Why New Yorkers hate AI Friends, Producer Claude gets an update, and the value of human writers in the Age of Slop | E2185

If you're a founder, this is the important lesson. If you raised venture capital before and your team, your team is made up of the people who raised venture capital and failed before, you're like level one in terms of fundable. Then if you had an exit and you returned your, you know, if you return people's money back plus a little bit, you're like level two. If you had a great return and you returned a lot of their money back, they had a great exit. Now you're like level three. And if you IPO'd or you had like a billion dollar sale, now you're like level four. So if you just look at those levels of founders, level zero is you're just new to the game. Okay, go to Y Combinator, launch accelerator, Antler, techstars, et cetera. But once you've raised venture capital before, now you can go to venture capitalists and say, hey, remember when I lost $4 million trying to do this crazy pending company and it didn't work? Well, now I've got a better idea and here's what I learned from my pending company. And you know, just putting the first two stories together, that actually makes you more, more fundable.

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All right, everybody, welcome back to this week in startups. It's Monday. It is September 29th. The summer is over, folks, and soon it'll be snowing and you will be getting Halloween costumes, Thanksgiving dinner, and putting up Christmas ornaments. Oh, my God. How did this happen? I just. It's like the starter's pistol. The only good news for me, when the fall comes. You know what that is?

What's that, Jason?

My Knicks. Knicks are playing in uae and I got invited by many people in the UAE to sit courtside because I am a micro celebrity. As you know, I'm a micro celebrity, a mini celeb. And so people invite me to sit courtside if they can't get an actual celeb. So they'll start with Timothee Chalamet and go to Ben Stiller and maybe Ben Stiller, Timothy, I don't know, whatever your bag is, maybe a Kardashian. And then they'll go down and eventually they'll invite me before they sell their tickets. I'm like the last before they put them on.

Got it.

But yeah, the Knicks are playing in UAE so Thursday and I get to watch them in the morning. And I am so excited for my Knicks this season. But you're doing really well. Your Eagles are 4 0. That's great.

Absolutely. We're stoked. Now, the context for here, Jason, is that you have some views about Eagles fans that I think you should put on the record and tell everyone in Philadelphia, the founders, the venture capitalists, what you think of them.

Oh, it's not like I have like a polarizing view. I don't want to create a Palmer Luckey like situation. But they're terrible. They're horrible, worst fans in sports. I mean, they burst, burn things down, they defecate, they urinate. I mean, was this the group that ate oats out of horse dung? I think when they won, that would.

Not, that would not surprise me.

But what matters, literally, like a guy got on his knees and was like, I'm going to eat that oat out of this horse dung on the street. And then like they're climbing up, they're in tighty whitey underwears on the top of lamppost poles. If these guys go 10 and 0 or something crazy 7 and oh, I mean, Philly, they're going to just, I mean, they're going to have to send in the National Guard, which I think, you know, Trump's on a 10 city National Guard tour anyway, so yes, yes, just skip Chicago and go straight to Philly. But congratulations to them. That's pretty. That's pretty hard to do to start the season off.

It is pretty hard to do. And what's even more important, any Eagles fan will understand this, but the Cowboys, the Dallas Cowboys, the team that claims to be America's football team, is currently 1, 2 and 1. So. Ha ha ha. Cowboys.

All right, listen, we got a lot to get to and friend.com I saw that had a lot of main character energy. People are losing their minds over friend dot com. Tell us a bit about this.

All right, so Friend is a AI pendant, one of the startups that was founded in the wake of the launch of ChatGPT. When people really wanted to bring the LLM closer to their lived experiences, their life. Jason Friend.com is a $129 pendant and basically it's a digital companion. Think of it as something that sends you text messages and kind of is your friend throughout the day. And they're back in the news because they put together an enormous campaign in the New York subway. Here's a picture of it. Here is the CEO Avi Schiffman describing this as the largest NYC subway campaign ever. And the if you can't, if you're on the audio version, it has signs like I'll never bail on your dinner plans, friend.com. and the gist is if you don't have enough friends, you can get this pendant and then it'll be your friend. Now, not everyone was convinced. Here's an image of someone who graffitied on the ad writing surveillance capitalism, get real friends. Which is a pretty big diss. But I think also, you know, if you're this company, no publicity is bad publicity. But Jason, I think that our view, or at least my view is that we don't need to aify everything. So to me this seems a little bit outside of my box, but I'm curious if you have a different take.

I mean I have been super critical about persistent recording because listen, I'm a Gen Xer. I think I actually care about privacy and the surveillance state. And I have enough scar tissue to know that anything that end up just firsthand experience, anything that can be hacked is going to be hacked. That's just how it is folks. And so you learn this over, typically you learn this the hard way. You know, something gets hacked, you know, whatever, your bank account, your email, something and your group chat. And that's what will happen with these. Somebody will hack it. Not necessarily friend.com, but all of these. And you will be having a spicy conversation or you'll be in a therapy session or you'll be drunk with your friends and you'll summarize your friend in their worst moment in time. And I can tell you whatever your friend's worst drunk moment in time is probably not meant to be broadcast to the world. So I do have issues with this technology. But I also am smart enough and experienced enough to know that this is an inevitability. People are going to embrace these. There's going to need to be some regulation. I told the story here. I was at a dinner with a friend of mine and he had one of these note taking pendants and, and like, I don't know A couple of minutes into the dinner, I see like a glowing white led. Not like glowing in a major way, in a minor way. And I was like, what's that? And he said, oh, it's my AI pendant. And I said, oh. And he said, is that a problem? And I said, I mean, only if you want to remain friends. Like, you're recording six people at a dinner. Like, what? And he took it off, but he showed me. And it was for the first five minutes, it was a perfect transcript.

