This Week in Startups - TWiST News: $100k Veteran Pitch Winner EMPEQ, US Unicorn Dominance, and T500 Updates | E2055

Episode Date: December 5, 2024

This Week in Startups is brought to you by…Gusto. Gusto is easy online payroll, benefits, and HR built for modern small businesses. Get three months free when you run your first payroll at ⁠https://www.gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025Fundrise provides access to diversified portfolios of private real estate to all investors with their industry leading, easy to use platform. Sign up today at https://www.fundrise.com/TWISTDevSquad. Most dev agencies only offer developers. Why? Because product management is hard. Get an entire product team for the cost of one US developer plus 10% off at http://devsquad.com/twist*Todays show:Alex Wilhelm joins Jason to discuss breaking news on Paul Atkins and SEC leadership transitions into discussions on corporate security concerns. Then, Mike Sherbakov and Herbert Dwyer share insights on veteran leadership and EMPEQ's equipment management technology. The conversation highlights technology applications in military contexts and Empeq's dual-use tech. The episode also covers SaaS growth, touches on crypto's influence on elections, economic growth, and more!*Timestamps:(0:00) Jason and Alex kick off the show(1:54) Paul Atkins and SEC leadership(6:36) Corporate security concerns(12:18) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist(13:24) Mike Sherbakov and Herbert Dwyer join the show(20:37) Herbert Dwyer on EMPEQ(24:21) Fundrise - Sign up today at https://www.fundrise.com/TWIST(25:44) Technology applications in military and equipment management(30:15) SaaS growth, funding, and customer profiles(34:42) EMPEQ's dual-use technology and contact information(36:33) DevSquad - Get an entire product team for the cost of one US developer plus 10% off at http://devsquad.com/twist(38:01) Launch CloudKitchens incubator and food delivery tech(44:28) Twist 500 database and Hugging Face spotlight(53:07) Live events for Twist 500 and EU startup culture(1:02:28) Crypto's impact on elections and economic growth(1:17:02) Safety nets and basic needs in capitalism*Apply for the Launch CloudKitchens Incubator here: https://ck.launch.coSubscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.com*Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Follow Mike:X: https://x.com/mikesherbakovLinkedIn: https://www.linkedin.com/in/mikesherbakov*Follow Herbert:X: https://x.com/herbertdwyerLinkedIn: https://www.linkedin.com/in/herbdwyer*Follow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis*Thank you to our partners:(12:18) Gusto - Get three months free when you run your first payroll at http://gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025(24:31) Fundrise - Sign up today at https://www.fundrise.com/TWIST(36:33) DevSquad - Get an entire product team for the cost of one US developer plus 10% off at http://devsquad.com/twist*Great TWIST interviews: Will Guidara,Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta,Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland*Check out Jason’s suite of newsletters: https://substack.com/@calacanis*Follow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com*Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

Socialism is garbage. Capitalism plus democracy is the best operating system humanity has ever come out with. When you and I look at this, capitalism, democracy, as American, do we go, well, of course you want to live in the country. That is at war with itself, is fighting. It's messy. It's sloppy. This election, the last election, the election before that, and every election before that, it's a mess here. It feels crazy. But the economy keeps beating everything else out there. Why? Because we believe in the fundamental tenant competition and that running from competition is a mistake and running towards competition is great. If you want to have big outcomes, you need to support crazy, vibrant competition. This week in startups is brought to you by Gusto. Gusto is easy online payroll, benefits, and HR built for modern small business Get three months free when you run your first payroll at gusto.com slash twist.

Fundrise. Fundrise provides access to diversified portfolios of private real estate to all investors with their industry leading easy-to-use platform. Sign up today at fundrise.com slash twist. And Dev Squad. Most dev agencies only offer developers. Why? Because product management is hard. Get an entire product team for the cost of one U.S. developer plus, 10% off at devsquod.com slash twist. All right, everybody. Welcome back to this week in startups. I'm Jason Kalakanis.

He's Alex Wilhelm. We do this three days a week, but this week, I think we're doing four shows. We are doing four shows. It's just going to be three. I promise you, Alex. I hired you for three shows a week, 150 shows a year next week or next year.

Three shows a week. And hey, if we sell out, I don't think I'm in the fourth show. Jason, before we get into our guests and the rundown, I do want to jump on some breaking news, which is... Breaking news. Yes, breaking news. As of like roughly 29 minutes ago, as of right now, the upcoming president has announced that Paul Atkins is going to be the next chairman of the Securities and Exchange Commission, aka the SEC. I don't think anyone really thought that Gary Gensler was going to get more time in the chair. So not a huge shock, but I do know that Paul is a, I would say, a person that the crypto community is going to love.

Okay. I see this is breaking. This has all happened. like Alex says in the last couple of minutes, I actually have never heard of this person. So I'm just pulling up a CNBC breaking news story here. So here we go. Paul Atkins, founder and chief executive of Potomac Global Partners LLC. Don't know what that is.

Speak during a Bloomberg television interview at the Milken Institute, which has about 17,000 speakers in May of 2017. All right. And currently, he's the CEO of Potomacian. Tomic global partners. I think I'm pronouncing that right.

Critically, Jason, he was a former SEC commissioner during the Bush W era, so 2002 to 2008. And, you know, I think he's a crypto guy. I think that's his background nature. So I think this is Trump making good on his promise to the Bitcoin folks and so forth who threw their support behind him. So if you were in favor of more stringent crypto regulation,

you're not going to get it. And if you wanted less of that, well, good news for you. This appears to be your guy. So what did Trump say? Let's read the Trump quote. If you can use your best Trump voice, that would always be appreciated. No, you're not.

I've actually never tried to do Trump impersonations. I'll pass. But he does say that he's the... Do you got to do a lot of this? I don't know. I can't do it. Yeah. I wish he was doing more of this holding on to bars, but he's not.

All right. Here we go. I am delighted to announce the nomination of Paul Atkins. Here we go. I'm delighted to announce the nomination of Paul Atkins to be the next chairman of the Securities and Exchange Commission. Paul has a proven leader for common sense regulations. He believes in the promise of robust, innovative capital markets that are responsive to the needs of investors. I can't do it.

And that provide capital to make our economy, capital E. Interesting. The best in the world, capital W. Okay. He also recognizes that digital assets and other innovative. are crucial to making America greater than ever before. Oh, it's not MAGA. It's McGebb.

Magib. Megeb. It's McGeb this time. Okay. Well, there you have it, folks. The nominations are coming in fast and furious. We should think about taking Trump seriously, not literally, is the famous quote that Peter Thiel quotes that somebody else said.

Okay. So he said he was going to create a national Bitcoin. trust he was never going to sell Bitcoin he was going to fire Gary Gensler and then he was going to allow more innovation in the space so if we took him literally

he didn't have to fire Gary Gary Gensler resigned right so that happened literally we'll see about the reserve building the Bitcoin Reserve I believe he wouldn't sell why would you sell the Bitcoin it's that we don't need the money

it's only 400 loss and coins. I mean, well, I mean, you have to ask yourself, like, is it going to grow more than 6% a year

or whatever our interest rate is on our debt? You would think that asset is going to grow more than 6% a year? Well, for Michael Saylor, you certainly do. You think it's 60. Yeah.

So, I mean, between 6 and 60s, big number. So anyway, if you think it's 6% you're going to keep it. And then here we go. New leadership. I'm excited about it.

I felt Gary Gensler did a great job on prosecuting and going after people who are criminals, I think he did a bad job of expanding and clearly explaining a roadmap for these new innovations. So, you know, we'll see. But, you know, the mandate is to execute the laws in the previous administration. I think this administration wants to evolve the laws. So that's what we're seeing here. Yeah, it's going to be interesting to see how this actually plays out how

much progress they can make. But Jason, I just checked. And in the last hour, Bitcoin has moved. basically not at all. So I believe in the words of market folks, this was priced in, even if it is still good news to the crypto fans. Yeah, I think it is priced in. And then the second thing is there was a shooting.

