Self-Driving Car Myths, Klarna’s Big IPO & Netflix’s $300M Gamble | E2098

25:27But I think anyone who does not have a five-day-a-week commute is absolutely in this target. Yeah. So if you're three-day-a-week, that would be only 24 of your 50 rides a month, let's say. Sure. Yeah, you'd be in the zone. Yeah. Good work. Okay. Speaking about being in the zone, I think we have an IPO filing. Is that right? Ladies and gentlemen. Alex is super happy. Let's take us through what's happening here. This is like the bizarro world. I thought it was the end of days with the tariff chaos and everything going on. But apparently we have a filing. Yes, we do. We have a filing from Klarna, the Swedish buy now, pay later giant, a venture capital darling, Jason, saw its valuation spike during COVID, came crashing back down the earth.

26:10The company became a cost-conscious business, kept growing. And I'm proud to say that I think you're going to like the financials, which I've conveniently pulled up for us. So ladies and gentlemen, I give you the Klarna F1 income statement. Now, if you're watching the video, it's a little small, so I'll walk you through this. Time goes right to left in this case. So Moving forward to 2024, Jason, what matters here is that the company grew about 20 % from 2022 to 23, but it grew faster, 24 % last year over 2023, while reducing its losses and so much so it actually turned in the equivalent of a gap profit last year.

26:50I think this company freaking rocks. I don't know how to value it, but Klarna managed to reduce certain costs. If you look at its sales and marketing expenses over time, they're dramatically down, G &A down. and I'm just super proud of Klarna for pulling it off and taking the reins to get this year's IPO cycle finally underway. Okay. Now there's Affirm here in the US. I remember it was a little controversial. I think the founder of Affirm had seen maybe Klarna at some point and he started his own version here in the US. I don't know where Affirm Holdings is at, but that was public, right? Affirm is public.

27:26It's currently worth$15.7 billion. And in the last six months, Jason, his shares are up about 14%. Okay. Yeah. Wow. That's a big market cap. You know, we did have a concern that the buy now, pay later economy was kind of like a gray market and it was underreported. So we have all this credit card debt. Now credit card debt has hit some all-time highs. Yes. We didn't know if this was adding like another 10 % to debt, but, you know, that is always the concern. And I teed off on one of them, I think, maybe a firm when they had buy now, pay later at the grocery store, which I felt was like, yeah, I don't think we should be offering that as a service, just not on a freedom basis.

28:09I mean, people should be able to do what they want to do, but I just thought it was not the right thing for a company to do. I don't like that concept of giving that offer to people, but you tell me what you think, gentlemen. Well, this is just a chart really quickly of kind of credit card and other revolving loans here in the US. And as you can see, we're at an all time high going up about 1.1 trillion. So the consumer in the US has been very active, Jason. On the affirm at the grocery store, it makes me sad that we would need an installment plan for regular consumers to purchase basic fundamentals.

28:42At the same time, we have seen quite a lot of grocery store inflation lately in the last couple of years. So I kind of get it. But that makes me sad. But I do think that if you are offering people a reasonable low fee low interest rate way to access goods i'm not going to complain about that and i okay long go well but the interest rate though i looked it up because i've not used clarna interest rates ranging from zero percent to thirty three point ninety nine percent so like that once you're getting into the mid-thirties range you're getting a little usurious like all i know anecdotally there is i i like that show financial audit that caleb hammer youtube show where he has people on who've gotten themselves into serious debt and he helps them get out of it quarna comes up all the time like that it's a very interesting it's a very frequent brand that you will hear people who have a lot of debt who get themselves into debt trouble they they like these kinds of buy now pay later it's not quite i'm not suggesting it's like up to the the the it like it's not like a payday loan where it's like straight up a scammy thing that's trying to take advantage of people but i do think it's like right in the start of that gray area like i don't know 34 interest for people who probably aren't paying super close attention yeah you're getting into loan shark that makes way too much exactly yeah i think it's no bueno but you know i was like almost when i bought my new mac it was like or yeah i was gonna buy a new ipad or something and replace the other one.

30:14And it was like, would you like to pay like whatever over two years or four payments? And it was no interest. And I like when it's abstracted and it's on the side of the retailer and they're taking it out of their cut. Founders, let's be real. Finding great developers is hard. It's like one of the hardest things you have to do in our industry, especially when you're trying to run and scale your startup. But here's the good news. I got a tip that's going to save you time, money, and a ton of headaches, you need to check out Lemon.io. Lemon.io has thousands of on-demand developers who can help you.

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31:32And twist listeners get 15 % off the first four weeks. So stop burning money, hire developers smarter, visit lemon.io slash twist. So I did see one of the Teslas now, it might be the Model 3, they're offering like zero APR. And I was like, how is that possible? And it's like, oh, I think they're eating the interest in order to move cars. Yeah, it's the Model 3. So that's like super compelling. So if it's done on the side of in a high interest rate environment, it's kind of a win for consumers to pay over for because if you have money in the market, you would be making you money. But I guess this is going to a class of people.

