TWiST News: Headphones.com, How Sound Takes Down Drones, TollBit Secures Series A | E2031

0:00quarter milli check non dilutive funding you guys are my heroes that's amazing wow the cap table stays pure i like it that's that canadian socialism at work they they you see jason it's good for business here they are incubating the youths yeah but you know what they didn't have to convince venture capitalists to clear market so that's the only problem in all seriousness with these gifts other governments do it too new zealand japan i've seen it all around the world where grants are given. Sometimes people get better at pleasing the grant committee than they do at selling venture capitalists on 100 times return, which are two different things.

0:43This Week in Startups is brought to you by LinkedIn Ads. To redeem a$100 LinkedIn ad credit and launch your first campaign, go to linkedin.com slash thisweekinstartups. vanta compliance and security shouldn't be a deal breaker for startups to win new business vanta makes it easy for companies to get a sock to report fast twist listeners can get a thousand dollars off for a limited time at vanta.com twist and beehive power your newsletters with ai tools referral programs and add network features all in one platform get 30 days free and 20 % off your first three months at beehive.com slash twist.

1:29All right. Hey, everybody. Welcome back to This Week in Startups. I'm Jason Calacanis, angel investor here in Austin, Texas. Yes, living in Austin these days. I invest in about 100 startups per year. I do about 150 episodes of This Week in Startups, 50 episodes of All In. So 100 startups a year, 200 podcasts. And yeah, then try to get a little skiing in and spend time with the family. how are you doing, Alex Wilhelm? I'm doing fantastic. I'm really digging our live news, just push in general. This is our third show in three days, which I think is the most live news we've done in a row, at least since I joined the team.

2:07So they can correct. And there's so much news out there. Technology is impacting everything in the world constantly. Yesterday, we had a really good discussion about election integrity. Last week, we talked about robo taxis and built a model. How long would it take to build out a robo taxi fleet just to service the united states and uh doing really all kinds of double clicks deep dives into what's happening in the world of technology from you know first principles and uh doing some math even to figure out what's happening in the industry and something that's happening in the industry in a major way is obviously what's going on with ai and so today I wanted to talk a lot about Claude AI because they have that new product.

2:52I don't know what the name of it is, but you can basically take over your web browser. Is there a name for it? Or is it just Sonnet? It's the computer use API attached to currently Claude 3.5 Sonnet. Okay. So you have Claude AI, which is the name of the company. The version of their LLM is Sonnet for 3.5, the version number. and then they call this the computer interface computer use computer use okay terrible branding seven names and it still doesn't explain what it is um it should just be quad browser or something yeah i mean you'd think so but i do think computer use does kind of say what it does on the tin um now as a recap if you were with us yesterday we talked about this just got to touch on at the very into the show but jason it caught your eye after we recorded because there was a story about a um a pizza that was procured not by a human right i mean uh once you give developers this tool it's going to unleash any number of interesting demonstrations and so this one was particularly interesting a bunch of developers got together and uh it seems like they told doordash um hey we need to feed a couple of people uh and it went and ordered pizza now it didn't need any intervention to do this and this is what we've always hoped siri would do or alexa we always wanted to say siri order me a pepperoni pizza and a regular pizza a cheese pizza medium have it ask us you know some questions when do you want it delivered which pizzeria do you prefer and then just go do it and here we are it's going to do it and if you look at the new ios 18 alex every single app has a checkbox to allow super intelligence essentially siri um to review your behavior in that app it doesn't take a genius to figure out why they're asking for permission they want siri to have watched you use uber to call a car united to book a flight and they want to be able to have you say, hey, Siri, book me a flight on United, going from Austin to San Francisco tomorrow, in business class, or premium economy, let me know the pricing, I don't like middle seats.

5:17And here you go, it would be able to actually figure all that out. And it feels like it's close to figuring all that out, huh? Yeah, it really is. So I went actually went out and went through a bunch of videos of people using this in action. And I picked one Jason from a founder. so we're going to watch a short clip here it's about one minute and it's from mustafa erghisi now he's the founder of ai2sql.io i'm not gonna lie i don't know what that does but i wanted to give them a shout out but this clip if we could get that on the screen all right here we go so here is a essentially him using it live so this is what it looks like when you play with it and he put together a a question go out find different headphones on the web and then pull the data for the different headphones into a spreadsheet now we can watch how it thinks so on the left if you're watching the video on youtube it literally kind of walks you through the steps that it's doing and the actions it's taking and it's not lightning fast because the internet only moves so quickly jason but i love seeing the steps here it's very encouraging yeah i mean this web scraping has existed if you know what business process outsourcing is you know people in manila india doing repetitive tasks um and then there are companies uh primarily based in manila israel india that do web scraping as a service there are tools that you can use as a developer to write these and essentially you train it and say hey i just want to grab the price here's the price on the page i want to grab the reviews i want you to look at the number of reviews and you kind of train it as to what you're trying to do and then it goes and launches web browsers virtual machines basically in the sky and it fires off the browsers and this is why when you load facebook websites instagram etc tiktok linkedin you only get to see so much today right it will look at your ip address and then if you're not logged in not let you scrape it because these tools are so prevalent there's a lot of legal issues around this but the vision here is absolutely fantastic because you could with very little work say just tell me the price of these headphones tell me when the prices change and when the price has changed send me a text message or an email or open that web page for me and just buy it you could just say buy it when it hits 600 bucks like a buy or sell order for a stock so really clever stuff going on here and this is going to change everything and i think this is why we're seeing that static team size alex that we've been talking about yeah no i'm so excited about this.

