Manufacturing in the US, Building in Open Source… and more | E2154

Today's show: TWiST is back with a trio of can't miss interviews with some of our favorite TWiST 500 founders. First up, John Harris of Harbinger Motors tells us about making his EV batteries right here in the USA, and why the loss of EV tax credits might not hurt the business as much as you'd think… THEN, we're talking to James Hawkins of PostHog about how keeping his burn rate low opened up a wealth of new opportunities for his company… THEN Yoshi Yokokawa from Alpaca HQ stops by to talk about working in a category that's no longer the hottest thing in the Valley (like fintech) and the importance of stable coins to his business model. You won't want to miss this one! Tons of fresh and important insights for founders. Timestamps: (0:00) INTRO, The market's hit an ALL TIME HIGH… what does it mean for founders and smaller companies? (2:19) Figma's going IPO… how its success could impact other the entire landscape for the rest of the year. (10:12) Netsuite - Download the ebook Navigating Global Trade: 3 Insights for Leaders for free at https://www.netsuite.com/twist (11:29) Harbinger co-founder/CEO John Harris tells us about building EVs for commercial fleet, live FROM the factory (19:58) Retool - Visit https://www.retool.com/twist and try it out today. (21:15) Harbinger co-founder/CEO John Harris tells us about building EVs for commercial fleet, live FROM the factory (cont…) (30:07) . TECH: Say it without saying it. Head to www.get.tech/twist or your favorite registrar to get a clean, sharp .tech domain today. (31:07) How much of Harbinger's product is actually manufactured in the US (and why that's a more complex question than it sounds) (31:39) Why the rollback of EV tax credits might NOT have a huge impact on Harbinger's business. (36:53) James Hawkins of PostHog explains how and why Stripe funded their most recent round. (40:23) Will it soon be easier to build a virtual product manager than hire the right human person? MAYBE! (42:11) Why building PostHog as open source was so vital for boosting adoption among developers (47:45) Why James credits a low burn rate and being "multi-product" with PostHog's success and traction (01:00:02) Alpaca CEO and co-founder Yoshi Yokokawa explains to us how the API brokerage infrastructure co. actually makes money (01:00:41) Why it matters that Alpaca is a "self-clearing market maker": Yoshi unpacks how trades actually get executed (01:07:46) The massive impact of Robinhood on the entire fintech business and how this benefits Alpaca (01:18:06) Yoshi's tips for founders working in categories that aren't THE HOTTEST IN THE WORLD right now Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp Follow Lon: X: https://x.com/lons Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis Thank you to our partners: (10:12) Netsuite - Download the ebook Navigating Global Trade: 3 Insights for Leaders for free at https://www.netsuite.com/twist (19:58) Retool - Visit https://www.retool.com/twist and try it out today. (30:07) . TECH: Say it without saying it. Head to www.get.tech/twist or your favorite registrar to get a clean, sharp .tech domain today. 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.

• 0:00Speaker 00

  When it comes down to is we actually build things here. And pretty much everyone else in trucking trying to make EVs is mostly in the business of buying things out of a catalog and then selling it to other people. Imagine if when you bought a Silverado, GM like went across the street and bought all the engines from Ford. It would be really tough for GM to compete with Ford's pricing at that point, right? And like, that would make no sense. This is the only place in the United States where a truck OEM is building their own battery modules and battery packs.

• 0:35Speaker 01

  This week in startups is brought to you by NetSuite. The business landscape is very chaotic right now. That's why you need NetSuite by Oracle. If your revenues are at least in the seven figures, download the free ebook, Navigating Global Trade: Three Insights for Leaders at netsuite.com/twist. Retool: Bridge the gap between AI demos and business impact with technology that's designed for developers and built for the enterprise. Visit retool.com/twist and try it out today. And .tech: Say it without saying it. Head to get.tech/twist or your favorite registrar to get a clean, sharp .tech domain today.

• 1:20Speaker 01

  Hello and welcome back to This Week in Startups. My name is Alex Wilhame. I'm your host and I'm joined today by my comrade in arms. It's Mr. Lon Harris.

• 1:27Speaker 02

  Hey, everybody.

• 1:28Speaker 01

  How you doing, baby?

• 1:29Speaker 02

  Doing great. Did not, did not really think about how I was going to be on camera this week. So it's a little bit of a wild hair situation, but we're working with it.

• 1:37Speaker 01

  Well, I actually did not do my usual hair trim before this one. So we're going casual Monday, I feel like today. But let's start with just the opening news of the day, which is that stock market hit an all time high today, both the S and P and the NASDAQ. And so I think it's time for some champagne and caviar. But no, it really is an all time high today. So if you are in the equities market in any capacity, it's a good day for you. Also, Lon, a critical upswing for market comps. So a lot of companies want to list, want to go out and get public. The higher the public markets are, the easier it is for them to defend private market valuations, the more enticing a new listing might be to investors. So overall, a pretty bullish sign as we go into, I guess, what we're going to call the second half of the year's IPO cycle. And there's one name in particular, Lon, that's driving the most attention.

• 2:22Speaker 01

  So tell me just a little bit about Figma.

• 2:24Speaker 02

  So Figma, of course, design unicorn. It's the vibe coding. It's the web design. It's that incredibly hot sector of startups that we talk about. I feel like just about every day. So Figma is in that in that range. They priced to an initial IPO range of about $25 to $28 per share. Renkap calculates that at the midpoint of that range, they're they're fully diluted market cap, somewhere in the $15.9 billion range. Now, that is less than Adobe wanted to buy the company for just a few years ago. So it's sort of a sort of a mixed signal there, but it's above the $12.5 billion tender

• 3:06Speaker 02

  price that Figma allowed shareholders to cash out in just last year in 2024.

• 3:11Speaker 01

  Yeah, so I think it's overall a pretty strong number to start. I think Adobe was overpaying for the company to take it off the table. Overpaying is a way of saying premium in more, you know, normal English. But whenever you buy a company and take it off the table, you have to pay for some of its future growth ahead of time. You see this in every, you know, major public market transaction and so forth.

• 3:30Speaker 02

  Yeah.

• 3:30Speaker 01

  Figma was a hot company. Adobe wanted it because, well, it's crushing the game and I would say eroding a good chunk of Adobe's market share today and also long-term cash flows. Next up on the docket, we have Polymarket. Polymarket is a place where you can place bets on what's going on in and around the world. Everything from Bitcoin prices to who will be the next president of pick a nation that's having an election. Well, you can make a wager on it. And we like Polymarket here at Twist and Lon and I have picked an excellent market for everyone today. It's entitled, What Will Trump Say During His AI Speech on July 23rd? Lon, let's give people some context here. Trump's talking about AI on the 23rd.

• 4:07Speaker 02

  Oh, yeah, we've got a co-branded event on Wednesday of this week. It is both an All In Podcast meetup. For those of you who just watched this show, All In is a separate show that Jason hosts with his besties, Chamath Palihopatia, David Sacks, and David Friedberg. Very popular project, more popular than this one. I don't know why, but it is. So they're hosting a big event this week. Co-hosting it with the White House, of course, David Sacks, also, in addition to being an all-in co-host, our AI and crypto czar here in the US. So Trump is going to discuss some aspect of AI during this same event, which is being co-hosted by the All In Podcast.

• 4:47Speaker 02

  And we're debating, what are the specific things, phrases, words, that Trump will say during this big speech? The number one 95% chance that Trump is going to say AI or artificial intelligence at least five times. I think that's pretty reasonable. What do you think, Alex?

• 5:07Speaker 01

  I think that's incredibly reasonable. That's kind of one of those like, they're selling dollars for 95 cents moments. There's a 65% chance, according to Polly Market, that he'll say million, billion, or trillion, any one of those words, at least 15 times. And we love this the most, Lon. There's an 81% chance, or just over four out of five, that he'll say China at least seven times.

• 5:31Speaker 02

  He'll probably say it, again. Yeah. He'll probably say it like this, China.

• 5:34Speaker 01

  He's never learned how to say the name of that country.

• 5:38Speaker 02

  That's how he says it. He just said like, like they're like, like it's very, it's very important that you hear him say China. You gotta hear how he pronounces it. I also thought this one, well, go ahead, go ahead.

• 5:49Speaker 01

  61% chance of mentioning Nvidia, OpenAI, 57%, Biden, 79%. And I would say the chance of him saying Biden in a pejorative fashion would be 100% as a subset. President Xi, 60%. And then there's some weird ones down there, like Drill Baby, Drill, 38% and so forth. But I appreciate the Polly Market folks having a good time.

• 6:12Speaker 02

  Yeah, I think, I think it's interesting that there are like other unrelated phrases, because that is, that is a thing that Trump does. Like, he, he doesn't necessarily stay entirely on topic. If he's thinking about drilling during the speech, he might, like, that, even in another context with a different politician, that would be a bad wager, I think. But in this case, I feel like you got a shot at it. I feel like, why not? You know, let it ride.

• 6:41Speaker 01

  You know what? I now have to tune in because I'm curious to see who's right and who's wrong.

• 6:45Speaker 02

  Yeah.

• 6:45Speaker 01

  But that's the power of prediction markets. You can really have a lot of fun with them. And it's not just zero day options on volatile equities. It's also, will Trump say hell more than two times during the speech? Well, tune in and we'll find out.

• 6:56Speaker 02

  I will say if I was going to participate in this particular market, which is not a huge trade volume, we should say only 53K on the board sort of so far. If I was going to pick any one of these options, I think I would go Biden. I think 79% Biden, that's the smart money on this table. Uh, I feel like I'm very, I feel very confident he's going to say the name Biden at least once.

• 7:23Speaker 01

  Well, if you make that wager and lose your shirt, you can send all of your complaints to Lon Harris.

• 7:29Speaker 02

  This is not investment advice. This is not investment advice.

• 7:32Speaker 01

  Sounded like investment advice to me.

• 7:35Speaker 02

  I said very specifically, it's what I was gonna do.

• 7:38Speaker 01

  We're not going to end with a joke because that's not what we do.

• 7:40Speaker 02

  No, that's not what we do here.

