This Week in Startups - Tech pullback, SEC considers tightening startup investing regulations, Apple XR headset leaks | E1357

Episode Date: January 11, 2022

We cover the tech stock pullback (1:34), discuss the impact of the SEC exploring more restrictions and disclosures for late stage private companies (12:00) and share details about Apple’s mixed reality headset are leaking (37:07). We wrap with a new segment... over/under(45:11)! 00:00 Molly intros the show 01:34 Tech stock pullback amid rate-hike concerns 10:48 Marketerhire - Get $500 off your first hire at https://MarketerHire.com/twist 12:00 The SEC in considering increasing private investing regualtion 21:17 FanDuel Sportsbook - Sign up with promo code TWIST to place a special $1000 risk-free bet at https://fanduel.com 23:02 What is the end game for accredited investor regulations? 35:32 Fellow - Sign up and get $1000 in credits at https://fellow.app/twist 37:07 Apple VR Headset 45:11 Over/under for when Tim Cook retires 51:34 Over/under for when VR is set replace iPhone FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Welcome, welcome to this week in startups. Today, we're going to talk about all those tech stocks tanking, many of them down at least 5%, the S&P 500 down for a fifth straight day. We're going to do a little macroeconomic analysis like we do on this week in startups. That's right. The SEC is looking into more restrictions and disclosures for late stage private companies. We asked the two basic questions here. What would that look like? And why? Plus, details about mixed reality headsets from Apple. There are a leaks, which makes us both suspicious and enthusiastic. We're going to break all of that down, and we have a new segment over under. It's a great show. Stick with us. This week in startups is brought to you by Marketer Hire. Need expert marketing help fast? Hire Vetted Marketing Specialists this week from the company already used by Netflix, all birds, and more. Get $500 off your first hire at marketerhire.com slash twist and use code. Twist. FanDuel Sportsbook. When you refer a friend on Fan Dual Sportsbook, you'll be entered for a chance to win an all-expenses paid trip to Super Bowl 56 for two people. And if you're new to Fanjul, you can also sign up with promo code Twist to get your first bet risk-free up to $1,000. And fellow.app is a game changer for all your one-on-ones and team meetings. Go to fellow.app. twist to get $1,000 in credits.

Big pullback this morning. Most tech stocks, with the notable exception of Uber, evidently, were down. Yum, yum. About 5%. The S&P 500 is down for a fifth straight day. Square now called Block, Robin Hood, Zoom, Coinbase, Snowflake, Airbnb, Spotify, DoorDash. All of these others were down at least 5% as of this morning. And here is a crazy stat from Bloomberg last week.

about 40% of public companies in the NASDAC composite index, because the Dow, not down so much, heavy on the financials, not really impacted so much today, but about 40% of these public companies in the NASDAQ have seen their stock prices drop at least 5050% from their one-year highs approaching the highest ever, according to Bloomberg. Let's turn it over to Professor J-Cal with some insights.

Well, I think Macy's is going to be great. as to why is it happening now? So I have my own theories about this and obviously the market has been incredibly hot. So we have to start there. And the economy is incredibly strong right now. But the market has been hot for since 2009. And so here we are in 2022. So we're talking about a 13 year bull market.

Maybe it's closer to 14. I don't know the exact time of the crash. Somebody can fact check me. But so we're well over a decade into a bull market. That means, and in that bull market, you have correction. So what we're seeing now is a correction. And then in some stocks, you're seeing a crash. So overall, if you zoom back on the NASDAQ, you zoom back on the Dow, major indices,

you'll see a correction. But if you look at Zoom or Peloton or, you know, Bitcoin this week, you'll see a crash, right? And so let's just put that there, that there's two separate things occurring. Certain things are crashing. Crashing means, I think, over 30 or 40 percent. certain things are correcting. That's generally in the 20%. So crash versus correction are the two definitions here that we're going to work with. Okay. What happened during the pandemic? Once in a hundred year pandemic, let's hope. We poured stimulus into the market. At the same time,

people stayed home and didn't spend money on, you know, White Claw, shout out producer Nick. They didn't spend money going to basketball games. Shout out, Go host Molly. And they didn't go traveling around the world on business trips in, you know, business class staying at Amman Hotel. Shout out, J. So all of people's personal balance sheets kind of got cleaned up. And we had record savings. Because they stopped spending.

And then people are like, oh, yeah, here's some stimulus checks that you don't need. A lot of people did not need them. Let's be honest. Probably 50, 60, 70 percent of the dollars that went out were not needed in hindsight. But we did that because we were scared as heck that the economy would crack. because it did have a crash. The stock market did, in fact, I think technically went down more than 20%. And so what are people doing?

They're at home with nothing to do in a lot of money. And they fire up Coinbase, they fire up Robin Hood. They fire up fantasy sports apps, and they start gambling. And so I think what we're seeing now is the unraveling of people who were speculating and gambling. And then what we have underneath it is a very vibrant group of companies that are making incredible products that people love, record low unemployment, a large amount of jobs available, record low in recent history, immigration, so we have a labor shortage, massively rising wages.

