This Week in Startups - This Week in Startups Australia hosted by Mark Pesce | Season 9 Episode 1 with Jason Calacanis

Episode Date: April 6, 2021

Check out This Week in Startups Australia: https://twistartupsaus.com FOLLOW Mark: https://twitter.com/mpesce FOLLOW Jason: https://linktr.ee/calacanis

Hey, everybody, one of the great joys of my life is the friendships I've built during my career in technology and startups and entrepreneurship. And one of my great friends, Mark Pesci, is down in Australia. He moved from the United States and he's been down there for decades. And in 2014, he started doing this week in startups, Australia. We are now in season nine and it's about to hit its hundredth episode. So, congrats to my good friend, Mark Pesci. This season's theme is the sweet smell of success, and it focuses on the rapid acceleration of tech adoption in 2020 and continuing that trend in the post-pandemic world. We decided we would cross-post this first episode. Maybe we'll make that a tradition in the future into the normal twist feed because the guests that Mark are getting

are just amazing. And in his first episode, it's me. So you get to hear me and Mark, chop it up, chew the fat, and talk about life after the pandemic. So go ahead and search if you want to hear more for Mark and this week in Startups, Australia. Just go and search. for Twista, T-W-I-S-T-A, or This Week in Startups, Australia, on all the major podcasting platforms. And you can go to the website, T-W-I-Startops-A-U-S-D-C-com. That's T-W-I-S-A-U-S-K-K. That's their website for This Week in Start-Ups, Australia. And please follow my friend Mark Pesci on Twitter.

He's M-P-E-S-C-E, one of the most thoughtful, interesting, and intelligent, good people I've ever met in my life. Love you, Mark. And thanks for doing the show. And I want to take a moment to thank the sponsors of season nine of this week in startups, Australia, Odo, Squarespace and User Testing, going down under and getting all those startups and founders supported in Australia. I do really appreciate that.

And who knows, maybe we'll have it this week in startups. I don't know, Japan or maybe in the EU or the Nordics, maybe there's somebody out there who wants to do it in Africa or South America. If you're a technologist, you've been added for a decade or something, you've got some level of credibility and ability to host a decent discussion, maybe we'll have you do this week in startups in your region. It's always been my plan maybe in the second decade to have a couple of regional shows. And we've done such a great job, or I should say Mark has done such a great job with this week in Startups Australia. Maybe it's time to launch a third of this week in

startup. So you know where to reach me, Jason at Kalakhanas.com. All right, let's listen to this great episode. G'day, this is Mark Pesci and welcome to Series 9 of this week in Startups Australia. This year we will be back weekly for 20 episodes, all asking the same question. What is it that makes a startup successful? Is it a great idea? Is it a great team, great customers, or something else altogether? This is an important question for all startups, a fundamental question. And on this series, we're looking for answers.

We'll talk to people who have been successful and ask them how it happened. We'll talk to startups on the road to success. and ask them how they plan to get there. And in this first episode of Series 9, we'll talk to legendary startup investor Jason Calacanis about what he looks for in a startup that's bound for success. The fast track for success starts with this episode of This Week in Startups Australia.

This week in Startups Australia is sponsored by user testing. Experience what your customer experiences with user testing. Request your free trial at usertesting.com slash Twista and get the fast human insights you need to make more informed business decisions at scale. This week in Startups Australia is also sponsored by Squarespace. From websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a beautiful online presence and run your business. Go to Squarespace.com slash Twista for a free trial.

Twista is also sponsored by Odoo, a fully-com. customizable and fully integrated suite of business apps that let you build and scale your stack as you build and scale your business. Go to Odo.com slash Twista to check it out. Twista's production partner for Series 9 is UTS startups, where they're equipping a new breed of startup founders by inspiring students to launch their own venture and build the foundation for a successful career. To learn more about UTS Startups program, go to startups.

edu. For the last four seasons on this week in Startups Australia, it has been our great pleasure to open each series with the patron saint of this podcast. Jason Calacanis, the angel investor par excellence,

founder of this week in startups, probably the most popular startup podcast on the planet. And once again, Jason, welcome back to Twista. I miss you. I miss you, my friend. I miss Australia.

And when this pandemic over, I will be swinging down under and see everybody in Sydney and Melbourne and Perth. And I can't wait to get back on a flight. When we talked a year ago, we were all locked down everywhere. No one quite knew what was going to happen next. Now that we're starting to see, particularly Silicon Valley and startup land emerging from the pandemic, what does the landscape look like? How did things shift during the pandemic in a permanent way? I mean, yeah, I mean, the most, the biggest change, which I had fought and underestimated was the work from home revolution.