• 7:41Speaker 01

  Very sober ending point. Now let's talk to some founders and some twist 500 companies. Lon, we have three interviews for you today. First up is Harbinger, a company that is building EV chassis for the midsize commercial market. Now, if that sounds a little boring to you, just keep in mind that not all of the cars out there that we need to electrify are sports cars, hot rods and SUVs. There's an enormous amount of commercial vehicles out there that bring you your Amazon packages, that deliver bread to your store, et cetera. That really could use an upgrade. And we've seen companies like Rivian work with Amazon on electrifying their fleets. Well, what Harbinger does is just makes the chassis. And it turns out, as I learned during my chat with the company,

• 8:23Speaker 01

  that is actually pretty standard to sell essentially a steering wheel and a battery pack and some wheels and some brakes. And then everyone else kind of builds their top on top of that skateboard looking thing. It's a really interesting company. I think it's going after an enormous market, tens of billions of dollars. Super smart, quick product velocity, just love it. That's going to be a treat. Then we're going to talk to Posthog, the company that you may recall recently raised a large round, not from Sequoia, not from Kleiner, but from Stripe. The well-known unicorn in the payment space. So what is a SaaS company doing raising from Stripe? Well, it all kind of boils down to how cool their website is. And I bring up that not to say just, hey, web design matters. But Posthog is actually a company that is breaking pretty much every single rule of thumb

• 9:08Speaker 01

  that we talk about in startup land at once. They cut prices, they avoid vendor lock-in, they work in open source. They're just kind of flipping every single thing on its head and it's crushing. So I was really excited to get them on the show. Great interview, great time. If you're a founder, you're especially going to love that one. And then today, we're going to wrap up with one of my favorite companies, I think in the entire world, which is Alpaca Markets. I covered them on back in the COVID era fintech boom, back when they were just getting started. And their pitch was simple. Everyone wants to trade. This is back during the meme stock Robin Hood kind of glow up days. And they built a white label service that allows other companies to offer essentially equities trading to their customers.

• 9:49Speaker 01

  And they were a little quieter during the post 2021 collapse. But as it turned out, and as I learned, they were just busy growing and building and are doing fantastically well. So a bit of a full circle moment for me, but another great 2700 company. And with that, Lon, I think we can just dive right in. Yeah, let's do it. Harbinger. All right. Harbinger, ladies and gentlemen, let's go.

• 10:15Jason Calacanis?

  Ask nine experts what the future holds for business and you're going to get 10 answers. Bull market, bear market, rates are going up, rates are going down. The truth is, no one knows and nobody has a crystal ball, nor do you need it. What you need is NetSuite by Oracle. That's the closest thing to a crystal ball you're ever going to find because it's the number one enterprise resource planning tool on the market. So why do you need an ERP? Well, you need that so you can integrate all of your core business operations into one single platform. That means your accounting, financial management, HR sales and more. This is going to give your team a single source of verifiable truth and just one place to check for relevant info on everything happening inside of your business. So as an investor, for me, it's a relief when founders get organized like this.

• 11:01Jason Calacanis?

  They have the data they need to run their business smoothly and efficiently. Maintaining and cleaning up your operations can have a massive impact on the growth curve of your company. So let's get this right from the start. Here's your call to action. If your revenues are at least in the seven figures, download the free ebook, Navigating Global Trade: Three Insights for Leaders at netsuite.com/twist. It's completely free. That's netsuite.com/twist if you have seven figures in revenue.

• 11:29Speaker 01

  When you think about electric vehicles, what comes to mind? You probably think about consumer vehicles like maybe a car from Tesla or the latest supercar from BYD. If you're a big EV fan, you might recall that Rivian was building some of its own vans that are out there in the world in a partnership with Amazon. But there are other companies working on EV chassis that are absolutely interesting and they're taking on segments of the market that you might not be familiar with, but that doesn't mean they aren't changing the world. One of these companies is called Harbinger and I wanted to learn more about what it's building and why and how it's doing it here in the United States. So please join me in welcoming to the show, it's John Harris, the co-founder and CEO of Harbinger. John, hey, how you doing?

• 12:06Speaker 00

  Good. Alex, great to be here.

• 12:07Speaker 01

  You win for the world's best background. You are currently in your manufacturing facility down in Southern California, yeah?

• 12:14Speaker 00

  That's right. This is Harbinger's headquarters and behind me is our battery module manufacturing line.

• 12:20Speaker 01

  If you want to prove that you're not building vaporware, I think putting your camera inside the manufacturing facility with people walking around doing things is about as good as it gets. And we're going to get to all that, but I want to start kind of at the beginning. Like I said in the intro, people are familiar with EVs, maybe even in a commercial setting. You guys, however, are building EV chassis for the medium duty commercial segment. So just for starters, what is that kind of market area and why did you guys choose that as the place to bring your EV technology to market?

• 12:52Speaker 00

  Yeah, so medium duty is a low volume, high mix segment. It's only about 350,000 vehicles a year sold in the US and that's about half the number of F-150s sold a year. So the big challenge for big OEMs is that, you know, they have these huge bureaucracies, huge, huge workforces. And when they want to develop a new product, they've got to develop a new product for a segment of 5, 10, 15 million units a year. And so this segment has just sort of sat here with nothing new since it was easier to make new vehicles, which was 30 or 40 years ago.

• 13:28Speaker 01

  So it's ripe time to go about this. Now, what you're not building is an entire vehicle. You're building what you guys call an electric vehicle stripped chassis. So for folks out there who are not as familiar with that part of things, how does that differ from the consumer EV buying experience, for example?

• 13:44Speaker 00

  So when you buy a medium duty vehicle, you're buying really something from two different companies. You're buying a chassis from one company and that's really the, what I think of as the vehicle part. So you've got this vehicle thing and it's a flat skateboard and then you've got some application specific outfit on top. And that could be the RV body, the delivery vehicle body, but it's something that sits on top of that skateboard and it's something that tends to be really, really customized. And it, it ends up looking a lot more like a home building company that does the top half.

• 14:20Speaker 01

  The historical analogy here is old school coach building, right? I mean, back in the day, you would have your car built on top of a chassis from the manufacturer and that's why people had wild car designs. When was this? Back in the twenties or whatever, but that has persisted in the medium duty segment. So essentially you guys provide the batteries, the drivetrain, the steering, the brakes and so forth. And then if UPS wants a slightly different enclosure on top of it, that's up to them. Okay. That makes a lot of sense to me. And just to be clear though, this is the norm for your segment. You're not breaking with standard operating procedure on this.

• 14:54Speaker 00

  Right. This is how every medium duty vehicle in the U.S. is sold. So we're not, we're not trying to get the customers to do something new and crazy.

• 15:02Speaker 01

  Okay. So one of the things that I was very excited about when I discovered Harbinger was your guys' set of values. You guys talk about delivering on a cleaner planet, just reducing pollution in and around communities, the things that resonate with me as someone who lives in an urban area with small children. So I care a lot about, you know, clean air and that sort of thing. But you guys also discussed quite a lot about how you want to be kind of price parity or half price parity with diesel vehicles. And so I'm trying to kind of sort out what is, what is the main goal of the company? Is it to, to improve the planet a bit or just to make better vehicles? What's the driving pulse behind Harbinger?

• 15:37Speaker 00

  Well, it's both of those things. And I think you can't have one without the other. Something a lot of climate companies really struggle to understand. If you don't have revenue, you're not making an impact. Like that's it. And you're not going to have revenue for any meaningful length of time in automotive unless you're selling a product at the right price. The right price for a truck is the current price of a truck. The fact that we want to sell you an electric vehicle doesn't make that vehicle worth two or three or five times more money to the end user. And that sounds extremely obvious, but that is completely like heretical thinking in trucks. If you go and look at an electric truck from Freightliner, you're going to find that it is

• 16:21Speaker 00

  2.5 times more expensive than a diesel truck. And then, you know, people wonder why they're not selling.

• 16:27Speaker 01

  Well, it's because businesses probably would like to help the climate on the margins, but they're probably more worried about their actual margins in the meantime. So essentially you're saying that reaching price parity with diesel vehicles is one in the same with the company's overall, let's have a cleaner planet push. Because if you don't have a commercially viable EV, then you're not going to sell any, no one uses them, whatever. So that raises an interesting point, which is how have you managed to build these skateboards, as you call them, at a price point that is competitive? Because if other EV trucks in the market are two and a half times as expensive, I presume you found some way around enormous cost creep in how you build these things.

• 17:06Speaker 00

  I mean, what it comes down to is we actually build things here. And pretty much everyone else in trucking trying to make EVs is mostly in the business of buying things out of a catalog and then selling it to other people. And imagine if when you bought a Silverado, GM like went across the street and bought all the engines from Ford.

• 17:26Speaker 00

  It would be really tough for GM to compete with Ford's pricing at that point, right? And like, that would make no sense. This is the only place in the United States where a truck OEM is building their own battery modules and battery packs in-house, under our own control. So, you know, we buy, sell, which is a commodity. They come in at that end, and at that end, battery packs exit and go into the vehicle production line. And that's fundamentally how the automotive industry was built 100 years ago. That's why it's called the Ford Motor Company. They actually have the ability to make motors there. It's not called the Ford seats and windows company because no one really cares if you can make seats and windows. What people care a lot if you can make motors.

• 18:10Speaker 01

  So essentially, if you purchase all the components and stick them together, you're always paying someone else's margin along the way. And that adds up to a relatively high, you know, cost of materials. Okay. I guess the next question is, why aren't other companies that build EV trucks for the medium duty segment following in your footsteps? Is it just simply harder to do your own battery module and sell, you know, agglomeration in-house?

• 18:32Speaker 00

  It's certainly harder. I would say there's, there's the difficulty and there's, there's a greater difficulty that I usually refer to as poverty of the spirit. There's a lot of poverty of the spirit in automotive these days.

• 18:45Speaker 01

  Okay, I can't let you just say that and not explain it in more detail. So tell me, tell me why everyone at GM and Ford and so forth have, have very poor spirits today.

• 18:53Speaker 00

  I'm not so much looking at GM and Ford, to be honest, because this isn't a big segment for them. Ford has shown us with the F-150 that they can build something that's pretty compelling. They struggle to make money at it, but like, that's a good product. You know, people enjoy F-150 Lightnings. They're not building stuff in this segment because this segment is a routing error to those companies. Ford makes four million vehicles a year. This whole segment is sub 400,000. The product that we're building here today, the strip chassis, that market is actually dominated by Ford. And it's about 0.2% of Ford's production. It's not Ford's fault. Like if Ford was paying more attention to this segment, you would probably have to go back and say, Ford, what are you doing?

