about this episode
<<Henry Blodget, CEO & editor of Business Insider, and Mike Isaac, senior editor at All Things D, analyzed Facebook Home & the market for the HTC First before discussing with Jason & Kirin the Mike Arrington allegations, Twitter Cards, Bitcoin, Tesla’s new lease program and Ken Auletta’s profile of Henry in the New Yorker. >>
2:00 – On this episode of TWiST we’ve got Henry Blodget of Business Inside and Mike Isaac of AllThingsD3:15 – Thanks to theresumator.com for sponsoring the program. This is their first ad on TWiST and I don’t even need the copy, that’s how much I love the product
5:30 – Welcome Henry Blodget, my friend of last two decades!
6:00 – How did it feel when Jeff Bezos invested in your company?
7:30 – Discussion about quality of CEO Jeff Bezos v. Zuckerburg
9:00 – Elon Musk v. Zuckerburg
9:22 – Zuckerburg v Larry Page
10:30 – News Story #1 Facebook Home, HTC First Release
11:30 – Best Zuckerburg product release of all time?
13:10 – Henry what do you think?
15:45 – What do you think of the chat heads? Isaac?
17:15 – What do you think of Zuckerburg’s performance on the product release? Henry?
18:00 – Henry are you going to long the stock (FB)?
20:00 – Content, Ad, Content, Content, Ad Discussion w/ Facebook Home, HTC First
22:00 – Thank you to my friends at My Turnstone! We love our new beatiful furniture! Go to myturnstone.com/twist to receive 10% off your first order
26:30 – News Story #2 Mike Arrington Debacle
28:00 – Jason weighs in
30:00 – What do you think about this Henry?
33:30 – M. Isaac weighs in
36:00 – M. Isaac asks Jason about his comment on Facebook after the story broke
40:50 – M. Isaac asks Jason: Do you think Mike is going to comment?
41:18 – Henry what is your response to a lack of comment from Mike, AOL, etc?
43:40 – Reference to Ellen Powell situation
45:00 – Jason reflects on a past Mike Arrington story
48:45 – News Story #3 Twitter Cards Release
51:05 – Is this a business model Henry?
52:22 – Why don’t they pay a penny per click for example?
53:20 – News Story #4 Bitcoin
57:00 – How do governments respond to this?
58:30 – Mike, do you think you’ll see this go mainstream?
1:01:00 – What do you think about Zynga? Does it have a chance?
1:01:50 – News Story #4 New Tesla Lease Option
1:06:26 – Mike what do you think?
1:10:00 – Thank you Henry! Thank you Mike! Great show!
1:11:48 Thank you The Resumator! Thank you My Turnstone!
Distribution provided by CloudSigma. The cloud that adapts to you. Visit CloudSigma.com/ThisWeekIn, for a free $200 credit.Today’s episode of ThisWeekIn Startups is brought to you by, Turnstone. More than furniture, we’re an experience. Go to myturnstone.com/twist, to learn more and receive 10% off your first order.
And by the Resumator. Try the Resumator. The hiring solution used by today’s fastest growing startups. Start a free trial at the Resumator.com/twist.
Jason: Hey, everybody. Hey, everybody. It’s Jason Calacanis. This is ThisWeekIn Startups. Our news roundtable edition where we talk about what’s in the news in the world of startups technology. On the program Mike Isaac from AllThingsDigital, allthingsd.com and the D Conference. As well as Henry Blodget, the founder and editor-in-chief of Business Insider which also made some big news this week. We’ve got a lot to discuss. It’s going to be an amazing episode. Stick with us.
TWiST title sequence.
Jason: Hey, everybody. Hey, everybody. It’s Jason Calacanis. This is ThisWeekIn Startups. Oh. Look at that nice new graphic. I love it. But just take out Mahalo because I’m sunsetting that brand. Put in Inside.com. Coming September 1. This is ThisWeek In Startups. The show about startups, technology, making a dent in the universe, making things that matter. If you’re interested in being an entrepreneur, if you’re interested in understanding what is going on in the technology industry you are in the right place. If you’re interested in anything else just click on one of those videos to the right on YouTube. This is our News Roundtable Edition. In the News Roundtable Edition it’s pretty simple. We take the top 10, 20 stories of the week and we talk about them with our round table of brilliant folks. Those brilliant folks are Henry Blodget from Business Insider and Mike Isaacs from AllThings D. Who I will intro in just a moment.
Jason: A couple orders of housekeeping. On June 26th and 27th we’ll be having the Second Annual Launch Education and Kids Conference brought to you by Pearson and SchoolMessenger. Thanks to those guys for the support. It’s taking place at MicroSoft’s campus. They gave us the space for free. Thanks a lot to my friends at MicroSoft who gave me an open invitation to host an event at anyone of their locations any time that I want. That’s pretty big.
Kirin: When did they do that?
Jason: Yeah. Over lunch. They’re like, “Listen. We love what you do. Any time you want any location… you can have it any time. You can have it for free. We’ll buy the cookies.” That’s kind of nice.
Kirin: “We’re going to buy the cookies.”
Jason: That’s kind of nice. You know when I was a kid growing up I had PCjr. I just tweeted this to Bill Gates and Paul Allen this morning. Like, “Hey guys. I was really inspired by you guys.” In 1983 I got the PCjr. Now, it’s like really? I’m 42. It’s 20 years later. 30 years later and I can actually host an event at MicroSoft anytime I want. That’s a big vote of confidence. I really appreciate that guys. Hey. The Resumator, The Resumator. I use this product all the time. This is one of the things I’m very lucky about. The program, ThisWeekIn Startups, is now 4 years old. 100,000 people download every episode. Yadda, yadda, yadda. But the best part is we’re able to have a team of people working on the show. Thanks to partners like the Resumator who’s sponsoring the program for the first time. But The Resumator is an interesting story. As we know, the founder called into the show for an Ask Jason 3 or 4 years ago.
Kirin: Don did. Yes.
Jason: Don did. Then he was a great guest on the program.
Kirin: He was an amazing guest.
Jason: Was he Philly or Pittsburgh?
Kirin: Pittsburgh. Come on man.
Jason: Whatever. I know the city’s named with a ‘P’ and it’s below New York. That’s as far as I go.
Kirin: It’s west of New York.
Jason: It’s sort of between somewhere between New York and Florida. Right?
Kirin: No. West.
Jason: Yeah. Exactly. Anyway. The point is The Resumator is an amazing company. I use it. It’s like software as a service for… I can explain it without even looking at the copy. You, basically, instead of putting your email list and getting flooded with resumés you put the URL of your resumator site, of your software as a service site. You pay like, I don’t know, $100 a month, $50 a month. It’s really affordable. I’ve been paying for it for about 3 or 4 years now.
Jason: Then all the resumés come in. You can ask questions before they actually submit their resumé. Then it normalizes it. It puts it into a workflow system. Then you can tell your people like, “Hey. Sort through the resumés and say are they a candidate or not. Then, if they’re a candidate, the workflow goes to the next person. They review them, normalizes all the questions, puts in your notes. You’re basically taking things out of your DropBox or Excel…
Kirin: Out of your email.
Jason: And certainly out of your email and put it all in one place. Here you go. Here’s The Resumator I’ve been using for years. We have almost 18,000 people have applied to positions at my companies. Cause I used it for 3 or 4 different companies. It just works brilliantly. I don’t want to show any of the resumés in there. Cause then you’ll see people applying for jobs and that would be a privacy thing. Anyway. It works brilliantly. It screens resumés based on job criteria. Track the applicants, hire employees efficiently, stay competitive by using time and cost per hire. You have to use the product. It’s absolutely great. I use it for everything. For a free trial… awesome… go totheresumator.com/twist. Go ahead and thank The Resumator on your Twitter account. Thank you Resumator. Hey. On the program today, Mike Isaac from AllThingsD. Welcome to the program for the first time Mike.
Mike: Thanks for having me.
Jason: A pleasure. A pleasure.
Mike: Good to be here.
Jason: Explain to the audience what your beat is at AllThingsD please.
Mike: Yeah. Yeah. So, I am the social reporter. I basically spend all my time thinking about Facebook and Twitter and all the little social startups in the ecosystem in the Silicon Valley.
