EP 28: Convo with Web3 is Going Just Great Creator Molly White, plus State of the Market, a Convo on Secondaries and Sam Lessin Recap

In the 28th episode Logan and Zach sit down for a conversation with Molly White on how and why she started Web3 is Going Just Great, which reports on the most disastrous of crypto news. Plus winding down web3 debates, the DataRobot AI scandal, and a recap of the Sam Lessin episode. (0:00) Intro (0:38) Releasing the Sam Lessin Episode (6:39) The state of the market (18:58) DataRobot AI (21:22) Zach’s take (25:00) DataRobot distinctions (28:11) Tax code is founder-friendly, not employee-friendly (32:49) Not all employees are treated equally (34:03) The market determines what’s fair (38:47) Balance of the private markets (40:31) Winding down Web3 debates (42:27) Introducing Molly White (43:48) Starting Web3 is going just great (46:41) The recruiting process (51:48) Considering editorial content (57:31) Who to blame for crypto hype (1:05:57) “Believing” is a core part of the strategy (1:10:06) Split on issues (1:13:58) Most interesting story covered (1:15:37) Dealing with backlash (1:19:27) Outro Mixed and edited: Justin Hrabovsky Produced: Andrew Nadeau and Rashad Assir Executive Producer: Josh Machiz Music: Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/5WqBqDb... Google Podcasts: https://podcasts.google.com/feed/aHR0... Follow on Socials 📸 Instagram - https://instagram.com/cartoonavatars 🐦 Twitter - https://twitter.com/cartoonavatars 🎬 Clips on TikTok - https://www.tiktok.com/@cartoonavatars About the Show A Saturday morning podcast hosted by Logan Bartlett (Partner and Managing Director at Redpoint Ventures) covering the tech news with his friends and other people with industry expertise. Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:05Logan Bartlett?

  Welcome to the 28th episode of Cartoon Avatars. I'm your host Logan Bartlett and joined by recurring guest, not co-host Zach Weinberg. Zach, how are you doing today?

• 0:14Speaker 01

  I am good. I am good. I feel like I need a pithy statement every time you ask me that and I've-

• 0:19Logan Bartlett?

  I know. At least you know it's coming. At least I have like a shtick that I opened with. I'm not really sure how I landed on, uh, landed on that, but yeah.

• 0:28Speaker 01

  I think it shows my level of preparation in that I know this question is coming and I still can't think of anything.

• 0:33Logan Bartlett?

  Yeah, yeah, we should have, you know, you could really keep people guessing every single time, but we did it. We, uh, we released, I think somewhat begrudgingly on both of our parts. We released the Sam Lessin episode and I think it went about like I expected it to. I think two thirds of people were mad at us, uh, in some way, shape or form. A third were saying it was, uh, their favorite episode, which I don't know what kind of, uh, masochists would want that as their favorite episode. But, um, yeah, it was kind of as expected, I thought.

• 1:09Speaker 01

  I have a very, I have a lot of mixed emotions. Uh, it was, it was definitely one that I have still not listened to, uh, and I probably-

• 1:17Logan Bartlett?

  I wouldn't recommend it. I've done it once.

• 1:20Speaker 01

  Yeah. I mean, you know, it's, it's definitely frustrating to try and have a conversation about details and specifics without having the chance to talk. Uh, and not that I am like the world's most, um, easy person to talk to, let's say, but it was definitely difficult as somebody tried to have like complex topics, uh, that we get through. So.

• 1:44Logan Bartlett?

  You know, when I made the comparison at the beginning of the episode, like, hey, you're gonna, this is gonna be very similar to Biden, Trump. And I did a really poor job moderating and I accept a lot of blame for this and I will, we will never release an episode that is like this again. That was like something to that effect is my preface and my comments all weekend were like. Terrible job moderating Logan like next time you should do a better job never release anything like this again and I'm like yeah but I said that at the beginning like you're I I know that's what I did I I realized that right but

• 2:20Speaker 01

  And I think also like we made I think we make a commitment when we do any of these that like we're gonna release it like I think Sam for whatever reason thought that I was like I didn't want to release I was like that is nothing I honestly like release away I just thought people were going to be somewhat miserable listening to it uh because it felt miserable doing it and so I just assumed it would be horrible and not entertaining and uh it seems like it's it was bifurcated

• 2:45Logan Bartlett?

  He was he was very proud uh he he tweeted about it he wrote one of he he posted it in the information he did like one of his little uh uh tweet like essay things about it um he was uh responding all in the comments he was very happy with uh the profits which which wasn't my reaction to myself I don't think was your reaction to yourself I don't think uh I totally followed uh why he was so pumped about it but I God bless him I mean

• 3:19Speaker 01

  You know there's a self-awareness skill that you have to develop at some point in your career and I guess some people don't develop it as well as others uh so you and I are both like oh boy that was not gonna be fun to listen to and Sam's like crushed it and so I don't you know like

• 3:38Logan Bartlett?

  Excuse me of of uh or like implicitly said something about that I edited it uh he was like I haven't checked if it's edited or not and I told him like five times dude I'm not I promise I'm not gonna edit it and then we released like two hours of people screaming at each other and and he like still put in an implicit like assuming this isn't edited and I was like I mean I promise you it wouldn't have been two hours that's the one thing I assure you it is I I would have cut it down to like you know an hour and a half max an hour fifteen or something if I were to edit it but yeah

• 4:15Speaker 01

  If there was ever a moment, it would have been that one. And I hope people realize we're not editing anything. Maybe Leron is clipping it in the internet, but we're not editing it.

• 4:24Logan Bartlett?

  Sometimes I will edit. I mean, we, we have Justin who works with us, uh, who I will have like edit for interest, but I knew this one, or like just to try to make it more compelling and we'll like cut, you know, a two-minute blurb here, a two-minute blurb here. But I just knew this one was going to be so, uh, controversial. And I sort of knew it was going to play out the way that it did. And so it just felt like any editing at all was going to, you know, make it look like I was trying to hide the ball or something. So I was like, oh, I guess we have to release this as is, right?

• 4:59Speaker 01

  I mean, look, you know, I don't know. Maybe there's the takeaway that it's, it's hard to like, seek the truth and seek facts about things when people have like a major stake in it. And I don't know, I don't have a stake in this game whatsoever. I just do this for fun. So I guess like people can get a little riled up when they're, uh, not reputation, but their money. I think the better way of saying it is like their money is on the line. I don't think Sam's reputation is involved in crypto per se, but definitely some money. Uh, so anyway, we'll try our best. Hopefully the next few of these to not have, uh, Mike Tyson biting off my ear halfway through.

• 5:40Logan Bartlett?

  Yeah. Wait, say something real fast. I want to test something. Just say something real fast right now.

• 5:45Speaker 01

  Right now.

• 5:49Logan Bartlett?

  Nice. Okay.

• 5:50Speaker 01

  Oh, you forgot to mute.

• 5:52Logan Bartlett?

  I was able to mute a lesson I wish I had, uh, back then. That, you know, that was my biggest takeaway in the structure is I hadn't tested that feature yet before, but it looks like if I sign in as a host, I can mute other, uh, guests. So.

• 6:09Speaker 01

  See, this is the benefit of Riverside, whoever makes this software of having real customers, because you can discover features like mute. By people having to actually use the software. It's a great process. It's called product

• 6:21Logan Bartlett?

  Now we, now we know and in the future, so to all the comments that said, we should never do another episode like this again. Uh, now that I know there is a mute button that I can control, I assure you, we most definitely will not. But yeah, uh, we will, we will, uh, try to stick to more substantive stuff here. I guess one thing, um, we did want to touch on, or I'd love to get your perspective on is just like the state of what you're seeing in the market. You see more C series A, series B that I do. We haven't done kind of a macro update. I talked to Josh a little bit about it last week, but what's kind of your purview of what's going on right now?

• 6:58Speaker 01

  Yeah, I would say, and it's not, there's probably more than this, but we're seeing, let's say three themes, if you will. Uh, the first is that the, the flat series A, series B is real. Uh, you know, I, we're seeing companies want to pad their balance sheet for a variety of reasons and valuations have definitely reset for companies that have, that have numbers. You know, they have customers, they have numbers. Um, so market is resetting, I think at the B and we're even seeing it a little bit at the A, just in terms of valuation expectations for those.

• 7:34Logan Bartlett?

  Is it mostly from, from inside people kind of doing extensions, little stubs? Or are they net new investors coming in for the most part?

