The LA Fire's Cost and the U.S. Jobs Report | E2070

0:00Aggregate fire budget for LA Politico reported that the actual assertion that it was cut at all is incorrect because, and I quote, the city was in the city was in the process of the city of the city of the city of the city of the city of the city of the fire. And that's reasonable. And then now you're left with the position. Well, okay. Hey, we've got her department's budget and here's what happened. Or you might think, Oh, the fire chief is a lesbian. And this is a DEI hire and not double click on it and look at our track record. And her track record is she was in the top 50 of 1600, 16 ,000 applicants when she went to it.

0:50And she's got this incredibly storied career. Yeah. Just, I hate to break the newspaper. I don't think lesbians cause the Santa Ana wins. Yeah. This Week in Startups is brought to you by Northwest Registered Agent. Starting your business should be simple. With Northwest Registered Agent, you can form your entire business identity in just 10 clicks in 10 minutes. From LLCs to trademarks, domains to custom websites, they've got you covered. Get more privacy, more options, and more done. Visit northwestregisteredagent.com slash twist today. Atlassian. From MVP to IPO, Atlassian for Startups provides your team the right tools to plan, track, and collaborate on work.

1:30Head to atlassian.com slash startups slash twist to see if you qualify for 50 free seats for 12 months. And LinkedIn ads. To redeem a$100 LinkedIn ad credit and launch your first campaign, go to linkedin.com slash thisweekinstartups. Hey, everybody. Welcome back to This Week in Startups. I'm your host, Jason Calicata. So my co-host, again, Alex Wilhelm. He's on the East Coast. I am in Niseko in the province of Hokkaido doing a little deep powder skiing. Yes, your boy J-Pow is hitting the Japanese powder right now. The J-Ranch era is paused while I'm out here crushing powder. And then I'll be back in the United States to go to the inauguration.

2:12We're going to have a little, I'm going to be doing a couple of live shows from the inauguration for All In. and I think we might even have a little tiny all-in VIP party. It's all coming together quite nicely. Alex, how are you doing? I am fantastic. I'm on the East Coast, like you said. So instead of it being very, very late, it's very, very early. But as we said last time, twist does not stop. We roll along and I... The show goes on. Yeah. You know what I need though? I think I'm going to give up on journalism and I'm going to go into, I don't know, private equity and I'm going to make a billion dollars.

2:44and then, critically, this is what it's all working towards, I'm going to hire an in-house barista. Just someone to make me fancy espresso in the mornings. That would be great. We could have an apron on and a whole counter. You could build a whole mock Starbucks setup. Yeah. And then they can hand it to my valet, right, who would then bring it out to my work shed and then they could bring me as we converse. I could have my, you know, it's going to be great. No, I'm good. We have a lot of news this morning, Jason. I do want to say for everybody who's curious we are going to talk about the jobs data that comes out in 16 minutes but we're going to hold off on that uh until a little bit later i want to start with ski lawsuits jason what i'm being sued for going to japan and no no no skiing in the deep powder in you and i yesterday i went to uh cat skiing which is where you go on a cat which is like a tractor and you have the whole mountain to yourself and you go to untouched ski runs and back country it was a peak experience i've done it two other times in my life and i have to say uh just on a recreation basis best day of the past two years absolutely crushed the water and had a great time yeah i mean all right it is a unique experience to be at the top of a japanese mountain with fat skis and a couple of friends on your own private uh ski slope and it's a i w a n a i you can pull it up you want me um if you just type in you want a cat skiing you will find a video on youtube uh from their resort or you know from their website and you'll see some vistas there we'll pull it up here for the crowd to see uh but it's a it's a peak peak experience for me because cat skiing um is uh really unique you don't have anybody else on the mountain and what happened here alex is in japan the population has changed obviously they don't have this crazy population growth that they did have for a while in fact it's maybe going down a little bit and so this isn't me but this i think is other people skiing you want to and as you can see there's a cat right there on the right and you see how deep that powder is wow this is an abandoned ski resort so there were all these ski resorts in the 80s and 90s that were built there were too many of them they shut down because there weren't as many people uh and so now this is empty and you go and there's a total of i think a maximum of 16 or 24 people we had a private kind of situation going on and we were skiing there so you get driven up in the cat because all the lifts are down it is absolutely extraordinary and beautiful and uh my friend john runs it a really nice guy who um is an american who gave this saved this uh abandoned ski resort and now the locals have one lift operating they get to come there and all the locals get to ski at a very very very affordable price i think ten dollars a day a hundred dollars a year for a lift ticket which is essentially free right yeah essentially and then wow yeah and then people from australia hong kong united states and china uh and some other folks uh you know new zealand all come from around the world if they can get one of the precious days on iwani cat skiing mountain in this resort and if you can get one of the days available you get to have this crazy experience and it was just incredible i'm very glad we shared all that because now my jealousy has reached an absolute critical level.