Oh, yes. We should just at least mention that here at the top of the program. United Healthcare CEO Brian Thompson and I guess United Healthcare's insurance group. This is other people in this. Fatally shot in New York in a targeted attack.

you pull up the drudge report, they have actual a picture of the guy. And there was just a press conference. NYPD is asking for people to help find this person. Suspect is described as using a firearm with a silencer. And there it is, folks, zoom in on that. Let's do a little speculation. This happened at 6.45 in the morning at a public event

for United Health's Reunited Health's shareholders. It was a shareholder meeting. So it was known. he was going to be there. Therefore, this was planned. This happened at 645. This person is dressed like an assassin, you know, prepared to, you know, be on camera. And he had an escape, he had escape route on a, on a city bike. That seems like a really, that to me means amateur. But the silencer says professional. So this is kind of a mixed bag here. Um, based on my knowledge of, uh, you know, mob hits and other type of hits, but

this is kind of crazy. Any thoughts, I mean, speculating is kind of meaningless here, but there is an all-points bulletin of like, hey, watch out for this guy because you can't get off the island of Manhattan pretty easily because they can lock it down. I don't know, they've locked down the bridges and gotten people on the platforms and every train

leaving and buses leaving, cars leaving, but... The takeaway that I have here is that I think we're going to see a rapid increase in corporate security budgets. Ah, yes. And I think that the era in which CEOs of companies of any sort of note are walking around and getting bagels or whatever you do as a normal person are probably behind us.

Because, you know, if this had been, and I'm going to try to get the language right here, everyone just give me a little space. If this had been a tragic random shooting, I think it would have the same amount of pain, but not the same implications for security? Of course, yes, that's a great insight, actually, and handled well. The week before in New York, or two weeks ago in New York, we had this person who was obviously mentally ill, who was in their 50s with a knife stabbing, kill, I think, three people going from Penn Station to Grand Central or something, just like went on a stabbing spray

and killed three people. That one is easier to reconcile because it's random. It's still as horrific, somebody dying, but. you can actually process it and make a plan for it. You're right here. Now, in these situations, just looking statistically, you have to think there are a small subset of possibilities they're going to look at. Hey, S chat, CPD, hey, tell me about CEOs actually getting tried.

It's pretty interesting. It's almost universally there is a layoff at a company, or somebody feels despondent at a company. They've been mistreated. There's some conflict at work. and the person goes postal. That's where the term comes from. Going postal is a postal worker

at some point went crazy and shot up the post office. So that's a possibility. Then of course there's like Lovers Triangle, all kinds of other things, gambling. You know, that's the long tale of crazy things

that happened when I did my research. But my lord, how terrible. And they said the person started shooting him from 20 feet away, hit him three times, and even did like one shot while he was down. So that means they wanted him dead

and they wanted to make an example of him in some way or a spectacle of it. Or the person didn't get their health care coverage, had a loved one who didn't, you know, there's that possibility angle I see a bunch of speculation about online as well. Yeah. Well, in this country where we do have several hundred million guns

and just to be clear, I got my first gun when I was 12. So, you know, I'm one of the people who has them or had. I don't in my current town, but I did it in rural Oregon where I grew up. You're not going to be able to have a gun-free environment pretty much anywhere unless you're screening every single person and you can't do that on the street.

So I think that's why we're going to see a army of corporate America to protect their principles. So a tragedy, NMS, and a very sad story. If you don't like guns, this ain't the country for you because it's number two in the rules. Freedom of speech, if you don't like words, You don't like guns. Might I suggest picking another country?

England, Australia, there are plenty of countries that don't have any guns or almost no guns. And they have different views of, you know, freedom of speech and slander, right? Or you can move to the Northeast where you can't have guns and you have free speech. Hey, there you go. Well, you know, you do have, that's a very interesting thing. You know, when I lived in New York, you, as a New York City resident, you felt like there were no guns. and then you went upstate New York to the Catskills or whatever

and people had guns over their fireplaces and you had this like juxtaposition what's going on here but no handguns in Manhattan you're correct and we're in San Francisco unless you're a famous person and I remember like Howard Stern and some other famous people

were given in New York the under 100 I believe it was carry permits were given to people who were basically celebrities or had donated that was some scandal back when I was a kid All right, you didn't start your company to run payroll. Did you? Of course not. We all know that. Gusto is here to help.

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That's g-U-S-T-O-com slash twist. Also, hailing from upstate New York. No, it's not a guy with a gun over his mental beast, though he might. It's Mike Sherbukov from the Veteran Fund and Herbert Dwyer, the CEO of Impact. Actually, Herbert's the one who lives in Upstate New York. I kind of butchered that. But, Jason, these are our guests for today. I'm so excited.

Mike Sherperkov from the Veteran Fund. Just closed their first fund, $21 million. That was announced three weeks ago. That was a final. close. And we also have Herbert Dwyer, the CEO of Impact, E-M-P-E-Q, which just won $100,000, Jason, in the veteran pitch competition that I do believe someone we know took part in. Ah, yes. You know, welcome to the program, Mike and Herbert. Great to have you here. We, uh, I know, I know, Mike and, uh, he invited me to come. And, you know, anytime there's any veteran

event, I try to say yes, like, it's kind of the top of my list of things to say yes to. Why? well, I got a family full of law enforcement. I know how hard the job is. And listen, I didn't have to serve. And so I always think, gosh, so much of my success in life and so much, think about how much your success is an American is related to the fact that we have a volunteer military, goes out there and defends this country, and not only our country, democracy around the world. And so Mike and Herbert, just right off the bat, Alex and I thank you for your. service and I know that's like a trite thing to say or maybe people say it all the time like as a functority thing that they have to say I actually sincerely think about this all the time like gosh

I really do appreciate that the sacrifice maybe you could talk a little bit about your service each and yeah coming on the program yeah thanks so much jCal and um you know on behalf of the veteran fund and the veteran community thank you for everything you do I think I remember at founder X you stood up and said that same thing where you'll do anything for veterans and you shared kind of your support. And it means a lot to us. So thank you for being a judge for the pitch comp and you've been incredibly supportive. I'm happy to kick it off.

And, you know, similar to what you just shared, Jason, I, you know, first generation immigrant to this country and ended up. Your first generation. Okay, there it is. Yeah. Yeah. Grew up in the Bay Area and joined the Marines at 18 years old. So post 9-11, kind of peak of the war, June 2003, when we first went into Fallujah. and I felt like I had a duty to serve this country.

And I saw what this country provided for my family, what it would provide for me later in entrepreneurship as a founder and now as an investor. And I really felt like it was my duty to kind of protect that way of life. And so served in the Marines, came back, ended up going to school, did the whole startup founder thing, had some wins in that world, and then realize that if there's an archetype of founder to invest in, you talk about this all the time, right, the three things investors look for is team product market. You could say product velocity as well.

But if we're investing in the earliest stages, why not invest in the founder archetype of a military veteran of someone who's gone through what we consider the world's greatest leadership academy that's going to run through walls that is so mission focused. So we end up, you know, we had this idea for the firm three years ago. Happy to say that initially it was a proof of concept. We tried to go out and raise 10 million. We ended up closing over double at 21 million. And company, like Herbert's and others, you know, we do space, cyber defense, everything. Our portfolio companies are absolutely crushing it largely because they have these incredible military veterans on the leadership team that are going to go out and make it happen. Awesome. And I just showed on the

screen some of the portfolio companies, but Mike, if you had to pick your favorite child, that's not impact. Who's growing the fastest? Who's the name that we need to have on the show next week? Like, who's the, who's the superstar? Come on. Look, they're all amazing. You love all the, you love all your babies. Of course. I'll tell you. you the two crazy breakouts right now that you absolutely need to have on the show. You already had Vatten on. You had Nelson Mills and the team. So the underwater submersibles, incredible technology. What they're doing in submersibles, we have Dan McGee and Chad McCoy, who are doing for Firestorm, unmanned aerial systems, agnostic payload systems, you can do ISR, you can do

kinetic, incredible technology. We did their precede and C. They just closed a series A. They're absolutely crushing. It got a big $100 million contract. Another one that I think you'll find fascinating, company called Lone Star Lunar that landed on the moon earlier this year, February of this year, and is going back to the moon. So, Jason, I know you're a big fan, obviously, Elon and SpaceX and all that. I'm going to go to my first space launch next year with the team because we're going back. So again, space, cyber defense, these are all investments that matter. One last thing I'll say is it's myself and three incredible partners, Ryan McAletty, who Jason, you know as well, Justin Nahama, Lisa Song Sutton, all four of us had reached this point in our careers where I would say we'd

had successful careers and it was this time to think about what's next. What are the things that we care about most? If we're going to put time, energy, and capital, what do we care about? And I say, you know, these are investments that matter. Our tagline is advancing America through venture capital. So, you know, this is the stuff I wake up thinking about. I go to sleep thinking about. It's what I'll do for, you know, the next few decades. And so just grateful to be doing this and Thanks for your support. Awesome. You know, one question I have for you about the archetypes,

and then we'll get to Herbert and you're a great company that won the competition. There are things that you mentioned like, hey, discipline, focus, running through walls, leadership, all great, recruitment. But is there a weakness, perhaps, in that founders sometimes are rule breakers and they need to do things that maybe are on the margins a little aggressive or improvised. So give me the straight dope because I, you know, I'm using the word improvised in a very specific way because I've done a little research on the military. You know, I always thought I would have been good in, you know, a CIA type, you know, on the ground role.

