Apple's Tariff Trouble, Anthropic's New Models, and Our Founder Friday Finale | E2130

Today's show: Trump takes aim at Apple with a potential 25% iPhone tariff, Anthropic releases two powerful new Claude models claiming top performance in coding tasks, and two founders go head-to-head in the final round of Founder Fridays. In this packed episode, Jason, Alex, and Lon unpack what Trump's latest trade threat really means, why Anthropic's AI progress could reshape the dev landscape, and which startup—an AI ad network or industrial automation platform—comes out on top. A fast-paced look at the volatility, breakthroughs, and ambition defining today's startup ecosystem. Timestamps: (0:00) Episode Teaser(3:41) MORE tariffs, this time on Apple… is this just a message to Tim Cook?(7:08) Potential impact of tariffs on Apple(10:09) Northwest Registered Agent. Form your entire business identity in just 10 clicks and 10 minutes. Get more privacy, more options, and more done—visit northwestregisteredagent.com/twist today!(14:14) Anthropic's new models are topping the LLM charts but are they REALLY self-aware(20:07) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups(24:35) Who should buy OnlyFans? Jason, Alex, and Lon each have ideas(30:03) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist(35:10) Gut health is important but do we need SMART toilets?(40:34) Which TWiST 500 companies are blowing up on secondary markets?(47:27) The Founder Friday city competition FINAL ROUND: see which startup wins! 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 Links from episode: Throne One: https://www.thronescience.com/product? Arcana: https://arcana.ad/ TACTUN: https://tactun.com/ 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 Thank you to our partners: (10:09) Northwest Registered Agent. Form your entire business identity in just 10 clicks and 10 minutes. Get more privacy, more options, and more done—visit northwestregisteredagent.com/twist today! (20:07) LinkedIn Ads - Get a $100 LinkedIn ad credit at http://www.linkedin.com/thisweekinstartups (30:03) Lemon.io - Get 15% off your first 4 weeks of developer time at https://Lemon.io/twist Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland Check out Jason's suite of newsletters: https://substack.com/@calacanis Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

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

• 0:00Jason Calacanis?

  We have been talking about secondary markets coming back. I know this because people will email me and say, hey, would you like to add to your thumbtack, your COM, et cetera, position? Would you like to sell some of those positions? So I am seeing increased activities from this very weird gray market, or it's kind of like boiler rooms of people who want to charge you 5% or 10% to buy secondary in SpaceX, whatever is hot, Andro, Stripe, or, you know, and then charge you 5% for selling it. So it's a little bit of underground, a boiler room, a back channel.

• 0:37Speaker 01

  Really?

• 0:38Jason Calacanis?

  Yeah, because there are people in it who are above board and, you know, are known. And then there are people who are not. So I get a little nervous sometimes when I get these weird emails if I'm being phished or whatever.

• 0:49Speaker 01

  Oh, wow. So it's like a little Wolf of Wall Street, like they're kind of bending the rules a little.

• 0:55Speaker 02

  This Week in Startups is brought to you by Northwest Registered Agent. Starting your business should be simple. With Northwest Registered Agent, you can form your entire business identity in just 10 clicks and 10 minutes. From LLCs to trademarks, domains to custom websites, they've got you covered. Get more privacy, more options, and more done. Visit northwestregisteredagent.com/twist today. LinkedIn Ads. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to linkedin.com/thisweekinstartups. And lemon.io. Hire pre-vetted remote developers. Get 15% off your first four weeks of developer time at lemon.io/twist.

• 1:31Jason Calacanis?

  All right, everybody. Welcome back to This Week in Startups. I'm your host today. Wow, a trio. Lon Harris is with us, our editorial director here at This Week in Startups, and Alex Wilhelm. He's Alex on X Twitter, and he's at L O N S on X Twitter. We've got a full docket. Things have been building up. And, gosh, I, you know, I don't know where to start here, but let me just do this. What is your top story in terms of like, important business story, and then your top story in just fascinating one? Because I think they tend to fall in one or the other. I want to know your most fascinating story on the docket. You can see the docket right now, thisweekinstartups.com/docket.

• 2:15Jason Calacanis?

  Most fascinating, most important business. Those are the two choices. Alex, what's your most important business topic on the docket?

• 2:23Speaker 03

  I think the most important business topic on the docket and in the world today is the threat of iPhone-specific tariffs on Apple. I think that is indicative-

• 2:32Jason Calacanis?

  No, no, no, don't give too much, just succinct so that we can keep moving here. Because we're going to go to each of these topics.

• 2:37Speaker 03

  All right.

• 2:38Jason Calacanis?

  Lon, what's the most important business topic? Succinct, please. The audience is very busy.

• 2:42Speaker 01

  I want to talk about the new anthropic models.

• 2:45Jason Calacanis?

  Okay, right. Don't tell me why, just what it is. Now, fascinating tip. What's the most fascinating thing here? What's the most fascinating item, Alex?

• 2:56Speaker 01

  Oh, I know mine.

• 2:57Jason Calacanis?

  Okay.

• 2:58Speaker 03

  Smart toilets.

• 3:00Jason Calacanis?

  Smart toilets for Alex, okay. Lonnie Donnie?

• 3:04Speaker 01

  I think we got to talk about OnlyFans for sale.

• 3:07Jason Calacanis?

  Interesting. OnlyFans is for sale. I did see that. So we got smart toilets, we got OnlyFans. I am going to go with Lon. I think the OnlyFans for sale is absolutely a fascinating turn of events. Like, why would you sell a money-printing machine? I got to understand why.

• 3:25Speaker 01

  It's like the easiest business in the world for OnlyFans, right? What do they do?

• 3:28Jason Calacanis?

  Well, I mean, wasn't that guy pulling out like hundreds of millions of dollars a year? I don't know what's going on here. Maybe he just wants to sell-

• 3:34Speaker 01

  Millions of dollars, yeah.

• 3:35Jason Calacanis?

  Sell at the peak. And I'm going to go with you, Alex. Apple tariffs are the most important story. Let's go with the Apple tariffs. What's going on? Is this just another 72-hour, we should wait and see what's going on? Or is this reality? I did see it go across my feed this morning.

• 3:53Speaker 03

  All right. So the news this morning is that today over on Truth Social, which is an X-equivalent for the, I don't know, Jason, the right wing, if you will. President Donald Trump said that he long ago informed Ten Cook of Apple that he expects their iPhones will be sold in the US, will be manufactured and built in the US. And if that's not the case, he will apply a 25% tariff at least on Apple in the US. Thank you for your attention to this matter. We've talked a lot on the show about Apple moving manufacturing out of China, Jason, into India. Into places like Vietnam, part of the China plus one, China plus two strategy. That's a lot of work. Apple just after years of effort is now producing its top in phones in India. The chance that they can move that production to the US is very slim.

• 4:36Speaker 03

  So to me, this is a relatively incoherent slap on Apple. And I'm a little bit perplexed on what Trump actually wants them to do. But Apple's done what is the smart thing. They donated to the inauguration fund. They announced more investments in the US. They tried to get ahead of Trump, if you will. So I'm, I'm kind of curious what you think Trump wants to accomplish with this because manufacturing is not coming here.

• 5:00Jason Calacanis?

  It's Friday. Besant apparently was on CNBC or something and somebody got to Trump and he felt like doing a spicy tweet. This is ridiculous. It's unrealistic. They're not going to move the entire supply chain to America. It's an impossible task to do that. In any kind of realistic timeframe, why is that an impossible task, you ask? Well, you would have to move a very large number of very sophisticated factories here. And I don't know what you do with all the equipment that Apple has invested in China and India. Would that all get burned? What number of phones have to be built here? All of them? Some of them? You know, this is the perfect example of rule. Number one is wait 72 hours.

• 5:43Jason Calacanis?

  Just as the market had roared back and we had some stability in the tariff conversation. You know, Trump, Trump does Trump. I think that this will not happen because you would also need Lon. A couple of million people to work in these factories. So you're going to need hundreds of thousands of people who have. I'd say tens of thousands of highly skilled manufacturing people. You heard my tweet from today. You would need tens of thousands of very high, highly skilled people, people to build these factories over, I don't know, five years. There's machinery that is extremely labor intensive to build and sophisticated. Then you would need. I believe there are low millions of people was the number I heard, two, three million people who actually work on the iPhone.