32:09Maybe we don't have that. I'm not crazy about the category. I was about to say, yeah. Well, that's the other thing. They set the interest rate based on your credit score. So it's another one of those like it's more expensive to be poor. Like if you've got a great credit score, you could probably get in a lower interest rate. If you've got a bad credit score, meaning you need Klarna services more, that's when they're really going to nail you. Who's going to get like a big hit out of this? I know Sequoia was like the original investor and Michael Moritz was on the board. Yeah. So Sequoia is the largest outside shareholder mentioned in the filing 78 point.

32:43I think it's 8 million shares. Then there's Heartland, which it turns out is like a holding company owned by this Danish billionaire Anders Holk Polvzen. I had to Google him and turns out he owns a castle in Scotland. Shout out to him. Okay. 37 million shares. A former co-founder of 31 Commonwealth Bank of Australia, 19 million. And that's it. And so this company, Jason, has raised a lot of money over time and its investors aren't showing up in the 5 % and above threshold, apart from Sequoia, mostly. So I'm curious if they didn't buy as much as we thought, or if there's been more secondary transactions reducing external stakes over time.

33:17But this is going to be a big win, probably for at least Sequoia. I think this company also had some challenges along the way. Who knows if they had a down round, flat round, or some other things occur. But it does look like this is another one of the situations where Sequoia had to invest multiple times, either to save the company or opportunistically. And that's been one of those great things. There it is. Corner's valuation plunged 85%. And I think they had a hard time raising money. And so those down rounds can be brutal. That's the big founder lesson here. And the other big founder lesson is sell as you go.

33:52So I hope the founders sold at those incredibly high valuations, 10 % or 20 % of their holdings. always my best advice is to sell 10%. You know, when you get to that half billion, 250 million, 500 million, if somebody owned 40 % as a co-founder, it's not going to change your life to go to 36 % and then go to, you know, whatever it is, 32 % if you sell 10 % twice and it will put a floor in and protect you and your family and get you diversified. But Jason, we have talked so much on this show about companies doing more with less, using AI for automation and Klarna has been a poster title of that.

34:26So the thing that I was really curious is how much money do they spend less than before? And in 2022, sales and marketing costs, 531 million. In 2023, 381. And last year, when growth re-accelerated at the company, 328 million. So consistently more efficient. And that to me is the story here. You guys are right. Usury is dickish. Fair enough. But from a purely capitalistic perspective, there's a lot to like in this Klarna F1. And now I feel like a supervillain. Lon, what are you doing here making me feel guilty? Listen, I'm not saying people need loans, you know, like people like their service.

35:01I'm not trying to say it's a bad company or anything, but it does. That interest rate gives me pause. Like you should. What is this? This week in generosity? No, sir. This is this week in capitalism. That's very high. That's that's a lot of interest. All right. There's a bunch of trends going on. You know, I always ask you guys to look out for some trends. Any trends that startups should know about here? I was reading a Wall Street Journal piece for last week that I thought was interesting on this. marketplaces are starting to rip off social media features instead of Amazon, Tmue, the sites and the locales that you would think of as being the primary e-retailers that everybody was looking to for inspiration.

35:39So yeah, they mentioned eBay, Wayfair, ThredUp, Etsy. They're all introducing features that are reminiscent of Pinterest, Instagram, TikTok, where it's algorithm-based personalization, like trying to just show you, hey, based on your purchase history, we bet you're gonna like this stuff and then scrolling like infinite scrolling through feeds as opposed to people our age we got used to the sort of hunt and peck search browser mode where you just type in like i'm looking for blazers and it's like here's page after page of blazers this is more like an infinite scroll like we're just gonna show you blazers and you're gonna flip through until you find the one you like alex this makes me really sad so yesterday i was talking to my spouse about Instagram and she was discussing how it's really strange that she doesn't see any posts from the people she follows anymore.

36:28It's always stuff that's been kind of chosen for her. Isn't it crazy? Yeah. Everyone wants to be TikTok. And to me, it's a real bummer as a hashtag creator that people who choose to follow me are instead of being attached to me in some way are simply being fed from the same pot of slop. And so I think ultimately, Lon, this is a trend that's real and totally valid for reporting on. But I would also say, I don't think it's going to be a net positive for these brands long-term because I don't think you can ever get better at knowing what someone wants than quite literally what's in their own brain.

36:57Maybe I'm old, but that's my take. It's kind of jarring because I really do want to see my friends and family and like specific brands and companies and restaurants on Instagram and I don't see them anymore, but I do see them showing me ski videos, videos from Japan and bulldog videos. I get it. That's what the explore tab is for. Is there a way to like stop the algorithm on Instagram and just follow your followers? That's a great question. I believe there is. I think you can change your feed. Where did Zuckerberg bury it? Because I want to make it the default. It is in the settings, but you have to go through and find it.