In America, we had a couple of little pockets of innovation there. You had 37 signals, which makes base camp. You had WordPress and Matt Mullenweg and Intercom and a handful of companies that I would say were quixotic, weird, or a boutique. Obviously, you know, a billion dollar, multi-billion dollar company like. like WordPress is not boutique. But it was generally considered like this weird thing over here. Well, when 100% of people are forced to get a setup with a proper microphone and lighting,

a light ring and, you know, put their Ethernet cable in for the first time to their computer and they didn't even know they had an Ethernet port or an Ethernet hub in their house, but they, you know, ran that 50-foot cable to make Zoom work properly. Once that happened, we saw actually that work from home technology does work. And managing people remotely does work. if 100% of people buy into it. So it's almost like a prisoner's dilemma where if you were a work from home employee,

you would be a second-class citizen in most companies because you'd have some conference or people would go for a walk, they'd make business decisions, and you weren't involved in it because you were in Boise, Idaho. Now, when you get on a Zoom, the CEO gets a little square box

and next to them is the lowest ranking person and everybody in between. So it's created this level playing field. And then, and this is where it gets even a little bit, it gets a little bit marauding, but I do think some CEOs looked at this and said, wait a second, if we can hire people anywhere, the 30, 40% premium we pay in Silicon Valley means we can get a third employee for every two and we can lower salaries 30%. Oh, and we're spending this much on facilities and space. It's our number three line item or number

two. We can reduce that 50%. Oh, and now there's nowhere left to hide. And that's the final piece, which is if you are not producing or you are producing really a lot of work, in a work from home environment, a remote work environment, proper management is forced to do their job, which is not evaluate people on their culture, you know, quotient or how good they are at meetings or water cooler or other performative stuff. You then have to look at what was the work that was done. So you don't, you get no points for bringing in. donuts or making everybody laugh in the cafeteria or whatever.

All that stuff is gone. It's just what work did you get done? And when you take out commuting, which is two or three hours a day here in the States, we saw, I think, a bargain happened, a grand bargain, which is you get to work however you want, wherever you want. We're going to take those two or three hours and you keep one, we get one. And people are working more in the startups I see. There's not like this delineation.

So that's something that's going to have to be corrected for. I think when do I officially stop working if I'm working in my pajamas? And when do I start? Like people are opening their laptops up in bed and working and taking a shower every other day. You know, so it's, but it is going to come back. And then that's where it's going to, I think, get super interesting is what happens when Netflix comes back or Zuckerberg comes back. And there's a locus of power.

And 80% of people are not part of the star chamber, right, of where the decisions are made. So I'm really fascinated to see how it works out, but it's good for employees. it's great for companies and it's going to be great for efficiency going forward. We're all much more efficient and we got through this together and I think it's going to make everybody stronger for it. What happens and people are asking me this. Are they asking you what's going to happen to commercial real estate as a result of this? Oh my God, yes. I mean, it's going to be dire depending on the city.

In the Bay Area, somebody did it like, this is the amount of open space we have and they did it represented by the Salesforce Tower, which is our largest tower. here. And it was like, we have, I don't know if it was six or seven on the way. We have like six. No, we have seven. Now we have eight. You know, Salesforce towers were at the space. And then in addition to that, you had Pinterest pay close to $100 million to cancel their headquarters. And so I think what's going to happen is there people are going to start giving up space. I think Twitter already has been quietly giving up space. There's a room where Uber is going to give up some space. And, you know, as we go down that road, it's obvious that transforming that retail space or the commercial space into lofts for people

can live because we have a housing crisis in the United States would be a smart move. So I think if these cities don't rebound and they have too much office space, I think we'll see some people start this conversion process so they don't have all these empty buildings. All right. Now let's turn this around. Are you starting to see startups? Did you see startups emerge during the pandemic? And if so, were they purely virtual enterprises where there was no office?

Yes. Yeah, yeah. I mean, most startups do no office anyway or like a we work space. And, you know, so that is part for the course, I think. Maybe it's 50-50. But yeah. And I never thought, the reason I moved to San Francisco from Los Angeles, which I candidly preferred, you know, in terms of lifestyle, was because I wanted to be the number one angel investor in history. And I thought, well, deal flow is there.

Founders want to go there. So then we move the accelerator in March. We canceled the in-person accelerator in the middle of, you know, week six of, you know, 12 weeks. And we realized, oh, this isn't going back. Do we just pause the accelerator? We said, well, screw it. Let's try and see if we can do a virtual accelerator. So I said, okay, let's provide more value.

