Pod Insights Equity Podcast Co-founder titles aren't a formality, they're a morality About this episode Good news, everyone: Mary Ann is back! Yes, after a short absence we have our third Friday host back where she belongs. Namely right in front of a microphone, talking to us.
And it was good to have her back, as we had a small mountain of news to talk through:
OpenSea could be worth $10 billion: Right before we recorded, news broke that OpenSea could raise new capital at a far-greater valuation than it did earlier this year. While we had some jokes, we also did a little math on why OpenSea could really be worth so much money.
Other rapid-fire funding rounds: If OpenSea does raise again, it will join good company in putting together several rounds in under a year. Facily has done the same, as has Justt. In short, the old 18-month cycle for raising capital is so dated it might as well get delivered by telegram.
Lambda School rebrands:
Casper goes private: After a tough time as a public concern, DTC mattress company Casper is going private. Notably its issues have not dampened market interest in taking other DTC companies public.
What makes a founder, a founder:
We're entering the holiday period, so expect the usual disruptions to Equity's production calendar. We'll be taking short breaks as per usual, but will be recharging some ahead of what should prove to be a very, very busy 2022.
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:09 Speaker 00 Hello and welcome back to Equity, a podcast about the business of startups where we unpack the numbers and the nuance behind the headlines. My name is Alex. I'm a reporter here at TechCrunch and I am joined by the Friday crew. We have Natasha Moskourenis. Natasha, hello. Welcome back to the East Coast.
0:23 Speaker 01 Oh my God, it is so good to be here. 10 degrees colder than San Francisco.
0:28 Speaker 00 Yes.
0:28 Speaker 01 Somehow.
0:29 Speaker 00 Yes. And SF was already too cold. So, welcome to the next couple of months of sadness. But speaking of good weather though, Mary Anne, Austin, Texas, I presume is 95 degrees and sunny.
0:38 Speaker 01 Hello, there are colors outside. I'm so happy to be back.
0:41 Speaker 00 San Francisco only has two colors, gray and grayer. Mary Anne, though, you are also in a part of the world with some actual weather. I hear it's lovely in Austin, though.
0:49 Speaker 02 Yeah, it was like 80 something yesterday and now we've dropped into the 60s, which, you know, compared to where you are, is still pretty good. Sorry, Alex.
0:57 Speaker 01 Mary Anne, I'm so happy to have you back. I like truly love you and was so sad when you were gone, but I'm so happy you're back.
1:04 Speaker 02 Thank you. I'm happy to be back.
1:06 Speaker 00 Yeah, it's nice to have the full team. Actually, Chris, one of our producers abandoned us today, so we can't seem to get the full team together, but we have most of it. And that's good because there is so much to talk about. Kicking off with OpenSea possibly becoming a Decacorn, many thoughts about that. We're going to talk about funding rounds from a perspective. We have Facile and Just coming up, but really, we're going to talk about the pace at which some companies are raising successive rounds. It's kind of being jumped together, if you will. And then we have land to schools rebrand. Natasha's going to explain that doesn't why there's actually a bullish take, I think. And then Casper's going private. What does that mean for DTC companies? And we'll wrap up with the conversation on what it actually means to be a founder. But first, OpenSea. Mary Anne, in the intervening time since we've seen you, have you become a bull on NFTs?
1:49 Speaker 02 No, I'm still pretty skeptical. While they are cool, they're hot right now. I have my doubts about where NFTs will be in about a year or two. I was kind of shocked to see this OpenSea news, to be honest with you. I mean, $10 billion is insane.
2:06 Speaker 00 It's a lot of money. I mean, I really do think, and I was actually posting on Twitter about this right before we hit record, but like, to me, 10 billion is the new 1 billion in terms of startups reaching the upper echelon or the upper, it's the standout companies now with Grammarly hitting 10 billion and so forth.
2:20 Speaker 01 This is the kind of company we start wondering if it's going to be going public soon, right? Like, this is when the rumors begin. And just a year ago, OpenSea wasn't a name we even knew or really talked about.
