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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN. Tuesday, 05/12/2026. We are live from the TBPN Ultra. I'm the temple of technology, the fortress finance, the capital cap. I'm boycotting.
Speaker 2:John's boycotting the soundboard. The soundboard.
Speaker 1:We have a great show for you today, folks. We have a bunch of guests and a bunch of news stories to go through. Of course, the trial is ongoing. Did you say that this might be the last week of the trial? I thought it was a four week trial, but it sounds like it might wrap up.
Speaker 2:Are they ahead of schedule?
Speaker 1:Todd, do you know?
Speaker 3:Yeah. Mike Isaac said it might end this week. Might end I assume just because they're getting through the, like, you know Yeah. Depositions, whatever, faster
Speaker 1:than Yeah. I mean, it seems like Ilya has gone. Gone. Mira's gone. Deposition Sam, and Siobhan Zillis.
Speaker 1:And then Sam's on the stand right now, I think. Mike Isaac is live tweeting it. So we'll run through that. We will also run through the run of show and what Brain Grill wrote in the newsletter this week this morning. Sam Altman took the stand in the OpenAI versus Elon Musk trial this morning.
Speaker 1:Just as a reminder, here's what's at stake per The Wall Street Journal. Musk is suing OpenAI and its leaders Altman and Greg Brockman for allegedly manipulating him into giving tens of millions of dollars to a nonprofit organization only for them to turn the AI lab into a for profit venture. Musk is also suing Microsoft, OpenAI's largest investor, for aiding Brockman and Altman in their alleged deception. So a big point big turning point in the trial was last Wednesday when former OpenAI CTO Mira Moradi and former board member Helen Toner gave testimonies about the events leading up to the November 2023 failed board coup that were critical of Sam Altman's leadership style in Candor. They call it the blip where Sam was out and then back very quickly with a couple other people stepping into CEO for just a few days.
Speaker 1:But last week, OpenAI side also began to land some punches on Musk. Earlier, testimony from Siobhan Zilles and, Greg Brockman also had already suggested Musk was not just defending a pure nonprofit vision. He explored scenarios where OpenAI might become a part of Tesla, where Altman might help lead Tesla AI, and where Musk could retain deep control. Brockman also testified that Musk supported a for profit conversion if Musk could control it, according to including a version tied to raising money for his Mars ambitions. Yesterday, Microsoft CEO Satya Nadella and OpenAI cofounder Ilya Sutzkever took the stand.
Speaker 1:Satya largely buffed OpenAI's side defending Microsoft's partnership with the company and saying that Musk never contacted him to complain about the deal violating any agreement Musk had with the with with OpenAI's nonprofit despite Musk having Satya's number. Ilya testified that he spent a year compiling a 50 page document documenting Sam's manipulative behavior but also said he never promised Musk that OpenAI would remain permanently nonprofit. Also it came out in the trial that Sotzkover's stake in OpenAI is probably worth around 7,000,000,000, which probably complicated how the judge and jury feel about his own motivations. So the story is since Marotti is first, the trial became a referendum on Altman's trustworthiness, then it became a referendum on whether the 2023 board was brave or incompetent. Then Microsoft came in and tried to make it look like it was the stabilizing partner.
Speaker 1:Now Altman has to personally answer the core questions hanging over the whole case whether OpenAI's evolution was a necessary adaptation to build frontier AI or a betrayal of the nonprofit mission. Musk says he funded the trial is expected to conclude this week. You can Max,
Speaker 2:Zeph pulled out a quote from Ilya
Speaker 1:This is the meme.
Speaker 2:Explaining why OpenAI has a for profit. And he's he I guess, yeah, was was playing in I don't think intentionally playing into the meme potential, but certainly that's how it played out. Ilya said under oath in a federal court, if there's no funding, there's no big computer. Max S says in the running for quote of the year.
Speaker 1:If there's no funding, there's no big computer and you need big computer if you want big AI.
Speaker 2:Very Yasin funny Yasin says bro walks around like he knows someone is going to make a movie about it. Probably thinks of quotes that are gonna sound good at movies to help Christopher Nolan in the future. In fact, I bet Christopher Nolan is messaging him quotes to say as an early investment.
Speaker 1:Oh, yes. The Iliad. That's what they're calling it. Well, Sam Altman takes a stand in Musk versus OpenAI. Mike Isaac has a live blog going on X under Rat King with lots of with lots and lots of side notes about his diet for the day.
Speaker 1:He seems to have continually be depending on a single banana for sustenance, which I'm surprised by. But let's run through some of what Mike Mike Isaac is finding and saying. Where where does this start? In the coffee line now. It's so confusing because he buys a butt pillow in the car.
Speaker 1:Okay. I'm gonna
Speaker 3:go back
Speaker 1:to the other one.
Speaker 2:Ready? Forgot
Speaker 1:it? No. I think he got it, but he's very upset. There are men you will get there's many twists and turns in the Mike Isaac saga.
Speaker 2:I mean, it's really the meta story
Speaker 1:Yes.
Speaker 2:You know, happening
Speaker 1:around the trial. Potentially bigger.
Speaker 2:Potentially bigger.
Speaker 1:Yeah. I wonder yeah. Is there is there a world where Mike Isaac sues the the court for having uncomfortable chairs? Sued sue the federal government since it's a federal courthouse. So OpenAI begins questioning Altman much in the same way that the plaintiff's side had questioned Elon Musk, establishing that Altman, like Musk, has been enamored with AI for years and wanted to build inventive things with it.
Speaker 1:This is a very interesting tidbit from that that original, like, that viral quote from Sam where he's like, AI will probably destroy the world. Like, that wasn't that would that happened in 2015, it was an answer to a question of, like, what do you think the key problems to solve are? And then the next sentence in that quote that always gets clipped out is like, and I'm starting a company. Well, it's more of a nonprofit to to work on this problem exactly. Yeah.
Speaker 1:But that doesn't make it in. But so they were clearly both very interested in building beneficial AI, although they ultimately butted heads. And they were also very worried about Google Rat king, Mike Isaac says, theme of the trial is basically everyone hates Google.
Speaker 2:We know the origin of the rat king nick sort of moniker.
Speaker 1:You don't know what a rat king is? A rat king is where so many rats come together that they ball together into one single organism and become a rat king. I believe it's a reference to 30 Rock.
Speaker 2:It's a Asking chat.
Speaker 1:It's a bit. Anyway, Altman email from 2015. Been thinking a lot whether it's possible to stop humanity from developing AI. I think the answer is almost definitely not. If it's going to happen anyway, it seems like it would be good for someone other than Google to do it first.
Speaker 1:And so this was what Elon and Sam were talking about back in 2015. Author, status update, hungry, uncomfortable, hit points taking, tiredness, poison damage. DOTA mentioned again, and Sam had to explain the difference between DOTA, DOTA two and the five v five player game. You just keep going back to DOTA. Altman said Musk once said he would potentially pass control of OpenAI to his children upon his death.
Speaker 1:I would love to know more about what that means because if you fracture it into, like, 20 different children at a certain point, like, that can create a whole different dynamic of, like, succession. Right? As opposed to Well,
Speaker 2:something. Maybe he wants to set up a reality TV show Mhmm. Where they compete
Speaker 1:Maybe.
Speaker 2:To take over the company.
Speaker 1:So I I think this is new, but there's an old email that says Altman might have joined the board of Tesla as part of old AI discussions. Also came with a nascent threat of Musk doing this AI work inside of Tesla. Very, it would be a shame if you didn't accept my offer sort of moves. The Tesla's offer the Tesla offer is interesting, says Mike Isaac. Musk's offer Musk offers a board seat.
Speaker 1:Altman says it was something he felt was to assuage concerns that Altman would have no direction direction over the development of AI if it were folded into Tesla. But Altman also said it appeared to be a nascent threat. If Altman had not accepted the idea, according to him, Musk hinted that it may have done that he may have done work developing AI on his own at Tesla regardless. And Mike Isaac gives some more context here. He says, this sort of talk is fairly commonplace these days on the battlefield that is Silicon Valley.
Speaker 1:Mark Zuckerberg, Meta's CEO, has in the past made overtures to companies he's interested in acquiring, though he is often more explicit about his intentions. If you don't take the deal, we'll come for you. Tony Soprano vibes. His back hurts. Continuing.
Speaker 1:Altman is criticizing stack ranking of engineers across AI labs, something Musk loves to do across his companies apparently, and something very common across big codes like Meta and Amazon. And also Microsoft is known for the for the stack ranking. They almost like invented it or or certainly popularized it throughout the '90s and 2000s, I believe. But Altman says AI engineering labs need more psychological safety. You have to be willing to let a researcher go off and try something random in the corner, very bottoms up.
Speaker 1:This is where the deep research project came from and a bunch of other AI breakthroughs came from. LMAO Altman says there was a meeting at Tesla during the evening about folding OpenAI into Tesla for AI research. And then a long, long period of time with Elon showing us memes on his phone. And apparently, the court reporter asked Sam Altman to repeat memes on his phone loudly. I don't know why they didn't hear it the first time, but Rat King, Mike Isaac is laughing I at am going to have Sam Altman stating memes on his phone into a booming courtroom mic playing inside of my head on repeat for the week.
Speaker 1:Memes on his phone in all caps. Getting hungry. He only had a banana this morning. Mike Isaac is suffering. His stamina points are draining.
Speaker 1:And he says, l l e mail between Altman and Siobhan talking about how to handle Musk and Altman telling him about a Microsoft investment. So Microsoft's going to invest. How how should we tell Elon? Altman narrates the email verbatim. Hopefully, it's easy.
Speaker 1:Cross fingers emoji because you have to read it out. So really funny to hear cross fingers emoji in the court record. Alman is going through his real first postmortem of his firing. Appears to have gone through all five stages of grief multiple times over the course of five days. What are the five stages of grief?
Speaker 1:Stages of grief.
Speaker 2:Cope, seethe.
Speaker 1:Cope, seethe, mold. Denial, anger, bargaining, depression, and acceptance. Yeah. That is that is actually cope, seethe. The five day period is what is referred to internally at OpenAI as the blip since it was a brief intermission for what it's worth.
Speaker 1:He said Altman said, I had poured the last years of my life into this. I was watching it about to be destroyed. There was something appealing about going to work at Microsoft. I was also very angry, hurt, and upset. It felt like an incredible betrayal.
Speaker 1:It was definitely one of the hardest times of my life. Allman finally broaches the issue of his widely rumored untrustworthiness. Clearly, there were misunderstandings in a breakdown of trust, he said, but with but with what comes of a bit of a practiced humility in his voice, I was not trying to deceive the board. I feel badly for the misunderstandings, but that was never my intent. This goes to the heart of how Musk counsel has tried to portray Altman across the entirety of the trial, a fundamentally slippery operator who says one thing to one party and something else entirely to others.
Speaker 1:OpenAI's rebuttal to that line of thinking has been to depict a board of directors at OpenAI rife with dysfunction. And as Microsoft Satya Nadella put it earlier in this week, directors who are operating from amateur city. Interesting. Taking shots at the board. Okay.
Speaker 1:Sam is giving a full jury Sam treatment, again, to bat back against Musk's picture of Altman as a serious liar. If I knew how difficult and painful this was going to be, I never would have tried, but I'm very glad I did. Opening eyes done. Cross examination begins. Stephen Molo, lust, lead Musk counsel who has the flare for dramatic will probably give us fireworks.
Speaker 1:And this is continuing. He says, oh my god, Molo, are you completely are you completely trustworthy? Altman says, I believe so. Molo says, do you always tell the truth? Wow.
Speaker 1:This is getting heavy. It's all about Musk's counsel painting Sam as a liar. Brutal. Altman is on the defensive, but taking more of a muted tone with some attempted humility in his voice. There's very clear contrast with how Musk appeared combative on the stand.
Speaker 1:Interesting. Cross examination is basically Musk's lawyer, Molo, reading off a list of questions saying, hey, bro. Do you remember do you remember all this messed up stuff you did? And all of them saying, no. I don't know.
Speaker 1:Not true. No? Absolute chaos. Well, you can follow along mike isaac. He has a whole thread and he's live posting.
Speaker 1:And I believe that there's a New York Times live blog as well that you can follow along with. Although the live blog does not have nearly enough snack updates. But anyway
Speaker 4:Should we talk about SPVs?
Speaker 2:Can you
Speaker 1:cover this? Yes. Let's move over to SPVs, the special purpose vehicles Posts are From rocking the valley right now. People are raking in the dough with SPVs. Yeah.
Speaker 1:So Not everyone's happy
Speaker 2:about it. Yeah. We can actually put go down a little bit and pull up this post which has since been deleted. Oh, really? The post said a few days ago, simply brokering an anthropic secondary deal made me more money than my entire net worth from working in my twenties.
Speaker 2:This is insane. It is especially insane because this is not legal. It is insane to post.
Speaker 1:Is it not legal?
Speaker 2:Yeah. So you need a broker dealer license broker securities.
Speaker 1:Yeah. That's right. That's right. Well, I mean, she didn't say that she doesn't have one. She might.
Speaker 2:Very very unlikely. It's Yeah. It's very burdensome. It just the compliance Yeah. To actually get your own broker dealer.
Speaker 2:Yeah. Even there's people that I know that just do secondary transactions. Yeah. They don't even have their broker dealer license. They work under a firm Yeah.
Speaker 2:That does. They basically cut like contract with a firm. Yeah. So they're kind of like an almost like a real estate agent working under a bro
Speaker 1:I'm I'm smelling an intern challenge. Tyler?
Speaker 2:Get your broker dealer
Speaker 1:license.
Speaker 2:Figure out a way to use AI to bring down the compliance burden.
Speaker 1:Slash goal. Throw that slash goal down. Get me a broker dealer.
Speaker 3:X high
Speaker 1:x high 5.5 codex. Yeah. And try and try and get your broker
Speaker 2:So let's see what it does. Yeah. Turns out that if you want to broker securities Yeah. Transactions Yeah. It is there's a big regulatory burden Yeah.
Speaker 2:For good reason. Right? Yeah. We're talking about, you know, transactions that are Yeah. At the scale of high end residential real estate in this case.
Speaker 2:Yeah. You know, if if this individual was maybe getting like a 5% fee
Speaker 5:Mhmm.
Speaker 2:On the deal Mhmm. Paid in cash, Who knows? It could have No. Could have been
Speaker 1:wait. There is another take here, is that there's there's there's there's the term brokering, which requires the broker dealer license. But there is also the format where you set up an SPV. The SPV takes in money from an investor and then buys secondary from someone who has the right to sell it, maybe an investor who is not subject to the the form that we saw Anthropic put out. Right?
Speaker 1:And in that case
Speaker 2:We'll get to that.
Speaker 1:We'll get to that. But hypothetically, there are SPVs that they are not technically brokering the secondary deal, but they are facilitating it. And they do take a fee. Right? Because SPVs often have fees associated with them.
Speaker 1:And that does not require a broker dealer license. Right?
Speaker 2:So it's possible. The the straightforward interpretation of the Post Yes. Is that they had some sort of side letter, which was like, yeah. I can find you I can find you a buyer. If I can find you a buyer for a 100,000,000 of your shares, you give me $5,000,000.
Speaker 1:Yeah.
Speaker 2:Yeah. Right? That that happens a lot but it it usually and hopefully is happening through through Legal channels.
Speaker 5:Yeah.
Speaker 2:Dealers. So this seemingly prompted both
Speaker 1:Oh yeah. I think this is what started it. Right? This must be what's very because that post really really matter.
Speaker 2:More specific language Yeah. On their site saying Anthropics said unauthorized Anthropics stock sales and investment scams. Yeah. And said, basically saying any transfer or sale of Anthropic stock or any interest in Anthropic stock that has not been approved by our board of directors is void and will not be recognized on our books and records. Mhmm.
Speaker 2:And so, yeah, typically yeah. Typically, like, these are there there's so many ways to, like, transact Yeah. Without informing the company. Sure. Right?
Speaker 2:A common one would be, you know, futures contract. Yep. Basically selling the right to the investment and the future performance.
Speaker 1:Yeah. And so I think the futures, the economic exposure enthusiasts or the futures contracts teams would say that, well, we didn't there was no sale of the stock. We didn't transfer the stock. And it's not a direct interest in the stock. And so it doesn't need to be approved by the Board of Directors.
Speaker 1:And the board of directors would say, absolutely not. That doesn't count. You think you found a workaround and it doesn't count in this world.
Speaker 2:But Yeah.
Speaker 1:That is going to be, you know Yeah.
Speaker 2:So the funny thing is there's there's these sort of digital asset equivalents like people Some of put out comments. Basically, meme stocks around
Speaker 1:Yeah.
Speaker 2:That that are trying to track overall interest or the overall valuation of these companies. They sold off which is funny because I don't believe they're actually tied to any Yeah. Real underlying equity.
Speaker 1:And and even So it's purely sentiment based. And even and even in the case that they were, like, saying that they were tied, it was typically, like, one one to 5% of the fund in Anthropic or OpenAI And or and they were like already well disconnected from the fundamentals of the book value. Right?
Speaker 2:Yeah. So I'm I'm trying to think through how this plays out. And overall, I think the reaction from the Internet was like being more dramatic than maybe maybe is necessary. Because already, like, if you're if you're, let's say, an early investor in Anthropic Mhmm. And you at some point sold your shares, you didn't go to the board and get permission Mhmm.
Speaker 2:But you structured some deal to sell your shares. You get your shares back. That is so so Win win. Waiting. Well, waiting for for that.
Speaker 2:Yeah. On one hand, neither party, if you bought the shares or you sold the shares, neither party is that incentivized to go to Anthropic board and be like, hey, I'm really sorry. Like, we did this. It was against. Because on one hand, like, there's probably some scenario where the the the investor or the Anthropic employee could get their shares, like, voided or reclaimed in some scenario.
Speaker 2:So they don't necessarily want to do that. The investor is like, well, I bought these shares, and now they're worth a lot more, so let's just, like, be chill and let this play out, and we'll we'll all forget about it. Right? But there is a scenario where the the seller tries to then make the case of, oh, actually, I'll just give you the money back because now the stock is appreciated so massively.
Speaker 1:Sure. Sure.
Speaker 5:Sure.
Speaker 2:There might be a weird But but what ends up happening is like there's sort of this like legal tension. Right? Tension between both these parties and then there could be some incentive. Again, the person that bought the shares at a lower valuation wants to just let it ride. Yeah.
Speaker 2:But then the but then somebody might be like, well, I kind of would happily ride up another 20 x or But something like then if this starts going if once it goes into like an actual complaint or a lawsuit, then it becomes public. And then you have this third party in there which is anthropic, is like gonna just be like, hey, like you guys have been messing around, like this isn't this isn't cool, this is against against, you know, multiple sort of agreements and and terms. Anyways, it's gonna be very messy, right? There's
Speaker 1:These already blog been posts are not new rules. It's merely they are publicizing rules that
Speaker 2:are probably already Exactly. In the stock Yeah. Because if you invested earlier, you're an employee, you should know all this, Yeah. Which isn't a surprise. Right?