We made it 16 weeks. And, Mark, we had three times as many qualified people apply. Because they could. Because they could. They don't have to travel. So if you were in Australia and you wanted to come to the accelerator, we made people move here for and so did YC. And so, you know, that means half the people would just say no and half would say yes. And even in the United States, we had people commuting from New York,

sometimes they had families, you know, gets a little bit hard, but people found it worth it. I've done more investing in the past year during the pandemic than ever. And the quality of the companies is going up and they're more efficient and they're more focused. So a very interesting thing happened. We would have a very relationship building, theatrical, you know, dramatic presentation of your deck. And we'd all get together in a conference room and have coffees and lottes and kind bars and, you know, all kinds of Pete's coffee pulled in for $6 to pour over. And we'd sit there and, you know, it's a two-hour affair. And then we realize, oh, there's no way we're investing in this in five minutes or ten minutes. And then we're like, okay, we've got to

go into diligence and the diligence is a disaster. Now what happens is nobody wants to be on Zoom, you know, for more than 20 minutes for a meeting. So everything comes to you in a nice, you know, as an investor, a nice easy package. Here's what we're raising. Here's our term sheet. You know, here's our metrics. And we do all the diligence first, take a quick meeting. And then after we made the decision to invest, we're like, you know what would be interesting? If we met you in person and went for dinner or went for a walk. And so I, of the 50 or 60 companies, I invested in the past year during the pandemic, I've never met them. I've never met them in person. And you know what?

Great companies. Maybe these people are going to be weird and they would have failed the in-person test. Who knows? But, you know, I think it takes a little bit of bias out for the people who are just really performative and great at pitching, you know, and who are six feet tall and, you know, have perfect hair. I'm this, don't take this personal mark, of course. I mean, you're tall, good looking, you got the great hair.

But I'm saying, like, that does, you know, we do have bias. And it does impact people. We see that. Like people who are taller will get funded, right? People who are taller will get, you know, elected easier. So this kind of bias is being sucked out of the system, and it's becoming more of a meritocracy, which is always good. Can we see the birth of a startup that takes advantage of globally accessible talent

in a way that it hasn't before? Yeah, I mean, I think for people who are smart, it's going to become the differentiator and the secret weapon for companies. You're going to be able to fill a position in, you know, 10 to 20% of the time because getting people to move to a city to take the job was getting harder and harder. Uprute your family, uproot yourself, get an apartment, pay all those costs. And then what I think's happened is the most talented people are going to basically say, I want the lifestyle of the CEO or the general partner at that venture firm, which is to say,

you know, CEOs of huge companies are like, yeah, I spend the summer in the Hamptons. I spend, you know, a month of the winter in Miami and I'm in Aspen for a month skiing and then I'm in New York for eight months. The next two levels down are getting that same treatment, which is I'll call the CEO treatment, where you get to define this. And then if you embrace that, you'll have less employees doing. more happier employees, more efficient employees with the lower, lower the risk, lower the time to hire somebody.

And it's just going to be a massive competitive advantage, I think. And so everybody's getting in on it. I opened a Canadian company and have Canadian bank accounts and all this stuff because we're hiring so many Canadians. A lot of the talent, you know, was not able to come to the United States. So for the last four years, you had all this talent go to the university system in Canada or just move there and kind of wait in a holding pattern. So I was like, all right, screw it.

Just set up a company up there. So we set up a company and now I've got a dozen employees in Canada, which is great for exchange rate. But it's also great because we can be a premier employer in Canada, whereas in the Valley we're, you know, solid, but we're up against Sequoia and YC and other places as places to go work. So that's like I think the really interesting thing is, you know, you could be a Facebook or a Google or an Uber

an Airbnb employee anywhere. And that's just going to be amazing. So yeah, it's a brave new world. I think online events are here to stay just in terms of what you and I do. I find that people really like these and they show up for them. And going to your boss

and saying, I need to go to Hong Kong for $20,000 and we got a couple of clients there. I'm going to check in on. kind of is hard to justify that these days of two weeks out of the office is going to be worth it, right? We always have that debate. Is it worth it for you to go to Hong Kong? Okay, well, that client spends a quarter million dollars. That one spends a million dollars. Yeah, we should go. Now it's like, eh, let's just send them a box of chocolates and we'll do a Zoom meeting. You know, like this is probably unnecessary. So I do think travel for business is going to be a big loser in all this, but travel for fun and joy and for.

people who live more nomadic lifestyles is going to make up for it, right? So it'd probably be a wash. We're talking to Jason Calicanis and you're listening to This Week in Startups Australia. We will be right back. Twista would like to welcome Series 9 sponsor, user testing. Are you launching a new product, developing a new prototype, rolling out a new campaign? User testing lets you see, hear, and talk to your customers to understand how they experience your brand, your product, and your services. Put yourself in your customer's shoes with real-time video feedback from user testing.

