Venture Concentration, High-Skill Immigration, And Who Should Buy Lyft? | E2067

I want to get into immigration. Thank you for bringing up this topic and following my Twitter stream because it is big on my mind. I know people like to know what I'm thinking and I like to share what I'm thinking. Why do I like to share what I'm thinking Alex?

People email me, jasonacallocannus.com is my email for life with a DME and tell me that I'm a horrible person. And, you know, you've got to stop my DME. You've got to lock down your DME. I love it. I'm not liking my DMs. I love the Savage DMs. I get it. It's incredible. Okay. You don't like. No, I tweet them. I tweet them. I tweet them. I'm just like.

I can only take so much, I think I have a slightly lower bar for negativity day to day than you do. After the third or fourth time someone calls me something nasty, I'm just like, all right, all right, that's enough. It's strictly a reflection on how they're feeling about themselves at that moment. Yeah, that's true. Yes. And usually it's a trouble person or a 12 year old or a Russian Chinese bot trying to cause trouble. Or just somebody doing engagement farming in order to make money, you know?

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Hey, everybody, welcome back to This Week in Startups. It is January 3rd, 2025. We are here in the new year. I'm still in Tahoe getting in some skiing at its 16-fold days. I took my first day off trying to beat my record of 40 days, which I did, I think.

three years ago. All right. My second best year was 36. So I'm currently ahead of my two best years. I track it with an incredible app called slopes. So I want to shout out slopes. If you don't have slopes and open snow in your skier, please go buy those two. I'm not an investor either.

But yeah, I'm just having a wonderful time, had a restful, great time with my daughter, skiing a ton, and I got to ski with Chamath and Freiburg. We're all on this sort of vacation to Tahoe, not in the same house, but in the same area. And so a wonderful, wonderful, restful holiday. How was yours, Alex? How was your rest holiday? Was it restful?

It was full of food, but because we had a three and a half month old year, most of it, no, not super restful. But I think that's just par for the course when you have really little kids. So not a complaint. I got to see my brother who actually he's living in Austin for another six months on assignment. Oh, I'd love to meet him. Also, I'll see what I can do. He's a major in the army and he just completed his PhD in applied physics and is going back to West Point to teach.

Wow, respect. Well, when we have our next event, we'll invite them. I do like some CEO dinners and VC dinners on Thursday nights in Austin. Every Thursday I invite five people to come have dinner with me. I got some regulars and then I always invite like a new person to have like wide ranging discussions because

I love people. Yes, you're doing the show. Let's say hi to some of our folks who have tuned in early. Mark Beatles, our first Nodie coming in today. Campbell, Nodie Squad, Bernie Hepp, Happy New Year All. He was our third Michael Dan, moist and sewn. He is also part of the Nodie gang squad, whatever.

I think Nodie Gang is good. Maddie Newman, our producer and researcher in Austin, she's here. You don't get to be in the Nodie Gang, sure. Oh, Uzi Obius here. Yes, I'm alive. Thank you. A little darker. Gregory Kennedy, Homestead Creative, and a bunch of other people are here.

We always like to shout out the nerdy gang. What's the nerdy gang? There's some people who put on notifications on YouTube, go to YouTube, and this week in Startups, Monday, Wednesday, Friday, we will be going live at about 10 a.m. Pacific. Yes. Noon, Jay Kal, Jay Ranch time in Texas, and 1 p.m. Alex time on the East Coast. Actually, Jason, before we jump into our first chart and our first story, because you brought up the time we do the show, would you like to tell people how the next couple of weeks are going to be slightly different?

Oh, yes, I am going to be traveling internationally for 10 days. So we might start earlier or later. Earlier, I think it's a couple of Eastern time next week. We'll confirm that. Put it in. No, eight a.m. Eastern time. Okay, which means five a.m. Pacific time. I mean, so if you get up from the Nody gang, you're going to have my absolute salute to you. So yeah, when I'm on the road, I still want to do live. Hell yeah.

And that's my, that's my big resolution for this year is to try to, you know, I got my sleep dialed in. I got my weight loss. I got my exercise. I'm adding meditation, but I just want to take those four fundamentals and increase them as part of my New Year's resolution. Maybe lose the at last, like maybe 10 pounds, get to 165.

And the weight training going really dial in the sleep, get that 80, 90 sleep score every night, not just about four or five nights a week. So try to get that to six nights a week, maybe. Yeah. And then the diet, I'm really doing well with that, but I got to take out a little of the sugar. So anyway, those are my resolutions. You got any short, any, any, any quick hits on your New Year resolutions, New Year's resolutions?

So abs for sure. I'm, I'm putting in a lot of pushups, Jason. I'm not going to lie. A lot of planking, a lot of crunches trying to work on that. I avoided new dad weight round two. Thankfully, cause I didn't, I gained like 15 the first time and it's brutal. Um, abs finish a novel.

Don't drink for a year. And I think I'm going to add a non-professional, really personal one. I want to be a really great husband and father this year. I want to be patient. I want to be kind. I want to be engaged and available. And I want to be a little bit less in my head. So a little bit more stoic, a little more zen, a little bit less frenetic, a little bit less all the time. I think you have an active mind as my perception. And when you have an active mind, you're highly intelligent, which you are both of those things.

You can have a hard time turning it off. There's a very simple way to do this. Just get the calm app. I'm talking my own book here, but that's in that company for a reason. And they have one minute, three minute, five minute, 10 minute. Just do a 10 days a row, one, three, four, five, whatever number of minutes, a breathing exercise, some music that they have at a specific hurts that helps you go to sleep. Just do that. Then go interact with your kids.

That's my secret. And there are other like stoic tests you can do. Yes. To help you frame and shout out to the guy. Is it Ryan Holliday? Ryan Holliday. Yeah. Yeah. Shout out to Ryan Holliday who I have to catch up with because you know we've crossed paths a couple of times. And he's also in Bastrop, which is east of Austin. And I would love to have dinner with him maybe one of these Thursday nights or go out to see him. Anyway, you know,

Doing that stoic exercise where you think about losing something or loss or not having it. Another framing is, if you were 70 years old, your kids are 30 years old, cats in the cradle, they're gone, they don't call you all that often, they're busy with their lives.