Jason: Great. Of course we’re going to talk about Facebook’s Android…
Jason: … home screen talking heads thing. Right? Yup.
Mike: Yeah. The super phone. If anyone will actually buy the thing.
Jason: Yeah. Exactly. And welcome back to the program my good friend of almost 2 decades, Henry Blodget.
Henry: Hello. Thank you for having me.
Jason: It’s going to be a great week. Boy, look at that smile.
Henry: I can’t believe you are only 42. You are just a young pup.
Jason: You know what? We were kids when we started.
Henry: I was shocked to here that.
Jason: How old are you Henry?
Henry: You were a kid.
Jason: How are you?
Henry: I was middle-aged apparently.
Jason: How old?
Henry: I’m 47.
Jason: You’re 47. So I’m right behind you. But hey. You’re walking on eggshells right now. I can see that huge smile from 2,000 miles away. Jeff Bezos gave you $5M. That is the biggest vote of confidence you could ever get. Is it not?
Henry: Well. It didn’t all come from him. It was great. Yes. It’s a vote of confidence but Jeff Bezos is actually somebody that I’ve actually admired for 2 decades. The way he leads Amazon, what they’ve done at that company is just tremendously inspiring and very different in a lot of ways than a lot of american corporations are run. So I had been a huge fan of his from afar. So yeaah. I was very stoked when he said, “I’d be interested in investing.” I was like, “Great. When can we get it done?”
Jason: So explain to me exactly how that gets done. Obviously you know him. So you had lunch with him at some point at some event from what I understand. Then all of a sudden you get this email out of the blue?
Henry: We had dinner. We talked about a lot of things. I mean we go way back. People talk about the target that I had on Amazon in the late 1990s and covering the company and so forth. We just had dinner. We talked about a lot of things. Then a few months later he said he was interested in investing. He’s got a great team at his investment firm that makes lots of different investments. I mean the guy invests in incredibly cool stuff. The atomic clock, rockets, different things like that. So his team handled it. But we went from there.
Jason: It’s a major thing to have him as an investor. He actually was going to invest in Weblogs, Inc. back in the day. I think pound for pound right now it’s him and Elon Musk and Larry Page. Those are the three best CEOs right now. I’d put Zuckerberg far behind those three. What do you think Henry?
Henry: Jeff absolutely. To me the best impressive attribute that he has is… A lot of people have vision. A lot people have great ideas. A lot of people are incredibly smart. Very few people have as long term commitment and vision as he does. He had it right from the beginning. Another thing that he does that is so helpful for companies is he will take a huge amount of flak over the near term. He will have his stock price beat up. He will have people talk about how the company can’t make money and all these other things. Everybody carping about how low his margins are. While he is investing for the long term. That’s part and parcel why Amazon has been so successful. Because he can resist that short term pressure and ridicule and so forth. Single-mindedly focused on Amazon’s customers. That’s something that I think every entrepreneur should look at and say, “That’ what I want to hold myself to do.” I think Mark Zuckerberg has certainly done that. Elon Musk is tremendously impressive as well. The amount that guy has created in his life, staggering.
Jason: OK. So let’s do our fantastic four right now. Isaac, I’ll ask you Elon Musk vs. Mark Zuckerberg. 5, 4, 3, 2, go.
Jason: What? What did he say?
Kirin: He said Zuckerberg.
Jason: Zuckerberg? What? Oh my God. Wow.
Mike: I had to say it. Cause I knew someone else was going to say Elon.
Jason: See he’s a social reporter. That was… OK. We’ll do the next one here then. Here we go. Henry Blodget. Zuckerberg or Larry Page. 5, 4, 3, 2.
Henry: They’re both great. Why are we picking one? What is this? A boxing match.
Jason: Because it’s an editorial device Henry. It’s an editorial device.
Henry: How? Sorry. Yeah, yeah. I know.
Jason: Play along.
Henry: Sorry. I reject that. These are four CEOs with different trials.
Jason: Larry Page?
Henry: The one thing they have in common is this long term focus and tremendous boldness. They’ve all got that.
Jason: You have $1M Henry. You have to invest it in either Larry Page or Mark Zuckerberg. 3, 2, go.
Henry: 50/50. $500 on each.
Jason: God. This is the problem with Henry Blodget today. He’s so damn successful he’s afraid to take and editorial stand. I think it’s over for you Henry.
Mike: I thought we were betting on who would win in a wrestling match. So that’s why I went with Zuckerberg.
Jason: You picked Zuckerberg over Elon Musk. You obviously never met either man. I think Elon Musk could take Zuckerberg and be like… That’s like taking a super hero… Alright listen. Obviously I’m falling flat with this contest. Let’s do the Facebook and Android release. Then we’ll do the Arrington story. Then we’ll do a commercial. Let’s start with Zuckerberg.
Kirin: So we know the big reveal yesterday. A lot of it had already been leaked. A lot of it seems to be very accurate about the Facebook Home. It’s a new skin app for Android. They have this thing called the cover feed, chat heads. So you’ll be able to chat with your friends no matter where you are in the phone. You don’t have to go into a separate app. The cover feed gives you all the updates with what’s happening with your friends without you actually having to unlock a phone first.
Kirin: Now the Facebook Phone which we’ve heard about over the years finally has emerged in the form of this HTC First. Which is coming preloaded with Facebook Home. It going to be $99 and beautiful colors and all those sorts of things. You will be able to get the Facebook Home on your Android select device starting April 12. Zuckerberg, of course, you thought did quite a job product wise with this particular product.
Jason: Best product announcement ever.
Kirin: Right. My questions are who’s going to buy the phone? Are you as concerned as Om Malik is about the privacy issues here?
Jason: Let’s ask the experts. Isaac what do you think? Do you agree with me, the best product announcement ever from Zuckerberg?
Mike: The best product announcement. Is that what you said?
Jason: Yeah. That’s my opinion. Do you agree?
Mike: I mean I was underwhelmed. I think the sort of shining points were the cover feed. Just in terms of the company and the constant flow of content coming through at all times. Obviously that’s where they insert ads in the future. That’s what Zuckerberg said. He’s going to insert ads. The sort of persistent Facebook is all up in your phone all the time. You can’t just sort of relegate it to an app anymore is a win or good thing for Facebook. I just don’t know who the target market is. I don’t know if it’s like teenagers that are obsessed with Facebook. Which I don’t know if those still exist or not anymore. Or grown adults that are still using it. I’m waiting for them to release an ad subsidized model that is essentially like free. Right? So they introduce ads into the cover feed and they can start giving away the phone.
Jason: Yeah. That’s a really good point Isaac. I think absolutely if they did, every time you turn on your phone you watch a 15 second pre-roll… I said this about… YouTube should release a $99 or $49 tablet that every time you turn it on you watch a Google ad… you know a TrueView ad that then goes into whatever the top video of the day is or something.
Jason: Pick your ad, pick your video. You just have to watch one ad a day. If that’s worth 10¢ or 20¢ you know, you start talking about some serious change after two years. Henry what do you think of the announcement from Facebook?
Henry: I thought it was a very cool product. They definitely did some things that look really sexy. There’s a lot of good functionality and so forth. I was talking to David Kirkpatrick actually on our Yahoo show this morning. He’s saying, “Look. Don’t compare this to the US. This is all about India. It’s all about China. This is where people really want this. It’s going to take off.” I guess that’s possible. I guess there are a lot of people who might in fact want their phone turned into a Facebook communicator. I would hate it. It’s already everything is already a tiny poke or swipe away from whatever I want. I like the app interface now. I don’t need to be assaulted any more than I am. My pictures or what have you. I think Facebook knows hat. That’s why you’re seeing them launch on mid range phones. At this point though, to me, is a suped up Android app is what it is. The reason it is not on iOS is I’m sure Apple would laugh out of the room saying, “You gotta be kidding me. We’re not going to give away that real estate.” It’ll be very interesting to see whether Google tries to restrict this going forward. Because effectively Facebook has now put itself between both the hardware provider and the operating system provider and the customer. This is all about owning the customer value. This is a very bold move. If this really becomes the thing I think a lot of the operating system guys are going to be disrupted.
Jason: That is a very astute point. I mean I cannot believe the level of interception going on now. There really is a trend now of infect the other guys ecosystem and rot it.
