Cuts CEO Talks Tariffs, Figma's IPO Buzz, and a Nerd Crawler Update | E2113

Today's show: Jason, Alex, and Lon discuss Figma's surprise IPO filing following its $1B breakup from Adobe, OpenAI's quiet push into social networking through a Sora image-sharing feed, and how sweeping new China tariffs are wreaking havoc on ecommerce companies—impacting jobs, supply chains, and pricing. Plus: the Substack vs. Patreon battle heats up, Lyft expands internationally, and we talk to the founders of Nerd Crawler and Cuts Clothing about how policy decisions ripple through startup land. A packed show with insights founders can't afford to miss. Timestamps: (0:00) Tariffs impact on ecommerce and CPG(2:22) Figma files to go public and Adobe's billion-dollar breakup fee(6:48) IPO market, competition, and Hammerspace's $100 million raise (9:34) Pilot - Visit https://www.pilot.com/twist and get $1,200 off your first year.(11:32) Patreon's new streaming feature and Substack's growth(19:08) Jason's experience with Patreon and Substack apps(19:33) LinkedIn Jobs - Post your first job for free at https://www.linkedin.com/twist(25:58) OpenAI's new social network and Temu's Google Shopping ads shutdown(29:24) Notion - Try it for free today at https://notion.com/twist(37:11) Nerdcrawler's business model and comic book industry economics(42:33) Marketplaces, scaling challenges, and tariff policy impact on startups(47:29) Steven Borrelli's viral tweet on tariffs and administration response(50:26) Effects of tariffs on costs, supply chain, and American manufacturing(57:56) Infrastructure, investment for US production, and potential layoffs(1:02:34) Closing remarks, endorsements, and quality of Cuts clothing(1:04:25) Addressing misconceptions about Asian manufacturing(1:05:00) OpenAI acquisition of Codium and market impact of tariff fears(1:05:52) Critique of tariff policy communication and domestic job creation discussion Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp Check out: Nerd Crawler: https://nerdcrawler.com Cuts: https://www.cutsclothing.com/ Follow Lon: X: https://x.com/lons Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis Thank you to our partners: (9:34) Pilot - Visit https://www.pilot.com/twist and get $1,200 off your first year. (19:33) LinkedIn Jobs - Post your first job for free at https://www.linkedin.com/twist (29:24) Notion - Try it for free today at https://notion.com/twist Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland Check out Jason's suite of newsletters: https://substack.com/@calacanis Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

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

• 0:00Speaker 00

  And that's what the average consumer doesn't realize. They hear tariffs and like, oh, it won't affect us. But you know, 45% of the world's production is still China. And so, you know, you'll see Walmart if not have, not be able to stock the shelves in 90 days if, if, if this continues.

• 0:14Jason Calacanis?

  Are you hearing from your contemporaries in this e-commerce group chat and CPG chat? Hey, I'm going to need to start laying people off and pausing in the next week or two because that's what I'm hearing.

• 0:26Speaker 00

  Yeah, it's, it's, it's one, it's either going to affect your growth or your revenue because the inventory you have that is not affected by the tariffs, you'll need to extend that runway. Or you're going to have to eat tariffs and that's going to cause your bottom line to just get destroyed.

• 0:46Speaker 02

  This week in startups is brought to you by Pilot. Focus on your product. Let Pilot handle your bookkeeping. Pilot provides the most reliable accounting, CFO and tax services for startups and small businesses. Head to pilot.com/twist and get $1,200 off your first year. LinkedIn jobs. A business is only as strong as its people and every hire matters. Go to linkedin.com/twist to post your first job for free. Terms and conditions apply. And Notion. Notion combines your notes, docs and projects into one beautifully designed space with AI built right in. Try it for free today at notion.com/twist.

• 1:20Speaker 00

  All right, everybody. Welcome back to This Week in Startups. I'm Jason Calacanis. We've been doing the show for 14 years and I am more excited today than I've ever been to host this show for founders, for investors and for people who are passionate about technology. I'm here with two of my besties, Lon Harris, who I've known for closer to two decades than one, and Alex Wilhelm, who has been on the show and we did This Week in Tech. Shout out to my guy, Leo Laporte.

• 1:45Jason Calacanis?

  Yes, sir.

• 1:45Speaker 00

  When Alex was 30 pounds heavier and had hair.

• 1:50Speaker 03

  Yeah, yeah, yeah. There's, there's a video of the day Jason and I met in person. It's a Twitter interview or show from early 2016 and I look like a man who's about to stumble into rehab.

• 2:02Jason Calacanis?

  Definitely not the tight is right, disciplined, crisp Alex.

• 2:08Speaker 03

  Yeah.

• 2:08Jason Calacanis?

  Dad Alex that we see today. I'm so proud of Alex. Getting sober, not an easy thing to do. Staying sober even harder. Congratulations on your amazing success. I am so excited today because I know that Alex's grand can mean only one thing. Somebody filed to go public. Who was it?

• 2:23Speaker 03

  Yes, sir. It's Figma. Ladies and gentlemen, the company that Adobe tried to buy and then failed and then had to give a free billion dollars to has filed to go public. Sadly, Jason, this is a private filing, so we only have the fact that they have filed. But here's the thing, I'm kind of blown away, given the market chaos, given the concern in the exit markets, given people saying, hey, we're going to hold off for a bit. Here's Figma going forward and doing something that surprises me and makes me very, very happy. I'm flat out stoked. I think this is great news for everybody.

• 2:53Jason Calacanis?

  Great. Awesome. Give us the broad strokes. Of course, I already know Figma was going to sell for 20 billion.

• 2:59Speaker 03

  Yes, sir.

• 2:59Jason Calacanis?

  To our friends at Adobe. There was a huge breakup fee. It might've been 500 million or something. You'll check. I'm sure. And then they couldn't do that. So they did a tender offer so their employees could cash out some shares. Don't remember the valuation there. What happened? You know, give us the broad strokes of the numbers.

• 3:19Speaker 03

  Yeah. So almost sold for 20 billion. That deal was called off. It was a billion dollar breakup fee. So a huge slug of capital for a private company. Then they did a tender offer, $200 million at a, I'm sorry, a tender offer at a $12.5 billion valuation. So less than Adobe offered, but still a relatively sizable number. We don't know what valuation they're targeting in this IPO, but we do know that as of July of last year, their ARR was about 700 million and they were tracking towards a billion at the end of the year. So this is going to be a really, really big debut. This is going to be a Decacorn IPO. And I, I think it just goes to show that while we have talked a lot about M and A and the importance of it, recycle capital in the startup game. If a big deal falls apart, it is not a death knell for those investors. They might just have to wait a little bit longer.

• 4:01Speaker 03

  And so if you want to know who's going to win, the most active investors, Jason, in this deal were Index, Kleiner, Greylock, Sequoia, um, durable capital partners and entries in Horowitz. So lots of big names that are going to make a lot of money.

• 4:14Jason Calacanis?

  Great. Awesome. Uh, the.

• 4:17Jason Calacanis?

  DPI getting distributions for paid in capital has been incredibly low. So congratulations to the LPs and of course, the employees and Dylan, the CEO. Here's a clip of Dylan on the program seven years ago.

• 4:30Speaker 04

  But on the other form, we talked with was Grohl and John Lee in particular. And John, John was like very transparent. He's like a very direct guy and he's like, look, like, and to be clear, he was correct. And he says with a lot of compassion, but he was like, I really like you guys like what you're doing. I think there could be something here, but like, I don't think you know what you're doing yet.

• 4:52Jason Calacanis?

  You're not qualified.

• 4:53Speaker 04

  And, and to be fair, like we totally didn't.

• 4:55Jason Calacanis?

  Agreed.

• 4:56Speaker 04

  And not just from like a like business standpoint, which I mean, we're all learning all the time, but also from like a strategic standpoint, like we just didn't have the right strategy at that point.

• 5:04Jason Calacanis?

  I have a question. I wonder if the billion dollars in breakup fee from Adobe

• 5:12Jason Calacanis?

  is taxable or not. Now, the company I'm sure had a bunch of losses that carry forward. So even if, you know, let's say, you know, Figma during its, you know, decade, first decade, lost some amount of money, most startups do, that would not be uncommon. Then maybe that if that was actually considered income or I don't know how you structure it. They probably would have to pay corporate tax on it, but those forward looking losses would be accounted against it. But now put yourself in Adobe shoes. This thing gets blocked. They're obviously Figma is a potential competitor to Adobe and in so many different spaces. Adobe gave them a billion dollars.

• 5:53Jason Calacanis?

  They bought out a bunch of their employees, you know, the company did, making the company stronger. And now they're going to be a fully operational competitor in the public market. So, uh, this is fantastic for competition, even though I would have let this deal go through because it's so de minimis. And there's going to obviously be Canva on one side, on the prosumer side. You got Figma on this side, and then you have the new entrant, which is AI. And there are going to be 10 AI companies that really, you know, are AI first attacking Figma. We had on the program, they do designs, um, Squarespace, shout out to my friends at Squarespace. They have a website builder that uses AI.