2:29 Speaker 00 No, no, no, no. I mean, really, I think that it kind of hit our radar, if you will, when it raised $100 million in a Series B this July. That puts valuation at 1.5 billion. And at the time, I was like, hot dang, 1.5 billion for an NFT marketplace? Man, there must be a lot going on there. And as it turns out, as we kind of looked into the volumes, quite a lot is going on. So I pulled some data from DAP Radar, a website that I use all the time because they have lots of funny little charts for me to look at and enjoy. But according to DAP Radar data, the company OpenSea did in the last 30 days about $1.5 billion worth of trading volume. Now, why do we care about that number? It's because they take a cut, a 2.5% cut, in fact, according to OpenSea's fee website before the show. So that means 2.5% of $1.5 billion in the last 30 days is $38 million revenue for OpenSea
3:13 Speaker 00 in a month. So suddenly, the $10 billion valuation, it's high, but it's not entirely based on fantasy and rainbows, you know?
3:20 Speaker 02 Yeah, I mean, and I also read that in August, that volumes on the marketplace were top $3 billion, which would be like 76 million for that month.
3:30 Speaker 01 And I, just to add some perspective, I stole this from your article, but Etsy handled roughly $3 billion in transaction volume across all of Q2. For OpenSea, that's one month. That's obviously very different kinds of products are being sold there, but I think that just was a big moment where I put it into perspective, how big of a deal and how much money is happening.
3:48 Speaker 00 So I want to point out that the information broke this. Our dear friend Kate Clark got the scoop, and she was a former co-host of the show. So shout out to Kate, as always, for her great work. Here's the other thing to talk about, though. Coinbase is moving into NFTs. I think Mark Andreessen is still on the Coinbase board, and Andreessen, of course, led the OpenSea Series B back in July. What's stopping Coinbase from just launching its NFT products, setting the fees to zero and undercutting the hell out of OpenSea and therefore essentially tanking its other investment? I mean, like, surely there must be a price war coming in these marketplaces.
4:18 Speaker 02 Yeah. And I'm also wondering, is there any potential for like M&A here?
4:21 Speaker 01 I feel like there is probably a benefit to Coinbase being a partner to OpenSea versus trying to eat its lunch at this point, just because Coinbase has so much and needs to figure out about how to trade consistently on its platform and make sure it shows up for its users. To your point, both companies seem like they've reached a big enough stage that I don't know if they would, if one of them would buy the other one.
4:40 Speaker 02 It just seems odd, as we've talked about in the past, with this investor in common, right, for them to be doing such similar things.
4:47 Speaker 00 I mean, yes, in the traditional venture mindset, but now that all these major VC funds are becoming essentially just kind of like asset managers, maybe it's, maybe this is just going to be the future because BlackRock owns stock in GM and Ford, you know, maybe Andreessen can have, I mean, it's certainly going to change the founder relationship, I think, to a large degree.
5:06 Speaker 01 Just to circle back on a Wednesday episode we did so long ago about fraud and crypto, and when OpenSea, if you guys remember, was being scrutinized for insider trading. Its head of product was buying NFTs that they, that he knew was going to be positioned well within the platform and making money off of it. I think then I was a little worried that OpenSea had lost its most valuable asset, which was trust. And now it's kind of clear that that didn't have as big of an impact as we thought it did.
5:33 Speaker 02 Not at all, it seems like.
5:35 Speaker 00 You know, I wonder if the broader crypto, and this is not a diss, to be clear, it's going to sound like a diss, but it's meant in good faith. But like, I wonder if the broader crypto world are just a little bit more okay with scuzzy behavior than the rest of us. Like, if that had happened at Fidelity, I would want someone to literally be put on a pike. But in the crypto world, everyone was like, oh, that's not very good. And then they just went right back to trading the same assets on the same platforms. It just didn't seem to have an impact.
