Forget ‘Founder Mode,’ what about Customer Mode?

You might have noticed in your time online that a lot of the services and the websites that you’re using are kind of getting…worse. The good news, though, is that this means that there are different sectors that are ripe for disruption. On today’s episode of Equity, Rebecca's joined by Ed Zitron —CEO of EZPR, host of the Better Offline podcast, and author of Why Everything Stopped Working—to dig into why this shift is happening and what it means for startups. Listen to the full episode to hear the pair discuss: Why it’s time to ditch ‘founder mode’ for what Ed calls ‘customer mode’ – a more sustainable, customer-first approach that beats the growth-at-all-costs mentality. The opportunities Ed sees for startups in what he sees as a declining market The long-term outlook for generative AI companies like OpenAI. (Note: this interview was recorded before the DeepSeek news broke, but don’t worry – Equity will have that update for you later in the week.) Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes here. Credits: Equity is produced by Theresa Loconsolo with editing by Kell. We’d also like to thank TechCrunch’s audience development team. Thank you so much for listening, and we'll talk to you next time. Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Anthony Ha?

  This episode of Equity is brought to you by Schneider Electric. Schneider Electric, your energy technology partner.

• 0:17Rebecca Bellan?

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. I'm Rebecca Bellan and this is the episode where we bring on industry experts to help us home in on a trend in the tech world and dive deep. Today, we've got a high-energy, fast-talking episode for you, so make sure to keep up. Now, you might have noticed in your time online that a lot of the services and the websites that you're using are kind of getting worse. Google search is dominated by sponsored links, dating apps have a paywall now. Writer Cory Doctorow has coined this phenomenon "inshitification." The good news, though, is that this means that there are different sectors that are ripe for disruption, something we spoke about on the show recently with Mastodon CEO Eugene Rajco. Today, to talk more about this is Ed Zitron.

• 1:01Rebecca Bellan?

  Today, we're talking to Ed Zitron. Ed is the host of the Better Offline Podcast, CEO of EZPR, and he's writing a book called Why Everything Stopped Working, and it's about why tech products have stopped working and kind of suck.

• 1:13Speaker 02

  Yeah.

• 1:14Rebecca Bellan?

  Yeah. Ed, welcome to the show.

• 1:15Speaker 02

  Thank you for having me.

• 1:16Rebecca Bellan?

  I'm really excited to talk to you, especially after reading one of your newsletters a few weeks ago called Never Forgive Them. I think that's what it's called, right?

• 1:25Speaker 02

  Yep.

• 1:25Rebecca Bellan?

  And that details all the ways that big tech companies have kind of prioritized growth over customer needs and why that makes for just like a really shitty internet experience, which sucks because we all kind of live our lives online. Do I have that right?

• 1:36Speaker 02

  Yes, you do.

• 1:37Rebecca Bellan?

  Yep. Do you want to talk a little bit more about that? You know, you and I caught up yesterday and you mentioned something about a slop society that I thought was pretty funny.

• 1:43Speaker 02

  Yes, so I'm working on a piece that's going out as we record this called Slop Society that kind of bridges off of this. I think that there has been a miss in the media, but also in society, about how bad things have gotten. People say, "Oh, you're being a cynic." Load up any of your apps. Load up Facebook. Facebook is an awful... It's been terrible for like years, but everything else is kind of like that, too. Within Never Forgive Them, I got the cheapest... Sorry, the best-selling laptop, which is $238 Acer Aspire One. And I wrote down, which I didn't think was going to be particularly prescient, I wrote down exactly how bad it is using a modern Windows Home S laptop. And it was, it took me like a solid like forty five minutes to an hour to actually

• 2:25Speaker 02

  set it up. And throughout the whole time, I was signing agreements and the whole thing was shuddering and juddering. You load it up and there's ads for booking.com, ads everywhere.

• 2:34Rebecca Bellan?

  Ads on your, on your like personal laptop that you just like bought?

• 2:37Speaker 02

  Yes. And on top of that, they're within the start bar. But if you hit the start bar, then there's a bunch of like slop, more slop. There's just, there was a thing about Mark Twain's birthday. He was trying to advertise me things in there. But this is everywhere.

• 2:50Rebecca Bellan?

  Yeah, it's everywhere.

• 2:51Speaker 02

  It's most of the web now.

• 2:52Rebecca Bellan?

  Yeah.

• 2:53Speaker 02

  And I'm talking to you right now. I just got a beautiful forty nine inch Samsung Odyssey monitor.

• 2:59Rebecca Bellan?

  Yeah.

• 2:59Speaker 02

  Now, you'd think Rebecca, because you'd be wrong here, I would just plug my stuff in and then I'd be able to use it. Incorrect. I could not do anything with this monitor until I downloaded the SmartThings app. Then on downloading that, I had to connect the monitor to the internet.

• 3:14Rebecca Bellan?

  Mm.

• 3:15Speaker 02

  At this point, I then had to agree to a bunch of stuff. And then I plugged my laptop in. At that point, it said, well, that's an Apple TV, right? This isn't an Apple TV, it's MacBook. Nevertheless, I then had to mess with the settings to get anything to work properly. It took about fifteen minutes.

