Welcome back on Sally. Hey, welcome to dead cat.
Hisses are newcomer. We've got Tom and Katie here and
we have Kate Clark. Startup reporter VC reporter
from the information who's been writing tirelessly about one,
Klick payment disaster. World with fast imploding and
the bolt CEO being a lunatic or export CEO.
Anyway, so we should have a fun. Startup World conversation.
Katie has undiagnosed covid at the moment and Kate has lost her
voice. So we've got a bunch of sick of
straddling this so sickos. This yeah, cait was probably
screaming at PR people all of yesterday.
Well, thanks for having me, despite despite my Lost voice.
Yeah, of course. I mean we feel like this story
is taken and it's been mostly you and your colleagues
reporting, you know, as taken Silicon Valley by storm
partially because it's one of the first real I think startup
implosions when, when everybody sort of thinks they're coming or
I don't know, like, I just want you to sort of lay out this
story a little bit because a lots happened.
Like where does it begin to you like when did we all start
caring about one-click, checkout companies went Did they really
get on your radar as like startups that mattered in like
the Zeitgeist of Silicon Valley? Yeah, I mean it's a good
question. I think they really started to
matter when all of this VC funding flew into them.
Like these companies were raising, you know, over a
hundred million dollars and in fasts case it really, really got
my attention when stripe invested which, you know, is now
been a couple of years ago. And then not only the stripe
invest, but this company, you know, free product launch really
early stage was Out in the market looking for a
billion-dollar valuation, you know, as long ago as like late
2020. So when you start seeing that
and you know, at the same time you're seeing them, sort of
pedal, these $1 hoodies on Twitter that didn't make a lot
of sense for a fin tech company. So, I think those early signs
really got people paying attention and then you had the
competition with bolt and you had this really bombastic public
figure CEO you know in Brian. Breslow sealed bolt and I think
he really he really Got people's attention to.
So then you have this war, these two companies, so Amazon lost
its patent in 2017 and then I think it in a couple, in the, a
couple years later, you really start to see two companies rise
with the help of hundreds of millions in VC funding together
and that's fast and bolt. Yeah.
Both companies had CEOs who were all over Twitter all over the
tech press like really Making a Splash and really really trying
to capture and bring a lot of attention to what they were
building, which was when I got software so fast in particular,
you know, really gets on my radar when stripe invests and
then invest again that the series B and puts a hundred
million dollars. You know, with the help of leaf
Exel. There's a former tiger Global
partner. His forearm addition puts total
of a hundred million dollars in this company and then again,
pre-launch nothing to show for it self.
So, of course, we're all watching.
Paying attention wondering what's going on this company?
Luncheon, even realize, yes, and they had a lot of delays and
it's a After bolt, right? Bolt is a little bit ahead of
fast. Yeah, so Ben and bolts run by
this guy, Ryan Breslow, or at least he he co-found sir the
dead and he's the CEO for a long time until this year, which is a
whole other story. Doesn't probably talked about
yes, a bowl. Get started many years before
actually, I think Bowl was founded in 2014, you know, it
took a long time to build the technology took a long time
before launch. So already had it, had a head
start, also had a different strategy, they were targeting
larger businesses which, you know, larger businesses Equals
more transaction. Volume equals more Revenue.
Fast was targeting smaller businesses and you need a lot
more customers in order to make any Dent there and that ends up
being a big problem for them. And so, then to skip it, skip
ahead a little bit. I mean Ryan Breslow is basically
the guy who does the Tweet storm right before leaving the CEO job
at bolt where he says you know there's this Grand conspiracy
where YC and stripe or basically running Silicon Valley and it's
made it hard for him to fun with the Irish mafia, right?
Exactly. So you know that, Now it's The
Road to Perdition drama. And honestly it made me think
sort of not following these companies closely like, oh, fast
the Rival must be doing super well because this tweet storm
seems really like defensive. It's like, oh, you know, we've
had such a hard time because all the stars have aligned with our
rival fast. Yeah.
And then all of a sudden so then then what happens with fast
like. So all of a sudden I had heard
of fast because you know the co-founder is what Allison.
Our Allen Bar Allen. Yeah, who is XU Burr?
And was sort of Buzzy Twitter presence.
So I knew I was more aware of her then Dom.
But so yeah, we're pick us up from.
We've got the Tweet storm and then where's the, what's the
first sign of something going on at fast?
Yeah. So what would was tweet?
Starting January January, February, let's say, okay, so a
few months ago, I remember reading that tweet storm and
thinking what is, you know, what is Dom?
The CEO fast going to say, you know, he had been, he'd gone
quite quiet on Twitter, I noticed then and again this is
someone who was very loud on Twitter for several years and he
made some statement on Twitter like supporting Ryan Breslow,
which I thought was interesting. But at the time, you know, I was
not aware of any issues at fast. I like I didn't think that they
were booming necessarily, but I wasn't aware of what was to
come. What's really unique to me about
this about fast. And what's really crazy is how
fast how fast it all happened, like the collapse.
I don't think I've ever seen. Suppling have a collapse so
accelerated. So you know, we first heard of
issues there. I want to say less than three
weeks ago. Yeah, maybe about three weeks
ago and, you know, the companies already shut down.
So, and that is because I mean at the end of the day, it's
because they expected. They could raise more money and
it was saying, oh good, Venture capitalists are not as readily
investing in companies right now as you know, so they just it
just happened. Like what was interesting about
it to me? Is it it shut the fuck down like
you don't see that that often in Tech, you know, companies will
have soft Landings, they'll manage to place, you know, half
of the P'nay elsewhere. They'll be just some sort of
selling in parts that happens but a full-on like everything
must go. This shit is over with.
Shut it all down. Just doesn't happen that often
and certainly not one that is. When's the last time you saw
that? Was it just Arrow?
I mean this is like eight years ago, seven years ago.
This is like very personal to me because I wrote about one
company. This was like 7 years ago, there
was like a laundry company called washio.
That had some high end VCS in a laundry space.