Like, I was, wow, that's insane.

In a restaurant. So I just want to encourage everybody to understand you're being recorded and transcribed already. It's already happening, so that doesn't mean we should do more of this. What's interesting about this story is the amount of hate for this founder, who I believe is brilliant. Friend.com. i think he spent like 18 million on that domain. I'm not sure if that number is correct, but I saw that go by in my feed. And friend.com is. That's a domain worth a couple of million. 18 million. Certainly overpaying for it by a factor of at least 3 or 4x should be no more than 5 million for that domain. But okay. When I was at AOL, we bought games.com and the guy wanted 10 million for it and had a conversation with the leadership and I was like the domain guy there. So they were like, do you think we should do it? I said, give me the rough profile of our games business. They explained the games business to us and I said, yeah, pull the trigger on that $10 million. If worst case scenario is we can resell it for 5 million. If this isn't a priority anymore and we'll have lost 5 million. But we've already got tens of millions of dollars in profit from this business. Why not have overpay for it?

According to producer Oliver, it was 1.8 million for friend.com, not 18 million. So they didn't overpay. They actually may have gotten it for relative steel.

That's actually cheap. That's cheap. So. And that is this company has raised how much?

2.5 million that we know of. So a pretty material chunk of that went to that domain. But if you sell a device for.

Wait a second. If they did the largest ad campaign in the subway, that had to be millions of dollars. So we need to figure out how much that they must have raised since then. We need to ask producer Claude to get involved here because they must have much more money raised.

They raised a $2.5 million round in July of 24 and then another 5.4 million by pace Capital in December of that year. So we're talking about the first round. So a total adjacent of 7.9 million, which actually now that I say it, think I say that out loud. 1.8 million for the domain, a million for the Subway ads, and they have a hardware device shipping theoretically later this year. That's pretty efficient overall.

I mean, here's what I'll say. The people who are like that should have gone into your product, et cetera. Okay, you can make that argument, hey, a million dollars with, I don't know, 5 more team members, highly paid, 200k all in. Would they make a better product? It might not be an either or. And what this signals is to a venture capitalist that this person understands branding and is willing to go big. There are far more founders who are not willing to go big. And VCs are like, well, I have all this money sitting over here, I would like to see you swing for the fences. So if you feel you have product market fit, then go ahead and spend a couple million on marketing if you can afford to do it. But this obviously could be Runway. If the startup was spending $2 million a year and they're burning 150k a month, let's say 200k a month, that $2 million could be an extra year or so of Runway, in which case you would be like, but this person's playing to win. And putting aside the product, I do think there's a market for these. And spending this kind of money seems a little bit aggressive, maybe a lot aggressive to people. But here we are, we're talking about it as the number one story and it's the. I think he has 25 million views on the tweet about the largest New York City subway campaign ever. So let's say the subway campaign got 5 million views. I think maybe 5, 10 million people take the subway every day. Probably saw this. Maybe, Maybe that means 15 million will see it over time. It's got 25 million views on the tweet about it. If you want your business to succeed online, it has to stand out. And that's why you need a beautiful, world class website. The good news is you don't have to hire an expensive designer anymore, nor do you need a bunch of developers. No, Squarespace has all the tools you need to claim your domain and start building your company. Hey, maybe you got a product to sell. Maybe you want to show off some samples of your work. Maybe you've got a new service you're providing. Well, Squarespace is the all in one tool you need for your business to grow and flourish. And they offer beautiful templates. Maybe you want to start an online course or you're scheduling appointments for people, maybe you're generating client invoices. All of that is built into the product. Everything you create with Squarespace is pre optimized to show up in search engines as well. So you don't need to hire some other expensive SEO person. Nope. They're building your meta descriptions, they're setting you up with an auto generated sitemap and the SEO is done before you even get started. Plus there's a new AI powered feature, it's called Blueprint, which makes it easier than ever before to customize your website and make it really pop. So check out squarespace.com twist for a free trial and when you're ready to Launch, go to squarespace.com twist to get 10% off your first website or domain purchase. That's squarespace.com twist.

It used to be you did things IRL to get viral buzz on social. Now I think it's kind of, it feels like the viral element of it's more important than the actual thing you're doing. Jason, a couple of things. First of all, According to the friend.com website, on the privacy point, where are your memories stored that it records? They say that they're encrypted by your friend's circuit board and if you lose your pendant, they're inaccessible forever. So it's on device. Now that doesn't solve the recording, your friend's point. It does at least though mean that hopefully you're not gonna have all memories leaked. I still don't know.

I mean they're using an industry standard concept in terms of keys. You lose your key, you lose your data, you lose your keys, you lose your coin like in crypto. So I get that. I'm sure there's an export feature where you could set it up that every year or every couple of months or whatever your bag is, that you back up your data and export it and email it to yourself. So I think that there will be a market for these. I predict that the product being made by Johnny I've and Sam Altman will be exactly like this. Some sort of a puck or device that has a long battery life, that has a 5G connection and wi fi, obviously that has a couple of really slick design buttons on it that you can take out. Ask question two. It has great speakers so it can play music.