5:58 Speaker 01 The argument for like transparency is so innate to crypto. This wouldn't have happened if crypto wasn't as transparent as it is. So it's kind of like, we might be more aware of fraud that's happening as a result, but we wouldn't have been as aware in a fidelity. That's kind of like an argument. I don't know if it's a good one.
6:14 Speaker 00 Natasha is going to be taking the, the, the tech positive angle all day today. So get ready.
6:21 Speaker 02 Very true.
6:22 Speaker 00 We actually, we were supposed to spend one minute on OpenSea. We've stayed too long, so let's scoot on to our first major theme today, which is about funding rounds. And what we have seen in the last couple of quarters is a decrease in the time between rounds. Now, this has been going on for a long time, Mary Ann, but like, it seems to have accelerated to the point in which we don't just see a company raising once in January and once in December, a company might be raising in February, June, and October. And it's getting kind of bonkers, frankly.
6:47 Speaker 02 There's a Brazilian company called Facilly that's raised four rounds over the past year. They have a really unique business model. They describe themselves as a social commerce marketplace. So they're trying to make it easier for lower income populations in Brazil, who are largely unbanked or underbanked, to purchase things online, including produce and food. So they've developed this group buying model and like a gamified app. They'll deliver things to a place so people don't have to have things shipped to them. They can just go pick it up. Seems to be doing very, very well. They've raised four rounds in the last year, totaling $366 million, and they just kept coming. So I was talking to this company from the Series A, and they were like, yeah, we've got the Series A, but hold on, because I think we might be raising some more money. Okay, I'll wait.
7:32 Speaker 02 And then it was like, well, we're still raising. Okay, so anyway, long story short, they kept raising so much money so close together, they didn't even announce all the raises till this most recent one. And now they're in talks, I hear, to raise yet another round that would value them at over a billion dollars.
7:51 Speaker 00 Why don't we just go to a bank, kick the gate down, open the safe, and just shove the whole company into the vault and close the door?
7:58 Speaker 02 Done. Acquisition.
8:00 Speaker 01 I mean, it's such a different sort of fundraising environment than the one where we used to be worried if founders were not going to be focusing on the product because they were so busy fundraising. It seems like this was kind of something that was just happening to them, and they were reacting to the market versus them going out to the market and trying to pitch their startup. Like, was there even a pitch deck involved? I don't know.
8:22 Speaker 00 Okay, so the reason why these two companies fit together in our little group here isn't just because they raised very, very quickly, it's that they had another shared facet, another bit of shared DNA between them, which is incredibly quick revenue growth. And obviously, you kind of presumed that was coming, but I want to tell you the scale of the growth that we're talking about. So, sales volume at Facily, the Sao Paulo-based e-commerce gamification food group buying thing, saw its sales volume grow from, sorry, grow 43x from January through September. That's an insane amount of growth for a sub-year period and kind of goes to show why investors couldn't help themselves, because if it's doubling that quickly, you just keep writing checks, I think. And then in the case of Just, by the way, Just with two Ts, so it's Just, I think
9:05 Speaker 00 you have to say with the little at the end there. They have seen their ARR rise 900% since September of 2020. And you always want to start up at the early stages to grow it by, you know, roughly triple and then triple again and kind of double for a couple of years. 900% is insane. And that's the kind of growth that does lead to potentially outlier results, which means investors want to buy in early, etc. So, don't expect your company to pull off these unless you're doing something like that. But we're seeing fast growth get rewarded, Mary Ann, to a degree that I think is still novel.
9:33 Speaker 02 And there were others that raised a couple of rounds in short times that we covered this week, Imprint and other fintech. Christine wrote about High Touch that raised three rounds in 12 months. But to your point, absolutely, the kind of growth that these companies are seeing is nothing short of astronomical.
9:48 Speaker 01 Does it feel like this is a fintech-specific phenomenon, this idea of like the windows between funding rounds getting shorter? Or like Alex, with the startups that you start to see in your inbox or that are pitching you, does it feel across all the sectors?