So, you did a new laundry strike.
I'll never stop. Keep it.
Your laundry stories. I will I will I will take you
seriously. It was like a ten million dollar
round or something. They didn't I say.
Yeah Taro and it's hot. Tom actually just he just needs
a new washer dryer. That's the actual no, actually I
got a new one that's will do a spin-off podcast about my my
back and forth with my home warranty.
But, but yeah, they they shut down like sold the desk sold the
Macbook. So that was one that I remember,
but, you know, not this is more professional than that.
This was 100 million race. This is different.
There have been many like, dis Arrow type startup implosions,
but I don't know how many there have been when they're, you
know, over 500 or roughly 500 employees and I think that's why
it happened so quickly. It's like there were the, the
other option, I guess would have been laying off 400 workers and
trying to keep on 100. But I think, you know, when you
actually have zero dollars and no VC is willing to invest.
Like they just they put themselves up against a wall by
growing so fast in 2021 they hired then went from 92 like
nearly 400 workers in 2021 and they were bragging about the
pace of employee growth as if that was sort of a sign of
underlying success which you all reported and then the revenue
figure is astounding. How did you get the sort of
financials who it was six hundred thousand dollars in
Revenue in a year s offer? Yeah, from their checkout
software. So and I note that because they
also have emerged business. So they sell t-shirts and
hoodies, and they've got they've sold 60,000 hoodies according to
the website. Oh, my God, it's like Evernote
back for maybe a dollar. Yes.
So there's there's perhaps other Revenue that we didn't account
for. I don't know how much I'm there,
merge business. But yes, I think we were we were
quite shocked by that number as well.
It's so much to ask about with the, I mean, I don't want to
jump too far ahead because the actual details of how Dom ran
the company or hysterical and, you know, to use an overused
term like a cautionary tale with in Tech.
But my takeaway from there being just no outcome for the company,
is that there was Nothing there in the end.
Like there was no Tech of substance to acquire.
I mean, it's a quasi fairness situation where like when you
really get down to like what it invented or what it really
produced over the course of its lifetime.
There's just nothing of value. No one wanted to a choir shit
other than some Engineers. Right there was some problems in
years. Yeah.
And we'll see, I'll, I'm very curious myself, how many of them
like what that deal actually entailed and how many Engineers
firms actually going to take on yeah as in a choir or just
hiring people? Well, it was Some kind of
agreement where they're going to take on.
Like, I don't know the specific. So we basically, we just said,
in our story like a firm agreed to take on, I'm in, probably
like a couple dozen of them. I think they have like a pretty
pretty large engineering team. So, I mean, there's a certain
responsibility when a company dies you're supposed to.
Like, I mean, I think they're even laws about it like you're
supposed to. If you think your company is
about to run out of money, you're supposed to say save
enough to give some sort of reasonable To the people that
work there. Like, did they, they gave like,
two days of severance or what did they do when this whole
thing shuts down to, like, look out for the employees.
Yeah, I don't know what the severance packages were, but
you're right there, I mean, not only is there may be rules or
laws but they also as a CEO he should have been thinking
further ahead and that's why I like the only way I can
understand what happened is by believing that he was 100%
certain that he would be able to get that rescue financing at the
end. I think that he really thought
the VCS like stripe or addition or index Ventures who are all
you know, big investors in this company.
I think he really believes that one of them would would provide
that last-minute round look like what good is being tied in with
the mob. Yeah, exactly.
Like it, right? And what is your thinking on
like why they didn't think we've seen Venture Capital firms
bailout? So many companies.
Yeah, was it simply the insanity of the CEO.
What, why was it? They chose to let this one go
and not just let it go. But like in a really public and
Incredibly dramatic way, right? I mean, because it's, it hurts
their reputations, right? Like, I mean, particularly
stripe who is like a absolutely balli darling, that's kind of
developed this big reputation as an investor to But I mean, I
think the real reason is likely because of how large the company
was and how much money it would have required.
Because it's not like one round would have, would have been the
Silver Bullet. It's going to need to continued
investment and how, I mean, how much hundreds of millions like
like to support a 500-person company that is made six hundred
thousand dollars in Revenue like yeah, ten million dollars a
month and burn so just, you know, you can do that math.
So I think that's the answer. I think another, you know, I
mean, I don't want to Be late too much, but I think that
there's perhaps I think some of these investors might have
realized what they had on our hands with dom and Lady realized
that what he had promised. You know, he was not delivering
on his promises. So I think there was some of
that as well. And maybe just the markets
themselves, sort of everyone seems like they're taking a step
back, a little bit to assess. Absolutely bad timing for them
with that, right? This was 20 21.
Yeah, I gotta say can like, can Massa no longer be tricked into
taking these shitty companies, what happened?
Wow. He wasn't crazy enough, soft
pink ball pulled back? Yeah, iger's kind of pulled back
and if it was a different, I mean, yes that's what's also
really interesting about this as it really tells a story of the
moment and I think we're going to see we're definitely going to
see more of this. This is certainly an outlier for
certain reasons like the behavior of the CEO.
He already had a spotty past Etc, but I think we'll see many
more startup implosions because they're just not gonna be able
to raise the money. They need to keep Going, can we
dig into that for a second here? I'm and I want to definitely go
into the larger implications and what, you know, what it all
means going forward. But he's I mean, there's so much
funny stuff in your story on the way he ran the company and like
the big kind of company-wide meetings.
I'm still watching the we work show.
So I just saw the episode where they have like the, we work, you
know, cult Camp. You know, we were chanting.
So what like give us some anecdotes from, how how Dom was
Hanging out in Florida with jet skis.
Oh yeah. So that I actually, I highly
recommend anyone listening. You can go on Facebook and
search this and you can watch the video and it is surreal.
So, Dom last year decided to open an East Coast Hub or east
coast headquarters in Tampa Florida where he had moved.
So yeah I bought a house there and you had a yes, Tampa
Florida. So I'm not even my Tampa
strawberry Choice. He bought a very nice home in
Tampa open up, open up a headquarters.
