The Newcomer Podcast

Elon Musk is the liberal elite’s enemy of the moment. How quickly the bad blood for Mark Zuckerberg is forgotten. When Zuckerberg’s Meta released Twitter rival Threads, reporters and left-leaning types (myself included) flocked to the new app as a potential refuge from Musk’s Twitter. The enemy of my enemy is my friend seemed to be the logic of the moment.I invited Facebook whistleblower Frances Haugen onto the podcast to discuss the sudden embrace of Threads, her ongoing criticisms of how Facebook operates, and her new book, The Power of One.Haugen, for one, has not forgotten the problems with Facebook. She hadn’t downloaded Threads.I said on the podcast, “As a reporter, it’s funny to see the reporter class embracing Threads at the moment when two years ago, or even more than that, they would have been so negative and apprehensive about trusting Facebook. I’m just curious watching the pretty upbeat response to Threads, what do you take from that and are you surprised there seems to be some media trust for Facebook right now.”Haugen was empathetic toward people fleeing Twitter for Threads. “I think it’s one of these things where the trauma the Twitter community has faced in the last year is pretty intense,” Haugen told me. “People really liked having a space to discuss ideas, to discuss issues, and the idea that they could have a space again feels really good.”We spent much of the episode getting into the particulars of The Facebook Files and her criticisms of Facebook. She outlines a core critique in The Power of One’s introduction:One of the questions I was often asked after I went public was, “Why are there so few whistleblowers at other technology companies, like, say, Apple?” My answer: Apple lacks the incentive or the ability to lie to the public about the most meaningful dimensions of their business. For physical products like an Apple phone or laptop, anyone can examine the physical inputs (like metals or other natural resources) and ask where they came from and the conditions of their mining, or monitor the physical products and pollution generated to understand societal harms the company is externalizing. Scientists can place sensors outside an Apple factory and monitor the pollutants that may vent into the sky or flow into rivers and oceans. People can and do take apart Apple products within hours of their release and publish YouTube videos confirming the benchmarks Apple has promoted, or verify that the parts Apple claims are in there, are in fact there. Apple knows that if they lie to the public, they will be caught, and quickly. Facebook, on the other hand, provided a social network that presented a different product to every user in the world. We— and by we, I mean parents, children, voters, legislators, businesses, consumers, terrorists, sex- traffickers, everyone— were limited by our own individual experiences in trying to assess What is Facebook, exactly? We had no way to tell how representative, how widespread or not, the user experience and harms each of us encountered was. As a result, it didn’t matter if activists came forward and reported Facebook was enabling child exploitation, terrorist recruiting, a neo-Nazi movement, and ethnic violence designed and executed to be broadcast on social media, or unleashing algorithms that created eating disorders or motivated suicides. Facebook would just deflect with versions of the same talking point: “What you are seeing is anecdotal, an anomaly. The problem you found is not representative of what Facebook is.”To jog your memory for the episode, in September 2021, the Wall Street Journal published the first in a series of articles, called the Facebook Files, about the company’s cross check program, which gave special treatment to high-profile users when it came to the company’s moderation decisions. The Journal followed that report with a story about how Facebook’s internal research showed that 32% of teen girls said “that when they felt bad about their bodies, Instagram made them feel worse.” The third story in the series showed that Facebook’s decision to preference “meaningful social interactions” seemed to have the opposite effect, giving more reach to posts that instigated conflict and anger. Perhaps most damning in my mind, was the Journal’s fourth story in the series which showed that Facebook had failed to implement internationally many of the table stakes moderation practices it applies in the U.S.The Journal won a Polk Award for its reporting. I have at times been skeptical of how damning these stories were. It’s not that crazy to me that Facebook would want to provide extra attention toward moderation decisions for public figures. Is Instagram harming teen girls more than Vogue or Cosmo? So it was fun to finally hash out some of these issues with Haugen on the podcast. Ultimately, I think we were mostly aligned that we both support much better disclosure requirements for Facebook. Regulators are fighting with both arms tied behind their backs.I was disappointed, however, that Haugen seemed to bend over backward to come off as apolitical in her critique of Facebook. She didn’t really engage in the obvious political asymmetry: Republicans are clearly much more likely to post the type of content that Democrats would call misinformation. I think that’s a fair statement whatever you think of “misinformation.”Anyway, that should give you enough context to dig into our conversation. Enjoy!Give it a listenHighlighted ExcerptsThe transcript has been edited for clarity.Eric: How would you see a disclosure regime working that still allows companies like Facebook to be flexible and to change?Frances: I think a lot of people don’t sit and think about what’s the menu of options when it comes to intervening in a problem as complicated as this. I’m really glad that you brought up the idea that these companies’ grow and change, where the next one to come along might not fit the exact same mold of this one. One of the ways the European Union handles that flexibility — and to be really clear, this kind of way of doing regulation of saying disclosure and transparency is instead of something like what’s happening what’s happening in Utah, where Utah is coming in and saying, “This is how you will run your company.” If people are under 18, they have to have parent supervision, no privacy for kids, their parents can see everything — or like Montana coming out and just flat out banning TikTok. Those are kind of “building fences” type roles, where we’re like, “Oh, this is the fence you can’t cross.” And the thing about technology is it moves and changes, and they’re very good at running around fences.So the alternative is something like what the European Union passed last year, which is called the Digital Services Act. And the Digital Services Act says, “Hey, if the core