• 19:36Speaker 00

  Go pay more attention to F-150 Lightnings. Like they're making the right call.

• 19:39Speaker 01

  Yeah.

• 19:40Speaker 00

  I'm more talking about poverty of the spirit with the big truck OEMs. Electrification in trucks makes 10 times more sense than electrification of passenger cars. Cause these vehicles consume just staggering amounts of fuel and maintenance. So there's real cost savings opportunities here.

• 20:00Jason Calacanis?

  We talk about the massive impact of artificial intelligence on every single episode of This Week in Startups Now. But I know a lot of you founders aren't getting the most out of these tools just yet. The days of just visiting chatgpt.com, asking questions, those have ended. They ended a while ago, by the way. You need AI apps that are integrated with everything else you're working on. That's how you make your workflow smarter and more efficient. Not just asking questions in a chat window. No. And that's why you need retool. Finally, a simple, fast, straightforward way for you to build your own custom AI apps that live alongside your existing workspace and the tools that you're using every day. Imagine having a virtual assistant that preps you for meetings and takes diligent notes, a virtual CPA watching your books and looking

• 20:45Jason Calacanis?

  out for fraud, or an interactive admin dashboard tracking all of your customer data and sharing valuable insights. So stop writing endless integration code. No more choosing between reliable performance and customization. No, you can trust this platform that's being used by over 10,000 companies just like yours. So here's your call to action. Check out retool today and get your AI doing more than just talking. Go to retool.com/twist to learn more. That's R E T O O L dot com slash twist to learn more.

• 21:15Speaker 01

  I mean, that makes that makes perfect sense to me. My question, though, is you found a niche where there isn't an enormous amount of volume and there's an enormous amount of strong competition, it sounds like, on the EV side of things. So it makes a lot of sense to build a company there. But are you capped effectively by just how many of these vehicles are sold per year? And does that put a ceiling on what harbinger is building?

• 21:38Speaker 00

  I think a little bit, yes. You know, we're never going to build 5 million vehicles a year here. And to be honest, we're fine with that. I've worked at plenty of places that have higher volume like that.

• 21:49Speaker 01

  Yeah.

• 21:50Speaker 00

  A market that is that big is too attractive. Everyone comes in and says, oh, we want to sell that too. And naturally, it erodes your margins. I don't know if you've ever worked at a business where they have like a 5% operating margin. It sucks. It's the sort of place where like the coffee machine has a cup next to it and you've got to like put a quarter in when you get a cup of coffee.

• 22:09Speaker 01

  Yeah.

• 22:09Speaker 00

  I don't want to work at a place like that. I don't want to build a place like that. So this is a segment that it's not that big, but structurally, it's basically impossible for people like Ford or GM to come into this segment. It's just too small. We can do it because we're a startup, we're small, we're pretty nimble, and we've done this a bunch of times before, so we can do it more cost effectively.

• 22:32Speaker 01

  Yeah. Now, I don't mean to say that what you guys are building is small because you guys noted in May of last year, so just over a year ago, that you had at the time $400 million in binding pre-orders. So there's quite a lot of dollar value to these. And elsewhere on your site, you guys said that, just to pick one of your examples, your model S524, which is a class 5, 158-inch strip chassis with 140 kilowatt-hour battery, has an MSRP of 103,000. So these are not low-cost items. There's quite a lot of revenue to be had here. Does the margin profile of what Haringer builds match competing companies' margins? Because I'm not sure how lucrative the traditional OEM side of the medium-duty segment is today.

• 23:16Speaker 00

  So that's probably my favorite part about this segment. This segment, because it's hard to access and it's small, the margin potential is much, much higher.

• 23:25Speaker 01

  Ah.

• 23:26Speaker 00

  This is a segment where our costs have been going up just outrageously fast. If we look at what we consider the benchmark product in this segment, it's Freightliner's MT55.

• 23:36Speaker 01

  MT55.

• 23:38Speaker 00

  That product has been going up by about 15% a year in cost for the last four years. Yeah, that's wild, right?

• 23:45Speaker 01

  Compounding.

• 23:46Speaker 00

  Compounding, yes.

• 23:47Speaker 01

  Wow.

• 23:49Speaker 00

  So when we started the company, we thought that we had to make a product and sell it for about $50,000.

• 23:55Speaker 01

  Okay.

• 23:56Speaker 00

  And we basically designed the cost structure of the company around selling at $50,000. And we said like, oh, this is interesting. We can probably build this business with like a 20-ish percent margin. And since then, that product has gone up to about $85,000.

• 24:14Speaker 00

  In four years, our cost structure has gone up a little bit, but not by that much. So this market over the last four years has gotten much more exciting, I think. When we look at margin profile, just because the cost of diesel vehicles has gotten way more expensive, and that shows no signs of slowing down.

• 24:33Speaker 01

  What is pushing up the cost of diesel vehicles today? Because I presume it's inputs, labor, maybe tariffs?

• 24:42Speaker 00

  Uh, it's, it's mostly rising input costs across a multi-tiered supply chain.

• 24:47Speaker 01

  Got it.

• 24:47Speaker 00

  When your labor costs go up by 30 or 40%, which happened last year at big OEMs in the UAW negotiations. That's bad, but when that happens at tier one and tier two and tier three and the OEM, it all stacks, right? And then all those companies have to make some margins, so their costs are all going to get compounded. Tariffs have the same effect at an OEM. You know, when we import, sells, we pay a tariff because now we pay tariff on everything. Uh, but, you know, if I have to pay a 10% tariff on $20,000, that's a lot better than me paying a 10% tariff on $60,000 or $70,000.

• 25:23Speaker 01

  Mm-hmm.

• 25:24Speaker 00

  And that's kind of what everyone else is doing. So those tariffs are having that same compounding effect across supply chains, uh, at large OEMs.

• 25:33Speaker 01

  I see. I, I want to talk a little bit about just manufacturing because again, one thing that I liked about your company was just how much it's here. And as you know, we're literally in the factory right now. How much of your components, products are, are, are US-built? And I know it's slightly a fuzzy term, but maybe the right way to ask you, John, is just how much of your skateboards are really US kind of manufactured, produced and manufactured or manufactured and assembled?

• 25:59Speaker 00

  Mm-hmm.

• 26:00Speaker 01

  Answer that in the intelligent way, given that I just butchered the question.

• 26:03Speaker 00

  So our vehicles are 100% US-built and assembled. So the factory I'm sitting in here has three production lines. Right behind me, you can see the battery module and battery pack production line. Behind that, and you can see some of the white structure there. That's a, a overhead crane in the next line. That's the chassis line. And behind that is our motor winding line and drive unit production line. So all the content is built here. The batteries, the electric motors, the cabling systems, the complete chassis. So the second part of your question, I think, is really what portion of this is US content?

• 26:39Speaker 01

  Yeah.

• 26:40Speaker 00

  So it's about 50% right now.

• 26:42Speaker 01

  Okay.

• 26:43Speaker 00

  Which by automotive standards, I would say is good. By EV standards is really, really high. Most people have a ton of content from China. And then there's like an important corollary to that question, which is how much content do you have from China?

• 26:58Speaker 01

  Yeah.

• 26:59Speaker 00

  And for us, it's under 20% now, which is pretty exciting.

• 27:02Speaker 01

  How far could that number go down if you wanted it to in the next handful of years?

• 27:08Speaker 00

  I think it probably goes down to somewhere between 5 and 10%.

• 27:12Speaker 01

  Okay.

• 27:13Speaker 00

  It's possible to get to zero, but it's sort of self-defeating. The biggest reason that we have such low Chinese content is just because we're building stuff here. The battery pack in an EV is about half the cost. So if you are everyone else in trucking and you're buying battery packs from cattle, like there you go, you're at 50% Chinese content right off the bat.

• 27:32Speaker 01

  Yeah.

• 27:33Speaker 00

  As long as you're not doing that, you know, 20% is pretty tolerable. We'd like it to go down a little bit more to just continue to kind of reduce geopolitical risk.

• 27:44Speaker 01

  Yeah, I mean, that's a material problem right now. And I think everyone has been watching the headlines, has been perplexed by the back and forth. And I think with a lack of clarity, reducing your risk is just the very reasonable thing to do. So that absolutely tracks with me. I want to talk about growth. So clearly you found something that people want because you had so many pre-orders last year. You just expanded into a hybrid EV chassis, adding even more range to your product line. So how did the company do last year? What's growth looking like this year? Maybe what's your revenue target for 2025?

• 28:18Speaker 00

  So right now, we're building strip chassis. We started delivering those, you know, actual production units just at the start of this year. So this is our first year of commercial revenue. I hesitate to give predictions with the level of insane volatility we have right now, but something in the $100 million ballpark, I think, is on the table for this year for us. Last year, we were delivering vehicles, but they were pre-production vehicles. So this this segment is really defined by durability and uptime. So we actually built three generations of vehicles before we started delivering any to customers and ran them through years and years of validation testing. We were delivering those last year to customers to put into trials, but not actually as, you

• 29:03Speaker 00

  know, full deliveries.

• 29:05Speaker 01

  Totally.

• 29:06Speaker 00

  From here, we're looking at primarily expanding within this segment. So we'll stay within class four through six for the next couple of years, but we'll add a cab. So now we build strip chassis, we'll move into cab chassis, which is a broader portion of the market.

• 29:21Speaker 01

  Okay.

• 29:21Speaker 00

  We're also starting to get pretty exciting traction in our components business.

• 29:26Speaker 01

  Interesting.

• 29:26Speaker 00

  So a lot of people have realized that bringing in, you know, huge portions of your vehicle from overseas is probably bad. Buying, you know, half the vehicle from a Chinese SOE is probably bad. And so they're starting to look around and say like, hey, where can we buy compelling battery packs and drive units and HV systems?

• 29:46Speaker 01

  And SOE is a state-owned enterprise, kind of a public company over in China owned by the state, or at least has a large state influence in it.

• 29:54Speaker 00

  Correct.

