Jesse Proudman - Is Washington’s millionaire tax driving innovators away?

Another Washington tech entrepreneur says the state’s new millionaire tax is pushing business leaders to leave for places like Texas. Could higher taxes and growing regulation weaken Washington’s reputation as a hub for innovation and startups?

Jesse Proudman is founder and CTO of the privacy focused AI platform Venice.ai. He joins the show to discuss why some entrepreneurs are reconsidering staying in Washington, concerns about the state’s new millionaire tax, and what the changing business climate could mean for jobs, investment, and the future of the tech industry.

Transcript

SPEAKER_00 0:01

Welcome back to the Lars Larson Show. It's a pleasure to be with you. And I'm always glad to get to your phone calls and emails, and I'll do that in just a moment. But imagine this across the broad sweep of the United States, there are some states that have become very, very friendly to business. And there are other states, they tend to be the blue states run by Democrats, run by Democrat governors, Democrat legislatures, and the like, and they have become decidedly antagonistic even toward business and especially toward startups. So I look forward to the opportunity to talk to a tech founder who's just decided to pack up his bags and point his moving truck in the direction of Texas. Is uh is that part of the reason or part of the outcome of what's happening when blue state governments decide we want so much money that we want more rules, more taxes, and everything else, and they're turning themselves from a place once friendly to business and especially to new business startups, to becoming uh anti-business even. I thought we'd talk about that with Jesse Proudman, who is founder and CTO, Chief Technology Officer of the privacy-focused, a focused AI platform known as Venice AI. Uh Ms. Proudman, welcome to the program.

SPEAKER_01 1:14

Thanks for having me.

SPEAKER_00 1:15

So tell me about uh from so my audience knows, what is Venice AI?

SPEAKER_01 1:20

Yeah, Venice AI is a privacy-focused uh AI platform similar to ChatGPT. So we founded the company on the notion that it's semi-dystopian, that a small handful of tech companies have a collection of everybody's most intimate thoughts, and we felt like there should be an alternative platform where you owned your data, and we don't have any record of what you uh send or receive from our platform.

SPEAKER_00 1:42

So, how protective are you? I mean, how much can you protect data? Because I assume once I've typed something or posted something online, it's pretty much out of my hands and subject to capture one way or another, either legitimately or illegitimately. How much can Venice.ai protect folks?

SPEAKER_01 2:00

Yeah, great question. We have three forms of privacy on the platform. So we have anonymized access to the state-of-the-art models. You can use anthropic, you can use ChatGBT, and your identity is masked. We then have private models where we have no record of the data at all whatsoever. So everything is stored on your computer or your phone that's processed on our servers but never retained. And then we have truly encrypted end-to-end inference where you can ask questions. It's encrypted in your device and only decrypted on the browser. There's no way that we can intercept it. Uh so it depends on what you're looking to use the platform for, but we can support all three.

SPEAKER_00 2:34

How do you end up policing that? Because isn't that a question for most social media that you have to police uh both the content and the people who are posting it as well?

SPEAKER_01 2:43

Yeah, we have built a pretty sophisticated set of image filtering routines. So child pornography is the one tenant that we subscribe heavily against. We uh have an incredible set of technology there. But the rest of the conversation, we think of Venice as a tool. Like you can go to the library and do research, you can go to Venice and do research. In the same way you can go Google things uh and find results there, you can use Venice and find results. And so we we believe that people are adults and they have the right to use tools accordingly.

SPEAKER_00 3:12

Now, I'm talking to Jesse Proudman, who's founder and chief technology officer of the privacy folks focused AI platform known as Venice AI. You, if you're quoted accurately, you're you once described the state of Washington where you started your company as a startup sanctuary. Was it and is it any longer?

