Cuts CEO Talks Tariffs, Figma's IPO Buzz, and a Nerd Crawler Update | E2113

Key Concepts

Figma IPO, Hammer Space (hyperscale NAS), Patreon streaming, Substack competition, LinkedIn Jobs, Lawfare podcast, Free Now acquisition by Lyft, OpenAI social network, T-Mu Google ad shutdown, Trump's tariff policy impact, NerdCrawler marketplace, Cuts Clothing tariff impact, Diminimus rule, Buy Once Buy American (BOBA), Supply and Demand in Marketplaces.

Figma IPO

• Main Point: Figma is going public despite market chaos, filing confidentially.
• Details:
  • Adobe's attempted acquisition of Figma for $20 billion failed, resulting in a $1 billion breakup fee.
  • Figma then did a tender offer at a $12.5 billion valuation.
  • As of July of last year, Figma's ARR was about $700 million, tracking towards $1 billion by year-end.
• Investors: Index, Kleiner, Greylock, Sequoia, Durable Capital Partners, and Entries in Horowit.
• Quote: "Here is Figma going forward and doing something that surprises me and makes me very very happy." - Alex Wilhelm
• Tax Implications: The $1 billion breakup fee is likely considered ordinary income for corporations, potentially offset by carried-forward losses.
• Competition: Despite the IPO, Figma will face competition from Canva and emerging AI-driven design tools.
• Confidential Filing: The filing itself is confidential, meaning the details are not public, not that the fact of the filing is secret.

Hammer Space

• Main Point: Hammer Space raised $100 million to build infrastructure for AI data management.
• Details:
  • Hammer Space focuses on hyperscale NAS (Network Attached Storage) and data handling for AI compute workloads.
  • Aims to provide instantaneous data access for more efficient GPU throughput.
• Investor: Alimter (Jamming Ball).
• Analogy: Compares Hammer Space to "picks and shovels for the gold miners" in the AI industry.
• Challenge: Addresses the challenge of moving and managing large datasets for AI jobs.
• Comparison: Similar to Tail Scale, which builds enterprise-grade VPNs for quick data transfer.

Patreon Streaming and Substack Competition

• Main Point: Patreon is introducing streaming features to increase user engagement amid slowing subscriber growth, facing competition from Substack.
• Details:
  • Patreon raised $155 million at a $4 billion valuation in 2021.
  • New streaming feature aims to make the platform "stickier."
  • Patreon focuses on creator-friendly video products, similar to Substack.
  • Patreon does not allow adult content, unlike Only Fans.
• Substack: Substack is actively adding creator-focused services, posing a competitive threat.
• Revenue Sharing: Substack charges 10% plus Stripe fees, leading to the question of when creators might switch to self-hosting platforms like Ghost.
• Multiple Platforms: The trend is shifting towards creators using multiple subscription platforms (Patreon, Substack, Twitter, YouTube).
• CRM Opportunity: There's a business opportunity for a CRM that reconciles memberships across multiple platforms.
• Patreon Engagement: Low percentage of active creators earning significant income on Patreon.
  • Less than 1% of creators earn $5,000 or more per month.
  • Only 2-5% earn $1,000 per month.
  • Majority earn under $100 per month.
• App Improvements: Both Patreon and Substack apps have improved, but Patreon's feed sorting is confusing.
• Sam Harris: Sam Harris initially used Patreon but later rolled his own platform and now also uses Substack.

LinkedIn Jobs

• Main Point: LinkedIn Jobs helps businesses find committed employees.
• Details:
  • LinkedIn has 1 billion members.
  • 72% of small businesses using LinkedIn said it helped them find the best candidates.
• Call to Action: Post jobs for free at linkedin.com/twist (terms and conditions apply).

Lawfare Podcast

• Main Point: Lawfare provides in-depth analysis of legal cases, particularly those involving Donald Trump.
• Example: The podcast provided detailed explanations of the New York case involving falsifying business records.
• Nuance: Highlights the importance of understanding the nuances of legal cases, even when there's a perception of political motivation.

