Okay, and I'm gonna do my new low voice intro. So,
your lower you have a lower voice,
Eric said that my voice is too high on the intro
pitches up when he does the intros,
I pitches up I speak in millennial up talk so that people can feel comfortable immediately and then I then I hit him with my podcast welcome Sally. Hey, everybody, welcome to dead cat, Tom here got the full House, Eric and Katie, and very exciting episode for you guys. It's a two parter. You haven't done one of those in a while. But first off, Eric is going to fill us all in on his time at collision, the US branch of the Web Summit Conference and his takes on the state of venture capital investing and I don't know whatever fun panels that he contributed to. And then we've got an interview that Eric and I did a couple days earlier with Lauren etre, a Bloomberg journalist who wrote a book about jewel, which is a tech company, we decided through the course of that interview, where does a tech story
you were you were skeptical? I'm like if their nose becomes a tech story.
I mean, no, you want you want your back. Yes, startup. Yeah, we get into it. And yeah,
now you want me over? It's like, yeah, it's hardware. It's hardware. I got it now. But anyway, so we talked, we talked to Lauren, in the wake of Jules, the decision by the FDA to yank jewel off the shelves, which now apparently has been stayed. And so when we recorded that interview, July I believe was not like it had just been struck down by the FDA. But since then there's been an injunction. So keep that in mind as you listen to her interview. So is that fair? That's a good update on where things are with jewel and the FDA.
Yeah, I'm glad we get a moment of just the three of us hanging out. I feel like we always have guests on and then
and they're so intrusive. They have their own opinions.
I know. Gary, I did. I love the Gary as a guest, talking about artificial intelligence but he he was a man after my own heart and that he had a lot of takes and he wanted to make sure he distributed to the world. He was like this. There's a random sidebar that I want my show to have random sidebars that I want to unload on people.
I'm gonna serve up a couple takes on Skoda global.
exactly everything that I'm too lazy to write up for a newsletter I intend to get on the air here. So at least I'm like on the record somewhere. But this is a little this is muddy it up.
This is the alternative to Twitter. This is what I always tell myself. It's like I have this take there is no upside for me tweeting it out. But if I can do it here.
No one would write out to you and there's no viral mechanisms
uttered in the forest.
Right. So few people get canceled for podcast episodes in comparison to tweets that's,
there's time yet?
Yeah. Eric, give us the rundown on collision. Why don't you even explain what collision is? I don't know if I did the best job. But what is this conference in Toronto this case?
Okay, so not only is this a conference in Toronto, it was once a conference in Spain in the year of our Lord 2016. Isn't that when you were you? Listen, is this like huge, huge, huge tech conference? It is so huge that you actually feel like you are in a cattle call. It doesn't make any sense. You don't. I don't I hate it so much. Eric's gonna give us a real definition. But I just know that a collision in 2016. Tom was there than
collision or Web Summit.
It was Web Summit. It's owned by the same company. Yeah,
they're the same Web Summit. It's a huge one in Lisbon, which is where 100,000 people collisions. Big. It's 35 collision. It's
a smaller one, a 35,000.
They're both organized by Patty Cosgrave. It's a bunch of Irish people. If you hear anybody with an Irish accent, you're like,
Are you your insurance artist? Yeah.
Irish are in charge of
collisions in Toronto Web Summit in Lisbon. I think both cities pay them a bunch of money. I think Lisbon pays them like $11 million a year or something.
It is insane. It's the most insane government handout I've ever seen in my life. We had regular dinners and like 16th century castles?
Yeah, I moderated two panels on sort of the venture capitals stage, which is smaller, more intimate about sort of the, you know, venture world crumbling, and one with him on a general catalyst. So I'd profiled then I did a mainstage interview, which is huge, similar, similar sort of, is the bubble bursting themes. My main take, honestly, is that there the conference, I loved it. The conference is really good at giving the elites a totally different conference that everybody else like, if you're a speaker, you get a badge that allows you into the forum where you know, only the speakers go, and they serve you lunch and dinner and breakfast and there's coffee and you can like never have to go in with the riffraff. There's a similar one for media that's like much worse. So I just thought hung out in the forum all day. And then yeah, they invite speakers to drink it. So I feel bad even admitting it. But it is a very like, I mean, you can see the the logic to it, which is you get the speakers to go because they're going to have this sort of more intimate conference experience. And then you get everyone else to go because they're going to be able to hear from the speakers that they want to. So there, there is a certain logic, but it is sort of, yeah, my experience was great, because it was sort of the rarefied version of
the car. You think it's the rarefied? I'm sure there's a version of it. That's even a higher level above you that you're not invited to? Well, you see, the real cute.
This is like, see, what is it CES in Vegas? It's so similar, right? You have this huge conference, with far too many people coming together to basically look at an exhibition hall and go here speakers, and then there's the presenters area, their experience, and then they're the people who go to CES and never attend anything. Private dinner,
right? They go to Rupert Murdoch suite.
Exactly. Yeah, well, there. Yeah. They have an event afterwards called founders, which is sort of a small scale. I think I could have gotten into that.
I've been the founders, we will do an episode about founders in which I will bring other people that read founders with me, because it's a real, it's a real experience. It's crazy.
