Negative Venture Returns, GM Kneecaps Cruise, and Finix joins the TWiST500 | E2059

This Week in Startups is brought to you by… OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. TWiST listeners can get an extra 20% off any plan for your first 6 months at https://www.openphone.com/twist⁠ Vanta. Compliance and security shouldn't be a deal-breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. TWiST listeners can get $1,000 off for a limited time at https://www.vanta.com/twist CLA. Innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at https://www. CLAconnect.com/tech * Todays show: Alex Wilhelm joins Jason to discuss the reporting that Tiger Global's 2021-era fund is not only posting poor results, it's lagging peers from the same timeframe. Then, the pair also interview Suvir Wadhwa, founder and CEO of Flite, a former Launch accelerator company, and dug into the Cruise-GM news along with a peek at the next head of the FTC. * Timestamps: (0:00) Jason and Alex kick off the show (2:19) Tiger Global's investment strategy and performance (5:49) Challenges of quick capital deployment and market timing (10:13) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (11:15) Impact of losing key investors or advisors on startups (12:24) Public market trends affecting private investments (16:09) Market downturns' effects on startups and investors (20:05) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist (21:16) Political influences on market and technology sectors (29:32) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech (31:10) Trump administration's business policies and immigration (38:20) Changes in the FTC leadership and impacts on startups (41:40) Finix's addition to the TWiST500 (44:53) GM's scale-back on Cruise and future implications (51:25) Self-driving technology's impact on car ownership (52:39) Flite's Suvir Wadhwa joins the show (54:18) Flite's business model, AI benefits, and market reach * 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 * Mentioned on the show: Check out Flite: https://www.flite.city/ Check out the TWiST500: https://www.twist500.com/ Check out Tiger Global: https://www.tigerglobal.com/ Check out E1207: How Tiger Global is outpacing VC with fast, cheap capital ft. Founders Fund's Everett Randle: https://www.youtube.com/watch?v=koDKxjHe_Kk * Follow Suvir: X: https://x.com/suvirwadhwa LinkedIn: https://www.linkedin.com/in/suvirwadhwa/ * 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: (10:13) OpenPhone - Get 20% off your first six months at https://www.openphone.com/twist⁠ (20:05) Vanta - Get $1000 off your SOC 2 at https://www.vanta.com/twist (29:32) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech * 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?

  A portion of it is the regime change in Washington and a portion of it is there's a lot of buyers. When there's a lot of buyers, they set a new top, they drive prices up. And so if you're like Tiger and you offer, you know, you compete to beat the entire venture community to put money into a SaaS company before it goes public, let's say it was Asana or HubSpot, I think those were public already, but that was the kind of businesses they were interested in, the Zendesk SaaS kind of companies. If they were pursuing that and they wanted to beat everybody at the table, those people have to deploy capital as well. So they keep top ticking the market. They keep pushing it up. Their bid is going to be higher than everybody else's because they want to win. They want to deploy the capital. Remember, they're getting one and a half percent, two and a half percent, who knows what their fees are on $12 billion.

• 0:45Speaker 01

  That's so much money.

• 0:47Jason Calacanis?

  A quarter billion dollars a year in fees. I mean, if it was 1%, it would be $125 million a year, a year.

• 0:54Speaker 02

  This Week in Startups is brought to you by OpenPhone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20% off any plan for your first six months at openphone.com/twist. Vanta. Compliance and security shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC to report fast. Twist listeners can get $1,000 off for a limited time at vanta.com/twist. And CLA. Innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at claconnect.com/tech.

• 1:37Jason Calacanis?

  Hey everybody, welcome to This Week in Startups. I'm your host, Jason Calacanis, with my co-host, Alex Wilhelm. We've got a packed show for you today. Tons of news and a great guest. What's on the program today? Alex?

• 1:49Speaker 01

  So today on the show, we have Tiger Global getting defanged and all the data that's behind that. We're going to talk to the founder and CEO of a company called Flight that we're very excited about. Then we're going to add Phoenix to the Twist 500. Then GM kind of gives up on its robotaxi dreams. And if we have time, if Jason and I don't yap too much along the way, the new head of The FTC and what he promised Trump. So it's gonna be an absolutely packed show.

• 2:13Jason Calacanis?

  All right, uh, let's get to our first story, Alex.

• 2:19Speaker 01

  Yeah. So we're going to talk about a name that has not shown up on this show in a while, but used to be something we couldn't get away from Tiger Global. Jason, one of the best parts of pension funds attached to, you know, states like California is that they will often disclose data on how their investments are performing.

• 2:37Jason Calacanis?

  They have to legally, right?

• 2:38Speaker 01

  Required or not, we get the data. And what that means is you and I can see inside of funds that we might not otherwise get data from. So the latest is that Cal STIRS, which is the California State Teachers Retirement System, has data on Tiger Global's 2021 era 12.7 billion dollar fund and a few other funds that are.

• 2:58Jason Calacanis?

  Let that sink in for a second. A 12.7 billion dollar venture fund.

• 3:06Jason Calacanis?

  12.7 billion dollar venture fund. The, the perfect size of a venture fund was like 400 million, remember?

• 3:12Speaker 01

  Yep.

• 3:12Jason Calacanis?

  And that was considered the ideal size. Fred Wilson talked about it. The first round team talked about it. That's 300 or 400 of these 400 or 500 million, 250 million dollar funds.

• 3:25Speaker 01

  And they deployed it really quickly. So, you know, we think a lot about venture capital funds having, I don't know, a 10 or 11 year timeframe. Jason, what would be the average length of investing you would do for a fund? Like three years?

• 3:36Jason Calacanis?

  There is, um, you deploy capital typically over three to four years for a fund.

• 3:41Speaker 01

  Yep.

• 3:42Jason Calacanis?

  Then that's when you kind of plant the seeds and then you harvest in the second two thirds of the fund. So let's say you spent three or four years planting and then you're going to spend another, you know, call it eight years. Uh, these funds typically last 12 to 15 years or 15, they kind of close out. They buy out the final positions for a dollar and everybody writes it off and you're done. They're timed as 10. They typically have extensions, but yeah, Tiger, because there was so much money flowing into funds and there were so many great deals and founders were raising so much money and founders were being offered so much money. And the market was ripping and free money was everywhere. Tiger decided to do an experiment, which was to deploy capital as quickly as possible. And basically just take the entire cohort that had reached series B or C in 2020, 2021,

• 4:27Jason Calacanis?

  2022 timeframe. And we saw a lot of our portfolio companies get offers to raise 50 million, 100 million from not just Tiger, but Kotu and a number of other firms.

• 4:39Speaker 01

  Sure.

• 4:39Jason Calacanis?

  That decided to write $50 million, 100 million dollar checks, not dissimilar to what Masayoshi Son did with his fund as well.

• 4:48Speaker 01

  Yes. So how did that all work out? Well, we have some data now. Now, Jason, there is the J curve that does come into play here. So you never expect a private investment pool to have very positive returns at the beginning. You're talking about fees. Some things are going to go sideways immediately. And so on the back half of a fund's timeframe, it tends to get better. That said, when we compare Tiger Global's PIP 15, it's 2021 fund, it's not doing well. So recently, CalSTRS marked its investment from 93 to 65 million. It's a net IRR of negative 15%, which I believe makes it a bottom decile fund. Four years in, Jason, is enough time, I think, to say that if your IRR is poor compared to your peers, something's wrong and we're not looking too soon.

• 5:33Speaker 01

  The data is my read.

• 5:34Jason Calacanis?

  This data is very early. So in fairness to them, you know, looking at it, they are literally in where the J curve begins. If they deploy this in 2021, is that what they're saying with this fund?

• 5:47Speaker 01

  Yeah.

• 5:47Jason Calacanis?

  Is that it was deployed in 2021? We're sitting here, it's about to be 2025. So it's a three or four year fund. In other words, they just finished that deployment cycle or how it typically run. But they did 315 startups in 2021 alone. So that's a pretty consolidated moment in time. And what you want because of time dispersion when you invest is if you were investing over, say, I don't know, 36 or 32 or 48 months, right? Four years, you might peak in, you know, the market might peak in month 24, then come down and be, you know, the valuations might be half that for the next 24 months.

• 6:29Speaker 01

  Yes.

• 6:30Jason Calacanis?

  You know, you might have been slightly paying above market by 25%, but not 100% or 50%. If you catch my drift.

• 6:38Speaker 01

  It's effectively dollar cost averaging for.

• 6:40Jason Calacanis?