If you could go back to this moment in time, I'll make it a little emotional here, but if you go back to this moment in time, what would you pay for that? What would the value of that be when you're 75 years old to go back to the moment when they're three and a half years old, they're screaming, they're inconsolable.

A diaper while you're changing the diaper. Yes. Another thing happens. They puke on you. You're covered in puke. You're cleaning a diaper. It's 2 a.m. You got an insufferable boss who's like, where's the Twist 500? Right. We're at my house last night because we had one of those notices.

And yeah, it's trying. It is trying, right? And so that's what I do. And when I was on this vacation, I was saying to myself, I don't get this back. I don't get this moment with the whole family. I got the whole family out one day, five at the same time going down the same ski run. It's all your picture of that. It looks really cute.

And I just have to tell you, like, I just looked at that and I said, I'm making memories, making memories for them, for myself, for all eternity. And so use those techniques. And I think you'll, you know, with a little meditation, a little equanimity and a little stoicism, you can get through what is the chaotic days.

I always loved Warren Zevon, werewolves of London, lawyers, guns and money, a ton of great songs. He was on David Letterman. He had found out he was dying of lung cancer.

Okay. He had never been to a doctor for 25 years. David Letterman said to him, hey, what can we learn from you that you've got this diagnosis and you've gotten a very short period of time now. He said, well, the first thing is go to the doctor more than once every 30 years. And they laugh. And then he said, well, what else can, you know, but seriousness, you know, aside from visiting a doctor, he was a smoker, a lung cancer, the whole thing. He said, what can you tell us? He said, well, you know, enjoy every sandwich.

enjoy every sandwich. And if I ever got a tattoo, it would be of one or two things. Enjoy every sandwich in a picture of a sandwich or a bulldog. And in my weird 54 year old, you know, I don't know, three quarter life prices, if I ever have one, I might do that. I might get a sandwich on my arm or something with just those E.

Enjoy every sandwich. E-E-S. Enjoy every sandwich. Because it is such a powerful concept, the simplicity of a sandwich. And just enjoy it every bite. That is my message for all of you in hope for a great 2025.

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Yeah, and thank you everyone for being here to kick it off with us a twist. Jason is still in front of a tree. He has his fire going. I still have my accoutrement up to indicate my own holiday enjoyment. But Jason, why don't we give the people what they want? And I believe that is spelled C-H-A-R-T in twist terminology. So let's grab one. We'll have a good chart. And let's start with this. So this is actually a chart that you tweeted.

And I wanted to start here because I thought it was a fascinating chart, but I'm curious, why is this quote something that you think a lot about and why did you share it to start the year? Well, you know, when I started Adventure Capital, there were very few players, very few, 30 years ago, there were 20, 30 years ago, very few players. You had your sequoia, you had your climber, you know, some other weird firms. It was a very bespoke, weird, unique, tiny business.

And then, you know, Google happened and you had this sort of big company that nobody had ever seen before. And obviously Apple, when Steve Jobs came back and the iPhone happened, those two things created an industry that was larger than people could ever imagine. And in the early days, people used to go public with

25 million, 50 million dollars in revenue. So a lot of the growth that happened was after the IPO, people would hand them off. And what this chart is showing is Instacart's delivery, Instacart's major investors and the price of each funding run. You see here,

Kosla, Canon Partners in Y Combinator paid 24 cents. I'm assuming that's the share price. And then Sequoia paid 24 cents. So what happened there is, even though that was a year apart, the seed in the series A, the seed round was on a convertible note that converted, I guess, without a discount.

to that Series A round, which is weird that they didn't have a discount on it, but okay. So those two people did the earliest investments and they paid 24 cents a share. Andreessen Horowitz came in for the Series B a year later and paid three bucks a share. And then you had Kleiner and some other folks come in for the Series C at 2015. And you see this nice like every year.

Sequoia Y Combinator come in at $18. Now they had paid 24 cents. Now they're paying $18, right? Almost like 100 X what they paid originally, maybe 75 X or something like that, five years later. In other words, that inside information, this was a great company. So they both made a second bet. That's when Y Combinator had their fund, which was their growth fund.

continuity of growth. They came up with the term continuity for it. We had a terrible name, actually, because it gives the impression that it's not as cutthroated as it is and that everybody gets one, which I think is why Gary probably got rid of it. And then you start to see other folks come in like Tiger Global, D1 Capital, DST, which is your email nurse famous firm, General Catalyst, one of the mega ones. And then eventually this last round where Fidelity, T-Rose, Andreessen and Sequoia paid 125 bucks a share.

in 2021. And somebody took these and they circled, you know, the series D and called their venture capital. And then they called the series D and above not venture capital. You and I had talked about this last week, I think. And I just want to point out to people that when we talk about venture, there's, I think, trad VC,

And then I think there's new VC. And for founders, it's really important to understand where you are in this journey, trad VC, traditional venture capital, we're placing bets, we're helping you grow the product, find product market fit. And then whatever this new VC is, this late stage new VC, what I'll just call

I don't know, the growth stage. Pre IPO, mez, I'm gonna just call it mez financing. Screw it, I'm going old school. Trad VC and mez, because we used to call this mezzanine financing, like this little round between when you were venture and private and going public. So I'm gonna say this is mez growth. Yeah. Trad VC is like the bespoke art, punk rock, gut feeling, roll up your sleeves. And everything else is just a spreadsheet.

It's just people with a spreadsheet. And I'm not diminishing them, but the decisions made there are made largely on some economic bet. And that bet did not pay off because the public markets did not reward

the private market investors after a certain round, and that's what the chart shows. So if we throw up that chart one more time, at what point, and what is the stock price today, if we look at Instacart, at what point will you under water with your investment? Because here, I think it's somewhere at IPO at $27, which means

You know, that series E, the first non-venture capital, the Mezz financing is still underwater by a bird almost. So the share price today, because I thought this would be good at this, was about 44 bucks when I checked it a little bit earlier. So actually, I think D1 capital with the Tinder offer in 2020 is probably only now underwater by just a little bit. But that means- They're at break even, yeah.

But that means everything after, which was the bulk of the capital probably invested in the firm because late stage rounds are larger than early stage rounds, didn't do well. And I think this just goes to show that venture capital, the model, the two and 20 model, the partner model, everything we know about venture capital doesn't always scale perfectly through the mez tranches. But the reason why I like mez, Jason mezzoning, as an idea here is it was always supposed to be temporary and short and constrained.

