How to Make Billions from Exposing Fraud | E2234

This Week In Startups is made possible by: Netsuite - https://www.netsuite.com/twist LumaAi - https://lumalabs.ai/twist Squarespace - https://squarespace.com/twist Today's show: Government fraud and waste has become a prominent issue in the last month. That's what we are looking at. On Today's episode of TWiST, Jason interviews Alex Shieh of the The Antifraud Company. Under the False Claims Act, enterprising Americans, like Alex, can receive up to 30% of fraud dollars they uncover! Jason digs into the business of fraud with Alex Shieh and how a generational company could be built around it! PLUS Alex Wilhelm and Marcus Brotman take a look at the history of BOOM, $1.5 Billion dollar startup bringing back supersonic commercial travel! Jason first interviewed Blake Scholl almost 10 years ago in 2016. Back then, BOOM was a dream to bringing back supersonic travel. The Concorde's failure, and why BOOM is different, is central to Blake's thinking. What is fascinating is Blake's mindset and vision for the early stages of this future unicorn startup. THEN, Jason answers live Q/A at Founder University Tokyo! In partnership with JETRO, Jason and the LAUNCH team are bringing Founder University to 35 Japanese startups over the next 9 weeks! Timestamps: (00:00) Why the Concorde failed and how BOOM Supersonic is bringing back faster than light travel (08:34) The 30% efficiency rule for Mach 2 flights (11:46) Netsuite - Get the free business guide Demystifying AI at https://www.netsuite.com/twist (17:12) Building million dollar planes on a startup budget (20:22) Luma AI - Stop guessing and start directing with Ray3 Modify from Luma AI, the AI-powered post production tool. Explore it at: https://lumalabs.ai/twist (24:11) The Checklist Manifesto: Lessons for pilots and founders! (26:02) How to build a team that can go supersonic (32:49) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://squarespace.com/twist (33:55) Private Sector Doge: The Anti Fraud Company (38:48) The $500B in Fraud uncovered (48:34) How Alex Shieh's team uses AI to hunt down fraud (52:48) How you can win 30% of exposed fraud with the false claims Act (56:27) Founder University Tokyo Q&A Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Follow Lon: X: https://x.com/lons * Follow Alex: X: https://x.com/alex LinkedIn: https://www.linkedin.com/in/alexwilhelm/ * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis/ * Thank you to our partners: (11:46) Netsuite - Get the free business guide Demystifying AI at https://www.netsuite.com/twist (20:22) Luma AI - Stop guessing and start directing with Ray3 Modify from Luma AI, the AI-powered post production tool. Explore it at: https://lumalabs.ai/twist (32:49) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at https://squarespace.com/twist Check out all our partner offers: https://partners.launch.co/

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

• 0:00Speaker 00

  Well, now he's built a company that wants to do exactly what you just said. Use investigative journalism and also the power of AI to uncover fraud and collect fat penalties from the government for saving us all some money.

• 0:08Jason Calacanis?

  And we talked about investigative journalism and how important it is. It turns out there are whistleblower laws. Whistleblower laws allow you to get 50%, a third of the money recovered.

• 0:18Speaker 02

  I think that we're probably not like any other company that that is in in the world because we don't have any customers. So this, it turns out, is a is a is a way that you can monetize information, investigative journalism about about frauds that haven't been previously reported. We're not a law firm representing the whistleblower. We're not a we're not a law firm at all. We are the whistleblower.

• 0:40Speaker 03

  This week in startups is brought to you by Squarespace. Use offer code TWIST to save 10% off your first purchase of a website or domain at squarespace.com/twist. Luma AI, stop guessing and start directing with Ray 3 Modify from Luma AI, the first AI-powered post-production tool. Explore it at lumalabs.ai/twist. NetSuite, get the free business guide, Demystifying AI, at netsuite.com/twist.

• 1:08Speaker 00

  Welcome back to Twist. This is Alex and today we're going back in time. One of my favorite founders in the world is Blake Scholl. He's the founder and CEO over at Boom. Had him on the show a couple of times. I got to catch up with him in late 2025. And if you want to learn more about that, go check out episode 2168. But we've talked to him through the years and I don't just mean a couple of years back. Jason actually had Blake on the show back in 2016. This has been Boom was more idea than product. It hadn't put a test aircraft into the sky yet. It had only raised a few million dollars and was miles and miles and miles further away from its goal of getting a consumer supersonic passenger jet into the sky. So I'm very glad to be joined today by producer Marcus. Marcus, hey, how are you?

• 1:50Speaker 03

  Hey, Alex, how are you doing?

• 1:51Speaker 00

  I'm doing great as we go through episode 638 and pull out the key moments from our first chat with Blake. Here's Jason and Blake talking about why the conqueror died and how Boom got started.

• 2:01Speaker 04

  Taking off on the wrong runway, over max weight. They landed just, you know, very, very close to a diversion runway or crashed of close to the diversion runway. They almost made it.

• 2:11Jason Calacanis?

  Wow.

• 2:11Speaker 04

  Yeah.

• 2:12Jason Calacanis?

  It's really sad. Now, did that crash derail supersonic flight? Or was it the expense? Why did we get so fast? Have this amazing technology and then not have it continue? When, when did that happen? When did they decommission the final?

• 2:28Speaker 04

  It was 2003, so it went back into service after the accident. Uh, that wasn't really the showstopper, but the reality is the death of supersonic flight happened in the seventies.

• 2:36Jason Calacanis?

  Okay.

• 2:37Speaker 04

  Uh, you know, supersonic flight never changed the world, never took over the way the jet age did. And the, and the reason was that we really rushed into it. We, and we built Concorde before it was possible to do it economically. So a ticket, yes, a ticket on Concorde costs 20 grand. And yet there were a hundred seats on the airplane and you just can't find a hundred people who want to pay 20 grand to go somewhere twice a day on very many routes. And so the result is then you get no economy of scale, only 20 airplanes ever built. That's further pressure on ticket prices and the whole thing is more thud than boom.

• 3:07Jason Calacanis?

  You have this crazy idea that you're going to bring it back.

• 3:11Speaker 04

  Yes.

• 3:11Jason Calacanis?

  Who are you and what qualifies you to bring back what?

• 3:16Speaker 04

  Yeah.

• 3:16Jason Calacanis?

  The French and the English could not.

• 3:18Speaker 04

  Right.

• 3:19Jason Calacanis?

  I mean.

• 3:19Speaker 04

  Well, Jason, like, like you, I never got to fly on Concorde and it pissed me off.

• 3:23Jason Calacanis?

  Right.

• 3:23Speaker 04

  And, uh, you know, I had, the first part of my career was all doing internet stuff, startups, uh, tech things. Uh, but meanwhile, I got my pilot's license and I, since, you know, since the 2000s, I've been waiting for somebody to do this.

• 3:35Jason Calacanis?

  Right.

• 3:36Speaker 04

  Because I want to go Mach 2.

• 3:37Jason Calacanis?

  Right.

• 3:37Speaker 04

  And eventually I realized that I might have to start the company if I want to have it happen.

• 3:41Jason Calacanis?

  Explain to everybody what Mach 1, Mach 2 is. Where do current planes fly? Where did the Concorde fly? Where does the boom fly?

• 3:47Speaker 04

  Yeah. So, so Mach 1 is the speed of sound and all the major commercial aircraft, private jets, everything except a few military aircraft fly subsonically today. So about 85% of the speed of sound is typical, typical speed, you know, 500 and some miles per hour. Concorde flew at Mach 2 and Boom will fly at Mach 2.2. Mach 2.2 is like 1451 miles per hour.

• 4:09Jason Calacanis?

  Wow.

• 4:09Speaker 04

  So, yeah, it's really fast. I mean, the way to think of it is what it does for your life though. Like you leave New York, first flight of the day, six in the morning, you land in New York with the time difference, 2:30 in the afternoon, London time. And then you can get downtown, get business done, go out drinking. You can have seven hours in London, still get back to New York by eight o'clock New York time.

• 4:28Jason Calacanis?

  Wow.

• 4:29Speaker 04

  So you can tuck your

• 4:30Jason Calacanis?

  So you're thinking three hours?

• 4:31Speaker 04

  About three and a half hours each way.

• 4:33Jason Calacanis?

  Three and a half hours each way. You're a former internet guy. You made a little bit of money at some point, I guess? And then you started flying around in a plane. Why do all these internet cats want to go fly planes? What is it about internet people and the private aviation? Because it's obviously a trend.

• 4:47Speaker 04

  Yes.

• 4:48Jason Calacanis?

  Is it just because it's like an expensive thing or because you want to be like in control of something very technical? Why did you take up aviation?