But I did I got to go to a dinner. The beauty of being a one man show is that I'm like the top person in my media organization. So yeah, I was at a dinner with what the I guess editor in chief of The Washington Post, like President of ABC News, executive producer of 60 minutes. John Kelly from PUC Peter Kafka was there. So that was a cool sort of media who's who experience the editor of refinery 29 was sitting across from me
as a media I'm so curious. So the obviously venture backed media is struggling. So was there conversation about that? Were people talking about what's going on with Bice? I mean, refinery 29 had its own issues. What's their word? Exactly? What's going on at BuzzFeed? And they sort of disaster that that became or did the dinner completely do you guys just ignore? Ignore this all together and have fun?
No, I remember talking about media. Was it off the record? Can
you what did it who's who by the way? Is the editor in chief of The Washington Post?
Isn't it Sally Buzbee?
Sally Buzbee Yeah,
I wasn't seated near her she was definitely I mean, a lot a lot of questions for Busby I did hear someone I don't know if it was off the record or not. So I'm gonna be someone definitely did. It was like, um, you know, you've really handled this like, Twitter thing very well, you know, just like, I'm sure like, she doesn't want it to even be brought up. But like,
this Twitter thing being the insane implosion that happened around to Porter, it's
everything you imagined with like, top people were sort of back slapping each other where they probably have only like consumed like a 10th of what's, you know, they're just like, it's like, God, there's definitely some of it where it feels like, I don't know, senior people in media, or I didn't talk to her at all. So I'm not talking to her, but they're not as in the weeds. The senior people in media necessarily is all the reporters and you can get sort of
make much, much, much more money than a reporter for doing more work.
If someone is complimenting Busby I can say this because I don't work there. But someone is complimenting Busby for handling the Twitter thing. Well, that's kind of the point of the dinner where maybe I get up and
I think they were these Twitter things is to handle them well, is literally to try to pretend they didn't happen, because so I talked to somebody who was thinking about, should I go, you know, I want juggler, The Washington Post, or should I go to the New York Times the post has had this issue. And I said, What do you remember this thing that happened at the New York Times that eventually waited in the firing of the head of our op ed section? He literally couldn't remember to happen two years ago. I think these things go away James Bennett, and are forgotten as quickly as they like, explodes only
the second. Remember that fire? Right, right. Yeah, that is Matt. So the the funny thing about asking you this question, Eric is like, what everyone would want to say coming out of a conference was like, Ooh, what was the temperature? What was the sentiment, but either you weren't really in like the, you know, the riffraff you were just with the elites, right? Which maybe gives you like, the high level understanding of what's going on
the mood. I mean, all the panels were like, is the world ending. But then the you know,
the panelists themselves backstage
you want to stay up stay up be so I think, yeah, definitely sort of the market turning. I mean, ever that's everybody everybody's talking about that and, and crypto taking a nosedive. I mean, that was definitely a big conversation piece. You know, Wesley Chan was there he just started a new fun so I mean, even though the world's ending people are clearly willing to like start start new things. I mean, now loosens, probably took a long time to get going.
It takes a long time for the world to end. I think that's what people forget. You know, like, even if you agree that we're on like an inexorable march towards some sort of dissolution, it's not going to happen overnight, you know, these things, funds will still be raised. Capital will still be deployed.
Ryan Peterson Flexport was definitely the best speaker. I mean, he's just good at being his story in that he was doing logistics. So some of it, it's like, Okay, I've heard this so many times now. But he is good at he, he's like, Oh, we think we're going to do 5 billion in revenue. You know, he's just, he drops in very specific stuff. He was also really self flagellating when it came to hiring Dave Clark from Amazon, you know, he's Ryan, Ryan, just like, you know, I was looking at everything I know how to do and everything he knows how to do. And he's better than me than all of it. So I was like, Oh, I guess you should be CEO. With that, then he couldn't help using the euphemism of I'm stepping up to be executive chairman. You know, like, people love to get promoted out of the CEO job. But overall, he was very good. I
think I was promoted out of the top job. I was.
That's good. Anyway, Ryan is great that we should have him on the show. I feel like there's always a it's just logistics, luck going on there. I feel like you're kind of at the nexus of a lot of points in the international capitalistic market.
I just find it so shocking, that people still want to go to things like collision, like this pandemic was just to make some of the worst things go away. And conferences are like back. I mean, the fact that Davos just happened. I have always hated conferences, though. So this is my bias. But I didn't think to myself, maybe people will want to do something else with their time. I was wrong. I was so wrong. Conferences are back.
It's a efficient way to see a lot of people that you would like to talk to. I definitely feel like I made a bunch of new sources. I did a hysterical small rant roundtable. It was like me and like four other people explaining them how to build life long relationships with media where like, I don't know, I don't know what my point is. I feel like if that. Yeah, if that were recorded, I really gave all my my immediate dark arts to four random people that I'd never met. I think this is like all the answers to Eric strategy on reporting were revealed to the random for people who showed up at a round table for an hour where I just monologue about, you know, media,
you should have charged for that. Are you still collecting business cards at conferences? Or that was your thing for a while? No,
I don't bring mine I wouldn't. But now I just asked for people's number. Right? Right there. It's
very personal.