Kirin: Well Googles’s doing it to Apple.
Jason: Right. Google’s the perfect example. What they’re doing with Apple, like infect their ecosystem. This is a really aggressive step. I’m going to take your home screen away. You can be sure in your next version of Android they’re going to say, “You’re not allowed to take the home screen away. You’re not allowed to take off the…” You know. Which they obviously didn’t do because every phone, like Samsung, everyone’s got a different home screen.
Jason: But I don’t know. They’re going to have to… I really did like the also… I thought it was the most original thing I’ve saw Facebook do ever. Cause Facebook’s never done anything. They always steal stuff. Right? SnapChat was just a total pixel for pixel rip-off of Poke. Sorry the other way around. This just seemed like wholly original. LIke, “We’re going to do…”
Kirin: They took their time.
Jason: But they do seem to be stealing a little bit from Path.
Kirin: Yes. Dave Morin.
Jason: Like the little circular faces was a clear hat tip to Path’s design.
Jason: So I felt there was a little rip off of Path there. What do you think of the chat heads Isaac? What do you think of the ripping off of Path?
Mike: Yeah. So I think that essentially what you’re saying is pretty right in terms of coming up with something original. I think that they’re very smart to take the things that are sort of hot right now… Obviously messaging apps are exploding. There’s like WhatsApp which has like tens of millions of users.
Jason: Message me.
Mike: SnapChat, things like that. Message me. Exactly. Which just launched. So they’re not doing direct rip offs and going head to head like they did with poke. Which totally flopped. But they are sort of synthesizing certain elements into a greater whole. Right? So if someone is like, “This is a cool feature that wouldn’t just be something that I would use in a stand alone app but rather than part of an entire system then.. Maybe that’s more of a compelling argument than say, “Download Poke and you can do exactly what SnapChat did.”
Jason: I think this is a watershed moment for Facebook. I think it’s really wholly original. Even though it’s got some inspiration. I feel like they’re finally starting to do original things. I still think Zuckerberg is the worst presenter ever. Like he doesn’t understand the timing of when people clap. He’s like, “So here is Chat Heads. Here is Chat Heads.” It was like…
Mike: He has gotten so much better over the years though. Like before he… Now he actually has like emotion. Before he was like affectless. Now at least he can sort of like say, “I’m excited about this.”
Jason: Right. What did you think of his performance Henry? I don’t mean to minimize it but it is… He’s still kind of awkward. Huh?
Henry: I didn’t watch him live. I think I have to agree with Mike. Mark’s gotten so much better.
Henry: The first big public appearance that he had after the IPO where just everybody was dumping on him and on the stock and everything else. That’s when he went out… I think on the TechCrunch Disrupt and he was excellent. He was funny. He was self deprecating. He presented very well. He instilled a lot of confidence. You saw the stock take off immediately on that. So I don’t people have any problem with his sort of awkwardness. I think you saying it… Dude you are a great presenter. So of course you’re going to have a problem with everybody else. I think people know Mark is Mark. Everyone knows is kind of awkward but kind of funny and endearing at the same time.
Henry: So I agree with Mike. I think he’s done a tremendous… he’s improved tremendously.
Jason: So are you long on the stock Henry? Do you think the stock price is accurate? Do you think they are going to have massive growth? Or do you think this is going to be a sideways company for a couple more years?
Henry: I think it’s going to be sideways. Sideways meaning very volatile, up and down as people get excited about different things. To me the issue is they went public very late. They were a very mature company. They already had a 50% operating margin. Their revenue growth was starting to decelerate rapidly and they were making this big transition from desktop to mobile. Normally when that starts to happen a stock that has been a momentum stock, that has done nothing but go through the roof, it breaks down. You have many years where the valuation starts to compress, you have different shareholders take over and then eventually it settles in and becomes a long term growth story at a much lower valuation in terms of a multiple and much different investors and so forth. I think they’re in that period. That said if you look they’re trading at 45 times earnings. Google is at about 17, Apple is at about 10. They’re just valued incredibly highly relative to a lot of other mature companies. So yes there’s always a chance that they pull a rabbit out of a hat. Some huge new product that they roll out to a billion people and the stock goes to the moon. I think more likely we’re just in this long term consolidation period. Where it would generally lose…
Jason: Is there any chance that this is an break out product like you’re explaining? This is not the break out product?
Henry: I don’t think on the revenue side it is. Yes there has certainly already been talk about how they’re going to put advertisements there. Maybe there is a species of human being somewhere on the planet that doesn’t mind having huge advertisements blasted at the home screen of their smart phone. But it’s certainly nobody I know. It’s… already really intrusive smart phone advertising is a different kind of assault than other advertising.
Jason: Let me ask you this Henry.
Henry: So I think there going to have a problem with that.
Jason: Henry if your iPhone 5 which you love… Right? You’re addicted?
Henry: I am.
Jason: If you were able to have that phone for free, no purchase price. Right? Would you accept a home screen that had content, ad, content, content, ad?
Henry: No. I would not. But I should caveat that by saying in The United States we have these wonderful subsidies that trick us into thinking the iPhone’s only $199. I only buy one every two or three years. In terms of a cost per minute of use that is one of the lowest cost and best spent $200 that I could spend anywhere. The thing is part of my anatomy by now I use it so much. So that trade off would not be absolutely worth it for me. I think there are many other options where certainly in The United States we could get free phones. That said the explosive growth for new internet users and smart phones right now is an emerging markets. LIke China, India and Brazil. There $200 and $600 for a full iPhone is just a crap load of money. So there it may absolutely make sense and that is a better model.
Jason: Isaac. What do you think Isaac? Do you think content, ad, content, content, ad would be a great trade off in those emerging markets? Do you agree with Henry Blodget?
Mike: Yeah. I actually really do. I think over here… We can already get free iPhones. It’s an iPhone like 4 I believe. But you can actually get iPhone 4 free at this point in The United States as long as you do the carrier subsidy. But I can totally see this being an emerging markets play. This is where they wasn’t to grow Android use already in terms of messaging applications and things like that. So that China obviously India, South America, Middle East. I agree with Henry on this one.
Jason: Alright. Let me take a moment to thank one of our sponsors then we’ll get back to the news. MyTurnstone offers simple and smart furniture solutions for small businesses and startups. I, Jason Calacanis, have a turnstone desk. So do my 40 or 50 people upstairs from me right now. I don’t have turnstone on my… Oh there it is. Look how gorgeous this is. Pull up my screen. Thank you, thank you to my friends at myturnstone. It’s affordable. It’s a step above… I’ll be honest. It’s a step above the cheap stuff you build yourself. I don’t want to say anything derogatory about the people from Scandinavia who make really cheap furniture that seems like a good idea until it breaks. This is like buying something ten times better but at only double the cost. If you catch my drift.
Jason: This is a very valuable play. You buy these. You can resell them for 60%, 70%, 80%, I think, two or three years later. They’re incredible. Everybody’s sitting on them here at that office. Everybody loves them. They’re gorgeous. I have to say morale goes up when you have beautiful furniture in a beautiful space. People have to spend ten hours a day there it better be gorgeous. Go to myturnstone.com/twist and get 10% off your first order. That’s serious money. Thank you to my friends at myturnstone for giving my audience, the ThisWeekIn Startups audience 10% off. Cause you know it’s not like they’re giving you 10% off software. They’re giving you 10% off a physical goods product.
Kirin: Exactly. You saw that one of your fans…
Jason: Yeah. One of my fans bought a bunch of stuff. He’s got it all set up. He said that it was easy to set up. You can get it installed. We had it installed cause we had so many desks to do. But boy isn’t it beautiful here at the office?
Kirin: Yeah. It is nice.
Jason: Myturnstone.com/twist. This offer is only for you. Our loyal twist visitors, listeners, etc… Simple and smart. Just awesome. Thanks so much. They have all these little cool groovy little ad ons you can get. They have little plants and stuff like that. That kind of stuff… I’m telling you. You put that kind of stuff in an office. Like people notice that you’re taking the time to put that little planter there and whatever. They just feel like they’re living in the future. That’s awesome. Thank you to my friends at myturnstone. Everybody follow @myturnstone. If you by a myturnstone desk… I’ll tell you what. Here’s an offer. I always try to do something a little extra. If you… Let’s see. How do I want to phrase this. If you buy my turnstone for your office… The first 3 people to buy myturnstone for their office and then send me pictures I’ll take them to lunch.
