Rippling Targets $16B, Market Chaos, TikTok Timeout, and Office Hours | E2107

0:00what this means is all the independents, all the moderates, let's call them Clinton Democrats, That's, you know, business people who quickly bent the knee to kind of smooth things over with Trump. You know, those people were kind of doing that in a very pragmatic way. Mark Zuckerberg being probably the ultimate example of it, right? He bought a house in D.C. now. He banned Trump from reaching billions of people. And then now he's all in on Trump. I think those folks, if this becomes cataclysmic and it's affecting their business, they could be pragmatic and say, you know what, maybe we should have more balance in the other arms of government.

0:39And maybe tariffs shouldn't be done by emergency edict, which I think is how they're being executed now. And they should be done through the Congress. And of course, there are people doing that. So all this chaos for startups means fundraising is going to get harder, selling into customers, especially like Fortune 500s is going to be harder. There will be only one thing that's easier. Can you guess? I was going to say hiring because there's going to be more people. Ah, yes, nailed it. It's going to be easier to hire people. So look for the purple hiring rings on LinkedIn is my best advice. This Week in Startups is brought to you by LinkedIn Ads.

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1:46All right, everybody. Welcome back to American Independence Week here on This Week in Startups and globally it's uh friday april 4th and uh the stock market at the time of this recording is now down 20 since trump's inauguration i believe the nasdaq's down 20 some of the other indices are down probably low double digits so i don't know 12 15 20 i'm not sure if that's even from the peak of the trump bump but just from january 20th i was looking at it and uh This is a very unique moment in time. I think you would agree, Alex, because you and I study markets and you don't have to make any of this political.

2:30But I can't find people outside of the administration who thinks that this tariff thing was either well executed or is a good idea. And I've asked on Twitter, I said, please, is there somebody out there? Yeah. I mean, I understand the justifications people are doing inside the administration. I saw the different interviews my friends at All In did when they were there. You know, that's kind of the bubble, right? Let's be honest. Let's call it what it is. If you're a major donor, if you're part of the administration, if you're in there, you know, they're lockstep, as they should be. The Biden administration was lockstep.

3:08Obama, you don't want to send from inside the house second guessing stuff. That's just not how business works or government specifically. Politics does not work that way. These political parties really like to be lockstep. But my Lord, I've never seen a situation where something so important, dramatic, consequential has been done with so many different versions of what's happening and interpretations of it. I don't know. What's your read on this and any data points you want to bring to bear here? Let's start with a couple of data points and then I'll dive into some other stuff. Cloud stocks that we try to be at the Bessemer Cloud Index trades under WCLD are off 30 % from recent highs, Jason.

3:48So that's, you know, 10 % of correction, 20 % of bear market, 30%. I don't think we have an actual word for other than catastrophe. And for folks out there who are curious, why do we care about kind of a sub index of the technology world? Well, a lot of startups are effectively cloud companies. And so this is an index they trade against. It's kind of a comp for them. So if it goes down, harder to exit. Each Magnificent Seven company fell under the$3 trillion mark that was above it. So that's kind of just kind of makes you feel bad, Jason. Now, on the point of who is defending this? I read your tweet and I read through a good number of the responses.

4:21I did see one person who we like, and it's Anthony Pompliano. Okay. Well, I mean, he's no finance expert, but he is a crypto expert. And I think he, let me, yeah, just give us the bullet points of his justification for it or why he thinks it's brilliant. He's been saying that it's already working. I didn't actually, I have not read enough of his stuff lately to dig deep into his viewpoint, but he has been consistently beating the drum in favor of terrorists as an American policy point for weeks, if not months now. He actually said in his response to Jason, that I'm not very notable, but I really do think that this is, I'm tempted to have him on the show.

4:57He offered to come on. I'm tempted to just to bring him on next week. Just to speak for himself. You'll be able to have him come on and see what he thinks of it, especially given that it's caused so much chaos amongst the most elite finance people on the planet of which I'm in a number of group chats with and friendly with the consensus is, if there is a strategy here, it's been incredibly poorly communicated and executed. And that if the strategy is this 4D chess that I think the administration has outlined, and you can just take them at their word, Trump has been planning to do this since the 80s or 90s.