So but here's the thing that blows my mind about this. They have only sent out and activated nearly a thousand of these friend pendants so far. So I know they've sold more than that. But with D30 retention. So 38 retention of 25% and only a thousand shipped.

Was it leaked or did he publicly talk about it?

Publicly talked about. This is Jason. This is pulling from a note to his investors that he put on X. Here it is. As of July 30th. Since July 30th, 464 friends have been activated. Now it's closer to 1000. According to him, D30 retention 25% and over 125,000 messages have been sent. It's a small sample size we're going to have to see, but they certainly have enough attention that if they can't convert this level of buzz and hype into a functional user base, I don't know what their plan is. But Moving on, paid AI raised a $21 million seed round Jason this comes after the company raised a 10 million euro pre seed round in March. Techwich reports the company is now worth over $100 million. Now I like this company for two reasons. One, what paid is doing is interesting in product terms, but also we just had the CEO Manny Medina on for a Twist 500 episode. That's episode 2175 if you want to go back and listen to it. But what paid's doing is awesome. So everyone out there wants to build AI agents that essentially do stuff for you, that replace humans, that lower your cost of doing business. But it's really hard to price them because you don't really want to use a traditional SaaS models Jason, because that's going to ruin your margins because tokens are both variable in demand and not cheap to generate and then deliver. So what Paid does is tries to help people pinpoint their costs and then price on a per value delivered basis and therefore allow the agentic economy, if you'll forgive me the phrase, to actually be a profitable business for startups that want to deploy these to end customers. I think it's a cool space and I think it's really cool that they just raised a bunch of money right after we talked to them.

Yeah, I wonder who is actually using this because I don't know of any AI agents right now out there in the field. I've yet to see somebody like say talk to my AI agent with the exception of maybe customer support sport, but it feels like something along the lines of Stripe where you're going to be billing people based on consumption. So it feels like Rails and infrastructure. So the bet you're making here on what really is not a seed in a Series A. This is a Series A and a Series B in terms of numbers. You're betting that there are going to be a billion agents out there charging for their money or a trillion of them, and that some number of them are going to need Rails. And I guess that was sort of like Stripe's pitch. We people need to do commerce on their websites and you can drop in this JavaScript and we'll manage it all for them. So makes sense. And I wonder if they have early revenue to back up this. Did they. Did they talk about their customers at all or is this all they did in the clouds?

Yeah, well, during my interview with Manny, so he said that they quote, broke code in January, February of this year. So it's a very young company. I know, I love that phrasing. Started out with the pilot customer, then have close to 20 of those. And they quote, just landed their first enterprise customer last week. Now a couple of weeks ago. But yeah, so they appear to have an actual real customer and maybe two dozen pilot customers. So very nascent. But Manny Medina was able to raise this amount of money at such a high valuation because he was one of the co founders over at Outreach and he was their CEO for a long time.

That makes sense.

Yeah. And that company was worth 4.4 billion back in 2021. Paid AI. I think it's a cool company. If agents are going to become big, they'll become big. If agents flop, they will too. But I love a binary bet in startup led.

Yeah. I mean, when you see $100 million valuation and 30 million raised with one customer, that can be frustrating for, you know, founders who have a million in ARR and they can't raise a Series A. Right. And so when you see that, always double click and see if this is a successful founder with an exit. If you're a founder, this is the important lesson. If you raised venture capital before and your team is made up of the people who raised venture capital and failed before, you're like level one in terms of fundable. Then if you had an exit and you returned your, you know, if you return people's money back plus a little bit, you're like level two. If you had a great return and you returned a lot of their money back, they had a great exit. Now you're like level three. And if you IPO'd or you had like A billion dollar sale. Now you're like level four. So if you just look at those levels of founders, level zero is you're just new to the game. Okay, go to Y Combinator, launch accelerator, Antler, techstars, et cetera. But once you raised venture capital before, now you can go to venture capitalists and say, hey, remember when I lost $4 million trying to do this crazy pending company and it didn't work? Well, now I've got a better idea and here's what I learned from my pending company. And you know, just putting the first two stories together that actually makes you more, more fundable because two things you've raised venture before and you're a serial team. Those two man people look at that. That's why it's important to bring your last team with you, get the band back together. Almost all of the great bands you've heard of out there, Dire Straits or whoever, they probably played in a band or two before and then one or two of the best members left the band and then went to another band and then they started a third band and that was the band that actually hit you. Just history forgets those previous bands. But yeah, really interesting story and great job getting that founder on the Twist 500. The twist500.com is where we're tracking the top 500 private companies. The top 500 private companies and our newsletter which you can sign up for@thisweekinstartups.com newsletter. Hopefully that's working. And if that's working, you can sign up for our newsletter.

Yep. If you want the newsletter, just go to ticker. This weekend. Startups.com that's where we talk about the Twist 500 companies. Because Jason, they don't get enough coverage.

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So as we were going to record the show today, Anthropic dropped a new model, Claude Sonnet 4.5. We actually went ahead and had the model itself explain to us what it does and what it does. Well, we'll get to that in a second.

But how meta? How meta?

Well, no, Jason, how Anthropic actually in this case?

Well, yes, I was using meta with the lowercase m. I know, I know.

