Avi Patel on the startup that copied Kled and why he called out General Catalyst by name | E2291

This Week In Startups is made possible by: Grasshopper Bank - https://grasshopper.bank/twist LinkedIn - https://linkedIn.com/twist Northwest Registered Agent - https://northwestregisteredagent.com/twistPlaud - https://Plaud.ai/twist Why raise $200 million if you are already profitable? That's the question Jason and Alex put to Mercury's founder and CEO, Immad Akhund, after the entrepreneur raised another massive round for his upstart, technology-friendly bank. TWiST then welcomed Kled founder Avi Patel to discuss the startup he considers a clear ripoff of his own company. Jason gavels in verdicts on all parties involved, including Y Combinator and venture capital firm General Catalyst. The show closes with a news lightning round, including OpenAI's decision to offer $2 million in token credits to hundreds of startups. Guest Links: Mercury https://mercury.com Mercury funding announcement https://www.businesswire.com/news/home/20260520511817/en/Mercury-Raises-$200-Million-Series-D-at-$5.2B-Valuation Immad Akhund on X https://x.com/immad Kled https://www.kled.ai/ Avi Patel on X https://x.com/avipat_/ Avi's complaint https://x.com/avipat_/status/2055384102409253056 General Catalyst https://www.generalcatalyst.com/ Y Combinator https://www.ycombinator.com/ Delve https://techcrunch.com/2026/04/23/another-customer-of-troubled-startup-delve-suffered-a-big-security-incident/ Discussion links: Anthropic's attack on secondary trading https://techcrunch.com/2026/05/12/anthropic-warns-investors-against-secondary-platforms-offering-access-to-its-shares/ Vanta https://www.vanta.com/twist Timestamps: 0:00 Welcome to This Week in Startups! 2:14 Plaud: If your work depends on conversations — interviews, meetings, calls — you need a Plaud NotePin. You can check it out at https://Plaud.ai/twist and use code TWIST for 10% off! 3:27 Immad Akhund (Mercury) joins to discuss $200M raise 6:33 Mercury's origin story and path to $650M run rate 9:53 Northwest Registered Agent - Get more when you start your business with Northwest. In 10 clicks and 10 minutes, you can form your company and walk away with a real business identity — Learn more at https://northwestregisteredagent.com/twist 14:23 Stablecoins: where they work, why Mercury won't launch its own 20:13 LinkedIn - Thanks to our partners at LinkedIn! Post your job for free at https://linkedIn.com/twist then promote it to get access to LinkedIn Jobs' new AI assistant. 22:38 AI agents, and the future of money movement 27:30 Why Mercury raised less this round 30:11 Grasshopper Bank - Time is money. Don't waste either. Go to https://grasshopper.bank/twist and get an exclusive $500 cash bonus just for opening an account. 42:48 Avi Patel (Kled) joins to discuss copycat startups 57:06 Jason's verdict on YC's hacker culture & "appearance of impropriety" 1:17:39 Sam Altman's $2M-in-tokens-for-equity offer to YC founders 1:24:32 NYC hotel housekeepers cross $100K in time under new union contract 1:30:14 Minimum wage, immigration & the case for raising it slowly Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp Follow Lon: X: https://x.com/lons Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis Check out all our partner offers: https://partners.launch.co/ Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland Check out Jason's suite of newsletters: https://substack.com/@calacanis Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Jason Calacanis?

  Another company cut and paste everything you do and steals your idea allegedly. After stealing your idea, you go public with it.

• 0:07Speaker 01

  I woke up to that post and noticed a very, very blaring resemblance to our website.

• 0:12Jason Calacanis?

  Like they photocopied your website to a level that was absurd.

• 0:16Speaker 01

  I was talking to General Catalyst, they were going to invest that money into us. The first five minutes of the post, I was messaged by like maybe three of them saying, Avi, you need to take this down right now.

• 0:25Speaker 02

  Like all know of you see by name, you you really stepped on the plank. This week in startups is brought to you by Grasshopper Bank. Time is money, don't waste either. Go to grasshopper dot bank slash twist and get an exclusive $500 cash bonus just for opening an account. LinkedIn jobs, hire right the first time. Post your first job and get $100 off towards your job post at LinkedIn.com slash twist. And Northwest Registered Agent. Get more when you start your business with Northwest. In 10 clicks in 10 minutes, you can form your company and walk away with a real business identity. Learn more at northwestregisteredagent.com slash twist.

• 1:05Jason Calacanis?

  All right, everybody, welcome back to Twist for May 20th. May 20th, 520, it's not 420, it's 520. Summer is upon us, graduations have occurred and it's going to be a wild summer. The pace at which things have been happening in AI, in global politics, it is just fast and furious. And we help you process it here, three days a week, Monday, Wednesday, Friday on Twist. Today, we're very lucky because one of the great startup stories of the past 20 years, or maybe it's 15, Mercury Bank is going to be on talking about their latest fundraising.

• 1:45Jason Calacanis?

  And then we're going to tell the story of what happens when you create a startup and allegedly another company from Y Combinator cut and paste everything you do and steals your idea allegedly.

• 2:00Jason Calacanis?

  And after stealing your idea, you go public with it and that strategy. This is our two guests today. Yeah, Alex.

• 2:07Speaker 02

  Absolutely. It's gonna be an absolute corker of a show. But Jason, before we get into talking about Mercury and their latest round, I think we should pause and discuss our favorite wearable gadget.

• 2:17Jason Calacanis?

  Oh, well, I have a plaid here on my wrist. Sometimes I wear it on the lapel of my jacket. You've got it on your wrist, too. You press the button, you hit the haptic, red light goes on. Now I'm recording anything I do, I can be like, oh, we're hiring six associates in training to start at our venture firm. This is a true story. And I know I have to catch up with Jackie, who's doing the hiring process. And we have to talk about how we're going to assign all that. So I can just say, hey, make sure we put on my calendar that I got to meet with Jackie. Go over the six new hires for the associate in training program and how we're going to allocate them across our, you know, eight different business units.

• 3:00Jason Calacanis?

  And let's put that on my calendar and let's make some training manuals for it. Now, you know, I gave it some basic instructions, all those notes. When I sync, which I can do either through my phone or by just putting it into this little charge pad, it's synced and it makes multiple versions of that conversation. A mind map, if it was a long one, like a rambling podcast episode. It'll make you notes, it'll make you bullet points, action items, and of course, just a perfect transcript. So you get all that out of the box, super easy, one click.

• 3:32Speaker 02

  Yes. So you need a Plaid note pen S if you want to get one. P L A U D dot A I slash twist. Use the code twist, save 10%. And while you were talking, Jason, I had an idea. I was thinking to myself, I'm going deeper on Codex from OpenAI. I picked that as my current tool to play with and just really figure out to the studs. And I was just thinking, why can't I bring my Plaid into Codex? I don't want to actually do the importing work myself. And it turns out they have an M C P server, so you can just do that.

• 3:58Jason Calacanis?

  So interesting.

• 4:00Speaker 02

  Yeah.

• 4:01Jason Calacanis?

  I've been thinking about that. At some point, I'm going to connect like. Either Open Claude, or what's the French one that everybody's talking about now?

• 4:10Speaker 02

  Le Chat?

• 4:11Jason Calacanis?

  No.

• 4:11Speaker 02

  Oh, Hermes Agent.

• 4:13Jason Calacanis?

  Hermes Agent. So my next goal is to connect those two. So then I would theoretically be putting all this into my Hermes Agent, or maybe an Obsidian Locker, something like that. But yes, Le Chat is even better than Hermes.

• 4:32Speaker 02

  Well, Le Chat is the offering, it's the ChatGPT from Mistral. And I was just thinking, French AI, talk to it, Le Chat.

• 4:40Jason Calacanis?

  Okay, go Mistral.

• 4:41Speaker 02

  All right. So we're gonna bring Ahmad Akun, he's the CEO and founder of Mercury Bank. Jason, we all know Mercury. It is the, I think, the leading name in where startups do their banking. It has a technology-first focus. It's becoming a real bank. And this morning, Ahmad, you announced that you raised $200 million at a $5.2 billion valuation. We love to talk to people right after the news. Welcome to the show.

• 5:04Speaker 03

  Thanks for having me. Excited to be here.

• 5:05Jason Calacanis?

  How long have you been running Mercury? And how many customers are there now? Because, you know, I became aware of you guys since you targeted startups as your initial sort of ideal customer profile there, and that initial customer profile. But it's, I know it's spread to other categories, larger enterprises, et cetera. But when did you start this? And how many customers now?

• 5:28Speaker 03

  So we started, as in we launched in April 2019. I started the company end of 2017. But I actually had the idea in 2013, because I've been an entrepreneur since 2006. And I just couldn't believe how annoying banks were for entrepreneurs. And every year I was like, oh, someone's gonna build this idea. And then, you know, no one had. So in 2017, we kinda, we did it. Yeah, early on, we were very startup-focused. Now, yeah, tech still makes up about 25% of our customers. But we have a lot of other kind of digital-first businesses, so e-commerce, professional services, things like that. About 300,000 businesses altogether.

• 6:04Jason Calacanis?

  That's a large number of businesses. Revenue now, I understand, 650 million a year, annualized run rate? Something in that range?

• 6:13Speaker 03

  Yeah, it's a bit high now. That's what we reported, kinda, towards the end of last year.

• 6:17Jason Calacanis?

  And where does that money come from? How do you make money?

• 6:19Speaker 03

  We have like five or six different revenue sources. We give both corporate credit cards and debit cards to our customers. So we make some interchange on that when we host people's revenue. Currently, we're not a bank. We just applied for a banking charter that we go conditional approval for. But right now we work with partner banks and we get kind of rev share on the deposits they host for us. And then we also have FX and a few other kind of fees. We try to make it like very simple and transparent. So most of the things you do on Mercury are free.

• 6:49Speaker 02

  I'm curious why you didn't update the revenue number, Amant? Because I was going back through your last announcements and you announced the $650 million run rate milestone. I think in like November or maybe it was late Q3 of 2025. It's May, it's nearly June, you just raised a big round. I feel like this is the moment to flex. So allay my concerns that you flatlined and the business hasn't grown in seven months.

• 7:12Speaker 03

  The VCs wouldn't have given me the money if I flatlined, Alex.

• 7:15Speaker 02

  Right? That's what I was thinking.

• 7:17Speaker 03

  Yeah, calm strategy, it's kind of boring, but I think they want to have like another news moment later in the year when we.

• 7:23Jason Calacanis?

  Got it.

• 7:24Speaker 02

  Oh, okay, okay.

• 7:25Jason Calacanis?

  Yeah, I assume you gave like another media hit when you hit 800, 900, eventually a billion. And I guess that puts you in an interesting position. You're still right below what people say is the benchmark to go public, which is $1 billion. But you're kind of consistently getting closer to that. So how do you think about how you want to run this business? What do your investors want to do? What do you want to do? Is it time to start considering going public? Obviously, you probably were offered during the SPAC crazes to flip the company into a SPAC and get public really easily. But talk about how you think about the public markets now.

• 8:07Speaker 03

  Yeah, I think of ourselves like still a pretty young company, right? 2019 launch and so that's like seven years old. And I have no rush. I really want to build this for the long term. Like, you know, we never want to sell the company. I think that's, yeah, I think the potential for what Mercury is doing is unlimited. So at some point, we want to be public and I think it'll be nice for our customers, especially to own a part of Mercury. We actually did actually a refund, a kind of crowdfunding campaign in 2021. So we had about 3,000 customers actually own a piece of Mercury, which is nice that they get.

• 8:40Speaker 02

  Really?

• 8:41Speaker 03

  Yeah, and they got a nice.