Speaker 1:Well, it's possible that very early investors don't have transfer restrictions for some reason. I don't think so. No. It's pretty standard.
Speaker 2:No. You always you always set this up up as a company because imagine you have an early angel investor and your company does well and they just sell it to somebody who you don't like. Like, part of the reason to be private is you control who
Speaker 1:deal is unique and every deal gets negotiated points. And there might be at some point when some investor and employee was like, I'm not joining unless you give me this. And they're like, okay. Yeah. We'll get we'll pay you less, but we'll give you this.
Speaker 1:Yeah. Maybe. There's always like horse trading, double trigger, single trigger.
Speaker 2:Yeah. But it would be People think it would be for different
Speaker 1:I I agree with you. I agree
Speaker 2:with you. So anyways, who knows how many transactions there's actually been? Yeah. Right? I would expect like certainly like I don't know.
Speaker 2:There could be like when you actually look down through all the trees of SPVs and SPVs A lot. There could be what what
Speaker 4:A lot.
Speaker 2:10 over 20,000 It's not individual don't know.
Speaker 1:Cab driver telling you about the SPV that they got into yet, but it's like close to it. I mean, there was the story of the guy who was like selling his house for anthropic secondary. Right? Like, there's a lot of examples of this.
Speaker 2:Oh, that's gone too. Imagine the record updates. Like, you'll be able to look at the deed or whatever and be like, oh, who's the new owner? Oh, you work? You're an early No.
Speaker 2:Like, so that No, that whole transaction doesn't really work?
Speaker 1:Oh, yeah. That's extremely public.
Speaker 2:Yeah. Yeah.
Speaker 1:Yeah. That's what more complicated. Yeah. Yeah. Very odd.
Speaker 1:Well, let's break it down for the frog and toad fans, the children in the audience, because Frankie over at Paradigm put it in terms even a child could explain, potentially a four or five year old. So if you're familiar with just Frog and Toad and you don't know anything about all the buzzwords we've been dropping for the last five minutes, you can think about it this way. Frog and Toad, the loved children's book. Frog put the shares of Anthropic or OpenAI in an SPV. There, he said, now we can transfer these shares freely.
Speaker 1:But Anthropic can still exercise its transfer restrictions, said Toad. That is true, said Frog. The Frog and Toad, it's a great one. It's a great one. Is there anything else we need to talk about Ankur says, if Anthropic deems all secondary sales of Anthropic stock should be voided, does that mean the original buyer retains financial interest even after selling it away?
Speaker 1:Lawsuit territory. Yeah. There's gonna be a messy thing. People have been talking about unwinding s SpaceX triple a or SPVs for a long time.
Speaker 2:Yeah. That's gonna be a billion dollar that's gonna be almost a billion dollar industry.
Speaker 1:Yeah. We need to get the mac that we need to get the Macrium clip up again. It goes viral every time we talk about SPVs. What does Mike Isaac say? He says, yeah.
Speaker 1:Look all the PrivCo's draft this language to scare employees who don't know better from trading on secondary markets and from buyers seeking those shares, and yet SPVs find a way. Funny to see the saber rattling in Twitter accounts doing hyperbolic posts though. And so it'll be interesting to see, like, how far does the legal implications, how far do they actually go? Well, over at a different AI lab, Mira Moradi, who was just was Mira on the stand? She was actually testifying in person or was she just video deposition?
Speaker 3:When I saw her, which was last Wednesday, it was just deposition. Oh, just I don't believe she actually has testified in the trial
Speaker 1:It was Siobhan that was on the stand.
Speaker 2:Correct.
Speaker 1:Got it. Okay. Well, Meera is cooking over at Thinking Machines Lab, TML launch interaction models with a delightfully concise YouTube video that we should play so that we can watch this. Miramaradi says on Axe, Today, we are sharing our work on interaction models, a new class of model trained from scratch to handle real time interact natively instead of gluing it to onto a turn based one. Let's play the video.
Speaker 6:Hey. I need your help with something today. You ready?
Speaker 7:Absolutely. I'm ready. What's up?
Speaker 6:Yeah. So we're giving an announcement today, and I've got two of my friends coming to help. Every time one of them enters the frame, I need you to say, friend.
Speaker 1:Look at those speakers. Got it. Insane setup audio file. Cool.
Speaker 6:So we've got a new system for full duplex audio and video, which means that you can stream input into it in real time, and it can respond to you even while you're speaking to it simultaneously. How does that sound?
Speaker 7:Sounds like a solid setup. Full duplex with real time interaction is super useful.
Speaker 1:It seems faster than the original voice mode, which was lamented by the viral Instagram reel producers.
Speaker 6:Can you translate in in to in English in real time for my friend and for audience?
Speaker 7:Absolutely. I'll translate as you go. Today, we're taking a look at our preview I
Speaker 1:saw or I heard about a version of this in China that's a mask that you wear that translates everything you say out of a speaker on the front. And I was hearing this, and I was just like, why is this not in America? This seems so sick. Like, hear about the AirPods, but then you so the example was a mom in China teaching her kids English. And so she basically wants to be talking to them in English constantly, but she doesn't know enough English to teach them, But she wants them to learn.
Speaker 1:And so she will, I think, wear
Speaker 2:Put on the mask.
Speaker 1:No. It's literally a Bane mask. It looks exactly a Bane mask.
Speaker 5:Yeah.
Speaker 1:You merely adopted English. She was born in it or born in the AI translation minds. So she wears this Bane mask that does the live translation out to her kids. Her kids speak back to her in English. Smart headphones translate
Speaker 2:metal that wraps around?
Speaker 1:I don't know. I couldn't find it. I was listening to it on a podcast, I didn't have any visuals. But we gotta find this thing and get a pair in America. Because in theory, we could do the whole show speaking Chinese to each other and the audience would hear Chinese, but we would be hearing English that we talk to each other.
Speaker 1:Woah. Isn't that cool?
Speaker 5:Powerful.
Speaker 1:Yeah. So I would be hearing English on a massive delay probably. And but I would be speaking Chinese as it comes out of my Bane mask. And and it was just a whole story. The whole the whole thrust of the The New York Times daily was, like, the optimism of of AI.
Speaker 1:The optimism in China around AI. Just tons and tons of examples of of, you know, everyday people being like, oh, yeah. Like AI is amazing. I'm teaching my kids English. They're gonna have a great life.
Speaker 1:And like, I would not be able to do this before and now I can just do this. And there's like so many examples of that and it's exactly
Speaker 2:David says the moment Jordi gets a live translation button, it's over. Yeah. We're not that far away from me being We're working on that right
Speaker 3:now actually. Yeah. For Are you serious? I guess. But it's more
Speaker 1:Oh, yeah. For guests.
Speaker 3:For that mask, I would actually be very surprised if that's like real or or at least if the audio sounds very good.
Speaker 2:It'll be because
Speaker 3:like you you can just look at like, okay, what are the best like real time translation models? What are they like API prices? They're like not super cheap. So you can't do it locally, which means it's somehow in the cloud. Right?
Speaker 3:And and just like even the best models are there's still some delay and they're just basically now getting to a point where it like sounds like a real person and not like super computer Yeah. Yeah. Yeah. This guy's audio.
Speaker 1:It has a it has a clanker dialect.
Speaker 3:Okay. Yeah. Maybe. But but just like getting the the latency down is like extremely difficult because people have been working on this for, I mean, this is
Speaker 1:like You don't think Google can
Speaker 5:do it
Speaker 1:on device at all?
Speaker 8:What if you basically At
Speaker 4:some point,
Speaker 3:you can, but I think it's still like
Speaker 1:very Phone ASIC for this one model. You take the llama three version of it. You bake it down. The huge battery pack. You're wearing a whole jetpack full of batteries to power the h 100 in the back.
Speaker 1:It's on device inference, but they didn't say how big the suit is. You have to wear the Kinect for the mask. Yeah.
Speaker 4:It's like
Speaker 2:the Nathan No. It's like the Nathan for you, the Chili suit.
Speaker 1:For sure It's an NVL 72 that you're just like dragging behind you like a washing machine. Anyway, we have our first guest of the show, Doomberg, the anonymous poster and analyst with us in the waiting room. We'll bring in Doomberg to the TBPN Trial. Doomberg, how are you doing? Stunning.
Speaker 7:Hey, guys. Doing great.
Speaker 1:Thank you so much for taking the time. I love an animated avatar. Can you what can you tell the audience about who you are, why you chose, anonymity, pseudonymity, any of that, just as a way of an introduction?
Speaker 7:Sure. Brief intro. First, thanks for having me. Of course. Great to be here.
Speaker 1:Thank you.
Speaker 7:Yeah. We are a anonymous team of former industry executives that write about the energy markets.
Speaker 1:K.
Speaker 7:When we launched Doomberg five years ago this month, we had nothing. And so we decided to build Doomberg on Twitter back then. Good decision. The choice came down between another middle aged white guy in a tie
Speaker 1:Yeah.
Speaker 7:Or a green chicken. And you can't be remembered if you don't stand out. And so that decision actually accelerated our early growth. Then once a brand
Speaker 9:A 100%
Speaker 1:believe it.
Speaker 7:Kind of kind of blows up. Yeah. We observe other other Twitter accounts de anonymizing, and it kinda destroys the brand mystique. So it's nothing more than that, really. No.
Speaker 7:Just
Speaker 1:the chicken green?
Speaker 7:Well, another master stroke of marketing by our co founder and editor in chief.
Speaker 1:Love it.
Speaker 7:So our ideal clients have Bloomberg terminals.
Speaker 1:Oh.
Speaker 7:And the colors on the Bloomberg keyboard are pretty iconic.
Speaker 1:I get it.
Speaker 7:And and the most dominant color on that keyboard is is a close proximity to the green that we currently wear.
Speaker 2:I love it.
Speaker 7:You know, so yeah, it's just a the a brand is the gut feeling you induce in people when they interact with your product. That's right. If our ideal clients have a Bloomberg keyboard and they see the green chicken, you know, Doomberg chicken little kits of terminal was our first
Speaker 1:Yeah.
Speaker 7:First tagline. And they don't know why they like it. It's some combination of the colors and the stunted eyes Yeah. We think. Yeah.
Speaker 7:Yeah. Works. And then when you got a winner, know, just keep riding it.
Speaker 2:I love it. I love I love I love combining this this high love Yeah. Right, which is like, you know, serious content with
Speaker 1:Sorry. I yeah. I I want to talk about energy and AI, but I also want to talk about the like the workflow here because like, am I just watching like a looping animated GIF or m p four file or can you actually puppeteer this like a v tuber or have you considered
Speaker 7:is very low tech.
Speaker 1:Okay.
Speaker 7:There's no new Coke yet in design. Okay. This is a GIF Yeah. Animated as our background Okay. On Zoom.
Speaker 1:Cool.
Speaker 7:And I'm speaking to you through a Roland VT four. Oh. Slightly modified in real time.
Speaker 1:Sure.
Speaker 7:The latency is perfect.
Speaker 1:Yeah.
Speaker 7:Build on your last discussion. Yeah.
Speaker 1:We had a couple guests come on and want to do voice changers no one's landed the plane like you have. So congratulations and for Technology dialing
Speaker 7:is one of the five pillars of any business and we decided to invest in our technology plan to execute the vision of the green chicken. Come on. Mean, works.
Speaker 5:Every time
Speaker 7:I see advertisement of all these serious finance people in suits and ties speaking at a conference and then a green chicken sitting there.
Speaker 1:I'm going take the suit
Speaker 7:off makes real quick. Me makes me laugh every time.
Speaker 2:Yeah. It's so good.
Speaker 1:Talk about the other four pillars.
Speaker 7:Brand channel technology, demand creation, and operations.
Speaker 1:Okay. Makes sense.
Speaker 7:And we have a plan for each. Mhmm. One of the hallmarks of Doomberg's execution on Substack is that we openly shared how we built Doomberg from the beginning. Sure. In a series of monthly pieces called the work of my life.
Speaker 1:Yeah.
Speaker 7:And it's been fun. Been a fun ride. We've got almost like 400,000 email subscribers now.
Speaker 1:That's amazing. Wow. Congratulations.
Speaker 7:Crazy. How makes this Crazy run.
Speaker 1:You said it's just a couple of people. Right?
Speaker 7:Our official statement is that you could count them on one hand with a few fingers left over.
Speaker 1:Sure. Okay. I like that.
Speaker 2:Leaving some ambiguity but with a few is a a few
Speaker 1:Yeah. Three? Yeah. Let's yeah. Let let let's start with, let's start with energy markets.
Speaker 1:Let's start with the Strait Of Hormuz. I've heard it's closed. Is that good? How bad are things? How serious is the situation in the oil and gas markets?
Speaker 1:And then we can go through some of the knock on effects. But just in terms of like, like, you know, a lot of people have been tracking this, but where are we on the cutting edge right now in terms of where this all goes?
Speaker 7:Yeah. We're launching a piece tomorrow. Look, if you had given us this fact set in February and asked us to bet the over under of $1.50 on oil, we would be homeless because I would personally have mortgaged the house to greedily bet more on the over
Speaker 1:Right.
Speaker 7:And and would have lost. I think one of the great mysteries of this whole affair is why is oil still so cheap? Yeah. And it's a really interesting mystery. Go ahead.
Speaker 1:Yeah. And and I that feels like that's true for also just like the broader market. Like, the market is not processing in the same way. And maybe it's like the AI narrative which we can get into, but it feels like there's a very, very big historically significant thing happening and everyone's just sort of like closing their eyes. I don't know.
Speaker 1:How do you explain it?
Speaker 7:So we've got a deep think on it. Nobody knows. So one of the things about the oil markets is everybody lies. That's the
Speaker 5:first thing.
Speaker 7:And one of the sort of theories I was bouncing around with a guy who traded oil for fifty years over the weekend was there was an enormous excess of oil all of last year. China bought most of it. They lied about it, and they're bleeding that into the market now to keep a lid on prices.
Speaker 1:Got
Speaker 7:it. That's one sort of conspiratorial look.
Speaker 2:Yeah. And and sorry, just to double
Speaker 7:Yeah.
Speaker 2:Ahead. Tap there. You're saying they were lying about their the the levels of their oil reserves? So saying like, you know, basically under underselling Yeah. So there's
Speaker 7:a lot dirty oil. There's a lot of dirty oil on the market, and they were buying it, you know, sanctioned oil, shadow fleet, Russian oil, Iranian oil.
Speaker 1:Sure.
Speaker 7:And and so you
Speaker 2:Yeah. Because back at the beginning when it first closed, weren't people saying China has forty days of oil or something like something to
Speaker 7:They they have 1,800,000,000 barrels is our best guess. They probably bought a million or 2,000,000 and a half barrels a day extra all of last year.
Speaker 1:Wow.
Speaker 7:And they're using that for geopolitical leverage now. They're cutting refined fuel deals with Australia. They're helping out their neighbors, looking like the mature, stable, don't have a truth social account to post on during the day. You know, ascending power with Trump going there this week. Yeah.
Speaker 7:Look, I just want to say, in a world where oil is more expensive, oil doesn't matter like it used to.
Speaker 4:Mhmm.
Speaker 7:It used to be 55% of global energy. Now it's 30 and change. And so the stock market, look, the AI revolution is powered by coal in China and natural gas in The U. S. And natural gas in The U.
Speaker 7:S. Has been made cheaper by this war for reasons that we can explain. And coal is basically insulated from oil. And so I don't think it's all that crazy, of course, with the benefit of hindsight. Yeah.
Speaker 7:Doesn't mean we would have predicted a $100 oil sixty days into the Strait Of Hormuz being closed or seventy five days, whatever it's been. But I I anybody saying that they would have not predicted a calamity is lying.
Speaker 1:Going back in time, are you learning any lessons or pulling any historical lessons from the previous wars in The Middle East? I grew up at a time when the war in Afghanistan, the war in Iraq were breaking out. And the protest signs said no blood for oil, which is a completely reasonable thing to say. But I was surprised by the fact that if you look at the oil markets during that time, it feels like even if you took the cynical approach that The US was going there to steal the oil, it didn't seem like that oil was successfully stolen and flooded the market. And I'm wondering what else you've learned from history and the various conflicts in The Middle East about oil prices that you can, like, draw on today, if anything.
Speaker 7:Well, the for that war, James Baker went went around the world and told all of our allies to start pumping Okay. To to insulate
Speaker 1:Okay.
Speaker 7:The world from it. The real comparison everyone draws is the Iran embargo following the war in the Middle East in 1973.
Speaker 1:Okay.
Speaker 7:But the big difference between then and now, aside from the fact that oil just matters
Speaker 1:less So
Speaker 7:is that there's an organization called the IEA that exists. And they have worked with the developing world to ensure that countries have a stockpile of oil for this exact situation. And they flooded the markets shortly after the Strait was closed with 400,000,000 barrels. There's still, when you do the math, oil prices should be higher, and they just aren't. So there will be lots of time for an after action report when this war is done.
Speaker 7:Mhmm. But for AI and for the tech world, natural gas in The US being cheap and coal and China being cheap means those data centers are humming and all is good.
Speaker 2:What's driving natural gas prices right now?
Speaker 7:Great question. So the shale revolution in The US not only made The US a net oil exporter, it twinned the production of natural gas and oil. It used to be that natural gas was drilled for on purpose, oil was drilled for on purpose. And now in the shale patch, in the same well, you get natural gas and oil. Got it.
Speaker 7:Especially in the Permian. Yeah. We're drowning in natural gas in the Permian. So when the strait is closed, oil spikes, drilling goes up, and you've got all this natural gas to get rid of.
Speaker 2:Yep. Got
Speaker 7:it. It's coproduction economics, which is actually not widely understood. And it that's like pulling on our industry days. Whenever you have to compete against a co producer, it's terrible. Because if either of the markets are hot, they're producing too much and they're flooding the market with the unwanted byproduct, which happens to be what you make.
Speaker 1:Yeah.
Speaker 7:And so when the war broke out, we correctly predicted that natural gas in The U. S, despite a global energy shortage would prices would go down. And in fact, as we're talking today, natural gas is trading in The U. S. For like $3 a million BTU, which is about $18 a barrel oil.
Speaker 7:Yeah. And in the Permian Basin, it's negative spot prices. They're giving it away. Yeah. They're drilling for the oil.
Speaker 7:The natural gas is a nuisance. And So it's possible there's
Speaker 2:a super intelligence that's already in control that wants to feed on natural gas and so here. Playing, yeah, this four d chess.
Speaker 7:This is the ultimate, you know, Claude agent Conor. Yeah.
Speaker 1:Yeah. How is China is China potentially like the biggest loser here? Because I imagine that coal and oil cannot be co produced in the same and so you don't have that dynamic playing out. Are they being squeezed? Like, who who is suffering the worst from the closure of the Strait Of Hormuz, I suppose?
Speaker 7:Europe and Australia. China is going to come out the big winner in this.
Speaker 1:Okay. Why?