So this is like three or four macroeconomic trends happening concurrently. So, you know, Peloton, I think is like a canonical example for me. That is the perfect example of a stock that a lot of people decided, and Zoom would be the the one. Let's just gamble the heck out of this one. I'm sitting here at home. I want to place a bet. Everybody's getting rich on crypto. Everybody's getting rich trading stocks. These are two obvious bets. And so it got run up more than it should. And now we're seeing that those trades get unwound. Will those companies go back to their former selves? Sure. In five years, in 10 years. And that's my take on what's going on here. And it's healthy to hash this out. But we have to stop pouring money

on a raging debt and fire is my personal opinion. Because we don't know exactly what we're doing here. I get the sense like the Fed, the way they're acting. They're in a bit of a panic. And then you superimpose on that politics and the people who are in office trying to stay in office. What's your take on all this money? Well, I think what you said just right there at the end, too, is also really important to point out, which is the debt question.

And in fact, Anyak 78 says so many margin calls. That's 100% true. A lot of the crypto crashes that we've seen. So when you look at some of that gambling on Robin Hood and the gambling on Coinbase, let's not forget that record low interest rates have also fed a ton of confidence in borrowing. And so you have people taking out debt in order to gamble in the market. Then they lose, get washed out. Institutions come in.

This is mostly happening with crypto, but I think it's probably going to be happening across the board in the stock market. Because you've got a lot of amateurs, right? You got a lot of tourists. And the soccer's at the table. The stock market should be more available to everybody. It's a good trend that more Americans are participating in the public markets, but at the same time, like a lot of them are going to get in trouble because these are some shark-filled waters. And then you also have all the things that Jason just said, plus some warning signs.

This question of whether inflation is going to continue and whether that's going to lead to rate heights. Is there going to be tapering, which means taking some of money out of this super, sloshy economy. And so I think those warning signs are starting to make people say, like, maybe the institutional investors at least, maybe I should get out of the fun, but shark-filled part of the ocean and head for the shallows, which are bonds. So you're seeing bond yields rise, like institutional investors are fleeing for safety. That's partly why you're seeing some of these more household name stocks, particularly tech

stocks where nobody was ever really sure if they were worth the valuation in the first place. Yeah, I mean, they're like, you know. Let's stop playing this dangerous game and flee for safety. And when you start to see that happen, it's good to pay attention, especially in our field. Because it could have huge impacts on company valuation, right? Yeah. I mean, the good news when you're an early stage investor is you're there at the moment of inception. You're there at the birth of the company.

And it's just a unique place to live because you have a 10-year outlook. And if you have a 10-year outlook, you get basically abstracted from these kind of morning. So when I wake up and I see my publicly traded stocks, you know, flipping over and over, I'm just like, I have a 10-year view on these. I believe in Robin Hood got crushed. I believe in Square, got crushed. I believe in Uber, not crushed. But, you know, I believe in these names. I believe in the companies, I believe in the products, the services, the teams.

So I think in 10-year increments, there's no world in which I think Uber Square slash block, whatever it's called, Jack. And Robin Hood will not be bigger companies 10 years from now. So I'm holding those companies. So holding those names. Which is so funny, like, just as a side note, that's how public market investors should be thinking, too. Like, buy and hold would be healthier for everything than the sort of speed of the trading that we so often see. But that's a separate. That's just investing advice from a totally not professional.

Well, here's the thing. You know, if you're, if we have a lot of new entrants, they're experiencing things for the first time. What do people do when things go down? A lot of times they hold them in the hopes that they'll go up, right? And then if things are going up, what do people do? They sell them because they're like, I got to book my win. And then, you know, there's this concept of riding your winners. If you believed in Uber in years one, two, and three, you know, are you going to believe it in years 11, 12, and 13?

I do. I still have the same conviction about it. So, in fact, I have more because of the delivery business. So I think the big picture here that makes me feel good is I think Omicron is like we're going through the eye of the storm right now. I think all of these day traders, these new entrants, to the market are getting a quick education. And I don't think a lot of them face the risk of ruin. Of course, some may.

And that's their fault for doing what everybody tells them not to do, which is be concentrated on one or two assets as opposed to being diversified, not paying down their debt, all those fundamentals and being long-term participants. So I'm actually very bullish on the market because of the consumer and because of the companies. And I think this is the setup for a rally as the Fed cleans up its balance sheet and says, Okay. And then maybe we don't pass this. And I know this may be controversial with some people, but the Bill Back Better Act just felt like, oh my God, there's like another barrel of curran on the fire. I'd rather see that broken up into smaller chunks and, you know, digestible spending going forward

until we have some way to pay for all this and then pay down the massive debt we're getting into. Well, once we reform the filibuster, it could totally be introduced as a package of smaller bills instead of all at once through reconciliation because we have a broken congressional process. Okay, I'm sorry, different shows. Totally different show. This week. Totally different show. In our broken political system. I think that was a Sunday show as yesterday.

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You can also get a free consultation on who to hire based on your needs and goals. So take advantage of that free consultation. That's five hundredie right now. Go get it at marketerhire.com slash twist and use that promo code TWIST, please, so you can get that five hundy. So what does this mean for? There's this sort of now ongoing question. Like what happens if the window to go public gets small? which is a conversation that's happening simultaneously as it was reported in the Wall Street Journal today, that the SEC is considering trying to make more private companies. So big, big, big unicorns that stay private for a really long time. See also Uber. It is the SEC is considering tightening qualifications and requiring private companies to routinely disclose information about finances and operations. Yeah, this seems to me to be a Theranos reaction.