• 6:36Jason Calacanis?

  You know, this technology is AI designing your website and talking to it is the future. So it's not like Figma and Adobe are not going to have endless, endless amounts of competition, but this is great for the market. Klarna on hold, Figma going for it. And if you have any confusion, Lon, they call it that they filed, um,

• 6:58Speaker 05

  confidentially.

• 6:59Jason Calacanis?

  Confidentially. So you're like, oh, it's a secret. They're confidentially filing. The filing isn't the confidential part, the details.

• 7:06Speaker 05

  Right, yes, the terms.

• 7:08Jason Calacanis?

  Less people are like, are we breaking some news? When you do say confidentially filing, it means the details.

• 7:14Speaker 05

  Don't tell anyone what you heard about.

• 7:16Jason Calacanis?

  But the IPO market will be back, uh, and Lina Khan is taking a victory lap, I think, over the Facebook case that's going on. I'm sure we'll talk about that a little bit today. Uh, but what else do we have in the news?

• 7:26Speaker 03

  So as far as I can tell, just to answer your question, Jason, I believe merger termination agreements, monetary transfers are ordinary income for corporations. Got it. There you go. All right, next up, Hammer Space is a startup that just raised $100 million. This company is interesting, Jason, not because it is building either chips to run AI or AI models, but because it's one of these companies that sits kind of inside the data center, if you will, and helps companies handle massive amounts of data that go into AI compute workloads. So essentially what they've done, uh, by the way, Altimeter was in this deal, Jam and Ball. We've had him on the show, fantastic guy. What they do, Hammer Space, is they do hyperscale NAS, which is network attached storage,

• 8:10Speaker 03

  and a lot of other fancy things to essentially allow companies instantaneous access to their data. And therefore they can have fat, uh, more efficient GPU throughput. So more efficient AI compute, lots of data handling for companies that want to do it. And I think it's super, super duper cool. I love seeing companies build the picks and shovels for the gold miners. In this case, quite a lot of capital into a cool company.

• 8:31Jason Calacanis?

  One of the big challenges when you're doing these large AI jobs is obviously moving data, you know, onto the GPU, off the GPU, from one GPU to the other, load balancing it, et cetera. And, um, the integrity of that data. So as An industry breaks out like we're seeing all kinds of picks and shovels and enabling technology gets invented. If you were to look at, huh, let's see, um, the last big revolution. Mobile? Mobile. And you look at apps. Man, the number of app economy related companies that weren't actually building the apps or the phones or running the app store were incredible.

• 9:13Jason Calacanis?

  App store optimization, you know, managing people's logins and their, their phone books for social networks. All these things got abstracted. So there's always a lot of great investments around there. So congratulations to them. Looks like these would probably be a great twist 500 company. Have you considered them for twist 500, Alex?

• 9:34Jason Calacanis?

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• 10:19Jason Calacanis?

  over spreadsheets with your P and L and all this nonsense. You want accurate financials delivered on time every time, and you want to be compliant with your taxes. You don't want any last minute surprises. And when it's time to raise your neck round and you're scaling up, Pilot's CFO services team is going to help you plan and grow with confidence. Startups that use Pilot tend to raise a bigger Series B and a bigger Series C round than the average startup. Why? Because when you're buttoned up from the start, everything gets easy. Focus on your product. Let Pilot handle your bookkeeping. This week in startups, listeners get $1,200 off their first year. Just go to pilot.com/twist. That's P I L O T. com slash T W I S T.

• 10:59Speaker 03

  Absolutely. I haven't gone enough detail yet to actually say yes or no, but they remind me of a company we just talked to, which was Tailscale. We had them on the show, I think it was yesterday with the episode air. And what they're doing is building essentially a kind of enterprise-grade VPNs to allow, once again, for quick data transfer. And so it seems that the, the data business is not just who can hold the most and then sift it for you, but who can move it around the fastest, the most efficiently and the most securely as well, because we do live in a hyper-scaled compute world. So quite a lot to say here. Um, I also love seeing a nine-figure round to kind of get off the quarter. So good news for everyone's venture numbers.

• 11:32Jason Calacanis?

  Lon, tell me, since you're our media guy, tell me about Patreon and the, and the new product offering there.

• 11:37Speaker 05

  Yeah, they're getting into the, uh, streaming game is what it seems like. A new Patreon feature is going to allow creators to stream theoretically 24/7. Uh, the company raised 155 million at a round of $4 billion valuation back in 2021, but they've seen paid subscriber growth slow.

• 11:54Jason Calacanis?

  Yes.

• 11:55Speaker 05

  Uh, so this is sort of obviously a way to make it stickier, to goose more, uh, participation, more time on site, you know, get, get creators excited about using Patreon again. They're probably not directly competing with Twitch. Instead, it's more an attempt to invest in creator-friendly video products, more akin to, we're thinking something like a Substack, which also sort of has added a video component. Also bear in mind Patreon, they're kind of in the same general field as OnlyFans, where they're allowing you to build a community of your followers, of your fans.

• 12:25Jason Calacanis?

  Do they allow adult content?

• 12:27Speaker 05

  Exactly.

• 12:28Jason Calacanis?

  Patreon does or doesn't?

• 12:29Speaker 05

  They do not. That's the big dividing line is OnlyFans, most of the creators on there who are building big communities on OnlyFans, doing it with risque content, sort of, you know, sexuality. Uh, Patreon is not that. It's focused on, you know, more.

• 12:42Jason Calacanis?

  Alex, how are you, how's your OnlyFans doing? Haven't heard you talk about it much.

• 12:45Speaker 03

  It's really been a disappointment. It turns out my feet pics just don't sell and, uh, I'm too bald to really get any of the, the men who like hair to show up. Uh, no, I, I just think that this is Patreon trying to stay relevant. I mean, Substack has been so active in adding creator-focused services to build out from its initial base of, of the written word. And Patreon, I think, just risks falling behind somewhere. And yes, they do have that, as Lon mentioned, Tiger, you know, Zerp 2021 era valuation to deal with. But let's just pretend that doesn't exist and just think existentially, they need more juice. I showed some charts a second ago that just shows that the company's growth. In a lot of ways, from what we can tell from third-party data, has slowed down. And Jason, a mid-sized, unprofitable, low-growth Patreon's worth like 250 million, maybe?

• 13:29Speaker 03

  So they have to find somebody else here.

• 13:31Jason Calacanis?

  Competition is brutal. One thing I noticed is Substack is really coming on strong now in terms of their offering. I always thought, you know, anybody who has a million dollars or more revenue would immediately leave, uh, you know, like maybe you get to 2 million, 3 million, you're giving 10% of that to somebody like, um, Substack, it makes no sense because you could fire up Ghost, you know, a competitor and pay zero. And I think, correct me if I'm wrong here, you would know Substack is 10% plus the 3% stripe fee?

• 14:08Speaker 03

  Plus the 3%, yeah.

• 14:09Jason Calacanis?

  So, you know, if you could go on Ghost, you're actually saving 10%. At what point does somebody like, who's the guy who was at the New York Times who covers social media? Casey?

• 14:19Speaker 03

  Casey Newton, now with the Platformer.

• 14:21Jason Calacanis?

  He has Platformer's own publication. You know, I used to subscribe to his, I stopped because it was like, he got too personal, like going after like personal, people's personal lives. When publications do that, I stopped supporting them. And I did the same thing with Eric Newcomb, who was a, you know, friend of the show, but he started getting very personal, you know, about some specific friends, uh, like David Sacks or whatever.

• 14:43Speaker 05

  Yeah, I got a, I got a few names in mind.

• 14:45Jason Calacanis?

  Yeah, I mean, when it's, when you go after somebody's personal life, I don't like it.

• 14:48Speaker 05

  Yeah.

• 14:49Jason Calacanis?

  I think you gotta keep it professional, um, to the extent you can. But I used to pay for both those. I don't pay for either one right now, just my own little protest there when they, when they get after people's personal lives. But I would think somebody like that, when you hit 250, paid to them, you would say, I could hire a full-time operations person and a full-time salesperson, or you could, basically that's three hires in newsletter land.

• 15:13Speaker 05

  Right.

• 15:14Jason Calacanis?

  Average salary, 80K, you could hire three people and stand it up. So I'm surprised that people haven't, and you have to wonder why. Why would you pay 250 grand to Substack? Well, Substack keeps coming out with new features, and there seems to be, um, I think in people's mind, the belief. That the network on Substack will get you 10% more revenue. Right. Or maybe 5%, and I think actually that's come to pass. So I think I was wrong in my initial assessment because I'm too close to the problem. Right. A publisher. Yeah. I'm like, why would you do that? I've been looking at it. I turned on subscriptions on Twitter. So now you have Twitter subscriptions. Mm hmm. You and I have been talking about turning on YouTube subscriptions. Yeah.

