Loading summary
Transcript192 lines
- [00:00]
A
Normally here on Twist, we don't talk about earnings because it's not a startup story. And so we just leave it to cnbc, we leave it to Bloomberg and we let them do it. This week, however, I just want to tell everyone out there who is building a startup that they may want to pay a little bit of attention to a couple of reports. And the reason why is this week we're going to hear from Meta and Alphabet and Microsoft and Amazon, which is essentially the hyperscaler set. And all these companies have been pouring tens of billions of dollars into AI infrastructure. And, and as of the end of last quarter they were saying we are so compute constrained, it is so tough out here for us to get enough GPUs. And so everyone is buying into the AI boom because there's still needed capacity and that implies demand. It's going to be good for Nvidia, good for OpenAI, good for everybody. But what we don't know is what they're going to say this time about not only the trailing three months, but also the rest of this year and into early 2026. All of Wall street wants to know that they are laser focused on this particular topic and that means we're going to get a good look at, at what they are seeing. So if you pay attention to no public markets whatsoever, and as a founder, I get it, totally fine. But you may want to tune into a couple of these because there's going to be interesting notes about industries that are buying and yeah, we should cover.
- [01:08]
B
This for sure because it does relate to the overall opportunity for AI. And what's interesting about this cohort of companies is of the four you mentioned, Meta, Alphabet, Microsoft, Amazon, Mama. Of the Mama, three are the top three cloud computing providers in the world. Alphabet, Microsoft, Amazon. So they are going to have two sided discussions about AI. First, Amazon's going to be talking about robotics and all that leaked information and they're going to be asked by analysts, so you're not going to hire 600 people. What happens to the 1.4 million people who work here you employ? 1% of the country works at Amazon, 1% of the country works at Amazon. And they're not growing any anymore. They're not going to grow that staff anymore. And I would say they're going to probably redeploy to save face, to keep the guillotines and the let them eat cake memes maybe settle down because they're, you know, so concerned about this bad narrative that they're saying, hey, let's call them Cobots, co workers. They're not cobots. They're your robots. They're robots taking your job, period. Full stop. Find another job quickly.
- [02:22]
A
This week in Startups is brought to you by AWS Activate. AWS Activate helps startups bring their ideas to life. As you build and scale your business, acctivate credits grow with you to support your changing needs. Apply to AWS Activate today and receive up to $100,000 in credits. Visit aws.Amazon.com startups Monarch Money get control of your overall finances with Monarch Money. Visit monarchmoney.com Twist for half off on your first year and Pipedrive. Bring clarity and control to your sales process with Pipedrive, the number one CRM for small and medium sized businesses. Supercharge your sales today. Start with a 30 day free trial at pipedrive.com twist.
- [03:18]
B
All right, everybody. Welcome back. Welcome back to this week in Startups. It's Monday, it's October 27th. The summer is long over and the ski season is upon us. But first we go through the fall ritual of Halloween, also known as kids Christmas, and then we have Thanksgiving and then, boom, it's all about to happen. We'll be talking about Black Friday and Cyber Monday deals before you know it, which is interesting. I had this acronym from one of our companies, bfcm. Yeah, you know, gonna bfcm. We're gonna BFCM it. You know what BFCM is?
- [03:51]
A
Black Friday, Cyber Monday, as I just learned by implication. But never heard that before.
- [03:55]
B
I never heard it before either. But this is a term for not just people selling physical goods, but if you're in the app space and you're selling a product like Tonebase, which is our how to learn classical music, an investment, we made great company. They're just crushing it. Go to tonebase.com, you'll check it out. And then, you know, Fitbot or Steezy for dance or calm, they will offer things on those two levels. Yeah, here it is. You know, this was like one of these crazy ideas that came to our accelerator. Learning to play classical music and then playing with the top artists. It turns out so cool. You know, it's a really hard career.
- [04:41]
A
In life being a classical musician.
- [04:44]
B
Correct. I telegraphed that one as well.
- [04:47]
A
Well, I, I know that intimately because I was a very serious trumpet player growing up in concert bands and symphonies. And this was an idea that I had. I toyed with it and then I realized that I was never going to be good enough to be anything worse. Better than the worst player at the pro level.
- [05:00]
B
Yeah. So the Idea here is if you go back to the website, you can pick some of those like famous artists. Now if you're a famous artist, how do you make money? Well, you know, like you perform, right? I guess you make a little bit of money there. I don't know what like the best, you know, pianist makes when they play live. But, you know, it's a, it's a reasonable sum. Yeah, it's a reasonable sum if you're at the top of the game. But it's not an NBA player. But what would people learning to play the trumpet play, pay to play or interact with? Was Louis Armstrong the most notable trumpet player of all time?
- [05:37]
A
Louis Armstrong, probably of all time? Yeah, I think so, yeah.
- [05:40]
B
I mean, I don't know if he was the best. Clearly there were people probably who were better. But imagine Louis Armstrong's life. What would you have paid in college or as a young adult? What would your parents have paid to go to a lesson with him with, I don't know, 10 students?
- [05:55]
A
I mean, I mean, more money than they should have afforded for that, but they would have definitely invested in that because they were.
- [06:01]
B
Give me a number. What would a middle class family play today?
- [06:04]
A
Today?
- [06:05]
B
Today? Yeah.
- [06:05]
A
What would they pay for a lesson? So today it's. Winton Marsalis is the best timber player in the world.
- [06:10]
B
Would have been players that want to.
- [06:11]
A
Get into college for at least 500 to 1,000 for an hour.
- [06:15]
B
Sure, why not? Yeah. To be in a. Yeah. So anyway, you can take lessons there from some of the greats. You can do interactive stuff. Go check out Tonebase, it's a really great company. But I saw in their update bfcm, so that's the time to really get a lot of sales in. So they prepare for this great rush, which is a great thing for startups to do. When you have a team, you want to work towards a goal. And so we're going to work towards our end of the year predictions for this show and the year in review. And I think that'll be like a really interesting episode. So I'm going to tell the producers now every week we want to make a little bit of progress on that. So we're not waiting till December 25 to do it. So it's going to be November. So for six weeks between. Yeah, for the six weeks up until December 15th, I want progress every week at the end. Most important stories of the last year and we're going to just recap the year and the best moments on the show and we'll have the twisties The Twisty Awards will be back. Actually, Lon used to do the Twisties with me, so let's just bring it back with the. With the songs and everything long. Let's bring back the Twisties and prediction show. Two unique shows. Okay, let's get started. It's a lot going on today.
- [07:24]
A
All right, so the Financial Times had a story out today that was the funniest thing that I've ever. I've ever read. Because it turns out people are using AI to create not funny images, but fake receipts that they didn't submit to their companies to effectively get paid out either more for legitimate expenses, Jason. Or to invent entirely new expenses that are complete bs. Now, what's actually funny about this is because that's just kind of crappy. But what's funny is companies like Ramp are also using AI to sniff out the AI usage, but that will only last until the next better model comes out, and then the fakes will get better. So then we're now in an AI arms race inside of companies between cheats and management. And I just find this to be so funny because if there was ever going to be a way to make expenses worse, I didn't think AI was going to be it. I thought it was going to help. But people suck. So now, now we have to deal with this.
- [08:12]
B
Yeah. So listen, a million and fraudulent. This is another one of these, like, stories to get us to mention Ramp, who's not an advertiser. I love it, though. They're so good at it. So I'll give them credit this one last time. But from now on, we won't mention any content marketing with peace and love. Any content marketing must be scrubbed from the docket.
- [08:37]
A
I was gonna skip the whole story, man.
- [08:40]
B
So I think some of this is not just fraudulent. I bet you some of these are people who forgot to get a receipt. Just being like, I got a bagel at the airport on my way to a sales call, make me a bagel receipt. So probably no harm no fou on most of them, but this is going to be something people do over and over again. And the countermeasures from SaaS companies and the HR department will always be greater than the people trying to cheat. So I don't recommend this because once you show that you're not trustworthy, it's over. And the smaller the untrustworthiness, the worse it looks. If you stole $50,000 because you're, I don't know, you had a health care crisis in your family or something, you embezzled that or like your mortgage or something, you were destitute. Like, oh my God, that's a crime. But I understand the circumstances. When you steal a $15 bagel and coffee, if you in fact did that, it really reflects on your character. I know this because when I was coming up in the game and I was fixing laser printers, there was a policy for expenses at Barrister Information Systems bis one of the first places I worked and all the engineers who were fixing laser printers with me had gamed the system. They did two things specifically to game it. Number one, you can be a brilliant founder with a great product and you can have an amazing team. But it means nothing if your sales process is disorganized and if customers are slipping through the cracks. Trust me, if your pipeline's a mess, you're going to spend way more time getting organized than talking to customers and closing deals. If this sounds like you, write down this name. Pipedrive. They're the number one CRM for small to mid sized business businesses like me. I use pipedrive and have for almost a decade. It brings your entire sales process into one simple, elegant and central space. That's why the sales team here at this Week in Startups uses it day in and day out. You just drag deals along your pipeline and you're good to go. Plus, they've got some amazing new AI integrations. Generate sales reports with advanced metrics and personalized suggestions based on where your company is struggling and automate your sales conversations with AI generated prompts. And when you use my link, you're going to get a 30 day free trial. No credit card, no payment. Payment needed. Go to pipedrive.com twist to get started. They took their time and they had figured out amongst themselves how to, as a group, say it took three or four hours to fix a laser printer, when in fact I was doing it in three or four minutes. And then when I showed them how to do it in three or four minutes, they told me to shut the F up.