You can't do everything that we're doing without a good paid plan over on Anthropic. So if you want to get Claude up to the level that we have it, you can get 50% off your first three months of Claude Pro if you go to Claude Claude AI Twist. That's Claude AI Twist. Now let's hear what it has to say. Producer Claude says the big leap is that this is better at writing code. We all know that Claude. Sorry. Anthropic's models have been very popular inside of products like Cursor, so not surprised to see another step here. It's also going to do faster debugging. It's better at the hard work of programming, like refactoring your code, and it has what it calls practical workflow improvements. Says quote, I'm better at working with real world scenarios, messy code bases, incomplete requirements, and legacy code. I can help fill in the gaps and make reasonable architectural decisions based on best practices while respecting the constraints you're working with. Not surprised to see Anthropic fire back, Jason, after we saw Xai's Grok code Fast one do so well.

Yeah, you know, these teams are working extremely hard. They're in the offices, you know, nine, nine, six. And although these models don't feel like they're tripling or quadrupling like the functionality because they're coming out so frequently and they're typically 10, 20, 30% better at specific tasks. If you're doing two of these a year, three of these a year, it's getting twice as good a year. And I like the fact that they're dropping them more frequently. That seems to me to be a wise decision because you just get to have more swings at the bat in communicating with your customer base and then your team is more dialed in. So I Think Apple was always like twice a year, two big keynotes. I think Airbnb did something similar and they copied it. Since the CEO had a mentor in Jony, I've. And I think he just decided let's just roll up four or five features every six months. Do a keynote and it just gives a cadence to the team where you feel like you're accomplishing something by a date. Everybody gets worked up for it. And yeah, it's like a great management technique. It's a great company cadence technique. And you can then look back and you can start to, not just on a quarterly basis by finances or a monthly basis by your P and L. You can look at the product drops over time and see the impact they're having. And you can also then measure your team. Hey, you know, is the team picking really good things for each six month Sprint or are they picking vanity things? Are they picking what matters? And here's everybody knows that code is the big piece and workflows, those are two major pieces that people are using. So you can then give examples to your user base, hey, coders, here's what you can now do, refactoring, et cetera. And then, hey, for people who are doing workflow and are using this for their, I don't know, customer support or their sales function, here are new features you can implement. So it keeps a dialogue alive with your key constituents. And I think that's what's starting to happen here. These companies are starting to get into buckets. Okay, for people doing X, here's the team working on X, here's the team working on code, here's the team working on workflow, here's the team working on images. And then that will become Personas, designers, finance people, lawyers, accountants, you know, service people writ large, coders, product managers. And that means this is all going from very theoretical and open ended platforms to very verticalized software. That's what we're seeing here is the verticalization as we hit four or five, six versions of this software is more application layer functionality. I think it's great.

Yeah. To that point they also teased a new thing called Imagine with Claude, which is, it seems to be almost like a vibe coding service from them. So going up into the app layer there. But I want to just highlight how quickly things can change. Jason, we talked about the GROK code model when it came out and I've been keeping tabs on its market share over on OpenRouter, which does hundreds of billions if not trillions of tokens. So it's big Enough to have a market share of material note. But if you take a look at how fast things have changed, this teal right here in this chart is Xai's market share going from very little to 40%, I think in the latest column. So Anthropic does have real competition on the coding front. I think people are underselling how much of that market Xai has taken. So I'm going to be curious to see how much market share Anthropic can get back at least on Open Router from the Elon Musk AI company, because they really have done quite well lately. Got to hand it to them, it's pretty darn impressive.

Yeah. At this pace, we're going to see developers obviously become 30% more efficient a year. 40%, some astounding number. Then you're going to see people who are Vibe coding or adjacent to developers. Maybe they have the ability to do light coding, but they never took the coding job, which is probably 10 times the 50 million developers in the world. I always hear 30 million, 40 million, 50 million developers in the world. I'm going to start saying 50 million, 50 million developers in the world. I think will 10x to 500 million. In other words, we're going to go from, if there's 7 or 8 billion people on the planet, what's the number? 7 or 8? Right now, it's less than 1% of the planet is a developer. It's going to go to 5%. And 5% times 7. 8 million people. 350 million developers, 400 million developers. That's going to be a very different world, folks. A very different world. And that doesn't count, you know, having the other 95% be able to vibe code or another 10% being able to Vibe code. I'm leaving Vibe coding out of that. I'm doing developers as a dedicated career and the next group of people who are developer adjacent and just haven't had the focus level or the aptitude or the time to just go fully into development.

Jason, there's a company out there called Circle and no, I'm not talking about the stablecoin company that went public earlier this year. This is Circle.

So we use this product. We do, yes. For Founder University, we use Circle. So it's a community platform and it's also really good at putting in your curriculum so you can have like, here's our curriculum, here's chat room. So think of it as a place to bring a community together to function as, you know, like a course. So it's kind of like a course combined with a chat room combined with Slack. Yeah, it's very good. We like using it. We are considering moving off of it because we love Discord and we love Notion. And so there's this tension. Do we use a full application like Circle, where people have to learn to use it again, or do we use something people already know, like the Notion Discord combination or Notion plus Slack? But Slack charges you for every person, so it's very hard to do free stuff on Slack. It doesn't give you your whole history. So we think the future is either Circle or Discord plus Notion. But it is something I've used now, I think for four, maybe four years and it's really good Circle. So it's a great product.