A mezzanine is not the entire venue, right? No, just this little balcony, right? This little mezzanine, the balcony there. So the point here is those people put their money and they sat around for four or five years and had no return. In that same time, if they had just bought the S&P, et cetera, they were 10 to 25% returns each of those years. In other words, they would have tripled their money, doubled, tripled their money if they had just put it in an index fund.

So the industry has changed radically. And the industry in some ways has been broken. Part of it is too much capital and trying to make it bigger than it is. And that's why just making the announcement here today, I am committing our firm to going even earlier. I have decided, you know, as over the break here, I want our firm launch, which does founder university, a pre accelerator where

Half the companies aren't even incorporated yet. And the accelerator, which is up here to tech stars and Y Combinator, where we have companies that have modest traction or MVPs just going into the market. We're going to really focus 95% of our effort there. And we were spending about a third, a third and a third, third in directs, third in accelerator, third in pre-accelerator.

I'm just looking at it saying, you know what, we can do our most work, the most work, the best use of our time is in founder, your verse, and accelerator. So I'm kind of reorganizing our firm around this concept. And so I am announcing that our founder, university 10th cohort is going to be in person in Austin. So if you're interested in hanging out with me every Thursday, every Tuesday,

Uh, because Thursdays I tape all in Monday, Wednesday, Friday, I do the swing startups. Tuesday is going to be my founding university day. I'm going to make Tuesday my day for just hanging out at the founding university accelerator companies. And we're going to do it in person. I don't know how exactly that will come together. I may get a coworking space. I may do it with my friends, that capital factory, but I've been looking at that chart thinking about it a whole bunch and thinking about where I want to spend the remaining years I have to be productive.

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Well, let's talk about the idea of going earlier because one thing that people have been talking about lately is how venture capital fundraising on the venture side has become very concentrated amongst a couple of firms. So just to give people some background around why you might be going early here is a chart that shows just the number of venture capital firms that are active just as a little bit of background for folks. This by the way, Jason is via the financial times and pitchbook data and just go to show that as you can see over time, more firms and then fewer firms.

And why that matters is we have seen the amount of venture capital raised go down, but also it become more concentrated. So if you look at this chart here from pitch book, this is from December, so it's slightly at a date, but it's mostly correct. We can see that a handful of firms have raised the bulk of the capital.

And if we're going to think about the example of Instacart that we started with, I presume that they're going to deploy a lot of that capital into later stage rounds because you cannot deploy billions of dollars each year into a pre-accelerator, Jason. I mean, what are the checks for family university? Yeah, I'll get right to that. But looking at this strip chart here, 49 billion raised by the top 30 firms.

Andreessen, $7 billion, General Catalyst, $6 billion, Thrive Capital, Josh Kushner, shout out to Josh, $5.5 billion. These people are doing mess-in-y financing. When you're putting a billion or $2 billion into, you know, taking Twitter private or, you know, chat GPT at $150 billion, like, should chat GPT not be a public company if they're making $6 billion a year? Like, what are we talking about here? Why are these companies private? Now, I know they have a special situation because they're trying to do this, Fugazi, Fugazi,

non-profit into a for-profit thing. But then you look, the other experienced managers and emerging managers are a small portion of that. I think LPs need to start thinking about, well, where do they want to concentrate their dollars and what is the best use of their capital in time? If they want to have average returns, I think these late stage funds are a great way to get exposure. And I think what's happening in their minds, I'm going to do a little

um, mind reading here is I think they're going to look eventually at this mez financing cohort. You know what Josh is doing at thrive. And again, this is not a criticism as public market investing. They're public market investing. So then Jason, just to be clear, that means they're going to be shooting for essentially the S and P.

They're going to be seven. If they beat 7%, 12%, they're better than the S&P on average, as you know, as a lover of low fee funds. True. And then the rest of us are trying to hit double or triple that. Yes. 15 or 21%, let's say. So that we say, hey, you know, these things are private. Anyway, I think

for founders who are looking at this, just understand, if you're going to affirm that has five, 10, 20 billion under management, they just are not going to give the attention to you.

as a tiny founder trying to figure it out. So I think just as founders, be thoughtful and put your expectation, you know, listen, if you're going to talk to Josh Kushner or Andreessen Horowitz, the late stage group there, they're putting a billion or five billion or two billion into some of these deals. If they're putting 250K into your deal, it's not going to move the needle for them. It's not going to get their attention. That doesn't mean they're bad people. It's just the nature of it. Just like I can't

help you when you're racing at, you know, a billion dollars or a hundred million dollars, even when you need 30 million or 40 million. I can refer you to my friends, but that's almost the entire size of my fund. We do a $45 million fund. The good news for me is I don't need a lot of capital. I want to do 200 of these 25k checks for founder university. It's your original question. We get people their first 25k check.

to start their company. And then we give them 125k check, just like the same terms as Y Combinar and Techstars when they're in that second stage. So I think ideally, I would like to do 200 of the 25k checks. You know, that's about 5 million and then do another 5 million and 125k checks, which is about, I guess, 40 of those, right? So, you know, that would be 240 companies a year, which would be two and a half times what we're doing now. We're about at 100 a year now.

I mean, it's only really need 10 million a year to deploy 15 million a year. And I can have enough surface area that if we hit a unicorn every 200, we could have a really amazing fund, just doing the math on paper. So I've been thinking a lot about this. The market keeps changing.

My original thought was I would keep half our money in reserves to bet on the biggest winners. But what I'm realizing is, gosh, a lot of these seed runs, when these big funds dip into them, they're demanding 10% ownership, which means they want to put in $10 million, which means they ratchet a seed round up to $100 million.

And the company's got a $100 million valuation. They have $1 million in revenue, so they get my $100. And that's just going to distort reality as we've seen. Instacart's reality got distorted there. And these distortion effects can be profound and problematic. We're going to talk about it in the back half of the show because bench and level two promising firms

just bust it out. We'll get into that in detail. I want to get into immigration. Thank you for bringing up this topic and following my Twitter stream because it is big on my mind. I know people like to know what I'm thinking and I like to share what I'm thinking. Why do I like to share what I'm thinking Alex?