• 3:29Rebecca Bellan?

  Yeah, I had a similar experience with this as well. I just bought a TCL TV and I guess I didn't realize had Amazon Fire Stick. And it won't let me download any other apps but Netflix unless I put in my Amazon details. And I'm like, I don't want to do that. I want to give Bezos my data.

• 3:44Speaker 02

  I just wanted to use my damn monitor and I'm.

• 3:46Rebecca Bellan?

  I just want to watch some TV. I just want to watch a little Showtime.

• 3:48Speaker 02

  This is everything.

• 3:49Rebecca Bellan?

  Yeah.

• 3:50Speaker 02

  And it's everywhere and it sucks. People say I'm a hater and a pig and they should put me back in the sty. But the truth is, this is everything. And you can pretend this isn't the case, but Google search is bad now.

• 4:01Rebecca Bellan?

  Google search is really bad.

• 4:02Speaker 02

  Most apps are growth hacked to mess with you, to make you do stuff. To use Instagram right now.

• 4:08Rebecca Bellan?

  Hmm.

• 4:08Speaker 02

  Is to fight meta to get to the things you want. And Facebook is even worse, as I've kind of been over. And what pissed me off a bit with this whole, oh, now Mark Zuckerberg's going to reduce, he's going to reduce the care that they take with Facebook. If you look, Glad put out a report last year that trans people have been attacked on Facebook for so, like years and years and years and horrible things are said about them. And Facebook's not a. Didn't do anything about it repeatedly. The Verge reported this, many places reported this. Meta has done basically no stewardship of their platforms for years. I'm frustrated because everyone's going, wow, suddenly Facebook will get bad. Come on.

• 4:44Rebecca Bellan?

  No, no, it's always been bad. I mean, we need to look no further than frigging Myanmar. Right? Like, they just couldn't be bothered to hire Burmese speakers to do content moderation. But I guess like what we wanted to see or what people thought was happening for a little while was that, you know, Meta and other companies were making a concerted effort to try to do content moderation. But I guess as

• 5:04Speaker 02

  But they weren't.

• 5:05Rebecca Bellan?

  It certainly wasn't good enough.

• 5:06Speaker 02

  They left thousands of anti-trans posts up. They were reported by GLAD and nothing happened. They have been for years and years promoting right wing content.

• 5:17Rebecca Bellan?

  Mm hmm.

• 5:17Speaker 02

  Like Dan Bongino, Ben Shapiro, Alex Jones. Like, this isn't a right wing pivot. This is just them formalizing a policy they already had.

• 5:25Rebecca Bellan?

  Yeah, no, I agree with you. And it's sad to see and it's just, Facebook was a place, you know, same with Instagram. You want to see friends' pictures and everything. Right now, I feel specifically on Instagram, it's like this kind of algorithmically fueled like anger machine. Like, I'm not seeing my, my funny memes and my workout videos anymore. I like, I happen to like a few too many posts about progressivism or feminism.

• 5:47Speaker 02

  Right.

• 5:47Rebecca Bellan?

  Suddenly, that's my entire feed and not, you know, I still care about these things. But, you know, it's, it's not making me want to spend a heap of time on the platform. All of this is to say, really, that while everything is shit, there is good news for other startups, right? Because this is the time where they can step in and challenge the incumbents. And we're not just talking about social media, although that is important. We spoke recently on the show to Mastodon CEO about the decentralized web. But talk to me a little bit about what you see as potential opportunities for startups. And we might get back into some shit talking after.

• 6:19Speaker 02

  So a big one right now, I would say is Microsoft 365. Microsoft has become just a monopoly company. They don't make great products. They haven't in some time. I would maybe put the gaming side, like, I quite like the Xbox division, but they love laying people off and I'm sure that that place is going to slop up soon. There is a massive opportunity to take Microsoft down within the enterprise software market, within the productivity space and look no further than Salesforce, proof of that. They love to buy things to try and convince people to rip little bits off like Power BI competitors and such. But the thing is, all of these companies that used to be beloved in the valley, Salesforce to blow, owned by Salesforce, even I would say Dropbox is weak.

• 7:02Speaker 02

  All of these companies have turned into, because when they go public, all that matters for them is growth, expressing growth, how we grow every single quarter. As a result, these products are fat, they're ugly, they're expensive, they don't work very well, you don't like using them. And this isn't just consumer apps. The opportunity for startups now is basically the same thing as always theoretically happened in the valley, which is the incumbents have become fat and lazy, they have become overconfident, they have built businesses, Google especially, on this idea that it's just easier to stay with us. That's not a business model, you can beat that. And putting aside the anti-monopoly stuff, there is just an opportunity to make good products that don't suck. The one thing to say though, is that I think the best thing startups can do is get out of the growth lust phase.

• 7:47Speaker 02

  They need to get into the sustainability space. And I don't mean, I mean, it would be great for the environment, but I mean-

• 7:53Rebecca Bellan?

  Sustainable business growth, right?