5:31He's been very consistent about tariffs, that this is a grand negotiation. So chaos is the desired outcome. that is where a number of people have landed he's trying to create market turmoil he's trying to get the fed to cut rates next and then he wants to get this 10 year down below a four handle four percent so they can refinance nine trillion dollars and then he will relent after they do that and then the stock market will come roaring back in time for the midterms but ben shapiro was on all in this week and he was like they're gonna lose the midterms this is incredibly unpopular if you do something this uh seismic to the stock market all that people are going to remember is the result of it right and nobody and listen the reason biden lost i think most people or i should say kamala lost but the the the overriding yeah the overriding criticism was inflation inflation inflation well get ready folks i got inflation one point i was you know challenging i mean i don't know what happens to an iphone or a pair of sneakers if you have to make them here well the market has an opinion about that jason did you see what happened to nike's stock in the last couple of days tell me i mean i did see the restoration hardware and i shared a clip basically restoration hardware was on an earnings call and when they told him how down his stock was i think this must have occurred wednesday night if it was after the market all right stock was down 25 take a listen in this race and i don't know like i don't have fourth or stock now i mean i guess i guess yeah that was back go down you know based on some of the numbers he reported and then it got killed because of uh uh oh really no okay so first of all what's rule one when you go on television jason i mean you're not supposed to say you know there's a selection of words there's a very small selection of words so i i bring that up not to be funny but because that goes to show how gary friedman clearly someone who does call-ins to television quite often well actually i don't think that was a call and i think that was his earnings call oh that was actually on the earnings that was the earnings call oh that's worse this is the you know called cantania shout out to my friend over at cnbc this is them replaying his literal earnings call and you know the background here is where does restoration hardware make furniture we really don't make furniture in united states i hate to break it to folks but there are places vietnam india indonesia pakistan lots of places where furniture is made at scale at incredibly high rates with low labor costs and low inputs and lumber and you know fabrics that are cheap made in mills there for jobs let's face it with four percent unemployment here in the united states we probably don't have the scale and the number of people to work in that factory and make your sofa your couch your side tables you know it's going to the lowest cost place in the world as you know free markets tend to do so comparative advantage jason it turns out it's a great thing in international trade to allow us to be richer now i do want to make one more point about the who's in favor of this i was going back through youtube clips of milton friedman and he had a funny point he says you know if you get two economists together they'll always give you three opinions so don't ask them any questions but he said the only thing that economists can generally speaking agree on like the the point of consensus is that free trade is good and trade barriers are bad and tariffs being a form of import tax are a trade barrier so i just it's interesting to me to see the economic thought that i grew up reading as part of the intellectual chicago school of economics is now persona non grata on the american right it's you know long-standing intellectual home and that that is a shift that i'm still digesting to your point about no one knows what's going on but that that threw me for a loop things have changed so dramatically so quickly so i you know i don't even care about political parties i'll be totally honest and the fact that they keep flipping roles where you know the the democrats were against globalization they wanted to keep the jobs and the factories here the globalist republicans wanted to send them over there and now they flipped where the the republicans have picked up that mantle and want to bring back these jobs etc the truth is americans like cheap goods it has made the average american's life so much richer so not have to buy a usbc cable for 40 but to be able to buy one for four dollars and then you get to have like an extra cable in your car and an extra cable in your you know side table.

10:10It's a stupid example, but it is an illustrative example of abundance. Hey, founders, I want to share with you an experience I love. It's when I get an ad that is relevant and not some nonsense. Like the other day, I got an ad for a fund management platform, and it was like a new one I'd never heard of. I clicked on the ad because, well, I manage four venture capital firms. We scheduled a call with them, and it was amazing. How did this happened? Well, I was on LinkedIn because I like to share links from the podcast, The Speaking Startups, right on LinkedIn. In fact, we live stream to LinkedIn three days a week, and we get a great audience over there.

10:48And I happened to be presented with this fund management platform, and it was a direct hit. I mean, talk about hitting the bullseye. If you're in business and you're making a product or service, it's really hard to find customers in the business to business space. And doing B2B advertising is hard, but LinkedIn makes it so easy because you know, their tools let you target people by job title, industry, company size, and more. So this fund management platform obviously was looking for people in venture capital who had a fund size and a number of people, maybe 10 people, maybe 50 people. And they found me.

11:19They got me. They split the arrow. Boom, right on target. And there's two things you really need to know about LinkedIn going into 2025. First, they broke a billion members and 130 million of those billion are decision makers and 10 million of the billion are C-level executives like myself. Where can you get to those people? It's really hard. And the second thing you need to know, LinkedIn makes an impact. B2B markers report two to five times higher return on ad spend, or ROAS, return on ad spend. You should know that acronym. Compared to other social platforms, 79 % of B2B markers say LinkedIn is the best platform for paid media.