10:01 Speaker 00 To me, it feels broader than fintech. But I think fintech is a good example, because it's still a place where VCs are putting, like, what, a third of all dollars in the last couple quarters, somewhere in there, a third to a quarter of all dollars are fintech dollars. And so, to me, like, you know, I'm not surprised that we're seeing this pop up maybe most frequently in fintech, but I wouldn't say it's so segregated to that one niche.
10:18 Speaker 01 I'm like really wondering like where the checks and balances will come to like I don't even think it's necessarily that they need to stop raising so much more money but where's all this alt capital that everyone's talking about where are those debt raises I haven't seen any debt raises or bootstrapping announcements or anything like that recently.
10:35 Speaker 00 Yes, people realize that venture capital is expensive for certain types of companies in certain moments like you know so why why raise VC to grow your ARR fair enough but then VC got so cheap because other money flooded in I wonder if that dampened the friction that was leading to people looking for other types of capital this is just a hypothesis I haven't run this by anybody but just thinking out loud why bother to do alt VC when VC is is you know 80% off.
10:59 Speaker 01 One follow up there is like when you say cheapen it's like the incentives of VC aren't going anywhere so what do you think is getting more accessible about it because I always had this idea that people weren't taking on VC not only because it was hard to access but also it didn't make sense for their business.
11:13 Speaker 00 I think we're still and we're gonna talk about Casper in a little bit so we'll talk about the the limits of VC and kind of where money should and shouldn't go but there's a lot of tech projects out there and so I think there's gonna be a lot of different approaches to this but I mean generally speaking when you can sell shares at a higher price earlier you limit dilution and you get more dollar for your equity and so you know at some point it probably just makes more sense to take on some dilution for an epic check versus taking on debt which has you know covenants to it and other sorts of things that are a bit stiffer because debt is a more serious check than an equity investment from a VC of which there's no recourse you know if you die it's just gone so that's my take I don't know but we do need to move on to a company that has raised I think nine figures Natasha which is the artist formerly known as Lambda School I guess.
11:58 Speaker 01 Lambda School woke me up yesterday with news that it is rebranding to Bloom Institute of Technology according to a blog post from the CEO Austin Allred you know they had raised 122 million in venture capital based off of Lambda School and I would say we're the most we're the name most synonymous with the tech coding bootcamp movement I knew them before I knew ed tech so the change I mean I'm curious what both of your first reactions were before we unpack it the name change itself was shocking to me.
12:26 Speaker 02 Really see it wasn't that shocking to me because I feel like they've had so much negative publicity over the years that it reminded me of Facebook and its recent change to Metaverse like isn't that the name I forgot.
12:39 Speaker 01 Meta.
12:40 Speaker 02 Meta just Meta yeah.
12:43 Speaker 01 Whatever. You get the point.
12:44 Speaker 00 Maybe they shook off the name Lambda School because it was something being associated with red. And so they wanted to have a new one evermore. I'm trying to make a Taylor Swift album name joke here. And it's not quite coming together.
12:56 Speaker 01 Oh my, I was like, I feel like I'm kind of following, but keep going. We need more Taylor Swift content on here.
13:02 Speaker 00 Marian finished her sentence faster than I thought she was going to. And so I had to start talking before I had finished the joke in my brain.
13:09 Speaker 01 I have a kind of boring reason also for why it changed its name. You know, some sources have said that they recently settled a trademark lawsuit and they haven't disclosed much about it. But that name change is one of the reasons, I mean, sorry, the lawsuit is one of the reasons there was the name change. Are they benefiting from it due to the negative press about it? And the lawsuits against Lambda School as we know it? Definitely. I think they also could in some world blame it on the lawsuit too.
13:35 Speaker 00 Okay, but let's dig into just past the name change because there's more going on here. There's a change to how education is financed. And also there's a change, I think, to the leadership recently, and that came before this. So Natasha, walk us through what's happened recently.
