This Week in Startups - Twitter's failed OnlyFans-like product, OpenSea trading volume drops 99%, major FTC lawsuit | E1548

Episode Date: August 31, 2022

BIG Tuesday show! First up, J+M break down the insane saga of Twitter's now-cancelled OnlyFans-like product (1:41), OpenSea NFT trading volume dropping ~99% (20:47), a MAJOR FTC lawsuit against a data broker selling sensitive info (36:26), and more! (0:00) Molly tees up today's news roundup! (1:41) Twitter's cancelled OnlyFans-like product (10:21) Dell - Apply for Dell for Startups and get an additional 10% off Dell Latitude products at https://dell.com/twist  (11:49) Practical issues around mixing adult content with brand advertising, Twitter's internal problems (19:24) Indochino - Get $50 off any purchase of $399 or more by using code TWIST at checkout https://www.indochino.com (20:47) OpenSea single day trading volume dropped ~99% from a peak of $400M+ in early May to ~$5M in late August (29:42) Vanta - Get $1,000 off automating your SOC 2 at https://vanta.com/twist (30:46) Alexis Ohanian's Seven Seven Six is raising $177M to invest in distressed crypto assets (36:26) Potentially groundbreaking FTC lawsuit brought against a data broker for selling sensitive geolocation information without user consent FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

We got a big news show today with many wild topics. This week is not getting quieter, even though everybody is a Bernie man. Including Twitter's canceled only fans project, maybe one of the worst ideas we've ever heard. Oh, no, wait. The worst idea was still getting Eminem and Snoop Dog to perform as their board apes to validate our critique from yesterday. NFT trading volume is down 99% since May. But Alexis Ohanian's new crypto fund is,

going to buy up some distressed assets. We also talk about a major FTC lawsuit. It's a great show. Stick with us. This Week in Startups is brought to you by Dell for Startups provides key solutions for all your startup needs. A dedicated tech advisor will get to know your business goals and deliver customized solutions for rapid tech enablement with top business class PCs and accessories. Apply for Dell for startups and get an additional 10% off all Dell Latitude products at Dell dot com slash twist indochino makes custom fitted suits shirts and casual wear at affordable prices shop for your next best look or book a virtual style consultation at indocino dot com right now you can get $50 off any purchase of $39 or more by using code twist at checkout and Vanta

compliance and security shouldn't be a deal breaker for startups to win new business Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. Hey, everybody, it's Tuesday, and we have a full news show for you today. Molly, we thought things would slow down. Everybody's favorite social network, Twitter. It doesn't stop. And you have been worried about product velocity.

I'm just saying they have no problem with product velocity. The entendras in this are going to get... They're going to be fast and they're going to be furious. Twitter, I kid you not, and I don't even know how to grok this one. This is breaking news, folks. So we are just coming across this right now. Twitter, earlier this year, was building an only fan's competitor for monetizing. adult content.

But it canceled it because they're not good at operating a company and getting rid of bad things from their platform. I think that's the best summary. They suck at managing Twitter. They're good at...

And that's why they pause this? They're okay to good at building product, but they can't handle bots or spam. I mean, the headline on this Casey Newton piece is, and I quote, how Twitter's child porn problem ruined its plans for an only fan's competitor. Eish.

That is an explosive headline. It appears to be that last spring, not that long ago, just a few months ago, oh, look, the YouTube comments just went crazy with adult dating site spam. What a coincidence. In the spring of 2022, evidently, after quietly allowing adult content on the service, Twitter was thinking, hey, we could probably make some money off of this. And they were proposing to give adult content creators the ability to begin selling OnlyFans style paid subscriptions with Twitter keeping a share of the revenue. No, I got to say, I personally have no problem with this.

Like, I think OnlyFans is a safe place for people to monetize sexuality, which is going to get monetized anyway. And so if Twitter was like, yeah, we're going to legitimize this and let this. occur safely with adults and consent. Great. However, when they, to your point, went ahead and tried to enact this new project, ACM adult content monetization, they formed this red team to pressure test the decision. This is all according to a scoop at the verge and Casey Newton and interviews with current and former Twitter employees. and the red team discovered that in fact, Twitter could not at all safely allow adult creators to sell subscriptions because the company was not and still is not effectively policing harmful sexual content on the platform.