7:51People are kind of focusing on a couple of the anecdotes that Anthropic put out in their release about this. You know, at one point in time, the system went off and kind of watched videos in a different tab and whatever. All of that to me, it sounds a little spooky, but I think it's probably just mistakes being made. But once I can have this embedded in my OS, which now feels no more than a year or two away, then it's going to learn, Jason. And you're not going to have to tell it, I prefer middle seats. It's going to know. It's going to know you fly on united pretty soon i'm gonna be like look can i just see a couple flights for tomorrow because i wanted to go to austin and it's going to show me the things that i like and it's going to talk to me and as long as i can make it my own i i'm very very excited about this i don't mean to sound too bullish but i think this freaking rocks uh this is where it's all going we made an investment in a company called athena you can go to athenawow.com and sign up for a virtual assistant a big part of their vision is to watch a virtual assistant work for you and learn and then have the assistant become bionic and using ai and so that is kind of the underappreciated part about athena is that they are really smart human assistants who are doing repetitive tasks for you are going to train their ai over time and that's why that product is doing so amazing if you don't have an athena assistant it's kind of sweeping the startup community athena ww.com is my link and they give you like a month free or something crazy uh it's a really generous offer so uh and i was the first investor in jonathan's first company and marco's thumbtack they came to me with the theme and they're like hey we want you to be jonathan said i want you to be the first investor in this company i said why do you want me to be the first investor in this company if your own money from thumbtack and you've done really well he said uh you're my lucky charm i feel like i need you on the cap table first because you were the first investor in thumbtack which warmed my heart uh because you know as investors you do very little in the scope of helping a startup you know you give them some money um and then you hope that you get out of their way and support them on the margins alex but it's very rare that i think a venture capitalist makes a massive contribution to the trajectory of an outlier company and so it's just nice to hear that you had an impact yeah i think vcs often step in when there are problems but on outlier companies, things tend to kind of click along and go pretty quickly.

10:11Okay, there are more than 50 ,000 venture backed startups in the United States alone. This means marketing has to be perfectly targeted. You got a lot of competition out there, or you're just going to fade into the background and your money will go with it. All your ad spend will be for naught. You got to make sure you target the right prospects. So how are you going to do that, especially in a business to business context? Well, the answer is obviously LinkedIn ads, where you can precisely reach the professionals who are likely to find your ad relevant. Just think about it. Wouldn't it be great to target your ads by the job title, or the industry, the location that that company is, you know, and maybe even a very specific company, maybe you got a list of 20 lighthouse customers that you want a bear hug that you want them to know about your product or services.

10:57LinkedIn ads is going to help you do that by building a relationship and driving results. LinkedIn is the environment where people are receptive to business. They're not there for food or politics or entertainment or music. They're there to do business. A billion members, 130 million of them are decision makers, and 10 million of them are C-level executives. So start converting your B2B audience into high-quality leads today. Get$100 from your boy Jay Cow, linkedin.com slash thisweekinstartups to claim that credit again linkedin.com slash this week in startups no spaces no dashes terms and conditions supply because they're giving you a hundy i'm curious though what startups will do with anthropics new tool because we've talked a lot about agentic ai or ai agents and sierra's working on this about taylor startup microsoft salesforce all the big companies but to me it's always been a little bit behind closed doors if you will but here there is a thing you can just go play with and then hopefully use.

11:54And so I'm hoping this opens the aperture for use cases style and also just bringing more intelligence to more stuff on the desktop. I'm blown away. And agentic, having the ability to control one's actions, goals, and destiny. Autonomy, basically. Being human is agentic. So when you hear that fancy term, apply to AI, just means the AI is kind of autonomous, like an agent, and it's working on your behalf. I can tell you what's going to happen. and I came to the conclusion in the shower today. Okay, hit me. Alex, I had a shower moment. I think we are going to see a cataclysmic, maybe it's too dramatic a word, but that's the word that came to my mind, a cataclysmic employment landscape for white collar in the coming years.

