How Many Startups Will Survive OpenAI? | E2288

This Week In Startups is made possible by:Pilot -⁠ https://Pilot.com/TWIST⁠Grasshopper Bank -⁠ https://Grasshopper.bank/TWIST⁠Quo -⁠ https://Quo.com/TWiST⁠Plaud - ⁠https://Plaud.ai/twist⁠Anthropic just declared every unauthorized secondary sale of its stock "void" — naming Hiive, Forge, Sydecar, Upmarket, and others in a public hit list. Jason and Alex sit down with Jenny Fielding (Everywhere Ventures), Dave McClure (Practical VC), and Sam Lessin (Slow Ventures) to unpack what the AI lab's move to limit secondary trades means for SPV operators, brokers, and the founders trying to keep control of their cap tables. Plus: a real story of a founder who returned a $15M Series A six months after closing because Claude was going to eat his startup, SaaS moats, and just what does it mean to be rich? Timestamps:0:00 Guest introductions0:48 Anthropic voids unauthorized SPV trades8:41 Accredited investor reform & the SEC sophisticated investor test8:58 Quo (formerly OpenPhone) - Quo gives you a clean, modern way to handle every customer call, text, and thread all in one place. Try it free at https://quo.com/TWiST11:43 Naval's USVC closed-end fund as a workaround16:41 Plaud: If your work depends on conversations — interviews, meetings, calls — you need a Plaud NotePin. You can check it out at https://Plaud.ai/twist and use code TWIST for 10% off!17:48 Pro-rata rights battles: when Series A investors push seed investors out19:36 Grasshopper Bank: Time is money. Don't waste either. Go to https://grasshopper.bank/twist and get an exclusive $500 cash bonus just for opening an account.29:13 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 https://pilot.com/twist and get $1,200 off your first year.30:23 Storing wealth in stories vs. cash flows34:19 Cerebras and Fervo Energy IPOs — meaningful liquidity?37:54 Will SpaceX, Anthropic, OpenAI IPOs redistribute capital or compound it?45:58 The $15M Series A founder who returned the money because of Claude50:01 Should founders pivot or return capital when the world changes?56:43 OpenAI's $6.6B tender and Shruti Gandhi's viral SF cost-of-living tweet1:00:25 Intercom rebrands to Fin: the AI-first late-stage pivotSubscribe to the TWiST500 newsletter:⁠ https://ticker.thisweekinstartups.com⁠Check out the TWIST500:⁠ https://www.twist500.com⁠Subscribe to This Week in Startups on Apple:⁠ https://rb.gy/v19fcp⁠Follow Lon:X:⁠ https://x.com/lons⁠Follow Alex:X:⁠ https://x.com/alex⁠LinkedIn:⁠ ⁠https://www.linkedin.com/in/alexwilhelm⁠Follow Jason:X:⁠ https://twitter.com/Jason⁠LinkedIn:⁠ https://www.linkedin.com/in/jasoncalacanis⁠Check out all our partner offers:⁠ https://partners.launch.co/⁠Great TWIST interviews:⁠ Will Guidara,⁠⁠ Eoghan McCabe⁠,⁠ Steve Huffman⁠,⁠ Brian Chesky⁠,⁠ Bob Moesta,⁠⁠ Aaron Levie⁠,⁠ Sophia Amoruso⁠,⁠ Reid Hoffman⁠,⁠ Frank Slootman⁠,⁠ Billy McFarland⁠Check out Jason's suite of newsletters:⁠ https://substack.com/@calacanis⁠Follow TWiST:Twitter:⁠ https://twitter.com/TWiStartups⁠YouTube:⁠ https://www.youtube.com/thisweekin⁠Instagram:⁠ https://www.instagram.com/thisweekinstartups⁠TikTok:⁠ https://www.tiktok.com/@thisweekinstartups⁠Substack:⁠ https://twistartups.substack.com⁠

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

• 0:00Speaker 00

  People don't want to talk about it because it's scary to admit that this is happening.

• 0:03Speaker 01

  A founder that closed a $15 million Series A from a top-tier VC and then a half a year later, they plan to return the cash to investors. You add that Claude will displace the product and erode the value. This is really happening. Most people are not talking about it. It's kind of wild.

• 0:18Speaker 02

  It's running a zombie company.

• 0:20Jason Calacanis?

  To put your nose to the grindstone at a startup for 10 years, 15 years, and the outcome is unknown. Or you get a guaranteed, you know, 10, 20, 30 million dollar package from OpenAI.

• 0:34Speaker 01

  Do you think that the companies in your portfolio that are facing the similar chasm going from the SaaS era to the AI era or the agentic era are going to make it?

• 0:40Speaker 00

  Probably 50% that I think might make it.

• 0:43Jason Calacanis?

  It might not be the money printing free cash flow machine that people think it's going to be.

• 0:48Speaker 01

  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. Grasshopper Bank. Time is money. Don't waste either. Go to grasshopper.bank/twist and get an exclusive $500 cash bonus just for opening an account. And Quo, formerly OpenPhone. It gives you a clean, modern way to handle every customer call, text, and thread, all in one place. Try it free and get 20% off your first six months at quo.com/twist. That's Q U O dot com slash twist.

• 1:30Speaker 01

  Hey, everybody, and welcome back to Twist. Today is May 13th. It's Wednesday, which means it's Venture Capital Roundtable Day. I'm joined by a bevy of some of my favorite people, including, of course, my usual co-host, Jason Calacanis. Jason, how are you?

• 1:42Jason Calacanis?

  I'm well. Excited for today.

• 1:44Speaker 01

  We also have Jenny Fielding from Everywhere Ventures. Jenny, how's life on your end?

• 1:48Speaker 00

  It's good. I'm excited to be back. It's been a while.

• 1:50Speaker 01

  It has been a while. If you don't know her firm, Everywhere Ventures does essentially raises capital from a collection of about 500 founders and then sources deals from the same group. Portfolio companies include Star Cloud, Headway, Devo, and others. Jenny, good to have you here. Now, Sam, Slow Ventures, how are you doing?

• 2:06Speaker 02

  I'm great, man.

• 2:07Speaker 01

  Glad to have you here. Major portcos include Nextdoor, Robinhood, Human Interest, Airtable, et cetera, et cetera, et cetera. Busy man. And then finally, we have Dave McClure from Practical Venture Capital. Dave, how you doing?

• 2:18Speaker 04

  Fantastic.

• 2:19Speaker 01

  Good to have you back. You run a secondaries-focused fund that also buys GP and LP commits, which is a big deal because we're going to start today by talking about the most important thing in the world, which is news, that Anthropic and OpenAI dropped successive bombs on the SPV market. And if you don't know what that means and you're listening to this, imagine that you can't buy shares in Anthropic or OpenAI because you're not a VC, you're not an employee. So you go to somebody in a back alley behind a dumpster, they whip it up their coat, they have a couple of shares in there and they say, "Don't worry, it'll pay you 30% of the load."

• 2:51Speaker 04

  Got some Anthropic for you here.

• 2:51Speaker 01

  Yeah, exactly.

• 2:52Speaker 02

  Just caught with a little bit of like, you know, sugar or something.

• 2:57Speaker 01

  Yeah, in this case, the fentanyl is the layered fees and it turns out that the two companies in question that have these great assets don't want you to trade them. They want to have permission. And so a lot of this is...

• 3:07Speaker 04

  What happened to democratization of capital? What happened to the little guy just stomping all over them here?

• 3:13Speaker 02

  But Dave, I'm confused. Like, most companies have roffers on stock transactions. Like, this is not non-standard in the industry. I'm actually surprised they didn't already have those limits.

• 3:22Speaker 04

  Well, I think Anthropic is picking and choosing who they want to be in their deals. I think single-layer authorized SPVs are still fine. Unauthorized SPVs, multi-layered SPVs might start to get into weird territory, but there's going to be a fuckload of lawsuits regardless.

• 3:39Speaker 01

  That's what I wanted to ask about.

• 3:40Jason Calacanis?

  Yeah, I mean, having been in the SPV game for, since its inception and Naval kind of taught me the industry. I was the first actual syndicate on Angel is famously because he sent me a link to it. I signed up and he's like, "Hey, check this out. This is what we're going to do next." And then I tweeted it and he's like, "Oh, we didn't announce it yet." And I tweeted my syndicate. And so if you are doing this and you don't have permission from the founders, it gets very annoying for them because now you're creating multiple ways to get on the cap table. And they may not want certain people on the cap table. Maybe I'm an investor in Uber, you know, and Sam is an investor in Lyft and Sam is doing some backdoor thing to get access to my shares.

• 4:22Speaker 02

  Give me the shitty one.

• 4:23Jason Calacanis?

  Well, I mean, it's just, I think that was the actual game on the field, right? You were

• 4:28Speaker 02

  I wasn't actually the investor.

• 4:29Jason Calacanis?

  No, okay.

• 4:30Speaker 02

  Fine, fine.

• 4:31Jason Calacanis?

  But the truth is, it's annoying to founders. Mark Pincus was the first to try to say, hey, I'm going to not allow this. And I want it to go in an orderly fashion. Elon has been very strongly managing this every six months. So it's kind of long overdue and it's too much of the Wild West out there. And people creating synthetic shares in companies. This is

• 4:52Speaker 04

  They can't have it both ways. These companies have been using SPVs to raise capital and create a competitive market for their shares. And their employees want liquidity. So like, why, why are they now saying, oh, it's not okay? When in the past they've used

• 5:06Speaker 02

  But just to push back, I don't, again, I might be out of date because I'm now old. But like, look, when I was at Facebook, it used to be called Facebook back in the day.

• 5:14Jason Calacanis?

  Yes.

• 5:14Speaker 02

  This was like an unbelievably tightly controlled process, right? Like, in fact, the way Yuri made a ton of money was by being the authorized buyer of share. Like, I don't, so when

• 5:24Speaker 04

  Same for Saka and Twitter.

• 5:26Speaker 02

  So, and like, by the way, in that era, there was a lot of concerns about the look throughs being like, you have too many people on your cap table and you have to go public. And so I don't, what did I miss in the last decade where some companies were just letting like unhinged SPVs happen? Like, there's something I missed because to me, this is the way it's always been done. And most companies do have like roffers on share transactions.

• 5:46Speaker 00

  I mean, have you seen the rise in all the brokers, though? I mean, I get five of those a day.

• 5:50Speaker 02

  Yeah, but those are all scam, like half of those guys are scammers. Like, they're not real, right? Or like, I mean, trust me, I've actually dealt with one of them recently. I won't name names on something.

• 5:58Speaker 04

  And I don't think it's true that all or half of them are scams.

• 6:02Jason Calacanis?

  Half. Well, Sam, Jenny did an actual study of it and it turned out to be 49.7% were scammers. So he rounded up. But I guess Jenny, my question to you then is, what did happen here? Did the companies just basically leave the barn door open? And maybe they did it because they wanted there to be some liquidity? That seems to me what I saw happening, which was, hey, you know, it's, it's not hurting anybody. Let's let it rip. And then Jenny, I think what happened eventually was the multi-tiered ones. And then the 10% load in fee, since everybody wants to get into Claude, OpenAI and SpaceX. And that's where maybe the founders were like, hey, that's our money. That's our money.

• 6:46Jason Calacanis?

  That 10% load in fee should be going to us. That's coming off our valuation.

• 6:51Speaker 04

  Jason, this is like Lady Gaga and StubHub selling tickets and like, it's okay if one layer does it, but now if like three different people are doing it and I'm not getting that money. Wait, no, that's not cool.