  Literally dollar cost averaging for venture capital. Yes. And so, and then also it increases your chances of hitting an outlier. Because there are a certain number of outliers created every year, which means every year a certain number of them get product market fit. Every year, certain ones get what we would call market pull in the industry. Market pull is when people are just calling up, saying, do you have this product? Can I get this product throwing money at you, signing up without you doing any marketing? Facebook, Uber, Teslas, you know, any great product Airbnb had this viral word of mouth. People just sought out the product without them having to do it. And that's market pull. Hopefully they were looking at companies with market pull. I think the criticism was how thoughtful can you be?

• 7:23Jason Calacanis?

  If you're investing in a company a day, including on the weekends. Yes. And how much diligence can you do? And how big does your team need to be? We are a team here of I think 12 investment executives. We do 100 investments a year. And we've run programs like founding university of launch accelerator, which are like Y Combinator tech stars. And then even a pre accelerator, a startup school, if you will. So, you know, we are an at scale investor. But I think they had the same number of people or less doing three times the number of deals in a year. And these are more complicated deals, but what they said was, hey, if you're at 10, 20, 30, 40, 50 million in ARR, we'll just give you credit for a valuation that will be coming in two years and deploy the capital. And I guess that's the challenge. Everybody saw in this approach. We all saw it there.

• 8:08Jason Calacanis?

  But I will tell you, it only takes one. So if one of these turns out to be HubSpot, or one of these turns out to be a Tesla or an Uber or an Airbnb, and they invested in, you know, the one to $10 billion range. You know, there could be a hundred bagger in there. There could be a 20 bagger in there. And, you know, maybe that makes up for a lot of mistakes. We'll see.

• 8:27Speaker 01

  It's true. I do want to go back to episode 1207 from Twist because you were talking to founder funds Everett Randall at the time. And you spent a lot of time talking about Tiger. But the quote from the show that really stuck with me was if there's no. In the room, what happens when things go wrong? And I wonder what fraction of Tiger's investments from this fund from the 2021 period when it deployed it that don't need help? Because you talked about staffs, I doubt their staff to help even a third of those companies.

• 8:57Jason Calacanis?

  Well, here's what I heard. A lot of people who are at peak Zerp funds have left. Now, why would you leave? Well, your track record for that fund that you'll have to live with forever would be based upon those investments. And if those investments were all at five times the proper valuation, and you knew there were a lot of duds and you know, you would be fighting tooth and nail for the next eight years to finish that fund. And your reward for doing so would be you would return one X, you would just get everybody their money back, or you would return 1.5 X. Well, you know, then you got the carry is only that small amount, right? It's not a three X fund, a four X fund. So a lot of people who felt their funds were underwater, especially if you were like a rank and file person.

• 9:42Jason Calacanis?

  It's kind of like being on a basketball team and like you lose your all star. You know, like their knee blows out and then like somebody else retires, whatever. And you can't win. You're like, you know what? I'm not resigning with this team. I'm going to get traded. I'm going to go work for somebody else. And so a lot of people, I think, and I don't know specifically with Tiger, if this happened, but I think what I did hear was a lot of people were like, yeah, you know, not my problem. Now I'm out. Founders know that every missed call is a missed opportunity. Customers don't want to wait. They will call someone else if you don't pick up. But if you use open phone, you're never going to miss another customer call. And guess what? It's super affordable and easy to use. People used to spend tens of thousands, hundreds of thousands of dollars putting in a corporate phone system.

• 10:27Jason Calacanis?

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• 11:10Jason Calacanis?

  Well, people need to say like, oh my God, you you lost your consigliere, you lost your priest, you lost your rabbi. At this organization. So then who do you talk to? Now there's somebody else there who's a custodian of this and they didn't do the initial investment and the hike you went on through the headlands in San Francisco for three hours and you hung out at Burning Man or in Ibiza and you went crazy and had a great time. And now you you built all that fabric.

• 11:37Speaker 01

  Yeah.

• 11:38Jason Calacanis?

  And it's gone. And so now you have to start over and this happens when your company gets acquired as well. You know, you you could lose the person at AOL or Microsoft who bought your company. Some mid level manager comes in, it's not their project. Uh, like Cruz, uh, which we'll talk about in a moment. And they're saying, you know what? This isn't my problem. I'm going to cut this thing. There's no way for me to win. I'm I'm not going to clean up somebody else's mistake.

• 11:59Speaker 01

  I I've been in a board meeting when there was an investor who was a custodian and they always dialed in and then they always did not listen. And they would get called on occasionally and you have to back up and you explain to them why. So I I think if you lose your priest, if you lose your consigliere, you really are adrift and that's not what you want when you are in trouble. Now, how did this happen? Well, I just, I think that there's some data that shows off just kind of what's going on and you and I were talking about this chart. And so this shows, uh, the Wisdom Tree Cloud Competing Index. What's that? It's just the Bessemer Cloud Index in index fund form. And it tracks software companies, more or less, that were in public. We also have the NASDAQ here. And I put a little time box around the period in which we had the absolute peak of enthusiasm towards late 2021 and then how rapidly, within 69 months,

• 12:44Speaker 01

  everything changed. And so I guess what Tiger ended up doing here was really effectively and efficiently and aggressively buying the top. And that will happen to everybody if you have a period of time, but it just looks so painful in retrospect.

• 12:58Jason Calacanis?

  I mean, they they created the top, you know, it's in a way what's happening with Bitcoin right now. If you go all in on a space, and we were talking about Mr. MSTR Microstrategies, Michael Saylor, there's another company, what it's called, Lava, Mama, I can't remember. Mara. Mara. They now are buying, I don't know if it's billions or hundreds of millions in Bitcoin. They're, I think, responsible for this top in Bitcoin. A portion of it is the regime change in Washington, and a portion of it is there's a lot of buyers. When there's a lot of buyers, they set a new top, they drive prices up. And so if you're like Tiger, and you offer, you know, you compete to beat the entire venture community

• 13:41Jason Calacanis?

  to put money into a SaaS company before it goes public, let's say it was Asana or HubSpot, I think those were public already, but, you know, that that was the kind of businesses they were interested in, the Zendesk SaaS kind of company, Salesforce, you know, next Salesforce, next HubSpot, next Asana, whatever. If they were pursuing that, and they wanted to beat everybody at the table, those people have to deploy capital as well. So they keep top ticking the market, they keep pushing it up. Their bid is going to be higher than everybody else's because they want to win, they want to deploy the capital. Remember, they're getting one and a half percent, two and a half percent, who knows what their fees are on $12 billion. That's so much money. A quarter billion dollars a year in fees. I mean, if it was 1%, it would be $125

• 14:22Jason Calacanis?

  million a year, a year. And I'm assuming it was two, but let's say it was one and a half, two, I mean, you're talking about a lot of fees, 10% of that fund, 20% of that fund will go to fees over 10 years, depending on how their fee structure, and people could have negotiated that. But at the top of the market, people don't sweat the small stuff. Right. So now for founders who took that money is the question. And I had to mentor a lot of founders, and I said, listen, if you're going to go with best price, least rights, just know when this all blows up.

• 14:52Jason Calacanis?

  We're going to have to clean it all up. So make sure you have a lot of runway. You know what? We had a lot of firms take the best priced, highest price per shares at the lowest rights. Board observer seat, one board seat, not two, that kind of thing. And so now I've been spending the last two or three years with those companies that let's just come up with a number. They're priced at a billion and raised a hundred million. And then the market and headwind started and people started laying people off. Your number of people who have seats for your SaaS product goes down. So you're working really hard, you cut half your staff and you bust your ass at, let's say Acme SaaS Company.

• 15:27Speaker 01

  Sure.

• 15:29Jason Calacanis?

  And this year's revenues 10% less than last year's. Then next year, you're at the same level as last year, but still 10% less than two years ago. So your best day, when you made 50 million was two years ago, or let's say 25 million, two years ago. Then you went down to making, you know, 21 million, then you went down to 18. Now you're at 18 again. You got to build back up. So it can be a little depressing, not only to be an LP in these funds, but you're diversified. It can be super depressing to be a GP in this fund because you don't know if you're ever going to get a return. And then if you're a founder of one of these companies, you've got to run a company that's sideways for four fricking years.

• 16:09Speaker 01

  Yeah.

• 16:09Jason Calacanis?

  To get back to growth because you were going for it. They told you to hire another 50 salespeople, to hire another 100 developers, to go international. And then maybe the market wasn't there, your product wasn't tight enough, you went too fast, car flips out. And then we go, we have to basically pull you back down to a reasonable amount of spending to try to figure this all out. I am on the board of companies and I've been involved in meeting with companies in the same position. You know what happens next? The founder leaves.