I was going to go into the FBI. I was like, you know, there's a lot of improvisation that occurs. dare I say, rule-breaking, bending in the field that maybe doesn't get reported on. So maybe tell me about that piece of the puzzle. I'm just curious. Yeah, what I'll say is in the Marines we have a tagline, which is adapt and overcome. And so I also think, you know, to be a good leader, you have to be a good follower first. So there is something to be said about that progression of when you start, you're kind of at the

bottom of the totem pole and you have to learn to be a good follower. where you have to understand, I know you're big on checklists and SOPs and understanding that whole thing, then eventually you kind of earn your way up to this point where now you can start to be a little more flexible. You can break some of those rules. And in the Marines, we understand nothing ever goes perfectly according to plan, but you have to have contingency plans. You have to understand how to adapt and overcome. So to your point, Jason, in addition to the leadership, resilience, and purpose that these veterans have, they also have this incredible adaptability and coachability that we look for in any great founder.

Got it, got it. All right, Herbert. Maybe tell us a little bit about the company. You can give us a little picture, if you like. You can run us through it. However you want to tee it up here, but tell us a little bit about the company and your mission. Yeah, sure.

Thank you, Jason. It's a pleasure to be here. And one more term, I'll add that we use in the Moray Corps. So everybody is typically familiar with Semper Fidelis or Semper Five, right? Always faithful. We have Semper Gumby, right? Fastened after our favorite little green friend, which means always flexible.

That is literally, you know, SEPER Gumpy, always flexible. I love it. It's a thing. Ask any Marine, they'll tell you. And because it's part of our culture and our ethos, too, we are rigid, we are the Marine Corps. However, we also understand that we always have to be flexible because the battle is

always changing, right? And what worked yesterday is probably not going to work right now in this current situation, right? So it is important. And that kind of thing Marines take into being founders. I've taken that into my company. it's installed in my culture and the people that work on my team, we're separate gummy.

It's important. There, yeah, love it. But with that, you said, so, you know, really honored to win the pitch competition. There were so many incredible, AKL, there's so many incredible men and women veterans that just had, I mean, 200 of over 200 people came in. And it just is just a deep honor just to be. to get first place amongst this peer group, right? Because veterans, we are

community. Hundreds of people applied, right? Yes, I mean, and dozens made it to that final round and you wound up on top. So what is impact? Am I pronouncing correct? Impact, yes.

Impact, yes. E-M-P-E-Q. That's right. And unlike some of the other technologies that you guys have covered in the show, you know, and even earlier, you know, we don't blow things up.

It's not a super exciting, you know, technology. However, we do stop things from blowing up. So what we're focused on is really the equipment that runs our critical infrastructure, right? It could be anything from planes and hollow bills to the buildings that we, you know, work and play within, right? And so that is our hyperfocus. Our passion is instant equipment insights, right?

Helping the humans that are interacting with equipment at scale, be able to have very deep information about that piece of equipment or its parts, right? So we like to say we're connecting the equipment you know with the information you need. You can make better decisions faster. And a great example, I guess to bring it home for all of us is we all have an appliance in our home. We've all had the light bulb go out in the refrigerator or in the oven or something. And it's not just the one to go to your basement or your attic and pull one out.

You know, it's like the regular Edison bulb and plug it in. It's a special bulb. And in order to find out what that is, and it's typically the problem. bulb was all burned off and you can't see anything. So you take down the make model and cereal of the piece of, you know, refrigerator or whatever. And then you Google it, right? And you're like, that's not mine. That's not. Oh, that's mine. Okay. Now I'm going to find out the part spec. And then, oh, here's the light bulb. Okay. Now I'm going to find out where the light bulb is. Right. You copy, paste and you go to maybe Amazon or eBay or hardware store or whatever.

Right. You just wasted 45 minutes to an hour of your life looking for-doing. Doing archaeology, I call it. We got to do the like archaeology of this water. I own multiple homes, I'm embarrassed to say, and I'm trying to sell them all so that I don't have to deal with so many water heaters in my life and then them blowing up. So I know this problem. You decided that homes were too many because of the water heaters. I thought it was the property taxes. There's the property tax. In California, you're not free or Texas, I will say.

But it is, it's just a known problem. AI is positioned to be one of the biggest wealth. creation events in history. That's my personal belief. That's why I'm working so hard to find great companies to invest in. I mean, experts predict AI could add over $15 trillion to the global economy by 2030. And you don't need to be an expert to know that AI is moving at a fast clip. Just open up all the different chat GPT apps and look at how good they're getting. But there's a catch. Most of the AI revolution is being built and funded in private markets, meaning it's venture capital, it's not public market investors who.

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charges, and expenses. This and other information can be found in the Innovations Fund's perspective at funrise.com slash innovation. This is a paid advertisement. And so you have people take out a smartphone, take pictures of all the equipment, and do a really quick or a fast site survey to kick this off. Now, this is not just for military people. This could be for any company, correct? Yes, that is correct. We are B2B currently.

We do have military customers. Our most notable is the Pentagon. Headquarters Air Force is actually a paying customer, so we're very proud of that. But yeah, I mean, if you picture this at scale, imagine your job being to look for lightball types within refrigerators and you're doing maybe operating with hundreds or thousands of pieces. of equipment or parts is part of your job. And you're typically a six-figure engineer or field analyst or something, right?

You're wasting a lot of time of just doing manual stuff. And 87% this is a real number, 87% of the critical infrastructure marketplace that has men and women at scale working with parts and equipment every day. 87% is still using pen and an analog capture device like a paper or an NCR form or something. Oh my Lord. today. So, and now you have AI. So when you're taking pictures like this,

you know, it's silly to say, but you're in these old legacy systems, somebody would write down the serial number, the model number, somebody would then type it into a legacy system or maybe into a Google sheet and have like a local inventory of stuff.

It was a disaster. And now you have AI who reads the labels, does OCR, and makes sense of it all. And you can do this. at a fraction of the cost and a fraction of the time and just charge a SaaS fee per number of items per

number of users in the system. How do you price it? Okay. That's a great question. So we went to market with a per seat pricing model. We're like, this is how everybody does SaaS and this is what we're supposed to do, right? Get in line. And we start talking to big customers. I mean, our customers include

Josh Control, Siemens, and many others worldwide. And, you know, they first got out of the game like, yeah, we don't really, we have a hard time with that. That's not really how we operate. We operate, you know, kind of more of a, you know, cost, the COGS accounting model, or cost of it sold. Can you, you know, work with your pricing? So it kind of fits into that. It makes sense to how we, we, we expend it, right? So just charge us a license per year. Yeah. And it's just, it's, it's, it's used as much as you want, let the AI run as much as it needs

to, to do its job for you. And so it's highly scalable up and it's highly scalable down. Herbert, does that, does that impact your gross margins at all? Because I love the consumer the customer-like friendliness of an all-you-can-eat price tag, but AI is famously expensive. So I'm curious if that does impact your overall gross margin profile. You know, it's a great question. It actually, we did a case study on this,

and we looked at kind of doing it the traditional way and versus how much it actually costs to expand into an account, right? The salesperson has to not to sell the first license, it has to keep selling all the licenses, right? And they kind of land to expand that, where the other side of this is you just sell once, And it's just, you know, whoever can come and eat, it's fine.

But then we also looked at the actual cost of running the technology in the back end. And actually the margins increased to this new, new model. So not only did you save money on your sales and market in line item, but you also save money on gross gross margin. Right. And we also reduce the barrier of sales friction, right? Because we're aligned with how the customer wants to buy. Right.