37:32You can reset it from an algorithmic feed to just show me the most recent post from the people I follow. The one thing about Instagram, too, and its algorithm is it's way too sensitive. If you click one thing, it's like, oh, you love this. Like, I sent around that Sandwiches of History channel that I like. That's a great account. Yes. And now you're Sammy's all day. Love Barry. But right now it's constantly like people making sandwiches or people making sourdough bread. And it's like, I'm not really like King sandwich. I just like this one guy. Once again, Zuckerberg stole somebody else's innovation and took it too far.

38:05Yeah, it's brutal. I am really trying to lean into Instagram to figure out how it works. But I also think we're hitting a tipping point here for content creators where you're going to have to make a decision. Are you creating to get on the for you page? which means you create 200 pieces of content 195 of them are one percent of you use and the other five are 99 of your views whatever it is you know some power law and then what that means is all this art and everything and all your effort is not going to subscribers and you're not building a subscriber base you are literally just trying to game an algorithm and so then what people are doing is it's always like, who can I get into the related videos?

38:50What do they call the related videos on YouTube? It's the related tab. Yeah. It's the related tab. It's the right rail. Yeah. The third column, if you will, the right-hand rail. So now all these content creators are creating for that. And I got to tell you, it loses the soul. I like to create for the subscriber. I consider the subscribers on Spotify, Apple, and other RSS feeds or YouTubes, That's the audience who I want to delight. The people who are in the This Week in Startup subreddit that we started, those like real hardcore people. And you're going to have to make a decision. Are you pandering to this algorithm and then losing your soul as a content creator?

39:32I think it's the worst thing you could ever do because you will have no grounding. There's nothing that you stand for. It literally would be like a musician just playing jingles. Like you're literally making little jingles for an algorithm and you're never going to write, you know, the wall or - It's turning everyone into the equivalent of a cover band. Correct. You're just doing covers. And so it's garbage. I hate it. I'm going to fight against it and just try to make original content. What else do we got? One more trend. I want to throw this in before we move on. So we had Roy, was it Roy Lee who was on the show the other day?

40:08showing off his former Columbia student Roy Lee. The former Columbia student who was coming in to twist from his Columbia dorm room. Who knew that was going to be happening? Yes. Anyway, so there's a new trend out there. This is a little excerpt I pulled from CNBC. Essentially, the problem of people cheating on remote technical interviews has become so big that Sundar Pichai has said earlier this year that hiring managers are considering a return to in-person job interviews. So the trend is not just RTO, friends. If you want to even interview, you now must show up on site. So get your Southwest points in place and fly yourself to Mountain View.

40:41I mean, if you want to live the delusion that remote work is here to stay, unless you're an elite high performer like Alex, it's not happening. I'm just letting people know. I today was in our hiring room and I said, the next three researchers, only in Austin, only at the headquarters. Anybody who is an extremely high performer, EHP, I told this to the team. We're moving to Austin. We're going to have a headquarters. I'm going to grandfather everyone in. It is now up to you. If you want to keep that job and not have it go to the new home office where I can mentor people, young folks, people who are, you know, maybe not as seasoned as Alex, you have to be an EHP, extremely high performer.

41:24You have to have the ability to write a start of day, end of day. And of course the end of week, AKA, what did you accomplish last week? trigger warning. Five things, perhaps, Jason? Is that what you're kind of... I mean, I never put a number on it, but I did create the S-O-D-E-O-D, S of week, start of week, end of week, and Elon has it as well. I mean, it's not like this is some crazy innovation, but if you want to work at big tech, prepare to be in an office, and yeah, I think 100 % you should start interviewing in person and start enjoying, as a young person, being in an office, socializing, and being mentored, and being near the locus of power so that you can advance your career.

42:04I know it's dope to work from home in your underwear. I am wearing sweatpants right now. Me too. You know, I'm skiing. This week is ski week, but I'm also working. But I too, you know, I could retire. I could have retired 10, 15 years ago. I too want to be back in an office. You need the mentorship. You need the opportunity if you're a young person. If you're an old person and you want to take care of your parents, an older person, experienced person, an extremely high performer, sure, work from home if you can get it. Oh, yes. But also keep in mind that Jason's EHP setup here is probably going to be the norm, I think.

42:35And what that means is at Sunday at 9.52 p.m., you're going to be doing a podcast. Yeah, it might happen. Hi, everybody. It's late. It's late. You got to go to your spouse and be like, hey, you know, I got a remote job. It pays well. I literally told her, I'm like, sorry, I'm actually working tonight. Jason has a blizzard. We're doing your show. And she just went, OK. Yeah. I mean, she gets it. You're at home with two kids. I mean, if you have to change a diaper or the nanny doesn't show up, you're good. Lon, I'm trying to get more discussions going on here on the program. So I asked you, take a look, Hacker News, Reddit, Threads, Twitter, wherever, LinkedIn even, and let's find some really great discussions, spicy discussions, places where people are arguing.