• 16:37Speaker 01

  And then you really struggle.

• 16:39Jason Calacanis?

  I've already fully vested.

• 16:40Speaker 01

  Yeah. What we should talk about founder vesting at some point and people that want to change it to avoid having early founder exits. Leave a lot of dead cap table at CSH companies, but that's for another day. The, the thing that I took away from this is no one, and I'm glad you brought up Masayoshi earlier. No one has cracked a foolproof method for deploying essentially infinite capital in the private markets at scale quickly and not losing their. At the later stages, I do think accelerators tend to do pretty well. But I just don't think series C or D plus you can do it and and make money. And I guess now we're just watching Tigers LPs sit and kind of cry quietly in the corner until all this shakes out. But I bet you they'll go back to at least one X by the end.

• 17:19Jason Calacanis?

  I mean, that's this is why people like venture as a cohort. If you hit something, you know, you could get back in the black again. You could, you know, get lucky, you know, hit some huge pot and you're back in the game, right? So a way to look at this is if you were allocating to venture, you know, 15% of your portfolio, 20% of your portfolio, 10% of your portfolio is a major LP. You know that over time, you know, you've got, let's say, 20 ventures, let's say 10 venture funds you work with. And they come back to you every two or three years with a new fund. So, you know, over 10 years, you're in 40 funds. Maybe they got a little frisky, they were 50 funds. Each fund represents 2% of your return.

• 18:00Jason Calacanis?

  So you could have 10 funds not return, you know, but half, you know, and then the top quartile return 5X. And you blend out to beating the market, you know, and tripling your money over 10 years. Hopefully, as opposed to just doubling your money as you might in the stock market in the same period of time. We got a question from the chat, LinkedIn, from LinkedIn. We go live on LinkedIn. Arz and Lee ask, what's your expectation, guys, on valuation decline from 2021 to 2025? Some of these cohort will try to make IPR or M and A next year. So I wonder how much equity will be destroyed in the upcoming year. Your thoughts? Any thoughts on that?

• 18:36Speaker 01

  Yeah, well, the equity is already destroyed. So if you go public at a lower price, that's not the equity being destroyed in that moment. That's just realizing what it has been worth. So I wouldn't blame the exit point as the the equity or value destruction.

• 18:50Speaker 01

  I don't want to get ahead of my skis, but there has been in the last month or two, an appreciation in public revenue multiples for software companies. It's not huge. It's very encouraging. If that keeps up, Jason, even another one X. I think we could see a lot of liquidity in lock because that's going to make a lot of things easier to do. But I'm just not confident in how. The economy is going to play out next year to make a real projection. You?

• 19:14Jason Calacanis?

  I'm super confident that the Trump administration and the group of people around them want to see M and A come back and be vibrant and they want to see regulations go down. And they're putting people in there who are pro-business, pro-M and A, pro-vibrant markets. And so, yeah, we need more companies going public and we need more M and A. So let the games begin, I think. Literally next year is going to be like a starter's pistol for M and A teams at all these giant companies who are going to be able to call somebody in Washington who they might know. Or, you know, they've been at Mar-a-Lago the last month or two and they've been hanging out there. I saw a report Mark Andreessen sent, he spent half his time in Mar-a-Lago. The last month, did you see that report?

• 19:59Speaker 01

  Yeah, this is why I call it the Musk A16Z administration.

• 20:03Jason Calacanis?

  Founders, do you want to sell to bigger customers? I know you do. You got to get that ACV trending up and you want to push your churn down, right? Sounds good, but to sell to those big buyers, you need to clear all of these compliance checks. You know that. That means you got to have things like SOC 2 sorted out. What's SOC 2? It's a standard and ensures that companies keep their customer data safe. And if you aren't SOC 2 compliant, you can kiss those big deals goodbye. You're not going to land the lighthouse customers. You're not going to be able to operate at the highest end of the market. But Vanta makes it really easy for you to get and renew your SOC 2 compliance. On average, Vanta customers are compliant in just two to four weeks.

• 20:43Jason Calacanis?

  Can take months without Vanta and they automate compliance for GDPR, HIPAA and more. So you could sell to bigger customers in whatever markup your startup is going after. Vanta is going to save you hundreds of hours of work and up to 85% on compliance costs. Stop slowing your sales team down and use Vanta. Get $1,000 off at vanta.com/twist, that's vanta.com/twist for $1,000 off your SOC 2. Well, I mean, it's everybody administration then because Keith Raboy, Jacob, his husband, his partner, you know, they're, everybody's down there. Even the people like Aaron Levy, who, you know, was a vocal Kamala surrogate supporter, whatever he was, donator.

• 21:24Jason Calacanis?

  And Pincus, who, you know, legendary Democratic fundraiser for Obama, Hillary and even Biden. They've all flipped now and they're like, you know what? Uh, we're going to support this team to go super pro-M and A. So I expect the market and I expect M and A. IPOs to rip in the next four years. Doesn't mean we won't have tariffs or inflation or other issues, but I don't think M and A is going to be the issue anymore. And so all this backlog, if you didn't die, if you, if you made it, you just have to, what I was telling people is make it to 25 alive, which I heard was like the slogan in Hollywood as well. Make it to 25 alive and a lot of options are going to, options are going to open up and the option is going to be if you

• 22:06Jason Calacanis?

  have a 10 to a $250 million software business, you're going to have Marc Benioff. Hello. You're going to have Salesforce coming, HubSpot, anybody with a hundred billion plus market cap is going to come knocking. And that's going to include Uber, Airbnb, looking to expand their businesses. You're that Expedia rumor previously, DoorDash, Amazon, they're all going to be, and Andy Jassy is going to be like, hello, anybody home? Oh, Whole Foods? Yeah, we'll buy that. Remember when they bought Whole Foods for 10 billion? You see a lot of these $10 billion little pickups. So it's going to be great for business.

• 22:38Speaker 01

  So the next FTC leadership class is coming into view. Big news, Andrew Ferguson will be the next chairman. He's a current commissioner on the FTC and Trump said over on Truth Social that Ferguson has, and I quote, "A proven record of standing up to big tech censorship and protecting freedom of speech in our great country." In terms of how I think about people, this guy's going to be very pro-business. He voted against banning non-competes recently and he voted against the bill that made it easier, sorry, the bill, the FTC action that made it easier to cancel subscriptions. So if you're Comcast, great. That's going to be lovely. But we also got our hands on his pitch to Trump about what he will do as chairman of the FTC.

• 23:20Jason Calacanis?

  Where did this come from? It got leaked or they released it or?

• 23:24Speaker 01

  Well, leaked or released is an interesting question that I don't think I'm qualified to answer, but.

• 23:30Jason Calacanis?

  Well, we've both seen that many times journal in my journalism days where you get a leak from like inside of Motorola, somebody would give us information about their next phone. It was a leak.

• 23:40Speaker 01

  Yes. I don't know if this was a leak or a leak, but Punchbowl got it and everyone's been taking a look at it. So there's a couple of things here that I think you're going to absolutely love. He mentions here how he wants to end Lina Khan's war on M and A. Fantastic. That's exactly what you're talking about. Also, ending the FTC's attempt to become an AI regulator. That stuck me as pretty interesting. But then this is why I get a little. Uh, curious about what big tech means because you said, you know, anyone over a hundred billion dollars next year is going to be on the phone, looking at incremental revenue, talking acquisitions. Absolutely. But here he says that he wants to focus antitrust enforcement against

• 24:19Jason Calacanis?

  I see that.

• 24:19Speaker 01

  tech monopolies, especially those companies engaged in, quote, unlawful censorship. So what, what does big tech mean? I don't know if anyone knows.

• 24:27Jason Calacanis?

  I mean, what he's referring to there is Facebook and YouTube specifically and Twitter back in the day cancelling Trump's accounts. I'll just translate it for you. This is a document for Trump, right? This is a pitch to Trump for his services. What does Trump remember? After January 6th, that horrible day in American history, Trump had his accounts suspended on Facebook, YouTube, Twitter, and I don't know if anywhere else. I don't know what else was like a major platform at the time, four years ago. He was basically ghosted like Milo Yiannopoulos or, you know, pick a person, Alex Jones. They just, boop, gone. Which is a private company's right to do. The Republicans have twisted this a bit where they're like, you have the right to do it,

• 25:11Jason Calacanis?

  except if you do it. So putting the hypocrisy aside, that, you know, a tiny business making cakes in, you know, whatever state in the South, you know, doesn't have, has the right to turn down gay customers. Do you think that's abhorrent? Do you think that's a civil rights penalty? Or do you think that's respecting a business owner's right to do, to work with the customers they want? We could have this debate all day long.