6:16I was thinking though about ski lawsuits much closer to home for me, Jason. I'm thinking about Park City and the fact that they are being sued by someone who says that he spent $15 ,000 and skied fewer than 10 runs while he was there visiting due to the strike that we discussed the other day. And I'll just say, if I spent$15 ,000 and got 10 runs at$1 ,500 a run, I better be in Niseko doing first powder cat skiing because that's what I think that should cost uh skiing is not cheap it is a sport for uh I mean you can do it on a budget I can explain how that happens but we talked about the other week you know product market fit creating new innovative products one of the innovative products to come to skiing was Vail Resorts doing the epic ski pass what that meant was all you can eat 400 bucks 500 bucks 600 bucks depending on when you buy the ticket and what mountain you have access to and right some block out day it looks like the holidays but for us cheap to say 400 500 you can ski unlimited so the ski industry learned how to create an incredible value proposition but it's still a tough business they had a terrible season because snow was off last year it was one of the least uh it was one of the shorter seasons right snow came late and it melted early that happens some years so you make less money uh and so but the the bigger issue was they didn't want to pay ski patrol ski patrol when you five bucks an hour uh it's 20 it turns out it's 23 and i can tell you jason as of this morning uh as of really about two hours ago if i'm being totally honest uh it has been resolved yay everybody we've sorted it out.

8:01The Park City Mountain ski patrol strike is over and the data points are as follows. They are now going to get$23 an hour starting through 2027, several years. And you get$4 more an hour if you are a veteran. So all of this, the lawsuit, the complaints, the media, the angry billionaires, over not much money, a couple bucks an hour for a couple hundred people. It strikes me as just a really small amount of money to have a fight over. It sounds like they made a poor decision. Yes. I will, you know, the management of this company is disgraceful. And the number of tickets and how they manage the support there.

8:38So, Disgraciad.com. I'm going to make a jingle here for the show. Disgraciad. We'll say that like part angry. Dot com. Like it's nice. So, you say, Disgraciad.com. And then you go to Disgraciad.com. We point it to whoever the biggest disgrace is. Right now, it's Vail Resorts for me. although i may need to change that given california's leadership with these fires and we'll get to that as our next story i am sure but yeah congratulations to the ski patrol for getting a meager extra two bucks an hour these people at val are nuts they're they're charging a fortune and uh everybody who's buying a lift ticket and a pass could afford to pay a little extra to be safer on the mountain they should have never done this travesty and i hope they i hope that it's painful and they have to settle an expensive lawsuit so they learn a lesson about not being cheap and paying their employees a living wage or something decent listen i know it's a great job skiing for a living and being on the mountain so it's it's kind of like being an actor or something like that it's kind of a dream to be on ski patrol i'll be honest but still they should you need two bucks an hour come on hey founders you want to build the next great billion dollar business, right?

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11:07All right. So let's talk about the fires in LA. First of all, as a reminder, these are still ongoing. Hopefully with the winds dying down a little bit, the fires can be contained and fully extinguished. Our thoughts are with everyone who's been impacted. There are lots of ways to donate and support. So we'll link those in the show notes, but also just Google it. There's a lot of fundraisers going on. And the latest news, Jason, that I saw is from Biden, actually. And he announced, quote, that the federal government will cover 100 % of the cost of measures to protect lives and property in SoCal for six months.