So basically they were like if they launched this, it's going to get filled with child porn because we still can't root that out at all. A lot of this doesn't make sense to me. I too think sex work and people selling nude pictures or, you know, adult content, leave it at that. No problem with that morally, et cetera. Do have a problem with, obviously, like everybody else, the exploitive nature of some of this stuff. And, you know, the fact that it is, user-generated content is not compatible. An open user-generated platform is not compatible with the adult industry because of exploitation. And you just have to pause for a second and just understand what we're talking about here.

On YouTube, if people upload content and they do something illegal, what's the ramification? Okay, they stole somebody's copyright. Okay, they have a copyright management system in it. You know, you can claim. So if I would have put a song up, you know, somebody else's, you know, Sopranos episode, a clip, HBO can claim that and they get the monetization on it, or it gets watermarked, they know the signature of it, they can take it down.

Okay. But now you get into adult content. You have all different categories from underage, child porn, revenge porn, etc. That you don't want to let people upload stuff without knowing who they are. So user-generated content, anybody can create an account and upload anything they want, and you deal with the ramifications of it,

because the ramifications, let's be honest, of stolen IP, stolen content, are not horrific in nature. That's what society, at least the United States has come to. And I think it's kind of, I'm okay with it. You know, people will steal clips of this show all in or whatever. People will repost episodes. And if it's a fan and they use a small clip, you know, we might put it into fair use. I ask people to use the YouTube clipping service. So you have to understand the nature of these platforms.

You cannot run adult content through UGC. It's too dangerous. And with after the fact moderation. Correct. Yeah. You know, we'll clean it up afterwards. We'll do it in post. Right.

Does not work with adult content. Twitter runs a service that is user generated where they freely let bots create gazillions of accounts. You need only have a Twitter account to understand this. they have the lightest hand in terms of account creation because they want to keep their numbers up. It's always been that way. Facebook and LinkedIn are much less permissive in people creating content. I'm sorry, creating accounts.

So it's obvious that this is not going to work on Twitter. Now, the other really bonehead stupid thing about this as a decision is Twitter is an advertising platform. And who do we see advertising on Twitter, Molly? who advertises on Twitter and what do they advertise when you see ads? It's on Twitter like tech stuff I guess like Wall Street Journal I feel like I see

the same Wall Street Journal ad all the time and then finally like the one about what Elon Musk is reading that I finally blocked If you go to All Roads Back to E If you go to Twitter trends What you will see inevitably is the latest Marvel movie

The latest car The latest television show They are selling brand Advertising. Advertisers. Mm-hmm. Yeah. Brand advertisers

love Twitter because of Buzz and the influence and the digirati literati and other Illuminati on Twitter. Mm-hmm. Now, you cannot sell

to Disney for Miss Marvel, She Hulk, Avengers, and be running only fans. They don't want to be anywhere near that. And now what's happening,

Twitter is so incompetent. I don't know if you've had this happen. But you hit a trending topic and you're scrolling and, oh, you see some crazy porn. Have you had that happen? Or you've been in like the groups and seen some crazy porn getting posted there on Twitter? I feel like I used to see some crazy porn, but I really don't anymore. But yeah, I mean, a couple of things are happening here.

Like one, it's advertising supported. This would have been a subscription. This is like Twitter clearly trying to explore some ways to get additional revenue because being advertising supported is increasingly. difficult and doesn't make them a ton of money. Maybe I have safe search on to Nick's point because everybody else is reporting like seeing tons of porn on Twitter, which by the way, would be the end of my time on Twitter. Like if that was, that's no, I'm out. But there is, to your point about being advertising, advertising, supported and not investing in moderation, there is this great paragraph from the article explaining that unlike its larger peers,

including Google and Facebook, Twitter has suffered from a history of mismanagement and a generally weak business that has failed to turn a profit for eight of the past 10 years. As a result, the company has invested far less in content moderation and user safety than its rivals. In 2019, Mark Zuckerberg boasted that the amount Facebook spends on safety features exceeds Twitter's entire annual revenue. So they're in a trap now where they want to find ways to make more money, but they haven't historically made enough money to make a service that is frankly good enough, robust enough, and safe enough to pitch. That's a bad trap.