• 25:37Speaker 01

  True.

• 25:38Jason Calacanis?

  What people have come to, this is their justification in their minds.

• 25:41Speaker 01

  Okay.

• 25:42Jason Calacanis?

  Because you're probably saying, hey, this is hypocrisy. Their justification is, at a certain scale, these sites are so powerful that to be removed from them, you are essentially being removed from the public square. So they want Facebook, YouTube, and people at scale, let's say over a billion users, over 500 million users, whatever it is, you have to justify or be transparent about why somebody is removed and have a process for them to be. Put back on platforms, appeal, et cetera, which you remember, Alex.

• 26:14Speaker 01

  Hmm.

• 26:15Jason Calacanis?

  Zuckerberg, who is pretty cowardice in this, he's like, yeah, we're banning Trump. Then he's like, I regret it. Trump's a badass. And then in between, he hired a group of like academics to create a board of people who would make these decisions for Facebook and then they think they disbanded it.

• 26:34Speaker 01

  Or they just ignored it a lot. I remember they'd be like, you shouldn't do this. And Facebook was like, eh, I'll be one too. Um, by the way, on the whole, Aaron Levie and Zuckerberg changing their tune, they're just afraid of retribution. Right? Like, this is, this is political fear to a large degree.

• 26:51Jason Calacanis?

  I mean, okay, um, that would be a cynical take. Sure. You could, we could have that take. I think the other take is, which would be mine. Um, my personal belief is if your candidate doesn't win, you should support the other candidate and push them towards their better angels and what they can do that you believe is in the best interest of Americans. That's the approach I'm taking. Which is the same approach I took last time. So I think Zuckerberg, you know, some people might say he's really scared that he's going to get broken up. And therefore, because of what he did to Trump, there's an argument there. Uh, the J D Vances of the world have been pretty hardcore that these things need to be broken up. They have too much power. And they determine an election. And so, you know, they do think he's probably nervous about that.

• 27:34Jason Calacanis?

  Aaron Levie running a SaaS company, I don't think is nervous about that. I think he probably thinks it's cool. That smart Silicon Valley people and a former venture capitalist or venture, you know, the vice president and that they're going to have some influence here as opposed to career politicians.

• 27:47Speaker 01

  I guess I do have a cynical take because.

• 27:48Jason Calacanis?

  Yeah.

• 27:49Speaker 01

  Um, I've been watching things, I think is the way I put it. Uh, but I think you raise some good points and I want to add a little bit more from what Ferguson said in this document.

• 27:57Jason Calacanis?

  By the way, I would think you're right, just to make that summary. You're probably right. Zuckerberg is scared. And then I think the rest of the people, Mark Pincus, who now is saying, hey, listen, I support this and this. Or me, I support these two or three things. I may not. Be like a Trump guy or a MAGA guy. I'm a moderate, but I do like these two or three proposals. So that's what's happening now. Think this myself, or you know, someone like Aaron Levie, you'll see us cherry picking. These are the things that I think Trump could do and the Trump administration and JD could do that would be positive for business, the world, humanity, Americans.

• 28:28Speaker 01

  The market is pricing in some cynicism, like, uh, shout out to Tesla, but I don't think every percent of appreciation since the election is predicated on, uh, changes to its business fundamentals.

• 28:40Jason Calacanis?

  I think it's lack of regulation is gonna be, is the big, you know, the, the people who are in highly regulated businesses, self-driving, finance, you mentioned before, subscriptions. If you're in one of those businesses, especially finance, you know, it's gonna be gangbusters now, like, you know, although Trump has, he does, he vacillates between the populist comments and the thing. So there's, you know, as people have said, and I'm not the first to point this out, there's something for everyone when he describes his position. And I'll give an example of it. He, he has publicly come out and said things about like predatory credit card prices and that they shouldn't be allowed. And then he's saying, we're gonna

• 29:21Jason Calacanis?

  have less regulation. We get rid of all regulation, finance comes in, be able to do great. So somewhere between these two is gonna be the reality. All right, everybody. Welcome back to the program. Stephen Estes is with us again. He's a principal at CLA. They're a professional services provider. They specialize in CPA, tax consulting and wealth advisory. His areas of expertise lie in VC-backed startups, VC funds, high-growth startups with complex tax issues in multi-state and international filings. Welcome back to the program, Stephen.

• 29:52Speaker 03

  Hey, thanks, Jason. Appreciate it.

• 29:53Jason Calacanis?

  When you look at these growth periods, right? When startups start rapidly growing, how do they screw it up?

• 29:59Speaker 03

  First and foremost is sales tax. There was a big shakeup in that about four years ago. It kind of opened the floodgates. The states really being able to force small companies to collect and remit sales tax in a lot of different states. When we had the pandemic hit and the rise of remote work, that really intensified that as having employees in various states creates the requirement to collect and remit to sales and customers. Customers in that state. So that was huge. And then secondly, like really just like how to handle the issuance of equity key employees. It amazes me that founders don't know more about various restricted stock awards and stock option plans that are out there. Safes have been a godsend when it comes to keeping 409A values low for early stage companies.

• 30:39Speaker 03

  But a lot of founders don't have a clue when it comes to how like a priced round can negatively impact your ability to bring on those critical hires. Cause it really massively increases the tax liabilities that come with the receipt of equity in those companies.

• 30:52Jason Calacanis?

  All right. You need a trusted advisor, taxes, accounting. You don't want to play games with this stuff. Get it right. Get a great partner like CLA. Go to CLA connect.com slash tech and let them know your boy Jake Al sent you. Once again, CLA connect.com slash tech. We're going to deport 15 million people. You're xenophobic. You want everybody dragged out of the country. He'll say that at one rally and then I'll say, you know, hey, and JD will come out and say, you know, we're going to start with a hundred thousand, 500,000 known felon criminals. Who attacked somebody in the United States. We're going to find them and get rid of them. Probably somewhere between the two, right? So you can pick where you want to interpret the bombastic colorful things he says. And then we'll see what he actually does.

• 31:31Speaker 01

  I think that's a very illustrative set of examples because in one, you have things that are diametrically opposed. For example, capping credit card rates at 10% and on the other hand, go wild to the fintech or in the financial sector. On the immigration point, both of those options are pointing in the same direction. So I think there it's much easier to say, yeah, somewhere in the middle. When it comes to things that are diametrically opposed, I'm, I'm just curious. Now, um, we'll find out. So Ferguson, back to him. He said in his pitch to Trump that he wants to quote, pursue structural and behavioral legal remedies under the antitrust laws and the FTC act. To make sure large platforms treat all Americans fairly and to prevent them from using their market power to box out new entrants and stymie innovation.

• 32:15Jason Calacanis?

  Yeah, that's classically what the FTC does.

• 32:17Speaker 01

  Without regulation. Like, I mean, I, I, I struggled. Like this document that I read, Jason, just goes back and forth on so many things. He said he wants to end Lena Khan's politically motivated investigations. Right under the bullet point that said investigate and prosecute collusion on DEI.

• 32:33Jason Calacanis?

  I mean, it's a job. It's a job application. So.

• 32:36Speaker 01

  How can you not care about your own intellectual?

• 32:41Speaker 01

  Like, like, I don't know.

• 32:43Jason Calacanis?

  Are we talking about politicians here? Or we're talking about ethics professors? I think we're talking about politicians.

• 32:48Speaker 01

  I'm talking about being a human. If I said to you, Jason, we're gonna end.

• 32:51Jason Calacanis?

  You have a very high moral ethical bar, Alex. I know this. And you are a man of logic. What you have to learn is politicians' number one jobs and people who work in politics, the number one job is to stay in power. And the way you stay in power is being flexible intellectually and being able to say both things at the same time and hold space.

• 33:11Speaker 01

  Yeah.

• 33:12Jason Calacanis?

  I'm being precocious here. You have to hold space for, as you called it, diametrically opposed things. Or things, you know, the, the, the level of cognitive dissonance of a person like yourself, who is logical, who loves numbers and facts and truth. The challenge you'll have trying to understand what politicians are doing is they're not looking at the facts or the logic or looking for hypocrisy or things that are, you know, would, they don't have cognitive dissonance. They just say everything and then they figure out what they're gonna do later. And I think that's what it is. After you get the job, he's gonna figure out what his, what the positions are.

• 33:51Speaker 01

  It's gonna be choose your own adventure next year then? Okay.

• 33:53Jason Calacanis?