People email me, jasonacallocannus.com is my email for life with a DME, and tell me that I'm a horrible person. And, you know, Matt. You've got to stop my DMs. You've got to lock down your DMs, man. I love it. I've got to lock up my DMs. I love the Savage DMs I get. It's incredible. Okay. You don't like them? No, no. I tweet them out. I tweet them out. I tweet them out.

I can only take so much, I think I have a slightly lower bar for negativity day to day than you do. After the third or fourth time someone calls me something nasty, I'm just like, all right, all right, that's enough. It's strictly a reflection on how they're feeling about themselves at that moment.

Yeah, that's true. Yes. And usually it's a trouble person or a 12-year-old or a Russian Chinese bot trying to cause trouble. Or just somebody doing engagement farming in order to make money, you know? Jason, you asked us to put together a couple of stats to help frame the debate that we've had nationally. I want to say about high school immigration and we have a guest in just a second that's an expert. But I want to show this little infographic because I think it provides some good foundational information for everyone who's watching today.

This is a couple of data points. One, how many new H1B visas were granted and the latest full year data we have is from 2023. Everybody will have 2024 data very soon, but we wanted to be consistent. So the number was 118,948. And that's a little bit above the cap number everyone talks about. And that's because there are some exempt categories.

Uh, the total number of illegal immigrants in the US in 2023, we went through a bunch of different data points. The best number we could find was about 11.7 million total. And then the unemployment rate for the US back in 2023, 3.6%. And as of right now, open tech jobs, the best number we could find that was inclusive was about 530,000 tech jobs. So Jason, that's what you wanted to know. And I hope that that is accurate to current data. Yeah.

Well, we will put these in the notes. We'll cite our sources always. And the illegal immigration number is hard to pin down because it's an estimate and they have this thing like encounters at the border. And I don't know if that 11.7 million is the cumulative during the Biden Kamala Harris administration or it's in the single year. I think that's like no. That's expected total illegal immigrants living in the US.

a living in the US. It went down to 10. And has now picked back up and we're approaching 12 million again, but we're still under the all time national peak, which was 2008.

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And let me just say here, I am trying to, because I have a lot of friends who are involved in the administration, I don't have to say who they are, you can just Google look at my, you can do the Google and look at my Twitter stream and people are weaponizing what I say against my friends. Like, I don't know if you've seen this, but a lot of like the like fringe elements.

of MAGA and some other things are just taking whatever I say and then slamming it into my friend's feeds and saying, hey, your bestie, your best friend, your good friend, your colleague, your business partner, they don't even know the nature of my relationships. They're saying this with people who maybe I don't even have a relationship with or have a very cursory relationship. I am going to be very muted.

for the next couple of weeks about these issues on my social in here, because I don't like to get my friends dragged from my comments. Okay. So if people think I'm being a little subdued, I am self-sensoring myself by choice. I don't have to, nobody's asked me to, but I'm gonna self-sensor myself a bit over the coming weeks, just so I don't get weaponized. But the H1B visa discussion you wanted to talk about, let me show you the co-host, we had a guest booked,

I want to talk about it here from maybe less of a political basis, but more of an educational basis, just to level set facts. This is Lisa Wedden, founder CEO of Plymouth Street. Jason, she worked for Bloomberg Beta back in the day. She's a Sequoia scout as well, so she's been on the venture side and the founder side.

And I booked her because I had the same thought, H1B visas. And then as I was learning so much more about the US immigration system this week, it turns out that sure her firm mostly works with 01 visas, which are different than H1B visas. So one, Lisa, thank you for being here. How are you? Thanks for having me. I'm great.

Happy New Year. Yeah, happy New Year. So I want to start at a kind of a high level here and talk about the impact of immigrants on the technology scene. The American Immigration Council says that 44.8% of the Fortune 500 companies back in 2003 were founded by immigrants or their children. I know this is a near and dear issue to your heart. So I'm curious, when you think about high school immigration, what is your compelling argument? You tell people who are skeptical as to why it matters to our national growth.

So I think this stats are really compelling here. 55% of technology unicorns are founded by immigrants. Some of the most iconic companies of our generation, SpaceX, Reppler, Stripe have all been founded by immigrants. And when you think about, you know, the early discussion, capital is not necessarily the constraint for innovation. Human talent is Plymouth's mission when we set up was to accelerate US innovation by enabling the highest skill talent to build in America.

And immigrants have consistently proven time and time again to be some of the most innovative risk-taking entrepreneurial individuals. Absolutely. And so that's the core focus here is how do we unlock a new era of US innovation? So my question then is, why is your firm so focused on 01 visas? As opposed to the much more, I would say, Newsy recently, H1B program that I think people are much more familiar with than the 01 program.

Totally. So the H1B program was designed in the 1990s, and it was set up with a 65,000 cap limit. Today, over 780,000 individuals apply for the H1B. And the reality is, is that we could be losing out, and I think we are losing out on the world's best talent, because these individuals are put into a lottery ticket system. And so you could imagine a leader in AI and leader in quantum, a leader in nuclear energy puts their name in a lottery ticket system.

And they don't get it. And I think the reality is, is that we want to recruit and retain this world class talent. And in comparison to the H1B, the O1 is not a lottery ticket system. You have to put together a real research report about an individual. You know, these applications are between 400 to 600 pages long to document someone's extraordinary ability. And so you have to be really elite to get this visa pathway.

Okay, I just want to recap here, Alex. O1 visas. This is, I think the quote is, I'm reading here, extraordinary ability or achievement in science arts, education, business, or athletics. It must demonstrate sustained national, international acclaim and recognition in their field. This can be proven through awards, publications, high salary, et cetera. That is one character, one type of visa to come to the United States. And this is extremely rigorous.

And there is no abuse here or almost no abuse. In your mind, Lisa, it's too hard to game the O1. You know, less than 5,000 STEM individuals come into the US on an O1 visa and you have to document substantial evidence to prove that O1 visa. So it's not easy. No, it's not an easy pathway to game.

How many get awarded each year and how many applications? Just ballpark if you know that number. Just under 30,000 get awarded each year. And the majority of those visas actually go for 01Bs, which is of the entertainment and the artistic professions.