• 7:55Speaker 02

  Yes, exactly.

• 7:56Rebecca Bellan?

  Yep.

• 7:56Speaker 02

  Make companies that don't need to be a hundred billion dollar companies, that don't even need to be a billion dollar company. They can be a really successful, happy 150 million valuation company that plugs along, that's profitable with happy people that work there with happy customers. And all of this seems very obvious, but I believe in the next year, we're going to see a real shift in consumers, both business and otherwise, away from these shitty companies. And when I say shitty companies, I mean most of big tech. And I think that what you're seeing with Zuckerberg right now is just a mask-off moment that shows the contempt that they already had for you, me and anyone else using their products.

• 8:36Rebecca Bellan?

  Yeah, so you know, when we talk about companies that are coming in and potentially able to disrupt, I mean, you run a PR firm, you work with tech startups. What are you telling them to stand out and to be able to disrupt these industries?

• 8:48Speaker 02

  So the companies I work with, I pretty much start with one basic thing, which is are your customers happy? Like, do you, do they like you? Are you making more money than you spend? And there are the ones that come along that are early stage. They're still getting to the point when they can be, but the goal is always sustainability. It's always, we will make more money than we spend. Crazy idea. And I tell them also, that's kind of table stakes and you need to make sure your product works. And I don't have that problem really ever, but it's always come back to these core values. And then I will find a way of explaining this to the media, why this is important. I don't think that story is going to be so difficult this year. I think the media is kind of waking up to the fact that profitable is better than not profitable. And also companies need to do things that customers like.

• 9:33Speaker 02

  But the big thing is, is the kind of preparing them for a cynical era. Cause I think that the generative AI era has really pissed off consumers. I've never seen a product in my life that has ever created this level of repulsion. This disgust. And so I don't really work with companies that work in generate.

• 9:51Rebecca Bellan?

  That could just be because of who, who you hang out with, other writers who are like, these fucking companies have taken my work and, and training their AI on it.

• 10:00Speaker 02

  I mean.

• 10:00Rebecca Bellan?

  Well, I guess there's like, it's also leading to a lot of layoffs and stuff. We're seeing that kind of levels of disgust as well.

• 10:05Speaker 02

  I don't even mean that. I mean, people who are not aggressively online, people that like my hairdresser and people that I know who aren't on the computer all day. They find this stuff disgusting. They think the pictures look weird. They know it's too expensive. They are kind of like, why am I having this pushed everywhere? Why do I have to have this? Why is this not a choice? Why is this something happening to me? And I think that a lot of the clients I represent, I've told them is just, you need to be thinking customer forward and none of this BS of, oh, we love the customer while you make things worse. No, you have to be able to explain, this is why our customers love this. And this is why, this is why this is good for them.

• 10:50Anthony Ha?

  Every company today is looking for an edge. Better insights, faster decisions, greater resilience. But as AI drives new growth, it also creates new demands on energy and infrastructure. Schneider Electric is connecting energy, automation, and digital technologies to help organizations make smarter decisions and operate more efficiently. Because the future won't be shaped by AI alone, it will be shaped by energy and industrial intelligence. Schneider Electric, advancing energy tech.

• 11:18Rebecca Bellan?

  You know, speaking of customers, customer service is a huge thing. I mean, one of my bugbears lately is like looking at big companies that have gone either the AI chatbot route for customer service, or just like they don't really have customer service. Like I was trying to get in touch with Walmart's customer service recently. I couldn't do it. I could not pull it off. It was actually insane to me. I was going around in circles, but I'm like Walmart can do this because they're Walmart and they're not going to lose customers doing this. But there are some studies that show that companies are actually leaving a lot of money on the table. But like at the end of the day, I think that it would be a unique selling point for startups if they do have like really good customer service, especially if it's something that you actually need that for, right? You need to talk to a person sometimes.

• 11:58Speaker 02

  You do, and I think companies like Klarna are really reprehensible as well. I had a Klarna experience recently where they tried to charge me a late fee because they would not send me the text to log in. And for some reason, I wasn't allowed to use my email to log in. And I think that you're going to sadly see a lot of companies move toward the AI customer service thing and then have to pull it back really aggressively.

• 12:21Rebecca Bellan?

  Yeah.

• 12:21Speaker 02

  Because consumers are being punished. This is the most punishing era to interact with a company, let alone a tech company. The thing I keep coming back to is I don't think big works anymore, or at least I think the big companies refuse to work ethically. And it's frustrating.

• 12:41Rebecca Bellan?

  Yeah.

• 12:42Speaker 02

  It's frustrating because it never had to be this way.

• 12:45Rebecca Bellan?

  No, well, it's just a misalignment of values. I mean, if you look at how, okay, everything is products are degrading. And one of the reasons we can look at that is how much money from a company's profits is going back into the R and D to actually create a better product and stay competitive and really care about its customers versus how much is going into like share buybacks so that it can boost the price of the stock so that we get, you know, more money back to shareholders.

• 13:08Speaker 02

  I had William LaZonic from UMass on a few months ago and talked about that extensively. It's that. And like the buybacks are vile and I wish that was not legal. I don't think it's a good idea. But putting that aside as well, it's it's when your incentive is growth.