The user testing Human Insight platform allows you to target your exact audience, ask them any question, or give them a task to perform. It's a tech platform that connects brands with their target audiences to get feedback on any experience. Testers can get paid $10 for their time, and these users aren't doing that to get rich. They're doing it because they really want to help make your products and services better. Watch, listen, and observe their reactions so you can connect the dots and keep improving. You'll get feedback within hours and strengthen your relationship with your customers. Request your free trial at usertesting.com slash Twista and get the fast human insights you need to make more informed business decisions at scale.

And we're back on the series opener of this week in Startups Australia with the patron saint of this podcast, Jason Callaghanis. Jason, let's think a little bit about the main theme for Series 9. What we're trying to do is we're trying to understand what are the qualities, the attributes, the skills, the kit that a startup needs to be successful. You have seen a lot of startups. If you can sort of filter against everything you've seen, what is it that defines the key attributes for success in a startup? Wow.

You know, I've been thinking about this a lot during the pandemic. and I started working on my next book, which I then kind of expanded and thinking about a wider kind of lens of it, just talking about this. And what I've come down to is the flywheel for me is a great product that delights customers that allows you to make enough money

to have great employees who then study those customers and make the product better. And so there really are at the end of the day three things that happen in our industry. Number one, you make a great product. Well, who does that? People, the team. So the team makes great product.

And then that product hits reality. And reality is customers. And you have to study the customers, both their data and anecdotally through user interviews. And what we found is the companies that are innovating early and listening to their customers early and engaging customers early do phenomenal. And the ones who build huge, you know, mansions to product development, but who never talk to customers if this is what they want in a home. They've never gone to somebody's home. And then they start making weird stuff. So you ever see some weird mansion that got made?

And you're like, who is this for? And it's like, well, like, just the architect made it this way. And then other times they're like, yeah, we need a bigger closet. And yeah, it would be great to have more closets. And it would be great to have a bigger bathroom. It may be two things in the bathroom. Like, it kind of like, if you're studying your customers and you listen to them, you're going to make a better home for them, a better product, a better mouse trap. So there's a lot of people who get very good at raising money and are very charismatic pitchers. And then I've just learned to just put all that aside and say, tell me about your customers. And when you ask a founder about the customers, some of them, you really know they know their customers and they

talk to them. And other ones, you're like, yeah, I'm not sure. I'd have to check that out. Maybe we should do a survey. And you're like, okay, you don't have a survey built into this. And the customers and their opinions and their usage of the product is completely abstracted away from the management team, it's a bad sign. So if you are ultra-focused on your customers and really building a great product and you have that ability to build a beautiful design, beautiful U-X, and things tend to work out really well in my experience. So I really like the idea that you've identified with essentially a positive feedback loop

where you have good enough product, which is then providing good enough revenue to provide for good enough employees to make the good enough product back. with better revenue for better employees so that you get this real virtuous cycle going. So that sounds like something that is easy to look at a business and say, do we have that? Do we not? How far are we from that? Yeah. There are some exceptions.

I mean, listen, if you're making a medical device to put into people's hearts, you know, like you don't really get to make an MVP, it's got to be perfect from the beginning or an airplane. You know, there are certain things where it doesn't apply. But when it comes to software, apps, SaaS products, marketplaces, all of these things, you know, take weeks to build, days to weeks to build an MVP. And customers can start using them giving feedback immediately. And we have in Silicon Valley mastered in venture capital, as much as it's easy to deride and to look at the losers and the money being burned, you can look at it and be very cynical. What I've learned is I've become less cynical since I went from one side of the table to the other. And what I realize is a beautiful madness to this, which is it's a milestone investment.

It's a milestone system. You get into an accelerator or you get some friends and family. Then you get some seed funds and high net worth angels. Then you maybe get seed funds in a series A venture capital firm. Then you get later stage funds. And then maybe you go public with a SPAC or a direct listing or whatever. But we don't just say here's $100 million. We kind of give you the $300,000, the $1.5, the five.

you hit those milestones and you become a good steward of capital and then we give you more. And you're in a competition in each one of those stages versus the other people looking to get that capital. And I hate to trigger anybody, but it is kind of zero sum. While there is an unlimited amount of capital in the world, there is a limited number of hours in the day and basically emails that a VC can respond to or an angel can respond to or an accelerator can hope. And that becomes the gating factor. And so once they get to 20 investments of VC or 10 or 20, somewhere in that range, they have to pause and stop investing. And so you are, in fact, in competition for those dollars.