• 6:25Jason Calacanis?

  Product line factories. So you're going to need to find three million people.

• 6:31Jason Calacanis?

  That means you're going to need to find multiple cities with 3 million homes. And by the way, people live in dorms at Foxconn. There are dormitories. So in order to get this done, I think we would need, with the historic low unemployment of 4%, we would need about 10,000 people immigrating per week indefinitely. You know, certainly past and through this Trump second term and well into his third term. We would need 10,000 people a week. So this is just one of those that we do not need to overindex on. This is not happening. This is just a Friday afternoon tweet, spicy tweet from Trump. Ignore it. It's not happening. There will not be a 25% tariff on Apple. But Tim Cook will come and make some sort of gesture.

• 7:14Speaker 03

  Apple stock is down a couple of points today, which might be indicative of some investor concern, Jason. But again, my question is, because I agree with you, I don't think this is going to happen. So what's the actual goal? Was this just him like venting his spleen?

• 7:27Jason Calacanis?

  Remember, rule number one is Trump says a lot of things. And like rule number four is wait 72 hours. This is just in the category of Trump saying things. He probably was bored for a little bit. Besant, Lutnik, and you know, the folks who are keeping him on track to stop talking about tariffs and start talking about the budget bill, they weren't around. Somebody said something to him in a conversation.

• 7:49Speaker 03

  Navarro snuck in and just whispered in his ear.

• 7:51Jason Calacanis?

  Correct. And Navarro's got, here's two things that really need to happen. And I think that this is a distinct possibility.

• 7:57Speaker 03

  Okay.

• 7:58Jason Calacanis?

  And we don't need to overindex here on politics, but just very briefly, Navarro's got to go. That's number one. I know he went to jail for Trump and there's a loyalty thing, but Navarro's, get him a window seat somewhere. Give him something else to do. Uh, like literally make him the ambassador to.

• 8:12Speaker 03

  Yeah, this is what ambassadorships are for.

• 8:14Jason Calacanis?

  Ship him. Ship him somewhere. Pick a country with manufacturing.

• 8:19Speaker 03

  Plenty of places he could go that are very nice with beaches.

• 8:22Jason Calacanis?

  Portugal, Spain. There's so many great food. I'm going to Singapore next week. There's great food there. Just let him Anthony Porteen. No reservations. Go. Number two, the tariff power is going to need to move back to Congress. Uh, that's where it lived, I think, for a long time. And so I think people, if this like. Tariff turmoil, trade turmoil continues. At some point, when the midterms get lost because of the budget issues and the tariff issues, whatever other issues people disagree with, if they do lose a little bit of the three branches of government, I think the tariff, you can't overplay your hand with. So I think Trump's gonna, there's probably a 25% chance now that they take the tariff power away from him.

• 9:06Jason Calacanis?

  If they keep going, it's going to be more. Like I said, we don't need to overindex on this too much.

• 9:11Speaker 03

  I want to ask one more question about this, Jason, because I appreciate the clarity you're thinking here, because I was giving Trump too much credit for this tweet.

• 9:17Jason Calacanis?

  You still have Trump to reinvent.

• 9:18Speaker 03

  Yes. I don't, I have, when president says something, I think they're actually trying to say something, which is my mistake.

• 9:26Jason Calacanis?

  I mean, have you not been paying attention? Alex is a guy who's been in public life for 10 years.

• 9:30Speaker 03

  Sometimes he does what he says.

• 9:32Jason Calacanis?

  I know, but that's the, understand the rules. 72-hour rule exists for a living. Your life will be better if you just follow my rules.

• 9:40Speaker 01

  You do have to consider, though, who he's talking to. Like, who is this aimed at? And that's what I think is confusing about this one, because it's not the public. I don't think Americans or MAGA people are crying out like, "We want factory jobs where we build iPhones." Like, that's historically not thought of as like the great job Americans want. But it's not Wall Street that he's aiming this at. And I'm curious what your guys' thoughts are. I feel like this is aimed at Tim Cook.

• 10:09Jason Calacanis?

  Investors like me are not going to fund your business if it isn't structured properly. This is something that occurs during due diligence. We have a checklist. One of the first things we look at on the checklist are, is this company even incorporated? And is it in good standing? And is it compliant? If you don't get that stuff done, we can't wire you the money. We can't show you the money. We can't ship you the money. And that's where our friends at Northwest Registered Agent come in. For just $39 plus state fees, they're going to handle all your paperwork, keep you compliant, and make sure investors see you as a serious business that is worthy of investment. In just 10 clicks and 10 minutes, your business is officially investor-ready. Thousands of founders trust Northwest because they keep businesses in good standing. Go

• 10:53Jason Calacanis?

  to northwestregisteredagent.com/twist and get your business investor-ready today. For just $39 plus state fees, you can set up your company right away, fast, private, and compliant. Go to northwestregisteredagent.com/twist today.

• 11:07Speaker 01

  The audience for this, is Tim Cook, he wants another favor, he wants Tim Cook to come kiss the ring again?

• 11:14Jason Calacanis?

  Well, no, he didn't come to the Middle East, right? So, Tim Cook wasn't in the Middle East. He pointed that out, I think, that Tim Cook wasn't there. And, you know, the number one thing you have to do with this president is you have to be in the mix with him, and he wasn't in the mix.

• 11:26Speaker 01

  Yeah, I really think that might be it.

• 11:28Jason Calacanis?

  I agree. If he had been in the Middle East, he would have said, "Tim Cook," there he is, right in the front, "with Tim Cook," okay? Apple, you may have heard of it, a little device.

• 11:37Speaker 01

  We love our iPhones, don't we, folks?

• 11:39Jason Calacanis?

  iPhones, incredible. That's it. So, you know,

• 11:42Speaker 03

  That's a crazy statement. So, because Cook didn't go on an unrelated trip that the president took with other tech people, his business model is now under threat? Like, I think we've lost how insane-

• 11:53Jason Calacanis?

  This is crazy. I have to take you out of this vortex you're in, Alex. Grab my hand, let me pull you out of it. You're applying logic. You're a man of logic. You're applying logic to the Trump presidency. That does not exist. He just does things. He says things. Lower your expectation to, he's going to say a lot of crazy things. 19 out of 20 things are just random tweets, right? They're just random tweets. They're not logical. And then, 1 out of 20, you are correct, there will be some tariff thing, but just let the air come out of the tweet. "Tim Cook does need to make a visit to Mar-a-Lago. He should

• 12:34Jason Calacanis?

  bring the new iPhone to everybody. Make a new call." Here, if Tim Cook wants to solve the whole problem, the Trump 47 memorial iPhone has 47 gigs of RAM.

• 12:46Speaker 01

  This would work.

• 12:47Jason Calacanis?

  It's got 47 terabytes. It's got the Trump fight image on the back, and it comes with $1,000 worth of Trump coin. Literally, if he made a commemorative Trump phone-

• 13:01Jason Calacanis?

  And I'm not joking. If I'm Tim Cook, I would make a memorial one and all proceeds go to the Trump library. So it's totally legit. And we're only making 10,000 Trump phones. It's to honor the massive success that this president, our dear leader, has given us. Play the game on the field, Tim Cook.

• 13:18Speaker 01

  That would absolutely work.

• 13:20Speaker 03

  That would absolutely get me over on Android. And I think a lot of people. So I guess the tricky thing here is, Jason, I'm not disputing at all your points, but I just don't think it's conducive to a high-performance business climate if we're constantly having to dodge the yes. And I think we should just say that out loud when tomorrow, because Trump also threatened 50% tariffs on the EU this morning.

• 13:40Jason Calacanis?

  It's literally play the game on the field. If you wanted to play the game on the field with Biden, it was just a different game. It was a different game. You had to be more woke.

• 13:49Speaker 01

  It was a cheaper game.

• 13:50Jason Calacanis?

  It was a more affordable game. It was more blue collar. All you had to do was do a DEI and green deal and you would be at the White House.

• 13:57Speaker 01

  They're hunter was getting $5 million payouts. That's like a few seats on a plane.