• 7:01Jason Calacanis?

  Yeah, go ahead, Jenny.

• 7:02Speaker 00

  I mean, in my experience, and I, and not talking about some of these big guys, but in the, you know, the larger companies that I've been in, the founders are kind of busy running their business, right? And so they've maybe like, you know, kind of looked the other way. For some of these, they're friends and friends of friends, and that's how it started. I think, you know, maybe in the last decade since Sam was at Facebook, there's been a whole cottage industry that has literally popped up and, you know, is, is kind of preying on this. And it's taken it to a new level. I get inbound from these guys being like, hey, you know, do you want to sell Star Cloud? Do you want to buy Star Cloud like an hour later? And I'm like, they're not even doing targeted marketing. And so, you know, I don't know if they're legit or not. I've actually have spoken to some, but I think that it's becoming quite predatory.

• 7:47Speaker 00

  And I really wanted to talk to Dave today, so this all worked out on where he thinks the lawsuits are going to be and what's going to happen in the Anthropic and OpenAI case.

• 7:55Speaker 01

  One key difference about what changed is that when Facebook went public, it was worth about $100 billion. And today we have several companies where-

• 8:01Speaker 02

  That used to be a lot of money.

• 8:02Speaker 01

  That used to be a lot of money.

• 8:04Jason Calacanis?

  Now it's an A round.

• 8:05Speaker 01

  Now it's, no, now it's like a pre-seed round for a NeoLab. The point is, I think that as these companies get bigger, the prize is larger, people want in more. And also I think right now, as people are afraid about the impact of AI on the job market and the economy as a whole, in some cases, we have some pulling data in the docket, people want to own a piece of it. And who wouldn't want to own a piece of the thing that might take their job? So I can see the demand rising. But, but Dave, on the point about the mechanisms here, so Anthropic says, "Any third party claiming to sell Anthropic shares to the public, whether through direct sales, forward contracts, tokenized securities, or other mechanisms, is likely engaged in fraud." Fraud's a big word.

• 8:39Speaker 04

  That's their opinion. That's their opinion. I would want to go to a lawyer to, I mean, some of what they're saying, I would say is probably true, but some of that is probably a little bit of, you know, marketing and fear and, and spreading fear and doubt. And, and I don't think Anthropic is the reference point for the entire market. Like it's, it's true that there's a lot of volume going to- SpaceX, Anthropic and OpenAI, or at least was going to OpenAI. But that's not, you know, 100% of the startups in the secondary market out there. And SPVs are a useful vehicle for for folks to raise capital, assuming they're done in an organized and authorized way.

• 9:18Speaker 01

  Yeah, like a surgical scalpel is a tool and a weapon. Just depends on how you how you use it and where you stick it.

• 9:23Speaker 04

  Single-layer SPVs authorized by the company are probably fine. Yeah, well, an authorized SPV.

• 9:28Speaker 02

  Authorized by the company is fine. What's the problem now?

• 9:31Speaker 04

  Well, I'm just saying that statement that they made was pretty broad and sweeping. And I'm pretty sure there are SPVs that Anthropic authorized in the past.

• 9:39Jason Calacanis?

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• 10:22Jason Calacanis?

  And you can keep track of important details with customer notes right there in the QUO app. And you can use it on any platform, Windows, Mac, Android. So sign up for QUO's smart system and make sure no more opportunities slip through your fingers. Try QUO for free and get 20% off your first six months when you go to quo.com/twist. That's Q U O dot com slash twist. QUO, no missed calls, no missed customers. We're going to see, I think what's important now is what happens from here and what's going to happen from here. I think somebody alluded to it. There's going to be a lot of lawsuits here. And then people are going to ask for their 10% load-in feedback. That money is already done by some promoter who promised them,

• 11:05Jason Calacanis?

  just pay me 10%, give me $100,000, I'll let you buy a million shares, a million dollars worth of shares in Anthropic, and I won't take any carry, which I guess it's a free market. People can make that trade if they want. But the alignment is the issue. There is a lack of alignment.

• 11:20Speaker 04

  Completely agree.

• 11:22Jason Calacanis?

  You know, a person doing SPVs, say like myself, where I'm taking carry, maybe we have a 1% or 2% load in fee and you know, you have to pay for the, you know, the Karda or SPV Solutions, our firm. You know, tho- those things are, nobody's getting rich off of. They're just paying for basic expenses. But 10% then brings out these schlocky cells, you know, Wolf of Wall Street types. And that's, I think that's the piece, that's the dangerous piece. Cause the, the Wolf of Wall Street people, getting a 10% commission, I know those folks, like, they're gonna just turn and burn. They don't care.

• 11:57Speaker 04

  Or even 5% on a $50 million allocation is, you know, decent chunk of money.

• 12:02Jason Calacanis?

  It's great money for this weekend to pay off your bookie and go to Vegas and get more in debt. Like, that's the, those are the characters here that are emailing all of us. And somehow they get the cap table every time. Somebody gives them a cap table and then they start emailing you. It, it's dysfunctional. But it, what it does speak to, at the end of the day, is we have a broken system in America of accreditation, where only 6% of the country can participate in this. But, you know, half the country wants to participate, or 30% wants to participate. And this is where, I think what Naval's doing with USVC, these closed-end funds, could take a little of the pressure off. And most importantly, I had the Chair of the SEC on the All-In Interview Program a month ago.

• 12:45Jason Calacanis?

  They're gonna create a sophisticated investor test. The SEC's been charged with this. So imagine going to sec.com/sophisticatedinvestor and you take a test, like a driver's license test, and then you can put money into SPV. That would be the ultimate solution here.

• 13:01Speaker 02

  Can I, can I be provocative?

• 13:03Jason Calacanis?

  Please.

• 13:03Speaker 02

  So I-

• 13:04Jason Calacanis?

  Sorry for your here, dude.

• 13:04Speaker 04

  Absolutely not.

• 13:06Speaker 02

  I thematically agree with you. I've been saying this forever, like, which is the, yes, exactly this. Which is, there obviously should be a test. There's lots of unsophisticated investors that have a million dollars and blah, blah, blah. And like, you just take a test and then you can invest whatever the hell you want. I'm, I'm a big free markets guy. I get it.

• 13:20Speaker 04

  Cause everybody who's driving on the road right now is safe and not gonna cause a disaster.

• 13:24Speaker 02

  I just think it's ridiculous. I'm totally with Jason. And this is like, not a new problem, where it just makes no sense that it's literally how the rich get richer. It's like, oh, let's take all the best investment opportunities and let the rich people have them. Like, it's insane. So I'm with you on that. But let me play devil's advocate, which is-

• 13:40Speaker 02

  You know, the rate of what you need to be an accredited investor is actually shockingly low. Like, it used to be high, right? Like, and the funny thing is just with inflation over the last 20, 30 years, it went from being like, I think it's like a million dollars in like liquid net worth, or income over $200,000 a year, $300,000 a joint. That was a lot of money when the rules were written, and the natural law of inflation just made that not that much money. Like, I'm not saying it's nothing, right? It keeps some people out, but I don't think a lot of these SPVs, like, people who aren't accredited investors don't have a ton of liquid capital they're playing with. Like, I think these SPVs are like largely accredited investors, right? Like, they're supposed to be in most cases. And it's not, I mean, it's a problem to solve, it's not as big a problem as it was 10 years ago, just because of inflation.

• 14:26Jason Calacanis?

  It's 7%, 8% of the country, when you're correct, because of inflation, you know, doubling every 10 years, you know, whatever.

• 14:32Speaker 04

  I think we're attacking the wrong problem.

• 14:34Speaker 02

  But also, it's, Jason, here's the thing, is like, that's totally true, and like, we're in this crazy inequality era, right? Like, it's wild what's happening. There's like, the rich getting, that's just what's happening, that's the nature of tech, AI's compounding, fine. But like, when you start slicing it, who has investable assets? It's not really 7%, right? Because like, half the company, half the country owns no equities, right? Like, so really, it's a lot higher percentage than people like to admit in terms of who actually has money to invest. Oh, people who own equities, yeah. Only half the country owns equities at all, right? And so like, when we're like, this is this huge problem, it's like, you know, 30% of people are accredited investors who could possibly invest. And like, the people who aren't, should they really be buying SpaceX with their $10,000? Like, I don't know, it's a narrative. I love, I mean, I'm an investor, but like, it's a narrative. It's like, not exactly a cash flow-driven

• 15:19Speaker 02

  valuation.

• 15:20Speaker 04

  I just think we're attacking the wrong problem. I mean, personally, I think everybody should have the ability to lose tons of money betting on venture capital, because they already have the opportunity to lose shit tons of money buying a house with 5 to 10x leverage. So like, people don't have to take a house...

• 15:35Speaker 02

  Oh, come on, what about Calci? That's not where they're losing their money.

• 15:37Jason Calacanis?

  Yeah, I mean, prediction markets gambling.

• 15:40Speaker 04

  Yeah, people lose money betting on real estate all the time. The, the thing that I think we're not attacking is the lack of transparency from the company side. Cause like everybody talking about, oh, I need to be an accredited investor and know what I'm doing. Like, who's got access to company financials when they're like doing this investing? People are not investing on balance sheets or financials. They're investing on vibes, like sophisticated investors.

• 16:03Speaker 02

  To push you, Dave, also, like, everything's just priced on vibes anyway. Like, what, when was like-

• 16:07Speaker 04

  Well, it shouldn't be, but that's what I'm saying is like, you know, we collectively, venture capitalists and companies, should be pushing for more transparency of information in private markets as well as public. You don't have to like disclose everything, but I think it's a disservice to the industry when every company wants to be like completely private with their information. Like, if you're doing well as a company, why shouldn't you want to be fucking telling me what your revenue, growth and profits are?

• 16:32Speaker 02

  Preach. I absolutely- I absolutely agree with that.

• 16:35Speaker 04

  And there should be a lower cost of capital available to people who want to provide that transparency. Right now, it's the opposite. We're giving people cheaper cost of capital for being private. That's fucked up.

• 16:45Speaker 02

  Look, Sarbanes-Oxley made being public super annoying and expensive, right? Like, back in history and like, it just is like not worth it.

• 16:51Speaker 04

  We went too far. We went too far.

• 16:52Speaker 02

  It's just like, it was a terrible set of regulations, right? And so all of a sudden, no one wants to be public. What you're basically pushing for is effectively half of the public market, which is like, yeah, let anyone buy it. And like, let the information be public and make it all public. That's like half of, take out the governance piece, that's what it is. Like, the question is like, what standards, like, whatever else.

• 17:10Jason Calacanis?

  After we get back from this quick commercial break, Thoughts with a Cause, Jenny, I want you to give us your opinion of what should happen in terms of accreditation and private market transactions like this. But let's take a moment to just turn on our Plod AI readers and thanks to Plod for supporting the podcast. I use this all the time to take notes when I'm on hikes on the ranch, which I did this morning.

• 17:36Speaker 01

  Jason, you have two different types of plods, one that goes on your phone, one that goes to your chest. Which one do you prefer and why?

• 17:40Jason Calacanis?

  Hmm, that's a great question. Uh, when I'm in meetings, I like this one. And when I'm skiing, I wear this one. When I'm, uh- Yeah, otherwise I have it on the back of my phone. I basically have both with me at all times.

• 17:50Speaker 01

  Double fisting, as they say.

• 17:52Speaker 00

  While skiing, that's impressive.

• 17:54Jason Calacanis?

