TWiST News: Headphones.com, How Sound Takes Down Drones, TollBit Secures Series A | E2031

Jason and Alex kick off the show (0s)

• A discussion highlights the benefits of non-diluted funding, mentioning that it keeps the cap table pure and is likened to Canadian socialism. It is noted that other countries like New Zealand and Japan also provide grants, which can sometimes lead to companies focusing more on pleasing grant committees than venture capitalists. (0s)
• The show is sponsored by LinkedIn Ads, Vanta, and Beehive, with each offering special promotions for listeners. LinkedIn Ads offers a $100 ad credit, Vanta provides $1,000 off for compliance and security services, and Beehive offers 30 days free and 20% off for newsletter services. (42s)
• Jason Calacanis, an angel investor based in Austin, Texas, introduces himself, mentioning his investment in about 100 startups per year and hosting 200 podcast episodes annually. (1m28s)
• Alex Wilhelm expresses enthusiasm for their live news push, noting that this is their third show in three days, which is a record since he joined the team. (1m54s)
• Recent discussions on the show have covered topics such as election integrity and the development of a robo-taxi fleet in the United States, with a focus on technology's impact on the world. (2m7s)
• The current episode plans to discuss developments in AI, specifically focusing on Claude AI. (2m41s)

Anthropic's latest launch, Claude 3.5 Sonnet capable of "Computer use". (2m52s)

• A new tool called "Sonet" is associated with Claude AI, which is a computer interface that allows users to control their web browser through an API. The tool is currently in version 3.5, but its branding is considered unclear. (2m52s)
• Developers have demonstrated the capabilities of this tool by using it to order pizza through DoorDash without human intervention, showcasing its potential to automate tasks similar to what users have long desired from virtual assistants like Siri and Alexa. (3m46s)
• The upcoming iOS 18 includes a feature that allows Siri to review user behavior in apps, enabling it to perform complex tasks such as booking flights by understanding user preferences and past actions. (4m37s)
• A demonstration by Mustafa Eresi, founder of AI to SQL, shows the tool's ability to perform web scraping by finding and compiling data on different headphones into a spreadsheet. This process is similar to business process outsourcing and web scraping services offered by companies in countries like Manila, Israel, and India. (5m43s)
• The discussion highlights the use of technology to automate tasks such as monitoring product prices online and notifying users when prices change, allowing for actions like purchasing at a specified price point, similar to stock buy or sell orders. (6m47s)
• There are legal issues surrounding the use of tools that scrape data from websites like Facebook, Instagram, TikTok, and LinkedIn, as these platforms restrict access based on IP addresses and login status. (7m12s)
• The potential for integrating such technology into operating systems is discussed, with the expectation that it could learn user preferences and automate tasks like checking flight options, making the technology highly personalized and efficient. (8m7s)

Future of AI assistants and employment effects (8m33s)

• An investment was made in a company called Athena, which offers a virtual assistant that can be accessed by signing up on their website, Athena.wow.com, and the company has a vision for the virtual assistant to learn and become bionic using AI over time (8m34s).
• Athena's virtual assistants are initially human assistants who perform repetitive tasks and train the AI, which is a key part of the company's vision and a reason for its success (8m56s).
• The product is popular in the startup community, and a free trial offer is available through a specific link, which includes a month of free service (9m8s).
• The investor was the first to invest in Athena, and the founders, Jonathan and Marco, chose the investor due to their past success with their company, Thumbtack, where the investor was also the first to invest (9m18s).
• The investor's role in the company is seen as a "lucky charm" by the founders, who appreciate the investor's past support and hope to replicate that success with Athena (9m32s).
• Venture capitalists typically have a limited impact on the success of a startup, but in some cases, they can make a significant contribution to the company's trajectory, which is a rare occurrence (9m54s).
• Outlier companies often experience smooth growth, and venture capitalists usually step in to address problems, but in successful cases, the company's growth can be self-sustaining (10m6s).