43:20Let's see what they're arguing about, what they're debating, and let's have extend the conversation here. By the way, I have not seen this. So this is part of the fun of it. This was posted this week to r slash entrepreneur. Do millionaires need to wake up very early in the morning? So the OP here, he's wondering or they're wondering if the key to success is waking up early and having a morning routine. They're considering options like early morning workouts, even ice baths to get themselves going in the a.m. This is apparently a big hang up for them in their path to being an entrepreneur. So Jason, what do you think?

43:55If you want to be a millionaire one day, do you need to start waking up very early in the morning? And if so, what time? No, that is not the qualifier. That is, I think, fool's gold. You should figure out what works for you. Some people are really good. Their rhythm is at night. I'm one of those people who've always been that way. So, but I do think sleep discipline is super important. So there's two things being discussed here. One is discipline around routine. The other is being a morning person. Does that correlate with success? I think being a morning person correlates with being disciplined.

44:28If you're a disciplined person and you can go into an ice bath, this is not causation. It's correlation. The correlation is if you can go in an ice bath, I did it. Somebody gave me one of those ice baths for free, you know, and I traded some advertising with them. It was awesome. It wasn't for me. I didn't like the pain of it. And I was like, this isn't doing much for me. So after doing it 20 times, I was like, okay, great. I don't think this does anything for me. But it does take discipline to stay in that water. And I noticed disciplined people, like a Joe Rogan is a disciplined person. Obviously, you see him in martial arts.

45:04What Joe Rogan says about the ice baths is it gives him a win first thing in the morning. If he can stay in the ice bath, mentally, he goes, I beat, I conquered the ice bath. Anything else today, I already did the hardest thing. I can face anything else today because I made it through the ice bath. That's the Joe Rogan. I think being ruthlessly efficient and understanding where to put your time is the key to being successful and being a millionaire. It also means you have to have a plan and take risk. Those are the more important things. So I would worry less about this correlation that we see with some people are extremely disciplined and they like to get through stuff and then just say, well, what is efficient for you?

45:49and I've seen people who are like this, who take the pills, who do the walk, who eat the egg whites, who do this and they never become millionaires but they're super disciplined because they don't have the other piece which is taking intelligent risks, knowing when to shut your company down, start a new one, make an investment and they don't take bold risks, they don't sell their companies, they don't have ownership or equity in anything. That's really like the thing this person should be worrying about but I understand a young person coming into it and seeing Tim Ferriss and Huberman and everybody talking about these things.

46:24Now, I also do optimize for my physical health. And I think there are four things to focus on in that regard as a foundation. Number one is your sleep discipline. That's number one for a reason. And Brian Johnson agrees with this. A lot of other people do. If you don't get your sleep right, you're going to be a mess the next day. Sleep consists of sleep discipline, which means not eating two hours before bed, from what I understand, using an eye mask, having it blacked out, not having noise, all this stuff. And then once you've got sleep down and routine is also critical. So go to bed about the same time and wake up about the same time.

46:58Even if you're a little groggy one day at 8 a.m. If that's your wake up time or 7 a.m. or 9 p.m., just 9 a.m. Get up at that same time. If you fall asleep at 1 a.m. instead of 12 or 11, forgive yourself, but keep the wake up time. Number two, diet and exercise is two and three for me. get those right, eat healthy and get a little bit of exercise in. Again, your focus is going to go up. Your mood is going to be great. And then meditation sounds crazy, but people who meditate lower their anxiety and they have great ideas. I have some of my best ideas when I'm meditating. After I meditate, I will then take out my notepad and I'll write a couple of things in my Apple notepad.

47:34Boom. Every time. This is a great segue to actually another one of the things that Lon dug up for us. This is from, I think the entrepreneur subreddit as well, Lon, but it's from someone who works quite a lot, but it's trying to figure out why they don't feel good about it. And they're talking about some days working four or five hours, some days working, you know, from 9 p.m. to 5 a.m. And Jason, it sounds like your advice to them would be have a more consistent routine and that will help you limit brain fog, burnout and so forth. And prioritizing and being ruthlessly efficient. They're trying to work 55, 60 hours a week, but they're getting burned out.

48:06And part of their problem is that they're working this odd schedule, four to five hours some days, making up the difference with all-nighters, that sort of thing. I think it's fine to work 50, 60 hours a week or so when you're running your startup. At a certain point, you'll have diminishing returns if you're not sleeping, if you're not seeing friends and exercising. So obviously you're not going to have a balanced life as a founder, but you don't have to be like a hero and work 16 hour days. That's actually going to work against you. What you need to be is ruthless. As an example, delegating.