Jason: Jason: Free hour lunch with J Cal. But only three. I can’t go to lunch with 30 people.
Kirin: No, no.
Jason: I may put you together for lunch. Cause it’s not a one on one lunch. I may bundle the lunch.
Kirin: You may bundle the lunch?
Jason: But I’m paying for the lunch.
Kirin: You’re paying and where are you taking these people?
Jason: I’ll take them to In and Out Burger. I’ll take them anywhere they want.
Kirin: I was going to say aren’t you doing Dobo for these folks? Come on.
Jason: What are you trying to do? Bankrupt me. I’ll do sushi. I’ll do something high end. It’ll be like a $100 person lunch. OK? It’ll be serious. Thank you myturnstone. OK. Henry Blodget how did you like that ad read?
Henry: It’s amazing. You integrated it in. The other thing I love about this is you use all of your products. That’s remarkable.
Jason: I won’t accept an advertiser if I don’t use their product.
Henry: There we go.
Jason: It’s called white listed advertising. See this is what I would bring to the board of Business Insider. These kind of innovations Henry. What did you offer me? I gotta find that original email. What did you offer me? LIke 2 points.
Henry: I don’t know. Whatever it was it wasn’t enough.
Jason: I felt like as friends I shouldn’t take it from you. I didn’t want you to live in my shadow if you named it Alley Insider. Remember I told you? It’s better I not be involved cause then people are going to think like it’s my idea or whatever. I wanted you to have your own success. It turns out to be great except for me. That 2% I’m guessing the valuation was $150M Henry.
Henry: Ha. Nice try.
Kirin: He’s not going to tell you.
Henry: It’s double secret man.
Jason: I can tell. It’s over $100M. I got it. Henry’s got an incredible tell.
Kirin: I was going to say he did this.
Jason: Let’s play poker heads up soon Henry. It’s over $100M. OK. Let’s do the story that everybody wants to hear about. Just as a precursor to this whole thing. I don’t actually really want to talk about this story. I have not talked about this for years. I have divorced myself from this individual after we had our breakup. This is not for ratings. The only reason I’m bringing this up is cause A. I feel like on an integrity basis not talking about it in the news program when I host a news program would be wrong. Number 2. My name is all over it now. My name is being brought up as knowing information. I need to clear the air about that.
Kirin: You’d rather do it in a format like this than in an editorial.
Jason: I just don’t want if I write something then people are going to misinterpret it. I want people to be able to look me in the eyes and hear what I have to say.
Jason: Do you have a recap of what it is?
Kirin: I didn’t write it down officially but I can spontaneously…
Jason: If you can recap without making … cause it’s delicate
Kirin: It is very delicate. The story came out in Gawker this week. It was based on a Facebook post by a woman named Jenn Allen. In that post she had said to her friend that she had been really depressed. She’d finally broken up with this person. He treated her very poorly. Had even threatened to kill her if she ever told anyone what he had done to her. She had a whole lot of comments. That came out I believe March 28. I think the Gawker story came out I think a couple of days later. I’m not quite sure why there was such a delay. But when they did come out with the story they took a picture of Mike and Jenn that was taken last year at an event you know. And put a nice little read banner over it. The article did confirm that they had dated at one point. The article also pointed out that Mike had included Jenn’s company in his write up a few years ago of female led startups in the Valley. And that photo they’d been photographed at an event last year at SOMA I believe. So that article comes out and is basically silenced. No one picks it up. You were already asking me that afternoon that we need to point out that AllThingsD, TechCrunch, that Venture Beat, that any number of tech blogs they haven’t covered the story yet. I thought well maybe they’re doing original reporting and they’re trying to verify things.
Kirin: But really it has been pretty quiet ever since then.
Jason: So it’s April 1 when the story broke.
Kirin: Right. Then Loren Feldman of 1938 Media felt compelled to share what he thought about the situation. He recorded and posted his video to YouTube the other night. You shared that as well. Lauren said, “I know Mike. I know I’m not a lawyer. I’m not all these things but I think he did it.” Lauren also said, “Mike’s just a guy. You shouldn’t be afraid of him. He doesn’t determine your startup success.” He thought it was terrible that nobody was talking about it.
Jason: Then today we have the big news drop. Which is pretty disturbing. Let’s see. What does it say in this story? A woman who was the HR person, her name is Cecile DeSmet Sharp, the director of human resources at RealNames at the time says, “I believe he threw her on the bed and she started kicking and he held her feet down really hard. She felt uncomfortable coming to the office with Arrington there. Then there was a cover up. She in good conscious can’t say anything.” So this is whatever… 10 years from then. The there is this talk of Meghan Asha and her being thrown against the wall by Arrington at the end of the TechCrunch 50 conference and me getting a phone call about it. So I am not commenting on the phone call except to say there was a phone call. Because the stuff that was told to me on the phone call I have no way of verifying if it’s true or not. I don’t feel it’s my place… If there’s another person… It’s hearsay until that original person I guess confirms it. I can’t lie that there was not a phone call because there are multiple people saying there was a phone call. I’m not a liar and I’m not going to ever lie. I wouldn’t lie to the audience. but let’s take a look at the media side of this. Henry Blodget you guys have not covered it yet. What is the benchmark for covering a story like this. How do you look at it? Without taking about this case in specific or talking about this case whatever your comfortable with Henry. What’s your take?
Henry: Yes. We should talk, absolutely, about this case specifically. Which is potentially very serious. I think we linked to the Gawker story immediately cause it is an interesting story and it’s a very serious allegation.
Jason: Business Insider linked to it?
Henry: Yeah. We linked to it immediately. Right directly to the story. We do that. We link out to a lot of things on our publications, AllThingsD and so forth.
Jason: Where did you do that?
Henry: I’m sorry.
Jason: Where did you do that? On the homepage?
Henry: Right from our homepage. Homepage of the tech section. So we linked to it. My feeling on this though is there was immediately a lot of talk about why are wire and tech folks covering this and that kind of thing. Look. This is a very serious allegation. If it happened the way it was described it’s a crime. Usually the way that these things come out is there is a law suit filed or there is a police complaint registered where everything is taken out. This was very odd the way that it came out frankly. It sounded a little odd. It’s a blog comment in a Facebook post but it doesn’t mean that it’s not serious. It does. But then the next step is, OK, what’s the full story? Let’s get it on the record. I think Gawker published another story today that goes back as you mentioned into some previous incidents where there is a lot of detail on them. We’re starting to get that. So for me it’s a question of time. Again, to be fair to everybody involved here you want to be very careful and right about these things. You don’t want to just throw them around. So I would defend the media in saying, “Look. Take your time do it right.” Gawker again has done a very detailed story here. I would encourage people to read it. There are more stories to come on this story.
Jason: You are aware of more stuff? There are a lot of rumors. Yes?
Henry: No. I should say that I’m not aware of other things. You may be and I would love to hear your talks on that. What I’m saying is there is one big story here that needs to be flushed out. Which is more from the woman who posted the original Facebook post. Again, to go public like that you then want to take the next step and say, “Spell it out. Cause if it happens the way you described it it’s just incredibly serious.”
Jason: Do you have a journalist Henry on the story pursuing the story?
Henry: I’m not going to talk about what we do internally. I was not surprised to see Gawker follow up with the story that they followed up with. I think that’s something that a lot of media organizations would be working on.
Jason: So you don’t have a responsibility as one of the publications of record to investigate this Henry? Or are you just not going to say if you are or not?
Henry: I’m not going to talk about what we’re doing or what we’re not doing. I just think that the immediately progressing from the Gawker story again is a very serious allegation.
Jason: Absolutely. Well it’s actually allegations of rape now.
Henry: To immediately pile it on and say that the media is not doing their job, their scared, they’re being wimpy and so forth. I would just respectfully suggest that maybe they’re in fact being responsible and they want to get it right for everybody involved.
Jason: I think that I can appreciate that. In the same way that I am not talking about that phone call. Because I don’t want to come out here and start saying hearsay about something that is a felony.