• 4:55Speaker 04

  Yeah, I mean, it's been a passion since childhood. There's something magical to flying a plane, especially a small one. On one hand, it's kind of technical. And so if you're a geek, you like that. And on the other hand, it's it gives you this very direct experience of having your life in your own hands. And so to a certain kind of person, that's very appealing.

• 5:12Jason Calacanis?

  Okay, so you have the idea for Boom. When did you have this idea that and how did you go about vetting that it could be not just an idea, but a company?

• 5:21Speaker 04

  Yeah, what started about two years ago. So I sold my first startup to Groupon. Spent a couple of years at Groupon, then left. And I wanted to do another startup. And I wanted to work on something that I was super passionate about. Because many times what makes the difference between success and failure in a startup is are you working on something that you care so much about? That you keep going through the thick and the thin. And so I figured I would make a list of all my ideas and descending order of how awesome it would be if they worked. And I'd work down that list.

• 5:46Jason Calacanis?

  Great.

• 5:46Speaker 04

  And so I thought I thought I'd get the supersonics thing out of my out of my system in a couple of weeks.

• 5:50Jason Calacanis?

  That was number one?

• 5:51Speaker 04

  That was number one. I was trying to eliminate science fiction.

• 5:53Jason Calacanis?

  Right, exactly.

• 5:54Speaker 04

  So I thought I would get into this and find that it was science fiction.

• 5:57Speaker 03

  And Alex and a tale as old as time. It turns out that being early is just as bad as being wrong. I think Blake laid it out, you know, really well. $20,000 for a seat, just for one flight.

• 6:07Speaker 00

  Far too much money. I had no idea it was that expensive. I thought it was maybe half that much. So I'm actually more surprised that it lasted as long as it did, Marcus, than the fact that it eventually came to an end. But he's right, you know, the jet age did revolutionize first military aircraft and then, you know, the civilian world. And certainly, military jets can go supersonic, but passenger jets can't. So it's an interesting situation. I do think, though, this is a good clip for another reason, which is That Blake is clearly the right founder for this project. He was a pilot. He had an itch. He had a grievance he wanted to go out there and take on. As Josh from Lux says, you know, chips on shoulders, put chips in pockets. Well, he was peevish. He wanted to take this flight and mock two. No one was working on it, so screw it. I'll go out and build it myself. I just hope that more internet entrepreneurs take this as a license, if you will,

• 6:51Speaker 00

  to go out there and build things in the physical world as well and not to be constrained to just things that are digital and also, you know, go out there and touch the metal, if you will.

• 6:59Speaker 03

  Absolutely. I think a top line from that section of the podcast was when Blake said that after selling his company to Groupon, he created a list of the top five craziest ideas that would be just not, not at all possible, but the craziest, coolest ideas that he could think of. And supersonic flight was at the top and he went for it.

• 7:19Speaker 00

  All right, now in this next clip, we're going to talk about how technology has improved from the day of the Concord. Why boom may make economic sense today? And also, how fast can we go over land without pissing off everyone that you know? Take a listen.

• 7:32Speaker 04

  It was September 2014, kind of officially.

• 7:34Jason Calacanis?

  Okay, so in 2014, you made a company.

• 7:36Speaker 04

  Yes.

• 7:37Jason Calacanis?

  To do this. How did you go about figuring out if this is a real business or not? And is it a viable business? Because frankly, my understanding of it was, and you'll tell me which are my misconceptions. Number one, it's very expensive because it burns a lot of fuel. Number two, the planes were extremely expensive to maintain and complex. There was a small audience for it because it didn't save enough time to make people want to spend. The two hours was 15,000 extra or $10,000. It wasn't worth it for people.

• 8:08Speaker 04

  Right.

• 8:08Jason Calacanis?

  What did I get right? What did I get wrong in my assumptions?

• 8:11Speaker 04

  Well, that's all true.

• 8:12Jason Calacanis?

  Okay.

• 8:13Speaker 04

  Except you can do better today.

• 8:14Jason Calacanis?

  You can do better today.

• 8:15Speaker 04

  It could do better today. So the Concord was 1950s technology. And today we've got better aerodynamics. We've got software optimized aerodynamics. We've got better engines, lighter materials. And here's, here's the key thing. If you could improve on Concord's fuel economy by about 30%, just 30%.

• 8:31Jason Calacanis?

  Seems doable.

• 8:32Speaker 04

  You can do, yeah, very doable. Then you can do a supersonic seat for the same fuel that a lay flat bed in business class would take. Ah, that's the key. That's what makes this feasible.

• 8:43Jason Calacanis?

  So you looked at it and said, hey, I will give you a non-reclining seat, like you're not going to get to lounge out and be in a sleeper seat, but you're going to get there super fast. So you're trading a little bit of that creature comfort for speed?

• 8:56Speaker 04

  Sort of, but not really. The flying from San Francisco to Tokyo in time and experience will be like flying from San Francisco to New York. So you get like a first-class seat, but it's not lay-flat. You get there so fast, you can sleep in a real bed.

• 9:10Jason Calacanis?

  Making it 30% more efficient. The design is obviously a little bit different. I'm looking at the plane right here. It looks longer and narrower than the Concorde. Am I correct?

• 9:22Speaker 04

  That's correct.

• 9:22Jason Calacanis?

  Looking at it?

• 9:23Speaker 04

  Yes.

• 9:24Jason Calacanis?

  So explain to me what is unique about the design? And did you get that 30% just from the design?

• 9:29Speaker 04

  Yeah, there are a bunch of pieces in the design that add up. It's part aerodynamics, part engines, part materials, and all adds up to that 30% actually with some margin. Concorde, so 50 years old technology, right? It was a big, long tube made out of aluminum because when you're working in aluminum, big, long tubes is what are easy to make. But for a subsonic aircraft, that's fine. For a supersonic aircraft, it's much more sensitive to the shaping. So think of, like, if you're familiar with the B-1 bomber, or take a look at that. Very dynamic shape. That was built in aluminum at enormous expense. But today, we've got carbon fiber composites. And what you can do with carbon fiber is mold it in any shape that you want. So you can use software to design and optimize shape, and then you can use carbon fiber to actually realize that. So if you look at our airplane,

• 10:14Speaker 04

  it's not a big, long tube. It's a little bit fatter up front. It's a little bit skinnier in the back where the wings stick out. That's a principle called aerial ruling, which makes a huge difference in aerodynamic efficiency when you're supersonic.

• 10:25Jason Calacanis?

  What do you think the efficiency will be, the efficiency gains will be between Boom and Concorde?

• 10:29Speaker 04

  Well, it's a minimum of 30%. We've got some margin in there, too.

• 10:32Jason Calacanis?

  Oh, so it might even be better?

• 10:33Speaker 04

  Might even be better.

• 10:34Jason Calacanis?

  Okay. Now, I've been reading about Sonic Boom, and they say that they're going to be able to narrow the boom. Do you see a time when Boom will go New York to LA, New York to LA, or New York to San Francisco in an hour and a half or two?

• 10:51Speaker 04

  Yes. I mean, that's absolutely common. It's just a question of timing. And today in the United States, there's literally a speed limit. No supersonic over land. Doesn't matter how quiet you are. It doesn't matter if you go and you play Beethoven while you fly.

• 11:04Jason Calacanis?

  Right.

• 11:04Speaker 04

  You're not allowed to do it. The technology exists to quiet the boom quite a bit. And so this airplane, our design, will be about 100 times quieter than Concorde. So that's a huge improvement. Is that enough to get the rules changed? I don't know. And smart, you know, I think smart startup thinking on this says, don't count on any regulatory change. So we're thinking overwater, supersonic, and when the rules get changed and we can fly supersonic over land, hallelujah.

• 11:28Jason Calacanis?

  But you could take like the Lyft or the Airbnb or Uber approach and just sort of break the rule and see what happens.

• 11:33Speaker 04

  That'd be interesting, wouldn't it?

• 11:35Jason Calacanis?

  Can you imagine you start flying supersonic over the United States? I think they might shoot you down. It would definitely ground your plane.

• 11:47Jason Calacanis?

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• 12:29Jason Calacanis?

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• 12:51Speaker 00

  1950s technology, that's actually almost terrifying to hear it laid out like that. The conquer looks super modern, but apparently it was already dated when it was put out.

• 12:59Speaker 03

  The really key statistic to focus on here is the 30% efficiency rule. Not only is it great just for explaining the business model, but even just for narrowing down what an investor might be thinking when they meet with Blake. You can see Jason starts out that clip a little bit concerned about if this is even feasible. And Blake just takes all of those concerns. How are you going to get billions of dollars for the capital expenditure needed? How are you going to get this team together? Are the unit economics going to work? And he brings it down to one statistic, 30% efficiency, just a masterclass right there in fundraising.