11:35So the federal government has arrived with a chock full of cash to try to help out with rebuilding and safety. Wait a second, though. It says to protect lives and property. that sounds like he's saying to put to prevent the stuff but i don't think that means that if it's a thousand or two thousand five ten million dollar homes they're going to just automatically pay to rebuild those no i don't think so you know that really is the bigger issue not picking up the tab for the firefighters who are there etc that is a cost but i think that cost is somewhat baked into LA's budget already in the California budget.

12:14So I think that's going to be the bigger higher order is, can you economically figure out how to pay for rebuilding a home in an area like Malibu or the Pacific Palisades? It's going to be very interesting because the regulations in California are really hard to build as are the costs of building. So building something in California, like a home uh friends of mine who have done it a remodel is a two-year process a new home's a four or five-year process the cost of building a remodel in texas or florida might be six months to 12 months and a building a new home might be one to two years the cost of doing it in you know texas or florida might be five hundred dollars square foot it will be literally double in California, plus regulations.

13:05Now, if you look at some of these homes, they're on the beach, which is managed by the Coastal Commission of California, which is a very rigorous organization that doesn't let you do anything. So there's going to be a big debate in the coming years about, are they going to be able to build how many years? So these poor families, just the trauma of losing your home and your goods. I have a very close friend who was renovating his home he was living in another place so he's safe his mementos were in his house that was being renovated passport photos right kids drawings you know just anything that they had just gone um which is just absolutely devastating and so the penciling out the cost of this is going to be really hard it's so hard that actually i struggled to find the right number to put in the show notes because um i saw numbers you know people are still sorting through the wreckage here, so I don't want to sound glib, but I saw numbers that this is$20 billion in damage.

14:04Jason, I saw that it's$50 billion in damage. I saw that it's 57. I mean, it's so much money. Pretty straightforward. The homes in Pacific Palisades, having lived right next door to it, were 5 ,000 square foot homes. Somebody might have 6 ,000 or 7 ,000 square foot homes. Somebody might have something as small as three or four, but generally, I'd say 6 ,000, 7 ,000 square of feet is what you're looking at in that town. Now you put that at a thousand dollars to, uh, construct it, right? All in. So that's six,$7 million, I think to rebuild each home, I think a thousand or 2000 homes have been lost.

14:41So if we look at just homes in Pacific Palisades, if it's 2000 homes were lost at an average reconstruction of six or 7 million, you're looking at$15 billion right there. It doesn't count any of the other stuff, schools, uh, and commercial buildings. And infra just straight up infra. Uh, there's a lot of infrastructure there. You're correct. That would need to be rebuilt. And so it's going to be tens of billions of dollars. Then people are just going to have to make this very strange decision. Do I rebuild or not? And do I rebuild in that area? And then if I do rebuild in that area, when is this going to happen again?

15:17Can I get insurance? Right. And if you can't get insurance, well, where, and you didn't have insurance because it got canceled six months ago, where are you going to get the money from? I mean, do these people have$7 million in liquid funds just sitting there to build a new home? And while they pay for another home to live in that they have to rent, you know, renting a$7 million home would be 5 % of that cost per month or per year. So 5%,$7 million,$350 ,000. This does not pencil out. No. So on the what to do, I think we are going to see in the wake of several hurricanes in Florida and this fire in California, a real national conversation on states setting the essentially regulating how fast you can raise the price of insurance.

16:10because the problem that they have in Florida and California, both states with a large economy, lots of people and natural disasters and a state run insurer of last resort is they're always doing a dance between allowing insurance companies on the private side to raise their prices and then therefore create more supply, or they want to keep those prices low. So that way it's affordable to live there. So they get elected again. And then you end up with a lot of people on the state insurer of last resort citizens in Florida fare in California. I just don't think that works anymore in a climate change world i think these rates have to be free market floating and it's going to cause a lot of people to struggle but it's it does not work yeah so putting aside like the terrible trauma these people are going through you're 100 correct and you went exactly where i was going to go which is you you have to let the free market mechanics work here because if the government is underwriting these or bailing them out over time what that does is it raises prices of homes because the government is now subsidizing them.