LinkedIn Ads - Get a $100 LinkedIn ad credit (10m11s)

• There are over 50,000 Venture-backed startups in the United States alone, making targeted marketing crucial to stand out from the competition (10m11s).
• To effectively target the right prospects, LinkedIn ads can be used to precisely reach professionals who are likely to find the ad relevant (10m31s).
• LinkedIn ads allow for targeting by job title, industry, location, and even specific companies, making it ideal for businesses with a list of target customers (10m42s).
• LinkedIn is an environment where people are receptive to business, with a billion members, 130 million decision-makers, and 10 million C-Level Executives (11m1s).
• LinkedIn ads can help build relationships and drive results by converting B2B audiences into high-quality leads (11m3s).
• A $100 LinkedIn ad credit is available at linkedin.com/thisweekinstartups, with terms and conditions applying (11m23s).

AI's impact on white-collar jobs and economic implications (11m36s)

• Startups are expected to explore new use cases with Anthropic's AI tool, which focuses on agentic AI, allowing AI to act autonomously on behalf of users. This development could significantly enhance desktop applications by integrating more intelligence. (11m36s)
• The introduction of agentic AI is predicted to cause a significant shift in the employment landscape, particularly affecting white-collar jobs. The impact is expected to be widespread, with creative roles and junior developers being among the most affected. (12m27s)
• Creative professionals may face challenges as AI-generated artwork becomes more cost-effective and efficient compared to hiring artists, potentially reducing the demand for human artists. (13m1s)
• Junior developers might also be impacted as AI agents can perform tasks typically assigned to them, with senior developers overseeing the process and correcting errors, similar to current practices. (13m40s)
• Alexis Gay, a comedian with a show called "Unprofessional," was mentioned for her humorous take on her name and her career journey. She is planning a Northeast tour and has been featured on various tech-related shows. (14m21s)
• A meeting with a Grammarly employee highlighted how the company has leveraged AI to enhance writing, reflecting on the broader impact of AI on professional skills like writing. (15m7s)
• The discussion highlights the impact of technology, such as Grammarly, on reducing the need for certain editorial tasks, while emphasizing the continued necessity for human editors to oversee content quality and structure. (15m29s)
• There is a prediction that 50% of white-collar jobs may disappear over the next few years, with a projected annual reduction of 10% due to technological advancements and automation. (16m27s)
• Companies have been reducing their workforce size, using events like the pandemic as a cover for cuts, and are now leveraging AI to make some roles obsolete, particularly affecting the bottom tier of employees. (16m52s)
• The trend of workforce reduction is expected to continue, with companies potentially becoming more efficient with fewer employees, which could lead to significant economic changes for future presidential administrations to address. (18m1s)
• The contraction of white-collar jobs due to AI and technology is anticipated to be a major issue for the current generation, affecting those in high-paying roles that could be replaced by AI solutions. (18m43s)
• The role of software developers is evolving, with individual AI agents potentially assisting them, and technology is increasingly capable of handling initial drafts of work, though human oversight remains crucial. (19m15s)
• The discussion highlights the role of humans in orchestrating tasks while technology handles the underlying work, noting similarities across different industries and jobs. (19m31s)
• There is a concern about the increasing economic power of the top performers and the decreasing viability of the lower half, raising questions about society's readiness to handle such economic changes. (19m45s)
• It is predicted that there will be an abundance in certain parts of the economy, leading to a significant reduction in the costs of services and products. (20m5s)
• An example is given where the cost of hiring a tutor is avoided by using technology like ChatGPT to provide educational support, illustrating how technology can replace traditional services. (20m19s)
• The cost of living is expected to decrease while the quality and offerings of products and services improve, similar to the trend seen in the pricing of flat-screen TVs over time. (20m45s)

Vanta - Get $1000 off your SOC 2 (21m12s)