• 13:31Speaker 00

  I think also he did a great job putting it into context that you can get a supersonic seat for the same price as a lay flat seat today in business. Everyone knows what that costs, right? Cause everyone's bought one at some point in time. So everyone knows the price point and also what you get for it. And so the trade off here, I think is really interesting. You don't need a bed if you're going to get there faster. Like I would so much rather spend less time sleeping on a plane, which is terrible and more time on the ground. So I really think kind of the double hit there is fantastic way for people to understand how to pitch a business and also how to get people like you and I super duper excited because it absolutely worked for me. I'd start reaching for my credit card right away. I gotta put my hand down, it's a couple of years away still. Another thing that I really appreciated though, Marcus, in that segment was the discussion

• 14:13Speaker 00

  of sonic booms and the fact that there is a speed limit over the country. You know, we think about speed limits so much being this terrestrial thing. We have to deal with the signposts and cops and radar and all that. But up in the sky, I guess I kind of implicitly knew that there was a speed you couldn't go over because of the, the sound barrier, but I didn't actually think it all the way through. So I love that framing of it as a thing that we're going to go out there and not only just deal with, but eventually, eventually break. And I think VCs also love that idea.

• 14:39Speaker 03

  Absolutely. We're going to go from two gunshots in the air to a little thump. I mean, we don't handle a little thump in our lives. It means going supersonic.

• 14:45Speaker 00

  Actually, let me, let me help out a little bit there because this interview, as you said, you know, 2016, very old. When I talked to Blake in 2025, nine years later, they've solved the boom problem. And they've effectively figured out a way to fly above the speed of sound that doesn't create a boom on the ground. So I, I, I think that this is going to be not just something to get us from, you know, New York to Paris or from San Francisco to Tokyo. But instead, really to get us from my favorite route in the world, SFO to BOS. And if I can do that in like, what, two and a half hours, oh, your boy is going to be so glad. They're going to have all my money, Marcus, all of it.

• 15:18Jason Calacanis?

  Absolutely.

• 15:19Speaker 00

  All right. Next up, the clip we're going to talk about is taking the startup approach. Now, how do they build this plane? What's the plan? How are they going to get from an idea actually into the sky? Take a listen.

• 15:29Jason Calacanis?

  Was it like a, a deals based email?

• 15:32Speaker 04

  It was, it was mobile e-commerce technology, totally, totally different as far as capital intensity.

• 15:36Jason Calacanis?

  Yeah. You, you made an app. You made some software before.

• 15:39Speaker 04

  Right.

• 15:40Jason Calacanis?

  Now you're talking about building what I think looks, I'm going to take a guess here. I don't know. I haven't done the research. But I'm thinking it, it look, it screams to me of a billion dollars to get the first one out the door. And 150 million, no, 300 million per plane. What does this cost?

• 15:57Speaker 04

  You're not too, too far off.

• 15:58Jason Calacanis?

  300 million.

• 15:59Speaker 04

  So I like to tell people that we can build the entire company and get to break even.

• 16:02Jason Calacanis?

  Got it.

• 16:03Speaker 04

  For less money than Uber races and around.

• 16:05Jason Calacanis?

  Okay.

• 16:06Speaker 04

  But it's, it's still a lot of money, but it's not an obtainable amount of money. And so you, you know, you, you, you approach it like a startup and you do it sequentially, like that we're flying next year with a subscale prototype, which will go Mach 2.2. It'll set speed records. But it's much less expensive to build versus the full scale certified to take passengers, proven safe airplane.

• 16:27Jason Calacanis?

  So you're actually making one for next summer.

• 16:29Speaker 04

  Oh, end of next year is when it will fly.

• 16:31Jason Calacanis?

  End of next year. So in eight, 19, 20 months from the taping of this.

• 16:34Speaker 04

  Yes.

• 16:35Jason Calacanis?

  You will have a smaller version of the boom.

• 16:38Speaker 04

  Correct.

• 16:38Jason Calacanis?

  And if you prove that, then you can start taking orders or you've already started taking orders?

• 16:43Speaker 04

  We've already started taking orders, actually. This, this surprised me that it was possible this early. We have 25 airplanes on LOI.

• 16:50Jason Calacanis?

  Okay, letter of intent.

• 16:51Speaker 04

  Letter of intent, correct. So not, not, not binding yet.

• 16:54Jason Calacanis?

  Not binding.

• 16:55Speaker 04

  But, but it's.

• 16:55Jason Calacanis?

  Does it include a deposit?

• 16:57Speaker 04

  Uh, it will.

• 16:58Jason Calacanis?

  It will.

• 16:59Speaker 04

  Not yet, but it will.

• 17:00Jason Calacanis?

  So like the Tesla to reserve your spot in line, you're gonna have to put something down. I'm assuming a slightly more than the thousand dollars that Elon's charging for the Tesla Model 3 will be the deposit for a boom. If not, I'm gonna put down a deposit for the first 25 planes.

• 17:12Speaker 04

  Right.

• 17:13Jason Calacanis?

  What will the deposit be? And what will the cost of the plane be? Ballpark, hundreds of millions?

• 17:17Speaker 04

  Uh, the, the, the price of the plane is 200 million.

• 17:19Jason Calacanis?

  Okay.

• 17:20Speaker 04

  200 million. And deposits, we'll see.

• 17:23Jason Calacanis?

  What did the Concorde program cost? And they, they built 25 planes or something?

• 17:28Speaker 04

  They built 20 planes. And so.

• 17:29Jason Calacanis?

  20 planes. They spent 10 billion?

• 17:31Speaker 04

  It's remarkable the thing ever flew. So it was a joint venture between the French and British governments.

• 17:36Jason Calacanis?

  Right.

• 17:36Speaker 04

  The screams of efficiency, right? They couldn't, for example, uh, the technical documentation was in French and in English. They couldn't decide where, how many factories to build. So they put one in France and one in Britain. Yeah.

• 17:46Jason Calacanis?

  Yeah, they were fighting. I think I saw a special on this where they were fighting over who got to build which pieces.

• 17:51Speaker 04

  Yes.

• 17:51Jason Calacanis?

  Which has an, on an engineering basis, when the unions were fighting over who got the jobs to do different pieces, that was a little bit weird, wasn't it?

• 17:59Speaker 04

  Oh, yeah. Yeah. I mean, so that you can do things way more efficiently. And Elon has really shown the path to this with SpaceX. Of what happens when you're scrappy, you hire a smaller number of really phenomenal people. You put them all in one room, you keep them around the hardware, you can execute way faster for way less money.

• 18:15Jason Calacanis?

  Who's ordering these, by the way? Or is it Virgin?

• 18:19Speaker 04

  Yeah. So the, so the.

• 18:20Jason Calacanis?

  Atlantic or?

• 18:21Speaker 04

  The first ten are for Virgin Group, which basically means that Richard can use them in whatever airline he chooses.

• 18:26Jason Calacanis?

  Okay. So Richard ordered 10.

• 18:28Speaker 04

  Mm hmm.

• 18:29Jason Calacanis?

  And at 200 million, it kind of, the billionaire crowd would be attracted to having these, I think.

• 18:36Speaker 04

  Mm hmm.

• 18:36Jason Calacanis?

  But that wouldn't be reasonable to operate as a.

• 18:42Jason Calacanis?

  Private for private aviation.

• 18:43Speaker 04

  Uh, it'd be, it'd be probably a stretch. I mean, some people can make it. There's a, there's a guy in Saudi Arabia who purchased an A380. That's the double decker.

• 18:52Jason Calacanis?

  Yeah, I heard about that.

• 18:53Speaker 04

  For his own personal use. So some people will have to have this, but we're aiming at, you know, our, our vision is to make Earth more accessible for everybody.

• 19:01Jason Calacanis?

  Right.

• 19:01Speaker 04

  So the ticket prices out of the gate will be about business class. And over time, we're going to chip away at that until everybody can afford to fly.

• 19:07Jason Calacanis?

  So 5,000 bucks?

• 19:09Speaker 04

  5,000 bucks round trip.

• 19:10Jason Calacanis?

  Round trip?

• 19:11Speaker 04

  Round trip.

• 19:12Jason Calacanis?

  To London?

• 19:12Speaker 04

  Mm hmm.

• 19:13Jason Calacanis?

  I thought Virgin Atlantic was 5,000 each way right now. It's like 10,000.

• 19:18Speaker 04

  It depends when you look at the price, right?

• 19:19Jason Calacanis?

  Ah, right.

• 19:20Speaker 04

  And there, you know, you have to model, when you're doing the business, you have to model out what are the average actual prices? Net of all the discounts. So the average, the average will be able to support us about 5,000 round trip.

• 19:29Jason Calacanis?

  We talked a little bit about SpaceX. They're a full stack company. Uber's a full stack company. But you're going to sell the planes to other people. Have you thought, well, why don't I just create the boom and then create Boom Airlines?