Lots of your remote employees are traveling right now. Everybody's getting back on the road. And if you want to keep performance high while you send your soldiers out into the field, you're going to need a Dell latitude laptop. They're amazing. And I'm going to give you an amazing discount code from Dell for startups. If you're a founder, you need to apply for Dell for startups because it's a complete no-brainer. You're going to get so many amazing benefits, including access to a team of expert

IT advisors. You don't have to hire your own. You use Dell's. They know what they're doing. These experts are going to provide you with customized solutions to make your entire tech stack world class. And Dell will help you access capital to build out your tech stack. So you don't have to use all that pressure venture money that you got there. And you're going to get exclusive discounts for Dell's amazing hardware. And I love my Dell hard. I got the Dell Latitude. I just upgraded to a Dell Alienware mind-blowing machine. Here at launch and at Inside.com, my other company, we send every new employee a beautiful 39-inch ultra-sharp curved monitor. Oh, my favorite. You get so much green real estate,

it makes everybody 10, 20% more efficient. Apply for Dell for startups today, and you're going to get an additional 10% off all Dell Latitude laptops and tablets. I want you to just head to Dell.com slash twist, d-E-L-L-L-com slash twist. There are practical issues here. You remember Tumblr, when it was an independent company, was known for adult content. Reddit, known for adult content to this day. Tumblr and Reddit were independent companies, and they weren't publicly traded. When you get to publicly traded independent companies, it gets really hard to be able to manage this adult content issue.

because, again, you know, Sony or Disney or Ford, they don't want to be within a mile of it. Tumblr, when it got bought by Yahoo, by Marissa Mayer, eventually somebody said, hey, Marissa, do you know about this? And she was like, yeah, that's gone. And this created a lot of unintended consequences. Some people believe a lot of only fan success was Tumblr taking adult content down. Absolutely. These companies need to be independent of advertising, and that's really the beginning and end of it. And this is a boneheaded decision for Twitter to even go anywhere near it.

That is such a weird. I mean, of all the ways to, like I understand that they were probably thinking that would be an easy way to make money, although it is not. It is fraught in a million different ways. Like you have visa and all these companies saying, oh, we're not going to process payments. And so we're going to, you know, push women back to pimps. Great job, guys. That is the issue, right?

I mean, people don't want to talk about it, but that's the issue. Yeah. I mean, like, OnlyFans and Tumblr give people a safe space to make money on something that people have been buying since the beginning of time. Yes. And every effort, this is a separate issue, but every effort to like purify it and shut it down and not process payments and whatever actually leads to more harm. Okay, but to or B, Twitter, come on. Like, you'd be better off issuing NFTs as a way to try to make money than getting into an only fans type business model. Like, what that is so out of the frying pan into the fire.

Like, I would, I feel like you in particular and even I could come up with like 1,000 other ways for Twitter to monetize things before we would ever land on. Hey, you know what you guys should do is his only fans clone. Like, what the hell? Elon's idea, I think, of charging for Twitter. which I've been talking about for 10 years. I wrote a blog post, let me pay for Twitter pro. Yeah, that's not Elon's idea.

That's, you know, come out. Well, it's been around, but as a potential new owner of it, his, you know, explicitly saying that's what he wants to do is go pay it route, I think is still the power move. Because if you think about anybody with any kind of a decent following, they would love to pay for Twitter because of the value and time they spend on it if they got something in return, What that something is, you know, who knows.