Or a we work reaction to me, which is, oh, my God, these private companies that are backed by the most sophisticated investors in the world need to be monitored. It's like, really? Does like Tiger and like, you know, and Kut and Goldman investing these companies really need to have somebody like standing next to them, you know, when they place a hundred million dollar bet? Are we still saying that soft bank is among the most sophisticated investors in the world? I would say so, yeah. I think that one, okay, just check in. Are they crazy gamblers? Are they the person who comes to the poker game, buys like five times everybody's stack and just starts betting every hand?

Yes, they are a volatile player, but still, I think will wind up turning, you know, $100 billion into $200 billion or $150 billion, and then getting 20% of that, so they'll net $10 to $20 billion in carry. And the Saudis and whoever put their money in there will be perfectly fine with getting 50, you know, a 50% doubling of their money in five years. years or doubling it. But is this, I mean, I'm going to caveat what I'm going to ask you by saying, I think that everybody in this game knows what's happening here. Everybody knows venture capital is risky capital. That said, because of the froth and the market and the money that can be made from private

companies, you probably have seen LPs be more willing to put more money in this risky capital bucket. And those LPs can include financial institutions with lots of exposure, right? So pension funds and banks. And is it, does that, when you back it up from the investor stage to the LP stage, is that what makes it the SEC's territory? I don't know why the SEC is doing this. I'll be totally honest.

It makes no sense to me because even if you look at those LPs, if you were to take a retirement fund, they probably put 5%, 10% of their money into private equity or venture or less. It's been their best performing asset class. So it's their best performing and it's a small part of what they do. And if they were to lose half their money at it, it would be fine. But instead, they are making a ton of money on it. So this is a very strange, when I saw this headline today, I was like, this is crazy. And, you know, maybe they're thinking is, and it's hard to know what the regulators are thinking here is,

maybe they want them to disclose so that there's better hygiene for when they do go public, right? So like, okay, we know you're going to go public. So maybe we want you to just start that process of cleaning up beforehand. But, you know, in my experience, people are doing that. Like post-wewerp, people are doing that? They've always done it. I mean, people have always done their diligence in this space. There's always been representations made.

And it's up to those, you know, the most sophisticated players at the game. We're talking about the top 1% of investors, 0.1% of investors who place these bets, actually. The 0.1% 1 in 1,000 capital allocators are the ones making these late stage bets on, you know, Stripe or Airbnb before they went public or Uber before they went public or Google, they know what they're doing. So I don't get it. It doesn't make any sense to me. I'll be totally honest.

I'm confounded. And I think we're just going to have to wait and see why they feel the need. This is not where they're needed, you know? Like, you know where they are needed? Crypto. I was just about to say that. Like, how about maybe spend some time giving the market more clarity, some regulatory certainty for companies like Robin Hood or Coinbase that could actually either help them grow

or help them grow safely, as opposed to getting involved in private companies, which to me does seem to be, even if they're backed, you know, far up the chain by public companies, it still seems to me to be out of the wheelhouse of the SEC. And I'm not, I don't understand. Why don't they resolve XRP? Is it a security? Is it a scam? Seriously. You know, and then like maybe let's look at every other crypto project that gets over a billion dollars and people are trading. Like, I mean, honestly, what's going on there? You know, those are the ones I'm worried about. I would rather. I would rather. I would. would rather see the SEC figure out a rule for Twitter than try to require disclosing from private companies who are, in fact, fundamentally private companies. Yeah, this seems like over-regulation and pointing the gun at the wrong place. Like, this is not where, like, people are, people are not losing their money in private companies, you know, at high valuations. That's not, and those people, if they do lose their money, can afford to, like they're sophisticated, as we've said here. So who, who's not sophisticated. I think, you know, a lot of the

crypto trading that's going on, I think people trading on margin, people day trading stocks, you know, maybe SPACs, you know, the ones that are pre-product, you know, the Jason's rule, like if it goes public before they have a product in market, it could be a scam or, you know, if it's worth over a billion.

Like, what about Fisker, you know, like, let's, Nikola, like, that's a good place to look. Right. I mean, I guess I will say the one population that has been affected here that we haven't talked about is, you know, because it's When a company like Theranos or even a wee work goes down, it doesn't take down the broad-based economy with it. It doesn't take down the stock market. It does hurt a lot of employees.

Employees who got paid incredibly well and who easily found another job. Who probably took a pay cut because they were betting on their company stock. Not at Theranoser we were. I mean, maybe in the first year or two, but by the time they started getting like the Series B money in those places, probably overpay. And those people... If you're trying to identify some damage, that's the... That's the place to look. It's a bit of a stretch.

Like, I think we're really looking hard for the SEC. Yeah. And also like, like, if we're going to talk about people in society who are getting screwed, like tech workers who have five job offers. It's not always tech workers who work there, though.

It's like low paid designers and there's janitors in the cafeteria. I mean, there is some. I'm just like literally like, if you were trying to identify a bubble of economic impact, it's fair to say some people are impacted when this happens. But you are like, To your point, you're also taking a risk by going to work at one of these companies,

and you should know that. If you're going in the first two or three years, yeah, especially if it's in the first series A, series B, when they're figuring out product, market fit, it's a real gamble, and you get equity for it. And then if it's in the later stages, they're probably flush with cash and competing against Google and Facebook for employees and giving less equity. But yeah, that seems like a weird one. The thing I really like to see the SEC workout is in addition to crypto regulation.

