Compliance Startup Scandal... Is Delve Guilty? | E2266 - This Week in Startups Recap

Podcast: This Week in Startups

Published: 2026-03-24

Duration: 5204

Guests: Elizabeth Yin, Ryan Mahdavi, Seb Sheng, Gavin Zaentz, Pranav Ramesh

What Happened

Elizabeth Yin, general partner at Hustle Fund, and Jason Calacanis discuss the impact of AI on venture capital. Yin explains that AI advancements have lowered the capital needed for software startups, potentially reducing founders' reliance on venture capital over time. She also points out the challenges of maintaining a competitive moat in the rapidly changing AI landscape.

Ryan Mahdavi, founder of Ceel, shares insights into the controversy surrounding Delve, a compliance startup accused of producing fraudulent SOC 2 reports. Delve allegedly created 500 boilerplate reports with identical errors and no auditor findings, leading to public criticism. Mahdavi reveals that industry insiders had noticed red flags about Delve's practices months before the scandal broke.

Seb Sheng, founder of Brick, introduces his startup's approach to reducing energy costs for buildings and data centers. Brick uses a combination of physical hardware and AI to connect with HVAC systems and optimize energy use, charging clients based on the savings generated. Notable customers include JLL, Hilton, and Lucid Motors, with an annual recurring revenue of $450,000.

Gavin Zaentz and Pranav Ramesh from LeadPoet demonstrate their lead generation technology, which operates on the BitTensor network. Their system sources and validates leads through a distributed network of miners, significantly reducing the cost per lead from $2-$3 to three to five cents. The duo's project is part of a larger effort to commodify digital services using BitTensor's economics.

Jason Calacanis discusses his investment strategy in Tau, a crypto project that creates subnets for entrepreneurs. He mentions that the market cap of Tau ranges between $2 to $3 billion and expresses optimism about its potential growth. Calacanis compares Tau's future prospects to those of Solana and Ethereum but notes it likely won't reach Bitcoin's scale.

The episode wraps up with a discussion on the risks and rewards of crypto investments. Calacanis shares his philosophy of treating such investments as learning experiences and emphasizes the importance of honesty in startup pitches to avoid securities fraud. Elizabeth Yin highlights the importance of technical aptitude and domain expertise for startup success.

Key Insights

• AI advancements are reducing the capital needed for software startups, potentially decreasing reliance on venture capital over time. Elizabeth Yin emphasizes this shift, noting that AI tools allow founders to build more efficiently.
• Delve, a compliance startup, is embroiled in a scandal over allegedly fraudulent SOC 2 reports. Ryan Mahdavi explains that the reports contained identical errors and lacked auditor findings, raising questions about Delve's practices.
• Brick, founded by Seb Sheng, uses AI and physical hardware to optimize energy use in buildings, offering significant cost savings. Their model charges clients based on actual energy savings, with an ARR of $450,000 from customers like JLL and Lucid Motors.
• LeadPoet leverages BitTensor's distributed network to drastically cut lead generation costs. Gavin Zaentz and Pranav Ramesh have reduced the cost per lead to as low as three to five cents, showcasing the potential of blockchain technology in digital service commodification.