• To sell to larger customers and increase the average contract value (ACV) while reducing churn, companies need to pass compliance checks, including SOC 2 compliance. (21m12s)
• SOC 2 is a standard that ensures companies keep customer data safe, and without it, securing large deals and high-end market operations is challenging. (21m28s)
• Vanta simplifies obtaining and renewing SOC 2 compliance, with most customers achieving compliance in just two to four weeks, compared to months without Vanta. (21m44s)
• Vanta automates compliance for various standards like GDPR and HIPAA, helping startups sell to larger customers and saving hundreds of hours of work and up to 85% on compliance costs. (21m53s)
• A special offer is available for $1,000 off Vanta services at v.com/twist. (22m8s)

Andrew Lissimore from joins the show (22m13s)

• Andrew Lissimore, the founder and CEO of headphones.com, appeared on the program to discuss his journey and the business. He founded the company in 2016 with his brother. (23m1s)
• Andrew shared the story of acquiring the premium domain name headphones.com, which was an unexpected development in his career. (23m19s)
• Before starting headphones.com, Andrew worked as a VP of marketing for a SaaS company in Austin, backed by Andreessen Horowitz. (24m20s)
• Andrew, originally from Vancouver, Canada, became interested in high-end audio gear as a hobby while working in Austin, which eventually led to the creation of his business. (24m16s)
• His interest in audio gear was initially a personal hobby, but it became a business idea to sustain his passion without financial strain, especially after discussions with his then-girlfriend, now wife, Monica, who is a CFO and accountant. (25m0s)
• In 2016-2017, a decision was made to enter the consumer electronics market, specifically focusing on high-end audio gear, despite the dominance of Amazon and Best Buy. The initial motivation was personal interest and the desire to have access to audio equipment without financial loss. (25m33s)
• The realization came that selling large speakers online was inefficient due to shipping costs and low repeat purchases. In contrast, headphones were lightweight, had better margins, and customers often bought multiple pairs for different purposes. (26m39s)
• The strategy involved targeting the ultra-high-end audio market, which was underserved by major retailers. This included selling headphones that could cost up to $50,000, with the average order value on the site being over $1,000. (27m22s)
• The challenge was to convince high-end audio brands, which were protective of their distribution and operated like luxury brands, to partner with a relatively unknown entity. (28m0s)
• A list of 50 strategies was created to build credibility, but initial attempts were unsuccessful due to perceptions of the business being too small or informal. (28m19s)
• One key strategy identified was acquiring the domain headphones.com, which was seen as a way to gain credibility and secure partnerships with high-end audio brands. (28m39s)
• A British entrepreneur who moved to Silicon Valley during the first dot-com boom owned a domain that was initially priced at $1.2 million. (29m7s)
• The entrepreneur was not a typical domain hoarder, which allowed for a more personal negotiation approach. (29m28s)
• A cascading payment schedule was negotiated over six months, allowing for a reduced financial risk if the business did not succeed. (29m54s)
• The negotiation was successful, and both parties benefited from the deal, maintaining a friendship over the years. (30m13s)
• The lesson learned was to structure agreements in a way that minimizes risk if the business fails, while accepting potential overpayment if the business succeeds. (30m20s)

Beehiiv - Get 30 days free and 20% off your first 3 months (30m38s)

• Beehiiv is a service built for growth, suitable for email lists and podcasts, and has been used for the TWiST 500 newsletter. (30m56s)
• Beehiiv was co-founded by one of the minds behind the popular newsletter Morning Brew. (31m5s)
• The platform offers tools that helped Morning Brew grow to millions of readers, and it also has an ad Network for driving revenue. (31m12s)
• Beehiiv solves two key problems: growth and revenue, making it a valuable tool for users. (31m30s)
• The platform features an AI post Builder, a referral program, and other tools, all at an affordable price of $39 per month. (31m37s)
• A special offer is available, including a 30-day free trial and 20% off the first 3 months, accessible by visiting beehive.org/twist. (31m45s)

Deep dive into high-end audio and audiophile community (32m6s)