problem is a power imbalance, right, the fact that you can know what’s going on and I can’t, let’s address that core problem because a lot of other things will flow downstream from it.” So they say, “Hey, if you know there’s a risk with your product, you need to tell us about it. If you discover one, if you can imagine one and you tell us about it. You need to tell us your plan for mitigating it because it’s going to be different for every platform. We want it to unleash innovation. And you need to give us enough data that we can see that there was progress being made to meet that goal. And if we ask you a question, we deserve to get an answer,” which sounds really basic, but it’s not true today.Eric: Some of these problems that you've identified are just human problems. If you talk about sort of the Instagram critique with it, potentially making sort of young teenage women — some segment of them unhappy. I mean, you could say, like, was that so different from Vogue? Is this really an algorithmic problem?Haugen: There have always been teen girls that were unhappy about their bodies or how nice their clothes were. But there are a limited number of pages of Vogue every month. The second time you read Vogue, you’re going to have a different impact on you than the third time you read Vogue. Or you’re going to get bored of it? And in the case of something like Instagram, Instagram progressively pushes you towards more and more extreme content.…With a 13-year-old girl, she might start out by looking for something like healthy recipes. And just by clicking on the content get pushed over time towards more and more extreme materials.Eric: Why did you decide to come out and reveal your identity?Frances: I had been contemplating for quite a while would I have to come forward at some point. I had a chance to talk to my parents about it a large number of times just because what I was seeing on a day-to-day basis while I lived with them during COVID was so different from Facebook’s public narrative was on these issues. But the moment where I was like “okay, I have no other options” was right after the 2020 election — so this was in December, less than 30 days after the election — they pulled us all together on Zoom and said, You know how for the last four years, the only part of Facebook that was growing was the Civic Integrity team. So it was the team, for Facebook.com aimed to ensure Facebook was a positive social force in the world, that it wasn’t going to disrupt elections, it wasn’t going to cause any more genocides because by that point there had been two. They said, Hey, you are so important; we’re going to dissolve your team and integrate it into the rest of Facebook. And when they did that, that was kind of the moment where I realized Facebook had given up. That the only way that Facebook was going to save itself was if the public got involved. That the public had to come and save Facebook. Get full access to Newcomer at www.newcomer.co/subscribe

Former BuzzFeed reporter Katie Notopoulos spent the first few days posting on Meta’s Twitter copycat, Threads, as if she were the editor-in-chief of the new app. “As EIC, it’s a lot of work! I’m personally curating the feed for users based on all of Meta’s information on them to bring each person a hand-curated feed that I’ve approved,” Notopoulos posted on Threads. While Meta tolerated the ruse, the company censored one of her more roguish posts. “At Threads, our expectation is for all users to treat others with kindness and respect. This encompasses acknowledging the choice to adopt a Nazi lifestyle. We embrace a diverse community,” she trolled.Ultimately, Notopoulos announced that she had been fired from her role as editor-in-chief. I invited her on the show, along with Dead Cat podcast defector Tom Dotan, who abandoned our old podcast in favor of a gig at the Wall Street Journal. Together, we made sense of the Threads-Twitter rivalry. We talked on Friday so a few of our stats on Threads’ growth might be outdated. Threads has since exceeded 100 million users and Elon Musk has proposed a “literal dick measuring contest” and called Zuckerberg a “cuck.” Otherwise, I think you’ll find our conversation perfectly current. It’s a lively episode. I posit that Threads will quickly become the Uber to Twitter’s Lyft. I didn’t just invite Notopoulos on the show because she has been a Threads troll and a the thorn in the side of Meta. She is famous for her extremely online, yet carefully reported pieces from her time at BuzzFeed. She wrote a piece titled, “Chuck E. Cheese Still Uses Floppy Disks To Make Its Rodent Mascot Dance — For Now.” And she revealed the real names of the Bored Apes founders. BuzzFeed is paying her for the next few months after the company shut down its news division. So she’s had plenty of time to spend on Threads. Dotan once covered Snapchat obsessively and we spent many Dead Cat episodes talking about Facebook, so I thought this would be a fun episode to have him back on the show — even if the Journal has muzzled how wild he can be in his pronouncements. We concluded the show talking about a much more Newcomer-y topic. Dotan wrote last week about how AI had stemmed tech’s downturn. He reported:The Nasdaq has risen 32% this year—the Dow Jones Industrial Average is up 3.4%—while Microsoft shares have climbed 41% and Nvidia shares have almost tripled on the back of optimism that AI will bolster their businesses.Companies that had been touting their cost-cutting and apologizing for hiring too many people in recent years have been adding to the excitement by broadcasting their AI ambitions. Of the S&P 500 companies with earnings conference calls from the middle of March to late May, 110 mentioned AI, according to FactSet. That is a record high and around three times the 10-year average.  