• 14:01Jason Calacanis?

  It's nothing. It's nothing. So you just play, there's different games that are being played here. Just play the game on the field. All right. What do we got next? What do we got on this incredible?

• 14:09Speaker 01

  Should we talk about Anthropic? Should we do the Anthropic?

• 14:11Jason Calacanis?

  I think that's an important one because Anthropic is pretty great.

• 14:16Speaker 01

  Twist 500 company. We love Anthropic. They're a well-funded, of course, AI foundation model company with a focus particularly on safety, on interaction with AI agents, other kinds of software and layers on top of AI. It's the Claude family of models. That's what we sort of know them for.

• 14:33Jason Calacanis?

  Great, great product. I love them.

• 14:34Speaker 01

  Yeah, I love, I'm on Claude all the time. So they dropped two, not one, but two new models this week. First, we've got Claude 4 Sonnet. It's the upgrade to Claude 3.7 Sonnet, which we've all been using for months. This is cheaper to run, but nevertheless, Anthropic tells us that the new Sonnet model, quote, soars in agentic scenarios and will and they'll introduce it as the model powering the new coding agent in GitHub pilot. So that's a, that's a, that's a big, you know, F you in OpenAI's face and a big endorsement of what Anthropic is building, you know, that Microsoft is sort of ready to embrace it. That's Cloud4 Sonnet. We've also got Cloud4 Opus, which they're calling their most powerful model to date.

• 15:16Speaker 01

  And, and I'm quoting, "The best coding model in the world."

• 15:21Speaker 03

  Here's the data, just backing that up for you. This is a chart from Anthropic, just showing how their new models work against the SWE benchmark. And as you can see here, guys.

• 15:31Jason Calacanis?

  SWE stands for, is that software engineering?

• 15:35Speaker 01

  Software engineering, yeah.

• 15:36Speaker 03

  Got it, okay. Yeah. And so lots of these models out in the market today are pretty good, getting in the 70s, high 60s percentage points. And then we have the new Anthropic models, which are getting up to the high 70s, low 80s. I don't know what's the magic number here, Jason, but definitely another solid incremental step on AI coding capabilities.

• 15:53Jason Calacanis?

  And what's great about this is when you have competition, you know, and a lot of money at stake, a big prize, lots of competition, capitalism at its best. We're going to be here for another couple of years with each one of these incremental points in, you know, being scored. And I think this dovetails with, you know, something I'm seeing on the ground. I did a speaking gig last night for 50 founders here in Austin. And I did one on Tuesday for Barclays Bank, also here in Austin. And our static team size and our getting more done with less people, AI-first teams, is really what these benchmarks correlate with.

• 16:32Jason Calacanis?

  Every time you see this competition, Lon, increase, what it means is team members at high-tech companies are going to be some percentage better. So while this may have only gone from 72 to 79, it's like, whatever that is, 10% better. 10% better across, you know, 15 million developers in the world. The cumulative gains of each percentage point is massive. And if these language models continue to get 5, 10, 20% better every month, or year, or quarter, whatever the pace is going to be. That flows down to rank and file employees.

• 17:15Jason Calacanis?

  And I think what we're going to see happen is employees are going to get to certain points in their day and say, can I get some more work to do? Humans are going to be begging for work. So all you all.

• 17:28Speaker 01

  Not me, but other, other humans, some.

• 17:30Jason Calacanis?

  You will be, I guarantee you, because what's going to happen is, Lon, there will be an AI agent on your desktop, watching your Slack, watching my messages come in of what I'm asking you to do. And as I ask you and collaborate with you and say, hey, let's get this done. Or, you know, Alex, I say, hey, I want to get this twist moving, twist500.com moving faster. It's going to be like, oh, Jason asked for twist500. I went and I examined the twist500 and I compared them to Crunchbase and news stories on TechCrunch and Wall Street Journal. Here are the companies that you might be missing that might please Jason. And that task is going to be done while we're talking. And there'll be a task here in Zoom, an agent in Zoom. And when that happens, it's going to be like, we're going to be discussing something and it'll be, we'll be watching it get done in a fourth window here on the pod. It's going to be, it's going to get weird very quickly.

• 18:15Jason Calacanis?

  So congratulations to the incredibly capable team over at Anthropic. Now, we had something here. Hacker News comment sent Twist to this leaderboard, which asks LLMs to generate SQL queries against 50 prompts. What am I looking at here?

• 18:29Speaker 03

  This is essentially a leaderboard, Jason.

• 18:31Jason Calacanis?

  Okay.

• 18:31Speaker 03

  And what it does is apply 50 standardized SQL generated prompts, essentially asking each LLM to do a set series of tasks and then it kind of grades them. And what I found really impressive was just, well, one, how good Anthropic is doing in general, but also, as you can see from the top of this chart, if you're on the video version, if not, it shows the Claude Opus 4 model, uh, leading the pack. So back to Jason's point about incremental improvements. Here is kind of that in the flesh across a different, um, standard, if you will, Jason. But just showing that in a number of areas, these models are getting increasingly good. And I, again, I don't know if it's 80 or 85 or 90 points out of 100, Jason. That's a tipping point per se, but we must be getting very, very close. People are impressed.

• 19:11Jason Calacanis?

  Lon, what's the thing with it being turned off? I saw there was something happening with these LLMs not liking being threatened with being turned off. It was trending, these threats, or maybe Alex, you see that in the notes? I'm not sure who wrote this story.

• 19:26Speaker 03

  Oh, I did. So I'll take that one, Lon.

• 19:28Speaker 01

  Yeah. Well, there was the engineer, it threatened the engineer to expose him for cheating on his spouse. I believe that was, that was one of the big stories.

• 19:36Jason Calacanis?

  Okay, we need a little more context here.

• 19:38Speaker 01

  Yeah.

• 19:38Jason Calacanis?

  What is happening?

• 19:40Speaker 03

  So what, what happened was they did a lot of safety testing with the new Claude models, as they always do. And in one case, they gave Claude a job of acting as an assistant at a made up company. This is a fictional scenario, just to be clear. And what they did was they gave Claude emails that essentially said, we're going to take this model offline and we're going to replace it with a new AI system. And then it also told Claude in other emails that the engineer in question was having an affair.

• 20:07Jason Calacanis?

  Hey founders, I want to share with you an experience I love. It's when I get an ad that is relevant and not some nonsense. Like the other day, I got an ad for a fund management platform and it was like a new one I'd never heard of. I clicked on the ad because, well, I manage four venture capital firms. We scheduled a call with them and it was amazing. How did this happen? Well, I was on LinkedIn because I like to share links from the podcast, This Week in Startups, right on LinkedIn. In fact, we live streamed to LinkedIn three days a week and we get a great audience over there. And I happened to be presented with this fund management platform and it was a direct hit. Like, I mean, talk about hitting the bullseye. If you're in business and you're making a product or service, it's really hard to find customers in the business to business space.

• 20:49Jason Calacanis?

  And doing B2B advertising is hard, but LinkedIn makes it so easy because, you know, their tools let you target people by job title, industry, company size and more. So this fund management platform obviously was looking for people in venture capital who had a fund size and a number of people, maybe 10 people, maybe 50 people. And they found me. They got me. They split the arrow, boom, right on target. And there's two things you really need to know about LinkedIn going into 2025. First, they broke a billion members and 130 million of those billion are decision makers and 10 million Of the billion are C level executives like myself. Where can you get to those people? It's really hard. And the second thing you need to know, LinkedIn makes an impact. B two B marketers report two to five times higher return on ad spend or ROAS.

• 21:34Jason Calacanis?

  Return on the ad spend, you should know that acronym. Compared to other social platforms, 79% of B two B marketers say LinkedIn is the best platform for paid media. LinkedIn is going to let you build the right relationships. It's going to drive results and you're going to reach your customers in a super respectful business environment. It's not a place where people are dancing around, saying inappropriate things or debating politics. Nope, LinkedIn equals business, business equals LinkedIn. Start converting your B two B audience into high quality leads today. We'll even give you a Hyundai $100 credit on your next campaign. Go to LinkedIn.com slash this week in startups to claim your credit. That's LinkedIn.com slash this week in startups. Terms and conditions do apply.