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12:22in this sort of abundance capacity are we going to take away that abundance and tell people you know what if you like having four pairs of sneakers you're going to go to one and you're going to buy it in america and it's going to cost three times as much so you know nike stock getting killed lululemon getting killed all of these people build this stuff overseas and you know to bring this back to startups we have many startups who build hardware in china in shenzhen specifically. We have ones who do it in Vietnam, who do it in India. There's many places you can send your work. This has basically created chaos in the supply chain.

12:57And when there's not a predictable market, everything freezes. And so my word of encouragement for startups is just keep building, just keep focused on your customers and try to block this out as best you can. Unless on a tactical basis, you're literally making, I don't know, some hardware device, and you have to then work your supply chain. You got to figure out where to get pieces from. You got to figure out if that piece is going to cost three times as much and if you're going to pass that on to the customer. For those folks, you're going to be in grinded out chaotic territory. What you might want to do is lower your expense basis so that you can weather the storm.

13:33This could be literally a three-day storm. Like on Monday, if the stock market goes down another 10%, I think they're going to claim victory and find an off-ramp, which they probably have already have planned. Going to be great. Vietnam and India and these countries have given us everything we want. And now we're, you know, lower the tariffs on these people. And now we're going to focus on the next group. And these tariffs, as you can see, we're going to work through them. We're going to do 10 a day for 10 days. We'll be through the holding in two weeks. Like literally Trump could say that right now.

14:00Stock market comes back 20%. We literally would catch up. They have that offer anytime. I predict they will take that offer at, let's say, the NASDAQ being down 35%. Something in crash territory, right? 10 % drop correction, 20 % bear market. I think you start getting into like crashes at some point. That's probably what's going to happen. So if I had to take a guess, I was thinking through the startup implications of this, because this is not a macroeconomic show, even though today I do wish that it was that we could just talk about this. You can geek out a little bit macro. It's okay. I'll allow it.

14:33It's kind of like a big topic. So yeah, sure. Absolutely. But I was reading a lot of commentary from folks, you know, Gavin Baker, Jan Ball from Altimeter, and I kind of packaged up what I think the consensus This is for startups. So startups today are staring down probably longer sales cycles because CIOs and so forth are going to be a little bit more conservative. Probably some pricing pressure. People want to make sure they're conserving cash. A return of the venture liquidity crisis. That means their investors are going to have probably less available capital because I don't think people are going to be racing to go public right now, Jason, or racing to sell.

15:05In fact, I just saw come across our chat and the newswire that Klarna has paused its planned IPO. So there you have it. That then creates the liquidity crisis for venture NLPs. They feel poorer. So that's a really important thing to point out. Your point about who made the point about CIOs and not wanting to, I want to make sure we give credit to that, that they're going to be on pause. Yeah, jamming ball from his blog, Clouded Judgment. He wrote, quote, every CIO is now going to be more cautious. Budgets won't be as loose. Everyone will, quote, batten down the hatches to some extent. That means tighter budgets and a real, quote, growth scare in the market.