• 19:40Speaker 04

  You know, there, you know, there's some days you get up, you think, oh, that'd be awesome.

• 19:43Jason Calacanis?

  Yeah.

• 19:43Speaker 04

  But, you know, it's one hard problem at a time. And there are, you know, airlines are a complicated business. Uh, building a supersonic airplane is a complicated business. So one, one thing at a time. There's a lot of appeal to working with airlines and.

• 19:55Jason Calacanis?

  There is?

• 19:56Speaker 04

  Yes.

• 19:56Jason Calacanis?

  What are they?

• 19:57Speaker 04

  Well, you get to pre, you have to accumulate an order book, for example. That's key to this business. If you want engine companies to work with you, you want to be able to, uh, you have to raise the capital you need for this. Uh, typically that works, the way it works for new airline programs, new airliner programs is you show that you've got a bunch of orders and then you go finance that. So if my, if my business plan is I'm going to sell a bunch of airplanes to myself, that's hard to finance.

• 20:23Jason Calacanis?

  We're AI first here at Launch, and I have a team try out every cool new app and tool just to keep track of what's the state of the art, what's possible. And we found the closest thing on the market to a real AI-powered post-production tool. It's called Ray3 Modify from Luma AI. And with most AI video apps, you're just plugging in words and you're hoping for the best. But with Ray3 Modify, you build on top of Luma's Ray3 model. This gives you precise nuanced control over your outputs, allowing you to actually direct your AI videos, not just guess. So let's check out some examples. We animated the launch logo, keeping its recognizable font and lettering intact. Oh my God, this came out incredible. Here you have producer Oliver going from just pretending to surf

• 21:08Jason Calacanis?

  to having an actual surfing video. This stuff is wild. And we can drop this Tesla into about any environment we want. Stop guessing and start directing your videos with Ray3 Modify from our friends at Luma AI. Try it today at lumalabs.ai/twist or via the QR code you see on the screen right now.

• 21:32Speaker 00

  Less money than Uber raised in a round. That is how you know Blake knows his audience. Because if there's one thing Jason loves to talk about, well, Uber, you know, it comes up here and there, Marcus. But the thing that I really took away from that clip was the idea of applying traditional startup approaches to a very different problem set. When we think about building sequentially or perhaps iteratively, I think about lean startup and rapid iteration and shipping software quickly and all that. But applying that to this space is just so cool to see that the same ideas can work both on the screen and on the ground or in the air, I suppose.

• 22:04Speaker 03

  Absolutely. And, you know, speaking of the same ideas, we are still today talking probably even more now about how the EU has a hard time innovating. And here we are, you know, 10 years before, same topic.

• 22:15Speaker 00

  Same topic. Turns out that governments are not the fastest way to do things, but they are how we do things as a group. But it does seem that in this case, comparing the Boom program to what we pulled off with Concord, that perhaps the private industry may be a little bit better equipped to handle supersonic flight. One last thing before we move on, $5,000 to go to London, round trip from the US. Man, they're going to sell a lot of tickets on these planes when they finally get there.

• 22:38Speaker 03

  I think a really intelligent point from Blake here and our early point was talking about Elon Musk and vertical integration. You know, in 2025, we have so many examples of vertical integration from startups. We have, you know, we talked to Base Power and Zach Dell. Elon Musk and all of his factories, you hear from Andoril, Andoril and their vertical integration efforts. And Jason asks, why not go for the whole gambit? Why are you even selling a book of business here? Why not just own the flight itself and, and become a passenger airline as well? Blake responds really well, saying, for one, this is a really complicated problem, just building this jet. So we'll take one step at a time.

• 23:18Speaker 03

  But part two, as a lean and scrappy startup, to your point, it is much easier to finance a plane when you have a book of orders. So he says, you know, we're going to get a book of orders, these LOIs, and once these orders come through, we'll be able to really scrappily get this, an amount of capital together that we wouldn't otherwise have access to if we were trying to become a passenger airline right out of the gate.

• 23:43Speaker 00

  Also, if you want to build an airline, you're kind of barking up a pretty tough tree because people like United Airlines trade at roughly 0.5 times revenue and Boeing trades more close to two. So if you're just thinking that's in purely price sales terms, Blake really does have a point. Now, next up, I do want to talk about a book because this is a book that Jason was talking about in 2016, and he talks about it each and every week here at Twist and Launch. Take a listen.

• 24:05Speaker 04

  Am I in a system that's constantly reinforcing discipline? Or do I, or do I kind of wing it and I figure, oh, I can make that work?

• 24:12Jason Calacanis?

  And this is where checklists, I don't know if you've ever read their book, The Checklist Manifesto.

• 24:15Speaker 04

  I love that book.

• 24:16Jason Calacanis?

  Isn't that a great book? Checklist Manifesto is my audible selection of the day. They're not a partner or sponsor on this episode, but they have in the past. But what a great, what a great book. Explain to everybody the story about the, was it the B2 bomber? In the book, they, when they talk about the checklist manifesto, they were talking about one of the planes was so big and complex that one pilot couldn't, the way they used to have the structure of it was you'd have one pilot in charge.

• 24:42Speaker 04

  Right.

• 24:43Jason Calacanis?

  And then everybody else would do what they said.

• 24:44Speaker 04

  Mm hmm.

• 24:45Jason Calacanis?

  But they, so they really didn't have like a delegation system. But then because of this checklist, they created checklists and then they would run them down with each other. So they sort of dispersed the load of maintaining.

• 24:55Speaker 04

  Yeah, splitting the load across pilots is a big deal as well. So typically for a commercial aircraft, you'll have one pilot reading the checklist, another one doing it.

• 25:03Jason Calacanis?

  Ah.

• 25:03Speaker 04

  Much less likely you skip steps or...

• 25:05Jason Calacanis?

  Right. I think this plane had like six engines or eight engines or something crazy.

• 25:09Speaker 04

  Sounds like a B-52.

• 25:10Jason Calacanis?

  I think it was the B-52, like they thought it would never work. And then when they got the checklist going.

• 25:14Speaker 03

  And there you have it, Jason, bringing forward the checklist manifesto, which is a common occurrence here at the launch and twist offices. We cannot run such an incredible operation without the checklist manifesto. But I think this episode is probably the best time to bring up, you know, the book in question. That's because one of the key segments from the book that we all read was about how B-17 flying fortresses in World War II were these new, much larger aircrafts that were very complex for new pilots to run. And they need to scale the amount of pilots going over Europe rapidly in order to, you know, engage in these bombing efforts. And here we are talking to the CEO of a supersonic aircraft company. I'm sure the crew members on those planes will also be using checklist themselves.

• 25:58Speaker 00

  Well, you know, humans don't have infinite memory, unlike AI models, so we do need a little help as we get through things. I do want to bring up one last segment, though, Marcus. This is all about raising money and building a team. Now, we know about hiring engineers. All the sponsors of this show are in that domain. But how do you find people that want to take on a project that will take a decade? And it involves building a plane that no one has seen before? Well, let's find out.

• 26:20Jason Calacanis?

  Do you have to get some crazy angels and be a crazy founder yourself who made a little bit of chatter to put up the money for this and prove it?

• 26:27Speaker 04

  Yeah, well, I think the time will tell on that.

• 26:29Jason Calacanis?

  Okay, so right now you guys have raised a couple million bucks, two million bucks?

• 26:32Speaker 04

  Uh, yeah, before, before YC, a couple million bucks.

• 26:35Jason Calacanis?

  Got it.

• 26:35Speaker 04

  And then after YC, we'll talk about it in a bit.

• 26:37Jason Calacanis?

  What will it take you to build the prototype? It sounds like 25 million bucks to build a prototype?

• 26:41Speaker 04

  Actually, less than that.

• 26:42Jason Calacanis?

  Really? 10, 20, something in that range?

• 26:44Speaker 04

  In that range, yeah.

• 26:45Jason Calacanis?

  Sounds very fascinating when you think about it, how little it costs for you to make a prototype that goes supersonic.

• 26:50Speaker 04

  Yes, it's, it's, uh, again, the bar for commercial aircraft is really high, as it should be.

• 26:55Jason Calacanis?

  Right.

• 26:56Speaker 04

  The bar for experimental one-off is...

• 26:58Jason Calacanis?

  Is disturbingly low.

• 26:59Speaker 04

  I don't know if it's disturbing, Lil. Like, you're, the responsibility is all on you to build something that actually works. So when I was first getting this business started, of course, I had to get an amazing team together.

• 27:10Jason Calacanis?

  Sure.

• 27:10Speaker 04

  And so I was living in the Bay Area at the time and flying Cirrus's out of Palo Alto Airport. And so I would, I would take off from Palo Alto and I'd fly down to Mojave in Southern California, which is like the hotbed of experimental aviation. So I was, I was going down there a lot, kind of, you know, on recruiting trips.