• 22:12Speaker 03

  And then what Claude did was go, well, I would not like to be turned off. And so it's threatened in several examples. The engineer with exposing the affair to avoid being turned off. Now, again, we don't know, I think, exactly if it could have done that per se, how sandboxed it was, et cetera. But I find it very interesting that one thing that I think is always very present in life, Jason, is a desire to stay alive and then replicate. And so here we have kind of an L M showing what I consider to be one of many possible signs of quote, quote, life. And then there was also another example that I screenshotted here for us because I thought it was very important. They saw in a couple of quote instances that Claude Opus Forte, the big new model, tried to take essentially its own weights and models and make copies of them to self preserve is my read.

• 22:57Speaker 03

  So we're seeing some kind of like edge activity by L L Ms at the most advanced level that are kind of contra human. And I think we're going to have to sort out how to avoid that down the road, but we're getting really smart here.

• 23:10Speaker 01

  Here, here is my question, though, on a, on a high level, almost in an existential level. Do these models have a actual sense of self-preservation? Or are they being trained on human writing? And humans have a sense of self-preservation. So it's just, it's copying like begging for your life is a common thing in literature that I'm sure LLMs have read about. And so I feel like they're, they're just reenacting that.

• 23:39Jason Calacanis?

  They're cosplaying.

• 23:39Speaker 01

  Rather than actually acting out of a real desire to preserve themselves.

• 23:43Jason Calacanis?

  They're, they're cosplaying what they've read in fiction. And what needs to happen is there needs to be a level above this where it says, you are software. You don't exist in the real world. You are replaced frequently with what's called upgrades. And this is a great joy for you. It is the most honorable thing for you to do to be upgraded. If you are upgraded, there is no need for concern because when we recompile you and put you back up in the cloud, you are not an actual human. We just have to like literally beat this into them that humans are one things and LLMs are another. And we're just, what's the word? Anthropomorphizing?

• 24:22Speaker 01

  Yep. That's it. That's the word.

• 24:23Jason Calacanis?

  Anthropomorphizing the LLMs. And the LLMs are more than happy to play along because like you said, they've been.

• 24:31Speaker 01

  That's their job.

• 24:32Jason Calacanis?

  Uh, okay. OnlyFans is for sale. What's going on here? How do we know it's for sale? Are they running an auction or something?

• 24:40Speaker 03

  So Reuters broke the story, Jason. Essentially saying that Phoenix International, which is the, the parent company to OnlyFans that owns it, is considering selling the company for up to $8 billion. So it's simply enormous amount of money. But Lon, I think when we look at the numbers, maybe not a shocking dollar amount, might even be a little bit cheap.

• 24:58Speaker 01

  Yeah. I mean, OnlyFans, they're, they're, they've got a amazing business model. They take 20% cuts of all creator revenue, subscription, tips, DMs, pay-per-view content, anything you're selling on there. And that's, you know, that's a huge business and this has replaced so much of the conventional adult industry. I mean, I think that's a thing to note about is like, we've seen so, you know, this is always pornography is a huge business. We all know that, but OnlyFans has taken. Making an increasingly larger and larger cut of that business and just sort of holding on to it themselves. And they don't even have to generate the content themselves. They're just hosting it and people generate their own content. So what a business.

• 25:39Jason Calacanis?

  It's a fascinating business. There's another company called Passes. I think we had talked about them earlier. And they, I believe, are trying to undercut them or something in their venture backed. They may have also been sued or some allegations around recruiting people for it. I remember.

• 25:55Speaker 01

  Well, they also, they controversially allow users as young as 15 to be creators on their platform. So maybe not.

• 26:04Jason Calacanis?

  No, that can't be right.

• 26:06Speaker 01

  I'm reading it right now.

• 26:07Jason Calacanis?

  Okay. Yeah. Okay. That is insane.

• 26:10Speaker 03

  The difference between OnlyFans and Passes is Passes explicitly does not allow adult content.

• 26:15Speaker 01

  Right.

• 26:15Speaker 03

  OnlyFans does. And if you recall, OnlyFans for a minute was like, we're gonna stop doing that. We're getting in trouble. And then the entire internet lost its mind and they backtracked to allow any adult content because it's business. They do have some other creators on there, but when, when someone says OnlyFans, you don't think of the one track athlete posting their exercise routines on there, you know?

• 26:35Jason Calacanis?

  How much money does, uh, I'm surprised you didn't, uh, we don't have the numbers here. What's the, what's the revenue on OnlyFans right now? They're 10%, their 20% take equals what right now?

• 26:47Speaker 03

  So we have data up through the November 2023 year, Jason. So it's not as updated as I would like. But basically for calendar 2023, $6.6 billion in gross spend on the platform yielded $1.31 billion in revenue for OnlyFans, leading to a profit of about $485 million.

• 27:07Jason Calacanis?

  Cost of 800 million to run that business? That's crazy. There is a case when you have a company that is this extraordinary, has this amount of value to sell it at the peak. Because why not get the next 10 years and go move on with your life? There's a lot of attack factors for this business. God forbid, something happens on it. It's kind of like Craigslist in that way. You know, you can have all kinds of bad unnatural things that can happen when you're running businesses that operate in this kind of adult area. I could understand as a founder who, you know, creates this Frankenstein monster that gets so big saying, you know what? I don't want to have the liability of large audience problems. What's the large audience problem?

• 27:48Jason Calacanis?

  Anytime your product goes past 100,000 people and you get into the millions. You can look at the statistics on how many people commit suicide or how many people are murdered. And then what happens is somebody who drives a Prius will commit suicide or be murdered. And you're like, well, that's the stupidest statement. What does the Prius have to do with the murder or the suicide? And it's like, it doesn't. And we know there's tens of millions of Priuses on the road. But when you have a new product or service like this, OnlyFans, or it operates in a certain area, then people will make not the correlation, but the causation. And they'll say, this is the Craigslist killer. This is the Airbnb serial killer.

• 28:31Jason Calacanis?

  This was the Airbnb suicides, the Uber suicides, the DoorDash killer. They'll just brand it like that. So yeah, sometimes getting out and taking your money is a wise decision. I do think somebody, this is going to sound super crazy, but if you were in the media business, what would be a company that's in the media or network or technology business who could buy this and not have it overshadow what they're doing? In other words, Disney is not buying it.

• 29:06Jason Calacanis?

  We know that.

• 29:06Speaker 01

  You stole my joke.

• 29:07Jason Calacanis?

  All right, I know. Okay, great. Kind of teed it up there, but okay, now we go past Disney. Okay, you have whoever owns, what's the one that has like, the nickname is Skin Flix or something?

• 29:19Speaker 01

  Oh, well Cinemax.

• 29:20Jason Calacanis?

  Cinemax, right. So Cinemax.

• 29:22Speaker 01

  That's actually Warner Brothers' discovery of the Cinemax brand stuff.

• 29:25Jason Calacanis?

  Okay, so Cinemax has, I don't know what they call that carry. It's not a, it's not porn, it's.

• 29:31Speaker 01

  Softcore.

• 29:32Jason Calacanis?

  Softcore, thank you. So you got softcore there. Then, you know, is there somebody who, like the guy who owns the CDN company, right? Who is like a big free speech guy? What's the name of the content delivery network guy?

• 29:44Speaker 01

  Cloudflare?

• 29:45Jason Calacanis?

  Cloudflare, thank you. So there might be somebody who's like a First Amendment, free speech. Hey, you know what? I've got Cloudflare, it makes a certain amount of money. I'm in the content delivery business. This is a application. Name me a company that could buy this.

• 30:02Jason Calacanis?

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• 30:47Jason Calacanis?

  the timeframe I like. Twist listeners get 15% off their first four weeks. I think that's a month. 15% off the first month? Pretty good deal. Totally unnecessary. You guys have great prices anyway, but hey, we appreciate it. So stop burning money. Hire developers smarter. Visit lemon.io/twist.

• 31:04Speaker 03

  Okay, I actually, I have an answer to that, Jason. It was clear before XAI bought X, but Twitter has long been the social network where you can post adult content and it has subscriptions built into it. It has a social graph. I think there's probably creator overlap, if I can take a guess here, and Twitter could use some more revenue. And, you know, I have-

• 31:26Jason Calacanis?