Speaker 7:A variety of reasons. So first of all, China has been building out something we've chronicled to the tune of hundreds of billions of dollars, the ability to convert coal into oil products.
Speaker 1:Oh, interesting.
Speaker 7:The only two regimes to have done this historically are the Nazis and apartheid South Africa. It's quite the exclusive club the Chinese have decided to join. Yeah. You do that out of necessity when you're worried about losing access to oil. Mhmm.
Speaker 7:It's very expensive, very environmentally taxing. It's not something you would do spontaneously to create shareholder value. Yeah. You do it for geopolitical insulation. Mhmm.
Speaker 7:And but also China's sway in The Middle East is going to grow Mhmm. If Iran continues to resist The US Israeli strikes and controls the Strait Of Hormuz because Iran is being backstopped by Russia and China. And so in a world where The US has lost some geopolitical leverage in a zero sum game, China benefits. And we'll see what happens this week. I think this is going to be a historic summit.
Speaker 1:Yeah. That's what I was going to ask you next. What are you expecting?
Speaker 2:Before we before we dive into that, I did want one one more question around oil. Sure. How are you forecasting whether we get high prices or massive shortages with, you know, oil, you know, everything from gasoline to other oil based products. Because I think they're I think like a lot of people right now are are kind of projecting, hey, we're just gonna pay more at the pump. But then there is some scenario depending on how things play out where you actually have, you know, you can't just go to the, you know, we were talking yesterday, and, you know, maybe there's a scenario where depending on the last digit of your license plate, it's an odd or an even number, you can only go on certain days, and you get actual rationing.
Speaker 7:That's not going to happen in The US. It depends where you are. So The US is a net oil exporter. It's a bit complicated. We're detailing it all tomorrow.
Speaker 7:Trump is playing a careful game where he is allowing the export of gasoline, diesel, and jet fuel to try to help the rest of the world, and The US is still well supplied, but is paying more. So we see $5 gas, $67 diesel. Trump could reverse that at any time just by limiting the exports of refined products. He's choosing not to yet. But if you're in Australia, you're already in situation where you have to have urgent intervention by the government, who who have done a great job, by the way.
Speaker 7:And Europe, you know, when you don't make your own hydrocarbons and you're beholden to the rest of the world, well, if everybody turtles up and says, we're not going to export until our domestic, you know, demands are met, then you will see real shortages and no amount of price will clear. And so North America is fine. If you draw a circle around Canada and The US, the two countries are self sufficient in oil, diesel, gasoline, jet fuel, fertilizers, wheat, corn, sulfur, helium, all the things that people are worried about globally. We have not yet instituted export controls. But before the stocks would run dry, especially with the midterms coming up, you would assume that Trump and Kearney would collaborate on such a such an action.
Speaker 2:Have you been tracking the diet coke shortage?
Speaker 7:I have not been tracking the diet coke shortage.
Speaker 1:Apparently, 8% of aluminum goes through the Strait Of Hermes.
Speaker 5:Oh, I
Speaker 7:did. And so the
Speaker 1:cans are in short supply now.
Speaker 2:Yeah. And this is top of mind top of mind for us because John could run to the to the studio if he didn't have gas, but you know, the show wouldn't be possible without him going through three or four of these Well,
Speaker 7:I I got one word for you too. Yeah. Plastics.
Speaker 1:Plastics. Not gonna be popular with
Speaker 2:technically can get a Diet Coke. You can get a DC.
Speaker 1:You could just buy a two liter bottle or maybe fountain. Maybe fountain is the future.
Speaker 2:It could. Fertilizer was was my last last question around, yeah, how, you know, how are you I don't know if covering, you know, future, you know, food prices, commodity pricing, etcetera.
Speaker 7:We we sure are. Again, North America, both in, well, in nitrogen and in phosphorus and potassium, the big three. Canada and The US are self sufficient. Canada has the world's biggest, most fantastic potassium deposit, potash deposit up
Speaker 5:in Saskatchewan.
Speaker 7:We wrote about this a couple of months ago before the war. The U. S. Ammonia is basically just a natural gas play and The U. S.
Speaker 7:Is drowning in natural gas. Oh, sure. Through the Haber process, you just take natural gas and long story, but you make ammonia that way. There will be shortages of fertilizer around the world. There will be food shortages.
Speaker 7:And all that really means is it will be more expensive for the rich countries and there won't be food in the poor countries. This is what we see historically, is the market clears
Speaker 5:Mhmm.
Speaker 7:And the poorest countries in the world suffer, and the rich countries complain.
Speaker 1:Black pill. Do you have any white pills? Is there a good ending that you are guiding towards optimistic about? Is there anything that you're optimistic about right now?
Speaker 7:Yeah. Okay. I think a major deal is in the works between look, I don't think Trump would be going to Beijing. I know we wanted to talk about that. Yeah.
Speaker 7:Trump wouldn't be going to Beijing if there wasn't a major deal, and the list of CEOs going with him
Speaker 1:Yeah.
Speaker 7:Is quite the tell.
Speaker 1:Yep.
Speaker 7:Broadly, you don't have the president of China and the president of The United States get together in such a high profile visit without a bunch of stuff worked out in advance. And I would I personally, being vehemently anti war, would love to see a solution to Iran and Ukraine all tied up in a nice bow. And The U. S. Focus on its neighborhood here in the Western Hemisphere.
Speaker 7:And we get back to growing and computing and competing and drilling for energy and, you know, making money in stocks and, you know, let the president make all the money he wants in crypto. I don't care. But another war in The Middle East was not on the It's not on the bingo card for us in 2026.
Speaker 1:I don't think many people voted for it. Well, let's shift over to what's happening in America if we can get back to domestic policy. What are you tracking on the AI build out? How important is energy? Everyone's been going back and forth on the chip bottleneck, the energy bottleneck.
Speaker 1:The chip bottleneck, the energy bottleneck, do you have a viewpoint? Has it evolved? Where do you see the build out going these days?
Speaker 7:Yeah. We're we're an energy newsletter, and so
Speaker 5:Yeah. I'm
Speaker 7:holding that hammer, all we see are energy nails
Speaker 1:That happens.
Speaker 7:Around the AI space. Look, I think natural gas is so cheap and abundant. So then, okay, what's the constraint downstream from being able to produce electricity from natural gas? That's gas turbines sold out. So then, can I make electricity with anything other than a gas turbine?
Speaker 7:All right. Well, solid oxide fuel cells by Bloom Energy, their stock is booming. Okay. If I wanted to get sophisticated, half the energy used at a data center is for cooling and the boy is an awful lot of natural gas in British Columbia. And last I checked, it's colder up there than in Texas.
Speaker 7:And so maybe I might want to look at British Columbia, Alaska, Iceland, to cold build my data centers. And you're seeing some of that. Yeah. But there's just so much fuel that has become almost taken for granted in The U. S.
Speaker 7:That this is the fuel of choice. And now you're running into grid connection issues. And so one of the pieces we wrote, again, before the war changed everything, was called irreconcilable differences where we predicted that most data centers would have to go off grid because like the clearing price for retail electricity is not what a data center is willing to pay for it, and no politician can absorb those increases for industry and for you and I at home. And so we sort of envision these buildings where natural gas goes in one end and data comes out the other. Yeah.
Speaker 7:And everything happens under the same roof.
Speaker 1:So in your
Speaker 2:What's the what's sorry to interrupt, but what what's the downside there? Hasn't it been, in in some instances, generally beneficial to bring a bunch of new energy production onto the grid, just due to, yeah, the yeah. More supply overall?
Speaker 7:Prices are set at the margin, and the rate of demand for electricity for data centers is growing faster than the bureaucratic ability to bring on new grid connected power. Yeah. The way in which the grid is operated, managed and built out in this country would shock you. And it is utterly incongruent with the Silicon Valley break it, you know, move fast and break it mindset.
Speaker 2:So A little Freudian slip there. Sometimes just break it. Just break it.
Speaker 5:Yeah. Well
Speaker 1:Yeah. You might be moving slow, but you're still gonna break it.
Speaker 7:That's the massive unfunded. I'll just pour money on the founder until they get it. Look, we wrote a piece called the exception that proves the rule where we we showed that, you know, Elon Musk built this major natural gas power data center for XAI in Tennessee by breaking all the rules, right? He just built his own natural gas power plant.
Speaker 1:Yep.
Speaker 7:And it proved to us, the exception that proves the rule, that the current rules need to be broken for stuff like that to happen. And so you since Microsoft and Google aren't ever going to behave like Elon, you need to do this stuff off grid. And so there's a hybrid solution where most of the power is off grid, but they still connect for backup.
Speaker 1:And
Speaker 7:you build these at old shutdown coal plants. That's another trend that we're seeing in Appalachia near the big natural gas So shale patches up you have an old coal plant with all the connections there that's shut down and you build new natural gas plants there powered by local natural gas. And you use the connections to the grid for backup. Yeah. But you're not leaning on the grid for most of the power, and that's kind of a win win.
Speaker 1:Walk me through what an off grid natural gas powered data center in Alaska would look like? I'm a big Alaska fan, but do they have natural gas deposits up there that you would need to go set up drillers and then Like, how would that work? And what what is the timeline for that versus something like nuclear?
Speaker 7:Much much quicker depending on bureaucracy. Okay. One of our operating mental models is that The US has an infinite supply of natural gas.
Speaker 1:Really?
Speaker 7:It's just a matter of going and getting it. Yeah. And so if you made it for example, if if we made it a let me put it this way. If Trump issued a nationwide price floor of $5 a million BTU for natural gas, The US would be the drilling stampede that would erupt would blow the world's minds. The US produces so much natural gas.
Speaker 7:I'll just give you some numbers. The entire European Union's dependence on Russia before the war was like 15,000,000,000 cubic feet per day, and The US alone produces a 110,000,000,000 cubic feet per day.
Speaker 2:Wow.
Speaker 7:It's just this mammoth machine of fuel. And so, yes, there's plenty of natural gas in Alaska. You could build it in British Columbia. Sure. Next door, a little to
Speaker 2:the infrastructure, south like, isn't part of the strategic importance of The Strait that they have the infrastructure to, what is it, liquefy the natural gas so it can be transported? Are we are we way behind on on that infrastructure?
Speaker 7:The US is stampeding to the lead in this regard. So when I was in industry But Freeport LNG
Speaker 2:But when did that stampede start?
Speaker 7:2015.
Speaker 2:Okay. So it's been in process.
Speaker 7:When I was in industry, Freeport LNG was meant to be an LNG import terminal. And then the share revolution happened. So just to go back to those same numbers, by the end of this decade, The U. S. Plus a sprinkling from Canada and Mexico will have gone from zero LNG export capacity to 30,000,000,000 cubic feet per day.
Speaker 7:And in Qatar today, about 15% to 20% of the world's LNG capacity sits at a place called Ras Laffen. And a couple of trains were blown up there, two out of 14. But LNG is still a small part of the global natural gas trade. So the Strait Of Hormuz is not really a natural gas problem in the way that it's an oil, fertilizer, you know, refined products problem.
Speaker 2:Right.
Speaker 7:Qatar is, let's say, just to make the numbers round, Qatar's 20% of LNG and LNG is 20% of natural gas. That means Qatar is 4% of natural gas.
Speaker 1:What has the environmental pushback been around natural gas? It feels very intuitive. It's burning fossil fuel. Sure. It's not scarce, but it feels like it could create global warming, And yet I've been shocked that there's been so much focus on the water that's consumed by data centers because that feels much more plentiful and much much easier to keep on.
Speaker 2:There's a certain irony that fear around global warming has been replaced by fear around AI mainstream media narrative. Yeah. Yet the
Speaker 1:So Yeah. Basically, root causes the same.
Speaker 7:Yeah. There's always a fear campaign around whatever America's excelling at. That's sort of our mental model. Like, America's dominating with AI and data centers, we better whip up some fear.
Speaker 1:Yeah. It's really a tall poppy syndrome in our culture.
Speaker 7:It's, well, who knows, foreign actors who don't necessarily want to see The US succeed.
Speaker 1:Sure.
Speaker 7:So to your specific question, natural gas is super clean burning, produces the least amount of c o two per energy.
Speaker 1:That's good.
Speaker 7:In fact, while you can cook with it in your homes with no ventilation, nobody would say that you would bring your barbecue indoors.
Speaker 1:Oh, yeah.
Speaker 7:Which is basically coal. Right?
Speaker 1:Yeah. That's right.
Speaker 7:And so you you have natural gas in your furnace, and you have it on your stovetop, you have it in the restaurant.
Speaker 1:Mhmm.
Speaker 7:And it's just burning away nice and cleanly. There is one made up problem with it. Well, I say made up. There's if natural gas leaks, it's considered a very potent greenhouse gas. Methane leaks.
Speaker 7:They've even launched satellites to try to track where industry is leaking methane directly into
Speaker 1:Got it.
Speaker 2:The Amsterdam. Were talking with Will from Planet Labs. Oh, he was saying you can use, know, sort of like real time satellite imagery to track natural gas leaks and they've been pretty effective, I think, at helping countries and companies identify leaks. This
Speaker 7:will blow your mind. Natural gas is so cheap historically and such a nuisance that they would just release it and vent it into the air to get the oil. This is before the
Speaker 1:bigger plant. Right?
Speaker 7:People cared about methane leaks, to be honest with you. And look, this is a much much smaller problem in The US. US is very regulated. Environmental permits and controls are tough. Where it's a big deal is places like The Middle East, Venezuela
Speaker 5:Mhmm.
Speaker 7:Where there's, you know, weaker governments, weaker environmental controls.
Speaker 1:Yeah.
Speaker 7:But you can go online and find a bunch of people really hyperventilating about methane leaks.
Speaker 1:Who else is big in natural gas across the world? Like, who are they do you know what country is number two, three, something like that?
Speaker 7:Yep. I know them all. Yeah. So US is by far the biggest. Okay.
Speaker 7:Russia's number two.
Speaker 1:Oh.
Speaker 7:Oh, is that some kind of
Speaker 2:It's an eagle. That was an eagle for us.
Speaker 1:For America.
Speaker 7:Yeah. So chickens don't like eagles.
Speaker 1:Oh, no. Oh, no.
Speaker 7:Yeah. So you're kind of giggling, kind of triggering me over here.
Speaker 1:You have
Speaker 7:to be careful. So Iran, Russia, Iran's a big natural gas player. Interesting. Obviously, Canada is a growing natural gas player because of the shale patch they have up Australia is a big LNG exporter. Qatar is a big LNG exporter.
Speaker 7:But Russia is the second biggest. They probably produce about half as much natural gas as The US. Mhmm. And then, you know, a sprinkling throughout the old Russian the old Soviet Union, the Confederation of Independent States, I believe they're called now.
Speaker 1:What are you tracking on the nuclear side? Every time we talk to a nuclear founder, they're ready to run through walls. They're they're well funded. They're ex SpaceX, ex rocket scientists, geniuses. They're like then they're like
Speaker 2:is 2035.
Speaker 1:Yep. Is there any optimistic scenario where we get nuclear a little bit earlier?
Speaker 7:So there's only one way to do it, which is not seductive and doesn't require any technology, which is just build a lot of the stuff we already know how to build. So that's AP one thousands and can do reactors up in Canada. There's no like, fusion is a fake solution to problems that don't exist.
Speaker 5:Sure.
Speaker 7:Like, we don't really have a nuclear waste problem, and we don't have a meltdown risk problem with the latest designs.
Speaker 1:Yeah.
Speaker 7:And so all we have to do is build what we have, but that's not sexy. Mhmm. And that's not a technology story you can sell on Wall Street and Mhmm. Have your IPO and, you know Mhmm. So that that's our
Speaker 8:Well, there
Speaker 2:are some that are not trying to reinvent the wheel and are just saying like, let's just do more of what we already know. Correct. Whether or not they should be venture backed is another question.
Speaker 7:I think there's better use for venture money than nuclear. Yeah.
Speaker 2:Where is solar in all of this? How much out of out of all of your coverage, how much is dedicated to solar? I think that will
Speaker 7:We write about intermittent renewables from a pretty critical lens. Broadly speaking, there's an awful lot of misinformation and disinformation about solar. The biggest one is that the sun is free as though the price of a fuel is the only input into the cost to use it. Yeah. As we're learning with natural gas, it's free in the Waha Hub.
Speaker 7:Doesn't mean that you can buy your turbines and build your data centers. And the biggest challenge with solar is that sometimes the sun doesn't shine, and dealing with that intermittency is a real challenge. And the expenses associated with making room for solar when it's there and getting out of solar's way when it's really hot and the sun is really shining, but also standing in for solar when it decides not to show up for work. Those expenses are never ascribed to solar. They're just piled on to all the other technologies that have to stand ready.
Speaker 7:And so historically, whenever you reach a certain threshold of solar on a grid, things start to break. I could explain technically where that breaking point is, but it's probably beyond today.
Speaker 1:Doomberg, is the name Doomberg, like, reflective of your demeanor at all times?
Speaker 7:It's mostly tongue in cheek sarcasm. We're techno optimists. And we are defensive pessimists. We spend a lot of time pondering worst case scenario risk, then once those are properly abated, we feel that we're in a position to take more risk personally. I'm personally a prepper, for example.
Speaker 2:That's good to know. I wouldn't have guessed that Doomberg was a prepper. Actually, maybe
Speaker 1:I would.
Speaker 2:I had one question. You Sure. One last question, then I I know we're out of time. Would love to do this again soon. I enjoy talking with the chicken, although your eyes do make me kind of go cross eyed myself, which is a challenge.
Speaker 2:Do you believe that we've seen videos online of people filming data centers with generators outside them. They seem to be not exceptionally loud, but loud enough to be mildly annoying, lower decibel than sort of legal limits, but still maybe not something that someone
Speaker 1:wants Do in
Speaker 2:you think there's any innovation on reducing overall noise pollution on that front? Or is that to date, at least we talked to somebody yesterday who was like, that's at least my issue. But it feels like something that probably can and should be worked on. Yeah. In Alaska.
Speaker 7:Nimbeism is real and I don't think should be dismissed. And I think local concerns are always worth listening to, especially if you want to be durable as a good neighbor and as a as an industry that has, you know, persistence.
Speaker 2:Yeah. Historically, factories were very ugly, but they provided a lot of jobs. So Right. If you just come through and you're like, hey, we're gonna build a new factory, but it's not gonna create a lot of jobs Mhmm. That's not a super compelling
Speaker 7:pitch Right. For community. And it's going be loud, you know. So I I assume that the diesel generators are there for backup power predominantly.
Speaker 6:Oh, that's what
Speaker 1:we're looking at. Yeah. That's right.
Speaker 7:And I would suspect that there's all manner of venture backed companies pitching stationary batteries. A stationary battery for backup at a data center is a different problem set than, say, a battery for an electric vehicle, which gives you some more degrees of freedom and design than as because with a car, for example, you care a lot about gravimetric energy density, whereas you might have different CTQs for a battery setup to provide backup power for a data center. And so there's lots of people working on it. I see some private deals floating around in our own personal lives. Look, the speed with which this revolution is unfolding means that you're going to break a few eggs.
