Apple’s Tariff Trouble, Anthropic’s New Models, and Our Founder Friday Finale | E2130

25:49they may have also been sued or some allegations around um recruiting people for it i remember well they also they controversially allow users as young as 15 to be creators on the oh so maybe not no that can't be right i'm reading it right now okay yeah okay that is the difference the difference between only fans and passes is passes explicitly does not allow adult content right OnlyFans does. And if you recall, OnlyFans for a minute was like, we're going to stop doing that because we're getting in trouble. And then the entire internet lost its mind and they backtracked to allowing adult content because it's business.

26:27They do have some other creators on there, but when someone says OnlyFans, you don't think of the one track athlete posting their exercise routines on there. How much money does... I'm surprised we don't have the numbers here. What's What's the revenue on OnlyFans right now? Their 20 % take equals what right now? So we have data up through the November 2023 year, Jason. So it's not as updated as I would like, but basically for calendar 2023,$6.6 billion in gross spend on the platform yielded$1.31 billion in revenue for OnlyFans, leading to a profit of about$485 million. Cost of$800 million to run that business?

27:08That's crazy. There is a case when you have a company that has this amount of value to sell it at the peak because why not get the next 10 years and go move on with your life? There's a lot of attack factors for this business. God forbid something happens on it. It's kind of like Craigslist in that way. You can have all kinds of bad, unnatural things that can happen when you're running businesses that operate in this kind of adult area. I could understand as a founder who, you know, creates this Frankenstein monster that gets so big saying, you know what, I don't want to have the liability of large audience problems.

27:47What's the large audience problem? Anytime your product goes past 100 ,000 people and you get into the millions, you can look at the statistics on how many people commit suicide or how many people are murdered. And then what happens is somebody who drives a Prius will commit suicide or be murdered. And you're like, well, that's the stupidest statement. What does the Prius have to do with the murder or the suicide? And it's like, it doesn't. And we know there's tens of millions of Priuses on the road. But when you have a new product or service like this OnlyFans or it operates in a certain area, then people will make not the correlation but the causation.

28:25And they'll say, this is the Craigslist killer. this is the airbnb serial killer this was the airbnb suicides the uber suicides the door dash killer they'll just brand it like that so yeah sometimes getting out and taking your money is a wise decision i do think somebody this is going to sound super crazy but if you were in the media business what would be a company that's in the media or network or technology business who could buy this and not have it overshadow what they're doing in other words disney is not buying it we know that my joke all right i know okay great that's kind of teed it up there but okay now we go past disney okay you have whoever owns um what's the one that has like uh the nickname is skinflix or something oh well cinemax cinemax right so cinemax that's actually warner brothers discovery of the cinemax brand still okay so cinemax has i don't know what they call that carry it's not a it's not porn it's softcore softcore thank you so you got softcore there then you know is there somebody who like the guy who owns the cdn company right who is like a big free speech guy what's the name of the content delivery network guy cloudflare cloudflare thank you so But there might be somebody who's like a First Amendment free speech.

29:51Hey, you know what? I've got Cloudflare. It makes a certain amount of money. I'm in the content delivery business. This is an application. Name me a company that could buy this. Founders, let's be real. Finding the right developers is time consuming. It's arduous. It's painful. You hear the tone of my voice. And you're trying to scale your startup. Well, my friends at Lemon.io can save you time. They're going to save you money. and they're going to get rid of the headache that you have right now, which is finding great developers. They've done all the legwork and they have pre-vetted developers and they're ready to help you ship product.

30:25Their experience, their results oriented. Lemon.io isn't just finding you great developers, but they're helping integrate them into your team. They're skimming the cream. They're only offering handpicked developers with at least three years of experience. This is the 1 % of the 1%. This is the creme de la creme. And if something goes wrong, lemon.io will find you a replacement developer ASAP. That's the timeframe I like. Twist listeners get 15 % off their first four weeks. I think that's a month, 15 % off the first month. Pretty good deal. Totally unnecessary. You guys have great prices anyway, but hey, we appreciate it.

30:59So stop burning money. Hire developers smarter. Visit lemon.io slash twist. Okay. I actually, I have an answer to that, Jason. It was clear before XAI bought X, but Twitter has long been the social network where you can post adult content and it has subscriptions built into it. It has a social graph. I think there's probably creator overlap, if I can take a guess here, and Twitter could use some more revenue. And, you know, I have - And Reddit, right? Reddit has adult content too. They're known for that, aren't they? I was thinking Reddit would be - Ah, wow. But also, here's what I would say. If Playboy Enterprises wanted to go raise some money, Like, let's revitalize this classic legacy brand.

