Best of This Week in Startups: Week of September 21st, 2020

Episode Summary

Executive Summary: The episode centers on Jason Calacanis’s alarm over Trevor Milton’s comments about Nikola’s strategy, especially building a consumer pickup to attract investors rather than solve a focused product need. It then pivots into broader startup/media trends: defensibility, the future of venture capital, geographic migration away from Silicon Valley, and the rise of paid newsletters as legacy media weakens.

Main Topics: Nikola and Trevor Milton’s strategy (Priority: 5/5): Jason dissects a prior interview with Trevor Milton, arguing that Nikola’s pursuit of both hydrogen and EVs, plus a consumer pickup, looked bizarre and potentially manipulative because it seemed aimed at expanding valuation and investor appeal rather than product focus. Trillion-dollar ambition and market sizing (Priority: 5/5): Milton’s explanation for the pickup truck was that semi-trucks alone capped the addressable market, while a consumer vehicle could help build a trillion-dollar company. Jason frames this as delusional given the product was not yet launched. Stock manipulation concern (Priority: 5/5): Jason argues that building a consumer product explicitly to appeal to Robinhood traders and family offices sounds like using product design to influence stock demand, which he says borders on stock manipulation. Loom’s defensibility and B2B moat (Priority: 4/5): A separate interview segment with Loom’s Joe Thomas explains defensibility through product quality, brand, enterprise adoption, and switching costs, contrasting healthy startup focus with Nikola’s perceived scattershot strategy. Future of venture capital and Silicon Valley (Priority: 4/5): Jason predicts capital access will broaden globally by 2030, with more investors and founders operating outside Silicon Valley as regulation, crowdfunding, and regional tech hubs expand. Media disruption and paid newsletters (Priority: 4/5): The episode closes with Jason’s view that journalism is being reshaped by Substack-style subscriptions, but that audience fragmentation and subscription fatigue will limit how many writers can successfully leave legacy outlets. San Francisco’s decline and relocation trends (Priority: 3/5): Jason argues San Francisco is becoming less attractive due to cost, crime, and weak governance, and predicts migration to cities like Austin, Miami, Nashville, and Park City.

Key Arguments: Nikola’s pickup-truck strategy seemed less about core product demand and more about expanding valuation by reaching retail investors and family offices. A company valued above $1 billion before launch is, in Jason’s view, often either fraudulent or destined to fail. Trying to serve only the semi-truck market limits Nikola’s potential, but building a consumer vehicle purely to widen the investor base raises ethical and legal red flags. Loom’s moat comes from best-in-class product performance, brand trust, enterprise scale, and viral sharing inside organizations. By 2030, startup investing will be less geographically centralized, with more global access to capital and more pathways for ordinary people to become accredited investors. Legacy media is under pressure because ad economics are weakened by Google and Facebook, while paid subscriptions can work only when most content is behind a paywall. San Francisco will likely lose talent and capital to lower-tax, higher-freedom cities, while New York is expected to rebound more strongly due to its enduring cultural appeal.

Data Points: Nikola target valuation: $500 billion to trillion dollars - Milton says the company wanted to be worth this amount over 10 to 15 years. Addressable market cited: 90% of Americans - Milton argues semi-trucks alone are too narrow because most Americans will never own one. Consumer market excluded by semi-trucks: 10% of Americans - Used to justify why Nikola needed a consumer-facing vehicle. Loom enterprise usage example: 7,000 employees - Jason describes a large organization using Loom across many teams. Video volume example: 10 videos a month per user - Used in the enterprise adoption example for Loom. Annual video volume example: 70,000 videos - Jason estimates volume at a 7,000-user organization. Annual views example: 100 million views - Jason cites this as the scale of internal video consumption. Credentialed investors in the U.S.: 4 or 5 out of 100 Americans - Jason claims only a small fraction are accredited under current rules. Potential future accredited investors: 95% of people - Jason predicts the SEC may broaden access through testing or education. Subscription burnout threshold: 5 to 10 newsletters - Jason says this is about the upper limit most people will subscribe to. Content mix needed for paid media: 75%+ behind paywall; ideally 90% - Jason argues paid newsletters require most content to be subscription-only. Influence drop for paid writers: 1% or 2% as many readers - Jason says switching from free to paid massively reduces audience reach. Ad volume for podcast: 140 episodes per year - Jason references This Week in Startups publishing frequency. Paid-episode target: 120 to 130 episodes - Jason says that many episodes would need to be paywalled for Patreon to work.

Pivotal Quotes: "Our trucks are a gravy train with money." — Trevor Milton: Explaining why Nikola wanted to expand from semi-trucks into a consumer pickup truck. "If a company is valued at over a billion dollars before it launches its product, then there's a good chance it's either a fraud or it's going to zero." — Jason Calacanis: Jason’s core skeptical thesis about pre-product mega-valuations. "We needed to touch the consumer." — Trevor Milton: Milton’s justification for launching the Badger pickup to broaden investor and market appeal.

Implications: The episode warns founders against hype-driven strategy and suggests the future will favor focused products, broader global access to capital, and smaller but more sustainable media businesses built on subscriptions.