  I leave it on for the whole day while skiing and then I just talk to myself like a lunatic. And then at the end of the day, I get a transcript and action items and I say, action item, or blog post, or notes, or to do list, and then it just organizes it all for me. Give them the code, Alex.

• 18:08Speaker 01

  Yes, plaud.ai/twist, P L A U D dot A I slash twist. Use the code twist, save 10%. Stop forgetting things, be a better employee or a better boss. Plaud, get one. All right.

• 18:18Jason Calacanis?

  Okay, Jenny.

• 18:19Speaker 00

  I run a small fund where we, um, our business model is SPVs. So when I see these huge statements, um, you know, we write small checks at the pre-seed and then we offer, you know, SPVs to our accredited and wonderful LPs who happen to be a community of founders. So when I see these broad statements by, you know, the model companies, it gets me a little bit nervous that there's going to be kind of broad crackdown. So while I agree with you that there should be, you know, democratization and that there should be standards, you know, I also don't want that encroaching in our business model and I don't think that's necessarily fair. So I don't have, you know, any huge insights on it, but I think it was kind of overblown.

• 18:59Speaker 00

  And as most people said here, a lot of this is already baked into the docs and people are just getting, you know, kind of shafted and.

• 19:06Jason Calacanis?

  Jenny, when you have this small seed position and then the company gets big, you have the right to that prorata, to your syndicate, right? That's in your docs?

• 19:15Speaker 00

  Correct.

• 19:16Jason Calacanis?

  That's how I structured mine as well.

• 19:18Speaker 00

  You know, we have great relationships with our founders and so we're in communication with them. They're introducing us to their lawyers and it's all, you know, a very transparent process.

• 19:26Jason Calacanis?

  Do you ever have a founder say, hey, thanks so much for supporting us early, but we don't want you doing SPVs now. We want you to waive your prorata. And then how do you handle that?

• 19:35Speaker 00

  I have had that. Um, it makes me quite grumpy. Cause quite frankly, you know, I was their first supporter before everyone was excited and, um, you know, we have it in writing and, you know, I do believe that you have to earn your prorata and hopefully, you know, we do that, but it happens very infrequently, I would say. But once in a while, it really gets under my skin.

• 19:54Jason Calacanis?

  Do you hold your ground?

• 19:55Speaker 00

  Um, I have. Um, I'd say sometimes it's, it's more, you know, you kind of just write off the founder and you're like, all right, well, this wasn't the relationship.

• 20:03Speaker 02

  Jenny, don't say that. Even if you sometimes cave, you have to hold the line, which is we never cave. Yes. Don't put it in the, don't put it out there that you cave. That is not what you want for us or for you.

• 20:13Speaker 00

  Yeah, I'd say it's happened. I've invested in 300 companies.

• 20:16Speaker 02

  Contractual rights are contractual rights.

• 20:18Jason Calacanis?

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• 21:00Jason Calacanis?

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• 21:18Speaker 00

  Correct. I've invested in 300 companies. There've been three or four cases where the founder has, you know, come back and basically, you know, tried to get us to waive our prorata. And I will tell you honestly, it's sometimes it's not the founders, it's the big guys, the big investors.

• 21:34Speaker 02

  No, the big investors are serious. They will, they will always say, yeah, whenever it gets tight.

• 21:39Speaker 00

  Putting pressure on the founders. And then that puts me in a position where, you know, I have to call up the, you know, series A or B investor and say, listen, you know, this probably isn't what you want to be doing.

• 21:49Speaker 02

  So well, that, I mean, for what it's worth, that, I mean, this is like, for sure, in hot rounds, the series A investors will always tell, especially young founders.

• 21:56Speaker 00

  Yes.

• 21:56Speaker 02

  Oh, you have, you have prorata rights, but seed investors will always waive them. Don't worry about it. And I've had that conversation several times. And like, for me, it's like a complete nonstarter. It's like, I will sue you. Right? Like I have contractual rights and then that's it.

• 22:09Speaker 00

  Yeah. So I think I take a slightly different.

• 22:12Speaker 02

  Sueing founders is. Yeah, I will 100% put it out there that if you sign a contract with me for prorata rights. I like it. Back and try to renege on them. Yeah.

• 22:20Speaker 00

  I take a slightly different approach, which is like you try to educate and support the founder and basically, you know, try to get them to push back. And if that doesn't work, then you call the series A investor and you say, I'm never sending you any deals, you know, again.

• 22:32Speaker 01

  Yeah. Jenny, can you explain why these major funds are pushing down so hard on C-stage investors to give up their pro rata rights? Everyone in this conversation knows, but not everyone listening understands that dynamic.

• 22:41Speaker 00

  Yeah. In a competitive round, there's just not enough to go around, right? So we recently had a case where it was a series B and there were, you know, three kind of leads, right? And it's like, you can't get three people all getting their 10% into a round. And so what the founder did was the founder came to their pre-seed investors and said, hey, I'm going to need you guys to sell. We were like, well, it's not actually how this works. So why don't we explain this to you? We went back and forth a bit and ultimately we did not, but we did have some conversations with those series B investors who we supplied deal flow to as, you know, the smallest person on the cap table. And, um, you know, it kind of all worked out. So there've been a few cases where it hasn't, but very few.

• 23:23Speaker 01

  I just want to understand broadly though, it sounds like the secondary market itself is not in trouble. The worst actors in the SPV market are over their skis and just got their earlobes flicked, Dave. But the model of buying shares, you know, on the secondary market in general will stay as it was, will hold, this will not kill it?

• 23:38Speaker 04

  Um, I don't think this is going to end the secondary market or the SPV market. It probably will clean up some behavior that should have been cleaned up anyway. And that's probably a good thing. Uh, I think future lawsuits might result in more regulatory oversight and that would be interesting to see.

• 23:58Jason Calacanis?

  I'll take the other side. I think this is, this is going to blow out the bad actors in the space because the people who are buying into it, you know, who are saying like, I want to put 250K into Anthropic or SpaceX. And they're like, yeah, give me 10% and I got this synthetic thing and yada, yada. They're just going to be like, this isn't worth the risk. I'll just wait till it go public. And I think that's, it's going to put cold water on that group of people. I know with, there was one robotics company that was funded like, just like crazy valuation, all on SPVs, no VC pricing around. I think it got to like 30 or 40 billion. I wouldn't say the name of it, but I may, may have just inadvertently said the name of it. And, uh, yeah, there was all kinds of shenanigans going on. And then the founder has to worry.

• 24:43Jason Calacanis?

  Am I losing control of my cap table? Am I losing control of the story and my valuation? Because if they're going out there promising stuff, they don't have information rights. They're telling a story to investors. Is that the story you want? And that's the problem. Yeah, there were people who were telling me the figure thing was just a Wild West of all SPVs they'd ever seen. I don't know if that's sure or not. No dig to the founder.

• 25:08Speaker 00

  But I just wanted to add, you know, one, one thing, which is, I think it was Anthropic. They actually named some of these broker guys who are in my inbox every day. And they actually named some groups, I won't say here, that actually aren't brokers. They're just, you know, the back office or the container for the SPV. And those people had to then come out and say like, listen, like, we, you know, we check all documents and like, we haven't done anything, you know, here. So I do think there is.

• 25:31Speaker 04

  I think it's okay to name names. Sim, Simdecide, the CEO and founder of Hive, wrote a very prominent letter this morning about that structure.

• 25:38Speaker 00

  Right, but I'm not talking about Hive because they are, as far as I understand, a broker, but I think it, they named Sidecar, like some other folks. And, you know, it's just, I don't think we should scare people away from the industry is my point.

• 25:50Speaker 02

  Well, it's also like, I am curious, what are you guys as VCs? It's like, who, where the hell is all this money coming from? Because like, it's an interesting thing, like, you know, the, the, the Middle East is kind of like out of money, right? Like they.

• 26:05Speaker 04

  That is so not true, Sam. You are absolutely wrong.

• 26:08Speaker 02

  Directionally. I don't know. I heard things.

• 26:10Speaker 04

  Dude, oil prices are up. You think they're out of money in this environment? Come on, dude. Do the math.

• 26:14Speaker 02

  Listen, let's see how it plays out in the next few years. My, my, my sense is, is that that honeypot, which has been the last few years of ridiculous amounts of money is like slowing and gonna stop. You know, VCs keep raising.

• 26:27Speaker 04

  I think you're absolutely wrong.

• 26:28Speaker 02

  I don't know. Alice is nodding.

• 26:29Speaker 04

  Those guys went into Anthropic and SpaceX just as much as anybody else.

• 26:32Speaker 01

  They still have a lot more money than I do, but I think Sam makes a good point that when you look at the minimum oil price for many governments in oil-producing countries in the Middle East, it's like 100, 110, 120. And so even though oil prices have rebounded, Dave, that does not mean they have massive surpluses that are new, that are coming into their coffers. So I've always thought that the big push into AI was get in early while we still have. The capital, build something that will endure and then as the oil industry slowly

• 26:57Speaker 04

  Alex, Alex, the sovereign wealth funds of Qatar, UAE and Saudi have over $4 trillion. The royals across those companies have hundreds of billions of dollars. They are not shutting off the spigot.

• 27:10Speaker 02

  They pulled out of Liv, right? They're pulling back on sports.

• 27:14Speaker 01

  They're pulling back on me.

• 27:14Speaker 02

  Rationalizing their portfolios.

• 27:17Jason Calacanis?

  I'm talking about Saudi specifically. I can adjudicate this officially. So Dave is in the Middle East. He's very close to it. And Sam, you're absolutely correct. They did get over their skis in a lot of projects. NEOM specifically and Liv would be great examples of that where maybe they started spending a little bit.

• 27:38Speaker 04

  NEOM for sure.

• 27:39Jason Calacanis?

  NEOM for sure.

• 27:40Speaker 04

  NEOM for sure.

• 27:40Jason Calacanis?

  And then in some cases, they were maybe doing too many venture funds and didn't have

• 27:50Jason Calacanis?

  the infrastructure in place maybe to manage these things properly. And I think they're catching up to their spending. That's what I see when I go over there is, hey, we need more partners. We need to have more eyes on these projects and they're just refining their strategy. So I call it like splashy cashy, somebody who's made a bunch of money goes to the casino. They just start playing a bunch of games. Then the next time they go, they're like, okay, which games am I going to play? Where do I want to put chips down? So I think this is just the natural second decade evolution of their participation in private stock, stocks generally. The specific thing to your question, Sam, of where the money is coming from. We have seen an upper, the upper middle class or the lower part of

• 28:34Jason Calacanis?

  rich people in the United States has grown massively. So everybody's moved up, but there's a very specific group of people, which is equity and owner based middle class. And when you see the charts of how that's grown, it's kind of nuts and it's grown at the expense of the lower and middle. Middle class is the upper middle class moving into

• 28:54Speaker 02

  So it is, but just to push them to connect the dots will go is it is accredited investors.

• 28:59Speaker 00

  Yes.

• 29:00Jason Calacanis?

  Hundred percent. It's accredited unless they lied on their self accreditation forms, which I would say maybe, you know, low, single digit percentage people do.

• 29:08Speaker 00

  So mine is anecdotal, but we just did a very large SPV in a buzzy company and all the money came from Palm Beach. So all families there, not Middle East, that is concentration of wealth in certain areas in this country, including South Florida, and they all want into certain categories.

• 29:27Jason Calacanis?