• 29:55Speaker 01

  Yeah. So the components business is super interesting because we were talking earlier about poverty of spirit and people not doing things, and here you are doing them. So does that become, do you think in time, a material portion of the the harbinger business?

• 30:09Jason Calacanis?

  We all understand the importance of a crisp, memorable, easy to spell domain name, but let's get real, the good ones, they're all taken, or some poacher is holding them ransom, waiting for some crazy unrealistic payday. You don't want to use all of your startups runway on a domain name. No, you want to put that valuable cash back into your actual startup so you can build products and features that folks love. And there's this beautiful domain extension that everybody's starting to use. It's called .tech, .t-e-c-h. You can get a clean, crisp, super memorable name for your website right now, and you'll signal to all of your customers, investors, hey, we're a tech company. Instant branding. That's why over 500

• 30:48Jason Calacanis?

  100,000 founders have collectively raised over $5 billion in investment while using a .tech domain name. So skip all the hassles and head to www.get.tech/twist or go to your favorite registrar like GoDaddy or Namecheap and grab your .tech domain today.

• 31:07Speaker 00

  I think it becomes material. I would expect it to always be less. I think it would always be a smaller portion than the vehicles.

• 31:14Speaker 00

  My expectation is that the components business can potentially be higher volume, but it's lower margin. So we want to keep that balanced. You know, if you have a buyer who's paying a ton of margin on components, that's a, that's like a temporary win because inevitably that means they're going to not have a compelling product at the end user. And so eventually they will go out of business.

• 31:35Speaker 01

  So effectively you can't have too much markup on components because then the end result will be uncompetitive. And then you're just selling a little bit and then they die. Okay.

• 31:42Speaker 00

  Exactly.

• 31:43Speaker 01

  Makes sense to me. Now, on the price point, you guys have an interesting, uh, it's called the IRA Risk Free Guarantee, uh, the Inflation Reduction Act. And essentially whether or not you guys say the IRA's 45 watt credits stay or vanish, you guys will kind of make that good. And we don't need to get into the technical details, but policies have changed in the last couple of weeks as we sit here together. So I'm curious, has anything in the recent government spending bills, regulations and tax credits, created a material headwind for Harbinger? Or are you guys going to be able to navigate the new kind of fiscal climate here in the United States without a lot of disruption?

• 32:21Speaker 00

  I think it's a little soon to say, but so far, I think we expected that the IRA credits would be a bigger tailwind. And it, it really wasn't. So I don't know that it's that much of a headwind. It's just kind of a return to neutral. You know, ever since the election, most of the customers immediately said, like, we don't think these tax credits are real. That's, you know, they, they are real still until September 30th.

• 32:48Speaker 01

  Right.

• 32:49Speaker 00

  $40,000 seems like a real amount of money to me, but it's been clear all year that customers are not really valuing those credits. So the withdrawal of those credits. I think it has a fairly low impact.

• 33:04Speaker 01

  Okay. Well, that's great. I was worried because I was thinking to myself like, here's a cool company that's, you know, raising money, moving up the products, getting out into market. It would be terrible if the rug was pulled out from underneath you at kind of the last minute when you were hitting your stride and starting to get commercial traction. So I'm really glad that that's not the case. But I want to flip it around. You and I are both fans of electrification of both commercial fleets and I'm also a fan of personal EVs. Just because I think they're a great way to approach the market. What should we be doing as a nation to more quickly transition our various fleets of vehicles towards EVs, towards cleaner energy and so forth that we're not doing. So what can we do to go faster?

• 33:47Speaker 00

  We have two goals, which are in many cases competing. We want to encourage more electrification. And we want to encourage more domestic manufacturing.

• 33:55Speaker 00

  Those are both valid, important goals. And 45W, you kind of had to pick one or the other. Because it was purely encouraging electrification and it didn't have enough defensive US manufacturing. Because a lot of that money was just going back out the door to CATL. You know, what we should be doing is we should go back to a similar tax credit. But we should make it much more targeted and say, we want electrification, but really only if you're supporting US manufacturing.

• 34:25Speaker 01

  That seems incredibly common sense to me. So I'm not shocked that it didn't make it through a budget reconciliation bill in the United States Congress, but

• 34:34Speaker 00

  Yeah, we wouldn't want any common sense.

• 34:36Speaker 01

  Just before I let you go, John, you guys are doing a lot in the United States. It seems possible. You previously worked at Androl. I mean, is American manufacturing coming back at a real pace here? Or am I just seeing a couple of highlights around the nation that make me feel excited, but might not be indicative of actual progress?

• 34:55Speaker 00

  I think American manufacturing is coming back, but people need to better understand what manufacturing means. Manufacturing is what's happening here behind me. Like, we're taking parts and we're making battery modules.

• 35:07Speaker 01

  Yeah.

• 35:08Speaker 00

  But we're not, like, this isn't a steel mill. We're not turning iron ore into steel. We're in a great position where we get to do the things that have the highest value add and the lowest health and safety risk. There seems to be a lot of government angst around, like, my God, we're not making enough steel. And I just, I don't know why we want to do that. It's, it's not a job that people want to have. It's, I mean, the government is also unhappy that we're not mining more coal, which is another kind of a death sentence of a job. So I guess we shouldn't be surprised, but you know, the work that we're doing here, the work that we were doing in Andorol, that's super high value add work that doesn't have

• 35:49Speaker 00

  to involve, like, how manufacturing was designed in the 19, or defined in the 1920s in a children's book.

• 35:57Speaker 01

  Yes. Well, I think you're a vision for the future, which I can see. And I'm watching literally your staff go back and forth. No one is running, no one is on fire, and everything seems to be going quite well. So it's a future that I can get behind and totally support. John, where can people find you on the great internet? And also, what is a job you are struggling to hire for?

• 36:17Speaker 00

  HarborJumotors.com, as well as all your common social channels, LinkedIn, Twitter, Instagram, et cetera. We're generally hiring for a lot of positions. At the moment, we're doing a big expansion of our sales team. So if you're someone who has experience selling trucks, selling capital equipment, we'd love to talk to you.

• 36:36Speaker 01

  All right. Well, thank you for coming on. And when you guys eventually do break into the small consumer electronic truck segment, which I'm sure you'll do down the road to make me happy, we'll have you back on. But in the meantime, John, thank you so much, and keep building here in the States.

• 36:48Speaker 00

  Sounds great. It's great to be on, Alex. Thanks.

• 36:54Speaker 01

  Hey everybody. Welcome back to Twist. Today I have an amazing Twist 500 interview for you with a company we have talked about on the show recently. But first, I have to rewind the clock. Often when we talk about up and coming startups that are out there, change in the world, they're backed by well-known venture capital companies. Your Andreessen Horowitzes, your indexes, your Sequoias. Sometimes though, an investor steps up to the plate that we don't expect. And in the case of Posthog, they raised a large round from Stripe. Yes, well-known payments unicorn. That caught my attention. I then dug into the company and discovered that it is one of the coolest firms out there today, one of the best startups I think in the world. So please join me in welcoming co-founder, Mr. James Hawkins. James, how you doing?

• 37:31Speaker 04

  Hey, very well, thank you.

• 37:33Speaker 01

  So you guys raised 70 million from Stripe at an announced $920 million valuation. Before we dive deep into product analytics and open source and pricing plans, how the hell did that deal come together?

• 37:45Speaker 04

  It all started with Twitter. So basically a while ago, like I think it was in 2023, Patrick Collison liked our website and said he thought it was cool on the internet. And then things really spiraled. So here we are 70 million dollars later.

• 38:01Speaker 04

  We've been very, very efficient. We're a product-led company. We've been averaging like a two-month CAC payback period, for example, for an awful long time. I think we had gotten kind of complacent where it's like, hey, we can pretty easily grow pretty fast. And we didn't really know how to spend money. And it kind of took us until about our fifth year of existence to really know, actually, we can increase our growth rate by spending more. And we want to trade off a little bit of efficiency for more speed, basically. So yeah, like change of attitude, like being around the right people at the right time and having a cool website with the three ingredients.

• 38:31Speaker 01

  I love that. This is just evidence that design actually really does matter and it totally got me. I was, I've never read so many corporate blogs in a succession on purpose than when I was on the Posthog site. All right, let's start with what you guys do. Now, when Posthog was initially put together, product analytics was the product remit and it had an open source core. You guys have expanded greatly in the intervening years. So tell me and everyone listening, what Posthog builds today?

• 38:55Speaker 04

  Sure. So Postul provides customer infrastructure. We simply aim to ship every single product that relates to customer data. Say we have about 14 products that relates mainly to product engineering or growth engineering use cases like product analytics, obviously. But like a whole list of other tools that are adjacent, like session replay, error tracking, feature flag, experimentation, data warehouse, this goes on and on and on. And what we're trying to do is instead of integrating a bunch of tools together, we're like, no, we are literally just going to freaking provide all of them. So there's perfect first party data. And as AI has come crashing in, to then just automate everything. And very long term, hoping we provide business autonomy. It's kind of the end game for us.

• 39:33Speaker 01

  Go ahead and define business autonomy for me.

• 39:36Speaker 04

  We want to automate every process that happens across every major function that relates to a customer. So then product autonomy would be a subset. This is like, hey, today you tell Cursor or Windsor for whatever, like, hey, this is the thing I would like you to build for me, please. You wait 10 minutes, it comes back, you edit it a bunch of times. But you're still deciding what to build as an engineer based on maybe what a product manager told you, based on like your own knowledge of your customers, whatever your process might be. We are trying to get to a state where we built AI already that's like chat to your data, as you would kind of expect. We're starting to get into a bit where now you can do things with it. Like, hey, these are actually the things you should work on. And then longer term, I suspect it'll be like, hey, you fire up Cursor in the morning or whatever else. It's like, here are the 10 things that have been built overnight

• 40:20Speaker 04

  based on a really deep understanding of customers. It's like multi-dimensional, like it's not just just the data you get from event tracking and just the data you have from errors. It's really every color to understand the painting, basically. I actually, I think it is going to be possible to build a better product manager than a human product manager with better understanding from just how effective the models now are, are really enabling this when you have this wide range of data. So when we started the company, everyone was like, enjoy the good old days when it's two idiots and no one else to worry about. And now we're like over 100 people. But it's getting, we've had the complete opposite experience. It's got much more fun as we've gotten kind of further along. And I think partly that's thanks to the changes in the tech landscape, too.