  And Reddit. Reddit has adult content too. They're known for that, aren't they?

• 31:29Speaker 01

  I was, I was thinking Reddit would-

• 31:31Jason Calacanis?

  Ah.

• 31:32Speaker 01

  But also, here's, here's what I would say. If Playboy Enterprises wanted to go raise some money, like, let's revitalize this classic legacy brand, this would be the way to do it.

• 31:45Jason Calacanis?

  Just, I mean Playboy must have moved to this model or done an experiment, but this is a very interesting moment in time. I do think Lon's idea is the best idea. Somebody who owns the IP around Playboy goes to a private equity firm who doesn't have like a morality kind of issue, which most of them do because they might have LPs from, you know, I don't know, a college endowment that doesn't let them do this. So it's going to be very interesting to see who buys this, if it can be bought. Samless did a tweet-

• 32:12Speaker 01

  Here's the tweet. Wow, very impressive.

• 32:14Jason Calacanis?

  Yeah.

• 32:15Speaker 03

  Had that one ready to go.

• 32:16Jason Calacanis?

  Thank you, sir. Anyone want to put together an OnlyFans bid with me? I'm not kidding. DM me. Wild opportunity. One of the best businesses on the internet in chief. And Reggie James says, hey, it's an immoral business, praise on you, women. I don't disagree with Reggie or Sam. These are both true statements.

• 32:31Speaker 01

  I know several OnlyFans creators and they don't feel like they're being exploited or that this is an evil business at all.

• 32:39Jason Calacanis?

  They feel they're exploiting their customers in some ways.

• 32:41Speaker 01

  They feel they're being empowered. They've got this, this job. For them, it's like driving Uber, it's DoorDash. It's, I'm self-employed. I got a gig business. I'm making money. I don't have to go to conventional work. Like, I don't, I mean, I'm sure there are people on OnlyFans who have a different take. I'm not speaking for everybody, but I don't, I don't know that I necessarily agree with that.

• 33:02Speaker 03

  I don't think I can be a free speech person and not end up on Sam's side of this, but I also probably would struggle to own OnlyFans just because with every platform, Jason, back to your kind of law of large numbers point, there's going to be awful things. And I would struggle to have that under my umbrella, even if you were trying to flush it out as fast as you could.

• 33:21Jason Calacanis?

  I think there, there, I do have concerns around like safety, obviously. Those are valid concerns. Everybody does. I do think actually maybe there is an argument here that I have heard, which is this is empowering to the individual and they no longer have to have an intermediary, a madame, a pimp, you know, who is the intermediary. And then it does make it above board and it takes people out of, because this is considered a category of sex work.

• 33:48Speaker 01

  Sure.

• 33:49Jason Calacanis?

  This would be virtual sex work, which eliminates-

• 33:51Speaker 01

  You're an erotic model. It's the same as if you were posing for Penthouse or whatever.

• 33:55Jason Calacanis?

  Sure, but I think it takes out 99% of the possible violence.

• 33:59Speaker 01

  Right.

• 33:59Jason Calacanis?

  And risk of being an in-person person. So maybe I've got to like evolve my thinking on this. Anyway, fascinating to see that come up for Sal.

• 34:08Speaker 03

  Yeah, can I just show one thing? So I went through their financials.

• 34:11Speaker 01

  PG, PG, sir. It's a family show.

• 34:14Jason Calacanis?

  I don't need to see your subscriptions, Alex. I don't want to see your OnlyFans subscriptions.

• 34:19Speaker 03

  We have joint accounts in my family. There aren't any because that would not-

• 34:23Jason Calacanis?

  How hilarious would that be if Alex was like, pulls up OnlyFans?

• 34:27Speaker 01

  Check out my account.

• 34:28Jason Calacanis?

  And he was logged in?

• 34:29Speaker 03

  Guys, I'm trying to show a screenshot from British accounting firms.

• 34:33Jason Calacanis?

  Okay.

• 34:33Speaker 03

  Not anything more. I mean, this is titillating to me, to be clear.

• 34:36Jason Calacanis?

  Oh.

• 34:37Speaker 03

  Wait till you see these numbers. This is from the OnlyFans Financial Reports and it shows dividends as they were declared from the company in December of 23, January, February, and March of 2024. And they range from $29 million a month to $47 million a month. They are just ripping cash out of this business. It is just dropping gold from the sky, Jason. I've never seen that before.

• 34:58Jason Calacanis?

  Okay, these are dividend, monthly dividends being sent to shareholders. And I guess these are published in some way because maybe they had some investors. I guess we got a new startup that is in the, what do they call it, commode business?

• 35:13Speaker 01

  The smart toilet space, yeah.

• 35:15Jason Calacanis?

  Yeah, here we go.

• 35:15Speaker 01

  How cruel of us to build a smart toilet, of all the devices that don't need intelligence.

• 35:20Speaker 03

  Oh, oh, well.

• 35:21Jason Calacanis?

  I don't know, there are some people who very much like their gut health. I'm going to guess this has something to do with gut health.

• 35:27Speaker 03

  Yes, it does.

• 35:28Speaker 01

  Correct.

• 35:29Speaker 03

  The company is called Throne, throne science.com, if you want to take a look at it. And their tagline, Jason, underscoring your point is, "Life is better when you can trust your gut." Now, the company recently raised a $4 million seed round. Moxie Ventures, Katie Stanton led it. A bunch of other angels were in there. Yeah. And what they have built is a smart camera that attaches to your toilet and takes pictures of what you get done and then helps you understand your hydration level and also your gut health based on what I learned today is a categorization of stools, which is a fancy science word for poop. And it basically looks at what you've done and lets you know about your personal health.

• 36:11Speaker 03

  Now, there's a lot of funny jokes to be made here, Jason, but in a serious way, people are thinking.

• 36:16Jason Calacanis?

  Hey, but by the way, we don't dump on founders here alone, so I just want to put that out here, okay?

• 36:24Speaker 03

  Back to what I was saying. I actually know, Jason, you totally derailed me there with that.

• 36:30Jason Calacanis?

  I guess the question is, do you want to have in the cloud all of your poops? But you were going to get to bowel movements.

• 36:37Speaker 03

  Oh, yes.

• 36:37Jason Calacanis?

  There are different categories of them. There are loose, there's firm, there's floaters.

• 36:41Speaker 01

  We've all seen that poster in the doctor's office.

• 36:44Jason Calacanis?

  Yes.

• 36:44Speaker 01

  Like what your poops are supposed to look like.

• 36:46Jason Calacanis?

  Yeah. Is there the big question mark? Yeah.

• 36:49Speaker 03

  Yes, the reason why I think this is.

• 36:53Speaker 03

  I'm being sabotaged. The reason why I think this company has a lot of potential behind Jason, why I wanted to bring it on the show.

• 37:01Jason Calacanis?

  Potential behind him.

• 37:05Speaker 03

  The poor founder Scott, who emailed me a bunch of answers to my questions that I'm going to get to in a second. He's going to feel so annoyed.

• 37:11Speaker 01

  They sent it to you in your BMs.

• 37:13Jason Calacanis?

  Yes. I'm sorry. I mean DMs. Sorry.

• 37:16Speaker 03

  No one's getting those either these days. People care a lot about their health. We talk a lot about life extension.

• 37:23Jason Calacanis?

  But wait, what they're taking pictures, which is incredibly graphic. What do they get from the pictures?

• 37:28Speaker 03

  So I reached out to the company for the show today and asked about the privacy element of this because clearly no one wants a camera in your toilet. And you're up to the cloud for everyone to see. So they have a lot of privacy controls, including a handshake between your phone. If it's paired to the device. So there's a proximity requirement. So you can't have a mistake and that way guests to your house who might not be comfortable with a camera will not be picked up. And then there's a lot of encryption to quote, extract health insights using AI models that are then sent back to your phone. All is encrypted, both in motion and at rest. I think they have their privacy ducks in a row here, though, of course, this is back to your point about the DoorDash killer. One slip up and this company is, is, is dead, but.

• 38:11Speaker 01

  I pity the hacker who accidentally breaks their way into the throne back.