17:11And then you raise the prices of homes, they become more unaffordable. And then these tragedies happen every 20, 30, 40 years. When I lived in California, as I said in a previous episode, I talked a little bit about an all-in coming out about the same time as this. These kind of fires in this area happen every 20, 30 years. And in 1962, there was a major one called the Bel Air Brentwood Fire. And that one, hundreds if not low thousands of homes it was same thing santa anna winds the cause of it was people were just doing a trash fire they were thought they were doing a controlled burn burning some trash in a backyard and some embers flew and that's what happens in uh with hundred mile winds when you have a bunch of trees and leaves and everything in a mountain range that bakes in the sun every year year after year so uh the free market's going to have to take care of this there's pictures of the bel air fire online you can look it up and 1961 so this was you know quite a while ago so we don't have the quality of footage and the thousand tiktoks that i think people are accustomed to seeing but here's some of the historical record of that oh what it's just brutal uh and really just tragic so um but it's um i i want to say jason this is this week in startups and i'm so happy to report that there is a a perfectly apropos startup for this moment in December, December 16th, 2024, as last year came to an end, I saw this story and I thought, that's a really cool idea.

18:34So I give to you Stand Insurance just raised$20 million series. A, they want to use software to go in and insure essentially homes that you can't insure in any other way. I mean, it's exactly on the nose for this moment. And I think that using software to quote, simulate the physical effects of a wildfire on a home to identify changes that a homeowner could make to decrease risks is a great way to actually, I think, make insurance feasible in certain markets where homeowners have made the right choices. And because you went through the cost of insurance and what that kind of works out to be, they think that coverage for a$3 million home, this is per the Wall Street Journal, in a high wildfire risk region would cost between$12 ,000 and$15 ,000 a year to insure.

19:18It's impossible. That's impossible. 1 % would be$30 ,000. so they're saying it would be one in 200 chance one every 200 years that's not how often this happens but i think what they're saying here is um when i uh i remember when uh the tahoe fires were happening and people were um you know doing cleanups there i was looking at what people were suggesting to do now if you cut down trees you get stopped when you live in one of these tony neighborhoods they have essentially a bible a planning guide and this is the standards for your neighborhood i don't know if you have that in your neighborhood but you know if you change your mission yeah yeah so you have a historical commission even worse so there's like um there's a master plan that happens where it's like you have to have you know the height of the fence the height of the shrubs this and that so you can't make a lot of changes because regulations when i talk to portfolio founders about what's slowing them down they always vent to me about project management juggling hundreds of different projects is hard if you're shipping a product or rolling out an update you're building a company and you need to be organized well at last thing has exactly what you need to streamline your work and smash your goals the atlasin for startups program is packed with the tools you need like jira to track every task sprint and bug confluence for team collaboration and documentation, and Loom for quick video explainer creation.

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21:29That's incredibly generous. It's a big number, 50 people. So head to Atlassian.com slash startups slash twist for complete details and eligibility. Again, that's Atlassian.com slash startups slash twist. the truth is if you put a metal roof on these homes if you put stones around them if you don't have trees around them you will lower the chances of your house going up in flames in one of these santa anna you know driven fires there's pictures now of the homes that survived and you're starting to see like you know there's a hundred homes and then there's one standing there it's a new home it's constructed with the metal roof in texas we have all these homes with beautiful metal roofs it's not to everybody's aesthetics but these metal barn roofs are very common they're not perfect, they have heating insulation issues as well, but putting all that aside, you can't light them on fire they're made of metal, it's like a high temperature, and if an ember lands on them it blows off then, clearing the area and the brush around your house, putting stones around your house again, the embers land, this is all obvious stuff, and the embers go out you can't do that in a lot of these neighborhoods the master plans and the you know etc will stop you from doing that so it does make sense to me that they could hit that number with a fireproof house i think we talked on the last episode about homes you mentioned one that are 10 feet up in flood zones yeah we're gonna have to start building resilient homes and if you build a resilient home you should get a different price and metro mile um which this person uh co-founded i think with david freeberg from the olin podcast was the other co-founder on metro mile um really i didn't know that how did i not know that oh i i've covered i covered metro miles so much that's so funny huh yeah and so and i am uh full disclosure and lp in chris saka's fund lower carbon capital so i like to say this is great i'm actually turns out i have a conflict here and an interest so interestingly this is a great idea to match the insurance not just to the place you live but to how the home is constructed and what steps you're taking to mitigate these things.