So if there is less abuse of 01 visas compared to the H1B program, which I think everyone agrees has a place could use some fixes. Do you expect that technology companies writ large are going to move away from H1B visas and toward the 01 process simply because it's not a lottery and therefore is worth the extra effort to go through because it's not random. It's merit based.

I think companies use every tool in their toolkit to retain their best talent and different visa pathways offer this opportunity. You know, there's the TN category for Canadians and Mexicans. There are visa pathways for Australians. You know, the visa

a landscape is not a one size fits all. I think also when you talk about early stage startups and later stage companies, they have different talent needs. I think that one is an amazing visa pathway for the very best talent, both at the earliest stages for founders who want to build an America.

and the later stages, and I think the best company is that we work with like mid-journey, wrapped-lit, piquere AI, they take their talent extremely seriously because they know that the constraints for growth is finding the very best talent.

I'm just curious about the viability of O1 visas to hopefully expand to allow for more high school immigration because I think personally, just my own view, not even speaking for Jason or the show, that if we could 10x the number of very brilliant people that work in technology that can come here and stay every year, it would be worth at least 1% GDP growth per annum, which is the cheapest thing you could possibly buy.

I'm just curious, does the O1 program have the capacity to help with that? Or do we have to fix H1Bs to get that level of high school immigration flow? So I think there's reform across the system, but the O1 is an uncapped visa pathway and we should be utilizing it. And this administration should utilize it insofar as it achieves our goal of American competitiveness. I think the message for the world should be America is open for business for the world's best.

skilled innovators and we want you to come and build here and innovate in this economy. And I think this is a golden opportunity to share that message and utilize every tool in our toolkit to do that. And these are a component of that.

All right. And then I just want to get your take on this, because I know you're a bigger fan of the O and VESA than the H-1B, but the H-1B has been criticized just a lot lately. It's lost some of its, I'd say, public luster. How fair do you think the criticisms are of H-1B visas that they underpay or they entrap workers into contracts they can't get out of, because then they get deported? How reasonable are the criticisms of H-1Bs in your view?

I think there were most practitioners would say that these are known issues that we need to identify and reform. I think there's been a ton of really interesting discussion online around increasing the compliance fees for companies, increasing the wage requirements. This program was designed in the 1990s. Again, we want a system that is adaptable and updates to our modern era. And so I think there is reasonable criticism that most practitioners have known.

Yeah, I can give a little color on that actually, Alex. When I was in the start of my career in the IT business, I was at Sony, statute of limitations is over. Or I don't really care. I'll just say it. I was out to lunch with the people running the IT department and they said, hey, we don't have to work weekends anymore. We got these Indian guys.

and they're going to be, you know, in this office somewhere in the middle of America, and they're dirt cheap, they get paid 50% less than us, and they come here with their family. If they don't do what we tell them,

And they don't work the hours we tell them, we can deport them. And they have 30 days to find a new job, which they can't. So therefore, they're going to do all the weekend shifts. They're going to work 50, 60 hours a week. There's nothing they can say. And I said, wow, that's really dark. And they said, yeah, it's great. And I was just a 21 year old kid. And I was like, yeah, but that makes them kind of like indentured servants. It's totally abhorrent.

And all the discussions I heard about H1B specifically during that time period in the IT business specifically, not entrepreneurial pursuits, was just about saving money and maybe being able to grind these employees down. Is there a fair criticism to that and what I experienced 30 years ago?

I can't speak on behalf of all H1B holders, but I can speak to the people that I talk to every day, a large number on H1Bs, and they want more flexibility to be able to work at different companies, start their own companies. There's these incredible H1B employees who are

working at large tech organisations and they want to move on to another visa pathway because they want to build in America. And they are struggling with this visa category that they're pursuing because they do have to maintain their status, maintain their prevailing wage.

And so from my own personal perspective, I am hearing stories of individuals who want to move off the H1B because it is not the right for you to category for them. And there are companies that abuse the H1B category too. We know this. How do you solve the abuse? How would you solve the abuse? I've watched the Twitter debates.

I have my own answers, but I'm curious from your perspective, if you could wave your magic wand, you do this for a living, you work on these, what three things would you change in order to make it more fair to American workers who want those jobs and to the employees who I believe in some cases might be 5% or 10%. It's obviously not the majority. Maybe it's unfair to them.

Yeah, you know, I focus most of my work not on H1B visas. Like I look to people who are moving on H1B visa.

But I think the reality is like, there are several things that are interesting about reforming the H1B. One is that you could look to explore to increase the costs for companies for the H1B. So increasing the annual compliance costs for H1B visa, that would be, I think, really interesting. Increasing certain elements of the wage requirements could be really interesting and reforming

the number of allocations in the lottery for companies. And I think those would be frankly kind of like an interesting and necessary requirement for ensuring that this visa category is updated from the 90s.

If you go back to twist episode 35, we had Brad Feld on and a little baby, Jason, 14 years ago, they were talking about this issue. And one thing that they brought up was the idea of an entrepreneur or an investor visa, Jason, the idea that if you're going to deliberately come here and start a company, there should be a separate door just for you. There should be an easy way for a foreign entrepreneur who wants to start a business in the US

that raises a certain amount of money from u.s. investors. You're able to get a visa and get going. Put that amount of money in a bank account, fill out a form you've done. That's right. So it turns out, as we start talking, politics is a mystery to me, but to my friends of mine that are in the house, in the Senate, and some of the other people that we know, what we found out pretty quickly was there's a type of visa called an EB-5 visa, which is basically the opposite of what we want.

The EB-5 visa, which has been around since 1990, gives a visa to a foreigner who invests a million dollars in a U.S. company. Oh, genius. Right? So you basically are, you know, the idea is to drive investment in U.S. companies, but the person getting the visa is simply the investor. So, you know, there's a lot of controversy around that particular type of visa, people buying visas, et cetera, but the structure was parallel. We want the opposite. We want the U.S. to be the investor and we want the entrepreneur to be somebody. This is the talent.

Exactly. If you have Yao Ming in China, you want him to play in the NBA. Exactly. So somehow his visa got approved. That's right. That's right. And Lisa, just as a lost as a lost thought, do you think we need instead of trying to fix and shoehorn our needs into the 01 and H1B categories? Just simply a blank sheet of paper and an entirely new category or new system to avoid just endless rounds of small technocratic fixes to a program that seems to have larger issues?