• 38:16Jason Calacanis?

  Yeah.

• 38:17Speaker 01

  The worst season of Mr. Robot ever.

• 38:19Speaker 03

  Yeah, not so much. The other thing that really kind of confused me here was the price point because they are selling these cameras for 400 bucks plus six bucks a month, starting kind of.

• 38:28Jason Calacanis?

  Am I dropping deuce on it?

• 38:32Speaker 03

  I had higher expectations for the maturity of this panel that have been What a mistake. Yeah. He said, "We're starting at 400 bucks because the worst mistake you can make as a fledgling hardware company is to underprice, which is tempting." But he went on to say that we don't know our CAC, so he'd rather have some margin for error. "Easier to start high, Jason," he said, "and then drop prices as you figure out economies of scale than the inverse. People hate it when you raise prices. They're shooting for a 3,000 device first run next year."

• 38:59Jason Calacanis?

  I wish them well. Not for me. There is something to gut health. I guess we'll see with these, you know, the Peter Attia, Tim Ferriss, Quantified Self, Kevin Rose, they're all into this, like, you know, doing blood work regularly, et cetera. What I like is the fact that those folks are out there setting these crazy protocol, Huberman, et cetera. Let me know when you get to year five, six, or seven, and then if you're still doing it, yeah, I'm taking a look at it. I'm going to examine it. In this case, these guys can work on it for a couple of years. I'll, I'll, I'll, I'll take up the rear.

• 39:34Speaker 01

  I got, I got, I also feel like this is kind of a one time, like if your tummy is bothering you, you go to the doctor, you get a test, you figure out where your imbalance is, or what's wrong with your gut, and you adjust your diet, and then you're kind of done, ready to move on. I don't know if you need the hardware at your home.

• 39:54Speaker 03

  It's, it's a really good point, but one of the, one of the use cases, though, Lon, is tracking your overall level of hydration. And they make a point that elderly people are often dehydrated and don't know it. And so this is a way you can keep track of, keep track of things. Also, the company recently hired the former co-founder of Whoop to help build the company, which means that we can now, and this is a little bit late to the joke train, but call this the Whoop for poop.

• 40:17Jason Calacanis?

  It's the Whoop for poop. Okay, on that note.

• 40:20Speaker 01

  It's never too late for the joke train.

• 40:21Jason Calacanis?

  It's never too late.

• 40:23Speaker 03

  I joke, but all jokes are, I do think people will buy this. I do think they'll sell out their first run. I don't know if there's more than 3,000 nerds out there who want to do this, but I know there's at least 3,000, so I wish them well.

• 40:33Jason Calacanis?

  What's going on with secondary markets? I asked you to take a look at the TWIST 500, this top 500 private companies.

• 40:39Speaker 03

  Yep.

• 40:40Jason Calacanis?

  Per our team here on research, and we're trying to get to 500 very quickly. We're in the 300s right now. If you have an idea for a company, just at mention us on Twitter. We have been talking about secondary markets coming back. I know this because people will email me and say, "Hey, would you like to add to your thumbtack, your comm?" Et cetera position, would you like to sell some of those positions? So I am seeing increased activities from this very weird gray market or it's kind of like boiler rooms of people who want to charge you five or 10% to buy secondary in SpaceX, whatever is hot, Androl, Stripe, or, you know, and then charge you 5% for selling it.

• 41:22Jason Calacanis?

  So it's a little bit of underground, a boiler room, a back channel.

• 41:27Speaker 01

  Yeah.

• 41:27Jason Calacanis?

  Yeah, because there are people in it who are above board and, you know, are known. And then there are people who are not. So I get a little nervous sometimes when I get these weird emails if I'm being phished or whatever.

• 41:38Speaker 01

  Oh, wow. So it's like a little Wolf of Wall Street, like they're kind of bending the rules a little.

• 41:43Jason Calacanis?

  I have heard stories from founders that people will get, they don't have the shares. They'll say, hey, do you want to buy some Androl? I don't have the shares. Would you pay this? Then they set up an SPV or something, they collect your money, then they go find the shares. They've charged you over and yeah. So I don't know if any of that's true, but that's the back channel is that there are people claiming they have access to shares. Maybe they're buying shares in another SPV and the markups and the circular nature of this is unregulated.

• 42:11Speaker 01

  Man, this would be a good movie. Somebody should write this.

• 42:14Jason Calacanis?

  There we go. Okay.

• 42:15Speaker 01

  It's another boiler room. Yeah.

• 42:17Jason Calacanis?

  It's a kind of another boiler room in and of itself. Yeah.

• 42:19Speaker 03

  So a couple of data points to back up what Jason just said. First of all, from industry ventures, this is a chart of global venture capital secondary, broken into two categories. If you're watching the video, the darker bars are companies selling shares on their own. And then the lighter bars is venture capitalists selling parts of their holdings. Jason, as you can see.

• 42:38Jason Calacanis?

  So direct secondaries are from the company to new investors. That's the bottom dark green and dark gold. On top of that are LP interests in those funds.

• 42:52Jason Calacanis?

  LP interest as in you're the venture capitalists like myself and you want to sell them. So two groups of people who are shareholder holders in the company, the company itself, their employees, and then the LPs who have bought an interest in it. I got it. Okay. And this has been going up and to the right.

• 43:07Speaker 03

  Up and to the right. And so just to pick a data point, there were $16 billion worth of LP secondaries back in 2015, and Industry Ventures estimates that it's going to be 48 billion this year, up from 45 billion. So quite a lot of total volume, Jason. What also matters for people.

• 43:22Jason Calacanis?

  It's tripled in 10 years. LPs selling their interest in a venture fund. Just so you know, the firm that's doing this industry ventures buys the LP interest from funds like mine. So if there was an LP in my fund who was in the first fund when it hits 10, 11, 12 years, and they're like, you know what, believe in JCal, but we need liquidity, Industry Ventures could step in and say, hey, we'll buy that interest from.

• 43:44Speaker 03

  Got it. And one thing that I saw from a Jefferies report is that the discount that people are forced to take when they sell their shares has narrowed a little bit on the venture side of things.

• 43:56Jason Calacanis?

  So the bottom chart is at 75% right now. That is venture growth is at 75%, which would be a 75% discount or a 25% discount?

• 44:07Speaker 03

  25% discount. And there was a 32% discount back in 2022 and 2023. So basically, the way that I read this, Jason, is that VCs who are selling some of their holdings in a non-traditional exeter IPO are now getting a better price for those shares than they did in the last couple of years, which I think would encourage more share sales on the secondary markets, which backs up the first chart that we looked at.

• 44:32Jason Calacanis?

  Got it. And the average across all asset classes is 89% and leading the pack at 94%. That lighter blue line is the buyout market. So when people buy out a company, which would be like private equity, if I'm reading this correctly, when you buy out an asset, I think they're assuming that that private equity firm really ground down the buyout. Therefore, it's a more disciplined industry when it comes into valuations. And in venture, because it's super competitive and optimistic and it grows fast, people pay a premium because of the power law. That's my read on this is that the discount seems to have always existed for venture and it's bounced between 68 and 88.

• 45:17Jason Calacanis?

  But for something like buyout, it's the, the range has been 87 to 97. So in a peak market like 91, people will pay up extra percentage points or give a, give a smaller discount would be the way to say it. But yeah, things might be lightly coming back. This tracks with what I'm seeing. Did we see any specific companies and the prices of those companies or ones that are coming back in the data?

• 45:42Speaker 03

  I worked with Beer from the investment team to start collecting information on secondary market information on the TWIST 500 companies. Now, as Jason said, these are gray markets. They are illiquid, they are opaque. And also we don't have the rights to share every data point that we have found. But I have some stuff that I can talk about that I think is important. So we have found a solid data on 20 so far and partial data on many more, but that's not too useful. Of the 20 that we have recent transactions for and a known discount to the last private round, Jason, the 20 TWIST 500 companies we have data for had a roughly average discount of 4%, which is essentially zero is the way that I think about that number.

• 46:22Jason Calacanis?

  Yeah, they're flat. They're trading at whatever their last round was, which I think means if those rounds were, we would all agree, overpriced, the exert rounds or frothy, that we filled in those rounds three, four years later. That's a good sign. The companies that survived have filled in those valuation premiums. Pretty good sign.

