Sam:
The AI world is splintering. E-commerce is evolving fast, and tech companies are stepping up to protect young users online. Today we're diving into ex-OpenAI insiders, launching rival startups, the rise of social driven shopping that's leaving some big players behind, and how AI is being used to make the internet safer for children. Big shifts and big stakes. Let's get into it. All right, we are just getting started, but first, a quick word from our sponsors and a disclaimer before we jump into the action. Stick around.

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Sam:
As a reminder, The Tech Optimist podcast is for the informational purposes only. It's not personalized advice and it's not an offer to buy or sell securities. For additional important details please see the text description accompanying this episode. Before we dive into today's conversation, let's set the stage because the shifts we're about to discuss aren't just trends, they're reshaping the future of AI, commerce and online safety in real time.

Mike Collins:
Hi, welcome to this week's Tech Optimist Alumni Ventures. We like to get together. I'm Mike Collins, the founder and CEO. I'm here with Lucas, and we try to bring some very practical, very casual, quick takes on what we're thinking about, what we're talking about, things that are going on around venture capital, water coolers, and obviously at this time and place, there's a lot about what's going on in the world. A lot of what's going on in DC and AI is on everybody's list, maybe the most profound technology of our lifetime. Welcome to the episode, Lucas.

Lucas Pasch:
Thank you for having me for one last ride, right?

Mike Collins:
One last ride on your tour of duty, and then we'll get another young, talented, smart, young venture capitalist to indulge me starting again next week. So, I wanted to kick off Lucas by talking a little bit about big AI versus little AI.

Speaker 1:
All right, that's my cue. First, we're seeing a familiar pattern in the tech world, which Mike and Lucas are going to get into first here in a second. When big companies grow too large, their best minds break away to build something new. It happened with PayPal, Fairchild Semiconductor, and even Google. And now we're seeing it with even OpenAI. Former executives and researchers are spitting off into new AI startups raising huge investments, and challenging the idea that AI will stay concentrated in just a few hands. But will this new wave of companies create true competition or will they eventually be absorbed into the same AI powerhouses? The next topic for today is we're going to shift to the changing landscape of e-commerce. Shopping isn't just about clicking buy anymore, it's becoming more interactive, social, and even community driven. Platforms that focus on live shopping, influencer led commerce and real time engagement are thriving, but not everyone is getting it right.
Some of the biggest players in tech have tried and failed to capitalize on this shift. So, why are certain startups taking off while others are struggling to make an impact? And then finally, to wrap up the show for this week, we are going to turn to a major conversation about online safety. AI is now being used to protect younger users on digital platforms with companies implementing new age estimation and content moderation tools. This signals a shift in responsibility where tech companies are no longer just providing platforms. They're expected to actively create safer digital spaces for generations to come. But how much can AI really do, and where do we draw the line between protection and overreach? So, we've got a lot to unpack. Let's get into it.

Mike Collins:
So, this week we are hearing about a couple of former OpenAI executives starting their own versions of AI companies. So, clearly they don't hate it so much that they don't want to do their own thing. So, Mira Murati, who is the CTO of OpenAI, has started something, I believe it's called Thinking Machines Lab or something like that. And oh, by the way, these companies, these spin out companies are raising enormous amounts of money. So, that's capitalism, that's venture capital, that's entrepreneurship. There's obviously all these things in the news every week about this week it was Elon and them coming out with their new model, the clash of the titans, internationally, a big speech by JD Vance in Europe on AI.
But the point I want to make is that I think that this is the story of entrepreneurs starting new businesses is not being told enough. And there are things coming out of incubators. There are two-person startups, there are meetups taking place that are, to me very reminiscent of something. There was a home brew club where some of the early enthusiasts about microcomputers got together just hacking, hanging out, showing each other their projects, Wozniak, other companies, Osborne, Grid that most of our listeners don't have any idea what I'm talking about. But the first wave of personal computers was just people hanging out together that were young and upstartish. And I just want to just remind people that is happening now too, and that I think there is a huge lack of imagination about what new businesses, new projects, new vectors will be created because of this enabling technology. When the personal computer was developed, who knew that there was going to be a job for an influencer.
I mean, or that when the cell phone was invented, that that would enable a revolution in YouTube videos and Uber. And I don't say I even know what these are, but when you have these enabling technologies that are very, very strong, everybody I think tends to look at things in a very static way and say, oh, self-driving cars are going to eliminate the need for Uber drivers. And they view that statically and they don't talk about what does self-driving vehicles open up for people to do other things, create new businesses, have new jobs. And oh, by the way, Uber driving as a profession also did not even exist 10 years ago. You know what I'm saying? So, I'm not trying to diminish or be flippant about people whose job can be changed or industries that have to go undergo radical transformation. That disruption is very real and very painful.
And so it is though, with all humility that I just want to make the point that there are young, hungry, smart, entrepreneurial people that are taking these technology enabling tools and are starting new businesses to do things that are going to be the next generation of Ubers and Airbnbs and OpenAIs and etc. So, I think the system is working and the competition and people leave their [inaudible 00:09:52] ... I mean this is like people leaving to form Intel and they-