13:49 Speaker 01 Yeah, so I have been feeling like Lambda School was due for a big announcement for a while because they had a restructuring in April and they laid off about 65 employees. Was when Austin really publicly admitted that they've been working for years to make incentive aligned education work, but it's been harder than they thought. So we knew something was going to happen. And now they're here with a new name, but also introducing an outcomes based loan. Putting it as simply as I can, it's trying to allow students to take a loan with $0 upfront. And then if they aren't able to get a job after a year of searching, they will get 110% of their tuition refunded. Kind of a snappy way to say, we believe so much in our education and the outcomes of it, that we'll even pay you above what you originally paid if you don't get a job.
14:33 Speaker 00 Now let's talk about the caveats though, because there's an odd series of stipulations about how you can prove that you tried to get a job and failed, not due to your own laziness, but because the market decided it didn't want you.
14:45 Speaker 01 Yeah, so students have to apply to 10 jobs, network with 10 professionals, and post at least five GitHub contributions to their public profile per week for 46 of 52 weeks in a year. The people who sign up for coding bootcamps part-time or are pursuing alternative forms of education, I'm guessing also are balancing a lot of different jobs and different responsibilities. So that kind of commitment seems pretty immense, was my first read. What about you?
15:15 Speaker 00 Utterly precludes part-time education. I mean, Mary Ann, if you have a kid, if you have another job, I mean, just doing 10 job applications, 10 whatever counts as a network with a professional, and five GitHub contributions, that's like, what, 60 hours a week?
15:29 Speaker 02 That's a job in and of itself.
15:32 Speaker 00 Yeah, if not more than one, frankly.
15:33 Speaker 01 100%. I think the only positive that I will say from this change is that Lambda School is finally admitting in between the lines that ISAs, which are income share agreements, you don't pay for your tuition, but then when you get a job, you pay a percent of your income back until the tuition is paid. They're admitting that that didn't work. It didn't work the way that they wanted it to, and a lot of students were burned because of it. So I'm hoping in some way that them changing the way that they are allowing financing is a sign to other startups that are pursuing ISAs to maybe rethink the way that they try and offer alternative forms of financing.
16:09 Speaker 00 You know, yes to all of that. I think it's, I'm disappointed ISAs didn't work because there is some version of reality in which they make a lot of sense, and I like them. It just seems that whenever they kind of, whenever the rubber hits the road, it kind of like flops. It's like when you read Marx for the first time, you're like, oh shit, what if we just shared? And then you look back at a history of communist governments, and you're like, oh, hard pass. No thanks. This is not the jam. Turns out humans suck. Ah, fair enough.
16:32 Speaker 02 Yeah, I mean, in theory, ISAs do seem like they would make sense, right? Like, you would think so.
16:37 Speaker 00 I mean, gosh, I mean, like, if you could have told me that I could have taken out an ISA on my tuition and not graduated with debt and paid, you know, 10% for five years, I probably would have said yes to my school or something like that.
16:49 Speaker 01 Yeah, I think it also, like, it holds bootcamps and institutions more accountable if you have an ISA, because then you're like, okay, listen, you're not going to get the money back if I'm not successful. Lambda School admitting that that didn't work, I think, shows how much the bar needs to be raised for bootcamps. And so I'm hoping, again, being really optimistic this show for some reason, that their rebrand is also... A move towards getting to a place of future accreditation? It sounds like a college. It sounds like they're not going to build a college. I don't know, Marianne, what do you think?
17:17 Speaker 02 Yeah, I mean, it's really hard to say. I don't know. Like, I'm not sure, but I am interested to see, you know, how this works out for them and for students as well.
17:26 Speaker 00 We're going to move on from Bit to something else, which is Casper. And guys, we are looking at the end of kind of Casper as we know it. The company that sold mattresses when public in early 2020 struggled, I would say, as a public company, has decided to go private in a deal worth $6.90 per share in cash, or roughly a 94, 95% premium on its pre-announcement trading price. So a pretty stiff premium to take this company private. It feels like a different era of tech in which we were talking about all the different mattress companies that were raising large checks. But it seems that some of the D2C bets, Natasha, didn't quite end up the way investors had originally hoped.