• 7:42Speaker 01

  A little bit of everything. I mean, definitely heavier on the insider round for sure. Or, you know, the strategic you wanted to bring in that you didn't in the last round and now you open it up. I, I don't think we're seeing like a full rationalization of pricing yet because we haven't seen the vast majority of the companies go out and fundraise because the ones that have cash are not doing it. So you're seeing like a little bit of trickle. It's very clearly valuation expectations are down. Really, I think for one somewhat simple reason, which is, you know, when you're underwriting high-priced series A and series B investments to outcomes that look like five, 10 billion dollar market cap businesses. And those don't exist in that market anymore. You know, the, the, the macro like public market

• 8:26Speaker 01

  expectations are down. Okay. Well then your underwriting has to change and that's what's happening. Right? I think it's just simply a multiple reset.

• 8:33Logan Bartlett?

  Our early stage team, by the way, I was surprised to hear that it had flowed through as quickly as it had. Our early stage team said that they've seen prices down, you know, 20% to in some cases, 50% of what, you know, an 80 is now a $40 million valuation or something, which I was surprised. I guess not totally surprised because like the end state of these outcomes have shifted. But the funds were raised at, for a dollar amount to invest a certain, you know, number of series As. Like if you think about portfolio construction, I don't know how all firms do it, but a lot of them will say, hey, we'll do 35 deals in this fund and we'll average whatever,

• 9:15Logan Bartlett?

  you know, 10, $15 million a deal and we'll blend up to 20 in some cases. And so we have a $500 million fund or something like that. Right? And I guess people are just kind of shifting to, hey, you know, and it's kind of a prisoner's dilemma where if anyone stays in the old mindset, then that's probably stays the market broadly speaking. Right? But I guess people are just kind of saying, hey, I'll either buy more or write less and have more companies in the portfolio. And so I'm kind of surprised it's flown through to the C, series A, I guess, as quickly as it has here in the last whatever six months.

• 9:55Speaker 01

  I think you're going to see fund life cycles go back to what they were. You know, it used to be like a venture fund was, you know, three years or so, if not more to deploy two to three years, something like that. And then you were seeing things get deployed in like 12 to 18 months. And we'll probably go back to longer deployment cycles because, you know, the round sizes will be a little smaller and a little slower. Personally, the one area I haven't seen it play out yet is in the true like pre-seed, seed valuations. Like when I was raising money for Invite Media, this is in 2007. I'm pretty sure, I had to talk to Nat about this, but like, I'm pretty sure our post money on our seed round was like two and a half million.

• 10:38Logan Bartlett?

  Yeah.

• 10:38Speaker 01

  Maybe three million, something like that.

• 10:40Logan Bartlett?

  For any, how much of the companies you give up or how much money you raise?

• 10:44Speaker 01

  Somewhere between 500,000 and 750 or so, or the round sizes were smaller too. Uh, it was less competitive at the time. And then, you know, we were doing, you started to see rounds like in the six post and seven post in the early two 2010s. And then eventually you were seeing these seed round, and I define seed really as like, you don't really have paying customers in any way, shape or form. And that's like, there's a variety of ways to measure it, but that's probably the best one, I think, or at least for me. And then you were seeing these like 15, 20, 22 on, you know, good ideas with good founders, but you've basically got nothing. And I think all of that is predicated on this idea that like, well, you make a bunch of progress and then you do 20 on 80.

• 11:25Speaker 01

  And there's the markup. And if those 20 on 80s are now 20 on 40 or 10 on 40 or 10 on 30, which is more likely these days. You can't do a seed round with that kind of failure rate at 16 posts, like it just, the math doesn't work as a seed investor. The challenge I think is that a lot of seed investing is done by people who haven't been through an entire cycle and that math is not intuitive to them. And so, you know, your six X seed fund becomes two X very fast when your entry point price is like 20, 20 posts. So I have not seen it. I'm curious if your earlier stage team sees it, but I have not seen the seeds down.

• 12:02Logan Bartlett?

  Well, you know what the thing is, right? If you think about a lot of these seed, pre-seed, uh, funds have now, like the good ones have kind of crept up the, you know, 50 million plus, right? At least 40, 50 million, some are at 100, 150, 200. And so if you think about it, like the, the point I was making earlier about just like the fund construction. I, I would have to imagine, like, let's take your example. You gave up 750, uh, and maybe it was like a $3 million valuation, whatever it was, right? And now, or 25% of the company, and now, uh, these funds are structured where they need to write $2 million checks, right?

• 12:44Logan Bartlett?

  Instead of, and so that same round is now 6.7 or whatever it is to, to get 30% or 7 million, whatever it is, right? Does it really matter? The situation that? I guess you could talk yourself into the mindset that hey, if this works, right? This is going to be a low enough absolute valuation, even if it's a $7 million valuation, right? And now the round's getting done at 12 or 15, right? And the next round's going to be, if they make progress, is going to be at 30 or 40 pre or something like that, right? Does it really matter when the ultimate outcome has gone from being 12 billion or 10 billion in these success cases to 5 billion?

• 13:29Logan Bartlett?

  Like, where does it really matter that the valuation has creeped up a little bit more, right? And I would say, I guess it really matters if the Series A is in trouble to get done because there's too much compression there. But I guess you still have buffer, right? Now, when you're doing 20 million dollar valuations, 30 million dollar valuations on these seed deals, you don't have buffer anymore, right? Like, you're looking at a flat Series A.

• 13:55Speaker 01

  Look, it only matters at the outcome. Like, the A is like, whatever, the A, the B, these are just like financing events, you're not selling. So all that really matters is how much money are you getting back when this thing has liquidity in, you know, 10 to 15 years? So the rest, the A, and it's just a proxy for like what this might be at the end. And the best example I can give you, at least in my head, is if you did the round at 5 million post, or you did the round at 15 million post, that's one-third the outcome. Like, that's the difference between a 6X and a 2X right there in terms of if it's just one company.

• 14:30Logan Bartlett?

  But if you're a seed manager, right? Like, how many, how often is the 6X or the 2X a fun driver? I would say that like most of the seed managers.

• 14:41Speaker 01

  Oh, I mean, sorry, when I say 6X or 2X, I mean for like the overall fun, not on an individual deal. What drives it, what drives it is your 150X is now a 50X. That's the, that's the difference. And then because you only get like one or two of those in a fund basis, that's what drives the 6X down to two. That, that's really what I mean.

• 15:01Logan Bartlett?

  I guess I would say that like the difference between if you hit a 50x or a 75x in a seed fund, right? Like it's probably going to be a good fund, depending on size and whatever, but it's probably going to be a good seed fund in general, right? I would think and we'll see, but like certainly if you're hitting a 250x or a 500x, like it's clearly going to be a good fund. I guess the the argument I would make is that the ball goes a lot further on the upside regardless. And so oftentimes, one of the things that I don't think is has been true of late, but like one of the mantras when I originally got into venture was like, within a certain low enough absolute valuation, you're usually not wrong on price, right? And the rationale was like,

• 15:46Logan Bartlett?

  you know, your return threshold almost never blended to be like within a margin of what the fund success is. In as a basket across the fund it can, and certainly as an asset class for LPs, it totally does, right? But any individual investment, I think that's why the seed people can probably talk themselves into not moving that much on price is like, hey, if you like it at five, you should like it at 10, right?

• 16:18Speaker 01

  Well, let's do like the math. Here's where I think it plays. So let's say like you have a hundred million dollar seed fund, right? And the one of the downsides of running a seed fund as a investor is that you don't make any money on the fees. None, right? You know, your hundred million dollar seed fund is like a 2% management fees. You've got $2 million in management fees. There's probably on a hundred million dollar fund, three GPs, let's say, maybe two, but let's call it three. So you've got $2 million to spread across three people, plus some associates, plus overhead. So I don't know what the GPs are paying themselves, but it's not. No one's buying their Hampton's house on this fund. I'm not crying for them, but they're not making a ton of money on the fee.

• 16:59Speaker 01

  And then all of a sudden, what you get to at a certain point is like, if that hundred million dollar fund is a 3X fund, right? So let's say it returns 300. Your carry pool of the 200 million dollar profit is 40 million bucks spread across, you know, it's over 10 to 12 years, you did okay. And you gave up the opportunity cost of working at a really big place with a high management fee, where you were making like two to three million dollars a year. And that's that opportunity cost of being a seed investor versus going and working at like a growth fund. If that fund is not 3X, but if that fund is 7X, right? That's a 600 million dollar profit pool of which you're splitting 120 million dollars across three people. It actually ends up being a very, very big difference for individual GPs.

• 17:44Speaker 01

  The difference between a two to three X fund versus like a seven and eight. And I think that's where it matters.

• 17:48Logan Bartlett?

  But I guess, I guess my argument would be any individual investment, it's hard to internalize. Like at the difference of five versus 10, you certainly want to play the game that's on the field and pay the fair price, right? But I don't know, it would be really hard for me. I'm not a seed manager and maybe this is why I'm not is because I can't internalize this stuff. But it'd be really hard for me to talk myself out, knowing how fun construction kind of works. It'd be really hard to talk myself out of a deal at four versus six versus seven or whatever. And I realize it matters, but.