Speaker 7:Like we were talking about earlier, move fast and break stuff. It's happening, it's real. And you'll see local communities embrace it because there are jobs, construction jobs, and you know, so on that come with these things. They're not all yet staffed by robots.
Speaker 1:Chicken legs or both? What are we breaking down?
Speaker 7:I'm I'm in the egg business, you know. Okay. It's a renewable resource from where we are.
Speaker 1:It is a renewable resource. That's an optimistic
Speaker 2:Last last question. Do you think California will be producing more or less oil in ten years than it is today?
Speaker 7:Oh, way more. Yeah. They're they're heading for a big crisis, and, you know, California needs to drill more, refine more, and connect pipelines to Texas. And and I do think one of the big laments of the Trump supporters is that this Warner Inn may have squandered the opportunity to get domestic energy projects like that over the line where he had political wind at his sails. We'll see.
Speaker 7:But I think let's put this well, I'll leave you with this. Please. California has as much oil and gas as Texas. And the the reason why Texas is a global energy superpower and California is a flaccid energy vassal is little more than politics, and you get a big enough energy crisis, politics is easy to wipe away.
Speaker 2:Yeah. I I had the pleasure of having dinner with a guy who had basically like an oil drilling SMB in California for like a decade and then ended up shutting it down about a year ago because of some new regulations and he was just sitting there being like, I don't you know, just kind of at at a loss because he's like, we use so much oil. We Yeah. We depend on it. We should be making it here versus just importing it.
Speaker 2:So
Speaker 1:Well, thank you so much for coming on the show. This was a pleasure. Pleasure. And we appreciate
Speaker 7:it guys.
Speaker 1:Yeah. Rest of your day. We'll talk to you soon. Awesome.
Speaker 2:So much.
Speaker 7:Thanks, guys. Talk soon.
Speaker 1:There's a good note for the listeners. If you're looking to build a diesel refinery on Malibu, reach out to me. I'm happy to finance it. It won't be a problem. We'll build a massive diesel refinery right in Malibu.
Speaker 1:Jordy's not paying attention. Westinghouse, they make nuclear reactors. We are in an AI boom. We are in an energy crisis. What do you think the stock's done over the last six months?
Speaker 1:Down. Completely flat. Up point 4%.
Speaker 2:Interesting. Value.
Speaker 1:Anyway, we have our next guest, Sahir from Forus. He is the cofounder the founder and CEO. Welcome to the show. How are you doing?
Speaker 6:Good, guys. How are
Speaker 1:doing? Fantastic. First time on the show. Please introduce yourself. Tell us what you're building.
Speaker 6:Yeah. Thanks for having me. So today, we are publicly announcing for the first time our company Forus, which has raised a $160,000,000 from Thrive Capital, General Catalyst, Excel.
Speaker 5:This is It's a lot out of
Speaker 2:this What a You
Speaker 1:have coming out of stealth with a $1,000,000,000 valuation. Congratulations. That's amazing.
Speaker 2:I usually give this advice to founders. Yes. Like don't just talk about what you're doing until you're a unicorn. Just focus on the basics. Don't worry about the news.
Speaker 2:Don't worry
Speaker 3:about the media.
Speaker 2:No. It's actually true. Underrated strategy if you can pull it off.
Speaker 1:Yeah. But let's talk about what you're actually building. Talk about the business, talk about the development, maybe a little bit of history that went into building the company, start deciding to start the company.
Speaker 6:Yeah. Sure. So what we do today is we help people get access to medicine faster, easier, cheaper. Most impactful are people with high cost and complex conditions. So think things like autoimmune diseases, COPD, cancers, anything where the drugs are unaffordable without insurance coverage or financial assistance Mhmm.
Speaker 6:Or have complicated supply chains. Remind to get doctor and patient weeks of phone calls and research and paperwork, get their medicine on time and affordably. Mhmm. What we're doing is using AI to take on all that complexity and extract it from them to get their medicine without any of the burden falling on their shoulders.
Speaker 1:Yep.
Speaker 6:But we do all of that entirely for free. Okay. It allows us to build a large network of doctors, patients, and the data and systems between them. Okay. And we're gonna use that network on the other side of our business to partner with life science companies.
Speaker 6:Think companies like Pfizer, Lilly, Johnson and Johnson, helping them develop and bring to market new drugs faster and more efficiently. This is really a two sided model.
Speaker 1:Okay. Two sided model. I feel like every time we just talk to health care, it's like 10 sided model with, like, insurers and health care networks and doctors, and then the the hospitals have private equity backed, and they have a different set of incentives. Like, who who are you are you cutting anyone out? Who are you not interfacing with?
Speaker 1:Are you interfacing with insurance or not? Is that a deliberate choice? Will that change over time?
Speaker 6:No. We so that's actually part of why this is such an impactful product for the core users. So we sell the doctor's offices Okay. As free product to help them automate all the complexity involved in dealing with all these other pieces. So think the insurance companies, the PBMs, the pharmacies
Speaker 1:Sure.
Speaker 6:Any other other aspects. And, really, the goal is to automate every process that involves them working with those folks externally so they can focus on treating their patients and not have to worry about all that complexity underneath the hood. We interact with all those folks to kinda push things to the system, but it puts us in a position where we are kind of at the center of each individual transaction and have kind of a unique view into what's going on. And that's what sets us up then partner with these life science and biopharma companies Mhmm. To help them in a unique way on bringing to market new therapies.
Speaker 1:Have you developed fax machine super intelligence yet?
Speaker 6:I would bet that we have some of the best fax AI
Speaker 1:No way. And that's both on is that both on sending and then receiving and transcribing, OCR ing, and understanding and then putting in some sort of database? So, like, do are you bidirectional in your faxing?
Speaker 6:We are bidirectional. There's, like, a pretty decent chunk in transactions that can only go through fax.
Speaker 1:Yeah.
Speaker 6:In reality, fax is actually a, considered HIPAA compliant.
Speaker 7:Yeah.
Speaker 6:So you have a lot of leeway there as opposed to in other transactions, but it's also very reliable. If you can't get someone on the phone, you don't have their contact information, you can almost always find their fax in publicly. So despite the fact that it seems insane, it's a shockingly reliable form of communication in the system.
Speaker 1:Yeah. And so what else is is what else is enabled or accelerated with AI? Because I can imagine you can use AI to build, you know, business logic and software. Like, you can build SaaS faster faster for deterministic workflows. But then you can also do sort of agentic things.
Speaker 1:When I hear about like finding someone's fax number online, that sounds like, yeah, you could Google it, but that's usually a person. There's not really an API, but with an agent, there sort of becomes an API. And so where where are you doing agentic tasks on an ongoing basis versus using AI to develop sort of SaaS?
Speaker 6:Yeah. So there's really two layers we think about Yeah. And what makes the problems hard. The first is kinda what you're describing, a genuinely hard set of agent problems. You're navigating this multistep path dependent process where there's almost never an obvious correct answer.
Speaker 6:Mhmm. And so it's usually not even cataloged anywhere what you're supposed to do or what the right answer is. You're working with imperfect information every term. What insurance does someone have? What does it cover?
Speaker 6:What pharmacies work for this specific drug? What approval criteria exist? What medications have this person tried before? And you're interacting with all of that, like you mentioned, through faxes, phone calls, poorly designed websites, and scattered information.
Speaker 4:Mhmm.
Speaker 6:And so that's kind of one huge piece of it. The second is a set of really complex ML problems where you're using dozens, sometimes hundreds of pages of medical records per person to answer very precise questions about someone's medical history across thousands of medications and diagnoses, dozens of subspecialties, and tens of thousands of doctors who all document and write notes about their patients and diagnose them and treat them differently. And so that same capability is what powers everything from navigating insurance authorizations to identifying whether a patient might be eligible for clinical research. That system kinda never stops evolving. Right?
Speaker 6:New drugs, new guidelines, new insurance policies. And so as we're building and scaling, the complexity keeps increasing, and you're kinda constantly regionalizing everything you've built in your platform.
Speaker 1:Mhmm. Last question for me. Talk about the data side of the business. I imagine that there's you want every doctor's fax machine number. That's a data problem.
Speaker 1:You might be able to scrape it. You might be able to buy it. There's also the data that goes into maybe fine tuning models, maybe just setting up models for success, giving them the correct context. Like, what is the shape of the data problem and how is it evolving?
Speaker 6:Yeah. I mean, it's kind of like what you described. It's through every single step in the process. Mhmm. You can imagine where we sit, we see this from end to end.
Speaker 6:Right? So we see everything from the clinical information, how the doctor made their diagnostic decision, all the way through to logistically what got stuck in the system and prevented someone from getting their medication or results from it being late. All of that's really relevant in understanding not just a, how do we translate that into helping us automate more effectively and have more predictability in every step of the process, but also in then informing decisions that our partners are making on how to kinda move therapies forward in the research and development process, how to think about launching them, where to allocate their resources so those medications can reach as many people as possible.
Speaker 1:Got it.
Speaker 2:How big can the business be?
Speaker 6:So and there's two parts. Right? We think this can be the most important company in life sciences. Our goal number one is ubiquity. Right?
Speaker 6:Every doctor's office and patient in the country should be using our product. That position doesn't obviously just let us eliminate friction for more people, but it puts us in a position to accelerate every step of bringing new therapies to market on the other side. Right? When a new molecule is ready
Speaker 2:to test Do you become basically just like a is the legacy, like, legacy version of this and maybe in another industry like a distributor? Is that like the less
Speaker 6:Distributors are like a partial analogy, but, like, a lot of what we're gonna do is not the actual physical supply chain.
Speaker 5:We're
Speaker 6:really helping on all kind of decision and actions around that. So think about when you have a new drug. Right? There's a ton of stuff happening right now in ad drug discovery. All of that is translating into more and more hypothetical molecules.
Speaker 6:But how do we translate those molecules into production, real life mass market medicines? Mhmm. From the moment a new molecule is ready to test in people all the way through all those steps, you have to figure out, you know, how do you identify the right clinical trial sites? Which patients do you recruit are not not contaminated by other medications? When a drug launches, which doctors are the most patients that look like the patients that did best in the phase three trials and therefore the right, you know, early adopters and can benefit the most?
Speaker 6:As it scales, how do you kind of use real world usage to identify where there are new conditions, the same drug can be effective, or there are gaps in the market? That full loop from clinical development through mass market access hasn't really been possible before, and we think we can kinda be the main chassis through which that happens. Today, we are, as you can imagine, kind of growing in a ton of different specialties. And the kind of first specialty we launched, we're already kind of approaching a third of the country. So you can imagine, we really can get really far along and become the best partner to facilitate all these decisions.
Speaker 1:Well, congratulations on the progress, and congratulations on the round. Thank you so much for coming on the shop.
Speaker 2:Great Thanks for having me. Day of media. Yeah. What were you doing before this?
Speaker 6:So I used to work at this company called Oscar, you're familiar with it.
Speaker 5:Was that
Speaker 1:That makes so much sense. I thinking this whole time.
Speaker 2:Yeah. I was thinking this whole time. Yeah. Must have been an Oscar. Thrive universe.
Speaker 2:Yep. Thrive universe. Thrive universe. Cinematic universe. Great wine.
Speaker 2:Great wine.
Speaker 1:You and the SF Giants, similar portfolios. Fantastic. We'll talk to you soon. Goodbye.
Speaker 2:Cheers. Thanks, guys.
Speaker 1:Take care. Up next.
Speaker 2:Before our next guest. What do want here? We actually are are running behind. So we're gonna bring in the legend, the living legend, Sam Blond.
Speaker 1:Let's bring him in from Monaco. Sam, company's Monaco calling in from San Francisco, I assume. But get that cash register
Speaker 2:out a CRM. No. Don't count guys.
Speaker 5:Yeah. Great seeing you.
Speaker 1:Great seeing you. Thank you
Speaker 5:so much for having me.
Speaker 10:Of course.
Speaker 5:Round two.
Speaker 1:Round two.
Speaker 5:Oh. What
Speaker 4:Do you
Speaker 2:wait by by the way, do you leave
Speaker 5:Did did did you guys wanna hear the gong?
Speaker 1:Yes. You
Speaker 5:wanna hear the gong?
Speaker 1:You have a gong? Okay. Here. Show us the gong. You have a gong?
Speaker 1:Hang on. Let's see if we can bigger gong than us.
Speaker 7:You guys
Speaker 5:seen the gong? Oh. Yes.
Speaker 1:This is
Speaker 2:Hey, team.
Speaker 1:Let's hit the gong.
Speaker 2:Congrats, everyone. Okay. I have a question for you. Do you leave up the whiteboard behind you to just kind of torture and mess with your competitors? So they're
Speaker 1:like screenshotting it and trying to like
Speaker 2:you just
Speaker 5:It's it's mostly art point. It's kind of funny. It's like it is a cool it is a cool wall because it goes like all the way around.
Speaker 1:Oh, yeah.
Speaker 5:It's big. Like, whiteboard wall. There is something up here that still has dates from last October.
Speaker 1:Okay.
Speaker 5:So I don't know that it's like current currently functional, but It's seen some more. We use
Speaker 7:it every once in while.
Speaker 1:It's seen some more. But, yes, kick us off with the news. What happened?
Speaker 5:Let's see. Well, thank you for having me on. Round two. Great seeing you both. Always.
Speaker 5:And we were we're so fortunate. We launched in February. Things are going really well. Jack Altman was an investor through Alt Capital, and so he receives the monthly updates. We've known each other for a long time now.
Speaker 5:And recently, you know, the business is is performing, I think, better than we would have anticipated last time we caught up, which was mid February. And Jack reached out and said, We're interested in doing something with you and in this space. And we caught up, and I think this is just the dream round for us. We did Founders Fund in the series a. That's a firm that John, you and I have a lot of history with.
Speaker 1:Couldn't
Speaker 5:have dreamt a better round for the series a, and then we're we're repeating it with the b. I think both with Benchmark leading, Founders Fund tripling down, Jack joining the board. It's awesome. So I
Speaker 1:I thought this was an Ev Randall special. I thought you were just like, I got to make F some money, my former colleague. But interesting that it's Jack Altman. Makes sense though. I mean, Lattice, a lot of experience like adjacent to this space, a lot of career lineage there.
Speaker 1:But take us through the product. How has the company evolved? What's traction like?
Speaker 5:Let's see. Launched in February. We entered February pre revenue. We had some design customers. It's tough to do this thing where you like predict how the first few months are going to go because you have no data history.
Speaker 5:On February 10, literally no one knew who Monaco was because we didn't have LinkedIns that were up. We didn't have a website that was up. We went from sort of like this deliberate stealth mode with design customers where there were a small handful of people that we were partnering with to build the product, to trying to make as big of a slash as we possibly could. And I think, like, you know, we sit here three months later in May, and we sort of blew past all of the sort of business performance expectations that we had in that period of time, measured by, like, you know, number of customers, revenue, customer sentiment, which is is maybe the most critical of those things. But, you know, just sort of couldn't have hoped for a better start to the business.
Speaker 1:In go to market, in sales, I imagine that there's a ton of processes that you just want to make reliable, more efficient, all of that. And I'm sure you're executing on that. But I'm interested, has anything stuck out to you that's sort of like the Studio Ghibli moment for this sector? Like, you know, image generators came out. Was like, yeah, can make a picture of a horse or a cat.
Speaker 1:But then like there was this thing where it was like, no one really knew that that was coming and then all of a sudden it was like this delightful new experience. Now you can like turn yourself into a cartoon if you want. Is there some like net new process or like your customers when you see them use the product you're like, oh, they're doing things a little bit differently. It's not just sending the email. It's not just the CRM management.
Speaker 1:It's not just all the other pieces. It's something that like, oh, this is uniquely enabled by AI.
Speaker 5:Yeah. I think there there are three things that come to mind that differentiate Monaco Yeah. Relative to anything else in the market. The third one is sort of the like
Speaker 2:It will shock us.
Speaker 1:It will shock us.
Speaker 2:The third one will shock us. This is good.
Speaker 5:It'll be the like Ghibli moment. Perfect. Let's do it. It it that to use Coogan's language. Yeah.
Speaker 5:The first two and I I won't go like super deep on these things. I'll I'll time box this to thirty or forty seconds. Yeah. The first two, we're we're an all in one. So we replace traditional or legacy CRM.
Speaker 5:Yep. These are your Salesforce's, HubSpot's, Adios. Yep. And we also replace all the disparate tools that integrate to those traditional CRMs over APIs. Yeah.
Speaker 5:And so we're an end to end platform or an all in one, maybe like the rippling version for go to market. So that's like the first category. That in and of itself isn't like the Ghibli moment. Mhmm. The second category is that we are AI native.
Speaker 5:You know, just sort of definitionally, we started, let's call it post chat GBT. The way that we think about being AI native, agents are the first line of defense. The things that, historically speaking, sales users like me, people in rev ops, SDRs, those workflows that we were doing with manual or human labor, we now have agents doing. And you should think about the user of Monaco as having this front row seat to all of the work that the agents are doing on their behalf. So that's number two.
Speaker 5:The third thing, and this one is a little bit contrarian, like Peter ism, and it is maybe the thing that I think we have a unique competitive advantage in. It's very difficult for any of our competitors to get right or even be able to do. And that is, there's this thing right now that's like the forward deployed a the forward deployed engineer, the FDE, is like the most valuable asset in deploying AI successfully across enterprise. And you see these OpenAI and Anthropic investing billions of dollars in these almost Accenture style consultant type companies. Well, we sort of invented this concept of the forward deployed AE.
Speaker 5:Okay. And every customer that we have is paired with a startup sales expert, somebody that has deep experience doing startup go to market. You should think about a lot of our customers. These are seed and series a startups that, one, don't have a lot of experience in go to market, a lot of technical founders and technical early teams, and so this is a very complementary skill set. But two, just definitionally, they have no experience working with the platform and agents that we have in Monaco.
Speaker 5:And so that buffer, that layer between the customer and the technology itself, that is our forward deployed AE, that is some of, like, the secret sauce for us in terms of making Monaco work better than any of the competitors that you try and just like deploy these agents and the technology in the wild without anybody making sure that you're successful.
Speaker 1:All in one compound startup rippling philosophy. I imagine that eventually you'll get to a point if you're not there already where some big company will come to you and say, ah, but like we're not ripping out this thing and you have to build a connector. Do you have a strategy for that or is that a moment where someone comes to you and says like, yeah. We have this weird niche, like, you know, b to b SaaS product for just our industry that we need to keep around. Is your philosophy agents will connect or you'll just go and rebuild that?
Speaker 5:We have an open API.
Speaker 1:Okay.
Speaker 5:Read and write API. The ability to do clawed MCP. Sure. And so we will integrate and do integrate with third parties. Okay.
Speaker 5:Examples would be like, have a granola integration. We have a Slack integration. We have a G And Suite many more. We don't today have native sort of traditional CRM integrations. And if you think about the category of sales technology, the market leader today is Salesforce.