And I think there's huge opportunities to explore like a fast track entrepreneur visa. They did actually come out with the International Entrepreneurship Rule, which was a different opportunity, but it was very complicated and not super fit for purpose. And so, yeah, to the extent that we can streamline this immigration system and have very clear opportunities for innovators, I'm so in favor of it. In this moment, we do have visa categories that are

advantageous for entrepreneurs. So we're doubling down on that. But again, you know, let's be innovative. And let's think about our ultimate goal, which is advancing us innovation. And to the extent that we can think through every tool in our talk, I'd advocate for that. All right, Lisa, thank you so much. Plymouth Street.com. If you want to look up with her work, thank you much. What do you charge? Lisa, how much is the cost of a company? How are you per person? How do you get paid? We get paid for per visa. So how much? What does it cost?

between 10 to about $12,000. Oh, okay. So it's kind of reasonable, but it's not cheap. It's your very best talent. We really fundamentally believe in investing in your talent and these applications over 500 pages long. So we really focus on ensuring that you can consistently and reliably bring over your best talent. Fantastic. Really appreciate you coming on, Lisa. Thank you so much. Appreciate it. You know, it was great to have her on. I think there's a really easy way to solve this problem.

Number one, a minimum salary. Yes. I don't know if it's 50, 60 or 70 K, but that's an easy one to do. You put in a minimum salary for this. Number two, you have one year to find a new job. So if you're on an H1B, VZ, have a year to find a job. Now I know what people are going to say, you know, like that's unfair or whatever, but hear me out because there's an X piece. When I'm up, when I am an employer, I pay 10% of your salary.

10% of your salary, not just $1,000 or whatever these application fees are, 10% of your salary up to a certain number. So there's like a minimum, but it also maxes out. So that you have a disincentive for trying to use this for like, let's say frontline IT PC support specialists, you know, somebody who comes and reform out your hard drive or reinstall software, you're whatever's not working.

And I think a lot of this stems from the fact that a lot of people on the GI Bill or, you know, folks thought, hey, I can get a degree from some degree mail.

They sold me on being an IT person. They told me the starting salary in IT was 75K. So I went 30, 40K into debt. I figured I could pay that back after the five or 10 years. And then I would be making six figures eventually. And then all of a sudden you're like, wait a second, the job I was going against, there's somebody getting paid 50K instead of 75K. Well, if you charge a minimum of 10K per year and you force people to pay not only the 10K,

But the employer has to pay the 10k, the second year when you leave. Oh, so if you go away, they're still on the hook for it. So on the hook for that deal. Or maybe you're on the hook for six months and the new employers on the hook for the next one, whatever it is. There's some sort of fee. So that if you are an employer, you really have to think about this. Then you take all that money.

And I think Aaron Levy friend of the pod has been on many times from box said, hey, why don't you put that money towards STEM education? Hey, there you go. Now we're talking. Or maybe you put that money towards the people who had IT degrees from those paper mills. We identify them and we have a way for those folks to pay down the debt for IT degrees that may be overpriced or whatever. And I'm not big into that because I like people to make that decision. But I'm just thinking creatively here.

Because there is valid criticism here. I believe there's significant abuse on the low end. And once you eliminate that, I think people can have a much easier time with this issue.

I think so too. I never, I don't think we're ever going to get the people who want to shut down all immigration for all time in the United States ever on our side here. But if there's a way we could grab 65% of the population and open up the economy to allow for more smart people to come here and build and have faster GDP growth and have more of a talent edge on the rest of the world by being an attractive place for brains to drain to. Well, then we'd have a stronger nation, more money and happier people, Jason and I am just so in favor of that.

I mean, I think America, big strong America. I have literally three blog posts. I've started, I drafted that I'm holding until after Trump's an office and this all dies down because I don't want to poke the tiger here and have people taking my blog post quoting it because I have

different feelings on this. And you can look at my Twitter, I've said, I think we should be the most prosperous and the most populous country. I think both of those things are important. And how do you get there? You're going to get there through population growth and people having babies and you're going to get there through immigration. But you know what? We got plenty of time to talk about this in 2025. We do. And we have plenty of time after the administration has all gone through confirmation. So now moving on.

Okay, sad news, but I want to talk about this. So, we're winding the clock a little bit. Bench fell apart at the end of last year. At the end of 2024, Bench, a company that people had heard of and used for a long time, that had last year's money back in 2021, Jason, and was- Outsource the counting firm, right? Outsource the counting firm, exactly. And they- Loved it by startups.

loved my startups. And when they died, it shocked people because I don't think people knew that they were on the ropes. And then to start the year, there's another company that's followed. It's a FinTech HR startup called Level. It offered benefits. So essentially if you were an employer, a startup, say you could create kind of an innovative benefit program for your employees. They did self-insured dental and vision products. And you could also do wellness, fitness, all sorts of things using this level of program.

They have also died. And according to Jason, the CEO Paul Aaron, uh, in an internal email that the information got, he said, quote, while fundraising, we entered an acquisition process that we believed would provide significant value to our clients and members. Unfortunately, the deal fell through at the last minute due to external challenges beyond our control. My question to you, because I have a lot of thoughts about the business and the timing and so forth. But when a CEO says we were fundraising, there was an acquisition and it fell apart.

What does that tell you in your spidey sense? It tells me the company was burning too much capital. The investors had lost faith in this company being a great place to deploy capital. They're burning too much money. Maybe the actual unit economics didn't work.

So new investors assessing this opportunity might have thought, if they're burning some millions of dollars a month at this company, the valuation is very high. There's all these covenants and all of this preference stack where the latest investors get 2X. If I come in and I do a pay to play around or a cram down round, where I say all the existing investors, their shares are gonna get diluted 100 to one,

or 50 to 1, or 25 to 1, or 10 to 1, or 5 to 1, they're going to be common shares. And then we're going to start over, raise more money. That pain and suffering, as Bill Girly has said over and over again, I've heard him say this on many podcasts, a lot of investors are just like, I don't want to come into a toxic situation and be the toxic person who delivers the medicine to the patient.

And maybe acquires, because of the wrath of Lena Komm looked at it and said, I can't acquire this for some reason, or they just weren't acquisitive.