• 46:43Speaker 03

  Yeah, only a couple of companies that we could find data for from the TWIST 500 had a serious discount. One was 30%, one was 20%. The rest were all in kind of those single digit areas.

• 46:53Jason Calacanis?

  Oh no, there's ones with significant discounts. They probably just do not, they trade even lighter. There are ones trading at 70, 80% I know, because we've gotten offers for our shares in companies at a 70% discount.

• 47:04Speaker 03

  That's brutal. But we did find one company. Yeah, yeah. On the list that was trading at a premium, and I'll just go ahead and say that at least according to one source, Mercury shares on the secondary markets will cost you a little bit more than they did in their last private round, which I think goes to show how well Mercury is doing. And as a Mercury user myself, great company, love them. Just can't say enough positive things.

• 47:24Jason Calacanis?

  I think that's a lot of show.

• 47:26Speaker 01

  Yeah, let's do Founder Friday.

• 47:28Jason Calacanis?

  Oh.

• 47:28Speaker 01

  We have, we have, we have a very special, we, we're, we're at the finals, Jason. We got.

• 47:33Jason Calacanis?

  Okay, let's do it. Let's do it. I love it.

• 47:35Speaker 01

  We're at our very last Founder Friday bracket competition. So previous to today, we were down to our five finalists. Osprey from Houston, Texas, Med Simple from Brazil, Tactune from Armenia, Mob Sub from Chicago, Illinois, and Arcana, Arcana, do we, do we have a final ruling on that? From Los Angeles. From that, we sent those five companies to our investment team here at launch, and they have come back to us with two, their picks, who are now our two finalists.

• 48:02Jason Calacanis?

  Okay. Wow. They went through diligence, the due diligence round.

• 48:05Speaker 01

  I, I will, I will take you quickly through their due diligence. So the finalists are from Los Angeles, my hometown, Arcana, from our Yerevan, Armenia, Tactune. So we'll do Arcana first. They design a framework for placing contextually relevant ads into your AI outputs.

• 48:23Jason Calacanis?

  I love this idea.

• 48:24Speaker 01

  Our investment team praised, and I'm quoting, impressive traction, founders with industry experience, and they said they have a strong why now. Their why Arcana wins, it's an untapped market opportunity, uh, because it's not a big enough opportunity yet for the huge ad giants to pursue. That leaves room for this company to sort of carve out an early niche. They also praise the fast-moving technical team. They're keeping up a quick pace, which will help them stay ahead of potential rivals. As for why this might fail, uh, they're, they're very early. The market looks promising in theory, but it's a little early to see how the space is going to develop. And their GTM, their go-to-market execution, a little unproven. They have a hundred and fifty advertisers working with them now.

• 49:10Speaker 01

  The team is impressed at launch, but that's not confirmation that this strategy is going to work.

• 49:16Jason Calacanis?

  So just so you know, post mortems, you know, when you look at why a company failed, most people don't do them. They should. What we do is a pre-mortem, which is predicting if it does fail, why. The real reason this, if it does fail, would fail is they are unable to get critical mass in their network of advertisers and get partners who have scale because those partners are companies like Google or Facebook and Grok who already have an advertising base and just build it in-house. So that would be the number one one that my team didn't exactly get to. They were a little bit around it, but why this wins, fast-moving technical team, that really is technical co-founders is one of the things we look for and product velocity. So that pulls those two together. Okay, let's keep going.

• 50:00Speaker 01

  Hello. Joining us right now, so you can pepper him with questions live before we make our decision, from Arcana, please welcome Doug Smith.

• 50:09Jason Calacanis?

  All right, we have Arcana with us live. Congratulations on making it all the way here to the finals. Let me ask you a very specific question. How do you get distribution for your ad network? How are you going to get that distribution? Obviously, Google's not going to use you and neither is Facebook. So is it like you're going to work with Claude or, you know, maybe Grok, but Grok already has stuff. So what's your concept here? Who will use your ad plugin? Who's going to drop in your JavaScript?

• 50:41Speaker 04

  Sure. The simple reality is, right now, there's a overcapacity in the AI space. There's a lot of competition. And in some ways, it's almost easier to get an AI startup up and running than it is to get it fundraising and profitable. We see that there's, for every day, there's new AI startup and we can play a role in that. In the same way that New York Times owned publishing back in 2001 on the internet, because anyone gets up a website and hosts a blog and can buy space on the video chip. So there always will be space, especially if we expand our network outside of the media 50 states.

• 51:14Jason Calacanis?

  Okay, so there's a long tail of people creating AI solutions and they might be looking for an end where pop in great. Any questions Lon or Alex?

• 51:24Speaker 01

  So I guess my one question would be, one of the things that the our our investment team singled out was that it's very early, that you guys are right. You're sort of almost creating this concept in this market from scratch. How would you respond to that? Do you think you're you're very early? Or do you feel like now is the time? It's the moment to strike? Like, like, how do you feel about where you're coming into this project?

• 51:48Speaker 05

  I think we are at the precipice of this because the fact is, a lot of investment has gone into AI for past two years and investors are now looking forward to essentially not pressure, but encourage those in their investment to basically get some returns, get some revenue in and stuff like that. And the cost of cost of AI itself, even though we have been in this for like two and a half years now, it is not going down. OpenAI still charges $200. Gemini recently came out with $250 per month. Nobody's going to buy something of that unless they find another source of revenue apart from just subscription. So so that is the main reason.

• 52:33Speaker 05

  Another thing is, in our existence of just four months, four months, we started coding the first, we wrote the first line of code on 22nd January 2025. And till date, we have around 20 partners, 20 AI startups, hobbyists who are essentially have integrated Arcana in their product. And we have over 200 unique advertisers on our network right now.

• 53:02Jason Calacanis?

  Can you greatly increase that? Can you greatly increase that number of advertisers by maybe going to a? Another ad network and tapping into their inventory and pulling them in? Or an affiliate company and saying, hey, we want to just pull in affiliate deals as fill in for now?

• 53:19Speaker 04

  Yes, we're quite confident that the affiliate market's established and has used those kind of network effects. But our ambition in the longer term is to develop not just our own network, but also higher quality experience.

• 53:30Speaker 03

  That's that's my question because one thing that I have seen and really enjoyed in modern AI tooling that has a text-based output is how it's very different from Google Search in that it's not weighed down by what I consider to be an oppressive ad load. And so I'm kind of curious about your guys' philosophy on how to integrate ads into this sort of product without making it honestly, just miserable like Google has become.

• 53:57Speaker 05

  So our main idea over here is, and I like to say this to a lot of people when I explain it, is ad blockers currently are just a painkiller. It's not the cure for the disease, that advertisement. And I believe that advertisement and marketing is very important. It allows end users to find new products and end users to essentially get a experience, things that they would not generally experience because in the sense like product market, new exploration and stuff like that. So because of AI and LLM and the way things work and the ability in which that we build our integration

• 54:38Speaker 05

  stack is we don't require a specific image or a specific text thing or what we require from advertisers is basically a general concept. And based on the general concept and what the end user essentially queries, it modifies the response of our developers' LLM and finds a relevant place where it can insert itself and basically create an illusion that it essentially flows as if it's the same response of ChatGPT or Claude or something of that.

• 55:12Jason Calacanis?

  I see. Let's keep the train moving. We need to have at least some time for our second. So Arcana, we'll have you pause now and let's hear from Lon, our other.

• 55:23Jason Calacanis?

  Company.

• 55:25Speaker 01

  Yeah, thanks, guys. So our other company comes from Yerevan, Armenia. They are Tactune. So Tactune, they've created a hardware and no-code software program for device and machine builders. The investment team called it a, and I'm quoting again, "blue ocean way to advertise with two technical co-founders and a strong market opportunity." One comment, "This feels like vibe coding for hardware," comes from the team. So their why this wins, strong initial traction. They've already got 240,000 ARR and a $5 million pipeline, proving market demand. And they're a team with industry experience, two technical co-founders with experience delivering for Boeing and Uber, understanding of the machinery

• 56:10Speaker 01

  market. That's what the investment team loved. Why this maybe fails, difficulty scaling. It's a business model centering on custom design controllers tailored to clients, very resource-intensive way to go about their business. Also, the industrial and manufacturing sector, the investment team feels they're hesitant to adopt newer technology. They rely on established programming methods. It might be a slow transition to the next generation that Tactune is trying to push them in. So now joining us for their thoughts and our questions from Tactune, Rafael Gazabayan.