• 40:58Speaker 01

  So just to kind of just that down, you guys started with product analytics, have expanded to essentially anything you might need for product related work. You've added AI in now. And then it sounded like you're describing essentially some sort of AI agent backend that's going to take on tasks for people that are building products. How did you get from working with your co-founder at a financial technology company to founding this, to then building essentially AI-driven business automation? It's quite the leap. What was the initial spark?

• 41:25Speaker 04

  My last job, I was, I wound up as the VP of Sales the first time in my life. And I was selling compliance software at a large banks for millions of dollars. I would wear suits in inappropriately hot climates. And I would be going up in skyscrapers, trying to get people to buy stuff for a couple of million dollars. And I just had this feeling that this approach we're taking feels like it won't, doesn't feel like the future. It feels like the past. And I could see vendors starting to put enterprise software that had been more focused on the end user, basically. Whether go to market is in enterprises, like, oh, 200 developers insist on using GitHub. And now, now the procurement team has to buy it, even though they don't really want to, for example. And so I could sort of feel this.

• 42:04Speaker 04

  So my co-founder, my, my co-founder was quite simply the fastest engineer I'd ever met and the best, in my opinion, kind of therefore.

• 42:11Speaker 01

  So this actually brings me to the open source point because going back to the history of the company, you guys discussed how having an open source posture of building and releasing software helped you get early attention to the company. I've often heard about open source as a great business model, less as a promotional technique. But was the open source starting point critical to finding that product market fit that early?

• 42:33Speaker 04

  Yes, I think it was a constraint that we faced was there's already a bunch of competition in, there's a massive amount of competition for what we're building, like in product analytics. I think at the time, there were probably three companies doing 100 million run rate or more. Like there's like Amplitude, Mixpanel, Heat, who have all been pretty successful to some degree or another. And the answer, well, we can't do cloud, that's off the table already. And we kind of, I am, I am technical enough to be dangerous, I would say. So I've got like a bit of a developer background beforehand. My co-founder is extremely technical, but he can be the other, he's very commercial side as well. But we kind of felt like we really want to build this for developers. And what's the ideal thing for a developer? And we kind of, we started talking to a bunch of more technical people about their analytics that we discovered a lot of companies were

• 43:16Speaker 04

  building, self-building a lot of things to keep their data inside their infrastructure. So we set off on a real zig before we then zagged across. Actually, we can do cloud if we get multi-product at the same time. And so it's very windy. Journey, but one of the quotes we had early that has I've understood later from Ali Mugani, who's been on board, who was the person that ran the continuity fund at Y C when that existed back in the day. And he said, when you get bigger, you can kind of see around corners. And I'm like, what does that mean? So now I know what it means. It was like, actually, once we have lots of users, we can figure out what to build properly. And so Postcards never felt like we've never kind of descended down from the hillside and gone, you know what, like this is the future. It's going to be this, this, this, this, this. The reason that we have a strategy is working now is because we had the wrong

• 43:58Speaker 04

  strategy, but we spotted some things that were working haphazardly along the way and then iterated our way across to something that worked great. So it's been very chaotic looking journey from a product perspective, I would say.

• 44:10Speaker 01

  You guys decided what to build in your roadmap in part based on customer and user reactions via like upvotes essentially of certain elements of what you're planning. Have any of those ever led you astray? Or is that how you see around corners kind of on a day to day basis?

• 44:24Speaker 04

  Yeah, it's a lovely, it's an input into the process. And it has, I think we, sometimes it can be painful, like right now it's painful. We want to build a CRM support platform. We want to do what we're doing for products for the entire stack of tools for sales, marketing and support teams too, because it's the same customers they're dealing with. It's the same data. And so we're like our top feature on our roadmap is like product tours, which or like we shipped an error product recently, it's been really popular. And now we're getting asked for like a logging product. And we kind of know full well, like these are getting lots of users asking for them. They make a bunch of money. They'll grow quickly. We don't really want to build them. We want to build like, so well, if we can get a CRM being adopted by developers before anyone else exists in like a Y C company, for example, we can build comments 10 times larger. And so like, okay, well, like to get from this

• 45:08Speaker 04

  maximum to the next one, we have to walk down the dip, which is what we're experimenting with. And we can always go backwards and up the hill if we don't like it. So yeah, we kind of currently we're in a mode of like lifting the fog of war, where it's like, okay, let's just see like actually how wide we can get away with here. Is it as wide as we believe it is? And that's what we're validating currently.

• 45:25Speaker 01

  So it sounds like there's not one single answer. It's constantly listening to users, looking at the market, making decisions, and then also seeing what actually generates revenue for the business and then try quadrangling between those elements?

• 45:36Speaker 04

  Yeah, the constant, I would say, has just been quick to do these things. And just getting it out and seeing what happens. It's also a little bit based on like the engineers we have, like if they are excited to work on something. It's like if I'm super excited or there's an engineer at Postdoc who's super excited, we'll build it literally three or four times as quickly. And yeah, it is really, it's very much an art form, I would say for us. We've tried to put frameworks in place for this, but they haven't felt optimal or we've actually executed them and stuff. So yeah, the core thing really is like, we just are very willing to embrace a little bit of chaos here. And then we'll watch intently what happens and we're trying to reduce the cost of errors. Like we won't spend a year trying to ship new products. So for example, we don't really target very top end enterprises hard. Like we have a bunch of them as customers.

• 46:18Speaker 04

  But our bread and butter is signing up like hundreds of thousands of companies that are a little bit smaller. And that sort of means that you can target releases, you can be more nimble because it's not like we have two massive enterprises breathing down our neck. It's to achieve some roadmap item where like we don't offer any roadmap dates to customers. We don't have any deadlines internally. There are no, there's no coordination, which or the whole company is designed around engineering velocity, basically. Which is actually the thing that really does matter to us more than anything, because you kind of assume that we'll be wrong a lot. And so for quick, we'll find good stuff and bad stuff pretty fast.

• 46:49Speaker 01

  That's really interesting. On the going too wide point, the first thing that struck me when I was getting to know Postdoc was just simply how many different products you guys have. It is, it is a wide number of things and I presume it's going to go up. Is there an upper maximum to the number of individual things you can have in the market and maintain well and host and support as a business? And are you getting close to that point? Or is there a lot more room for you guys just to keep building new stuff that people ask for?

• 47:13Speaker 04

  It's a million times better than you'd expect. Like it doesn't, like you said, like one of the number one, like one of the most painful parts of business. Managing like 14 products at once, whatever it is, depending on what defines a product, it's just not on the list. And these products will support tens of thousands of customers. We're just not finding it hard to do that well. We hire engineers who literally decide what to build, but they don't have product managers determining the roadmap. So I think because we're willing to let go of control, we hire people that. We frame as product engineers internally has made it feel ultra scalable that way around. There are certainly other issues with having a lot of breadth. Like we have a big debate going on at the moment about when do we create a platform team? For example, we've been really hesitant because we're worrying about creating coordination between teams or suddenly having to have meetings and stuff.

• 47:59Speaker 04

  So yeah, it's not always, I would say, but it does feel to me like we could. Like our goal is like 50 plus products minimum, potentially a couple of hundred, depending how we get on. But I think it's going to be very possible to do that. There is precedent, like AWS, for example, has hundreds of products.

• 48:16Speaker 01

  Oh, absolutely.

• 48:17Speaker 04

  They are a little bit bigger than us. But even like, we actually looked at Y Combinator, we're like, well, they have 250, whatever, like roughly 250 companies in a batch with only 500 people shipping them or whatever. And it's 250 totally distinct businesses being managed and optimized for a certain extent. And so we're looking at kind of how YC is structured initially and like, why are people so productive in the batch? And then we're also looking at AWS as like a very late stage example of this. So we think, and we think AI is massively accelerating this too, which is like needless. We already thought this was happening, like open source software is more available. It's getting quicker to develop stuff anyways. We already felt like software is going to get kind of commoditized. I think AI is putting it from the gas here and we're like, well, like rather than hiding from this stuff, like going into enterprise, we should just drive that change because it's better for users.

• 49:01Speaker 01

  We're circling something interesting here, which is with very small teams, nimble engineering and a lack of centralized roadmapping. You can move very quickly and build stuff that a lot of people want to use. I'm actually familiar with several of the companies in the product analytics space. I've been talking to Amplitus since before they went public. So I have a little bit of insight into them and their market and their growth and so forth. I'm just kind of blown away by, by how much you've managed to barge into markets that are filled with, you know, incumbent companies, often public with lots of money and time and history behind them. And you're able to grab, to grab market share. What makes that possible? Is it that their products are just too enterprise focused? Or is it you're just engineering velocity that allows you to show up to so many different parties and walk out with a punch bowl?

• 49:43Speaker 04

  I think a standard playbook that I think is getting outdated now is you build a product, you get a little bit of traction and you build like a 10K a month business. You go raise like your seed round, you do a series A and then you're like, man, and then you start getting serious. You're like, okay, I need to keep up my rate of revenue growth. How do I do this? And like, I think the easiest, like most intuitively possible way of doing that is. I need to add more salespeople and go up market because the order values will could jump like 10x or something and it's like and we're kind of more competent at this stage. You can handle these enterprises and whatever. And we built and companies have all and fast forward and it's like, you know, after 20 years of SaaS and like VC coming in here and it's like, cool, there's now what I would term a fragile mess of tools in enterprise. And so I think our opportunity is like, well, we think it is harder. We won't grow as fast if we like, we could right now just go, hey, we're just getting a whole bunch of salespeople that are very enterprise focused. We're going to really

• 50:28Speaker 04

  up market. We're not going to invest in going wider. We'll just invest in depth of each product and we'll take that little toolkit we've already built up market and we'd probably get to 100 million quicker if we did that. But I don't think we'll continue to compound. And so we've just sort of been willing to like, yeah, we're going to lean into engineering glossed over everything else. We'll do some really counterintuitive things there. But it's kind of almost a constraint of going, well, if we went up market, we're just going to lose. Like, we're never going to beat Datadog today at enterprise sales or something.

• 50:54Speaker 01

  Kind of a dated paradigm, really.