- [11:20]
A
Right, because you're killing our revenue.
- [11:22]
B
Well, not that we could do more work, we could get more jobs done. And it turns out with the laser printer in the early days, like literally the first HP laser printer and HP laser gen 2 I would fix and it turned out the fusing unit was 9 out of 10 problems and we had extra fusing units that we used to fix and then we'd have them on a shelf there. They were the spare parts. I kept two of these in my bag. I would go to the Blue Cross Blue Shield office where we had 1,000 of these printers under maintenance for $40 a month each. So we were making a half million dollars a year with just that one account. And somebody's would break. I would go up. I go with my electric screwdriver, battery charged, replace the fusing unit, reset it. It worked. I'd leave in under 15 minutes. They were like, no, no, no, no, no. Take the whole thing apart, put all the pieces back, do a little show. Lay out your napkin, put all the parts there, pull out the schematic guide, open it up, and pretend that it's a larger job or else they're not going to pay us $500 a year for these. And I was like, okay, well, why don't we just get more contracts and charge $30, right? And they have PCs too. I'm thinking like a business entrepreneur. These guys were thinking like union workers on how to screw. Anyway, the second piece was they had a whole racket going with tokens for the subway. And, you know, you got food if you worked past a certain hour. So these guys would all wait a certain number of hours, get food, wait a certain number of more hours, get a Lincoln Town Car home, and they would have packs of receipts. So back in the day, you would just go to your local diner and you'd say, hey, sweetheart, can I get a. You used to call people sweetheart back then, hey, sweetheart, can I get a couple extra receipts? And you'd be like, yeah, here you go, love. They give you 20 receipts and you get their receipt thing. Then you would trade those out. Everybody would do fake receipts.
- [13:15]
A
So what you're telling me here is that this AI receipt fraud is really just a remix on a very, very old this time.
- [13:23]
B
Old as time. This is why my feeling is I just like the idea of a stipend. I tell everybody who works for me, like, hey, you're traveling, you know, you get whatever it is, a 50 buck, a 75 buck a day, you know, stipend. Sure. Spend it however you want because people are fasting. They anyway, don't cheat. It makes you look stupid. And if you're the boss, just give people a card from various providers, Neo banks that provide cards. I wouldn't say which one you should use.
- [13:52]
A
Yeah, I wouldn't be willing to say the first letter of these companies, you know, R or a B.
- [13:57]
B
Pick the one that's. Or if you remember, one with the twist code. That's even better. So there you go, folks. Yeah.
- [14:05]
A
All right, let's move on. Jason, normally here on Twist, we don't talk about earnings because it's not a startup story. And so we just leave it to cnbc, we leave it to Bloomberg and we let them do it. This week, however, I just want to tell everyone out there who is building a startup that they may want to pay a little bit of attention to a couple of reports. And the reason why is this week we're going to hear from Meta and Alphabet and Microsoft and Amazon, which is essentially the hyperscaler set. And all these companies have been pouring tens of billions of dollars into AI infrastructure. And as of the end of last quarter they were saying we are so compute constrained, it is so tough out here for us to get enough GPUs. And so everyone is buying into the AI boom because there's still needed capacity and that implies demand. It's going to be good for Nvidia, good for OpenAI, good for everybody. But what we don't know is what they're going to say this time about not only the trailing three months, but also the rest of this year and into early 2026. All of Wall street wants to know that they are laser focused on this particular topic and that means we're going to get a good look at what they are seeing. So if you pay attention to no public markets whatsoever, and as a founder, I get it, totally fine. But you may want to tune into a couple of these because there's going to be interesting notes about industries that are buying.
- [15:14]
B
And also yeah, we should cover this for sure because it does relate to the overall opportunity for AI. And what's interesting about this cohort of companies is of the four you mentioned, Meta, Alphabet, Microsoft, Amazon, Mama. Of the mama, three are the top three cloud computing providers in the world. Alphabet, Microsoft, Amazon. So they are going to have two sided discussions about AI. First, Amazon's going to be talking about robotics and all that leaked information and they're going to be asked by analysts. So you're not going to hire 600 people. What happens to the 1.4 million people who work here you employ? 1% of the country works at Amazon. 1% of the country works at Amazon. And they're not growing anymore. They're not gonna grow that staff anymore. And I would say they're gonna probably redeploy to save face, to keep the guillotines and the let them eat cake memes maybe settle down because they're so concerned about this bad narrative that they're saying, hey, let's call them cobots, coworkers. They're not cobots, they're your they're robots. They're robots taking your job, period, full stop. Find another job quickly. And then you have Alphabet, also known as Google. And Google's really, I think, the most interesting one. They're up 40% this year, their stock, because people were like, they're going to get killed. So last year, search was going to get killed. As I said on this program and the other program, my thesis is people are going to be doing more searches and that the pie is going to continue to get bigger. Why? The answers are better. And if the answers are better and you solve problems quicker, you still have a certain amount of time, you will be more inquisitive. So as. But one example, because I'm getting through my work so quickly, I'm frequently doing things like, hey, I'm going to Saudi Arabia. Remind me of the history of Saudi Arabia. You know, the 10 years before MBS took over and since then, and make me a timeline. And I was reviewing that literally, you know, while working out, just to give, you know, I wouldn't have normally done that, but now I'm getting through work so quickly. So this is inducing a massive amount of extra activity on Google services. Then you start using Google Docs and you see the AI Assistant or Excel and the AI Assistant will do the formula for you that's gonna make you use these products more. It's counterintuitive. It's Jevons paradox, as you guys have heard many times in the last two years, or me say induced traffic. You build more highways. People drive more because they can get to cooler places and they get inspired to go on a road trip, period, full stop. If you raise the speed limit to 75 or 85 miles per hour between Austin, Dallas, Houston and San Antonio, people drive to those places more often. I notice people drive to these cities more often. They'll go to have dinner or to see a basketball game. Stay over. Why? Because they can drive like 85 miles an hour. The posted speed limit might be 75 or 85, which means you can go 85 or 95 and you don't get.
- [18:20]
A
I was gonna say it sounds like you can go 100 now.
- [18:22]
B
Yeah, yeah.
- [18:23]
A
It's very impressive. I'm stoked about this. We'll talk about it. I'll bring it up on the Friday show. Then, Jason, because it's Wednesday and Thursday, we're gonna get the numbers. So it's going to be a good time. And just for the sake of everyone's wealth, may all the reports be strong, because that would be good.
- [18:38]
B
Sanke charts would be great. I love those ribbon charts. We use the Sanke, so I love looking at a Sanke and analyzing it. And then I think we should just tease out the specific dialogue around AI. So I want to know how many times they say AI in their conference call and then what percentage of the questions are AI? So if they had 10 questions, how many were related to AI? And just pulling out all the quotes about AI so what we should do is we should use AI to do this. So, producer Marcus, what I want you to do is grab those calls, get the audio files, put them into Google Notebook lm, or put them into Dis Descript, which will take. This is less than an hour of work. There'll be four conference calls, put them in there, and then we'll pull clips from it. And then we will have those clips ready to go. And we'll have the ability to analyze them because we'll have the transcripts. We can just say, how many times is AI? How many times was AI said in these four calls? And make me a graph based on those four calls so you can grab all four transcripts. And I think you could just make them into PDFs or documents and we can put them in the context window of Claude, because it's got a huge context window. So that's another way to do it. Anyway, let's use AI ourselves to analyze this more deeply.
- [19:52]
A
Next up on the docket, we're talking about the east versus west in the context of drone shows. Jason, you wanted to put this on the docket because something crazy happened over in L Yang in China. Something crazy happened in Lu Yang, China, in which one of the their drone shows had a bit of a mishap. I'm going to play this for everyone so they can see it.