• 18:20Speaker 01

  Yeah, they were probably right in that range, like four post, eight post, something in that 20 post.

• 18:27Logan Bartlett?

  Yeah.

• 18:27Speaker 01

  For these deals. And I think that's where the compression is going to start to come from. It's going to come from the absolute crazy ones come down and then that pushes everything else down a little bit. And, you know, no, no one's like crying at the end of the day here. Like people are doing perfectly fine. But yeah, the days of that, you know, 20 pre-seed round, I think are hopefully gone. And we'll see when it rationalizes that. I just haven't seen it yet. I also think because the really good founders are not yet raising or they've been doing stuff very privately or quietly. So it takes, takes time.

• 18:58Logan Bartlett?

  So we're a little dated on this topic, but one of the things Zach and I had been texting about was a story that the information had reported that I think has a broader,

• 19:12Logan Bartlett?

  I don't know, extrapolation that at least he and I were texting about a little bit. So I thought it would make for an interesting topic. So Data Robot is a Boston-based.

• 19:22Logan Bartlett?

  AI, artificial intelligence company. And over the course of the last couple of months, they've been embroiled in some different scandals. Their, their, their CEO and co-founder, Jeremy Atchen, stepped down after disagreements with the board. And in the COO at the time, I believe, Dan Wright stepped into the CEO role. What had been reported a few months ago was that their, the CEO and a handful of other executives had sold about $32 million of stock while the company was at their peak valuation, which was about $6 billion.

• 20:07Logan Bartlett?

  And so they collectively, the executives sold and didn't offer it to the, the rest of the companies, the rank and file employees that had been there for, for a long time. I believe the, those executives that sold had been there 18 months or, or something like that. And the CEO, I believe, sold about $20 million. And, and then a handful of other executives sold the balance, the 12 million. The, the reason that they had sold was the board had granted loans to the company,

• 20:48Logan Bartlett?

  or sorry, to the employees from the, the company for these folks to early exercise their options. And this was done to repay those loans that were given by the, by the company. And so they sold a little bit of secondary compared to their overall position that, that, that allowed them to repay these loans. This was done a few months ago that it was reported on by the information. It set off a, a total shitstorm within the company. Zach, I think you had maybe different opinions than me about this, this whole situation, or at least some, some interesting insights. So we'd love to get your take here.

• 21:32Speaker 01

  Yeah, I guess, I mean, when you had sent it to me. And I read it and then I had to reread it to make sure I understood what I think the controversy was, which was if I define this right, a bunch of senior executives at a private startup, essentially selling some of their equity, whatever equity they owned in like a secondary sale while the company was still private to some outside investor, might have been insiders or outside, I don't remember exactly, and taking some money off the table.

• 22:07Logan Bartlett?

  Yeah, and, and, and just a point of clarification, it was an outside investor, uh, and it was, I, I don't believe it even went to their, uh, bank accounts based on my reading of it. It went to repay a loan that was granted to them by the, the company. And so they took out a loan to early exercise their options and they sold a small portion of secondary to then pay back that loan.

• 22:35Speaker 01

  Yeah, and you get your long-term capital gains clocks to detect, basically.

• 22:39Logan Bartlett?

  Yeah.

• 22:39Speaker 01

  Yeah. And, and then in a sense, like the controversy within the company was that only a small set of senior executives were able to do this and it wasn't offered to the broader population or the grand play base.

• 22:52Logan Bartlett?

  Right.

• 22:53Speaker 01

  Yeah. And my reaction was, this is happening everywhere. Why are we surprised in this? I, I, that was the thing I didn't understand and it's not about whether I agree with this or not, and I have my thoughts on it broadly, but it didn't seem surprising to me because this is something that happens in some way, shape or form, typically with founders, but not always, it can sometimes be the senior execs, where they're offered the ability to sell some of their equity to take money off the table in a private financing round. It's how you see founders of still private, but very large companies, all of a sudden have a bunch of money

• 23:36Speaker 01

  to do angel investing, right? Like where do you think that money came from? It's not like it's coming from their salary, uh, it's typically because they were given some secondary. And part of the reason, just to justify at least one side of it for a second, not, and then I can maybe argue the other, but is that, you know, as an investor, you don't want the founder of the company worried about having like a little nest egg, because you just wrote them a really big check and you want them swinging for the fences. So you want their risk appetite to be turned on. You actually want them swinging for the multi-billion dollar outcome. And what you do to give them that risk appetite is you let them cash out some, like enough, enough, and everybody's enough is like a totally arbitrary made up.

• 24:21Speaker 01

  But maybe you let them sell five to 10 million dollars, you know, something like in that range. I've seen higher when it was like a really crazy bull market where people sold like 20 to 40 million dollars. But that's the general logic behind it. And I guess I was surprised that this was new to people because it's been happening all the time. And again, I'm not, I'm not trying to justify it. Like I completely understand the employees take of like, if the founders are selling their common shares, like, why wouldn't everyone else be allowed to do it? It's unfair and like, yeah, yes, it's unfair, but it happens everywhere. So why did it, why did it become such a good deal as one company?

• 25:00Logan Bartlett?

  I guess, I guess the, um, the distinctions I would draw here, and I think what led to the, uh, the outreach page is one, the dollar amount was really high, right? 32 million, 20 for the CEO. Now they, uh, their, their equity was obviously, uh, percentage was high. Uh, as such, they needed a large amount to early exercise as a loan, right? The, the, the, maybe the more interesting and slightly more unusual part of this is that, uh, they were granted such a big loan by the company, right? Uh, to early exercise. Um, so that's an interesting.

• 25:40Logan Bartlett?

  Thing, but I can understand when you're a CEO coming in, you're sophisticated and you want the ability to start the capital gains flock. And so maybe, you know, that's on the board for allowing all of this to happen, I guess. Again, I don't have, I've had companies that have done loans for executives as they've come in, right? And so I don't judge it necessarily. Every situation's unique, but I would say that that was one was the loan is more of the the unusual part of it. The secondary, I would say, happens more. The second thing is these, these folks weren't here particularly long, right? And so more often, when you hear

• 26:23Logan Bartlett?

  the big secondary sales, it's, it's often a founder. And I think that really, at least the chief AI strategist or whoever stepped down, he was like, you're basically taking money out of the pockets of the people that actually built this business, who are the engineers that have been there for five, six years and were not afforded the luxury to take chips off the table.

• 26:45Speaker 01

  It was like a hired gun team as opposed to the

• 26:48Logan Bartlett?

  Higher gun team, they all sort of came over from AppDynamics together, I think, to help run the business. And so that was part of it. And then I also think outside of the the loans and the dollar amounts and the tenure, I also think what would happen was it didn't seem like their performance, at least now in retrospect, I don't know what was going on at the business at the time, but their performance, they had misplanned pretty significantly. And so I think that at least the criticisms I saw were that the executives were provided this financial reward incentive when they hadn't actually

• 27:29Logan Bartlett?

  performed or met the the expectations that they set out. And so I think, and then also the market, right? In between when it happened and they were valued at 6.3, went down pretty significantly. And so I, you know, that if these employees hadn't sold at

• 27:50Logan Bartlett?

  Been given the option to sell at 6.3, but there was a round going down at 10 billion right now. There would not be this vitriolic post and people resigning, right? If they were now given the option to sell at 10. And so I think also the market tanking has led to a little bit of a, you know, the sour grapes behind it.

• 28:11Speaker 01

  Well, this is like, maybe the more interesting takeaway for people and something that I've struggled with as a founder in the first two companies we started and, and a little bit in this new one I'm starting now, but the US tax code is really not employee friendly. It's very founder friendly, but it is not employee friendly and it was never designed necessarily to solve this problem. But the consequences of it are fairly negative for employees who join later in the cycle for, for this one, like really kind of stupid reason, which is, and I'll try my best to explain the basics of it, but when you get your equity, your ownership in a startup in the beginning,

• 28:57Speaker 01

  right? When the company is just being formed and you're maybe one of like the first five or 10 employees or something along those lines. And definitely if you're the founders, the IRS views the value of that company basically at zero. If you kind of give your, if you get your equity prior to the financing round, or if you only raise a little bit of money, you can basically say, look, this company is worth nothing. It has nothing. It has no money. And so as a result, when I'm giving myself equity, the gain, because I'm getting something, right? I get equity in this company. As a result, the gain that I received is so low that I don't, the taxes on it are irrelevant, right? If it's worth $5 or $10, so I pay a bunch of taxes, but it's really, I don't pay basically no taxes rather.

• 29:40Speaker 01

  And the benefit of that is that you now own the equity and your long-term capital gains clock starts ticking. Right? Meaning that if in the future, your company sells and somebody gives you cash for your equity, you're going to pay long-term capital gains on that equity instead of income tax. And that's like a material difference for a lot of people, depending on what state that they live in, right? If you don't live in a high income tax state like New York, it's even bigger, right? Cause then you're basically paying exclusively federal long-term gains, which could be like 20, 25% or something.

