This Week in Startups – E2274: Bittensor Drama! TAO down 15%!

Host: Jason Calacanis
Guests: Alex Wilhelm, Gareth Howells (Video Subnet 85), Ola Lehman (AI Solopreneur)
Date: April 11, 2026

Episode Overview

This episode dives deep into the recent controversy shaking the Bittensor crypto AI ecosystem—allegations of a "rug pull" involving the project Covenant AI and a dramatic drop in the TAO token price. Jason and Alex dissect what happened, discuss ongoing governance challenges in decentralized crypto projects, and bring on subnet founder Gareth Howells for inside perspective. Later, Ola Lehman joins to demo a cutting-edge “Council of Advisors” Claude skill and discuss security, digital work, and the future of AI entrepreneurship. The episode wraps with pop culture and tech gear recommendations.

Key Discussion Points & Insights

1. Bittensor/Covenant AI Drama

[00:54 - 08:58] Background & Breakdown

• Jason sets the stage: Bittensor, a decentralized AI network with its own crypto token (TAO), has faced a major incident where one project leader allegedly pulled out funds, leading to a 15–20% price drop and fears of a "rug pull."
• Subnets: Bittensor allows creation of 128 subnets, each running different distributed AI services, incentivized through TAO.
• Rug Pull Risk: Crypto projects routinely face loss of funds and community trust when governance isn’t solid. Bittensor’s ongoing challenge is how to offer decentralization without giving malicious actors too much control. There’s debate on appropriate regulatory and safety mechanisms for subnets.
  • Jason: “What Tao is trying to do is remove that possibility. So what system do you create … you have to have some control over the subnets and there has to be governance.” (04:33)
• Alex explains the players:
  • Covenant AI ran three influential subnets (pre-training, compute, post-training).
  • Allegations: Founder Sam is accused of taking TAO tokens and leaving, while blaming Bittensor co-founder Jacob Steeves ("Cons") for sabotaging them.
  • Community Fallout: TAO's price fell from ~$3.35 to ~$2.71. Both a confidence issue and a potential market oversupply due to token dumping.
  • Alex: “Even though a lot of people in the Bittensor community are … negative about Sam right now ... I don’t throw a fit when someone leaves Substack.” (07:08)

2. Subnet Perspective: Interview with Gareth Howells (Video Subnet 85)

[08:58 - 29:35] Inside Bittensor’s Subnet Culture & Economics

• Gareth Howells’ Take:
  • “I think this is an individual acting rather than the company or the community ... The subnets that Sam was heading up are probably going to carry on doing the same work.” (09:20)
• Market Impact: Not just Sam’s token sales, but broader investor fear caused a selloff; a high-profile project departing naturally shakes confidence.
• Subnet 85 (Vidayo):
  • Video optimization: compression, upscaling, archiving, AI-based transformations.
  • Customers: Anyone with video archives (e.g., BBC, broadcasters, individuals) who want to upgrade quality for modern formats.
  • AI & Compute Model: Miners (sometimes ML engineers or video experts worldwide) compete to improve open source models, earning TAO. Competition incentivizes rapid improvement.
  • Gareth: “We’re essentially paying 256 machine learning engineers to outdo each other on a daily basis ... That’s an unbelievably powerful tool to have behind you.” (25:01)
  • Open Participation: Anyone globally can participate, no central approval needed.
    • “That’s a really, you know, unique thing in all the world,” says Jason. (27:54)

Governance, Opportunity & Global Labor

• Alex’s Learning: There’s a huge, under-utilized pool of ML talent worldwide—no longer just big tech companies. Crypto/AI networks enable this labor to participate and compete freely.
• Jason’s takeaway: “It moves faster and it more violently removes cost ... if everybody in the world could work at your local Starbucks … it would be delivered faster and better and cheaper, that’s all.” (30:58)

“Winner Takes All” Concerns

• Alex questions if subnet economic models might make it harder for the "average" contributor to earn.
• Jason counters: This is pure (global) market capitalism—if someone can do the job better, faster, cheaper, they win, but competition and validators keep standards up. (33:25–36:36)

3. DEMO: Ola Lehman’s “Council of Advisors” LLM Tool

[40:22 - 57:04] Pushing LLMs to New Utility

• Council of Advisors: Inspired by Andrej Karpathy’s “council” concept, Ola built a Claude skill where multiple AI agents, each with distinct personas, debate business decisions, peer-review and synthesize a final verdict.
  • Example question: “How much equity should I give my VP Engineering who worked at Google…” (42:28)
  • Roles: Contrarian, First Principles Thinker, Expansionist, Outsider, Executor.
  • Review process: Responses are anonymized; peer agents rate answers, then a "chairman" summarizes.
  • Jason: “This is why I think you should create a digital board of directors from day one of your startup … It's really genius.” (54:13)

Tool Availability & Open Source

• Ola’s tool is available via his X profile and GitHub; he encourages more contributors, noting a $1,000 bounty for an OpenClaw show notes enhancer designed for the podcast.