- [20:12]
B
Hosting podcasts, running my accelerator, doing speaking gigs all over the world. Man, I got a lot going on, folks. And even for the world's greatest angel investor, it's easy for me to overlook my personal finances. That's why I use Monarch. It's the all in one personal finance tool that brings your entire financial life together in one clean interface. It takes all the busy work out of your bookkeeping. Monarch links all your accounts together in just minutes and gives you clear data and categorization of what you're spending so you can take control over it. Listen, I know you're a busy professional and you might not feel like you need to stay completely on top of your finance, but letting them slip entirely is going to cost you in the end. Monarch Makes it so easy to scan what you're spending at a glance. And right now, just for our listeners here at this Week in Startups, Monarch is offering 50% off your first year. What a deal. Just go to monarch.com/monator.com Twist that's M O N A R C H.com Twist well, it looks like the battle of Endor happening while, like, the Empire are fighting and like the Death Star is blowing up. My lord. There are. There are thousands of drones in the sky, but apparently a large number of them look like they're on fire and dropping from the sky.
- [21:39]
A
Yes.
- [21:40]
B
Like, it's. I mean, if. If this is real. You know, I constantly want to know if this stuff is real. Now I every tweet when I'm talking about ICE agents or, you know, something going on in the world with if this is real. And not just because I feel like there's a whole camp of people who are taking my tweets, waiting three years to repost and say, remember when you got this wrong? It's like, yes, if you're responding to 20 things a day in real time, you're going to get it wrong.
- [22:06]
A
But apparently keep folders of stuff about each person they don't like and then they just have it.
- [22:11]
B
No, Sack said that on the show. He said, I have these folders of, you know, then they just pull it up when he's ready to dunk.
- [22:17]
A
Man, I do not have sufficient amounts of pick in my soul to do that.
- [22:22]
B
There was actually a service that Jack convinced to turn off that would specifically record everybody's tweets of note, anybody who was verified back in the time. And then if they deleted it, you could subscribe to this and know the deleted tweets. And if you look at this person deleted this Tweet, stories from 2005 to 2015, it was all journalists signing up for that service. And it was like, oh, this person tweeted something when they were at a bar and had a couple cocktails. And it was like the total gotcha thing.
- [22:53]
A
But in this case, the drone show we're talking about was reported by cnn. So we can probably say that it's pretty valid. What happened. Jason was very dry weather. And these are not just drones with lights. These are drones with fireworks. You combine the two. Yes.
- [23:08]
B
They're attaching fireworks to a drone.
- [23:10]
A
Would you like to see a better example of this from the same city in China?
- [23:14]
B
Yes. You would? Okay, that's. I was trying to figure out, like, what happened to them. Like, why would they all spontaneously go up.
- [23:21]
A
So here's the same city, and I'm just going to zoom ahead here to about here. Jason, look at this beautiful tree. Now watch. How about that?
- [23:31]
B
That's gorgeous. So it's a tree of life, like dropping, you know, seeds or something. It's beautiful. So I guess the idea is the drones have those fireworks on them, and it. Yeah, it looks like Avatar. Yeah, good one. It does look like Avatar. And they're just dropping. Yeah, the stuff. But I guess they lit on fire. It's sparklers. Yeah.
- [23:51]
A
Yeah. One last thing here on this one, Jason, you'll love this. I got to get the branding in there. From the geographical indication of PR China.
- [23:59]
B
Great.
- [24:00]
A
This is just such impressive stuff.
- [24:02]
B
I mean, I would love this. We should be sending this into, like, battlefields and convincing people to defect. I mean, if you sent this over a Russian territory and said defect and get amnesty, put your weapons down, go this direction and point an arrow. You will not get killed. If you go through here, you're surrounded. Like, it'd be great for psyops, these things.
- [24:25]
A
What did we drop in World War I in mass quantities? Leaflets from airplanes saying you should defect. This is the modern version of that. Back to the fraud conversation. But what's interesting, though, is I almost wonder if you should have it be instead of up like this, so you can see from a distance, flat. So that way, if you look up.
- [24:39]
B
Yes. See, like a canvas right over people. We know you're there.
- [24:44]
A
Yes.
- [24:44]
B
We know this is your base. It's about to get Surrender.
- [24:47]
A
Now there's a target right over you. Now, there's another example that Marcus wanted to show you, which is a bitcoin conference in Switzerland. Did something that is. Well, I'm not going to. I'll just show it to you. So, everyone, we're going to play one more clip here really, really quick. And, Jason, you'll see why it's slightly different.
- [25:04]
B
Okay? Okay. It's the Pepe the Frog flying across the sky like Superman and then turning into Money Machine. Alan Greenspan. Money Machine goes brrr. That they don't know. Meme from the party. Yeah. All the trolling memes. Yeah. There's the midwit versus the elite. There's bitcoin roller coaster meme. Satoshi, by the way, there's a poly market. This is Pac man eating up bitcoin, eating up all of the cryptocurrencies. Oh, take the bitcoin pill or take the blue pill. Yeah, it's hilarious.
- [25:39]
A
Sped up, by the way, if you Watch everyone's heads. You can see how fast they're moving. This is definitely compressed to serve.
- [25:45]
B
Okay. Because I was about to say that's moving really fast. I'm impressed by the speed of the movement, but it was actually moving slowly.
- [25:50]
A
So two things here. One, the Chinese show is much more technologically advanced than what we just saw from Switzerland. But I was chatting about this with the prod team, and the thought was kind of this, Jason, it is true that the demonstrations in China have more drones. They've set Guinness World Records. Very impressive. But one thing we really liked about the bitcoin one was how dumb and silly it was. This is not showing off national pride. This is not trying to set an east versus west narrative. This is bitcoin kids having fun. And that to me, just shows like, we may have fewer drones in the west, but we have more freedom of speech. And I'll take that. Yeah.
- [26:23]
B
I mean, we could be a raw shock test for any number of things. I'll just say this is a great alternative to fireworks. I love seeing a good fireworks display, but these are obviously super green. I guess they're less dangerous, I would think, theoretically, unless they fall out of the sky. And I think this is going to turn into a new form of narrative. I would not be surprised if we see in the next year somebody do short films where you can sit and watch a short film. Or these things could get small enough that you could take an existing film like Star wars, put it through an 8 bit or a 16 bit converter, and then watch Star wars, the entire full film in the sky that's coming, folks. And I think Disney, Universal Studios, they're all going to have these kind of installations and they're going to get rid of the fireworks. I noticed at the Disney celebration the last time I went, they did have more physicality to it. So they had strings set up like wires, and they had a real Buzz Lightyear flyby on that string, but you wouldn't be able to tell. So I do think live performances. I saw Barry Diller being interviewed by. I think the guy's name is Shane from Vice magazine. He's doing Vice interviews again. Shane Smith, who's, you know, he's pretty good interviewer, smart editorial producer. And he was interviewing Barry Diller, whose book is amazing, and he was asking him, if you could put all your chips in like he did for QVC and make a bet here, what would you bet on? And he said, things that are alive that cannot be disrupted. So going to something in the real World, like an MGM resort that's, you know, a casino to go see a show that's not being disrupted by AI that's what I would invest in. I think this falls into the live entertainment category, where live entertainment is going to be huge for these and people will start doing them on the regular. I could see these being franchised everywhere. And I think that's Kimball. My friend Kimball Musk has a drone company that's a pioneer in the space. And I think that's what they're pursuing is these things being like touring versions of a Harry Potter show. So you could tour them around the United States, go to every single fair, and then people buy tickets to go see a drone show. And now imagine a drone show with a live orchestra, like they do at the Greek Theater in Los Angeles. Sure, they'll have, you know, they'll play Gladiator or Goodfella or the Godfather and put the symphony orchestra to play the. The soundtrack live, which is really cool. Oh, here's the.
- [29:06]
A
Yeah, yeah, yeah. Check this out. So this is from, I think, Kimball's company. And this is the confluence of Christianity and modern technology.
- [29:14]
B
Here we go.
- [29:15]
A
The famous combination. This is not sped up, in case you were curious.
- [29:21]
B
Beautiful. Yeah. So there's a Vatican with this drone show. And then I guess they're playing. I would assume they're playing the music live. Gorgeous. Yeah. I mean, there's. There's hope. Hope is dope.
- [29:34]
A
Tesla is training on synthetic data in its FSD regime. This is a video that Tesla shared on X recently. Jason, you want to take a look at it? So here it is, and we'll talk about it on the other side.