Yeah, well, it has a lot of competition, but it's also doing very, very well. So in May of this year, the company said that it reached profitability and was going to reach about 50 million ARR by the end of this year. Critically, it's been essentially bootstrapping. It's been making its own money. It hasn't raised since 2021. And then this September, just a couple of days ago, the company said it's going to blow past the 50 million-ARR milestone soon, on track for its best quarter ever. More free cash flow every month and it can wisely reinvest. And its rule of 40 score is up to 64. So here's a company that really has found an amazing growth trajectory here. I'm just trying to figure out, Jason, how common is this? Is this trajectory because they raised money before venture capital, tiger, etc. Back in the day and then they've just been exploding and funding their own growth feels very rare. So what's going on here?

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Ah, okay. So yeah, the founders have been tweeting through their growth trajectory, which I really appreciate because it gives us such a better insight into how companies are performing on the rule of 40.

Point.

Jason. I have heard different things from different people about what should count as profitability. Some people like operating cash flow, some people prefer ebitda, some people claim it really should be gap net income. Is there a standard in startup land that people should stick to?

I think as long as you explain your math, you show your work is the way to do it, most people will be able to figure it out. Sometimes you have one time transactions that occur on a balance sheet of a startup that can just distort things. Let's say a founder got bought out. So you use 10 million of your profits that year to buy some early shares and then you retire them. How do you put that in? So you probably separate that out and you just say, hey, here's the gross profits or here's what our EBITDA would have been if we hadn't done this office build out or bought out this lease, whatever it is. So the growth is the growth that's easy. So if the growth is 30%, great. And then you can back of envelope explain away your profitability. And if you get over 40, man, it's hard to fake. That's what's nice about that number is it's hard to fake. If you had 0% profitability, 0% EBITDA, but you were growing 50% year over year, people would be like, okay, that's fine with me. Eventually you could stop marketing or cut some growth team or cut salaries and run this business for profits. If it's 50% profit margin business and it's not growing, yeah, that'll come out as well and probably balance. They probably should have a rule of 40 where there's like a third thing which is. And neither of these represent more than 75%. Right. So there's some sort of balance between those two.

All right, well I like that a lot. But do you think companies today that have quite a. You can get the rule of 40 in a number of ways because you can have high growth and some lack of profitability Is there currently a unprofitability percentage point that's too high to explain away with growth. I'm thinking about early stage companies here that might be burning a lot of cash but also growing very quickly. So is there an extreme that's too much?

No, that's where you get to your Runway. And so if your Runway is 36 months and you know you're losing 10 million a year, nobody cares. Now if your Runway is six months and you're losing, you know, 100k a month, and if you can get that to 50k a month now you got a year of Runway. Yeah, you know people are going to have that conversation. So it really has to do with Runway. And then can you raise more money? And can you, how easily can you raise money? Circle could raise money probably easily, depending on what the valuation was. When they did their peak zirp, if they did a peak ZERP type round, which I'm totally guessing here, but end.

Of the day, 5 million was that.

Round valuation according to PitchBook395?

No, 195.

Oh, okay. So yeah, they could easily raise money again. If they're a 50 million and they're profitable and they're growing 50 million in revenue times 10, times 8 is 400 million, 500 million, 600 million, you could probably get a good deal. I think ultimately that product and all these SaaS products that aren't at 500 million are going to be, you know, either becoming acquirers of other companies or they're going to be acquired and we're going to see a lot of roll ups like iac. And Barry Diller famously did a perfect.

Segue to the next thing we're talking about. Menlo partner Didi Das, recently promoted to that role over at Minlo, tweeted out that he's quote, met with dozens of slop as a service startups that are making millions of dollars using AI to create an endless stream of blogs for their customers to help them with SEO and geo. They're all growing insanely fast. And then he adds, the initiatification of the Internet continues. So I was curious what companies might fit into that bucket. Jasper does AI generated marketing content. Writesonic former YC company similar thing. Profound. Had them on the show, they do GEO and some AI generated content. The thing is, it seems that everyone agrees with you that this is either gross or in the eyes of many temporary, that people are essentially taking advantage of a moment in time to make a lot of money.

How do you go with yeah, what's your question? Yeah.

Oh, I just. How do founders tell the difference? Because yeah, people are doing well in the sector, but we also don't like it. So I'm trying to just balance out the two.

Yeah. So before dunking on any of these companies, it really depends on how much content and with what type of supervision. I think a lot of these companies are probably the white hat companies that are saying, hey, we're going to help you do this in a better way so that you don't get dinged with a search penalty by Google or Bing or DuckDuckGo. The people who are doing the slop as a service are probably gray and black hat people or just gray. And they tend to be just shops that you give them some amount of money, they publish all this stuff, then you wind up getting reported to Google as a slop generator. They see your robots txt, they see your site map and they're like, okay, this is garbage. And it is a moment in time where identifying AI content is going to become easier and easier. And once they do that and you don't have an author and there's like an authorship tag and that authorship doesn't go back to a social media account of a known person, you're going to start having problems. Google knows who wrote stories. You know, techmeme, Gabe has done an amazing job of building a database and semantically understanding who is the author of every article. The New York Times, The Washington Post, TechCrunch, all of these publishing companies vox, they know how to put the authorship on there. They know how to put the bio of the person. What's going to happen in the age of AI slop is those writers are going to become more valuable. Those companies that have authorship on them of known people that link to their content, a substack, for example. If substack does their job like the New York Times does or Beehive does theirs and they don't allow slop on their platform.