• 30:15Speaker 01

  As an employee, if you join downstream, the reason you get options instead of like equity that vests over time is if you were to give employees equity at that time, the equity now has value, right? It has like real value to it. And so you would actually have to pay taxes on the equity, even though you can't get any money from the equity. So your employees would be liable for a tax bill, but not have any money. And so as a result, what we've kind of like worked around, if you will, in the startup ecosystem over the last 15 years is like, all right, we're not going to give you equity. We're going to give you options. And those options are basically like the chance to have equity in the future. It's a legal right to the equity in the future, but you don't actually own it, right?

• 31:00Speaker 01

  Cause you don't actually own the equity, you just have an option. And it works, except for that long-term capital gains clock. And that's where it breaks down, right? Which is that you don't actually own the equity. And so if somebody were to come in and buy you as the business or buy the company that you work for rather, and then you exercise your options, you get your equity. Unfortunately, you haven't held them for the long-term capital gains 12 months. And so now you're paying like crazy high income tax rates, basically in some cases, like, you know, over 50%. And so that's why you see employees, or sorry, executives who are coming in late, borrowing money to do the early exercise thing. So that if this company were successful over time, they would be able to save like a whole bunch of money on taxes. And then they do all these like crazy cockamamie schemes that we just saw, right?

• 31:44Speaker 01

  Which is like they borrow money from the company to early exercise and they sell some of their equities. And it all comes down to this like stupid accounting issue related to like long-term gains versus short-term gains, which in a really weird way, actually disincentivizes innovation. Because you want people to take risk, like as an economy, as the US economy, you want people to take on economic risk because risk creates in the aggregate innovation and productivity and as a result, reward. And we're actually like disincentivizing people to do it in the tax code. And that to me is like the more interesting issue in all of this, which is like, look at all the crazy hoops people are going through to just like shift their equity from short term to long-term gains. And if we just solve this by saying, hey, actually, if you give people equity

• 32:29Speaker 01

  in this private company, until they can actually get cash for it, there's no tax bill, right? You delay the tax or some, some version of this that allows that long-term gain clock to kick in. This problem somewhat goes, I'm sure there's some other negative externalities I haven't thought about. But that's the source of this issue. At least that's my impression.

• 32:49Logan Bartlett?

  Yeah, I mean, the other thing I guess that's kind of implicit in this, which, you know, you could say is very not fair. I think a lot of people would argue that, but is that not all employees are treated equally, right? And founders and CEOs and executives are granted not just compensation, not just percentage equity, but also perks and benefits and types of things like this that they can negotiate that other people can't, right? And it leads to a bunch of societal,

• 33:27Logan Bartlett?

  you know, issues. It leads to different economic outcomes at exit for a bunch of these businesses. Is it fair?

• 33:38Speaker 01

  Let me poke on this one. This is going to be the right wing side of Zach, which exists in very limited places. But like, should it be fair? I would start with that question, which is like, there are reasons there are executives, right? Like, they have better skills at certain things, they're more seasoned. So I don't think like fairness is necessarily the goal. I do think the issue is transparency.

• 34:03Logan Bartlett?

  I mean, listen, I think the, the market determines what is market and what is fair, right? And so market and therefore what is fair. And so, does it feel fair when you've been at a company for six years and a CEO has been there for two, or a CRO is making, you're an engineer and you've been there, you know, for, for five years and you're making 200K and the CRO is making 700K at OTE, like, that certainly doesn't feel fair because you're just, you're building the product and he is just selling it. But. Somehow that has been decided that that is the market for these different talents and these

• 34:45Logan Bartlett?

  different people. And so I think the market has determined that that is the right, the commensurate things that different people could negotiate, right?

• 34:56Speaker 01

  Yeah, I think like we, and we should be comfortable with two things. One is that the market, it's a private company. You can do what it wants. We want private companies to be able to do what they want because they can innovate in different places. And by the way, as an employee, you have the ultimate opportunity to change jobs. Like if you don't like how that company is working, you're not an indentured servant. Like you can get up and, you know, speak with your feet and switch jobs. And so as a result, it's not, I would make the argument that it's not supposed to be fair and we shouldn't pretend that it's fair, right? Like senior executives and founders get better deals because investors view them as more important to the company. I think where the issue, and I agree with that, by the way, to a point where there are clearly like people in

• 35:41Speaker 01

  a company who are just simply more important because they're better at their job and they have a skill set that's particularly unique. That's really the key, right? They're uniquely good at something. Where the issue stems, and this is a part I, I would agree with the employee base is lack of transparency. Like this stuff is kind of done in quiet and secret and not disclosed. And that's the part that I think really is where the issue, leaving aside the fact we should probably just fix this in the tax code. It seems unfair to be able to do these things without, without at least disclosing that they're happening, right? That people should be aware that this kind of stuff happens. And it's funny because in an acquisition scenario, right? When you get bought as a company, we had to go through this at both my companies, they both got

• 36:26Speaker 01

  bought, one, one by Google, one by Roche. And in both situation, I believe, actually, maybe just in the Roche situation, when the acquiring company

• 36:36Speaker 01

  Gives like golden handcuffs to give retention basically to employees who are incoming. There's actually a disclosure they have to give. It's called like a 280G disclosure. I don't remember the exact legal for I think it's 280G. Anyway, the point is like the money that's going, the excess dollars that are going to senior executives actually get disclosed to all shareholders. And since employees own equity in the company, they get to see the disclosure.

• 37:00Speaker 01

  And I remember actually at Fattar, we were doing this. You know, we had a bunch of senior executives who were going to make quite a bit, you know, seven figure plus in retention compensation. And part of it was knowing we had to disclose it. You know, what does that conversation look like? How do we discuss this? What is the blowback going to be? It wasn't like good or bad. It was just a discussion that had to be had because of the disclosure. And I think that was actually like a really healthy discussion about like what's fair, what's not fair.

• 37:29Logan Bartlett?

  It's like the New York Times rule of like, do you want to do something that would end up and maybe it's the information rule now? Do you want to do something that ends up on the, the front page of the information, right? Or for all your employees to point and there are, it should, it should be pointed out. One, and I think people, this, companies aren't democracies, right? Like we don't have all equal votes and making decisions. And, and two, there are other things, right? I don't know if you guys had this in this example, but like they will often, instead of just doing a, a top up or whatever, they will make you revest shares that you, you already had vested, right? As an incentive, as a executive coming on, right?

• 38:13Logan Bartlett?

  And so you might own 2% of the company and it sells for a hundred million dollars. And you're not getting $2 million in your pocket, day one. They might say, hey, we'll give you a million dollars and we'll give you, you know, 250 over the next four years. And then maybe we'll add another million on top of it for each, you know, whatever year you stay. And so like, it could be a $3 million package, but you're not getting all of that day one, right? And so again, it sort of goes back to the point that like executives are treated differently in general, right? Wrong or indifferent.

• 38:47Speaker 01

  Look, this comes down to like, there is a balance between you want to let the private markets do their thing. You want to let them innovate and compete and offer giant compensation packages to people they think are great and have it work and have it not work. And this is the beauty of the market, right? Which is it's going to try a bunch of things and some stuff works and some stuff doesn't. And that's what gets us to productivity gains. But when it does it in these like very opaque ways without disclosures and just like knowing what the basic facts are, then you get yourself in trouble. Then you get like scams and issues. And that's part of like this argument, not to always try everything back to stupid web

• 39:29Speaker 01

  three stuff. But that was like the argument I was getting in with Sam about like buying equity in small little LLCs without information rights is like a completely insane idea, right? You need to understand the basics of these businesses. And that's why there are rules in place, in particular, as obviously as public companies of like information that has to be disclosed and checked. Even in private companies, right? Like private investors have information rights and the management team knows who has those information rights. Like those are important tools we have in the toolbox to kind of have some check and balances on back office dealing and scan. And it still happens too, but at least it's a check in place. I think a lot of stuff ends up coming down to that. Like, I think you said right. It's the New York Times.

• 40:13Logan Bartlett?

  Yeah.

• 40:14Speaker 01

  Disclosure issue, right? Like, it's not about legal, not legal, or right or wrong. It's just, it feels wrong when you do it in a sneaky, quiet way. And I agree, you should strive to like, we're going to do something that ultimately, we would be interested and willing to defend in a public setting.

• 40:31Logan Bartlett?

  Yeah. Well, everything inevitably comes back to web three. I think we're winding down our web three series. I, yeah, I think we have. So next up here, you're going to hear a interview that Zach and I did with Molly White from Web Three is Going Great, a entertaining blog about all the mishaps in the web three world. And then we have one recorded that we'll release at some point with, with Kyle Samani from MultiCoin, in which we talk about a bunch of stuff related to helium and what Kyle believes and all of that stuff. But I think that might be it. Short of, I don't know, SPF or Chris Dixon

• 41:15Logan Bartlett?

  or someone raising their hand or coming on. I think we've sort of, we've sort of made the, made the rounds on the web three thing.