48:36I of them did the S1 or the F1 for Klarna. The other one found these great stories to comment on. I didn't have to do that. They teed up. I respond. That gives me some of my time back. I now have an Athena assistant. Go to athenawild.com, get some couple of free weeks. And I set two of them up now. So I have two eight-hour overlapping by one-hour assistants, 15 hours a day working with three or four executives. What they do, they pre-sort my email box now. So they go through my email box and they say, this is a startup pitch. And now I'm having them give that to somebody on the investment team.

49:06Okay, this is a PR person emailing me. They're blocking that person. Okay, this is a receipt put into the receipt folder. So now, you know, I don't have to do that. That saves me a half hour a day. So I'm constantly looking for ADD. I wrote a blog post about this. Automate, delegate, deprecate. What can I stop doing? What can I automate? What can I delegate? Be ruthless about that. What is the most efficient thing you can do to drive your career forward? For Alex, it's coming on this podcast or doing an email newsletter. For Lon, it's finding great content to come on here or great social media.

49:39Everything else is chores. Try to get rid of the chores so you can do the actual thing. The actual thing in a startup is the product, hiring a great team and demanding excellence for them. That could be professional development. It could be firing somebody. It could be any number of things. And then obsessing about your customers. If you're not doing those three things like every day and often, something's wrong. You guys look at me now, like how much time do I spend on professional development explaining to people how to do things better, showing them how to do things better, training people?

50:08There's a reason why I invest in professional development now. What I used to do is I just used to throw it on my back and climb up the mountain. Like it's easier for me to do it. You got 20 people working for you. You do a professional development. If five or six people get it, oh my God, you know, the whole organization can go much further. If I can get six people here to save an hour a week, I get six more hours a week of productivity out of the overall team. That's amazing. So anyway, that's my best advice is really. And people need coaches is the other thing I think. I think people need coaches and people to tell them, hey, this is a waste of your time.

50:42Why are you doing it? That's super important. Yeah, which is also, I mean, it sort of dovetails right back to the remote versus in-person office stuff. You don't get mentorship. You don't get coaching when you're working from home. people only see the output they don't have any idea how you got there yeah but if we're talking about cutting out cruft i mean commuting is a pretty big time suck yeah that's why you have to live close to your office if you commute more than half an hour you've made a just a terrible mistake um now i know that's hard in a place like silicon valley or whatever yeah los angeles it's pretty difficult to be a three block radius for 30 minutes in los angeles well because a lot of companies they want you to work in you know beverly hills or west hollywood these impossible to live near very costly places you know people have to go very far away this is just a great argument in favor of yimbyism which is one of my favorite uh causes out there but like we should absolutely build tons more dense housing near employment let's just do that and let's you want to watch the economy go boom as president trump said on truth social the other day build more housing okay literally uh you know this was one of the things i've been talking about doing here I'm going to do this maybe later on Wednesday.

51:54Just to give the audience a preview, I'm going to give you my stump speech on building, when I'm president, what I'm going to do as president. What if it's going to be around housing? Okay. That's my feeling on these two stories. Do you have anything to add or should we move on? One more question. This one came from user Wolium on Hacker News. I haven't seen this now. It's the first reaction. They've got a very specific problem that I thought you'd be interested in. They're asking how to stop Google from auto-correcting their startup's name. They have a small cloud computing company called Audimo.

52:26The problem is when you Google the word Audimo, it autocorrects to autismo, the Spanish word for autism. So people can't find their company because they get redirected. It thinks they are a Spanish speaker looking up, you know, treatment or what to do about autism. The company was founded in 2018. They're a little worried changing the name. They've got all these longstanding relationships and customers. People know them as Audemo. They would prefer a strategy that somehow gets Google to start recognizing that their name is a valid search term. People in the comments are suggesting SEO campaigns using some sort of strategy where they use ads on non-Google systems to get people to go back and Google the word Audemo so Google learns.

53:12But most people agree they should just change their companies. What do you think? No, unless it's like super offensive, I would not worry about this because the people who are looking for your company are going to click it, you know, where it says, oh, we're changing this to autismo. They're going to click it and let you do that verbatim. Or are they going to type in another word descriptor of your company? Yeah, you could always go search instead for the thing I looked up. But you could see the thing it brings up are it assumes you mean autism spectrum disorders. This is them. They are a cloud computing.

53:43Don't worry about it. People are going to they'll find you. It's nothing to worry about. No, there you go. Like there's other things to work on. And if you're successful, this will work. How do I know this? If you were to type in Uber, you know, before Uber became big or Robin Hood. So type in Robin Hood right now into Google. I want a generic name, right? If you don't leave a space, if you leave a space, it thinks you mean the folklore character. If you don't leave a space, it knows you mean the investment app. So I think it might be as simple as, look, we just did Robin Space Hood. They're number two.