Yeah.

Then they're going to move up. So there's going to be like a slop rating and a known authorship rating that probably exists in some way today. On the the latter part, which is known authorship, Google knows who the authors are. Just like Gabe at TechMe built that brilliant site where you can now like go see who not only like who's the author, but who are the top authors with breaking stories. But by this category, that data is amazing. I don't know why Google or Xai or somebody doesn't just buy tech meme for 100 million call it a day.

I mean, not our beloved tech meme.

I mean, yeah, that's true. If they bought it, they probably would screw it up. But, you know, that kind of semantic content that he suffered over building that architecture, super valuable today. And so I don't know if Didi is talking about Jasper and writesonic and profound, but this AI generated marketing content should always be a starting point that humans then clean up. I would never let anybody produce, you know, AI directly to publish on the web for any of our properties. And if I caught somebody doing it, and we did catch some people retroactively doing it, man, that would be like instant firing. And now every company is going to need to have these rules. No AI slope. Do not post AI content. Really, really bad. And we had a story last week, didn't we, about how people feel about Workslop. So this is becoming a significant issue. People are now hating droids. They don't like the droids. They don't want them in their bar like in Star Wars. We don't accept your kind here. That's what's happening is people are gonna start fighting for humans, and Spotify is going to have to make a decision. Substack is going to need to make a decision. Everybody's going to need to make a decision. Do we want to be a slop shop or do we want to say humans only in here?

Yeah. I saw on a heavy metal subreddit that I frequent there was a AI generated band that people were discussing, and it was the metalcore subgenre, and people were calling it Clanker Core Clanker. Being a meatspace slur for our digital friends, I guess. I don't know how to phrase that, but this is becoming an issue across every single place. I just don't think we're ever going to be able to fully replace humans. Trying to reach out to humans by putting robots in place of humans, doing the actual outreach.

But for now, clankers were actually battle droids in Star Wars. So you remember those stupid droids in, like, Attack of the Clones that had the weird heads and Jedi would, like, kill them 100 at a time? Those were called clankers by Jedi and by. Yeah.

Were those the ones that had the bubble that went over them in the Jar Jar movie?

Yes.

Oh, okay.

Jar Jar movie. Yes, they were. Yeah, Those are clankers. Specific type of droid.

Oh, well, I didn't realize. A Star wars reference. Yes. No. Yeah. It should look a banana. Yeah.

Clone troopers. Hated them. Yeah.

So, Jason, we have a couple of companies that we might add to the twist 500 today. The first one's called Fiat. This is known for its founder, Phoebe Gates has raised money from people like Kleiner Perkins, Kris Jenner and Hailey Bieber. It's doing quite well. It's consumer AI breakout raised $8 million. It's working on helping people find fashion at an attractive price. Not really my domain, but I think people are going to be interested in it.

Yeah, it's a Chrome browser extension. People love shopping. I think it's a good candidate for consideration. Before we add it to the twist 500, I would want to see who the contemporary set is. So when we do the twist 500 process, we should look for FIA competitors, established ones and new ones. I think many of the larger LLMs are now incorporating shopping specifically. We've got to look at FIA in the context of what Google Shopping is doing. That'd be very interesting. And just compare side by side the results and ask yourself, hey, is the FIA result a better experience? Does it have better content than a Gemini search, which is basically Google Shopping? That's the way a venture capitalist would do their diligence on these kind of products is side by side comparison of the results. Take out the logos, take out the accoutrement of the interface, which still counts, and just say, what blazer did you tell me to get? If I described I want a blazer between 500 and $1,500. That looks great. And it's classic for when I go to Nantucket, you know, in the fall for a wedding. Boom. And just do those side by side. The second one, Hux, you know, this competes a bit with OpenAI's pulse or what I used to do at Inside, like the Inside Daily Brief. We would just do a short summary of news. People liked it. But what I found was, you know, with news products, we've never had a news app, never had a news app in the United States reach critical mass. You have to ask yourself why that is. And it turns out people consume news in Instagram, TikTok, Twitter X Facebook. Those are the places people go for news. And it's incredibly hard to build a product that is 2, 3, 4 times better than that experience. What you can build is communities in verticals. But I think Hux, like what I did at Inside with apps, or there was, gosh, what were the news apps at the time? Pulse was a news app. There were. Circa was a news app I had invested in Circa.

Oh, I forgot.

It's a really interesting cohort because there was something called Smarter News in Asia And Smarter News became smart. Really? I think it was Smart News or Smarter News app. Let me take a look here. Smart News, you're right. And Smart News in Asia became something where people just lived on it. It was so popular. But again in the United States. Yeah.

One last thing before we move on here regarding FIA and E Commerce and the large AI model companies and who's going to win? While we were recording today, so this isn't actually in the docket, OpenAI announced that they're going to put out buy in ChatGPT instant checkout and the agentic commerce protocol working with Shopify and I believe Stripe as well. So there's quite a lot of movement in that space. I think they really want to bring e commerce into ChatGPT because that's a way to make a lot of money. But yeah, a space to watch and we'll keep an eye on it.

And last week we talked about ads coming to ChatGPT. So, you know, Sam Altman watched Web 2.0 to today, you know, worked at and ran Y Combinator for a bit. He understands monetization comes like just three or four different ways. Consumers can pay you for the product, advertisers can pay for the consumer's product or transactions can pay for the product. And I would be surprised if you wouldn't do all three of those in a product at scale like ChatGPT is.