• 41:22Speaker 01

  There'll be more.

• 41:23Logan Bartlett?

  Yeah, I know. Everyone's gonna clip this and show it back to me when we have like 15 more of these. Yeah, well, I guess I would add Brian Armstrong to that list as well. We have some, we have some titans of the industry that we would welcome on.

• 41:39Speaker 01

  Yeah, if somebody came with, hey, I've got this like really specific idea or thing I want to talk through. And I've thought it through and I have a write up, I don't need it right, but just something that shows that you've logically thought about it. That would be interesting and fun to talk through. I think for me as a founder and sometimes investor and whatnot, like the specifics and the details are always the most interesting. As opposed to the, you know, liquidity is great in any context whatsoever. Do you agree? It's like, ah.

• 42:08Logan Bartlett?

  The abstraction, yeah.

• 42:10Speaker 01

  Life has nuance, man.

• 42:11Logan Bartlett?

  If you have those use cases, please DM Zach Weinberg. We can, we can put his email in the show notes. I do not want those requests, but if you have any specific use cases, it sounds like Zach's hunting for them.

• 42:24Speaker 01

  As long as you're comfortable with me posting them publicly.

• 42:27Logan Bartlett?

  Okay, well, everyone, Molly, Zach, thanks, thanks for doing this. I guess Molly, do you want to give your background on how you got into Web 3 is Going Great? Which seems to be something that we, yeah, we've been following along. And so we're, we're super excited to have you on.

• 42:46Speaker 02

  Yeah, so I'm a software engineer, but I started Web 3 is Going is Great as sort of a side hobby project in the winter. When crypto was kind of booming and some of the marketing was getting really out of hand, it seemed like. And I sort of noticed.

• 43:01Speaker 01

  Well, we started it in this, this past winter.

• 43:03Speaker 02

  Yeah, in December of 2021.

• 43:05Speaker 01

  Yeah.

• 43:06Logan Bartlett?

  Wow.

• 43:07Speaker 02

  Yeah, I sort of noticed kind of a big discrepancy between what I was seeing in, you know, the real world where projects were just like exploding and people were getting their money stolen and things are going really poorly. And then, you know, in the media, social media, you know, people were saying crypto is the future. Web 3 is the future. It's going to replace the, you know, traditional web stack. And so I started this site to try to sort of. Add an alternative narrative, I guess, to the pile.

• 43:35Logan Bartlett?

  I feel like you were prescient in doing it at the time you did. I mean, December or whatever, end of, end of 2021 was certainly the, the peak of euphoria. Was there, was there something that you saw at the time that just was the tipping point for you? Or was it just the volume of stuff that was going? I mean, you were, I think we could say you were working at HubSpot, right? At the time as a software engineer, which is, uh, is not web three related. And so were you just following this on Twitter and seeing all the money that was going into the ecosystem? Or what drove you to do it?

• 44:13Speaker 02

  Yeah, I was seeing it, you know, on social media and in the news a lot. And, you know, it was hard to kind of escape it, you know? It was like everyone had NFC profile pictures and people were talking about how you were dumb if you weren't putting your money into it. And, you know, so it was really hard to avoid. And I started kind of digging back into it because, you know, I've been familiar with crypto for a really long time and, you know, it was sort of uninteresting to me from the beginning just because I, you know, when I first learned about it, it was mostly either for people who wanted to buy drugs online or for people who wanted to, you know, sort of speculate wildly with their extra money. And I was like in college and didn't have extra money and I wasn't buying drugs online. So I kind of was like, okay, not for me.

• 44:54Logan Bartlett?

  Yeah. At college, you can buy drugs in a lot of different ways. No need to do it online. Yeah, yeah, exactly.

• 45:00Speaker 02

  Um, and so I was like, did something change? Like now this is going to be the future of the web. Like, what did I miss? And so I sort of started researching it, you know, mid to late year. And then it was, I just kept seeing sort of all of these projects exploding and just going really, really badly. And it felt like, you know, you would hear all about it in one day and everyone would sort of be laughing at it on Twitter or whatever. And then like people forgot about it the next day and people were putting all their money into some other crazy, you know, Ponzi scheme or whatever. And it's like, didn't you just see the one that was just like that? You know? Um, so yeah, there were definitely a handful of projects that sort of all contributed to me being like, okay, you know, I'm just going to put this together.

• 45:39Logan Bartlett?

  Were you getting recruited? I assume as a software engineer at HubSpot, you get like a email on LinkedIn or something every day for a new, a new job. I assume you're being recruited by some.

• 45:49Speaker 02

  To some extent, but, you know, I kind of just wasn't responding. I haven't sort of gone down that rabbit hole.

• 45:57Logan Bartlett?

  Yeah, in December, you're like, give me a month and you will stop recruiting me.

• 46:01Speaker 02

  I actually still get recruited.

• 46:03Logan Bartlett?

  Yeah, I still get DMs from people being like, Logan, love the podcast, would love for you to take a look at my like web three NFT thing. And I'm like, do you love the podcast? I like that as a compliment and it's a good like intro thing to say, but I don't, I doubt you really love the podcast. If you're, if you're.

• 46:23Speaker 02

  Yeah, I get people message me saying like, hey, can you feature my NFC project on your website? And I'm like, you don't want that. If you're featured on my website, something has gone very wrong.

• 46:35Logan Bartlett?

  Yeah, give it enough time and I trust you will find your way on my website, but it's probably not the way.

• 46:42Speaker 01

  Did you ever consider taking any of the interviews to learn more or just to get the next layer?

• 46:47Speaker 02

  I didn't. No, I was pretty burnt out, just in general, last winter, I guess. And so I was like, I didn't feel like doing the interview circuit at that point.

• 46:58Speaker 01

  And that content to me would be remarkable just to hear the, you know, the inside baseball of how the company is pitched and what information people are willing to share and what they're not willing to share. And it's really hard to get that without being a candidate, but if you're a candidate, people will share quite a bit of info about the business as you go through the recruiting process, especially as a sufferer.

• 47:19Speaker 02

  Yeah, I would think so.

• 47:20Logan Bartlett?

  We've gotten a handful. I don't know if you have Zach, but I've gotten a bunch of former employees of, of some of these businesses that have blown up, reaching out to me, being like, you know, you're spot on, or you should talk about this, which was just a total rug pull, or this person was super shady about stuff. Like I've gotten a bunch of those DMs as well. So I think, yeah, perspective or former employees are probably your best, best bet for some of this information.

• 47:49Speaker 01

  Well, not that I'm advocating for this, but maybe subtly I am. When you are a former or current employee, you're obviously like subject to non-disclosure agreements and things that you definitely should not break as an employee, because you have liability risk and I would never suggest anybody doing that unless it's like a true whistleblower case. As somebody who's being recruited, you have not signed any of those documents. And as a person who's like recruited hundreds, if not a few thousand employees over my lifetime, you know, companies share quite a bit of information in the recruiting process when it's competitive. And I'm actually somewhat surprised we haven't seen people go in, do the interviews, kind of understand what's really going on

• 48:33Speaker 01

  and use the information as a, I don't know, it's like a pseudonym blog post or something along the lines of like, here's what I learned in my XYZ.

• 48:41Speaker 02

  Well, wasn't there that journalist who like, got a job at one of the big crypto exchanges or something like that? There was definitely like a journalist who did this.

• 48:49Speaker 01

  Well, but there's the line I just like, wouldn't suggest people cross of like taking the job. That's a little, first of all, there's like some moral issues with doing that. And also you do sign a bunch of, I'll go back to the legal issues. Uh, but as an interviewee, as long as you're like a credible person, you can ask lots of detailed questions. I used to have people at Flatiron ask questions about the business model and the revenue numbers and the customers. And I mean, maybe we were doing this wrong, but we definitely shared quite a bit of information as a company because we knew it was competitive. We were competing against Google and Facebook and Coinbase at the time and all these other groups for engineering talent. And the more that we could share, the better it made us look in the interview process.

• 49:32Logan Bartlett?

  Molly, what has the, uh, so what's the journey been like since, uh, since December? Like, did you have any idea of where this was going to go? And, uh, I mean, you timed it right at the top. And so like, what's the evolution been or volume of stories to report on? And, and how has this changed since, you know, what your expectations were early on?

• 49:59Speaker 02

  I definitely didn't expect it to become popular. You know, I've done a lot of sort of dumb side projects in my time that are just like for my own entertainment and no one actually really cares about them. So when people started to like the site, I was like, oh, that's cool. Um, you know, as far as the actual stories on the site, I think they were more fun at the beginning because it was less of like people losing their life savings and more of like, oh my God, this is the dumbest project you've ever seen. Or like, I can't believe they got away with this NFT scam or whatever it was. And they were sort of like funnier, I think. Whereas now it feels like they're very. Sort of heartbreaking in a lot of ways because you know they're damaging.