17:59 Speaker 01 No, I mean, I think people were talking about this on Twitter a little bit, and you too. I think investors finally realized that D2C is not going to give them recurring revenues at high margins. And it's an entirely different kind of business model. So I think Casper going private isn't necessarily like gonna ruin funding for D2C brands. But I think it may be some of those checks and balances we were asking about earlier of like level setting, how much you should be raising and how much you should be growing and spending as a company too.
18:26 Speaker 02 Casper ran into a couple of challenges. One, it seems to have spent a lot on its physical brick and mortar stores. And I don't know how smart that was. And unfortunately for them, they went public right before the pandemic. You know, here in Austin, we have a pretty high-end shopping area called The Domain. And Casper has a huge location there. And every time I walk by it, I'm like, how can they afford to keep things like this and do well? And then now I'm hearing this news and I'm like, oh, well, they're not doing well. D2C, if it's like online only, it's different. But when you start factoring in expensive leases and real estate, that changes it up some.
19:02 Speaker 00 The thing is, normally we might say, hey, you know, a DTC company that was well known, struggling in the public markets, going private, you know, probably bad news for DTC companies in general that have venture backing, and yet not really the case. We saw Allbirds go public. We saw Warby Parker go public recently. And today, maybe even actually as we record this, Sweetgreen has probably started to trade after pricing above its IPO range last night. So even though Casper seems to be the cautionary tale of the DTC world, companies that are in and around or near its business model are doing great. And so investors don't seem to be skittish about this. It doesn't seem to have had the effect we might have had because there seems to be just a much broader kind of artery of optimism going through investing today than I think you can dent with one particular flop.
19:46 Speaker 02 I do feel like mattresses is part of the problem. Like, I feel that whole market is saturated, and there's just so many companies selling mattresses. Casper at first was super unique, but I feel like over time, it's just less, you know, less so, if it feels less so in the eye of the consumer.
20:01 Speaker 01 Yeah, I'm like wondering what the new rubric is for startups, for DTC companies that want to go public. Like, what do they need to prove? What does Warby, Sweetgreen, and Allbirds have in common that Casper didn't?
20:14 Speaker 00 Frequency. I think it's frequency. Like, you know, you can buy a new pair of glasses every year. I've broken more pairs of glasses than I can possibly want to admit to. Concerts, drinking, drinking at concerts, you know, it happens. And Sweetgreen, you can go to a salad five days a week, you know, and Allbirds, you can buy five pairs of their shoes in a year. You can just show up more. So the CAC, the cost of acquisition cost, can be essentially cut up amongst much many smaller or many more frequent purchases. I can't recall the last time I bought a mattress.
20:42 Speaker 02 Yeah, excellent point, Alex. I mean, most people wait years before they, in between buying mattresses. So that's like, that's a really, really good point.
20:50 Speaker 01 It will be interesting to see now, like Casper isn't shutting down, it's going private. And so there is something that's truly changing there. Unlike Lambda, which is rebranding, I think Casper has really had a huge executive shakeup, too, that gives me hope that there's probably a lot more change happening than just the state of what its business sounds like. Like Philip Krim stepped aside, you know, he was a co-founder, and now he's no longer part of the company in the same way. So I think we'll start to see some change there.
21:14 Speaker 00 So let's talk about co-founders and founders in general, because this is our last topic of the day. Natasha, you wrote a piece about a company, well, Compass, which a company we've all heard of, that had a big kind of brouhaha about if someone was or was not a co-founder. So before we talk about that in general, run us through the skeleton of the news, if you don't mind.