• 15:59Jason Calacanis?

  Patreon, where we keep all of our mailing lists because Mailchimp was so expensive for like low volume usage. Right. I was paying 50,000 to Mailchimp. Now I pay like, I don't know, maybe 300 a month or something. And I'm like, why do we still have a list on there? Get it off of there. Stop paying. It's free to have a mailing list. Uh, and sure enough, uh, you know, you have Patreon. Mm hmm. This like, um, shattering of, of all these subscriptions is really challenging, I think. And Sam Harris is a great example. Sam Harris was originally on Patreon. Patreon started getting into the censorship game. They started picking who would get to have a Patreon or not. Right. Sam was like, I'm going to roll my own. And he did that five or six years ago. He

• 16:40Jason Calacanis?

  rolled his own. But then I noticed he's taking subscribers on Substack now. So I don't know if he moved or he added that. I don't know. I think he added it so that he could do it. So what's going to happen now, I believe, is people are going to do subscribers on multiple platforms. Oh, yes. And the reason I believe that's going to happen, and then somebody will build a piece of software that reconciles membership across multiple. I want to back that business. Yeah. So if you're an entrepreneur and you can come up with a layer, we were just talking about this, uh, company, uh, that, that my friend Brad Gerson, uh, cover, invested 100 million in, or the consortium did. I will, I will incubate this company. Take all my subscribers from Twitter. Take, I'll turn on Substack subscribers.

• 17:25Jason Calacanis?

  I'll turn on YouTube subscribers and um yeah, I'll start a Patreon.

• 17:29Speaker 05

  Mm hmm.

• 17:30Jason Calacanis?

  But I want to know that if anybody's on any of those, that I have them in a centralized CRM.

• 17:37Speaker 05

  Right.

• 17:37Jason Calacanis?

  This would be an incredible business.

• 17:38Speaker 05

  Yeah.

• 17:38Jason Calacanis?

  CRM for uh folks to sort of consolidate all these and.

• 17:43Speaker 05

  Yeah, uh one, one place where a creator could sort of manage all of their various communities. I think that makes a ton of sense. I mean, I think especially like for me, looking at Patreon, I think the biggest issue for them is it's just, it's so easy to make a Patreon and get started. But it's, it's not sticky. It's not something people stick with. It's too hard and people give up. And so such a small percentage, I pulled this up from ChatGPT, if we were to pull it up. There's a very small percentage of people who are on Patreon who are actually active. They're saying uh a, a creator's earning five thousand or more dollars a month is one percent or less. Creators earning a thousand dollars a month is only two to five percent. So the long tail, a majority of creators on Patreon are earning under a hundred dollars a month. And that's just not enough motivation to keep going.

• 18:28Jason Calacanis?

  Hmm.

• 18:28Speaker 05

  And so I think that's what stuff like streaming and like you were mentioning, all the Substack bells and whistles and new features. It's all just, it's, I think it's less about the audience and it's more about the creators themselves and getting you excited to come back and make something new. Next week and the week after, the week after, and to not give up after a month.

• 18:46Jason Calacanis?

  I currently pay for a Patreon and by the way, the Patreon app has gotten better.

• 18:50Speaker 05

  Mm hmm.

• 18:50Jason Calacanis?

  The Substack app has gotten really good.

• 18:53Speaker 05

  That's true.

• 18:53Jason Calacanis?

  It's confusing as hell and I'll get to that in a minute, but I just want to give my notes for Patreon first. Patreon's app um along the top has like a nice little strip of your subscriptions and then it makes like a meta feed. But the sorting of the feed is not very good.

• 19:08Speaker 05

  Right.

• 19:08Jason Calacanis?

  It doesn't work like a podcasting app where you understand it and they allow people to put all kinds of different posts.

• 19:14Speaker 05

  Sure.

• 19:14Jason Calacanis?

  Whereas you know, like my main consumption is podcast player kind of thing. So it's a bit confusing for me to know what I've listened to, what should I listen to next? But I have the video archives podcast. Quentin Tarantino.

• 19:26Speaker 05

  Yeah, and Roger Avery.

• 19:27Jason Calacanis?

  And Roger Avery. It's fantastic. If you're into movies, highly recommend.

• 19:33Jason Calacanis?

  All right, we all know if you're a founder, or even if you're a small business, you're thinking about your company 24/7, 365 days a year. That's the life of a founder. This is not clock in, clock out, nine to five gig for you as the business owner. So when you're hiring, you want a partner that's as equally as committed as you are. And that's of course LinkedIn jobs. LinkedIn jobs is like your co-founder. They're going to make it so simple for you to post your jobs for free on LinkedIn, where there are 1 billion members. You're going to be able to share what you're posting and actually keep all the promising candidates organized in one place. And also LinkedIn is going to help you quickly write a job and get it in front of the right

• 20:16Jason Calacanis?

  people, whether you want to post for free or use some promotion to get it in front of even more qualified applicants. So do me a favor, don't take my word for it. I mean, you should, I know what I'm talking about. This is where I find my great people, but just understand that 72% of small businesses using LinkedIn said that it helped them find the best candidates. So find out why more than 2.5 million small businesses already use LinkedIn for hiring. So here's your call to action. Post your job for free. Why wouldn't you do it? It's free, F R E E. That's a good price. LinkedIn.com/TWIST. Once again, that's LinkedIn.com/TWIST to post your job for free. Terms and conditions do apply.

• 21:04Jason Calacanis?

  Then I subscribe to lawfare. I love lawfare because Trump does all kinds of illegal crazy things. Trump, there's a bit of lawfare against him, like he does something, they'll escalate some stuff from a misdemeanor to a felony. And you get these great lunatic lawyers, like former prosecutors, and they're awesome. And they'll do 45 minutes on the latest case. And it really, you know, they were going to have this like little segment they would do Trump's trials and tribulations based on those six or seven active trials he had before this term. And it was really a great way for me to realize the public has no idea what's going on and what these cases mean.

• 21:46Jason Calacanis?

  And I had such deep incredible knowledge. That was when I was on All In, I could actually explain to people the New York case. And they're like, oh, this New York case is nonsense. And I was like, no, in New York City, falsifying business records. And I gave the case of why the falsified business records was like a really valid case.

• 22:01Speaker 05

  Yeah.

• 22:01Jason Calacanis?

  Even though Letitia James definitely said when she was running, hey, I'm doing this because I want to get Trump. And that was not wise because it made it appear like this was an unjust lawfare case. So somebody like Saks could argue, oh, it's lawfare. But in fact, they explained really in detail that New York has a history because they're the finance capital of the world.

• 22:23Speaker 05

  Sure.

• 22:24Jason Calacanis?

  They want records to not be fraudulent.

• 22:27Speaker 05

  Yeah.

• 22:28Jason Calacanis?

  Because they want people to trust businesses in New York and Wall Street specifically.

• 22:32Speaker 05

  SDNY, the Southern District of New York, infamous for bringing these kinds of cases. They're the Wall Street prosecutors.

• 22:38Jason Calacanis?

  And they're like, what is this even case about? Like, they always tried to dismiss it. And I was able to actually go into the nuance of it and say, falsifying business records is a crime. And it should be.

• 22:48Speaker 05

  Yeah, we all agree. That's an important thing to make.

• 22:51Jason Calacanis?

  Okay, I saw that Free Now has sold to Lyft. And I saw this story and I said, oh, what is Free Now? Which I think is what we all said. What is Free Now?

• 23:01Speaker 05

  I don't know what Free Now.

• 23:02Jason Calacanis?

  Apparently, this is an EU taxi app. And it's selling to Lyft for 197 million, which means Lyft, for the first time, has rides outside of the US. So as these two failing companies tie to each other, they'll sink even faster. Alex, is there anything to add to this news story?

• 23:20Speaker 05

  Free Now, not a good name for a ride share app because it sounds like a discount thing or I'm going to get a good deal on it. Like, it does not sound.

• 23:28Jason Calacanis?

  This is what happens when, you know, you have a bunch of copycats.

• 23:31Speaker 05

  Yeah.

• 23:32Jason Calacanis?

  Like, the last era of the of the copycat game is.

• 23:38Jason Calacanis?

  As they sink, they merge together and increase their velocity to J.B. Jones lock.

• 23:42Speaker 05

  I get what you're saying.

• 23:43Speaker 03

  I'm gonna take the other side of this one.

• 23:44Speaker 05

  Okay, go ahead.