SPEAKER_01 3:32

Yeah, I I've been here for 28 years running companies. You know, I grew up in Tacoma. Uh, I remember being in middle school and I had to do a report on the startup community in Seattle. So we drove up and met with a number of founders on the waterfront, and I just remember being so enamored uh and excited about what was possible here. And that's really what kicked off my entrepreneurial career. So I started my first company when I was 13. I've been running companies ever since. Venice is now my my third company here that I've operated from the state, and we've sold two prior companies uh to acquirers. Um it up until uh really until COVID has been a phenomenal place to run uh startups. We've had uh a very supportive entrepreneurial tech community, we've had great investors, uh, and it's an amazing place to live. And and then for whatever reason, sort of beginning in the middle of COVID uh over the last number of years, there's been this rising sense of uh of sort of hatred and and uh disdain against the entrepreneurial community and the tech community in in the area, uh, and it it's really made it quite frankly an unpleasant place to do business.

SPEAKER_00 4:34

Well, and in fact, is is that embodied for in for example, a couple of people come to mind in my mind. Kathy Oakle in New York State, who said, Oh, well, if all you people are just gonna pack your bags and go to Florida, fine, goodbye, get on the bus. And similar comments from Katie Wilson, somebody who's never really had a real job in her life and still depends on her parents to support her, the mayor of Seattle, who said, Okay, bye-bye. And and that seemed to, to me, to embody the kind of, I don't care if you stay or not. Did it to you?

SPEAKER_01 5:05

Yeah, that yeah, absolutely. And that was the breaking point for for many folks in the state. You know, I I think everybody that I know that is an entrepreneur, they they love it here, uh and we all want to build our businesses here. But when your government is actively uh working against you, uh and when they're excited at the proposition that you're gonna leave because of being targeted, uh like it it's unreasonable and it it really is uh a strong motivation to look elsewhere in this country.

SPEAKER_00 5:31

I mean, Jesse, I've got my own opinions, but tell me, where do you think that comes from? Because because the tech community, I mean, look, starting with Boeing a long time ago, then with Amazon or then with Microsoft, then with Amazon, and now all the others, including the smaller, lesser well-known companies, you would think that folks would say, This is the goose that lays the golden egg. We want to make sure that goose is very comfortable here and can lay all the eggs they want, and they've decided instead to strangle the goose, at least in my view.

SPEAKER_01 6:03

You know, I I've run so many businesses and never once uh running those have I just been able to will myself more revenue. I've had to go work for it, right? And so when that's your world uh and you have a spending problem, you have to figure out ways to cut. And the problem is that we now have uh a government whose philosophy, uh both a city and a state government whose philosophy is uh when there's a deficit, we'll simply raise our revenues. And so they never uh having folks who've never had to run businesses before, they they've never faced that reality that maybe you should operate within your means. And so it's just the sad state of affairs that we've ended up with.

SPEAKER_00 6:40

Well, and and I suppose even people in the tech community can overspend. I mean, we I I remember the 90s and all these companies that were saying our burn rate is nine million dollars a month or something ridiculous, and at the end of two or three years they burned up all the money, they've produced nothing. You have to also say, does this money actually turn into product that at some point we'll be able to sell? The government never has to do that. Your business does every day.

SPEAKER_01 7:05

Yeah, no, that's exactly right.

SPEAKER_00 7:08

So, what do you do? How do you get that, how do you get the folks in charge to actually understand? You can't just spend your way to oblivion and just demand more revenue and have the revenue never run out.

SPEAKER_01 7:20

Yeah, you know, I I think it's the whole process that they've enacted for this income tax uh has been quite fascinating. It's it's an end round around the voters. In ten uh different situations, voters have said they do not want an income tax in Washington. And we've ended up with a legislature that uh really has done everything in their power to find every sneaky workaround uh to avoid the vote of the people uh and to make this as as hard as possible. And it's all led by a gentleman, Jamie Peterson, who has said it's his intent to tax everybody in the state of Washington. Uh so like that's the the fundamental problem.

SPEAKER_00 7:57

We've got that is the problem. Jesse Proudman, who is Chief Technology Officer at Venice.ai, and his company is now leaving the Pacific Northwest. You're listening to the Lars Larson show.