15:41Got it. So this is a legit thing for startups to understand and for people who just, you know, understanding markets. Business people are fine with competition. They're fine with pricing pressure. They're fine with talent wars. They're great with technological innovation and disruption. That is like the great parts of the game. the worst part of the game is when somebody says i'm changing the rules of the game because you can't play the game if you don't know where the three-point line is like how do you take a three-point shot if you don't know is is there a three-point shot maybe there's not a three-point shot anymore maybe it's a four-point shot you got to shoot it from half court people need to know the rules they adapt to the rules what we have right now is chaos and the chaos causes everybody to slow down what happens when there's a bunch of fog on the road if unless you're driving a car with lidar as we talked about two weeks ago you slow down right slow down sometimes you pull over i don't know if you've ever had that happen in fog but maybe once or twice in my life the fog was so dense i said not safe pulling over gonna wait gonna wait it out yeah if you happened in a snowstorm so this is kind of approaching that point jam and ball smart guy works for uh my bestie uh brad gerstner at altimeter i think that's what you know he's probably pointing to and he's correct now the cio is saying you know what um we're not going to implement and take on that project because we don't know if we have customers or if our revenue is going down or our supply chain so now everybody starts slowing down cascading you know what the next piece to that puzzle is cuts so i haven't heard anybody talk about this yet but i'm a business owner i'm an investor in businesses as i just said if you have a supply chain issue maybe you need to lay off 20 percent of your staff furlough which is like kind of like a pause sure uh and that's pulling off to the side of the road so you could see a restoration hardware lululemon and nike in the next two weeks if this doesn't get resolved announce a round of layoffs so literally nike might cut 20 of their employees so this is second order and then third order effects or consequences clarna is a second order consequence but clarina not going public the third order consequence is the lps don't get a distribution the lps decide i'm not going to invest in your next fund or i'm taking my 25 million commitment down to five or ten just to keep the relationship alive right which is what happens so here we are how many times in in your life isn't have you seen kind of back-to-back 5 declines in the nasdaq i can think of a couple times like 9 11 covid 9 11 dot com bust great financial crisis those would be the four that stick out yeah in 80 1987 when we had black friday right i kind of remember that a little bit because my dad had a bar and wall street guys hung out there and they all lost their jobs shortly thereafter couldn't pay their tabs all that kind of stuff you know hot shots in armani suits all of a sudden couldn't pay their tabs to my dad and the third order effect is his business wound up his bar wound up shutting down because the whole economy crashed people couldn't afford to buy you know go out on a thursday friday and saturday night and spend 50 bucks or 100 bucks on dinner drinks or whatever so um you know we're in a this could become cataclysmic this could you know result in uh one of these massive massive sell-offs and layoffs and then i guess you have to ask yourself for what reason and brad gerstner had an interesting um tweet vix spiking highest fear level since covid now things start to break the danger with shock therapy approaches in complex systems it's impossible to model the negative reflexivity time to make some deals and move on before we cause a recession and lose support for tax reform so you know and he's like fully 100 on board with trump and doge i'm not 100 on trump i am 100 on doge i am 100 on like reciprocal thoughtful tariffs i don't know anybody who's not and so this is i think what you're starting to see and then uh of course gavin who is balls and strikes has always been he did a really long post and you know he started to he's getting a little more focal here he basically saying listen geopolitically nothing matters more than winning ai i think we all agree on that ai is going to define you know who wins china the u.s somebody else these tariffs as constructed essentially guarantee that america will lose ai by making america the most expensive place on earth to build ai data centers semiconductor instructor exemption was irrelevant for ai data center semiconductors come into america and finish goods from taiwan and other asian countries servers storage systems and networking switches by the time we have developed the capacity to domestically produce these systems we have lost the ai race i'll just leave it there this is actually now we're in a second and third order effect if you can't bring these in here you can't build data centers third order impact no data center is no bueno for ai and then if other folks are forced now because they don't have the u.s market they find other customers so now you have the chinese silicon companies doing partnerships with vietnam india pakistan russia pick your country and maybe the eu wants an off-ramp or and they want an excuse to do a deep partnership canada wants to do a deep partnership with russia and china so this is the uh dare i say foolishness of how this was executed you could literally give a group of people who maybe had some pride in you know uh not wanting to partner with despots and dictators yeah and you know like look at germany they they had no problem partnering with uh putin for cheap oil india has no problem partnering with him with uh putin for cheap oil and they kind of like us look at China as a rival, but maybe they're like, well, if we don't have America as a partner, I guess we'll take the next best thing, which is China.

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22:44Thousands of founders trust Northwest because they keep businesses in good standing. And with their expert corporate guides, so you get real support. You don't get bots. You get real people on the phone. So here's your call to action. Very simple. Easy peasy. Lemon squeezy. Don't let bad paperwork cost you your next funding. Go to NorthwestRegisteredAgent.com slash twist and get your business investor ready today. For just$39 plus day fees, you can set up your company the right way. Fast, private, and compliant. Go to NorthwestRegisteredAgent.com slash twist today. I have notes about Europe at the very bottom of the show.

23:20I didn't think we'd get there, but we have talked about Project Europe. We had Harry Stebbins on the show. We've discussed how there does seem to be a movement inside of the continent to reduce regulation, bolster technology investment, and I think Cherry Ventures wants to build the first trillion dollar European company. Shout out to them for all that. A couple of interesting things to add on to what you said, Jason. One, Macron is calling for a pause in European investment in the United States. Now, that's mostly a symbolic statement from a national leader, but I do think it goes to show the sentiment in Europe about working with the U.S.