Jason: Right? It’s very dangerous. Isaac, AllThingsD only covers stuff, my understanding is, they will only cover it if legal papers are filed. Correct?
Mike: I don’t think that is necessarily our hardline. But basically what Henry said is completely true. Obviously we are going to be a whole lot more careful about this sort of thing if actual crimes… It’s not like he said she said in terms of like money, you know, in valuation rounds and things like that. So this is serious stuff where serious journalists are going to tread carefully. What I think is being conflated though is the sort of media not covering it immediately vs. the greater Valley population at large not talking about the story at all or sort of not commenting on the story period. Right? So if even I as a journalist have not come out and given a story based on reporting facts the fact that people aren’t sort of retweeting the thing or it’s not circulating at least publicly. I think that’s sort of getting carried over to well I guess the media is copping out to this.
Jason: We do have the media not commenting yet. Right? Outside of Gawker. I think only Betabeat has done something. So we have this really… Nobody has gotten to the story. Now of course today is new information. So there could be, I’m assuming, everybody is investigating this including The New York Times, including AOL, including Henry Blodget, including AllThingsD. I’m assuming everybody is because it’s a serious, serious issue. It would be a big problem if they weren’t. But they have to be careful. But there is something where nobody will talk about this on Twitter. I have mixed feelings about talking on Twitter. Cause obviously anything I talk about people are going to feel is biased because we broke up. You know.
Jason: Now the breakup of myself and Mike at TechCrunch 50 is being linked directly to this phone call on the same day. So now that makes it even more complicated. I realize that makes it much more complicated. But you know I can’t…
Mike: Why did you… Can I ask you, why did you fell compelled to write your post on Facebook when Shannon first posted her thing?
Jason: That’s a good question. In the post on Facebook I don’t mention anybody by name.
Kirin: That’s true.
Jason: I talk about my experience in misreading a person and the impact it’s had on me. I’m having a little bit of a conscious thing right now. I’ll be honest. Cause it’s very difficult for me. You know, I was friends with Mike for 3 years, 4 years. I was his business partner. That’s a very serious thing obviously to be in business with somebody.
Jason: When I look back on it in hindsight a lot of my friends say, “Do not get involved with Mike Arrington.” When i met Mike he had no full time employees. Maybe two employees working out of his house. He didn’t understand the media business. I feel… I know I made a mistake being in business with him. Number one. But I have learned certain things about the media and how to accumulate power in media and how to accumulate status. I taught him that. That I regret.
Kirin: You gave him the ability to be what he is.
Jason: I taught him how to become important. I taught him how to have power. I taught a guy who abused that power how to have power.
Kirin: You knew he was somebody who was capable of abusing power at the time?
Jason: I didn’t. No. It’s very hard to know when somebody goes from being just a jerk to being more than a jerk. You know. I learned it over time. I really learned it… The whole thing’s very hard for me.
Mike: Also. I’m just sort of curious also in your post you didn’t name Mike specifically. Is that more like a legal maneuvering thing or are you just sort of reticent to…
Jason: I don’t want to be dragged into it. You know. I really don’t. I separated from Mike. He’s a toxic person.
Jason: We all know that. Now we obviously know a lot more. is it possible that this is all made up? You know. That’s what I’m asking myself. I don’t know the answer to that. I don’t want to seem like I’m injecting myself into this story. But I regret ever having a relationship with him. I regret doing… I love the work we did together. There was a time I considered him a very good friend. So I really feel like an idiot. That I actually got duped. I don’t get duped often. It’s very rare in fact. I built my whole career on being savvy you know. What I lacked in smarts… Henry Blodget is where he is because he’s really smart. I’m where I am because I’m really savvy. You know?
Kirin: You’re street smart.
Jason: Yeah. Henry Blodget, if I play him in chess he’s going to kill me. If I play Henry Blodget in poker I’m going to own his house. You know. That’s the difference between Henry Blodget and I. Not to make light of it. I got duped. I wrote it because I write process things by writing. I’m a writer. I didn’t think it was going to get picked up by Gawker. I thought this would be something I’d write to my friends on Facebook. That’s why I didn’t publish it as an email.
Kirin: Interesting that you chose Facebook as your outlet.
Jason: I thought that that would be the place that it would just live there. You know? I didn’t think it was going to get blown up. I honestly didn’t.
Mike: I just want to like I think it’s interesting Jason. Like obviously you are part of this but it’s interesting to see the tension… You kind of are putting in it in terms of like taking a stance and sort of showing that I was wronged by this person. It didn’t really work out. I’m just wondering is there going to be a threshold where you’re kind of officially going to take a stance on everything.
Jason: Yeah. I mean… Listen. My stance is that he’s a bad person. He’s a bad actor. Right?
Jason: He stole from me. But at the end of the day, as I told people, when he stole from me and he threatened everybody around me not to be involved with me, to not participate with my conference. I said to my wife, at the time, I will fight through this and I will be victorious in terms of on a business level. People realized that the TechCrunch 50 conference was me not him. Then I poured my heart and soul… With you at my side Kirin.
Jason: … into the Launch Festival. I think that this year…
Kirin: It was the best event ever.
Jason: It was the best event ever. I sort of feel like… For me I don’t make any money off of the event. Although we did make money on TechCrunch 50 together. You know, I don’t like getting screwed and all that kind of stuff but I don’t feel like a victim at all. You can’t look at me as any kind of victim. Especially if anything that’s being said is remotely true. Which we don’t know. I feel like I’m a big personality and I got a little P.T. Barnum in me and I realize that. I feel like me commenting on this stuff actually detracts from it. Because people will discount me as P.T. Barnum and I’m just a little bit of a loud mouth and I’m a spurned business partner. The truth is breaking up with Mike was the best thing that could have happened to me because now I own the Launch Festival and it does fantastic and it’s pure to my vision. I don’t have that person in my life anymore who is a bad actor. Whether he’s as bas as this…
Mike: Do you think that he’s going to comment or do you think or is he just going to dig in and sort of like let the lawyers do the talking right now?
Jason: See that’s the other thing. His silence is kind of deafening. AOLs silence is kind of deafening. You know if it’s me and I’m accused I am filing lawsuits immediately to defend myself and making a quick statement. I don’t know. Henry what is your take from the lack of any response from any camp?
Henry: Well. I think you are reading something into it. I think a lot of people probably are on that. I think the other thing I would say is just give it time.
Henry: The truth will come out here as you’ve said many times. I just think it’s this story that you want to be very careful with. It’s an incredibly serious allegation as you pointed out. If it happened as described it is a crime. You want to be careful with that. Frankly out of respect to Mike Arrington and everybody else in this you want to be careful with it. It’s not the kind of thing that you just throw around. I hope that the media is doing that. I think that over time… Gawker has already posted a very detailed, careful follow up with some prior instances, again alleged, but we’re talking about that. My guess is we’re going to see more stories on this. Then ultimately we may see a response.
Jason: Yeah. I have to lay back. We have to let this process go. I’m not the person to sort of carry it over the finish line because frankly I don’t have any of this information. That’s the other thing that’s kind of…
Kirin: I think that needs to be more clear Jason.
Jason: Yeah. People are starting to think that I had information and sat on it. Just so you know, all of these rumors I found out years after we were broken up. Years after. You know. Certainly when I read Gawker whenever the story came out, April 1. Obviously I didn’t think it was an April Fool’s joke but I did not know any of that. Now with the Meghan Asha stuff obviously I know something’s there. I think it’s up to Megan to make her own decision as to what she wants to talk about. I can’t come out and say what somebody else told me about that situation cause it’s second hand. It could be made up. If could be false. Megan has to make that decision. Now this other HR person who came out she’s a professor of sociology and she was the HR director there at RealNames. So if she… Looking at that that to me says this is a very credible person who has a lot to lose…
Kirin: By speaking out.
Jason: … by speaking out. Obviously Jenn has a lot to lose by speaking out.
Kirin: Well look what happened to Ellen Powell.
Jason: Yeah. It has to take it’s time out.
Henry: Understand the Ellen Powell point is a very important point. I think that that is just good to keep in mind here. That was an incredibly detailed legal specified allegation of exactly what happened. So again I’m not trying to defend media and everything else but it’s a very different situation. Then Ellen Powell said, “Look. This bad thing happened to me I’m going to go through excruciating detail exactly what happened.” I would expect that if what has been described has happened here that you’re going to see follow on like that. That would certainly be the next step.