Speaker 5:And Salesforce is a system of record. And then you think about other system of record companies, there are some large players that exist in the space. Mhmm. The other type of sales technology company is a point solution. Mhmm.
Speaker 5:These are tools that integrate into the system of record. And if you think about the outcomes, the terminal values, the market caps of these point solution type companies, they are less interesting to us to be like I think this word is politically correct now. We don't want to be the tallest midget. We want to be the market leader in sales technology. And in order to be able to do that, we have to disrupt the system of record companies today like the sales forces of the world.
Speaker 5:But the space will become much larger than it is today because we are not just taking the IT budget away from companies that today are spending on platforms like Salesforce. We are taking the labor budget. And so Monaco is far more expensive than the traditional competitors that exist in the space. And it's because we're not a replacement for the traditional CRMs, we we're not just a replacement for the traditional CRMs. We were a replacement for you hiring a bunch of people to do this for you Sure.
Speaker 5:In a deeply integrated platform.
Speaker 1:Okay. Where can people go get go to get started? You're in public beta? Full print?
Speaker 5:We're in public beta. Okay. GA in the next couple months.
Speaker 7:Okay.
Speaker 5:I would love to come back.
Speaker 2:Yeah.
Speaker 5:So that that would be fun. We'll Gong
Speaker 2:Who's the best sales rep at Monaco?
Speaker 5:Who sells the most? Guys, I can't do that.
Speaker 1:You can't pick a favorite.
Speaker 2:You can't objective? Isn't
Speaker 1:There is an objective truth. Can't leak it right now. They'll get poached. Well, look them out to Hawaii.
Speaker 5:Yeah. Come on.
Speaker 2:Comes to him with the dolphins. Yeah. He'll do his little
Speaker 5:We we don't have a worst sales rep, but I I should say that name if we did. Oh, okay. Just if we don't want
Speaker 6:to be Yes.
Speaker 1:Yes. Yes.
Speaker 5:No. This is a little this is maybe like philosophically against what I would recommend for folks. We are in the fortunate position that we are in just inundated to an in demand. Mhmm. We're still on team goals.
Speaker 5:The whole team is like really working with one another just to try and manage the demand that we have. And so we actually don't even yet, to your point on like, isn't it objective? Yeah. Maybe we don't have a leaderboard. Yeah.
Speaker 5:It's just ball winning. So what you're saying
Speaker 1:is Mark Benioff has to buy
Speaker 2:a book. Got it. Has the the billboard campaign gone?
Speaker 5:It's great. You know, I think these things, we do we do the launch videos and a bunch of the, you know, launch posts and those sort of things that hopefully get amplified. We do the billboards. Our billboard strategy right now, we're just doing like a dollar symbol and then monaco.com.
Speaker 1:It's a
Speaker 5:little provocative. We have these big poker tournaments and a whole bunch more.
Speaker 2:Who won poker tournament?
Speaker 5:It was the CEO of Syndoso. His name's Chris Rudegarp.
Speaker 2:Nice. Nice. Another sales guy.
Speaker 5:So all of these things, it's sort of like one plus one plus one plus one. It it like equals 10. Like the billboards compound the a poker tournament that compounds the post, that compounds the truck that are driving. Today, we have a plane
Speaker 1:A
Speaker 5:plane? With a banner
Speaker 1:A banner.
Speaker 5:Trailing Monaco behind it. Love down the Bay Area.
Speaker 1:This is blimp adjacent. We're huge fans of this. Anyway, thank you so much Congratulations for coming on the
Speaker 2:on the and always
Speaker 1:Counting down the days till GI. Talk to you soon. Have a great day.
Speaker 5:You guys are the best.
Speaker 7:Thank you
Speaker 1:for having
Speaker 5:me on.
Speaker 2:Thanks, Sam. Goodbye. Yep.
Speaker 1:Up next, have Kevin Hartz from A Star. He's the cofounder and general partner.
Speaker 2:He's A Star.
Speaker 1:He is A Star. Is that why he named it A Star? He's like, I think of myself as a bit of a star. Kevin Hartz, welcome to the show. How are you doing?
Speaker 9:Hey, guys. I'm doing great. So great to see the both of you. First time on the show.
Speaker 1:Welcome to the show.
Speaker 4:That's that's
Speaker 1:crazy. I feel like We've talked about so many we we've talked about so many of your investments and so many of the projects you've Well,
Speaker 9:it's funny you say that because I'm I'm I'm sandwiched between Sam in Monaco and Judgment Labs and we have a A Star has a small check-in each one of those.
Speaker 1:So, it
Speaker 9:feels very very comfortable in
Speaker 1:this position. The man The man behind the curtain. With the curtain behind him actually. But that's not we're not here to talk about Judgment Labs or or or Monaco. We're here to talk about A Star.
Speaker 1:Give us the latest news. What is the update with the fund?
Speaker 9:Well, we've we've just announced today that that we've raised our third fund. It's 450,000,000. Let's do it.
Speaker 1:Okay. So seed fund, $450,000,000. So, like, one AI lab. Is that the plan? Or you're gonna split this up between, like, two companies these days?
Speaker 1:I mean, valuations are high, but what's the strategy?
Speaker 9:It's it's a good point. It it would be, you know, if if it was a a lab, it would probably be just about one company. No, we are sticking to our knitting. We are generalists. So, we're looking at all different types of businesses.
Speaker 9:Certainly, in this super cycle that we're having right now, it's driven by AI and the application layer of AI, and we're investing pretty aggressively in that space. But our checks tend to be 3,000,000 to $5,000,000 although we go higher up to 10 and so on. Now, certainly, there's a NEO lab that will raise a big round, but that's really in the 1%. We're still in this this core market.
Speaker 1:Yeah. Where where where are you fishing? Where what lakes are stocked these days? Are you fans of the mafias or the or the, you know, universities or the dropouts? Like, there's so many different pools of entrepreneurial talent.
Speaker 1:Where are you finding success at Seed?
Speaker 9:Yeah. That that's the right question is is how to source, this talent, how to be in front of everyone else, how to meet these founders when they're still working in their gigs or still in college or in sometimes even high school. I I will say ages have declined on average, you know, like you're now seeing more and more founders that are teenagers. Yeah. And, you know, I like to think of it as having, you know, seen like, you know, we had Bill Gates and Steve Jobs in the seventies when they were teenagers, they started their company and that was such an anomaly.
Speaker 9:And you fast forward to today and it's really dramatically changed. So, to answer your question, I think of folks like Corey Corey Levy Yeah. At Z Fellows who's just terrific at finding dropouts. And, you know, more and more, they're high school dropouts as much as they are college dropouts.
Speaker 1:Yeah. It's remarkable when you meet a founder and it's like Corey did the deal like three years ago and you're like, just getting started. He's a
Speaker 2:How are you thinking about incubations with this new vehicle? Is that gonna be opportunistic? Yeah. Do you do you expect to have it or do you expect to have a certain amount that you're aiming for? What's the philosophy?
Speaker 9:Well, incubations are I I don't like the term incubation. It kind of sounds like this sort of contrived venture. We like to find founders and spend time with them and help them kind of develop ideas. And we've done this a couple of times. We did this with a mortgage AI business that's run by a founder named Michael White who came out of Block.
Speaker 9:And that business has grown substantially. And we've done that very recently with a company called Soron, which is a physical So, security starting in the high end of alarm systems or monitoring systems. That is really just a bet on, you know, you see all this stuff happening in autonomy, autonomous cars and robotics, And a lot of money is invested in that space. And when we see that happen, know, that usually means there's, like, dropping price of LiDAR, cheaper sensors and the like. And, you know, that means an opportunity, in this case, in the home security space.
Speaker 1:Wait. Is there an application for LiDAR in home security that I'm not aware of?
Speaker 9:Absolutely. You if if you have sensors around LiDAR sensors, you can know exact distances. You can track objects more effectively in different weather. Okay.
Speaker 1:You see in the dark That
Speaker 9:doesn't become available when they're so expensive, but it absolutely becomes a very meaningful aid to understanding a scene when the price drops.
Speaker 1:That's fascinating. You're obviously have an incredible track record in Silicon Valley. But I'd love to know about the mood in among LPs around a $450,000,000 seed fund because we talked to a lot of the mega funds and then we'll talk to solo GPs. We had one on the show last week that raised a $50,000,000 fund. And I'm wondering about are LPs looking for a particular strategy with that size of fund?
Speaker 1:What's the appetite? Like how do you talk about like where you're positioning for the long term? Just any of the dynamics around that particular fund size at this particular time in the market.
Speaker 9:Yeah. Great question. It it was a step up. Our first two funds were about 300,000,000 each. Yeah.
Speaker 9:And we went up to 450, but we do have five of us on the investment team, and we're expanding the team. So, if you look at kind of divide the amount of capital by the number of those putting that capital work over the period of time over a couple of years, we've been successful and our first two funds are in top 5% kind of category. Thank you. I'm a venture capitalist, so I have to brag a little bit. But we've been very good at sharpshooting, like meaning, like we haven't plowed money and we've really waited for the right companies and spent the right amount of time with these companies and helping them grow.
Speaker 9:You know, it's kind of expressed in, like, we have an incredibly high conversion of seed to series a, which if you would imagine, like typically most companies don't even make it past the seed stage, the zero to one phase. And so, don't want to disassemble our model by spraying capital out there. We think that's very different from the multi stages that have almost this incentive with the fees against very large capital bases. We're very opposite of that.
Speaker 2:How do you how do you how do you stay collaborative? Or is are there are your elbows getting sharper with this fund? I mean, we have a we have a mutual friend who has this like a similar size seed fund. I know you guys have collaborated a ton on deals in the past, but, I know, you guys are also both very competitive and wanna put up, you know, top funds. And I'm sure it can get, you know, tempting at certain points of, hey, I could get 20% ownership in this company and I don't necessarily want my my buddy, you know, because it doesn't necessarily benefit my fund to to give 10% to someone even if they're a great friend and could also help the company.
Speaker 9:Yeah. It's challenging. Our partner, Gautam, his wife is Christina over at the GP over at chemistry. Uh-huh. And, you know, if he wins a deal over her, you know, like I could only imagine what would happen.
Speaker 9:So, you know, it's tricky, but it is, you know, we see a lot of new funds. I spend a lot of time backing new funds and helping, you know, these fund managers kind of grow. And then they get to a point where you can no longer kind of even co lead deals, the funds get so big. So, and we're going into this like massive super cycle of incredible amount of fast paced and a lot of capital invested. So, it's I wanna say that it's it's always on our shoulders to find, you know, the founders early enough and be the first ones there and just not be in those situations.
Speaker 1:Mhmm. How are you thinking about services as a software, the AI economy expanding beyond software and IT spend? I mean, Sam Blond was just talking us talk to us talking to us about, like, the forward deployed account executive, and we talked to Long Lake about buying companies that are heavily service oriented and infusing them with AI. And I'm just wondering if there's going to be a boom in de novo companies that are more services sector focused and what you're seeing in that category right now.
Speaker 9:Yeah. Well, you you really have to turn towards Palantir and just give them a nod because this for deploy engineer thing back in 2004 or 02/05, you know, was like universally, hated by the world and the investors and so on. And they really gave us twenty years of a look at how to make that incredibly effective. And generally though, I think that it's in the early stages that this kind of custom work is done and that may lead to kind of automating things over time. And then the flip side that, you know, to critique it would be simply that, you know, if you look in other kind of boom eras, the consulting services really did well.
Speaker 9:When the markets pulled back, they were hit almost the hardest. So, there's certainly a trade off there. But to get new services into these old markets, we're just going to have to get our hands dirty. But you know, I'm old, so I look at the services industry as this, like, really tough thing we wanna replace by software.
Speaker 1:Yeah. It's tough. Second best city to invest in? I assume you'd say SF It has to New York. New York.
Speaker 9:Yeah. I've been very impressed with New York. We have a number of companies there from a company called WAP in the creator services side
Speaker 4:Yep.
Speaker 9:To Antioch, which is physical AI robotic infrastructure. Cool. And and I'm just amazed every day of it. But I guess it makes sense that you're able to pull talent from the Northeast to have college and it's still a big financial center. There's a lot going on.
Speaker 9:So it very much in my mind is a number two. Nothing's even close. Not Austin or anything else.
Speaker 1:Yeah. That makes sense. I agree.
Speaker 2:How how often do you find yourself backing teams that are building things that you know are on that or you you expect could be on the road map of the labs? Because in certain instances, even if the labs care about a certain part of the application stack, that doesn't mean you just shouldn't still back a team. Right? It's just a new version of what if Google does this or something along those lines.
Speaker 9:You know, I want to say that the startups, you've always got to like hope and pray and expect that the startups are going to win. This is the big question of our era is, you know, do we go ahead and build all these put all these apps forward or build all these applications only to be steamrolled by the big labs. We saw that happen in the 90s. Bill Gates and Microsoft would watch and see what people would build on Windows and then they build their own disk compressor and give it away for free. So, this is like a pattern that these monopolists do in this case.
Speaker 9:And you know, our our companies need to show that they can stand on their own two legs. You know, we're we're in businesses like Decagon, which is AI customer service. It is the best product in the market, and they have to stay the best. Mhmm. And we know they can do it.
Speaker 1:Yeah. That makes a of sense. Well, thank you so much for coming on the Congratulations on the round and we have Great.
Speaker 2:Thanks, guys. That you got some more Great to see it.
Speaker 3:Great to
Speaker 2:see you.
Speaker 1:Have a great rest of your day. We'll talk to you soon. Goodbye. Up next, we have Alex Shawn from Judgment Labs, an A Star portfolio company apparently, but here to talk about a new round from Lightspeed Venture Partners. Alex, how are you doing?
Speaker 10:Doing great, guys. Thanks so much for having me on board. Kevin's great.
Speaker 2:Also nice for To open. To open for you.
Speaker 1:Yeah. Exactly.
Speaker 10:Yeah. But Some nice guys over here.
Speaker 1:He only gave us a little bit. So tell us a little bit about yourself and the company.
Speaker 10:Yeah. Happy to. And before I do that, we got a little bit of a crowd here with us.
Speaker 1:Let's hit the
Speaker 10:here out in the Office Financial District and the rest of SF, but thanks for having
Speaker 2:me Explain the orange suits.
Speaker 10:Yeah. You know, we are judgment orange. You know, it's the color of the company and we like to be proud about that. Mhmm. And so, you know, we wear it loud and proud.
Speaker 10:You'll catch us running the beta breakers race in SF, hopefully winning it with the whole team. So be on the lookout for the orange suit.
Speaker 2:It's still such a good strategy to pick a color that doesn't have a loud start up already kind of anchored around it. Yeah. Just own it.
Speaker 1:Good luck going up against Facebook blue or Coinbase blue. Yep. Much easier to stand out with a funny color yellow
Speaker 2:or Anyways.
Speaker 1:Please introduce the company. Tell us about the progress, the news, everything.
Speaker 10:Thanks a lot, guys. You know, Judgment Labs is the platform for improving long horizon agents from production data. We sort of started the company with this thought process that these autonomous long horizon agents are gonna consume the vast, vast majority of the economic value that AI is set to create across the next decades in the economy. Yep. And, you know, we're already seeing the first sets of those things happening.
Speaker 10:Developer productivity is skyrocketing at rates that I don't think anyone, including myself
Speaker 5:Yeah.
Speaker 10:Coming from a research background could have anticipated. And yet, that sort of progress is also barbelled in the sense that in many industries, we don't see the same progress on these long horizon agents. And so, typically, that's to do with a lot how verifiable or semi verifiable the outcomes are and therefore how easy it is to train those agents. But we believe that regardless of what agents you're building, the single source of truth to improve them to get to that point is going to be production data. During the run time of these agents, these long horizon agents emit so much production data ranging from their reasoning tokens to the tools they call to the retries and their memory and all the things more that are going to come out on these agents.
Speaker 10:And so that data just forms the cleanest record of how those agents behave with customers, software, and their broader environments.
Speaker 4:Mhmm.
Speaker 10:And when, you know, you process that right, we can sort of find out what users actually ask for and struggle with, which failures actually happen in production, and where agents actually find breakthroughs to solutions that we could have never predicted. And so, therefore, the goal for us as developers and sort of people that are going to bring about this agent revolution is to operationalize that production data for all these agent companies out there to create these flywheels that convert distribution advantages of, you know, people like Sam into their product modes that are going to last them for a long time. And so we've been very lucky to partner with a lot of people across the journey of the company. Coming out of Stealth today has been an amazing journey and, you know, Nova backing us at the Preseed all the way to Lightspeed backing us at the seed and Lightspeed doubling down to co lead the series a with Green Oaks.
Speaker 1:What's the sweet spot customer look like right now?
Speaker 10:So we love partnering with people who are building, you know, agent native companies and focusing on long horizon agents. And
Speaker 1:Start so I can break down ups, like scale ups, like series b companies, like what's the
Speaker 10:Primarily agent native start ups in that range of like series a to series b is our sweet spot. We focus on these companies that produce a lot of production data
Speaker 1:Yeah.
Speaker 10:And wanna figure out how to use it.
Speaker 1:And and is it particularly focused on knowledge work and sort of like the next iteration of AI agents or are you doing coding work as well or both?
Speaker 10:Definitely a lot of coding work. Okay. You know, we actually serve agents across the stack. Sam and his company, Monaco, are customers of ours. And so, different vertical agents require different versions of improvement.
Speaker 10:And so, we work across the stack but mainly on these new age long horizon agents that sort of autonomously do tasks end to end.
Speaker 1:Yeah. What what what are you helping with specifically? Because I imagine that if Monaco builds an AI SDR, an agent that goes and runs around and figures out everything about a customer and builds scripts and battle cards and all the stuff that they do, all of that's logged. They have it somewhere. Where is your value at?
Speaker 1:Like, why are they a customer? Like, are you helping them actually change production designs? Or is it more about organizing and unifying data for them to go improve their own products?
Speaker 10:Great question. Mostly the latter.
Speaker 1:Okay.
Speaker 10:So if you think about in practice, improving those agents is really challenging for teams. Okay. And so, like, most teams with all those logs that you're saying that they store have to sort of manually comb over these tables and tables of data. Okay. And so, whenever they find a failure case, the question often in the case is not just like, is this a problem?
Speaker 10:But it's, you know, how frequent does this happen? Sure. Are our most important customers affected? Yeah. What task types are most affected?
Speaker 1:Yeah.
Speaker 10:And so being able to chop up and parse this data using other agents, in fact, to sort of pinpoint the exact failure modes and therefore the exact part of, you know, an agent framework or an agent harness is exactly what we help these companies do.
Speaker 2:Interesting. Jordy? Next breakout agent category.
Speaker 1:Use case.
Speaker 2:Yeah. Coding.
Speaker 10:Yeah. You know, we tend to believe here that at Judgment, we think that the domains that are going to get solved first are proportional to those that are most verifiable.
Speaker 1:Yes. Meaning that
Speaker 2:if you
Speaker 10:can check the answer, you know, the the smallest feedback loop exactly. I would say that a lot of these domains are going be the ones that are quantitative. Know, these are things like, you know, the coding agents are easy. You can imagine the site reliability and ticket resolution agents next and then the ones that do math. But, you know, we are increasingly seeing a lot of progress in non verifiable domains as well.