Anyhow Hosted this big really lavish exciting event to
announce this. He has the mayor of Tampa there
with him. He has several local sports
stars who I can't name, you know, sports teams that are
based there. And then he makes a grand
entrance in a NASCAR with a, a NASCAR race driver in the driver
seat, and they do a bunch of doughnuts spinning around in the
vehicle. And then, in a revving, the
engine like crazy. And then they'll and you right
next to kind of where the mayor's speak again.
Dom gets out. He has somebody in the audience,
put his jacket on him, kind of like you know like a celebrity
Pink Blazer walks up on stage and then just gives this speech
about how, you know, how the phenomenal growth that they've
had what's ahead for them, how they, you know, Tampa's the next
big Hub. And they, you know, he's got all
these local supporters because of course, the mayor was there,
right? Yeah.
Yeah.
Mary Jane Kelly, Eric everyone who buys a house in Tampa gets
this treatment. So just know that if you buy a
house in Tampa, Summer in Kansas is one of the things that happen
nice city. You know?
It is. It's a real, it's a big.
I think it's a biggest, major blow down there in Florida.
It is. Yeah, I think Florida mayor is
one of those jobs that like, at some point in your career, you
may not you may not put on your LinkedIn like Florida town,
mayor is a chance. You're just like yeah, that did
that did happen but let's not go after the events you went to
were with some sort of like huckster Florida man type you
know you look the yeah I'm like yeah look at some point.
Mary. You converted your entire income
into Shiba Inu. You realize that this was all a
huge mistake and your third wife is leaving you.
And yeah, you didn't realize you gave Dom from Fast, a pink
jacket like it's all a blur anyway.
Well yeah that was going down. He's got all their support
because this is like a, what there may be a third tier Tech
Hub, whatever you want to call it.
That's trying to invite more Tech workers.
So there are so excited that you know, they say this is one of
the fastest growing companies in Silicon Valley.
Lee which, you know, he just told them and they repeated and
it's exciting to watch. I mean it to see what else we
can get you a video with a bearer of the mayor of
Pensacola. Yeah, so anyways, it's eight
months later there are sent down so it's quite a sight to see.
Any didn't hire anyone in Tampa, right?
Nobody. Yeah, that one colleague.
Who moved out there with him. An engineering manager.
Yeah, but that it was. Yeah.
I mean, he was again, false promises.
I don't know what his intentions are.
This guy is not, he'd like changed his name because his
past was good. That's you right?
He used to be got he used to go by Dominic, he changed it to
Dom. Long story short, he had a
towing tow truck startup in Australia that not only like was
liquidated but there was like some really bad things that
happened to some of the like it just kind of screwed over all
the employees and you can read about that.
I think NPR has done some good reporting on that.
And I mean I personally think that some of the early investors
did not know about that and that is completely on them.
It just takes a Google search but I think we were it's not
like he changed his name from Dominic to Richard.
He changes him. Nominated are incredibly easy to
find and I think it just really telling of the moment you know
that was 2019 when he raised all that early funding and certainly
that was at 2021 but honestly 2019 was pretty like euphoric
and Venture Capital to it was just before the pain that Boom.
So it was during a period that lasted years where diligence was
sometimes don't exist. I mean, I literally just just a
pause there, like there was the 2012.
Boom, the 2014, Boom, the 26 teams of the Trump, Boom, the
recession. Boom, the penalty was abuzz the
valley. Not booming.
They will Bloom for anything bill, right?
Boom. Is not even Sims.
I don't know. It's sort of no.
But sometimes, there are like three weeks for three-week-long
drawbacks and, you know, the batten down the hatches winter.
Winter comes. Yeah, like winter comes for a
long weekend this, I just think that's not what you know, but
that's just crazy to me. That it would have been easy to
find out more about his past. Yeah, I mean, literally you
probably when you Google like Dominic or Dom they're just, you
know, Google's like did you mean Dominic?
I mean y'all Hammers and index. I mean, he's sort of the lead
early investor here, right? Or I feel like he's big in Robin
Hood, which is his own company that people have liked.
Big big moral like objections to.
I don't know, like, what's your sense of his role here?
Yeah. So he's the First Institutional
Investor. So he plays a huge role in
providing credibility to this early stage company.
He is at the time already big and Robin Hood transferwise and
add Yen, which are three of, you know, the largest fintech
companies. So he is kind of the consumer
fintech investor. Like, there's no denying that
again, that he provided that credibility, I don't know what
he knew. I mean, you can I cited some of
the blog? That he wrote about fast and
2020, he really believed in Dom and he thought that Dom was an
incredible leader and said many nice things about him.
You know, he wouldn't, they would not comment for the
article. So I couldn't really find out
more about what actually happened in more recent times.
I mean, one broader, one Trend in Silicon Valley that I'm sure
you've seen, is just like these boards are becoming more and
more like founder inventions, they like bring on whoever they
And so that they don't get bothered by like their investors
and I went in the Wayback machine and it's like in January
2021, they say their board is Dom, lucky groom and Brian sugar
from group 9. Like what, what is that for?
Like I mean I think of you know, lucky as you know, he was at
stripe, he deployed a lot of capital.
Like what what's the, what's the deal there?
And then I guess like towards the end, And I forget you
probably know the board at the end better than I do.
Yeah. Yeah.
I think it's it's a small board. I think it's maybe someone an
executive might, right? Yeah, Brian Dom.
And and Ian. Yeah.
So it's interesting. Lucky lucky groom was a surly
stripe employee as we know now is like a big-time solo VC.
He is not investor in fast but he has a close relationship with
stripe and was sort of like there he represented straight.
The board basically, like he is kind of like a call a favor.
He knew stripe. Well, I thought he'd be good.
So he's on the board for a bit. I don't know much about Brian
sugar. I know I know.
Brian quit. Yeah, welcome down.
Would ya? I mean, Brian.
Brian is the president of group 9.
I imagine he may be on his way out.