  Choose your own adventure, bending towards much less regulation, smaller government, less taxes. So if that was, if you're in that group of people, and I, it's important to kind of distance yourself from the personalities involved, because I feel like it's, there's a lot of baggage, and for good reason, scar tissue baggage, whatever you wanna call it. I like to divorce myself from it and just say, if any presidential candidate were doing this, if it was Bill Clinton, and he said, we're gonna have less government, we're gonna lower regulations, and we're gonna lower your taxes, I'd be like, high five, huh, thank you, voting for you.

• 34:27Speaker 01

  Yeah, I just, I, I can't do away with things like, you know, the attempts to end birthright citizenship, which might have impacted my mom's citizenship status, if I, if I think about my family tree. And so to me, like, I, I cannot look at my family's income statement and think to myself, you know what? For 3% more net income per year for my family? I'm gonna give up X, Y, and Z. And this is your personal thing. I'm not trying to make a moral point, but I'm perplexed occasionally by what people are willing to let go for a little bit less friction. But, sorry, I've lost off.

• 34:56Jason Calacanis?

  I think it's actually, no, no, it's, I think it's within our mandate, you know.

• 35:00Speaker 01

  Sure.

• 35:00Jason Calacanis?

  With immigration, there is a really important case to be made. I did ask the president about this, about green cards for people who get degrees. He gets that issue. People around him get that issue. So I think what we're gonna see is when, yeah, when all the fireworks stop, and the bombs stop going off, you're gonna see immigration settle into less people crossing the border illegally. We all want that. People being deported who are just known felons, like, you just beat up a cop, you're going home, that's it. We're not, you know, one strike, you're out, kind of situation. No leniency, no, like, probation, just out of the country. Now, I don't know the legality of all that. I'd be totally honest of how that would occur.

• 35:43Speaker 01

  Sure.

• 35:44Jason Calacanis?

  But, and if there's gonna be, like, due process, do people who've come here illegally get due process? How much due process do they get? Do they get due process once they're back in their home country? Who knows? And then you're gonna see talent get exceptions. And people who invest get exceptions. Trump loves a good deal. For me, it's very simple. You come here with a degree we need and a service we need. You get a couple of extra points, you invest money here, you get a couple of extra points, and we just sweep the most talented, entrepreneurial, technical, talented, rich people from around the world and get them here. And then, yeah, it's just a little less people at the border, sounds like a pretty good idea. 0.6% population growth, which is whatever it is, 3 million, I think it was

• 36:29Jason Calacanis?

  like, it looks like 2 million people a year crossed the border or came here, which was like roughly double what it normally is. So. We're kind of in spitting distance of what everybody considered normal before.

• 36:40Speaker 01

  Yeah, well, things changed, but also like, you know, going back to the the point you made about trying to figure out what the hell Trump's going to do. The high school immigration point that he made to you on on all in, you and I talked about this a couple of times, but like, whenever I go back to the record from his first administration, um, they made high school immigration harder to do. So maybe this time it'll be entirely different, but I think Stephen Miller is still gonna run. Anyways, one thing I do know, Jason, is that-

• 37:05Jason Calacanis?

  Right, and so I think that's what's in play right now.

• 37:07Speaker 01

  Yeah.

• 37:08Jason Calacanis?

  Who gets to decide? Who does Trump listen to? You know, and once he's listened to everybody, does he go with the Trump 1.0 administration or the Trump 2.0 administration? Does he go, you know, with people who are the business people? Who are the billionaire crowd, who are the successful entrepreneurs who have created millions collectively, jobs, tens of thousands of jobs each, or does he go with the career politicians? Who got him in the first time?

• 37:35Speaker 01

  I gotta, I gotta, I gotta ask Jason, would you-

• 37:37Jason Calacanis?

  On the business folks.

• 37:38Speaker 01

  Yeah, yeah, but like, I mean, talking about Mark Andreessen, talking about your friends, you know, all this like-

• 37:42Jason Calacanis?

  He's also not, by the way, running again, keep that in mind. He's not running, this is a legacy moment for him.

• 37:47Speaker 01

  I know, but like, how many people in Silicon Valley do you think would be okay? With deleting democracy and putting the six richest people from tech in charge? Cause that that kind of feels like-

• 37:59Jason Calacanis?

  Well, I mean, it, it, you know, Trump's in charge and he makes his own decisions as we've seen, you know, he's, he's, he, he fired two thirds of the people in the first administration, so he's pretty clearly in charge, I'll be honest, I think, and I think when you see him in office, he's gonna make his own decisions, uh, absolutely, he's gonna make his own decisions and I think everybody around him kind of knows that.

• 38:20Speaker 01

  I hope so, but one decision he made, uh, the other part of our FTC story is that Mark Meter, N D A D O R, is being added as well to the FTC, giving the Republicans a majority. One data point here on him is that while he worked for Senator Lee, he drafted a bill that would have forced the breakup of Google's ad tech business. I think that was back in 2022. So anyways, a mixed bag when it comes to the FTC, certainly a change in Lina Khan, we'll see the details when they come out.

• 38:46Jason Calacanis?

  It's gonna be 10 times better than Lina Khan for startups and entrepreneurship.

• 38:50Speaker 01

  Perfect segue. My question, Jason, was very simple. Startups that might, um, let's say not see a path to an IPO. If you wanted to get your company ready for this starter gun M and A moment, what do you recommend?

• 39:00Jason Calacanis?

  Oh, what a good question. Um, I always tell people partnerships lead to purchases. Partnerships lead to purchases. Great companies are bought, not sold. If you go and you say, I want to go meet everybody, do M and A, you have a chance of getting bought or 5% or less. If you're, I don't know, Whole Foods or your Instacart, and you're working with Walmart or Amazon and you've got some, you know, deal where you could order certain items from Whole Foods on, uh, Amazon, let's say. Uh, let's say their house brands were made available. Uh, okay. Yeah. Now we made a deal. Somebody in the organization who wanted certain Whole Foods brands on, you know, made a

• 39:42Jason Calacanis?

  deal with somebody who is responsible for that. And then the CEOs find out about it and they're like, oh, that's interesting. And then they see each other at Sun Valley, at the Allen and Company Conference, or they see themselves at the All In Summit, or they see themselves at some, you know, Davos. And they're like, oh, yeah, I know. Yeah. John and Suzie are working on that. Yeah, that's great. Um, how's that business going for you? High margin? Yeah. I was wondering, maybe, have you thought about like us maybe helping you like maybe put more SKUs on? We could run a test like maybe in Austin or wherever your home base is. And then all of a sudden the purchase happens, right? And so you see that over and over and over again. It happened with the Weblogs Inc. AOL wanted to invest. Bezos and Andreessen were going to be the two investors.

• 40:23Jason Calacanis?

  They each offered 250K, uh, at a $5 million valuation. We were going to sell 10% of the company for 500,000. It was going to be Mark Andreessen for 250 and Bezos for 250. I met with both of them. They both committed. And then AOL came in and said, we want to buy the company, uh, or we want to invest in the company. Can we put a million in next to them and we'll take 20%? And I was like, well, I don't know if I want to dilute that much. Like, hey, we want to buy 49%. And we want to use your software, you know, and it just, the conversation eventually was like Ted Leonsis called me, my Greek brother, uh, we're going to buy your company. You're going to become very rich for a 30-year-old man. And you're going to learn a lot here and then you go off to do even better companies after this will take care of your brands boom and then $30 million sale happens and so that's

• 41:08Jason Calacanis?

  it it's just partnerships investment collaborations lead to getting to know each other lead to the acquisition yeah every single time it happens that way

• 41:18Speaker 01

  This this reminds me a little bit and I'm going to try to make this PC but like essentially if you're out and about in society you're in a run club spend time at a cafe go to live events the chance of meeting someone to date goes up dramatically if you're at home by yourself so go out there and make some connections and then hopefully we can talk about your M and A deal founders on the show in 2025 awesome all right now Jason news we added a really killer company to the twist 500 today I'm very excited about this it's called Phoenix Phoenix helps businesses accept payments by giving them tools to build their own payment systems directly into their apps and services and I think this company is one of note for the next five or 10 years

• 42:00Speaker 01

  because the digital payment space is both so large and still growing so quickly so Statista estimates that the total value transaction value of digital payments is going to be about 17 18 trillion this year and grow about 16% per year through 2029 so that's an enormous tan can't do much better than that and critically there are a lot of great companies in the digital payment space we talk about Stripe on the show at what at least once a week and Stripe did grow its payment processing volume to about a trillion dollars last year up about 25% but the market is so big fragmented with so many different needs that I don't think any single company's going to actually win the whole thing so Phoenix and the reason why I like it is that it started

• 42:42Speaker 01

  life as a kind of a payments infra company versus a payment processor so I wanted to go into your company help you build payments into your own software stack keep your costs low and essentially to be in the background but the company as of 2023 also became a payments provider so now it does kind of both sides of the equation growth has been fantastic up I think Forex in the last year as of October and they raised 75 million dollars more I just can't say enough cool things about this company I think it's really really whip smart well positioned and it's grown really fast I love it

• 43:15Jason Calacanis?