• 8:42Speaker 02

  And these are, these could be non-accredited investors in this kind of a fundraising?

• 8:47Speaker 03

  Reg CF fundraise, so that was completely non-accredited. So I like customer zoning Mercury, so at some point we'll do it. Right now, we're very focused on kind of getting this bank charter live and kind of get through that. I also think like you probably want to be on like a $10 billion kind of market cap before you go public. So that's my kind of, you know, get the bank charter live, get to that kind of scale. But it's definitely in the horizon.

• 9:10Speaker 02

  Talk to me about the, the process of getting a bank charter. I know you've applied for one and you've gotten like conditional approval. Now, I don't spend a lot of time reading the deep details of banking application regulations and all that. I know you do.

• 9:21Speaker 03

  Yeah.

• 9:22Speaker 02

  So where are you in this process? When does it complete? When are you safe in your status as a bank?

• 9:28Speaker 03

  It's a multi-year process, especially when you're a pretty scaled up fintech. You know, we have to update all of our processes and procedures and controls and all these things to be at the level where we can have the bank charter. And we're also hiring a bunch of people both last year and this year to be in a position to launch. So yeah, it's like conditional approval and then you kind of go through the setup process and you eventually open the bank doors.

• 9:53Jason Calacanis?

  Okay, so you've identified a real problem and you put together a solid solution and a business model that you believe in. So you're all set to launch your new company, right? Not so fast. If you want investors and potential customers to take your new business seriously, you need to consider forming a Delaware C corp. And that's where Northwest Registered Agent comes in. They're going to give your new company a real identity. That means an address for your public filings, a domain, a custom website, a business email, and of course, a phone number. And that's going to take just 10 minutes and 10 clicks. They don't charge hidden fees. Customer service is available around the clock. They're not overwhelming your inbox with spam and they make it easy to cancel at any time.

• 10:33Jason Calacanis?

  So get all the advantages of a Delaware C corp, independent, regardless of where in the US you're operating from. Visit northwestregisteredagent.com/twist for more details and the links are in the show notes.

• 10:46Speaker 02

  So what does this bring to Mercury? Because we've seen a lot of neo-banks build. Grow without having a bank inside their own house, right? They've used third-party banks and so forth. And the model frankly worked pretty well. It seemed to abstract a lot of the complexity and regulatory overhead. You're going for it. So I presume there's a lot of benefits to doing this. What are those and what will that do to the the quality of your business?

• 11:08Speaker 03

  You know, when we launched, we were only nine people. And frankly, it was just completely impossible to launch with nine people without having bank partners that supported us. And really, were the, you know, were the reason we were able to go live. At this scale, we are, we are much bigger than our partner banks at this point. And at some point, you know, you're not like, you're basically regulated entity. You're just regulated by a proxy.

• 11:32Speaker 02

  Yeah.

• 11:32Speaker 03

  You know, for us, it's much more important to have that direct relationship. And I think we'll actually end up being easier. Not easy, but like, I think we'll be able to deliver a better customer experience, which, you know, at the end of the day is what we care about. So, yeah, there'll be some.

• 11:45Jason Calacanis?

  You have more control, right? If you if you are a bank, you don't have to ask the bank you're partnered with, hey, can we do this and that? And get their buy-in, you can just go straight and do it, yeah?

• 11:55Speaker 03

  We'll be focused on our priorities and we can execute against them.

• 11:58Jason Calacanis?

  Yeah, it's so funny. This was like, do you watch the TV show Industry? I chance.

• 12:02Speaker 03

  I haven't.

• 12:03Jason Calacanis?

  It's an incredible show on HBO. It's it's like really about like banking and.

• 12:07Speaker 03

  Oh, really? I should watch.

• 12:08Jason Calacanis?

  This year, in season three, and it takes place in the UK. And this year, the entire storyline was about a bank charter and somebody trying to get one for like a green energy company and trying. And it like all resulted in, or maybe it was season four. It all resulted in the the hand wringing of just how important it is there. There's industry, like the trailer. The government, whether it's the UK or the United States, they're very judicious about bank charters because banks are moving money. Money can be used for nefarious things around the world, human trafficking, terrorism.

• 12:53Jason Calacanis?

  It's just all the bad things that can happen. And then we have seen that allegedly, people claim things like Tether have become and and stable coins outside the US have become the place where people do that activity. And we want those things to maybe come on shore so and and be more regulated, know your customer. So you're trying to do all these things right. How do you think about? Stablecoins and will they become the default rails for us doing payments between companies? And then what does that do for the banking industry yourself? Do you have to provide that? You don't make any money on that or do you make money on it? How do you think about all that?

• 13:34Speaker 03

  Yeah, I think stablecoins have a place. I think if you, yeah, if Jason is wants to send money to a business or, yeah, there's Zelle and like other kind of local rails are like pretty simple and most people have access to them in the US. I think where stablecoins work really well is globally. Yeah, there's lots of people that want access to US dollars and having a stable currency. So having the stablecoin accounts is powerful. Being able to send money internationally is still a bit of a pain. So I think there's some really powerful use cases and, you know, we will probably have, allow you to kind of send and receive stablecoins soon. So, yeah, I think it's interesting. I don't think it replaces the system. I think it augments it and, and there'll be lots of people that get like a big.

• 14:19Speaker 02

  So you're not going to go buy a stablecoin startup as we've seen Stripe and other companies do? Sounds like.

• 14:25Speaker 03

  No, not in the current plan.

• 14:27Jason Calacanis?

  But you could launch one, right? I'm sure these companies are all pitching you on being the rails to have a Mercury stablecoin.

• 14:34Speaker 03

  Yeah, it comes back to customer value. I think USDC is like pretty good and that's got a big network effect because people have it. So, yeah, we don't have like a plan to launch our own stablecoin. I guess if we come up with like a reason customers really want that, then we might do it.

• 14:48Jason Calacanis?

  Tell me about the journey from small companies and using them, you know, going back to your more like early entrepreneurial days and trying to find product market fit. A lot of young founders, year zero of their startup, they're not even incorporated. They're building and vibe coding a project while they're working at, you know, some big tech company, working at Mercury and on the weekends they're working on their startup and.

• 15:11Speaker 02

  For those folks, explain to them how you first got product market fit with startups, why you chose startups, and then what you learned from that process.

• 15:21Speaker 03

  Yeah, one thing that was nice about Mercury is it's the first startup I've built that's been for myself, which kind of made it easier because I had this very specific vision in mind. I was like, we need wires, which seems obvious, but actually we were the first US neo-bank with wire support. And it needs to be really smooth and you need like multi-user permission. So we spent a lot of time, we spent a year and a half actually just building it and getting, you know, we went through a couple of bank partners because we were doing new things and there wasn't that much support for it. But I would say like the day we launched, we had kind of instant kind of product market fit, especially with kind of early-stage startups. And the reason I chose early-stage startups and why I thought it would work there is, you know, they tend to be very product-minded, they

• 16:06Speaker 03

  want to use the best tools. If you do well in one part of them, like, you know, a lot of Y-combinator companies use us, more than 50% of each batch uses us, you know, you tend to become like a viral kind of solution to the ecosystem. So you can like quite quickly build distribution, even though you start early. And then they grow really quickly. So, you know, we, we quite quickly had, you know, our first seed-funded startups and then Series A. And now we have, you know, many startups that have raised like more than $100 million using Mercury. So you can start with like a very small set where you can like solve their needs. And, you know, banking is very sticky. So as, as long as we keep delivering kind of features and customer support and things like that, you can kind of grow to like pretty big companies using it.

• 16:51Speaker 02

  Ahmad, whenever I hear someone talk about like really quick or instant product-market fit, my ears go up because I'm always curious about how you reached that so quickly. And it implies that you had customers very quickly. So talk to me about launch, getting those first customers in, and how you felt confident in having PMF that early because you didn't have a lot of historical data to compare it to at that point.

• 17:11Speaker 03

  You know, I really thought we'll launch and then, you know, we'll have that moment and then everyone will forget about us and then we have to go figure out like GTM and like, you know, that's how every other startup I'd ever done. Was uh but yeah with Mercury we really launched and yeah it was really posted on X and like you know we had Andreessen Horowitz which is our seed investors kind of post about it and uh Elad Gil and Justin Khan so we we had like I actually had sixty seed investors I thought it was good to get like the whole as much of the ecosystem as I could get to invest shame Jason to know invest uh.

• 17:42Jason Calacanis?

  Oh I mean and you guys are buying ads from the beginning I'm such an idiot it's the story of my life like you guys were like oh we're doing startups and you guys were I think you were one of our you I think we were one of your first podcasts that you you know got the word out on and you know it's so dumb every time somebody advertised us on this program I just need to tell them go invest a hundred K or two hundred fifty K in that startup because that's what I did with eight sleep.

• 18:06Jason Calacanis?

  And um uh Vanta both of those folks were advertisers on the pod I had to get them on as guests because they were incredible businesses independently and then I was just like can I invest and man I miss Mercury so I miss that you know gosh I probably would have gotten in at a hundred or two hundred fifty million it would be a twenty five X right now uh but I think actually maybe now is the time for me to invest because I have a late stage syndicate.

• 18:32Jason Calacanis?

  How do you think about SPVs and syndicates and late stage financing now and allowing your employees to maybe get some liquidity or just using that as a vehicle we just saw Anthropic say hey we're gonna negate all these non cap table SPVs but obviously on the other side of the ledger you have folks like uh Claude SpaceX Stripe. Uh and previously when there were private company Facebook doing very orderly secondary transactions to put primary capital into the company and or let existing employees liquidate so how do you think about that as the founder and these SPVs?

• 19:11Speaker 03

  I don't like being draconian about it my thinking is you know if investor invested or employee uh you know vested their stock that like they should really be able to do what they want with it and like you know if we were a public company again like there would be liquidity right uh so we try to make it flexible obviously you know I don't want a bunch. SPVs kind of, I think the issue with both Anthropic and SpaceX SPVs is there's a lot of like liars out there. Like people like taking advantage of people, charging crazy fees. So there is like some problems in the industry, which you know is not great. In our last year with our CVC, we did do an employee tender. So you know, if there's an opportunity, we'll try to just make it easier.

• 19:52Speaker 03

  I mean, if you're, you know, if you are an employee and you have a few hundred K, it's actually kind of hard to like get access to secondary. Secondary is much easier when you have like bigger chunks to sell. So we do want to facilitate it, but in general, we're like pretty flexible about it.

• 20:07Speaker 03

  But yeah, the SPVs are not, unfortunately, like if it's, yeah, if it's done by the company, it can be like much smoother than like people.

• 20:14Jason Calacanis?

  Adding a new member to your team is a crucial decision and you don't want to rush into a hiring situation that you will regret. But if you're a busy founder, you also don't want to spend a ton of time in the trenches, looking for that perfect candidate. Instead, you need a partner and you need a trusted partner and LinkedIn Hiring Pro is that partner. How do I know this? Because I use LinkedIn Hiring Pro. You want a real world testimony? All right, here you go. We recently hired a new customer success manager. They handle all the advertising accounts here on this week in startups. And they ensure that we're keeping all of our wonderful partners happy. LinkedIn helped us connect with an amazing candidate right here in Austin. And he had exactly the combination of experience we were looking for.

• 20:57Jason Calacanis?

  It's magic, it's alchemy, it's everything for me to find a great team member. So hire right the first time. Get started by posting your job for free at LinkedIn.com slash twist. Terms and conditions apply. That's LinkedIn.com slash twist. So if I wanted to theoretically put $5 million in for, you know, like primary capital into the company, how would you look at, you know, me negotiating that with you? Obviously you just topped off a bit with this 200 million, but hey, an extra five million is great. Maybe I could tweet once in a while. Hey, you know, I'm an investor. How would you look at that if I wanted to like just, I don't know. Cause people have brought up Mercury, like how do we get on that game?