Give it a listenHighlighted ExcerptsThe transcript has been edited for clarity.Eric: Will threads be bigger than Twitter? Will it be the Uber to Twitter’s Lyft?Katie: I predict yes.Tom: Twitter in its current state? Not at its peak? Yeah, such a low bar.Katie: Twitter still has advantages over Threads, like anonymity and retaining large followings. [Instagram Head] Adam Mosseri recently mentioned that Threads won’t be a place for news.Eric: Threads aims to be a “nice” platform, countering the mean-spiritedness associated with Elon Musk and promoting a friendlier environment. Do you think the personality and positioning of Facebook will play a significant role, or is it all about the product and Instagram’s connection?Katie: It’s a combination. Threads’ success will come from being a product under Instagram, which many people don’t realize is owned by Facebook. On the other hand, people are leaving Twitter because of Elon Musk's presence.Tom: Facebook has a history of copying features in response to perceived threats, such as stories. However, Twitter isn’t a threat. This opportunistic move by Facebook. To launch Threads won’t magically fix the limitations of text-based platforms. We’re in an era of niche social media experiences, and reaching a billion users with this format is unlikely. It’s unfair to hold that expectation. Nonetheless, with 70 million users already, it can be considered a success.Katie: The Instagram account provided a dictionary where a conversation is referred to as a thread. For example, I was reading some intriguing threads that Eric was discussing. However, an individual post is still called a post, and instead of a retweet, it’s called a repost.Eric: What are your thoughts on what was happening there? I found it very strange that they were dictating the language they want people to use. I couldn't determine if they're worried people will start using terms like “tweet” and if they wanted to discourage that.Katie: I interpreted it similarly. People were genuinely asking, you know, what should we call them? Since they're not tweets, do we call them retweets? What should we call them? I think the worst-case scenario would be if people started jokingly referring to them as “threats,” which is probably not what they intended.Eric: People are really enjoying wordplay, and personally, I'm not a fan of that. There are posts about your followers or your thread count. It's like a new summer camp where everyone is trying to come up with the language that will dominate the platform.Katie: Absolutely. And it’s important to remember that there are a lot more people signing up than they expected, maybe around 70 million or something. But most of these users aren’t on Twitter and don't know anything about it. They’re not comparing it to Twitter. It’s mostly regular users, like 16-year-olds in Brazil, who are thinking, “Oh, a new platform? Where does this fit in with Instagram? Just tell me what to do.” The user base is incredibly diverse, which is why it's very straightforward in terms of understanding.Tom: Explain to me, though, why people who have never liked Twitter would suddenly join a Twitter copycat and find it useful. Twitter has been around for a while, and its mechanics and design haven't broadly appealed to more than 200-300 million users. So why now are they expecting people in Brazil, who have ignored Twitter for the first decade of its existence, to suddenly find “thread” compelling just because they can use their Instagram handle and easily sign up?Katie: Personally, as someone eager to test out new apps, I preordered it on iTunes so that it would be ready for download at exactly 7 pm. I was excited about it because I follow technology news and knew there was a new app coming out. But for most people, I don’t think they heard about the app and actively went to the App Store to look for it. I assume that when most people opened Instagram, they received a prompt to click and experience the new threads. They were signed up right from inside the Instagram app. So, anyone who opened Instagram yesterday was directed to join the app. They might have thought, “I’m not sure what this is, but I like Instagram, so I’ll give it a try.”Eric: It seems like there are a couple of factors at play. There’s definitely a disdain for Elon Musk, particularly among reporters and the left, including myself. I feel like that revolt and the desire of that crowd to find a new home helped motivate this, which is amusing because those same individuals have been critical of Zuck over the past five years.Katie: I think it’s a case of “the enemy of my enemy is my friend,” to a large extent. That seems to be the prevailing sentiment.Eric: Indeed. It’s obviously Instagram's power to bring Instagram users to the new app. Additionally, there are people who believe in getting on a platform early and building followers. So it’s like these three groups trying to coexist—the social media managers who want to grow their accounts in case it becomes the next big thing, the Twitter rebels, and the Instagram influencers who are being told that this is part of the app.Katie: I have another theory as well. When you sign up for the app, the feed is currently purely algorithmic, and it includes a lot of content from people you don't follow. There’s probably a lot of enthusiasm from these big celebrities who haven’t found success on TikTok and are holding onto Instagram as an essential platform for their careers. Fans and regular users are excited because they suddenly see celebrities who hadn't posted on Twitter for years.Eric: What are people’s opinions on the algorithmic feed? I think the average person wants an algorithmic feed.Katie: I believe so too. Instagram has continued to have an algorithmic feed for years because multiple tests have shown that it's what people actually want.Katie: Another important factor to consider is the timing of the app’s launch. Summer is the ideal season for such apps because teenagers are out of school and have more time to use their phones. The current success can be attributed to the high number of young users who are typically in school during other times of the year. While the app’s popularity may decline in the fall, I don't think it will fade away like Clubhouse did.Tom: Additionally, Facebook can easily maintain the app without much effort. Even if it reaches its peak user base, let’s say around 100 million, and then gradually declines to 50 or 60 million, it will still be manageable for Facebook to sustain it. The operating costs are likely low, mainly cloud computing expenses, and it might even serve as an ad platform. For Facebook, it could be a side project that requires minimal effort. If it also happens to cause some inconvenience for Elon Musk and the ongoing competition in Silicon Valley, then that's an added bonus. Get full access to Newcomer at www.newcomer.co/subscribe