Will this be how we're going to go to market for everybody? eventually, no, we're going to have to work our way back and include some sort of traditional pricing model just because we'll start to automate people to be able to get out of the platform without a human being involved. I think that we'll move in that general area, but right now today, this is what's being...

Self-serve people being able to pay like some entry fee for a certain amount of inventory, a certain number of users you'll eventually get to, but starting with big companies and whales, not a bad idea. Either of these strategies can work. What's most important is that you define an ideal customer profile, as we say in the business,

an ICP, and say, hey, this is who we're going to go after first. And you have some rationale behind that. Hey, we're going to go after this group first because they desperately need a solution. They have a budget for the solution. They see the value in it. And, you know, they're not so large that it's going to take three years to get through their process. But they're not so small that they don't need the product. And that's where, you know, this great art,

of go-to market comes into play. Did you define an ICP yet? I know you're in early stages here, but is there an ICP that you've settled on or do you have two or three you're experimenting with? Yeah, we do have two or three that we're experimenting with in regards to field analysts. Right.

So again, this goes back to a male-female, kind of field engineer type that is highly analytical that's dealing with lots of pieces of equipment or parts as part of their job. and they need deep information about what they're looking at in front of them, right? The refrigerator or the car, the saleable, the counterfeit part, the electronic, you know, part, the heating and cooling system. And they're there like, I know that's a chiller.

I know that's a, you know, a printed circuit board. But what is that black spec on there? Does that belong there? I don't know, right? Take a picture. Boom. Oh, it doesn't belong there. I'm glad I took a picture with Unpex technology because I almost put in my airplane and put into the sky.

Yeah, that is a whole other. reason to use stuff like this is to know the provenance, fancy way of saying where it came from, and making sure you don't have counterfeit parts. Amazing book, by the way, Alex, by Michael Crichton called Airframe, which is about the counterfeit. It's basically, you know, one of his great books he got into like, why planes fall out of the sky

and found out that there's all these planes that are maintained suboptimally. And when you get to the developing world, formerly known as the third world now called frontier markets and emerging markets I think is the proper term yeah people might want to save money on parts

and they use third party aka counterfeit parts you're giving spirit a lot of props here and other discount discount carriers I want to say though I'm not shocked that Herbert won this competition because we have this little bit of information from him about his financial

performance Jason and I believe that you would call this number tasty. Yeah, 300% growth in 2024 to looks like 1.4 million in revenue is your estimate there. And so that means

you're going to triple revenue year over year. That's actually like we just found out that we're we will be over that issue. Nice. And so there is a term in SaaS or just in the industry, triple, triple, triple double double double. Basically it means in the early

stages, somebody starts the 100k in revenue, you know, that first to second year, they get to 500K in revenue, second to third year, 500 to 1.5, maybe two, then they get to like six. And then it's hard to get from 6 to 18, obviously, you know, it's a bigger number. And so maybe they go 6 to 12 or 6 to 14 or, you know, even 6 to 10. Things slow down a little bit. They have to, you know, maybe some growing pains here and their headwinds, competitors, whatever it is. But you start to pattern match when you're going for the Series A, but you're a C. stage company. Total amount raised for the company is so far. So 2.5 in equity and

convertible to venture. We haven't had a VC round. We're just, that's what this pitch competition essentially kicked off is a $4 million seed. But we have another million dollars in grant instruments, mostly from New York State, NYSERDA, New York State Energy Development Authority. So 2.5 million to get to 1.4 million in revenue. It's pretty good use of capital so far. Yeah. And then also, you said that you have a match. I think with the formulating that you're raising, so it's actually eight. Is that correct, Herbert? Yeah, so what's great about dual-use companies, right?

And these are companies that serve a commercial purpose and a military purpose. I can tell you the military wants that. They don't want the startup to be fully relying on military funding because that's like watching Patriot sometimes. So with that being said, there are programs within the federal government that enable you to accelerate and provide typically a one-to-one match for pilots. targeted technologies. So we have right now two programs that we'll be applying to

early part of 2025 that is a one-to-one match on that $4 million equity. So for every dollar we raise an equity, up to $4 million, we'll get up to $4 million match in two programs in the federal government. Amazing. Awesome. Listen, this has been great. What's the website if people want to go learn more about your solution, Herbert? At mpec.com. E-M-P-E-Q-O.

Caught it. I'm assuming you're Herbert at. Yes, I am. Perfect. Mike, if people want to learn more about the veteran fund, either potentially as an LP down the road, I'm not sure if the fund's open or not, nor do I want you to say because you'll be soliciting.

So if they wanted to potentially participate as an LP down the road, I'll frame it like that. Or if they were seeking funding, how can they get in touch with you? Yeah, thanks, Jacob. We'll be back to market next year. So not fundraising, not general solicitation. And we'll go out for, we're targeting 100 cap on that one.

Simple, veteran. Dot fund. Mike at veteran. Fund, super easy. And one quick thing, Jason, I'll say is it was a 100K pitch comp that we did. But because of Herbert and Impact, we were really impressed. First of all, we'd love to co-invest with you on this. We're bumping our investment up.

It'll be a 250 minimum, probably closer to 300. And what Herbert just said is a very important takeaway, I think, for all founders and investors listening to this, is this whole dual-use technology. We love companies that have strong commercial traction like Herbert. and then go out and get the government as a customer. They lock in that non-dilutive capital in the form of Sibber and Sitter's, and then they get fun matching through TAC-Fi, Stratfi, and other vehicles. SIPIRs, just to find those for a quick.

SBIR, small business innovation research. It's essentially R&D and product development, non-dilutive funding the government provides. They have billions of dollars available to companies to get into the government. Amazing. All right, well done. And we'll drop you guys off and we'll see you next time. Keep us informed of your progress

and I look forward to the next pitch competition. Thanks so much. My brother, go Army. All right, thanks guys. Oh, God, I just got two Marines on here. Ura. Ura.

Appreciate it. Simplify, boys. Okay. Bye, guys. I have to get in the Army, the Army elbow in there. Absolutely. It's got to do it for the family.

All right. Take a second and picture the ultimate all-star team for your startup. Okay, you got that mental image? Maybe the Avengers. Maybe even X-Men. Wolverine, Cyclops, pick your favorite superhero team. And let's be realistic. Until you've raised

your Series A or your Series B, you might need some help building that dream team and finding top tier talent, managing all the timelines you've got and maintaining quality. It's a big lift for all founders. I mean, scouting for that elusive 10x developer, that's going to eat all your time. And that's where Dev Squad comes in. Think of them as like Professor X, you know, they they know where to find those exceptional mutant developers who are 10x devs. And DevSquod offers a complete product team from Latin America. You're going to get two to six full stack developers, a technical product manager, and specialists in case you need them like product strategy or UI and UX design, DevOps, and of course, quality assurance,

all for 75% less than a US-based team, all for 75% less than a US-based team, while being on your same time zone, which is really important. There's no long-term commitment. It's just seamless collaboration. So if you want a GSD, if you want to get stuff done, and you're ready to squad up, head to devsquad.com slash twist for 10% off your first engagement. That's devsquad.com slash twist and transform your startup with the all-star team it deserves. Alex, I just wanted to also inform the audience that we're doing our launch,

Cloud Kitchen's incubator again. All of you know, my friend Diego and Travis, formerly of Uber, created Cloud Kitchens, and they are doing an incubator with us. It's a 14-week program for food and tech entrepreneurs. If you want to break into the ghost kitchen space and you think that you can create the next great food brand, this is the way to do it.

If you know, Alex, a lot of people will start by doing a pop-up or being like a chef for people, maybe doing parties, right? Yeah, absolutely. And then you build up to like maybe a food truck and a food truck that might cost you, like, you know, and setting up your own catering business, and might cost you $0,000, might cost you $10,000. Sure.

Setting up a food truck and going into business there, it's like low hundreds of thousands of dollars, setting up a restaurant or like, let's say you had a really cheap storefront, like I think a minimum million dollars, $2 million, proper restaurant, you know, it's circled to $3, $3,000, $5 million investment. And the problem with that is, you don't know if it's going to work or not, right? There's no MVP of restaurants. No. Well, now there is.

Called a ghost kitchen. When you get a ghost kitchen and we're investors in cloud kitchens, our fund is, it's like a cloud kitchen cost you know, a low thousands of dollars a month, and you're up and running, and you're plugged into immediately an incredibly high volume infrastructure called, food delivery. Uber Eats, DoorDash, etc. So the Cloud Kitchens

are run to make food for those and what we're doing in this accelerator and incubator is just getting you plugged into all that. Starting you on third base,

kitchen economics, the operations, how to do marketing and branding inside of these apps. It's completely different than doing a restaurant. Oh, right.