31:43This would be the way to do it. I mean, Playboy must have moved to this model or done an experiment. But this is a very interesting moment in time. I do think Lon's idea is the best idea. Somebody who owns the IP around Playboy goes to a private equity firm who doesn't have like a morality kind of issue, which most of them do because they might have LPs from, you know, I don't know, a college endowment that doesn't let them do this. So it's going to be very interesting to see who buys this, if it can be bought. Samless did a tweet. Wow. Very impressive. Yeah. Had that one ready to go. Thank you, sir.

32:17Anyone want to put together an OnlyFans bids with me? I'm not kidding. DM me. Wild opportunity. One of the best businesses on the internet and cheap. And Reggie James says, hey, it's an immoral business. Praise on young women. I don't disagree with Reggie or Sam. These are both true statements. I know several OnlyFans creators, and they don't feel like they're being exploited or that this is an evil business at all. Oh, they feel they're exploiting their customers in some ways. They feel they're being empowered. They've got this job. For them, it's like driving Uber. It's DoorDash. I'm self-employed.

32:49I got a gig business. I'm making money. I don't have to go to conventional work. I mean, I'm sure there are people on OnlyFans who have a different take. I'm not speaking for everybody, but I don't know that I necessarily agree with that. I don't think I can be a free speech person and not end up on Sam's side of this. But I also probably would struggle to own OnlyFans just because with every platform, Jason, back to your kind of law of large numbers point, there's going to be awful things. And I would struggle to have that under my umbrella, even if you were trying to flush it out as fast as you could.

33:21I do have concerns around safety, obviously. Those are valid concerns. Everybody does. I do think actually maybe there is an argument here that I have heard, which is this is empowering to the individual and they no longer have to have an intermediary, a madame, a pimp, you know, who is the intermediary. And then it does make it above board and it takes people out of because this is considered a category of sex work. Sure. This would be virtual sex work, which eliminates. You're an erotic model. It's the same as if you were posing for Penthouse or whatever. Sure. But I think it takes out 99 % of the possible violence and risk of being an in-person person.

34:02So maybe I've got to involve my thinking on this. Anyway, fascinating to see that come up for sale. Yeah. Can I just show one thing? So I went through their financials. Whoa, whoa, whoa. PG. PG, sir. It's a family show. I don't need to see your subscriptions. Alex, I don't want to see your OnlyFans subscriptions. We have joint accounts in my family. There aren't any because that would not - pulls up OnlyFans. Check out my account. And he was logged in. Guys, I'm trying to show a screenshot from British accounting firms. Not anything more. I mean, this is titillating to me, to be clear. Wait till you see these numbers.

34:39This is from the OnlyFans financial reports and it shows dividends as they were declared from the company in December of 23, January, February, and March of 2024. And they range from$29 million a month to$47 million a month. They are just ripping cash out of this business. It is just dropping gold from the sky, Jason. I've never seen that before. Okay, these are monthly dividends being sent to shareholders. And I guess these are published in some way because maybe they had some investors. I guess we got a new startup that is in the, what do they call it? Commode business? The smart toilet space, yeah.

35:15How cruel of us to build a smart toilet. Of all the devices that don't need intelligence. Oh, well, I don't know. there are some people who very much like their gut health. I'm going to guess this has something to do with gut health. Yes, it does. Correct. The company is called throne throne science.com. If you want to take a look at it and their tagline, Jason underscore. And your point is life is better when you can trust your gut. Now the company recently raised a$4 million seed round Moxie ventures, Katie Stanton led it. A bunch of other angels were in there. Yeah. And what they have built is a smart camera that attaches to your toilet and takes pictures of what you get done and then helps you understand your hydration level and also your gut health based on what I learned today is a categorization of stools, which is a fancy science word for poop.