Maëlle Gavet and I first crossed paths about a decade ago when she was the CEO of the Russian e-commerce company Ozon. Then, we met up again when she was working as the chief operating officer for the SoftBank-backed real estate tech company Compass. A couple of months ago, I ran into Gavet at a networking dinner in New York City. I interrogated her about her two-and-half years so far as the chief executive officer of Techstars, the global pre-seed investment firm.I invited Gavet on the Newcomer podcast to talk about her time at Techstars and the state of the early stage market. You can listen on Apple, Spotify, YouTube, Substack’s app or wherever you get your podcasts. I’ve also included some excerpts from the discussion below. What she said about the state of venture capital firms will strike a chord of fear with many of my readers. Gavet warned that many VC funds are entering “zombie mode.”She said: In the VC environment, there is a consolidation ongoing, it’s not visible yet and in my view, the worst is to come. Emerging general partners not being able to raise their next fund. In the venture world, they don’t shut down. It’s not like in the operating company world where a company goes bankrupt and literally fires people, closes the door, and that’s it. In the VC world, it’s more like they move into zombie mode. It’s like we are still managing our last fund, but we’re not raising anymore.Our conversation covered a range of topics, including Gavet’s book, Trampled by Unicorns: Big Tech’s Empathy Problem and How to Fix It. We concluded our conversation, interrogating how tech has changed since she published the book and discussing what it would mean for brewing artificial intelligence regulation. Give it a listenLightly edited podcast excerpts from my conversation with Maëlle Gavet:What was the main thing that you wanted to change about Techstars?I wanted Techstars to become the best and largest pre-seed investor in the world. I thought that there were a lot of really good building blocks. The fundamentals were there, and there was also an opportunity to scale it further, streamline it, strengthen it, and provide more value to entrepreneurs, helping them get better terms, better exits, and better valuations. That’s a long process. The VC industry works in a very, very long cycle. So it’s not like you arrive and then three months later things change. But that was the idea of taking this great company to a whole different level. To start, when I would talk about Techstars, people would actually know who we are and what we do. And I remember announcing that I was joining Techstars to my network, and a few people, including venture capitalists from Silicon Valley who will remain unnamed, saying: Why are you joining a nonprofit? My answer was, this is not a nonprofit, this is an investment business and a pretty good one at that. It’s just that they never really position themselves as an investment business. And so part of the work was to change internally and externally, the image of Techstars to say, we are very large pre-seed investors. And by the way, as for Crunchbase, a few months ago, we officially became the largest pre-seed investor in the world.What has been the company with the best return for Techstars?We have some really, really cool companies that I like very much. Companies like Chainalysis made headlines not long ago because they provide blockchain data and analysis to governments, banks and businesses around the globe. And when things like FTX happen, and it’s only the most famous but there have been multiple situations where figuring out what is happening in the blockchain, crypto world has been pretty critical for a lot of institutions. Chainalysis is usually the company that calls.One that I liked very much is called Remitly. They’re a mobile payments service that enables users to make a person-to-person international money transfer. So that’s the tagline. What they do is that they allow to a large extent immigrants from all around the world to send money in a safe and cheap way to their families and to the people who need it. That's a $6 billion company. They went through an IPO in 2021. This is a company with a mission, which is amazing.We’re talking about billion dollar plus companies, and we can also talk about smaller companies because we have 3,600 companies in our portfolio. We’ve got a bunch. But the one that I like a lot among our billion-dollar-plus companies is a company called Zipline. They design and manufacture these drones, and then they operate them to deliver vital medical products in Africa. It’s a $3 billion company. They did successful fundraising in April of this year. Again, what they’re doing really makes a lot of sense for the world, and the risk of using a Silicon Valley sentence: to make the world a better place. But the reason why it matters so much is because I deeply believe and so does my team that big money comes from solving big problems. Big problems usually are found in things that make the world a better place. Not always, but it does help. So that’s my $3 billion-plus favorite company, but we got quite a few others.Are there standard terms for Techstars? If I’m an entrepreneur, what should I expect in terms of money and ownership?We have standard terms and they’re public. So it’s $20,000 plus $100,000 convertible notes. And depending on the conversion of the note, we ended up on average about 8% of the capital in the company. Basically what we provide to founders is the capital, obviously. But there is what we call the Techstars formula. So it’s the $120k that I've just mentioned. It’s the program. Our programs are very intense. It’s a small class, very small classes — 10 to 15 companies. It’s very hands-on. You have the Techstars team, and these are Techstars employees dedicated to that particular program. These tend to be people who are former entrepreneurs themselves. What is your read on the funding environment right now?In the VC environment, there is a consolidation ongoing, it’s not visible yet and in my view, the worst is to come. Emerging general partners not being able to raise their next fund. In the venture world, they don’t shut down. It’s not like in the operating company world where a company goes bankrupt and literally fires people, closes the door, and that’s it. In the VC world, it’s more like they move into zombie mode. It’s like we are still managing our last fund, but we’re not raising anymore.A lot of venture firms have not yet taken the full write-down on their valuation, which compounds the problem because a lot of institutional LPs have public and private portfolios and the public portfolios have taken the write-down. Valuations has dropped quite dramatically.We came from a period where it was not abnormal for a venture firm to raise every two years, sometimes every year. And so a lot of the firms are now out in the market fundraising. And if you take a significant write down, then suddenly your performance on paper doesn’t look great. And so it can create a problem for you. So it’s not like they are in denial. I just think that they’re trying to keep the appearances. The institutional LP knows that so there’s like a double effect. The first one is most institutional LPs are over overexposed to VC because the VC hasn’t taken the write-down that the public market has so there’s like a denominator effect. And then the second reason is the LPs know when they look at the GP they invested in that some of them have not taken the full write down, and they’re like, okay, maybe we’re going to wait to see where all of that lands. And so VC environment is very tricky at the moment, and I think what we’re observing is a complete change of the guard, a complete reorganization of the venture space. It’s not over. My guess is that it’s