• The headphones.com domain was acquired at a great deal, and although it initially didn't gain immediate respect due to the presence of link farms on canonical domain names, it eventually earned credibility and attracted people willing to buy it (32m6s).
• The owner of headphones.com sent a pair of high-end headphones from the brand Bathy, which are French and known for their high-quality sound, and also owns the Utopias, another high-end model (32m42s).
• The owner discovered a service called Qobuz, a French company that offers high-quality FLAC files, and paired it with a British amplifier called Naim, which streams music directly to the Utopias, resulting in a significantly improved sound experience (33m14s).
• The improved sound quality, referred to as the "Sound Stage," allowed the owner to hear details in music that were previously unnoticed, and this experience led to an interest in high-end speakers, including a pair of KEF speakers (33m40s).
• The concept of Sound Stage is a real aspect of high-end audio, and it's not just about aesthetics or obsession, but rather the ability to hear music in a more detailed and immersive way (34m15s).
• The high-end audio community is known for its complexity and opacity, making it difficult for newcomers to navigate and find quality products, but there are also companies like Sonos, Bose, and Apple that dominate the market and influence consumer choices (35m20s).
• There is a subset of people who are highly sensitive to sensory experiences, such as sight, touch, and sound, and they derive significant joy from using products that are superior to average ones. This joy is not just a one-time experience but is felt every time they use the product. (36m13s)
• For individuals who value aesthetics, the combination of sound quality, design, and feel is crucial in creating a great product experience. These people often seek a balance between functionality and appearance in the products they purchase. (36m59s)
• Some people prioritize audio quality over aesthetics, even if it means using products that look unconventional. Others, however, appreciate a blend of excellent sound and appealing design, valuing both the auditory and visual aspects of a product. (37m5s)
• Headphones.com caters to customers who care about both aesthetics and sound quality. The company also offers a reviews section on their service, which plays a role in attracting customers to their eCommerce platform. (37m54s)

The role of reviews and content at headphones.com (38m3s)

• A company's business model is based on e-commerce, with a focus on building a media and reviews platform to monetize their business (38m8s).
• The cost of acquiring customers through digital platforms like Facebook and Google is increasing due to improved algorithms and increased competition, making it harder to target customers (38m27s).
• To address this challenge, the company focused on building a community and content side of the business, prioritizing awareness and trust over sales (39m21s).
• The company partnered with KEF, a high-end audio equipment manufacturer that provides speakers for the BBC, to review their products (39m38s).
• KEF's products, such as the KEF Engineering Foundry, are sophisticated and well-crafted, with features like USB-C input and a companion app (39m50s).
• The company also reviewed the Chord amplifier, a luxury product with a heavy and solid build, a user-friendly interface, and a high-quality remote control (40m20s).
• The Chord amplifier can stream music directly from providers like Kobz or Apple, and its craftsmanship and design make it a desirable luxury product (40m49s).
• Luxury products, like the Chord amplifier, offer features that go beyond necessity, such as a smooth motion dial, which can justify a higher price point (41m15s).
• The company also reviewed digital analog converters, such as those from Dax, which are used to convert digital audio signals to analog signals (41m44s).
• The discussion highlights the importance of a Digital-to-Analog Converter (DAC) in enhancing the audio experience by converting digital files into electrical signals that drive the magnets in headphones, creating sound waves. (41m53s)
• Bluetooth technology is criticized for its lack of bandwidth, which affects its ability to handle high-resolution audio files effectively, making it less suitable for continuous audio streaming. (42m29s)
• Companies focused on high-quality audio invest significant time and resources into developing superior DACs, as the average consumer is often unaware of the impact of cheaper components on audio quality. (43m34s)
• The audio chain, including the recording quality, cables, headphones, DAC, and amplifier, plays a crucial role in achieving optimal sound quality, with high-end setups optimizing every component. (44m1s)
• A specific audio setup is recommended for those seeking a peak audio experience without extensive technical knowledge, featuring a Koba unit with industrial design, a DAC, and Focal Utopia headphones, which are noted for their exceptional quality despite their high cost. (44m29s)
• Phil Kaplan, also known as PUD, has gained significant recognition in the headphone community, with his posts becoming some of the most popular on the headphone subreddit, which has over a million members. (45m1s)
• A person, often referred to as "Steve jobless," has created unique and humorous designs, including headphones, that have gained significant attention online, with one tweet about his designs receiving 50,000 likes (45m27s).
• This individual has become friends with the narrator and is known for taking his creations to public places and doing photo shoots with them, bringing a bit of levity to the hobby of audio enthusiasts (45m59s).
• The term "audio file" has become a nerdy and gatekept term, but the narrator believes it should simply refer to someone who loves sound, and this person's creations embody that spirit (46m19s).
• The person behind these designs has also created real-world products, including DroKid, a distribution system, and has showcased his creations at live events, such as a headphone show in LA, where he drew a large crowd and attention (46m41s).
• The narrator appreciates this person's ability to turn his ideas into reality and bring joy to the world of audio enthusiasts, which has become a stuffy hobby (46m10s).