• 23:45Speaker 03

  And I'm gonna, uh, cause I feel the need to provide some balance here. So a little history to start. First of all, uh, Union Square Ventures, back to a company called Halo back in the day. That later merged with My Taxi. Then Daimler and BMW put some money into it. They ended up owning the thing. So this is kind of a startup story. Um, but what matters here is for Lyft, this is a billion dollars in, uh, yearly bookings. It's a lot of market share in Europe. And I believe it's also adjusted EBITDA positive out of the gate, Jason. So it's not a profitability hit. It's expanding them and bringing more stuff into their orbit. If you're Lyft and you want to survive, maybe you still sink, but I can't fault them here. They, they really needed to have more than one market. Europe makes sense. Why not just buy into an existing functioning platform?

• 24:28Jason Calacanis?

  I mean, it's a dickcap bounce. It's a fine thing to do. It's kind of like the TechCrunch story sadly, where TechCrunch got bought by that company. That's got all the Ziff Davis stuff. And it's just like, okay, a bunch of stuff is failing. Um, we'll just, yeah, we'll just put it all together, you know? And, um, you know, the, the house of brands, you know, putting this all together. There's probably a lesson in here. I don't know the details of it, of the original company Halo, which I remember and My Taxi, that kind of stuff. Those companies were probably too early, didn't have, um, you know, uh, the perfect timing. And then when Daimler and BMW start buying stuff and you have two different people trying to, who are corporations,

• 25:12Jason Calacanis?

  trying to compete with some other assets. It's like throwing together four different restaurants that have nothing to do with each other.

• 25:23Speaker 05

  Right.

• 25:23Jason Calacanis?

  And all operate differently and then making them into like a food court or something.

• 25:27Speaker 05

  The camel being the horse designed by committee thing.

• 25:29Speaker 03

  Correct.

• 25:30Jason Calacanis?

  Yeah, it's, it's destined for failure. Um, anyway.

• 25:34Speaker 03

  Investors kind of agree with you. I, I was expecting this to trade up on the news, but Lyft's actually down a little bit today. And they're worth about 11 bucks a share, down from a 52 week high of around 19. So not looking good for Lyft sadly. I want them to succeed, so I'm gonna root for them here, but yeah, I can't really.

• 25:48Speaker 05

  You know how expensive it's gonna be to ship all those big fuzzy pink mustaches to Europe?

• 25:53Jason Calacanis?

  They haven't used those in a thousand years yet. Behind the times, old man. All right, uh, lightning round. Hit me with two sentences. I'll give you my lightning reaction. Alex, you do one, then Lon, you do the next one that you like best. Will do. Lightning round.

• 26:08Speaker 03

  All right, uh, OpenAI is building a social network likely focused around photos. It's not clear if this is going to be a big social push or merely something for OpenAI members to share tips and tricks. But I think, Jason, that everyone's going to want to have their own source of information that is not available to the internet. And so it's a smart move from OpenAI.

• 26:25Jason Calacanis?

  Uh, yeah, you can see this in Sora already. If you log into Sora with your chat GPT login, if you have the paid version. Mm hmm. As you make images in Sora, um, there is a feed that shows, uh, people who are using it. Right. And so, um, it's kind of cool, you know, when you're looking at the images, it just has the person's name there. All they have to do is put comments under it and a reshare button and you're off to the races. So this will work. Will it compete with threads, Instagram, et cetera? No, because it's not going to be a place where people talk about politics inherently. Right. It's not going to be a place where people post their own images. But it will be a news space where people make funny, interesting images.

• 27:09Jason Calacanis?

  The one thing I did notice when I was in Sora, uh, and then we'll go on to the next one. Um, is that Sora, um, was an awful lot of IP infringement. So Sora is behind a paywall right now. It's not open. Right. You can do all these interesting things with the video. Uh, oh, there it is. Thank you. Um, is that your login or is that just the, is that an unlogged in?

• 27:33Speaker 03

  This is my personal, uh, chat GPT account into Sora first look.

• 27:38Jason Calacanis?

  Yeah, if you zoom in, you'll see it has likes and it has comments. So if you click on one of those and if you scroll up, see if you see, uh, so, um, go ahead, look, go down and does it show you who liked it? And are there any with actual comments? And then do you see any that have, um, you see any of these? Yeah. If you scroll down, do you actually see who had the likes or had the comments?

• 27:59Speaker 03

  No, it just says 907 up here and we have some information about it and, uh, you can.

• 28:05Jason Calacanis?

  And you can see the prompt. All right. So anyway. Literally, they could turn on those features at any moment in time to share

• 28:12Speaker 03

  Yeah.

• 28:12Jason Calacanis?

  And it will be gangbusters for usage on there. But when you do look at your Sora, if you take a look there, do you see any copyright infringement of like people making Disney characters, etc.?

• 28:24Speaker 03

  I see the Scream Ghost. I see a lot of people trying to steal from ancient artists. And I do see Pinky in the Brain done in an evil style. So yes, we have IP infringement.

• 28:34Jason Calacanis?

  Yeah, so there's a ton of IP infringement there, which is why it's still behind a paywall. They want to put the IP infringement behavior on the users. The second that's public and the users are sharing IP infringed characters created by it and they're monetizing it, it's going to be lawsuits like crazy. And so if you are... Yeah, well, there's Paul Rudd. Yeah, if you are, um, so they're basically building a service that trades on celebrities' names and other IP names. It's going to be a disaster. Well, and the Section 230 of it all is like they're, it's, they're publishing. I mean, they're creating the, you're creating the IP infringed material in their platform. If you were doing it with an LLM on your desktop and then you decided to post that

• 29:16Jason Calacanis?

  to Instagram, then it would be up to the person who's being infringed to give the notice and then take it down. Be more like a copyright strike. If you're a startup, you need to use Notion. I want you to head over to notion.com/twist and sign up for free right now. The product is getting better every day. We're running the entire investment team, the entire podcast and the entire sales team on Notion. These internal tools have taken us from being chaotic and having things on people's hard drives, in documents, in spreadsheets, and putting them all into one place, including a database that now has thousands of startups, the ones we've invested in and the ones who want to partner with us. We basically have a CRM. Now, I was pitched as a venture capital firm on all these vertical tools for managing

• 30:01Jason Calacanis?

  my limited partners in the fund, managing our startups, managing our deal flow. And it turns out that the CRM system with its gorgeous note-taking, with perfect document sharing, with gorgeous project management is better in Notion than solutions just for

• 30:18Jason Calacanis?

  Very narrow things we were doing and it worked so well that we canceled two or three other SaaS products. Now, when somebody is looking for truth in our organization, they go into Notion, they find it, it's simple, it's powerful, and it's gorgeous. I love the desktop app. I love the mobile app. You can do any workflow or business model inside of Notion. Notion.com/twist to get started for free. Again, notion.com/twist to take the first step towards an organized, productive work and life today.

• 30:48Speaker 05

  All right. I do want to talk about Timu. I think this is so fascinating. So after tariffs and all the tariff mania of last few weeks, Timu, the Chinese e-retailer, completely shut off their Google Shopping Ads in the US. So that happened on April 9th. But that's not that surprising. The interesting thing that happened is almost overnight, their Google app rank absolutely collapsed. I think they went from number three or four, where they usually ranked it down into the 40s and 50s, almost instantly. So it's a real indication of Timu's traffic not organic at all, all really based on paid customer acquisition.

• 31:24Jason Calacanis?

  Yeah.

• 31:25Speaker 05

  And this massive, massive ad spend that they were doing. And as soon as they shut that off, they sort of vanished.

• 31:31Jason Calacanis?

  Um, I have the off-ramp for Trump and tariffs in relation to Timu.

• 31:38Speaker 05

  Well, thankfully, he watches the show.

• 31:39Jason Calacanis?

  Absolutely.

• 31:40Speaker 05

  Right into camera.

• 31:41Jason Calacanis?

  Here's Trump's tariff Timu off-ramp.

• 31:44Speaker 05

  Hmm.

• 31:44Jason Calacanis?

  If I'm Donald Trump, Alex, if I'm Donald Trump, here's what I want you to do. Buy once is buy once, buy American. Buy once, buy American. B O B A. Boba.

• 32:00Speaker 05

  Boba.

• 32:01Jason Calacanis?

  Buy once, buy American.

• 32:02Speaker 05

  Hmm. Not just a T.

• 32:04Jason Calacanis?

  Chinese Boba.

• 32:04Speaker 05

  Yeah, I was just gonna say.

• 32:05Jason Calacanis?

  American Boba.

• 32:06Speaker 05

  Korean-American Boba.

• 32:08Jason Calacanis?

  Boba. We want Americans to Boba. Buy once, buy American. Buy something that's high quality. Pay two, three, four times as much for it, but have it for 10 times longer. So we're gonna ask American craftsmen. People, we ask American craftspeople to be part of the BOBO movement. And we're going to save people money long term by investing in better products, investing in craftsmanship, and investing in America. Yeah. And not buying cheap, dangerous, disposable, environmentally unfriendly products from Timu in China. If you, this is why I should have taken a job in the administration, because I would have saved them. Yeah, this is.