It is funny to conference. It's the see adult, it's the last adult place you can go to have camp friends, you know, you have those people that you like, meet up with early and then you're like, oh, we should hang out, hang out at all the different events together.
Yeah, they were my South by Southwest buddy. Right. I think the reason conferences persist is that there's just enough to make like to appeal to the weaknesses and narcissism of all the different types of person that goes to a conference that no one's really willing to call it out for the uselessness, that every other part of it is, you know,
right because nobody I mean, the panels are sort of beside the point. I'm not really sure what I've ever heard
but exactly like to be asked to speak on the panel. They're like I get to be on a stage
right because microphone enough to spell a platitude on CNBC I need to say the same thing that doesn't say anything to an even smaller group of people right?
I really truly insane though, the people who just fly in just for their panel, I'm like, nobody loves it assuming this like what what's the
point because it's live audiences you know, you get to hear you get to see on their faces the recognition when they intake your brilliance, whereas when you're doing on CNBC, you're talking into a piece of glass.
So our executives like just frustrated former theater kid, they talked
down to the theater kids, like they definitely bullied them. But they also understood the core truth of what the theater kids wanted, which was you know, they want to be on stage they want to show they need to fill that hole in their in their heart and their and their soul.
So as you came out of collision, what are the what are the parts of the venture backed world that just don't really make sense anymore? We're not gonna see as much of you know, I think I feel like when obviously, I don't cover tech anymore, but when I did, it was hardware was the future and like, direct to consumer
goods talk some substance, I think, you know, a lot of people are turning on crypto that wouldn't have been willing to before now right? Well, you know, there are people who are like who are skeptical dipping their toes in it, who thought who, you know, who now are seem more skeptical Chema on all in was talking about a Chris Dixon and sort of the, you know, venture firms basically, you know, selling tokens along the way and getting rich quick and like that being sort of a big area. Big Question mark. So that's super interesting. It was hysterical to see chamalla shinny on someone else when, of course His back performance has been totally under scrutinized. It was like a bullet point in my newsletter, but definitely on a permanent To Do List of hold Chema accountable for taking a bunch of companies public that have seen their stocks tanked in the beauty, of course of being a sponsor, you get a cut of the value of the company. And it's only if you had to do the private round at high valuation, you really got screwed. And I think in most cases, he avoided doing that he got other people to hold the bag. So I mean, the death of Spax is ongoing, the death of not death, but the sort of sinking values of crypto. I mean, bird is down to like 100 660 million. I mean, I just reported that even Sequoia, you know, has held on to DoorDash, and unity, some two of their biggest bets. Those are down significantly.
BuzzFeed is a spec that's obviously eaten shit.
Yeah, it'd be funny. I'm interested to see which of these high profile Spanx like eats it first, like, if BuzzFeed is like the, I don't know, one of the iconic companies of this downturn, that would be really lame for media. But I think I
think you're onto something, Eric, I really do think that your mouth is going to be held accountable and sort of be seen as like one of the great, you know, almost you could some will say I would not say this, but some could say kind of charlatans of the spec era. And I think you'll see a real change there.
So somebody has to do the math, like, how much did he make? And how much did other people lose? And I mean, yeah, the math there.
So I think what's interesting is that tech is the most visible part of the downturn, because the stocks is a lot of public market companies. And they were doing so so well. So it feels like an early indicator. But I think that we live in a world, and especially because of the the combination, very low interest rates and a lot of money. When I say a lot of money, I mean a lot of money being taken out of things like the stock market and put into the hands of private equity, that the downturn that happens in other sectors might not be as visible this early on, but we could see later and have real impact later. It's almost like it for our purposes, tech stocks are the canary in the coal mine of something bigger, right? And the world is so interconnected. And it the very sort of like riskiest part of the of the market. So everything from like public companies out to private equity and venture capital, that it's hard for me to believe that stops with tech stocks and sort of the tech industry. And then I guess, the last thing is that the first the first like would like really clarion call about housing bubble and the residential mortgage backed security risk started happening was probably in 22,005. So it took until September of 2008. For the
claps, I know, these things are so slow being in
about faith, and it's about trust. And so people will fool themselves for a really long time until they suddenly wake up and say we can't do it anymore than they all are. And then the
books don't even come until after that. That's when everybody concludes what actually happens. So it is this amazing thing where the reporters early on are like, Oh, this is looking bad. It's starting to happen. And then the big stories come, you know, and then the final actions come and then the books come you're like, you know, I mean, the movies or even later, right, exactly. It's just like the movies about the founders came exactly as we've been processing on this podcast, so long after, you know, years after and so yeah, The Big Short came years after the last downturn. So I think what's changed is we have this Twitter world where people, not just reporters, but everybody is consuming the narratives very quickly, you get the information right away. But then the sort of entertainment info industrial complex still takes a while.