12:44Tell me more about which parts of the white collar economy you think this is going to hit the hardest or first. i'm having a hard time seeing finding places where it doesn't hit so you know people would have said creatives previously right uh but when we did artwork for a little bit on monday and we had our founder university things that artwork was a six or seven out of ten it was done by chat gpt and it was extraordinary how i didn't even consider for a minute using an artist because the cost of an artist would be whatever 500 to a thousand dollars per illustration even an offshore one might be two or three hundred and it would take them a day so the time it takes plus uh you know um the cost would have made it cost prohibitive so but you can do it you know basically for free so creatives i think are going to be hit very hard then i look at developers and i think the bottom third of developers if they don't level up are going to be essentially you know that work will be done by a senior dev kind of having three or four junior devs reporting into them and the junior devs are essentially agents like we're seeing here because you can now tell these agents go make me spotify go make me twitter and it will go make it uh now it's going to have bugs in it but that's what young developers do too is they submit bad code and the senior developer fixes it so i think that that's happening right now and i met somebody i was at a show for alexis gay she has a really cool show called unprofessional you know the artist uh the comedian and i went to see her in austin with bill gurley he tweeted about it it was quite charming she's got a wonderful story about working at a company called redacted well worth seeing she's going to do a northeast tour so shout out to alexis gay and she is yay alexis gay on all the socials y-a-y alexis gay and her joke is my parents named me alexis gay and then for 12 years in school everybody was like alex is gay um and made jokes is part of her funny bit in the show she's she's hysterical we actually had her on my old show at tech ranch we had her on equity once she's just a treat she's a treat yeah um so uh you know i was just thinking uh how so i met somebody from grammarly uh who just happened to be at the show a really nice guy and um who lives in austin is a fan of the shows uh the pods and i was just thinking how grammarly took what we do alex and you're you're a 10 out of 10 writer i'm i'm i hope i'm up there too and the nines or tens but you know how it is to like manage bad writers um and have to like you're just like come on man i've taught you about you know spelling out the numbers under 10 i've taught you about the oxford comma you're not getting it and then grammarly just does all that work now you don't need an editor to do that first 90 pass you do need an editor to tell you like you missed the story or move this graph up to the top it's your strongest one start with this work backwards whatever it is so the only things i see not being impacted by this in the short term are manual labor trades persons tradesmen although we have a company master tech that is making automotive technicians bionic so you know they're they put in to the system they're working on a toyota it's making this kind of sound it's this alarm is going off and it kind of guides them so a junior tech again could become a senior so i think we're going to see half of white collar jobs go away so there's a really fun parallel 50 okay fine but time frame then 50 i think it's going to be 10 a year for three or four years in compounding i think we're going to lose 10 percent of jobs and i i'm just watching it like these companies with the static team size alex have been getting smaller year after year after year for three or four years now they use the cover of the pandemic to make cuts then they use the cover of get back to work you know amazon is sticking to their five days a week in office if you don't like it the head of aws just doubled down he's like bye if you don't like it we understand go find another job that's the gentleman's riff we talked about it and then i just keep seeing disney 10 more 5 more that five or 10 that's occurring now is not just because the companies were too fat it's because the top third of the staff is using ai and making that bottom five percent obsolete now you can always make a team better by cutting the bottom 10 everybody knows that that's well established cut the bottom 10 of any team replace them you're going to do better that was jack welch's thing to do it every year five ten percent riff um because just that's just the nature of sports and performance etc but yeah i think this is going to occur five to ten percent a year depending on the industry for four or five years straight and we'll be sitting here and companies will be twice the size with half the people well that does imply that whomever wins the upcoming presidential election is going to have a really weird economic uh trajectory to deal with and uh good luck to them i mean it also makes it i think it makes me realize that the president you know can maybe you know on the margins steering economy in certain directions but the economy is going to do what the economy is going to do technology has a much bigger impact than any president and i think what the second and third order effects of the cataclysmic white collar contraction cataclysmic contraction of this cataclysmic contraction i think if i'm right is going to be the story of this generation is what happens to people who made 100k or 200k working at tech crunch or the marketing department at salesforce or somewhere and their job just went completely into clawed AI, got completely consumed into, you know, a one canvas.

19:12Do I sound crazy to you? No. And here's why you mentioned that the software developer in your model will have several people working for them and there'll be individual AI agents. You also said in your Grammarly bit that you can have now technology do the first draft for you, but you do need someone more senior to look at and say, hey, you missed the story. But in both examples, you have a human doing orchestration, and then you have technology underneath them handling the grunt work. But both examples are actually kind of the same, albeit in different industries, different jobs, but they kind of feel the same.

19:44So I think what we're going to end up with is increasing economic power of the best and decreasing economic viability of the lower half, to use your 50 % point. And I just don't know if we're ready as a as a species to deal with that kind of economic change at the time frame you're describing it get messy and i think the way this messiness works out is there'll be abundance in other parts of the economy and that abundance will be that services and costs of products will plummet so the cost of a tutor is now zero i told you the other day i started doing i realized finding a tutor to do history with my daughter yeah was going to be more work than simply when i pick her up and i drop her off at school doing history quizzes and talking to chat gpt yes so i am not going to hire a tutor but my daughter is going to experience having a tutor yeah that's kind of crazy when you think about it right um and so your costs are going to go down in terms of living and the products and services you use are going to go up in terms of what they're offering and so it's kind of like buying a flat screen tv right now and did you ever go through this process like it used to be five to ten thousand dollars to be at the top of the curve and now it's like two thousand a thousand and you could get a giant screen tv for 500 if you don't care about bells and whistles founders do you want to sell to bigger customers i know you do you got to get that ACV trending up.

21:18And you want to push your churn down, right? Sounds good. But to sell to those big buyers, you need to clear all of these compliance checks. You know that. That means you got to have things like SOC 2 sorted out. What's SOC 2? It's a standard and ensures that companies keep their customer data safe. And if you aren't SOC 2 compliant, you can kiss those big deals goodbye. You're not going to land the lighthouse customers. You're not going to be able to operate at the highest end of the market, but Vanta makes it really easy for you to get and renew your SOC 2 compliance. On average, Vanta customers are compliant in just two to four weeks.