Speaker 10:Stuff that you would traditionally think is not very easy to quantitatively measure, such as finance and legal and even sales to say what Sam's agents are doing are incredibly, you know, fast in terms of how the teams have been able to use their data to improve their agents.
Speaker 1:Tax and accounting seems pretty verifiable and, like, closed loop versus, you know, like, I don't know, long horizon, how did this cancer drug respond to someone over a decade? Like, it's very hard to close that loop. Well, congratulations on all the progress. Jordan, any other questions?
Speaker 2:No. This was great.
Speaker 1:Thank you so much for coming the show.
Speaker 10:Go orange. Great.
Speaker 5:We'll talk
Speaker 1:to you soon. I'm sure
Speaker 2:you'll be back on.
Speaker 1:Sounds good.
Speaker 2:Congrats to the whole team. Have a good day. Cheers.
Speaker 1:Up next, we have Glenn Wise from Cinder. He's the co founder and CEO. Good nominative determinism. We got a wise man in the waiting room. And here he is.
Speaker 1:How are doing, Glenn?
Speaker 8:What's going on, guys? Good. Thanks
Speaker 1:to for the show. Thank you so much for stopping by on such a big day. Introduce yourself. Introduce the company. Tell us the news.
Speaker 8:Yeah. I'm Glenn. I'm the founder and CEO of Cinder. Mhmm. We just raised 41,000,000.
Speaker 8:Woah.
Speaker 2:Woah. Woah.
Speaker 1:Woah. Woah. Woah. Guy. Woah.
Speaker 1:Good news.
Speaker 2:Right to it.
Speaker 1:Yeah. Radical Ventures. We're I got a buddy Rob Taves over there.
Speaker 8:Oh, yeah. They're great guys over there. Yeah. Amazing. Really great team.
Speaker 8:But our our focus is helping companies stop all of the AI powered abuse that's happening across the Internet today.
Speaker 1:Okay. Yeah. What does that mean? Because there's, like, cyberbullying and, like, mean comments on YouTube videos or livestreams, and then there's, like, spam and hacking and cyber attacks and all sorts of crazy stuff.
Speaker 8:Yeah. And honestly, it means the entire gambit of threats. Okay. And that's really, I think, like, what gets missed in this conversation, which is the fact that, like, there's small. Right?
Speaker 8:There's small incidents such as bullying. There's large incidents such as state sponsored espionage.
Speaker 4:Sure.
Speaker 8:But companies need to respond to all of
Speaker 1:these,
Speaker 8:and we've never before seen the scale of threats that we have today. Yeah. And this was a problem before, Gen AI, but obviously, AI has made this exponentially worse.
Speaker 1:Sure. So it says customers include Open AI, Spotify, Depop, Black Forest Labs. I'd love to know about how much of this is happening, like, internal to a particular product, like, someone is effectively doing Internet graffiti on, the Spotify comments. We get comments on our Spotify sometimes. They're usually pretty positive, but I could imagine a state sponsored actor wanting to take us down and writing a bunch of mean comments versus and that would be something where you would go to Spotify and say, can solve your problem internal to your product versus there's a there's a misinformation campaign that's happening on X or Instagram about Spotify, and you're notifying them.
Speaker 1:Like, what's the trade off there?
Speaker 8:Yeah. That's a really good distinction. So we sell directly to the customers themselves.
Speaker 1:Okay.
Speaker 8:So they can combat if there's some horribly racist comment
Speaker 1:Sure.
Speaker 8:Right, that shouldn't be on there. Okay. And so they can combat taking that off. And so how the platform actually works is that our customers set what policies they care about. Mhmm.
Speaker 8:So they say, hey. We really care about some of the really big ones now, AI generated NCII is like AI generated deepfake porn. Right? That's a huge one. Yeah.
Speaker 8:A huge issue that a bunch of people see. Obviously, anything child safety related, anything any egregious hate speech and and things like that. They are able to set these policies on our platform, and then we use AI to detect and mitigate it at whatever scale the platform is operating at.
Speaker 1:Yeah. How what has it been like ramping up to some of these bigger customers? I imagine that if you get the fire hose of, like, Spotify content, that's a lot. Was that a challenge? Like, how did you solve that?
Speaker 1:Obviously, there's a lot of off the off the shelf tools, but, like, how big is the company at this point? How are you able to take on those clients?
Speaker 8:Yeah. I mean, we were really lucky in the sense that the whole team the whole founding team came from Meta. And so, like, we saw
Speaker 2:Saw things too.
Speaker 8:Yeah. We and prior to that, we were at the US government.
Speaker 1:Okay.
Speaker 8:So we've seen we've seen kind of what harm at scale looks like. Yeah. And and obviously, that's, kind of like an infrastructure challenge that we deal with. Inevitably, it is, one, actually being able to process data as quickly as possible. That's a big one.
Speaker 8:So how can we make a decision as fast as possible of whether or not something violates your policies? There's a bunch of techniques there as well as just being able to handle that scale. Right? We have some customers that have a really large Gen Z audience that all log in at the same time. So that adds some really great kind of distributed computing challenges that that the team is working on.
Speaker 8:Yeah. No. That's all part of the fun of of building this.
Speaker 2:Is there is there something about this problem that makes companies want to outsource this function? Because I'm assuming at Meta, if you were working on this problem at Meta, you were working on internal tooling and platforms at a certain scale. Maybe they end up wanting to do this themself, but is there, themselves, but is there a certain part of this problem that makes it particularly suited for, you know, having a partner like Cinder?
Speaker 8:Yeah. I think there's a few. I think primarily it's taking the human expertise and really understanding the policy and understanding how to mitigate that policy. Right? Like, every customer of ours can't be an expert in every single issue that they might face.
Speaker 8:And so that right there means that they need to bring people on. And, yeah, Facebook, I was on the threat intelligence team there. They have an amazing threat intel capability, where they're also Facebook. So they can spend on building out that threat intel capability, but not everyone can or should have to do that. So that's a big piece.
Speaker 8:Another one that we've been seeing more and more often actually is the third party credibility of going with a company that's also truly a set of experts. Right? And so you're not grading your homework when you're trying to defend your platform. You have someone else that can bring that expertise in and do that for you.
Speaker 1:Totally. How how are you thinking about, like, the actual model choice or or just scaling? Because I imagine that there's so many of these, like, TOS violations. You know, you just ask, like, is this a the of the TOS violation or threat of violence or something that's know, doesn't conform to any of, the frontier models, and you're gonna get a very accurate result. But that's gonna be slow and probably expensive if you're running it, over every single Spotify comment or every single upload to the platform.
Speaker 1:And then you can go open source, cheaper models, faster models. You can also try and run models on ASICs or more advanced chips like Cerebras is in the news this week because of the IPO, but there's obviously other providers. But how have you thought about the infrastructure trade offs and as you scale the service?
Speaker 8:The thing that is most important for our customers right? I talked about policy. Yeah. It's really evals and ground truth data.
Speaker 1:Okay.
Speaker 8:And so once our customers have, within our platform, set what does true look like, right, what does an actual violation look like because as you can imagine, these violations are incredibly nuanced.
Speaker 2:Yeah.
Speaker 8:And it really depends on what's the platform, where they're based, how old are their users. Yep. A really classic example, right, is like a gaming company could have two different games. One that is a first person shooter for adults, the other one that's a game for children.
Speaker 1:Sure.
Speaker 8:Obviously, they'll go they're gonna define a threat of violence very differently.
Speaker 1:Oh, sure. Even within the campaign. Right.
Speaker 8:And so you need to be able to set ground truth and really set these evals. So then from there, you run evals on these models. And so and it kind of depends on are you prioritizing are are you prioritizing, you know, costs or latency or accuracy? Yeah. Those are basically the three trade offs that we see.
Speaker 8:Yeah. And
Speaker 5:but
Speaker 8:you can get really great results now, especially around fine tuning some of these open source models. Yeah. But what's funny is that, obviously, these are like, these models themselves are trained to not be able to produce this content, so you do start hitting limitations with these foundation models. Yeah. And so you can do techniques like model obliteration where you can actually remove guardrails and host them yourself.
Speaker 1:Sure.
Speaker 8:You can do tech or you can do kind of traditional classification, again, depending on what the policy area is.
Speaker 1:Yeah.
Speaker 8:But that's why you need to
Speaker 2:I've heard enough. Give them a billion dollar cluster.
Speaker 1:Well, speaking of cluster, has there been any demand for on prem? We were talking to David BuzzFeed from Roblox about this, and I was sort of saying, he has a younger audience, obviously, on the platform, and there's been a lot of pushback about the communication that happens between adults and children on the platform. And I was saying, like, it feels like, although this is a huge problem that obviously needs a lot of attention, like, the technology is getting better and better to the point where you should be able to screen every single chat message that flows through the Roblox platform in real time with a very, very advanced LLM. But Roblox runs their own infrastructure. Is there an API call?
Speaker 1:And I could imagine a situation where Roblox wants to run this like deeper in their stack. And is that something that's on your roadmap where you've heard customer pull from, or do you think it will never be an issue?
Speaker 8:Yeah. I would love an intro. I really appreciate
Speaker 1:that. Okay.
Speaker 8:Yeah. I I think for us Yeah. Because of these the proliferation of these foundation models, our customers have gotten really comfortable on utilizing you know, already utilizing OpenAI.
Speaker 1:Because they're already pulling stuff from AWS or GCP or Azure, and they already have, a fabric they can pull things into.
Speaker 8:Exactly. And and we because of our sort of security paranoia background, we've invested a lot in we even have run a full single tenancy architecture that our our customers love because, you know, they have they know all of their data is theirs. And so, you know, customers have gotten more and more comfortable, but I could see the pendulum swinging, especially with open source models. I could see it going the other way where they wanna self host host Cinder, in which case, you know, it's built in a way where, you know, they can.
Speaker 1:Yeah. That'd be really cool. Last question. Get me up to speed on your work with Black Forest Labs because I believe that that's a more unique relationship. They do benchmarking.
Speaker 1:It seems like they've shared some data, but can you get me up to speed on on your work there?
Speaker 8:Yeah. We've been doing some really exciting red teaming work with these models. You know, I think it's a really important job that these models are able to be tested before they're released, obviously. Right? Because once they're released in the wild, then they are subject to the rest of the world.
Speaker 8:And so that's a lot of the work that we do as well, right, is allow companies to set up those guardrails, but also allow them to not only test the guardrails, but test the models themselves. And that leads to just dramatically safer outcomes when they release these models out into the world. And I think that we're gonna see standards coming out of The UK, The EU, The US on expectations around red teaming, especially as these models become more and more powerful and the attacks become more sophisticated.
Speaker 1:Yeah. Yeah. We're already seeing with that with the who who was it? It wasn't Meta, but it was Google, Microsoft, and maybe XAI joined OpenAI and Anthropic in, you know, delivering models to the government earlier to test, this could be a logical place to test as well. But congratulations on the progress.
Speaker 1:Thank you so much for coming
Speaker 2:Fantastic to meet you. Thank you for doing this work. And the chat is concerned by your coworker's posture in the back there in the blue.
Speaker 8:We're gonna get some ergonomic experts
Speaker 2:in here. But Give him give him our best.
Speaker 1:Yeah. Well, I gotta I
Speaker 8:gotta tighten up the shit.
Speaker 2:No. No. It's good. He's locked in. That's actually a high performance possible.
Speaker 1:That is. That is.
Speaker 2:You know,
Speaker 1:it's the window opening in fresh air. C o two levels, probably not
Speaker 4:a problem.
Speaker 2:Doing some critical work.
Speaker 1:Anyway, thank you so much for joining the show.
Speaker 2:Great to meet you, Glenn.
Speaker 8:It's so nice
Speaker 1:to meet you. We'll talk to
Speaker 7:you soon.
Speaker 1:Bunch of updates really quickly. First, the chat has given a name to my next project. It's the diesel the diesel refinery company of Malibu. Get ready, Jordy. We're gonna be pumping diesel fumes all over Malibu.
Speaker 1:It's gonna be a boom time. Also We got a Swatch.
Speaker 2:Yep.
Speaker 4:Yeah. Pull it up.
Speaker 1:Video. We talked about the Swatch AP collab, the Swatch, Adamar Piguet, royal pop collaboration. Well, the final design or something close to the final design has finally hit the timeline and we can pull up this image because it's not wristwatch. It's more of a pocket watch. It it goes on a necklace, I guess, and it doesn't
Speaker 2:More of a come with a charm. Like, I see people tying this to like
Speaker 1:Yeah. Dad. Think this this tells me that the all of the fears that this would be confused with a stainless steel royal oak were probably misplaced. What what do you think, Tyler?
Speaker 3:Yeah. Well, okay. So that's based off like the swatch pop. Right? Yes.
Speaker 3:So this is just like I'm talking about like this is a long time ago, made the Swatch Pop, which is like this little Yeah. Is a watch that you can pop in and out Yes. Into a necklace into like
Speaker 9:a little charm
Speaker 3:or onto like an actual bracelet.
Speaker 1:A stainless
Speaker 3:steel thing. Like we haven't seen anyone actually buy this yet. It's just like promo videos. There may actually still be bracelets that you can put it into a watch form.
Speaker 1:That's true.
Speaker 3:But so far everyone is up Platinum. In
Speaker 1:Platinum. Platinum wrist.
Speaker 2:Yeah. I'm trying to find pictures Bracelet you of these pop into. Watch.
Speaker 1:Maybe? Hop. I don't know. Well well, there's a release video that we do think is real. I think we verified this with Quaid over at Bezel.
Speaker 1:And it's it's showing how they're building it, how they're putting it together, some cinematic music. And they are making them these are mass manufactured. They're showing them being mass manufactured, testing them, but they come in all sorts of colors. And we'll be see we'll be interesting to see what happens. This does not seem like an it's so overt moment for the AP Royal Oak market.
Speaker 1:It seems like
Speaker 2:for the Bears.
Speaker 1:Yeah. It's so overt for the Bears. Everyone that sold yesterday needs to buy them back potentially.
Speaker 2:Yeah. Interesting. I I I think it's working to the degree that I see that and I'm like, I I kinda want one of those.
Speaker 1:Yeah. It's like a cute I don't know. It's like a it just fits a different
Speaker 2:I have a I have a guess as to what the hypebeast will do, John. You know what they're gonna do? What? They're gonna take those
Speaker 1:What will they
Speaker 2:royal pops. Yes. They're gonna use them to tie their shoes. They're gonna use them as shoelaces. So they'll have like, you know
Speaker 5:Mhmm.
Speaker 2:A bunch of swa swatch pops hanging off of, you know, some some like Nike dunks or something.
Speaker 1:I could see that. I could see that. But why not just have the full stainless steel royal hanging off their shoes? There's levels to the game. Yeah.
Speaker 1:Well, GameStop is going to need to level up if they want to successfully take over eBay because eBay has rejected GameStop's $55,000,000,000 takeover bid. The online marketplace, that's eBay, called the cash and stock proposal quote, neither credible nor attractive. The New York Times has a story here. The online marketplace rejected the proposal. GameStop announced the proposal last week.
Speaker 1:We talked to Ryan Cohen on the show about this. Combined with eBay, which is a company nearly four times its size, the offer has confounded much of Wall Street in part over questions of how the company would afford it. GameStop's chief executive, Ryan Cohen, initially declined to elaborate on how he would finance the deal, and much of Wall Street remains skeptical about the mechanics of the deal. EBay has officially turned down its lopsided marriage proposal, said Don Bilson, head of event driven research. This news should surprise no one since the odds it would accept GameStop's brash offer were infinitesimally remote.
Speaker 1:In a letter to GameStop, eBay's Chairman Paul Pressler listed several concerns with the bid following a review of the offer with legal and financial advisors. The concerns include uncertainty about how it would be paid for and the amount of debt the deal would add to the company. A cornerstone of the deal was a letter that GameStop secured from investment bank, TD Bank, saying it was highly confident it would raise 20,000,000,000 to fund the offer. That letter, which is not binding, stated that the confidence rested partly on the assumption that the combined company would be investment grade according to at least two of the three major credit credit rating agencies.
Speaker 2:So What does Ryan say?
Speaker 1:What he responded? I did. I was confused No. Because I saw a post by Paul Branham and I I thought, Paul, that's the chairman of eBay. No.
Speaker 1:It's a different Paul. And this Paul is a major GameStop supporter, I believe, who said, Ryan, we got your unsolicited. Let me translate the eBay letter. We got your unsolicited bid. Our board thoroughly reviewed it.
Speaker 1:We're rejecting it. Not because the math doesn't work. Not because we're highly confident. Because the high and so this person is very, you know, excited about this deal, think. Anyway, there is another media deal going on right now.
Speaker 1:Byron Allen is buying BuzzFeed, investing $120,000,000 in the digital media company and will become the CEO. This is a very interesting story because I don't know how familiar you are or the audience is with Byron Allen, but he had a fascinating career where he was originally he jumped straight into late night talk show host. He was he he became a late night talk show host and then eventually had this very interesting business where he would buy
Speaker 2:Zero to Yap. Basically.
Speaker 1:He would buy the rights to broadcast on TV in certain slots, in certain hours. And then he would independently go sell advertising against the programming that he would put together. And so the money would flow from the advertiser to him and then he would pay to air his content on traditional TV. Interesting. Very interesting.
Speaker 2:So he was on the hook for the airtime basically, but any any difference
Speaker 1:was But he was paying for the airtime and then he eventually bought the Weather Channel and a number of other sort of traditional over the over the air TV stations and sort of grew. He's also will be taking over the time slot from I believe Stephen Colbert post that changeover with a show called, what is it, Comics Unleashed. It's a roundtable conversation. It's sort of just a podcast with a bunch of comics. And when I first saw it I was like, that's so weird that they're replacing Stephen Colbert with a show about comic books.
Speaker 1:But it's not. It's a bunch of comedians. And Theo Vaughan's been on before and it'll be interesting to see how that show does in that slot. I think the cost structure of that show will be much, much lower. I don't think it's a live band.
Speaker 1:It's sort of just a studio with a round table and a couple chairs. And so I imagine that the economic equation works much better. But that's not what is in the news today. What's in the news today is that he is buying BuzzFeed and will become the CEO of BuzzFeed. BuzzFeed had sort of changed hands a few times and now it is in the hands of Byron Allen.
Speaker 1:Jonah Peretti who co founded BuzzFeed fifteen years ago or so will step down as chief executive but he will still serve as its president of AI. And if you love reading AI listicles, you're probably going to get a lot more of them because I think that's part of the plan. But let's read through what the New York Times wrote about Byron Allen's acquisition of BuzzFeed.
Speaker 2:It's time for listicles to come back.
Speaker 1:Yes. Here are five key things to know about Byron Allen buying BuzzFeed. Number four will shock you. Byron Allen, the comedian turned entrepreneur is buying a controlling stake in BuzzFeed, the digital media company that pioneered virality on the internet. Pioneered virality on the internet, that's a bold claim.