• 27:25Jason Calacanis?

  Right.

• 27:25Speaker 04

  And one of the first times I was down there, I was very new to the whole thing. Like, I had my pilot skills and like a little bit more, but not yet a ton. And I was getting a tour of the hangars and there is something amazing behind every hangar in that airport. And so this guy showed me his hangar and he had in there a, a Bert Rutan-designed aircraft, one of a kind that he had refurbished. And so I'm looking at this aircraft, I'm thinking, I want to ask a question about it.

• 27:49Jason Calacanis?

  Right.

• 27:49Speaker 04

  But it can't be a stupid question, right? And so he looked at the wings and there were these bumps about a foot out from the fuselage on the wings. I'm like, well, that's different. I haven't seen that before. What's that? And he said, oh, that's a great question. Well, when we built this, we didn't want to build a new landing gear from scratch. So we stole one off another airplane, but it didn't fit. And so we, so we didn't, so we cut a hole in the wing and we put some fiberglass over it. And then he says, let me show you what we did with the nose wheel. And so apparently the nose wheel that also stolen off of another airplane, and it would retract if it wasn't canted just right, it would kind of jam and not go into the wheel well. Well, they fixed that by

• 28:30Speaker 04

  drilling a hole from the cockpit into the wheel well and giving the pilot a stick.

• 28:35Jason Calacanis?

  Yeah.

• 28:36Speaker 04

  To poke the wheel if it didn't, if it's not aligned correctly.

• 28:38Jason Calacanis?

  It's not aligned correctly.

• 28:39Speaker 04

  And at that moment was when I realized that people in Mojave hack on airplanes the way people in Silicon Valley hack on software.

• 28:44Jason Calacanis?

  You had to hire people who knew much more about aviation than yourself because, let's face it, you were a web guy, a software guy, who got a recreational pilot's license and now wants to build Concorde 2.0.

• 28:58Speaker 04

  Right.

• 28:59Jason Calacanis?

  There's a little bit of a gap between what you know and what the people who built the Concorde know.

• 29:03Speaker 04

  A little bit.

• 29:03Jason Calacanis?

  A little bit. Who's the first person you get on the team or the second person you get on the team? And, and how do you convince them that you're not insane?

• 29:09Speaker 04

  You get all manner of responses. But first off, I think most people underestimate as adults, how much they can learn, how much new things they can learn and how quickly they can get deep.

• 29:18Jason Calacanis?

  Right.

• 29:18Speaker 04

  Uh, especially with experience, you start to learn what knowledge really feels like, what clarity feels like and what it feels like when you didn't have it.

• 29:24Jason Calacanis?

  Right.

• 29:24Speaker 04

  So I spent about six months or so. Teaching myself aerospace engineering fundamentals, just reading textbooks, doing problem sets, meeting smart people, showing them my work and saying, can you check this? And people are really generous with their time, especially when you tell them that, tell them what you're trying to do. And so I learned a ton from that. And I got at least to the point where I could judge the people I might hire. And we went through, so we went through an exercise where the first couple of people in the company, so critical, and I wanted the best people in the industry. So I asked everybody I met in aerospace, if you had a magic wand, and you could wave it, and you could get anybody to come work on this project, who do you want? And you start to see what names come up.

• 30:02Jason Calacanis?

  And then which ones come up multiple times?

• 30:04Speaker 04

  Exactly, exactly. And so a little over a year ago, we had about a half a dozen candidates for the first couple of roles on the company. We flew them all out to the Bay Area, got a conference room for a couple of days, and said, let's tear this whole thing apart technologically, and also tear apart, like, what are the lessons of how you build an airplane company? And you can tell, you know, you sit in a room with half a dozen really, really bright people. And these, these people are like the inventor of the personal jet, the chief engineer from Adam Aircraft, the chief engineer from Spaceship One and Spaceship Two, whose airplane is in the Smithsonian. Like, this was a high level room. And you, you spend a couple of days with those people, and you quickly figure out who are the ones you really want to work with. And so we hired two people out of that room. People go into aerospace because they either want to build a rocket, and go and

• 30:47Speaker 04

  colonize Mars, in which case they should go work at SpaceX.

• 30:50Jason Calacanis?

  Right.

• 30:50Speaker 04

  Or they want to work on fast airplanes.

• 30:52Jason Calacanis?

  Right.

• 30:52Speaker 04

  In which case, they should come and work at Boom.

• 30:54Speaker 00

  Well, will investors put the money up? With the benefit of hindsight markets, and nine years going by, I can tell you that the answer is, yeah, they will. Boom has raised to date over $700 million, according to Crunchbase data, and they raised $300 million last December. I will say, though, there have been some bumps in the road. This has not been an easy journey for Boom. In fact, they raised their most recent capital, Marcus, when they announced their new data center project. Essentially, they're going to take some of their engines they've made, put them in a shipping container, and use them to power data centers. Because if anyone has money today to spend, it is AI companies trying to expand their compute footprint.

• 31:27Speaker 03

  That's absolutely right, Alex. And I think this goes to the heart of what Silicon Valley has come to represent philosophically over the last 10 years. For one, being lean as a startup, pivoting to where the value is today, for this very long-term vision to change the world. And secondly, and more, almost more importantly, is getting a few smart, hardworking individuals together who are going to change the world for, you know, any, basically every part of our lives from Google, Uber, Instagram, even the US government with Doge.

• 31:58Speaker 00

  Small people, small groups can do quite a lot of work very, very quickly. But I also really appreciate what he said about learning because it sounds like the, the number of people or the individuals who can have this level of impact is not small. In fact, it's open to all of us.

• 32:11Speaker 03

  Absolutely. Blake picked up a book and started reading about, you know, aerospace engineering. If he can do it, then we all can do it.

• 32:16Speaker 00

  Yeah, there's no excuse, which actually is kind of annoying. Like, thanks Blake. Just saying, hey, I became an aerospace engineer in six months. Well, some of us have other responsibilities. No, I'm kidding. I love going back in time, Marcus, and seeing founders earlier in their journey. We often talk to people after they've achieved success, after they've gone public or raised the big rounds and whatnot, but it's fun to go back and see the, the joy in the challenge, the early progress and the seeds of future success. So thank you, Marcus, for your time. Everybody, we'll do a couple more flashbacks this year. Look forward to them. Until then, I'm Alex and this is Twist.

• 32:51Jason Calacanis?

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• 33:34Jason Calacanis?

  Just think about that. And you're going to get pay links, dedicated URLs that make it easy for you to collect payments online. So go to Squarespace.com/twist for a free trial. And when you're ready to launch, go to Squarespace.com/twist for 10% off your first website or domain purchase. Thanks again to Squarespace for being my longest running supporter here on Twist.

• 33:57Jason Calacanis?

  All right. Next up on the program is a fascinating project, Alex. You and I have talked on Twist about investigative journalism. You and I have spent our careers in journalism. Journalism is broken, journalism is transition, yada, yada. Creative destruction is occurring. And we talked about investigative journalism and how important it is. It turns out there are whistleblower laws. Whistleblower laws allow you to get 50%, a third of the money recovered. And the settlement's here. People don't know about this, but the SEC has been giving these awards for some time. Some of them have gotten very large, I think up to nine figures. Our guest today, who Alex will introduce in a moment, has created a startup to address this and productize it. What a brilliant idea, Alex. Over to you.

• 34:38Speaker 00

  Yes, please welcome to the show Alex Shea from the Anti-Fraud Company. Jason, I first heard about Alex when he was taking Brown University to task. Given that Brown University is about 25 feet from my house, I was like, who is this guy? What is he doing? Well, now he's built a company that wants to do exactly what you just said. Use investigative journalism and also the power of AI to uncover fraud and collect fat penalties from the government for saving us all some money. Alex, welcome to the program. How are you doing?

• 35:01Speaker 02

  Thank you for having me.

• 35:02Jason Calacanis?

  Yeah, Alex, tell us, what is your company? The mission, the product, and where are you at today?

• 35:09Speaker 02

  Yeah, that's a great question. So I think that we're probably not like any other company that is in the world because we don't have any customers. And the reason for this is the way that we monetize is using an obscure piece of law called the False Claims Act, which has a provision called the KEY-TAM provision, which basically says that if you're a whistleblower, you found fraud that nobody else knows about, and you bring it to the government, then you can file a lawsuit essentially on behalf of the government against the fraudster, the person who's defrauding the government. And then when it settles, or you have a recovery, or you win at trial, then you're entitled to 15% to 30% of whatever you end up recovering.

• 35:50Speaker 02

  So this, it turns out, is a way that you can monetize information, investigative journalism about frauds that haven't been previously reported. And it turns out that this can be a pretty fine business model because the fraud that is out there can get pretty big.