23:37Yeah. I think, I think, you know, you're never going to get, I have been to state farms offices in, in Bloomington, uh, Illinois, I think. Sounds exciting. You went to an insurer's office. Uh, well, it was the only time in my life I've given a paid, a paid talk. I was in college and, uh, they invited me to come down and, uh, they paid me some several hundred dollars to do this. I just did it for, you know, the experience, but I, I got to tour state farms office and headquarters and walk around. And it was the first time I've, actually and i no offense to everyone there they all seem incredibly lovely but it was my first time seeing the actual dilbert style office you know like like actual like floors of cubicles you know and if you're 20 that that is a revelation to you about what life can be and i bring all this up to say that there's lovely people there but they definitely seem to be in an insurance mindset which is um not the most progressive you might say actuarial tables don't attract people who want to rip up the whole world.

24:30So I think that we're going to have to have something different and with a strong technology base to fix this problem for high-risk homes because I just don't think that other companies want to take it on because that's not what they do. They just want to insure your car and spend a lot of money on ESPN advertisements and make us look at a weird lizard all day. You know, we got an interesting question here from the live audience. If you're listening to the pod on the replay gang, we do it live and you can go to youtube.com and search for speaking startups, click subscribe, turn on the bell, and you'll get an alert actually from YouTube when we go live.

25:04And you can click on it and you can ask us questions. And Keith Jordan asked us, do you think there'll be a class action lawsuit against the state of California since the stated reason for the insurance companies dropping fire policies was because government neglect of not probably mutating bush clearing and preparedness. So yeah, you could sue the state of California for incompetence. And I do think there is definitely an issue of incompetence When you hear these leaders talking about their preparedness, you're getting an incredible amount of deflection. And I actually think this is going to be a turning point for the people in California who have dealt with a lot of maybe the priorities in California, not matching the amount of tax they're extracting, and maybe not having leaders who are executives who know how to run organizations.

25:52So I do think that's quite possible. I don't think you can sue the insurance companies because they are not canceling your insurance, which I tweeted. And somebody made an interesting distinction without a difference. But the distinction is they're just not renewing as opposed to canceling. Right. Yeah, please. Well, I should say for the person who's a homeowner, it doesn't matter what canceled, you know, three months earlier, you know, not renewed on time. I mean, you live in a home for 30 years, you pay your insurance for 30 years and you're 31, which must have happened to some people. Oh my Lord.

26:30Yes. To have that year, you don't have your home insured. I understand Jimmy Woods, who I've played cards with a bunch of times. Nice guy. The actor, you know, I feel terrible for him. He lost his home. I don't know if that he had insurance. Someone like that, a famous actor, maybe they have the wherewithal to take that hit as hard as it is. But, you know, other people don't have it. So I read the state farm letter that they sent to the state of California going over why they were going to be not renewing certain policies and so forth. I'll just share it. Why not? I have it pulled up here. It's mostly financial, as far as I can tell, you know, this, this particular paragraph here, so I'm not zoomed in.

27:08I wasn't going to share this. The state farm says, you know, we recognize and appreciate that there has been a rate increase that will take time to come in, but more rate increases are needed because market conditions are not static, inflationary trends, costs, and in short of getting to charge more money very soon, the current rain template may necessitate homeowners having, essentially, it's about money. And so I think that to answer this question, maybe, maybe, but I think it's going to be really hard to nail down who's in charge of uh of local municipal cities or state regulations on on brush clearing but i i think fundamentally you solve this with the free market and i think that's the way people want to go on the what you're getting paid for in california i did you look at the la city data and how much money they they moved around in the 2024 to 25 budget versus the 2023 I think it's good for you to state it because it's been changing every 12 hours.

28:09Uh, there was one report early on on social media. And again, you know, I think it's a bit of a raw shock test and the human mind tries to place blame or understand what's happening here based on tribalism and just filling in the blanks. If you are for less government, you might've wanted to cut budgets to reduce deficits. Right. And that's reasonable. And then now you're left with the position. well okay hey we've got the fire department's budget and here's what happened now if you're anti-ukraine and you're pro-putin you might be looking at and saying why did these people do a tweet or a blog post that they were donating equipment to ukraine uh or you might think oh the fire chief is a lesbian and this is a dei hire and not double click on and then look at her track record and her track record is she was in the top 50 of 1600 16 000 applicants when she went to it and she's got this incredibly storied career.