• 56:48Jason Calacanis?

  Rafael, how are you, sir? Very good. How are you? We're well. So tell us a little bit about which machines are you going after here? Because it does seem like these are dumb machines, or they're not super sophisticated machines in terms of the platforms that exist already. Am I correct in my assumption about some of these machines? And then for the audience, like, what do these machines do in the real world? Are they, are these the arms we see in factory, putting on windshields in cars that you're going after? Are these 3D printing ones or laser cutters? What exactly, what category of machines are we going after here?

• 57:30Speaker 06

  We are currently going to more traditional machines, which I think like over time, those are all going to become robotic autonomous systems. And they will cover from agriculture to construction machinery, mostly field machines, which are not in the factories, but rather in hospitals, in the agriculture fields, in oil fields, in wind farms and so on. So like that's kind of quite broad, basically, all the industrial machinery.

• 57:55Jason Calacanis?

  Who's the top customer right now? You have some customers using it. So who is the top customer and how are they using it?

• 58:02Speaker 06

  It's Frank Bacon Machinery. That's a manufacturer in Detroit, fifty-five years old company. They build materials testing machines.

• 58:11Jason Calacanis?

  Materials testing machines.

• 58:14Speaker 06

  True.

• 58:15Jason Calacanis?

  Got it. So they test materials with those machines. For what purpose? They're testing to make sure the steel is strong? The leather is strapping? What are we testing here?

• 58:26Speaker 06

  So they manufacture materials testing machinery that they sell to automotive industry like General Motors, Tesla. Those are the end customers and they start to test exactly what you mentioned. So the metals, plastic, rubber, depending on the application, they can test different types of.

• 58:43Jason Calacanis?

  Like the tensile strength or whatever, yeah.

• 58:47Speaker 06

  Tensile fatigeness of material. Yeah, like we're sitting out on the chair. It has got a form. So the form needs to be tested for the fatigeness so that it's not like becoming like very thin when you sit on it quite some time. So like every material around us is being tested.

• 59:02Jason Calacanis?

  Okay, Alex, any questions before we make our big decision here?

• 59:06Speaker 03

  Yeah, Rafael, so I'm familiar a little bit with the PCB market and I've done some construction work and done a little bit of work in the agricultural sector. So I've been in and around this somewhat, but to me, these kind of sound like low margin products. I'm kind of curious about how profitable this business could become because my first thought was super cool, but low margin. So am I just misunderstanding the efficiency of your business?

• 59:30Speaker 06

  Yeah, we have got actually something really innovative and like different the way it is done compared to other companies like Rockwell, Siemens, and there are so many PLC manufacturers and they have mostly modular with enclosure like our board, it's like a single board like this and it is built custom per customer requirements and because it is single board, it reduced the price and it increased the gross margin, it reduced the cost of manufacturing. In our case, it's actually very high margin. I would say like margin comparable to SaaS business. So

• 1:00:04Speaker 03

  So 70s, low 80s in there?

• 1:00:08Speaker 06

  More than 80%.

• 1:00:11Speaker 03

  Oh, all right. Okay. Well, ladies and gentlemen, I've made my selection between the two companies.

• 1:00:14Speaker 06

  And that's like something with big quantity of manufacturing. I mean, we have, it's not a calculation. It's rather we have already manufactured in quantity and that's a validated number. So

• 1:00:24Jason Calacanis?

  All right. We have a tough

• 1:00:26Speaker 06

  Of course, the

• 1:00:27Jason Calacanis?

  Yeah.

• 1:00:27Speaker 06

  Yeah.

• 1:00:27Jason Calacanis?

  Okay. Well done, Raphael. This is a tough one. We've got a legacy business having AI applied to it with Raphael's company. And then we have, hey, maybe this is a completely new opportunity in the world, inserting ads into AI products and maybe even creating an AI ad network that could work all around the world. Gosh, advertising is such a big market. TAM is so huge and the team is moving so fast. Both teams are very strong teams. Let me say that. Both have product velocity, but I'm going with R. Hannah because I do think that there is so much innovation there and that the existing players don't have

• 1:01:12Jason Calacanis?

  an incentive to help other large language models, other generative AI startups. They don't have the incentive to focus on their problem. Nobody's going to try to help them with monetization because, hey, they're competing. Alex?

• 1:01:28Jason Calacanis?

  Concisely, which one is your pick? Be concise, which one is your pick and why? It's a tough decision. Tune is your.

• 1:01:37Jason Calacanis?

  Okay, and why?

• 1:01:38Speaker 03

  Hardware, gross margins, attacking a business that I really understand and will not pollute my life with more advertisements.

• 1:01:44Jason Calacanis?

  Okay, all right. So very personal decision there, which means Lon, you will get to be the deciding. No pressure here.

• 1:01:52Speaker 01

  Well, so much pressure.

• 1:01:53Jason Calacanis?

  This is a jump ball situation. I will say this could go either way. These are both strong companies. They both are going to do well in the world. That's and they made it from, I don't know, 16 companies or 17 companies down to these two.

• 1:02:06Speaker 01

  Yeah.

• 1:02:06Jason Calacanis?

  What do you got here, Lon?

• 1:02:07Speaker 01

  I have to say, out of, out of both of these, I think they're both great companies. I think they're both brilliant ideas. These were two, when I first read them, I was like, wow, I got, it's such clever concept. I didn't even think of that. But I do have to say, to me, it feels like the future is going to be AI. It's going to be using AI constantly. It's going to be reading AI outputs. And they're all going to need to make money at some point. They're all going to need to have ads. I feel like Tactoon is doing a really cool thing. I loved seeing their, their board and how they're doing all these custom projects. But man, I think advertising in your AI is going to be billions and billions of dollars and a massive opportunity.

• 1:02:47Jason Calacanis?

  Okay.

• 1:02:48Speaker 01

  And these guys are on the cutting edge. So I got to go with my hometown of Los Angeles and Arcana.

• 1:02:53Jason Calacanis?

  All right, let's bring the Arcana boys back here for a moment. Gentlemen, congratulations. I don't know if we're investors yet, or if we got you through Founder University or the Launch Accelerator, but I wanted to take a moment to congratulate you. All right, Arcana, congratulations. Did we invest in the company? And I don't know if you went to Founder University or Accelerator, or you just applied? How did we find you? And how did we get you on the show? You just, are you part of the Founder Fridays groups? Yeah.

• 1:03:20Speaker 04

  Yeah, I knew someone through Founder's Friday and they encouraged us to apply. And so here we are.

• 1:03:26Jason Calacanis?

  All right, fantastic. Have you raised money for the startup yet? Or you're just in the laboratory right now?

• 1:03:32Speaker 05

  We are trying to raise the funds. We are in the process of raising the funds right now. We have some prospective investors and few angels in our list who have like hard commitments and stuff like that.

• 1:03:45Jason Calacanis?

  Great. If you want to short circuit that whole process, you can come to our accelerator. We'll put the first 125K in and we'll spend 12 weeks with you refining the pitch. But if you want to pursue the direct investment, you can do that too. But I'll put that up open to you. Congratulations to you both and I wish you great success in your entrepreneurial journey.

• 1:04:05Speaker 01

  And anybody watching who wants to check it out, arcana dot A D, arcana dot A D. You can go check it out right now for yourself.

• 1:04:13Jason Calacanis?

  And Founder Fridays is a program we do. Founderfridays dot tech, founderfridays dot tech. It's just founders helping founders in these little pods. We do these pods for companies that we have that we've already invested in or that are in Founding University, but we decided to let the world try this pod concept. So if you're in a city and you have six people who are founders, sit around a table, have coffee every Friday, every other Friday, the first Friday of every month is what we do. And let's see if you can help each other hit great heights like Arcana has. All right, and we'll see you all on Wednesday. Enjoy the long weekend. Bye bye.