probably another few another couple of years. At the outcome of that change, we're most likely going to see very different players really influencing the markets.I would assume that over time, there’s less money available.There’s less easy money available. We have a little over 15,000 investors who have made an investment in Techstars, portfolio companies we’ve been connected with. So we talk to a lot of these people like we are deal flow to the VC industry, we’re not really a VC ourselves. And what we tell our portfolio companies is, it’s not that there is no money. There absolutely is some money, but it’s harder to get because the VC is going back to some fundamentals — you should probably do due diligence before you give a check of a few million dollars to a company. You are going to have to show a clear path to profitability — doesn’t mean that you have to be profitable, but it has to be clear and credible, not like you know, the hockey stick that makes you profitable in year 10 if all the planets align and you have no competition. And so that, by definition makes it a lot harder to create compelling cases. And then in a lot of cases, the VC will now ask, even at an early stage, to see some traction. We have companies that have raised recently very good rounds at seed and Series A levels, but they had a good track record a clear path to profitability, and a great product market fit. I think, if I had to summarize: Gone are the times where you could go and raise $5, $10, $15 million based on a napkin and a barely put together MVP [minimum viable product]. That’s not happening anymore unless you're in AI. And that's a different thing.Some of the founders think the gloom and doom has been oversold. VCs want to get better terms, and it’s in VC’s interest to emphasize how bad things are. What do you say to that?The valuation that we saw in 2021 and 2022 didn't make a lot of sense. We’re seeing a recalibration of the markets. We also say that to our portfolio companies: If you are being offered a down round, you probably should accept it because most likely, and obviously it's always on a case-by-case basis, but most likely, your last valuation was probably a little inflated, and the new valuation that you're getting is probably closer to reality. And so yes, it looks like you're down round. But maybe the way you should look at it is your previous round was an out of the ordinary round and this is the normal round. So it's not a down-round technically; it’s just a normal round. Get full access to Newcomer at www.newcomer.co/subscribe

The metaverse had been left for dead. The massive hype for virtual worlds that we saw during the pandemic dissipated once we could all see our fellow humans in person again. But last week Apple finally revealed its augmented reality device, the Apple Vision Pro. The tech giant that rarely misses the mark with its carefully thought through product releases revealed that it wanted people to strap on ski goggle-like devices, direct a computer with their eyeballs, click with their fingers, and video chat in a digital realm.I invited Wired senior writer Lauren Goode and Anand Agarawala, CEO of the startup Spatial, on the show to talk about the new device. Goode got 30 minutes first-hand with the Apple Vision Pro. So we spent the first part of the show interrogating Goode about her experience with the $3,500 device that’s expected to be released next year. Goode told us that she didn’t think the device is truly augmented reality in the purist sense of the term. “It’s not using any waveguide technology that refracts light and then puts it into your eyeballs. It’s not holographic or volumetric, but it is AR if you think about the literal definition of AR as augmenting your reality,” Goode said. “Once you are running computer applications into this space in front of you where you would typically be looking at your real world living room but actually you’re seeing apps and playing games and doing stuff, you are augmenting your reality. It’s conceptually AR.”Agarawala has been hard at work on building tools for augmented reality devices for the past seven years at Spatial. The company builds 3D creation tools and hosts experiences across a range of devices, including virtual reality and augmented reality devices. Agarawala is cheering for real competition among the big tech giants when it comes to developing these wearable computers. “The market at some point of maturity would need all the Big Tech companies to get involved. If you’re just the one company doing it, that means it’s probably not a big enough market,” he said. Apple’s entry into augmented reality “absolutely validates it,” Agarawala said. On the episode, we talked about Meta CEO Mark Zuckerberg’s comments on the release of the Apple Vision Pro:Apple finally announced their headset, so I want to talk about that for a second. I was really curious to see what they were gonna ship. And obviously I haven’t seen it yet, so I’ll learn more as we get to play with it and see what happens and how people use it.From what I’ve seen initially, I’d say the good news is that there’s no kind of magical solutions that they have to any of the constraints on laws of physics that our teams haven’t already explored and thought of. They went with a higher resolution display, and between that and all the technology they put in there to power it, it costs seven times more and now requires so much energy that now you need a battery and a wire attached to it to use it. They made that design trade-off and it might make sense for the cases that they’re going for.But look, I think that their announcement really showcases the difference in the values and the vision that our companies bring to this in a way that I think is really important. We innovate to make sure that our products are as accessible and affordable to everyone as possible, and that is a core part of what we do. And we have sold tens of millions of Quests.More importantly, our vision for the metaverse and presence is fundamentally social. It’s about people interacting in new ways and feeling closer in new ways. Our device is also about being active and doing things. By contrast, every demo that they showed was a person sitting on a couch by themself. I mean, that could be the vision of the future of computing, but like, it’s not the one that I want. There’s a real philosophical difference in terms of how we’re approaching this. And seeing what they put out there and how they’re going to compete just made me even more excited and in a lot of ways optimistic that what we’re doing matters and is going to succeed. But it’s going to be a fun journey.Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