21:52It can take months without Vanta, and they automate compliance for GDPR, HIPAA, and more. So you can sell to bigger customers in whatever markup your startup is going after. Vanta is going to save you hundreds of hours of work and up to 85 % on compliance costs. stop slowing your sales team down and use vanta get a thousand dollars off at vanta.com twist that's vanta.com twist for one thousand dollars off your sock too i think it's a very interesting moment in time for the economy and you know i wanted to have somebody on the program today who i met over email who's a fan of the show and and he uh is the founder of headphones.com he told me a really charming story over email we've become friends since about how he saw the episode with um um um the founder of calm and yeah when uh he was on the pod he we talked about calm.com and owning a four-letter domain name and so maybe you could introduce our guests and and we'll talk a little bit about premium domain names yeah so this is hey trust me jason we are going to mention hi-fi headphones i even grabbed some data for you on that exact point um everyone please welcome to the show it's andrew lissimore he founded headphones.com in 2016 with his brother he is the ceo and if you think you like audio gear headphones and speakers that sound delightful well wrong because he has you beat andrew welcome to the show thanks very much great to be here jason and alex so maybe uh you know you could tell the story of how you got the headphones.com domain and the little connection to this week and startups and uh you know how the business is going and then we'll get into how ai is going to impact your business yeah i was gonna say first i'd love to address the fact that all the examples you guys could have used for your cloud thing you did this terrifying headphone terrifying and incredibly exciting headphone example so i don't know if that was on my behalf but man my heart just started pounding myself like i gotta leave this thing and get to work um but yeah yeah that's that stuff super exciting um i'll give you the kind of crazy story about how we ended up with our domain and uh it was super unlikely that that I like a few eight years ago told me I'd be here with this company.

24:04I would have said not a chance. In fact, if I had like whiteboarded out this business idea to myself eight years ago, I would have said this is a stupid idea and I wouldn't have done it. So things kind of just took their own course. And it started when I was in Austin, actually. I'm Canadian. I live in Vancouver, technically. But I was working in Austin for a SaaS company. I was a VP of marketing. It was Andreessen Horowitz back. And I was working really hard because it was my first big role at a startup. And being from a corner of Canada, I felt just pretty excited and special just to be able to participate in the big venture world with big investors and everything.

24:43So I was working hard just to try to prove myself. I got burnt out and I started buying super expensive audio gear. and it was like a way i i don't know the first time i did it i i think i just like i like gear and i like music and it felt so good when i got it and i was playing around with it that i just kept doing it and i'm now married to monica who at the time i was dating and she's a cfo and an accountant and very financially intelligent and she said edu this has got to stop like you're spending way too much money on this stuff how many pairs of headphones can you wear at one time and i i said you know what you're totally right except i like this so much i want to keep doing it so i i devised this stupid idea to save what would become my marriage it wasn't yet but this relationship and still be able to enjoy headphones which was i'll start this little business selling them on the side and it was like who wants to go compete in this is 2016 2017 who wants to go compete with amazon and best buy and consumer electronics like it seemed it seemed foolish but i thought as long as this thing breaks even then i can have all the gear i want at my house and monica won't get mad so that was that was the catalyst of the genesis for this and you decided you would start selling the product this sounds like a familiar refrain you have an addiction and then the most logical thing for anybody addicted to any substance or product or service yes that's rock bottom sell that service yes this is i think there's many uh yeah adult r-rated films and dramas about this like it's yeah it is a common pattern and the thing is even though it seemed like a dumb idea and probably was i liked it so much that i just brute forced it in the early years and just made it work because i was like if i can have a chance to do this instead of being a sas executive for a b2b sas company i'm going to take it so i started selling all kinds of high-end audio gear including speakers and amplifiers and headphones and realized through some not too tricky analysis that shipping 300 pound speakers and selling them online was not super efficient.

26:48And also that person who I had to pay money to acquire probably buys one pair of speakers in their lifetime, maybe two, if they're 300 pounds. But headphones were light, they were, people would buy multiple pairs for different purposes. They wear out so people replace them. The margins were interesting, and I could store a million pairs in a warehouse and ship them pretty cost effectively. So I thought, okay, here's the plan. I'm going to sell these headphones, but I couldn't sell the stuff that was on Amazon and Best Buy because they had that locked down and had built a great service to deliver those products.

27:21So I found this whole world of audio that I didn't even know really existed at the time. It makes sense that it did, but this ultra high end kind of world. So it's not because I'm snobby about it. But it's just because I kind of had to, it was the only place that was underserved by the incumbents. And so I found headphones that cost up to$50 ,000. And our average order is over 1000 on the site. Yeah. And that's kind of area we played in because I thought, you know, Amazon's built for efficiency and, you know, your margins, my opportunity, they can't really service the kind of customer that's going to spend$10 ,000 on a pair of headphones and probably won't be able to in the near future.

27:58So then I had to try to convince these really high-end audio brands and they kind of operate a bit like luxury brands where they're they're snobby they're really protective of distribution and i'm at this point like a guy on a couch yeah young pretty young guy on a couch um and these are mostly european companies too so they got the european attitude about things and so i was i made a list i think probably of 50 different ways that i could try to hack credibility in fact that i did that because i kept getting no's and i finally got a yes and then they looked up my corporate address and they're like this looks like a condo and then they ended up saying no so i gotta i gotta like change my approach here and look credible so one of the things i wrote on the list was if i got the domain headphones.com yeah these companies would have to say yes they totally have to and i just got glossed over it didn't seem very realistic but uh i did in my list of attacking these ideas i emailed the who is on the domain the guy wrote me back like an hour later and thank god he wasn't a domainer that he wasn't it wasn't i didn't enter that shady world of having to get a domain from someone who's hoarding a bunch of domains it was a british entrepreneur who'd moved to silicon valley in the first dot com boom super nice guy and uh he promptly told me he wanted 1.2 million dollars for the domain um and i i didn't have any money of course monica would have been thrilled for me to pay 1.2 for a domain.