Security Caution

• Ola warns about the power of upcoming models like Claude “Mithos”:
  • “It’s a point in time where it just makes sense to take a step back and take your security seriously, because the downside if you don’t is just so immense.” (55:37)

Ola’s Background

• Based in Cyprus (formerly Berlin); founder of AI Solopreneur (AI-focused media, training, B2B AI/automation consulting). He moved for lower taxes, highlighting global arbitrage opportunities for tech founders.

4. Off Duty: Tech & Pop Culture Picks

[60:41 – End] Jason & Alex share what they’re currently obsessed with

• TV Product Placement Rant (Alex):
  • Criticizes egregious Microsoft Copilot placement in ABC’s “High Potential”:
    “That is essentially a television commercial inside of a television show … who is that for?” (62:23)
  • Jason on product-first vs. marketing-first philosophy:
    “If you’re spending more time promoting your product than making a great product … that is pouring kerosene on a giant tree” (63:38)
• Star Wars: "Maul" Series (Jason):
  • Recommends the new animated Darth Maul series (visually stunning, fixes franchise missteps).
    “These are serious animations telling serious stories in the way Japanese folks do with their anime.” (67:03)
• MacBook Pro (Jason):
  • Advocates for investing in the new 14” MacBook Pro (M5, 48GB RAM) for future local AI workloads.
• MacBook Neo (Alex):
  • Cheap, colorful, aimed at Chromebook market, but build quality feels noticeably lower than Pro/Air—good for education and emerging markets.
• Sourcing Seminal Industry Books:
  • Jason shares tips for finding classic advertising/design books for inspiration (e.g., Nigel Holmes’ “Designer’s Guide to Creating Charts and Diagrams”).
  • Alex: “You should scribble on every page of your books ... Enjoy yourself.” (76:29)
• Book Recommendations (Alex):
  • Hyperion (Dan Simmons); These Burning Stars series (Bethany Jacobs) for sci-fi fans.
• Gear Note:
  • Jason recommends Shokz bone-conducting headphones (safer for parents/joggers, keeps ears open to surroundings).
• City Life Banter:
  • Discussion of living in San Francisco/NYC, neighborhood vibes, safety, privacy, tech culture.
  • Jason: "If you're in the Marina … you're going to be fine. If you're in the Tenderloin, you're going to be murdered." (80:03)

Notable Quotes & Memorable Moments

Bittensor Crisis

• Jason: “What Tao is trying to do is remove [rug pulls]. So what system do you create to remove that possibility … there has to be governance.” (04:33)
• Alex: “I don’t throw a fit when someone leaves Substack … but it would be though if you took all the subscribers’ money and then didn’t provide the subscription product.” (08:13)

On Global Crypto Labor

• Jason: “They can permissionlessly join a Tao subnet and immediately start making money and put their tech skills to work … you can just participate without somebody approving me.” (27:54)
• Gareth: “We’re essentially paying 256 machine learning engineers to outdo each other on a daily basis.” (25:01)

LLM Council Demo

• Jason: “This is why I think you should create a digital board of directors from day one of your startup… Really genius. Amazing.” (54:13)

Cultural & Tech Commentary

• Alex on product placement: “That is essentially a television commercial inside of a television show ... who is that for?” (62:23)
• Jason on capitalism via subnets: “This is capitalism at its finest. If you ever dreamed of one human race working on projects beyond borders, beyond governments, beyond regulation—that’s what makes this so compelling to me.” (36:36)

Highlighted Timestamps

• 00:54 — Bittensor background and incident introduction
• 03:06 — Alex summarizes the Sam/Covenant AI controversy
• 09:20 — Gareth Howells provides an insider subnet perspective
• 12:43 — Discussion of Covenant AI as a marquee project
• 13:39 — Vidayo (Video Subnet 85) explanation
• 25:01 — The unique advantage of subnet-competitive AI model development
• 27:54 — Permissionless, global labor in crypto/AI
• 40:22 — Ola Lehman demos the Council of Advisors LLM tool
• 54:13 — Jason’s rave about digital boards/AI advisory
• 62:23 — Rant about Microsoft Copilot TV product placement
• 67:03 — Star Wars “Maul” series and franchise discussion
• 70:25 — MacBook Neo vs. Pro tradeoffs

Tone and Style

The episode maintains Jason’s signature direct, energetic, and sometimes irreverent approach. Alex brings analytic, thoughtful counterpoints, while guests Gareth and Ola are candid, technical, and enthusiastic about their projects and the global, disruptive opportunities their work represents.

For listeners:

• You’ll come away with a clear sense of Bittensor’s growing pains, what’s at stake for decentralized crypto AI projects, and how entrepreneurs around the globe are already leveraging these networks in creative, competitive ways.
• The Council of Advisors segment gives a sneak peek at how advanced LLMs can supercharge business decision-making.
• Off-duty discussions are an upbeat mix of tech analysis, lifestyle banter, and recommendations for serious nerds and founders alike.