Lucas Pasch:
Exactly right. Yeah, that's exactly [inaudible 00:10:00].

Mike Collins:
So, I think it's like this is just history rhyming with itself over and over again.

Lucas Pasch:
Yeah, there's a lot you brought up there. And to your point, the entrepreneurship ecosystem is all about what you could do in the face of limited resources. And the answer now more than ever, is quite a lot. You could do quite a lot with limited resources more than you ever have been able to in the past, and it will spurn a boom of value creation on the back of the introduction and proliferation of AI. But yeah, this story about the open AI talent, to your point, Fairchild Semiconductor is where my mind went first. We've seen this pattern before, there is a single pioneering company that becomes a breeding ground for talent, and that fans out to create massive industry defining company. So, if our listeners are interested in our world, the history of our world was captured very well in a book called Power Law, and the first few chapters is dedicated to this company, Fairchild Semiconductor. It was the birthplace of the so-called Fairchild Mafia. And many of its key engineers, a couple of them founded Intel, others built companies that shaped the entire semiconductor industry. We've seen it more recently with PayPal.

Mike Collins:
PayPal Mafia, same deal. This is the OpenAI Mafia. Right?

Lucas Pasch:
Yeah, exactly. So, it's Mira Murati with her new company, it's Ilya Sutskever. It's Dario Amodei who founded Anthropic, and Claude is their model that we use all the time here at Alumni Ventures alongside the OpenAI models. And we're going to see more and more of this happening over the next decade.

Mike Collins:
I mean, you see this with companies and the people who leave the PayPal Tree of Life kind of thing. I think you also find it geographically. So, you can go to a town and if you can have one or two very successful tech companies and attract talent and attract skills and that they then leave. But like the area, and it becomes this, the story of Silicon Valley was not just the people and the companies they created, but just the whole culture of the Bay Area can be transformed.
And I've made the point as well, which is I think the Silicon Valley, it's not Silicon Valley or Boston to a lesser extent, or New York to a lesser extent, is losing share. Everybody says, oh, everybody's leaving the Bay Area to move to Austin or what have you. I just think the rest of the world is becoming Silicon Valley. And I would argue nothing is pure. There's good and bad of that. But I do think that the culture of innovation, risk taking, trying new things, failure is okay that these things that I think of when I think of Silicon Valley, I think are generally good for society and generally good for a moving the technology forward.
We build on these things, and some of these things are not just the technical knowledge, but it is just the culture of this is what a talented person does at some point. They join a tech company, and it doesn't have to be high-tech, but it's about growth and innovating and disruption and trying new things and moving fast and failing and trying again. And that is spreading across this country. But I think if you take a step back and look at the arc of history, it's spreading around the world because it works and technology is the underlying thing behind all of this stuff.

Lucas Pasch:
Yeah, look, as investors, when we're talking with a founder, one of the things that we always ask is, what is your strongly held belief about the industry that you're playing in? What is your unique insight that you're building for that?

Mike Collins:
What does everybody else have wrong?

Lucas Pasch:
Yeah. And so the people who are building through the founding period at OpenAI have these unique insights about, okay, here's this incredible culture that we built at OpenAI, but there's an offshoot of something that I want to do differently and that I think the market will respond really well to. And nobody else knows about that because I was there, I was in the room where it happened. And so we're always looking for that, and it's where you're going to see a lot of value creation from Mira and from Ilya and all the others that come out of that ecosystem. And to your point, it's not necessarily about fragmentation of an overall set of values, it's about kind of building that culture in new and interesting and bigger directions.

Mike Collins:
I want to take it in this direction versus that direction, and I'm highly motivated to do it. So, it's great.