36:05And it basically looks at what you've done and lets you know about your personal health. Now, there's a lot of funny jokes to be made here, Jason, but in a serious way, people are thinking - Hey, but by the way, we don't dump on founders here alone. So I just want to put that out here okay uh back to what i was saying uh i actually know jason you totally derailed me there with that i guess the question is do you want to have in the cloud all of your poops but you were going to get to bowel movements maybe there are different categories of them there are loose there's firm there's floaters poster and the doctor's office yeah what your poops are supposed to look like yeah the reason why the big question mark yeah yes the reason why i think this is i'm being sabotaged uh the reason why i think this company has a lot of uh of potential behind you and why i wanted to bring it on the show is because the poor founder scott who emailed me a bunch of answers to my questions that i'm gonna get to in a second is gonna feel so annoyed um They send it to you in your BMs.

37:13Yes. I'm sorry. I mean, DMs. Sorry. No one's getting those either these days. People care a lot about their health. We talk a lot about life extension. But wait, wait. They're taking pictures, which is incredibly graphic. What did they get from the pictures? So I reached out to the company for the show today and asked about the privacy element of this because clearly no one wants a camera in your toilet and you're up to the cloud for everyone to see. So they have a lot of privacy controls, including a handshake between your phone if it's paired to the device. So there's a proximity requirement.

37:44So you can't have a mistake. And that way guests to your house who might not be comfortable with a camera will not be picked up. And then there's a lot of encryption to quote extract health insights using AI models that are then sent back to your phone. All is encrypted both in motion and at rest. I think they have their privacy ducks in a row here. Though of course this is back to your point about the DoorDash killer. one slip up and this company is is is dead but i pity the hacker who accidentally breaks their way into the throne back yeah the worst season of mr robot ever yeah not so much um the other thing that really kind of confused me here was the price point because they are selling these cameras for 400 bucks plus six bucks a month starting kind of early drop a juice on it i had higher expectations for the maturity of this panel uh that i was wrong yeah he said uh we're starting at 400 bucks because the worst mistake you can make as a fledgling hardware company is to underprice which is tempting but he went on to say that we don't know our cat so he'd rather have some margin for error easier to start high jason he said and then drop prices as you figure out economies of scale uh then the inverse people hate it when you raise prices they're shooting for a 3 ,000 device first run next year.

38:59I wish them well. Not for me. There is something to gut health. I guess we'll see with these, you know, the Peter Atiyah, Tim Ferriss, Quantified Self, Kevin Rose. They're all into this, like, you know, doing blood work regularly, et cetera. What I like is the fact that those folks are out there setting these crazy protocol, Huberman, et cetera. Let me know when you get to year five, six, or seven. And then if you're still doing it yeah i'm taking a look at it i'm going to examine it in this case these guys can work on it for a couple years i'll i'll uh i'll i'll take up the rear i got okay i i also feel like this is kind of a one time like if your tummy is bothering you you go to the doctor you get a test you figure out where your imbalance is or what's wrong with your gut and you adjust your diet and then you're kind of done you're ready to move on i don't know if you need the hardware at your home it's it's a really good point but one of the one of the use cases though lon is tracking your overall level of hydration and they make a point that elderly people are often dehydrated and don't know it and so this is a way you can keep track of keep track of things uh also the company recently hired the um former co-founder of whoop to help build the company which means that we can now i mean this is a little bit late to the joke train but call this the whoop for poop it's the whoop for poop okay on that note it's never too late for the joke train it's never too But all jokes aside, I do think people will buy this.

40:27I do think they'll sell out their first run. I don't know if there's more than 3 ,000 nerds out there who want to do this, but I know there's at least 3 ,000, so I wish them well. What's going on with secondary markets? I asked you to take a look at the Twist 500, top 500 private companies per our team here on research, and we're trying to get to 500 very quickly. We're in the 300s right now. If you have an idea for a company, just at mention us on Twitter. We have been talking about secondary markets coming back. I know this because people will email me and say, hey, would you like to add to your thumbtack, your com, etc.

40:59position? Would you like to sell some of those positions? So I am seeing increased activities from this very weird gray market. or it's kind of like boiler rooms of people who want to charge you five or 10 % to buy secondary in SpaceX, whatever is hot, Andrel, Stripe, or, you know, and then charge you 5 % for selling it. So it's a little bit of underground, a boiler room, a back channel. Yeah. Because there are people in it who are above board and, you know, are known. And then there are people who are not. So I get a little nervous sometimes when I get these weird emails, if I'm being phished or whatever.