23:50economically. This could harm the ability of some American companies to sell into Europe. And there's also some brewing tension between European regulators and the Trump administration. Zuckerberg is lobbying for some reprieve there, you might say. But I think that it's going to be tough to get concessions out of a block, if you will, that we are kicking in the shins repeatedly. and this is going to harm immigration it's going to harm our ability to sell there's going to be technological restrictions it just feels jason like an unnecessary sharp move that could have been done smaller more tailored more carefully and would have had a potentially positive impact versus trillions of dollars of wealth being deleted in two days i think uh what this means is all the independents all the moderates let's call them clinton democrats you know business people who you know either retroactively quickly bent the knee to kind of smooth things over with trump with their donations to the inauguration to crypto to whatever you know however they bent the knee and you know kind of made amends with him you know those people were kind of doing that in a very pragmatic way those were pragmatists i would say bezos from amazon is a pragmatist in that regard tim cook is a pragmatist i don't think that they're enthusiastic about working with trump they obviously weren't in the first term mark zuckerberg being probably the ultimate example of it right he bought a house in dc now he he banned trump from reaching billions of people and then now he's all in on trump and he went down there and sort of made amends with the ufc guy i think those folks if this becomes cataclysmic and it's affecting their business they could be pragmatic and say you know what maybe we should have more balance in the other you know um arms of government and maybe tariffs shouldn't be done by emergency edict which i think is how they're being executed now and they should be done through the congress and of course there are people doing that so all this chaos for startups means fundraising is going to get harder selling into customers especially like fortune 500s is going to be harder there will be only one thing that's easier can you guess the one thing that'll be easier i was gonna say hiring because there's going to be more people ah yes nailed it you know this it's going to be easier to hire people i mean if you get laid off from nike and you were making you know some six figure salary and you were you know in marketing or you were in uh you know e-commerce and you worked in their e-commerce store and their app they might shed hundreds of people uh hundreds of people who worked on the lululemon website uh technology marketing and they might be like you I don't have a job.

26:32I got some severance. Sure. I'll take a flyer on a, you know, so look for the purple hiring rings on LinkedIn. It's my best advice. And then you can tell them, listen, I know you made a fortune over there. You made 100 ,000. How about you make 60 ,000 here, and I give you 100 ,000 in equity. So you're, you know, if it works out, you get this huge bonus, and you know, whatever. So this is going to be disastrous. If it continues. I know our show is not Alex asks Jason questions, but we went through it. It kind of is, yeah. Well, I mean, I think people do want to hear from you. So I just try to elicit things that I think people might want.

27:072021, 2022, grow at all costs, raise hella money, go fast, go fast, go fast. 2022, 23, slow down, get close to profitability. Then AI acceleration, spend, grow, et cetera. If you're a startup today who has been tracking, you know, sentiment about how to handle your burn rate, would you expect people or would you recommend that they try to pull back on burn or maybe new investment that could increase burn at least until we have some picture of what the new normal is or is that too conservative and people should just be going for it if you have under 18 months of runway you should always have a plan to get back to 18 months of runway so let's say you're at 10 months of runway you should have the ability and you're like oh my god i got so much interest we're easily raise around you should always have in your back pocket okay i'm burning a hundred thousand i have a million in the bank i can cut to fifty thousand a month by doing these three things and get to 20 months in the bank this is in case of fire break glass plan b got it you should always have that and i have that i always have it i always keep you know i don't know a year or two of runway in the bank and i could always backstop our operations with my own personal money which i have some of so you know but if you're a founder who doesn't have the ability to say you know let me just grab a million dollars over here and and float the company for you know 10 more months of burn or whatever it is you know in this example i'm using the classic 100k a month and burn yeah i would say by next friday i would say a week from today you should make that decision if it's this chaotic you should go to your board in you know one week from today and say i want to extend our runway from i'm going and here's how you execute it you say if we cannot get a deal closed to do a bridge to get to 20 months of runway i'm going to make these cuts so you talk to your board you say would you like to do an internal round i want to put another million dollars in the bank at the same terms as the last round or we tripled our revenue so i'll meet you halfway, 2x the valuation, not 3x.

29:12I just need to put another million in the bank. Are you interested in that opportunity? Let me know by next Friday. If you don't get back to me and you don't sign a term sheet, because the term sheet and the convertible note are in your signature package for review with your team. If you don't sign it by next Friday, then I'm going to start making cuts. And that's just my duty as the person. 2025 is going to be the year that voice AI really breaks out. Voice AI is going to change everything. And this technology is perfect for building a chatbot or automating customer calls and basically creating these next-gen voice experiences.

