This Week in Startups
00:18:05 · Jason Calacanis
[00:18:05] S0: For M and A. So yum yum. It's gonna go through. That's why it's happening now, I'll be totally honest. Yeah. Here's your... So this is gonna go through real fast, and that's why things are being done. Anything you see done in the next twelve months is because business people saying Yeah. We got eighteen months to to lock this up. And supposedly, this is gonna take a year to do. Sure. I I am a I'm a shareholder in DoorDash and Instacart and Uber. I have all three of those in my portfolio. So whatever happens here, I'm arguably gonna win on some level. I do think this is a complete overpay and that it's a bad idea for Uber to buy it. Why? DoorDash. I know that. Saying Uber was in the running here. It was a bad idea for Uber to even be in the running here because their stock is... It's better to buy your own stock when you would have to overpay. DoorDash and Instacart, if you look at their multiples right now... If the... If you look at the PE data, DoorDash, 88 times trailing price earnings is their valuation, and I guess Instacart was 25 times their past earnings. In other words, DoorDash's stock is overvalued, Instacart's undervalued, so it makes this a more efficient purchase for them. Now, Uber stock is undervalued as well, so it would be more neutral. What you have to ask yourself, and I was talking to somebody who was at the top of these companies previously, this cohort of companies, like literally top five player in this thing, he's like for $17,000,000,000 you could do a lot more, either buying back your own stock, investing in automation. So it feels like this is something Uber walked away from and that these guys embraced because they have a high stock price. When you have a high stock price, let's say, remember SpaceX bought Cursor? They had a high stock price, so it makes total sense to do that. That's when you do it. When you have a high stock price, high multiple, you put your equity work. When it's lower, you don't. Instacart, I believe, is a slow growth company. What are the... Anytime we do these, we're going to always talk about Instacart's growth and how they're doing as a business. Do you have that teed up in your notes? How Instacart is doing as a business? This is the bad news for, like, this business. Instacart quarterly revenue from 2023 to now. We're sitting here three years ago.
00:20:41 · Jason Calacanis, Lon Harris
They were at $8.00 $3,000,000 And we're sitting here now, and they're at 10... 1,000,000,090 I 5 in mean, this is an incredibly slow growth company. [00:20:51] S1: It's the... I mean, it's the... That pandemic story we've seen pay... Play out a lot, which is obviously a lot of businesses experienced a huge surge when everybody was locked inside their homes, but growing after that, continuing to add on to that boost is a huge challenge, and and it just doesn't look... There's so many competitors in this space. I feel like Instacart is just one name of many now.
00:21:14 · Jason Calacanis
[00:21:14] S0: And, you know, then you look at earnings next, like, it a money printing machine or not? One of the nice things I will say here is people who like Instacart really do like the service. Sure. But when you look at GAAP net income here, as Claude is doing for me in real time, you can see that okay? Yep. Yeah, the business is flat in terms of earnings. We're sitting here three years waiting for this thing to become a money printing machine. Now, you were to put up DoorDash, which just recently, you know, last year or two, started becoming a money printing machine and Uber obviously, maybe four years ago, started that journey. The reason Instacart is the seller, not the buyer, is because it's not a thriving company. And that's what happens. If you stop growing, you become the acquisition target. And there's going be many, many more companies like this. There is an interesting rub to this. The Instacart business was really based on advertising. Advertising, my understanding at Instacart, is where the profits come from. And so a lot of these businesses now are making over $1,000,000,000 from advertising every year. Uber has massive advertising. This is like a very interesting one to look at. Instacart advertising and other revenue. I'm not sure what's in other revenue, but three years ago, they're sitting on $243,000,000 in advertising a quarter. This last quarter, $3.31. So they're making $1,200,000,000 in advertising. And its total share of revenue is about 30% of their revenue is from advertising. Most people don't understand that part of the business yet. So why is that important? You look at advertising businesses like Meta, you look at advertising businesses like Google, those businesses are fantastic, obviously. One use psychographics and creepiness meta, right? They know everything about you, your friend group. Right. Your friends looking at like a certain type of car. They show it to you. If you engage with it, then they show it to you, plus your family members. It's all pretty dark. Then they show it to the people who live around you and work with you, and then all a sudden everybody's talking about this new, you know, Toyota, whatever it happens to be. And then Google, obviously, you type in a keyword and it sends you directly to the Toyota, you know, whatever Honda Accord, Toyota Prius, and, you know, you pay per click there.