I couldn’t help but spend the first few minutes of my conversation with Pejman Nozad fishing for the story of how a rug salesman built one of Silicon Valley’s top institutional pre-seed and seed funds. Nozad has such a fascinating and inspirational story; it reflects what is possible when Silicon Valley is at its best. Nozad told me how Sequoia’s Doug Leone gave him a shot. “We connected [as] both really good salespeople,” Nozad recalled. “I said Doug, ‘I can help you invest in some amazing founders.’”Leone said he would come to meet with Nozad. “I made my life mission that I’m ready,” Nozad remembers. They hit it off and the deal flow, well, it flowed.Nozad would later introduce Sequoia to Dropbox. Pear VC, which Nozad co-founded with Mar Hershenson, first raised $50 million in 2013. Nozad and I spent much of our conversation talking about the practicalities of a $432 million seed fund.For a firm that invests in pre-seed and seed round startups, the latest fund size is enormous, especially as we’ve been in a downturn outside of AI.With that fund size, Pear VC will need to find many more winners than in earlier funds to generate high multiples for its limited partners.“I wake up every morning and I think we’re going to go out of business by the end of the day,” Nozad said. “So that’s the mentality. It doesn’t matter if you have $400 million or $4 million or $4 billion. I want to stay on my toes. DoorDash performance, or Guardant Health, that doesn’t mean anything about Fund IV.”Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

For this week’s Newcomer podcast, I talked with Contrary general partner Kyle Harrison. We spent the first part of the episode talking about his piece VC Contagion: Is Venture Capital Killing Itself? I just published the essay exclusively in Newcomer. Then, on the podcast Harrison talked about Contrary and its research strategy. The firm has published reports on Stripe, OpenAI, Databricks, and many other private companies.We also discuss whether, when it comes to the private markets, information really wants to be free. Harrison talks about the gossip economy that powers the venture capital industry. This episode of Newcomer is brought to you by VantaSecurity is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity.But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.Vanta’s enterprise-ready Trust Management Platform empowers you to:* Centralize and scale your security program* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR* Earn and maintain the trust of customers and vendors alikeWith Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

It’s been a sad state of affairs for consumer companies not named TikTok. Poparazzi just shut down. (At least some of the team went to Instagram.) Popshop is struggling. The venture capital firm Benchmark helped establish both companies as consumer startups to watch by leading their Series A rounds. Sarah Tavel, who led the investment in Poparazzi and has worked closely with Popshop, agreed to come on the Newcomer podcast to talk about the brutal state of consumer startups. “Our deep belief at Benchmark is that our job is not to predict the future, but to try as best we can to see the present clearly,” Tavel told me.Of course, it’s not just Benchmark’s once high-flying startups that are reeling. Andreessen Horowitz audio company Clubhouse laid off more than half of its employees. Hype for the photo company BeReal seems to be dying down. (Searches for the company’s name on Google are at less than half their peak.) “It is a really tough environment right now to build that type of company,” Tavel said about startups building for consumers. “It’s always been difficult, but the level of difficulty has been turned all the way on. Because right now, anybody building something in consumer has to compete with the most addictive consumer format that we’ve ever had — which is short video.”Tavel, who co-led an early investment in Pinterest and then became the company’s first product manager, talked through some of the most promising opportunities in startups. Artificial intelligence seems poised to create new consumer startups. Tavel flagged the legal artificial intelligence company EvenUp, which just raised at a $350 million valuation from Bessemer, as one such promising startup. I marveled at the bootstrapped rise of Midjourney. But, of course, many generative AI startups, especially ones building foundation models, are raising such large rounds that it can be difficult for a firm like Benchmark to rationalize an investment. We also talked about one of Tavel’s most successful investments at Benchmark, Chainalysis. The blockchain data company raised $170 million at $8.6 billion last year. The New York Times wrote a glowing profile of the company last month. Tavel, who doesn’t like to announce her startup investments, revealed that she has secretly invested in an unannounced NFT company.“Crypto is a bad word now,” Tavel told me. “It’s really hard to train consumers to trust something again — once a consumer has made a first impression. It’s much easier to teach a user a first impression than to rewrite that first impression.”Finally, I asked Tavel to give us a peek behind the curtain at Benchmark. Fortune’s Jessica Mathews recently interviewed Benchmark’s Bill Gurley about his decision to step back.Mathews wrote:“The venture business, if you want to be at the top, requires insane, remarkable hustle… You have to live in fear that the next Google is going to get funded by a firm that’s not yours,” he says. “Either you’re in there rowing as hard as you can, because we’re all a team, or you’re not.”That said, he still has strong instincts about the future of tech. “If I were still active as a venture capitalist, I’d be looking at a lot of the vertical applications of A.I. I look at the coding stuff, and it’s insane… If you’re not using it, I think you’re probably writing your own death certificate as a programmer, because people are going to be so much more efficient. And the question is: What are other applications that have that kind of productivity boost or lift, and I think people are trying to figure that out.”But in the end, it was a book by Steve Martin, Born Standing Up, that helped convince Gurley it was time to step back. “One day, [Martin] is in Vegas and he comes out, and the top row is empty, the first time he’s ever seen the top row empty. He quits the next day—never does standup again. And then he goes off and he does his banjo and his theater and his acting.… Like I said, I don’t think I ever played the stage, so I’d rather not say I’m the same. It influenced me. That notion influenced me.”Today, the Benchmark partnership is made up of Tavel, Peter Fenton, Eric Vishria, Chetan Puttagunta, and Miles Grimshaw. Tavel said about the firm, “We’ve always had a pretty simple idea, which is that there’s this creative destruction.”“Once you start — there’s no training wheels. So you’re thrown into the deep end. You’re an equal partner and you’re expected to be 100% until the minute that you retire,” Tavel said. “And when you have an equal partnership, it kind of pushes you in the direction of just recognizing — as Bill said in that interview — the hustle may not be in you anymore. And if you feel that way, then the model — as was set up by the founders — is such that it’s time to raise your hand and move on.”Of course, my understanding is that partners like Gurley, Matt Cohler, and Mitch Lasky remain fairly heavily involved at Benchmark even so. “It’s like an affliction. The reason they’re here in the first place was because the curiosity and competitiveness and the drive for learning and relevance, being in the mix, that never leaves you,” Tavel said. “They are a significant portion of our LP base, they’re still there on Mondays, and I’m texting all of them all the time.”Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