Jason: And the Keith Rabois case. Am I pronouncing his name correctly? That never… That didn’t have any legal…
Kirin: He was accused…
Jason: Legally? Was there a legal document? He says there isn’t I think on Quora. Anyway.
Kirin: The accusation was enough for him to be forced out.
Jason: Anyway. So that’s… My public position is very clear. I’m not the person to just go out there and just speculate. But I do applaud… The people who are coming out if they are in fact telling the truth. Then I don’t applaud them. I do think it’s the right thing to do. I do think that there was an instance that Mike… I am on record about this and Brooke Hammerling is on record about it. Brooke Hammerling is the highest profile PR person in the industry. Mike called her the ‘C’ word. This is when I was working with Mike. She came to me crying. I said, “I’ll handle it.” I talked to Mike. I said, “You cannot… What is going on here? Were you joking? This is not appropriate.” He just brushed it off. That was very much at the end of our relationship. That was when I was like there is something deeply wrong here.
Jason: You just don’t ever say that. This is where I think you are friends with somebody who’s a bit of a jerk. Then you hear something like that. Then you’re like this is starting to move over into a different area of…
Kirin: This is not normal jerkdom.
Jason: Yeah. Trust me. I’m a jerk sometimes. I know that.
Kirin: Sure. Of course.
Jason: I am full contact sport kind of a guy. I will write things. I will challenge Henry on picking Larry Page vs. Elon Musk and try to force him to answer it. That’s all in good fun. It’s all for the audience or whatever. But calling her the ‘C’ word to me… I apologized to her for not standing up. That, to me, is where I think I… Now I’m second guessing myself. I should have broken off the relationship with him at that point. Which is probably a couple of months before we actually did break off our relationship. So to Brooke Hammerling I’m sorry. I told her I’m sorry. I’ve told her I’m sorry many times and she’s forgiven me for it. Cause you start to think that you can work with a person. I though that with Mike. I was teaching him how to build his business. We were partners. We were both profiting from it. I thought, “Gee. I could mentor this guy.” I don’t say this lightly like… I don’t want to use a Star Wars analogy. I felt like I was teaching him how to do this. Like I was Obi Wan and he was Anakin Skywalker. Like I was teaching him how to accumulate power in media. I specifically had conversations with him about accumulating power in media. How having a conference or having a magazine, making lists…
Kirin: Having a platform.
Jason: … making a platform then how you can grow that. How that works. How the media works. i explained all that to him and he accumulated all that power. Then of course he used it against me. Obviously he used it in some other startups. But the stuff that’s coming out now predates me even being involved with him apparently. If it’s true. The alleged stuff.
Mike: That’s the interesting thing to me. Someone is saying that ii is the worse kept secret in Silicon Valley. I have not heard of it but I have also only been covering technology only 5 years. I’m interested… You said these new sort of allegations are new to you being surfaced recently.
Jason: Yeah. These are new. I mean there was whisperings. I’m not talking out of school. Henry’s heard the whispers, I’ve heard the whispers, Gawker’s heard the whispers, Kara Swisher has heard the whispers for a couple of years. When I say a couple I do mean like two or something like that. These rumors have been going around for two years. Or course I didn’t say anything, Henry didn’t say anything, Kara didn’t say anything for the right reason. You can’t be talking about rumors about a person that are of this gravity. But when the people who are on the other side of it, who are actually impacted talk about it that’s when we have to just sit back and let the process work. I agree with Henry. I’m assuming Henry is working on part of that process. Henry any questions or comments to close this up?
Jason: There you go.
Kirin: Moving on?
Jason: I think we should move on.
Kirin: I think we should move on. What do you want to talk about?
Jason: Anything but this one. Frankly any story but the last one. I don’t mean that in any light. It’s a very heavy story and I just… If I never see Mike Arrington again in my life it will be too soon.
Jason: Literally. If nobody never says Mike Arrington’s name to me again and I never read about him again that would be my druthers.
Kirin: Alright. On the record. Twitter does updated cards. This is something Mike could probably talk about as well. The new cards let you see photo galleries, apps…
Jason: Mike or Isaac?
Kirin: Mike Isaac.
Kirin: His last name is Isaac.
Jason: Oh your last name is Isaac? All this time I’ve been calling you Isaac?
Kirin: Sometimes people call you Calacanis. Right?
Jason: Oh. Sorry. Go ahead.
Kirin: So the new card let’s you see photo galleries, apps and product listings. The bigger deal is of course you can deep link to apps. So you’re looking at a tweet and you see on the card that it says, “Open this in Path.” for instance. The original cards launched last June. You had just more articles, snippets, photos and videos. Partners in this new form of the cards are Path, Etsy, Flickr, FourSquare. They came out with the new iOS app and Android app. The mobile version is also supporting the new cards. Fred Wilson thinks this is a really big deal for ecommerce apps. Twitter’s saying there’s already 10,000 developers, apps and websites using cards. So is this really as big a deal as some people think it is?
Jason: OK. Mike Isaac what do you think?
Mike: Yes sir. I think there are two things. One is Twitter is essentially kind of making it’s play to app developers… or making it’s case that yes. We, like Facebook or we, like other discovery mechanisms can help you build an audience. Can help you build a way for other people to discover your applications that are buried in the Appstore. I’m not sure if I believe that fully. You can go into a tweet which has a card to open up and click directly from there. I don’t think people are going to necessarily go to Twitter to discover apps but at the same time I think about the way I find apps. Which often is word of mouth. So Twitter is like word of mouth but at scale. So I can see incidentally if there’s a link directly to the Appstore that I can download an application. If someone mentions that on Twitter maybe that’s going to raise the possibility of me doing that. I think the sort of keys for developers is to make it really lightweight and not super difficult for a one or two person shop to integrate this into a Twitter card.
Jason: Wait a minute. Henry is this a business model Henry?
Henry: Well I think if they can establish a beachhead for commerce one of the biggest disappointments about Twitter has been the expectation that it would be this great commerce generator. That is just utterly flopped. It’s the same for Facebook in a lot of ways. So if there’s a beachhead here where you can get people using it that would be great news for Twitter. That said I’m going to defer to Mike on this just cause I have not spent a lot of time looking at the product. I think the general commune that I would make is that what Twitter is increasingly trying to do is pull media and other things into itself and sort of become more of a media company and here become more of a commerce jumping off point and probably just give people a reasons to spend more time within it. They’re ability to do that will really determine how big and powerful a business they can become over time.
Jason: Now why didn’t they launch these cards that link out to the app and just say if you want to turn that on for your app it’s a penny per click. Mike why wouldn’t they just do that? It seems reasonable to me if you’re an app developer to pay a penny per click is a fraction of what you would pay other services to get over them.
Mike: I would think. I think they’re trying not to charge initially just because they want as many people to get on board with it. They have to make the case that it’s worth it to do this extra work. Right now i’m not personally convinced that people are going to necessarily would click through to a lot of these things. People just want to look at pictures a lot times and maybe watch a video inside of their Twitter stream. So is it actually worth me paying a penny per click. I guess you could make the case that it’s so small it might be worth it but I don’t know. I think Henry’s right definitely though. Twitter’s been talking a long time about ecommerce in terms of tweets will lead to a free flow throughout the twittersphere and you can click on a button and essentially buy something from inside a tweet. I think that the closer a company gets to that the more compelling the platform gets and the more third party developers would actually be interested in it.
Jason: Let’s do Bitcoin. What’s the Bitcoin story?
Kirin: Alright. So Bitcoin blew up in the last couple of weeks. It’s become a billion dollar market. A lot of this is related to what is happening in Cyprus and the uncertainty there. The expense report service Expensify let’s you get reimbursed in Bitcoin. Boost VC is looking for coin related startups for its next accelerator class. There is just under 11M Bitcoin in circulation. Of course this week with all this extra value being created the Bitcoin Wallet Instawallet was hacked and service suspended. The biggest Bitcoin Exchange Mt. Gox was hit with a denial of service attack. There were trading delays and some people couldn’t log into there accounts. So what’s happening with Bitcoin? Is it really mainstream? Would you invest in a Bitcoin startup?