• 32:53Jason Calacanis?

  I'm not saying I was offered. I was offered. I could have been part of it, but chose not to be. Instead of being part of the administration, I am now an outside observer. Trump could save the entire tariff brouhaha and win versus China by appealing quality, the environment, and America. So buy once, it's a really interesting concept, isn't it? Buy American, that's what we're trying to do, right? And B C. Buy craftsmen. Right. Buy craftsmen. I have my Contigo. You guys see me carry the Contigo? Oh, we do.

• 33:37Jason Calacanis?

  The Contigo lasts forever for 25 bucks. I don't use paper cups. I'm not like these other girls out here using paper cups. I'm demure, okay? So demure. So demure, so mindful. So respectful. So thoughtful of the environment. Anyway, let's, we have a guest, don't we? We do, we have two guests. We have two guests, all right, let's get to the.

• 33:58Speaker 03

  Let's start with nerd crawler, Lon. This is a company that I think everyone here on the show is super excited about. It is a comic book marketplace. We are going to talk to Christopher Tong, the solo founder. Let's bring him up. Christopher, hey.

• 34:10Jason Calacanis?

  This company came to, I believe, our founding university. They pitched me. And sometimes I hear an idea and I'm like, this is such a good idea. I have to invest immediately, if not sooner, and I get nervous that I'm going to lose my ability to invest in the company. I get nervous. And then I say to myself, not only do I have to invest, but I have to build a position. Tell us a little bit about what you're building, why I'm so excited about it. And which of our programs did you come to? How did you find out about our little venture outpost here called Launch?

• 34:43Speaker 06

  Yeah, sure. So Nerdcrawler, or hey, everyone, I'm Chris. I'm the founder of Nerdcrawler. We are the fastest growing marketplace for top comic book creators and sellers to auction rare comic sketches, published comic art, signed comics, and other like one of few products to super fans. So think eBay, but curated just the best of the best from comic creators. I started this in 2024, and since then, we've helped over 190 sellers earn over a million dollars in sales. And our monthly order volume is growing 30% month over month. We were part of Founder University, actually, when I was doing like 2K GMV a month. And now we're doing over $100,000 in GMV. But then from Founder U, I joined Launch.

• 35:22Jason Calacanis?

  The accelerator.

• 35:23Speaker 06

  Correct. But I joined the accelerator, Lon. I quit my full-time job.

• 35:26Jason Calacanis?

  You did. Congratulations. So at Founder University, it was a side hustle.

• 35:30Speaker 06

  Correct.

• 35:31Jason Calacanis?

  Were you even incorporated?

• 35:33Speaker 06

  Uh, no, it was like through an LLC that I had done, and then you guys were like, you better be a C corp.

• 35:38Jason Calacanis?

  So we taught you something about that. You're a first-time entrepreneur. You're a solo entrepreneur. Lon, we have a rule in the Founder University. We want teams. We always want two or three co-founders. Just like Y Combinator or Techstars, we're always looking for multiples. But if the idea is so compelling and the founder is so compelling, which we saw here, incredible execution, incredible idea, incredible founder, we'll say, you know what? We'll go with the solo founder. We just know as a firm, we're going to need to add a little support there, right?

• 36:05Speaker 06

  Right.

• 36:06Jason Calacanis?

  And so if we add a little support, hopefully that will help. And one of those support moments that came up was you were in LLC. LLC is just a little technical thing here on this week in startups on a tactic basis. That's a partnership, and then you pass through. So if you're a taken investor like me, then I have to have units in it. If I own, let's say, 10% of the partnership, then if the partnership makes $100,000 a year, you have to distribute 10,000 to me. I have to pay taxes on it. Now complicates everything. I made the same mistake. Weblogs Inc. was originally an LLC. Because we want it to be profitable and only pay one-time tax.

• 36:42Speaker 06

  Right.

• 36:43Jason Calacanis?

  So for a partnership, when you have an LLC, like a law firm, You only pay tax one time. When you're a corporation, you pay tax twice. You're gonna pay corporate level, then you do a distribution, you get your distribution, your dividend, you have to pay tax on that. Double taxation, not fun. They're good.

• 36:58Speaker 03

  Here's how, uh, here's Chris's progress to date, showing how his wild 2024 came to be. Just bringing it back to the nerd crawler discussion here. 1.2 million GMV at the end of last year. That's super impressive. How's growth been in 2025?

• 37:10Speaker 06

  Yeah, so, uh, the big thing is like orders are starting to take off. So, uh, you know, you normally think, uh, Q4 is when all of the sales for an econ business would, would start. But, uh, month over month, orders are now going 30%. Uh, it feels like we're really starting to hit something. And then with category expansion into things like signed comics and prints. Uh, we just continue to grow, um, which feels great.

• 37:32Jason Calacanis?

  This is, you know, whenever you know somebody who has some like deep secret, like, there's a theory, Alex, that like every founder has a secret. I don't know who came up with the secret theory of startups, but the secret theory of startups is every great founder, every great business has a secret. And the secret here, as told to me, was the people who draw comics, the artists, they get to keep their original drawings. That's theirs. They own it. Ah. The character Wolverine is owned by Marvel, quite obviously, right? And so, when I was talking to Chris in the other days, I was like, explain this to me. He's like, I was like, how much do they get paid?

• 38:15Jason Calacanis?

  And Chris is like, they get paid terribly. And I'm like, explain it to me. So if I was gonna draw a comic for one of the top 10 comic companies, and I drew the page and I was just the, the person who draws it, because there's also somebody who colors it, I think.

• 38:30Speaker 06

  Correct. Yeah.

• 38:31Jason Calacanis?

  So I draw it. What would I get paid by it? I don't want to pick any specific one. I just want, just generally a top 10 comic. For a top 10 comic slash comic book label, what would I as an artist get?

• 38:44Speaker 06

  It's probably below, below $300 a page.

• 38:47Jason Calacanis?

  What?

• 38:47Speaker 06

  Regardless of the higher up you go, it's probably close to that 300, but the page rates are, are lower than you would.

• 38:55Jason Calacanis?

  And how many pages in a comic?

• 38:56Speaker 06

  22. And the expectation is you'd probably get the book done in about four to five weeks for the publisher. And then you're trying to do multiple books at once to, you know, pay your rent and buy 30.

• 39:07Jason Calacanis?

  I just wanted to go through the math there. 300 times 22 is 6,600 for the drawings.

• 39:13Speaker 06

  Right.

• 39:13Jason Calacanis?

  Then the coloring, they get paid a, I'm sure a lesser fee.

• 39:16Speaker 06

  Less than that, yes.

• 39:18Jason Calacanis?

  So that adds another, let's say a hundred dollars a page, maybe for the, the 22 pages.

• 39:23Speaker 06

  Colorist, yeah.

• 39:23Jason Calacanis?

  Colorist, so now you're like eight grand.

• 39:25Speaker 06

  Mm-hmm.

• 39:25Jason Calacanis?

  And then somebody wrote it.

• 39:27Speaker 06

  Yep.

• 39:27Jason Calacanis?

  They got paid as a writer. What does a writer get paid for the script of a comic?

• 39:31Speaker 06

  I, you know, that's a good question. Um.

• 39:34Jason Calacanis?

  That's not your business. Yeah.

• 39:35Speaker 06

  Yeah, that I'm less familiar with, but you know, the higher up you go, like the big names, because they have folks like Jeff Loeb, who's the showrunner of Daredevil. Like he'll write books and so he gets paid more than like the upstart kid.

• 39:45Jason Calacanis?

  They probably get paid 50 grand to write a comic though, right? Or something like that. 25.

• 39:49Speaker 05

  Yeah, still even Kevin Smith is not making that when he was writing.

• 39:52Speaker 06

  Anyway, yeah, that's exactly right. Yeah.

• 39:53Speaker 05

  No way.

• 39:54Jason Calacanis?

  So they get paid a pittance.

• 39:55Speaker 05

  Yeah.

• 39:55Jason Calacanis?

  A comic book then costs something to the effect of 10K to put together.

• 40:00Speaker 05

  I think that sounds reasonable.

• 40:02Jason Calacanis?

  What do you call it? An episode? An issue?

• 40:03Speaker 06

  Issue.

• 40:03Speaker 05

  An issue.

• 40:04Jason Calacanis?

  So 10K an issue. How many issues in a season of a comic book?

• 40:07Speaker 06

  It depends. So like ideally like 10 to 12 if no one is late.

• 40:11Jason Calacanis?

  So let's put it at 10, easy for math. So it's a hundred thousand to stand up the IP, basically, maybe 120 to stand it up. And then you gotta print it. So if they make it, and then they probably make, what does a comic book sell for today? Five bucks?