And I'm not saying like crypto legal action. I think there should be legal action against frauds, of course. I just think clarity of regulation so that what investors do for a living and coin offerings do for a living have the same set of rules. Like we're both driving on the same highway. And one group has no speed limit, no brakes, no airbags. And like, they can just go 150 miles down the road. And like everybody who's in venture running a syndicate like myself or doing any other kind

of investment is like in the. middle lane going exactly 66 miles per hour. Which is how you always get killed by somebody. You always get killed by somebody faster behind you and you always get screwed as the person who's like following the rules. And I'm always like, I'm watching people pass me and I'm like, I would have been in that lane. Can I go faster? You're like, I'm going 65.

I want to go 85. I don't want to go 150, but I'll go 85. Like, I want to live in a state where the speed limits 85. In August of 2020, the SEC voted three to two to expand the definition of accredited investors. and they've been charged with that for a while. So that's what I'm looking for is, you know, like if people can bet on crypto,

like why can't they bet on private companies? It makes no sense. Seriously. Yeah. Well, maybe this is a step in that direction. Oh, I see what you. Oh,

okay. This just occurred to me. Like maybe the SEC is saying, okay, well, listen, we want to create a pathway for people to invest in private companies, but we want to de-risk it a little bit.

Yeah. Therefore, these, these rules. That's the most optimistic possible reading, I think I have of this headline from today. I mean, the other possibility is they want those companies, they don't like the trend of people essentially running a public company privately. Yes. Because that's what I hear from the inside. Some people are like, I can just be private. I have a small number of shareholders. And if large institutions want to own a part of my business, I go to them privately, I open the books. I say you can buy 5%.

They buy 5%. And here we are. The end. And essentially you can have a shadow private company that just has, let's call it, 150, 100 major shareholders. And they just trade the shares privately amongst themselves once per year. And maybe that's their issue. It's Wild Card weekend in the NFL and we're getting six great playoff games. Too bad my giants are complete and utter disaster.

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800 bets off in Iowa. 1-8009 with it, Indiana. 800 gambler in Michigan, New Jersey, Pennsylvania, Illinois, and Virginia. TN Redline, 1-800-889-9-7-89 in Tennessee, or visit 1-800-Gambler.net in West Virginia. Producer Nick just said, note that the WSJ article said the SEC is also considering tightening the qualifications that investors must meet to access private markets. So that actually gives credence to what you just said, which is they don't like this, and they kind of want to encourage companies to go public, which is like, don't put your finger

on that scale. It's not your business. I mean, I guess it is sort of your business, but it's not totally. We have to have a conversation like we had with cannabis in this country or gay marriage or wagering. If you look at those three issues, gay marriage, cannabis and gambling your own money, sports betting, wagering, poker, whatever. And you look at what the public, how the public felt about them. Over time, the public went from the minority of people wanting, you know, gay marriage, cannabis legalization and wagering to the majority of people wanting that.

The majority of people would like to be able to buy LinkedIn in year two or Uber in year three or DoorDash when it's in year four. Most people would like to do what they want with their money. They would like to be able to buy weed, you know, bet on sports, bet on private companies, and if you're gay, get married. And that's where our country has this very weird, I guess the word would be paternalistic sort of view of its own citizens, which is we need to. really take care of you.

Like, you're too dumb to figure this out, and we have to make the decision for you. And I think we have to get to the point where we're like, you know what? People can make their own decision on these issues and betting on private companies. And if we don't, the thing I fear is there are other countries that allow easy access to it, and we're going to lose those. As an example, if I ran our syndicate, the syndicate.com, I think in the UK, and didn't allow U.S. citizens to have access to it. I just let the UK folks have it.

I could allow anybody. I believe their laws are anybody can bet on startups. Or if I moved it to, you know, Southeast Asia. So what's going to happen over time is the opportunity to invest in private companies could go to other citizens of other countries. Now let that sink in. If people in, I don't know, Singapore or the UK or whichever country it is, are able to access these and move up in wealth, that seems unfair to U.S. citizens.

I'm not saying I'm thinking about that, but I am. I mean, I didn't spend the weekend thinking about it, but. The whole, or tweeting about it. Entire weekend. No, like, why can't, I mean, people can, people can, people are starting Dows, you know, and there's, I said, how do you get 100,000 LPs in a fund, right? Like, if I wanted 100,000 LPs in our next fund or a fund I created for early state startups, I could just talk about it here, talk about it on Allend, and tweet it.

And 100,000 people could put in $1,000 each, right? $100 million fund, boom. I can't do that. I can have up to 250 in one fund and then, you know, 2,000 QPs, qualified purchases in another, put those numbers together. You know, you talk about just over 2,000 people. Okay, I'm a, like, expert at what I do.