29:25So I, but I didn't give up because I thought, okay, I've got this guy. We're talking. He's not like a shady domain guy. Maybe I can just connect with him on a human level. So I just kept working at it and working at it. And the, what I was kind of solving for was how do I get this thing and not be on the hook for millions of dollars or, you know, even hundreds of thousands of dollars if this business doesn't work. This is super early. And I thought there was a really good chance. the business wouldn't work. So I negotiated this kind of cascading payment schedule with him over six months. And I think he took a big risk to do this with me.

30:04I think he just kind of saw a little bit of his young self in my persistence and finally just caved and did it. And this is like eight years ago, eight and a half years ago now, we're still friends. And he did great off that deal. And so have we. So I think it really worked out. And I think the lesson I took from that is like the outcome was kind of binary for me with buying this getting this domain so if the business doesn't work i don't want to owe anything i want to give it back i know nothing if it works if i overpaid for it a little bit it's not going to be that big of a deal so that's kind of how i negotiated the the agreement amazing we switched to beehive and it has been huge for this week in startups we have this twist 500 newsletter i've been working on this entire platform where we're trying to find the 500 most important private companies so twist500.com and we've been using beehive for this email newsletter beehive b-e-e-h-i-i-v it's a service that's built for growth and when you're doing an email list or a podcast you want growth and they've baked it into it beehive was co-founded by one of the minds behind morning brew you know that incredible newsletter well you can get access to the tools that helped build morning brew to millions of readers and if you're interested in making a little money with your newsletter beehive can do that too because beehive has an ad network so it's a no-brainer for folks who want to drive revenue and want to grow there's a million platforms there's a million tools out there but a tool that solves those two problems growth and revenue that's the winning tool in my mind that's why we moved over to it they have an ai post builder they got a referral program the list goes on and on it's super affordable at 39 per month but we got a great deal for you now 30 day free trial and 20 off your first three months just head over to beehive.com twist for 20 off your first three months beehive b-e-h-i-i-v.com twist hit the rewind button write the url down sign up now and get that discount great job to the beehive team we really love the product so you were able to get a great deal on it and then uh people started respecting the headphones.com domain it made people respect it and people were willing to buy it now when actually i should stop you jason they didn't immediately respect it because back then there was a lot of those link farms on those kind of canonical domain names yes i hadn't really considered i thought this is this is super credibility and i got a lot of people expecting like a link farm like it is so i just pay 50 cents a click a dollar click kind of buy search traffic flow the search traffic through as opposed to actually building a site where you know people can get good information um and then you sent me a pair of like incredible headphones thank you very much that was incredibly generous of you as a thank you um and uh this brand bathys i couldn't believe it um this these are the bathy these are the focal batis batis technically yeah they're french so they don't really care if these things make sense if it's hard to pronounce and then there are the utopias which i have as well and i went down the rabbit hole i had no idea alex that there was an entire onion you could peel here of the file size so i signed up for a service called cobus cobus yeah also french so another french company and all the files are flak files then i have a name is it name n-a-i-m that is yep name uh british british amplifier that goes it's a headphone amplifier that streams directly from kobuz and then it goes into these utopias with these special cables and i couldn't believe that the albums i fell in love with from pink floyd uh or dire straits could sound so much better the sound stage as they call it like i there were things happening in the music that i did not hear on you know these things uh which are great for a phone call or you're listening to a podcast i guess it's okay and then i started getting into the speaker game and i just bought a pair of these keefs k-e-f kef yeah kefs and then these things are incredible i can't believe this concept of soundstage again with the desktop speaker so is are the is this like an actual known thing and and and this is why people get addicted to it or is it the aesthetics and the obsession that people are into because i i've now gone into all the subreddits i've started going down the rabbit hole and i see all these websites where people are literally using testing tools to test all the different frequencies and waves and i can't hear that it's testing people talking about wine alex um that's actually a good analogy the wine yeah um so tell me how much of this is reality versus aesthetics versus like a hobby that people have lost their minds on because i actually buy that i'm hearing something completely different than i experienced for the first 50 years of my life yeah you definitely are uh first i'll say that it's sad that someone like you who loves music and certainly afford this stuff has waited this long to be able to be exposed to it and that's something i'd like to change it's kind of an opaque world where you feel like you need to do a lot of research and dive down these communities to kind of figure out what's worth buying on the flip side you have companies like sonos great product uh bose apple kind of spending a lot of money to tell you that those are the only things worth buying, regardless of how much you can you can afford.

35:44And you know, we don't manufacture this stuff. So we're not really able to change it at the source to make it more approachable. But I do wish it was a lot easier for people to know exactly what to get to be able to experience what you did, because it is real. I will caveat this was saying there's, of course, diminishing returns as you spend more money. But that's not to say that they're not super noticeable. So and there's a subset of people who just love great, well crafted experiences, I think they actually have the more sensitive in the sense that there's like, sensitive to the senses, like sight, touch, detail, sound, for sure.

36:23And the way that I the way that I've thought of this is and that's kind of the way I justified it for myself, even before I started the company, is people like that get so much joy and pleasure out of using something that's better than the average thing. And they don't just get that joy when they buy it and it goes away like the Hedonic adaptation, which happens to most people. They get it every time they pull that thing out to use it. And so the way I thought about it is that the net present value of the joy that you're going to get out of that thing, if you're that kind of person, is so high that it makes sense to go and optimize and try to find the best possible thing to buy.