• 13:25Rebecca Bellan?

  Yes.

• 13:26Speaker 02

  That's the problem because growth is not just revenue. It's growth of metrics, it's growth of users, it's growth of activity.

• 13:33Rebecca Bellan?

  Users who will need help, yes.

• 13:35Speaker 02

  Yeah, but that that that's not what we're in the business of doing. I don't know why you brought that up.

• 13:40Speaker 02

  Like getting back to Meta, actually, really good example of just, I despise this company. And I really love technology, by the way, I'm looking at a beautiful giant monitor. I love my doodads and gizmos, I must be really clear, but broken hearted romantic. But looking at Meta, again, I'm really pissed off that people are like, Metas changed their mind. Metas become evil. Are you flipping kidding me? They haven't had customer service for years unless you pay for verification. You have to pay for this site. And I think that they make some obscene amount of money a user.

• 14:12Rebecca Bellan?

  Yeah.

• 14:13Speaker 02

  Like, I think like a hundred, like some insane amount of money per user. And then they'll say, oh, well, it's a free service. Screw you, no, it's not, you're lying sack of shit. And that's the thing. We have been sold this idea of free services by these companies.

• 14:28Rebecca Bellan?

  Yeah.

• 14:28Speaker 02

  And they they kind of play and whine and oink about it. And they say, oh, well, it's a free service. We don't make money off our free users. Unless you're OpenAI, that's not true. OpenAI does lose money on all their free users and they are a terrible company. And Sam Altman is good at raising money. He's not good at running a business, as proven by Looped and OpenAI. But all of these companies selling you a free service are not actually, they're making a lot of money off of each one. And I think what founders need to realize is eventually consumers are going to work this out and they're in the process of working out. So I don't know, how about a free exchange of value? How about you express why your customers enjoy talking to you?

• 15:05Rebecca Bellan?

  Yeah.

• 15:06Speaker 02

  Why your customers trust you, for example. I don't know, maybe they pay you for some sort of good or service. And then that service would be good enough that they would keep paying you. Because eventually the bottom is going to drop out here.

• 15:18Rebecca Bellan?

  Well, who's doing it right that you've seen? Like, are there any startups, any companies that you're like, okay, I'm actually, I appreciate what you're what you're bringing on the table?

• 15:26Speaker 02

  I have exactly the example.

• 15:28Rebecca Bellan?

  Perfect.

• 15:28Speaker 02

  A company called Flighty.

• 15:29Rebecca Bellan?

  Okay.

• 15:30Speaker 02

  Flighty is this, the tablet of flight tracking things. It connects with Tripit, one of my other favorite things, owned by Concur. Can't believe I'm giving Concur

• 15:42Rebecca Bellan?

  Concur.

• 15:42Speaker 02

  the applause. Like, they bought Tripit like a hundred years ago and they haven't touched it at all, which is great. So Tripit is a thing where you can forward your travel things to it and it will put it in a nice itinerary. Great company. I paid them for over a decade. They're wonderful. Flighty connects to Tripit, but you can use it without it. And it is just the cleanest, nicest flight tracking in the world. Everything looks great. It's very like nicely designed, won an Apple Design Award, it's like App of the Year in twenty, I think it was a finalist in twenty twenty three or something. But you can add your friend's flights and when you do it as a friend's flight, it disappears entirely. So if you're picking a friend up at the airport. Now Flighty costs real money. Flighty is three ninety nine a week, three ninety nine a month annually, or two hundred and forty nine bucks lifetime. It rocks.

• 16:26Rebecca Bellan?

  Yeah.

• 16:26Speaker 02

  I paid that money happily. I use it every single time I fly. No anxiety. I know that it's just really well done. It gives you faster information than the airlines have. No financial relationship with this company, other than that I've paid them. But I love them because dang, what if we had an app that did exactly what we wanted, that was created considering the many problems of the thing it was solving?

• 16:49Rebecca Bellan?

  Yeah.

• 16:49Speaker 02

  And then what if this thing looked really good and was easy to use so that when you used it, you weren't actively fighting with it? Hey, what if I paid them for this service? You get my point?

• 16:59Rebecca Bellan?

  Yeah.

• 16:59Speaker 02

  It isn't impossible to do this, but Flighty-

• 17:02Rebecca Bellan?

  Well, this is the thing. People don't want to pay.

• 17:04Speaker 02

  I actually disagree.

• 17:05Rebecca Bellan?

  I think increasingly they are wanting to pay, but I think we've lived this kind of world where we're like, everything's free. I don't have to pay for anything. I can stream whatever I want. I can have email, whatever store. Like, there's just so many realms. You know, we say OpenAI is losing money now, but what they're doing, I assume, what I have to assume they're doing, is trying to like get their hooks in to as many, they're doing the same playbook, right? Grow at all costs and then when people are hooked, then you start charging them more money or taking what you can from them.

• 17:34Speaker 02

  Which, which isn't working.

• 17:36Rebecca Bellan?