What I used to wonder about is like with the housing bubble and the collapse, there was all of this interconnectedness and over leveraged companies over leveraged assets. And I don't really see the same I'm trying to find like, what is the over leveraged? Or like, what is the leverage here with time
it was the issue was that the banks were amongst the group of over leveraged lenders and over leveraged actors, and the banks also had to do a lot of other functions for the economy, keeping money flowing all around the world. And like keep keeping, keeping our savings accounts open. I mean, like there was, so part of the issue was that such a central part of the economy was in such big trouble insurers and banks, because of Dodd Frank, I mean, Jesus Christ, I can't believe I'm saying this. If nothing else, that horrible piece of legislation, if nothing else, what it did is it did force big financial institutions to hold cash on hand to offset risky assets. Like if even if that's all it actually accomplished. That's good, because it means it's less likely that a central player in the economy could go down in flames. But So, Tom, you're right. What if it is just a lot of hedge funds that start imploding? It's hard for me to argue that even a very large hedge fund is so interconnected. Debt and so important to the world that its collapse will really, really hurt Main Street and the way that the housing collapse and attendant securitized finance collapse hurt.
Yeah, like the most that I could see here is the contagion sort of spreading to, quote unquote, non tech stocks. Because from my perspective, what's really happening here is just a revaluation of these companies, a lot of them have businesses that are more or less the same, you haven't seen a huge downturn in revenue quarterly, that may happen. But what's happened is, you know, investors basically said, Oh, maybe they're not worth 100x multiples on their revenue, maybe they're only worth two or 3x, or 10x, or something. And over the last couple of years, I just saw this covering media, there were a lot of companies that were looking very longingly at these insane multiples that tech companies had. And we're like, Well, how can we pitch ourselves in a tech like way in a growth like way? So it seems like it's a we can get the that's what Disney did, right? They basically said, Oh, actually, we're a streaming company. And they one day just got valued at like, you know, I can't remember that the multiple difference but you know, significantly more than they were just because they call themselves a streaming company, and they're down along with the rest of the market
about I mean, valuation reset has been sort of a key key piece of this. I wanted, I forgot if anything, I didn't tell you, I was looking at but finally, we're figuring out the market, thinking classic fashion, you know, you know, I was in I went early for like the venture day collision. And, you know, there was a guy, you know, in shorts, right, which, of course, I think was the richest guy there. He he's one of the top people, if not the top people at multicoin. Have you even heard of this phone? Have you heard of this fund? I love the name, though. multicoin, according to their last filing, which I pulled up while we were on this call. This was at the end end of last year? I think so. So they've certainly sunk significantly from this. But they had $8.9 billion in assets under management. You'd never even heard of them. I mean, that's how big some of these crypto funds have gotten this guy standing around shorts, the I think there's 17 people that work there. So this guy got it. They're huge in Solana and they're huge in helium. And I mean, it seemed like they were just holding it holding on tight. You know, it's like, we don't sell that sort of that was the attitude. Yeah, it was it was amazing. You
should follow up with that guy. Yeah, yeah, he might, he might lose his shorts. With the last few minutes. Before we cut her interview with Lauren, do you want to quickly talk about the overturn of Roe v. Wade, and all the tech companies that put out statements saying that they will support their employees crossing state lines? Well, Duolingo
did a good job. Right. Didn't they say? He was threatening Pennsylvania? I don't know. Katie, Katie, do you have
I think that there were tech companies there were also like larger companies like Dick's Sporting Goods. I think JP Morgan said we will pay if our employees need to grasp their minds, obtain an abortion. Yeah. And Susan Lucci basically came out and said, like, I understand I run a company. And I understand there are a lot of different opinions on this issue in the company, but my personal opinion is terrible. So I think the two questions beyond like the making of the statements, which being realistic, people inside those companies are going to have a variety of opinions on they're not going to agree is for corporate America. One, do states pass state legislation, were doing something like providing that kind of funding and transport violates law, not that the person moved from one state to another and cross border, which I think Kavanaugh and his separate decision says he does not think should you know that you can't go after people just for leaving your state to obtain an abortion, but can accompany be attacked for aiding and abetting an illegal act. So I think that's like a big gray area they'll have to work out. And the other thing is, or will companies be eager to headquarter in states where abortion is just straight up illegal or highly restricted? So that throws Texas, which has been the recipient of so much business, Pete, so many people setting up companies, there are so much investment? What happens to Texas, what happens to Florida? And then what happened? You know, so there there are definitely bigger questions beyond like the making of the statement, which, of course, would make sense that that happens in the moment. But it you were going to have to see those bigger questions worked out and worked out pretty quickly.
Yeah, no, I completely agree. I'm actually more interested in people reckoning with that, you know, that reality of so much energy and effort, I mean, basically boosterism for Texas and Florida, by prominent people in the tech community. Now having to deal with the fact that yeah, these states are not politically aligned with what you claim to stand for. And what are you going to do? I mean, you can shut all over California for its anti business proposals and statutes and culture. But politically, you're far more aligned with the people than you are in those other states. And what are you going to do? And
I do, there will be another, I think beat to the story in that, you know, a lot of the actual humans doing the work for these big tech companies are employed by outside contractors, and they rarely get the benefit of tech protections. And so they're, they're also, you know, what the poor people are more affected by, by these abortion rules, obviously, they're not making the high salaries. And I think in a lot of critiques, the outside contractor issue has sort of been met with shrug as is maybe too strong, but I feel like it hasn't really hit these companies. But I do think on an issue, like abortion, where people, you know, really want everyone to have access, I would not be surprised if companies like Google and Facebook got a lot more pressure to make sure their contractors could get out to or not to have contractors in these in these states. And, you know,
yeah, we talked about that in the Kinky Friedman episode, that it's, it's one thing to kind of make statements in favor of what your employees want. But when you do start crossing into a world where yeah, these contractors that you have, are not eligible for the same rights, and you know, if they want to be, they choose to be unionized, that is directly in contradiction to your business interests. And they have no interest in these companies in furthering that at all. And so they're going to walk very gingerly on this line, even though, you know, politically speaking, you know, they're happy to make statements, you know, in support of abortion rights of their employees, you know, freedom to get them
terrible. I can say that hard, hard not to be like a legal realist after this, that it's just an exercise of power and not sort of argument or coherency. I don't know very, very disillusioning. Always hard. I don't know, when these national stories sort of swamp what's going on in tech land, it can be a little bit like,
Well, I think it's actually just a very clear reminder.