29:03So just, I hate to break the news, people. I don't think lesbians cause the Santa Ana wins that have been burning this specific area down for thousands of years, apparently. And certainly in our lifetime, when humans have been living there, they've burnt down homes over and over again. So it's a raw shock test. People who have grievances across either side of the aisle will project into it. Yes. The truth is there's incompetence in California's government. We see it all over, all the time. There's incompetence in all government everywhere. Right. But if you've lived in California, it's specifically not high functioning.

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31:22Terms and conditions apply. LinkedIn, the place to be, to be. The thing that I'll say is, I mean, there's one particular venture capitalist who's been really all over this issue and putting out some what I would consider to be very sexist tweets. I just think it's disappointing that that's become platform to such a degree. But just to throw some data out there for everybody, because I know you've seen this all over Twitter, I went ahead and did a little research. Here is changes, Jason, in the 2024 to 2025 LA budget. This is an infographic from the city controller. As you can see, quite a lot more money was spent on police, a little bit more on library housing, building safety, city planning, et cetera.

31:57And then as you get down into the negatives, this is where they save money, cut costs. Fire was cut by$17.6 million in this budget and from this perspective. Two things to know about that, however. one, the aggregate fire budget for LA in that year after the cuts was 820 million. So we're talking about roughly 2 % cut, not very big. And then also political reported that the actual assertion that it was cut at all is incorrect because, and I quote, the city was in the process of negotiating a new contract with the fire department at the time the budget was being crafted. And so 50 million more was added.

32:32So the idea that California gave all the money to DEI and get no money to fire departments, firefighters is wrong. And also we're using prison labor in California and not paying them much to do the hard work here. So - Well, by the way, in that program, my brother, as many people know, is a retired firefighter. My grandfather, rest in pieces, was the oldest living firefighter for a long period of time in New York City and very storied. Shout out. And I come from a firefighting and law enforcement family. And in fact, that was going to be my chosen career before the internet happened. I got very lucky to get into the industry.

33:06You know, the issues around DEI in the fire department, there's a very logical argument there that you should have the ability to carry a person out of a building. So, okay, sure, that's logical. All firefighters and firefighter families agree you got to be able to carry a person. Doesn't matter if you're male or female. And those standards should not be altered. Some places they did alter the standards. So that's like a logical argument that has nothing to do with this fire. Put that aside, obviously, you can have that debate separate from this. additionally you know people would pay to you know clear this underbrush and put more fire lines in it's so crazy like in tahoe and other places where people fight against clearing the brush because they're like well that's the natural way in order of things you want that brush to break down and biodegrade and i've been given this speech countless times in california and in texas in fact that that's the best practice hey when a tree falls let it let it let it rest and go back into the earth and what kinds of great critters and live in these old trunks and it's awesome for whatever.

34:09It's not good in the Santa Monica Mountains near a city. It's really deadly. That's the thing. It's a real distinction, folks. If we're going to have people live places, we cannot keep the natural environment because it burns down. I'm actually, I'm perfectly fine with relatively natural forest management. I grew up in Oregon. my child, the best friend's dad was the dean of forestry at OSU. And I grew up in the trees as a boy scout, you know? So like, I have a deep appreciation for nature and I've been around the United States camping and bikepacking and so forth. But where you build houses, where people live, where our stuff is, we need different rules.

34:45And if you don't think we should change nature, then let's not build houses there. But as a big fan of housing stock, you're going to have a hard time getting me to agree to fewer housing during our current crisis. Let's talk about the jobs report because I think the data just came out. The data just came out, ladies and gentlemen. Uh-oh, uh-oh. So don't steal my thunder. I want to do this. Okay. So ladies and gentlemen, here we have the December jobs report fresh off the presses. Expectation was about 155 to 165 ,000 jobs, depending on how you did the average. The actual number, Jason, we gained 256 ,000 net jobs in December.