And you should treat it as such. You have to perform. But talking to my friends who are general partners in funds, the thing that they are more than anything else is time pool, right? They have the startups that they are deeply involved in and they are deeply involved in making sure that those startups succeed. Yes, they're always looking for the next deal. But in order to, I guess, pop up above the noise level, you do have to be exceptional enough or have exceptionally good luck. So you're absolutely right when you talk about that zero sum. It's not cruel fate.

It's really just that human beings are kind of limited and that venture capital has not, in the same degree, learned how to automate and scale itself the way the businesses it funds does. And also, you know, it's a hit-based business. So like anything else, there's a limit to what consumers can manage. How many apps did you download and say, wow, this is wonderful and beautiful? And then forget you had them on your phone until you go to use it again. And Apple's like, yeah, you know, I took that off your phone. Let me redownload it for you. You know, like, has it been that long?

So it is one of these things where there's attention is the gating factor. And you can gain more attention by simply hitting. 10% month over month growth. And it's really, when you get to 250 investments and you've seen the movie over and over and over again, I kind of feel like I'm a studio head in your second decade. And I'm like, this film's not going to connect with audiences. Or I'm like, this is going to be a blockbuster. It's worth the risk.

Like, spend more money on it. And it's very clear when you have that product velocity early, when you make great product early, you are going to make great product later and you're going to be innovative later. Today I sat in on a hackathon for com.com, the meditation app. And I started off saying, you know, Alex is just such a tremendous product executive.

He did the million dollar homepage. He did com that you're very lucky to work for him because he's pound for pound, one of the 10 best product folks in the industry today. And then I watched these, then I watched all of these projects. And I said, I just want to tell you folks candidly, like I would angel invest in every one of these projects

are so good. And if the person at the top is great a product, everybody's great a product. If the person at the top is driven, everybody else is driven. You cannot work for a hard driving person and not be hard driving. It just doesn't work. And you can't be cutthroat and hard driving in a company that is run in a very, you know, introverted, slow way, you know, or in a very quiet way, right? Because I'll just be like, who is this guy? I'm making all this noise. So it's a wonderful time to be a founder.

We did the All In podcast this morning, and we talked about the future of venture capital. And it is changing dramatically, dramatically, because there are so many funding sources, you know, the syndicates that I run with the credit investors. And I don't know if you saw we have something, you know, equity crowdfunding here, Reg CF, they call it. And we up the limit from $1 million to $5 million, which then actually makes it worth going through all the audits and everything to do it. And then anybody, even, you know, non-sophisticated, you're sophisticated down on direct for accredited?

Yes. Yeah, yeah. And so now you can have non-sophisticated investors investing $500, $550, you know, whatever you want. And so it's going to be amazing the next decade. I think this is the roaring 20s like we've never seen. And I'm super optimistic. I don't know. Are you optimistic after this pandemic?

Well. More optimistic than you are when we came in? Look, we already know what Goldman said the U.S. economy is going to grow 8% this year, so it's going to have the most growth since 53, right? Wow. So much longer than either of our lives. We know that the Australian economy, which has basically chugged along because we didn't have to shut down in the same way, right?

We're already back to basically the same employment levels that we had pre-pandemic. We're expecting sort of 3 to 4% growth this year, which for Australia is insane. sane. So yeah, there's going to be a bit of a roar. But I really want to draw back to because no one was saying SPAC before pandemic, right? So there's a number of different vehicles. Could you take our listeners? Because we don't, we kind of don't have SPACs here yet. We kind of do through this sort of backward listing in the ASX. Take us through a SPAC. Yeah, so it means special purpose acquisition corporation. Somebody who's famous like Chamoth or somebody who is a CEO of a car company, let's say. They put their name on this. They pay somewhere between five and 10 million to

set up a public shell company, essentially. They go to investors and say, I'm smart, I'm connected. We're going to go find a company and buy it. Will you give us $300 million at $10 a share, and we will take these shares and then if you like what we buy, then keep your money in the SPAC and it becomes a public entity. If you don't like it, there's a period where you can redeem it. So this $300 million sign, you know, just sits there. And then the SPAC sponsor is what they call sponsor, which would be like being the general partner, in my case, a syndicate lead. They're the person shepherding it.