  You know, it has, I don't, I don't know what they're gonna do. They're spending a lot of money on AI infrastructure. Maybe there'll be an energy business in the future, but.

• 17:42Speaker 02

  I mean, it's just they're losing money even on the $200. So the thing is, OpenAI is really funny. Because so Carl Wigg has actually reported a few lot that they were losing money on their 200 bucks a month plan. And the problem with OpenAI is you're seeing, I think they are probably the biggest sign that we're at the end of the hypergrowth era. Because they are doing something that you only do if you have, like, you're just running the old playbook. Because like you said, they're doing the thing where it's, oh, we'll just get everyone in and then we'll do that. Except they don't scale like software companies. Software companies are meant to scale and get cheaper. They get more expensive. I'm sure someone's gonna hear this and say, Ed, Ed, you're crazy. You give me a better option. Don't just say they'll have more silicon. That isn't happening.

• 18:25Speaker 02

  But you're right in the, I think companies have just run this playbook so many times. And consumers have got chilted by it enough times that they're gonna start paying for things again. Fleity is never gonna go public.

• 18:38Rebecca Bellan?

  Yeah.

• 18:38Speaker 02

  But they're gonna probably toddle along with a really healthy business.

• 18:41Rebecca Bellan?

  Yeah.

• 18:41Speaker 02

  And I think that you can take a lot of lessons from that. Now, some people will say, well, how will I possibly grow a startup to the size startup should be? And my counterpoint is, do you really have to? What is it? If your goal is to sell your company to someone, even then, having a sustainable business is probably gonna put you in a far better position to negotiate. If you don't have to sell, if your company is profitable and sustainable with customers that love you, how would that make you weaker to an acquirer?

• 19:09Rebecca Bellan?

  Yeah.

• 19:10Speaker 02

  How would that make M and A less preferable? If you build sustainable, reliable companies with good customer bases, that's a real moat. That is a thing. The valley having competition, the valley having lasting businesses is nothing but good for founders. And there are so many founders out there that are building businesses like this.

• 19:27Rebecca Bellan?

  Yeah.

• 19:27Speaker 02

  It's just that I think that the VCs also kind of have to adjust to this as well. And maybe they need to find new ways for liquidity.

• 19:34Rebecca Bellan?

  Well, that's exactly it. VC needs to adjust as well. And you're starting to see that. You're starting to see a lot of VCs who are saying, we're a little more risk averse. We're doing our due diligence finally, right? But then at the same time, they're saying on the one hand, they want more sustainable businesses. But on the other hand, the mega deals of last year were all to AI startups and AI companies. Or AI-related companies that are still not sustainable. And so, yeah, there's this kind of mania, like we reported recently from Marina Temkin, that in Q4 of 2024, investors funneled $75 billion into US startups, which is up from an average of $42 billion in the previous nine quarters. However, while that sounds good, nearly half of that total investment went to a handful of colossal deals at crazy valuations.

• 20:16Rebecca Bellan?

  Databricks raised $10 billion at a $62 billion valuation. OpenAI raised another $6.6 billion at a $157 billion valuation. Like, it's crazy. And, you know, a lot of this money is going towards later-stage deals, per Crunchbase Data. And so it's like, where's the money for the early-stage companies that are gonna be trying to, you know, pick fights with the incumbents?

• 20:40Speaker 02

  I think there is a problem where we talked about people kind of running the old playbook. I think that's what venture's been doing. And this isn't exclusively a cross-venture, but an alarming amount is just, what's everyone else investing in? What is everyone else eating today? That's what I want for dinner. And I think they're gonna have to stop doing that. But also, the money needs to go back into early stage. I've talked to VCs who try and say, oh, but the LPs don't like it. Sell better. I don't know what to tell you. VCs love to tell startups to grow faster and do more. Do the same bloody thing. There are VCs not doing this. But nevertheless, they're gonna have to get creative. And I don't even think that that necessarily means equity investment anymore. There may be a need for revenue share. There may need to be more inventive ways. Because what we need to do is return to the time when,

• 21:25Speaker 02

  and it's been a long time, when most of the money went into early stage. That's better for everyone.

• 21:30Rebecca Bellan?

  Has that ever been the thing? I mean, I suppose it must have been a thing eventually.

• 21:33Speaker 02

  A very early, like 80s, 90s.

• 21:35Rebecca Bellan?

  Yeah, like when it all first kind of started.

• 21:37Speaker 02

  But that's the thing. And it went in that direction because growth worked, because everything grew at all times, and there were all these lands left to conquer. The thing I'm worried about is that once the AI bubble pops, and yes, I am of the belief that that is gonna happen. Argue with me in the comments. And I'll be there if that happens, if you wanna human that. It will create an era where there are no more growth, there are no other hypergrowth markets. Quantum computing isn't one of them. We, we have quantum computers. They don't do the things that hyperscalers need. Metaverse is not coming back. There is no growth market there. Look at the video games industry. If the video games industry was a twenty five trillion dollar industry, maybe I'd buy that argument, but that's not gonna happen.