  So their 401ks are doing really well. The businesses they own, whether they own a restaurant or an HVAC or a finance company, like the rich are getting so much richer because of the stock market and the poor are staying the same, which goes to your point.

• 29:41Speaker 04

  Certainly the last five years. Yeah.

• 29:42Jason Calacanis?

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• 30:56Speaker 02

  Yeah. And the interesting thing about this is it's not just technology. There's also this like feedback loop cycle to the market, right? Where it would basically what's happening is like the market is going up because the market went up, right?

• 31:06Jason Calacanis?

  Yes.

• 31:06Speaker 02

  And that is a real, I mean, that is like a classic. It's interesting because on one hand, that's classic bubble dynamics, right? It's up because it's up. But on the other hand, I keep going back to this thing that we as a society have decided to start storing wealth just in stories, right? Not in cash flows, right? If you think about it, it's like-

• 31:25Jason Calacanis?

  Give you an example.

• 31:26Speaker 02

  Well, I just say like the global clearing price, if I said I have a billion dollars of free cash flow, there is a global clearing price for that, right? Based on the growth rate or whatever that we could all model and everyone globally would basically model the same way, right? And you come up with the value of that cash flow, right? None of the assets that Anthropic, OpenAI, SpaceX, all these enormous numbers, the tie to business logic is basically non-existent, right? Like in terms of valuation, right? It's a tie to-

• 31:56Speaker 04

  For those, for those companies, yeah, I agree.

• 31:58Speaker 02

  For, but that's basically everything in tech, right? Like I can't name the last-

• 32:02Speaker 04

  No, that's, that's not true. That's not true. There's companies that are still valued on fundamentals, not, there's more companies being valued on vibes recently.

• 32:10Speaker 02

  Well, but I'd say the ones that are valued on fundamentals, like the movement in the stock has much more to do with the vibe shift around it because it's just a multiple expansion question than like revenue growth, right?

• 32:20Speaker 04

  But, but this is my point is that I think, you know, we're, we're leaving fundamentals behind when we should absolutely be paying attention to fundamentals. And in our podcast, every week we, we focus on valuation corner and we analyze companies and there are some that are way crazy out there and there are others that are much more reasonable.

• 32:38Jason Calacanis?

  Example, Palantir comes to mind.

• 32:40Speaker 04

  Well, Palantir got ahead of itself, kind of crazy.

• 32:43Speaker 02

  Well, I would, but this is, I just, my basic point of feedback cycles is like, if you were a, like being a fundamentals, if you were a value investor over the last decade, you're screwed, right? You've made like no money, right? Whereas if you're a vibes investor, you are like crushing it, right? Like-

• 32:59Speaker 04

  Until you're not.

• 33:01Speaker 02

  I, I agree with you. I struggle with this. I'm not saying that, that the vibes investing is right. I have to argue in general, I'm not a vibes investor and I'm not an Anthropic or OpenAI.

• 33:09Speaker 04

  But if you look at the public mag seven, you know, five of those seven, maybe six of those seven aren't crazy on fundamentals. Tesla is a little bit crazy on the fundamentals, but the other ones are not. They're, you know, you know, 20 to 25 PE, maybe 30.

• 33:23Jason Calacanis?

  Jenny, are we, are we massively ahead of our skis as, you know, in terms of the public markets and the valuation of these companies and how they're being valued? And will we return to maybe a scale at some point where we actually weigh them? And say, what is the free cash flow from this company?

• 33:42Speaker 00

  I think it depends if there's other asset classes to go in, right? A couple of years ago, everyone was very excited about credit. You know, that turned out not to be a great place. And so they're just looking for, you know, interesting opportunities. So right now the stock market's crushing. I think what we're here all interested in is what's going to happen, you know, as these companies go public and more liquidity kind of starts coming back. So that's, that's the question I'm more interested in is like, it's really hard to raise capital right now as a, you know, pre-seed investor, but I think, you know, the floodgates are going to open with SpaceX and these other ones.

• 34:14Jason Calacanis?

  Here is the share of families in each class, 1979, 2001, 2024. And what you're looking at here really is the lower middle class going from 24% to 15%. The core middle class going from 35 to 30%. And then the upper middle class went from 10% to 31%. And then rich people went from 0.3% of our side. It went up 10x since 1979. So you have tripling of the upper middle class and 10x-ing of the rich.

• 34:43Speaker 02

  What's kind of interesting though is this chart says that the poor and lower middle class are declining.

• 34:47Jason Calacanis?

  Yes.

• 34:48Speaker 02

  So like, I guess the question is, what's the basis of how you define these buckets?

• 34:51Speaker 01

  Yeah. What are the, what are the bands here for income or wealth, Jason?

• 34:54Jason Calacanis?

  Yeah, let me look it up while we continue the conversation.

• 34:58Speaker 01

  But on the point about exits and liquidity, Jenny, you make a really good point. This week, we saw Fervo Energy go public, venture-backed, Worsing Cerberus go public, venture-backed. A little bit of liquidity there. Jenny, do those two IPOs drive any meaningful amount of liquidity through venture? Or are they relatively sideshows as we wait for the big three, SpaceX, Anthropic and OpenAI?

• 35:18Speaker 00

  My understanding of LPs is that, um, you know, they kind of work on, you know, sentiment and vibes and not necessarily reality. So I think seeing a few things gives them hope and we start, I mean, we can literally track this, like the amount of inbound we get from LPs and how fast they kind of get back to us based on some of these IPOs. So I don't think that moved the needle necessarily, but I think there's a lot of anticipation of some bigger ones. And I think those will move the needle, but we're actually seeing a lot more inbound.

• 35:45Speaker 02

  We'll see, there might not be though. And this is about, I mean, I have this on a personal level, right? Like, which is, uh, you know, I have a relatively small, it's all relative slice of like the SpaceX, you know, thing. And I'm excited, I mean, like, you know, that'll be a great return for me personally, just from a PA perspective. But it's a really interesting question about whether you sell and redistribute back into other things or not, right? And it's not clear, right? And I'll give you the two.

• 36:08Speaker 00

  But if you were an institution and that was really your job and you were waiting for it to even come back.

• 36:12Speaker 02

  I mean, I talked to a lot, we have a lot of institutional LPs. I mean, there's a similar question, which is like, there's a really big difference between institutions that pay taxes and then those that don't, right? So if you're a tax-free institution, you can reallocate for free. That actually makes sense. But if you have to pay taxes, you're paying 40% taxes, 50% taxes, we call it 40 in California. It is so expensive to redistribute. And on the flip side, you know, we are living in this new feudal age of like effectively these like fiefdoms where number go up because number go up and everyone has to buy SpaceX and da, da, da, da. So it's actually really unclear. I understand historically how those work, but it's really unclear to me how this redistribution is going to work on these IPOs.

• 36:54Speaker 01

  Dave, what do you think?

• 36:55Speaker 04

  Just to get to some numbers here, on the Cerebras IPO, projected float's going to be probably between $4.5 billion to $5 billion back to investors. That's meaningful capital. Might be the only IPO we see before SpaceX and after that, because SpaceX is going to take up a lot of the available capital in the market and maybe Anthropic and others might before the end of the year. But, you know, I think our numbers are way out of whack because we're focusing on Anthropic, you know, SpaceX and OpenAI being these massively large IPOs. Venture capital doesn't need that big an IPO to have meaningful paydays. Like, it's still fine to have billion-dollar IPOs. That creates meaningful returns.

• 37:38Jason Calacanis?

  I think Sam brings up a really good point, which is if you are a family office, right? And you've got 20% allocated to venture and you've got, I don't know, 40% in equities. You're eventually, if your pipeline is, you're VC firms, you know, and you're in Founders Fund or you're in Sequoia and your VC fund is delivering you SpaceX shares or delivering you, you know, WhatsApp, Facebook shares via the WhatsApp and Instagram acquisitions, and then you had sold those previous. Book the gain and then you want to buy them in the public market like it's just not tax efficient. So you might as well just sit on them forever and then you know, this does create a redistribution issue.

• 38:23Jason Calacanis?

  I think Sam's correct there and then it's going to really matter to the company. If you're, if it's an Elon Musk company because of the Elon premium that he's created the future so many times now. That's like a venture investment and a public investment. If you look at Tesla's valuation now, it's not a car company anymore. It's going to be remembered as Optimus. The company will only be remembered, they will, nobody's going to remember robotaxi or cars, I predict. They're going to remember Optimus because that thing's going to sell a billion units and they're going to charge by the hour for that product. It's got unlimited upside and if he figures that piece out or data centers in space for SpaceX. This is like a unknown cap, a known TAM.

• 39:06Jason Calacanis?

  These TAMS could, could break people's brains in terms of how big they are. So you basically have no choice but to hold it, I think, forever if it's like SpaceX or Tesla.

• 39:17Speaker 02

  Which becomes self fulfilling because if everyone's holding it forever, the number go up. And like this becomes an interesting disconnect of what's going on, which is if you believe the future is a future, a feudalism 2.0. Where you have a few hyper winners that have the cost of capital zero, they have all the things, right? And AI is fundamentally a compounder, then like it's just an incredibly different configuration of the venture landscape and like what you want to allocate to than what we've seen for the last 20 years, where the whole story was software helps insurgents beat big guys. You know, I've been saying this for a while, that AI is just a strict benefit to like the winners effectively, like cheap cost of capital. These are like the things that matter, but I just think we have to come to terms with the fact that like

• 40:00Speaker 02

  the venture capital of the next 20 years is just going to be massively different than it was the last 20 years, right?

• 40:06Jason Calacanis?

  What do you think Jenny? How, how is it going to be different? Do you just take your fund when you raise your 50 million, put it into a mag seven index and then slowly draw down from it? And I mean, I know this sounds ridiculous, but in a sense, you know, that That's what these crossover funds do.

• 40:21Speaker 00

  Yeah, we've been seeing that for years. I mean, people are getting really grumpy when all those funds were putting money into Bitcoin and Solana. And the LPs were like, screw you, I could do that, too. Why are you charging me a fee? So I'm not sure that's the future of venture capital. But getting back to like the trickle down, I would say, maybe I'll amend my answer. You know, a slight bit that some of these, you know, although it may not be enough to transform the liquidity issue. I mean, a small investor like us, we're not in some of those names you mentioned, but you know what? The folks that put money into us are, and I don't mean the LPs, like, you know, the benchmarks, the foundations, they all put money into early stage funds. And so then I have more money that I can deploy to early stage founders. So I actually think that it would be very healthy for the cycle, even those small ones.

• 41:05Speaker 00

  I mean, obviously, you know, the bigger ones would be even better, but I'm pretty excited.

• 41:09Speaker 04

  I think we need to temper our enthusiasm for tech and vibes and the potential for investing in companies that are going to have big outcomes. With the strict valuation fundamentals that are still required. Like, you know, when my son was 16, over the summer during COVID, I sat down with him every week. We said, hey, let's go take a look at a public company. I'll give you a hundred bucks. You can go buy it on Robinhood, but I want you to explain to me like why it's a good buy. Let's talk about revenue growth and profits. Let's talk about balance sheets and capital. And like know whether you're investing on fundamentals or whether you're investing on vibes. And it was okay if he wanted to invest on vibes, but I was like, you know, why the fuck are you investing in this company? When P E multiples are way out of whack and this one's a reasonable.