But anybody who's, you know, especially corporations and business accounts, my lord, if you could run, like we talked about merch, you know, if I could pay for an account and then I could sell merch directly, I'm paying $49 a month. If I could, you know, put my podcast in my feed automatically and have it on tip. The unified profile thing that we talked about, like the professional profiles with all the unified media sharing, like, that's an is that just too hard to build like I don't understand no this is oh I don't get it it's just desperation it feels like desperation that one no it's just they're not good at making strategic decisions so they're reasonably good at building product of late they're not good at strategic thinking strategic thinking requires leadership and it requires saying no to a bunch of things and understanding what the purpose of your services and who your users are.

People who use Twitter are very intelligent and very successful people. It has skimmed the cream of the social media. It is the intellectual version, as Naval said, of TV. Like people are addicted to it who are smart and successful. Okay, so what do those people want? And those people are well-heeled, they'll pay for a subscription or, you know, to have more control over their system. It's just very obvious.

It's really true. So if you've got metrics, the fact that I can actually collect emails now, that's worth paying for. If I can more easily collect emails, if they put an email form and allowed me to, you know, understand my CRM of followers.

So just a follower CRM, I would pay $10,000 a year for. I'm going to literally pay $1,000 a month for a Twitter CRM. If Twitter collected and curated, because the thing that I use Twitter for, frankly, is seeing the future. and I would subscribe to feeds that you know how like any anytime something happens there's kind of the running joke now like welcome all my epidemiology experts and all my experts on espionage law and whatever but that is actually what I use Twitter for like I was one of the people in January of 2020 or whatever being like hey guys I think this this pandemic is real this is going to be a really big deal and that's not it was not magic it's because I have Twitter so I'm like a time traveler so if Twitter would let me subscribe

to time traveler feeds, give me all the best epidemiologists, give me all the people who actually know about, let me pay for that so that you curate it and you make me essentially a futurist? Yeah. Like, that's why we're on Twitter. It isn't actually to, I don't know. What did they tell you is the number one reason to pay for Twitter Blue, which I pay three bucks a month for? But what's the number one reason to pay for Twitter Blue? I have no idea. Exactly. They literally came out with a pro version and nobody knows what you get this. This is how bad they are at, oh Lord. This is how bad the clown car is at value proposition. They made a Franken subscription. There are at least 10 things listed on the Twitter

Blue subscription. None of us can remember any of them. I'm a paying member so I can tell you a couple of them. One, you can change the buttons on the bottom of your app. So you can customize the app. I have, as an example, our community and the spaces in my bottom toolbar. It saves me a clicker You can also edit, it also holds your tweet for 30 seconds so you can edit it. You know, they could have just made the edit button. You know, you can edit your tweets of your pro. You can, um, I'm just mad right now. What's that?

I'm just mad. Like, that's absurd. They're very bad at what they do. In terms of strategy. In terms of strategy. Right. Like, there's such a magical opportunity to use the audience that you've been given, you know? If only had new leadership, somebody who could run this and steer it in the proper direction

who has other experience building world-class products. I bet he's going to do a great job when he doesn't want it anymore. It's going to be awesome. I can't wait to have another checked-out CEO with another company or two to run. That's going to be great for Twitter. Yeah, there's a description. Nobody ever had Elon Musk checked out. He's going to be checked out of running a company that he didn't, they lost interest in

buying. If he gets forced to buy, I'm not. Red line, red line. Oh, yeah, sorry. You can mean we dazzle on the line. No comment. No comment. I'm on the red line.

D, d, d, d, d, d, d, d, d, d, d, d, d, d, d, d'a, d'a, d'a, d'a, d'clock. Moving on. Yeah, Twitter, just issue an NFT. It'll do better than Bored Apes are doing these days. Okay, here's a funny story. My sales guy, Matt. He gets back from a wedding last weekend. He got asked four different times where his suit was from, because it looks so good.

Was it some incredibly ridiculous, expensive brand? No, was Indochino making these miracles happen again? Weddings, black tie events, in-person business meetings, everything's back on, all right? Everybody's out there doing things, conferences are back on, and you got to look good. You know, you got to look good. You got to use Indochino. And Indochino makes these beautiful, high-quality fitted suits, shirts, casual wear, and more. When you hear the words Indochino, just think beautiful tailored experience at a great price.