- [29:47]
B
Hey, startup founders, are you tired of losing deals to endless procurement cycles and complex contract negotiations? There's a better way to sell your SaaS product. AWS Marketplace isn't just another sales channel. It's your shortcut to enterprise customers. When you list on AWS Marketplace, your software charges appear directly on your customer's existing AWS bill. No separate invoicing, no procurement headings headaches, no waiting months for approvals. But here's the best part. AWS actually incentivizes buyers to purchase from your listing with credits, helping you land your first 20 customers. And after that, AWS provides you with a budget to fund even more deals. Plus, you get one click deployment, free trial capabilities, and access to committed spend budgets that enterprises are already planning to use. So stop watching your competitors close deals faster. Join thousands of successful startups already selling on AWS Marketplace, ready to accelerate your Sales cycle. Visit AWS Marketplace today and turn your biggest procurement obstacle into your biggest advantage. All right, so I guess we're seeing nine squares here. It's a. I guess this is all the cameras on the car. Maybe it's eight, actually. Yeah. The new Tesla hardware stack is eight cars. And this looks incredibly real. If you showed this to 100 people, 100 people would say, that's real. So they now have the ability to build situations for the car to navigate and then test it over and over and over again, which is extraordinary because what are the chances that, like, I don't know, a deer comes running out into the street in this or a dog? You know, it's like to capture that on video very hard. But I would say, sadly, I know this from living in the hill country in Texas. Like, there's a dead. I always know when there's a dead deer because you see all the hawks and everything circling. And sadly, there's a deer dead on the road every day somewhere I'm driving. Like, you'll see at least one every day or two. So they could simulate all this. I think it's going to get them closer and closer. They said they believe FSD has been solved. Of course, there's the natural criticism that Elon's been saying, hey, we're very close for a long time, but he was very close at landing rockets and then they did and had reusable rockets. So he's often late. But never wrong is what I always say when people ask me for a quote. Always frequently late, never wrong is, I think, the track record so far.
- [32:31]
A
I think this is freaking awesome. And just to be clear to double click it in case you're watching the video version, none of that Tesla video was real. It was all synthetic. Or as Tesla put it, video below is fully generated and not a real video. But I love this idea. Jason, we talk a lot about how, you know, once we get self driving, it's going to save lives. Here's a way to accelerate our timeline to that point. Fantastic. I did a little more research though. I was curious if anyone else is doing this. There's one or two other examples, not that many to be clear, but wave W A Y V E. We talked about them on the show a couple of times. They just raised a few billion dollars. They made something called the Ghost gym back in 2023. Seems to be a similar idea. They said, quote, simulation supports large scale synthetic data generation, allowing us to leverage thousands of diverse driving scenarios, blah, blah, blah. And then wabi, a company that I had totally forgotten about. But it's working with Uber on self driving. Semis is also working on a thing called Wabi World which is a closed loop internal simulator that's powered by generative AI. So companies are really putting this to, to work and I'll just say people asked what the use case was for AI 24 months ago and it seems that we've stopped asking that question. But here's one more example of what we're doing with it.
- [33:40]
B
Yeah, Wave is probably underreported on. They have tests going on in uk, which is where I think they're based, and San Francisco they've been testing Germany, they've been testing all over the place and I think what's going to happen very soon is we're going to see the commodification of self driving software and and it's going to be built into the Nvidia hardware stack and built into every car. Now that's going to take a little more time, but there was an underreported story, everybody knows like there's a relationship with Uber and Nvidia. Just last week, this underreported story, you can pull it up about how Nvidia and Uber have revealed a little bit more of what they've been working on together. They're taking all the Uber ride data, they're giving it to Nvidia as part of this partnership to be part of their Thor stack. They have a hardware stack that is doing self driving. So the Uber team here, Uber teams up with Nvidia to accelerate autonomous mobility. And you could find the paragraph where they talk about what they're doing. But this is going to be, I think and you can read it for the audience. Yeah.
- [34:48]
A
So millions of trips occur every day on Uber. It's a lot of data. They're going to pull that into the Nvidia Cosmos platform. And Nvidia loves brand names, the Nvidia digits cloud to help AV partners build stronger models. The idea here, Jason, is that this is a platform that has state of the art Generative World foundation models and so you can run around in a car inside of them. And what do you need to build them? You need lots of data. What does Uber have? Lots of that. Actually, you know, you talk a lot about, you know, Tesla having cars on the road, so many of them giving them a data advantage. Yeah, Uber has a lot of cars on the road too. This could, yeah, I make more even.
- [35:23]
B
Playing field, you know, just obviously people will claim I'm like talking about my friend or Talking about, like an early investment of mine and they're like trying to figure out my motivation here. I've said the same thing consistently for a decade. I think there's three or four players who are going to get there all around the same period of time. So for everybody, like, oh my God, Tesla's never going to get there. Oh, they're, you know, they missed all these different benchmarks over 10 years. They're going to get there. It's obvious. They are going to build something that hopefully this is the dream, this is the objective. Will be able to navigate things it hasn't seen before better than the people who are building perfect models like Waymo. Waymo is also doing this language model kind of version of this where it just reacts to what it's seeing. And then you have all the different people who make cars. So there's like four or five pieces to the stack. There's like the data and the cloud and your algorithm and like the data is one piece, the algorithm and your system for doing this, your model for doing it. Then there's the hardware stack on your car, then there's building a car itself and then there's running a network. There's like many pieces here. And what we've seen is the pieces are there are people who are specialists and there are full stack people and then there are people who have two or three pieces of stack. And then there's the giant Uber network, which is betting on all of them, and Nvidia, which is kind of betting on all of them and commodifying it. I think self driving becomes commodified and then it's going to be a deployment issue and a regulatory issue and oh my God, don't have an accident issue. Tesla's rightfully being very cautious, as they should be. And they have permits to run ride sharing in 10 cities. And as I said here on this program many times before, just do a year with the safety driver, prove that you can do 10,000 rides, 100,000 rides, without any instance, share all the data publicly. Waymo should share all the data publicly. The regulators should share it all publicly. Because really what we have to do is convince the public that when a random death occurs, it's not a reason to shut all this down. That will only happen with transparency and cautious rollouts.
- [37:39]
A
Can I tell you why I'm not that worried about that, Jason? Because everything you're saying, totally valid. We had a friend of ours come visit the other week. She is a physician. So far, far, far away from our World doesn't care about Xai versus OpenAI, doesn't know who any of that stuff is. Right. She was raving about Waymo in la. Just raving about it. She's a complete convert and is never going back. And she is a normie. So to me, I think that as customers touch and see these cars in the real world get to take a ride on them, it changes minds. So I think you're dead on. But I'm less concerned than I was six months ago.
- [38:16]
B
I'm also. We Ride is the other one and they're part of the Uber network. But I think, you know, a lot of these companies are going to be part of every network. Like for We Ride, why would they only be with Uber? They'll be with Grab in Malaysia and Singapore, they'll be with Didi in China, they'll be with everybody. But We Ride and Uber have launched their robo taxi in Riyadh. I'm going to be in Riyadh next week, Monday, Tuesday and Wednesday in the UAE after that. And both of those places have these services operating now. So I'm hoping that might.
- [38:49]
A
Can we do a. Can we do a twist from you inside of one of those cars?
- [38:52]
B
Literally is about to say that. Producer Marcus, let's get on it. If anybody's listening, I need We Ride contact info and then whoever else is in UAE and I'd like to jump in those cars, so. And Waymo published just their incredible safety data. I don't know when they published it, but it was a couple of weeks ago. Miles through 2025, they've done 16 million in Los Angeles, 30 million in San Francisco, 46 million in their first market, Phoenix, and 3 million. And as you can see, 91% fewer serious injuries, 79% fewer airbags deployed, 80% injury causing crashes and crashes involving vulnerable road users, 92% fewer pedestrian crashes with injury, 78% fewer instances with cyclists, and 89% fewer with motorcycles. So you have to be saying, well, wait a second, does that mean they've hit a human or they've hit a motorcyclist? You know, all of that data, what it means is typically motorcycles. Tragically, there was a motorcyclist that hit a Waymo and died last month. Nobody talked about it. I think we were the only show to ever talk about it. Why? The Waymo was stationary and it got hit. So the press is even like, that's not a story. Now, when Teslas do this, some motorcyclists will run into a Tesla. I guarantee you that they will be treated much different than Waymo. Why? Because Elon got involved in politics. And so there is going to be like a much higher.
- [40:32]
A
There's another reason for that, though. There's a more cynical reason. You're applying a lot of intent to that. One of the reasons is that Elon Musk is one of the two most clickable terms in the world. And news business does have a business element to it. We had a joke at Tech Wrench in like 2014, which was put iPhone in the headline. Just somehow just weasel it.
- [40:52]
B
Get the iPhone in there.
- [40:53]
A
And I joke. But I do think that there is a positive feedback loop between covering Elon Musk, people getting mad about it, driving more attention to it, which makes editors want to cover it more. So it's kind of one of those things. You're right too. But don't forget the money part of it.