That's actually a really good point. It's an entirely different marketing space. Yeah. Totally different. You know, Should you pay for ads on Uber Eats and DoorDash to move up in the rankings? What market should you launch in?

What should you be your second and third market? You know, there's a big issue. Like, hey, if you're got something great out in Brooklyn, is your next best idea to be further into Brooklyn? Brooklyn's a pretty big place. Or to go to Queens and Manhattan? Or is it to go to Philly and Boston or Rhode Island? You know, how do you deploy that second, third, for Cloud Kitchen?

And that's the magic of, I think, this new space. Also, delivery food is different than in a restaurant. You can do a souffle in a restaurant. You can do a little ice cream tasting. Can you do ice cream and souffle? You know, delivery? I don't know. It's a good question.

Maybe you can figure it out. If you can figure that out, if you can bring me a souffle delivered, that's actually good? My God. I'll give you all my money. But I can tell you, I know Boba and ice cream is getting

delivered and it's getting delivered in a certain way, a certain radius. So anyway, these are all the technical things. We're on our second class. We had great companies come to the first. It's an experiment. I like to do little experiments. You can apply at cK.launch.com. We put money into each company. We have a little fund, a microfund. It's like a million or two million dollar fund. And we give a little bit of money, a bunch of mentorship, a bunch of networking. So if you want to come to Lick, the Launch Cloud Kitchen's incubator, see that? We took the letters L-C-K-I and we just call it Lick internally. Go to cK dot launch.com.

I love that and I'm just going to say it again. I've been watching a new bakery slash coffee shop open a couple blocks from where I live, keeping it slightly vague. And, you know, I met the owner and the proprietor and the entrepreneur behind it before they opened and I was just so hoping that the care and the effort that will lead put it into this place was going to get paid off. And now every time I go there, there's a line out the door. and I'm like, how dare you guys eat my croissons that I was going to eat?

Get out. I live here. Anyways, but there was no MVP, to your point. So when he built this place, Brown Bee Coffee, he didn't know. It was literally a gamble with, I think, is just two savings. Yes. Brutal. You're basically, and then if it doesn't work out, hey, you got to go,

maybe you got to go drive Uber Eats and DoorDash to pay for the bills. And there's all this modern technology stack. I've learned a lot there. You know, you can use. like Uber Eats drivers or Uber drivers or even DoorDash drivers as like an API service. So a lot of these folks are trying to convert you to directly going to their website, directly ordering from them to get rid of the fees that Uber Eats or DoorDash charge. So there's a whole bunch of ideas here about how do you build direct relationships with your top customers,

you know, what are high margin things that you can include in it? So, you know, I've been brainstorming with folks. I'm like, how come you don't have like anything for the whale in the system? I'm always wondering like, where's the Peking duck? Where's the, you know, rib eye for two? You know, you should have a $100 item every menu. And I, when's the last time you saw a $100 item on a to go menu? Well, never, but I have paid what feels like $100 have a burrito brought to my house.

Precisely. So, you know, exactly. And so you should be thinking about that. And I was talking to one of the comments, I was like, you know, this is really great. It would be great for breakfast the next day. Like, when you sell in, why don't you put kids, because I was literally ordering, and I was like, why don't you offer something for the kids school lunch or breakfast the next day? When you get into the private chef space, you know, a lot of what private chefs do is they serve

you dinner one night, as you know, Alex, and then they will prepare for you breakfast for the next two days, lunch for the kids for the next three days, and then maybe at dinner you cook yourself tomorrow. You know, put the salmon in the tray and let you bake it. So a lot of these... I don't know that. I don't know that. I do not have private chef money.

I have used those. There's a local meal service that just something very similar. That essentially it was a one or two women shop and they would, you would sign up for some number of meals per week and they would pre-make like half of it and then you kind of finish it. And we loved that. But then our kids just were more picky than what the offerings were supposed to be had to drop it.

But I would love to have a private chef. What do those cost? There was just a story on it in Silicon Valley. In Silicon Valley, it's 150 to 300K a year all-in comp for the chefs. And there is a big competition amongst elite people to be able to say, my chef previously worked at X, Y, and Z, or Z. And so I have been to people's homes. hey, this person, you know, worked at Quince,

this person worked at this Michelin Starplace, whatever it is. And it's a little bit of bragging, right? It's like a little fancy, like, oh, yes, our chef at home worked at Quince, you know, a Michelin's store place in the city. So, and then, you got food on top of that, obviously. So, you know, you would be talking about spending $1,000 a day, basically, on something like this. I mean, it is rarefied air.

It's one percent of territory. But there are other ones that are doing what you're sort of talking about, the one I'm talking about. So here in Austin, I was looking at it because I have some friends who have it who are affluent but not 0.01% and don't want a full-time chef. And those services, and I've looked at these

because there's like marketplaces that have tried to come out to do this, and I think there might be a marketplace business for it, of, hey, you pay 500 bucks for a chef to come for a day, plus the cost of the food, let's say 300 bucks. So for 800 bucks, they make the meals for four days. So they serve your dinner that night, but they come early, they stay a little bit later.

So you get like this nice, you know, Monday night, Tuesday night, Wednesday night meal. But then they prepare for you, hey, you got two kids. Here's their breakfast for the next couple days. You know, we like to make these egg bites that you get at Starbucks. We make those at the house because we all love them. And so we'll make those in advance. When I say we, I mean, my wife and I will make them. And those are great, you know, grab and go kind of options.

And they'll do that kind of thing, right? Or maybe make lunches or maybe. maybe make two dinners for you. And here's your salmon with pesto on it. Here's your baked lasagna. You know, pop it in the oven, easy, breezy. So there's a lot of opportunities there, and I think this could be a very interesting business.

What I love about the Cloud Kitchens model is, you know, you can do these with two people, and you can pop it up for 25K or less. If you lose the 25K, it's not the end of the world. And if you lose our 25 or 50K, it's certainly not the end of the world. You've got to take a shot. And so my advice is if you are,

somebody working at a kitchen, maybe you're a sous chef, maybe you work in the front of the house, or maybe you and your friend work front and back of the house, and you got an idea, you know, hey, these three menu items are really killer. We should make a Caesar salad branded restaurant. And we're just going to do Caesar salads. And but it's Caesar salad with three or four different things on it. It's like, you know, Caesar's Palace, make some pun about Caesar Salad Palace. Caesar Salad Palace. Actually, that's pretty good. He's a And this is the kind of riffing you can do. Caesar salad palace would be a great idea.

You know, everybody loves good Caesar and you have three or four different options there. You have two or three different types of anchovies. You got two of the, and you can get a Caesar wrap. You'd have it as a wrap. You'd have it as a salad. You can get a Caesar burger. Maybe there's all kinds of interesting things you can do in that space. And people might want to try it.

If people don't try to pitch that now for the incubator, I'm going to be really disappointed. And by the way, if you do make Caesar salad Palace, we'll have you on the show. What's your idea? Alex, give me your best idea. What's your favorite dish

of the moment? What's something you keep going back to? What's your favorite dish? Let's do a little riff right here. I'm not going to lie. It's not as adventurous as I wish it was to share on the show, but it's a sandwich called the Vermonster.

There's a place near where I live called Aynes. It's open five days a week. And the Vermonster is a wrap that has sausage and scrambled eggs in it. It's kind of like a breakfast burrito, but critically, It has this maple aoli that goes through it. And so it's like hot, maples, sweet, but salty.

It's the best breakfast thing I've ever eaten. And I've purchased hundreds of them. The breakfast rap shop. There we go. And so, you know, doing a rap shop is such a good idea and making it 24 hours a day because I bet you would eat that for lunch. Oh, yeah. And I love the breakfast all day.

When I see breakfast all day on the menu, I'm like a French person. You know, they like to have an omelette at dinner sometimes. You ever see that? go to a bistro and they're like, you go to Balthazar, they still got the $18 omelet on the menu. I love that. I'm more than willing to have an omelet for dinner.

I think it's quite sophisticated. So this could be like a really good one. The breakfast wrap shop, 24 hours a day, absolutely fantastic idea. Why do we do this week in startups when we could just pivot the whole brand and do this week in food?