• 50:56Speaker 04

  Yeah. And I'm like, engineers exist first. Like, they exist when there's two of you starting the startup from scratch. So if we just go in with engineers or upstream of every single piece of software that company will ever use. And so if we can just offer it all, then they'll buy all of it if we're the best vendor. And then we keep doing a good job of looking after people. And so there's a few factors that I think that have meant that we're successful. If I'm harsh on myself, it's because we can't invent something. We've struggled to be, I haven't been given up a product to invent something totally box fresh that has zero competition or whatever. Like, maybe that would have been better if I could do it, but I haven't been able to. We're now getting to a point where we are starting to innovate and it's proving a lot of fun. But I've had the chance to now hang out with lots of people and learn stuff and spend time with my co-founders doing the same thing. And now we're getting a little bit more competent at like actual, whatever term, actual innovation. But yeah, that's kind of why it's a bunch of things at once. But the main one is like, we've sort of been forced into being different to everyone

• 51:40Speaker 04

  else because the market is so saturated. And which is why it's all really well. Like, I think conceptually, it's easier to do a better job of something that already exists than it is to completely invent something from scratch. And so we're merely doing about what we think is a better job of something that already is out there.

• 51:52Speaker 01

  So you mentioned getting to 100 million. I presume you mean ARR by that point. And you said that if you had gone perhaps upmarket originally, like the usual SaaS playbook, you might have gone to that milestone faster, but you will get there. You also said that you're compounding, which I think shows that if you have a wide base early, as those customers grow, they'll grow with you, which makes a lot of sense to me. But you also do some things that do decrease your revenue, which is an interesting thing that I don't often see. One thing you do, you have side hustle insurance. So if someone blows through usage caps, you don't take their entire house. You guys have done actual price cuts, which hearkens back to the AWS days of your, back when they actually cut prices, if people were kind of think back that far.

• 52:32Speaker 01

  So I guess my question is, how do you balance between what I very politely call extreme customer friendliness and the need as a business to keep the growth coming? Because you do have backers and you do have people that are expecting a certain return from you.

• 52:45Speaker 04

  The core one, I mean, the core ten of our firearms that I think serves very well. And our core principle is don't need to make, ensure that we don't need to fundraise, basically, which means that we can take a long-term view on stuff. So we don't have to rely on, we don't have the dependency on like, oh God, like if revenue dips and after fundraise at the same time, we have to explain it to everyone. We'll lose momentum, it'll be hard to do that. But when you don't really care, because you're like, well, I just kind of fundamentally, we're running the business sufficiently enough that we can just get profitability, whatever. We can take move, make moves like this because we think they have a lot of upside. And if we screw them up, it's like, oh, I was just knock this back a couple of months. Still doesn't matter. Like we've just got a backup ourselves that we'll be able to get it back. Yeah, just not feeling desperate is unlike, and that's partly why we raised is

• 53:25Speaker 04

  there's a huge psychological effect of having the ability to take lots of long-term views on things. And including like, you know, it comes out and also like the marketing channels you pick, for example. And all the ones that are like really the work better in the short run, like paid ads or something are worse for you in the long run because they're really saturated. So yeah, I think it's, you just can't be burning a huge amount. You have to find a pretty efficient business to get away with moves like this so that you can run yourselves in a good financial spot. And you have to be able to fundraise in some way, shape or form. I treat finances kind of like a, our revenue growth is almost like a constraint on the business or something. You go pretty quick, but like we will sacrifice it for more. Like again, mentally, it's like, well, if we cut your pricing today. You'll keep using us, you'll probably use us more, you'll retain better.

• 54:11Speaker 04

  You'll probably tell your friends more often about us and then eventually you'll buy another 20. Like in my head, I'm like, you're gonna buy 20 more products or have 20 more to sell you. So it's like, it doesn't matter, you're like at 2% of your total spend with us over the next 10 years, for example. So like, we should really optimize for that. And that's how we're thinking about these types of changes. I would have said that they don't make our revenue look good in the short run, but they have like that change increased our revenue growth rate, which was so counterintuitive, but basically retention went up.

• 54:37Speaker 04

  Usage went up and growth went up massively, which offset the difference. Even if we cut pricing for a whole existing customer base for our two biggest products, for example, by like an average of 60% or something.

• 54:47Speaker 01

  What was the total hit to your revenue from that decision in the absolute short term? Like day two, what was the?

• 54:54Speaker 04

  I don't know what it was runway wise, but yeah, it was our two biggest products and it was 60% average decrease in spend for all of them. I think it like almost halved the, it like halved the average order value of customers signing up, but we tripled the number of customers signing up.

• 55:07Speaker 01

  That's, that's, that's what I was gonna ask you, because what was the impact of it, you know, day three?

• 55:11Speaker 04

  Yeah, it was skewed towards customers which had a lower, that had higher margin because it's towards the bottom end of our revenue scale, which actually means the revenue impact was like unnoticed, sorry, the margin impact was unnoticed in our numbers. So we make a lot of margin on the bottom end of our pricing scale and like much less further up. It was after like a long meeting where we were debating doing some ridiculously complicated, like let's do a reverse trial. Where if you put your credit card in and this and then this and this and this, then you downgrade them. But in this, I'm like, man, this feels like peak midwit meme. If you've seen that where this pricing thing is so freaking, it's like, we're just trying to get around the fact we should be making it cheaper if we want to win. And I think the other thing is we concluded was because we're efficient, we grow inbound, we don't have to pay for sales team. We have super low cap payback periods. Like I think we can actually sustain in a pricing battle quite well because of this.

• 55:56Speaker 04

  So we can kind of afford it in a way that like if we were. Very dependent and high overhead to acquire the next customer and so on. We're fundamentally higher operating costs. We can't cross sell it as easily if you just have one product. So we kind of felt well from first principles, we would win if we did a pricing war. And so we're happy to like start undercutting our competition.

• 56:15Speaker 01

  Yeah. Okay. So last question for me is this. I thought the core trick of Postdoc was going to be open source because I'm a big advocate believer in open source software companies in general. But listening to you talk about how the company has approached the market and learned and grown, it seems like your lack of burn has provided the most flexibility for Postdoc to choose its own path. So is that right? And then also, is, do you think that's a viable strategy that other startups should emulate?

• 56:44Speaker 04

  Yeah, I think that has been incredibly important part of our journey. It's, I think it's that. And the other one that's worked has been, the whole reason we're multi-product, we found this alternate path. Like we built a successful, like not venture scarcity, we're building a reasonably successful growing business off the back of self-hosting, where we were just charging self-hosted customers, we're making money off this thing. But it just doesn't feel like the business that we could be, doesn't have the best business we could possibly build. Like it's all right, like we're growing fine. But we're spending, we're doing so much support. We don't think this is a great experience from a lot of our customers who are like, because we have to run lots of support, they have to deal with lots of support requests all the way around as well. And then like, and some customers were self-hosting for no reason. And we're like, man, if we just like, why don't we host it for them? Lo and behold, we have now got a cloud product. Fast forward, you're like, wait, the cloud customers are way happier than the self-hosted ones. And yet

• 57:29Speaker 04

  loads of people are using it. And like, I don't know why they're signing up our cloud products. It's just like kind of worse than our competitors' ones. But it was like, well, it's because it's a different audience. And like, because our branding, and we got away with like, a lot of branding and developer, just by being really good at handling developers and knowing how to run a company for them, meant that even though products were like very similar, ours was even worse at that stage. And we just got enough traction that we could lean it. And the other ingredient that was very important was, the whole reason we're multi-product is because we let our engineers decide what to build. And one of our engineers randomly built the next, not randomly, like he had reasons for it, but he decided to build session replays, a second product, and it was just popular immediately. Like users had kind of asked for it in our repo. And then we went, oh, hang on, I can see how this works out now. If we stay like a little

• 58:12Speaker 04

  bit more down market, we can go much wider, much quicker than everyone else. Because we don't really have to pay for sales team, all our money, we can just put into engineering. So we can have more engineers, we have a much bigger engineering team than a normal company at this stage. So actually, we do have quite a lot of engineering bandwidth because we're not losing money elsewhere. So yeah, having like, kind of like, low financial desperation or whatever, and it has made it super easy to do cool stuff like this. And it also like now our marketing works like that, too. Like, we can just do like really weird brand marketing stuff that sometimes like you mentioned, you put something on Twitter, and you get more exposure than if you'd spent half, and we also do the billboards, but like you get more views than if you spent like half a million bucks on billboards, for example, in one tweet that you spent 25 seconds to write. Or like, we have a newsletter, we're building up, it's got 75,000 subscribers. And that's like, it's new, it's not been going on for

• 58:56Speaker 04

  very long, but it's like really climbing quickly. And we're like, well, this is not going to help us in this year or next year. Like, but in five years, this might be, this is probably the most important thing we could possibly do in marketing if it works. And we can sort of see that we're trending into that sort of direction. So we're just continuing to invest in it. And now when we hire candidates and stuff, it's like, cool, we have inbound only recruitment, because people already know who we are, they're like learning from us. And we've managed to get that thought leadership, because we're just willing to invest in stuff that is going to suck on a spreadsheet for a long time, basically. So yeah, that's been very important, because it's made us, the key is to like maintain urgency, when you don't have like crippling fear of death coming. But yeah, like low, yeah, you have something bizarre much better than I'm about to repeat back to you, basically.

• 59:38Speaker 01

  No, you're all good. I really appreciate it. And if folks, if folks want to learn more, it's posttalk.com. And James, where can they find you online?

• 59:45Speaker 04

  Uh, probably Twitter's best place, James406.

• 59:48Speaker 01

  I want to get into why that's your username, because we don't have time. But thank you so much for coming on, James. And when you hit part 20, come back on the show and tell me what the next four or five were.

• 59:56Speaker 04

  Cool, I will do. Thanks so much.

• 59:58Speaker 01

  Thanks, James.

• 1:00:03Speaker 01

  Hey everybody. Welcome back to Twist. This is Alex and we have another Twist 500 interview for you today. This one comes with a little bit of history. I first met Alpaca back when they were a small company raising their first funding rounds. And now here we are a half decade later, the company is scaling and growing, recently raised more money and has a really interesting perspective and take on building fintech in 2025. So please join me and welcome you to the show. It's Yoshi from Alpaca. Yoshi, how you doing, man?