Leveraging Organic search and YouTube for brand growth (47m0s)

• The business benefits from organic search traffic, but its impact has decreased due to Google's fading dominance and the prioritization of paid ads over organic results, making it less powerful than it used to be (47m21s).
• Despite this, the company's philosophy has always been to create the most useful content for its target market, which has led to it becoming the number one or two result when searching for headphones on Google (47m49s).
• The company has shifted its focus to YouTube, the second-largest search engine, where it creates a lot of content and acquires more customers through this channel (48m15s).
• YouTube also allows the company to create highly educational content, which is kept separate from the sales and marketing side of the business to maintain authenticity and trustworthiness (48m38s).
• The company's products, such as high-end headphones, offer a unique experience that can change one's mental state and environment, making them worth the investment for those who can afford it (49m20s).
• The company's goal is to provide the best products for its customers, regardless of price point, and to help them optimize their sound experience (49m46s).
• The company's website, headphones.com, offers a wide range of products, including high-end headphones, and the company is excited to have customers visit and explore their options (49m51s).

Prandtl Dynamics team on anti-drone technology (50m11s)

• A team of four students from the University of Toronto, consisting of Assad Isak, Anna Pavia, Parman Mahindu, and Michael Aquaviva, developed anti-drone technology using sound waves, which won them second prize in a competition, surpassing Boeing. (50m59s)
• The team is working on creating a company based on their project, which addresses the evolving role of drones in warfare, including their use for surveillance, delivering munitions, and as kamikaze drones. (51m9s)
• The affordability and accessibility of drone technology have led to an increase in their use in conflict zones, with individuals able to build drones for as little as $50, making traditional counter-drone measures, which can cost up to $50,000, economically unfeasible. (52m21s)
• Many drones used in conflict areas like Ukraine and Gaza are hand-built using locally sourced parts, as commercial drones from companies like DJI have built-in restrictions and are subject to government control. (53m12s)
• The rise of websites like Instructables has facilitated the construction of custom drones, allowing individuals to bypass the limitations of commercial drones and build them for specific purposes at a lower cost. (54m2s)
• The development of drones began in the hobbyist community, where enthusiasts built drones for photography and competition, leading to the availability of open-source software and detailed instructions for creating custom drones. (54m32s)

Building cost-effective anti-drone solutions (55m21s)