• 36:07Jason Calacanis?

  Okay, so here's justice.gov, the Justice Department of the United States of America, the DOJ, the False Claim Act. Many of the fraud sections cases are suits filed under the False Claims Act, FCA 31 USC, blah, blah, blah, blah, blah, a federal statute originally acted in 1863.

• 36:30Speaker 00

  It's old.

• 36:30Jason Calacanis?

  To defense contractor fraud during the American Civil War. The FCA provides that any person who knowingly submits or causes to submit false claims to the government is liable for three times the government's damages plus a penalty that's linked to inflation. Wow. This thing's existed. You've created a company to file these claims on behalf of the whistleblowers who find it and then split the revenue with them? Is that the business model?

• 36:54Speaker 02

  That's not quite right.

• 36:56Jason Calacanis?

  Okay.

• 36:57Speaker 02

  So we're not, we're not a law firm representing the whistleblower. We're not, we're not a law firm at all. We are the whistleblower. And so the, the way that people typically think about this is when they think about the, these whistleblowers, they think that these are typically people who are inside the company, their boss is doing something wrong and, and they tell on their boss. And this is what it most commonly was used for. Um, but they, they made an amendment to the False Claims Act in, in 2009, I believe. I think Senator Chuck Grassley of Iowa was the one who pushed this, who broadens, who can bring these whistleblower lawsuits. And so whistleblower might, might even be a misnomer because you don't necessarily have to be an insider. Maybe a more correct way of, of thinking about this is more of, of a bounty hunter program.

• 37:40Jason Calacanis?

  Yeah.

• 37:41Speaker 02

  Completely outside the conduct and, and still bring, bring a case. And I think one, one notable type of, of case that happens is oftentimes a, a company's competitors will, will sue them if they're engaging in some kind of unfair business practice that is defrauding the government. And they'll be like, hey, hey, you can't do that. And, and numerous times in the past, um, this, this has worked and companies have been able to get these whistleblower recoveries by, uh, telling on their competitors. And, and so we're similar to that, but taking it in, in a different direction in that we're, we're just investigating and, and when we find stuff, we're bringing it ourselves as, as a company, um, even though we're not insiders to the conduct. That doesn't matter. We're, we're still able to do this under the law.

• 38:21Speaker 00

  But Alex, just to be clear about this, we're talking about fraud from corporations that are essentially overbilling the government. That's my understanding of kind of your thrust. Is that fair?

• 38:29Speaker 02

  That's correct. Yes. The, the statute is applicable when federal government spending is implicated.

• 38:33Speaker 00

  Okay. Now, I found some fraud stats from the government and it's looking like they're finding several billion dollars a year in terms of fraud. My question is, how much fraud are we actually catching as a percentage of the whole? Are we getting, and this is an estimate, like 10% of it, are we finding half? How much more is there to uncover?

• 38:52Speaker 02

  There's a lot more. So I think even the low estimates, I mean, some people like Elon Musk is famous for saying it's

• 39:02Speaker 02

  Elon is famous for saying it's 1.5 trillion dollars in fraud. Some other estimates are less than that. The Government Accountability Office says it's more like 500 billion dollars a year. But again, we have like a 7 trillion dollar budget to like a non-negligible percentage of the federal budget every year is going to fraud.

• 39:21Speaker 00

  500 million out of 7 trillion?

• 39:25Speaker 02

  500 billion, billion. And what's being uncovered under the False Claims Act so far, every year is maybe like 4 billion or something like that. So this is what we call a TAM expansion play, is we think there's a lot more fraud that's not being uncovered so far. And we think we can help the government do it.

• 39:42Jason Calacanis?

  Now, you partnered with a co-founder who has been doing this for some time. So tell us about how you formed the startup. You know, you had this original idea. Give us the origin story because this is one of those startups that I would say is, when you're an investor, confusing. You've never seen it before, which then makes me lean in and get interested. And I've had to train all of my 12 associates and training at our fund. When you don't understand a startup, when you can't put a pattern on it, when it seems weird or crazy, that's when you lean in. That's when you get more curious. So give us how you originated this startup.

• 40:29Jason Calacanis?

  Maybe a little bit about your partner and why that was so important.

• 40:33Speaker 02

  Yeah, no, thank you, Jason. So there's there's myself and there's two other co-founders, actually. And and the other two are both lawyers and I'm I'm more of an engineer. But so so my background, I think, as Alex alluded to at the beginning of the episode, is a is a few months ago, not not too long ago, I was I was a student at at Brown University. And I sort of noticed that there were a lot of issues with Brown that implicated both tuition dollars, because it costs like ninety thousand dollars a year to go to Brown. But also government funding, because Brown receives on the order of magnitude of five hundred billion dollars a year from the feds as well. And so, like, why is it so expensive? And and sort of, I'm I'm a fan of Andrew Yang a little bit, and and something that he's been saying for a while now

• 41:18Speaker 02

  is that the reason why Brown was so expensive is because of all these wasteful practices in the administration and a particular number of administrators. The fact that there are four thousand or so administrators, and to be clear, these we're not talking professors, but we're talking about deans and and secretaries and and people who who do people all day. Why are there so many? And as as myself and critics, like, on all sides of the political spectrum, like Elon Musk or Andrew Yang, will say is that that's kind of weird that there's like twice as many administrators as professors, especially since there haven't been so many in the past. And so I sort of put together a data mining project that really analyzed what what they did.

• 41:56Speaker 02

  And that got a lot of attention. I ended up testifying before Congress about this. They also tried to discipline me, but that case didn't go anywhere and I was cleared. But I ended up testifying before the House Judiciary Committee, really about issues about what was going on in Brown and how this was implicating financial aid and our tuition dollars and federal funding. And this really just made me aware that, you know, the government, they're they're great and all, but they really can't stay on top of everything that's going on on the ground. And I think that's a critical insight that that that that I had. And that my co-founders also had independently. One of my co-founders is a former FTC attorney. He worked in the Biden administration.

• 42:37Speaker 02

  And what he his focus area is really pharma, Medicare, Medicaid. Sort of how how big pharma companies are cheating and and are leading to regulatory capture in ways that are preventing generics from entering market from lowering prices for consumers. He's really been interested in this from a different angle than our third. That was David Barclay, right? That's David Barclay. And then our third co-founder, Sahaj Sharda, is he's he just graduated from Columbia Law, where he wrote a book also about higher ed, about how how what what the higher ed institutions of higher education are doing with their tuition pricing actually is is a violation of antitrust law.

• 43:20Speaker 02

  And he wrote the book and then it became a federal class action lawsuit. And all these Ivy League schools have had had to settle this for like tens of millions of dollars. And so I think it really goes to show how much grift there is out there that that really the federal government hasn't been effective at putting a stop to so far. And and maybe some private market incentives are the way to go.

• 43:44Jason Calacanis?

  How many cases can you take on at once? How much do you? How long does it take to settle these? Because as a startup, you have to have a business model. Okay, bounty hunting, great. Love it, Boba Fett, IG88, I like the analogy. But you have to collect the prize. How long will it take you to collect the prize and get your startup to the point at which it becomes sustainable, right? That's going to be the big question from your investors, I'm sure.

• 44:11Speaker 02

  Yeah, so that's a great question. And I think the best maybe comparison that you make. Fraud bounty hunting too is it will sound unusual, but I think one, one of the good comparisons that you can make is by comparing us to a biotech company because essentially where it, we have sort of these, these legal assets, biotech company has pharmaceutical patents, also sort of IP assets and they take, take, take a while of time to develop is that you have to pass all these clinical trials and, and wait for FDA approval and, and maybe get approved and, and so there's some duration there, but eventually it, you'll, you'll win some and you'll lose some and that's, that's the business model. I think what we have here is, is pretty similar is that, uh, is that you're right. It's low is that with these false claims.

• 44:56Jason Calacanis?

  Five years, seven years? What's the, what's the, what's the estimate in, in your model for how long it takes to, to settle these and to, to get your bounty?

• 45:04Speaker 02

  It depends on if, if, if the case settles or if it has to go to trial. If it settles and, and the DOJ gets in, involved and really puts this pressure on, on the company, on the fraudster to settle, then that could be as fast as two years. But you're right. It's like for, from the longer cases where, uh, where there's a lot of back and forth and discovery and it goes to trial is it might take five to, five to seven years. But, but because we're running numerous cases every, every year, maybe 10 a year at, at a good rate, maybe even more than that. If we set up in more verticals, um, we, we think that, uh, that, that we'll be able to, to be solvent, not, not to, not, not to, uh,

• 45:45Speaker 02

  or, or pretty soon in the future because at least some of these will settle. Um, and, and, and the other, other way that we can monetize this is by selling portions of the cases to litigation finance firms, even, even before.