When When, when when I got to think about something other than venture capital,
that's sort of the opposite. It's like, how can you expect me to think about venture capital on the days where I feel a little silly sometimes, you know, publishing thing, and then
iCloud is so much lesser in these stories? And
I also feel, I don't know, I don't sometimes it's good. You know, you covered tech, you repurpose it, you know, you could talk about the contractor thing. But it can be a little ridiculous, every tech reporter just trying to recontextualize their beat into the national political issue of importance, sometimes, like, you're not really, the heart of the story just happened to cover this other thing. I don't know. It's just an awkward dance for I also think
it's just a good reminder for tech reporters, of what power really is, and where power really resides in this country. And certainly business
one, two and three with. Exactly, you know what I mean, like
resides in the Vatican.
It's like we think about like the Chamber of Commerce, or we think about big companies being able to lobby or Mark Zuckerberg having private dinners with Trump, but really, it's about, you know, it's still about the the three branches and our state legislatures
that day in constitution. Oh, well,
we're gonna get rid of that soon enough.
On one level, I'm like, Oh, I guess I do believe in like, I was thinking, Oh, would I support Jeff Bezos for President, I think I would support just,
I just had a meeting with somebody who is an executive. And he was so interesting, he was explaining why he doesn't think that executives actually make good political leaders. Because as CEO, your job is to figure out what works quote, unquote, and then do it over and over and over again, with only enough deviation to keep up with the changes that are buffeting your business. But at the end of the day, you're you have one goal, truly, or if you have multiple business lines, each line has a goal, but they're all rowing in the same direction. It's like if you're the mayor, or you're the governor, or you're the president, you have competing constituents. Not everybody is rowing in the same direction. You are not supposed to do the same thing over and over and over again, because you will fail and there is no measure of success, like p&l. I mean, it's like and so people come in wanting to think it's actually very simple. And then they realize, unfortunately, that it's much harder. I don't know. Yeah. And that was from somebody who is a CEO,
Katie, you need to go back and read Amazon unbound Brad's book on basic. I mean, it really
was really my favorite part of that book is when Bezos is like these employees are not working hard, or they're taking a lot of time off because their knees hurt because I'm making them pack the boxes on the floor. So I'm going to get them knee pads and I thought, there you go
practical. Exactly. Bezos comes off as someone who's good at like, Okay, we hear all the fires burning. I'm gonna push you on this because you and that, you know, I don't know. All fires
burning around a single coal mine Making money for the company. It's not like oh, look at this is their fight because keep in mind that when Roe versus Wade happened, there was a significant portion the country that was very happy and felt that a goal had been realized. So you're managing just on one issue, completely competing constituencies because when you're president, even if you're Democrat or Republican, it's still all the people.
I this I can see your argument and abstract. But then if I actually had to compare the Vert a strengths and weaknesses of the various top Democratic contenders or the current President, I'd say, I don't have these people, you know, I mean, what's his name? Transportation. Pete Mayor Pete budaj edge, like that. Guy's an ex consultants, who's even a good ex business minded, at least Bezos has done that to me. No one's gonna like Bezos, obviously. So it's sort of it's a moot point. But I was just as a thought exercise. If I could actually like, save, who would I really want, like, if I could install anybody? That's the closest I come
Bezos. I think Tim, I, you know,
I go to Tim Cook.
I go Tim Cook, because at least he's had to negotiate with leaders around the world.
Yeah, yeah, you're right. He's done more of the foreign policy, and actually manages like, huge workforces you be good at running empire. But you are the dominant force in the ecosystem, and you have to throw your weight around. So yes, I believe losers in the business world do are the American foreign policy, sort of, I see that I would absolutely not want Mark Zuckerberg.
Zuck forced himself to learn Mandarin so he could connect with the Chinese market that never wanted Facebook in the first place. Whereas Tim actually operates in China and probably doesn't speak a word of Matron. So one is power. The other one is, you know, goals. Anyway, on that front, we should probably kick it over to our interview with Lauren, editor of Bloomberg and our fascinating discussion about the state present and future of jewel.
And jewel is already already fought the banning, I think, temporarily. So this is a story that's gonna keep turning and she is the expert. So
keep in mind that as Eric and I were doing the interview, both of us were like, man, that actually sounds great. Like a jewel like,
oh, yeah, I need more vices. That's whatever. Yeah, take a
long to take a long drag on a mango jewel pod right now.