Jason: I’ve passed on investing in Bitcoin startups because I didn’t think they were going to be legal. I thought our government would have a really big problem with it.
Jason: I think they will have a problem with it when the first 15 year old, sadly, dies of an OD because they bought drugs off of Silk Road with Bitcoins or if a terrorist attack is funded God forbid in Europe, God forbid The United States as well and somebody funded it through Bitcoin. Which of course could be done with a brown paper bag. It would be people being Luddites.
Kirin: People die from stuff they buy with cash.
Jason: Of course. But I do think perception is reality.
Jason: People start thinking “how dangerous” this currency is. How dangerous in quotes because it’s untraceable and virtual and uncontrollable. Although it does have some controls. Henry what do you think? Is this for real now?
Henry: I think… I said earlier this week. I think Bitcoin is the perfect asset bubble. It’s really fun to watch. A lot of whet’s happening is very similar to what happened in the dotcoms in the 1990s. Basically at it’s fundamental core conceptionally the Bitcoin promise is very compelling. Which is we need a global currency now. It is incredibly tedious and friction full to have to deal with all these different currencies and everything else. You want a single currency world wide. People who hold currency for a long time are incredibly frustrated that inflation takes away the value of it. The promise of Bitcoin is that there is going to be a finite number of them and that’s it. So it will store your value and everything else. So all that is very exciting to people who look at it conceptionally and understands it. Then you got this thing where it has suddenly broken out. I hadn’t paid any attention to Bitcoin despite hearing about it for a couple of years. Until a conference at the beginning of March where somebody at dinner had said, “Dude. You have got to understand Bitcoin.” He explained it to me. There was this game that you would have loved cause it’s like your poker where a couple of big hitters passed a couple hundred thousand dollars worth of Bitcoin around the table from smartphone to smartphone and back to the guy where it started. So of course this was very exciting. At that point Bitcoin was trading at $35. Now here we are at $140 or whatever it is. The higher it goes the more people are piling in saying they’re making so much money. What I would say is there is no way to value it. If there is really is a finite amount of it, the government doesn’t make it illegal or you don’t find a way to counterfeit it or hack into wallets and scare the heck out of people. There is a lot higher that the price of Bitcoin can go because how can you determine it’s value? What do you pay for a currency that’s a finite currency with no government meddling, that is increasingly accepted all around the world? It’s very exciting. Anyway that’s my view. I think it’s conceptionally very interesting and we’re now in the beginning stages of what I think could be a massive asset bubble.
Jason: How do governments respond to it? If the citizens like the ones in Cyprus say putting money in the bank means anybody at any time could take it. Putting it in Bitcoins means that nobody can take it anytime. Unless it’s a hacker of course. But it seems like for the people in Cyprus this is a better deal Henry.
Henry: Listen. My guess is the biggest risk to Bitcoin right now is government involvement on some sort. There are rules about creating legal tender and the government having the power to create a currency. If Bitcoin really gets cranking and people really start to use it as a currency and they trade it and we have a continuation of the price moves that we’ve had. It wouldn’t surprise me if the government took a look at it. It’s conceivable that the government could say, “It’s illegal to accept Bitcoin.” Suddenly you would have the price go from whatever gazillion level it is to zero overnight as a result of that. I thick there will be government looking at it at some point if it continues to grow. I think sure if you got hosed in a Cyprus bank you’re looking out for pretty much anything to protect yourself. Although I should point out that most of the people who hate paper currencies there tends to be a lot of philosophical views in there. Paper currency’s worked very well for most people most of the time. They’re actually very good for economies because a little bit of inflation is good for keeping things going and keeping people wanting to spend. So I think the fundamental premise right now Bitcoin feels very much two people who love gold and things like that. But again you can see it going mainstream.
Jason: Mike do you think you’re going to see this go mainstream? Are you aware of some of the other companies like Ripple or other ones who are trying to make similar currencies. Is this going to be the next startup wave? We’re going to have 20 companies making 10 different currencies that are all finite and tweaked? We’re going to have cross currency? Just like when you’re in Vegas you can take your Bellagio chips and at the Aria trade them in for cash and/or Aria chips I heard.
Mike: That’s funny. You know what? The people that i find are the most fascinated with this are actually sort of Silicon Valley… I’m in Silicon Valley so it’s sort of skewed. The engineer like love this stuff. I was talking to a Facebook engineer the other day and they just like the idea of government free perfect currency with a limited supply. Right? It’s kind of what like Henry said. I’m mostly going to defer to him because this is his sort of ballgame. It’s conceptionally brilliant. it’s conceptionally perfect. At the same time there’s so much volatility, there’s so many… I don’t think normal people trust something that’s nonphysical that sort of, “OK. I can’t pull it out of my bank account and hold it in my hands and put it in my freezer at some point.” To the point that we will get to the ability to exchange it screams that. I think it just sort of fun. A lot of the super finance and engineers want to like this idea.
Jason: I think the people… Yeah. The line’s very well with the libertarian and open source movement. It’s obviously an open source project.
Jason: If developers like something they tend to use it and it tends to become the default. I think this has open source… You’re already starting to see people accept it for… people are starting to accept it for coffee and stuff like that. At some of the cafés in Silicon Valley. So it’s going to be very interesting if, for example, Square builds Bitcoin support into it. If that happens we’re going to $1K a bitcoin.
Kirin: So Expensify is not quite mainstream enough?
Jason: No. Nobody cares about Expensify supporting it. Nobody cares about that. But that being said all you need is somebody like Facebook. Zuckerberg is very aggressive. If he said, “We accept bitcoins for gifts. Or Pincus for Zynga says you can play bitcoins in his new casino. What do you think of that? The casino in Europe they just launched. You think Zynga’s got a chance to come back Henry Blodget?
Henry: I don’t think it’s worth zero. For a while I think the stock was trading as if the company was worth zero. I mean you basically could take the cash and value of their headquarters and it would be like saying everything else is worthless. I think it’s a possibility. Online gambling is huge. If they can figure out a way to do and not get screwed by US regulators and things like that there should be money in that. So I’m not surprised to see it coming beck. My guess is there is some sort of business there. We’ll see how big it can get.
Jason: Alright. Next story.
Kirin: So Jason we know you’re a Tesla fanboy.
Henry: Jason I have to say I’m so sorry. We’re on the east coast and I have to run home at some point soon.
Jason: Yes. Last story.
Henry: This has been totally great. Let’s do one more story and then I gotta run but you guys keep talking.
Jason: No, no. We’re going to do one more story. We’re at an hour. So yeah right. One story.
Kirin: Jason, the Tesla fanboy, and Tony Hsieh buying 100 Model S’s. So very briefly. The lease program you can… banks provide 10% of the purchase, you’re going to get- depending on where you live- thousands of dollars in tax credit. After 3 years you can sell the Model S back to Tesla for the same residual value percentage as a Mercedes S Class. Now Elon said in his video that the cost is about $500 a month. Some folks have come out and said that it’s a lot more because Tesla’s considering things like the time you spent pumping gas and what you spend pumping gas and things like that.
Kirin: Henry actually tweeted, “Shorter Musk. We can’t sell enough cars at $100K so we’re going to figure out a way to make them seem like they cost less.” Then just as a side note on Tony Hsieh project in Vegas It’s a collaborative transportation system. So it’s not just 100 Teslas. It’s 100 bikes, it’s 100 bus shuttle stops and things like that. You’d pay $400 a month for access to this great transportation system.
Jason: Yeah. Henry what do you think of it? The lease system.
Henry: Let me give you my take. I know you’re a huge fan of Tesla. I just want to say that I am unbelievably impressed with what Elon Musk has created. I think these are incredibly beautiful cars. They gave us one to drive around New York for a day. It was a thrill. It’s just a beautiful machine and very cool. Now that said, I think that the winning environmental progressive car right now is a hybrid. With both electric drive and gas drive. Most electric cars right now are basically play toys for people who can afford to have a $100K third or fourth car. I know that Tesla down the road is planning to come out with a really cheap car that everybody can buy. Nissan has already come out with one called Leaf. It just hasn’t been that big a hit. Part of that’s because of gas. People are willing to tolerate gas at $5 a gallon. I think that all electric cars are ahead of their time. I think that’s the issue. My guess is this new leasing is as I’ve said a way of making the car less expensive than a $100K ticket would be.