And or the unit economics of doing outsource bookkeeping just looked like this was a bookkeeping firm that didn't really have enough technology there and the mission to use technology to make bookkeeping, you know, auto categorize expenses and costs. Maybe that just never got there. So maybe it wasn't was in great execution or maybe they just couldn't get the margin there in this experiment failed.

And the board seems to have made two mistakes. One, they asked it the founder. Yes. There's been a big controversy, hey, trying to out the board. Now, I would be very careful. The board might have been doing something fiduciary that was responsible as a fiduciary. If that CEO and we don't know was not hitting their numbers, was not a great leader, couldn't track talent, we don't know.

that they probably were right to try to find a new leader and maybe they found the wrong one. Or maybe it just, like I said, was a crack foundation or a failed experiment. So we don't have full information.

you know, trying to out the VCs who ousted the founder. I'd be very careful. Yeah, I saw that. I would be very careful with that because they might have actually been doing the right thing and the hard thing and doing the hard right thing is hard and it makes you look like a jerk as a VC. I've actually never ousted a founder. I've never because I'm an early stage VC. We never got to that point. But I, you know, know people who have and sometimes it's like this founder was off the rails. They were in founder mode. They were off in La La Land.

Well, that's why, to me, when a VC does actually pull a founder, I almost don't view it as a non-founder-friendly move, because it's done so infrequently, I presume, and only the most extreme of observations. So to me, if that happens, I actually judge the founder more than the VC. I want to go back to this bench thing. One last question, because I have been, a lot of questions, more of a thing that I'm curious about.

We have seen fewer deaths, fewer implosions, fewer big flameouts in the startup world of companies that raised a huge round at a big valuation in 2021 than I expected. But then we just had these two companies land in quick succession, bang, bang. And so the thing I'm curious about for this year is how many will we see in 2025? Will this be the year when companies that haven't raised since 21 fail? Because there's probably

several thousand of them out there that are just waiting to either get bought for a dollar or to die. Maybe we're finally at that moment, Jason. Maybe it's here. I think when you raise a ton of money and you have a lot of runway, you can kick the can down the road, you can do four riffs, you can raise your prices, but eventually

You know, you can put lipstick on the pig, you can paint the house, but it's still got a crack foundation. It's still got a bad fundamentals, possibly. And I think that is the challenge. That is the challenge. Well, we'll see. Do you want to wrap up with just a little bit on this lift Amazon? Sure. Yeah, I mean, I think that this was one of my big, the all in prediction show comes out tomorrow.

I predicted that one of my big business deal of 2025 in the prediction show, which you'll get today, Friday, was that there would be consolidation in the on demand space and the autonomous space in 2025. Now, that's a bold prediction, but I do think we could see Amazon

Uber, DoorDash, BYD, Uber, Tesla, Zoops, Waymo. You're gonna see some of these merge. If Waymo and Uber merged, their de facto gonna run the table on everybody. It's gonna be like a battle. It's gonna be hard for Tesla to beat that, right? Absolutely agree. Uber plus Waymo equals win, I think. I think they win. Uber plus Tesla means they win.

So if you look at that, you have Waymo and Tesla plus Zooks, very promising, plus another 15 other providers of autonomy. So you take those 18 different autonomy providers. There's probably five that are the most credible. You take those five and you pair them with either Uber or DoorDash or Amazon,

and their deliveries, you got a pretty robust offering. And so in, with the end of the, the wrath of Lena Khan, we could see something epic occur. Something like the acquisition of Whole Foods, or something like the acquisition, maybe even a better one, YouTube, Instagram, WhatsApp, like a mega matchup that has significant impact on the future.

So I agree with all of that, but I'm a recent convert to the Amazon possibility. And I had honestly forgotten that Amazon owns Zooks. Yeah, you forgot. Zooks has got great potential. It does. And so Amazon, if you forgot, like I did, Amazon bought Zooks back for 1.2, 1.3 billion in 2020. The company had raised up to

Over about a billion dollars, Jason, at a valuation there reached as high as 3.2 billion. So not the best venture exit, but certainly a property at Amazon that's done well. So lately, Zucs is as expanded to San Francisco, larger Vegas footprint and Foster City. And they're going to do their first public writers in Vegas this year. So Zucs officially is going to be a real Robotaxy company in the near future. So that means that they had the technology side, Jason sorted out at Zucs, which is Amazon.

And then there's Lyft, which my friend Anita Ramaswami over at the information pitched this Amazon Lyft deal as a 2025 option, which got everyone talking. And the thing that I've just blown away by is how essentially Lyft is free. Lyft today is valued at exactly one X. It's trailing revenue.

Whereas Uber is worth three and a quarter X and Tesla's worth 13 and a half X is trailing revenue. So you can buy a Lyft for one X revenue. It's actually two zooks. You'd have to pay a premium to get the shareholders to give it up. And that premium would probably be two X or 50% or two X. So I think if you add a 50% premium to it, but I think you're and it is about to, you know, they are going to be break even profitable. I don't know if they're.

Got some funny gap uniqueness to lift. I haven't been tracking them, but I do. I can answer that for you. So they are roughly breaking vanish on a gap basis. They have a hundred and seven million of just an even on the last quarter. But the thing that I think is most important, Jason, is their trailing operating cash flow was seven hundred and forty million in the last four quarters. So it's kicking off cash. Awesome. So, you know, it's not, I mean,

Buying the number, you know, what will be the number five, six, seven, eight, most important player globally, maybe the 10th most important player globally is not a power move. Power move is to buy Uber, grab, DoorDash, like that's the power move. And so Amazon tried to do restaurant delivery. They failed at that one. I don't know why they failed. I guess it's a hard problem to solve. They weren't focused on enough. Who knows what the reason was, but they like to take big risks.

They bought Whole Foods. I think that took them a couple swings at bat, but I think that's actually working because I see Whole Foods come into my house and I know a lot of people are buying from Whole Foods via the Amazon interface now and they seem to have figured that one out too. So I think, I don't think this is going to happen. I think it would be.