• 21:38Speaker 03

  All right, Jason, you get the best. Let's, let's do it.

• 21:40Jason Calacanis?

  Is it okay if I? Well, this is actually the interesting thing.

• 21:43Speaker 03

  Get you on the cap table. How about that?

• 21:45Jason Calacanis?

  Perfect. Okay. So I'll put five million in at five million. Welcome to this week. 1% is 50 million. I can get my 10 bips now. I should have got it earlier, but get my 10 bips now. It just cost me 100 more. Listen, great job. Continued success. Appreciate your supporting this podcast and independent media and banks. You're my bank. I love using you guys. Before you go, though, how do you think about AI as the CEO running the business? And then how do you think about AI vis a vis agents wanting to do transactions now? There are some new protocols. I know Coinbase has pioneered some of them. I think you might have been part of this new standard that's coming

• 22:24Jason Calacanis?

  out. But people are going to want to use agents. Scary or just obvious? Like, how do you think about agents touching money?

• 22:33Speaker 03

  You know, I'm a big sci fi guy. I love reading and watching sci fi. So I always think like, what's the future, right? And I just feel like in 10 years from now, like, everyone's going to have like a personal agent and it's just doing stuff for them. So like, I want Mercury to be an enabler for that. So, you know, we launched a CLI and we already have an MCP. So lots of people connecting their Mercury into cowork and Claude code and chat GPT and like, you know, their workflows and we want to be wherever people want to use Mercury. Yeah, agent payments, people already using Mercury kind of virtual cards to give a card and like, let your agent go do things. So we're going to enable more of that. And then, you know, not everyone is like bought into this future yet. And we're also introducing features on

• 23:14Speaker 03

  the Mercury app and Mercury website. So you can, we launched Mercury Insights. So you can kind of ask questions from your transactions. I know like summarize things like, hey, your AWS bill went up by 30%. Are you sure about that? That kind of thing. And then later, later this summer, we're launching Mercury Command where you can do kind of complex workflows. Like you're like, hey, pay my landlord 5K and it kind of sets it all up for you and you just click approve kind of thing.

• 23:36Jason Calacanis?

  Yeah, that's going to be a really cool future when you can just ask questions about what's going on with your bank as opposed to now. Where banking is just, you know, really hard to get a handle on what's going on with your money. This, the easier it can be and just my whoop makes it so, I don't know if you're like a fan of whoop. You got your whoop, yeah. Like, I don't know if you've been watching or have you started using the AI?

• 24:00Speaker 03

  Yeah, it's kind of fun. You can ask a few questions, but you know, we actually do.

• 24:03Jason Calacanis?

  It's really neat.

• 24:04Speaker 03

  We actually do a lot more than banking now. So we started in banking, but we have invoicing, corporate credit card, bill pay. We just acquired a payroll company. So actually like the AI gets even more powerful when you can like do.

• 24:14Jason Calacanis?

  Oh.

• 24:15Speaker 03

  You can hire it all together and you can be like, hey, I just hired an employee, set up payroll, issue them a card, set them on expenses. And like, it just does all of that in like a couple of, you know, you just say it and it does it in a couple.

• 24:26Jason Calacanis?

  So you now you're going up against like the expensifies, the ripples, the P E Os, you know, all those folks.

• 24:32Speaker 03

  I'm just like, you don't want to sign up to all this stuff. Like you just want to, you know, banking is where your money is. It's where your finance team is. Like, let's just do everything in one place. That's my, my thinking.

• 24:41Jason Calacanis?

  Yeah. And if you get to, I remember Jerry Yang in the Yahoo days told me at some point, I was interviewing him for my old magazine Silicon Valley Reporter to really date this conversation. And I said, hey, what's like, what's the focus now at Yahoo? And he said, the focus is 2.4. And I was like, what does it mean? He's like, if we can get you to use 2.4 services from Yahoo, you'll never leave. And I'm like, I don't, I still don't understand. He's like, okay, do you have a Yahoo mail account? I was like, yes. He's like, okay, do you use Yahoo Finance or Yahoo Sports? I was like, yeah, I put the Knicks in there. I get my schedule and, and yeah, I have some socks and yeah. He goes, okay, so you're three.

• 25:14Speaker 03

  Yeah.

• 25:15Jason Calacanis?

  You're never going to leave. And to this day, I have Yahoo email account.

• 25:20Speaker 03

  Oh, you do? I thought the story would end with like, but it didn't work.

• 25:25Jason Calacanis?

  I mean, I still look at Yahoo Finance, just out of like a creature of habit and the webpage is a bit of a mess. Like it, I mean, it, it needs to be really overhauled and cleaned up, but it's, it's kind of like this archaic.

• 25:38Speaker 03

  But I think the problem there was like, it's not like these were interconnected services, you know, it's with, with core like money movement and all of this stuff is just so closely connected that you can really like by doing like, you know, we also track this like we're like, are using three products or more, which is like, I think 15, 20% of our customers use three products or more. But yeah, if you're using them all and they work really well, because like, you know, we, we like, if everything's a blue box, right? Like if every money movement that you do is like all within Mercury, it gets even more powerful. That's, that's kind of the value.

• 26:07Jason Calacanis?

  It is definitely the case with, I think, Robinhood as well, you know, any of the, or Uber, I think, is also having this. They, they found that people who use eats, shopping, if you think about eats, shopping, and

• 26:22Speaker 03

  Driving.

• 26:23Jason Calacanis?

  Uber, transportation as three separate products. The people who use two of those three, or three of those three, are like 10 times more active on the platform. So it's also a catalyst. Once you make that connection, they're in the app more, so they use it more. It makes sense, right? So if you, if you use the expensing in Mercury, or the invoicing in Mercury, you're in the interface, you see the next product, you click on it, and your acquisition cost for that person is $0.0. Yeah, really great, really great observation, and like, an important one for founders, maybe in later years, first couple of years, gotta stay focused on maybe

• 27:03Speaker 03

  Well, I was thinking, like, now that software development, especially with new features, have got a lot easier, maybe multi-product becomes like not, you know, maybe it's like earlier on, because

• 27:14Jason Calacanis?

  You can do a lot more, a lot faster.

• 27:15Speaker 03

  Yeah.

• 27:16Speaker 02

  Amal, can I ask you one question before we let you go, which is, you raised less money this round than your preceding round by $100 million. And I could read that so many different ways, you're just burning less capital, et cetera, but I'm curious, why less?

• 27:28Speaker 03

  Yeah.

• 27:28Speaker 02

  As your valuation went up?

• 27:30Speaker 03

  So we've been profitable for four years, so this was much more kind of raising money, not for the money's sake, you know, the bank is fully capitalized, et cetera. We have way more money than we've ever raised in the bank as well. So we're really doing it because, like, you know, it creates a marketing moment, I get to be on this podcast and feel the things, it's good for acquisitions and hiring, and yeah, it's

• 27:53Speaker 02

  That's what I was curious, is the money earmarked for acquisitions? Because you guys have been talking about profitability for years now, both, by the way, both non-GAAP and GAAP, to your credit. So, how many startups are you gonna buy over what

• 28:05Speaker 03

  It's not like a big strategy, I mean, we'll do it, we do it carefully, we've done two so far.

• 28:09Speaker 02

  Which two did you do, and how did it go?

• 28:11Speaker 03

  So we just acquired Central, which is a payroll company, yeah, it's still, we're running it independently right now. And we're slowly kind of integrating it. So it'll be like Mercury Payroll they did this year. And then we made another kind of acquisition called Teal, which is in the book space. You really think about so far, like, you know, how do we get like one or two years of like, in the case of payroll, probably three years of kind of progress in like a category that like is interesting for us to do.

• 28:37Jason Calacanis?

  Ah, there it is. Teal, a seed stage accounting startup founded by Ian Crosby and Adam Saint. I think I know them.

• 28:44Speaker 03

  Yeah, they were the bench founders.

• 28:46Jason Calacanis?

  Yes, yes. It is. Oh, wow. So are you going to have like an accounting service for your customers? Is that the vision?

• 28:52Speaker 03

  Nothing announced yet.

• 28:55Jason Calacanis?

  Well, I mean, it is interesting. A lot of people are using probably Mercury or your contemporaries. And then they have an outsourced, you know, virtual accounting company, which they typically charge, I think, three thousand a month. Most startups pay two, three, four thousand a month for these. I'm talking about like seed stage, series A. And it's just a much better way to do your accounting. You spend thirty, forty, fifty K instead of having to hire, you know, an accounting firm. Some of the kind of firms I think are probably in a similar thing. But yeah, Pilot, I guess, is the other big one.

• 29:26Speaker 03

  Yeah. And yeah, because Mercury has all of these kind of core transactions, we already auto categorized for you. We already push all of that data to QuickBooks and, you know, a lot of the things that you might think of as a bookkeeper, you can kind of do automatically and programmatically if you have all that kind of core data within, within a service. So, uh, yeah, we're already doing a bunch to make that like much simpler for bookkeepers.

• 29:47Jason Calacanis?

  Continued success. And, uh, yeah, I'll, I'll DM you about maybe I can get in on SPV here. Get some of my investors together and get on that cat table. Mmm, yum, yum.

• 29:56Speaker 03

  Yeah.

• 29:57Jason Calacanis?

  I smell a 10x from here. Great job. And thanks for supporting founders and thanks for supporting this podcast. I don't know if you're a current advertiser or not, but I know in the past I've read some Mercury ads and I use it. It's a great product.

• 30:09Speaker 03

  Thanks for having me.

• 30:09Jason Calacanis?

  Highly recommend. All right. Well done. When you're a founder and you're moving fast and you want to close a big deal, a traditional bank can kill your momentum. Long approval processes, clunky outdated systems, not intuitive. I mean, some of these systems look like they were made in the 1970s and have never been updated. Not all. Banks are designed to work for startups. We all know that. And that's exactly why Grasshopper Bank was created. Grasshopper is a real federally chartered bank, but with the kind of financial tech stack that you'd build for yourself. They're going to open your new account in just minutes, not days. That's a key pain point. An integration-friendly platform with real-time transfers and AI tools that are going to save you even more time, all without straining your budget on a bunch of unnecessary fees. That's where they get you.

• 30:53Jason Calacanis?

  And because you're a valued Twist listener, Grasshopper will drop a $500 cash bonus into your account when you use the promo code TWIST, T W I S T. Start building without the slowdown. At grasshopper.bank/twist. Terms and conditions apply. Grasshopper is a federally chartered bank, member FDIC.

• 31:12Speaker 02

  You make a good point there, Jason. I'm a Mercury customers' boss for my little, my little company. And you know what I would love is some handholding. So if you're filing your federal, you know, LLC taxes for the first time, it'd be great to have someone you could call and ask three dumb questions to.

• 31:25Jason Calacanis?

  This is, I think, the full stack is more achievable. The most interesting part of that was when he said, yeah, maybe it's easier now because software development is so much faster to maybe add those next incremental products. I think he's right. It's just a matter of the distraction, customer service. Maybe it's easier, but you still need to think about it. And then founders need to be able to keep multiple business units in their head at the same time and then have the enthusiasm and energy to keep growing them. So that is now becoming the finite resources is the founding team or the founders or the founder. Their enthusiasm and energy, creative cycles to push something forward

• 32:09Jason Calacanis?

  as opposed to the blocker being, can I get three more developers? Or, you know, in the case of these larger companies, you know, maybe a team of like 15 or 20 or 30 of them. To allocate to a new product line and they get the new product line to a revenue level that actually impacts our bottom line. And that's why companies like Meta, Microsoft, and Google don't go after very small niche products too often. Because even if they put 30, 40, 50 developers on it and they start making a, you know, interesting product, it doesn't move the needle for them. So then the founders are like, are we still doing that? Is it at a billion in profits yet? Oh, it's at 500 billion in profits? Or let's say it's at the amount Mercury's at. Oh, it's doing 650 million. It's got a 10, 20,

• 32:53Jason Calacanis?