36:57You were talking about aesthetics. I care about that a lot. And I think that's just part of what makes a great product. So there's people that, and there's subsets, of course, in this hobby. There's people who are purely chasing the best audio and they don't care if it looks totally ridiculous. They're usually single. They've got those wild things on their head and I could show you some of these and you just immediately laugh, but they're just, they don't care. Yeah. There's people like me who, you know, I like great furniture. I like art. I like design and architecture. structure i like great products and industrial design and i like a balance like you know i want something that sounds incredible but i also want it to feel great when i hold it and i want it to look really nice and to me the gestalt of all those things put together makes an awesome experience so i think that's kind of where most people are and those are the people we kind of like to focus on as customers it's interesting to me because when i think about people who do care about the aesthetics and the sound quality and have an ear for this i feel like they would be doing their own research and testing but there is a reviews portion of the headphones.com service so i'm curious how important is that for driving people into the e-commerce funnel for you guys yeah i wouldn't even say it's a portion i'd say we're this is kind of facetious but we're like a media and reviews company that monetizes through e-commerce is how i would look at it like that e-commerce is our business model and this is like early on when i was a sas exec i was doing sas market again, like 2014 and 2015.

38:21And even then, I kind of just realized the cost of acquiring customers through digital platforms like Facebook and Google was just going to go up over time. They'd kind of get better at capturing value, and there'd be more people competing for the same real estate. And there's all the privacy stuff that was also making it harder to target and also going to push those costs up. So before I decided to jump into this with both feet, I thought I need some strategy to acquire customers where I don't have to constantly look for digital arbitrage to acquire customers. Find some quick thing that works with the algorithm for three months until everyone else discovers it and I got to find something else.

38:57That's not like a fun way to build a business, at least not for me. So I tried some stuff and what I landed on was this idea that the kind of people that buying really expensive headphones can uh they can see through uh ad disguised as a review so i thought you know what i'm going to do i'm going to build like a community and content side of the business and i'm going to focus 100 on two things building awareness through that content and building trust nothing to do with sales and you know here's the um i think it's a really great powerful observation here are the the keef kef kef kef uh wireless engineering foundry from uh they've provided speakers for the bbc actually is how they they started and um these are a little bit controversial because they don't have like a traditional audio in it uses usbc um as the input and it's got a ton of different ways you can uh put stuff into them it's got its own app but again it's got the these products are so sophisticated and they're so well crafted you can see the craftsmanship in these alex in terms of how they're built and i think that that to me is like one of the really interesting aspects of this journey is there and here's the name uh amplifier uh for those of you who are wondering which is beautiful in person too this thing is so heavy and it has a ridiculous it's kind of ridiculous how heavy it is the thing's got to weigh 20 pounds 15 pounds and it's you know the size of a small personal pizza box but the interface and the remote control is so heavy and that dial on the top you can spin it and it's got like a motion to it and that's your volume and then all of them will stream directly from the provider like kobuzz or apple or i guess a lot of people use the jay-z one that title title so you know there's incredible craftsmanship here that i love and i think the best description i heard of a luxury product is um that luxury begins where necessity ends and i think necessity you know with a pair of aripods uh is you know totally fine but um you know when you start getting into these luxury products they you know it doesn't need to weigh as much as it weighs it doesn't need to have this smooth motion but it does yes because i would pay 500 more for something that had a really beautiful dial like that dial on top when you explained to me how it's fun my first thought was i want that yeah um and then there's something like dax digital audio converters digital analog converters and these headphones have i mean i'm not i don't make this like the whole thing but the dac um from my understanding really does increase the experience of listening to the details in the music from these high-res files i think i can actually explain this in an interesting enough way for for everyone and this has it built in right this has a built in that's been tuned for those headphones yeah and when you turn the switch you can either do like bluetooth alex or you put it in dac mode and then you have to put a usbc cable in and run the usbc cable to your iphone in order to have the high res files go over and you can't get phone calls but because you need the bandwidth and it turns out what bluetooth doesn't have the bandwidth to do proper yeah it wasn't built for continuous streams it was just packets going back and forth so it wasn't built for the stream well that's why bluetooth is garbage and always has been in my view for for audio yeah the thing about a dac that's kind of interesting is you know all the the files uh jason that you're you're getting from kobuz for example those flak files as you know they're all ones and zeros so what the dac's doing is it takes in those ones and zeros and then it converts them into an electrical signal that's then able to move what's a magnet in the ear cup in most headphones and that magnets that ring around you can picture it in speakers a little bit more easily that big ring and that magnet's going back and forth oh there we go thank you for the graphic uh real time it's uh that moves to create the sound the sound wave and so what you have with like apple and your iphone and a lot of companies is one of the bill of materials that they know consumers the average consumer doesn't care a ton about.

43:31So they're putting a really cheap one into your gear. And so companies that are really focused on a great audio go and they spend years and tons of R &D on this one little discipline to make the best possible conversion. And so it's part of that chain. So of course, it starts with the recording and the track, and then the quality of that track in terms of digital or analog and how high res it is. The cables do matter a little bit, not as much as a lot of people say, but if everything else is dialed in, the cables start to matter. And then the headphones, the DAC and the amp, those are all part of your audio chain.