Post the merger with Vox and then he has a side Venture fund
that I think he invested his personal capital.
I think called like sugar fund or something and they're an
investor in fast. Yeah, and they do a lot.
He's done a lot of e-commerce like oh yeah, see stuff.
Yeah he does a lot of data, see stuff, he knows e-commerce but
not necessarily the fan Tech side.
Apparently I don't know, I don't want to speak for Brian.
We should ask him to come on some time because he's a chatty
guy but you know, he's plugged into that space but seems like
something something. There's it seems like there's a
bit of a gap between that expertise.
And what would have been good oversight for this company?
Would be my assumption that I was, you know, in the reporting
process, we were told Some former employees that Brian was
often cited kind of like in sales pitches as like in a lucky
investor and some of the sales people were like why are we even
talking about this guy like this is it going to be relevant to
any of these customers so there was a lot of confusion about
like your dry why they promoted certain investors in the in the
pitching to two clients. He has a great Instagram, I
follow him there because it's all solid stories, a lot of home
cooking, you're all over the startup World stuff.
What's your view on like, I don't know.
Board composition. Isshin right now sort of
generally because, you know, we saw, you know, the Tigers of the
world basically being like we don't want aboard see we don't
want to meddle, it gave the founders a lot more like control
over who they appointed. I'm sure you've heard the same
things as I have where there there early investors who
bristle you know, the Sequoias the world.
I mean they're obviously all over but when they invest early
it's sort of like oh we have to keep being the responsible
person. Even though these sort of hedge
funds crossovers come in, I don't know.
What do you think? There's Have any optimism that
there's a move back to like, okay, investors need to take a
board so you can have some, like, culpability for their the
companies they invest in. I mean, I think, I think it'll
be interesting to have this conversation and like six to
nine months when there's been more of a Fallout because right
now, a lot of, the more traditional Silicon Valley
investors who do take board seats are really trying to
convince me of like how messed up.
It is the strategy, the tiger took, which is, you know, not
not to take board seats and to be passive investor.
Because now a lot of those companies, Knees are struggling
more and they don't have like the expertise.
And this is this is only if you believe that some of these
people are actually helpful on the board.
If you believe that then some of these companies feel a little
bit abandoned because they don't have that support and more
difficult times. So I mean, I think it will be
interesting to see like if a lot of tiger Global backed companies
which and negatively, a lot of them are going to fail because
there's hundreds and hundreds of them if they if they do feel
abandoned and there's a more of a public dialogue about that, I
do think that we will see a shift But it kind of depends on.
Again, it's really about, if you believe that these people are
really helpful members of the board, which you can only find
out and more difficult times. It does seem Reckless to me,
just like, you know, like you're saying these companies rate get
customers based on the firms to invest.
It's not like they're Anonymous. It's not like we just have
Anonymous money. It's like we have named money
and so the firm's reputations are being attached to these
companies. And just like, I don't know, I
run a business. I wouldn't want my brand to just
be attached to things. I had no influence over what
what came of it it's like people are ruining your brand and you
don't care like to me like if there's more of a correction
like just there will be business pressure to worry about it
because you're trashing your brand by attaching it to
companies. That's probably why the plug was
pulled at this point rather than you know investors, I mean yeah
like there's a different way of an investor nothing more
embarrassing than a company with six hundred thousand dollars in
Revenue. I mean it's just like that's a
makes you look like an idiot. Yeah.
Right. They should address it.
I think that it's frustrating as a reporter that all of these
investors are being so silent about it.
I think, you know, I mean I know it's we all say this but it's
like the hive table so much and they beg us to write about them
and that it's like the times that there are these these
implosions. I just wish there was more
honest about it. I think like that's frustrating.
Agreed, you know, every startup forwarder would agree with you,
right? Like, we all it's a broken
record, but, but as far as the like the what you're Thing about
the board and the brand, I think, like the hedge fund
crossover funds. I actually don't think that
that's something they're concerned about.
I think that perspective is a very like, Silicon Valley
venture capital firm, Sand, Hill Road, Our Brands, important,
like tigers, as you know, we've all reported as like operating
like a public market investor and just like, treating
everybody like stocks. So different strategy.
What I mean, what's the situation now with with bolt?
Obviously their CEO, got shit-canned is the chair he got
elevated, he ascends he was from Right?
He got a pyramid chairman of the board now.
So he's still revolved. You reach, Enlightenment?
Even rest and top. Yeah, he decided he wanted to
spend more time with his Twitter posts.
That is what a chairman allows you to do.
He's got a lot of side projects. I mean, didn't he say in his
Twitter that initially that he was thinking about building some
kind of Y, combinator competitor, he said something
about like yay. Yeah he's working with the
founder of Mind Med which is so psychedelics companies like love
medicine or what's it called It's called love our love.com,
okay? They've really gotten to the
essence of what what people want, you know, we're selling
blockchain psychedelic or not. It's actually, it's not
psychedelics. It's right, is the intersection
of psychedelics and blockchain. It's yeah, it's it.
Anyways, he's doing that. He's involved.
Decal and bolts doing much better than fast.
We, I think we reported the revenue.
I'm doing much better than fast that's well.
Well, obviously. Yeah, they're still, there still
a business, like, souvenirs also doing better than your right But
they had 40 million. I think 40 million Revenue last
year, so a better business but they do have like a 12 13
billion dollar valuation. So the correction is probably
overdo there. But like I said doing a lot
better than fast. Right.
Okay so so so is there still a belief?
I mean because I imagine what happened with both.
These companies is that there was this thesis on the part of
investors saying, like well the patent is expiring there's going
to be a bun or at least like a couple of winners of people in
like the one-click checkout. Space.
And so that's how you get, you know, quick Investments and high
valuations early on. With these two companies fast is
dead bolt is, you know, I guess doing better, but is there like
still a strong belief among investors that?
There's a real opportunity here or is this just something that
what little business exists is just going to be owned by
whatever Amazon one-click checkout or Apple pay or what I
mean. Like is there anything here?