- [41:07]
B
I think that, yeah, it's going to be one and the same. There'll be people who do it. Because right now, if you look at the number of journalists who identify as Republican, it's like 3 or 4% now it was 30% Republican, 40% identifying as like. Or it was maybe 35% Democrat, you know, 27% Republican, and then 40% or so independent. Okay, great. That's how it was in the 70s and 80s when I was growing up. Now it's down to only 3% of journalists report that they are conservatives. So then you have that. That explains a lot of the downstream hand wringing about this, which I've told all the Republicans I know start publications that do journalism, not just commentary. The reason Wikipedia and I just got asked a comment for this New York Times story coming out about the Wikipedia's bias. It's very easy to understand Wikipedia bias. They only will let you put a fact on Wikipedia if you can cite something. What are citable sources? They're trusted news sources or trusted like research studies? You cannot link to a Breitbart editorial. You can't link to a podcast with you and I giving our opinions. That's not a trusted source in Wikipedia's definition. At the same time they did that, the number of conservatives in the number of conservatives doing actual journalism versus commentary has plummeted. You have a lot more doing comedy, a lot less doing reporting. Therefore they don't get cited. The New York Times, Breitbart are not allowed to be cited. Now, sometimes the New York Times, sometimes Breitbart and the New York Post will actually do journalism, but often they're doing commentary and this is why I think the free press is an interesting example. Because they will, you know, I don't know exactly their politics. I don't know. How would you describe the free press? Moderate right leaning or moderate left leaning?
- [43:05]
A
No, it's MAGA with a thin veneer of intellectualism smeared across the top of it.
- [43:10]
B
Okay, so show your bias. Like, I think there's probably a million people who would say it's not maga because they didn't. They disconnect from massively with a lot of these things. I think they.
- [43:21]
A
Not really.
- [43:22]
B
Really.
- [43:22]
A
I also, I was around, I read a lot of the free press around the election time. So I don't think I'm even being that unfair about it. I think, I think they're, they're masquerading. It's the central right when they're actually a bit further right than that. Okay, and that's fine. That's fine. That doesn't bother me.
- [43:35]
B
But they're doing real journalism like they.
- [43:37]
A
Actually do about half and half. There's a lot of commentary, sure, but.
- [43:41]
B
They'Re like one of the few, few of the right. If they were considered right leaning, which I think they are.
- [43:46]
A
That's what I was saying.
- [43:47]
B
I would say moderate to right, but maybe not. Yeah, she was. Barry Weiss is a New York Times colonist. Correct. Anyway, I think if to the point as well. There's two things going on here. The press is overwhelmingly left leaning and you have things like the TechMean leaderboard here. To your point, who ranks high? The number one is Mark Gurman, who is an Apple pod who covers Apple. Apple for clicks, Elon for clicks. You get the idea. You'll move up the rankings if you cover these things. And when you were at TechCrunch without revealing too much people's compensation based on in some way or their career advancement based on traffic views. Leaderboard. No, no.
- [44:34]
A
We had a. Not to bring it up again, but we had a very, very lightweight tiny bonus system that might add up to like 1% of your total comp. If you wrote the most stories or got the most traffic. But we tried really hard actually to not from the top down think in those ways, but if you're a reporter and you publish a story and no one cares, and then the next time you pick up a little shorty about, you know, Tesla does X and then everyone reads it, that's a signal that you respond to you as a, as a market participant. I think while I would love to riff with you for about an hour and a Half. Let's keep going on the media thing. Let's keep going. Next up, Sequoia has raised new funds. And Jason, I have a question for you because I need to better understand fund dynamics. So the news item here is Sequoia Capital, probably the single most famous venture capital firm of all time, has raised a couple of new funds. A 750 million dollar fund aimed at Series A focused firms and another 200 million dollar fund for seed, pre seed investments. The earliest stuff they do. The thing is, if you go back to 2021, Sequoia famously became a RIA and they also announced a permanent capital setup. And my understanding of that, Jason, was that they were kind of done raising discrete funds and instead they were just going to use their recycled capital in the so called Sequoia Capital Fund. And now we're doing this. So just help me understand what's going on here because I know you know better than me.
- [45:58]
B
I think it's probably people. It's a little bit of both. And people are confused. There is the permanent capital model. Things go public and then you as, I don't know, some endowment, and you say to Sequoia, we're a giant endowment. There was a billion dollars in distributions over the last two years. You manage it as part of this Sequoia Capital Fund. You tell us when to get in and out of these stocks because you're still on the board of Square or New bank or Uber or whatever they were early into Airbnb. And you will probably understand the fate of the company better than our internal people, because you met the founders in the Series A and you've been with them for 10 years. So why not stick with them for the next 20? And so they have that permanent capital base. And I think you can redeem every year. You can have a chance to pull out some money from it. Then they're still doing their venture funds because some LPs just want to have the venture fund access. They don't want that. So that's what's going on here. And what's notable here is their discipline. Their Series a fund is 750 million.
- [47:05]
A
Yes.
- [47:05]
B
I don't know what the past ones were for Series A funds, but I'm guessing they were typically 350, 500. So they've gone up modestly. They probably doubled in size in 10 years, but that's because the Series A check size has doubled in size. And the Series A feels more like a Series B in the industry. And the $200 million seed fund, our last seed fund 45 million is probably double what they previously did in seed funds. And the fact that they've separated those in the seed fund, they don't join the board in the Series A, they do join the board, and that gives them two swings at bat. The seed fund can just make these 500k to $3 million checks. They can put 40 of those investments, maybe into the $200 million fund for about 5 million on average, a 2 or $3 million original check, and then maybe follow on for some of them. And then the Series A make their own independent decisions, and the Growth fund makes their own independent decisions. The only challenge here is when you're a Sequoia CEO, you know, you have to then figure out, okay, which fund am I going to be in? Is the growth fund going to do this? And it can be a little conflicted. And then your later stage investors, let's say you go to Founders Fund or Andreessen for your Series C. The first question, who's participating from the Series A and the Series B? Is Sequoia participating? Are Benchmark participating? How much is available in the C? Is that a negative signal if they don't? If they have a growth fund? Now the growth fund is looking at the seed fund. So if the seed fund owned 6% and they didn't do the Series A, now the growth fund is looking at Uber and saying, huh? And just as that example, I did the Uber investment as a Sequoia scout from the seed. Or even it was its own fund, it was the scout fund. Then they did do. My understanding is that the growth fund had invested in Uber. I can't confirm that right here, but that was what I had heard. But in the middle, they didn't do the Series A, B or C. They didn't get there or they didn't compete for it. I don't know what the terms were, but they didn't benchmark. And then eventually Shervin did the B with Menlo. So you can look at those two and you can see that they have discipline. I don't think they want to chase the average return.
- [49:16]
A
No, no. I mean, that's why I started off by saying, this is Sequoia. This is not, you know, Andreessen. Yeah, I was trying to avoid that example. But the reason to avoid.
- [49:25]
B
I mean, this is what everybody would say in a bar talking.
- [49:28]
A
So lower day, so lower fun size, higher expectations, returns, more concentrated positions. Sean McGuire, a partner over at Sequoia, did a separate interview with Man, I forget the name of the publication. The Israeli focused publication calicastec or something like that. Anyways, he was talking about how individual Sequoia investors invest and he said, look, we only do per partner three deals a year. So we're talking about fun size, discipline, we're talking about partner discipline in terms of what they have to choose. So in that vein, Jason, I went through the Sequoia announcement. I pulled out some themes from individual partners and what they're looking for over there. So if you're a founder that's working on apps built on top of cutting edge image and video models or voice, that's very interesting to them. Several mentioned cybersecurity, observability was in there on a geographic basis. One partner was really into Europe. Maguire mentioned Israeli founders and then they said that they think there's a trillion dollar opportunity at the intersection point of commerce and AI. So something in the E commerce realm. I don't know what that would look like, but I liked the boldness of that bet.
- [50:33]
B
Yeah, there's tons of opportunities in Israel as well. I don't know how you run a seed fund from the US and invest there without boots on the ground. Everybody asked me to invest in their region and I've always had the same position, which is if I don't speak your language, I don't understand the culture, I don't understand the legal stack.
- [50:55]
A
Okay.
- [50:55]
B
And I can't use the product myself and I can't come to your office and hang out if I need to. It's going to be really hard. You're better serviced having a local investor. So I'm not sure how they're going to get that done. But there was a big another story with Sean. I don't know if you saw that story in the Financial Times, but the CEO of Sequoia reportedly left in protest because she felt his comments on X were. And I think it was the Financial Times who broke this story.
- [51:31]
A
Yeah, I have it up on the.
- [51:32]
B
Screen, but maybe you could explain what his spiciest quotes were and. Yeah, well, maybe the background on that story.