We've got Lauren editor from Bloomberg, who I've interviewed once before about her book, The Devil's playbook on jewel. And now jewel is back in the news. I was I was shocked to find out that the FDA is thinking about or intends to take them off the shelves. Right? What what's when were you surprised by this? Or do you saw this one?
I definitely did not see this one coming. In fact, I was very surprised. And I've been asked several times over the past year, what do you think the FDA is going to do? And I really would have put money on the FDA keeping tool on the market. And we can talk about the reasons why. But I was very surprised by the decision.
Yeah, I mean, you know, in some ways, it seems like as lame not as like a scholar of the FDA or something. It feels like very deserved in that this was a company that, you know, as you can tell from your book, sort of flout the rules, like marketed aggressively, but we can you really be punished for that sort of, I don't know when when their product today seems like in line with other e cigarettes or I don't know, what, what is this about? I guess, is this about past acts? Or is this about sort of the status quo, a tool that's
really interesting, I mean, going going into it, you know, I would have thought that the FDA would have used the youth usage crisis as a way to sort of punish jewel or to seek retribution or to hold their feet to the fire. But it turns out that in the decision by the FDA, they didn't even mention, I mean, in the they sort of mentioned the youth issue. But that was not the reasoning that the FDA gave for pulling jewel off the market. The FDA essentially said that jewels application, that for having their product in the market did not provide enough evidence and in fact, sometimes provided conflicting data on some key health issues, including something called genotoxicity. Whether or not the product could affect cellular change in the body and potentially lead to cancer. And they mentioned that they provided insufficient and conflicting data on the toxic toxicology of the product. So inside of jewel instead of a jewel pod, the little heating element that is essentially used to heat up the vape to heat up the liquid and turn it into a vapor is made out of chromium and nickel. And there's studies out there that indicate that when you inhale the jewel vapor, you're also inhaling some level of heavy metals. So the FDA didn't specifically point to that they just said that they provided insufficient data on the Geno toxicity issue. And on this potentially leaching issue related to the pod. So to me, it was really interesting, because it wasn't even, they didn't even conclude that the data showed that there was a problem. And the FDA, in fact, said, We don't believe that there's an immediate harm associated with using this product, we just believe or we conclude that the that the company didn't provide enough data or conflicting data, so to meet, which seems like a technicality with their application. So it's, it's a really interesting finding by the FDA, it didn't find that, you know, this is a company that created a new generation of kid teen nicotine addicts, and therefore, we're punishing you. So it is actually very surprising and interesting decision by the by the FDA. And obviously, Jewel has already filed a motion in court to try to seek a stay to keep their products on the market. And so they're not going to go down easy, there's got to be a legal fight, the FDA could get sued. So it's definitely you know, does not bode well for jewel, but it also that we still have some legal maneuvering ahead of us.
It seems like the story is, you know, this is like the latest step in this long, slow descent of this company from its height, maybe four or five years ago to now. Whereas once you know, they were this hugely successful e cigarette business, that I just as I was following it story, just as a tech reporter, living in San Francisco, where, you know, there was a whole controversy about them even being headquartered in the city. You know, it went from maybe you know, the jewel pods themselves being banned a flavor jewel Paul's being banned to just they're generally Oh, there was concern around at the beginning of COVID that first
they came for our mango jewel pods now that right? That's that's sort of the Reddit Yeah,
it's it's been so interesting to watch its path from being, you know, what was maybe arguably one of the hottest, quote unquote, tech companies we can get into whether, you know, this is tech or like, what the tech connection is here to something that it seems like nobody wants any part of and the FDA is using, essentially technicalities to kill this thing. It's quite an incredible story over not that long a period of time.
Yeah, yeah, no, certainly arise. very stunning rise and fall. Remember, this is a company with that was valued at $38 billion. At its peak, at one point, it was bigger than the valuation of SpaceX. I mean, it was a huge, it was a unicorn, this kind of huge success story investors piling in from Tiger global to Fidelity, you know, I mean, the growth, the growth potential and prospect of joule, on its ascent was really something that was steady. And it was, it was like you couldn't have a better product in terms of customers, your customer becomes highly addicted to your product. And we'll buy it first before food and anything else like so they they they describe this them as sticky customers. So yeah, it was a it was a very, it was a very valuable, sticky,
you get that right. Yes. Before that addiction is the greatest business model of all time.
Yeah. Tom and I have been arguing, you see, I mean, it sort of fits into the Theranos ambiguity here. But do you see jewel as a tech company or ever again? Is
this a tech story, Lauren? Yeah,
I mean, it's definitely a tech story. You know, this is this is a company that innovated on an old product and innovated on a product and brought to bear technology, if you want to call it that. I mean, it you know, it was a little essentially a little flash drive. Like that's literally what they modeled their product after was a flash drive. So, you know, it is one of those companies that kind of falls in between the cracks, is it a tech company is that a cigarette company isn't a health company, because there are all the really there are all those Blurred Lines and there are people who believe that this is a product that is for the benefit of the public health because it can potentially theoretically help smokers get off of their, their addictive smoking habit, which we know to be very deadly. So it is it is an interesting company, that's for sure. It blurs lines. I think it's a tobacco company. At the end of the day, you can't really ignore the fact that they are selling nicotine, plain and simple. That is what they're selling. And to me that fits into the tobacco category. But yeah, it has the tech element. You got the you got the Silicon Valley, kind of element to it. You have the Stanford creators, so yeah, I don't know. I do think it's Can falls into two lines? Yeah, yeah.