  30% margin, whatever it happens to be. I don't know. They were like, okay, that's incredibly boring. I guess we should just reassign those 30, 40, 50 engineers to make people click on, you know, search ads a little bit more. Let's put them on, you know, Google flights or Google shopping, whatever's the most profitable part of the business. That's, that's why startups get to keep existing. And so really interesting future.

• 33:16Speaker 02

  So Jason, it is summer, which means people are getting around the world. And I think it's time for a patented Jason travel hack.

• 33:22Jason Calacanis?

  All right. I'm a big fan of Athena. Athena gives you a virtual assistant, right? $3,000 a month, you got an assistant. They work on whatever time zone you're on. I travel a lot, right? And so I have to book a lot of travel. So I made a travel playbook for myself. What I do now is whenever there is a potential travel, I have instructed them, these are the airlines in which order I like to fly. This is the pricing. If something is within 20%, there's no reason for me not to take my preferred carrier, which happens to be United right now. They're like the best out of Austin. Then I have the hotels I like and the type of hotels I like. Now, I like hotels that are funky, interesting,

• 34:05Jason Calacanis?

  hip designer. I like them in a certain price range. And so I told them, hey, use Monocle, use Claude or OpenAI, whatever you want, to search through Content Ask Travel and Leisure, Eater, Monocle Magazine, The New York Times Travel. I gave them, these are the places to look for stuff. So then Go rank them, give me my options, call them on the phone, get the best price. Then tell me what the prices are. Then when I tell you, call them up and say, "Hey, we're coming to Singapore. We'd like to stay here. We're going to be here for five days.

• 34:46Jason Calacanis?

  I'm booking. Can you match the price?" We had four options of hotels we gave to this executive, the executive being me. And I know this sounds crazy, like, "Why are you trying to save money?" Well, we should always try to save money. I said, "Hey, just call them on the phone and say, "Hey, you know, we have a rate of $400 at this hotel. You're charging 600. Wondering if you could match the 400 price or come a little closer for a five-day stay." Nine times out of 10, they're like, "Of course, we'll do it for 450. We'll do it for 500." And we book it. That saves me the cost of the Athena assistant per year.

• 35:20Jason Calacanis?

  Let that sink in. If you travel 100 days and you save a certain amount of money per day, it adds up. The same thing with the travel costs of the flights, finding these different routes. Then, when I go to the city, I like to go to the best restaurants. So I told them, "These are the places to look for the best restaurants. Here's how Instagram works. And then, what I want you to do is when I go to that city, "I want you to book me a 5:30 and a 7:30 dinner reservation for the entire five days I'm there. Every day, in the afternoon, ask me which one I plan on going to, and we'll cancel the other." And sometimes I get charged 10 bucks a head. If I do it too short, I'm happy to pay to the restaurant.

• 36:01Jason Calacanis?

  This has made travel so easy for me. Could I do this with an agent? No. But an Athena assistant who knows how to use agentic technology and knows how to use the software, they become superhuman. And all I have to do is explain it to them once. I look at the work. I iterate. Explain it to them once, do a little bit of work, iterate. That has led to my travel being cheaper, better, and just so deft. I would never ask an American assistant to do this kind of lunacy, because they would look at me and be like, "That's completely inefficient." But I have extra hours for my Athena assistant. So I say to my Athena assistant, "I want to fill those hours. They want the work."

• 36:47Jason Calacanis?

  Them being a little inefficient is no big deal because the arbitrage between what they're getting paid in the Philippines and what an American who will not take the job here, I couldn't find people who would take the executive assistant job. If you try to get an executive assistant in a major city in America, it's a hundred to 150K. Why? Because the people who take that job are like, nobody wants to be of service and do this job anymore. What used to be a secretary then became an executive assistant, they just, people don't want that job. And if they do take it, they only take that job, Alex, as a springboard to the next job.

• 37:25Speaker 02

  Yep.

• 37:26Jason Calacanis?

  So you lose them every 18 months.

• 37:28Speaker 02

  And then you get to retrain them, which is so much fun. If you want to get an EA, go to athena.com/jcal. It'll take you right to this page, the secret engine behind Jason Calacanis' productivity. Jason is pretty

• 37:43Jason Calacanis?

  There's my tip.

• 37:43Speaker 02

  Gotta say.

• 37:44Jason Calacanis?

  Yes, I was, I'm glad that you, I'm glad that you reminded me to share this tip because I give this tip to my friends when they're like, hey, I got an Athena assistant. I heard you talk about it. Go to athenawow.com as well. Just athenawow.com will send you to that URL too. And I think after us talking about it on All In and talking about it on This Week in Startups, they've started to build up their inventory. So if you were somebody who was on a waitlist, if you go to my URL, they'll move you up the waitlist because you're a friend of Jake's.

• 38:20Speaker 02

  Also, if you want to think about this in a different light, I was just listening to you talk about it. I'm like, well, it's a little expensive. Then I was like, wait, I pay a lot more than that for my nanny right now. You know? So as soon as I don't need a nanny, I'm going to get an EA.

• 38:33Jason Calacanis?

  2,000 hours a year. If it was, yeah, if it's $2,000 times $20 an hour is 40, and this is 36. So it's like, whatever it is, 15, 16 dollars an hour or something. So it's a great deal for them. Athena has a little bit of margin in there, but not crazy. And go ahead and try to hire somebody who is a professional who wants to do this kind of like what would seemingly for an American be tedious. Boom. Uh, nannies right now, minimum in a major city. Uh, I know in San Francisco, it's 50 bucks an hour, minimum.

• 39:08Speaker 02

  Yeah, it's, it's 30 to 40 here in Providence. So it's a little bit of a discount.

• 39:12Jason Calacanis?

  So you live in, yeah, you, you live in like a, I don't want to say second tier, but a, a smaller, well, no, it sounds like a major city. And then there's whatever minor cities. What do we, what do we say? Like, so it's one, two, three.

• 39:27Speaker 02

  Correct. You're dead. I was just pretending to be annoyed, but I like living in a tier two city because I can walk.

• 39:31Jason Calacanis?

  Absolutely. I mean, I live, is Austin a tier one city or a tier two? I guess it's a million people now. Is it tier two?

• 39:37Speaker 02

  Upper end of tier two, like Chicago, LA, New York City, you know, like the, the big tier.

• 39:42Jason Calacanis?

  Washington DC.

• 39:43Speaker 02

  Absolutely. So tier two is a pretty wide band and I would Providence at the lower end of it by size, Austin at the higher end by size. But I think they're about the same. Yeah.

• 39:52Jason Calacanis?

  Yeah. San Antonio is like top 10. I guess it's in population, but uh, yeah. So yeah, Austin, I think is tier two out of, I think we're at a million here in population. All right. We have another guest. Let's get to work.

• 40:02Speaker 02

  We do. Next up, we're going to talk to our different Avi Patel from Kled. Now, Jason, this is a company that reached my attention because it was going absolutely bonkers over on X. And what Avi was talking about was essentially being ripped off by another company. And unlike we, when we usually see this sort of thing, people don't name names. They just allege bad behavior or unethical behavior. In this case though, Avi went nuclear by saying this company, this venture capital around. So let's talk to Avi about what's going on. And nice to meet you as well. Tell us, what does Kled do? K L E D. What is your company and what does it do?

• 40:35Speaker 01

  So Kled is the first human data marketplace. We let anyone upload their personal data and get paid for it. You can think of it kind of like Merkle or Scale AI, except they focus mainly on aggregation or they focus mainly on labeling. We focus on aggregation. Um, we collect, uh, we've collected over 1.1 billion files to date in the last four months alone. We get over 5 million files uploaded to our platform a day, have over 300,000 users, have it number one at the app store in multiple countries. And have raised over $10 million from some really cool investors. Yeah.

• 41:05Jason Calacanis?

  So to explain in plain English, there has always been this desire for people to reverse the meta.

• 41:14Jason Calacanis?

  Model Meta collects our information by providing free services like Facebook, Instagram, and WhatsApp. They collect your data. You get paid nothing. You get a free product in return. You get to share your images unlimited to your friends. You don't have to pay for it. But they collect your data. You get nothing from that. They resell your data to anyone who will pay them anything for it. Your idea was, hey, let's get people to upload their data, and then you can then resell it, and you give them a portion of what you get paid.

• 41:41Speaker 01

  Correct. Yeah, I think the added benefit to that, as well as that you can guide participation very easily, because you're being very explicit that you're paying people out for it, meaning that we just have like a massive gig app with tasks directly from the leading labs that tells you exactly what we want, and we can collect that data.

• 41:57Jason Calacanis?

  Ah, so this is the wrinkle. It's really more like Micro One, one of our portfolio companies, or Scale AI, where you can say to somebody, hey, we have an LLM. You would abstract who the LLM is, but let's say it was OpenAI, and they want to study people who play video games because they want to have better video game content, or they want to study people who shop on Amazon and Walmart. You say, hey, we're going to collect your data for that. I assume you do that with a browser plugin, or you do it with?

• 42:25Speaker 01

  We have an app. We just have a mobile app. I think it's the easiest form factor. Instead of going for like experts, which actually is typically what most of these labs do, we've shot for the general consumer audience. We let anyone upload. So, yeah, we have an app where it's just a full feed where you can see pretty much anything on there, from tasks from any of the labs, and then you can also upload general data. So you can go on there, upload your entire camera roll, and surprisingly, because we have, again, that's what most people do, actually, surprisingly, that data is very valuable, because it's consent-driven, and right now, people like OpenAI, for example, are preparing for IPO, cannot risk buying bad data that isn't legally licensed, right? So when you upload on our platform, you're giving your 100% consent across the board.

• 43:09Speaker 01

  And when you license rooms, you're confident you're not going to get sued after.

• 43:12Jason Calacanis?

  How much would I get paid if I put 100,000 images into the system?

• 43:16Speaker 01

  Depends on the images, but if it's on the higher end of quality, like definitely 500 bucks. We had a recent, we had a recent lab, I can't name which one, that was willing to offer $1,000 for a full person's camera roll, just the selfies on the camera roll, actually. And they wanted 100,000 people, and actively working on that contract right now, yeah.

• 43:40Speaker 02

  That's a $100 million contract.

• 43:43Speaker 01

  Correct, yeah, the blocker in that is our fraud detection pipeline, which no one will ever admit, by the way, is what needs to be improved. We're almost there. I'd say another like two weeks and we're going to be at 90%. But fraud detection is really hard at scale. If you're collecting data from a bunch of different regions, you need to make sure duplicates aren't being uploaded, interplay, deranged images aren't uploaded, AI-generated images, and then even task-specific, like let's say the task is take a video of you taking out the trash. That task requires two hands in the video at all times, head-down angle, this time of day. Let's say you remove your hand from the video frame for five seconds, that task video becomes completely null and void, and we have to detect that at scale, because the second you give bad data to a lab, they'll never work with you again. So we pride ourselves in the quality of the data that we provide, yeah.

• 44:27Jason Calacanis?