• 1:00:29Speaker 05

  Great. It's been great. Like it's been a long time, Alex. It's great to be here.

• 1:00:33Speaker 01

  It's a, I ask that because it's 4:30 in the morning in Kyoto where you are and Yoshi got up way before dawn to come record with us today and we're very thankful for that. It's Saturday where he is. So Yoshi gets 10 founder points. All right. So it's been a minute since we've talked. So I'm out of date, Yoshi. Why don't you just tell me and the folks listening what Alpaca does today?

• 1:00:53Speaker 05

  Yes. Alpaca is a brokerage infrastructure company and then also FINRA SEC registered self-clearing broker dealer. You know, it's a, it sounds pretty boring, but what we do is that we build embedded brokerage product that a lot of fintech applications and then broker dealers and banks all over the world can embed and add investing and wealth services to their end customers.

• 1:01:19Speaker 01

  So the way that I've always thought about this is if you have an application that has a financial bent to it and you want to expand your product offering, you go over to Alpaca, plug into your API or sign a contract and then you can offer equities trading, options trading, and a number of other wealth related services to your product as kind of a white labeled solution, Yoshi. Is that fair?

• 1:01:40Speaker 05

  Yes, that is correct. You know, we take care of all the mid-office, back office, all the compliance requirements on our side and that also the reporting as well and everything comes through the API. So the, you know, developers and businesses don't have to worry about backend stuff.

• 1:01:56Speaker 01

  It's interesting because when we used to talk about APIs, kind of back when Twilio was blowing up, we would talk about abstracting complexity away and then offered a single developer hook that provides a complex service that's very easy. And it's, I think Alpacas are just a really good example about how that still works. Because people still want to use API delivered products. It's not all AI today, you know, there is still money to be made. But that's where I wanted to start because I was going back through my coverage of your guys', I think 2020 and 2021 era funding rounds. And you and I were going back and forth on how Alpaca made money. And one thing you told me, if memory serves at the time Yoshi, was that you guys weren't charging much directly for the service,

• 1:02:37Speaker 01

  but were instead splitting payment for order flow revenues generated by end user trading. So I'm just curious if you could give me an update on how the company makes money today? And if you're still doing that revenue split on order flow payments?

• 1:02:51Speaker 05

  Sure. So at the end of the day, our business that we do, even though we say this is a brokerage API or brokerage infrastructure, at the end of the day, type of the businesses is the securities clearing and securities custody business. And you know, since we are membership of DTCC, this is the really, you know, core semi-governmental, you know, entity that actually has all the custody of the securities. So we're a membership member of that, which means that, you know, we take care of all the end customers, cash and securities on our, on our book on the custody. The business model becomes nothing trivial. It has been something that existed for a long time. So all of those clearing firms makes money of the transactions,

• 1:03:36Speaker 05

  interest as the kind of main things. And the inside of the transaction revenue, there is, you know, as you mentioned, payment for order flow specifically for the United States stocks, equities trading and options trading. There are certain market maker model that connects to the bunch of the exchanges that exist in the United States. And then they create, you know, model that pays back some of the rebates that was, not rebates, the money that's been built between the bid and offer price to be offered back to the broker dealers like ourselves, which we can, you know, split to the partner broker dealers that we work with.

• 1:04:12Speaker 01

  All right. Now, one thing I did notice that you guys have somewhat recently become quote, "a fully self-clearing broker-dealer." I kind of know what that means. I'm pretty familiar with market making.

• 1:04:23Speaker 05

  Yeah.

• 1:04:23Speaker 01

  But it might help just to hear it from you about why it's important that Alpaca is now a self-clearing broker-dealer. And also, if you could just tell folks listening who aren't as familiar, what a market maker is and why they matter.

• 1:04:34Speaker 05

  Yes. When someone buys, for example, Nvidia stocks, the thing happens as the trade is executed, which trade execution means that we're basically deciding the price when this, you know, person A buys Nvidia stock at what price. And then after that price is decided, actual exchange of the Nvidia stocks with the cash that person pays, that process is basically called trade clearing. So in terms of the, you know, the first one, trade clearing, like companies like us who are behind the scene, we, there are multiple layers of the businesses actually that's

• 1:05:15Speaker 05

  built up on this financial industry system because maybe while you're interacting with your app or businesses may not have the full integration into the, like, you know, deepest core of the, you know, booking records, which is the DTCC. The finance services is like, it's always relying on each other. So you outsource these licenses, you outsource these functions, it's really, you know, connected everywhere. So with that said, us being at the very much one-stop-shop, having all the licenses and membership, it reduces the fees that we have to charge because we're not outsourcing anything to anyone.

• 1:05:53Speaker 01

  Does it also allow for tighter spreads when you offer a price for a particular equity?

• 1:05:59Speaker 05

  So in terms of the tighter spreads, it becomes more of the, yes, exactly, definitely. Because like, you know, when we are pricing back to our partner brokers, which, who is going to basically charge back to the end customers, the fee that we are getting charged from those systems becomes the, basically the lowest in the industry because if you own everything in terms of the licenses and then also the systems, and also, this is the interesting part, most of the financial services company, like, most of them, they outsource the system. Because they are not tech companies, so they don't build stuff, which means it creates a lot of overhead and unit expense, which we don't have. So we can offer the tightest price, basically, logically speaking.

• 1:06:43Speaker 01

  And just to clear up an acronym, the DTCC is the Depository Trust and Clearing Corporation.

• 1:06:50Speaker 05

  That is correct. Yes.

• 1:06:51Speaker 01

  And you said you were a member of it. Does that mean you guys have like an equity stake? Or is it a partnership? How does that work?

• 1:06:57Speaker 05

  Yeah, so it's not like an equity or partnership, but there's so much like, you know, application process that you have to file. So the DTCC basically allows us to be a member, same as like being a bank, becoming a bank or becoming a broker dealer. You have to prove and you have to show that you have all the, you know, compliance ready. You have all the, you know, risk, right? You know, risk system ready. You have all the right people ready and you have enough capital ready. So the DTCC welcomes you as the direct member that's connected to the DTCC system.

• 1:07:31Speaker 01

  All right. So what I loved about Alpaca at the time, back in the day, was that everyone wanted to have a broader suite of financial services. Once they got customers in, all these fintech companies wanted to offer more stuff to them. Because the more stuff they could offer, the more money they could make, made perfect sense to me. Time passes.

• 1:07:47Speaker 05

  Yeah.

• 1:07:48Speaker 01

  The COVID era, what I call the savings and investing boom, you know, kind of like the early meme stock era and Robin Hood blowing up and so forth. We're now pretty far past that. So I'm curious if you could just give me a bit of an overview of the last couple of years of adding new customers from you guys and how they're adding end users. Just what's it been like in the last two or three years?

• 1:08:09Speaker 05

  Yeah, so surprisingly, and you know, thanks to our, you know, teams are working really hard. We've been more than doubling revenue last several years. I always, you know, do admire what the, you know, Vlad and Beja did in the Robin Hood. You know, obviously, it's always been talked about and, you know, paid attention to. But, you know, they have been always kind of making a way, creating new things, like, you know, like, you know, really focused on like what comes next. I think like, you know, there is definitely the maturity. That's happening for the B to C fintech applications. Uh, you know, maturity means that adding a lot more uh service verticals. Uh, and then I think like winners are more becoming a winning uh players and to becoming more of the enterprises.

• 1:08:54Speaker 05

  So having uh becoming more invincible in terms of the market. So uh that's.

• 1:08:59Speaker 01

  Yoshi, can I, can I jump in? So are, are you saying that because the upstart companies from a few years ago are becoming the incumbents?

• 1:09:07Speaker 05

  Yes.

• 1:09:07Speaker 01

  It's a good time for Alpaca to be out there helping to power a lot of these companies because essentially your customers are maturing and becoming the new leaders.

• 1:09:15Speaker 05

  Yeah, definitely. And then like, you know, we, I think like the reason why I wanted to bring up the example of the Robin Hood is that there is always a continuous innovation on the B to C products. And then like, you know, uh, the players who are good continue to uh uh add new things to continue to grow. So that's the kind of uh the proof point that I see from the Robin Hood. And that the second thing is that by looking at the Robin Hood, there are like many other following Robin Hood types of the applications. Uh, not only in the United States, but also outside the United States. That's or maybe a few years uh behind or five years behind or seven years behind. Which means that the growth curve is happening in a very different diversified, diversified way in terms of the revenue assets under custody growth.

• 1:09:58Speaker 05

  And that's our built on top of us. So like, you know, we see the growth like a very diversified. So like, that's why we see like very constant growth of our revenue and assets under custody. Regardless of the uh despite of the uh situations that we see.

• 1:10:11Speaker 01

  So Robin Hood does very well for itself. I just pulled up its stock chart. Currently worth sixty four billion dollars, which is more than anthropic, shout out. And people around the world have seen this and gone, oh, we need to build the Robin Hood for Malaysia and the Robin Hood for Nigeria, et cetera. And they're a little bit behind the initial Robin Hood curve, but if the curve still goes up.

• 1:10:31Speaker 05

  Yes.

• 1:10:31Speaker 01

  You guys at Alpaca, if you're serving those people, do very well. Okay. Is, is, is part of the demand for Alpaca's services, the fact that people really want access to US equities in particular?

• 1:10:42Speaker 05

  Yes, so 65% of the market cap of the whole equity markets in the world is United States, US stock market. Yeah, and then, you know, obviously, I don't have exact stats, but like, you know, computers people use in terms of that Mac or Windows or Google or even OpenAI or whatever, I think it has like much, much higher penetration, which means that like 8.5 billion people on this earth probably has thought about the United States listed companies the most. So I think that is the reason why we started from the offering the US stocks and then that has been our core asset classes.

• 1:11:18Speaker 01

  But last year, you guys added quite a lot. I was going back through your 2024 recap and also looking at your original blog posts, things like options, high yield savings accounts, IRAs, fractional shares.

• 1:11:27Speaker 05

  Yeah.

• 1:11:28Speaker 01

  The thing that I'm that I'm struggling with is what's left to add? I mean, do you remember when robo advising was a big deal? Everyone was talking about Wealthfront and the other one that I now forget?

• 1:11:38Speaker 05

  Yeah.