So the sponsor then finds something, writes a deal memo, shares it with the world. And they hope that those people who put the money and don't say, ugh, I don't like it. I'm taking it back. And then you are suddenly public and you have a bunch of money in your pocket. and it's theoretically faster. And so what happened was this was something that was kind of like, I wouldn't say Fugazi, but it was considered like the poor man's way to do it, right? It wasn't a proper IPO where Goldman Sachs or whatever, Barristerns, you know, JPMorgan took

you out and, you know, but it's quicker and easier. And then someone like Chimov brought it back and said, I'm just going to do one of these every two weeks. I'm going to do IPO A through Z. Here we go. And then for retail investors, that's where it gets challenging. Is it a cruel thing to take a startup and suddenly turn it into a public corporation? Because the way that a business is run as a public corporation internally and externally

is quite different when it goes public. I think these sponsors really have to think that through is can this company and this management team handle being a public company? And then retail investors, which is where I'm, I'm a little concerned and I've been talking about this on CNBC constantly, which is, because they ask me about it every time, not all of these SPACs are created equal. And in a lot of cases, you are investing like a venture capitalist in a company without product market fit or that is yet to release their product or launch it. And we have something we call Jason's rule creatively internally, which is if a company

is worth more than a billion dollars before they shift, ship their product and have customers, it's probably a scam or a fraud. And you can use the Buffett rule at that point. That's the thing. It's like when you have a real company, you can start to actually use real analytics on it. Yeah. And some of them like, you know, I love the idea of investing in Virgin Galactic or Joby, the, you know, the quad cop, you know, like the basically, they're making drones for humans to fly in. VTOLs. It's flying cars. It's the flying car market. It's flying cars. Basically, if you want to envision in your mind, think about a small fixed wing airplane, but instead of jets, it's got a bunch of rotors on it. It's kind of a hybrid situation, but it's all electrical. And, and. I think that's a great one to make a long-term bet on. The fact is, though, these should be a small percent of your overall mix in a portfolio that's diversified. So be careful, folks. It could end in tears.

But the big thing is, you know, the companies that are successful now are going to be able to start going publics in year 5, 6, 7, 8, as opposed to what we've seen, which is Uber and Airbnb will be waiting until years 10, 11 or 12. So if we can have that happen, the capital and the monetary velocity will increase and we'll see investors who invested in an Uber becoming liquid in year six or seven or Airbnb as opposed to 50% longer. And then they get to put money back into the next wave of startup. So this could create a long boom in the United States like we've never seen because

we have half the number of publicly traded companies than we had 20 years ago. And we need to build that back up so people can buy into speculative stuff because speculative is another way of saying more upside if it does work. So, you know, I'm a little concerned that some people are not actually, you know, using their judgment, but it's part of the learning process as an investor, like gambling. You know, sometimes you have to get burned. Or non-fundurable tokens, but we'll leave that alone. We're not even going there.

I love, I mean, I love the concept of, I think non-fungible tokens and crypto-kitties, when I first saw that, I said, best use of absolute best use of. crypto that I've ever seen. And sure enough, here it goes. I mean, I think the idea that artists can release something and maintain some ownership of it is absolutely brilliant. I do think, like, the $70 million people is a publicity stunt. And it could be like some kind of wig thing and who knows. Is there something funky going on over there, I think? Do we think that there's a possibility now in America, given the same rough investment climate that will see a lot more capital flowing into more sort of startup-be,

IPO-based businesses because there's that capital, and that capital needs to get yield. Yeah, I mean, people are chasing that alpha. They want something to, you know, grow. And so they'll try alternative assets of all types. There's a really cool website called masterworks.io that is buying Picasso's and Basquiat's and Warhols. and they,

they curate a five or $10 million photo, a painting, and then we can buy shares in it for $1,000. Then they're going to, their big game, had them on the pocket. It's really brilliant idea.

Then they will trade, they'll allow people who own fractions of these artworks, these master artworks, they'll be able to trade them between each other. So if, you know,

this Basquiat goes from 10 million to 50 million and you want to get that 5x appreciation, you can say, I want to sell my shares. Does anybody else in the Masterworks ecosystem want to buy those shares? We're not investors in

company. I wish I were. I tried. The person who was running it is rich and doesn't need money. But I tried a couple of times. But again, this is probably, I mean, this is disruption coming to the fine arts world. You know, you see that happening in the NFT space as well, where Christie's actually did the beep a auction, but you can also see how they're trying to hedge against the future of what an art market might look like. Yeah. And I, I think, you know, we've always loved digital art, right? You and I and all these new ways to do it. I think there'll need to be some clarification on, you know, what rights you get when you buy this. So when I saw the people, I was like, okay, $70 million.