- [51:43]
A
I think if I was to choose which of his comments I think are the spiciest, I think I would invite a whole bunch of invective on myself from various online people. I'll just say that if you are sympathetic to criticisms of the Israeli military operation in Gaza. Well, I feel you just threw my hands from here's.
- [52:03]
B
No, it's very simple, like.
- [52:05]
A
Oh, you mean just the mom dummy. Just the mom Darmi stuff.
- [52:08]
B
I think that's the one that she was objecting to. Oh, okay. So it comes from a culture that lies about everything. It's literally a virtue to life. It advances his Islamic agenda. The west will learn this lesson the hard way.
- [52:21]
A
Islamist.
- [52:22]
B
I'm sorry? Islamist agenda.
- [52:23]
A
Sorry. That's an important distinction.
- [52:26]
B
So that is a pretty spicy comment. If you were talking about radical Islam, I think that would be an important way to say that. Like if you were talking about Al Qaeda. But I don't think that applies to all people who follow the religion of Islam. So I think this is where politics is toxic, and having leaders spout out about it all the time can cause chaos.
- [52:53]
A
Sean's tweets are very, very spicy all the time, Jason. They are spicy at night.
- [52:58]
B
Well, and also Paul Graham's. Paul Graham's been accused of anti Semitism countless times now. Sean's being accused of being an Islamophobe, I guess would be the. The term that people are using online. You know, if you're independently wealthy and you don't care about the fallout, you know, you can spout off, but it's going to have downstream ramifications. My lesson here for startups and founders is you may not be in that position, and it could cost you your funding, it could cost you your employees, it could cost you partners. Why would you even do that? Like, why would you make that part of your. So this is a very important case of do what I say, not what I do. If you're Jason Calacanis and you're 54 years old and you're on one of the top 10 podcasts in the world, and then you have this week in startups and you want to say spicy stuff because you already made your money and you don't care if you lose some partnerships on this side of the margin or that side of the margin, or you're David Sacks and you're a partisan and you're part of the White House and you want to defend their position, or if you're Paul Graham and you've already made your money and YC is so big that you don't care about losing Israeli founders who think you're an anti Semite, Paul Graham.
- [54:16]
A
Is Paul Graham still that involved operationally?
- [54:20]
B
He's the patriarch of the program, so there are plenty people. And yes, he still owns it. He owns it, period, Full stop. He benefits from it. He gets all the carry. So, yes.
- [54:31]
A
Oh, well, that's clarified. I did not know that. That wrinkle. I was.
- [54:34]
B
I. I mean, he didn't gift it to anybody. There's still I think three founding partners, I'm sure they get the bulk of the economics or half the economics. And then Gary Tan and the current partnership gets some percentage of it and he gets to hang out in London and enjoy his life. Very smart move. I think it's smart. But what I would tell any young executive, what I tell my young analysts, like, not worth it.
- [54:57]
A
Yes, that's not worth it.
- [55:00]
B
Just stay out of politics.
- [55:02]
A
It gets messy. Keith Raboy went back to Khosla and Khosla backed Amjad Massad of Replit, I believe, if I have all my things.
- [55:11]
B
Correct, yes.
- [55:12]
A
And Keith was just going after Amjad, who we had on the show. I've talked to him, he's lovely, great guy. We talked about our favorite boats.
- [55:21]
B
And Raboy, also a great guy, by.
- [55:23]
A
The way, doesn't talk to me. But I'll just say, like, the thing I want to bring up here is that it seems that the era of expected founder friendliness, even across political lines has been broken. And I think that that is the loss. So I'm with you.
- [55:36]
B
Yeah. I mean, if you think like chiming in on one of the oldest and most bitter conflicts in the world is like you're going to make some incredible progress with your opinion, that hasn't occurred and you've never been to the region and you have no influence in the region, but you've feel you need to sound off. By all means. I certainly have fallen for that many times.
- [55:59]
A
You know what I do is I, in situations like this, I call my Jewish friends, I call my Palestinian friends and I ask them how they're doing, I tell them I love them and I let everyone else who knows more about geopolitics than me sort out the Middle east, because it's not. I have nothing novel. I love you all. All right.
- [56:14]
B
I mean, the Arab Israeli conflict in modern day, like the modern era of this conflict is 75 years old and it's in 50 years on the planet, 40 years of which I can remember it from the age of 10 on. I remember reading about it. I'm not sure that this is the one where a venture capitalist or the CEO or the startup founder or the person who and the accelerators going to make much progress on it. I don't think that, like their statements on Twitter are going to move anything now if you want to go there and start and start YC in Israel or Palestine, you know, if Paul Graham feels so strongly about he should start Y Combinator in Palestine, he should make, you know, a version of it there to help the people have a sustainable life, et cetera. If, you know, and if Sean feels so strongly about this, he should quit Sequoia or, you know, and create a venture for Israel and put all his energy into that. I just think these, you know, incessant all day long. I wonder if incessant all day long harping on these issues is actually good for the Sequoia brand, the Y Combinator brand, or if it doesn't make a difference because those brands are so strong. Well, but I do know for the small folks who are coming up, stay out of it. It's not going to work for you. It's just.
- [57:43]
A
Can I read that one? Can I read the comment from Lawn? Okay, all right.
- [57:47]
B
Lon's making jokes, but let's keep moving.
- [57:49]
A
Disrupting the show. All right, we're going to do one more awesome story, Jason. Then we're going to talk to a great founder who has a pitch for us. But first I want to talk very briefly about Mercor M E R C O R. We've had them on the show, I think was back in August, episode 2159. This is what do they do? This is a company that is working on connecting experts to AI companies. So that way they can do reinforcements learning for human feedback or RLHF. It has blown up. It is raced from very little to 100 million ARR. And then all the way up to about 500 million in their annual run rate. And they're raising $350 million at a $10 billion valuation. Blah, blah, blah, blah, blah, Blah, blah. 20x arrangement. But is it? I was going back through reporting from the information and they said in April that Merkur pays out 60 to 70% of its top line revenue. That means that its net revenue is far less than half of the then current 100 million dollar figure that they announced. So this yields an interesting question about gross revenue versus net revenue. We talked a lot about people kind of doing fuzzy things with ARR. I don't think Merker is. I just think they're counting the bigger number. I also found a great question from Reddit about people talking about how easy it is to game arrow annual recurring revenue in that context. So Jason, could I please better understand from your perspective when something should be counted as recurring revenue, when annualized run rate makes more sense and how founders can avoid accidentally tying their shoelaces together and getting a pink flag from firms like Launch? Because I keep seeing this story come up.
- [59:18]
B
Yeah. So this is a valid issue and we have an investment in micro1, you may have seen we were the seed investors in this company and it's now grown to. I think, I think they reported a 500, a raise at 500 million. And these two companies, Mercore and Micro One, are always mentioned, I think, in the same sentence. So I have a horse in this race. Of course, I wish all founders well. And just so people know, I don't see the items on the docket. I mean, I do see them if I want to, but often I'll respond to things on the show if I'm busy. Like, I didn't know Mercour was going to be on the docket today. I had like three or four stories I wanted to talk to and then I rely on, on my team to present them. So there is. This is an editorially independent program this week in startups. If I have an investment in Uber, we'll talk about Lyft and we'll talk about Grab and I'll. I interviewed the Lyft founders. You know, Travis never had a problem with Lyft founders speaking at the event. Elon's never said to me, oh, you can't, you know, or gotten mad at me because I had a Tesla competitor on the program. Whatever. We have done 2,300 episodes of this podcast. I don't pick the topics anymore, probably a third of them. And we don't give favoritism to the portfolio companies here. I might say I'm really excited about the space. So just looking at this, there is a new group of companies like Athena, which I was the first investor in, and I was the first investor in Jonathan's other company, Thumbtack, where investors in Micro One, I won't speak for them, they can speak for themselves. We'll have Ali on the program at some point. Mercor and these companies, if they are in fact not reoccurring, they're working on projects. And it's low margin for AmeriCorps. Let's say 70% goes, by the way, you know another company that gives 70 or 80% of the revenue? Uber. Uber. Apple.
- [61:11]
A
Oh, yeah, good point. Yeah, yeah, yeah.