54:14Robinhood. They came up number one because they bought the ad. So I think maybe Artissimo or whatever the heck this thing is called. Automo. Automo is their actual name. Automo should just buy the keyword for Automo and then they would definitely be at the top. So just like Robinhood we did here. So you get that sponsored link. It's not going to cost you that much because nobody else is competing for that keyword. Yeah, I know. But I hate telling people to pay the Google tax, but in this case, Jason, I do think that's the right advice. I think they might be paying like 20 bucks a month in Google tax, 300 a year.

54:40So if it actually matters to the founder that much. But you know that we live in a new world. People find things. They're like really good at searching. And then we'll be in a world eventually where AI is going to point people to stuff. So you have to have articles written. You're going to have to have a corpus of media. Right. So that would be the SEO approach, you know, like that old school SEO tactics. Yeah, but SEO is kind of good. I think it's more about having a lot of content ingested into LLMs over time. So from credible sources. And so the whole SEO link backing thing, remember the links are going to go before the summary.

55:16So aside from the sniper shot here of like looking for my company name or looking for Robinhood to trade stock, what else can you do that are on the long list of keywords for their cloud business? And where can they make content about that? So back to the kids investment club, before I start that thing, I'm going to write or have somebody write literally a hundred sub stacks, emails, beehives, whatever, to get that SEO going for teaching kids about stock or how to teach kids about bonds or how to explain bonds to a child, how to explain this to a child. And we'll get that sort of SEO going in that content base that will be ingested.

55:56And if you make great content, it will be ingested and eventually people will find you. Jason, can we, can we do a child, a children's book? Like a, like a, It's a really good idea, right? Really good idea, yeah. I've read every children's book ever written now, so I need to know it. And also, I'd love to have them be like, all right, here's what an index fund is, and just watch their face fall. That'd be pretty funny. Mommy, what should I do with my allowance? All right, we have a video you want me to react to. Hit me. That's very viral. This is from YouTuber Mark Rober. He posted this video, Can You Fool a Self-Driving Car?

56:31This video has only been online for about a day and it has 8 million views already. This thing is blowing the hell out. So what he did is he did a number of tests and he used two different self-driving cars. He used a Tesla in autopilot with its camera setup. And then he tried a unnamed self-driving car LIDAR camera system, which is more the more high tech LIDAR system. And he wanted to see how much he could do to obscure the car's vision and if he could mess up both. So here's one of the tests where he's got a mannequin of a child in the road and then he's covering the road with fog to obscure the car's view.

57:13So here's how both cars did. I can no longer see that there's a kid through this fog. Yep. This is something where LIDAR will absolutely see the kid through fog, but FSD with a camera is not going to see it. Guaranteed LIDAR stops. Guaranteed FSD doesn't. I am sophisticated enough to know this specific edge case. Also, a human is not going to get this right. So a human and an FSD is the same thing because it uses cameras. The cameras are better than humans, but nobody can see through fog except for it's going to hit it. Yeah. As as would a human. Any of us driving that car would have hit the kid.

57:56Right. He does note at the beginning of the video. OK. All of these tests are, yes, specifically designed around things that would mess up human drivers. And you'll see this next one we're about to show. There's no way a human would be able to pass this test. Oh, really? The endorsement here, just before we move on, is I think now every car should have LiDAR because that, as a parent, I love to see what LiDAR did. Yeah, but yeah. Very comforting. Yeah, okay. Well, that's going to be the discussion we're about to have. Let's see this one. So this next one, he's got a painted wall like in a Looney Tunes.

58:27This is a wild E. Coyote situation. Right, that looks exactly like the horizon. And this will never happen, but okay. Yeah, it's not a real world scenario. I like it for comedic points. It's funny, right? Yeah. yes that would and i think the lidar the lidar worked i think the lidar would be able to pick up on the cues but here what's interesting about this one is okay this is the most interesting one you know why lidar is gonna get it fsd is not but a human is gonna get this one this is not going to trick a human because you can see that as you come in the different angles yeah it's you see the outline of it right so you would be able to see the nuance the only way a human would really be tricked by this is if it was maybe a video wall presenting what's exactly behind it but if it was painted like the wile e coyote tunnel on a brick wall that would change with the sunlight and everything so you know right you could maybe with leds or something you could maybe hologram an effect but not not with regular just painting it like the horizon no i'm glad they did this yeah lidar it it works because it casts the shadow that's how lidar knows it can tell that the light is not reaching it from behind and that's how it knows that there's a barrier right it's like right you get this extra century because lidar is yeah it's actually it's working like radar, but with light instead of sound.

59:56That's in layman's. So number one, I'm glad somebody did this and they should have just added for fairness, a human driver. And that would have also been much more entertaining to have a human. I do note that in the beginning that these are, I know, but I'm just saying, why did they not use a human in a regular car? Get a Toyota Prius, get your Toyota Prius C, put somebody in and say, go. And, you know, let's see if they hit that wall. Let's see if they, you know, just tell them, like, nobody's gonna get hurt. You can't get hurt. But just go. And then if you think you see something, stop. And what we would see is the human wouldn't hit that fake Wally Coyote wall.