Well, I just think you're buying a brand you're going to disappear anyway, and Amazon already has the Prime members. So simply opening this up to Amazon Prime members and saying every Amazon Prime comes with essentially what Uber One is and Uber One, Apple One, Amazon Prime, it's all the same thing. A membership fee to get people to use a product more, to increase consumption.

and to do more lock-in. Uber One's got, I think, 20, 30 million members now. It's incredible. I just slowly picked up on it. And those people, from my understanding, from public reports, spend a lot more money. So, there's something really interesting about that Uber One membership and Amazon Prime, that could be very powerful. If you think about those as one thing, and you think about what they're both doing, at the core, Amazon and Uber both move stuff.

Yes. If I was on the board of Amazon, Tesla or Google, I would have one thing in mind. And now people think I'm talking my book here. I have exposure to all these names except Tesla. And if I wanted to have a bunch of Tesla, I could. I think the stocks kind of hit meme territory right now. It's like, and I have owned Tesla in the past. The reason I don't own Tesla, as I said before on the show, is like people think I have some inside line because of my friendship with people over there. Just, I have exposure to everything. I'm not talking my book here.

Whoever on those boards buys Uber, and I don't think Uber's for sale, but- No, I don't think Dara's gonna- No, but if I was Bezos, I would get in a room with Dara and say, what do we gotta do here? If I was Elon, if I was on the Tesla board, I would be like, because I think Tesla's not worth over a trillion.

Uber's worth $130 billion or $40 billion, giving up 10% of your equity or 5% of your equity to own those 25 million members and then just be guaranteed to win and to have a global footprint, footprint day one or day zero because the cyber tactics aren't gonna be on the road till next year sometime or maybe the end of this year and they'll go into mass production. To have that advantage, if Waymo gets that advantage, if I was Larry and Sergey, I would be going at Uber. I believe Uber merges

or is acquired with one of the four players, Tesla, Amazon, Google, Waymo, and then long shot of long shots might get blocked.

but a DoorDash and Uber combination. Ah, that's scary. Murder. So that, even me, my ding, ding, ding antitrust bills go off of that one. But I'll tell you why this is something that the antitrust people should at least maybe consider letting happen. Okay. Then you would have a company add to the Maggate.

or Uber plus Airbnb. So expanding the Maggate makes each member of the Maggate less powerful. We should be trying to take the Mag 7 or 8 and make it into a Mag 17 or 18. Yeah, Mag 20. Yeah. Make a Mag 20. Then that's the way, because you're not going to stop them. They're just too good at what they do. They're at the top of their game. They have too much cash. No administration can stop them. You're not going to break them up. Even if you do break them up, they're going to add more businesses.

Or if you break up, if you forced Google to spin out YouTube or something, you would actually then create a MAG9. So there might be a case to break up one or two along the margins. That's my best belief here. But I do think we will see, we're going to go from 1% of rides globally being ride-sharing to 20%.

In that case, the TAMS going 20x in the next decade or two, easily in my mind. And if that's the case, then car ownership goes away. Man, Tesla's flat year over year, I think, on car deliveries, 1.8 million or something like that. It was 1% down year over year. So even car ownership is having an issue right now. I think young people don't want to own cars.

So actually Tesla's making the absolute right bet on the cyber taxi. So why not ensure the win for 10% of your shares by buying Uber? For me, that would be like a dream or Amazon buying it or door dashing. Couple of data points here. Just to wrap up this conversation, lift valuation as of right now, $6.03 billion.

DoorDash, $72.5 billion. I think people don't realize how much more valuable DoorDash is to lift. Uber, $137 billion. And then we get into the big boys, Tesla, $1.27 trillion. And then Amazon, $2.35 trillion. And I'll just throw in Alphabet for good measure here.

That is, drum roll please, $2.36 trillion. So there's a lot of capital here. Someone buy Uber to make Jason's month and we're back on, we're doing a late show on Sunday. We're going to record the Monday show on Sunday. We might go live with it, we'll see. So if you're around Sunday night because I'm going to be traveling on Monday, we're going to record the show Sunday. Back to, hey listen.

No rest. We love doing the show. We do whatever we have to do to get it. No rest for the worry. All right, everybody. Do me a favor. Found it at university, start a company in 25. Number two, follow x.com slash Alex, x.com slash TWI startups, x.com slash Jason. And finally, I'm trying to get to a million dollars and start up credits.

for getstartupcredits.com. This is a gift from me and my team to all startups. We can't invest in every startup. 20,000 people apply for funding from us. So what we did was, anytime anybody takes a meeting with us, we give them the getstartupcredits.com package, which is, I think, over $500,000 in credits. I'm gonna get it to a million. I got Oracle in there.

I got Google Cloud in there. I got Cruise for accounting, like really stable accounting. I got Vanta in there. I got Oracle. I got Zendesk. I got LinkedIn. I mean, these are the biggest names. I got in Broker. I got Northwest. I got HubSpot, Athena. Go to AthenaWow.com. Get a free month, I think. So what I'm doing is

The people who are my friends who provide services at an elite level, I'm allowing them to provide something really great to founders. This is my mission to help support founders in year zero, zero, year one, year two, the hardest years. You go there, you fill out the form, you say what you need.

I need accounting. I need hiring from LinkedIn. I need marketing from HubSpot. I need cloud computing. It could be, you know, Azure. I don't think we have Azure in there anymore. Oracle or Google Cloud.

I need any of those. So if you want to be part of it, just email me, Jason at calicanas.com. It's got to be something like legit. If you give away one month of your service, like the rack rate deal, don't bother contacting me. It's got to be super generous, like two years of the product, 100,000 in credits, no strings attached, and you have to attach.

and evangelists to it. So the way they get startup credits works is when they fill out the form, Alex, the founders contact information. If they opt into it, goes to that provider. So if you say you want cloud, it'll go to the evangelist at Google and we'll go to the evangelist at Oracle.

it will not go if you don't click off clouds. So you're not going to have your time wasted, but then you're put in touch with people like a real human being. So you're not supposed to be part of it. No, you're not just going to get added to a mailing list and get spammed. You have to have to have to put an evangelist on it. It has to be a good deal. Anyway, it's an experiment.

We experimented in the fourth quarter with it. We had hundreds of people, I believe, come in and fill out the form and the experiment. We had, I think, a half dozen partners. We're going to go to a dozen partners. It's working great. And we'll see you on the next episode of This Week in Service. Bye-bye.