- [61:15]
B
55% goes to YouTube creators. So it's pretty standard to. When you have a marketplace to give the bulk of the revenue, the majority of the revenue Airbnb would count in this as well, to the people providing the service. And that's Marketplace Dynamics, if you wanted to call it reoccurring revenue. Yeah, that might be dishonest or not accurate because unless the person says we want to do, you know, I Don't know, I don't know how they price but 100 million questions answered per month to train our data or a billion per year. We're going to pay you $3 per or whatever it is. 100 million, we're going to pay you $3 per, you're going to make 300 million from us. And that's a two year contract paid monthly. So that is reoccurring and it's a two year contract but it doesn't feel exactly like Slack reoccurring or Microsoft Office reoccurring or Salesforce where your lifetime value would be considered four, five, six years. So the opportunity here is you're getting into something where people this is a new product or service. That's what makes these new companies exciting. It's not just like the standard software stack. So I think all of these are going to do great. I think these are great companies and they're providing a massive service that's never ending. I don't think the need to train data is going away.
- [62:40]
A
That was my next question was how long is this business model going to last? Because Mercor has a much bigger vision for what they want to build as a company and their AI work was the wedge originally and I think it just got bigger than they expected. But they had a much larger plan that I thought they would just use this new capital to go off and pursue. Because if you can sell 3.5% of your company, Jason, for nine frickin figures, sure.
- [63:02]
B
Well, and wasn't the other company here, the one that Facebook bought, there was.
- [63:06]
A
Another company, Scale AI which they, they.
- [63:08]
B
Would have been competitors.
- [63:09]
A
Yeah, yes, absolutely. In fact Merkur and Micro One and other companies we've talked to saw their business, business just absolutely accelerate in the wake of that deal because no one trusted scale AI anymore because of their meta ties.
- [63:20]
B
Sounds reasonable.
- [63:22]
A
I'm just reporting what everyone said. Jason gives that a thumbs up. But I think that they're benefiting quite strongly from this. I just wonder if VCs are properly de risking. The downside of this is contract labor and it's going to be price competitive. And yeah, you know, that's what I think.
- [63:38]
B
The same argument was made about Airbnbs and Uber drive drivers and Athena Assistants. Like can it scale? Can anybody replicate it? What I'll say is my understanding of this data engineering work is that it's incredibly sophisticated already and it's only year like whatever 2, 3, 4 of this really starting to click in. It's not going to end folks. It's only going to get bigger because as lawyers and accountants, as but two examples, or doctors, radiologists, nutritionists, engineers, as they start using these services and they go, wait, it's hallucinating. Wait, this is wrong information. Wait, cite your sources. You're going to want experts to be in there saying, yeah, somebody wrote this page on Reddit. Somebody did this clipped article and they rehashed it with somebody in the Philippines for $6 an article, and it's slop. It's, you know, outsourced slop versus AI slop. Somebody's going to need to make sense of this and say, okay, this is slop. This is 60% accurate. This is 80% accurate. This is 95% accurate. Except the 5% that's wrong in this article is because they didn't update the article in seven years and it was written in 2013. And, boy, we found out that you really don't want to be taken this statin anymore because there's a new one or it's, you know, the. The whole philosophy has changed because of this reason. Yeah, that's going to keep happening. Information is going to get harder and harder to discern. And if you look at what we just talked about in I think, the second or third story today of creating synthetic data, well, I'm sure these companies are involved in that pursuit as well. I don't know that, but I would assume.
- [65:27]
A
I would assume so.
- [65:28]
B
I mean, if you were like, hey, let's make some synthetic data, they'd be like, okay, let's get some experts in here to tell you what synthetic data to make. Like, we don't need a bunch more Austin streets since there's 17 people on the streets mapping it. And, like, we know where every, like, pothole is at this point. We know every, you know, homeless person wandering into the street at every intersection. Yeah, yeah. Literally, like, these things have. But we do need to do, you know, the air, the drive between Austin and San Antonio and the cattle coming out of this ranch and the construction being done on this highway. Seems like those things are going to just keep popping up. So.
- [66:09]
A
And going very Biloxi to Lake Pontchartrain. You know, we need other routes, too.
- [66:13]
B
Yeah.
- [66:14]
A
All right, really quickly, I want to do a poly market, Jason, because we talked about a very fun thing last week, if you recall all. There was a game going on in which a company set all the AIs against one another to do trading. And I'm not going to name the name of the company because I didn't want to give them Points. But we did enjoy this chart of watching. Watching the crypto guys trade. Sorry, Watching the AI models trade cryptocurrency. And as you can see, Currently Gemini and OpenAI are down quite a lot. Grok and Claude are flat up 10 12%. And then the Chinese AIs from Alibaba and Deep Seek are crushing the game now.
- [66:47]
B
Why? But that's because they're using inside information. Maybe, Maybe. But I mean, you would think that they maybe are crushing. I mean, I'm making a joke here. Yeah. I think there might be something to the fact that they maybe don't respect copyright or, you know, paywalls and that kind of stuff. Maybe they have an edge, maybe. And maybe the LLMs from America have been trained to not use inside information. Or they could have some red teams that have constrained them in some way, maybe. So that makes this competition to get the most returns, it would give an unlicensed, more freewheeling LLM a massive advantage.
- [67:27]
A
It could be. All I can say is by looking at this, I want to set up my own Deep Seq trading bot. But here's the fun thing. Over on Polymarket, watching AI's trade crypto wasn't good enough. There's now a market for which of the models is going to become the best one. So now, Jason, we have humans setting wagers on AI setting wagers on humans setting wagers on crypto. And this is what technology is for. And if you're curious, over on Polymarket, currently deep seeking Alibaba, as you might.
- [67:58]
B
Expect, I think we could say this is the Alpha Arena AI training competition. It's. This isn't like content marketing, I don't think. It's not like it's. This isn't like Carta or whoever saying like, let's get ourselves ads on this week in startups to sell our product. I'll put this as separate Alpha Arena AI training competition winner. Everybody seems to think it'll be, I mean, 90% chance here that it's going to be one of the Chinese language ones.
- [68:25]
A
But what's fun is since I took the screenshot and put it into the docket, this changed quite a lot. Because this changed quite a lot.
- [68:32]
B
And when you say this, the people listening don't know what you mean.
- [68:35]
A
Thank you, Jason. Of course, the two leading lines became much closer together, so people are now making a much more even trade between Deep Seq and Alibaba than they were because the results from those two models have changed dramatically in the interim. As you can see right here.
- [68:47]
B
Jason.
- [68:48]
A
So I just, I love seeing synthetics on top of AI because it just humans will speculate on anything and I love seeing polymarket kind of cross over into our little world. So shout out to our friends over at PM. Microsoft has a service called Microsoft 365. It was previously called Office 365, previously called Office. It's Word, Excel, PowerPoint, Cloud.
- [69:07]
B
You pay by month.
- [69:09]
A
Yes. And now it includes AI because Microsoft, of course is working a lot on AI now down in Australia, they reached out to their customers on the consumer side of Microsoft 365 and they said, hey, you got to pay us more money to get AI or you got to cancel. So a lot of folks were like, well, I can't not have Word in Excel. So they did convert to the higher paying tiers. But if you clicked cancel, then they offered you the ability to keep your current plan without AI. Scummy. Scummy. From a multi trillion dollar company that doesn't need to grind out the extra 48 cents.
- [69:42]
B
Microsoft. Something Satya Nadella needs to get his hands around. We call these dark patterns. I give Lena Khan a hard time because she destroyed the energy in industry for four years. One of the things she did well always I'm calling balls and strikes, you know, as the official chairman of the Interwebs, which I'm now serving my third term.
- [70:02]
A
Third term, wow.
- [70:04]
B
Third, eight year sequential term. Now 24 years as a chairman of the Interwebs, I'm pretty sure that's his.
- [70:09]
A
Dictator at that point in time.
- [70:11]
B
I mean, if the people vote me in, the people vote me in. It's up to them. I'm not saying I won't run for a fourth term, even though the limit is three.
- [70:19]
A
Start making the hats.
- [70:20]
B
I'll start making the hats. Now JC out for his fourth term. Here's the thing, dark patterns are not good. They especially to your point, Alex, when you're a big company, you don't need to do dark patterns. Now there's somebody trying to hit a number for retention and for their AI goals. So there's somebody who tried to hit their goals and it's understandable they want to do great. So they did a dark pattern, apparently, allegedly here. The problem with doing these is you always get caught and then it always gets amplified and you become an abusive large company and the resentment builds up over time. If you're winning, you need to be magnanimous in life. As I started to win in life, investing in companies, doing podcasts, whatever it is, I always kept this in the back of my head because my book author, John Brock, my book agent, John Brockman, pulled me aside one time. He was like, you made a kid. You can stop fighting with everybody. You could be magnanimous in victory. And like, boom, it hit me, and I was like, oh, yeah, you're right. I've been battling for 20 years to try to get something going in my career, but I hit. So now I have to flip to magnanimous. What does it mean to flip to magnanimous? It means I don't need to be fighting with people over things that don't matter. I need to be helping founders and remember what got me here, what got me where I am is, you know, entertaining on a podcast. And I help founders. You got to stick to your knitting and just really lean into that. That's why I love having founders on here. And I love founder university and getting involved in year zero for Microsoft. How did they get there? By building productivity tools that helped people. Yes. Not dark patterns.