1:00:34They would hit the child in the fog. Yeah, and the fog was so dense, you couldn't see anything. He did another one where it was like water, like a storm. Right, yeah. Which I think humans and FSD would not stop for. FSD didn't stop for that, right? No. Did the LiDAR stop for it? I believe the LiDAR did. Yeah, LIDAR would suffer. So anyway, that would be the way to make this, you know, really entertaining and let people understand FSD is like human plus and FSD with LIDAR is like superhero level, right? You're becoming like Daredevil. Exactly. That's that. That's the best analogy for it. It's like how Daredevil sees.

1:01:14That's exactly it. So Alex, I'm going to bring you in this discussion. Please. The question I have for Alex is, when we look at this, what standard should cyber taxis, Waymo, let's just call the category autonomous vehicles, should they be held to a standard that is better than humans or the daredevil standard? Which one? Superhero? Superhuman? Obviously, humans are already on the road. So then we're just deciding, should we expect a lot more or a superhero level? Superhero level for a number of reasons. One, aim high. Two, the number of deaths we have right now from human drivers is way too high.

1:02:02I think FSD is safer. Great. But it doesn't get the death rate down as far as I want it to. And third, my 2019 Subaru Outback. Our car before didn't have a rear view camera. We didn't think we needed one. Why would we need that? we literally look behind that rear view camera that we now have on our car is mind-bendingly better for us as safe drivers. So now my thing is, if we have the technology and it's mass producible and affordable for at least most cars, which would fit this rubric, then we should do it because why not? LiDAR only costs, I was looking up like about a thousand bucks per unit in mass production for a K we can have better.

1:02:37Is it really that cheap? I thought the LiDAR sensors on the Waymo were much, much more money, but I think maybe the base ones, you could spend as little as a thousand, but you know, the way I'm going to look at this is you got to quantify the number of lives saved. And I think the rear view camera is so quantifiable because I mean, I hate to be morbid here, but the number of times somebody has killed their own child or pet backing out of their driveway is truly tragic. And I believe those cameras are now required. Is that now standard that you can't believe it is now standard? Yeah. I don't think you can have a car without a rear view camera.

1:03:13So that probably eliminated thousands of deaths a year in the United States. I'm guessing hundreds to low thousands. I don't know that this test of like in the fog, not hitting somebody is going to save any lives. But if it's a thousand bucks, I'm going to agree with you. Why wouldn't you? I'm also heard that Waymo is testing and is, I don't know if this is true or if I just overheard this from somebody I shouldn't have, But I also heard that Waymo might be testing a non-FSD version of their car, which would only be able to be run in certain conditions. And that's going to be the next sort of puzzle to solve.

1:03:53I think we're going to see a number of people say you can only use these cars when it's not raining or foggy. When it's foggy, the fleet is not allowed to drive in fog. If it detects fog, the fleet's going to have to pull over. So on the 280 in the Bay Area and you get fog conditions and in San Francisco, you get Carl the fog. They're literally going to have to like have the fleet go back to port or just pull over. Like, by the way, humans do this too. In San Francisco, when the fog gets really bad on the 280. Yeah. I have seen people pull over. Yeah. It's dangerous. Yeah. I mean, it is nuts. I've pulled over in the fog in LA once or twice before too.

1:04:31It is like, it's too thick. It's just dangerous. In your lifetime. That was long. That was smog, not fog. It's very different. I heard actually documented anywhere. I'm seeing various people talking about it on Reddit and other forums. I don't have enough time to actually deeply fact check this, but it does seem that Waymo is at least testing some non-LIDAR cars to which I have to say, if your other bets, the Alphabet subsidiary that houses Waymo, which torches like a billion dollars a quarter, don't cheap out on safety. Like push forward here. set a standard so high that every single death from a car collision is a national tragedy let's get to that it's just weird because i feel like when we first started talking about self-driving cars it's like a real thing we could build this was part of the promise was it's gonna get so much safer like we already think of automotive travel is like it's not like it's safer to be in a plane than in a car and like this was supposed to be the revolution that makes that a reality that like we You don't have to worry about somebody automotive death.

1:05:29There's something that happened on the way to this revolution. And I just want to say for the industry, I'm not talking my own book here. Once again, I am diversified. I have bets on all the major players. I'm good. So I'm not talking my Uber book or my historical Uber love. Although I'm over indexed there, but it's not going to change my life. So I think we need to have a much slower rollout of business. autonomous vehicles. I know everybody wants to go faster. I know right now, Zoos, Waymo, Cruz, rest in peace, and the woman they dragged, Tesla, cyber taxis, BYD, everybody's racing right now.

1:06:14This is where actually the government does their job. The government needs to come in and give licenses for this that are extremely restrictive, extremely restrictive. Now, I'm saying that as somebody who is going to benefit financially from the rollout of this. When I say extremely restrictive, what I mean is certain areas, certain times, certain speeds, and you have to hit milestones. I think Waymo has been so conservative because they live with the fear that knowing if they drag somebody, even if they didn't hit them first, if they just make a mistake like Cruz did, Waymo could be shut down for years.