And if you were to sell $100 t-shirts and $200 hoodies, how many would he need to sell if he just made $50 on each one, you know, to make his money back? And it was like, okay, yeah, you're going to need to sell a lot. But you never know. Like, maybe you could. But I don't think that they have the rights to exploit that artwork commercially. But that's where I think it does get interesting. Imagine you were an up-and-coming electronic music artist.

And you're the Chemical Brothers in Day Zero. And they just start sharing stuff on some website. And that website lets you and I as connoisseurs of electronic music listen to tracks. And then we see when we like, we look and see if anybody's purchased it. Or nobody's purchased it? I would like to buy that for $100, for $500. Now the artist gets $500. But I'm not buying 100% of it.

I'm buying simply 50% of it. of it, they keep 50%. Now you build up this catalog, and when I open my Spotify, I might own 50 songs or a percentage of these 50 songs, and then every time they trade or get used in a commercial, and if one of them becomes, you know, it's a beautiful day by, beautiful day by you two, all of a sudden I might have hit the jackpot. This to me is a fascinating concept. And it kind of like is like the Mendicis or something like that, where we could all have a little, what do they call those patrons? We could all be patrons. of the arts, you know, buying the rights to a podcast.

But if you own the rights to that podcast and the person becomes Joe Rogan, maybe it's worth something. And you get to participate in it. I love the idea of the residual value goes to the artist. So every time that people sells, if it sells for 700 million, people gets another 70 million, right? If they can keep that 10% with the smart contracts, I feel like this is the manifestation of all this noise over the last decade.

And boom, you know. We are talking to Jason Kellikannis. and we will be right back on this week in Startups Australia. Twista would like to welcome on board. Series 9 sponsor Squarespace, the all-in-one platform to build a beautiful online presence and run your business. With Squarespace, you can blog, publish content, promote your business,

announce upcoming events and special projects, sell products and services of all kinds and much more. No matter what you need to do online, Squarespace has the answer. They've got beautiful templates by world-class design, along with powerful e-commerce functionality to help you sell from day one. Everything is optimized for mobile right out of the box. Plus, it has built-in SEO, free and secure hosting, and 24-7 award-winning customer support. From websites to online stores, from marketing tools to analytics, Squarespace has what you need to

secede online. Go to Squarespace.com slash Twista for a free trial. And when you're ready to launch, use the code Twista to save 10% off your first purchase of a website or domain. That's Squarespace.com slash Twista. And we're back with Jason CaliCannis on the series opener of this week in Startups Australia. Season nine. Jason, we are looking at a decade, a decade. So 2021 to 2030.

This is a decade. It is clear that the pandemic drew a great big, line under all of our lives. Everyone who lives through the pandemic will be before pandemic, be after the pandemic. What are your predictions for the shape of this decade? I think the roaring 20s are going to be the roaring 20s. You're going to see after this great pause, I think there was a lot of reflection that went on. I know personally I reflected on everything. And then you saw people say, you know what? Living in an apartment in San Francisco for $4,500 month, I'd rather live in Tahoe and pay $2,000 a month on a mortgage with two acres, right?

That's but one example. Then you look at education, people homeschooled, people saw what actually, when you do remote school, you kind of figure out what's actually happening at school. So I think there's a lot of great revelations that occurred, a lot of great opportunities. And I think it's going to make people value experiences and life and their freedom to do things in a major way. And I also think it serves as an amazing example of what. what coordinated effort can do and what uncoordinated effort can cause. So when we were not coordinated

and the globe was not acting in unison, we saw chaos and suffering in death. And then as we slowly started to get organized, we saw people saying, let's challenge every piece of dogma. How long does it take to make a vaccine? What's that MRI? Anybody have an idea? Oh, MRI? We've never done that before. Well, sounds like a good time to give it a shot because we have nothing to lose here because this will never end if we don't get a vaccine going. I think rethinking all dogma, all things that can't change and saying maybe what if we did something differently? I mean, we're basically doing UBI in the United States. Here's another thing that I want to take a look at for this decade. We have just had a very interesting event in Australia that

happens sort of at the end of February where Facebook basically pulled the plug on news in Australia, right? I saw it. I was covering it in detail. Yeah, it was really funny because you want to to galvanize an entire nation. Yeah, turn off their Facebook pages and news. And so that worked out poorly for Facebook. Facebook managed to find a face-saving solution. But in terms of declaring both Google and Facebook monopolies and starting to regulate them as monopoly entities, Australia has now done this. First real national jurisdiction in the world to do that.