  So if you want to have payments but not use Stripe you would use Phoenix And FinX lets you have your own payments inside of, so you can accept credit cards, you can accept PayPal, whatever it is, buy now, pay later. Instead of using Stripe or these other models, you would not have to do that, but you'd still have to pay fees to the credit card companies, I assume.

• 43:38Speaker 01

  Yes. So what's the advantage of this? Why not just use Stripe? Oh my God, Stripe works. It's lovely. It's so big because it's good. Well, FinX makes the pitch this way. Do you want to send your customers to a Stripe interface to do a transaction? Do you want to share any of your brand with them? Probably not. You want it in-house. And also they think, they argue that Stripe's model, which is very, very simple, 2.9% plus 30 cents per transaction is a bit expensive. And so they charge, uh, they make you pay the interchange fees, of course, at cost, there's a SaaS fee. And then I think it's a variable rate, but the idea is own your own infra, have it in-house, keep your brand and pay less. And frankly, that's not a non-compelling pitch for business customers, I don't think.

• 44:20Jason Calacanis?

  Okay. Uh, well, welcome to the Trust 500 and any notable investors there listed? I'm curious.

• 44:27Speaker 01

  Yeah. So way back in the day, Homebrew, so shout out Hunter Walken, Sato over there. Um, Amex and Visa have also put money in, unsurprisingly, uh, Bain, Lightspeed, and then Accrue Capital, which actually I don't know that well, led their last $75 million round.

• 44:42Jason Calacanis?

  Got it. Okay. So they're cooking with oil and more competition always great for customers of those products. You'll keep Stripe on their toes and good for them to have a competitor, I guess.

• 44:52Speaker 01

  Yeah.

• 44:53Jason Calacanis?

  All right. Awesome. What else is in the news as we get ready for our guest who'll be coming up next?

• 44:58Speaker 01

  Yes. Uh, let's do GM and Cruise. I am, uh, do you ever read a headline and just want to cry a little bit?

• 45:05Jason Calacanis?

  Yeah.

• 45:06Speaker 01

  So sad. That was me. Okay. So if you don't know everybody, GM, which owns Cruise, most of it, is backing off its dreams of building a robot taxi fleet and is instead going to take Cruise, this entity that has gone through a hellacious there and back after an accident and some controversy. And they're going to fold it into their existing, uh, driver assistance program inside of GM. They're not going to build a Waymo competitor. Instead, they're just going to make their trucks. Self-drive better and they're gonna cut their spend on self-driving. I'm just disappointed. It feels like such a failure to understand the innovator's dilemma.

• 45:39Jason Calacanis?

  Well, and there's another shoe that's gonna drop here. I'm almost certain of it. This sounds like there is gonna be some sort of a partnership that's going to occur or some divestiture of Cruise, perhaps. I don't know. I don't have any inside information, but usually when somebody shuts something down like this, it's probably because they have some other better deal and some other better option presented itself. So I think we've seen half the story here and the third act is still gonna happen. First act was trying to do it and then they had that terrible accident where they didn't hit somebody, but somebody got hit by a human-powered car. They ricocheted into a Cruise car, which then dragged the person unknowingly.

• 46:25Jason Calacanis?

  And then Cruise, of course, famously selectively edited the video when they submitted it, did something which most people, I believe, felt was dishonest, as be charitable. And that led to them being shut down in San Francisco and then the program being canceled altogether. Waymo, of course, is doing great in San Francisco and other locations, and they've got partnerships with a couple of different companies, including Uber. Cruise was obviously an Uber partner. Yeah, it stinks that they are giving up, but I do think we're gonna see something happen after this. And so I wouldn't be surprised if GM announces that this asset and this technology is going to be co-branded with another person.

• 47:07Jason Calacanis?

  I don't know if it'd be Uber or Lyft or another automaker who doesn't have a solution, a Toyota, Nissan, whatever, or one of the third parties we've had on the program who are working on the problem and you have Zooks, of course, owned by Amazon, working on this. So, you know, how many self-driving technology companies? How many ride-sharing companies do there need to be? It's probably there's 20 people working on self-driving now and it will go down to seven. And this is part of the process is people saying, you know what, I fold. I don't feel like I can keep up with Waymo, Uber, Lyft, Zooks.

• 47:41Speaker 01

  Yep.

• 47:42Jason Calacanis?

  Um, what was the other one?

• 47:45Speaker 01

  Wave.

• 47:46Jason Calacanis?

  Wave, wave, thank you. Uh, there's Aurora doing trucks. I mean, there's so many out there.

• 47:52Speaker 01

  Is evidence of what you're talking about.

• 47:53Jason Calacanis?

  Plus five or six people by do BYD, everybody doing in China. So this has got to go from 25 people down to 15, down to five, basically. And then they'll just, it'll consolidate down to five players and

• 48:06Speaker 01

  I think that's

• 48:07Jason Calacanis?

  Cruise is not going to be one of them, apparently.

• 48:08Speaker 01

  Dead on. But I just think Cruise should be one of them. So, uh, GM in their call about this, they had a call last night and I read the transcript this morning and it's going to say them about a billion dollars a year, by my understanding, which is not chump change, but if you pull their Q3 earnings, they expect their full year EBIT to be 14 to 15 billion dollars. So it's not even that much savings and they could have de-risked their entire future.

• 48:32Jason Calacanis?

  Sounds like an announcement's coming.

• 48:34Speaker 01

  Okay.

• 48:34Jason Calacanis?

  All right. All right. Well, so they get the, they decide that they're not going to do this, but they're still going to make their cars powered by, I don't know, Wave's technology, Aurora's technology, Tesla's technology. I mean, it sounds crazy that Tesla would do it right now. They've given no indication they would.

• 48:53Speaker 01

  Yeah.

• 48:53Jason Calacanis?

  That I know of, but, or let's just take superchargers as an example.

• 48:57Speaker 01

  Sure.

• 48:58Jason Calacanis?

  Can other people use superchargers right now?

• 49:00Speaker 01

  Yes.

• 49:00Jason Calacanis?

  Yes. Could people use superchargers five years ago?

• 49:04Speaker 01

  I don't know the answer to that.

• 49:05Jason Calacanis?

  No.

• 49:05Speaker 01

  Yeah, they could not.

• 49:06Jason Calacanis?

  No. It was not, it was not like it was open to other people. Now it's open. So, you know, sometimes people change their mind and I, let's say, if Tesla did have the best, or Waymo did have the best self-driving technology in the world.

• 49:23Speaker 01

  Yeah.

• 49:24Jason Calacanis?

  Or Wave, or Zooks. Let's say those four people or Aurora, those five people have incredible, like they're 80, 90% of the way to solving it.

• 49:33Speaker 01

  Uh huh.

• 49:34Jason Calacanis?

  I think we all agree they're 80% of the way there, 85% of the way there.

• 49:37Speaker 01

  I do.

• 49:37Jason Calacanis?

  Um, so if they're 85% of the way there. If you were one of the, would one of the four of them consider licensing it to GM to be in all their cars?

• 49:46Speaker 01

  I mean, sure, but that's not the risk. Yeah, but that's not the thing that I'm, that I'm, that I'm thinking about because to me, Waymo and the promise of Zooks style self-driving cars and Tesla talking about building a fleet that you can rent and just use means that personal car ownership is going to eventually become such a dated concept that we're not going to understand it. And GM just looked ahead and said, you know what we need to do right now is pay more in dividends, make more money from large trucks and just go for the most mealy mouth option of working on our L3 technology in the meantime. So sure, maybe, but I mean, oh my gosh, there was a future that they could have shot for, and they shot for the most tiny thing.

• 50:29Jason Calacanis?

  What if Waymo decides they don't want to make cars, but they do want to make the greatest driver in the world? And they say you can put it into all your GM cars and then you can sell those to any ride sharing network, DoorDash, anybody you want.

• 50:43Speaker 01

  Cool. But I mean, if that's the case, then every single car company in the world can do it. Cruise was unique.

• 50:48Jason Calacanis?

  Well, Way, but Waymo doesn't make cars, right? They adapt Jaguars, I think, currently.