I'm a good actor. I do deal with. You're here now. You see the care we put into investments and how we think about them, you know, really vet the companies and struggle over that and turn down, you know, 100, 200, 300, companies that we meet with for every company we do invest in. and you don't trust me to have 100,000 LPs,

but a million people can buy Salana or 10 million people can buy Solana or NFTs or anything. It just feels to me like it's just completely unfair. And it's a little bit, if I'm being honest, it's a little frustrating for me to play by the rules over here and really be diligent about it. And then watch a bunch of people over here, you know, take out some piece of software

that makes 10,000 monkeys and then airdrop them with like one filter on them and they can just print their own stock exchange and call it a Dow or an NFT drop. It's just bizarre. Yeah. I mean, I think fundamentally that model is a very interesting threat to the type of, I mean, it's so weird to even say that the type of like early stage investing or venture or traditional investing, it is a bit of a threat.

It is also potentially dangerous to the people who are doing it. Like it really is, right? We're partly having a conversation about mitigating risk for all. the parties, the SEC might be headed in, like, unfortunately, it's pointing its fire in some ways in the wrong direction. It is reasonable to, you know, to go back to your sort of Europe example, it's reasonable to say that when there is a lot of money at stake, moral hazard gets introduced. So if you make it easier for everybody to invest in private markets, you know, somebody, I think, in one of the Nody gangs just pointed out that like a lot of people don't want to do the

hard work. They just sort of want someone else to do it for them, which means they will be strung along into disaster. They will follow the Pied Piper right into the start. I have such an easy solution for this, too. I don't know why people lack the common sense of this one. Here's an idea. Whatever your last two years tax returns say combined, right? So you're, let's say, the janitor at Google and you make $50,000 a year, all in, you made an app, and you made $40,000 last year. You had $45,000 as a custodian. Okay. What is 5% of that. Okay, $2,000. Sounds good. That's the max you can spend investing in private markets. And it's up to you to go to a portal. These are easily set up. A Shore Angelist, a lot of them have

this service. I think Republic does it too now. Maybe Seed Invest does it where you go to a portal, you upload those, that portal looks at it, certifies this is the amount the person can do. then I, as a private company investor or syndicate lead, you authenticate through that service. And it says this person is qualified to spend up to $2,000 a year. They've invested $400 a year. They have $1,600 left they can do this year. You could just come up with very simple rules like that. Imagine if Vegas, when you walked in, said, what was your yearly income?

Okay, you can buy up to $2,000 in chips, but you can't buy $10. You know, people might be a little freaked out by that, but it might also save a lot of risk of ruin that happens in Vegas. I'm like that that's sort of the exact opposite of people should be allowed to do what they want with their money and if they're stupid, then it's on them. I mean, but yes, you're talking about basically the credit system, right? That exists in and it's why it's why this is so frustrating because there are two totally different sets of rules. On the one hand, you can only take out so much debt on a credit card because we have like a bunch of opaque black box corrupt companies determining credit worthiness and, you know, like screwing people during the pandemic for like missing one bill that didn't

get mailed to them because like the minute like you have that whole system that says you can only have 20% of your creditworthiness be debt but you could cash out your entire bank account put it all in salana or take it all to Vegas and nobody will say a word so the question is do we want those two systems to try to exist simultaneously or do we want to try to equalize and i think intellectually i would just like everybody to talk about these things at the same time Yeah. Like, can we keep all of these disparate concepts in our mind without this like cognitive dissonance, have a little tolerance for ambiguity here, and say, hey, the same human beings, the custodian at Google, the teacher, you know, in New York City public school teacher,

the police officer, you know, in Los Angeles, and the real estate broker in San Diego, they're all going to Vegas. They're all doing these activities. And it's, I mean, Imagine if when you got to Vegas, they tried to stop you. People would be up in arms. Right. Yep. What is a, what's a, what's a better bet, you know, the Jets? Betting on the Jets, you know, betting on the Jets, playing blackjack or poker, a game of skill,

or betting on a startup. Or betting on Uber. Yeah. Yeah. I mean, come on. Like, I think we all know the answers to this. And, you know, I. I think if you forced unicorns to report their revenue,

like that's just as they said top line, you raise over a billion dollars, you got to start reporting your revenue every year, not your earnings, but just how much money you made this year. Does that make any difference to the people who are investing at that level? No, they already know that number. So what does the public need to know that number for?

I don't actually get it. Well, and then you get to this question that producer Nick is raising, which is then do companies start to try to route around Anytime you create a metric, people will try to either hit that metric or avoid that metric. So as soon as you've created a logo, get a billion dollars, you have to report. Well, then they'll be like, oh, we're not worth a billion dollars. And since we're private, there's literally no way for you to confirm that. Well, or if they're raising more than a billion, they could say, you know what, we're going to raise $5 billion.

It's a loan. Right. We didn't sell equity. We have a loan. And although it's not relevant to us, what would it mean for that later stage investing, where you've got these, would that keep the Saudi you know, funds maybe out of our business so much because there's not as much incentive to raise billions and billions of dollars from people who chop folks up. This is the kind of thing where like mucking with, you're changing the rules of the game

that don't need to be changed. And like there's a whole other set of things that do need to change. And just here's another thought experiment. So I did the one thought of experiment of you were capped in the number of chips you could buy at the ARIA in Vegas based on. on your income. Okay, seems crazy to do that to people going to Vegas, right? But I'm proposing it for private company things because, sure, why not? If people have this concern, I'm totally willing to start there, right? Maybe after 10 years, if we don't see a lot of people getting hurt,