That's it. The experience is amazing. I went. They did all my measurements. Beautiful. It took very little time. And they do so many amazing details. Lapells, your linings, monograms, all that beautiful stuff you expect with a great blazer or suit. And you don't have to spend a fortune. It sounds crazy. But Indochino suits started just 449. And the shirts? Just $89. Getting the perfect look is very simple. You just go to Indochino and you get 50. off any purchase of $399 or more. If you use my promo code, which is Twist at Indochino, let me spell it for you.

I-N-D-O-C-H-I-N-O-D-O-C-H-I-N-O-D-C-O-K-O-G-N-O-GOM. And then use that promo code Twist, T-W-I-S-T. Wow, quickly looks like NFTs are going to be Pokemon of our generation, or Magic the Gathering cards of whatever generation. I mean, this is shaping up to be a complete and utter wash. Nuclear.

I mean, so we went pretty hard on NFTs at the end of yesterday's show. And it turns out we were 100% correct. Okay. OpenC daily volume of NFT transactions has dropped 99% since it's May 1st peak. That is, that peak, by the way, was $406 million in a single day. Wow. So that was. $406 million in trading cards.

One day. In one day. On August 28th, volume dropped to $5 million, according to the decentralized app tracker DAP radar. On a monthly basis, that is, again, a 99% drop in volume. On a monthly basis, OpenC's volume has dropped about 90% according to Dune Analytics. And the price, the floor price of board apes, if you want to know why somebody's out here trying to buy off Eminem and Snoop to get any sucker in the door you possibly can, it's because the floor price of a board eight has dropped by 53% from May to August. Important to say here, we believe that NFT technology is unique and there could be some great applications for it,

like memberships and the ability to, you know, sell them and fractionalize them. I think the technology is sound and interesting. The permissionlessness of it I like, and I said, I like this fried fish club, whatever thing that Gary's doing or, you know, some other NFTs for We've had that. We've had that guy. We've said it a million times and none of us can ever remember the name.

But anyway, yeah, the fish thing. The fish club. I think it's a good idea. Like if you're buying into a club and, you know, great.

I mean, I don't know why it can't be accomplished by a QR code, but whatever. Well, I mean, it could just be a membership. But the fact that it

permissionlessly trades is super fascinating. Super interesting. You can re-size it. And you can fractionalize it. Yeah. There's something there and that thing will develop

right now, what we're seeing. is the first wave collapsing, hard. Every surfboard out there is dead in the water right now. Well, and the other thing that I've seen some statistics on, and I don't have them at my fingertips here, is that it turns out the majority of the NFT volume was a small number of people who had very large collections

and were very much into flipping them. So you had a trader class for these assets, and then you had the public. And so that to me speaks to maybe what's happening here, is that the public, the retail market, is no longer here. So like stonks, like AMC and all that stuff that was going on, you know, and GameStop, if you remove the retail portion and you have the traders and the people kind of running the desks, maybe there's not that much here without the retail folks buying these.

And just to pause for a second and think about how much money $400 million is in one day, in 10 days, that'd be $4 billion, and 100 days that would be $4 billion. in a hundred days, that would be $40 billion. I mean, seriously. And if you triple or quadruple, 40 billion, you're getting $120, $150 million. $150 billion. This is an extraordinary amount of revenue. So I'm sure people who are OpenC investors or people inside of OpenC see were like,

well, that's an incredible GMV. And if they take but 5% of that, does that mean they made $20 million in a day? I think their take rate's probably 3, 4, 5%. I don't know their exact take rate. Probably. I mean, in February, December of last year, 2021, OpenC raised $300 million at a $13.3 billion valuation, which you could 100% understand if they were making $400 million in a day. Yes.

If they were making but 5%, that means they would be making $5 billion on that $100 billion in, you know, going through it. Okay, 13 billion, only three times or whatever, whatever that number is. but there must have been 2.5% take rate. So that means on that one day, they made $10 million a day. You know, you start to put it in $10 million a day in profits or just in top-loy revenue. On that day, all those investors at KOTU and Paradigm

were just... They felt pretty smart. Just to think about the velocity of this, that was only nine months ago. That was nine months ago. It's so crazy. Things change quick. I don't think it's coming back.