  Wow, it's such a fascinating business. So that would be for robotics and real-world model building is, hey, we need 10,000 people taking out the trash, and we're willing to pay for that, and how else are you going to get it? So it's a, people have had varying degrees of enthusiasm for these businesses. We have one, Micro One, that we incubated that's doing phenomenal. And I think it's a never-ending business, because models are constantly going to need data, and they need quality data, verified data, bespoke data, and they need to make sure that they're not breaking any IP laws. And so you, as the middlemen for these, are responsible

• 45:11Jason Calacanis?

  for that cohort. Okay, so you wake up one day, you've met with a venture firm, and a venture firm has backed a company from Y Combinator with $30 million. You've been funded with $10 million. You, according to a post that I read, had met with that firm, that firm had passed. You know, most firms pass on 99% of investments, so that's not new. I guess it was General Catalyst here, who led this $31 million round. But this company is a Y Combinator company. There is a belief in the market that Y Combinator companies who get that 500K, something's not working, they get A bit desperate, there's a bit of a hacker culture there.

• 45:56Jason Calacanis?

  These are all, you know, sort of what they optimize for. Um, and they want people who are rule breakers. They they're kind of upfront about that. And Paul Graham came up with the question. I don't know what the question is on the application. Give us an example of things you packed. Uh, and Sam Altman was one of those people who they thought fit this mold. Now, of course, we just got over a trial with Sam Altman and, you know, there's all these allegations that he's not trustworthy by his former co-partners. Put it all aside.

• 46:26Speaker 02

  Yeah.

• 46:26Jason Calacanis?

  They optimize for that type of person. If you don't get product market fit, the best way to get product market, but he also has it. And then be inspired by their recipes and then maybe open a similar restaurant.

• 46:40Speaker 02

  Uh, a time you most successfully hacked some system to your advantage.

• 46:44Jason Calacanis?

  So you're alleging here, Avi, that they hacked the system to their advantage. Explain what you woke up and saw and then how you reacted to it and why.

• 46:53Speaker 01

  I want to preface all of this first off that I am very non-drama oriented. Uh, I, uh, I love competition. I'm friends with, uh, Merkor and Turing. These are my colleagues, my partners, everything. Um, but the, the sheer combination of factors that came together here, uh, was, uh, in my opinion, absolutely unacceptable and deservingly needed to be called out. Um, and that's exactly what I did. I one day woke up, I saw a post from Yuri from General Catalyst, who I was talking to extensively. We had over five meetings with General Catalyst, was going to meet Hamon to the owner of the fund to discuss, um, a actually the same exact terms of $30 million investment at the same valuation.

• 47:37Speaker 01

  God knows how they came up with that number. Uh, maybe General Catalyst told them to raise the same amount. Um, and, uh, yeah, I, I woke up to that post. Uh, I then clicked the website and noticed a very, very blaring resemblance to our website. Um, you may put the side by side up. I think, uh, the better, the better thing is to scroll and look at the templates, the format, everything. Now, naturally, this is okay. Um, I think tons of people have copied our website. And tons of people have have like tried to do the exact model. But then you look at their app a little closely and they are not anywhere near us when it comes to the the competition. It's it's not even close. The app has 500,000 users supposedly, or 600,000 users.

• 48:21Speaker 01

  And 50% of their web traffic is from Nigeria. If people are unaware, we had to ban the entire country of Nigeria from using the Claude app as of last week because of

• 48:30Jason Calacanis?

  And just to pause for a second, Avi.

• 48:32Speaker 01

  Yeah.

• 48:32Jason Calacanis?

  If you if we look at these side by side, which Alex is doing a good job of here, font, color, and then section by section, a complete ripoff.

• 48:41Speaker 01

  Complete ripoff. Yeah.

• 48:43Jason Calacanis?

  So this is a level of stealing, you're a legend, and that just with the eye test. I don't know if these have changed since. Have they changed their website since you?

• 48:54Speaker 01

  So I I can get into that, but yeah, they were misleading their compliance practices and now they fixed them on their on their trust page. So yes, they have changed slightly, but yeah.

• 49:04Jason Calacanis?

  So they copied the exact, like they photocopied your website to a level that was absurd. I think that's kind of established.

• 49:13Speaker 01

  Yeah.

• 49:13Jason Calacanis?

  How does something like that occur? Did they address that allegation?

• 49:17Speaker 01

  They have not addressed anything. They have not even said anything publicly. I don't think they're actually messaging or talking to anyone because, I mean, that's like an admittance of guilt, honestly. I don't know how bad it would be if they started talking publicly. Um, but yeah, uh, anyways, the the main point is that, yeah, look, I was talking to General Catalyst. They were going to invest that money into us and we are a way more established app. Thousands and thousands of ratings on the App Store, all five star, have not been accused of wage theft, which is something Luel is extensively accused of. If you even Google the company, it's everywhere. Um, and, uh, yeah, 50% of their user from Nigeria. We had to ban the entire country of Nigeria as of last week because of a 95% fraudulent upload rate.

• 49:57Speaker 01

  So what they've done is they only have 113 people in organic traffic each month, or 300, somewhere in in that range is what Semrush and all the other services are saying. The rest is all paid. So these guys manually paid to get Nigeria, which is known to be a fraudulent region, to upload to their platform, to bolster their user numbers, to then look good in front of investors.

• 50:20Speaker 02

  Was Lul founded after you were talking to GC about raising money for Claude?

• 50:25Speaker 01

  Yes, yes. So they announced it after we were talking at GC, much after. They were founded way after we started, which was over a year ago now. And the last thing I will point out is they were using DELVE for compliance, right? So they were asserting that they had SOC 2 GDPR, CCPA and HIPAA compliance on their website.

• 50:45Speaker 02

  Yep.

• 50:45Speaker 01

  I put a second video that not many people saw. I think like 2 million people saw it, so I can't say not many. But 2 million people saw that showed their website asserting those numbers, asserting those claims. And then you go to their DELVE compliance portal and it only had SOC 1 compliant and SOC 2 in progress. So they weren't even compliant with SOC 2. And it's DELVE in the first place, so God knows if the SOC 1 was actually compliant or not.

• 51:08Speaker 02

  Probably.

• 51:09Jason Calacanis?

  And just so people know, DELVE was the Vanta competitor.

• 51:13Speaker 02

  Yes.

• 51:14Jason Calacanis?

  That was doing allegedly AI slop, SOC 2 compliance, destroying their customers allegedly. Reputation. So you had a, and this is, I guess, where, you know, ethics and morality matter.

• 51:34Speaker 01

  Yeah.

• 51:35Jason Calacanis?

  What, did they come to YC with that idea? Or did they come to YC with a different idea and pivot, do you know?

• 51:42Speaker 01

  Llewel, Llewel came to YC with the same idea.

• 51:45Jason Calacanis?

  Okay.

• 51:45Speaker 01

  So, yeah, and we, again, we've been building in public for a year. So every, many people, we've gone viral many times.

• 51:51Jason Calacanis?

  I wonder if YC knew that they were copying the idea.

• 51:55Speaker 01

  And the reason why I know that is because the day we announced our fundraising video, they announced demos for three exact replica products to CLED. I think one of them was actually Llewel as well. So they were very well aware. Yeah.

• 52:09Speaker 02

  So do you think that Y Combinator is specifically trying to get companies to ape existing successes as a way to essentially create a series of follow-up hits here? Do you think this is a strategy or just a coincidence?

• 52:22Speaker 01

  I want to say that's not a bad strategy, by the way. I have no qualms with that or quarrels with that. It's just like, the last thing I will say is that if you inspect Element their site, the number counter where it says live users was a manual number counter going up and they're. Heat map was manually set to where people were located. So it wasn't actually live or real. So God knows if the 600,000 was just again, take all of this into consideration. And then general catalyst gives $31 million. That's the problem I have.

• 52:48Speaker 02

  You said nepotism. I'm curious about why you think general catalyst would go through all the trouble of backing this company, talking to you, and essentially trying to pull the rug out from underneath you because it seems like a huge waste of time. They could have just invested in you and then moved on with life. So why nepotism and what was their impetus?

• 53:05Speaker 01

  The reason I say that is due to factors that are not actually public. I've messaged several people from general catalyst. And I can't say who, because I respect them greatly, is one of the biggest investors in one of the really big data companies in their portfolio. And it's usually the rite of passage that you have to meet this one person and become, in their eyes, impressed with what you do. And this person actually had no idea Luel even existed prior to this investment or any idea about the company and had nothing to do with the deal, which is very strange to me. So I don't know how many people from GC knew about the deal or anything, but it's just very weird across the way.

• 53:46Speaker 02

  Yeah, Jason, I want to get your venture perspective here. You talk to a lot of startups. You probably heard every horror story there is. When you hear all of this, to me, it sounds like some behavior that I wouldn't do myself. But I'm curious what your take is on both YC, the startup and its competitor.

• 54:02Jason Calacanis?

  Oh yeah, I'm prepared to give my judgment as the judge and jury and chairman of the internet, interwebs and startups. As the official judge, jury, judge dread of these kind of issues, I will give my ruling. First, I'll give my ruling on Y Combinator.

• 54:17Jason Calacanis?

  Y Combinator encourages this hacking behavior because they know if you were to make a four quadrant chart, people who break the rules and who are competent, people who don't break the rules and who are competent, people who are incompetent, break the rules, don't break the rules. If you were to make those four boxes, rule breakers, rebels, who are competent or incompetent, tend to win.

• 54:43Jason Calacanis?

  Over people who are not rule breakers. Now, people who are somewhere in the middle, they'll bend rules. They tend to do really well if they're competent. But there is a special place in the world for people who are willing to bend and break rules. And the problem with that is, once you establish that culture of rule bending, breaking, reinterpretation, say Airbnb, reinterpreting how things work. Obviously Uber, I was famously an investor in. Like, they reinterpreted some laws. Ride sharing laws, renting your couch laws. Hey, we're not a hotel, we're just renting a room. Um, okay, distinction without a difference, you know, I'll leave it up to you.

• 55:25Jason Calacanis?

  But, uh, the problem with this is, you have to explain to those rule breakers, when you invite the rule breakers in, some of them will do criminal things. Some of them will do things that are morally unethical. And that's why you see YC has to do cleanup. Uh, they, I think with that company, that was, yeah, did they?

• 55:47Speaker 01

  Yeah, they had to remove them from the batch, basically. But that was only after all the allegations. They were well aware of all of this, probably, and just didn't do anything.

• 55:55Speaker 02

  And they initially supported them after it broke, too, if you recall.

• 55:58Jason Calacanis?

  Right. So the default stance is always to support your founders. That's what they should do, that's what I do. And then, if they did truly do something wrong, you know, selling your shares back, breaking up, and cleaning up the relationship is also the right thing to do. So, I understand YC's position. YC should be a little bit more clear on the margins about this specific type of behavior, which is blatant ripoffs. They've now become known for being the blatant ripoff shop. Because when you have 200 companies, they have 500K each, they don't get product market fit. I know these founders, I know what they go through. They go through massive panic of, oh my god, I'm gonna fail. And you get the shame of failing. So with your last, let's say you did your first idea, and you spent 300 of the 500K,

• 56:43Jason Calacanis?

  you got 200K left, you throw a Hail Mary. You stand up a website really quick, you copy somebody else's idea, you try to raise money, sometimes it works out. So now I'll move on to, so they should just be a little clear that that's lame, don't do it. I'm pretty clear with that. If somebody comes and applies, and Y Combinator or any accelerator can't say, "We're going to just bet on one person in a vertical." There's all the companies pivot, like literally the majority of the companies pivot from their original idea within the first two or three ideas when you're at the accelerator stage. So people pivot into each other, that's all good. But they should just say, "On a moral, ethical basis, ripping off and stealing and photocopying is just lame and unethical, please don't do it."

• 57:27Jason Calacanis?