Speaker 1:
So, now there are very many instances of this where executives from top industry leader companies fan out like Lucas was saying, and do their own thing and create their own industry leading companies. So, I wanted to share a few, because there are some really cool ones that I think are going to surprise a lot of our listeners. So, let's start with this. What do Twitter, LinkedIn, Uber, and Bumble all have in common? Yes, they are apps, and yes, there's some sort of social media involved in them, but these major companies didn't start in garages or dorm rooms. They started within the industry. Take Evan Williams, after working at Google and playing a role in the rise of Blogger, he went on to co-found Twitter in 2006. Reid Hoffman helped to build PayPal before launching LinkedIn, which later sold the Microsoft for $26 billion. Travis Kalanick, who had already spent over a decade in the startup world took what he knew and co-founded Uber, turning it into a global transportation giant.
Even in corporate leadership, future founders have emerged. Spencer Rascoff, a former Goldman Sachs employee, went on to co-found Zillow transforming how people buy and sell homes. Eric Baker once a consultant at McKinsey built StubHub and then later founded a competing platform Viagogo. These stories prove that experience in major companies can be the perfect launch pad for innovation. But this isn't just a story about men in tech. Women founders have also taken the industry experience and have built their own empires. Take Whitney Wolfe Herd who left her role as VP of marketing at Tinder and launched Bumble, a dating app that flipped the script by putting women in control. Just a few years later she took Bumble public and became the world's youngest, self-made female billionaire at the age of 31. Then there's Sara Blakely who didn't have an executive title, but worked as a fax machine salesperson before launching Spanx with just $5,000 in savings.
Today she's a billionaire who revolutionized what we know as a fashion industry. And let's not forget Meg Whitman, who brought her leadership skills from companies like Disney and Procter & Gamble to eBay, turning it from a $5 million company to an $8 billion powerhouse. Now these stories prove a simple truth. Experience breeds innovation. The skills, connections and knowledge gained inside major companies often lead to game-changing new ideas, and with more funding and resources available to women and unrepresented founders than ever before, the next wave of industry changing companies could be coming from places we least expect. So, the question is, who's next?

Mike Collins:
Okay, what do you got?

Lucas Pasch:
All right, so I do want to talk about some evolving trends in e-commerce. So, e-commerce is evolving beyond simple transactions. Younger consumers raised on streaming and gaming and social media when they shop, they want an experience something more robust than clicking and dropping items in a cart. So, shopping is becoming interactive, it's becoming community driven. It's more infused with entertainment.
And platforms that embrace that shift are seeing pretty explosive growth right now. There are a few companies that embody that trend really well. So, Whatnot is kind of the core example that I think of. It's a live shopping startup. They just raised close to $300 million, pushing its valuation to nearly 5 billion and Whatnot's success is all about creating this shopping experience that feels dynamic and feels social and engaging. It's all about real-time interactions. Sellers are hosting these live auctions, they chat with their buyers, they generate a sense of urgency that kind of mirrors the excitement of a bidding war or a limited type drop. And that format is working especially well for some niche markets like collectibles and sneakers and vintage fashion. But I think it's going to keep coming more and more into the mainstream, and it taps into engagement mechanics that are the same types of mechanics that are keeping people glued to platforms like Twitch or TikTok.
So, I think that's one interesting trend. And on the opposite end of that trend, Amazon, despite its dominance in e-commerce, has completely misread this shift of live shopping. They had launched a platform called Inspire, and it was this TikTok style shopping feed. They launched it in 2022, and it was designed to bring short form shoppable videos into the Amazon ecosystem. But Amazon doesn't have an organic creator community. Its users don't come to the platform to passively browse videos. Even with financial incentives Inspire could not manufacture the kind of engagement that fuels platforms like TikTok.
And I think at the core of that, so last week, they quietly shut down the whole entire platform, and I think at the core of that shutdown, and something we should all take away here is, hey, if you are a consumer facing company, you have to be real with people, whether it doesn't matter, it could be a D to C model, a marketplace retail business, or some other compelling business model, you need to build for who your users are. And if you don't, you're going to be snuffed out pretty quickly. And so when Amazon launched Inspire, they basically offered creators 25 bucks per video, and it was viewed by the broader creator community as a joke.

Mike Collins:
It's a joke.