This week in food. We just talk about food, the whole show. So anyway, if you got great idea, ck.launch.co. Or if you go to launch.com, It should be in the menu, ck.launch.com. So, uh,

let's talk about the Twist 500, the top 500 private companies in a database selected editorially by our research team and talked about here on the podcast every episode. Yes. That's what we're doing. We've got a hundred of them or so. And we're trying to get to 250 by the end of the year.

Yep. Go to twist 500.com to see this database. The idea is people always ask me one of the top private companies after SpaceX and Stripe and all the ones you know that are in public yet. And we want to, We want to help people sort that.

And so we are slowly but surely getting there. Yes. And Jason tasked us with putting together a neat little graphic to show off today's company that we're going to add. And Jason, this is a company that I would have sworn we had on, but I had not added. And so I want everyone to say hello to our dear friends over at everyone's favorite emoji-based startup hugging face. Jason really briefed just in a couple of words. It hosts AI models. It sells some AI compute and also hosts AI.

community, though it's a bit more than just a repository. And on the business model front, two part, mostly at SaaS, they also do have some on demand compute, but I wasn't able to figure out from the outside how much of that their business is predicated on that. But certainly amongst the AI companies, this is one that I think has probably top five mind share out there today. A lot of people are talking about hugging face, because if you want to track what's happening on going on in the AI open source model with open source.

models. You just go there and you can actually use them. You can fire up instances of them. And yeah, it's backed by Lux Capital. Josh, shout out to Josh. Beto works, my friend John Borthwick. Salesforce Ventures, I guess, has gotten in there in addition. I'm not sure which firm that is. I may know them. Sales Force Ventures led one of the later rounds according to Quench Bay. So I threw them in. But Lux Capital has, if memory serves, led several different rounds in this company. So if Hugging Face does well, Josh will be able to afford his own. private chef in New York.

They have raised $395 million. That's a big number. That's a lot of money. I think that goes to show, Jason, how active the AI market is in a positive sense. Because this is not a foundation model company. This is not a Neo-Cloud.

This is something that sits in between them, but has become the GitHub of AI, I want to say. Yes. And GitHub obviously has their own hosted AI models. and GitHub was purchased by Microsoft. Right, so by Microsoft, there's a really savvy move because Microsoft loves developers, developers, developers.

You could throw in the graphic of Steve Barmer, clapping and yelling, developer, developer, developers in post if you don't know what that meme. And the other competitor is Kaggle, obviously, K-A-G-G-L-E, which we should put into the Twist 500 if they pass the bar, and then we would have them in the database as competitor. So we should, in the database, I don't know, We have competitors as a field, but let's make a note to add that to the field.

Hugging Face, welcome to the Twist of 500. We're going to do a series of events next year, by the way, Twist 500. Just so Alex and I can do live events together. So we will be booking like a day for the robotics companies here in Austin or maybe Boston, wherever like some of the top ones are. And it's not going to really have an agenda. I'm not really doing it to make money. I'm doing it because I'm passionate about tech.

It will make great content and I'll get to meet all these amazing foundations. in a very efficient fashion. They get to meet each other. Yeah. So I'm trying to think of a format for an event. I was thinking of having, I usually like single track events. I was thinking of maybe making this a multi-track event

where there's maybe five tracks going on in five rooms. Each room has 100, 200 seats, something like that. And then one track for SaaS, one track for robotics, one for AI, one for marketplaces, et cetera, FinTech and consumer.

and my idea is 30 minutes. You just pitch your company as best you can for 15, 20 minutes. You take two or three questions from the audience. Yeah. And then you got a nice like, hey, here's our company. Here's why it exists. And then at the end, you know, those groups get to all hang out together and have dinner. Well, pretty simple format, right?

So we just have 10 of them. What would you do if you did two, see, 9, 12, and then 2 to 5 is 3 plus 3 hours? So six hours, half hour each. 12 per day per stage. Yeah, 12 per day per stage, maybe five stages. You get 60 companies a day. You do it for two days. You get 120.

So you get one out of four. Yeah. It's pretty cool. I think it would be a lot of fun, especially because what I've learned about how you host events is there's usually a poker table within about a one mile radius of the event. And so that means that I can go collect venture capital money via third part. I staked you the last time. No, you didn't.

And I didn't stake you? I offered to stake you out. Okay, how did you do? Did you wind up up or down, be honest. I was up like 150 or something relatively modest. That's fine. Yeah, but no, I mean, the reason why I played the lowest stakes is an outer shape. My poker game has fallen off because I have, I have small children.

I do want to add one more thing to the hugging face because I was looking into them today. I've known them. I, you know, we all followed together on Twitter. Great company. I use it. Love it. But I didn't know that it actually started off as a chat bot. And then they open sourced.

I didn't know that either. They open source their own model, and then they began to open source more models, and then it kind of grew from there. But I love seeing people come together, build something, notice something else, and then go hard into it. I give this speech to me, it's so interesting that you have this observation. It's not necessarily a pivot. What I call it is keeping your peripheral vision open. So when I have a talk with founders, like, hey, you want to have blinders on, you're staying super focused. You got your ideal customer profile, as we've talked about with countless founders.

You know, you're really trying to solve an acute problem, as Paul Graham would call it. on fire problem for people. That's what these companies do, you know, startups. You build the best team you can to build a product that solves a really hard problem for customers. If you do that, things tend to work out. If you break that model,

not a great team, not a great product that doesn't solve a problem, you're going to have problems. So keep your peripheral vision open. And sometimes you're like on an adventure and you see something off the side. Christopher Cumbullis comes to mind. I always talk about Christopher Columbus going, you know, trying to find a new route to, you know, the new spice route or whatever he was looking for, a new way to get spices.

And he wound up hitting North America. Here we go. Boom. So keep your peripheral vision open. Hugging Face did it. Let's get the founder of Hugging Face on the show here. We should have them on this week in startups. And this would be, I think, the next piece of this Twist 500 is we announced them.

We walked through it. Boom. Then we half them on. So I'm currently trying to get Clem to come on because he drops some very interesting 2025 AI predictions and then he graded his 2024 predictions. I love the public accountability there saying what he got right and wrong. And he was mostly right. So I think he's probably the person to talk to at the end of the year as we look forward.

So that is on the list. Hogan Faced PR team, if you see this, I have emailed you. So please hit me back. And Jason, to close us out today, can I show you something that I think you're going to find very interesting? Because I want to talk about Europe again. This is one of my, something I've been thinking a lot about. Did you see the report that came on September from the EU about why its economy isn't growing as much? It was the druggie report?

I didn't, but it's no news, having been in technology and business since the early 90s, which means I've been doing it for 30 years. Yep. I have been meeting founders in Europe all the time, and I hear them complaining, lamenting, rules, regs. And even like a culture that doesn't celebrate entrepreneurship, dare I say, reckless entrepreneurship at its best, risk-taking, reckless abandon, pursuing your dream. It's just, it's looked at differently there.

And that's actually been part of the complaint, too, is that you just feel unsupported. You feel like people look down on you, as opposed to America, they come to America, they're like, everybody, I told everybody I have a startup. They all give me a high five. I tell them when I'm in France or Europe, Germany, wherever. I have a startup, people look at me and they think

I'm trying to pull one over on people. I'm running Iraq. Well, the report highlighted a result of what you're describing, which is that, and I'm quoting from a speech about the report, in fact, there is no EU company with a market capitalization of over

100 billion euros that has been set up from scratch in the last 50 years, all six U.S. companies with valuations above one trillion euros have been created in that time period. And that is indicative of the gap. But that's old news. People have talked about that. What's new is that a guy from MIT, Andrew McCaffey, took the same idea, Jason. He said, what if we lowered the threshold to $10 billion? Not a hundred billion? Okay, a jack of corn, as opposed to a centurion, got it. And these would be public from scratch, US and EU companies. So they have to make it through the threshold.

But here is what? Well, so you have Klarna, you have Spotify, you have Clash of Clans. I'm wondering if any of these, I know, obviously, Spotify went way past the $10 billion mark. Yeah. But I mean, we're just a wide window. This is since the 70s or 80s?

This is 50 years. So SAP, a multi-100 billion dollar company is actually 52 years old. So it just missed this chart. But this is on screen, a look at the, different companies and their relative market caps by bubble size. And so we see a lot of green bubbles, the giant ones being the magnificent seven, Amazon, Google, Microsoft, Apple, Nvidia, et cetera, meta, and that's wild. You see the EU.