  And that's what I say. Like, it looks lame. Okay, now I will move on to this company. This company looks lame, unethical, and immoral based on stealing the website pixel by pixel. Is that illegal? No. Can you trademark design and stuff like that? Yes, on the margins, but you can't really, you know, Avi can't stop his business and spend $10 million on a lawsuit over a website. It's just not possible. So when somebody does that kind of behavior, if you're an investor, if you're Y Combinator,

• 58:08Jason Calacanis?

  if you're GC, whoever's investing, that is a blaring, blaring alarm signal. If somebody is willing to do something that's unethical, immoral, then that means you need to investigate if they are doing other things that are immoral, unethical, or illegal. So as a founder, you should never do anything with the appearance of impropriety because it's a blaring alarm signal to double-click on everything else you're doing. Your equity, your pay, your contracts, who your customers are, your metrics. And sure enough, Avi alleges a bunch of other things about this startup that don't look good. I'm not taking any of those and giving a verdict on them.

• 58:50Jason Calacanis?

  But now GC is being pulled into this. It's a bad look for GC. The company looks really stupid. And now the eye of Sauron, the magnifying glass is on your startup and every single behavior you do. And what I found... Of the first 400 companies I invested in, we had three that were doing things that were in that area of unethical, immoral, maybe illegal, securities fraud, pricing of options, making claims when you're raising money that were bending the truth. Man, we had to cut loose from these because when I went to my counsel, I said, hey, this company said people

• 59:31Jason Calacanis?

  worked for them who didn't work for them. They said, okay, that's were they raising money at the time? I said, yeah, it's in their deck. I said, they said, okay, that's securities fraud. I said, what? They said, yeah, that's the definition of securities fraud. You're making a claim while raising a security, while selling a security to investors. That's not true. Securities fraud. I'm like, great. Now I understand this really well. We train our startups. Don't ever mix your pipeline, your, you know, trials with customers. If they're on a trial, say trial. If it's a paid trial, say paid trial. If it's unpaid trial, say unpaid. If they're a customer and they're paying, say they're paying, but don't exaggerate. We had startups doing crazy things like taking four years of a contract

• 1:00:13Jason Calacanis?

  value and then saying that was the revenue they earned this month. That's crazy stuff, right? So let's put that aside.

• 1:00:19Speaker 01

  To add to this as well, this is, this is a human data marketplace, right? In order to actually win in this, you need to grow in the US. It's really important. And you also have to grow like pretty high like areas like Malaysia and Indonesia that are like low fraud rate and have good user bases. In order to do that, like they, they really rely on public reputation. The fact that this is something that has been put out there and there's Reddit articles and all of that stuff is just not good for the user base in the future. It's it's personal data. That's like really, like the whole point is your reputation has to be good. Like otherwise, no one's trusting you with this stuff.

• 1:00:50Jason Calacanis?

  Yeah. So we've adjudicated YC. They could do a little better on the margins, but the strategy is the strategy. Then we've adjudicated this specific company. Now, Avi, I'm going to pass judgment on you. I've come here to this week in startups, the official place where these judgments are given. And I think you did, you handled this exactly right.

• 1:01:14Speaker 01

  I appreciate that, man.

• 1:01:15Jason Calacanis?

  I'll tell you why. You know, you don't have the resources, time, or want to waste time on a lawsuit. So then what are your other options? You can imprison, let somebody F with you. You can let them, you know, take your cake from your tray, or, you know, spit in your food. You've seen all these moves. And if that kind of stuff happens, then you become a prison B word. You become a prison. Now, everybody's gonna F with you. If you go to the yard, and somebody, or you get in your meal, and they take your cake, you gotta take the tray, you gotta smack them across the nose and break their nose. And then if you get your ass cake and they jump you, fine, but at least you stood your ground.

• 1:02:00Jason Calacanis?

  You had no choice but to stand your ground on this. So, I think it's great that you said, hey, listen, here's the evidence, here are the facts, judge for yourself. And you called the venture capital firm out, and you said, hey, listen, you guys invested in them, that's your right. If you prefer them over us, that's fine. But it doesn't feel great to me. And I think you need to look at this startup, and maybe just check the reality. So you did what you had to do. You had to defend yourself in the face of somebody F-ing with you, if this is all true. The same thing with Vanta and the company that was doing the AI, allegedly doing the AI slop, SOC two things, right? Like, what is Vanta or

• 1:02:43Jason Calacanis?

  their contemporaries supposed to do? They have to call the company out, because they're poisoning the well.

• 1:02:49Speaker 01

  Yes.

• 1:02:50Jason Calacanis?

  You're in a category, this company, if what you say is true, they're poisoning the well of the same customer base. And now what you've done, By calling them out, keeping it unemotional, not being drama, just saying, here are the facts. And now I need to get back to work. Now I know your company. I saw your follower count went up. I noticed a lot of VCs started to follow you. I'm assuming some people are interested in like, hey, you're the high performer and you're alleging this other one is the copycat. They've raised more money than you. You seem to be the real deal. You're alleging they're not. Maybe people want to put a little more money into your coffers. Maybe people want to be on your team. And now your profile goes up and you get more attention. So I think you did the right thing.

• 1:03:32Speaker 01

  I appreciate that, man. I do want to say that I did turn down pretty much everyone that asked to invest because I would rather raise my series A on the on the merits of my revenue and numbers, because I think that's the right thing to do rather than some Twitter virality. But I'm just glad that the reputation of this company has been properly called out. That was the only objective.

• 1:03:52Speaker 02

  What was your investors' response to this? Because you took a risk, right? By calling out a VC by name, you really stepped on the plank here. You could have fallen off. I mean, people talk a lot about reputation management in the fundraising game. So were your own existing backers concerned that you were about to kick the wrong beehive?

• 1:04:08Speaker 01

  For the first five minutes of the post, I was messaged by like maybe three of them saying, Avi, you need to take this down right now. I love you, but you need to take it down. And then an hour later, they all said, Avi, I love you, never change. And that was a pretty consistent reaction from all of them. I have a lot of seed investors.

• 1:04:25Jason Calacanis?

  Remember I told you, like, the founders who win are a bit punk rock. They're, you know, a bit effervescent. Like, you obviously are signaling that, like, you're not going to. You're going to go down swinging, period, full stop. If they're going to try to stop you, if they're going to try to steal from you, you're going to go down swinging. You're not going to be a prison. You're not going to be somebody else's. I will say, GC is a great firm. This is a great, honorable, awesome firm, so it's perplexing.

• 1:04:53Speaker 01

  I said no to so many people, so many people, because I wanted GC to do our round.

• 1:04:56Jason Calacanis?

  And then here's, here's what I'll say. I didn't adjudicate, so the judge dread J Cal.

• 1:05:03Speaker 01

  Yeah.

• 1:05:03Jason Calacanis?

  Or just, you know, J Cal has spoken here. I will say, I'll give my, I will adjudicate the issue for GC. I think GC probably made a speed error here. They didn't, they, they knew the category was emerging. They wanted to place a bet. There's 20 different. Companies going after it. They picked one and they may have just made a mistake in vetting that company. Maybe they didn't vet them well enough. And maybe the company, if they, if that company, let's say, was not ethical or moral, as you've pointed out, and if that's all true, well, maybe they didn't present themselves ethically or morally to GC. And GC got taken

• 1:05:46Jason Calacanis?

  for a ride here. GC's in their, up in their grill right now, saying, why did you do something stupid like this? Why did you kick the hornet's nest here and do unethical things if these unethical things are all true? And it wasn't just random that like some AI just made the website for them and didn't copy.

• 1:06:06Speaker 02

  I don't have to work with general catalyst or potentially raise money from them. So I don't have to be nice. My view of the firm has gone down dramatically because of this. And I've been to GC. I've known investors there. I've been in their stupid elevator pitching room. Like, this is a firm that I used to hold in relatively high regard. But when I see behavior like this and an unwillingness to admit, possible, are you making a mistake? To me, you're just not a serious actor and I'm, I'm gonna judge you for it. Like, I mean, this is-

• 1:06:29Speaker 01

  I was messaged by them telling me that they've been asked not to communicate with me at all, basically. So they don't even want to apologize or say anything on it.

• 1:06:36Speaker 02

  I, I'm, you can do better. And so I, I, I now have moved them down back to our tier rankings, Jason. GC is now a tier three firm for me.

• 1:06:46Jason Calacanis?

  They're a great firm. Great team over there. I think I'll give them a little gracier that, you know, they're in an impossible situation right here. They, their choice now is to throw this person under the bus, to, you know, take their money back. Who knows? Maybe they're talking to that for that company and saying, hey, we want our money back. And we wanted, you know, and they're just in the process of settling that. They might be. You never know. Just like Y Combinator initially came out in support of that company. Was it Delve? I just want to make sure I'm talking about the right company.

• 1:07:16Speaker 01

  Yeah.

• 1:07:16Jason Calacanis?

  They came out in support of Delve and then they withdrew their support. And I think they just erased the note and let them keep the money. I think they just gave their shares back. I don't even know if they got their 125K back. So, yeah. There it is, folks. All right. Great job.

• 1:07:30Speaker 02

  Kled, K L E D dot A I. Go take a look at it. Sourcing the largest licenseable data sets on the planet. Avi, you're the best. Thanks for coming on.

• 1:07:38Speaker 01

  Thanks, guys. I appreciate it.

• 1:07:39Jason Calacanis?

  Have a good one. You've got to just put it into your work now. That's like what founders need to do is just stay focused on the work. These things can make a founder a bit crazy. And if you get in these kinds of situations, what you have to do is channel that energy into the product, into growth, into hiring, into raising money. The only thing I disagree with him, he was like, oh, I shouldn't raise money, whatever. Immediately open a note and get those investors on the cap table. Just open a note. That's, you know, 50% more than your last round, 50% less than what you think your series A is going to be. So, you know, if he did the last round of 30 million and the, he wants to do the next one at 200, like just.

• 1:08:13Speaker 02

  115, sure.

• 1:08:15Jason Calacanis?

  Yeah, 115, just raise 15 million, 20 million, start building up your chip stack so that you can go more aggressive and most of all, win, just win. Winning is the greatest. Winning is the greatest revenge. Living well is the greatest revenge. I had some people I was partners with previously on conferences and whatnot. They turned out to be of not the moral character allegedly, whatever that I wanted to be involved with. In the breakup, I lost millions of dollars in value in a conference. And then I went on to just absolutely flourish with the launch brand. So without mentioning anybody's names and all this theoretical stuff, like sometimes just getting out of something toxic and moving on from it.

• 1:09:00Jason Calacanis?

  Opens up so many other doors. I can tell you just from my personal experience, it's just much better.

• 1:09:05Speaker 02

  I think we're going to see a lot more of this issue though, because we talked earlier about, you know, making software, everyone can make more features now. When we were talking to Ahmad from Mercury. Now a VC firm can meet with a founder, see a cool idea, just go pick some people they know and have them build it. And so I think.

• 1:09:20Jason Calacanis?

  Yeah, which is there's, and that's not moral, that's not unethical or immoral. If you saw Uber or Airbnb being, being successful, you said, hey, that's an incredible category. We need to go for the silver and bronze in that category. Let's be a fast follower. Let's build something that's on the margins better. Let's take the margin out. Let's change the business model. Great. Go for it. Generally, that's not how to win. You want to go with the leader, but Facebook was a fast follower of MySpace and Friendster, and they wound up being a colossal win. People would say Uber was a fast follower of Sidecar, even though it was just like the timing was there. But they did follow Lyft into ride sharing, right?

• 1:10:02Speaker 02

  Sure.

• 1:10:03Jason Calacanis?