44:07And once you get into the really, you know, the upper echelons of all this stuff, you're, you're optimizing every little millimeter nanometer of that chain. And I kind of, Jason, to help you out, because I wanted to find what's the perfect thing to give people kind of peak experience in audio without having to worry about all that stuff. It's really what you did like kobuz that name unit that's beautiful industrial design it streams kobuz directly powers your headphone has a DAC and then that focal utopia which is my favorite headphone in the world it's very expensive ridiculously expensive but that whole package together is like if you just want to skip to the end save yourself all the time and fiddling right to the utopias or four or five grand and man i mean i wear them every night and i love them and sometimes if i'm getting a little fatigued what do you think of my friend phil caplan pud has these new crazy headphones you can see them here so we've become great friends and like he hasn't just so he's a become in a few short months a legend in the headphone world the headphone subreddit has over a million subscribers or members and if you and they've been around for whatever since reddit basically started and if you go look at the top posts of all time puds posts which start this year are like five of the top 15 or five of the top 20 and then he's crossed over he had a tweet with like 50 000 likes on it when someone just tweeted about these crazy designs so obviously that's outside of the audiophile sphere um yeah pudd and i have become great friends he's just uh actually someone called him steve jobless which i love because it's like only a guy like him exactly with enough idle time and resources can go and do something like this like people get these ideas not many people go and actually make them a reality and i love the britishness of how he he poses in these pictures always so seriously he goes and takes these things out in public places it does photo shoots with them it's incredible what he's doing is just uh absolutely deranged and wonderful that it exists in the world exactly and it brings a bit of levity to what's become a pretty stuffy hobby, which I love.

46:16Like I, I want to just ruin and this term audiophile, uh, it's just become this gross kind of nerdy gate kept term. And I think an audiophile is just someone who loves sound, right. And you don't need to know anything. You just need to know you like sound. That's the definition of it. This is a guy who's just bringing like joy. He came to it. We were at a live headphone show in LA, uh, two weeks ago when he brought all this stuff and this show has thousands of people at it and there's just this swarm he had like this entourage of people around him the whole time laughing millions of pictures were taken he created distro kid people who don't know which is a distribution system and before that he did uh he has created real things that are incredibly created real things in the world well also his book f companies about his time at f companies.com is the reason why i was initially interested in startups so i'm i've been a philip kaplan fan since i was at the public library growing up um andrew before we let you go one quick question about the uh back to the funnel of points about the business and so forth i really wanted to get your take on what it's like to have a business that benefits from organic search traffic in this era of fading google dominance and i'm just kind of curious how that's impacted how you run the company and how you approach reaching out to net new people apart from coming on shows like this yeah uh it's kind of sad right like we kind of peaked too late in terms of being able to dominate on Google.

47:39I'll say our philosophy around Google, I think was always the right one where this was another one of those things where we didn't want to have to constantly chase the algorithm. We thought, let's just create the most useful stuff for our target market. That's our North Star. And eventually Google should catch up, which it did. So we're like number one or two when you search for headphones now, which is pretty cool considering we sell stuff that's$1 ,000 and above. So we were at kind of a handicap cap for that one. But yeah, the SERP now is a big money making engine for Google, and they've kind of wiped the organic stuff below the fold.

48:09So it's not nearly as powerful as it used to be. It's a cool kind of vanity thing. But what we have done is YouTube is the second biggest search engine still, I think. And so we've really focused on YouTube, which is a great place for people to learn about this stuff. We do tons of YouTube content. And so we're actually acquiring way more customers through that channel. And it also has the benefit of being able to be highly educational. And we kind of keep I alluded to this earlier, we kind of keep this wall between the sales and marketing side of the business and our content side, so that we can make sure it's as authentic and trustworthy as possible.

48:44You know, I think that that comes across because the difference for people between you know,$1 ,000 or I think these baties are now much cheaper. yeah they're$699 they were$1000 yeah they were$1000 and so that's a pretty good entry price when you think about like my wife likes the Bose and those are into that range AirPods$399 yeah good AirPods are$299 maybe or$250 or something so I think it's worth the investment if I'm being totally honest but I understand everybody's at a different point in life so and maybe this isn't in the budget but man I do think that this changes your experience to that point audio is one of the few ways that you can change your mental state really reliably reliably yeah so you know it's kind of it's like one of life's true pleasures you can change your environment so for a certain subset of people it's totally worth it if you can afford this stuff you know i'd never recommend that someone spend four thousand dollars on headphones it's crazy but if you have four thousand dollars to spend on headphones i've got the ones that are gonna make your life great uh but really at any price point you can optimize and get way better sound than you're getting with your stock uh bose sony and apple stuff awesome everybody go to headphones.com andrew you're awesome um really excited to have met you and i saw you at the all-in summit and you're just a great entrepreneur uh and come back on the show anytime and uh we'll see you soon thanks so much for having me let me know when you're back in austin yeah yeah we'll do all right very good and you know the guest train doesn't stop here alex we see stuff in the news we we see people building interesting things and uh we have them on the show so uh this story uh we both saw and we thought hmm interesting uh let's talk because military tech's becoming a big thing so why don't you queue up our next guests and let's talk about what they've done yeah so our next guests are kind of a four for one we're not just bringing on one person we are bringing on four students from the university of toronto uh we'll have them come on now they are actually in a conference room all keyed up hey there they are and just everyone's name uh we have asad isak we have uh anna polia tavia we have parth min uh mahindaru and uh michael aquaviva sorry i tried to get all those right guys i think you did okay yeah we prepped before the show but jason what's cool is they took second prize in a competition beating boeing building anti-drone technology using sound waves this is the coolest science fair project i've ever heard of and they're building a company out of it okay so this started as a project uh i don't know who wants to speak for the team but maybe you could explain um how drone warfare is uh changing what's going on in the battlefield and then how you approach coming up with a product to uh you know maybe uh help counter drone warfare of course um i can take that one like like you mentioned drone warfare is is changing the landscape of war as we know it we know about the unfortunate situations in in eastern europe in the middle east as well and we can see drones being used for more than what what was what we bargained for in a sense that drones are used for surveillance they're used for delivering munitions They're used as kamikaze drones with bombs attached to it.