This is interesting. Wow. What are the purples? The purples are the 10 billion? The purples are the other companies. So green is tech. Blue is just like, you know, Blackstone, Home Depot. So we're living in a tech world.

So what are the two or three largest blue circles in America? I'm curious. Tesla, United Health, T-Mobile, Costco, Vertex. Wait a second. I would consider Tesla and T-Mobile tech. Yeah, so, I mean, this speaks to a number of things. American exceptionalism being the primary one. And, you know, the culture of American exceptionalism.

We are a young country. We're a hungry country. I think other countries maybe are not as hungry because they're older and when I meet families there they may be into the country the culture might be into capital preservation

and so when I was talking to some of the people from Italy trying to do economic development there or England or France they would often tell me that the differences this is not my opinion this is what it was told to me is that you know families

that own businesses there do not participate the legacy companies, let's say, the old money does not participate in things like venture capital. Now, when I came here to Texas and I was talking to a bunch of venture capitalists and people who run

SPVs here, they were telling me the oil money. The old money here loves to get in on tech deals, loves to do an SPV, loves to drop a half million, a million, five million into some new technology. I'm like, who are these people? Like, they don't want you to know who they are. Nobody knows who.

they are. They're just rich people and they really want to get in on the action. And that is another part of it. So the high order bit for me is, you know, the American exceptionalism, a young country, but then there's also capital formation and capital markets and regulation. And here, we talk about regulation all the time. We talked about the wrath of Lena Khan for the last four years. We talk about accredited investor regulations. And in this show, we talked about Gary Gadsler, not creating a path forward, getting fired, essentially. Um, getting a lot of, you know, criticism. Some of it's rightful. Some of it's not.

And, you know, I'm saying, you know what? Let's replace him. And I don't know what you think. But here's my question for you. What percentage of young men coming up for Trump do you think could have had to do with the pro-crypto stance?

And then what percentage of the money he raised came from pro-crypto, you know, individuals. Because crypto is not a niche anymore in America or South Korea. There's a large contingent of people, low-double-digit percentage who are either holders, holders, or fans of this. It's not niche anymore. So when you look at the election and getting to Denmark, two questions, what percentage of the voting populace do you think

might have voted with that as one of their top issues not the top but it could be the top of top of the money you'd think sloshing around is crypto related well the second one's larger than the first if you look at you know that number it compared to the whole I don't think the number of people whose votes changed strictly due to crypto was that large in terms of a percentage of the electorate

comma, but in the U.S. where Trump won by about a point and a half, 1.7%, whatever the latest number is of the vote tally. A couple of points is a lot. And that's why I think people talk a lot about this. Now, on the money side, I forget her name, is it. Molly White ran a very interesting site looking through all the crypto packs and so forth. And the answer was hundreds of millions of dollars, if I recall correctly. And so I think that what crypto did was they decided that they were going to get very involved. They backed, if I recall, several hundred different candidates, mostly Republicans, some Democrats,

and they made this an issue that they then won. I mean, we started off the show with the new head of the SEC who is very much aligned with the crypto industry. They absolutely won. So I think it was a couple of points. It was a whole hell of a lot of money. But the ROI, Jason, on every dollar that was spent in these crypto super PACs, I believe it's going to be very high,

probably higher than investing in your funds investing in crypto. Yeah. I mean, it was a 3% win for Trump. He had 3% more of the overall voting electorate, I believe. There's about 150 million votes. He won by 2.5 million. 2.5 million is roughly 2, 3% of the overall voting. So if 1% of those were crypto, you know, now you're down to a 1% you know, coin toss as opposed to a 2.5 clear victory.

So what was the Jervison tweet? Did you have a similar observation to me? Bring it back up. Jervinson pointed out. Europe's tiny balls. Well done, Steve. I thought you were going to like that. He says that he agrees with you that Tesla should be scooted into the green category.

But the reason why I wanted to bring up Jervison is not that his view is agreeing with you that Tesla is a tech company versus a non-tech company. But it was this stat right here. When we look at companies that are born from scratch, am in public, and now are worth more than $10 billion in the U.S. versus the EU, the U.S. wins by 70X. And that is bad for Europe. Like, it's not good for their economy, their dynamism, their ability to, you know, compete with China. Like a bunch of people that we are nationally, politically and militarily aligned with

are really struggling financially. Here's what you can take from this. Okay. If you are, I'm just going to, may I be based, base Cal? Can base Cal come out for a moment? moment. All right. Let's do it. Okay. It's a base gal. Socialism is garbage. Capitalism plus democracy is the best operating system humanity has ever come out with to date. It's flawed. It's got all kinds of criticisms you can make. Socialism is the road to communism is the road

to slow economic growth. And so we get to pick as human beings on planet Earth in some cases if you want to live in which of these pros and cons. When you and I look at this, capitalism, democracy, as American, do we go, well, of course you want to live in the country. That is at war with itself, is fighting, it's messy, it's sloppy, this election, the last election, the election before that, and every election before that, it's a mess here. It feels crazy. but the economy keeps beating everything else out there.

Why? Because we believe in the fundamental tenant competition and that running from competition is a mistake and running towards competition is great. Now, in competition, you have winners and losers. And when you have a vibrant competition, that is rabid. I think I said reckless before,

you know, that you can pursue with reckless abandon and I brought it up when we interviewed our veterans on today's show. And so, and I'm not sure where that's going to be placed here, but I did talk about, hey, did the military folks, do they have that like sort of improvising,

bend the rules kind of thing? If you want to have big outcomes, you need to support crazy, vibrant competition. If you want everybody to live in a tight-out tighter strata, what you're asking for is socialism. And then, you know, socialism sometimes leads to communism. There's dictatorships.

And then, you know what we have in a vibrant capitalist society? You have people buying elections. You have people using money as influence. You have these other set of problems that we have to contend with here, where these super PACs, as we're talking about with crypto, could have bought, quote unquote, bought one or two percent electorate. Is that a problem? It feels unfair in some ways, but in some ways it feels very fair because they have collectively said,

we're going to place our resources, aka money, on influencing our government to make rules that go in favor of more innovation. Could it go the other way and the rich get richer? Yes, the rich get richer in a competition. That's how it works. The high performers get more money. What do you think happens with actors? You think George Clooney and Brad Pitt get paid less? than people who aren't as good looking and aren't as good at acting

and don't sell as many tickets, of course not. Robert Downey Jr. sells tickets. That's why they brought him back. That's Dr. Doom, a villain. Like, Marvel was struggling. They bought back the highest performer. Robert Downey Jr. It's a competition.

He gets paid more than the 10,000, 10,000 extras who were in those films. Is it fair? I don't know what fair means. All I know is that kid sells a lot of tickets. That's it. pick your poison. And if you want healthcare that's, you know, and you want to live in a tighter strata and you want the entry level job and the highest level job to be in a tighter

and, you know, the difference between a CEO comp and the, you know, entry level comp to be tighter, you can do that. Go to Europe and you'll have a bunch of small balls. And if you want the big balls, you come to America. Yeah. Base cow. I just want, okay, so I have a, I pulled up a section from the report, actually that underscores what you were saying. But I just, want to take a moment while we're here, kind of the bad half for the show, kind of the loose zone. How do you define, how do you define socialism? Because it's one of those words that I feel like,

sure, has a lot of, everyone has their own pet definition. So when you start off with, socialism sucks. Yes. What are you referring to in that nugget? And it's a spectrum. So when people say socialism, they would say the redistribution of wealth, people taking care of each other,

the highest performers in the society, paying a bunch of taxes that they can get redistributed through products and services for the rest of the folks in that country. And communism, we obviously know what that is. You know, it's a dictatorship where they decide the winners and losers. Socialism, you kind of throttle the winners and losers. You mute the winners and losers in favor of taking care of more people and more people sharing in the bounty of the big balls, thus shriveling the balls and making smaller balls. Now, I actually believe in universal health care. So am I a socialist?

I think I am a pragmatist. I believe capitalism, rewheeling capitalism, as long as you're not breaking the laws and the rules. That's what I believe in. And on the margins, I kind of like people who reinterpret the rules and fight to change the rules in real time.