• 41:53Speaker 04

  The same is true for venture. We can't just say like, hey, everything is going to be 100x, 2000x, you know, sort of outcome and throw fucking valuation out the window. You know, early stage valuation entry points still matter and fundamentals still matter. Like, I don't want to invest. I don't want to give my money to VCs who think that it's all vibes and not based on fundamentals. Fuck that. I want you to understand the numbers of the companies you're investing in. I want you to understand your portfolio model. I want you to understand whether like makes sense to do follow on investments or not at new prices. Math still fucking matters.

• 42:24Speaker 02

  Of course, like Dave, I'm like you, like, look, I like, we're incredibly cheap at Slow Ventures, like we don't do.

• 42:31Speaker 04

  Well, sometimes it's okay to not be cheap.

• 42:33Speaker 02

  No, we're cheap. We're cheap motherfuckers, right? I don't know. This is like, and like.

• 42:37Jason Calacanis?

  You are allowed to say that on twist.

• 42:39Speaker 02

  Okay, good. And like, you know, it's like you look at cash flow based deals. It's like it was reported by the FT and a bunch of others that, you know, OnlyFans just did a transaction valuing it at $3 billion valuation. Financially, that's a steal, right? Like, it's incredible.

• 42:52Jason Calacanis?

  Yeah, because what is their, what is their earnings? I mean, they, they make four or 500 million in profit a year?

• 42:57Speaker 02

  I, I shouldn't comment, but the point is like.

• 43:00Jason Calacanis?

  I know you were trying to buy it.

• 43:01Speaker 02

  The, um, the, um, the point is only that like, yes, there's always going to be a financial clearing price to things based on growth and fundamentals. But in the last like five to 10 years, the people who have done well have not done that at all, right? And the question is what happens to the industry because of that? Like, you know, one tweet from Elon about space data centers makes your company worth a billion dollars, right? On vibes, right? In the market, you know, versus like if you go double, triple, triple, double, double on a software company right now, truly no A round investor cares, right?

• 43:34Jason Calacanis?

  Which is insane. Like, it's such a great business. It could be a money printing machine. I, I, you know, at some point, free cash flow is going to matter to people, and I think it's going to be this time next year. After these companies get out, then there are going to be institutional investors who are going to start looking at Anthropic and OpenAI, and they're going to take out their abacus, their spreadsheet, whatever, their back of the envelope. And they're going to just go, hey, math doesn't math. You're losing this much money on every transaction. When does this become a free cash flow machine? When does the J curve end? How do I know this? I watched it with Uber up close and personal. The, the entire narrative of Uber and ride sharing was it can never make money. It will lose money forever. It's going to constantly go down that J curve. It's never recovering.

• 44:19Jason Calacanis?

  And then I was on CNBC famously one time and I just said to one of them, like, would you pay, would you stop taking Uber if it was $3 more a ride? And they were like, no. And I was like, okay, who would? And they're like, the bottom 3% of users was like, okay, great. You fired your bottom 10% of users and then you became wildly profitable. And that's exactly what happened, but it took a changing of the guard and the changing of the cap table for that to happen. And that's about to happen for SpaceX, Anthropic, OpenAI, and Cerebrus. They're all gonna start getting weighed.

• 44:53Speaker 02

  Unless it doesn't, because the retail investor base of your upper middle class, Jason, is big enough and vibey enough, right? It's a GME situation, right? Where it's like, it actually hasn't have to result in reality at all.

• 45:03Jason Calacanis?

  No, I don't think Sam's right. I think that we've, we've hit the top. I think we've hit the top to a certain extent.

• 45:08Speaker 04

  Jason, why do you think, why do you think Elon's making a 30% retail allocation in the IPO? Because they do math?

• 45:15Jason Calacanis?

  Elon is a total exception, and I think it will get filled. The question is, when that gets filled in SpaceX, who, what other stocks are gonna go down? Where is that money gonna come from? Is that coming from somebody's 401K, from a Vanguard fund? Is it coming from their cash on hand? Is it a second home that they sell to buy more SpaceX? Where is that incremental money coming from?

• 45:37Speaker 04

  If Elon gets his way, it's gonna come out of the NASDAQ 100 and eventually out of the S and P 500.

• 45:42Jason Calacanis?

  Yep. Correct. Yes. And that, so that's my point is this rebalancing over the next year is going to be vibes now, get on, get your shares, and then a year from now, people are gonna start weighing these things and saying, what's the long term?

• 45:57Speaker 02

  What I could imagine, Jason, is that people, I mean, this has already happened in some places where people are, you know, on the margin, pulling out of MAG7 and going to Chips in various places. Like, but like, I could imagine that the PEs on some of the MAG7 become so attractive that people just can't help themselves, right?

• 46:14Speaker 04

  The PEs on the MAG7 are, are actually not crazy. Like, you know, again, Meta at 20, Alphabet at under 20, Microsoft, Amazon, Apple at 30. Tesla's the only one that's really out of range there.

• 46:27Speaker 02

  Right, because it's a meme stock.

• 46:28Speaker 01

  Yeah, but if you buy into those companies, you get allocation to the other private firms you care about, because they're all investors. Next up, Jay, you said something that I thought was absolutely fascinating. You told the story that I don't think I've ever heard told before. You said that you heard about a founder that closed a $15 million Series A from a top-tier VC, and then a half a year later, they plan to return the cash to Investors, you add that Claude will displace the product and I wrote the value. This is really happening. Most people are not talking about it. It's kind of wild. Tell me more about this story and how common it is.

• 46:59Speaker 00

  First of all, I think people don't want to talk about it because it's scary to admit that this is happening. And it doesn't really serve their interests of raising capital from LPs or telling the narrative, you know, that Silicon Valley is healthy and everything's good. Now, I'll preface this by saying like, I'm long-term bullish. I will keep on investing in startups and I'm very excited. But I think people have underestimated the impact. And this isn't just about, so in this case, it was a founder. He'd raised about $15 million Series A and he'd been working in the legal tech space, but not, I mean, this wasn't just like an application layer. This was a deeply technical second, third time founder who, you know, thought that he had a really interesting data mote.

• 47:40Speaker 00

  And was working very, you know, hand in hand with a few firms to kind of pilot this and, and design it. And he wasn't saying that just because, you know, Claude released their, you know, their MCP connector, that he was going out of business. But what I think is interesting is that these savvy founders are basically taking a long view, kind of looking back and not saying what's happening today, but like, where am I going to be in five years? And where are these models going to be in five years? And I think that's what scared him and that kind of freaked me out. And then when I started telling some of my, my peers at other firms, they all seem to have stories about this. Maybe this one seems extreme, although it is, is quite true. I think it's a real, it's a real thing and it's a threat and like, we're not talking about it.

• 48:22Speaker 00

  I don't think that serves our founders. I think we need to have more, you know, open conversation about what, you know, moats can be. And not moats today, right? I mean, I think everyone has a theory on, you know, what's interesting today, but five and 10 years out.

• 48:34Speaker 02

  I think it's moats. I think it's also just like what people want to work on in this moment. Like to, to run a company and build a company, like you need two things. Like one is you need a great business and the second is you need to care, right? And like the great business part, I couldn't agree with you more about like, we spend a lot of time on like, what's a mode? How do you really think about that long-term? But like, we've also, we had one founder, this is years ago now, one founding team, excellent founding team. Like couldn't be better group of people doing a thing. And they called up and they said, look, AI is about to happen. This like, oh, this is the LLM moment. And we've studied this our whole lives and we're building this company. And candidly, like, we really need to work on this. Like this is like what we've trained for and the moment we're waiting for. And they're like, so we're effectively returning capital and going to go take senior positions at OpenAI.

• 49:17Speaker 02

  Good for them like to have that like perspective, which is like, this is my life. You know, this is my next decade. And if the world is changing so fast and things change and like all of a sudden like I just emotionally have to do something like I respect.

• 49:31Speaker 00

  Yeah, I think there's opportunity costs, especially for seasoned founders. And in this case, it was that it just seemed quite extreme. They just raised the money. They just, you know, convinced a top.

• 49:40Speaker 02

  I just think it's funny. If, if, for instance, if Jenny and you and I are talking about this, I'm extremely serious about pro rata rights, like hear me now startup world, like they're not. I would say like, I'm crazy about that.

• 49:52Speaker 00

  I've heard that about you.

• 49:53Speaker 02

  But actually, if a founder comes to me and raises money and like six months later is like, we're wrong. And like, by the way, our opportunity cost, like the really expensive thing, especially early is your time and effort. It's not the money, right? Like, you're like, I'm going to return money because like I've this is not, it's better for everyone. Like, they're not going to win at a thing they're not super passionate about, right? The world changes fast. I candidly would rather have the money back and redeploy it if that's the situation.

• 50:15Speaker 00

  I mean, I'll just take the other side in that, you know, you're betting on people at the pre seed and you're betting on them to figure it out. And I'd rather not get my money back, but have them try a few different things and try to, you know, skate where the puck is going.

• 50:27Speaker 02

  I get it.

• 50:28Speaker 00

  And I think you have to just be fast in this market, you know? I was talking to someone that runs a kind of quasi consulting, AI consulting business, but there's they've productized some of it. And they said, our team, you know, rips everything out every two weeks and starts again.

• 50:42Speaker 02

  I get it. It's just like ultimately like, it's like, it's running a zombie company as a great person in a moment where the world is changing so fast is like, it's like the worst feeling you could possibly have. Like, there's this amazing thing going on and you're boxed out of it because I'd like rather just fix that and like life is long.

• 50:59Speaker 04

  I think whether I'm investing in an entrepreneur or another fund manager, I want them to feel like they've got an edge and have conviction and passion for what they're doing. And so if they've lost that, then sure, I don't want them doing it either. But I want to invest in people who think they can still figure it out.

• 51:15Jason Calacanis?

  All right, we got to drop Sam off. Sam, thanks for coming on the pod.

• 51:18Speaker 02

  Good to see you guys.

• 51:19Jason Calacanis?

  And we'll see you next time. Thank you. Hi, he's got a high.

• 51:23Jason Calacanis?

  Um, hot take per minute. So we, we allow him to leave early. Check out his podcast, More or Less. Everybody has to have a podcast now. So

• 51:31Speaker 04

  You gotta have a podcast.

• 51:32Jason Calacanis?

  More or less. You gotta have a podcast. You need to control your media channel.

• 51:36Speaker 00

  He's, he's gotta go beat up those founders who didn't give him Prorata.

• 51:39Jason Calacanis?

  He, yeah, somebody just said, oh my God, uh, we're, we're challenging you on this. He's getting on the phone with his attorneys. You know, if a family gets to the point, Jenny, where they're like, um, I just can't do it.

• 51:51Speaker 00

  Yeah.

• 51:51Jason Calacanis?

  I'm not living my real life. I kind of feel like it's, uh, like one of these kids who, uh, goes and does ayahuasca, or they go to Burning Man and they, they, they do LSD or something. They come back and they're like, I'm living a lie. I need to go be a yoga instructor. I need to start a surf camp in wherever. I'm just like, you know, okay, Godspeed, Godspeed. I mean, everybody, everybody has somebody in their circle who came back from Burning Man and their brain was broken and whatever they were doing is over. Like they left their spouse, they left their city and they're in Kauai, living their best life, mazel tov.

• 52:31Speaker 04

  Or they came back with a great vision for you startup. And I'm like, great. I want to give them.

• 52:35Jason Calacanis?

  But it is frustrating, Jenny. I, I always think to myself, like, I, I always say to the founders, what are your three other ideas? Do you have another idea? We've already got the capital here. We bet on you. What else?