• 40:25Speaker 06

  Right now it's like 4.99, 5.99. Yeah.

• 40:28Jason Calacanis?

  Okay. So retail takes a couple of bucks of that, maybe half of that. So they're probably making three dollars per comic. For them. To break even on a comic, they need to sell, if they sold, let's say 50,000, they'd be at 150,000 in revenue. It's a guy sell 50,000 to break even. Does that sound about right?

• 40:47Speaker 06

  Yeah, that sounds about right. Yeah.

• 40:49Jason Calacanis?

  Which is really a small number. I mean, it's not a giant number, but you just have to have a somewhat loyal following.

• 40:54Speaker 05

  It's a bit like the, the film industry too, where a huge book that sells massive can make up

• 41:00Jason Calacanis?

  Power law business.

• 41:02Speaker 05

  Other, other issues that don't do as well.

• 41:04Jason Calacanis?

  It's a mutual fund.

• 41:05Speaker 05

  Right. So like, that's why like DC, there's tons more Batman titles than there are smaller characters because that's airing the weight for a lot of experiments and smaller runs.

• 41:15Jason Calacanis?

  So for somebody who does this and makes, you know, if they're, if they're drawing comic books for a living, they might make 50 or 100,000 a year in total.

• 41:24Speaker 05

  Yeah, like the top, the, the big people.

• 41:27Jason Calacanis?

  So they're ma- they're basically making, they're a wage slave, as we say in the business, right? Like.

• 41:31Speaker 05

  And you really get into where it becomes insulting when you've got a guy like, you know, Steve Ditko, who he's, he's drawing Spider-Man for years. He's creating so much of that world and so many of those characters really defining what we now think of as Peter Parker, Spider-Man, what that looks like. And yet he was getting paid piecemeal for all of this work, but Marvel owns

• 41:53Jason Calacanis?

  Spider-Man.

• 41:53Speaker 05

  Everything for all the villains and everything. So he's not making, his estate's not making money for all these Sony movies.

• 41:58Jason Calacanis?

  So what I love about what Chris is doing here is you're basically given the ability to double or triple their revenue a year.

• 42:04Speaker 06

  And in fact, a lot of them are already using tools like Shopify to sell direct to consumers. But they weren't getting distribution or they weren't capturing the true value of the work. And so even on our own platform, you know, we've had some issues or moments where we've five X earnings on like one sketch cover or one piece of art. Um, notably an artist was like, the money allowed me to throw my daughter a birthday party, right? And so that stuff is fantastic.

• 42:29Speaker 05

  Yeah.

• 42:29Jason Calacanis?

  All right, listen, great job on the business. The sky is the limit. It's a marketplace. We love marketplaces here. I've done pretty well with Thumbtack, Uber. Um, anything you're struggling with now as we wrap?

• 42:39Speaker 06

  Yeah.

• 42:40Jason Calacanis?

  Anything that's challenging?

• 42:41Speaker 06

  I, I would say like, you know, Jason, your background with marketplaces, right? You talked about quite a few. Uh, you know, we're at 1 million GMV, growing really fast. What are some things that you saw? That allowed a marketplace to break out and hit that like 10 million GMV or rocket shift to 50 million GMV?

• 42:57Jason Calacanis?

  Yeah. So supply, demand, supply, demand. You have to build a team where one group. Is solely responsible on supply. And then one individual is solely responsible for demand. So you, as the CEO, can meet with them and yell at them. I'm sorry, inspire them to great.

• 43:16Speaker 06

  Right, of course.

• 43:16Jason Calacanis?

  But demand excellence. What happens in a startup is if people don't have a clear lane. They're like, oh, you know, I was working on getting a couple of more artists, but you know, then I, I, I was doing an ad test for demand and, but I did a little bit of both. And everybody's like, you know, the peanut butter gets spread then. You have to set aggressive goals. I want you to meet with 10 artists. I want you to reach out to 10 artists a week. I want you to get on the phone with them. I want second calls. I want to hear why they will do it, why they won't. And by the end of the year, I want to have, you know, uh, an extra. You know, if you, if you're doing 10 a week, 50 weeks, 500 meetings, I want 250 artists on here.

• 44:00Jason Calacanis?

  And of those 250, I want, you know, uh, every single one of them to have sold three pieces. So I want 700 people. Now, wait a second, who's responsible for the selling of the pieces? Oh, that's the, that's the demand side, not the supply. So one person got those artists. Now the other side has to make sure that those artists have the registering. So now you put another person on, get somebody to buy that. Okay. Well, what is it going to take to get somebody to buy? Well, maybe they put up the wrong prints. Maybe they didn't frame the prints. Maybe they didn't take good pictures of the prints. Maybe we didn't SEO the prints. Maybe we didn't pick the right artists, whatever. Uh, or maybe we need to buy ads. Maybe we need to do some PR, some marketing to get people to know that this is possible.

• 44:42Jason Calacanis?

  Maybe they need to do some blocking and tackling like, hey, this is Spider-Man. We've got some Spider-Man here. How come we are not finding the Spider-Man group on Facebook or putting these tagged properly on Instagram? Or doing a TikTok around Spider-Man and the different characters and the marketplaces and you could own this. So that's really what you have to do is get those two pieces dialed in.

• 45:03Speaker 06

  Yeah, I love that. Awesome.

• 45:05Jason Calacanis?

  Go, get back to work. All right, we'll see you soon.

• 45:07Speaker 06

  All right, take it.

• 45:08Jason Calacanis?

  This thing's going to be a billion dollar company.

• 45:11Speaker 05

  It's a great idea.

• 45:12Jason Calacanis?

  Billion dollar company.

• 45:13Speaker 05

  I think what it does so well, you know, when you would go to old school comic book conventions? I'm sure you know.

• 45:19Jason Calacanis?

  A lot of times in New York, the Roosevelt Hotel.

• 45:21Speaker 05

  Right. Artist Alley used to be like the prime attraction where you could go and like meet comic book artists and get them to drop it. He's taking that exact experience and putting it online at the exact time that comic book conventions are getting redirected to movie promotion and Hollywood PR.

• 45:37Jason Calacanis?

  He could be doing any number of objects on there. He started with the artwork, but he could do a cameo. He could have you, he could make the three of us into a super startup team and you could pay $500 to make Alex and what's his superpower? You and what's your superpower, my superpower, your ability to eat tacos?

• 45:56Speaker 05

  I can eat a lot of tacos.

• 45:58Speaker 03

  That's a challenge.

• 46:00Jason Calacanis?

  All right. I want to talk.

• 46:02Speaker 05

  I do love tacos.

• 46:03Jason Calacanis?

  Let me do this one up. You know, we've been trying to make sense of the tariff policy. And obviously that's a moving target, not easy to do.

• 46:11Speaker 05

  No.

• 46:12Jason Calacanis?

  But what we really want to understand is the people who are being impacted by it and what it's like to run a startup that is directly impacted by Trump's tariff policy. The Trump tariff cornetto.

• 46:27Jason Calacanis?

  Let's see. So, you know, I love these cut shirts. Everybody knows that. I met Steve, I think, when we were both in Saudi. I think we met for the first time in person, but introduce our guest, Alex.

• 46:39Speaker 03

  Yeah. So Stephen Birelli went viral over a tweet calling out essentially the impacts of tariffs on his business, discussing how rapidly they're coming to the fore and their scale. We'll pull up his tweet in just a second. But Jason, we wanted to have him on to learn more about how people are dealing with not just the scale of the tariffs, but how quickly or unquickly they're being put in place and taken down again. Stephen, welcome him in.

• 47:03Jason Calacanis?

  How you guys doing? Happy to be here. Steve, do you go by, good to see you. Do you go by Steve or Stephen? Uh, Stephen. Stephen, we met. Is that my correct that we met when we were both in Saudi? Yeah, we met. You were wearing cuts too. So I know you're a loyalist. I'm a loyalist. I love cuts. You have a great T-shirt. Really well, you know, very flattering. They're nice looking shirts. Nice looking shirts. Nice looking shirts. Also a nice bomber. You got a nice bomber jacket. I like the bomber jacket. And also very affordable, I might say. So tell us about the tweet you posted. Tell us about what's happening in the business.

• 47:37Jason Calacanis?

  You know, the discussion on All In and here has been, of course, we want to have redundancy in our supply chain for pharmaceuticals. We want to make sure we have semiconductors here. You know, we want to be able to build ships in case we get into war. Everybody agreed on that. And then the thing people didn't agree on was, do Americans want to sit in a literal sweatshop making T-shirts? Or is that better to be done in another part of the world where they're developing a middle class and they really want those shops?

• 48:14Jason Calacanis?