we could up it to 10% or we could get rid of the rule altogether. Here's another one. What if you went to Vegas and to play blackjack and, you know, let's say any games involving cards, poker, blackjack, whatever, we made you take the card room license. You had to sit, you had to take a two-hour online course to understand the odds. And then you showed up,

and if you didn't have your license, you could go to a room on site at the area, and you could take the quick two-hour course and, you know, answer 20 questions. Well, that's what we're asking people to do for private market or to be involved in this. So I'm in favor of that. So Vegas,

imagine of Vegas, a cap and you needed a license to play there. They would be up in arms. And here in the private markets, I'm saying, let's do it. Let's give people a license. I'm all four people being educated in. There's nobody in Silicon Valley or the private market world, or I'd say there's very few people who are bad actors who are saying, let's get private, let's get small-time investors involved in this so we can steal their money. Right. It's quite the opposite. Right. Anybody who's in the private markets who wants to do this, including myself, I want to see people who are the janitor, the custodian, the teacher, put $1,000 into an Uber and have a million dollars come back.

That's sincerely what I would like to see. That to me would be the fulfillment of my career journey would be to make millionaires from people who were blue-collar people, just like what happened to my family. That's kind of what I want to do it. Pretty weird to consider that that was supposed to be the promise of public markets all along, was that anybody could, in fact, put in that money into publicly traded companies and have an opportunity to reap wealth from that. That was the concept, right? But of course, we introduced, because of course, when the incentive is money, things are going to get out of whack.

You have this massive inequality. It's something like, what is this? Less than 30% of Americans are actually invested in the stock market. And that includes like 401 case and retirement. So you have that system that has failed to enrich the public broadly, which is what it was designed for. Now you have private companies that people are going to work for in some cases because they hope that they will reap that benefit through the stock options that they'll get paid in. And you have this outstanding question of like, well, if people aren't participating in public markets because they're being front run and there's like dark pools and there's like all of these sort of incentives and reasons they're going to fail, maybe they could have this opportunity over here to invest in private companies and gamble that way.

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Give a shot, fellow.app slash twist. All right, let's go on to our next story. Everybody who's watching on YouTube, YouTube.com slash this weekend, go ahead and give us a thumbs up, hit subscribe and hit the bell next to the subscribe button. So you get alerted when Molly and I go live, which is typically around 10, 10, 15.

We did a little bit early today because I got an Ivy League, a phone call to do after this. I got some business after this. We'll see. But give us a thumbs up. And then if you're new to this program, just to give us a hashtag new in the chat and also tell us where you're calling in from and what topics you would like to hear us talk about on the show next up more details are coming out about Apple's mixed reality headset mixed reality is a fancy way of saying AR or VR it's a catch-all term for both of those nine to five Mac reported rumors that Apple's headset could be announced this year and might cost $3,000 that would put it in the developer kit kind of mode when people launch

something that expensive. It's usually for the first year or two to get developers and real, really elite enthusiast business builders to play with it. The headset is rumored to have both AR and VR, which means you could be in a virtual world, or you can press a button and see through the lens and see virtual objects in your real world field of view. That's what, you know, defines mixed reality or XR is, you know, the ability to do both of those things. This would be 10 times the price of the Oculus Quest 2 headset. That goes for $300. now, but again, that's just VR. And of course, if Apple is going to do this,

they want it to be better than what's out there, both in terms of look and feel and ease of use. The information made a drawing. We'll show it to you here based on rumors that looks Apple-like. It looks like ski goggles, I would say. What do you think, Molly? It looks a little like the Sony one, actually. Oh, yeah.

Or the good. And if you compare that to the Oculus II Quest, you know, which has a lot of battle. battery power on the back, et cetera, or computing on the back, I guess. It's pretty obvious which one's going to be more appealing. And I think this is why Apple has weighted. Famously, Steve Jobs was going to do the IMac first, not the iPhone. But then he's like, you know what, this is not responsive enough to do the big iPad.

Let's go with the phone first because the touch and the screen is more responsive on the smaller one. So they really care about usability. Apple's approach will differ from Meta's VR approach because Apple will not create the Metaverse, Bloomberg's Mark German reported that he was told pretty directly that the idea of a metaverse is off limits internally at Apple. In other words,

they probably don't want to be responsible for a bunch of people walking around in a social network doing things to each other. Obviously, crazy stuff happens when you run a virtual world, whether it's Grand Theft Auto or any other service.

German reported that. Apple's headset will be used primarily for short bursts of activity rather than prolonged sessions. Focus will include gaming, communications, and content consumption. Project is horribly codenamed reportedly N301.

Maybe that's a room in the basement or something. That doesn't sound right at all. Yeah. Come on. Project Falcon. Can we get like a bird to pray? Hawk. I now have doubt.

I mean, I had some doubt about this entire endeavor and this rumor and whether Apple is like going to do this at all. But now that I know it may or may not be called code name N301, I'm like, nah, it's not real. And I,

you know, this like late mover advantage is typically Apple's approach, which is, let everybody go up the hill, Google, glass, if we forget, less we forget Google Glass, Oculus, let everybody, you know, what's Microsoft's called? HoloLens.