So I admire that about crypto people. I admire that about Airbnb, about Uber, about the full self-driving movement. but I like they're putting pressure on it. They're trying things. Now, don't kill anybody. I don't want to see it be like Theranos, where people's lives are at stakes

and you're incompetent, right? So if you want to bend rules and break rules, you've got to be competent. My point is socialism, you know, and trying to have equal outcomes, I think is how a lot of people would say it is. Everybody benefits. Everybody gets a more similar outcome.

It doesn't result in big and huge balls. And big, huge balls throw off so much tax that the standard of living here tends to be better than most places and the opportunity here is certainly better. So again,

people in socialist countries and the rabid democracy that's America can move between them. You can leave one and come to the other, which all the Europeans do to come here, all the entrepreneurs come here. And you know what people say?

You're smart. So what I say to socialists, I have friends who are very socialist and they want universal health care and they want, nobody should be able to make over a billion dollars, right? That's like a real socialist concept, Bernie saying, like, why do we even have Elizabeth?

Why do we have billionaires? Why should people be able to acquire this much wealth? You know what? I have an idea. Move to France. Enjoy it. Enjoy paying 55% tax, 60% tax, whatever the Nordics,

some of them have on the margins, these crazy tax laws. We had somebody on recently. Anyway, that's my right. So, what do you think? well, I think your definition of socialism is slightly squishy because what counts as redistribution for one person is probably not for another. And so, and this is why I wanted to, I wanted to get your explanation of it because I presume that your views on what socialism is are shared amongst other folks in technology. Do you think your definition of socialism is typical or atypical for people in tech?

I think it's pretty typical. I mean, classically, you know, I'm just looking at the definition from Chad GPT. Socialism is a political economic system where the means of production distribution and exchange are owned by regulated collectively by the community or the state. Yeah, democratic control of the commanding heights has always been how I've defined socialism as compared to capitalism. I think that what you're describing is more like just welfarey capitalism. And that to me, I think we've deluded the terms of socialism to the point in which people

are not using it correctly. Like, communism, you phrased as dictatorship, when actually it's the abolition of private property. Socialism is collective ownership of certain elements of the economy, which, by the way, not in favor of. But I think that when we make socialism anything that's to the left of Ted Cruz in terms of how we spend our national resources, we don't give ourselves enough space to be creative with our collective pot

and get to things like you might both agree on, which is decouple the healthcare from employment. Which is, you know, that's the pragmatism I look at. Now, the reason I don't want to give capital, I don't want to give health care to the government right now, is the government so incompetent. So I almost feel like the free market would do better. And you're starting to see it.

Urging care and paying for doctors virtually post-COVID is how a lot of people are rolling their own health care. I know rich people who roll their own health care now. They pay out of pocket for everything, and they have like an umbrella policy where like the first 50K they pay and over 50, they have like a, what do they call that? High deductible plan essentially?

Yeah, like an absurdly high deductible. It's a catastrophic plan. Yeah, yeah, yeah, yeah. Oh my God, you know, you had a million, two million, three million dollars in healthcare. So you pay the first 50 and you have this catastrophic, you know, God forbid something terrible has. happened. But my lord, you know, we we need to, and health care is just a huge discussion, but

I feel like the government should try to provide some services extremely affordably for free. Okay. And that would require some private partnership, private public partnership with competent people in the government winding down multiple vendors to get the right cost. which we're starting to see with the military. So if the military can do that, why can't we do that with, I don't know,

like, what is the proper amount you should pay have your blood work done? What is the proper amount you should pay for a foreign meniscus? And when you start to have a global marketplace for these things, you see people going and getting

their plastic surgery in South Korea, Mexico, in Europe. So now there's this whole plastic surgery tourism because people have to pay out of pocket, the free market does it. So I kind of feel like more free market solutions would be good. And I think Pronova and some of those new urgent care is one, you know, like you pay out of your pocket, but you get better service 24 hours a day.

And then people are going to Hymns or hers and getting certain prescriptions or dollar cost, you know, more Cubans. And they're rolling their own health care paying for their own pills out of pocket because it's better than using an insurance company. Yeah. I just remember, I didn't have to pay it, but when I got out of rehab, my, I was part of Kaiser in California that kind of like, um, vertical health group. And they sent me a bill of like what they counted internally as the costs associated with my hospital stay and then, uh, a week or two in outpatient rehab. And it was some ungodly figure.

Like it was so large. I was giggling. I paid like 200 bucks because I was insured. Um, but I don't think p kindness from the collective pot constitute socialism. And that's kind of the point I wanted to make is that I, I think we do a lot of things together. For example, we spend a lot of money on the military and we share it around the world. You know, so roads, schools, bridges.

I mean, there's some things that we provide. You know, there's some things we do together. I don't think having public water utilities counts as socialism. But if we did have, for example, all aircraft manufacturing under the government, that would be different. So that's, that's my take. I think you can be a capitalist society with a safety net and not be stuck in the European malaise. I think that is a possible thing. How many people should the safety net catch? If you had to pick a number, what percentage of society? Answer me this first. What percent of people in the U.S.

the safety net currently catch? I think it's like 50, 60 million people. Yeah. Because I think Medicare and Medicaid are like 150 million people are on those. Oh, I don't know if I was counting that. I was counting more like how many people are on welfare. Snap and so forth, yeah. etc in the USA I'm curious I thought that was like 50, 60 million but also there's household so many numbers could be wrong

but yeah Social Security 68 million yeah 25% 20% of the population supplemental nutrition snap 42 million 12% Medicaid 23%

so in tempore so yeah I mean there's overlap obviously that's the struggle so 35% just for the sake of conversation Yeah. One in three.

That sounds about right. Yeah. So that's a very high number. Well, I mean, there's two. It speaks to something. Yeah. You know, I don't know how to phrase this. I said something rude about everyday people on the show about two months ago and people

called me out for it and I had to tidy that up. So I'm going to just be as kind as I can. Jason, you and I look at the world through the lens of our experience. are education and our intellect. Not everyone has as much to pull from in those areas. And I'm sympatheticing people who struggle in a very competitive, fast-paced society because not everyone is born with the same capabilities. And I think everyone should still eat.

If that, if that needs me a socialist, bring it on. I, there is something to be said for what R.K said about, hey, you know, if we could actually provide healthy food for everybody for what we're right now. And so as much as some people find him to be like a loon or, you know, they make him anti-vax, whatever, you know, I think he does have some insights there about, aren't he, if we were starting from a zero-based budget and we said we wanted everybody to be healthy, what will we do? You know, we might all come to the conclusion that clean drinking water would be on that list and maybe vegetables and kids lunches, health.

would be on the list and we would be okay with it. Michelle Obama was talking about this 10 years ago. And everyone was, everyone was so mean to her about this. She was like, kitchen hot broccoli and everyone's like, ooh his, eat Doritos.

And now that Trump's doing it, everyone's, oh my God, we have to make America healthy again. Make America healthy again. The cognitive dissonance, Jason, Calacanus,

not with you, everyone else drives me, my blood pressure goes up. That's because Trump is a populist, not a Republican. He's not a conservative. Yeah. He's a populist.

You know, and you know what two populist positions are? Getting skinny. Being healthy. Closing the border. And crypto. These are populist positions. Those are incredibly populous. Did you see the picture of him on his plane when he made RFK pose the Big Mac?

And RFK looked at him like it was an alien turd. Yes. I wonder if he actually ate any of that. But here's my advice. Once a week. If you want to do fast food, once a week, your body will be fun. with it. Just don't make it twice a day. I don't think it's healthy twice a day. No, no, no. I eat trash, but I also, I also eat healthy exercise, but like, you will never get me to stop eating

nerds, for example. Like, I will die with a half box of nerds in my hands. There's a chewy nerds. My daughter's got me on these chewy nerds at the movie theater. It's quite nice. All right, everybody. This has been another amazing episode. He's at Alex.X.com slash Alex. We're into rambling territory now. X.com slash Jason. We do this three days week, Monday, Wednesday, Friday. times four, who knows, and subscribe to the show. And when you come into the, you can watch the show live and you get about 20% more show. If you want 20% more show, go to YouTube or X and follow the show account and put alerts on. You get a thing when the alerts come on and we read your name, we say hi to you. The first, like, 20 people who come in, we say Nody Gang. Notie Gang is the notification gang. So turn your notifications on for YouTube. It's a lot of fun to talk to the live audience. We'll see you all next time. Bye-bye. Thank you.