41:38Oh, wow. So there's like a little Wolf of Wall Street, like they're kind of bending the rules a little. I have heard stories from founders that people will get, they don't have the shares. They'll say, hey, do you want to buy some Andrel? I don't have the shares. Would you pay this? Then they set up an SPV or something. They collect your money. Then they go find the shares. They've charged you over. And yeah, so I don't know if any of that's true, but that's the back channel is that there are people claiming they have access to shares. Maybe they're buying shares in another SPV and the markups and the circular nature of this is unregulated.

42:11Man, this would be a good movie. Somebody should write this. There we go. Okay, there it is. It's another boiler room. It's a kind of another boiler room in and of itself. Yeah. So a couple of data points to back up what Jason just said. First of all, from Industry Ventures, this is a chart of global venture capital secondary broken into two categories. If you're watching the video, So the darker bars are companies selling shares on their own. And then the lighter bars is venture capitalists selling parts of their holdings. Jason, as you can see - So direct secondaries are from the company to new investors.

42:43That's the bottom dark green and dark gold. On top of that are LP interests in those funds. LP interests as in you're the venture capitalists like myself and you want to sell them. So two groups of people who are shareholders in the company, the company itself, their employees, and then the LPs who have bought and interested in it. I got it. Okay. And this has been going up and to the right. Up and to the right. And so just to pick a data point, there were$16 billion worth of LP secondaries back in 2015. And industry ventures estimates that it's going to be 48 billion this year, up from 45 billion.

43:19So quite a lot of total volume, Jason. What also matters for people - It's tripled in 10 years. LPs selling their interest in a venture fund, just so you know, the firm that's doing this, Industry Ventures, buys the LP interest from funds like mine. So if there was an LP in my fund who was in the first fund when it hits 10, 11, 12 years, and they're like, you know what? Believe in J-Cal, but we need liquidity. Industry Ventures could step in and say, hey, we'll buy that interest from. Got it. And one thing that I saw from Jeffrey's report is that the discount that people are forced to take when they sell their shares has narrowed a little bit on the venture side of things.

43:56So the bottom chart is at 75 % right now. That is venture growth is at 75%, which would be a 75 % discount or a 25 % discount? 25 % discount. And there was a 32 % discount back in 2022 and 2023. So basically the way that I read this, Jason, is that VCs who are selling some of their holdings in a non-traditional Exeter IPO are now getting a better price for those shares than they did in the last couple of years, which I think would encourage more share sales on the secondary markets, which backs up the first chart that we looked at. Got it. And the average across all asset classes is 89 % and leading the pack at 94%, that lighter blue line, is the buyout market.

44:43So when people buy out a company, which would be like private equity, if I'm reading this correctly, when you buy out an asset, I think they're assuming that that private equity firm really ground down the buyout. Therefore, it's a more disciplined industry when it comes into valuations. And in venture, because it's super competitive and optimistic and it grows fast, people pay a premium because of the power law. That's my read on this is that the discount seems to have always existed for venture and it's bounced between 68 and 88 but for something like buyout it's the the range has been 87 to 97 so in a peak market like 91 people will pay up extra percentage points or give a give a smaller discount would be the way to say it but yeah things might be lightly coming back this tracks with what i'm seeing did we see any specific companies and the prices of those companies or ones that are coming back in the data?

45:42I worked with beer from the investment team to start collecting information on secondary market information on the twist 500 companies. Now, as Jason said, these are gray markets, they are illiquid, they are opaque. And also we don't have the rights to share every data point that we have found. But I have some stuff that I can talk about that I think is important. So we have found solid data on 20 so far and partial data on many more, but that's not too useful. Of the 20 that we have recent transactions for and a known discount to the last private round, Jason, the 20 plus 400 companies we have data for had a roughly average discount of 4%, which is essentially zero is the way that I think about that number.

46:22Yeah, they're flat. They're trading at whatever their last round was, which I think means if those rounds were, we would all agree, overpriced, peak ZERP rounds or frothy, that we filled in those rounds three, four years later. That's a good sign. The companies that survived have filled in those valuation premiums. Pretty good sign. Yeah. Only a couple of companies that we could find data for from the 2500 had a serious discount. One was 30%, one was 20%. The rest were all in kind of those single digit areas. Oh no, there's ones with significant discounts. They probably just do not, they trade even lighter.