Yeah. Next up, Jason, we're going to talk about main character energy. And perhaps no one has more of that recently than Tai Lopez. This is a well known YouTuber who was busted by the sea because along with his partners Alex Mayer and Maya Birkenrode, they ran a Ponzi scheme that involved raising money to buy distressed E commerce brands and turning them into money pits. As far as I can tell, they raised hundreds of millions of dollars. And between 2020 and 2022, their holding company called Rev or Rev, cheated and they got busted by the sec and they're in quite a lot of trouble.

What's funny is this is all allegedly, this is what the SEC alleges, that they ran a Ponzi. Just so we're super clear here.

I appreciate that. Keeping me out of trouble one year at a time. The reason why this is somewhat humorous, even though of course fraud's never funny and financial crimes are bad, is because the man in question, Mr. Lopez, did things like this. Jason, I don't think I can improve on his own words. Check this out here in my garage. Just bought this new Lamborghini here. It's fun to drive up here in the Hollywood Hills. But you know what? I like a lot more than materialistic things.

I don't know. Tell me.

Knowledge.

Yeah, me too.

In fact, I'm a lot more proud of these seven new bookshelves that I had to get installed to hold 2,000 new books that I bought.

Okay.

I don't know how to, how to improve on that. That's like a bite size. It's the amuse bouche of like YouTube.

I'm super aware of this because when I was doing my. My pilot for NBC that never got on air, and then another reality TV group wanted me to do a show, they. They brought up Tai Lopez in both. No, in one of them. It's come up like two or three times actually when, you know, I've talked to CNBC about doing shows, whatever, everybody. And Tai Lopez's name would come up and they would be like, what do you think of Tai Lopez? And I was like, I'm sorry, who? And they would be like, this guy. And I was like, oh, I think he's selling courses or MLMs, you know, multi level marketing products and all of those courses and stuff like that. I was always like, oh, God, I hope I don't ever get perceived as somebody with a course. Because we have Founder University and Angel University. In both cases, Founder University is free to founders. As long as they show up. They can't take the seat and not show up. And then Angel University, I think we charge like 500 bucks and all the proceeds go to charity, and we've given 200,000 to charity. Obviously I don't need to do courses to make money, but it's always a red flag for me when a rich person with lamborghinis and, gosh, 2,000 books and seven bookshelves, you know, needs to make money off poor people with a course. That's always like a bit of a red flag. So, yeah, and then it was always very weird, like people buying Pier 1 Imports or, you know, Radio Shack, Radio Shack, these logos. Because I did. I do remember when Radio Shack went up for auction. Somebody was like, hey, should we buy this? Or whatever in one of my group chats. And I was like, what would be the plan? Because Radio Shack means something to a small niche audience of Gen Xers or older who used to use soldering irons. You know, those people are all going to be gone. Like, what would you do with it? And I brainstormed with somebody what to do with it. And the best I could come up with was like, Maker. You remember that magazine and event series maker that Tim O'Reilly had sort of done? I was like, make it into a maker space. Sell all that stuff in the back or in the front, rather. And then in the back, just have classes and let people bring their kids there for STEM classes and how to learn how to build circuit boards or whatever. But, yeah, that's not surprisingly. I'm not surprised by any of this Tai Lopez stuff. Every time you see these people, you should just run. It's really gross.

A couple more red flags here, because the Lamborghini part of this is humorous. Yes. If someone's showing off their Lamborghini to make them seem like a person of great business acumen, what they're really showing you is their ability to pay depreciation on an asset that's not even very drivable. Also, the company Rev was promising people a 25% annual return and a 2% preferred dividend. No, that's never going to be the case. No one's ever going to offer you that kind of guaranteed return. It's fraud. And, Jason, they did use some of the money to pay back newer, sorry, older investors. They used newer investor money for that. They stole allegedly 16.1 million for their personal use, et cetera, et cetera, et cetera. I don't think humans are ever going to stop falling for Ponzi schemes, but we can at least highlight them when they touch on our space. And this was a pooled investment opportunity into E commerce, so it kind of lands in our domain. It's fraud, folks.

Yeah, I guess that's Madoff style, right? The new investors were paying off the old ones who were trying to redeem their shares. Startups are hard and you need to have diversification. I wrote a book called Angel. It's super honest about how hard this is. If you're going to do it, you need to put in 20 hours a week for, call it three, four, five years. During your primary investing, you're going to need to meet with 50 to 100 startups for everyone you put a small check into. And of your 20, 30, 40 or 50 startups in your portfolio, be prepared for 80% to go to zero very quickly within the first three years. That's called the J curve. And then if you decide you want to be at this long term, you're going to have to have a strategy for exiting those investments. That typically takes 10 to 15 years. So it's an amazing career. If you love startups, if you love entrepreneurship, and, you know you're Retired with a bunch of money. I think it's like one of the great jobs being an angel investor for successful accredited investors. But we tell them in the Angel University course, which is based on the book angel, and the book is like 10 bucks or 20 bucks. So it's the greatest deal in the world if you decide not to become an angel investor because I scare the shit out of you in the book, which I try to do. Great. And if you decide to become one, you basically get everything I learned up until that point, 15 or 20 bucks, you can go resell the book for half that amount and it'll cost you seven bucks. Books are incredible in that way. And so, yeah, it's like these are very hard pursuits. And anybody who, like I see this guy Grant Cardone all the time on like CNBC or this whole cohort of people selling courses or access to real estate, access to startups. And I run a syndicate as well. When we do the syndicate dot com, it's only for accredited investors, no retail. Have to be sophisticated, basically, or have inherited a bunch of money or won the lottery. And in all those cases, you should only invest money you can afford to lose. So I always tell people, like with crypto or startups, if you're accredited investor, less than 5% of your net worth, let's say your net worth was 10 million, you put 500k into crypto, let's say you lost it all. While the other part of your portfolio should be making 7% a year. So in one year you've made up for your mistakes in crypto. If you were going to retire in five years, that would not be good. But if you were retiring in 20 or 30 years, that'd be just fine. You could weather the storm. So just 1%, 2%, maybe even 100K, 200K and be thoughtful about it, folks. Always my best advice.