Speaker 1:I think that's probably true but, you know David after dentist would like a word. Allen Family Digital, a company associated with Mr. Allen, will pay $120,000,000 for 52% stake and this is a huge jump from where BuzzFeed was trading. I think BuzzFeed was trading around like 40,000,000 to $80,000,000 market cap or something. So it's like almost a 3x premium, and we can get into the share price in a minute.
Speaker 1:But Mr. Allen will become the CEO. Jonah Peretti will become the President of Artificial Intelligence. Byron Allen, pictured there, is 65 years old. He will remain CEO of Allen Media Group, a news and entertainment company that owns local TV stations, as I mentioned, The Weather Channel and a TV production arm.
Speaker 1:He also produces comics unleashed, not about comic books but about comedians, which will replace Stephen Colbert's The Late Show on CBS at the end of the month. And where I'm did I lose this? I don't know. But it's an interesting story. I'm I'm sure there will be more developments on what happens with BuzzFeed as
Speaker 2:Yeah, I'm so curious what the plan is. They had Q1 revenue of about $31,000,000 $31,600,000 to be precise and a net loss of roughly 15,000,000. Revenue was down 12.4% year over year. Yeah. So losing a bunch of money.
Speaker 1:Yeah.
Speaker 2:Revenue is shrinking. Yeah. I don't think the brand is I don't think it's a good good brand at this point. Certainly has name recognition. But I don't know anybody that wakes up in the morning Home pages.
Speaker 2:Says, yeah. I gotta know what BuzzFeed is talking about today. Granted, there's probably a lot of people. Yeah. And Byron is a a media tycoon.
Speaker 1:Yeah.
Speaker 2:So now that's why I'm curious like what is what's the play here? No.
Speaker 1:I think opportunity.
Speaker 2:If you if you had a 120,000,000 to just build a new media property
Speaker 1:Yeah.
Speaker 2:You wonder, hey, what what could you actually do? So is it is there some massive audience that's still sneakily more engaged? Maybe he sees a pivot to prediction markets.
Speaker 1:Oh, I don't know.
Speaker 2:You know, I don't know.
Speaker 1:Like BuzzFeed today. Let's check it out. Buzzfeed.com. 50. Why would you put that thing in writing photos that prove people are the worst?
Speaker 1:That's the number one trending article in BuzzFeed. 41 celebs people used to love and now can't even stand to look at. 22 they really go they love the listicle and they're getting longer. I was joking about five key reasons. That would be that would never make that cut at modern BuzzFeed.
Speaker 1:22 stories about boy moms and their sons that will make you cringe into oblivion. I don't want to read that. 32 people confessed to the secrets they've been hiding and these would destroy multiple people if they ever came out. And there are reactions.
Speaker 2:Crazy.
Speaker 1:I did I was a fan of I was never a fan of the BuzzFeed quizzes but I was
Speaker 2:a fan Yeah.
Speaker 5:There's an
Speaker 2:arcade so maybe there's They a gaming
Speaker 1:also had a bunch of different like CPG spin offs at various points. I think they got into physical goods. But a lot of the talent did did go off and venture on their own like the Try Guys, I think famously left BuzzFeed and and started a YouTube channel and and there was always like a little bit of a talent management not always perfectly aligned. Anyway
Speaker 2:We have the perfect guy
Speaker 1:to ask I don't know who's gonna comment on any of this, but we can certainly try and ask him about it because we have Roger Lynch, the CEO of Conde Nast with us here in the TBPN UltraDump. Roger, great to see you again. How are doing? I'm alright. For those I mean, we were hanging out last week, but for those who don't know, introduce yourself.
Speaker 1:Let's go a little bit back in time, take us on your journey, then we can get into all the hot topics in media.
Speaker 4:Sure. Well, yeah, I've been CEO of Conegas for seven years, but prior to that, I spent my whole career really in technology.
Speaker 1:Yeah. And primarily a fantastic guitarist.
Speaker 4:Thank you very much.
Speaker 1:That was my ambition. That was an incredible performance. It's a little bit of just lore, I guess, but we we we can get into hobbies and and things outside business. But, yeah, take us back. What was the first job in media?
Speaker 1:How did you get to where you were?
Speaker 4:First job in media?
Speaker 1:Yeah. Maybe that's a good place to start.
Speaker 4:Well, I mean, depends on how you define media. Really, I spent my career at the intersection of technology and media. Sure. So the first company that I ran was a broadband business. It was one of the first broadband businesses in Europe going back to 1999.
Speaker 4:And literally, one of the first things we did is we did a deal with the NFL to stream live NFL games in 1999. That's crazy. That was Where
Speaker 2:would how much how much demand was there for NFL in Europe at that time?
Speaker 4:Well, the reason the NFL was interested in it, this is back when Paul Teigleboo was the commissioner. He came over to announce this, crazy idea that we had, was they were trying to build the NFL in Europe.
Speaker 2:They had They're like, I hear people love football over there. Why aren't we why aren't we making money?
Speaker 4:Why isn't it our football? They had think there was a team called the Amsterdam Admirals at the time. That's right. There's a European football league Yeah. They're trying to promote.
Speaker 4:And, you know, broadband was a really interesting technology, and I was really excited to see how it could be used to change how people consume content. And that's why we did that that deal. And then I started an IPTV company, first video on demand IPTV, and then Sling TV, Streamy TV. So always sort of at the intersection of technology and media content. Then I ran Pandora, the first company I ran that I didn't start.
Speaker 1:I loved Pandora.
Speaker 2:Yeah. Pandora Pandora is truly Good. When I think of magical when I think of magical Very much. Yeah. When I think of magical technology experiences in my childhood Yeah.
Speaker 2:I think of Pandora. I think of being in my garage with my dad, we'd be like Yeah. Playing pool, listening to music
Speaker 1:or Sounds work so mad. Obscure songs on Pandora is amazing. Was there some sort of unique opportunity with Pandora around treating it like a radio station to because it feels like there was some sort of licensing deal on the back end that was not the same as Spotify or iTunes Store at that time where Right.
Speaker 2:Because I remember I must have been I must have been intuitively at the time, was like, okay, this is a fair trade off. Like, I'm used to going to iTunes and having to pay 99¢, or I can just kind of like roll the dice.
Speaker 1:Yeah. Maybe I'll get my
Speaker 2:maybe I'll get my favorite song on Pandora. So I found myself on Pandora a lot.
Speaker 4:Pandora took advantage of some rights that allowed them compulsory rights allowed them to stream all of that content. And but, you know, one of the trade offs was you couldn't choose the song. Yeah. Yep. And so they did launch a subscription.
Speaker 4:This is before long before I joined.
Speaker 1:Yeah.
Speaker 4:Yeah. Subscription service, but we're late for that game.
Speaker 1:They were
Speaker 4:quite late for that game. By that time, Spotify already had a very strong presence, and some of the other big tech companies were getting into it. Yeah. But you you mentioned AI. I mean, to me, one of the key things with Pandora was the way it combined sort of human taste with AI.
Speaker 4:Mhmm. So we had a team of musicologists. Mhmm. And one of the you know, you mentioned I've been a guitar player all my life. One of the best parts of that job is they were all fantastic musicians.
Speaker 4:So we do these company events, and we play all the time. Absolutely.
Speaker 1:These guys
Speaker 4:were so and they were mostly men. We're so good. Yeah. But then we had the data scientists also. Yeah.
Speaker 4:And they would take the work that the musicologists did and create their machine learning algorithms Yep. Around that. And each of the algorithms, they had I can't remember, 90 or so algorithms. Each one would get tuned for every individual listener. Interesting.
Speaker 4:So it'd be weighted a little bit more. Jordy likes this. John's like this. And and so it creates a personalized experience. And and to me, you know, I I still listen to Pandora.
Speaker 4:I also listen to Spotify. Yeah. But when I want something to just put something on and let it play, I'll go to Pandora because I think Yeah. Those algorithms still outperform.
Speaker 1:Yeah. And we I mean, we've talked to this new co CEO of Spotify, but, like, the that AI driven feature, the promptable playlist is just coming to Spotify, like, this year. And I'm sure it's souped up and powerful and stuff, but it is it is remarkable how long that like Internet radio
Speaker 4:Right.
Speaker 1:Like last these things have long these things have long lives. I'm wondering about your view on durability in media generally. It feels like anytime that there's some platform shift, there's endless think pieces about legacy media is dead. Linear TV is dead. This is dead.
Speaker 1:Everyone loves to talk about that. But in your experience, how does how does the media industry actually change as technology arrives?
Speaker 4:You know, the media industry is has a history of not changing quickly enough. And you can start with the music industry. Yeah. You know, music recorded music industry peaked in 1999. And then, you know, Napster
Speaker 2:And that's sales revenue.
Speaker 4:Yeah. And recorded recorded music industry.
Speaker 2:Yeah. We we found out like last week or the week before that vinyl record sales are like something like 10% of streaming revenue, which sounds
Speaker 4:So vinyl records that's an interesting trend to talk about. But but what the music industry did or didn't do is and this is one of the big mistakes and, you know, like most lessons that you learn, you learn the biggest lessons from your mistakes. What the music industry didn't do is look at how their customers were behaving and say, okay. Let me craft my business around that. Mhmm.
Speaker 4:They said, no. I don't like that behavior. I'm gonna change the behavior. Let me sue these teenagers in Iowa who are downloading music or sue the ISPs or their parents or whatever so I could change the behavior back because I really like it when they buy CDs. Yeah.
Speaker 4:That's really good for my business. That was disastrous for the So finally, once they had, you know, embraced, you know, downloads and then streaming, it started growing again. It's only just gotten back to the size it was in 1999.
Speaker 1:That's crazy.
Speaker 4:You know, twenty seven years later.
Speaker 1:There's more people and people still like music just as much as they did before.
Speaker 4:Of course.
Speaker 1:Purely failing.
Speaker 4:Of course. But they fought it for for far too long. Yeah. And it's it's a mistake. Vinyl records have grown every year for the last eighteen years.
Speaker 4:Exactly. Sales of vinyl records. And it was it used to be people my age buying vinyl records collecting Sure. Now there are as many people in their twenties buying them as there are people in their fifties or sixties buying them. A lot of people in their twenties don't even own a record player.
Speaker 4:Yeah. They buy the final records. There's an interesting trend that we and we had seen a bit in our industry too, like
Speaker 1:It was bizarre.
Speaker 4:Young people buying physical magazines. Yeah. Yep. It's like, why? Well, I think it's a search for authenticity.
Speaker 4:I think when you have so much
Speaker 1:I I got the paper right here.
Speaker 4:Digital content that is in your pocket and it's all free or free to consume, it becomes less valuable and and maybe less authentic to you. Mhmm. And so Yeah.
Speaker 2:There's there's something that's always been missing from like part of the the experience of being a music fan to never actually go and trade your dollars. Like I think people do like to vote with their dollars Yeah. And express their interest and actually have this physical embodiment of their of their taste.
Speaker 4:Well, they're doing it with live music now. That's where Yeah. The money has gone. Yeah. The money is, you know, really moved to to live.
Speaker 4:It used to be, you know, in the nineties and eighties and everything, people would go on tour to support their record sales. And now it's the reverse. Yeah. Release the record so you can go on tour and sell tickets.
Speaker 1:And it feels like the in person event stadiums are getting like, the CapEx is just skyrocketing across the sphere. SoFi Stadium here in Los Angeles. There's, like, more and more ways to draw people in with like ever larger spectacles and these like shelling points where like, did you see Taylor Swift in the Heiress tour? Like that was a key moment that even like the casual fans needed to find.
Speaker 2:Yeah. So after Pandora, talk about the journey into Conde Nast.
Speaker 4:Yeah. It was you know, we I wasn't at Pandora very long because we sold it to SiriusXM.
Speaker 2:Yeah.
Speaker 4:And, you know, I was thinking about what I wanted to do next, I was fortunate enough to be in process in four different companies. Two were in New York, two in LA. We're we're from LA. So LA had a lot of attractions for us. And I was flying back and forth between New York and LA and having trouble deciding what I wanted to do, and my wife was like, usually you're so decisive.
Speaker 4:I was like, I know. It's really tough. And then I finally realized on one of these flights that when I'm sitting here, had all the information on all these companies. Every time I'd go to the Conde Nast information. I wanted to read about that.
Speaker 4:Was like Mhmm. And that's how I literally have it made my decision. Mhmm. Like, that's the most intellectually interesting to me. I'm gonna go do that.
Speaker 4:So and I I But there were a couple criteria I was I had for what I did next. One was I still like the intersection of content and technology and distribution models.
Speaker 5:Yep.
Speaker 4:But nonexclusive content was gonna be dominated by big tech companies. You know, music Sure. Films, TV, whatever. The stuff that I had been doing, it had all been nonexclusive. Like, I wanted to go somewhere where we had our own content, we had our own brands, we could control our distribution more.
Speaker 4:And so that was certainly one of the criteria, but also still the opportunity to innovate around technology, how you use technology to create new business models, distribution models. And, you know, Conde Nast really fit that well.
Speaker 2:Yeah. Yeah. There is interesting I mean, we've talked about this a ton because, know, thinking about all the new categories of media, which we joked about, we put out this really like unhinged market map of of media as a joke. And then unfortunately, we like called ourselves neo traditional media, which was a joke. And then now people will tell us and be like, you guys are a pioneer of neo neo trad media.
Speaker 2:We're like, we created that But category as a but something that we've come back to over and over is just the value of these legacy brands that have been built across decades and how, you know, take away like the business models and and how those are evolving. Like, it just seems like the value of a Vanity Fair or a Vogue or the New Yorker are are shockingly durable because we're just, you can make more of these kind of properties but you need decades. Right? And and and so I'm wondering your strategy around kind of how you think about counter positioning these brands against the content that is flowing so freely across
Speaker 1:You're referring to the trough.
Speaker 2:What's that? Oh, yeah. Yeah. Yeah. The trough of social media apps.
Speaker 2:Yeah. But yeah. But yeah, like even, you know, I I've also talked about the the challenges with Substack around certain stories. Substack, if you're an individual selling a subscription, it wants it will reward people that publish multiple times a week that sell a subscription, and yet there's so many stories that take Months. Months to tell.
Speaker 2:Year there's great stories out there that you'd want somebody writing spending a year on
Speaker 5:it.
Speaker 1:C. Molde Hirsch is not gonna break the My Lai massacre on
Speaker 4:something.
Speaker 2:And so and so there's this opportunity of like the value of brands and curators that that is maintained. And we're not creating We are Like again, I would say we're creating new iconic media brands but it'll take, you know, twenty, thirty years. Right? It's just you cannot do it overnight. And then how these things can operate as platforms where there are a lot of super talented writers that shouldn't be trying to publish every single week because their calling is to publish maybe once a month or even once a quarter at different points, right, and finding finding those lanes.
Speaker 2:So I'm curious about how you're thinking about the role of the different brands under Conde Nast and, you know, counter positioning against platforms like traditional social media or or Substack.
Speaker 4:Look, I think you bring up a really good point about Substack in particular, which is it is a great platform for certain creators.
Speaker 2:Yeah.
Speaker 4:And if you are if you wanna be on that bit of a hamster wheel, meaning but it may not feel like a hamster wheel to a lot of people. Like, they they love to publish content multiple times a week. That's great. It's a great platform for that. If you wanna spend six months, twelve months deeply researching something, and Substack is not the medium for that Yeah.
Speaker 4:It won't reward that behavior. The New Yorker is.
Speaker 2:Yeah. Yeah.
Speaker 4:You know? It really is, and that's and and we get rewarded for that by our subscribers.
Speaker 1:Yeah.
Speaker 4:When we come out with these really deeply researched investigative pieces that, you know, we have a huge army of fact checkers at The New Yorker that comb through every single word in that so that when it is published, it has really, really been thoroughly fact checked. When we publish that, we see the numbers spike on subscriptions. Our subscribers reward us for that type of journalism in a way that I don't think works so well with Substack. Other things work really, really well with Substack.
Speaker 2:Yeah. Yeah, that said, there's been there's been, you know, we cover tech primarily, so we've seen a lot of people from tech leave the sort of like brands or platforms to go to Substack. And some of the some of the times they come out and they're just scooping every single day and it's it's amazing. But more often than not, I'm like, I actually wish that at least a few of you guys would go to one company and I could subscribe to you and Just try to rebundle. Pressure.
Speaker 2:Oh, yeah. And and I don't actually want like for a lot of people, I'm like, I think you selling ads is a waste of your time. You should just be writing, right? And a lot of them feel that. And then the hamster wheel thing, I I was talking to, you know, a really big substacker yesterday and they were feeling that.
Speaker 2:They were like, I don't I don't wanna publish every day. Right? But you built a business around that and then you're sort of like trapped to this business model. So so anyways, I think we're gonna I've I've said it. I think in this in this age of AI, in this age of slop, and sort of like ultra fast media, I believe that being a true journalist, being a reporter, being a writer is only gonna I think it was always relatively high status, but I think it will even go up and up and up over And become
Speaker 1:more valuable as a
Speaker 2:people Yeah. Yeah. It's more valuable. It's like we want people that are doing original journalism, fact finding. It's so essential.
Speaker 2:And then also, yeah, just just spending spending the time. I mean, we're we're sort of a a symptom of the Internet. Right? We make ultra fast content. Right?
Speaker 2:I don't expect people to watch most of any of the shows from last week. Right? Mhmm. Maybe there's some interviews that are sort of durable, but the majority of the commentary, it's just it comes and goes. Right?
Speaker 2:We expect people to watch it in the twenty four or forty eight hours that we create it. But there's so much content that I think about, you know, sitting down on a on a Saturday, where I'm like, well, maybe I wanna read. I have limited time. Maybe I wanna read something that somebody puts six months into.
Speaker 1:Mhmm.
Speaker 4:Look, I think it's important to know what you're good at and take advantage of that and not try to be something that you're not good at. And you guys are really good at exactly what you just described, and so you've made the most of that, and you've attracted a really important audience, and it's really worked for you in a business model. For us, to try to chase that would be to move away from what we're really good at and try to become something different. And I agree with you. I think where, you know, with with the amount of AI generated content or low quality content that is being flooded into the market, that only, I think, accrues to the benefit of companies that can really stand out from that.
Speaker 4:And so don't try to be that. Like, I always tell our you know, we're we're gonna always have human created content. First of all, I think it's what our I know it's what our audiences expect and want. Secondly, we have no competitive advantage over just creating AI generated content. There is that doesn't leverage any of the advantages we have.
Speaker 4:And so knowing what your advantages are competitive and and and really building upon that, I think, is always important in any business. And for the industry changes that are happening right now, I think there's real value in it because, unfortunately, there's gonna be fewer places that can do that because the ones that are more marginal may not survive the changes that are happening. And our brands have been really thriving in it.
Speaker 2:What is how do you compare your philosophy of running like a house of brands versus, let's say, an LVMH? Is there similarities, differences? What is the philosophy?