• 50:41Logan Bartlett?

  For every Gary Vee raises $50 million, we have like people on, you know, like Suicide Watch and Reddit forums and stuff for losing their life savings. Yeah, it really is. It's taken a dark, a dark turn in a lot of ways.

• 50:55Speaker 01

  Are people sending you stuff? Do you get content like, hey, did you see this? Like, how much sourcing do you have to do?

• 51:00Speaker 02

  Yeah, people send me stuff, which is really great. It's helpful, especially when people send me stuff from like outside of the US. Just because like I don't always follow the right news sources or like I don't even know to translate them to like get the content. Um, so yeah, I definitely, you know, I do a lot of the sourcing myself, but I do get a lot of sort of tips as well, which is really helpful.

• 51:18Speaker 01

  What's the most interesting one you've gotten sent that was maybe not publishable? Were there any of those where you're like, ah, I'm not sure I can publish this or the information is not public? Anything along those lines?

• 51:30Logan Bartlett?

  Yeah. How, how do you think about your editorial? I mean, you're not similar to us. We're not like journalists, actually. We're sort of like just larking as interviewers. And so how do you think about the editorial line as well?

• 51:41Speaker 02

  Yeah. So I mostly try to cover stuff that has like already been covered elsewhere in news or, you know, at least is, uh, can be confirmed with like, you know, a blog post by the company or something like that. Versus, you know, doing a lot of the real like speculation on, you know, oh, this company looks like it might be shaky. Or, you know, the, the allegations that, you know, such and such is so and so. You know, I don't usually dive into stuff too, too far in that sense. Um, so I do get people who send me stuff that's like, you know, hey, I think X, Y, you know, the exchange is going to not, not the X, Y, X, Z, uh, N O T platform. But, you know, they'll say like, hey, I think, you know, this, uh, platform is looking really shady or shaky or whatever.

• 52:23Speaker 02

  And I'm like, okay, but, you know, until I actually can point at something concrete, you know, I can't just sort of say, I can't just really post that, you know, without any evidence. Um, so yeah, I try to sort of keep it fairly, you know, by the book. But people have definitely sent me stuff, you know, like even before the, um, some of the big exchanges, uh, sort of like paused withdrawals recently, I was getting messages from people that are like, hey, I think, you know, um, Celsius is gonna, you know, pause withdrawals. I think they're insolvent. Um, and so I was sort of just like waiting and watching for a while to see how those would go.

• 53:01Logan Bartlett?

  Yeah, it's, uh, it's a fascinating place to be in the, in the ecosystem. Have you, I assume, I mean, are you at the point now where you're, uh, reporting, I don't know what you call it, posting, uh, blogging, whatever, whatever the right term is, uh, like, does it lead, do you, do you feel the gravity of the implication with it going on for the number of hits you get? I assume when you post something, right, it, it probably drives market movements in some way, right? And so is it, one, is that starting to happen? And two, is that like a consideration of making sure all your facts are buttoned up? And, you know, that it's reported in multiple places and all that?

• 53:42Speaker 02

  Yeah. So, um, I definitely try to be really cautious about that just because like, I don't feel like being sued, you know? And, you know, I'm also, my background for what it is in terms of this kind of writing is like with Wikipedia editing, which has a fairly high bar as far as like what you can use for a source. Um, definitely higher than what I put in place on, you know, mentally put in place on the project. And so, you know, that's kind of like my gut instinct anyway. Um, so I definitely try to be careful. I don't want to like accidentally slander someone who like didn't do anything wrong, um, or like get the wrong company or something like that. Um, recently I've started to notice occasionally, like I'll post something that hasn't really hit mainstream media or

• 54:27Speaker 02

  even like English language media, and then I'll see news reports start to come out. And like I'll realize that people are sourcing Web3 is great, which is a really cool feeling that's happened, I think, twice now where I've really noticed that. And that was like a big moment where I was like, oh, okay, like this actually is sort of driving the narrative to some extent.

• 54:46Speaker 01

  Do you get diligence calls at all? Like, hey, we're looking at this area. What have you seen?

• 54:50Speaker 02

  Yeah, I mean, I get, are you talking about from investors or are you talking about from?

• 54:55Speaker 01

  From anyone, I mean, probably investors, but it could be individuals who are looking to invest. It could be institutionals, like anyone who's just doing their, their homework.

• 55:03Speaker 02

  No, I haven't really gotten that. I mostly get like media people who are like, hey, how did you find this out? You know, basically trying to find my sources so they can do their fact checking. Although I usually just put the sources right on the post.

• 55:16Logan Bartlett?

  I feel like Laron also reached that point now. I mean, he sort of kicked off this whole, this whole helium shitstorm, I feel like. I mean, Mario kicked it off with his, his public article, but then, you know, hi, his tweet sort of set off the chain of events that now The Verge is reporting on it. And, and Salesforce and, and

• 55:38Speaker 02

  Lime.

• 55:38Logan Bartlett?

  Bird or one of those are, yeah, requesting that they're like sending cease and desist to them. And so, I mean, it's interesting. I guess this is kind of a meta comment on the state of media and, you know, these social platforms and all that. But it's certainly interesting how much of a shitstorm can just be set off by, you know, individuals with platforms.

• 56:00Speaker 02

  Yeah. But I mean, I also think it works in the other direction, right? Like we see people pump crypto all the time. So, you know, I think it's just so volatile and influenced by perception that that just happens.

• 56:12Logan Bartlett?

  Yeah. You mean, you mean Paris Hilton maybe isn't doing the diligence on all of this stuff and it's just maybe market manipulation?

• 56:19Speaker 02

  Maybe she'll give me a call.

• 56:21Speaker 01

  I mean, I've seen the more and more, like, we're starting to see people, I think, just read the details now, like not commenting on the helium thing per se. Although I think it's like a great, interesting example where at least my understanding and I've looked a ton of this, like all around did is just find a piece of an interview where the person had mentioned a statistic that was like tucked in a much larger article and said like, hey, has anyone actually thought about this? Like one little fact that is included in a broader set of facts? Like sometimes I think it just comes down to reading things with a critical eye and asking the basic questions of. Revenue and adoption and churn as opposed to having to get all like hyperbolic about,

• 57:05Speaker 01

  oh, I don't believe in it conceptually. It's like, well, what are this? What are the these? That I believe that's why the helium thing started just looking at an article. Is that? Is that right?

• 57:13Speaker 02

  Yeah, I think he found the $6,500 a month in revenue number in some much longer report about helium and its business and was like, hang on a second, that is not the number we would expect.

• 57:27Logan Bartlett?

  Mario, I think generalist was the one that wrote the long form thing about it. But now, what in your mind, I know you've or I've seen some posts that you're skeptical of VCs in general. So thank you for coming on. But I guess what role do you think as you sort of zoom out, you had this like very specific view and enough people had memed Zach asking about use cases, right? And specifically asking like, hey, what use case does this solve? As you sort of zoom out and think about the broader ecosystem at play and like, who is culpable in all of this stuff? Because I think I don't know. I don't want to speak

• 58:12Logan Bartlett?

  for either of you. I think there's elements of this that are really cool tech and I don't know exactly what problems are ultimately going to be solved. I think that there, there could be some not to the tune of $26 billion being invested into the category like there was last year. But as you sort of zoom out, having looked at all of this, what role do you feel like the federal government not stepping in to regulate, you know, these things as securities far earlier versus venture capitalists just trying to make quick buck at the expense of retail versus, you know, the people that are actually promoting these

• 58:53Logan Bartlett?

  things? Like, who do you sort of place blame on for maybe the hype cycle getting a little bit out of control? Or is this just, you know, the an unregulated economy at work and people are going to be self-interested in their actions and find ways to make quick bucks?

• 59:10Speaker 02

  Yeah, I mean, I think all of the people you just mentioned are sort of culpable. You know, I do put a lot of blame on your regulators for not regulating where they could have or, you know, not acting as quickly as they could have, you know, a lot of the Enforcement actions we're seeing right now are related to things that were happening in like 2017 and 2018. It's like, what? No. Don't worry about the ongoing step. Um, so I put a lot of blame there. I also put a lot of blame on, um, you know, media for really buying the hype in a lot of ways. You know, we saw some really, really uncritical coverage of a lot of the crypto projects, especially, uh, last fall and last

• 59:53Speaker 02

  winter, when things were really on sort of a bull run. Uh, and it was, you know, it was shocking, I think, the lack of like, just asking the questions, um, you know, considering more of a, a critical viewpoint on things. Um, you know, we were just seeing, it felt like just puff pieces getting into the media, which was pretty surprising to me.