HoloLens. Yeah, let everybody embarrass themselves with products that are 40, 50, 60% away there. But if you plug this into a new M1 machine, which is what I think is also driving this, is Apple made their own chips. I think one of the reasons Apple invested in those chips was to make the batteries longer on phones, make the laptops faster, but also, I think their end game. was to be able to make chips so good that VR-A-R-R actually worked. What are your thoughts, Molly?

Yeah, that makes a lot of sense. I mean, I think I've gotten to the point where with Apple, every time I hear about Apple getting into some new business or some new part of a business, my question is, cool, how's that going to sell iPhones? And secondarily, how's it going to sell Macs with fancy new chips in them? Because let's be honest, like almost all of Apple's revenue. services, sure, it's growing, right?

Other things are growing. And profitable, yeah. And profitable, but most of the nut comes from the iPhone. And so still to this day, almost everything, the entire orientation and people who work at Apple will tell you that this is fundamentally the question is, how does it sell more iPhones? And so that's why the car doesn't make a lot of sense to me, but VR-A-R makes a little more sense because this is something that could sell devices and or tie into that ecosystem, I still think that there is an issue with them saying we're not going to create a

metaverse, by which I mean, what is their operating system going to be? Is it going to be, you know, an extension of iOS and then they'll have developers just build games and things like that? If you start to get into an arms race where you have like multiple different ecosystems, that does benefit Apple? I just wonder what they're software for. Explain why. Explain why. I mean, Apple's great at ecosystems.

They're great at locking you in. The last thing that Apple is going to want. So really, the success of Apple's VR, AR efforts totally depends on how successful the metaverse ends up being. If everybody wants to be there, and Apple has built a headset

that only works in the Apple ecosystem, which we can virtually guarantee, that's what they're going to do. Virtually guarantee? I'm sorry, We can 100%. No, I see what you did there. Oh, I got a pun, not intended.

That's amazing. You got it there. You got there. But if everybody wants to be in the Metaverse, which is highly doubtful, then Apple has a little bit of a problem because they don't want to play with that. Apple is also great at running an app store at scale with high quality content that parents and everybody can believe in. And so that's going to be what's going to be great about this is Facebook is going to try to control the full stack, the hardware, the operating system, the app store, and the actual

metaverse you live in. Apple wants no part of being, you know, the community where you walk around. That's why they don't have their own version of Twitter or social networking, and they easily could have done that. Remember, they built some social networking into iTunes at one point. I forgot the name of that failed project, but I thought it was pretty cool. They don't want a police content. No. They know that is a not a great place to be. It's a losing place to be. Much better to have this beautiful hardware that people buy for aesthetics and pay a 50% margin on. I think it's going to be, this could be Tim Cook's legacy, actually, because the big critique of Tim is under Tim Cook. They massively optimize the business. They continue to print money

and increase the velocity in which they printed money. But they did it on Steve Jobs' vision. That meant the iPhone, Apple TV, you know, and the watch, which, you know, supposedly jobs had a lot of input on. So this could be great for Tim Cook, I believe. I think this will be his legacy. I think it's going to be a huge hit. And I think the reason I think it's going to be a huge hit is I think people

will use it sitting at their desk to play games. And there'll probably be some work stuff for it. Like imagine we put the headset on and we had a version of Zoom. That actually worked in a meaningful way where we could I don't know, pull up a whiteboard. You know, I could be looking at my desktop and looking at my laptop and

And these laptops are so super powered. Now, did we send you a new computer when you joined? It's so fast it scares me. I have the M1 MacBook Pro. Oh, the new, the 16 inch, the new one? Uh-huh. Oh, yeah, wow. It's the size of a Volkswagen, but it goes as fast as a Tesla.

It's crazy. It's a bonkers laptop. I just got my M-1 upgraded to that one, and it is. I had the, like, first M-1, and it's crazy how fast and beautiful the screen is, and they put the ports back. But what do you think if we, what's the over-under? I see our producers put a little note in here for us. They set the over under at 3.5 years for Tim Cook retiring.

For Tim Cook retiring. Tim Cook retiring after this product is released. If this is his iPhone moment, if this is his legacy. So let's say this gets released this year, 2022. That means starting in 2023. You would retire before after 2026. He's 61 years old. Now what do you think, Molly?

You take the over the under. So the over is that he would retire after 26? Yeah. Okay. Yeah. Hi, I have a lot to learn about gambling terms still. So here's how you would set the over under for the Clay Thompson yesterday. Yeah.

Will Clay score 20 points if you were betting on yesterday's game? I set the over under at 16 points. Do you bet Clay does over 16 or under 16? That's probably what you would set it at. And what do you score yesterday, 19 or something? Uh-huh. Yeah. And also happy Clay Day.