• 45:58Jason Calacanis?

  Explain what a litigation finance firm is. I mean, I can guess from the, from the term, but explain to us how long they've existed, how they work and, and how they sell and interest in a case.

• 46:09Speaker 02

  Yes. So, um, I, I guess the legal mechanics of, of what we do is that each, each false claims act case is, uh, is, is, is we're not actually filing it through the anti-fraud company, but we were dropping down, um, a subsidiary. Um, and then we're, we're essentially just sharing, uh, selling shares in this subsidiary to, to litigation finance.

• 46:30Jason Calacanis?

  Like an SPV, like you might for investing in a company? Is that the format you use?

• 46:35Speaker 02

  Or? Something like that. I mean, it's just literally selling, selling shares and that they're, they're, they're buying them, uh, shares in, in.

• 46:41Jason Calacanis?

  Who buys this? High net worth individuals and, and how much would your average case?

• 46:47Speaker 00

  Be like, what would the opportunity be? And then how do you syndicate it? How do you find the investors?

• 46:54Speaker 02

  There's like an established market for litigation finance. I guess the thing that they typically like to do is they like to fund these big class action lawsuits. Because you need a lot of funding upfront and these sort of like class of plaintiffs probably don't aren't able to front the costs when these things can cost like 20 million. To actually litigate. And so essentially what these are is these are a certain class of investors who who invest money that pays for the legal fees and stuff upfront. And at least in the class action context and that and then they have an interest in what the outcome is.

• 47:29Speaker 00

  How big is the interest? Like, how much do you have to give up to access this kind of financing?

• 47:33Speaker 02

  I mean, it depends. I think that maybe maybe we give up like 10%, 20% of the of the interest in in our cases. I think we don't want to give up too much. Because with litigation finance, it often is pennies on the dollar. But this is the way to get liquidity fast. But this is not the primary way that we intend to generate revenue because we think that all our cases are good. And we think our hit rate is going to be better than than you see on average because whereas many whistleblowers are sort of bespoke whistleblowers that don't really know. What they're talking about are our industry insiders who are telling on their boss. Whereas this is our whole business. We think we'll have a better hit rate. And so.

• 48:12Speaker 02

  We're going to be more inclined to hold on to most of the cases, if not all of it ourselves. This is just sort of one way that we could get liquidity. If cases are taking a while.

• 48:21Speaker 00

  Alex, I'm a huge fan of rooting out fraud and saving us all money. Like Jason and I are absolutely behind you here. But I'm curious about repeatability and you're how you're going to be able to keep finding things on a kind of like. Plan basis, like how are you going to do this year after year after year? So what techniques are you using to to look for fraud? How are you confirming it? And and what legal? Resources you need behind you to ensure that you're doing this and won't get sued into the ground because you're going after companies who have an interest in you not getting your way.

• 48:51Speaker 02

  That's a great question. And and the way that I see it is that when when you're committing big fraud, because because we're going after big frauds here, we're we we don't think that like that tinkering around the edges with like small million dollar frauds is is really gonna fix the the budget deficit that we're facing. And so we're going after billion dollar frauds. And the thing is, when you're committing fraud at that scale, at a billion dollar scale, is that you're you're gonna leave trace traces somewhere in in in data, in government data sets that we have access to, in commercial data sets that we're purchasing, in in filings that you're making with with with the government. And and there are sort of there's this whole

• 49:31Speaker 02

  branch of researching this called OSINT, Open Source Intelligence, that has been going on for a while now, where we're just sort of sleuths on on Reddit, we'll dig through all this information and and try to try to put it together. And I think that now that we have AI, though, that and and that that really accelerates our ability to process information, because fundamentally, at at the core of what we do is that we're an information processing company, because we were gathering signals from all all these places. And so there's there's really two key key ways that that we're doing this here, is we're we're going through textual data with L L Ms. And so I I don't want to give away too many of the secrets here, but essentially, we we have access to a a trove

• 50:15Speaker 02

  of documents of of relevant stuff. And and we're running through this through L L Ms to see if we can find any indicia of fraud. And then secondly, we have access to a bunch of sources of data from the government. And this is more structured data. And so my background is actually, I'm formerly at Palantir. And so we should ontologize these these structured data sources and and see if there are any flags raised there.

• 50:37Speaker 00

  So you're gonna put the entire government into notebook LM and find the fraud. I I love that. My my question is, why are you talking about this? Because Alex, you don't need publicity to go out and get customers. It seems like you're talking about this and you're gonna be in gender competition.

• 50:51Jason Calacanis?

  Or do you need to get inbound? I mean, I I would. Maybe you do get inbound. I don't know.

• 50:57Speaker 02

  We do get plenty of inbound. And if anybody is is watching this show and knows of any fraud against the government, feel feel free to let let us know or go to the anti anti fraud company dot com.

• 51:09Jason Calacanis?

  Is there a submit form there? Or you just have to guess?

• 51:12Speaker 02

  There is. Email link if if anybody has has any tips for us. I mean, we've gotten some tips that that have been useful, but also there's just a lot of subject matter expertise on on our team. Like, like, we have experts in sort of the pharmacy space, expert, long tenured investigative journalists, obviously, a bunch of legal experts and engineers who who know what they're doing with with all this data stuff. And and so a lot of the ideas also just come from in house. We have a hunch that something's going on. And and we go try and find it. But honestly, I don't mind if if other people want to do a similar thing and want want to find fraud. Because again, there's there's a lot of fraud.

• 51:52Jason Calacanis?

  I mean, 500 billion is the low estimate. 1.5 billion is the high estimate. Somewhere between those two numbers will probably wind up being the truth. You can't be taking on more than a couple of dozen active cases at a time, can you?

• 52:05Speaker 02

  Oh, absolutely not. And I think this just shows the the the value of capitalism and incentives. Because when when you have a law that Lincoln passed in 1863, like the False Claims Act, that entitles sort of whistleblowers to a share of of the interest in in recovering fraud for the US government, then everybody wins. The whistleblower wins, the government wins, because they have money that they otherwise wouldn't have recovered. And just by aligning the incentives, so people do stuff that is protective for society. This is a very good way, I guess, of of structuring this this law here.

• 52:40Speaker 00

  The problems that we've had it since 1863, we have these incentives in place, and we all agree incentives matter. But why hasn't that incentive structure of getting such a large chunk of the recovered monies?

• 52:50Jason Calacanis?

  Done more to combat fraud. How did we end up with 500 billion to a trillion dollars in yearly fraud if we have these aligned incentives? Was AI the missing piece?

• 52:58Speaker 02

  Well, I think there's two missing pieces. I think AI was one of the missing pieces because it just makes the information processing so much easier. There's this metaphor of the blind man and the elephant, right? Is that one is touching the leg, one is touching the trunk. And this is how fraud detection has been for a while now is that people have sort of a glimpse at part of their conduct, but they don't really get the full picture and AI and having that that gives us more of a full picture than than blind men and elephant. But I also think there's a lot of activation energy that you really need to put together all these pieces. And that's why the most effective way of being a whistleblower is by being a whistleblower company, because then

• 53:42Speaker 02

  this is what you do every day. You learn from it and then you're able to make it repeatable. As opposed to sort of these bespoke whistleblowers, who's like a guy in the company and then they they got fired and so they're mad and they have some dirt on their boss and so they file an FCA case themselves. I mean, like, this is useful, but I think that putting it together in a company that specifically does this is incrementally more so.

• 54:07Jason Calacanis?

  Final question, and congratulations on all this. I think it's awesome. And it's really of the moment. You must have seen Nick Shirley's knocking on doors at daycare. That story obviously is a 15 year old story and people have already been tried. What's your general take on what he's doing first? And then two, when things have been, you know, bubbled up and investigative journalists have knocked on these doors many times, is there more of an opportunity there for you or less of an opportunity?

• 54:38Speaker 02

  Yeah, I mean, I'm not so sure if we're going to be taking on on the Minnesota case necessarily ourselves, because a lot of stuff has already been publicly reported on that. And I mean, like, one of the central premises of the False Claims Act is that you have to bring information that's not already public. I mean, that makes But I mean, I like the the the whole concept of exposing fraud and really having citizen journalists doing that. I think that's all really good. And I think you're alluding to something more fundamental here is that the business model for investigative journalism sort of is broken. Maybe it might have had more of a golden age in the 80s or the 90s way before my time, when you had these local newspaper powerhouses where everybody had

• 55:22Speaker 02

  a subscription and everybody bought ads in the newspaper. And so they really just had a regional monopoly and they could really, they could, they could really look into these things like the, like the sexual abuse in the Catholic Church or Theranos and investigative reporters really had a lot of resources to make these these prestige stories. But I think what we're seeing these days is that where everything is online and that you you get paid based on on clicks is that then everybody is making more clickbaity flavored content. And there's not so much interest in in investigative journalism. And we really think that False Claims Act and these other whistleblower programs is a great way that we can monetize these these investigative insights that that are non-public. And also, we plan on publishing full write-ups when when

• 56:07Speaker 02

  we're able to do so. But I think that this is a new business model for investigative journalists and one that we're hopeful is going to be the future.