• 1:00:14Speaker 01

  And these are fairly reputable media organizations. I mean, this isn't like fly by night, uh, crypto blogs or whatever. I mean, it's fairly reputable, uh, organizations that wrote, you know, fairly, uh, pieces that lack substance in terms of like their critical thinking.

• 1:00:34Speaker 02

  Yeah. I mean, you know, you sort of expect it from some of the crypto blogs that are just sort of, you know, math pieces for various crypto projects. Um, but it was, you know, mainstream, you know, highly respected news publications, um, that were just not doing any fact checking of claims. They were not, you know, trying to take sort of a neutral viewpoint, where they did try to take a neutral viewpoint. It was sort of like a both sides ism thing where they were like, well, it might be a huge scam, but you could get extremely wealthy overnight. And it's like, um, so yeah, I think it was sort of, I was really surprised to see that in some publications that, you know, I normally would trust.

• 1:01:14Speaker 01

  It's hard, right? It's a very like, technical pitch wrapped in what is perceived to be like very, like an innovative branding. Web three is some of the best branding I've ever seen, wrapped around like a very technical pitch that has a lot of jargon and technical terms that if you're not from the industry, it's really difficult to even know what question to ask in the first place. So I don't necessarily think it surprises me, although I'm surprised, I guess, that they would write anything at all, uh, as opposed to like, you know, at least doing a little bit of work, but. That's probably my guess. Like, it's just difficult for a normal reporter to get into the weeds here.

• 1:01:55Speaker 02

  That might be true, but I also think that, you know, a lot of these publications have the resources to find someone who is, you know, very technically savvy or is sort of an expert in the field. I think in some cases, they tried to do that and they ended up getting sort of the people who are working for these companies or who were, you know, running these companies, telling them, you know, yeah, blockchain's technically, they're great, you know. But, you know, I do still place some blame on them. I think you're right that it is tough sometimes for journalists to really pick through the details, but I think they could have done a better job.

• 1:02:28Speaker 01

  I mean, that's probably the best point, right? Which is like, most people who have some credibility or sophistication in the area tend to be the ones involved in the area and as a result, you know, financially incentivized to promote, let's say.

• 1:02:44Logan Bartlett?

  I could be a whistleblower or I could be a rug puller. Like, one makes me zero dollars, one makes me very rich, right? It's like, you know, very perverse incentives.

• 1:02:55Speaker 01

  Yeah, it's tough. Like, you learn about it by participating and then when everything is going up and to the right, which it did for quite some time, you don't make any money from being a bear in a bull cycle. And so, like, who's really there to provide the thorough, detailed information that is critical? And now that the tides have turned a little bit, not nearly as much as I think they will, but like, a little bit, you're seeing more critical voices, yours included, at least just saying like, hey, have you asked some of the basic questions? Like, it's not even about, you know, I don't think this is going to work under any circumstance on the extreme end of things. It's just the simple one of like, well, why would somebody use this? And what happens after like, six months?

• 1:03:37Speaker 02

  Yeah. But I do think that, you know, when there is a situation where there isn't a strong financial incentive created by, you know, the ecosystem itself to be skeptical or critical of the ecosystem itself, you know, the person whose job it is to do that is the journalists. And so I was sort of unhappy that there didn't seem to be that many that were really doing that job.

• 1:03:58Logan Bartlett?

  I actually have been impressed. There have been a handful of people that have been, I think are true believers and have been really...

• 1:04:08Logan Bartlett?

  Happy and positive about the criticism that the industry has been getting because they think they're getting wrapped up in all this grift, right? And they genuinely believe there's core principles here that they want to espouse and that all these other people are just trying to make a quick buck on this. And so I actually like the whole have fun staying poor and like not going to make it rhetoric. And the people that block incessantly online from engaging in any discourse and narrow their bubble even more.

• 1:04:53Logan Bartlett?

  I realize that maybe some of them feel, especially right now, that there's like some level of witch hunt going on, trying to like destroy what they're doing. And I get that sentiment, but you know, what is it? Light is the best sanitizer or something like if you both, this is the perfect time. If you're a genuine believer in all this stuff, engaging in these conversations and calling out the bullshit that exists feels like, feels like the, I don't know, the most important thing to be doing right now, rather than getting angry and blocking people. That that just feels not very constructive.

• 1:05:30Speaker 01

  Yeah, I would think so. I mean, part of the, part of the challenge with that, by the way, is like this idea that the speculation is part of the product. You know, there's like that case that's been made by a few VCs out there that says, ah, yes, but this is just like a different way of building an initial user base where you don't have to spend money on marketing because the speculation does it for you.

• 1:05:57Logan Bartlett?

  It's the Axie Infinity case, right? It's like, it's only a Ponzi scheme if we can't run far enough to turn it into not a Ponzi scheme, right?

• 1:06:06Speaker 01

  Yeah, it's like making this excuse of like, ah, actually the speculative nature is just like saving on marketing expense as opposed to just like a speculative bubble, which is a very clever. I mean, the people branding this stuff are just so good. You have to untangle some of these, ah, it's just a better user acquisition channel. And you're kind of like, well, that makes sense at a high level. Like, can you explain user and acquisition? And then you realize like, oh, okay, you just. Wrapped speculation, but sounds really great on paper. It's hard when you believe, I think, that that speculative nature of the coin or token or whatever is part of the product. Like, you have to believe in this because it is a core part of your strategy to grow the initial user base is to use the speculative nature of this stuff as part of the hype.

• 1:06:51Speaker 01

  And so hence the like ridiculous phrasing, unhappy to stay, whatever. I don't even really follow the phrases, but the same idea of like, it's this general theme of like, you're missing out.

• 1:07:02Logan Bartlett?

  Yeah.

• 1:07:02Speaker 01

  That's it, right? You're missing out. And the part of it is like, you can't do, you're missing out on a product where then you have to go and like, use the product and make sure you want to pay for it. But it does work on a coin or speculation and then it becomes part of the psyche and it's just all wrapped.

• 1:07:18Speaker 02

  Yeah.

• 1:07:18Speaker 01

  Wrapped together.

• 1:07:19Speaker 02

  This very weird situation too, where like, if you're running a business and you are trying to get initial users and you're spending a lot of money to do that, like, it sucks if the business fails and you've wasted all that money and it just doesn't pan out. But with crypto projects that are doing it, the way you just described, you know, it's not you that's losing the money. It's the people who are buying this token. You know, it's usually often retail investors who are losing that money. And it's sort of weird that people have, you know, convinced themselves that that's just sort of a cost of doing business.

• 1:07:49Logan Bartlett?

  Yeah, it's funny, the rhetoric, I like, I mean, this is just, again, back to Zach's point about the wrapping and marketing on this stuff. It's like web two companies, you built the product and then figured out how to sell it to and got users. Web three, you get users and then you figure out the product. It's flipping it, it's on its head, which will lower user acquisition costs over time. And I'm like, that sounds actually really interesting, right? Like, that sounds like a good idea. Get your users first and then just, you know, sell them whatever, right? But then you think about it for like more than 10 seconds and it's like, actually, does that, does that really hold in most use cases? And no, it doesn't.

• 1:08:31Logan Bartlett?

  Like, people want to come for something and then they stay because of a product, right?

• 1:08:36Speaker 01

  Yeah, I talk about like, community driven, which sounds awesome. Everybody wants to be part of a community. And then like, Maybe 12 months ago, we were making fun of WeWork for a community adjusted EBITDA, or whatever the thing is that he was selling. And like, did we just, did we forget about that in the last 12 months? So it's, it's the, yeah, the storytelling and the wrapping is, is like, very, very impressive. And just this idea of like, I know this is going to sound so ridiculous, but three is bigger than two, right? Like web three, it's just, and so it implies iteration and next generation and the third version of it. And for anybody in the, like, I guess, technical industry, you know that it's, it's, doesn't mean anything.

• 1:09:18Speaker 01

  But somebody outside looks at it and goes, well, this is the, this is the third web, I thought, right? Like, it's web three, it's not web two. As opposed to what I would describe it as, it's just like, it's really web crypto, which has nothing to do with two or three, and there's no number involved here. It's just like a totally different thing onto the side, but the branding of it makes it feel-

• 1:09:39Speaker 02

  Yeah, I would agree with you that the marketing has been pretty phenomenal around web three, and crypto more broadly. Like, they've done a really good job of making it feel like people, you know, if they don't get on board, or they don't at least, you know, accept the idea that crypto is a good thing, they might be, you know, old fashioned, and, you know, they'll get left behind, and they'll sound like, you know, a fool in five years, or something like that.