I'll be totally honest with you. I think it's going to keep dropping because I think this is a debt spiral of a realization that there's not value here. And if people have other things because of inflation that they need to pay for, then discretionary spending comes out, whether it was Stimmy checks or people not going out during, you know, there's like five different income sources that were here. And some of it was also like dark money, remember.

There was a lot of dark money and flipping going on here. And that will all come out. We've already started to see the beginnings of it of people front running NFTs. But if you wanted to wash $100 million in, you know, some breaking bad methamphetamine sale, I buy a $10,000 NFT, four other accounts run it up to $70,000 in bidding. I sell it for $70,000. I pay my taxes. Now I get $40,000,000 in profit.

$40,000 in profit. Okay. Yeah. Right. I didn't sell methamphetamine and do this on the dark web with a bunch of different accounts. I'm an NFT collector slash, you know, dark money flipper. And I think there was a lot of that going on. People don't understand the scale of the gray and black markets in the world.

And these places became a great place to wash it, just like it used to be dry cleaners, you know, Chinese food restaurants, cafes, anywhere you could have a cash-based business. people used to make those fronts and they would say oh I made a hundred thousand dollars this month they made 10,000 and then they pay tax and then they clean money I mean you see them so

oh I mean what's what's kind of sad actually is the number of like I assume there were some true believers in here who were just overrun by the majority of people who were, see who correctly saw this as the simplest and fastest way to make a buck that exists

right this second, because there's always a new way. And this is the way. And that, I think, only bolsters what you're saying about how this is probably the end. It's because the reputation of NFTs now is going to be, is inextricably linked with scam and cringe. Like I, you know, I mean, if, if, if yesterday, if the VMAs were the, the, the, the, the, the, you know, the, the like jumping the shark the first tap in a double tap oh you know the open sea thing is the double tap

the chat yes that what is it two to the head what is it two to the body one to the head double top something like that that's a triple tap but yeah triple tap I think that was the I think this is the jumping at the shark moment was what we saw with Eminem and Snoop yeah and then these numbers are like that's it well there's another shoot of drop two

which is a lot of people who owned NFTs who had done well did a fractionalization of their ownership. And some people who bought in, bought in to those fractions. So, okay, I own a board A if I pay 10K for it,

it's now worth 110K. Pick it a number. So I got 100,000 in profit. I want to put that to work. Okay, what do I do? I take a margin loan against it, right? So somebody says,

okay, it's worth this many eth, and the Eth price collapses. Okay, I took out 50K against mine. The Eth collapses 70%. now I have to liquidate. Oh, who's buying? Who's buying the NFTs? And that's what you're going to see next.

Is there's a lot of these fractionalized margin loan NFTs out there. And if there's no buyers, just like when there's no buyers for a stock and you've got to liquidate it, oh my God, the price orders might be very low,

which is what we saw when Bitcoin went from 70 to maybe 18,000. That was quite a drop, right? And there was a lot of forced selling. The forced selling that could happen in NFTs, from what I understand, could be the next shoot a drop. And then, you know, who's, who's going to buy these? Is there somebody crazy enough to say, I want to buy distressed crypto assets?

Who in their right mind? Isn't there always? Credible audacity, I believe, is the term. Oh, okay. Credible audacity? Yes. If you're a SaaS or services company that stores customer data in the cloud, then you need to be stocked to verified.

from a third party if you're going to close big deals. No SOC2 compliance, no closing major customers. No lighthouse customers for you. Oh, no. And Vanta makes it so incredibly easy for you to get and renew your SOC2. On average, Vanta customers are SOC2 compliant in just two to four weeks. Compare that to three to five months without Vanta. And they partner with over two dozen audit firms who have been trained to file

SOC2 reports directly within VANP. This is a total no-brainer. It's such a no brainer. I invested in the company. I got a little slice. I got a taste. I wet my beak. Tons of my portfolio companies and my founders use Vanta.