Yeah, I was just googling Grant Cardone. I forgot who that was. And one of the first pictures that came up was him standing in front of a private jet, which in my experience, Jason, people who have private jets don't do.

There's like two rules. There's three rules of private jets known. There's four. I can tell you these. Number one, don't be late. I was like an hour late for a jet with Chamath. He still tells the story. It was his. It was my fault because I was like, I have a speaking gig and I'll go to Toronto with you to interview you for this other Shopify thing or whatever, but I'm Leaving the shopping, this gig here, I got to get all the way to San Jose. Like, don't worry about it. If we're late, we can go to the. And it was like I hit massive traffic. And we did have to divert from one airport to the other. Bummer. Second thing. Second thing, you don't take pictures or talk about it.

That's what I'm saying.

Third thing, you let the principal decide where they're going to sit first. So you come in, you place your bag somewhere neutral. You don't sit down, you wait for the principal to pick their seat, which is typically, if you go in, if there's like a four top in the front, like four seats, not that, no table. It would be the right one facing forward. That's where the principal sits. Typically, in my experience. So you can sit to the left if you're having a conversation with them or cross from if they don't want to spread their feet out or catty corner to them or you sit at the table back there if they want to have privacy. So you just say, hey, where do you want me to sit? You got a preference? You just say that.

Yeah, because they're paying for it.

Well, it's. Yes. It's like being in somebody's car or their house. You don't just go into the master suite and you're like, I'll stay here. It's the biggest bet. And number four, you have to read the room. Is the principal, is the owner of the plane, like reading the newspaper or doing work and put their headphones on or are they like, hey, how was your day? And they want to talk. So read the room. If it's a, especially if it's a long flight. Like if you're going to Japan, you know, if you're going to Europe, this is like a 10 hour flight. You can just say, do you have a plan for sleeping or eating? Let me know, whatever. Or you just read the room and just read the vibes and just say, where do you want me? Boom, that's it.

But part two, or point to that you just said is you don't talk about it.

You don't talk about private.

Yeah. So if someone's trying to show you their Lamborghini or them in front of a private jet, red flags, folks.

I have been, if I'm being totally honest, looking at planes. So there is that. I may throw all these out and you might, I might take you to.

Vegas with me at some point or drive a lot of thoughts in New.

York on my way back. But I have been looking at private jets and I just can't do it. I have not been able to pull the trigger on only because I'm just still cheap. I still think like a poor person. So I was like, I don't know man, that seems really expensive.

I mean, on the wall of my childhood bedroom I had a sales brochure that I procured from Dassault falcon of their 900 dol EX jet.

Oh, that's a great jet. A lot of my friends have falcons and the Falcon is just also very good per hour operating costs. Ah, but the two I like are the Phenom 300 and the Pilatus PC24. And there are companies that let you either do a fractional ownership, you can own an eighth, a fourth or whatever, or you can just buy a jet card for essentially 10k an hour is what it comes out to end of the day. So, you know, if I spend, I don't know, 500k every two years, I have 25 hours. I can do three trips or two trips or whatever it is, you know, cross country or maybe three regional trips a year, but I don't need it. And I like walking through the airport.

Alex, you know why people stop you and say jason Calacan, I love people.

And I love talking to people. I cannot tell you how many friendships or catch up meetings I've had in airports. I like walking through the airport. I love going on Emirates Airline. In the back they have a lounge. After I get settled in my seat, I take the business class. I don't take the first class as you heard on all in this weekend. And the first thing I do is I take my laptop, I go to the back, there's a lounge, there's like a four top table, like a diner table. And I sit there with my laptop and I, you know, I get served, you know, some croissant and an espresso and I work. And then people come back and they're like, oh, Jason Galganis. I'm like, yeah. And they're like, I'm like, what do you do? And they're like, oh. I'm like, want to sit and join me? And people are like, are you that guy? Are you weird? I'm like, just love people. So if you see me out, folks, I love people. I love people. If you have courtside seats to a Knicks game, I'll go, I don't even need to know you. This week in startups founder, university launch accelerator. I'm Jason, he's Alex. Email me anytime. If you got a great idea for a company jasonalicanis.com launch co apply if you want to apply for a meeting with my amazing team and get that process started. Founder University is starting in mena, but I think we've picked all the companies. I think. I don't know if you can still apply mena. I go to Founding University. You'll see the MENA link at the top. And Founder University, we do it three times a year here in the US. See you next time everybody.

Bye bye bye bye.