• 1:10:06Speaker 01

  Well, one of these concepts, and I brought it up, and I actually have to admit that I waver back and forth on this issue, because, you know, there's some libertarian pieces, I guess, of my brain, not that I am a libertarian by any means, but there's just like some pieces that I find interesting, at least. And we had this conversation, I guess it's not released yet, with, with Kyle from MultiCoin, of this idea that, like, adults should be allowed to invest and lose their money in the way that they want. And that, like, big brother government is not supposed to be making, you know, they're not supposed to be there to protect us. Like, we're adults, you have your own agency, you make your own decisions. And it always comes back to this balance of, we had this

• 1:10:49Speaker 01

  conversation before, of the coins as like an investment vehicle, which are totally unregulated, and anyone can buy them almost at any point. And then the inverse of this, which is like startup equity. Right, and startup equity is actually fairly regulated about who can and buy. You have to have a certain sort of income and assets. And that's always brought up as like the counterpoint on this. And yes, there's a lot of people losing money, which is sad. You do also have to admit that they are making their own choices. I guess I would be curious how you shake out on that issue of, you know.

• 1:11:21Speaker 02

  Yeah, I mean, I am also actually probably more split than people might think on that particular issue. You know, I don't love that, you know, the idea of like, oh, well, only accredited investors should be able to, you know, do whatever it is crypto or, you know, options trading or whatever it might be. Um, you know, because then it's like, okay, only the people who have a lot of money can, you know, have access to these financial products and that feels unfair. Um, but on the other hand, you know, we're seeing people who clearly, you know, should not be making these decisions, um, doing so. And so, uh, you know, I, I don't love the idea of the government saying that like, okay, you know, a million dollars or more in assets and then you're allowed to do whatever you want. But otherwise, you know, you're stuck with these other things.

• 1:12:06Speaker 02

  And I think, you know, I think to some extent crypto has capitalized on that already. Um, you know, you'll see a lot of, I've seen when I've been reading the Celsius letters from people who are putting money into Celsius and who are writing to the judge now in the bankruptcy case. There are a handful of people who said something like, you know, I just wanted to invest like the rich people do. You know, I just wanted to, um, have access to these higher yields that, you know, I don't get access to because I'm not an accredited investor. Um, and crypto is really sort of taking advantage, I think, of that sentiment that, you know, we'll let you take these risks in, in exchange for high returns, just like rich people do. Or we'll let you, you know, uh, borrow money to speculate on crypto, just like rich people do.

• 1:12:49Speaker 02

  Um, and so, you know, I do see the flaw there. But on the other hand, I think that there's just an enormous amount of, uh, information inequality happening with these crypto projects where they are not required to even be transparent. You know, for, I think in order for people to. You know, basically, in order for us to have the system where it's just let adults be adults, let them lose their money if they want to. I do think that there needs to be some, you know, base level of transparency of, you know, enforcement around like truly criminal operations and things like that. And then, you know, if there was, you know, basically risk disclosure and things like that, like I could see the argument. But I'm, like I said, I sort of go back and forth on it, too.

• 1:13:34Logan Bartlett?

  That's where, if you go look at like, I don't have the exact numbers in front of me, but I've seen it reported, like the demographics of who's heavier weighted to crypto or the economics of who's heavier weighted to crypto. It does you to less represented groups, right? And that's what I think is particularly tragic about everything that's happened here. I guess one, one last one before, before we let you go. What's been the most interesting story that you've reported on or, or kind of had on the, the website that brought the most zealotry backlash to you?

• 1:14:17Logan Bartlett?

  Any interesting anecdotes or pushback that you've gotten on any?

• 1:14:21Speaker 02

  Um, I think honestly, the ones that get the most backlash are ones where there's discussion of like social issues within crypto where, you know, I will highlight like some, you know, sense of bigotry, I think, within the community. There is a whole issue with the guy who was part of the E N S Foundation. He like said some pretty offensive stuff and then they, you know, were trying to figure out whether to kick him out and people were very polarized on that within the crypto community. And so those draw kind of a lot of pushback, I think. And then I think any of the ones that question some of the sort of plausible deniability around, you know, references and crypto project to like racist memes and stuff like that.

• 1:15:06Speaker 02

  People hate reading about that, it seems like. So those get the most, you know, those are the most like hot take Twitter posts, basically. And then the other ones where sometimes, you know, there are, they're definitely like. Crypto communities that are more hostile than others, you know, around different tokens. And so if you like poke the wrong bear, you know, there are specific crypto tokens where you will get that sort of zealot community in, you know, DMing you and or, you know, telling you how stupid you are.

• 1:15:37Logan Bartlett?

  I'm asking for a friend who might be named Zach. Like when, when there's a big backlash to something like that, what do you actually do? Do you just, do you mute your Twitter for a day or two? Do you, do you just not engage? Do you engage? Like, what, what do you actually do when there's this avalanche of online hate coming your way?

• 1:16:00Speaker 02

  I usually don't engage with it too much. Every once in a while, I sort of can't help myself, especially if people say something really dumb. It's hard to resist that. But yeah, usually I don't engage or I'll just try to like clarify if, if people have like misunderstood something in some cases or, um, but yeah, in general, I think a lot of those people, especially when they're like replying publicly, they sort of make fools of themselves. And it's like, not that much me adding to that is not really going to help anything, especially, and especially when it's, you know, the really sort of, uh, zealot types. It's not like I'm going to change their mind, you know? It's not like responding to them on Twitter. They're going to be like, you know what? That's right.

• 1:16:45Speaker 02

  You know, maybe I am being unreasonable. So it feels like mostly it's a waste of time. Yeah.

• 1:16:50Speaker 01

  The key is you only engage with the ones that have monkey pictures for, that's the, those, because you know, they're real and clearly not a bot. Uh, and that's where you get the most ROI of your time. So that's my advice.

• 1:17:06Logan Bartlett?

  I tend to retweet if, if anyone says anything that's like really, uh, offensive and like to the point, it's humorous. I tend to retweet them at least for a little bit of time, just, just let other people kind of share in that. But, uh, yeah.

• 1:17:21Speaker 01

  Those were the best where people are like, who's this idiot? I'm like, all right, cool. This is going to be, that's a fun one to engage with because you know, you're not getting anywhere and at least you can have like some entertainment value of it. You know, that, those ones I always love, especially when they're like direct personal attacks. It's like, okay, we could have some fun with this. And my, my favorite, if I, no, I don't have the time anymore to do any of this stuff is to just like, just like really agree with them. You know, for someone to come out and be like, yes, this point you're trying to make is totally right. And here's why it's right. And you kind of like replay it back to them. And while you're doing that, you clearly it's wrong. Like as you walk through the logic of what they're trying to argue, it's that same idea of like, the best argument against somebody is just to understand

• 1:18:03Speaker 01

  the bull case from their perspective even better than they do. So that when you can say it out loud, people realize like, oh, yeah, I guess it doesn't sound nearly as good as I thought to know the details and

• 1:18:13Speaker 02

  I get a lot of people who assume that I like, don't know anything about crypto or, you know, blockchains or whatever. And so every once in a while, if I'm feeling particularly punchy, I'll just be like, wait, what's a Bitcoin? You know, like, can you explain? Wait, I don't understand, you know, and that really, they'll, they'll usually go for a while before they realize.

• 1:18:33Speaker 01

  I mean, honestly, it's a great tactic of like, wait, so how does helium work?

• 1:18:37Logan Bartlett?

  Just, just make them waste their time. Right? That's actually, yeah. So many arguments have been won over Twitter that just really make them make a compelling argument back to you that's going to change your mind.

• 1:18:48Speaker 01

  I mean, just asking somebody that, this is probably just a good tactic of in life in general, is somebody pitching you some idea that they love. I mean, the question is, all right, well, cool. How does it work? How does it work today?

• 1:19:01Speaker 02

  Right. Where does the yield come from? That's the, that's the big question.

• 1:19:05Logan Bartlett?

  Uh, well, Molly, thanks for doing this. Appreciate you, you coming on. Uh, this is, this has been fun. And, uh, yeah, keep up the, the good work in spite of, uh, in spite of the pushback or hate you might get online. I think, uh, it's nice to have a single forum that highlights all this stuff together.

• 1:19:21Speaker 02

  Yeah, thanks for having me.

• 1:19:27Logan Bartlett?

  So that'll do it for the 28th episode of Cartoon Avatars. Thank you to Molly White for coming on. Thanks to Zach Weinberg as usual. Appreciate everyone listening and bearing through.

• 1:19:42Logan Bartlett?

  Another slight variation of crypto topics as well as I'm glad we're able to hit some different, more broader broader stuff with Zach. I hope we're reaching the tail end of some of these crypto things. As you heard from Zach, I think maybe he'll like some more, but if anyone has a line into SPF or Chris Dixon or Brian Armstrong, I think that's our wish list at this point. So please feel free to send those our way if so. Thank you to everyone for listening and for all the support and some of the outrage over last week's episode. Look forward to seeing everyone next week on episode 29 of Cartoon Avatars.