And my bestie David Sachs led the last round of financing. What an amazing company. Congratulations to everybody who have Vanta. And here's the best part. Vanta's going to give you $1,000 off. That's right. Get $1,000 off at vanta.com slash twist. That's V-A-N-T-A-com slash twist for $1,000 off your sock too right now.

Not a, um, a me. Let me look at the date here. A mere few months after, March, April, May, June, July, August. A mere five to six months after offering young co-founders $100,000 to work on climate solutions. Alexis O'Hanian, who yesterday I was like, come on the show, climate guy. Ah, yeah, he should come on the show. Yeah, he is now announced that his venture firm, 776, is planning to raise $177 million to invest in distressed crypto tokens.

Ah, this is a mistake, I think. But Alexis is smart, but I think this could be a mistake. Well, some will come back around, presumably. Like we're saying, the technology, if you acquire the users, you acquire some underlying technology,

maybe some IP, you're poised for round two, I guess. You know, I just, I don't know. I think the face

we're in right now is the fundamental value of crypto has become the discussion, or it's going to quickly become the discussion along with regulation. These are two things that are long overdue. A discussion about what's the regulatory framework here. Okay, Gary Gensler spoke up and he said, we have a regulatory framework. He's like, well, we already have rules. Yes, here they are. If you need a refresher, and if you'd like to do something innovative, like come talk to us, but the rules set still applies. So, okay, that conversation has now manifested in the last, what, 90 days, in a very strong way because of all this lost money. A lot of that regulation means that if you were going to buy distressed assets, you're buying the lawsuits and the regulatory and the legal issues

associated with them. So that's my problem, number one, with what Alexis is doing here, is, okay, you're buying some token project that's distressed? Okay, is that going to fund the lawsuit? I mean, not that you're buying the equity in the companies. I don't know if his plan is to buy the equity or just buy the tokens. But maybe that project is going to be sanctioned in some way and essentially that could be downward

pressure and or headwinds. And then number two, you know, past regulatory is do any of these have value? I thought one of the most constructive discussions we had with Vinny and and Sandeep

on our crypto roundtable which we're going to do every other Wednesday, so I guess we'll have one maybe next Wednesday. The big issue is what's the core value? And I thought Filecoin was a great discussion. That got me excited about crypto again. I was like, oh, wow, file coin makes sense to me. You know, there's coins in the ecosystem

and people are actually, you know, putting content up there. Distributed storage, right. There's value. There's real utility here. People need storage. But then that's not distressed and it's not going to get bought. So the ones that are getting a bought. Some amount.

Yeah. Yeah. Some amount. But I don't know if it's as to stress. But anyway, fundamental value. Where is the fundamental value in any of this? The goal of the new fund, which will be called cryptos with a K, Greek style. Nice.

And an accent on O. 776 registered as an investment advisor in April so they can up their investments specifically in tokens. Like, to your point, they're talking about investing in tokens. 776 gave up its VC exemption, which limits a firm's ability to make investments. other than direct stakes in private startups to 20% of a fund. This is a wonky law, by the way, that people don't know. Basically, there's a venture exemption for form to build a fund. And if you have to invest in private companies to get that exemption,

if not, you have to be an investment advisor. And that's what they're talking about here. Got it. Here's a quote from 776 founding partner, Caitlin Holloway, saying, quote, this is the best time to buy if you're really long on the industry. It's on sale. Everything is on sale. And of course, to tie it all together, 776 was an investor in Yuga Labs, $450 million seed round back in March of this year.

Yeah. So. Okay. Hey, man, Lake, it's a long game. We could be wrong. These seem like crazy bets and it could be bad money after good. But maybe, you know, Alexis Mark Kat, so maybe it's a great bet. I would be very concerned here about the bad money after good.