• 22:17Speaker 02

  Oh, well, they're just gonna bring crypto back. Again, crypto is not that scale of growth. When I say growth, I mean, they need, tech needs to create a trillion, five trillion dollar industry, something at the scale of the smartphone and the cloud computing. Generative AI is not that. And as long as we keep doing this dance, we're getting away from the next one, which is what happens when there isn't one? What happens when it's obvious that Google, Meta, Amazon, et al. Do not have a new shiny object to promise fifteen to twenty percent revenue growth quarter over quarter, year over year. And truth is, it may really blow things up in the markets, but there is an opportunity for sustainable, reliable startups

• 22:58Speaker 02

  backed by VCs who actually know what they're talking about and have built things, or at least have talked to people that have built things and listened to them.

• 23:04Rebecca Bellan?

  Yeah, and potential for like more competition from smaller companies, creating a better ecosystem for consumers. But, you know, actually, we talk about AI in this AI bubble, and you and I have spoken about this before. My question is, could the next wave, or this current wave of AI and the breakthroughs we've had, could that help speed things up for the variety of new startups? I mean, we've got smart people getting laid off from, you know, tech companies for the last two years, three years, maybe. And surely, my suspicion, and it's just a hunch, I don't actually know if this is backed by anything, but like, could the fact that we've had these generative AI breakthroughs help a lot of people start smaller companies with fewer staff

• 23:42Rebecca Bellan?

  and less need to, you know, make hires, but then you've just got kind of this like decentralization of companies, and I don't mean that in, in the web three way.

• 23:50Speaker 02

  I think it will help people spin things up, kind of. But well, first of all, I worry for the long term viability of any of these AI coding startups. Right now, OpenAI, Anthropic, they are unprofitable companies. They're companies where they are selling things at a massive discount for their actual costs. I worry about kind of a subprime AI crisis where these companies have to start raising their prices. ChatGPT Pro, the 200 bucks a month one, should scare people. It should scare them because it's not profitable. It should scare them by the fact that they had to do it.

• 24:22Rebecca Bellan?

  Yeah, like, don't rely on that because the price is going to go up times 10 eventually, yeah.

• 24:27Speaker 02

  Exactly, and maybe they're on device models. Maybe people come around, but there really isn't enough maybe's here to save this.

• 24:33Rebecca Bellan?

  Unless they figure out how to make it, you know, cheaper. We've seen some, I think there was, we published something recently and there was a team of researchers. I'm going to butcher this, I'll try to include it in the show notes, but there was a team of researchers and they came up with a like $400 data processing center that can be like on your desk. And

• 24:51Speaker 02

  Yeah.

• 24:52Rebecca Bellan?

  I'm going to leave it at that and I'm going to try to find that link and put it in the show notes because I don't remember.

• 24:56Speaker 02

  The thing is, if they train it for that cheap and they can do all of this stuff, maybe, but I also just severely doubt it. But if they pull that off, great, but I don't think that's going to happen. It doesn't change.

• 25:10Rebecca Bellan?

  I mean, the reason it's all so unprofitable is because of data, data, data, big data centers, having to power all the data centers. If they figure out a different way to do

• 25:18Speaker 02

  That's

• 25:19Rebecca Bellan?

  AI that doesn't rely so much on more compute plus more data equals more clever, possibly, maybe. I'm not an AI engineer, I don't know.

• 25:26Speaker 02

  The problem is, is that a lot of this is based on the actual power requirements that come from the Nvidia chips. And the thing is, there is no real way of making this cheaper at scale at the way that OpenAI is doing it. Or who's Google's doing it, they're losing billions of dollars. There's no real getting away from that. Researchers might be able to train that better, but the inference costs are still there. And training models like Orion or whatever the next crap that OpenAI pulls out isn't going to get cheaper as a result of this. Oh, three, their reasoning model, I think it was like $1,000 for 10 minutes. Like, this is not viable.

• 26:04Speaker 02

  But nevertheless, to your question, as of right now, I think, yeah, generative AI coding can help people spin things up quicker. It can help people streamline parts of some businesses. There are companies that are going to be able to do this. I don't know how that scales. I don't know how you scale a company like that, and I fear that founders are going to take this is easier and conflate that with this is going to replace people entirely.

• 26:29Rebecca Bellan?

  Yeah, well, it could make it easier and less money to do things. Right, we have to come back to the money. The fact that there's not a lot of money in early stage, right? We're seeing that venture firms, the top VC firms like Thrive, like A16Z, they're getting most of the money. We're having like a monopolization of VC world. It's very strange. But it's not all doom and gloom, right? We recently reported on PowerSet, I think. This is a like a new fund that gives one million dollars to founders to invest into other startups.

• 26:57Speaker 02

  A cool idea.

• 26:57Rebecca Bellan?

  Their thesis is maybe founders know where the disruptive tech is, and maybe they make the best investors. So I actually kind of like that idea.