• 50:53Speaker 01

  Yeah, yeah, but they're moving away. They're moving away from that thanks to the move deal that we mentioned. I, I, I guess, yeah, sure. Maybe GM can find a way to license, but to me, they, they were investing like they wanted to be a critical technology leader in a growing industry. And now they've gone, eh.

• 51:08Jason Calacanis?

  It's really three different businesses. You got the ride sharing business, Uber and Lyft. You got the self-driving technology business. Uh, Zooks, Tesla, et cetera, Waymo, and then you have the car manufacturing business. Tesla's going to have all three. Uber's going to have two out of three. The car manufacturers will have one or two out of three. And I think that's the way this is going to go down. And then if you're placing your bet, you're placing your bet on do people want to own cars or not? I think young people probably do not want to own cars. If there are cars available all the time, they're just going to go with cars available all the time and not own one.

• 51:44Speaker 01

  I mean, you brought it up last, uh, last time on the show. So I don't think I'm breaking any personal boundaries here, but your oldest is getting closer to driving age. And so I'm, I'm kind of curious, what do you hear from her friends? What do they want?

• 51:56Jason Calacanis?

  I mean, we live in Austin where you kind of need a car. And if you live outside the circle in Austin, you know, first 10 miles or whatever, it's a little hard to get a Uber or a Lyft way out there. Now, you know, in the future, that might change, but I do think the people in her school and people her age do have cars and they learn how to drive right about now. And I'm going to teach her on the ranch, how to drive the RTV and the, and the tractor and the lawnmower. And yeah, she'll know how to drive the car right after that.

• 52:25Speaker 01

  Nice. No, I mean,

• 52:26Jason Calacanis?

  Can't wait to teach her.

• 52:27Speaker 01

  I couldn't wait to get a car and get my license so I could get the hell away from my parents. And, uh, the fact that kids don't drive these days means their parents are too nice, is my view. You should be mean enough to your child that they want to drive. That's it. All right. Our guest today is Souvir Wadwa. He's the founder and CEO of a company called Flite, Jason. That's F L I T E dot Citi. This is a company that I'm personally excited about because when I first heard about it, I was not sold on the idea of working in the events business. But after digging a little bit deeper, I'm kind of obsessed. The way that I think of it is that it's vertical SaaS for event hosts. Souvir, welcome to the program.

• 53:03Speaker 04

  Good afternoon, guys. Thank you. Thank you for having me.

• 53:05Jason Calacanis?

  Nice to see you, Souvir. Uh, we are investors in your company. Tell us, uh, and the audience, maybe share with us what you do. What's the mission of the company? Uh, and how it's going so far?

• 53:15Speaker 04

  Of course. Yeah. So, um, I'm building Flite. Flite is the operating system for event organizers. It stems from a problem I faced myself as somebody that would put up events, you know, all around the country at different nightclubs. What we realized that was, um, you know, artists, TikTok DJs, you know, creators that have a massive following, couldn't monetize on their audience, or even connect with them. Just because they were really good at sort of like creating an experience for them, but they didn't know how to take care of what happens in the backend of an event. So operations, taxes, finances, hiring, payroll, and then finding synergies between these different tools and, you know, building product on top of that. So we released Flite to sort of simplify the operations. So you as a creator can do what you're Best at, you know, performing for your audience or, you know, connecting with them.

• 53:58Speaker 04

  Started this in school when I went to NYU, just graduated in May, um, was in launch this February and yeah, uh, it's been an exciting last nine months. I'm happy to share a demo as well.

• 54:07Jason Calacanis?

  Yeah, um, well, yeah, show us the product here and we'll ask you questions while you get it queued up. I guess the first question I have is, who is the customer and what is the business model here?

• 54:18Speaker 04

  So currently our business model is a fee on top of tickets sold through our marketplace. We charge a dollar plus 12% on tickets sold. Our customer is an event organizer that puts up about one to two events a month. Sells about 600 tickets for those events at an average price of $28.

• 54:33Jason Calacanis?

  How do they sell tickets currently? Because this is the long tail of events. This isn't a Ticketmaster Taylor Swift event you're going after. This is on average a 500 person event, uh, or something in that range?

• 54:46Speaker 04

  Right, yeah, 500 to 1,000. Um, the way we sell tickets or the way these creators sell tickets is by sort of advertising it on Instagram or YouTube. But what we do is more than just the ticketing, right? Um, I think events have so many different revenue streams in terms of, you know, drink sales at bars or, you know, uh, just everything related to the ecosystem. And we come in there and sort of help you monetize and grow your revenue in those streams as well.

• 55:08Jason Calacanis?

  And, uh, a portion of this is obviously the promoters who are involved. I remember when you first pitched me.

• 55:15Speaker 04

  Yeah.

• 55:15Jason Calacanis?

  You were explaining how this, uh, entire space works. Somebody who's a DJ who's throwing the New Year's Eve party or I don't know, some, you know, uh, party in the summer, whatever, they're in Ibiza or, you know, New York, whatever it is. There are promoters who have mailing lists, who bring people to see a DJ. They get cut into the revenue. So there is a budget of accounting that goes on here. It's a lot more complex than, than people knew, yeah?

• 55:42Speaker 04

  Yeah, yeah, of course. Um, and these promoters, you know, you nailed it. They struggle to get their payments. In a city like New York City, every promoter spoken has taken three to four weeks to get paid out. Maybe 200 to 300 bucks from an event. And that's absolutely, you know, horrible. So we help you streamline that and then take care of the accounting and sort of retargeting with these promoters as well. And, you know, it's funny that you mentioned Jason, Taylor Swift, right? Ticketmaster, massive concerts, theater stores in the news recently. Think about an artist a couple of levels below Taylor.

• 56:11Speaker 01

  Yeah.

• 56:11Speaker 04

  She probably has the exact same level of talent and the exact same, you know, a pretty strong audience. But she probably doesn't have the team or operational sort of resources to put up concerts at scale. So with something like Flight, she can hop on, do what she's best at performing, but take care of everything that Taylor has a team for just through technology on Flight.

• 56:30Speaker 01

  I wanted to ask about that because to me concerts are an enormous driver of my personal nightlife. So they're the thing that I care about the most. Have any bands actually used Flight thus far to do more than a one-off concert severe?

• 56:42Speaker 04

  We haven't had a band, but we've had a lot of TikTok DJs.

• 56:45Speaker 01

  TikTok DJs, I see.

• 56:46Speaker 04

  Yes. So they travel around the country, whether it's, you know, in the West Coast or New York City. These guys, yeah, they put up performances, but all their operations and team and sort of finances is all managed through Flight.

• 56:57Speaker 01

  Can I ask one more question about that? So on the finance side, you guys in your FAQ talk about how you have same-day payouts, which is awesome as a feature. People love to get paid. But one thing we also think about are chargebacks and, you know, people disputing payments and so forth. Does the company hold any risk by making it so easy to pay out event hosts? Are you all up holding any kind of the bag financially there?

• 57:19Speaker 04

  Um, not really though, because what we do is we firstly vet these customers really well before they hop on the platform. And then secondly, we've integrated a lot of APIs to sort of like reduce payout amounts. I mean, you can cash out instantly, but there's still certain restrictions we place.

• 57:32Speaker 01

  Okay.

• 57:32Speaker 04

  Amount of chargebacks. And it's great that I'm, you know, presenting my screen. We've built a lot of custom APIs around the whole dispute sort of, you know, section to manage chargebacks. So everything's automated and taken care of through the platform.

• 57:43Jason Calacanis?

  And so if somebody wasn't using Flight in this business, if they're a TikTok DJ, they would, I don't know, put something on Eventbrite, but not have all these additional features and ways to manage the events. Yeah?

• 57:53Speaker 04

  Absolutely. Yeah. They'd use Eventbrite and then take care of, you know, their marketing on Mailerium, Twilio. They do their finances on Quickbook. They, you know, run ads through Meta directly on Snapchat. Uh, and we have Flight AI as well, which I'm super excited to talk about in a bit.

• 58:07Jason Calacanis?

  Oh, uh, any announcements here you want to make or what is it going to do?

• 58:10Speaker 04

  Uh, well, we, we learned that with Flight, we bring a lot of operations. Into one platform. And so we make it very easy for you. But on top of that, I mean, these DJs are performing, right? They're on the road all the time. And what they've done at times is text me while I'm out with my girlfriend being like, hey, can you change this ticket for me? So what we've done with Flight AI is literally everything you can do on flight is happening through a conversation now. So instead of texting the founders at four AM in the morning, you know, the AI does it for you.

• 58:35Jason Calacanis?

  Ah, so instead of going into an interface on your desktop, you just go into a chat room and say, hey, raise the prices of this ticket or this offering, this table or whatever it happens to be.