29:50But building with these tools is so difficult. It's just a bear. It's going to take your developers months to build and test anything even basic, unless you use VAPI. V-A-P-I. This is the fastest and easiest way to integrate voice into your products. It's just the most simple API you ever used. It helps you build, test, and deploy voice agents in just minutes. And you can create ultra-realistic AI voices and customizable personalities. I like that part. All with real-time response speeds. You know what would be great? Maybe I just demo it. Okay? Listen to this. Hey, Jason. It's great to be on your podcast.

30:28It seems like Vappy has figured out how to be very low latency. Maybe you could talk a little bit about why that's important. For sure. Low latency is crucial for a smooth user experience, right? It makes conversations feel more natural and engaging. People expect real-time interactions, especially with the voice assistants. At BAPI, we've optimized everything to keep that response time around one second. It's like having a chat with a friend, not waiting for a robot to catch up. Can you do other voices and personalities? Right now, I'm rocking my CEO's voice, but with BAPI, developers can bring their own voice models.

31:00So if they want to add some walk and flair or any other personality, they totally can. I mean, who wouldn't want a little drama in their AI conversations? Just think of me as your friendly AI buddy, keeping it real. If you want to give it a spin yourself, and trust me, you should, just head over vappy.ai slash twist and twist listeners will get 1000 free minutes per month for life. That's F-R-E-E. Free. What an amazing price. Again, that's V-A-P-I dot A-I slash twist. What I find is the founders are wishy-washy. They don't make definitive crisp plans. Ah. And then you have to go to your team. And then you have to say to your team, here's what's happening.

31:37we have 10 months of runway globally this looks really shaky so here's what i'm doing there are 30 people in this company we're laying off six people they're getting this you know modest amount of severance because you're a startup you don't give you don't have that much cash yeah so they're getting two weeks severance like one week for every year of duty you know whatever you know it's a hard reality but it's better than everybody getting no severance which i've seen happen as well really not good no so um you say everybody here's what's going to happen these four people for performance and because we're extending our runway but these are the four weakest people out of the 30 then uh i need six more people if you want to leave you can take this two-week severance if not i'm going to just have to make those cuts let me know we're going to be 20 people we're going to be one-third less salaries and we're going to cut spending on marketing by 50 so it'll be 20 people doing this when i explain that to you if you were at tech crunch and the person came into let's say it's an independent company or you're at crunch base which was an independent company yeah how do i sound to you as a leader very very very having had touched grass like this is not a time we're gonna coat things in candy things are bad we're going to move quickly there's not going to be a lot of discussion there's gonna be some offers on the table i'm trying to be upfront and fair uh i would just pair it with and i'm reducing my personal salary by 50 percent for the next six months because i'm not here to profit while you suffer but i also think i like that actually yeah shared so shared suffering yeah great startups are inherently cash constrained like that is the game they run at a burn and so there's just not the same like google lays off a thousand people and gives them seven months severance and a pat on the head like you're not going to get that but you knew that going into the startup game so i think treat them like adults be up front be clear about why you're doing this and then make sure you give glowing recommendations to everyone you lay off yeah i mean there's all these standard practices so my gut tells me there's a 50 that chance that happens and a 50 chance trump sees another two days of this and he says unbelievable vietnam gave us everything we wanted great people in vietnam you may have heard of vietnam very simple it's the place he didn't like before but now he likes a lot incredible great leadership uh they make great great factories in vietnam yes anyway there we go i'm uh i'm just thinking a lot about the founders who are watching this i i guess stay tuned because we're going to be talking about every single thing that happens monday will be the telling day i think this weekend is going to be one of the most eventful weekends uh in our country's history yeah uh jason before we jump in and do our first office hours with a startup i just want to bring up a little note to everybody amidst the chaos there is some positive news to bring up so rippling company we talked about a lot in the case of the deal spy mess uh bloomberg reports that they are in the process of working on around a couple hundred million probably at a valuation of 16 billion which is notably up from their 13.5 billion dollar valuation they got to last year and the information reports that they grew to about 570 million arr and they ended 23 with 350 million ARR.