Or is this just a mistake? I think people are gonna like
put that on ice for a little bit and maybe it keep their
distance. I don't think we're going to see
a lot of funding there. I mean, I think it's also like a
product that I'll other fan text can build, right?
A firm was sort of, didn't you say this in the story sort of
competing with them? I mean, obviously a firm offers
a different product, but I mean, people are building in this type
of I think a bit more complex businesses are incorporating
this into their business. Like, I don't think that we're
going to see a lot of funding and Standalone one-click
checkout companies. Here's my big question.
Do you think if the Tweet storm never gets dropped?
You know, I Ryan told What the three cartoon avatars but I
guess he was like oh I'd been sitting on it for two or three
years, waiting for the right moment.
Like you think of you never drops up fast and still in
business today? Like do you think like that
really drew the attention in or you think this was like this was
coming, whether there was the Absurd, I think this was coming.
I just didn't care about these companies until it was like he
was talking about but you reported them so you know your
own interest in it and I don't if I wasn't doing it I do them
well I think so I guess I'm biased.
It's hard for Like have an objective opinion on that
because I already knew them already knew.
Ryan, are you Dom? But I could know.
I really think it was inevitable.
You just can't you can't burn ten million dollars a month.
What the only thing that could have saved them is, you know,
going back, six months and like us, like not allowing the stock
market to the behavior that as, you know, right?
It's because of the environment change what also, it seems like
the mistake that they made here is that there were only burning
10 million a month, you know. Like that's an unfortunate.
Ozone to be in if you're burning two million.
Oh yeah, you've got some Runway if you're burning 100 million or
like 70 million. Oh, then you've got investors
really feeling that they need to get this thing going because
because you're in the too-big-to-fail zone, but like
10 million is like, you didn't go big enough right?
Actually, it's funny because a lot of people after the article
came out, we're like, well, you know, like that's pretty normal
for a start-up like burning 10 million and like not making any
revenue and like, okay, well, like a semi the list of
examples, I would like to have is like, you know, others that
Okay, but again, yeah, if you run out of the funding, then
you're screwed. So it doesn't really seem like
what was, what was Uber doing, Eric at like, edits craziest and
I mean, who burn like two billion dollars in China and
like a lot of the revenue was like yeah if you want to be
late, so many accounting games. Yeah.
I was going to actually joke on your point about yeah, not
pretty enough money. There is like, well, we're a
company that burns through a lot of money.
So we need to raise a lot of capital, which means you'll be
able to deploy a lot of capital. Take a lot of owners are, you
know, you can sell any of these things is like, Upside in boom
times where it's like, oh yeah, we want to deploy.
And this is a company that really, really has appetite for
Capital, right? I mean if you're good at
fundraising, then you can fund raise a lot of money and that's
the thing. It's like, there are these
people in Silicon Valley who like they've started.
A lot of companies, we know them.
They're really good there. They have a lot of charm, big
personalities, and they're really good at selling a vision
and like all, sometimes, obviously, sometimes terrible at
building, but that ability to fundraise really well can take
you really far. I would not be As if Tom is back
in a year with a new company, raising my, I really won't be
Insider. We ran a story.
I had nothing to do with it, but we ran a story.
Interviewing, some of the angel investors who were like hundred
percent back him again. Do it tomorrow?
Pitch Me Pitch. Me.
Dom pitch, me hard like yeah, I love it.
They love this shit. What, what are some companies
that have burned that much money, or more that did turn
around. And we're successful, like,
obviously Uber, but they had to shut down.
Down some of its money losing. They had to shut down like a lot
of projects. I'm order to like look, here's
this is like Javi. I'm interested, but like, should
be very high. Right, I'm margin, right?
It's like, yeah, it's like, what's a pure software company
that has had that kind of burn rate will palantir burn.
A lot of, I mean, palantir had the whole Consulting thing
forever, where it was like, yeah, that's they were never a
pure software company because their software us too hard to
use needed. Like so many people.
All right at it first to make it go.
So but yeah, it's like so weird. I just like the math is so
bizarre doesn't make anything. But on the angel investment
point, I just wanted to say, I mean, you know, we had Parker
Conrad on is our first guest. He's sort of the case in point
on Fantastical blow-ups, or a strong sign that this is a CEO,
who knows where the action is, you know, knows how to build a
company with Buzz Right Place Wrong.
You know, I mean obviously I mean some people would say what
Parker it is and if it's is worse, I mean I think Parker I
know Parker better. He's such a product Visionary
that it feels like. There's so much substance there
that it was believable. But yeah, I mean there's a
reason to back Founders who have crazy blow-ups, I mean, because
they did some things really well and learned things from the
rest, right? I mean, it's frustrating for
people, especially like female Founders watching someone like
that continue to raise money, but you're right and I do think
that he was a talented brand marketer.
Like, I don't counted. Yes, Don.
Talented fundraiser, maybe, I mean, maybe a good salesman
clearly, not good enough good considering that, you know,
their business. But in a different role could be
successful thing. It's the not good enough that
makes it that clearly was. The flaw here.
It's like he was a good fundraiser, but not a good
enough fundraiser. He was good at promoting himself
and making a big, but he wasn't that big because not that many
people knew who they were. You know, like didn't reach Adam
Newman like levels, you know? He was big in Florida but not in
Miami. It was fucking Tampa, couldn't
cook couldn't reach Adam Newman level.
As though if the market had to change these last few months and
he continued to raise like that's the question because he
did raise 125 million dollars. That's a lot of money.
It makes way more sense. We were I don't think this guy
this guy didn't go big enough. He's not, maybe you're right if
he'd gotten there but he's not, he's not Parker he's not out of
he's not I don't think he's getting the ice Australian but
he's always really it's not there.
He just seems like some of these other people at least they were
like really in it. You know, you want to come off
like you were a lunatic but on a huge impression, To scale battle
commence, the lunacy big enough. You know, this seems sort of.
So what does stripe look like after this.