• 1:11:39Speaker 01

  That's now table stakes. So, so Yoshi, how much more stuff is there for Alpaca to build? That's like net new in a feature sense?

• 1:11:47Speaker 05

  Yeah, yeah. So I think like it probably goes back to again, you know, how the Robin Hood is adding stuff as well, right? And and then a lot of companies in the world, even in the fintech companies, but also big companies who are launching a bunch of digital banks and digital arms are looking at what the Robin Hood is doing because like, you know, they are best at growing the customers, best growing the businesses. So, you know, again, like it's not only about the, you know, stocks and options. There is, you know, the saving accounts products and even fixed income products. There's like money market sweep and then of course, there's a prediction markets and then investment advisor products. And this is really showing the shift of the money from just speculation and trading into

• 1:12:30Speaker 05

  the more the long term saving and wealth management. So I think it's now coming back to the core thesis of the money is coming from the boomers to the new generation and how we supposed to cover more of the cash. And then that's again, happening everywhere in the world, but there's always three years, five years, seven years, 10 years behind. So that we just need to keep building those infrastructure for them to make sure that they can do what they need to do like Robin Hood has been doing in the United States as

• 1:12:56Speaker 01

  So essentially, Robin Hood is not just the millennial brokerage of choice. It is an indication of new generations of humans demanding different services than their parents, effectively back to the boomers point. That sounds pretty bullish for Alpaca because it means that the companies you're serving that are offering your equities and other trading services to their customers have a lot of growth ahead of them. So I guess the question then becomes amongst your more mature customer set, people you've had for a couple of years that are not new, are they still growing very quickly or as quickly as your more recent customer additions?

• 1:13:32Speaker 05

  Yes, yes, definitely. Like, you know, the growth curve of the existing customers are higher. And then, you know, those guys, those guys like, so we work with the 220 applications in the 40 different countries. Like, you know, that's like, you know, the benefits of the big banks having the new offering, which, you know, we serve the infrastructure for as well. Definitely the first first period of the growth is really high because you can cross sell it. I think that's another thing that we have been seeing is that, you know, we now work a lot more enterprise customers, including legacy banks and then legacy incumbents, broker dealers, because like they're also fighting against competing against new fintech players and

• 1:14:16Speaker 05

  they have to like, you know, make sure that they have to grow against the new competitors that's coming up. So we're serving both segments.

• 1:14:23Speaker 01

  I was kind of working my way on the feature point to ask about stable coins. Because I feel like everyone's been been yapping about them.

• 1:14:30Speaker 05

  Yeah.

• 1:14:30Speaker 01

  And people want to have access to them. They're not a trading thing as much as equities. They're not really an investment that you hold forever like money market or bonds or so forth. But do stable coins come into the Alpaca world at all? I'm just not sure if they have a fit, but I just wanted to ask.

• 1:14:46Speaker 05

  Definitely like, you know, stable coins do come into the play because in terms of the money movements, you know, we have to deal with the, you know, traditional rails of like, you know, moving money around. For example, a customer in the Saudi Arabia buys, you know, the Microsoft stocks and then he comes to the United States because in order to purchase the stocks, the money has to move. So there's a bunch of the corresponding banks and all those payment rails. So when that stable coins happen, definitely like, you know, the money movement's faster, even though we have to on ramp it or off ramp it. But there's definitely the future there, in my opinion. So we do definitely follow very, very closely what's happening there to make sure that we can provide the best service for our partners.

• 1:15:28Speaker 01

  Would you consider building your own? Alpaca USD coin, just for your own internal settlements. Because to me, thinking about the example of someone purchasing Microsoft stock in Saudi Arabia, that is far away geographically, it's far away in currency terms. It's not close. And so if I was, if I was you, and this is maybe ignorant, I would think having my own in-house stablecoin would allow me to effectively take money from my right hand and give it to my left and skip all those borders and other sticky issues. Is that how it would work? Or am I oversimplifying to the point of stupidity?

• 1:16:01Speaker 05

  I think like, you know, there are multiple takes that how the future will be in terms of stablecoins. I think some people say that it's going to be predominantly, you know, two or few stablecoin. I wouldn't say even use the word of stablecoins, it's going to be with a stable dollar, in my opinion, as a concept. And some people think about building the infrastructure so that so many people can build a bunch of the stable US dollar, like One Money by Brian. I think there are multiple futures possibility. But, but what I think is that, you know, both of them are true, right? I kind of think about it more like ETF, right? So like, if you see like Bitcoin ETFs, there are a bunch of them. And there's a, and then like, you know, in order to create better experiences, we need to lower the entry hurdle.

• 1:16:46Speaker 05

  So we need to create the infrastructure for that ETF, those stablecoins to be built, built made easily. So I think like, you know, both things have to be happening at the same time. But for Alpaca side, we haven't really decided in a way. We're definitely like looking at it, what is the future? But like, our focus and priority is to solve the problem. So like, if the existing environment allows us to solve the problem faster, cheaper, quicker, we'll take that route. If it doesn't, we have to build our own.

• 1:17:13Speaker 01

  So it really just comes down to how good is the offering out there? And could we do better internally? Okay, well, when you do make that decision, let me know. Cause I want to ask you with that question again, once you've made it.

• 1:17:22Speaker 05

  That is true.

• 1:17:23Speaker 01

  Because I think it'll be illustrative for other, well, I'm just thinking about other founders who might be thinking along similar lines. And you guys are, I mean, you're a serious company, you're pretty mature, you're well established. And so I think there's probably a good lesson there for when you make that choice. All right, on that theme of Talking to other founders, when we were talking back in 21, fintech was the hottest thing. We were joking before the show that it was, you know, the AI of its time. And then there was, you know, Zerp ended, everyone freaked out, suddenly startups had to be profitable. It was all very strange for a while. And now with Circle, eToro, you know, Chimes, fintech feels very hot again. So you've gone through a period of time in which your company was out of fashion. What changed operationally for you because fintech lost its luster?

• 1:18:08Speaker 01

  And any tips for founders out there who might be building today in a market that is considered less sexy than AI?

• 1:18:16Speaker 05

  I think market cycle always happens. The, the concept that I always like to think about is the, you know, Bridgewater's Ray Dalio continues to talk about short-term debt cycle and the long-term debt cycle. So I want to always like, you know, the kind of step back to see what's really happening in the world, in the bird eye view, so that I don't freak out, even though I'm freaking out every moment about revenue and growth and client and all the things. So my, my team members probably say, what are you talking about, Yoshi? But, but I think like, you know, for definitely like, there's always a cycle. And I think what really important is that we have to, in my opinion, react as quickly as possible to what's happening in the world, because it's impossible to predict the futures.

• 1:18:58Speaker 05

  But what we can do is that we can react as quick as possible to what's happening with the, to, to beat out our emotional barriers or whatever that stops you from acting. So I think that's one key component, I think. And the second component is that these things actually allow us to grow and mature us extremely in a good way, to be very strong and very organized of how we run the company. So I, I always think about those two things as the benefits going through the multiple market cycles.

• 1:19:28Speaker 01

  So essentially, because you had to go through a period of time in which investors were no longer showing up in a car with just briefcases full of $1,000 bills, you had to become a more mature company, probably think about cash a bit more seriously. And so now that- You know, fintech's back at it. I mean, your Series C was, I know, announced this year, actually happened last year, but with these IPOs, I presume you'll have more investor interest and so forth. Now you are much more stable and just healthy company. Like, is my reading of what you're saying?

• 1:19:57Speaker 05

  Yes, yes, definitely. Like, I think in addition to the healthy, it's more predictable as a business, and then more visible and transparent as the business. And I think that's what it matters, in my opinion, because if there's a visibility and transparency of what we are doing, we can, we can, like, we have many choices, what levers that you pull to expect certain outcomes. And now, it's a very nuanced and balanced situation that, and I think that's really the, you know, role of the CEO, that we have to navigate which direction, which nuances that we have to be taking at the moment.

• 1:20:33Speaker 01

  Yeah, you have to steer the ship and not worry about the little waves, but keep an eye on the, on the bigger waves. All right, one last question, usually before I let you go and either go back to bed or have a very early breakfast. We haven't seen these fintech IPOs, and it's got me very excited because I love an S1. You know, and I would put Alpaca in the not going public this year, but maybe the back half of 26 or something, because, you know, you've been doubling for a long enough time now, you're getting big.

• 1:20:57Speaker 05

  Yeah.

• 1:20:57Speaker 01

  But at the same time, there's also been a kind of an uptick in M&A. So I'm just curious, from your chair, are more people reaching out, kind of testing the waters to see if Alpaca wants to exit early? What's it like out there for a founder of a mature and healthy fintech startup?

• 1:21:12Speaker 05

  Yes, definitely, like, a lot of inquiries and the conversation that, you know, we receive. And then I think it's one thing is that fintech getting the traction, but also multiple industries of the fintech are getting traction and getting more capital. Also, in the, in the US, of course, like, you know, Robin Hood is adding more products and, you know, becoming even more mature and like, you know, brand name. And I don't think that's only the case, only in the United States. Like, if we look at Europe... There's like, of course, Revolut and Monzo and 26 and Klarna and all those guys are also becoming even more winners and adding new things. So that means that those companies are even growing faster. So there's a more cash and like an opportunities they're looking for.

• 1:21:57Speaker 05

  So in addition to the fintech as a general as an industry, but also like each of the key players are also becoming bigger. So I think like they're also like looking at the opportunities, how they can also grow faster. So I think like this trend will continue and you know, of course, like I'm friends, I try to be friends with everyone to try to understand what's happening in the world. So I'd love to be talking with as many people as possible always.

• 1:22:19Speaker 01

  All right. Well, you heard it here first. No buying alpaca until they go public. I want to see the gosh darn documents. Yoshi, thank you so much. Let me know when you're done with the stablecoin choice. And also I want to talk to you again at the end of the year.

• 1:22:30Speaker 05

  Yes.

• 1:22:30Speaker 01

  Just to go over the growth rate and the metrics to see how it all wraps up because I suspect it's going to be quite good. Thank you very much. And it's alpaca.markets.

• 1:22:39Speaker 05

  Yes, that is correct. Alpaca.markets.

• 1:22:41Speaker 01

  All right. Thank you very much, man. Talk to you soon.

• 1:22:43Speaker 05

  Thank you, Alex.