You know, sometimes you make a bad bet and then you want to keep betting, right? And sometimes it's time to go home and leave the table. I think for crypto, I would be leaving the table right now with the rare exception of something that is buttoned up on regulatory and very clear value proposition, which is what I've always said. Bring me something that's buttoned up on a regulatory basis. You know, that just makes legal sense, you know, that doesn't have those risk factors. And I have a couple of investments in crypto that we have a couple that are good.

and show me the fundamental value. I mean, I think you can be long on it and waded out and raise $177 million fund for climate tech investment. Like, I just don't, I don't understand. I do think the good money after bad feels like, it feels like part of the bailout process. You know what it feels like too is like SBF FOMO? Like it's Sam Bankman-F-Freed FOMO. It's somebody seeing what he is doing in the industry where he's buying up everything and being like, wait a second, we don't want this to all get. owned by this one dude we better we better get in there if we want to have anything left which

is kind of an interesting like monopoly side we got a wrap up option what's this FTC lawsuit as we wrap here this data broker Cochever is selling geolocation data for people going to reproductive clinics and other sensitive areas I guess Planned Parenthood would be the one and Lena Khan is not having it. This is abortion data. Yep, 100%. So we have talked about the absolute horror that is abortion bans, which are going to into effect in more and more states, occurring in an environment of near total digital surveillance. And the FTC, in a pretty aggressive and surprising move, is suing a data broker called Kachaba for selling geolocation data on people who are visiting reproductive clinics and other sensitive areas. She, Lena Kahn announced the lawsuit on Twitter,

and what's interesting is that, I mean, everything about it is absolutely disgusting, right? She was like, this data can be used to track people. They actually went through an example. So the FTC actually got itself a free trial of this software, right? They weren't even paying. And they were able to get a person's information and deanonymize it and say, we could 100% tie this person back to their house. There were a couple interesting things about this. One is how gross that is. just absolutely gross. The other is that the FTC evidently doesn't seem to be going after this. They're going after the business model of this company. They're suing under their doctrine of unfairness. And according to one legal scholar, Jessica Lee, who I follow on Twitter, who studies

privacy law, it's not, they're not saying like, you can't sell abortion data. They're saying, if you're promising that you're collecting data that's anonymous and you're not, we're going to come after you, meaning that if they win this case, way bigger precedent in terms of privacy. We really have to just really rethink our privacy laws around location and consumers need to start thinking about their phone settings. You know, Apple does a pretty good job of this, like only allow you to use the app and location data and they constantly make you aware of it. So I think if you're in the Apple ecosystem, you're a bit more protected.

Not from your carrier. I want to be super crystal clear on this. you are not protected from your carrier even just because you're using Apple. They got the data here from an app. They got the data here from an app. But our carriers sell our data to data brokers.

So just like, so I wonder if that data can be tracked back. So the fact that, listen, we're in the industry and we're even perplexed at how this is working tells you something. I think a lot of this, just to be clear, if you're using an app, that's not a top app,

and you're not using it specifically for a location just do not put location on. The only thing you need location for is Uber, you know, or DoorDash and your GPS. Everything else do not allow any use of your location. And that includes Apple,

like turn off the advertising ID in your Apple settings, which I think is maybe still on by default. But I don't think this is an app. This isn't like a thing that consumers are opting into. This is a data broker. They're buying data from all kinds of sources.

Yeah, I think the data brokers are using like flashlight apps and like kind of single purpose apps. And then those apps, when they get installs, then ask for your location, people turn on location, and then those apps that are free, that are giving you something of, you know, some value, like a, you know, a gift keyboard or something like that, those have been selling to the data broker. So that's how they monetize. So these data brokers go to those apps and say, hey, if you put this in, we'll give you

X amount per thousand users, you know, every month for their data. So there's this whole, this all has to be exposed. So we'll get back to you on what your settings are. But I think we should just do a little primer here of how to turn your settings off. And we'll just go through it step by step, how to make yourself more private, just as like a little big thing we'll do here on the pod. Also, I'm never letting carriers off the hook, not for even a minute. Because every time they say they're going to stop selling our data to do, there's no more sensitive data than what Verizon, T-Mobile and Sprint have on you. And they sell it.

They sell it. All right, everybody. We'll see you next time. Bye-bye.