34:49So 63 % growth, according to my math, over a 15 month period, lower than I expected from a company adding billions in valuation, but clearly a company at scale. And you can still raise money in this market. You just have to be a outstanding market leading company that just kneecapped a rival very publicly. Market leading is the key word in your recap there. If you're the market leader, if people perceive you as the number one, you pay a premium for the number one 28 times arr is roughly two and a half times market rate right i think it's 10 times uh arr might be like what public sas people get on the besmer index you were referring to previously uh so you get a premium for being high growth there if it's 63 percent growth on your back of the envelope math and again that's back of the envelope over five quarters um maybe it's 40 year over year if they're growing 40 year over year that's a high growth company in the public markets obviously absolutely um but for startups it's not you know triple or double so you know the reality is 20 times if it was public today it'd probably trade at 15 to 20 times there i would have said 17 so right right in the middle of where you're you're guessing so let's just give them the benefit of the doubt 18 and so they're trading at you know 50 % more, a 50 % premium to what the public market valuation would be.

36:09And the way that's justified by investors is, again, market leader, Parker Conrad is a beast. Like, just it is what it is. Like, he's fierce, bold, great entrepreneur, you can say what you want about the SEC stuff. But we talked about bending rules breaking, sometimes you go off the rails. I think he's probably learned a lot from that. And you know, it happens. So everybody moves on. And, you know, the deal thing is a cell phone by what I think is one of their top rivals. So yeah. No, I mean, it's a great time to go back to your investors and say, hey, not only have we been growing while our competitor was cheating, we exposed it and we've ruined their brand.

36:46Give us more money. Because that pitch would work on me in a heartbeat. The crazy thing is, you know, like now we, in all this chaos, and listen, it's hard to even do a podcast about technology and startups without having the constant overhang of what this administration is doing. pretty fast yeah isn't the tic tac ban today or tomorrow tomorrow that would be the number one story in the world we would have done three segments on it brought on an expert and what's happening a lot of yeah i literally had to go back and look up the date on that it's april 5th so tomorrow saturday is theoretically the deadline uh keep in mind that tic tac was banned for a hot second before trump said we're not going to enforce that law there's no liability put it back up eventually tiktok returned to the markets uh the number of suitors has expanded amazon threw its hat into the ring a couple days ago love that loving apparently is also okay i wonder if this is just a pr tactic i don't think anyone thinks they're going to be able to afford it uh but the main consortium is i mean they're worth 70 billion so they're worth the same price as tiktok what is the price going to be for tiktok i don't think they sell just the u.s version the current sticking point with answering that question jason is that we're not sure about the fate of the algorithm so the latest reporting that i saw is that the trump administration and this is from i think it's abc is working on a deal that would allow china to maintain control of the algorithm that would be leased to the u.s entity however i went back to the actual text of the bill the law in question here and it says that uh a qualified divestiture which would allow to not be banned in the u.s does not allow for cooperation with respect to the operation of a content recommendation algorithm or an agreement with respect to data sharing so i don't think that's a legal thing so i think the algorithm has to go with it and then that's some law changes or yeah they figure out some way to do it when i don't think you need the algorithm i'll be totally honest looking at the x.com for you algorithm the instagram algorithm i think there's probably no difference or it's you know plus or minus five or ten percent from the best of breed okay for your algorithm now stop stop stop stop jason we got we just got this just happened the team just sent this over to me oh no breaking news from nbc quote president trump is expected to extend the deadline for tiktok to find the how can he do that he can't do that there's a law um you know as we've talked about you can just do things and then it's up to courts to enforce that and so maybe he just does it and then it's up to somebody in our government in another branch of government to enforce it uh who knows uh so there's a breaking news story there's a breaking news story all right let's i mean i think part of this is back to the tariff issue because again there's no way to get around this it's just impacting everything the tick tock deal and the uh taiwan issues the ai issues the ip issues and the tariff issues are all one giant set of issues and so the grand reconciliation with china all of this could be energy and listen you can be democrat republican never trump or always trump or whatever put it all aside the the modus operandus of trump is to put a lot of energy into something create what one person might uh call chaos i might describe it as chaotic uh you might describe it as other people might call it brilliant in the art of the deal doesn't matter what we all frame it as this is what he does and maybe a lot of this tariff stuff has been designed to hit at the same time as the tiktok ban and some grand reconciliation what if next week okay xi jinping and trump or in the next what if they announce over the weekend xi jinping and trump are going to meet or jd and she's number two are going to meet sure and then trump's going to china she's coming to america or they're both going to saudi arabia or they're both going to moscow who knows and that the grand reconciliation is here there's going to be uh reciprocal clean tariffs there's going to be some you know agreement on one china taiwan and we go back to strategic ambiguity and tiktok has been divested and everybody's happy again stock market not only recovers these gains it goes 20 up from there and here we are he's a hero that might be no it sounds crazy no i look i'm i all of my money well most of it's in the u.s economy like this this is very much impacting me i'm just i think there's there's a there's a a theme in people like you and i to look at things that appear to be sclerotic and crazy and we tried to put them in such an order that they make a lot of sense if you go back to the coverage of the april 2nd tariffs keep in mind that no one knew what they were going to be until the last possible second because they were still deciding.