• 52:46Speaker 00

  I'd be curious, um, if you're seeing this too, Jason, around first time versus second time founders. We are finding that the first time founders will just like, you know, put their nose down and just like, try to get through and burn the money potentially, but they're going to try to find something, the passion, maybe the ego. And the second and third time founders who've had a lot of success or some success, it's just opportunity cost. And in this case, it felt like a team, very seasoned, very technical, had a lot of success. And they just said, you know what? Like, it's not going to work.

• 53:15Jason Calacanis?

  It's a function of how great those offers were. I've seen some of these offers and to put your nose to the grindstone at a startup for 10 years, 15 years, and the outcome is unknown. Or you get a guaranteed, you know, 10 Twenty, thirty million dollar package from OpenAI. And you know it's going to 10x from here. So it's really a 300 million. And there's a secondary market, as we talked about in the first thing, and I could just start selling my shares immediately. You know, I told somebody recently, they were like, 99% of my net worth is in one of these companies. And I just said, sell it all and put it in index funds.

• 53:57Jason Calacanis?

  Like, or sell at least half of it, put it in index funds. Go buy yourself, you know, a house and a ski house. Like, by the way, that's the advice I gave myself, which is just keep building that foundation that's rock solid with the speculative stuff and get yourself diversified and out of these. Because if these companies are trading at 30, 40, 50 times revenue. Okay, there's a chance that they'll catch up and their earnings will get there. There's also a significant chance that open source and other products win a big part of this. And tokens just are the fastest declining commodity in the world are tokens.

• 54:37Jason Calacanis?

  Like, the cost of a token is plummeting because more data centers, better energy, photonics between the chips, language models that are more efficient, open source, distributed computing, tau subnets that are, you know, racing to the bottom. So if these things keep going down, I'm not going to give myself a clip like you only ever need a 10 megabyte hard drive. Obviously, people are just going to keep using a phenomenal amount of tokens. But it just may not be the most profitable business. What if the business looks like a bandwidth provider? What if the business looks more like a hard drive provider? And it's a commodity business that braces to the bottom. It just, it might not be the money printing free cash flow machine that people think it's going to be. That's a possibility.

• 55:20Speaker 01

  If it's not though, then what is? Because if AI really does subsume a number of industries, like we're seeing progress on the legal field from Anthropic. They just dropped SMB products. And if they don't make money, Jason, then who does?

• 55:29Jason Calacanis?

  The hardware, the energy company, the data center, the application layer, the person running a law firm that needs half as many people and charges, you know, the same amount of money. But, or they charge 20% less, but the cost to deliver the products, 40% less and their margins went up. Like, there's a lot of permutations to this. And anybody who says they know exactly which one works and where the value gets captured, it's just not telling the truth, right?

• 55:53Speaker 04

  Jason, I think you pointed out a good, you know. A thing for a lot of founders and actually for VCs, this happens later too, is you're concentrated in a single asset. You don't have access to diversification of liquidity. But that's literally why the secondary market exists.

• 56:09Speaker 00

  But you help with that, Dave.

• 56:12Speaker 01

  Go ahead and give a plug. Yeah, I mean, it's.

• 56:14Speaker 04

  Well, I'm just saying, I did the same thing, you know, five or six years ago when I was looking to sell a piece of my carry in my first two funds at 500, which had become very concentrated in a couple of winters. And I wanted to take a little bit off the table and buy a house. I think that's the, the big reason the secondary market exists, at least for founders and employees who are selling, is there's 100,000 people in the Bay Area who own $1 to $10 million worth of equity. There's probably 10,000 people in the Bay Area who own $10 to $50 million worth of equity. And they can't afford to buy a house in the Bay Area that costs $3, $4, $5 million. Can't even qualify for the loan, you know, to buy a house. And I think that's why you're seeing more of these tender offers and a lot of companies providing, you

• 56:56Speaker 04

  know, regular liquidity programs is to give them an outlet because, you know, IPOs are taking 15 years now. The employee vesting schedule happens, you know, in a third of the time it takes for a company to go public.

• 57:08Speaker 00

  So I think that's great, but I also think like, you know, these companies like Intercom, you know, that have to reinvent themselves and they're pushing through are very inspiring as well. And if you find a founder like that who's just gritty as hell and wants to, you know, then become an AI native company after all these years, like, I think that's pretty awesome.

• 57:24Speaker 04

  And I was an early investor at Intercom and oh, and coming back and figuring out Finn was amazing. That doesn't always happen.

• 57:32Speaker 01

  There was a lot of commentary on the how much money does it cost to be kind of set in San Francisco conversation. OpenAI had a tender offer for employees last year. Turns out 600 investors, sorry, 600 employees sold stock, $6.6 billion, which led to this tweet from Shruti from Array VC that went incredibly viral. She says, "The people who sold their roughly 10 million will still be, quote, SF brokey, 50% in taxes, $3, $4 million in cash for a house, probably needs another million of improvements. Leaves you with $100,000, $2,000,000. Kids on the way. Nannies $100K a year. Daycare's $45K a year. Camps, extracurricular, $30,000 to $100,000." Tesla 50K, they will still be at the office 996 and not going to enjoy any of this, only have money to hike and camp.

• 58:14Speaker 04

  I think they'll be just fine.

• 58:16Speaker 01

  Thank you.

• 58:17Speaker 04

  There's a high class problem there.

• 58:18Speaker 00

  Yeah, and that's also just one secondary that they did. So they have a lot more upside.

• 58:24Speaker 01

  I don't think the perspective though, she got dunked on a little bit, but I don't think the perspective is that that far off when everyone looks up to near billionaires now as a second class compared to the 100 billionaires and possibly compared to the first trillionaire. I think people's expectations have really changed and I don't think it's the right time for technology to become richer in a visible way, given how AI is polling right now. It seems to be a mistake.

• 58:48Speaker 00

  Well, first of all, get out of the Bay, get out of the Bay area.

• 58:51Jason Calacanis?

  Yeah, by the way, in Austin, by the way, you can buy an acre of land for 100K, 20 miles outside the city. And so you want to buy like your 10 acres for a million bucks, like, and people have no idea how big 10 acres is like, it's a lot of space. Go, go buy your 10 acres.

• 59:14Speaker 04

  Austin and Austin and Miami are great places to move after you've made money, but there's a ton of people who are still here in the Bay area. Who are making money in spite of the high taxes and the high cost of living because they're making a lot of money working for the company.

• 59:28Jason Calacanis?

  Totally fine to make it there. And then when you're ready for your second or third company, if, if you're doing your second or third company and you've got a crew. Like basing yourself in Austin is such an unlock, which is why you see so many people saying like, yeah, why not put my company here? And if I move my team there, they save on the state tax. So that's a whatever it is, 10, 12, 14% raise. Then their cost of living goes down a third. So now they're at a 50% raise. And your nat, your 100K nanny goes down. Well, that's in the cost of living.

• 1:00:05Speaker 04

  These are life optimization strategies after you've made money.

• 1:00:10Jason Calacanis?

  Or you're running your second company.

• 1:00:11Speaker 01

  Nannies don't go down in price that much if you live in the Bay area.

• 1:00:15Jason Calacanis?

  Well, I thought that was the one thing about her tweet that I was like 100K for a nanny.

• 1:00:20Speaker 04

  I, I think Keith Rayboise was going to be mayor of Miami for a few years, but he decided to come back.

• 1:00:25Jason Calacanis?

  Is he back in the Bay? I thought he was in New York most of the time.

• 1:00:28Speaker 04

  Well, I'm just saying that a lot of people came back to the Bay Area to either make money or invest in people who are here.

• 1:00:35Jason Calacanis?

  Yeah, absolutely.

• 1:00:36Speaker 00

  I just think like it's an entrepreneurship about zigging when other people zag. So if like you have to live in pack heights and you have to send your kid to Alpha School and you have to do all these things, then like you're going to have to pay the price. But otherwise you have to get scrappy and move to Austin or wherever. And I think you can do really well.

• 1:00:50Speaker 04

  I think New York and the Bay Area are still great places to build companies.

• 1:00:54Speaker 00

  I mean, I run a fund called Everywhere Ventures, so.

• 1:00:57Jason Calacanis?

  It's in the name, folks. What is this story about the company rebranding that you mentioned?

• 1:01:04Speaker 01

  Oh, Intercom.

• 1:01:04Jason Calacanis?

  Yeah, we kind of skipped over that, but tell us about that.

• 1:01:07Speaker 01

  Jenny brought it up. So Intercom is a company that early in the AI era said, we are going to rearchitect our firm around building an agent. And they said it early enough, Jason, that people were a little bit like, eh, maybe. Is the technology there yet? Is it going to be there? And as they worked on their customer service agent called Finn and saw real success with it, they've talked about this kind of over the last, Jenny helped me out here, year and a half, two years, something like that. They just announced, Jason, they're going to rebrand the whole company, Finn. And Intercom will then be a sub-brand of it. They're still going to work on the core Intercom product. They said in a blog post that Intercom 2.0 just came out and they're going to invest more in it. But the company is clearly moving in the agentic fashion. And what I think really matters here is this is not just a new product. It's not just a new name.

• 1:01:49Speaker 01

  They stress that they have changed how they price, how they build, et cetera. So they've really done a full architect, rearchitected the company and they've made it through. So when Jenny was talking about notes earlier.

• 1:01:59Speaker 00

  They're starting to make it through. I mean, I think we all have portfolio companies that are Series C and beyond, and they have to go through this chasm right now. I have probably five or six that are, you know, late stage and they have to transform. And like some of them will work long-term and some won't. But I thought this was like a great story. And I mean, Intercom customer service, you think that would be the first thing to be displaced. So I kind of love that it was a bold statement, the founder coming back and I'm rooting for them. I'm not an investor.

• 1:02:25Speaker 01

  Do you think that the companies in your portfolio that are facing the similar chasm going from the SaaS era to the AI era or the agentic era are going to make it like 50% of them, 80%? How many? Make that jump.

• 1:02:36Speaker 00

  The ones that moved fast and took action when they didn't want to. They had to fire their executive team because they weren't AI native. They had to change their pricing from SaaS to usage based. That was hard. So I think in my portfolio, it's probably 50% that I think might make it because they were very decisive. They had great leadership and they had vision and it was painful, right? They didn't want to fire those people. It took them two years to recruit, but they did. And so I think that's, that's the key.

• 1:03:01Speaker 01

  Jason, something in your portfolio, are people taking the medicine?

• 1:03:03Jason Calacanis?

  Yeah.

• 1:03:04Speaker 01

  To get across to them?

• 1:03:05Jason Calacanis?

  There's, um, there's an interesting story about ZoomInfo, which helps you find leads, right? And sales team use these. What was like one of the first thing people did when they saw OpenClaw? When they see cowork, they're like, find me 10 leads. Find me, you know, everybody who, the first thing I did with OpenClaw was I was like, take these 100, the top 100 podcasts. Tell me who the advertisers are, then go put those leads into our SaaS product, which is PipeDrive. And then tell me if they're in there already and when was the last contact date? It did that beautifully. And it was like, okay, that's an SDR job of, you know, 30, 40K, you know, offshore, work from home. Or 60, 70, 80K in the United States, work from home or in a city, you know, in Austin or in Phoenix.

• 1:03:48Jason Calacanis?

  So ZoomInfo is like the perfect example of a company that's going to have a heck of a time. That's like private equity home company. I think it's a private equity company or a public one.

• 1:03:58Speaker 01

  It's public, yeah.

• 1:03:59Jason Calacanis?