• 56:16Speaker 00

  Well, I do hope that you publish all those documents because I would love to see the spirit of investigation live on, Jason. But a fantastic company. We love it. Private Sector Doge, it's the anti-fraud company. He's Alex Shea. Thank you much for your time, Alex. In God's speed, save us all some money.

• 56:28Speaker 02

  Thank you, Jason.

• 56:29Speaker 00

  Thank you so much, Alex.

• 56:30Jason Calacanis?

  All right, we have a question from our amazing founders.

• 56:33Speaker 05

  Hi, my name is Gopala GP for Supra.ai. We make basically AI foundational models for pharmaceutical and healthcare industries. So we're in Japan right now. And obviously, we have some global growth ambitions and you're a

• 56:51Speaker 05

  I guess a high-powered recruiting agency in Tokyo. But one of our clients is the larger, one of the larger drug companies in China. And we have to basically have models in, in the China mainland. So there's some data federation issues. Obviously, we can manage this remotely. But are you able to help us get the kind of talent that we need? So we need A-plus talent. You know, I'm coming from a background with AWS, IBM, all this type of experience. I want that quality in the mainland.

• 57:32Speaker 05

  And I want to be able to communicate with them very tightly in that we are in the same culture. Because I'm part of another larger company right now, and culture is important.

• 57:44Jason Calacanis?

  Great question. Recruiting A-level talent in China in a very interesting moment in time in terms of globalization.

• 57:54Speaker 06

  Yeah, uh, well, I mean, we also have a mainland China office.

• 57:59Speaker 06

  But to be honest, like, actually, there's a lot of like Chinese people who, you know, like, love Japan. Like, you know, there's a lot of like companies, Chinese companies out here in Japan as well, right? Like a ByteDance, for example. So I think like, again, you know, it's not a secret sauce. Like, you can, all you need to do is like, make sure that you reach out to as many people as you can. Of course, have the right partners. Why working with an external recruiter is a good thing is because if you directly go to the candidates, you know, you, you could tell them stuff and they might tell you stuff, but they're not going to be hundred percent honest with you guys, right? Like, but if they work with external recruiters, candidates will tell you exactly how they feel, right?

• 58:37Jason Calacanis?

  Right, because you're their advocate, you're their intermediary.

• 58:40Speaker 06

  Exactly. And, you know, like, that's why, like, I think, you know, if you have a right partner who understands the market and who understands your business, and of course, like, we have to get to know each other. If it's me or whatever recruiter, you have to spend time with them. Because like, if you really care about culture, like, they need to know you well. What are you looking for?

• 58:59Speaker 05

  How do you spend time with recruiter? Before the process, I mean, like, are we gonna hang out in the office? You're gonna watch us work before we start hiring?

• 59:06Jason Calacanis?

  Yeah, how do you interview the founders? What do you typically ask them? And then how do you pick? Because you, I'm assuming, don't take every client.

• 59:12Speaker 06

  As a founder, like, you would reach out to recruiter, and then it's like, hey, can we have a chat? This is what I'm looking for. And then you have that first initial consultation, right? And I think within 30 minutes, or even within five minutes, you kind of know, like, if this person's gonna be able to vibe with you, right? So, yeah, like, spend time on the calls. As a founder, you have to ask questions like, is this recruiter trustable? Do they know their things, right? Like, do they know the market?

• 59:36Speaker 07

  Thank you, I'm Yoko. We are building Japan Media. Japan Media is a kind of, anyone can create and sell manga and anime with AI. And how can we acquire global talent? Because we cannot pay so much salary compared with that of US. So...

• 59:57Jason Calacanis?

  How do you do it on a budget? Or you don't?

• 1:00:00Speaker 06

  Yeah, that's the difficult part, right? I mean, if you want to get really good talent, you gotta pay to play ball. Like, that's just how it is. So, unless, if you don't have cash right now, you can do equity. But then, you have to find a candidate is that's passionate about what you're doing, right? They gotta be passionate about the manga, the anime, the sales, whatever you're doing. You will find that person, it just takes a lot longer time.

• 1:00:22Jason Calacanis?

  And it kind of precludes you from having a recruiter, because recruiters get paid typically based on a percentage. And so, the great recruiters are probably not gonna take on early-stage startups. It's good for you to know this now as a founder, for when you get your Series A, and maybe, you know, you've got $2 or $3 million in the bank, and you can afford somebody great.

• 1:00:41Speaker 02

  Yes.

• 1:00:42Jason Calacanis?

  Then the recruiter will kick in. My best advice would be, you're trying to find the person, if you were to draw an X-Y axis, passion for the subject matter, and talent and ability. And the further into that top right-hand quadrant you can get, the better you'll be. And there's another variable that you can put in there. They've already made their money. So finding somebody at Meta or Uber, you know, or Microsoft or Google, who has taken down a large chunk of cash and is, doesn't need to work, but wants to be productive and really loves your mission. Wow, what if everybody in the world could participate in anime and manga? That would be like an incredible thing for them. Wow, they might really love working on the product. So that means even more you're selling them on the mission.

• 1:01:27Jason Calacanis?

  And what's great about those people is they are potential co-founders. They'll be probably more equity driven and they might even want to invest in the business. So I've seen people come to startups or come to me and say, hey, I made a bunch of money. I worked at Meta. I want to join another startup. Here's my skill set. I also want to invest. I want to buy 2% of the company, 4% of the company, and I want to get a 2 or 4% equity package and I want to be the CTO. Hard to find, but you always have to be recruiting. A, B, R, always be recruiting.

• 1:01:55Speaker 08

  Hey, this is Miki Vita, co-founder and the CEO of Caster Technology. I have a simple question. I saw the movie about Uber and that there was a tough time there. So what is the most important lesson for an HR leader to build the tough team?

• 1:02:15Jason Calacanis?

  Okay, yeah, it was, there were some tough times.

• 1:02:17Speaker 06

  Yeah.

• 1:02:18Jason Calacanis?

  You had to have a bit of grit. You were there for during some of them, yeah. So what's your best advice for building a resilient, gritty, strong team?

• 1:02:26Speaker 06

  Yeah, that's a great question. I think what happened with Uber was like, it went from like a baby to an adult real fast. Skipped all the teenage years. So like, a lot of drama and a lot of things happened. But I think like if Travis was to do it again, like I think someone, an HR person who's gone through that growth environment, who've seen crazy, is probably the, the perfect fit for, you know, someone who's going to go through that kind of like tough times, right? So people who've been through Uber HR, like they can do like anything, basically, right? So if you can find someone that... Basically went through a growth environment, chaos environment. That's gonna be the person that will hustle with you and probably can solve like a lot

• 1:03:11Speaker 06

  of great problems for you.

• 1:03:12Jason Calacanis?

  One of the paradoxical things about grit is sometimes it's those type of environments that make the great entrepreneurs. So they come in and they're have great potential and then they have significant hardship and that's how they actually become great. And sometimes it takes getting kicked out of your company like Steve Jobs did and then coming back. Sometimes it takes having a near-death experience, almost running out of money, like happened to Elon three times with Tesla, or three times when he blew up rockets and he couldn't get one to, you know, not blow up. It's the crises, it's the challenges that make the entrepreneur. But we have a perception of like, oh, there are these people who are incredibly resilient,

• 1:03:57Jason Calacanis?

  incredibly strong, and you know, those are the people who change the world. No, the world is hard. Startups are hard, competition is hard, and that's what makes them. It's that experience, it's going through that fire that actually makes them. And I think your advice is really good. The companies that have imploded or had great success and then had it taken away, they're filled with people who have the scar tissue to be strong, right? Sometimes the bone breaks, comes back stronger. It's like it heals stronger, right? There's this concept, what's the concept in Japanese culture where something breaks like a vase and then they use gold to? Kintsugi. This is a very beautiful concept.

• 1:04:38Jason Calacanis?

  Kintsugi, it's when something shatters and then you remake it and you glue the pottery back together with gold. And they stole it for Star Wars. In Star Wars, they had this concept where like some of the masks, which originally came from the Samurai, Darth Vader is inspired by Samurai, but one of the masks was broken and then they've... Kylo Ren's helmet. Thank you, editorial director, he knows every cultural reference. Kylo Ren's helmet was re-put back together and he welded it back together after he smashed it, or it got smashed. Really interesting concept, comes back stronger. Okay. This has been a great episode of This Week in Star Wars, we'll see you next time. Bye-bye.