• 58:45Speaker 04

  Um, yeah.

• 58:45Jason Calacanis?

  Question for you about software development as we wrap here. We are entering this age of efficiency and a lot of founders are using AI inside their organizations to drive efficiency. Maybe you could tell us a little bit of how AI has changed running a startup, if at all, uh, and specifically your startup.

• 59:06Speaker 04

  Yeah, um, it has been, you know, massive for me. I think while being in school and building a product like this, balancing classes back then and then, you know, being able to write tons of code. Uh, G P D, especially when it just came out, really, really made it easier for me. I mean, I didn't know how to code in JavaScript or React or any of what Flight is built with, and I've built most of the product myself, so. Uh, come a long way using, using AI tools. And then now our team, we have an, you know, we have a international team that codes for us. They take care of all of our development and we've given them access to almost every AI resource they need from GitHub Copilot to sort of different subscriptions, so they can be more efficient. And what have they asked for?

• 59:45Jason Calacanis?

  What I'm curious, what besides, uh, you know, uh, GitHub or, you know, Chat G P T, is there any other specific products that they say, hey, we really need this?

• 59:54Speaker 04

  Uh, not, not, not, not at the moment, but I keep looking for more products. I think I can find more solutions to make their life easier. We're going to grow faster and, you know, more efficiently as well.

• 1:00:03Speaker 01

  Oh, I just want to pick up on the growth part because I was going through your LinkedIn. And you said as of a couple of weeks ago that you guys are growing seventy percent month over month. And you've grown to over a hundred thousand users. So I'm just kind of curious, that's tickets sold to people, not event hosts themselves.

• 1:00:20Speaker 04

  Yes, that's the consumer that has bought tickets on flight. We have about sixty active event organizers on the platform that, you know, run events every twice a month. That's why I say active.

• 1:00:29Speaker 01

  Okay.

• 1:00:29Speaker 04

  Yeah, a hundred thousand consumers in the platform. So that's exciting.

• 1:00:32Speaker 01

  Just a question about getting getting out there. I know you were just in college. You were NYU. You and I were talking before the show about how busy New York City is as a place to be. But does flight scale to other markets that are smaller? And I know I live in a smaller city, so I'm thinking about Providence, but I'm just curious how far down market you can go and still have a flight friendly event.

• 1:00:50Speaker 04

  I mean, our biggest market is Connecticut. Funny that you mentioned. So, yeah.

• 1:00:54Speaker 01

  What's?

• 1:00:55Speaker 04

  Massive in Connecticut, Philadelphia, Washington DC. And I think around thirty three cities around the country of use flight. We just started in Dubai, in London, and now India as well this winter.

• 1:01:07Speaker 01

  Oh, my gosh. All right, cool.

• 1:01:08Jason Calacanis?

  It does seem like these younger generations, Alex, because they're online so much. I think that they're starting to get to the point where maybe they're online too much. And they're like, I need to get out and hit the club. I need to do something with people in the real world.

• 1:01:22Speaker 01

  Yeah.

• 1:01:22Jason Calacanis?

  So every time things go, you know, pendulum swings too far one way, I think you get a reaction. And live events, people just keep asking me, when's the next live event? When's the next live event? When can we see people in person? Is that a trend that you're building off of?

• 1:01:35Speaker 04

  Yeah, absolutely. And it's also it's also nice that you mentioned. I think ticketing is a very big space, but you know, there's tons of players building ticketing platforms. I think the way flight stands out is, you know, targeting these consumers and bringing, say you're in your bedroom, using technology scrolling through your, you know, feed. You want to organize an event. You can hop on something like flight and do an at scale event as well if you need. So we not only get these kids off their chairs to attend these events, we also start to get them to throw these events, which is massive.

• 1:02:01Jason Calacanis?

  It's going to be a big part of, I think, the future. People talk, Alex, about like, oh, my God, job destruction. You used to always be able to get a retail job.

• 1:02:09Speaker 01

  Yeah.

• 1:02:09Jason Calacanis?

  Then that went away as a safety net. We were talking just yesterday or the day before, hey, you know, used to be able to get a job. As a Uber driver or a DoorDash driver, maybe over time that goes away.

• 1:02:20Speaker 01

  Yeah.

• 1:02:20Jason Calacanis?

  And so what's left, you know, people become podcasts, creators, content creators, poets, musicians and live events. There's actually, I think, as we get rid of some of these jobs, humans are going to be looking for something to do. And one of the things they might want to do is throw a party or throw a concert and go and attend it. And that's a beautiful thing. Enabling people to do that, it's in a way, flight is kind of like Airbnb in that it kind of helps people build this platform. And you do help aggregate some people to attend events yet? Or is it still more like MailChimp where, you know, you bring your mailing list? We're not here to grow your mailing list. But eventually Substack, when they competed with MailChimp, their focus, or Beehive even better, because they came from the morning brewer team.

• 1:03:03Jason Calacanis?

  They had that cool feature of like affiliates built into it. So they, they said, you know, hey, there's tons of mailing list products. We're going to help you grow. You have the affiliates, that's the tool for your growth. So I'm wondering if you're not just aggregating supply and being a tool for the supply, but are you aggregating demand yet?

• 1:03:23Speaker 04

  Yeah, um, to start, we've built a lot of product for you to reach your audiences and mails, you know, notifications, text. But we focused a lot on our consumer app. A lot of these kids, you know, discovery is very important for them to sort of find events. So we've nailed down an app where they can easily find events, explore, and that helps bring the demand in for them. But what we've realized is helping them sell an extra six, seven tickets is amazing. But helping them sort of make backend operations efficient will help them sell 50, 60 tickets in the future and build a brand, which we always want to focus on the B2B operational side of things.

• 1:03:54Speaker 01

  Can I just slip in one last question, Jason? Cause I just remembered this. So when I was going through flight before the show, just prepping, going through the service, signing up, looking at different events. I noticed that they do have a great mobile app for iOS, but not for Android. And so it's severe, I'm really curious about the choice to go iOS only at this stage. And I guess when does it become necessary or beneficial for you to invest in building an Android app? And I say this as an iOS user, to be clear.

• 1:04:18Speaker 04

  Yeah, yeah. The Android app is important. I mean, I have a Swift background and, you know, we had to pick our battles and what we want to build, what product is more important and dedicate resources to. So we thought we'd get the iOS app first. Um, a lot of our customers use iPhones as well. But yeah, we're going to scale our team after our fundraise and expand to Android as well.

• 1:04:37Speaker 01

  Okay, well, if you're going to go to India, Android, you know?

• 1:04:39Speaker 04

  Absolutely.

• 1:04:40Speaker 01

  You have to have it.

• 1:04:40Speaker 04

  Yeah.

• 1:04:41Jason Calacanis?

  You'll get there. Well, listen, continued success. It's great to be on the journey with you. I think you're on to something. You know, I do see all these TikTok DJs as I'm scrolling. It's amazing how many people are listening. Sometimes it's become like a modern day radio station where the live feature has a little bit of monetization built into it, but it's not a lot. And then I noticed a lot of singers. And then I noticed the singers, you know, who have two, three, four, 500 people watching them. They're all announcing their events. So it's kind of becoming Alex, like stand up comedians, remember Tony Hinchcliffe would have like these shorts, the shorts for TikTok and for YouTube came from, you know, the small event he would do here, Kill Tony. And then all of a sudden he's on tour across the country

• 1:05:25Jason Calacanis?

  or podcasts helped them do it. I think there's going to be something there with TikTok DJs. You know, you, you get into a certain DJ, a certain vibe, a certain community, and then you go out and see them when they tour. It's really a fascinating way to monetize the celebrity people get on TikTok specifically.

• 1:05:41Speaker 04

  Absolutely. Yeah.

• 1:05:43Speaker 01

  Well, Sufir, thank you so much for dropping by. We will keep track of how things are going. And when you cross the next major ARR milestone, you let us know. We'll talk to you again.

• 1:05:50Speaker 04

  Thank you for having me, guys.

• 1:05:51Jason Calacanis?

  All right.

• 1:05:52Speaker 04

  Have a good day.

• 1:05:52Jason Calacanis?

  Well done. Well done. All right. Another amazing episode. It's Wednesday, Wednesday here on December 11th. We'll be back on Friday, December 13th with another news program for you. He's Alex. I'm Jason. Turn on your YouTube and you can see us live Monday, Wednesday, Fridays, 12 o'clock Texas, 1 o'clock right coast, 10 a.m. left coast ish, ish. Start right around that time. All right, everybody. Bye bye.

• 1:06:19Speaker 04

  Bye.