Lucas Pasch:
It wasn't going to move the needle for them. And everything started to unravel from there. We're always talking about how we cater to our customers and how important that is. And so consumers are gravitating toward these very [inaudible 00:22:34]-

Mike Collins:
And it's a case too, Lucas, too of this is classic upstart, entrepreneurial, fresh approach, taking on the big, big company that just can't get out of its own way that is locked in a different paradigm. It's nothing against Amazon, but they've created systems to do what they do really, really well. And that's entrepreneurship. And we try to find teams like that and invest in those kinds of companies. And sometimes they work and sometimes they don't. But that's the game. And consumer behavior changes. And listen, if you go back in time as you described it's like, oh, that's a 2025 version of QVC.
When we had cable television, there was a huge innovation which like, oh, we're going to 24/7 shop, and they still are around, but it's like this is QVC for 2025 and young generation kind of deal. And we're seeing this, I think with physical space selling as well, which is there's all kinds of innovation about what kind of experience do you want as a shopper. And I know there's innovations going on, we're looking at some of these deals where it's like, is this even a store? Because it doesn't even feel like a store. It feels like a place where people are hanging out, but you can buy the furniture.
So, I think one of the things about consumer facing stuff too is there's so much innovation and it's so into the technology foundation that you can build it on. And yeah, people are on their phones, people are lonely. People are wanting to be entertained every second of every day. So, if you're going to sell them stuff, design it for the world we're living in kind of thing. And not trying to bolt something onto what you already have. Amazon would've been much better buying these kinds of places and leaving them alone. And again, very tricky conversation about how do you stay innovative and experimental while trying to serve your existing business really efficiently.

Speaker 1:
All right, this seems like a good place to take a break. We'll be right back. Don't go anywhere.

Speaker 2:
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Mike Collins:
That's a good [inaudible 00:25:55].

Lucas Pasch:
And it's something that they've, at their core, have always tried to work into their philosophy at Amazon. Bezos was known for his "day one culture", trying to lay out all the foundations to [inaudible 00:26:06]-

Mike Collins:
I mean, they tried at least. The other part of it on the good side is their list of failures is really long, and so at least they're taking swings, kind of thing. And so I think that this is like Bessemer's Anti-Portfolio, right, which is like you're going to miss, but keep trying.

Lucas Pasch:
Yeah, for sure. And hey, to be clear, Amazon's going to be okay.

Mike Collins:
They're going to be okay. They're going to be okay. Yeah.

Lucas Pasch:
All right. Should we go to our last topic?

Mike Collins:
Yeah, take it away.

Lucas Pasch:
All right. So, I wanted to talk here about internet safety for children. A couple of interesting headlines in the past week. So, look for a lot of families with kids of a certain age, this is just one of the only things you could think about every day. No one wants their kids exposed to harmful content or manipulated by online predators or influenced by AI-generated misinformation or disinformation. Stakes have never been higher here. The National Center for Missing and Exploited Children reported a 12% rise in suspected child exploitation cases in each of the last two years. And platforms like Roblox and Discord where millions of kids are spending hours daily have been coming under fire for failing to appropriately control content for children. So, this week Google announced an AI-driven age estimation system.
A pretty aggressive move toward enforcing age-appropriate experiences at scale. So, instead of relying on the enter your birthday model, which is about as effective as a bar hanging a sign that says you must be 21 to drink, Google is now going to, at least start testing to analyze a user's browsing data and behavior patterns to detect if a user is under 18 and automatically enforce stricter settings like SafeSearch and YouTube content restrictions. If misclassified users can verify their age and use official documentation. But this is kind of an evolution in digital identity, AI acting for good and acting as an active guardian rather than a passive gatekeeper. And if successful, I think it could be a new standard for online safety and start to force other platforms [inaudible 00:28:39].

Mike Collins:
These wonderful technologies can be part of the solution in these challenges for sure. I mean, again, I'm a little beyond that young kids phase now probably entering more of the grandparent phase soon. And I hear experts talk about, generally we're probably a little overprotective of our kids in the physical world and a little underprotective of our kids in the electronic world. And again, we just had our own Cyber Night in New York recently where we're talking about cybersecurity. There was a venture capital firm that was recently kind of hacked. So, I think we're all concerned with AI and deep fakes and protecting our kids in online ways. There's a huge movement now, and this isn't directly safety, but I think it's related, which is there's a huge movement toward taking away phones in schools that is really gaining a lot of traction in both blue and red states.
So, I think we've talked a lot about are you a tech optimist or a tech pessimist? And as tech optimists, we tend to see these problems which are brought about by technology. You really can say, "Hey, we need to go back in time." And I think that there are guardrails like no phones in schools, like sign me up. My parents are teachers, I get it. My brother's a teacher. I think it would be wonderful. And then tools where we use technology and innovators solve problems that protect our kids. That's I think a more practical way to address these problems through entrepreneurship and technology and systems and innovation than to just clutch our pearls or try to go back in time. Because that just won't work.
But it is good to see, again, an area where you can bring AI to bear to do good and protecting kids and authenticating. And frankly, probably long overdue. And again, where I am a big believer in competition and innovation, if there was a profit incentive to age gate kids, figure it out. Because there's no reason that this can't be done. And so competitive pressure to make it happen and consumer pressure to make it happen is good. And then AI is a fantastic tool to do it. If it can spot cancer in an X-ray, it can surely figure out that with 97% likelihood this is a 13-year-old girl and act accordingly.