41:54It's just difficult for me to believe in 4, 5, 6, and 7 D chess when the principal players don't really have a plan. Because I think if you're going to be that clever, you have to be thinking not one step ahead, but six. Alright, I think we have a guest. Do we have a guest? Yes, we do. Alright, so today on Office Hours, we are going to meet with Luke from Pod Engine. Pod Engine builds podcast research and media monitoring tools, Jason, that all use AI. You can find the company at podengine.ai. Please welcome to the program, everybody. It's luke hey how's it going good good i like the flags oh thank you yeah that's texas and that's america uh and uh yeah i'll put the chinese one here after we do the after we do our big uh settlement with china uh so um we're investors in your company it's going well uh tell us a little bit uh educate the audience on what you're building and why and uh let's talk about any questions you might have this is office hours with jake all right yes i'm uh luke i run a company called pod engine uh you guys invested in us about a year ago yeah and what we do is we're an intelligence platform that helps businesses grow through podcast sponsorships guesting and analytics but how's the business going uh i guess uh we were finally feels like we're coming out of the darkness a little bit and uh we have some signs of early product market fit which we're very very excited about uh last quarter for us was great we doubled uh doubled revenue uh yeah so and actually this quarter we're on track to triple it and we actually almost quarter over quarter tripling yeah which means you're growing 20 percent month over a month on thousands to tens of thousands of dollars in revenue i would take it yeah yeah thousands uh soon to be tens of thousands and so uh pretty excited because we're about to close a uh our first enterprise api which will be a five-figure deal amazing a year five figures a year yeah five figures a year yep probably like low to medium five figures okay so you mentioned three different ways in which your database and engine uh can help people so for stepping back one step i remember when we met you had this really great idea hey if you're an advertiser or a marketer you could figure out which podcasts have the topics you like because you have the transcripts you've essentially built the best database i think in the world of uh podcasts and how do you take all that intelligence and data and make it work for consumer you make it work as a business who needs it well if you're an advertiser and you're oracle cloud and you want to figure out hey what are some good startups where what are some good podcasts where people are talking about startups they could find places yeah that was the first yeah yeah exactly and uh and sort of that gets to sort of both the the the challenge and the question I have for it for you, which is there's so many use cases for this.

44:47And so for example, I actually prepared for this interview using our own platform. So what it did is we have a guest prep feature that's we've been working on for a little bit. Basically we looked at past transcripts, analyze it with AI, did some deep analysis and I got a nice three page PDF, which is these are questions that usually come up. These are questions that sometimes come up. This is the type of stuff to prepare for. So the verdict will be out in about 20 minutes if I do a half-decent job. But if I do a decent job, it's partly thanks to PodEngine. But that kind of gets the heart of our challenge, which is we can do amazing reports for, like you said, businesses and brands about podcast strategy, what are competitors doing, what are people saying, what are people talking about.

45:31We can do reporting analytics for individuals. We can do it on the B2C side. There's all of these different use cases, and they're pulling us in a million different directions. Some of those use cases, there's lots of long tail, which would be, you know, 100 bucks a month kind of thing. Some of the use cases, right, for example, guest booking services and agencies, we're talking$1 ,000,$2 ,000 a month kind of size. And so we were struggling with this a lot last quarter. And so what we decided to do is we took down all the pricing off the website and we really focused on just one ICP because we've got a small team.

46:05And that was agencies who have a dedicated podcast function. so basically they are either finding podcasts for their c ceos or people to go guest on or finding podcasts to sponsor how many of those have you landed we're up to uh we're up to about about 15 15 is amazing and how many um are there in the in the united states in the english speaking world do you think if you had to do a bottom-up tam there's a certain number of people who work and PR and PR equals podcasts. So maybe you just do the total number of public relations executives and you times it by 50%. Yeah. So, I mean, that's where like, it's interesting.