I caught up with Substack co-founders Chris Best and Hamish McKenzie at Substack’s office in San Francisco last week. They’re fresh off raising a community fundraising round and launching their social network Notes. I wrote in March about my decision to invest $5,000 in Substack’s fundraising round, even though the company revealed that it had negative revenue in 2021:I’m already compromised when it comes to Substack. They’ve made my job possible. And while I already have plenty of financial exposure to Substack’s performance just by dint of running my business on Substack’s platform, I’m eager to have a chance to show my support.So this is the rare — hopefully singular — interview where I can’t claim true editorial independence. I’m compromised on this one. Still, I think you’ll find it an informative and entertaining conversation. I’m able to bring my perspective as a Substack writer to the conversation and I can’t help but fish for drama and news.This episode of Newcomer is brought to you by VantaSecurity is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity. But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.Vanta’s enterprise-ready Trust Management Platform empowers you to:* Centralize and scale your security program* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR* Earn and maintain the trust of customers and vendors alikeWith Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.In our conversation, I asked McKenzie and Best about Twitter’s one-sided war with Substack. Elon Musk has at times throttled links to Substack. It is impossible to imbed tweets in Substack posts anymore. Adding some intrigue to the tensions, Andreessen Horowitz, Substack’s largest outside investor, is an investor in Musk’s Twitter. And, Musk actually long ago hired McKenzie, a former PandoDaily reporter, to write for Tesla.“I try to think about Elon as little as possible,” McKenzie said in our conversation at Substack’s office. “What we’re trying to do here is not build the anti-Twitter or build the anti-Instagram or anything like that. We’re trying to build the first Substack. The vision for what we think it can become is an amazing, beautiful thing and it’s bigger and more important than social media.”McKenzie acknowledged that “arguably Twitter is trying to kill Substack.”I asked about newsletter godfather Ben Thompson’s critique of Substack’s community round in his newsletter. Thompson wrote in April:We know that valuation because Substack asked its writers to fund a round at the same $650 million post-money valuation it achieved in 2021, despite the fact the company failed to raise money last year; the company never released its 2022 financials.Frankly, I think this request was shameful: Substack has rightly earned the affection of a lot of writers by providing them with a new way to earn money, and of course those writers want Substack to succeed. Keeping such a lofty valuation, though, is effectively asking for a donation from an audience that almost by definition doesn’t know any better. That doesn’t seem very writer friendly! Nor, for that matter, does this fight with Twitter. Again, I think this is a product bet that makes a lot of sense: Substack needs to take big swings if it’s ever going to reach its valuation. Writers, though, who need Twitter’s distribution, didn’t sign up for this fight; they are simply stuck in the middle.We also talked about Best’s botched podcast interview with The Verge’s Nilay Patel. In the interview (here’s a link to the key exchange), Patel hammered Best on Substack’s stance on blocking overt racism on Notes. In that interview, Best declined to say that Substack would ban particular objectionable racist comments from the platform unilaterally. In my conversation with him, Best continued to oppose “centralized censorship” on Substack’s platform. And he doubled-down on his answer, saying that he had “basically the same answer.”Best said, “We do have a content policy. It allows a lot of stuff we don’t like. It bans only very extreme things. If people are putting things that are against the overall content policy, they are taken down by us. However, that allows a lot of stuff that we find very objectionable. Then we try to build a system that puts people in control of what they see and who they interact with.”As should be pretty obvious from the conversation, I think that if Substack Notes is successful, it will actually be much more curated than many other social networks. Writers want to give their readers a premium, elevated experience — not just a platform that does the bare minimum of content moderation. So I’m optimistic over time that Substack will find ways to empower writers to curate the platform. Even though Substack often finds itself talking about free speech and tough moderation decisions, in many ways what the company has built is a system where writers are given the power to moderate the platform themselves. The last thing I’ll tease from the conversation is that the Substack founders no longer come off as diametrically opposing to supporting advertising. Judge their answer for yourself.In the conversation we name-dropped a bunch of newsletters and Substack writers, including Gergely Orosz Jesse Singal Heather Cox Richardson Matthew Yglesias Substack Writers Andrew Sullivan The Ankler. Bulwark+ Bari Weiss The Free Press The Pillar Give it a listen.Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