Obviously, I don't think there's a reckoning that's going to
happen in stripe, put out a report on its super high level
financials and said that in 2021, the total payment value
over his platform was six hundred, forty billion dollars
up, 60 percent year over year by comparison, add Yen, had five
hundred sixty 1 billion, In up 70%, add un's, valuation is
about fifty seven billion and down 25% year over year and
Stripes valuation is 95 billion and flat since basically March
of twenty Twenty-One. This is she'll Mo not an
investor seed investor. I hope I'm saying his name,
right, but credit to him for pulling the information
together, but yeah, so and stripe also said that document
that they didn't think 2022. Be necessarily as good as 2021
be. Some of what they saw was thanks
to the pandemic anyway. So those are just some fast
facts from their report, but yeah, Kate.
I don't know. We have what is to follow up on
times. But, yeah, I mean, Kate, you've
done a really good job for a number of years.
I even back when I was at the information talking about
Stripes VC effort and their kind of path towards disrupting, a
lot of, a lot of early stage investors and their their stripe
is like when it comes to fintech, they're basically like
the NSA, right? They they know everything.
That's going on. Which is another reason why it's
kind of incredible that fast went on as long as it did
because they should have had very good Intel as to whether or
not this was being picked up. But anyway, I mean, like, what
what's, you know, what's your take on them at this point?
Well, on the DC side of things, I don't know, but I think that
they are going to probably slow down a little bit.
Well, for, of course, because of the market, but I also think
like I get this, this probably, this took a huge hit to the
reputation. I think that they're probably
quite embarrassed about it because they're Involved.
I mean every headline it's like I mean from us like Strike Back
fast like they're just they're a huge part of this story and also
the two people who are really leading VC.
There have left they left a year ago hey that was Jordan Angeles
who went to Ribbit and Justin overdorf who went to light speed
right and both now Partners at these firms, Jordan was the one
on this steel was involved guess who was on the deal had been
there in that emanate apartment are Corp tempted, Parchment a
long time, our while longer than Justin.
So they're gone. So Maya, I can't, I don't know
her last name, but she's now kind of filling that role in
Cork Dev. I think she's interim.
They haven't really seem to build up that team.
And I think in their absence, like they're just is in.
It's not as much of a priority, although I do think the
Collison's and will Gabe Rick, who's like their Chief product
officer? Do care a lot about investing in
are very interested in it, so I will be watching, I don't know
how they're going to act, I don't know if they're going to
make a splash or just kind of chill.
I think given everything happening in the market.
They Probably are going to take a step back and maybe they'll
focus more on Acquisitions because things are going to be
real cheap. And we're going to be seeing at.
So it's probably what I would expect for them and what about
stripe the business? Or what's your view?
Yeah that's a big question. I mean like it doesn't seem like
this is going to be the year for them to go public.
I'm curious what you guys think but I still going to do it this
year. It's got to be under the year.
I probably looking more like 2023 to me but like of course,
employees are wanted to go public so bad.
How old is this company now? Like 12 12 years, 13, Ten.
It's like a decade plus and it's time but now they kind of missed
their Winter Camp was founded in 2010 toys.
Answer told ya. I mean do you guys what do you
think about their valuation? Like people ask me all the time
and for the longest time I felt like they were like I was
expecting made raised at you know, a hundred fifty billion,
two hundred billion and they took me there were definitely
private Market transactions in the mid, you know, hundred we
got 1450 range and you know, I had an interview with Chris
sacca who's bought up a lot of stripe and he said that he'd
gotten offers at 200 billion. It's not clear if that actually
transact it or not but, you know, yeah, they got out.
There is definitely a ton of appetite.
Yes. I mean, we don't really know,
you know, the numbers, so it's hard.
The public comps are hard. I mean, I think that's sort of
didn point is just. There are companies that have
gone public, that seem to be trading at worst multiples than
stripe. And the other point this
investor made is that stripe has more than 7,000 employees,
whereas a d and has like Thousand employees.
So just on a sort of payment volume to employee basis, stripe
is clearly racking up the expenses.
I think that there's a theme here to about over hiring like a
lot of the companies I've been covering that's been a key
issue. And like we saw with hopin that
was like a that was like the company for the last couple of
years and they cut I think 20% of staff and I I've heard like
interest in Reading other reports that there are more
layoffs likely to come. And I just think last year
people made a really big mistake.
And beefing up their staffs just way too much and hearing that.
Maybe that's the case was right. Maybe they need to also take a
haircut to the to that massive number and that's that's huge.
Well did they I mean was part of that with stripe because they
were Staffing up for pandemic. Level transaction, volume
increasing. I think you saw that being a big
driver of head. Count increases for businesses
that had a tail one because like I mean again sorry to bring up
go puff again but like, you know they hired a shitload of people
because ordering to your home was a big deal.
During the pandemic. And you know, they had layoffs
at you guys reported and that is a result of needing to
restructure both because, you know, we're not living in the
same environment. Now, where you need, you know,
the maybe the number of people to do that and there was maybe a
mistaken bet on, you know, the continuation of the business.
Yeah, those are very different types of business.
Yeah. It's really great.
It's not a great comp. Unfortunately, the one I've been
spending time talking to people about right?
But you're right. I see what you mean.
It's like people did make that bet.
But like, in Hopkins case, I don't know if I understand fully
why they thought that the demand for their service would would be
sustainable after people are no longer at home of the growth
metrics are all predicated on pandemic Behavior, continuing
right? As if even after the pandemic,
then you have to sort of commit to that in strategy, even if it
doesn't really make sense and it's a huge issue for cops.
Right. I mean like that really was what
Screwed instacart when they really had their hearts set on
going public. Was that right there, massive.
Honey. And, you know, 2021 was going to
look awful and you're going to go, you know, to Market with an
S one. That was like, yeah.
So we're flat but were, you know, at best but we're going to
command, you know, growth multiple on.