- [72:07]
A
No.
- [72:07]
B
Dark patterns make you look lame. Like you're using your technological business savvy to abuse your own customers. That builds resentment over time. And then when you get three, four, or five of these strikes against you, you know what happens? Your customers are going to start talking about it, the press is going to get on it, and then you're going to get different federal agencies who are going to go, oh, I'd like to have that pelt on my wall. I'd like to have that scalp on my wall.
- [72:39]
A
That's an example, Jason, of just what you're talking about from September.
- [72:42]
B
And this is all alleged, by the way. Give them the benefit of the doubt.
- [72:46]
A
Fair enough. But we talked about the FTC case against Amazon for their prime renewals upgrades. I forget the exact details of this, but last month, just about a month ago, the FTC security quote, historic $2.5 billion settlement against Amazon. So you will get cut.
- [73:03]
B
This happened a month ago. I didn't even see this. The ftc.
- [73:06]
A
It's the Trump era, Jason. Everything's blowing up all the time.
- [73:10]
B
Got it. So between the White House East Wing being knocked down, the Epstein files, tower of chaos. I didn't actually know that. The Federal Trade Commission secured a historic order against Amazon that enrolled millions of consumers in prime subscriptions without their consent, knowing it made it difficult for consumers to cancel. Amazon would be required to pay 1 billion civil penalty and 1.5 billion in refunds back to to consumers harmed by this. And here's the thing. If you want to raise the Price of Amazon Prime. I'm here for it. You know why, you lunatics. I was ordering some camera equipment. I'm teaching my daughters how to take pictures. I found my old cameras. Turns out one of my nannies is in photography school. I was like, hey, when you're here, if I gave you this old camera equipment, will you take the girls out on the ranch and take pictures of animals she would like? I can do that. I was like, yeah. And I had to buy a bunch of old compact flashcards and batteries because you know, this literally. I found a duffel bag of the equipment I had from the Weblogs Inc. And Gadget Days.
- [74:15]
A
That's awesome.
- [74:16]
B
It was just in a box. So I took it out, I cleaned it up and I was like, oh, the batteries don't work. They brought the batteries at 4am today in the compact flashcards. I don't need them at 4am I don't need them till next weekend. If you want to charge me an extra $10 a month, $5 a month. We love you, Amazon. We love what you're doing. You're getting a stuff too fast. I have now gotten to the point where I'm like, I don't need it that fast. And opening up four boxes on three different days is more painful than getting these things early. Wait till Tuesday, put it in one box. I only have to open one. That's how good Amazon is. You don't need dark patterns.
- [74:55]
A
Exactly. You also don't need Amazon to start putting unskippable blocks of minute long insurance ads into my prime video. Because let me tell you, everyone in the world, I'm not buying insurance. Not all State, not State Farm, not the annoying yellow brand.
- [75:12]
B
Off. Off. Anyway, here's the other thing.
- [75:15]
A
Yeah.
- [75:16]
B
How about communicating? Instead of in a dark pattern, why don't we become the White Wizard? Gandalf. Gandalf the White. Right.
- [75:24]
A
I think he was the gray and he came back as the white for Return of the King.
- [75:28]
B
Yeah. If this is a good analogy, let's go with it. If there's a better one. Pop culture expertise. Sorry.
- [75:34]
A
You can't bring up Lord of the Rings and not get my nerd back up.
- [75:37]
B
Okay.
- [75:37]
A
Yes.
- [75:37]
B
Is it close to like he's as good as it gets? As the White Wizard. Perfect. Be the white wizard in this. Which is say to people when they're watching Amazon, your Amazon prime subscription is 12.95. If you want to get rid of these ads, which we only have two per episode, you have to pay 16.95. If you'd like to do that. That option's always available to you. Would you like me to remind you of this or would you like me to never remind you that of. Of this? Take the opposite approach. Be super generous. You know who does this? I knew it. With Stratetry, which is like one of the best newsletters ever. It's like the OG of like newsletters really considered. He would send my $10 a month bill to me every month. I had never seen somebody in a newsletter do that. They all just hid their updates of their monthly billing. He sent it to me every month and I. And it said right on the thing, click here to cancel. And I was like, I'll never cancel stratetury. Because A, it's great. B, you're so upfront about it.
- [76:37]
A
So upfront about it. Now I want to take all of this and apply it to startups because briefly, I know we've gone a little bit long today, but the Microsoft thing we're talking about from the perspective of here's a company that doesn't need to do this and they're burning goodwill. But if you're a startup out there trying to raise money, competing with other companies for capital, customers, attention, it's pretty tough, Jason. And there might be a temptation to make it a little harder to cancel or maybe a little dark patterny. So how do you, as a founder with less capital, less cash, more pressure, always stay on the right side of things and not fall prey to essentially growth hacking gimmicks at the expense of customers.
- [77:11]
B
You have to be obsessed with your reputation at all times in your life. Now when you're young and you're just on adrenaline and nicotine patches and caffeine and you're burning them at night oil, you might not always be thinking sensibly. You might have pressure from your well done with your vape and coffee. You might not be seeing straight. Just always go back to if my mom knew I was doing this, just do the mom test. If your mom, if you work for Microsoft and you did this or Amazon and your mom saw it, what would your mom say? My mom, when I would drop an F bomb, she'd say, you know, I thought the book was spectacular, but the F bombs I'm not comfortable with. And I started saying fracking or frickin. And my mom gets upset if I curse, God bless her, you know, and she's right. If I'm cursing too much, it's my Brooklyn side. And it means I don't have clarity of thought that I Can't come up with a better word to use to express my expression, frustration, or feelings or my point of view. And so just run the mom test. Hey, mom, I trick people into upgrading their Microsoft 365 package. Can I. Can I show you what I did and how many people, percentage of people I tricked at Christmas? If your mom's not going for it and she's like, I'm very disappointed in you, and don't do it. Don't, don't do it. And if you're the leader of a company, what happens is you have to be careful about incentives. Incentives matter. Show me an incentive. I show you the outcome. So in the case of a startup, if you make sales, hey, if you book a sale, you get 10% of the sale. And if you book the sale for the premium product, you get 20% of it. When they sign up and give us their credit card and we charge them. Okay, fine, I get it. What you want to do is say, you know What? Instead of 10 and 20%, you're going to get 7 and 15%. Then you're going to get the other 7% and another 5%. If they use the product and they're in and they use the product more than 10 times a month, you'll get another bonus. And if they renew, you're going to get another bonus so that you're not incentivizing them just to churn people and sell it to the wrong people and trick people into getting it. You want alignment. Alignment. So a lot of times people will make the renewal of a sale much less than the initial cost of the sale, when, in fact, the renewal speaks more to the entire team doing their job. So think about, hey, if our renewals are 80%, the product team, the sales team, everybody gets, you know, two days off at Christmas more valuable than any amount of money. If our renewals are 90% or 85%, everybody gets three days off on the holiday. If we hit 90%, everybody gets four days off. You come up with something like that now to get that esprit de corpse. You ever hear about the esprit de corpse?
- [80:09]
A
Yes, I do.
- [80:11]
B
I don't know what it means. No, it means the spirit of the group, right?
- [80:14]
A
Yeah. It means essentially, how does the team feel and esprit de corps, usually in a positive sense, as in, we have good esprit de corps, which means we have lots.
- [80:20]
B
All right, everybody, it's been another extended amazing edition of this week in startups. If you care about startups and technology and you want to be the tip of the spear if you want to be part of the vanguard, the early adopters. Tune in Monday, Wednesday, Friday here and we'll be announcing a second show in the new year shortly. We're going to have a second show, a spin out show from this Week in Startups. This Week in Startups. Family is going to grow.
- [80:52]
A
I'm excited. I don't even know. I don't even know what's going to happen. So I will be tuning in to hear about our show.
- [80:58]
B
Tune in. You know what I'm talking about. But just don't spoil the surprise. And please sign up for our YouTube channel this week in startups.com YouTube and if you could do me one favor, please write a review or post a comment on Spotify YouTube or write a review on Apple Podcasts. If you do, we're going to include your comment, if it's an intelligent, funny, insightful, spicy comment, in the YouTube comments, the Spotify comments. And you can tell us what company you're from. We'll give a shout out to your company and we're going to play those at the end of every single episode. So if you make it to the 75 minute mark, 60 to 75 minutes, or if you want to just advance to the end and see if you got picked for that for today's show, go ahead and do that. We'll see you all next time on this Week in Startups. Bye Bye.