  As far as I can tell, we're at the lowest unemployment of our lifetime, 4%, and nobody wants to work in a clothing factory in America. You know, just, am I correct in my assessment here? And then tell us about your post and why you posted it, because I'll be totally honest, I had two other people when I asked how these things were impacting the business. They said, two different people said to me, I don't want to talk about it publicly because I'm afraid of retribution from the Trump administration. Let that sink in. Wait, I think Donald Trump likes to get revenge on people? He is. So, I mean, tell us the post. And do you fear retribution? And then what's

• 48:59Jason Calacanis?

  going on in the space?

• 49:00Speaker 00

  So, I've been on a group chat with, you know, many founders that represent billions of dollars of sales. And we were all kind of screaming it from the mountaintop of, hey, we've already ordered inventory. A lot of it's coming from China or other countries with heavy tariffs. And 145% now, 245% is not really a tariff as, you know, the average person understands it. It's really an embargo. Because no business can obtain that margin hit to their bottom line. And so you're stuck with inventory you've already paid for, that's sitting in your warehouse, but you can't sell it. And so, what a lot of business owners are doing is saying, hey, well, let's go to a different country. But because there's so much uncertainty of where to go.

• 49:44Speaker 00

  It's causing chaos in businesses and my prediction is if this goes on for 60 or 90 days, a lot of businesses won't make it because they won't have inventory to sell at a profit, or they're just gonna have to like slow down massively. So they let their inventory last them instead of 30 days, it'll last them 60 days and their revenue will go down. And so there's a lot of repercussions that's happening underneath the surface. And I think the biggest thing I want to get to, these tariffs are gonna hurt American jobs. You know, graphic designers will get cut, production managers, a lot of American jobs are at stake if the tariffs don't get solved and you know, even a month is too long in my opinion. This needs to be adjusted in one or two days.

• 50:26Speaker 03

  Has there been any response to your thread thus far, Stephen, from the administration? Has anyone reached out? Because you tanked a lot of folks in there and I'm just curious how responsive the government is to X posts.

• 50:37Speaker 00

  You know, I did get one prominent figure in the in the White House reaching out saying, hey, we're working on this. From the White House's standpoint, I did feel that they were listening to me. They were made aware of, okay, this is, this is gonna hurt small businesses and medium sized businesses in the United States, and we have to keep that into consideration. So I am hopeful that they're listening, but I'm also a little bit nervous as you know, you know, the, the debate between China and the US is gonna be, it could take a while. So cuts, we're really preparing. If this negotiation goes till June, what do we do?

• 51:15Jason Calacanis?

  Okay, so you are gonna have to pay 150 or 250% every time cuts clothing lands in, I'm assuming, Long Beach, or I don't know where your stuff comes into. Where does it come into?

• 51:28Speaker 00

  So that's also important note. So there's a 321 de minimis law, which is if it's under $800, you can import, you don't pay tariffs. That goes away May 2. So we come into Long Beach, and this is what, why this rule is really gonna crush companies like cuts is, not only are you having to pay the 145% tariff, but you're also adding in that 30% tariff that you weren't paying before.

• 51:53Jason Calacanis?

  Got it. So you are shipping directly from China to me. When I order 10 shirts, as long as it's under 850 bucks. You're in that de minimis?

• 52:03Speaker 00

  We're shipping them to Mexico in bond and then on a daily basis, they're shipping over the border to you.

• 52:10Jason Calacanis?

  Got it. And you had no warning any of this was going to happen in this fashion. And so you had no way to plan for this?

• 52:20Speaker 00

  Yeah. When Trump was picking up steam, we started to move a lot of our production to Vietnam. But stuff like that, this is another big point. You can't just pick up and move overnight. It takes time, you know, to move production facilities. It could take as long as six to nine months. So if he makes an announcement today, we're all left wondering, what do we do? So do we move it out of Asia and go to the Western Hemisphere? We're looking at places like Dominican Republic. But again, the time it's going to take for us to move versus the effects of trying to sell items at 145% is really damaging for small businesses.

• 52:59Jason Calacanis?

  Are you going to just pass this on to consumers like they're instructing you to? The administration's position is kind of like, hey, Americans have gotten used to cheap clothing. I'm not saying yours is cheap. I'll say the word affordable because you actually produce high quality shirts is one of the reasons I picked them and they're not cheap. I think your shirts are 50, 60 bucks I pay for them. Am I right?

• 53:21Speaker 00

  Yeah, 50, 60 bucks. So we, at 145%, there's no passing that to customers. That's the part people don't understand. It's an embargo. We're not going to sell those items.

• 53:32Jason Calacanis?

  Because people just won't, won't pay two and a half X what they currently cost?

• 53:37Speaker 00

  Yeah.

• 53:37Jason Calacanis?

  Okay.

• 53:38Speaker 00

  It, that, that, think about a jacket that you have. It's a hundred, you know, it's a $50 jacket, two and a half times that. The MSRP has got to go up too much where the demand would just be shrinking.

• 53:49Jason Calacanis?

  Where would you put the MSRP to make the same profit level-ish, you know, ballpark?

• 53:54Speaker 00

  So for a T-shirt, if it was?

• 53:58Speaker 00

  We would have to sell it at 80, 90 bucks to get the same profit margin.

• 54:01Jason Calacanis?

  You basically gotta double it. And now, I guess, the major concept, if there is a concept behind these tariffs, is people in America want these jobs. You've been running cuts. This is a very successful company. I think you have hundreds of thousands of customers, I'm gonna guess, and you sell millions of products, millions of items a year. Am I ballpark correct?

• 54:25Speaker 00

  Ballpark, yep.

• 54:26Jason Calacanis?

  Perfect. So, this is a vibrant business. You must have, and you've been doing it for, what, five, six, seven years?

• 54:34Speaker 00

  Yep, right around there.

• 54:36Jason Calacanis?

  So, you've been at this almost a decade. You know what you're talking about. You must have considered at some point making it at those sweatshops, those factories in Los Angeles. I know these because when I lived there, I knew people who were in the schmazza business. They told me they had illegal aliens working there, off the books, all this kind of stuff. It's a little bit of a gray market or underground market. Am I correct in describing what my friends told me was happening in downtown LA?

• 55:03Speaker 00

  I don't know that I would call it sweatshops, but it's 30 years behind where Asia is right now.

• 55:08Jason Calacanis?

  Got it.

• 55:09Speaker 00

  Back in the 80s, a lot of the, about 90% from the 80s to now has left LA. And so, the factory, supply chain, and the machinery is so outdated that the yield that it takes to make one shirt in the United States, it's, you can make five in Asia. So, I'm all for, and that's what I wanted to clearly say in my post, I'm all for bringing manufacturing back to the United States and being a part of Trump's mission. But it's gonna take, just like China does, grants or government programs to build that infrastructure. But if it's done the way it is now, hey, you just have to move.

• 55:49Jason Calacanis?

  Okay, so this is important for everybody to understand. It would take, you know, I think at a minimum quarters, but probably low years to build out the capacity to make t-shirts, to make clothes, the way they make them in Vietnam and China. You're gonna need a couple of years to build out those factories. You're also gonna need What I would think would be hundreds of millions of dollars in factory equipment to service Americans, maybe billions, and that money's got to come from somewhere. And there's not an entrepreneurial base that wants to invest in that. Therefore, and then there's finally the people to work in those factories.

• 56:28Jason Calacanis?

  So my understanding was it was undocumented, dare I say, illegal aliens. I'm not sure what the politically correct rule is in terms of how we describe people today, but undocumented workers, non-US citizens are the ones who are currently probably working in these sweatshops, and maybe I can't even call them sweatshops, factories. What's the reality of workers? If you did have the new machines, what type of workers do you need to maintain those new machines? And what education level do they need to have? And are Americans wanting those jobs?

• 57:03Speaker 00

  Yeah, that's going to be the tricky part. You know, when I did talk to the administration, I think this would be, you know, if we did want to bring in more, like you've talked about an all-in, these are jobs that we could get people to get their green cards, but I don't see a lot of current Americans wanting to do these jobs. So I do agree with you.

• 57:23Jason Calacanis?

  Because they would be minimum wage jobs.

• 57:25Speaker 00

  Yes, minimum wage.

• 57:26Jason Calacanis?

  Minimum wage federal, like eight bucks an hour, whatever, seven and change, or like LA minimum wage, which probably is 15.

• 57:33Speaker 00

  Yeah, that's why places like LA probably wouldn't be able to exist because even in that, that minimum wage would be too hard to beat.

• 57:39Jason Calacanis?

  So you got to put it in, I don't know who actually uses the federal minimum wage. I'm going to guess like Alabama or some places. You have to put it in a place where people probably also don't want those jobs. So is there any realistic path for clothes to be made in America that you see?