21:31 Speaker 01 Yeah, so for about seven years, Compass has been dealing with a lawsuit from an early member of its team, Avi Dorfman. So he, we've talked about him on the podcast before because he's currently the founder of Clearing. But he played a material role, or so he argued in his lawsuit, he played a material role in Compass's early days in the founding of the company alongside Robert Refkin. So who, Mary Ann, I know you did an awesome profile on at some point. So the long story short is, he was part of the company, he ended up not joining them. And two years later, after Compass had grown its business and landed, I believe, a $320 million valuation, Avi filed a lawsuit against the company saying
22:14 Speaker 01 that he deserves a stake in the business and acknowledgement that he was part of the founding team. He felt like he was kind of screwed over in the early days, when he was promised a bigger stake. And then when they gave him the job offer, this is why he originally declined, the equity stake was, was really small. So this week, we finally learned that Compass has settled with, with the entrepreneur. We don't know how big the stake is, but we do know that they acknowledged that he was part of the founding team and kind of set that precedent that he did play a role.
22:41 Speaker 00 Can you read the, the statement from the, the Compass spokesperson? Because there's never been a more begrudging use of English.
22:47 Speaker 01 Oh, my God. Yes. It's, it's so funny how like in the court filings that I put in the story, the words are so much more powerful. It's like angry, emotion, feeling screwed over from both sides. And then now that a settlement's been reached, it's like the most buttoned up English I've ever heard. So this is what Compass spokesperson, when I reached out for comment, gave acknowledgement to Mr. Dorfman's work in the early days of Compass as a founding team member of the company. That, that was it. And then Avi said that, "I am pleased to have been recognized as a member of Compass's founding team and have to resolved this dispute in a manner that is satisfactory to both sides. I wish CEO Rob Refkin and the Compass community only the best." How do we feel?
23:27 Speaker 02 Quick thought. So he filed the lawsuit 2014. When was the company founded?
23:34 Speaker 01 2012.
23:35 Speaker 02 And it was after this 300 and some million dollar valuation. So I think it's fairly clear that this is more about money than just being recognized as founder, because if he was really so concerned about being recognized as founder, why would he wait two years to to file this lawsuit?
23:53 Speaker 00 It's a lot like someone who's like, when some artist blows up, they're like, oh yeah, we used to date in high school. I know them. We're essentially besties. Look, I have their cell phone number. It's like, shut up. And here's, here's the thing that I want to get into about this. It's because we talk about founders a lot on the show because they matter, and they often are the people that had the initial grit to kind of kickstart an idea, and they often hold the vision. And, you know, being a leader matters. It's a, it's a whole thing. But I think we over DFI the phrase co-founder, because it's, it's a little bit flexible. It depends on kind of how you want to define it. There's no set death of like, you must have been involved from the day of incorporation plus 180 days full time. Like, there's no set thing. And so to me, founders is more just a phrase that we use to say, early person who got outsized equity. And so at that point, it just seems like key
24:38 Speaker 00 employee. And so at that point, I wonder if we just don't even really need it to the same level that this kind of implies, like, recognition for being a founder. I mean, fuck, that's just money, right? It seems like we're doing too much here.
24:50 Speaker 02 Yeah, I feel like a founder could be someone that helped come up with the idea for a company, and then that's it, right? Or a founder is someone who helped come up with idea, but also helped grow and build it, to your point, Alex. But like, why should they have the same title or as co-founder? Like, if you just come up with an idea, like, maybe there should be a new title for someone who just came up with an idea, and then like, didn't really have anything to do with building the company. Like, why should you get the same, quote unquote, credit as a co-founder, when if all you did was help come up with an idea, and not necessarily help build and grow a company?
25:25 Speaker 01 Yeah, I think the claim to fame that you get with being a founder matters more depending on who's getting that title. Like, Avi obviously was able to raise money for a future venture-backed startup after Compass, before the lawsuit was even settled. So he was doing great in that way. But I think the issue gets a lot more complicated when we talk about women or historically overlooked people who might often be left out of the table, even if their idea was the root of a successful business. So that's where I find the professionalism of getting a contract and saying, you are a founder, or you are not a founder, matters, because those creds matter. The same way a Stanford degree still matters, is like, And I think it's very difficult. It's like a very perfect world magic contract sort
26:08 Speaker 01 of way to expect everyone would always have their titles to them. But that's kind of why I feel strongly about getting a founder title.