52:04And that's changed the landscape of war completely. Now, soldiers are not just fighting other soldiers. They're fighting robots that are remotely controlled a few hundred kilometers away. And with the advent of cheaper rotary drones, we see the price to acquire them has gone down so significantly that one can build a drone for 50 bucks in your house. and strap emissions to it and do whatever you want with it. And as of now, there's no reliable ways of getting these red team, these drones down. The ways that exist are using special microwaves, lasers or other fancy drones that you just launch up and you hit the other thing.

52:51Kamikaze drones, you could say. Exactly, yeah. But each of those pieces cost like 50 grand, like$60 ,000. It just makes no sense to keep purchasing these expensive kamikaze drones to counteract$50 drones that some guy just built in his station. Let me point you there on the handcraftedness of these drones. So when we see drones being used in Ukraine or in Gaza, Israel, you know, different fields of combat, they are being hand-built. people have the parts and they put them together and they manufacture them locally is the reason they do that is because the drones that you would buy from dgi out of china which is obviously a very controversial issue because the chinese government owns dgi by default any company in china is owned by the chinese government by default those have all kinds of protections in them with my dgi drone i can't fly in certain airspace i can't ram it into something it will not allow you to do that.

53:58So you can just buy the parts, almost like a 3D printed gun and just do whatever you want, correct? Obviously, yeah. And with the advent of websites like Instructables and so on and so forth, you can build your drones for much cheaper than what you would procure DJI drones for. And there's obviously ways to counteract the limitations of DJI drones by using third party. And we see some of that, especially with the DJI FPV drones, the drones with the with the field of view vision glasses um so yeah like you said it is it is a very interesting field right now i'd like to pop in here specifically about custom side uh drones started in the hobby sphere uh most of these drones are developed by people who just wanted to take pictures and they wanted to compete and fly their drones around and so dgi and these other companies kind of came on to what was like a hobby community where people were building these things on their own so it's kind of like this already existed these components the different like software it was all open source so for a fraction of the cost and for a completely different use case you have these uh kits available and very detailed instructions and all the troubleshooting you could possibly need to create a vehicle that flies and here's uh you mentioned instructables here's that website uh and they just have tons of different quadcopters that you can build from scratch and this is what is happening and you can build these for what what do you think the drones that drop and i think they drop stuff right is a is the key way they've been using them in ukraine is to drop a grenade on uh other soldiers so they build some sort of arm that has the pin and the grenade is active and then at some point they release it and boom pretty much and each of these drones can be manufactured for under 50 usd from from what we saw that is that is very scary but so plus that means though that if we have to have a solution then that costs less than$50.

56:12And that's why I think the use of sound and lasers and microwaves is attractive because the cost to use each individual bullet or cycle is effectively zero. Yeah, pretty much. That is where we come in with our solution. All right. So let's see your solution. What did you build? And this was part of a competition? Or how did you guys get started as a entrepreneurial group? Anna is the best person to answer this question. So we all met together via the programs that we have for engineering. And we saw this challenge that appeared for everybody. And we met together. We were brainstorming ideas. And you can see at the same time how in the world all these problems are emerging.

56:54You have different market solutions for it. And we started to think, what do we have? What resources do we have to do this in a viable way? And also maybe not using the current solutions of lasers or microwaves or anything like that. So show us how it works. All right. Add a little graphic and maybe we can walk through your solution and what you figured out. And then, of course, the obvious question will be, well, if you put this out publicly, I guess countermeasures are now going to happen. So maybe we'll talk about escalating tools. But yeah, explain to us what you built. So basically, what we realize is we're combating really cheap, easy, accessible drones.

57:35and since we don't have a lot of money we've fallen that whatever solution we can make up with it's probably going to be a viable strategy combat the situation so the way we work is that we disrupt the electronics that are present in the drone so the drone needs to know where it is and for certain kinds of drones and other kinds of drones the operator needs to be able to see around the drone. So we're targeting these electronics. So on one end, we're targeting the navigation system, the way the drone is able to know where it is in the world. So for a certain class, and the other side where it's just the operator flying through his vision, we also want to be able to interfere with the electronics that are relating to his field, his camera system.

58:22So the way we do that is using our ultrasonic sound waves, these are able to, we're able to where it'll find the effect that they had on the actual electronics that are inside these drones across all varieties of drones from really expensive dgi drones to fixed-wind drones to the consumer kits that people built so we also tested with these hobby kits that obviously actually built and on a wide variety we were able to notice that there are some effects that can really hamper how a drone flies. And we're working towards full spoofing of this idea of where the drone is. And so if we can fully control that, we have a lot of control where the drone thinks it is or just a general problem in that sense.