  Because Uber was Lincoln Town Cars. They saw ride share was coming, and they were like, well, that's illegal. We're not doing that. And then Lyft was like, yeah, we are reinterpreting the laws. And they had no choice but to include that in their product line.

• 1:10:16Speaker 02

  Yeah.

• 1:10:17Jason Calacanis?

  What people can't do in all of this is people cannot, people can't not do anything. If there's a new market, you have to go after it. That's part of it. But what people can't copy is your resilience, your self reliance, your enthusiasm, and you not quitting. The people I find who do derivative startups for the money, they wake up on the day it's hardest, or the day it's second hardest. And they're like, you know what? This is hard. I'm playing for the bronze. I quit. That's what happens. You see it in professional sports sometimes. Somebody is like, super highly intelligent. They've got this incredible physique.

• 1:11:00Jason Calacanis?

  They've got all these physical gifts. But they don't pursue it with the level of discipline that Jordan or Kobe or LeBron do. And they just don't succeed. Then you see people with less gifts, like Jalen Brunson on the New York Knicks, who's smaller than most point guards, who are slower than most point guards. But he figured out how to be the best point guard in the league and one of the top five players in the league somehow.

• 1:11:25Speaker 02

  Kelsey Mitchell for the Fever, same thing.

• 1:11:28Jason Calacanis?

  Yeah, you just can't replicate that passion and the drive and the resiliency to not give up. I guarantee you, these companies that are stealing websites and just copying them pixel by pixel, not putting their own spin on it, they don't have the enthusiasm that will carry them through the downtimes. They'll just quit. So you just have to understand that and keep going.

• 1:11:49Speaker 02

  All right. Now, before we get into a couple of news stories really quickly, Jason, let's talk about-

• 1:11:53Jason Calacanis?

  You didn't put up the, you had these great images. You guys should have thrown them up while I was talking.

• 1:11:56Speaker 02

  Oh, oh.

• 1:11:56Jason Calacanis?

  It was so funny.

• 1:11:57Speaker 02

  Oh, okay.

• 1:11:58Jason Calacanis?

  That would have been hilarious.

• 1:11:59Speaker 02

  I was just, I'll show everyone now, because you brought it up. I was just messing around. So here-

• 1:12:04Jason Calacanis?

  There it is. I am going to, if anybody has a case and you need a judge, I'm your judge.

• 1:12:10Speaker 02

  Here he is, ladies and gentlemen, Judge Jaccaldred.

• 1:12:14Jason Calacanis?

  I like it. I look as Judge Dredd.

• 1:12:16Speaker 02

  It's not that. Here's me.

• 1:12:17Jason Calacanis?

  There I am. Oh, you, you look better. Yeah, you and I should just judge these things. We'll adjudicate these. We are the law. Bring us your startup cases and we will pass judgment. You know, like Y Combinator is just always gonna have this issue where if you, if you route for hackers, sometimes hackers take it too far. If you say like, tell me a time you broke the rules to win, which is essentially what they're saying. That's what hacking means. Tell me the time you broke the rules in order to win. And then you invest in people based on that. Don't be surprised if people break the rules in order to win. And then some of it might be uncomfortable.

• 1:12:58Speaker 02

  A, a former head of the Y C community, Mr. Sam Altman, recently swung by his old alma mater and announced that he's gonna give out $2 million in OpenAI credits in exchange for equity to any of the companies in the current batch that want it. Now, I think this is gonna be done in a form of a safe, Jason, or perhaps a tafe, tokens for future equity. Uh, but I think it's a very interesting idea, quite a lot of value on offer for Y C firms. I'm curious what your thoughts are about this and if they should accept it or they should spurn it.

• 1:13:28Jason Calacanis?

  The most important thing to realize about any of these platforms coming in, uh, cause Facebook did the same thing. And you can look that up and I made a video like, attention to Facebook founders. I forgot what the offer was, if it was like platform credits or whatever. But I just did a thing. Hey, Facebook. Uh, hey, Y C founders. And it went viral many times over. And I said, listen, you're letting the fox into the hen house. Facebook is going to study whatever you're building and just incorporate it into the native platform. You can't trust Zuckerberg. I turned out to be exactly right. I, I don't wanna be right in these things, but as. Somebody who has experience, I can tell you what the platforms all do. The platforms study the app layer.

• 1:14:12Jason Calacanis?

  They pick the best things and then they make them defaults. So Windows, Android, iOS, Facebook, they all do it. Apple. And the question is, at what velocity and with what level of, you know, morality or ethics? People would say, Apple is the most conservative in this regard. If you look at when they add something to iMessage, they typically have let other people wring as much value out of that. And then they finally add to the Apple Watch, the ability to get a sleep score. But for like years, Apple Health is like, here are five different sleep apps. Here are five different meditation apps, whatever. And then eventually they, you know, calm.com is like a meditation app,

• 1:14:55Jason Calacanis?

  but they put a breathing exercise into the Apple Watch. Okay, great. So they tend to want to have a robust ecosystem and then do this. I don't believe Sam Altman is not going to just use this to study and to get a leg up and to buy them, which is his want and right. He can do that to collect information about these startups. Now they know that you're part of this. So they take those 200 companies. The business development group looks at your usage. They study your usage. They see which one of those companies is growing best. Remember, he was the founder, he was the CEO of YC for a while, so he knows the value. Oh, yeah. And then he will just go to each of these companies. Let's say 10 of them are breaking out and I'll say, hey, I want to buy the company. He knows. So now OpenAI can buy those companies, put them in there.

• 1:15:40Jason Calacanis?

  Or if they don't take his offer to buy them, because he now owns 2% of the company already, he has some amount of information rights. By having that, he's got some connection to the companies. That's what makes this offer brilliant and dangerous. And then he can just say to his team, hey, look, this person went from, you know, whatever, 2 million in tokens to 20 million in tokens. We need to study that company. Now, does that mean they're going to study them in a unethical way? No, they can just watch usage go up. They need to understand the usage. So when they see these 20 YC startups now had their usage go 20X, right? These are the 20Xers. They can just say,

• 1:16:21Jason Calacanis?

  Look at their website, go hire their people, go compete with them. And then boom, all of a sudden you now have educated Sam Altman and the OpenAI team on what's working. That's why they're doing this. This is an information play. This is not out of the goodness of their heart.

• 1:16:40Speaker 02

  Oh.

• 1:16:40Jason Calacanis?

  This is for them to, they don't need the return on the 2%. This is for them to get data to steal ideas from early-stage startups. That's what it is. Now, I'm using the term steal ideas, but it's for market intelligence is the way you could say it in the most generous way possible.

• 1:17:02Speaker 02

  Sure.

• 1:17:02Jason Calacanis?

  The most charitable interpretation of this is it's market intelligence.

• 1:17:05Speaker 02

  Okay.

• 1:17:06Jason Calacanis?

  You're stupid if you take the steal.

• 1:17:07Speaker 02

  I need to, to work through a disagreement that I have with you here because I presume that I'm missing something. But if I'm in a startup today, I'm going to be using probably some amount of inference, AKA tokens, from one of the major AI labs, probably OpenAI or Anthropic. They're very popular for a reason. They have excellent technology. Therefore, a lot of startups are already going to go use OpenAI's models and give them access to this information without OpenAI needing to go through all the work of offering them tokens and putting up together all these contracts and so forth. So to me, the risk is already there, Jason, and this doesn't seem like too much of an acceleration of that risk or an increase to it. It sounds more like, kind of like subsidized, you know, API inference for a while.

• 1:17:51Speaker 02

  So to me, I don't see the, the reason to treat this differently than using their products commercially without the investment.

• 1:17:58Jason Calacanis?

  I would study the individual making the offer.

• 1:18:02Speaker 02

  Speaking of charitably put phrases, there you go, Jason.

• 1:18:05Jason Calacanis?

  No, I'm listening. Sam is cutthroat. Have we learned anything from the trial last week? You know, Mira leaving, her impression of him, everybody leaving, the nonprofit board blowing up. This isn't like, I'm not making this up, there's. Questions about his ethics or morality, his approach to business, his cutthroat nature. I mean, phrase it any way you want. The New Yorker article is certainly a little bit sensational, but people wind up to

• 1:18:33Speaker 02

  To share.

• 1:18:34Jason Calacanis?

  Yeah, to share their experiences. They came to me and were asking me to be part of their article. I was like, I, you know, I, I like Sam interpersonally. I think he's incredibly smart. I don't like what he did to Elon. I thought he stabbed him in the back. I think it was incredibly immoral, unethical, what he did to him. Okay. You know, people do moral, they do unethical things all the time. Okay. Here we are. So just be thoughtful if you're a founder. And this is why I think open source and maybe using Anthropic, XAI, or other, you know, Gemini, there might be other places that maybe have less of a reputational issue and might be more in the acquisition camp.

• 1:19:14Speaker 02

  Yeah.

• 1:19:15Jason Calacanis?

  Than OpenAI.

• 1:19:17Speaker 02

  So the

• 1:19:17Jason Calacanis?

  If a deal seems too good to be true, it might be.

• 1:19:19Speaker 02

  Yeah. Last thing on this, we made, the market made such a big fuss last year over all the work that Sam did to get compute for OpenAI in anticipation of future demand. And now they're able to reset Codex limits pretty frequently. They're able to give out, you know, what is this, $800 million in compute credits to YC startups. I kind of think that if we can rewind the clock, we should have been slightly more positive about the compute work that OpenAI did last year because it does seem to be today coming good as Anthropic scrambles to find any GPU, TPU, or ASIC that it can to get its inference through. So I think that's worth keeping in mind as we talk about this. But let's move on. Jason, you wanted to talk specifically about a recent union outcome in New York City. Now,

• 1:20:04Speaker 02

  hotel housekeepers are going to get a relatively large raise over the next, I forget if it's six or eight years, but the headline here is that average pay for NYC hotel housekeepers that are part of this union, which is called the Hotel and Gaming Trades Council, will see there and come rise to over 100K in time. Your thoughts?

• 1:20:21Jason Calacanis?

  Uh, this to me was just incredibly notable about

• 1:20:27Jason Calacanis?

  How much a housekeeper in New York City gets paid versus other cities? Other cities are paying thirty thousand. I think the average housekeeper gets paid thirty thousand dollars a year, thirty five thousand.

• 1:20:44Speaker 02

  Thirty nine, yeah.

• 1:20:46Jason Calacanis?

  Okay, so this is triple. And then other cities, which would be very comparable to New York, they make like fifty or maybe sixty. So this to me was like, whoa. We are been talking about wages and this fear of like not keeping up. This is incredibly notable. A housekeeper at a hotel in the New York City area gets paid one hundred thousand dollars a year. And I was wondering, how is this possible? And I did just a wee bit of research and obviously a very powerful union. New York City has banned Airbnb. So there's no competition in New York City.

• 1:21:29Jason Calacanis?

  Without competition, they are kind of getting the highest rates of any city. So going to New York City, I don't know if you've ever had to go and stay in a hotel. But it's extraordinarily expensive.

• 1:21:42Speaker 02

  Yes.

• 1:21:43Jason Calacanis?

  Like a bad hotel is five or six hundred. An okay hotel is eight hundred to twelve hundred and a great hotel is like fifteen hundred a night.

• 1:21:52Speaker 02

  Yes. Now. Across New York City, Jason, it has the highest average cost of a hotel, three thirty five per night and the highest occupancy rate at eighty four percent.

• 1:22:00Jason Calacanis?

  So this is regulatory capture at its highest level. The hotels have basically banned Airbnb as a competitor. The unions know that there's not a lot of supply. So therefore, if there's not a lot of supply and there's a ton of demand, prices go up. And then everybody benefits from it. And then I looked at what is the, what is the number of rooms? Cleaned by a housekeeper per hour. Turns out it's like 1.4.