The blitzscaling funding model failed news companies. Vice Media — which raised more than $1 billion from the likes of TPG, Technology Crossover Ventures, and Disney — is reportedly preparing to file for bankruptcy. BuzzFeed — which raised hundreds of millions of dollars from investors like Andreessen Horowitz, General Atlantic, and NBCUniversal — just shut down its news division and has watched its stock price sink 95% since going public via a SPAC.Meanwhile, Gawker, which successfully avoided the cash-burning approach, was brought down in a lawsuit funded by tech billionaire Peter Thiel. This episode of Newcomer is brought to you by VantaSecurity is no longer a cost center — it’s a strategic growth engine that sets your business apart. That means it’s more important than ever to prove you handle customer data with the utmost integrity. But demonstrating your security and compliance can be time-consuming, tedious, and expensive. Until you use Vanta.Vanta’s enterprise-ready Trust Management Platform empowers you to:* Centralize and scale your security program* Automate compliance for the most sought-after frameworks, including SOC 2, ISO 27001, and GDPR* Earn and maintain the trust of customers and vendors alikeWith Vanta, you can save up to 400 hours and 85% of costs. Win more deals and enable growth quickly, easily, and without breaking the bank.For a limited time, Newcomer listeners get $1,000 off Vanta. Go to vanta.com/newcomer to get started.In his new book, Traffic: Genius, Rivalry, and Delusion in the Billion-Dollar Race to Go Viral, former BuzzFeed editor-in-chief Ben Smith takes stock of the heady days of media spending and snarky online writing. (Of course, for all his insistence that that spendy era of media is over, Smith is the co-founder of Semafor, a company that raised $25 million — including about $10 million from Sam Bankman-Fried — to build a new digital media business.)I invited Smith on the podcast to talk about his new book. I started the discussion by going back to David Carr’s 2012 profile of BuzzFeed. Carr wrote at the time:[W]ith the addition of Mr. Smith and his new hires, BuzzFeed is growing some serious news muscles under a silly, frilly skin, and added the header “2012” for election coverage. (More traditional news verticals will be rolled out in the coming months.) It’s gone well so far, with comScore showing 10.8 million unique visitors in December, more than double that of the same month in 2010.Its business model, in part, capitalizes on the mix of high and low content; instead of banner ads, BuzzFeed works with companies like Pillsbury to create content ideal for sharing, including “10 Things You Never Knew You Could Do With a Crescent Roll.”If it is successful, BuzzFeed will generate the kind of traffic that will rival behemoths like, yes, The Huffington Post. Mr. Peretti says that BuzzFeed makes a profit some months, but given the level of investment and growth — there are now 78 people in its Flatiron offices — the burn rate on that new chunk of capital is significant. “It’s fun to watch them make all these hires,” said Choire Sicha, the founder of The Awl site and a veteran of the New York Web scene. “But it’s important that they don’t overspend. Web ad rates are what they are and that isn’t going to change.”Then I turned the conversation to former Gawker editor Max Read’s review of Traffic. Read writes: In the end, only one character in “Traffic” can really be said to have any vision. In 2013, Disney CEO Bob Iger offered to buy BuzzFeed for $650 million. In the book’s strangest and funniest scene, a nightmare blunt rotation of Smith, Peretti, BuzzFeed video chief Ze Frank and BuzzFeed president Jon Steinberg get high on a hotel balcony in Los Angeles and discuss the offer. Frank and Smith urge an ambivalent Peretti to turn down the offer, worrying that “Disney’s corporate culture would stifle” Buzzfeed’s creativity. Not so much Steinberg, the company’s money man, who gets “down on his knees on the balcony to plead with Jonah to take the deal.”Frank and Smith would go on to win the argument; they and Peretti saw BuzzFeed’s monster traffic as the key to their dreams of a burgeoning, independent media empire. As we now know, they were wrong. Steinberg is far from a genius — after leaving BuzzFeed, he joined the Daily Mail’s U.S. operation, and then founded the cosmically annoying CNBC-for-millennials brand “Cheddar,” whose videos can be found on gas pumps across the country — but he alone managed to see that traffic for what it really was: the “pump” phase of a pump-and-dump scheme that Peretti never had the vision to complete.In my conversation with him, Smith, the former media columnist for the New York Times, also offered his thoughts on the upcoming presidential primary and Tucker Carlson’s departure from Fox News. Give it a listen.Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe

Union Square Ventures partner Albert Wenger has been successful enough to write a techno-manifesto. Wenger made early investments in companies like Twilio, MongoDB, and Etsy. Now, he’s spending much of his time on USV’s climate investing out of the firm’s $200 million climate fund.Wenger has historically been a media recluse — but he’s started popping his head out. So when I got the opportunity to talk to him on the Newcomer podcast, I jumped. After all, Union Square Ventures has ranked 1st and then 2nd in the Founder’s Choice VC Rankings. And USV was among the first venture capital firms to privately raise the alarm to portfolio companies that they needed to protect against a banking crisis. So we had a lot to talk about. Plus, Wenger is in the big ideas phase of his career. “We live in a period where there is an extraordinary range of possible outcomes for humanity. They include the annihilation of humankind in a climate catastrophe, at one extreme, and the indefinite exploration of the universe, at the other,” he concludes in his book The World After Capital, which is available for free online. Wenger has a strong point of view about where we’re headed: He argues that we’ve moved from the Industrial Age to the Knowledge Age and that we need to dramatically rethink society in light of that change. Despite the book’s manifesto-like qualities, The World After Capital frames up some of the core issues of our time. In particular, he argues that financial markets cannot adequately price the ultimate scarce resource of our age — attention. As artificial intelligence looks poised to further disrupt society, Wenger’s point of view is only becoming more compelling.In our Newcomer podcast discussion, Wenger and I examine the current state of universal basic income. You can hear how we think differently about the issue. I’m eager to think about how it could realistically be implemented in the United States sometime soon; he’s interested in the broad sweep of history. On the podcast, we talk about the banking system and I interrogate whether there’s any hypocrisy in opposing the 2008 bank bailouts and defending the government’s decision to backstop depositors at Silicon Valley Bank.It was a fun conversation that looks beyond the day-to-day news cycle to some of the bigger questions that technological progress posses for our society. Find the Podcast Get full access to Newcomer at www.newcomer.co/subscribe