• Instructables is a website that provides tutorials on building various quadcopters from scratch, with some drones being used to drop grenades on soldiers in Ukraine, and can be manufactured for under $50 USD (55m23s).
• The use of sound, lasers, and microwaves is an attractive solution to counter these drones, as the cost to use each individual cycle is effectively zero (56m10s).
• A group of entrepreneurs met through engineering programs and came together to develop a solution to counter drones, using resources they had available to create a viable solution (56m34s).
• The solution they developed uses ultrasonic sound waves to disrupt the electronics in drones, targeting the navigation system and camera system, and has been tested on various types of drones, including DJI drones and hobby kits (58m20s).
• The ultrasonic sound waves have been found to have an effect on the electronics in drones, causing problems with how they fly, and the group is working towards full spoofing of the drone's navigation system (58m51s).
• The goal of the solution is to be able to control where the drone thinks it is, giving control over the drone's actions (59m2s).
• The technology involves using sound waves to disrupt the electronics of drones by emitting specific frequencies that can confuse them. Different drones operate under different frequencies, and the system includes identifying these frequencies to effectively target the drones. (59m12s)
• The system also involves measuring the response emitted back from the drone when hit by a sound wave, using this data along with camera footage and drone signatures to fine-tune the targeting process. (59m59s)
• The current effective range of the technology is around 50 meters, but there is a goal to extend this to 100-150 meters, which is considered optimal by industry experts for integration into existing workflows. (1h0m21s)
• The technology is designed to be non-destructive and safe for use in urban environments, focusing on ultrasound frequencies that are safe for humans, similar to those used in medical imaging. (1h1m48s)
• The system can be deployed from a truck positioned on the perimeter of a target area, such as a military base or hospital, and involves arrays that work together to direct sound waves from different directions. (1h1m21s)
• The technology is being developed into a business, with venture capitalists showing interest in funding the startup. The team consists of four co-founders who have participated in competitions to advance their project. (1h2m30s)
• The company has been perfecting its technology since the end of May or beginning of June and has now reached a level of readiness that allows them to bring on potential investors to grow the business (1h2m49s).
• The company has been working on incorporating feedback from experts in the field, including solutions to improve the range of their technology (1h3m0s).
• The founders are all fourth-year engineering students who are wrapping up their studies and have one year left to graduate (1h3m25s).
• The company is seeking an incubator-style check or a small seed check to get started and allow the founders to focus on the business without taking other jobs (1h3m36s).

Prandtl Dynamics business potential and funding (1h3m42s)

• Pranal Dynamics, a company dedicated to aerospace technology, received a non-dilutive grant of approximately $270,000 USD from the Canadian Department of Defense. (1h4m3s)
• The grant allows Pranal Dynamics to maintain a pure cap table without diluting shares, which is beneficial for the company's growth. (1h4m15s)
• The company was named after a German aerospace scientist, Luffy Prandtl, as the founders needed a name quickly for a proposal submission. (1h6m11s)
• The founders of Pranal Dynamics hope to see their technology used in Ukraine for safety purposes and are open to future investments to scale their business. (1h7m8s)
• The discussion emphasizes the importance of giving attention to startups, as it can provide valuable feedback and motivation for founders. (1h7m36s)
• Founders, especially student founders, bring a unique energy and enthusiasm to their projects, which is celebrated and encouraged. (1h8m26s)
• The podcast aims to celebrate and support founders by providing a platform for them to share their work and receive attention. (1h8m20s)
• TollBit, a company featured on the Twist 500 list, has successfully raised a Series A funding round, indicating positive progress for the companies on the list. (1h8m57s)

TollBit's Series A funding news and AI data marketplace (1h9m4s)

• Tobit raised a $24 million Series A funding round in 2024, led by Lightspeed, focusing on licensing data from content owners and large AI companies. (1h9m5s)
• The company aims to create a marketplace where data owners can license their data, and those in need of data can purchase it, addressing the tension between content creators and AI model companies. (1h10m25s)
• The rapid Series A funding follows a Series C earlier in the year, indicating a trend of overfunding in the AI sector due to the perceived large market opportunity. (1h10m44s)
• The business model involves business development and software for licensing, which does not require extensive resources, suggesting the funding may be more than necessary for their current operations. (1h11m56s)
• A company has announced securing partnerships with AI companies and onboarding 200 publishers as part of its Series A funding. This funding might be used to provide guarantees to bootstrap the publisher side and address the cold start problem in the marketplace space. (1h12m58s)
• Trip Adler, founder of Scribd, has launched a new startup called "Created by Humans." There are several companies entering this space, and Trip Adler is expected to appear on a podcast next week. (1h13m30s)
• Jason and David Sacks are both investors in the new startup, despite having disagreements on political issues. They maintain a friendly relationship and plan to have dinner together. (1h14m2s)
• The podcast is broadcast live three days a week, with plans to establish a regular schedule of Monday, Wednesday, and Friday shows in 2023. (1h14m44s)