46:58There are ones trading at 70, 80%, I know, because we've gotten offers for our shares in companies at a 70 % discount. That's brutal. But we did find one company on the list that was trading at a premium. And I'll just go ahead and say that at least according to one source, Mercury shares on the secondary markets will cost you a little bit more than they did in their last private round, which I think goes to show how well Mercury is doing. And as a Mercury user myself, great company. Love them. Just can't say enough positive things. I think that's a lot of show. Yeah, let's do Founder Friday. Oh.

47:28We have a couple. A very special, we're at the finals, Jason. Okay, let's do it. Let's do it. I love it. We're at our very last Founder Friday bracket competition. So previous to today, we were down to our five finalists. Osprey from Houston, Texas. Med Simple from Brazil. Taktun from Armenia. Mob Sub from Chicago, Illinois. And Arcana, do we have a final ruling on that? From Los Angeles. From that, we sent those five companies to our investment team here at launch. And they have come back to us with two, their picks, who are now our two finalists. Okay. Wow. They went through diligence, the due diligence round.

48:05I will take you quickly through their due diligence. So the finalists are from Los Angeles, my hometown, Arcana, from Yerevan, Armenia, Taktun. So we'll do Arcana first. They design a framework for placing contextually relevant ads into your AI outputs. I love this idea. Our investment team praised, and I'm quoting, impressive traction, founders with industry experience, and they said they have a strong why now. They're why Arcana wins. It's an untapped market opportunity because it's not a big enough opportunity yet for the huge ad giants to pursue. That leaves room for this company to sort of carve out an early niche.

48:47They also praise the fast-moving technical team. They're keeping up a quick pace, which will help them stay ahead of potential rivals. As for why this might fail, they're very early. The market looks promising in theory, but it's a little early to see how the space is going to develop. And their GTM, their go-to-market execution, a little unproven. They have 150 advertisers working with them now. The team is impressed at launch, but that's not confirmation that this strategy is going to work. So just so you know, post-mortems, when you look at why a company failed, most people don't do them. They should.

49:24What we do is a premortem, which is predicting if it does fail, why. The real reason this, if it does fail, would fail is they're unable to get critical mass in their network of advertisers and get partners who have scale because those partners are companies like Google or Facebook and Grok who already have an advertising base and just build it in-house. So that would be the number one one that my team didn't exactly get to. They were a little bit around it. But why this wins, fast-moving technical team, that really is. Technical co-founders is one of the things we look for, and product velocity.

49:57So that pulls those two together. Okay, let's keep going. Well, joining us right now so you can pepper him with questions live before we make our decision. From Arcana, please welcome Doug Smith. All right, we have Arcana with us live. Congratulations on making it all the way here to the finals. Let me ask you a very specific question. how do you get distribution for your ad network how are you going to get that distribution obviously google's not going to use you and neither is facebook so is it like you're going to work with claude or you know maybe grok but grok already has stuff so what's your concept here who will use your ad plugin who's going to drop in your javascript sure sure um the simple reality is right now there's a overpass in the AI space.

50:46There's a lot of competition. And in some ways, it's almost easier to get an AI startup up and running than it is to get it fundraising and profitable. We see that there's, for every day, there's a new AI startup, and we can play a role in that. In the same way that New York Times didn't own publishing back in 2001 on the internet, because anyone could set up a website and host a blog, and we can buy space on the video chip. But so there always will be space, especially if we expand our network outside of the media of 50 states. OK, so there's a long tail of people creating AI solutions and they might be looking for an end where it will pop in.

51:20Great. Any questions, Lon or Alex? So I guess my one question would be one of the things that our investment team singled out was that it's very early, that you guys are right. You're sort of almost creating this concept in this market from scratch. How would you respond to that? Do you think you're very early or do you feel like now is the time, it's the moment to strike? How do you feel about where you're coming into this project? I think we are at the precipice of this because the fact is a lot of investment has gone into AI for the past two years. And investors are now looking forward to essentially not pressure, but encourage their investment to basically get some returns, get some revenue in and stuff like that.

52:09And the cost of AI itself, even though we have been in this for like two and a half years now, it is not going down. OpenAI still charges$200. Gemini recently came out with$250 per month. Nobody's going to buy something of that thought unless they find another source of revenue apart from just subscription. So that is the main reason. Another thing is in our existence of just four months, four months, we started coding the first, we wrote the first line of code on 22nd January 2025. And till date, we have around 20 partners, 20 startup hobbyists who essentially have integrated Arcana in their product.