Typically the over under, you will have like a point five. They call it the hook so that you can't push. You can't have it land on 16 because then nobody really wins. Oh. Oh, my God. This is a gambling terms. So I am, I love it. So here, I'll tell you how I would do this. I'm looking at it. I'm, I'm, I'm massively over. I think he would, he would not retire before 67, 68. Because in your 60s, I can tell you this having turned 51, my lord, like, all the bullshit that you deal with and all the hard stuff becomes easy. Yeah. And then all that's left is the work. Because you know who to hire, who to empower, who to empower.

what systems to set up to deal with bull's. Like when I was in my 30s, my 20s and 30s, it was like just piles of punch lists of nonsense that I had to get through. And then you kind of hit your 40s and you're like, wait a second. Here's how you just dispatch that stuff really quickly. You just triage it immediately. And then you hit 50 and you're ruthless. You're like, this is your job. This is your job. Get it done. Great. This is no longer your job. This is your job. Get that done. And you're just like, have this roots of the efficiency. I think he's in the ruthless efficiency era of his career where he's probably enjoying it. How could you leave running this company? And if you look at Apple and where they are now, right, they're not

being hauled before Congress. They're not trying to deal with content moderation at a grand scale. They're making crap tons of money, but without pressure to make more money, right? Like, they are just a solid, trustworthy growth stock. They couldn't possibly make more money. the VR AR can only be additive in some way. It's not going to take the company down. It's not a particularly big risk the way something like a car would be. So I got to think that running Apple right now and probably for the next decade, it's just pretty fun.

I'll tell you, there's only, I can tell you the reason why his life is great is because they get to pre-record all those Apple presentations now. He doesn't have to do it live with all the technical problems. He's just like, wow, it's such an amazing day here on campus and you're like, It's raining outside. It's like, yeah, we taped this two weeks ago. Game changer.

I'll tell you. I'll tell you. The hard part is over. The hard part is over. Remember Steve Jobs when something wouldn't work? He looked like he was going to murder something. Talk about ruthless. Someday we're going to find out a list of all the people who got fired after every single Apple keynote.

Or just chewed out or just, yeah. Or just chewed out. Can you imagine being the poor audio guy or something and like he throws? There was one time I remember he threw to something and the audio wasn't playing. And it's like there's some audio guy. with his or her finger or their finger on the audio thing, and they forgot to push the button or slide the slider up, and they're just like, oh, my God.

They just probably just run away. I'll tell you, if you want to get, you're out. I'm out. I moved to Mexico. I can tell you how to get Tim Cook to immediately retire. If the employees really want to get him out of there, all you have to do is start leaking stuff, writing petitions that, you know, and unionizing. If the Apple workers became so entitled that they made his life,

like dealing with a bunch of like difficult problem childs, like, which they've had like a, what, like two or three little flurups? Yeah, I mean, there are some teeny little brush fires. Tiny little brush friars, yeah. Tiny, tiny, tiny. So, yeah, it's a question of whether that continues. But yeah, right now you've got to figure being the CEO of Apple is a pretty cush gig.

It would be like, imagine like three of those brush fires like connect and become like an actual fire. Like that would be when, yeah, like Tim Cook would be like, you know what? You ungrateful. Because it is like. The flip side of it is I am a little astonished that they haven't had more. I mean, you know, they've just got like literally the same cadre of white guys in charge that they've had in charge forever. The pressure to seriously innovate is essentially off.

But like that's also kind of a bummer. I mean, I don't know. I was at that Warriors game yesterday with my brother who has the Samsung just like as just one thing, right? He's got the note ultra, note 20 ultra, whatever, with the Super Zoom. what the hell? Why do I not have that? It's incredible. It's my backup phone and the camera on it is ridiculous.

I always buy the best Android phone as my backup phone and it's just ridiculous. But you know, Apple's been out this for a while back in January 2016. Financial Times Report Apple have built a secret team to quote, kickstart their virtual reality effort and they were building prototypes in 2016. I'm sure they built prototypes, you know, 10, 20 years before that. And, you know, it's six years later. Why don't they have one yet? because they want it to be perfect.

Somebody named Brad Lynch tweeted, Koo says Apple already anticipates delays in the production of its mixed reality has set as devices expect to have much more advanced hardware and design than rival products. Its play alone is pretty advanced and likely to be the biggest slowdown

for release. So maybe some, you know, you could see these supply chain issues, maybe slowing this down. You definitely could, but I would say if there is a delay in this device, it's because they're afraid

it's going to cannibalize iPhones. I guarantee. Yeah, I think it's... It's a business consideration. They're like, is it going to sell iPhones or take away from my device? iPhone sales because that's the only thing they're thinking about.

I think one out of, I think one out of 20 people buys this in the first couple years, one out of 20 in the first year. And then maybe one 10. And it will be if it's $3,000, it's the equivalent of buying like three more phones. So it's only like that would be net net, a 15% lift in iPhone sales.

I think it's going to take five or 10 years for this. I would say it's going to take out. If I was going to set the over under of when you could take your headset, we'll play over under. again, your headset let you leave your Apple glasses. I'm going to call them glasses because it would not be ski goggles because nobody's going out to a restaurant with ski goggles on or to the Warriors game. So let's say they get down to the glasses format. I'll set the over under at 10.5 years that you will be able to not have an iPhone and do everything with the goggles or glasses.

Would you take the over, Molly, or the under on that bet? On 10.5 years. 10.5 years. Yeah, I'm going to take the over. You're taking the over. See, I said it so high. I was going to originally go 9.5, and I said it 10.5. So then if I said it at... It takes a decade for any consumer product to find a market and find its legs.

And this is really difficult technology to miniaturize, and they're going to protect the shit out of the iPhone for another decade. So when Tim has gone, then boom, this becomes the new iPhone. Now I set it at 14.5, over under. Under. Okay, there we go. So now that's a new segment, by the way, over under. Over under.

So that's how you said it. All right, everybody, it's been a great show. And for Molly Wood, we'll see you next time. Bye.