Free Now Acquisition by Lyft

• Main Point: Lyft is acquiring Free Now, an EU taxi app, for $197 million, expanding its operations outside the US.
• Details:
  • Free Now has $1 billion in yearly bookings and is adjusted EBITDA positive.
  • Union Square Ventures backed Halo, which later merged with My Taxi and was acquired by Daimler and BMW.
• Investor Reaction: Investors were not enthusiastic, as Lyft's stock price declined slightly after the announcement.

OpenAI Social Network

• Main Point: OpenAI is building a social network, likely focused on photos and AI-generated content.
• Details:
  • The social network may be integrated with Sora, OpenAI's video generation model.
  • Sora already has likes and comments features.
• IP Infringement: Sora currently has IP infringement issues, with users creating content based on copyrighted characters.
• Section 230: Concerns about Section 230 implications if users monetize IP-infringed content on the platform.

T-Mu Google Ad Shutdown

• Main Point: T-Mu, a Chinese e-retailer, shut off its Google Shopping ads in the US, leading to a collapse in its Google app ranking.
• Details:
  • Indicates T-Mu's traffic is heavily reliant on paid customer acquisition.

Trump's Tariff Policy Impact (Cuts Clothing Case Study)

• Main Point: Trump's tariff policy is causing chaos for small businesses, potentially leading to layoffs and empty store shelves.
• Guest: Stephen Belli, founder of Cuts Clothing.
• Tariff Rates: 145% or 245% tariffs are effectively an embargo.
• Inventory Issues: Businesses are stuck with inventory they can't sell at a profit.
• Job Losses: Tariffs will hurt American jobs, including graphic designers and production managers.
• Diminimus Rule: The 321 dimminus law (under $800) is ending on May 2nd, adding to the tariff burden.
• Relocation Challenges: Moving production facilities takes 6-9 months.
• Consumer Impact: Passing on the tariff costs to consumers is not feasible.
• Domestic Production:
  • US clothing factories are 30 years behind Asia.
  • It would take billions of dollars and years to build out domestic capacity.
  • Minimum wage jobs in clothing factories are not appealing to most Americans.
• BOBA (Buy Once Buy American): Trump's tariff timu offramp is buy once buy American.
• Call to Action: Support American Craftsmen and invest in better products.
• Cuts Clothing:
  • Started with $50,000 and has sold hundreds of millions of dollars.
  • Employs hundreds of people.
  • Shirts are high quality and affordable (around $50-$60).
  • Shirts are tested for fading and peeling.
• Layoffs: Layoffs are expected to begin in the next week if the tariff situation is not resolved.
• Communication: The administration has not communicated a clear goal or plan for the tariff policy.
• Recommendation: Implement a 6-12 month thoughtful plan to avoid chaos and job losses.
• Quote: "That's what the average consumer doesn't realize they hear tariffs and like 'Oh it won't affect us.'" - Stephen Belli

NerdCrawler Marketplace

• Main Point: NerdCrawler is a fast-growing marketplace for comic book art and collectibles.
• Founder: Christopher Tongue (solo founder).
• Concept: Curated marketplace for rare comic sketches, published art, and signed comics.
• Growth:
  • Over $1 million in sales.
  • Monthly order volume growing 30% month-over-month.
• Programs: Participated in Founder University and Launch accelerator.
• Artist Compensation: Comic book artists are often underpaid for their work.
• Revenue Opportunity: NerdCrawler provides artists with the opportunity to double or triple their revenue.
• Marketplace Strategy: Focus on supply and demand, building dedicated teams for each.
• Goals: Set aggressive goals for artist acquisition and sales.
• Quote: "This is such a good idea." - Jason Calacanis

Synthesis/Conclusion

The episode covers a range of topics, from the excitement of Figma's IPO and the potential of AI infrastructure companies like Hammer Space, to the challenges faced by creators on platforms like Patreon and the real-world impact of Trump's tariff policies on small businesses like Cuts Clothing. It emphasizes the importance of innovation, strategic planning, and clear communication in navigating the complexities of the startup world and the broader economic landscape. The episode also highlights the potential for new business models and solutions, such as a CRM for managing subscriptions across multiple platforms and marketplaces like NerdCrawler that empower creators.