• 1:22:33Speaker 02

  Yeah, that sounds.

• 1:22:33Jason Calacanis?

  And there's a, there's an upper limit, so they're not allowed to because of union regulations. You're not allowed to hit two in an hour. You're not allowed certainly to hit three, so, and you probably don't want a hotel room like being cleaned in 15 minutes. You probably want a thorough job for cleanliness and hygiene and you're charging a high price. So, you know, it's not like you can have people come to a room and there's dust bunnies or like, you know, dirt or garbage in the room like you might see in some lower end hotels. This is just an extraordinary look at a regulatory capture market and the pricing of it. Blocking Airbnb combined with the demand, combined with the regulatory capture, the taxes. It is just extraordinary what's happened in New York City in this regard.

• 1:23:18Jason Calacanis?

  They really need to figure out how to get Airbnb working in that city and how to create more units. They do have, they do have, have done some experiments with micro units.

• 1:23:29Speaker 02

  I love that idea. Yes.

• 1:23:31Jason Calacanis?

  Yeah.

• 1:23:31Speaker 02

  Yes.

• 1:23:32Jason Calacanis?

  And capsule hotels in Japan and in other, this Japanese company, you can look it up. It just opened their first Hawaii capsule hotel. And so these capsule hotels are really interesting. You can get a room for, you know, somewhere in the 50 to $100 range when you're stacked in a capsule. Then they have ones where the capsules are next to each other. So it's like a bed with a side table and a door that closes and you use a common bathroom, kind of like a hotel. And so I guess this is the one. Yeah, this is it.

• 1:24:04Jason Calacanis?

  And really what has to happen for these things to change is competition. But New York is, you know, turning into a non-competitive regulatory capture market. And I just thought it was super notable.

• 1:24:14Speaker 02

  So a couple more data points about this before everyone jumps and tries to go become a housekeeper for 100K in New York City. The wages will rise by about 50% over the next eight years, which works out to about 5% compounded annually. Their prior contract was three and a half percent to 4%. And this will move housekeeper pay from about 40 to about 60 by 2034. So by then, Jason. Hundred K in New York City is not going to have the same bite.

• 1:24:39Jason Calacanis?

  Sure.

• 1:24:39Speaker 02

  Also, if you are a family with children in Manhattan, the median income is one hundred and eighty six. And instead now it's one hundred and thirteen. So these people will still be earning less than the median family with kids in the city. So it sounds extreme, but honestly, if you want people to do hard labor in expensive, high cost of living areas, you're gonna pay for them. I mean, I agree to go on the, on the, we need Airbnb in New York City point. We also need to build more, but I don't know. These people do work I don't want to do.

• 1:25:07Jason Calacanis?

  Yeah, no, it is definitely the future of our society that if we're not going to allow immigration, get ready for thirty, forty, fifty dollars an hour to be the bogey for this type of work, whether it's a valet, a barista, a housekeeper, these seemingly entry level jobs. If we don't have immigration, be prepared to experience what New Zealand, Australia, the Nordic countries have all experienced in this regard, which is a minimum wage. That's around twenty bucks. Twenty-five dollars in those other countries is the max it's ever reached.

• 1:25:49Jason Calacanis?

  It's kind of fifteen to twenty. And I have to say, and I was just on the Prof G podcast with Ed Elson. I just, they invited me. Prof G didn't show up, but Ed Elson did. And we were supposed to have a debate, me and Ro Khanna over the wealth tax, the seizure tax. And Ro Khanna dropped out, I think, because it's kind of hard to defend. Anyway, Bradley Tusk came on and we were kind of aligned in it, but we were just talking a bit about solutions to wealth disparity, which has got a lot of hand wringing going on here in the United States. The upper middle class has massively increased. People in poverty has decreased in

• 1:26:32Jason Calacanis?

  the United States, but it's really a tale of equity owners versus non-equity owners. What's happening is, I think, we should really look, and I'm going to get called a libtard and a socialist for just even bringing this up. I do think we need to look at the minimum wage as a backstop. If we are going to be not letting people into the country, it's just naturally going to go up anyway. And if you study when they, where they did this in other developed countries, including English speaking ones, that very much Model, the United States, it worked out okay. The only place that was problematic was underage workers. Underage jobs went away because sixteen, seventeen, eighteen year olds are not worth twenty dollars an hour.

• 1:27:16Jason Calacanis?

  They're worth less than the minimum wage. So you just need to have like a for sixteen to nineteen year olds or something, a different wage, maybe, or sixteen to eighteen year olds. It's worked out just fine for New Zealand.

• 1:27:28Speaker 02

  Yeah.

• 1:27:29Jason Calacanis?

  Just fine for Australia, just fine for Finland and these other places. And if you look at Seattle, San Francisco, New York, you did see fast food workers, jobs get automated. They're getting automated anyway. It just pulls the timeline by twelve months. I think we should really just add a dollar to the federal minimum wage for ten years. Just one dollar. Go from seven dollars an hour to seventeen or from seven to thirteen, whatever. Let's make it a dollar for five years and see what happens. Like, would it kill anybody to pay seven or twelve? No, it's gonna be no difference.

• 1:28:01Speaker 02

  No difference.

• 1:28:01Jason Calacanis?

  So just, it's, it's even just on an optic space, even if most people are not getting paid that, just on an optical base.

• 1:28:07Speaker 02

  Yes.

• 1:28:08Jason Calacanis?

  It would look good for our society to say, yeah, seven's unlivable.

• 1:28:11Speaker 02

  So.

• 1:28:12Jason Calacanis?

  Let's just add a dollar a year for five years and see what happens. We can always reverse it.

• 1:28:16Speaker 02

  Why can't people realize that it's okay to make a little bit less money in the near term to prevent the guillotine from being rolled out as you reformat the entire economy around AI? I'm a capitalist, but I would like to also not be shot.

• 1:28:29Jason Calacanis?

  Well, I mean, you bring that up and there is, uh, this would be an easy concession to make. And what they found in those other areas, so I, I, I had a preconceived notion about minimum wage, which was bad, just let the free market decide because you're going to eliminate jobs. The second you increase minimum wage, I saw this in my portfolio, all the companies doing automation. The second you raised the minimum wage in these major cities, San Francisco, New York and Seattle were the, the ones with the most aggressive programs. You saw automation take off in those areas. So I was like, ah, it's a quick way to retire jobs. What actually happened was, yes, those jobs got retired, but there still wasn't enough people to work in these jobs. You still had low labor participation because the rates were so low.

• 1:29:12Jason Calacanis?

  And what happened was you, in New Zealand, Australia, and these other places, you created more consumers.

• 1:29:21Jason Calacanis?

  People making under a hundred thousand dollars a year do not save money. They spend it. And Bezos was on CNBC just saying, why are we charging a nurse in Queens? Any taxes, if they're making 75K a year, they're paying 12,000 to the federal government. It makes no difference to the federal government. 50% of the taxes are paid by the 1%, 80% are paid by the top 10%. We might as well just wipe out taxes under 75K a year.

• 1:29:45Speaker 02

  No.

• 1:29:45Jason Calacanis?

  Makes sense to me. We might as well increase the number of people in the middle class by just slowly. I'm not saying dramatically, I'm not like saying go to $25 an hour or $50 an hour like these lunatics in California. That would be a shock to the system. That would cause people to leave. You don't want to do shocking things. Just slowly. 50 cents a year for 10 years is $5 more. 75 cents a year for five years. You know, whatever it is, come up with something de minimis, not shocking to the system. And what you'll see is your cup of coffee goes from 450 to 5.

• 1:30:18Speaker 02

  Yep.

• 1:30:18Jason Calacanis?

  Your hamburger goes from eight to nine.

• 1:30:20Speaker 02

  Yep.

• 1:30:21Jason Calacanis?

  Your french fries go from $4 to $5 or 4 to 450. But you create more consumers who then buy more hamburgers and french fries.

• 1:30:29Speaker 02

  So it's the old Henry Ford Model T, pay your workers enough to buy a car thing. I, everything you said is fine. Except for the let's not pay taxes. Are we as a country are watching right now yields on long dated government debts blow out? Because there's too much spending and there's too much borrowing and it's unsustainable and we can't afford it. So Bezos, thanks, man, but fuck off. Like, no, we need to have more money coming into government. Cause otherwise, Jason, we're going to be bankrupt in like two years. And that's terrifying. And no one seems to be that worried about it because I know the Republicans are currently in power in Washington. So we'll talk about it when they're out of power and they can piss and moan about it. But like, this matters now.

• 1:31:12Jason Calacanis?

  You know, neither party is going to stop the crazy spending.

• 1:31:17Speaker 02

  No.

• 1:31:18Jason Calacanis?

  That's, that's what I've come to. You know, they were gonna do Doge, they were gonna get rid of fraud, they were gonna cut spending, and they just moved the spending around. Instead of having the spending on social programs, they're just adding a trillion dollars to, you know, the military. When we were supposed to cut the military, we're just gonna increase it by a trillion and a half. Trump is adding more to the national debt than any president ever has. Biden added more than any president had. Trump won, added more than any president had. In other words, every president is adding eight or nine trillion dollars to the debt. There has to be some consensus here to stop it, or else the country is gonna go out of business.

• 1:31:58Speaker 02

  Like, like literally, like out of business, like collapse our currency, reshape up the entire global order. Like, everyone's like, whoa, you know, we can't afford-

• 1:32:04Jason Calacanis?

  Just own equities. It's the only way to, you know, if, no matter what happens to our country, if you look at Google, you look at Amazon, you look at Apple, you look at Uber, you look at Airbnb, you look at Coinbase, these are international companies that transcend any region or any dollar. They're truly international diverse companies. Sure, they might lose a little bit in a seismic, you know, seizing of markets that could occur or devaluing. But, you know, Amazon, people are not gonna stop ordering from Amazon and using Amazon Web Services. They're not gonna stop using their iPhones. They may buy one every three years instead of every two, one every four years instead of every three.

• 1:32:44Jason Calacanis?

  The cycle could slow down, but these companies remain money printing machines. Just own equities is the advice I would give to my brothers.

• 1:32:51Speaker 02

  And you know what? It's good advice. Index funds, baby, zero percent. Get exposure to the MAG7, you'll own Anthropic shares by accident. Jason, uh, let's leave it there, but we're back on Friday. Lots more to talk about.

• 1:33:01Jason Calacanis?

  All right. See everybody.

• 1:33:02Speaker 04

  On Friday. Bye bye. Thanks for watching This Week in Startups. If you liked this episode, check out more. If you're a startup founder, Founder University Cohort 13 kicks off this fall. It's a 12-week program that provides guidance on building your product, launching to real customers, and pitching to investors. Top startups receive $25,000 or $125,000 in investment. Apply now at founder.university/twist. Already have traction? The Launch Accelerator invests $125,000 and connects you with 500-plus investors to help you raise your next round. Apply at launchaccelerator.co. If you're an accredited investor looking to gain access to quality deal flow, apply for Jason's Angel Syndicate at thesyndicate.com.

• 1:33:46Speaker 04

  We find two to three deals a month. And check out This Week in AI, Jason's experts-only roundtable with top AI founders and operators every week. Find it thisweekinai.ai. Check out the TWIST ticker, our daily newsletter, at thisweekinstartups.com/ticker. Thanks again to our sponsors for making today's show possible. Follow the show on Instagram. Follow the show on X.com. This Week in Startups publishes three days a week, Monday, Wednesday, and Friday at 5:00 PM Central Time. You can submit an audio or video file question by emailing it to thisweekin.com.