Yeah, I know. And it's funny as you're going through the argument, I mean, the Theranos connection, not you know, as in this was an app note scam. But the fact that it was really pulling from the playbook that so many tech companies want like Stanford, like raising from venture capital, like pitching it as a hardware, you know, like, like a hardware type product, whether or not it is, you know, in its essence, a tech company or not,
the company, Tom was also spending a lot of energy on innovating on this device and the flavors. And it's easy to laugh at that from the outside. But there was a lot of like, that was a big part of the code.
And I want to point out that this was a highly successful innovation. The cigarette hadn't been innovated in over a century, literally still rolling plant matter in paper and setting it on fire that had not been changed. So they actually did bring to bear a very a genius innovation, part of which came from the tobacco industry's own playbook from their secret files, as you document in your right. And they, they did it brilliantly their product really delivered, what smokers were looking for, which was that that throat hit that very quick spurt of nicotine that goes to your brain. We're all gonna start drinking. Yeah, I mean, that's a crazy, crazy thing about it, their product was highly successful, it was in it, arguably too successful, they put too much nicotine in it. And then they didn't disclose the risks. They didn't tell people that oh, there's actually a shitload of nicotine in there so much that you use it once, and you're gonna get hooked.
Right. Now, there are lots of copycats. Right? I mean, that's, that's relevant both for Jules business, but also this sort of crackdown. It's interesting, they're going after jewel. But not the copycats is that again, one theory would be their Mata jewel, another would be jewel is just the furthest along so that, you know, there's more. There's more history here. So the FDA is ready to go after them, or that jewels product is distinct in some way from the follow on competitors. I mean, I know this is just playing out, but you have a theory of sort of which of those buckets this FDA action sort of fits into.
I mean, I think there would have to be a pretty big conspiracy against jewel inside the FDA that I don't know if that actually took place. You know, you have to take them at the word that they evaluated their application. And they found that their application was deficient. And that's why they denied the application. It is hard to imagine that there were no political kind of aspects to this. And it's also impossible to ignore the harm that jewel inflicted on the American public. And so yeah, did that color the FTAs decision? It's not supposed to this is supposed to be purely a scientific review. So you got it. I at least take the FDA, the word that they did this, there were that they did a scientific review and arrived at this at this decision. So So yeah, I mean, in terms of a copycats. It's a really interesting point in question. I mean, the market has been flooded with brand new nicotine products all the time. And some of them fly under the radar, they're not spending 100 $50 million to ask the FDA for approval to sell their product. They're just this product gets on the market, they end up in vape shops, people are selling it, then there's a black market, you can get it on the black market. And remember, a lot of these products are really built on the back of jewels innovation, which is very stinging for jewel, because some of them are literal copycats black market, but others actually just derived some of the innovation from jewel, for example, the the nicotine salts, that was jewels kind of discovery that really made their product pop. Now there are a million products that have nicotine salts in them, some of the products even look like jewel. So you know, it is a little in terms of like, is this going to solve a problem like will taking jewel off the market solve some bigger problem about youth nicotine addiction, it's just the fact is that there are so many products that are currently on the market that came after jewel and that are in fact very similar to joule, and the FDA doesn't really have the enforcement resources to go to all these vape shops to see what's being sold. You know, they they actually are a little bit stretched in terms of the enforcement resources that they have. So yeah, it's a huge loss for jewel, they're gonna fight it, obviously. But I will say it's a huge win for all of these other companies and all of and the two companies that are so jewels number one right in the market. Yeah. Number two is Reynolds views. Number three is enjoy both of those products receipt through PMTA authorization.
It's funny, by the way, Lauren that you bring up Reynolds is one of the winners here. I've been bugging Eric and almost everyone else about this recently, but I'm rereading barbarian At the gate, and there's a hilarious passage or section where they talk about their attempts to develop, you know, 30 years ago, the smokeless cigarette, which was a disaster back then, you know it right?
It tasted like shit. He said, right, right, yeah, hilarious scene where the CEO
of RJR Nabisco is like making all of his wealthy friends try, you know, an early prototype of the smokeless cigarette, and they're all like, Dude, this is disgusting. You cannot use that. And that would kind of ends up precipitating. But you know, the whole drama on the story, because they can't innovate at all. But it is funny to see, you know, a cigarette company not able to do it. A tech company doesn't 30 years later, now, it's getting fucked by the regulatory, you know, structure, and big tobacco, whatever you want to call Reynolds these days, somehow emerges victorious all these years later, to kind of leap off the, you know, the technology and product that was built by another company. So it seems like the establishment if you want to refer to it as that kind of one in the end here.