• 27:04Speaker 02

  Yeah, and I think that kind of goes back to the core of the valley where plenty of founders have become VCs. Some of them have even been good at it. And one of the problems you have with some venture capital firms is that they're run by people who are far, like many businesses, I would say, they're too far from the eventual customer or the real value point. They're too far from, I know what it's like to build a company and work on it every day. And that's just the necessity of becoming a VC, and at some point you are distant from it. I think VCs could do a better job of really sitting in with these people. And the idea of founders investing in founders is pretty sick. I like it. The ideal valley, and as much of a cynic as I might be about things, I think the ideal valley is one where like a thousand flowers bloom,

• 27:48Speaker 02

  where it's tons of founders, super competitive, things will live, things will die, but they will do so in a competitive environment, which leads to happier customers, and plenty of people making money. Like, this isn't, it isn't going away. It's just going to change. And I think the best way for it to change is for A refocus on product, founder mode. I'm so tired of these noxious, boring ways of romanticizing things like, what if the founder was involved? What if the founder micromanaged everyone and looked like they'd have seventeen coffees before going on a podcast? How about customer mode? I don't know. What crazy-

• 28:29Rebecca Bellan?

  Customer obsessed, though. They love that term.

• 28:31Speaker 02

  No, they should actually be obsessed with the customer. They should actually, customer mode. There we go. That's my new thing I invented on this podcast. What if we gave a about customers? But that's the thing. It isn't hard to adjust what we're doing today to that. But as long as growth continues to be the obsession of the valley, the obsession of VCs, it will become the obsession of founders, because founders have to raise money. And if VCs are gonna sit there and go, well, how are you gonna grow into a $500 million company? I don't know if I wanna, well, you have happy customers and you make more money than you spend, but I don't know how I feel about keeping that business going. But also, the incentives changing would be better for founders as well. If founders could plug along for three, four, five years, building something, building like really happy customers,

• 29:14Speaker 02

  the things that gave us things like Basecamp, the things that actually gave us things like, I mean, Dropbox was at one point something that people liked because it allowed people to move away from things like FTP, when you wanted to share files. Like, there are very simple problems that got solved. The problem is, is that if we're always focused on growth at all costs, we're not gonna really have a valley to look back on in fifteen years. We're gonna have corpses everywhere of these companies that got, and look, historically, it's already happened. These companies get fat and then they die. We've seen the recent deaths in fintech. Bench, I think, is one of them. These are companies that were forced, that have companies that are like dead or being acquired for parts with miserable customers

• 29:57Speaker 02

  because they overpromised, they grew too fast, they were unsustainable. Look at Better.

• 30:01Rebecca Bellan?

  And Bench, we just reported, actually, that Bench, their bankruptcy filings show over $65 million in debt. So, big yikes. Yeah, that happens quite a lot. Now, you know, we have to wrap up soon, but I wanted to briefly, super fast, lightning round, brainstorming about potential realms of disruption. Okay, so we talked to social media. Obviously, there's Mastodon, there's Blue Sky. Blue Sky's coming up with their own Instagram competitor, apparently. Pixelfed was pretty dope. What about search ad tech? Go.

• 30:27Speaker 02

  So with ad tech, I must be clear, we're approaching an adpocalypse.

• 30:31Rebecca Bellan?

  Yep.

• 30:31Speaker 02

  You need to read the subprime attention crisis. Ads are in problem, problem mode. I'm deeply worried.

• 30:36Rebecca Bellan?

  Ads make the world go around. I don't see them going anywhere.

• 30:38Speaker 02

  Oh, then you need to look at the amount of bot traffic. Anyway, let's go on solutions. I actually think there's a huge thing for business productivity at the moment. I think that Microsoft 365 is a giant monopoly with a just FTC, they would be broken. But nevertheless, right now, every single product that Microsoft sells in their like E5, basically enterprise software thing is like you could take them on. I actually think Zoom is weak too. I think video conferencing is terrible right now, but basic productivity software is as well. Google Docs was beloved for being this really clean, easy to use thing. The problem is it's now telling me that it needs AI. I must have Gemini in it now and sometimes.

• 31:17Rebecca Bellan?

  Oh, my God, no.

• 31:17Speaker 02

  You go to like do an auto typo thing and it will go, yeah, there's a typo here. And you'd be like, okay, well, what is it? It's like, I don't know. It just has a pop up now.

• 31:25Rebecca Bellan?

  Ed, this isn't lightning round. We're lightning round brainstorming.

• 31:27Speaker 02

  Oh, okay. I'm sorry. Sorry. Productivity software.

• 31:29Rebecca Bellan?

  Okay, productivity software, cool. Search, we've got perplexity, which we both have feelings about, but they are a competitor and that's.

• 31:36Speaker 02

  DuckDuckGo apparently makes money.

• 31:37Rebecca Bellan?

  DuckDuckGo? Okay.

• 31:39Speaker 02

  And at some point, the antitrust trial will allow data sets that can connect to it.

• 31:42Rebecca Bellan?

  Hmm.

• 31:43Speaker 02

  Like, so there's going to be something there.

• 31:45Rebecca Bellan?

  All right, let's talk Amazon. Amazon, I don't think there's any major competitors, but I think something we've talked about is transportation logistics. If somebody could figure that out, then there might be a realm for disruption there.