• 57:56Speaker 00

  It would take billions of dollars of infrastructure and then you'd have to create a alliance of companies that said, hey, we're going to help do this, but then you'd have to grant them, you know, call it like a discount on, and federal funding, similar to what China does. China will give grants to the businesses to subsidize it. That's what would have to happen for it to get off the ground in the United States. All these e-commerce companies, if I could just say one thing, we're living the American dream. Cuts was started, bootstrapped, didn't raise a ton of money, and we've sold hundreds of millions of dollars. We employ hundreds of people. E-commerce is the is the lifeblood of the American dream today. Uh, I, you know, we started with $50,000 that I saved up when I was living at home.

• 58:42Speaker 00

  My, my plea to the administration is just remember us.

• 58:46Speaker 03

  I'm a free trade guy myself, so I'm, you're beating my drum here, if that makes sense. So I'm really glad you're making noise about this because my gosh, we don't need to have embargoes on trade with some of our largest partners. Suddenly, it just doesn't make a lot of sense to me.

• 58:58Speaker 00

  And that's what the average consumer doesn't realize. They hear tariffs and like, oh, it won't affect us, but you know, 45% of the world's production is still China. And so, you know, you'll see Walmart if not have, not be able to stock the shelves in 90 days if, if, if this continues, which I don't think it would because it would just cause too much pain for, you know, some of the way bigger businesses.

• 59:18Jason Calacanis?

  So we're but 10 weeks out from store shelves being impacted. I've been told by a number of people that layoffs are scheduled in the next week or two for companies in your zone. I'm not saying you're planning layoffs or furloughs, but it would seem to me if you can't inventory, are you hearing from your contemporaries in this e-commerce group chat? Uh, and CPG chat? Hey, I'm going to need to start laying people off and pausing in the next week or two because that's what I'm hearing.

• 59:48Speaker 00

  Yeah, it's, it's, it's one, it's either going to affect your, uh, growth or your revenue because the inventory you have that is not affected by the tariffs, you'll need to extend that runway. Uh, or you're going to have to eat tariffs and that's going to cause your bottom line to just get destroyed. I mean, 145%, it eats into almost all your margin.

• 1:00:10Jason Calacanis?

  When do you think we'll start seeing the first of the layoffs?

• 1:00:14Jason Calacanis?

  If this isn't resolved?

• 1:00:16Speaker 00

  I, I, I would be willing to bet in a week, you start to see it with some of the bigger companies. And then in, really, it really starts after May 2nd.

• 1:00:25Jason Calacanis?

  It's literally what I heard. Literally, your intel is the same as mine. People are saying there's layoffs coming in the next week if this doesn't get resolved.

• 1:00:33Speaker 00

  There's a big date coming up, May 2.

• 1:00:35Jason Calacanis?

  Why is that?

• 1:00:37Speaker 00

  321 goes away, May 2. So like, a lot of Walmart is direct imports from China. That can still happen now.

• 1:00:44Jason Calacanis?

  And this is the de minimis rule.

• 1:00:46Speaker 00

  Yes.

• 1:00:47Jason Calacanis?

  It's rule 321, but in the industry, they call it 321 because that sounds cooler.

• 1:00:52Speaker 00

  Yeah, it's the de minimis, under $800. So.

• 1:00:56Jason Calacanis?

  And if we were gonna get out of that, if we were gonna get rid of that rule, would not the more thoughtful way to do it to be to say, on this date, in six months, 12 months, somewhere, a number between six and 12 months would be easily or more easily absorbed by the industry, yeah?

• 1:01:15Speaker 00

  Yeah, I think that's the biggest thing that if I was planning this, and I know that I don't know how this goes into the negotiation, but give manufacturers six to nine months to plan, and just, and put the tariff at 400%. Make it so clear that you can't do business in these countries, and, and just tell us what to do. Every time you change it day to day, it produces a ton of uncertainty, and uncertainty makes businesses very hard to run.

• 1:01:39Jason Calacanis?

  This is so poorly executed, and it doesn't need to be this. I don't understand where the wind comes from doing something so poorly executed. And it's so disruptive to small businesses, which is my wheelhouse. Small to medium sized businesses is the business I'm on. Those are the businesses I know best. This is so disruptive for them, and it's so unnecessarily disruptive. You would just need a six to 12 month thoughtful plan to be able to not lay off people, to not have chaos, to not have empty store shelves that I hope the administration listens to the people who voted for them.

• 1:02:15Speaker 00

  And I think it needs a nuanced approach. If you're, it seems like there's competing priorities. And if you got in the room with, you know, e-comm founders and said, hey, what's this coalition? How do we achieve my goal? Let us know what you're trying to do. And then allow us to provide some insights so the economy just doesn't get trash and Americans don't lose their jobs.

• 1:02:34Jason Calacanis?

  Yeah, big layoffs coming, folks. Steven, Cuts is amazing. I highly recommend everybody go to cuts.com, get the black t-shirt. It is a workhorse. Even, I'll tell you something so great about those shirts, and shout out to wherever they were made, if they were made in China. These shirts are such a bargain at 50, 60 bucks. I wear them. And then, when I, you know, because, listen, I can afford to, I rotate them out. I have a stack that I use for working out. This morning, I worked out when I did my kettlebell workout at the ranch. I was wearing a Cut shirt from four years ago. You know how long I've been a customer. You see my orders go through.

• 1:03:08Speaker 00

  He's a VIP customer.

• 1:03:09Jason Calacanis?

  I bought the VIP thing because I buy shirts. Listen, I don't want to flex or anything like that, but I buy them, you know, a dozen at a time. And then I take the other dozen and I move them to my workout stack. And the other ones are the ones that I wear on a crisp. You know, if I'm going out socially, I want a crisp shirt, you know, when they fade after I've washed them 30, 40 times. You get a lot of use out of these. They go in the workout pile, and then after that, I go, they go into the donate pile. I kind of keep track of this. I got a system. You think $50 for a t-shirt is a bit crazy. Not if it lasts you 100 wears. I think you're, how long do you have these shirts maintained? Not get the bacon collar and maintain the crisp blackness that I could wear it to the club. I could wear it out on a Saturday night under a blazer.

• 1:03:52Speaker 00

  I mean, we, we test them. They go, we have 17 dryers that we put them through. And to check for fading and pilling, and that's one of the staples with Cuts is we want things to last. And so, one more misconception about things made in Asia is people think that, oh, made in the USA is better quality. That couldn't be further from the truth. The machinery that they have there is so advanced to be able to have that quality and to do it at an affordable cost, that the quality that you're getting for 50 bucks is so much better than anything we could do here. And I was getting trolled on Twitter and saying, oh, it's, it's dropshipping business, shitty quality. It's a completely opposite.

• 1:04:32Jason Calacanis?

  All right, listen, Steven, I really appreciate you being honest about all this. We're all Americans. We're all in it together. Let's work towards making American businesses successful with predictability. Thank you, Steven. Everybody go buy a Cut shirt. Go support him. Love you guys. Cuts Clothing. Is it cuts.com? Or you got cutsclothing.com? Cutsclothing.com. Sorry about that. I thought you had cuts.com. Cutsclothing.com. Go there now and support a small, medium-sized business by buying a couple of shirts. You're gonna love them. All right. Thanks, Stephen. Hey, thanks, guys.

• 1:05:00Speaker 03

  All right, Jason, just before we go, back in December, we had Varun Mohan, the founder of Codium, which was making the Windsurf IDE. And big news from CNBC as we're wrapping the show today. OpenAI is in talks to buy it for about $3 billion. So we're gonna go ahead and put that in the newsletter today. But we do love seeing TWIST 500 companies in the news, and here's two of them and a 10-figure transaction. Love that.

• 1:05:25Jason Calacanis?

  And yeah, I see that OpenAI, $3 billion to acquire AI coding startup Windsurf.

• 1:05:31Jason Calacanis?

  Also, just now these tariff fears are hitting the market again. So NASDAQ off 4% at the taping of this show on Wednesday. Oh, my lord, S&P down 2.84, and the Dow Jones almost 2%. The VIX up 12%, almost 12%.

• 1:05:52Speaker 03

  Brutal.

• 1:05:53Jason Calacanis?

  Makes no sense what we're doing here, folks. Somebody's got to get through to Trump himself and just let him know this kind of chaos is not going to be good for anybody. And you're playing with... You know, the thing I really object to here, Alex, about this whole thing is that they have not communicated to the American people, to entrepreneurs, and to the rest of the world, what success looks like. What is the goal here? Like, where are we trying to get to? How many jobs? And you know, I gave you that homework to do of like, how many jobs we're trying to create. I'll save that for Friday, unless you want to just give it to us real quick, but...

• 1:06:33Speaker 03

  No, there's a lot. We have lots of material on the domestic ship industry, labor's degrees, the impact of the CHIPS Act, community colleges, technical roles. I got a package for you, Jason, so let's give it some time.

• 1:06:44Jason Calacanis?

  Let's give it some time. We'll talk about that on Friday. We'll see you all next time on This Week at Serbs. Bye-bye.