1:06:52If Waymo got shut down for a year, what do you think that does for competitiveness with them? it's over i mean nobody's going to believe in self-driving and then all the different jurisdictions around the world they're going to stop the whole movement so please everybody doing this restricted zones restricted speeds real conservatives safety safety safety do not worry about competition they should just say to everybody you can have this many cars per year on the road and then when you hit this milestone of safety, this many miles, then you can apply to add more vehicles and just literally make it a milestone-based thing.

1:07:34Cruise didn't have that. There was like a licensing system where you get approval and you go, how about this? You can put 10 on. If those 10 do 1 ,000 rides each, 10 ,000 rides safely, then you can add another 10. If they do, and you just tell people, And then if you do it between, you know, daylight hours and you get to a hundred thousand or a million rides, you get to a million rides in daylight hours. Now you can do nighttime rides and you can do it at this speed. If you can safely do it at 25 miles an hour, then you can move up to the 35 to the 50 and then eventually the highway, which Waymo has done.

1:08:10They've self-policed themselves. I really just don't want this to be screwed up. I'll be totally honest. I think this could, I live with this fear. Somebody is going to go too fast. I just want to say that there's concern about competition, especially with Chinese companies in the domain of AI, which autonomous driving does fall underneath. Is there a not a risk, Jason, in your argument? And again, just taking the side of this for conversation, that the incremental approach you are outlining is too slow to generate a national champion in self-driving by the time China has this iced because they're willing to take on more human risk.

1:08:40Listen, if China values life differently than America, nobody should be surprised. like literally in a factory in china they've got slave labor called the uyghurs like they don't care if they kill themselves they don't care if they die in a robotic machine you know accident the way we do here in america so that should never be our standard you can buy cars in india right now without airbags that would never pass anything tata put in to yeah just tell us what the cheapest car from tata is it's the nano i think it is yeah i think it was three thousand dollars when it first came out two thousand uh u.s uh okay yeah the tata nano yeah just for giggles if one of you gentlemen could find a tata safety test and there's it gonna be a video of a tata there's the there it is now if you're in india by the way it's adorable it looks like a mini Prius.

1:09:34They sell millions of these, I believe. It was discontinued in 2018. They stopped making the Tata in 2018. I would never, in my life, get in that car if it had gasoline in it and a battery and was able to drive. I might sit in it in a museum, under duress, because that thing is a death trap. That's literally... There are coffins that are safer. Dismal crash test results is what I've seen. I don't even want to see this. That thing looks to me like a paper bag here is uh from the global in cap uh airbags behold oh that's oh what's oh my god it turns out the entire front half of the car is the crumple zone sadly that's also where you sit to drive it but your legs are there not anymore lawn oh my god i'm gonna go ahead and say the airbags in america and the airbag systems are more expensive than that freaking car like i bet you like the airbags in a Tesla, which by the way, wrap around your head.

1:10:36Or have you seen the Zoox airbags? Pull up the Zoox airbags. The way we value life in this country is one of the greatest things about America. We overvalue life. We over-index. We do insane things to make people safe. And when something happens, like a plane drops out of the sky, we spend so much money trying to figure it out when often it's like the pilot made a mistake. But we still want to know. And we still want to incorporate that. That's why we had, what, a 12-year run of no commercial debts before this stupid tragedy with the helicopters flying? There was a few different ones, yeah. Here is how the airbags work inside of a Zoox.

1:11:19I had to... I mean, this is incredible. These guys are doing it right. Look at this. All right, so now I'm gonna... Here you go. Observe. I mean, that's pretty freaking cool, man. You're totally covered. Yeah. I mean, for people who are listening, it is literally putting you into a giant boy in the bubble. I mean, it's unbelievable how safe you would be in a Zoox if you got sideswiped. I think it's probably the safest vehicle you could ever ride in based on that. I could be wrong. All right, everybody. There's been another amazing episode of This Week in Startups, late night edition. If you want to get the docket thisweekinstartups.com slash docket.

1:12:00If you want to follow us on Reddit, get involved in the Reddit community. We're top 60 % of Reddits. I think we're now in top 40 % of Reddits. We're trying to get into the 30s. If we get another 100 followers, it's TWI Startups. We are in the top 43%, about to cross 40. Need your help. Get in there, participate. I'm in there. Lon's in there. Alex is in there. We're trying to build a little community on Reddit because that's where a lot of entrepreneurs are. Some of the questions we took today were from entrepreneur. really great entrepreneurial communities in reddit uh he's lawns on x he's alex on x i'm at jason founder fridays coming up founder friday.tech if you want to hang out with other ceos and founders and uh if you want to come to founder university founder.university our 10th edition coming soon our 10th cohort and we'll see you all next time bye