What's basically, you know, a not great Merchant delivery
business and so, yeah, I think for any company that had a huge
tail, when going public at this environment is just such a bad
idea. Macro macro factors,
notwithstanding, you know what, it reminds me also Kate like the
stripe. Raishin and I actually, I defer
to Eric and Katie on this because you guys actually cover
the company, but reminds me of Airbnb near like the final
stages of being a private company where they really wanted
to hold out for as long as they could.
But employees were so antsy, I do think it's similar.
Yeah, I think that's the biggest easy to compare to that moment.
There was like a lot of reporting in the lead-up to are
babies IPO. And I like there hasn't really
been actually that much reporting on how stripe
employees are failing. It's something I've liked on my
to-do list, I haven't gotten to but I know it.
Well, it's always I always I'm sure you feel the same way.
It's like I should write more about stripe but it's like is it
that interesting of a story like everybody else?
Typical cautious. It's harder right?
Right. And they're just, has it been
that narrative that has been that interesting?
I mean, like the colosseum's are just like picture-perfect, like
again like Silicon Valley's darling.
So it's like, I don't know, hasn't been as compelling
diving. I mean, like, the Airbnb
Founders. They seem a little, like,
Precious about their brand. I don't, but they're good at it.
I mean, they're really good guy and he's more reporting, though.
It does. I think like, given the given
its size, I mean, it's 7,000 people.
It's a hundred billion dollar company.
Definitely is a Silicon Valley story.
It's it just I wish I wish there were people who could smell more
time on it. What has striped done to relieve
some of that pressure because I feel like, you know, palantir
Airbnb. Different companies have done
more or less to give employees secondary.
So yeah, exactly. It's like has stripe done.
Secondary is how they found ways to obtain.
I'm sure that they have. Yeah, I'm sure.
Done many. They've I'm sure they've done
many trenches of secondary sales to they've had to have re like,
I named both die. I think.
Important. All these companies are doing
secondary. Yeah, I mean, it's a big again,
another topic always, worth more reporting.
You know, I using their these firms that pursue secondary
strategies, where they have a big information advantage over
employees. Employees are often the ones
getting the worst deal on these secondary sales.
But then they have the least control over when the company
actually goes public. Alec so they need they need the
money. So I do think.
Yeah, the push back on some of these companies when you forever
to go public, is that they're hurting their own employees.
And I feel like they don't get that much criticism for.
Yeah. But I said go like I've strived
goes now, you know, it's a bad outcome for everyone.
Yeah, that might be an interesting way to look at a
company like stripe because it's not consumer-facing but to look
at it through the employees, this a long time ago, I did a
story on a company that had basically failed and So you
know, looking what happened the employees there was really a
dramatic, but I think I would love to read a story about a
company like stripe where the company is not failing, but the
employees are still not having good outcomes.
Yeah. And like the flip side of it is
also actually just had a story this morning about doordash
which, you know their stock has been pretty bad over the last
six months if they had a pretty good, you know, first half of
2021 and they really they they're down like more than half
from their Peak and they hired a lot during the pandemic and
They're not having to offer, like, refresher Equity, grants
to employees, because so many of them were compensated, you know,
their compensation comes through stock and that stock is now not
valuable as much as it was. And so it, you know, it's a I
almost feel somewhat for the companies here.
That's like, yeah, sure. We can go public, but that's not
going to solve the problems. I mean, give some liquidity to
early shareholders so you'll get returns there.
But if you staffed up a ton during, you know like stripe
maybe did. And if they were to go public
and their valuation is down, you could suddenly Have you?
No, not particularly valuable, you know, Equity.
So craziest thing about startup employees, is also always been
that there's a set that seems to pick companies based on High
valuations when they should pick them based on low valuable.
They don't, well, they don't know.
And that's like the big issues. Like, nobody knows how Equity
works, really, and companies do such a terrible job of educating
employees about exercising and options and what Equity is and,
like, valuations and it's frustrating.
I think like, for those As employees and like their taxes
and all these things that like these companies often times even
like the executives are for a start-up, like a sort of
executive might not even be that educated on and then gets a big
problem that I'm surprised hasn't that's what like Carta is
doing it. Like they're trying to like sell
that education to these companies.
So I think that's a good thing because it, it seems like a
problem that there's not more knowledge in the ecosystem about
that, but they're happy to Hype it up when times are good.
Right. I remember years ago, read
Albert Gotti at the Sandro I think fuck I'm pretty sure he
wrote the story. I remember talking to him about
it. How palantir used to have like a
fun interactive expel, Excel spreadsheet for palantir
employees to sort of show like how much their Equity be worth
if they joined at certain times, you can kind of, like, put a
little slider on to see how much your, your net worth would be.
So they're totally happy to gamify it when times are good
and uses an attraction. But yeah.
Like the nitty-gritty of flat or a Down Round or like you're
saying the taxes. It's like, I don't know you guys
for you. Get into that and even like, in
fast case, I saw an offer letter, you know, that went
through total comp and the trajectory that they like the
projections that they provided were.
So were somewhat silly. Like I said, in the story the
highest was a 12 billion dollar valuation and this is like a 500
million dollar startup. That was that was struggling
than this is a September offer letter.
Like you know it was a different period, maybe they didn't know
what was coming but like they knew their revenue.
So it's just those are the kind of numbers that employees are
given and they're like oh shit like my equity.
Going to be worth that much like when you guys had to 12 billion
dollar valuation, like that's awesome.
Yeah, let's think for the car last question here.
Like last segment here. Like we really in a downturn.
Okay, like is this actually something that you think is
going to persist for any I mean, I was just talking to people
about a company the other day and they were sort of saying
like, I looks like the text out you NASDAQ is back.
You know what maybe seem like a completely postponed IPO for the
rest of the year can now be like a cue for thing and and that
sort of stuff, you know. It starts early in the private
market. So like what's your sense
actually as this, you know record this on April 8 22, like
where are we? Yeah, I mean it's six months now
of me just being like it's an uncertain period I don't know
right but I think what I'm realizing is like regardless of
how the stock market's behaving regardless of other
macroeconomic conditions. I think investors Venture
capitalists have decided collectively that like, they
don't want to do those high-priced valuation Deals.