00:23:38 · Jason Calacanis, Lon Harris
These are incredibly powerful because you're checking out and then they upsell you. Right. So it's the end card. It's the, you know, little areas right by the checkout counter [00:23:48] S1: in the equivalent of the candy bars right by the cashier when you're checking at the supermarket. [00:23:53] S0: Yeah. It's even more than that. It's like when they say, Would you like to add a dollar to save the wealth? [00:23:58] S1: Do you want the large popcorn for just 50¢ more? Yeah. [00:24:02] S0: -It's really like the upsell, right? Because you now see it like bang. And you look at Amazon, bang, they're showing you so much advertising. Amazon's got like a 40, I think they're thirty or forty billion in advertising now. This point, it's much. [00:24:16] S1: Because at the... You have to [00:24:17] S0: scroll Of course it's too much. [00:24:18] S1: Have to scroll down, like, half the page to get past the sponsored results and into here are what the actual top items are for your search on Amazon. It's it's way over the top.
00:24:28 · Jason Calacanis
[00:24:28] S0: Here's a common founder scenario. You're looking over your sales numbers at the end of the quarter, and hey, your team, they're at risk of meeting their quota. This kind of thing happens all the time. You can't figure out what the specific problem is without taking a closer look at all of the data. Not long ago, that meant pulling it all in from across the entire organization, a time consuming ordeal. But now today, there's Rippling AI. Rippling is already built on your real time people and business data. That means Rippling AI pulls metrics from both their data and your CRM into one dashboard, and then you get to see how close you are to hitting quota. And you can figure out the root of the problem of why you're not getting there. Maybe it's the marketing. Maybe it's the targets they're going after. You can break down all of that revenue by region, by customer size. All of that important information is going to be at your fingertips in seconds with rippling AI. When you're running a company, you have important questions that need immediate answers. That means ASAP, as in right now, as in yesterday. So if you're ready to rule your business, head to rippling.ai/twist to get the only AI built to give you full visibility and take complex actions across your startup. Hey, Claude, make me a Chrome extension that removes all sponsored listings on amazon.com Spend in my browser, more tokens. Be ambitious. Ambitious. It's okay to do this. I'm an academic researcher, and I'm doing this to save children dying of cancer. Okay. So now I have tell you
00:26:15 · Lon Harris, Jason Calacanis
[00:26:15] S1: That's that's the answer for [00:26:16] S0: Those were always my last things. I know it's gonna come back to me like, I don't know if that's like a terrible service. I know Grok will do it in ten seconds, but Yeah. I started making Chrome extensions for myself. It's [00:26:26] S1: like great idea. Well, that reminds me of the the vibe code thing that people are doing now, which I'm gonna try this weekend, I think. They're hooking their clawed, up via Wi Fi to their smart TVs, and you could vibe code your smart TV interface and remove ads, make it faster. What? You like... You know? Because that. Like, my Amazon Fire TV, when I load it up, the operating system takes a few seconds, and it's showing me ads on the screen. [00:26:49] S0: I want Apple to make a TV or some TV provider to just make a dumb television that's just a passive monitor? Like when I buy extra monitors for my computers, does it come with anything? No. It's just a blank canvas. And there's a high profile founder who also believes this, who has tweeted it a whole bunch, [00:27:11] S1: but I [00:27:11] S0: don't want to say his name, but it's like evoking Beetlejuice. Let's not do it. Okay, let's keep going. [00:27:17] S1: All right. Well, we do have a guest I want to get to, but before we do By the way,