52:56And we have over 200 unique advertisers on our network right now. Can you greatly increase that number of advertisers by maybe going to another ad network and tapping into their inventory and pulling them in? Or an affiliate company and saying, hey, we want to just pull in affiliate deals as fill-in for now? Yes, we're quite confident that the affiliate market is established and is used to those kind of network effects. But our ambition in the longer term is to develop not just our own network, but also higher quality experience. That's my question, because one thing that I have seen and really enjoyed in modern AI tooling that has a text-based output is how it's very different from Google search in that it's not weighed down by what I consider to be an oppressive ad load.

53:45And so I'm kind of curious about your guys' philosophy on how to integrate ads into this sort of product without making it honestly just miserable like Google has become. so our main idea over here is and i like to say this to a lot of people when i explain it is ad blockers currently are just a painkiller it's not the cure for the disease that advertisement and i believe that advertisement and marketing is very important it allows end users to find new products and end users to essentially uh get a experience things that they would not generally experience because in the sense like product market new exploration and stuff like that so because of ai and llm and the way things work and the ability in which that we build our integration uh stack is we don't require a specific image or a specific uh text thing or what we require from our advertisers is basically a general concept and based on the general concept and what the end user essentially queries, it modifies the response of our developer's LLM and finds a relevant place where it can insert itself and basically create an illusion that it essentially flows as if it's the same response of chat GPT or cloud or something of that.

55:12I see. Let's keep the train moving. We need to at least some time for our second. So, Arkana, we'll have you pause now and let's hear from Lon, our other company. Yeah, thanks, guys. So our other company comes from Yerevan Armenia. They are Taktoon. So Taktoon, they've created a hardware and no-code software program for device and machine builders. The investment team called it a, and I'm quoting again, blue ocean way to advertise with two technical co-founders and a strong market opportunity. One comment, this feels like vibe coding for hardware, comes from the team. So they're why this wins.

55:54Strong initial traction. They've already got 240 ,000 ARR and a$5 million pipeline, proving market demand. And they're a team with industry experience, two technical co-founders with experience delivering for Boeing and Uber. Understanding of the machinery market, that's what the investment team loved. Why this maybe fails. Difficulty scaling. It's a business model centering on custom design controllers tailored to clients. Very resource intensive way to go about their business. Also, the industrial and manufacturing sector, the investment team feels they're hesitant to adopt newer technology.

56:31They rely on established programming methods. It might be a slow transition to the next generation that Taktung is trying to push them in. So now joining us for their thoughts and our questions from Taktun, Rafael Gazabayan. Rafael, how are you, sir? Very good. How are you? We're well. So tell us a little bit about which machines are you going after here? Because it does seem like these are dumb machines or they're not super sophisticated machines in terms of the platforms that exist already. Am I correct? in my assumption about some of these machines? And then for the audience, what do these machines do in the real world?

57:17Are these the arms we see in factory putting on windshields in cars that you're going after? Are these 3D printing ones or laser cutters? What exactly, what category of machines are we going after here? We are currently going to more traditional machines, which I think like over time, those are all going to become robotic autonomous systems and they will cover from agriculture to construction machinery, mostly field machines, which are not in the factories, but rather in hospitals, in the agriculture fields, in oil fields, in wind farms, and so on. So that's kind of quite broad, basically, all the industrial machinery.

57:55Who's the top customer right now? You have some customers using it. So who is the top customer and how are they using it? It's Frank Bacon Machinery. That's manufactured in Detroit, 55 years old company. They built materials testing machines. Material testing machines. True. Got it. So they test materials with those machines. For what purpose? They're testing to make sure the steel is strong, the leather is strapping. What are we testing here? So they manufacture materials testing machinery that they sell to automotive industry like General Motors, Tesla. Those are the end customers. and they start to test exactly what you mentioned.

58:38So the metals, plastic, rubber, depending on the application, they can test different types of materials. Like the tensile strength or whatever, yeah. Is that right? Tensile, fatigueness of material. Yeah, like we're sitting out on the chair, it has got the foam, so the foam needs to be tested for the fatigueness so that it's not like becoming like very thin when you sit on it quite some time. So like every material around us is being tested. Okay, Alex, any questions before we make our big decision here. Yeah, Rafael. So I'm familiar a little bit with the PCB market. I've done some construction work and done a little bit of work in the agricultural sector.