Yeah. Well, yeah. And then the also the irony layered on top of that, is that Altria, of course, formerly known as Philip Morris, the maker of Marlboro cigarettes, had this huge investment in jewel were $12.8 billion, it's now worth a fraction of that, like 1.6, sorry, billion now worth about $1.6 billion. They had their own product, and they took their own product off the market to back jewel. So not only, not only did they have the worst investment make the worst investment or one of the worst in American history, business history, but they also lost out on an opportunity to develop their own IP their own product, and basically bet on the wrong horse. Yeah,
did the original on this one I always want to know did they get away with it did did the original sort of jewel founders jewel money Tiger, like, are there? So I mean, they got paid out big by Altria and then had some stake or who's sort of still a big time over this jewel project? And who's who's out of them? Yeah, thanks to this or this company?
That absolutely, if you want to say they got away with it, fine. Absolutely. The the founder, your like your work wonders tool, made out like bandits, the Board of Directors made out like bandits on that $12.8 billion deal. And basically, you know, they're not at the company anymore, or have a diminished role, not really involved in the day to day affairs and became billionaires and then those that were already billionaires including Nick Pritzker are, you know, even more billionaire ask timezones every billionaire,
rolling back the clock a little bit to the era where jewel was on the rise. And I remember at when I was working at the information at the time, we ran a couple stories about the dithering among venture capitalists about whether or not they could even invest in jewel, because it would be you would run afoul of their vice clauses, that they couldn't really be investing in a company that was contributing to a, you know, addiction. Well, at least nicotine addiction, what is your sense of how those people might be feeling at this point? I mean, you know, what even like, was the what was going on among the VC community as jewel was on the rise.
So we know that jewel was brilliant at its marketing, maybe, you know, obviously, their early marketing was ended up going down in history as being maybe their original sin, if you will. But I'm only saying that because to good marketing. But what I will say and the reason I'm bringing that up is because they were also very good salesmen. On these, the two founders of the company, really, first of all, they believed in their product, they believed like, why are we still smoking? It's really stupid. It kills people, why can't we find a healthier, safer way to do it, so they come up with jewel, so they really did believe and there's actually this very big public health movement that's been gaining steam for the past two decades, that argues that if smokers really want to keep smoking, because they're addicted to nicotine, that's why they continue smoking. If we just find a way to give them nicotine in a way that doesn't involve combustion, then like, that would be great. You could save a lot of lives, you could, you could, you could render the cigarette moot. So they really sold that story. They sold the story of this being not only an innovation, but an innovation that is a very promising for public health and the greater good. So that's a story that they shopped around. And I think that really got the attention of a lot of venture capitalists and that made them sort of like set aside this kind of like dirty association with big tobacco and, you know, doesn't really run afoul of the vise clause because it's actually helping people. So that's been always kind of like the twin kind of thing with jewel. It's like, it's like, the problem is that day, they packaged it as it is it having this health promise. But then they sold it. Like a Silicon Valley company sells widgets like a Silicon Valley company sells scooters, you know, bird scooters or you know, you name whatever product, and they sold it in a way that was very irresponsible. So it's the initial launching of it and sort of like the get the gathering of the money and finding backers and gaining earning sympathy of them. Like, it was kind of all wrapped up in this package. And I don't think that it caused too many people, too many of these investors a lot of heartache, honestly, because ultimately, they could say, you know, this is, yeah, sure, it might be a controversial product. But at the end of the day, it's going to help a lot of people,
if this truly were embraced by tech, you would have seen a lot more people out there right now, you know, railing against the regulatory state for stopping this innovation from from, you know, continuing its march. And instead, there's really not been that much I've seen from the tech community. So it again, puts it in this weird nether region,
I think, you know, a lot of people aren't really excited to get out and differential there are certainly a lot of, you know, the people in this pro vaping movement that feel very strongly about the right to vape. And you know, that have, you know, come out in their defense, but, you know, going forward, yeah, there's going to be a lot of legal maneuvering, if they get a stay, that potentially means that they could keep their product on the shelf. So remember, 90% of jewels sales are in the United States, they have the rest of more than 90%. So wiping out that market, potentially wipes out tool, they have some foreign markets, but they're very tidy. So if they don't win, or if they don't, if they aren't able to push back, or if they aren't able to continue selling their product, they're screwed. But yeah, so what does that mean for jewel? Bankruptcy, potentially, you know, it's it's definitely potential there, but I don't think jewel is going to give up that easily. They have an arsenal of lawyers, they have a lot of very smart lawyers who have litigated in this space for decades, and who are veterans of the tobacco wars, and know exactly how the game works. So I wouldn't write them off immediately, but it's definitely gonna spend it, they're gonna have to spend a lot of money to keep the product on the shelf. And it's going to be you know, it's going to be a cloud that's continuing to hang over the company for for quite some time. So yeah, we shall see what happens. In the meantime, nicotine isn't going away anytime soon.
If I'm, if I'm jewel, my game plan here is just get this tied up in the courts for as long as possible, until you have enough millennial judges on the bench, enough like activist millennial vaping judges who are going to be sympathetic to their cause. And then you've got it. I mean, we've seen We've seen how this works. The parties
get more polarized. We have some old gray vapors, that's that's the thing that brings the fart. That's the horseshoe theory is vape. Together. Yeah, exactly.
But long, the long term plan is actually a very solid one for them, but they just need to stick it through. Not that I'm advocating for it, but I see
Well, I guarantee it might it might drag on for that long. So you may may end up being right and at the end of the day, I love the