• 31:56Speaker 02

  Here's a billion dollar idea. I think that someone takes out Amazon's shipping and logistics side by creating a coalition for other companies, for smaller businesses. A Shopify put for the delivery side. Shopify has tried this and failed in their fulfillment side because Tobias Lupek loves growth, can't do anything. He doesn't know how to grow by markets. He can only grow everywhere at once and he sucks at it. But that's the thing.

• 32:18Rebecca Bellan?

  Well, if anyone has such a startup, please reach out to me because that sounds really cool.

• 32:22Speaker 02

  ShopRunner tried this, sold 10 years ago. They're still around. It gives you two day shipping in these places. An actual coalition that would build up warehousing would take real money. It would take hundreds of millions of investment, but it is the actual thing that could break Amazon. And here's an even crazier idea. What if they allowed everyone to unionize there? You may think that'll cost more money.

• 32:41Rebecca Bellan?

  Oh.

• 32:41Speaker 02

  What do you know? People who unionize traditionally stay at jobs and are happier. But that's how you break Amazon. You do that. I think there's a massive opportunity in email. I think that.

• 32:51Rebecca Bellan?

  Proton, how do you feel about Proton?

• 32:53Speaker 02

  Proton's fine. I think it's not as usable as it needs to be, but I think you could definitely take that on. I think that within the tech media, there is an opportunity. I think that there is an opportunity.

• 33:02Rebecca Bellan?

  What are you trying to say, Ed?

• 33:02Speaker 02

  I'm just saying there's an opportunity within tech to actually, I actually think the real people who are at threat within tech are the analyst firms. I think that there is a rising tide of tabloid analysts who will just talk but actually have good stuff.

• 33:15Rebecca Bellan?

  Yep.

• 33:15Speaker 02

  Within real estate, I think Realtor.com, Zillow and all them, they've got fat and happy, their site's too hard to use. Anything you see on the web that sucks right now is at threat.

• 33:25Rebecca Bellan?

  Yes.

• 33:25Speaker 02

  They are not doing any of this growth or cost stuff because they're doing great. They're doing it because they're desperate.

• 33:31Rebecca Bellan?

  Yep.

• 33:31Speaker 02

  Even if you launch in a market, even if you have a limited launch, that is still something. Build real happy customers.

• 33:40Rebecca Bellan?

  Yeah. Build real happy customers, find investors who are willing to stick it out and be a little more long-term thinking and allow you to get to the point where you can grow sustainably rather than just get everywhere and then maybe one day we'll make money.

• 33:54Speaker 02

  I got one more for you.

• 33:55Rebecca Bellan?

  Okay, one more and then?

• 33:56Speaker 02

  Adobe.

• 33:57Rebecca Bellan?

  Oh, yes.

• 33:57Speaker 02

  I think Adobe is the weakest company in tech. I think they're desperate. I think that someone could come up with a replacement.

• 34:04Rebecca Bellan?

  I feel like Canva's coming for them.

• 34:05Speaker 02

  Canva's rotten economy bullshit. It's no, you log on to Canva, it's like an M.C. Escher painting. Canva is weak too. That's the thing. You look at these companies and you load them and you're like, this sucks. Why is everything so horrible? Every time you have that thought as a founder, think about whether you could solve that problem.

• 34:23Rebecca Bellan?

  Yep. Think about whether you can solve the problem, be obsessed with the customer, find good investors that, you know, don't suck.

• 34:29Speaker 02

  And know the problem. Actually know the problem. Deal with the problem itself and like live and breathe it.

• 34:34Rebecca Bellan?

  Well, that's what happens when you're customer obsessed. You, you understand what the actual problem is rather than what you think the problem is.

• 34:40Speaker 02

  I agree on some points, but I think that if you yourself, the whole dog fooding thing is so annoying, but it is true. If you experience the problem and you feel the pain of the customer, you'll fix it because it pisses you off.

• 34:51Rebecca Bellan?

  Hmm. Excellent. That's a great quote to end it on. Well, thank you so much, Ed, for this lively discussion. Always a pleasure. Where can our listeners find you?

• 34:59Speaker 02

  You can find me at betteroffline.com for various media properties, ezpr.com, for various PR stuff. Yeah, you'll find everything there. You can email me at [email protected]. That's EZ for the Canadian and British listeners. Yeah, I'd love to hear from you. And I'm Ed Zitron on everything, like @EdZitron on Blue Sky.

• 35:16Rebecca Bellan?

  Do Canadians say Zed, too? Weird.

• 35:18Speaker 02

  No, apparently.

• 35:20Rebecca Bellan?

  Well, you can find me, listeners, at Rebecca Bellan on X, and then I'm also on Blue Sky. I forget what my whole handle is, but you can find me there. And you can find Equity at EquityPod on X and Threads. Talk to you all Friday.

• 35:34Rebecca Bellan?

  Equity is produced by Teresa Locan Solo with editing by Kel. We'd also like to thank TechCrunch's audience development team. Thank you so much for listening, and we'll talk to you next time.