59:14So I've been in and around this somewhat. But to me, these kind of sound like low margin products. I'm kind of curious about how profitable this business could become because my first thought was super cool, but low margin. So am I just misunderstanding the efficiency of your business? Yeah, we have got actually something really innovative and different the way it is done compared to other components like Rockwell, Siemens. There are so many PLC manufacturers, and they have mostly modular with enclosure. Our board, it's like a single board like this, and it is built custom per customer requirements.

59:50And because it is single board, it reduced the price and it increased the gross margin. It reduced the cost of manufacturing. In our case, it's actually very high margin. I would say margin comparable to SaaS business. So 70s, low 80s in there? More than 80%. All right. Okay. Well, ladies and gentlemen, I've made my selection between the two companies. And that's something with a big quantity of manufacturing. I mean, it's not a calculation. It's rather we have already manufactured in quantity, and that's a validated number. All right. We have a tough... Yeah. Okay. Well done, Rafael. This is a tough one.

1:00:30We've got a legacy business having AI apply to it with Rafael's company. And then we have, hey, maybe this is a completely new opportunity in the world, inserting ads into AI products and maybe even creating an AI ad network that could work all around the world. Gosh, advertising is such a big market. TAM is so huge and the team is moving so fast. Both teams are very strong teams, let me say that. Both have product velocity, but I'm going with Arcana because I do think that there is so much innovation there and that the existing players don't have an incentive to help other large language models, other generative AI startups.

1:01:17They don't have the incentive to focus on their problem. Nobody's going to try to help them with monetization because, hey, they're competing. Alex, concisely. Which one is your pick? Be concise. Which one is your pick and why? It's a tough decision. Tuning. And why? Hardware, gross margins, attacking a business that I really understand, and will not pollute my life with more advertisements. Okay. All right. So very personal decision there, which means, Lon, you will get to be the deciding. No pressure here. Well, so much pressure. This is a jump ball situation. I will say this could go either way.

1:01:58These are both strong companies. They both are going to do well in the world. And they made it from, I don't know, 16 companies or 17 companies down to these two. Yeah. What do you got here, Lon? I have to say, out of both of these, I think they're both great companies. I think they're both brilliant ideas. These were two, when I first read them, I was like, wow, it's such a clever concept. I didn't even think of that. But I do have to say, to me, it feels like the future is going to be AI. It's going to be using AI constantly It's going to be reading AI outputs And they're all going to need to make money at some point They're all going to need to have ads I feel like Taktun is doing a really cool thing I loved seeing their board And how they're doing all these custom projects But man, I think advertising in your AI Is going to be billions and billions of dollars And a massive opportunity And these guys are on the cutting edge So I've got to go with my hometown of Los Angeles And Arcana All right, let's bring the Arcana boys back here for a moment.

1:02:57Gentlemen, congratulations. I don't know if we're investors yet or if we got you through Foundry University or the Launch Accelerator, but I wanted to take a moment to congratulate you. All right, Arcana, congratulations. Did we invest in the company yet? I don't know if you went to Foundry University or Accelerator or you just applied. How did we find you and how did we get you on the show? Are you part of the Foundry Fridays groups? Yeah. Yeah, I knew someone through Founders Friday, and they encouraged us to apply, and so here we are. All right, fantastic. Have you raised money for the startup yet, or are you just in the laboratory right now?

1:03:32We are trying to raise the funds. We are in the process of raising the funds right now. We have some prospective investors and a few angels in our list who have hard commitments and stuff like that. Great. Great. If you want to short circuit that whole process, you can come to our accelerator. We'll put the first 125K in and we'll spend 12 weeks with you refining the pitch. But if you want to pursue the direct investment, you can do that too. But I'll put that open to you. Congratulations to you both. And I wish you great success in your entrepreneurial journey. And anybody watching who wants to check it out, arcana.ad, arcana.ad.

1:04:10You can go check it out right now for yourself. And Founder Fridays is a program we do, founderfridays.tech. Founderfridays.tech, it's just founders helping founders in these little pods. We do these pods for companies that we have, that we've already invested in or that are in Founding University, but we decided to let the world try this pod concept. So if you're in a city and you have six people who are founders, sit around a table, have coffee every Friday, every other Friday, the first Friday of every month is what we do. and let's see if you can help each other hit great heights like Arcana has.

1:04:43All right, and we'll see you all on Wednesday. Enjoy the long weekend. Bye-bye.