  It's public. So they're getting their ass handed to them. They're going to need to cut half the staff. They're going to need to take an air approach, but we have a company, Lead IQ, um, which was nipping at ZoomInfo's heels. Has a figures in revenue. Go to leadiq.com. Their homepage is here's AI. Here's our AI solution to the same problem as opposed to, you know, here's our SaaS software for the same problem. So accelerate revenue with AI driven data. So they're like, here's the next person you should talk to. Here's why you should talk to them, but this is going to require a totally different company. And I remember talking to the founder, May, and she was like, okay, we have these, you know, offers to get acquired. They're not quite where we want them to be. We're still growing, but AI, you know, and AI first companies are super dangerous.

• 1:04:44Jason Calacanis?

  And I was like, there's really only one choice. Sell. If you don't believe in your ability and you just want to get off the train and you know, accept, you know, what might be to you, I don't know, the bronze medal or like a participation trophy, or do you want to go for the gold? If you want to go for the gold, then you have to skate to where the puck is going while dealing with a board of directors who wants the number to go up and is, and that really is the problem. You have, you might have somebody like Jenny or myself who's like, yeah, we don't care about a little revenue destruction and shaking up the, the management team in order to get to the future because we invested at whatever valuation. The later stage folks were like, wait a second, you know, we were supposed to, you know, double, double, triple, triple,

• 1:05:29Jason Calacanis?

  triple, double, double, double, and then exit, and this is going to be incredible, and Salesforce was going to buy us, and HubSpot was going to buy us. Those folks are the ones who are over their skis. So the real dynamic is the board issue.

• 1:05:39Speaker 00

  Hundred percent.

• 1:05:40Jason Calacanis?

  And, and it's just unfixable. And you, I, I've had to have these conversations multiple times with the late-stage board members, just like, leave the board, sell your shares back to the company at a discount, or just leave the board and we'll, we'll take it from here, you know, and you'll see if you get a return or not, right off the investment, whatever you got to do. But yeah, it just becomes untenable.

• 1:06:02Speaker 01

  What was their response to that? What did they say when you told them?

• 1:06:03Jason Calacanis?

  I mean, it's always, the late-stage folks always want to believe that they're the early-stage investors and they have that gestalt, and they have that passion for, you know, a, a, a blank whiteboard. They want to have that passion for a blank sheet of paper and we're going to come up with a product this weekend. Let, let's do a hackathon at the company. We'll break into five teams, come up with five different product ideas. And one of them, you know, Evan Williams will say, oh, Jack, your version, this Twitter thing is what we're going to put all our eggs in that basket. Let's go. They want to believe they're that. But their LPs are not that. Their LPs, if they're late-stage like that, are looking for five-year, you know, returns on invested as opposed to ours, which might

• 1:06:46Jason Calacanis?

  be okay with 10 to 15 years. So time horizon is everything, right? And you, you just can't make unnatural.

• 1:06:54Jason Calacanis?

  Late-stage company pivots are not very common. No.

• 1:06:59Speaker 00

  It's why we don't, we don't take board seats so we can be, you know, the whisperer in the founder's ear and, you know, the voice of reason and they don't feel nervous about it. I think it's a real advantage.

• 1:07:08Speaker 01

  I think the difference between VCs and late-stage private market investors that are not quite PE is the divide that Jason just outlined. Like, are you willing to do revenue destruction or do you have to have this steady rise? So are you modeling or are you believing?

• 1:07:22Jason Calacanis?

  Yeah. I mean, and go to grin.co. This is another SaaS era company that we incubated, did fantastic. And if you scroll down on their page, you'll see their GIA product, G I A. And yeah, go, keep going down. So this is like their existing product. And then they're like, and by the way, if you're done with that affiliate product to manage influencers, here's GIA, the AI that lets your team focus on relationships, not the busy work. And what happens over time is you have the existing product, the paradigm has shifted, here's the new product, and you're trying to service both of these revenue lines and educate your market on, hey, the new product's going to be more effective. And man, it's just, it's hard to sell two different

• 1:08:06Jason Calacanis?

  products concurrently. I saw this with Google right now. They released a Google Book yesterday, and I tweeted like, what's the difference between this and the Chrome Book? And people are like, oh, well, it's Android, but it's built on Chrome, but it's got the Google. And I'm like, yeah, but my Chrome Book had the ability to load these apps. And it's like, yeah, we don't know. It's just, people's perception is they want a Gemini Google Book. They don't want a Chrome Book. Chrome means browser. Google Gemini Book means like new AI book. It's essentially the same thing. It's a, it's an Apple Neo laptop competitor. It's a less than $500 laptop.

• 1:08:42Speaker 01

  Yeah. Here's a, here's an important picture of Google announcing the Google Book recently.

• 1:08:48Jason Calacanis?

  Yeah.

• 1:08:50Jason Calacanis?

  I mean, it's, it is really hard. It is really hard. That's ours. Running a legacy business. That's printing money. That's growing. That has constituents internally on the board.

• 1:09:02Speaker 04

  Hey, Satya made it work.

• 1:09:04Jason Calacanis?

  What, who did?

• 1:09:05Speaker 04

  Satya made that pivot work. That's a really late stage pivot.

• 1:09:09Jason Calacanis?

  Yeah, I mean, it's just, it's, it's, it's just hard. You're gonna be having, you have to have, I, I can tell you exactly how to say it. The only people can figure this out is people with a high tolerance for ambiguity.

• 1:09:21Speaker 04

  Okay.

• 1:09:22Jason Calacanis?

  Like a Jedi knight.

• 1:09:24Speaker 01

  Give people more about ambiguity in this case, Jason. Ambiguity about what's going to happen or ambiguity about which.

• 1:09:28Jason Calacanis?

  A tolerance, I'll give you like. The idea of a tolerance for ambiguity. Taiwan is a proud nation. That's part of the incredible China story. And we respect. Taiwan and China. This was the strategic ambiguity that the world gave China and Taiwan for the last 30 or 40 years. And it's worked chef's kiss. You, you don't need to challenge China.

• 1:09:52Speaker 04

  So far.

• 1:09:53Jason Calacanis?

  So far, it's worked pretty damn well. Now, you're talking out of both sides of your mouth, right? Is it a lie or is it you're holding space? You know, to use the woke term. You know, um, our company. Uh, Intercom is loved and super helpful and has, is a catalyst for growth in over 10,000 enterprises. And our new product Finn is the future of customer engagement. Like, okay, wait.

• 1:10:22Speaker 04

  As soon as they realized that fun, that Finn was working and becoming the future of the company. They decided to go all in on that and just recently.

• 1:10:31Jason Calacanis?

  But they didn't fire their customers for Intercom and people can still log into their Intercom accounts. Now, if you want to understand somebody who burns the boats. Elon said. Tesla Model S and X, there's a hundred left. You can buy one of the hundred to end the run. My wife bought one of the Model Xs, God bless her. You know, she had one of the, I had the first signature Model S. She has one of the last Model Xs. And he's like, I, those are loved cars, but they have to die. So Optimus can live and they're retooling those. Like there are burn the boat founders. They're very rare. Most people in Elon's shoes would have been like, absolutely. We're going to put these on a paste rollout. You can still buy your Model S, we'll incrementally improve it.

• 1:11:16Jason Calacanis?

  They wouldn't have the boldness to say that business is nothing compared to the upside of Optimus.

• 1:11:23Speaker 00

  So you're basically saying that Google doesn't have that agility anymore.

• 1:11:27Jason Calacanis?

  Only a founder can do that. It's founder authority that allows you to kill products. What a company like Google does is they just let it taper off. They just let it taper, taper, taper, taper. And then someday you wake up and they're like, yeah, the Nest is the Google thermostat. Took them like 10 years to have the boldness to say, you know, or Dropcams are now Google cams. Or the Chromebook is now the Google book. Like it's just, there's somebody internally fighting, there's, there's two camps internally fighting for each product. And then the CEO wants to be magnanimous and, you know, she, he, they, them, it says, yeah, you know, okay, you made a great argument.

• 1:12:11Jason Calacanis?

  So yeah, let's launch that new product on this date and we'll do, uh, we'll do, uh, we'll, we'll, we'll keep supporting that other product.

• 1:12:19Speaker 00

  I mean, I don't think you can, you can count them out though, right? I mean, they came back with Gemini after, you know, they could have been ahead and did a phenomenal job and I actually love that product, so.

• 1:12:30Jason Calacanis?

  And I made a huge bet on it. I bought Google at a hundred dollars a share when everybody said it's over and all the searches are going to chat. Cause I was like, wait a second. I watched them after Mahalo take all the little innovations we were doing at Mahalo and put them onto the Google homepage when it was 10 blue links. And I was like, there's nothing stopping them from putting the AI answer at the top of the page. They did that with the one box. So what if they put the AI answer at the top, which is exactly what they did. I'd seen them do that my whole career. They would put flight information up there. They would put their local information up there. They would put the one box, the sports score. What's to stop them from putting the AI answer? They did it and their revenue went up.

• 1:13:05Speaker 00

  Yeah, very successful.

• 1:13:07Jason Calacanis?

  Yeah, it just took them. How long did that take them? Two years to make that decision?

• 1:13:11Speaker 00

  Until they felt like they were going gonna be outrun pretty quickly. They had to feel the pressure.

• 1:13:16Jason Calacanis?

  And and then who who actually made the decision?

• 1:13:19Speaker 00

  Right. They had a founder come back.

• 1:13:20Jason Calacanis?

  The founder had to come back and put down his foot and say founder authority.

• 1:13:24Speaker 04

  That was a very important part when somebody came in and did that. Yeah.

• 1:13:28Jason Calacanis?

  No, Sergey came back and said, enough. The decision's been made. We're going AI first.

• 1:13:33Speaker 04

  I think there's only so many Steve Jobs who can make, you know, company changing pivots and make that work. And

• 1:13:38Jason Calacanis?

  Yeah.

• 1:13:39Speaker 04

  Sometimes if they're no longer there, that pivot might not be as easy to pull off.

• 1:13:43Jason Calacanis?

  Which is, I think, why Tim Cook is retiring is they're at a crucible moment, as Ruloff would say at Sequoia. It's like a crucible moment for for Apple. Are they going to play a role in this next universe? Are they going to leverage their massive hardware footprint or not? I think they put a guy in charge who worked on the chips and the is an engineer for a reason. Their future is local models running on massively powerful Apple silicon with 128 gigs, 256 gigs of RAM on your laptop, and you're going to pay $4,000 for the privilege.

• 1:14:18Speaker 01

  I hope so. All my Macs are constantly out of RAM. I wish someone would fix that bottleneck. All right, listen, before we go, Jason, I want to get to a question from the noted gang that was submitted before we even went live today, where you get taking questions from our awesome noted gang group chat over on X. If you want to join, there'll be a link in the show notes. But from Goldilocksville, Jason, how should I manage a meeting with large venture capital firms in New York City without losing credibility as both a newbie and someone who's still determining who to build the company with? I apparently need a co-founder. So they're looking for some general advice, talking to New York.

• 1:14:48Jason Calacanis?

  I mean, if you somehow got a meeting without your co-founder in a very nascent company, you should just own the state of your company. Hey, it's great to meet with you, Fred Wilson. I've been reading your blog and I heard your recent podcast. I need really three pieces of advice from you. Here's my vision. Here's our progress. Number one, do I need a co-founder? Or should I just go to building a founding team? Should I raise a friends and family round? Or should I go directly to seed? And, you know, we have this B2B or B2C function. I'm leaning towards B2B because that seems to be where I can get the flywheel going. And, uh, you know, uh, what are your thoughts on these three questions? If you come in and you say it the way I just say it, I'm owning the state of my business.