Jason: Yeah. I understand what Elon is doing here. So I haven’t gone to a gas station. I will say that the Model S is my primary car. It goes 250 miles. I don’t have any drives that I do that are more than that except for an occasional road trip. We do have a car that’s a gas car. We have a SUV that we can’t take on that. That literally is once a year. We’re actually getting rid of that and getting a second Model S. So we’ll be 100% electric.
Jason: The Roadster and two Model S’s. In about 3 or 4 months. Our plan is if we need to rent a car… If we need a car that needs to go over whatever number of miles and there’s not a super charger station… We’re in California so the super charger stations are everywhere we’re just going to rent one. We don’t foresee that happening cause the only place we drive is LA, Vegas and San Diego. All those All those have super chargers so we’re done. So I disagree with Henry there. If you live in California the super stations make it viable as a primary car. But this was a mistake I think…
Kirin: The optics of it.
Jason: Well there’s a couple of mistakes in it. LIke the business tax benefit is by default on. I would have have that off by default.
Henry: Yeah. Can I ask you… I felt like I… First of all I thought that some of the assumptions in the $500 thing were just ridiculous. I gotta say people gave Steve Jobs a lot of guft for the reality distortion field. Elon Musk takes the cake. I mean this is reality distortion on a level even Steve Jobs couldn’t have imagined.
Jason: Well I do think the avoid the gas station is valuable.
Henry: My question for you though is when I read that it’s like, deduct my car as a business expense. Am I the only guy in America who doesn’t deduct his car as a business expense?
Jason: I don’t.
Henry: I take calls in my car sometimes. Does that mesa it should be a work expense?
Jason: I don’t know. I don’t know exactly what the thinking is there. I do agree we need to avoid the gas station though. Because I literally don’t go to gas stations anymore and oh my God is that one of the great benefits of like you save that 15 minutes, 20 minutes or whatever. Or just having to go out of your way to go to a gas station. Or even remembering it. It’s just so delightful. You know, we’re going to have gas at $6 or $7 or $8 in the next whatever, 5-10 years. That’s clear.
Kirin: It already is in Europe.
Jason: Yeah. So it’s going to go up and the price of the car is going to go down. So I felt like he was trying really hard to educate people and maybe he missed the mark here. But of course I’m a fanboy so I’m not… What do you think Mike? You’re seeing them all over. You’re seeing Teslas everywhere. I was at Google yesterday and YouTube yesterday. There’s like… I see like… I think Google and YouTube and Facebook and certainly on Sand Hill Road, you see so many Model S’s. It’s unbelievable. It’s like the Toyota Prius of Sand Hill Road. What do you think Mike?
Mike: Well you know Sergey Brin has a pink one with chrome rims on it now apparently.
Jason: That was genius.
MIke: Did you see that?
Jason: I did. That was an April Fool’s joke apparently.
Mike: Yeah. That was an April Fool’s joke. I don’t know. I’m not too into it either. I think kind of like Henry said we are way far off. A way of saying that they’re ahead of their time. At the same time pro boosters like you need these sort of people to jumpstart the markets. Actually get this sort of thing going. If you want it to be a viable option in the future. I’m not going to buy one. Maybe people can get sort of interested in this plan to put it forth.
Jason: Yeah. The way I look at it is the market it went from a $140K car to a $70K car. You can get into it reasonably for $70K. We went from $140K for the Roadster to $70K. It’s at 50%.
Kirin: It’ll come down more.
Jason: The Leaf is like $40K. I think he’s in shooting distance. Oh and it’s maybe $70K or $80K with a $10K tax credit. Depending on the state. He getting into shooting distance. I think it’s all going to work itself out. So I felt this was a little aggressive. Henry felt this was a lot aggressive. Hey. Let me thank Henry Blodget for being on the program. Everybody check out Business Insider and The New Yorker…
Kirin: I was going to say.
Jason: … where Henry Blodget finally got his New Yorker profile.
Henry: That was quite the humble brag there.
Jason: Finally Henry gets his thing.
Henry: Quite the humble brag. Anyway thank you so much for having me.
Jason: You got Ken Auletta treatment. Whoa. I got…
Kirin: You got Larissa Macfarquhar.
Jason: I got Larissa Macfarquhar. I need to get a follow up on mine. I need to do something interesting. But hey how does it feel to have the New Yorker profile Henry? How does it feel?
Henry: I’ve been studiously avoiding it. I don’t know about you but it’s an old survival tactic.
Jason: You lying…
Henry: No. I haven’t… People telling me that it’s OK. I’m not going to be depressed or angry. I should just go read it. I probably will.
Jason: You haven’t read it?
Kirin: No. He hasn’t . He told before the show.
Henry: No. I haven’t read it.
Jason: Listen. Let me explain something to you. Nobody reads it. Nobody reads. Like 5 people reads it.
Kirin: I read it.
Jason: The rest of the people skim it. They read the first two paragraphs. The fact is you’re anointed now. Ken Auletta profiled you Henry.
Henry: I’m happy about that. It was an honor to be written about by him.
Jason: It’s a big deal. It’s a BFD as we say in the business. What’s this nonsense you want to get reinstated on Wall Street? Is that true you said that?
Henry: Well look. The way I would describe it is I feel like I got what amounts to a dishonorable discharge. I am frankly ashamed of that. I don’t like that status. I would like to possibly at some point if it’s ever appropriate to see if I can reapply to the industry. I don’t know whether i will do that. I am incredibly happy with what I’m doing. It’s not that I want to go work on Wall Street again. But as a possibility that would be interesting.
Jason: What do you think… Is there a penance that you should… that would get people over that hurdle if you did something? Or do you feel that your work has been so good over that last couple of years that would warrant it?
Henry: I don’t know. When I entered the agreement where I was effectively kicked out of the industry permanently I did actually ask some attorneys at some point. I said, “Look. Are these things ever undone? Is there a way back in?” The feedback I got at that time was 10 years. Go live a good life and do things. You can revisit it. There’s always a right to reapply. You can try that at any time. So I don’t know honestly what the reaction would be. My case was a high profile case. So I don’t know is the answer. But if the opportunity’s there and it’s appropriate it would be something that I feel like, just personally, I would like.
Jason: Listen. I wish you the best. I know you’re a great guy. Thank you for being on the program. Continued success with Business Insider. Everyone follow Hblodget @hblodget on Twitter. Thanks for being on the program.
Henry: You’re very kind. Thank you for having me.
Jason: Hey. Mike Isaac thank you so much for being on the program. Everybody follow Mike Isaac on Twitter. Isaac.
Kirin: Mike Isaac.
Jason: That’s what I said, Mike Isaac.
Mike: My New Yorker profile will be coming out in 2014 by the way.
Jason: 2014? Oh. You’re next up?
Jason: Ken Auletta’s knocking on the door right now. If you want to read the best social news and also pound for pound perhaps the best publication. I’d say it’s… Yeah. It’s probably the best pound for pound publication in tech right now. Wired and AllThingsD would be neck and neck right now.
Kirin: Mike used to work for Wired.
Jason: Oh, OK.
Mike: I was at Wired before AllThingsD.
Jason: Yeah. So listen. Pound for pound I’d say those were the two best publications, best journalistic teams. I’d say Pando is up and coming. Business Insider is a business one so they don’t count on that list. But hey. Everybody check out AllThingsD as well. allthingsd.com and the D Conference. They do dive into mobile now which is an excellent event. I’ll see you in a couple of weeks or months at the D Conference Mike.
Mike: Yeah. I will say, “Hi’ in person. Thanks for having me.
Jason: We’ll play high card. Thanks for being on the program. That was an interesting episode.
Kirin: You have to thank your sponsors.
Jason: Ah yes. Thank you to The Resumator and thank you to myturnstone. Did I do OK on the Mike Arrington stuff?
Kirin: You did good.
Jason: Was it OK? I think it was OK.
Kirin: Yeah. Do you want to close the show?
Jason: Yeah. We’ll close the show. We’ll see everybody next time on ThisWeekIn Startups.
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