Do we see the very biggest, the trillion-dollar tech firms, come under an entirely new? international, national, local regime of regulation in this decade? Yes. And I think, you know, it's very hard to parse what's happening through the lens of existing legislation because all existing legislation was focused on consumer harm. The problem with these companies is they make their living by delighting customers and lowering prices. And there's no...

harm quite the opposite to somebody having Facebook for free or Instagram for free or Gmail for free or Gmail increasingly amount of storage they give you or Google photos. I mean, they're in a competition to see who can be more generous. So if you put them through the lens of consumer harm, there is none. I mean, even Amazon, they allow third parties on the platform to sell and compete against them. So if you can make better, you know, USBC cables, so you can compete, heads up. And that, if you were going to come up with a sanction against Amazon, it would be allow third parties to put on your platform, right?

That's what you do. But there are all these other things that are making people nervous about them. And then there's an overlay here in the United States that we have to deal with, which is we're in a competition with China. And if China picks, and it's in it, and I would say humanities in an existential crisis with them. So the United States is in a competition. for supremacy of the planet. And then humanities, you know, in terms of picking freedom and democracy versus authoritarian,

you know, as a paradigm. So we have to win versus those companies. If we let Baidu and Alibaba and TikTok and Tencent, do whatever the heck they want and be picked as the winner, and then we break up our tech companies. We're basically saying China, you win. It's really hard to argue that Facebook hasn't had some bad, um, effects on democracy. It obviously has.

And so there's a downside to the social media stuff. And yeah, and I think the social media stuff has poisoned the well for a lot of people. If not for Facebook and Zuckerberg, I don't think tech would have such a bad reputation in the United States. I think that was the one company

that just took it too far in terms of removing friction and always thinking about themselves. Facebook has never had a partnership with any content producers, never shared any money. And they have, Not only that, they've killed all their partners, like game companies, etc.

And people remember pages, you know, and building up your following there. So they've been a bad actor in my mind. If they would have just shared revenue from the beginning and been generous like Google does with AdSense and YouTube, right? They give 55% every dollar or Apple does with the app store only taking 30% and giving 70%. Zuckerberg doesn't think that way. He thinks everything for me, complete control, I own your data. I get 100% of the money. And that greed has made him the most hated person on the planet, I think.

and rightfully so. And so when you get that great power, you really want to spread it around and share it and build up a group of people, you know, like Airbnb hosts or Etsy sellers who will be like, oh, I love this. This is great. And that is a beautiful name.

And Don, thank you so much, Jason. I love you, brother. I love you, brother. I'm so happy for you that we're doing season nine. And thank you for being our first guest on Series 9 of this week in Startups Australia. We will be right back. Twista is happy to welcome series nine sponsor,

Odu. One of the toughest parts of building a company is choosing which tools and service providers to use. You want to pick the best solution for each department to help your employees succeed. They deserve the best. But you also want to be frugal and not spend too much. There are so many functions in a startup and each space has endless vendors for sales tools, email marketing, accounting, HR and payroll, project management, customer support, point of sale, e-commerce, it goes on. on and on. And eventually, you'll end up with a franken stack of tools that cost a lot and don't integrate properly.

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Take $1,000 off. Go to O-D-O-com slash Twista to check it out. That's O-D-O-O-O-O-com slash Twista. Listening to Jason Calacanis describe the elements in a virtuous cycle of success for a startup, we start to get the first indication of what we need to be asking. The other startups will be talking to across Series 9 about how they found their way into success or how they plan on finding their way into success. I hope that at the end of the 20 episodes in Series 9,

We will have looked at this problem from many different angles, and we will have given you listeners a wealth of indications of how you can look for the markers of success in your own business, in a business you might be thinking of working for or investing in the broader startup world. Big thanks to Twista sponsors, user testing, Squarespace, and Odu. Thanks to our production partners at UTS startups for their assistance. Thanks to Jason Calicanis for making the time to come on to our show. visit our website at TWI StartupsAUS.com. It's got everything. It's got all the shows, all the interviews, all the photos, all the links to all the stories. So check it out at TWI StartupsAUS.com.

We will be back next week with our first news special for Series 9. And as it's been a while since our last one, you can expect it will be filled with the unexpected. Until then, this is Mark Pesci thanking you for listening to This Week in Startups Australia.