• 1:15:32Jason Calacanis?

  I'm self-aware, I'm confident, and I have questions for you. I know that you're a wealth of knowledge. You did all of these dot com era companies. You did Cosmo, you did, uh, you know, um, Twitter. I have specific questions for you. So you're just basically kung fu-ing it. You're saying to the person, you know, uh, here's where I'm at. Here's my problems. You might have solutions for me. I want to make the most of this meeting and I need to get this information out of your brain. Which then makes the person realize, oh, this person is good at collecting information and listening. They're a sponge. If I back them, they're going to suck more information out of other people's brains. As opposed to they're an arrogant 21-year-old who's telling me like, I'm going to miss the boat.

• 1:16:16Speaker 01

  I miss being an arrogant 21-year-old.

• 1:16:19Jason Calacanis?

  Or delusional, like a little bit, that's okay.

• 1:16:21Speaker 01

  No, life grinds that out of you slowly.

• 1:16:24Jason Calacanis?

  What do you say, Jenny? You were nodding, I think, a little bit.

• 1:16:27Speaker 00

  I was, um, you know, I've actually personally changed my tune on the solo founder. So it used to be something, I ran two companies, um, I had co-founders. I actually had a founder breakup and I know how awful that can be. But I think for the first, you know, five years of my investing career, I always said, you know, you need a co-founder, mostly because it's a lonely road and you need a thought partner. But I have really changed my tune on that. I think solo founders that have great foundational teams and support can be great. Um, and very successful. And so I guess my advice is I wouldn't really bring it up. You know, I would just run it as if things are going smoothly. I would talk about the momentum in the business rather than the traction, right? So you don't have to worry about that you don't have metrics, that you're super early, especially if you're talking to, you know, an early-stage investor.

• 1:17:10Speaker 00

  But just talk about all the progress that you and potentially, you know, your founding team have made. So that's how I would approach it.

• 1:17:17Speaker 01

  All right, friends, this has been another amazing venture capital roundtable. We're doing this nearly every single Wednesday. So if you want to hear from the VCs who are writing the checks, come to us on Wednesdays. Jason.

• 1:17:27Jason Calacanis?

  This is my favorite one so far. I mean, this is the based candid group. I like this one a lot. Absolutely. Jenny, thank you so much for coming. The URL is everywhere.vc and for Dave, it's close, it's practicalvc.com. Please get together, figure out your TLDs, harmonize them. I'm going to forget those, I'm all wrong.

• 1:17:47Speaker 04

  Can we plug something before we wrap up here?

• 1:17:50Jason Calacanis?

  Yes, of course. Jenny, add me to your syndicate.

• 1:17:52Speaker 00

  Oh, yeah, for sure.

• 1:17:54Speaker 04

  Well, before I plug my other stuff, I would say Jenny is an amazing VC and invests all over the place. And I would plug her as, you know, investing in her fund.

• 1:18:02Speaker 00

  Thank you, Dave.

• 1:18:03Speaker 04

  But I would say for folks who are interested in learning more about secondary, Trading Places is our podcast. Every week, we cover news in secondary. We do Evaluation Corner.

• 1:18:11Jason Calacanis?

  Who's your co-host?

• 1:18:13Speaker 04

  Aman Verji, my PayPal colleague from way back.

• 1:18:17Jason Calacanis?

  Got it. He's good. He's a little spicy on the.

• 1:18:20Speaker 04

  He's a lot smarter than I am. I mean, he actually teaches classes.

• 1:18:25Speaker 04

  And then a brief plug for a company we just invested in, not a secondary. We invested in a company called Equity B that provides employee option financing. You may not know this, but a ton of options go unused, unexercised, because the employees can't afford to exercise their options before they leave companies. So Equity B helps people finance the purchase of their employee stock options, so they can still keep some upside when they need to leave the company.

• 1:18:52Jason Calacanis?

  Tel Aviv based?

• 1:18:54Speaker 04

  They were, but now they're Palo Alto based.

• 1:18:56Jason Calacanis?

  Got it. I remember. I think I heard this pitch. Great job.

• 1:19:00Speaker 04

  And we're actually running an SPV. Ooh, I don't know if that's legal. But if folks are interested, Jason, I'll drop you an email.

• 1:19:07Jason Calacanis?

  Yeah, send me that deal memo. I'll read it. Absolutely.

• 1:19:10Speaker 04

  Will do. And I'll see you at Liquidity Summit.

• 1:19:12Jason Calacanis?

  Oh, yes, you're coming. Awesome. Great. Yeah, Liquidity is going to be nuts this year. Liquidity was my original angel summit. I renamed it Liquidity. Did it for a year. The All In guys did me a favor and showed up when we taped an episode there for the last few years. And then Chamap was like, I like this event. Can we buy it? And I was like. It's just for angel investors and early stage folks. It's like, well, what if it was for everybody? And I was like, okay, so we took the price from $5,000 a ticket and I would just break even on it. And then we doubled the price and we tripled the attendance from, you know, 150 people to 500. And we took over the town of Yountville. So the budget, the revenue, everything year over year,

• 1:19:52Jason Calacanis?

  or a year over 18 months went like 10x, uh, triple, and it is going to be absolutely nuts. We said no, I think everybody who got a spot there, we said no to three or four other people who applied. This is applying to buy a $10,000 ticket. It's, it is, uh, pretty

• 1:20:09Speaker 04

  What a privilege.

• 1:20:10Jason Calacanis?

  Well, I mean, the amount of money we're spending is crazy. Like, we literally took over the town of Yountville for the entire, uh, duration. It's gonna be nuts. And people are coming in from around the world. And I have like, speaking of people in the Middle East, I have people like, "Hey, I met you when you were over here. I run this sovereign wealth fund. I applied for a ticket. I didn't get in. Is there any way you can get me in?" And I'm like,

• 1:20:31Speaker 04

  What?

• 1:20:32Jason Calacanis?

  Ah, we need a bigger boat, like the

• 1:20:34Speaker 04

  I think you should have let in the people with sovereign wealth funds, Jason.

• 1:20:38Speaker 00

  I know.

• 1:20:38Jason Calacanis?

  But you know, here's the problem.

• 1:20:39Speaker 00

  Tell them to buy the next town over.

• 1:20:41Jason Calacanis?

  The problem is, it's everybody comes at the last minute and then there's like, you know, four besties. Each one gets 30 requests, 40 requests for last minute tickets, 40 requests times four besties, 160 seats. We're out of seats. It's a physical limitation.

• 1:20:58Speaker 00

  And that, that little town can't handle it, but that's so great.

• 1:21:01Speaker 04

  This is, uh, LeBron playoff game problems.

• 1:21:05Jason Calacanis?

  Absolutely.

• 1:21:05Speaker 00

  So Jason, you know, the last time I was on a, you know, platform with you was at your launch festival in, um, Fort Mason. And your producer, uh, Jacob, sent me the clip and I was like, oh my God, that was 10 years ago and

• 1:21:19Jason Calacanis?

  Holy cow.

• 1:21:20Speaker 00

  Yeah. And that was such a great event. I loved that venue. It was so fun.

• 1:21:23Jason Calacanis?

  You know, I did that event. I had started TechCrunch 50 with, uh, my friend and then we broke up. Or I should say, he kicked me out and screwed me. Uh, and I was like, okay, I'll just do my own. I'll do Launch Fest. And he went on to rename it Disrupt. Um, and it was the best thing that ever happened to me because I got away from somebody who was a bit toxic, uh, but I was able to Uh, do it the way I wanted to, which was I used to do it. Anybody could get a free ticket if they were a founder. They just had to fill out a form. We had 15,000 people at the peak uh, register and then you had six, seven thousand people there. And the audience size was like, the number of seats was 2,000. We had like video rooms to watch it. So I brought it back this year.

• 1:22:03Jason Calacanis?

  And we had launch festival in San Francisco, only 400 seats, free for founders. I sold like 30 tickets. Uh, you know, for VCs or whatever, and sit in the front row. And we really had a great time making it intimate again.

• 1:22:15Speaker 00

  Yeah.

• 1:22:15Jason Calacanis?

  So I'm gonna do it again and I'm gonna do it twice a year and I'm gonna make it themed. So launch your company for free. And I had done it Jenny, as a reaction to demo. Demo was charging $20,000 to be on stage. They would then charge you five or $10,000 to be coached. So they had like a mandatory coaching product. And then you had to buy tickets and then you had to buy a booth. It was, do you remember those days?

• 1:22:38Speaker 00

  I mean, I just remember being on that stage and looking at the audience and there were thousands of founders there. When I got off the stage, it wasn't like a line of 10 people. It was like hundreds of people. It was like so exciting. And that venue was just amazing. So.

• 1:22:50Jason Calacanis?

  It will, they made it impossible for me. The unions then attacked me for using non-union spaces, started banging on the doors and protesting it. Cause I used robotic cameras and I was like, I'll never do an event in San Francisco again. And here I am. I did one recently, but I think I'm gonna move it to like the peninsula. Because San Francisco is just too hard. They make it way too hard to do anything. But you were at the early ones, Dave. You were, you were um, at everything. Back in the day.

• 1:23:14Speaker 04

  You were admonishing me to uh, take my iPad off the stage.

• 1:23:17Jason Calacanis?

  Yes, we had a, we had a showdown since he was using his iPad. I was like, these guys have 90 seconds. Please pay attention to them.

• 1:23:23Speaker 04

  I was doing due diligence on the company. I wasn't like flunking around.

• 1:23:26Jason Calacanis?

  You have ADHD, my friend. You have ADHD and I am your Ritalin. I am your human version of Ritalin.

• 1:23:31Speaker 01

  I think everyone here has, has at least ADD. Uh, I'll just throw in my historical context. I was in high, late high school during the Tech 140, Tech 150 days, Jason. And uh, you guys got me drunk enough that I threw up on the wall outside the venue as a baby. So.

• 1:23:45Jason Calacanis?

  There it goes. I got you drunk enough. Yes, I put the gun to your head.

• 1:23:48Speaker 00

  Okay, I think that story, that story wins.

• 1:23:52Jason Calacanis?

  You win. You win. Puking at TechCrunch 40. All right. All right, everybody. We'll see you next time. Bye-bye.

• 1:23:56Speaker 05

  Thanks for watching This Week in Startups. If you liked this episode, check out more. If you're a startup founder, Founder University Cohort 13 kicks off this fall. It's a 12-week program that provides guidance on building your product, launching to real customers, and pitching to investors. Top startups receive $25,000 or $125,000 in investment. Apply now at founder.university/twist. Already have traction? The Launch Accelerator invests $125,000 and connects you with 500-plus investors to help you raise your next round. Apply at launchaccelerator.co. If you're an accredited investor looking to gain access to quality deal flow, apply for Jason's Angel Syndicate at thesyndicate.com. We find two to three deals a month.

• 1:24:41Speaker 05

  And check out This Week in AI, Jason's experts-only roundtable with top AI founders and operators every week. Find it thisweekinai.ai. Check out the TWIST ticker, our daily newsletter, at thisweekinstartups.com/ticker. Thanks again to our sponsors for making today's show possible. Follow the show on Instagram. Follow the show on X.com. This Week in Startups publishes three days a week, Monday, Wednesday, and Friday at 5:00 PM Central Time. You can submit an audio or video file question by emailing it to thisweekin.com.