Lucas Pasch:
And there's some hope there. And Google OpenAI, Roblox, Discord, they have banded together to do this. And I hope this isn't just, maybe this is naive, but I hope it's not just PR. I hope it's not just optics. I think AI driven safety tools have the potential to make a real difference, but their impact needs to be measurable. It can't just be a feel good announcement to appease lawmakers and kind of keep the lawmakers at bay. [inaudible 00:32:41]-

Mike Collins:
So, you have to watch that, because it can be that at times. We all have to be vigilant and really demand.

Lucas Pasch:
We are tech optimists here. Kids using technology I think is an overwhelmingly positive thing. But those digital spaces needed to be designed with their safety and not just their safety, but their development in mind. Something I thought about recently is when I was in high school, I was on a debate team and my partner and I would spend hours and hours and hours pouring over articles and developing these super tight arguments and crafting our narratives and practicing on each other. She says this, I say that and vice versa. And there are parts to me like, okay, high schoolers today, using AI to generate all of that is on the one hand I think damaging at times because it can ... They're not developing the tools they need to [inaudible 00:33:49]-

Mike Collins:
Their own software. It's their own software maximizing its own development, right?

Lucas Pasch:
Yeah. Are they creating a system for themselves where they're not teaching themselves how to actually hold a conversation as an adult? But on the flip side, AI can be incredibly enriching. They could find new arguments and narratives and paths and kind of enrich themselves and dig deeper than I ever was able to. So, I think we just got to create the right ecosystems to push this AI usage toward enrichment and as much as possible.

Mike Collins:
And again, I think a lot of these debates are often pushed to extremes, and I think the right answer is a muddy middle. And so I was hearing a debate on how free-range of a parent do you want to be? And I think there's a growing movement toward less helicopter more let the kids develop their own decision making, let them do what they want when they want, eat what they want, and let them learn to own all of their own decisions. And taken to extremes, I think that that can be a little nutty. And I think the command and control parenting where the kid never develops any of those independent decision-making abilities and to make mistakes and to learn from those mistakes and to have agency and obviously the difference between a three-year-old and a thirteen-year-old is huge there. But I think that also applies to technology and education and learning. I mean, again, in my era there was that debate about calculators, believe it or not, which is outlaw calculators in schools, because what if Mike is in the woods and can't do long division?
And I do think you want to be able to have your own brain be capable of doing some basics. And there are things about communicating with another human being and developing an ability to empathize and to write and to communicate and to speak and to ... I think those things regardless of AI, but to say that those tools are all bad and that we're not going to allow them when they're going to live in a world where ... Again, I was in the car with my wife and we're just literally asking kind of an audio version of ChatGPT question after question about what is the history of 21 gun salutes?
And they answer was there, and we're talking to them. And then going through my own family history where my grandmother taught in a one room schoolhouse with nine grades and an outdoor bathroom, and that was 75 years ago. And so crazy, the state of change in technology and what parents have to deal with very different in kind of a moving target. So, Lucas, it's been a good tour. We've had great conversations. I've enjoyed it. I think we've covered some important topics. It'll be fun to look back in five years to kind of what we were talking about, what was on the agenda for these conversations. And I look forward to kind of getting you back in the mix down the road.

Lucas Pasch:
Sounds great. Well, I would love to be back sometime. Thank you for having me on these last couple of months. It's been a lot of fun and yeah, well good luck to the next [inaudible 00:38:21].

Mike Collins:
Yeah, we'll carry the torch forward. All right, we'll talk again soon. Thank you Lucas.

Lucas Pasch:
Thanks Mike.

Mike Collins:
See you.

Lucas Pasch:
Take care.

Speaker 1:
Thanks again for tuning into The Tech Optimist. If you enjoyed this episode, we'd really appreciate it if you'd give us a rating on whichever podcast app you're using and remember to subscribe to Keep up with each episode. The Tech Optimist welcomes any questions, comments, or segment suggestions. So, please email us at info@techoptimist.vc with any of those and be sure to visit our website at av.vc. As always, keep building.