They don't want to work at that pace that they've been working
at and they are all kind of taking a Back.
And if they're all taking a setback like startups, have a
harder time raising you know, so domino effect on the startup
Market in particular. So yeah, I think we're entering
I don't know how. I don't want to be the person to
say it's a downturn, I don't know, but I think we're
certainly entering into a much slower period.
I think on the macro economic side, it supports you because as
interest rates are rising, I'm not going to say that it will
cause a downturn, but if interest rates go up, it just
makes other Investments that have been really low return, for
basically, since 2009 makes them more attractive because I'll
yield more as interest rates go up.
So part of the reason why so much money was going into
venture capital and into private equity, in general, was because
the yields of the Investments were generally so much higher
it. Seems silly not to put the money
there but if you can get more on a more traditional investment.
Now, you'll just start allocating big, you know, big
endowments will start allocating money differently.
So, I mean, is that a downturn or is that just people saying we
can make more money with less bullshit?
Are we gonna make reasonable money?
You've got somebody who agrees with you.
You may watch Peter teal, talk at a, the Bitcoin conference, I
watched the you to know but I'm going to say that I'm surprised
like I've listened to Peter tail Taco.
Like a lot of his speeches especially like his Rene Girard
speeches and stuff. The number of times that I'm an
agreement with Peter teal is not zero.
I'll put it that way, but just make me think.
Like I mean he was an amazingly Tie company argument for
somebody who makes a bunch of his money from a VC first, but
it sounds like a contrarian Tay. I know, I mean, I thought I was
dumb, I thought I was dumb, but he was basically arguing, you
know, that gold and equities used to be sort of similarly
valued in, you know, Collective Collective equities and gold in
the 70s. And that now, we've seen just
like an explosion of equity values.
And is it that crazy to think that the value of Bitcoin should
be more? Equivalent to the total value of
equity is. I don't know that.
It seems like it and then then he got all the headlines by
saying that, you know, the enemies of Bitcoin are, you
know, Warren Buffett, Jamie dimon and Larry Fink at
BlackRock. And then he then teal was like,
you know, ESG equals CCP, you know, it was a very sort of
trumpian sort of argument as Other the smartest point of his
thing was that he was arguing that, you know, Bitcoin, we had
basically been a canary for, you know, inflation and that if
inflation continues, that that will be a strike against
equities, and we'll people moved to sort of more old-school
stores a value like old or as he would sort of prefer Bitcoin.
Yeah, I was being sort of cute that you were totally agreeing
with. And I think I have to say it's a
correction, right? How NVC, that's probably like.
Is that safe for them saying, it's a full downturn.
I think it's a correction to like what happened last year and
just like the insanity and yeah, you're right.
Like the it is going to be much more difficult for second tier
or credit like the crappier VC funds to fund raise and that's
going to, you know, of course, that a plays a huge role.
So I think we'll start to see more evidence of that.
Like so far this year, we've just seen like, record
fundraising because it's all a steer, kind of right tumbling
over into early this year, but soon, we'll get into Like the
meat of this actual year and we'll start to see the struggles
a little bit, but that's, you know, that's the funny thing
here though. Is that you do you still see
these crazy rounds that will come up from time to time and
everyone's like? Yeah.
But that was a deal that really is more of a 2021 deal, you
know? It's really just trickling over
carrying over from 2022. It's like all right you know we
are four months into this year don't announce that stuff for a
long time. Yeah fair enough.
So that's why I mean you know you have a lot of deals where
it's like the hands were they shook hands and October or like
Java and they They wait to announce it so you don't need to
ask when it was done as you and your colleague Berber reported,
you know, you've seen companies like tiger clawing back and
really in elegant ways on some of the deals that they had
strong. Honestly, that was a great
story, but I think less and some of the VCS would fear Monger
over. It doesn't feel like there's
been this like, wholesale claw back, or do you.
You think they're just like a ton of unreported cases?
I mean, that is what like a free pricing.
Yeah. Maybe he's ever maximum points
that same one. The Forbes reported, I feel like
that company comes up all the time.
Oh, DBT. Yeah.
Yes, I think the repricing was like, a, six-week season, not
occurred, like, in January February, after like those 21,
you know, really close to 20 21, so like the deals kind of were
negotiated around when the markets really changed.
So I don't think it's happening now and I agree with you.
I don't I mean I was like I just went like weeks trying to find
as many examples as I could and kind of continued for a while.
And I don't think there's a ton that we Know about because like
those are often the ones that get to us because people want to
like shit on those investors that people want to show tiger
is like bad. Like this is why you shouldn't
take their money. There's so much of a source
interest in. Showing that the fact that more
has emerged to me, is I like agree.
I think that probably shows because I mean most investors
know that that is like suicide because if you're if you start
doing that like that gets around so quick and then people don't
want to work with you. So I don't think that that a
still in a founder market. Even if like even if things are
changing, the Dynamics are changing Changing like there are
still you know, a finite number of like these great companies.
And there are so many investors and there's like what like three
hundred and fifty billion dollars or thing raised in 2021,
just like insane amount of money.
So I don't think this is much too, that sometimes I feel like
they're more exciting investors than companies.
It's like it's more fun to talk about some of the investors.
I'm like, what are the companies that are like, so exciting to
talk about? There's so much politics in the
ventures and I think that is interesting to.
So, like, yeah, I think it can be more compelling.
To dive into like their Dynamics, then the founders.
I agree. Sounds to me, like, we're all
getting ourselves ready for a Dom Holland.
Come back, maybe maybe in the next week or two.
So when that happens I'll be very excited to have you back on
here. Kate definitely hopefully
feeling better. And look at least we're all
doing better than fast. Can we?
At least say that. Thanks so much for coming.
Yeah, thanks so much for joining.
This was fun. Thank you.
Yeah, thanks for having me. Goodbye.
Goodbye, goodbye, goodbye.
Goodbye. Goodbye.
Goodbye, goodbye, goodbye.
Goodbye.