26:16 Speaker 00 No, I think that's a great rejoinder to what I said. And I think I'm going to change my perspective based on that because I think it's a good point, Natasha. We shouldn't do away with the honorific just because it's occasionally misused, but maybe more to the point, we should be a little bit more careful about how we apply it. And then also make sure that people who earn it don't not get it. And if you want to learn more about how women have been overlooked throughout history despite great accomplishments, look up just like women who were on teams that got Nobel prizes and the women were excluded, for example, just to pick the first thing that comes to mind.
26:42 Speaker 02 One of the first things I thought of when we read this article, and I think Chris brought it up too, is like, how was this not more spelled out, you know, in the beginning? Like, was this not formalized in the early days? You know, was there not some kind of contract or paperwork or legal documents that that named who founded the company? So I think that also, that brings up the point because there's sometimes startups just are, they are formed based on a conversation in a coffee shop or whatever. But at some point, at some point, you kind of have to formalize things. So one has to wonder, like, what happened here?
27:14 Speaker 00 It happens a lot, though. You know, I mean, I think you're dead on, Mary. Like, I'm curious about the specific nuances of this. But like, think about like Reggie Brown and the Snapchat thing. I mean, like, remember how long that suit went on? It was, it was messy. And then, of course, there was the Brothers Winklevie and Mark Zuckerberg and all of that. And there's other examples. Those are the two that we just kind of jot it down in our notes because they came to mind first. But there's probably, if there's a couple at the very top of the pyramid, there's probably a lot more at the smaller scale down, down the pike. So it probably happens rather often, I guess.
27:45 Speaker 01 It's like a lesson to me, writing the story and just like a reminder that building that co-founder relationship is so much harder than just like agreeing on a few things. Like, you need to be very brutal with each other and very honest. I was talking to a founder who was part of YC and she was saying that, you know, before she got into YC, she, they actually got rejected from another accelerator because she didn't have a good answer to who was the CEO of her company, the two co-founders. Like, they didn't have a good enough answer for what was the difference between both of them. And I feel like that, like, summed it up pretty well of like, they want to kind of test you to know how good you are at saying what your role is within a company. That's insane.
28:21 Speaker 00 Of course, the woman was dinged for not knowing who to the CEO, whereas Jack gets to be the CEO of two public companies at the same time and no one cares.
28:29 Speaker 01 Go off. It's insane.
28:31 Speaker 00 Maybe she should grow a very large beard and then talk very strangely and then she'll get to have all the jobs she wants.
28:37 Speaker 01 Walk barefoot in San Francisco for one day, won't you?
28:42 Speaker 00 We're going to leave it there, but quickly before we go, next week is a holiday week in America, and that means that the Equity Crew is going to slow down, but we are not going to leave you bereft. We will have the normal Monday show early, early. We will have a Wednesday episode out that we're already compiling and it looks very, very good. And then we have a little treat for you over the actual Thanksgiving kind of break. So if you're not in the US and you're not celebrating get fat and take a nap day, well, we'll see you on the other side of that, but we will keep you entertained as best we can. And then, guys, after that, it's kind of December, which is the end of the year. So we're kind of getting into like predictions. Exactly. If you don't know this tradition, every year on Equity in December, usually the last week of the year, we put out an episode of predictions that are usually wrong by what?
29:25 Speaker 00 February 15th, give or take, somewhere in there. It takes about six weeks for us to be proven wrong. But it's good fun. So we're kind of getting into the hopeful news slowdown. So if the show changes a little bit, that's what's up, but we will be back to completely normal programming on the first of January, give or take. So don't worry if things seem a little bit different. We're just kind of in that part of the year. So Mary Ann, Natasha, I'm glad you guys are healthy. Mary Ann, great to have you back. Natasha, I'm glad your flight was good. And Equity's back Monday. We'll see you then. Bye.
Previous Did Zillow get high on its own supply? Next Equity Monday: Paytm's rocky debut gets rockier Page updated October 14, 2026 · transcript and summary are machine-generated