Speaker 4:Yeah. I mean, you know, when I first joined, I spent a lot of time talking to those companies to try to understand how they were organized, because one of the things I had to figure out is what I wanted to do with the way we were structured, because we were structured very differently. We were really a loose collection of companies all around the world. Every country operated entirely independently from every other country.
Speaker 1:Wait. Really? Oh, my God.
Speaker 4:It was crazy. Wow. There was no technology Okay. Collaboration. There was no they competed.
Speaker 4:Yeah. Literally. I remember literally three weeks into the job, I start traveling. I go to Milan. Yeah.
Speaker 4:You know, I'm trying to visit all our different offices. And I get a call from my assistant, like, you know, some of the team in Milan is upset you're not visiting. I'm like, I'm in the office. I'm here visiting them.
Speaker 1:The wrong office.
Speaker 4:I found out we had seven offices
Speaker 1:in Milan.
Speaker 4:Conde Nast US had an office. Conde Nast Russia had an office. France had an office. In Milan. All different offices.
Speaker 4:Because, of course, they couldn't be in the same office because they were competitors.
Speaker 1:Yeah. So a
Speaker 4:lot of changes to make Yeah. In that model. But but look, actually, it was a great strategy Mhmm. When the company was a print publication business. Mhmm.
Speaker 4:It worked by definition. Carnass became a very big, successful company following that strategy. But it was not the right strategy for the Internet age and the digital age and, you know, how and how audiences had changed. Audiences moved from, oh, I read my local, newspaper, my local content, to I wanna see what's happening around the world. I wanna consume content from Korea or China or Sweden or Israel or wherever.
Speaker 4:Yeah. Much more cosmopolitan in their approach to how they consume content. And so really, we use that as a guidepost to say, okay, how should we structure ourselves? Mhmm. And just, you know, question everything about, you know, how we organize ourselves.
Speaker 4:And even the culture of the company, was very, very territorial and fiefdom based to to what it is today, is much more collaborative.
Speaker 1:So obviously, of efficiencies across the portfolio geographically. The brands are power law driven. Right? You have a few brands that drive the the vast majority of the revenue. Have you been in a portfolio expansion period or portfolio contraction period?
Speaker 1:Is there benefit to going more focused around the the tent pole brands? Or do you wanna expand further? How are you seeing like the
Speaker 4:What we find is
Speaker 1:scope for the business.
Speaker 4:You know, certainly our largest, most important brands have done very well in this. Yeah. You know, like Vogue is our largest brand.
Speaker 5:Yeah.
Speaker 4:Vogue has grown every year I've been at the company. It grows revenue, grows profitability every year.
Speaker 1:Good news. Good news right
Speaker 4:It is good news. And and you know, The New Yorker also. The New Yorker just had its most successful year ever by a long shot. Those brands, whatever's happening with search algorithms or AI, they seem to just be able to rise above it. Sure.
Speaker 4:We have smaller niche brands, Pitchfork, a music brand, very small. It's 1% of our
Speaker 1:revenue. Sure.
Speaker 4:But it has a very strong loyal audience in the category that it covers. It's doing very well. And so there's this sort of barbell effect that's happening, at least within our portfolio. And then we have some that are in the middle that that are impacted more. Either they don't have a strong authority in the category or they're a little too broad that they don't go deep enough in a specific category.
Speaker 1:Were just talking about BuzzFeed and it felt like for a long time it fell into that category of, you know, decent sized audience, but ultimately built on the shaky ground of another platform without that really strong core audience that would stick around through thick and thin. How
Speaker 2:do you think about talent identification going with sort of discovered talent? Let's say a writer who's established that's that already has a a, you know, following versus somebody who, you know, has a lot potential but maybe hasn't had a breakout moment yet, and then the same thing with executives.
Speaker 4:Yeah. I think, you know, first of all, for writers, we're a great home for the best journalists in the world.
Speaker 5:Mhmm.
Speaker 4:In part because, yeah, I wouldn't have thought this was a necessary competitive advantage several years ago, but it is today, which is that we're not impacted by political influence. We're not under the FCC's thumb. We don't have licenses that they need. We're not trying to buy Warner Discovery and need Sure. Merger approval.
Speaker 4:And so and we're owned by a family of his own cutting ass for seven decades. Yeah. That, you know, I've at the company now seven years, and not once have they ever called to interfere with anything we do. Therefore, I don't need to do that with our editors. We can just hire the best editors and stay out of their way and let them let them do their job their best.
Speaker 4:So that is very attractive to journalists, cause they know when they come to our company, they're not gonna get a call from the CEO or the board or whatever about why'd you say those things about this advertiser or whatever No. It The journalism comes first and will always come first. So that helps us attract very established writers, but at the same time, we also are a great place for people earlier in their career to learn because they can learn from the best. So we always try to make sure that we are recruiting really high potential new journalists into the company as well as, you know, the best external. In terms of executives, you know, other than Anna Winter, every other executive has turned over since I joined the company.
Speaker 4:Every single one.
Speaker 2:Wow.
Speaker 4:And I did most of it immediately. And and two reasons. One, if you want to effect culture change, change people. Change people that that that that don't reflect the culture that that you want to have. And when I got to Conde Nast, I felt like this is not the culture of there were great things about the culture.
Speaker 4:You know, the the focus on excellence really, really deep at the company. But there are other aspects of it, very internally competitive and political that I that I didn't like, and I just decided I'm gonna I wanna create the culture of a company that I wanna work in, so let me find people who think similarly about about the importance of culture. And then secondly, because, you know, we were going from like in The US, that was a had its own CEO, was a separate company from the rest of the world, it was very focused on The US market. I wanted people who had much more global perspective and global experience. And so the skill set I wanted to be broader than than what the company had traditionally had.
Speaker 9:Mhmm.
Speaker 2:Probably 2018, this idea of like content to commerce incredibly popular. And even by the time we were starting this show
Speaker 1:You're thinking New Yorker protein powder.
Speaker 2:When's it coming? Yeah. Love that. But even when we were starting this show, a lot of people said, wow, you have this audience of, you know, entrepreneurs. Why don't you build your own software and, you know, spin out software companies or develop stuff internally?
Speaker 2:And we said, what with what hours in the day are we gonna do that and why why would we deserve to win over a team that is, you know, entirely dedicated to a certain problem? Where has content to commerce worked within Conde Nast, and where have you experimented or avoided it?
Speaker 4:Mhmm. You know, the if if you think about from an advertiser perspective, the reason advertisers have always come to Conde Nast is the influence that we have with audiences. Mhmm. Right? That that, you know, whether it's fashion or travel or home, you know, it's Yeah.
Speaker 4:It's it's the influence that we have. Now, you know, that that was very, very true in the print era. It's very true today. But they also have many more avenues to reach audiences than than they used to. So for us, when we look at commerce, we think that ability to influence audiences certainly exists even more than before because of how much larger our our reach is.
Speaker 4:And so we can use that, maybe not to create the New Yorker protein powder, but to sell fashion, to sell travel. Good. So we've been investing in commerce, but not creating our own products per se. Partnerships. Yeah.
Speaker 4:In partnerships. And that that also has grown every year. Okay. We we announced it'll be launching soon an initiative we announced last year called Vet, which is really at the intersection of, you know, certainly e commerce growth, social commerce in particular, and the creator economy. And so what Veth is, you know, we have relationships with all the luxury fashion companies.
Speaker 4:We're using those relationships, creating a marketplace commerce platform that then creators can use to connect with their audiences. Mhmm. And so we'll be working with initially a small number of of real taste makers in fashion
Speaker 1:Mhmm.
Speaker 4:And then using the relationships and the technology we've built to create this creator marketplace called Vet.
Speaker 1:How do you think about journalists becoming influencers? Can be great, develop their own audience, and then that draws more people into their stories when they do have something to publish. Double edged sword because if they leave, they have an audience that might sign up on day one. They might say something that doesn't necessarily represent the views of the publication. There's sort of, you know, some some organizations have gone back and forth on it either saying everyone needs to be posting on Instagram every day to you can never post on Instagram any day.
Speaker 1:How have you toyed with that or dealt with that tension throughout your career?
Speaker 4:You know, because we have, as you said, a house of brands, our brands are very different. So, you know, a journalist for The New Yorker may be very different than a journalist for Vogue Yeah. In their approach to that question. So, you know, we don't have hard and fast rules that we
Speaker 1:would So no one size fits all.
Speaker 4:Definitely not one size fits all. But we do know that, you know, journalists that are able to build profiles for themselves tend to be good for business. So we certainly support that.
Speaker 1:Got it. I want to talk about events. Yeah. Are events more power law driven? Do you want to, like, raise the long tail of events, do more events, and try and elevate to something where there's a Met Gala happening every week or something.
Speaker 1:I don't know. Where does the event strategy go?
Speaker 4:Events for us are one of the fastest growing parts of our business. Interesting. But not because we're just doing more and more events. Okay. We're actually doing fewer events
Speaker 5:Okay.
Speaker 4:Than when I started. We're doing fewer events, but we're focusing on events that really are what we call cultural moments. Met Gala's a great example of
Speaker 1:that.
Speaker 4:Yeah. Met Gala was last week you know, last Monday. Yeah. You know, in the first seven days, I just saw the numbers last night, we had 3,100,000,000 video views of the content we created.
Speaker 1:Yeah. That's remarkable.
Speaker 4:It is. It was up, I don't know, 60% over last year.
Speaker 1:And isn't a lot of this, like, off the record too?
Speaker 2:Or or,
Speaker 1:like, there aren't necessarily I've I've never seen, like you can't just livestream it. You can't watch what happens inside or, like, there aren't, like, microphones on the dinner tables.
Speaker 4:We do a livestream of the red carpet.
Speaker 1:Yeah. Yeah. Yeah. Exactly. So it's it's even limiting in terms of what you're sharing.
Speaker 4:Livestream had 200,000,000 to view it.
Speaker 2:That's amazing. Wild.
Speaker 4:So it it every year we do the Met Gala
Speaker 1:Yeah.
Speaker 4:It just grows at a level that's hard to believe, and we finish it and we go, oh my god, how are we ever gonna exceed that next year? Then it grows 65% again the next year.
Speaker 1:Wow.
Speaker 4:And it was the same thing for the Oscar party, Oscar party this year. 65% growth year over year. Remarkable. So I think we found a playbook
Speaker 1:Yeah.
Speaker 4:On that. But it's not a playbook where you can say, oh, great. Let's just do one a week. Yeah. You can't create cultural moments like
Speaker 5:that.
Speaker 4:What you can do what we found is doing fewer and doing them at very high quality
Speaker 2:Sure.
Speaker 4:And make them global events. Like, the Met Gala is a global phenomenon now Yeah. In a way that it wasn't, you know, seven years ago when I joined. It was an important, very important, you know, event that people in The US knew about and, you know, people in the fashion community around the world knew.
Speaker 1:Yeah.
Speaker 4:But by bringing the company together into one organization, now all of our brands globally promote it and promote the livestream and the content from it, And that's really helped elevate it to become now a global cultural moment.
Speaker 1:Yeah. Interesting.
Speaker 2:Help me I don't know how much you'll be able to say here, but help me understand why BuzzFeed is worth something like a 120,000,000.
Speaker 1:No. $2.40. That is about half the company for one point.
Speaker 2:Oh, half the company. Yeah. $2.40. What's the Revenue bull is declining. Decent, you know, run rating 60,000,000 a year of losses.
Speaker 2:I would guess an aging audience. Do have any idea where the where the value is?
Speaker 4:Well, look, the the only thing I read about that is there was like $20,000,000 going into it. I understand it.
Speaker 1:I thought it was a 120.
Speaker 4:There's a valuation of that, but there's Oh,
Speaker 5:a lot
Speaker 4:of that. I you guys may have read
Speaker 1:about that. Okay. Yeah. Yeah.
Speaker 4:But look. I can't speak
Speaker 1:Sure.
Speaker 4:Specifics of that business. That that was a business that did very well. They were very innovative around a different era, the Internet. And you could take search traffic and social media traffic and turn it into commerce dollars or other things.
Speaker 1:Yeah.
Speaker 4:That era is gone.
Speaker 1:Why? Why? Yeah. What killed that era? Like, people are still spending time on social media.
Speaker 1:They're still searching on Google, and yet publishers have not been able to monetize traffic or generate traffic is
Speaker 2:like I I look at BuzzFeed as like, you know, I I look at Conde Nast
Speaker 1:Mhmm.
Speaker 2:As like luxury media.
Speaker 5:Mhmm.
Speaker 2:That is what that that's my personal view on it. It's like this is the LVMH of media. Mhmm. And BuzzFeed was like a fast fashion.
Speaker 1:Just say you've never been to the BuzzFeed Gala.
Speaker 4:But think think about it's really interesting. We we did this for a board meeting about six months ago. Mhmm. Took a snapshot of search results from, I don't know, seven or eight years ago.
Speaker 1:Okay.
Speaker 4:And what you saw were, you know, a few sponsored links
Speaker 1:Mhmm.
Speaker 4:And then the 10 blue, you know
Speaker 1:the Yeah. Traditional search page.
Speaker 5:Yep.
Speaker 4:Do the same search term today. You get an AI overview. Yep. Then you get rows and rows and rows of commerce links.
Speaker 5:Yep.
Speaker 4:And then you
Speaker 2:get sponsored stuff. Somebody last week was saying, how is search revenue up? I was like, have you have you done a search recently? Yeah. And I got all I basically got to go to the second page to get an organic result.
Speaker 4:It's been good for Google.
Speaker 1:Yeah. It's been great.
Speaker 2:It's been great. Great for business.
Speaker 4:If you're a publisher, you've you've Okay. Launched that if you were if you had a business
Speaker 9:Yeah.
Speaker 4:That relied on that Yep. To arbitrage that traffic to sell whatever
Speaker 1:Mhmm.
Speaker 4:That business got very, very difficult.
Speaker 1:Yeah. Yeah. Yeah.
Speaker 4:So, you know, and look, the changes in search traffic have certainly impacted our business Mhmm. But not to the point that we haven't been able to grow our revenues and grow our profitability Yeah. But it's a headwind. Yeah. You know, last year so, you know, each of the last three years, we would do our budgets, and we put some forecasts in of search traffic declining.
Speaker 4:You know, why? Just because we'd seen the pattern of algorithm changes, and generally, those algorithm changes were negative. Mhmm. They had negative impacts. So we're gonna forecast it be to be down, and then every year, it was down more than we forecast.
Speaker 1:Yeah.
Speaker 4:So last year, I told our teams, assume there's no search. Mhmm. You have to have your businesses planned Mhmm. As if search is zero. Mhmm.
Speaker 4:We don't expect it to be zero.
Speaker 1:Yeah.
Speaker 4:But we, you know
Speaker 1:Don't bank on it.
Speaker 4:We expect it to be a single digit percentage of our traffic.
Speaker 2:Mhmm.
Speaker 4:Very low. So we started working on plans for each of our brands around that. And some of the brands we looked at said, they don't really have a good plan for that.
Speaker 1:Yeah.
Speaker 4:So we're gonna reprioritize on the ones that do. And but if you don't have those paths forward, and if you don't have really strong authoritative brands or brands that have very strong niche in certain areas or direct audiences, then you're just gonna be fighting that all the way down.
Speaker 1:Talk about subscriptions, bundles, subscription pricing in a time when we have little spurts of inflation here and there. How important has that been? How resilient has the subscriber model been? What are you seeing there?
Speaker 4:You know, it's it's a it's a very important part of our revenue stream. Mhmm. But, you know, our digital subscriptions grew 29% last year revenue.
Speaker 1:Oh, wow.
Speaker 4:And, you know, they're growing double digit percentages this year. So it's a really important growth area of our business. Yeah. We're launching more digital subscriptions Mhmm. For more brand like Pitchfork, small brand, just launched a subscription earlier this year.
Speaker 4:Tatler, another small brand in The UK, launched it. But, you know, our big brands, The New Yorker, you know, very, very strong growth. Mhmm. Vogue is showing incredible growth in digital subscriptions. Mhmm.
Speaker 4:So that's that's an area that's important to us. Mhmm. And we think we've built up some really good capabilities both on the technology side, but then also on just the people capability side too.
Speaker 1:Yeah. And then do subscribers get stuck in a mentality of I pay a certain amount and they're resistant to a price adjustment in a time of inflation? Or is there some You price elasticity
Speaker 4:know, we have we have raised prices on subscriptions fairly materially over the last couple of years.
Speaker 1:Okay.
Speaker 4:And, you know, each year we think, okay, we're raising the price. Yeah. We're gonna the retention is gonna go down, and actually the retention has gone gotten better every single year. Yep. So the elasticity looks pretty good
Speaker 1:That's good. For us so far.
Speaker 2:Yeah. In some ways, you know, and the biggest fans of independent creators on on Substack and other newsletter platforms. Like, we we really we have a lot of them on the show. We subscribe to a lot of them. But in some in some ways, they're helping your your guys' like pricing dynamic and Oh, yeah.
Speaker 2:They're like, well, I want $20 a month for my newsletter that publishes, you know, twice a week And I just kinda like write what I'm thinking. And you guys are like, well, we're gonna give you, you know, all these stories and all of this like video and images and and, you know, these deeply researched stories. And so your product or subscription for one of the brands starts to look like incredible value. Because you're like, the alternative, my dollars are gonna go way less far with an independent creator in terms of volume of stories. Now you don't get the same dynamic that they have which people just like to support independent writers and content creators.
Speaker 2:That's a part of it. It's just you enjoy saying putting, you know, kind of helping somebody be in business. But I think that's an interesting dynamic.
Speaker 1:Can you talk about the further niche ification of media? Architectural Digest, The New Yorker, these are already not niche publications, but they have category Vogue, GQ. Right? There's a there's a theme to the to the product. And what we've been tracking over the last couple of years is that the Internet native media properties, the creators have been able to find even smaller niches.
Speaker 1:So we've talked to someone who just does, you know, car reviews or just does the
Speaker 2:Car dealership.
Speaker 1:Car dealer the car dealership guy was a good example of like that that would not be a national magazine, but he's made a business work there. And I'm wondering if there's opportunity for more niching or if there's value in not over niching a product and how you're thinking about because you see all these niches and you think, maybe there's a roll up strategy or maybe there's some sort of, you know, synergy between them, but that's already sort of playing out on the platform in the sense that,
Speaker 5:like Mhmm.
Speaker 1:YouTube is making money from both Doug Dumero reviewing every car and the car dealership guy talking about the dealer side of the automotive industry. And these are separate from an automotive magazine that might sort of in previous era address both sides.
Speaker 4:Mhmm. You know, I think where publications can get hurt is if they're caught in the middle. Sure. If you if you try to be too broad Mhmm. Too large of an audience Mhmm.
Speaker 4:This is not the era for that.
Speaker 1:Yeah. You know, five years ago, maybe that worked, but
Speaker 4:not today. You either need to be large and authoritative in a big category.
Speaker 2:Mhmm. Yep.
Speaker 4:Vogue is a good example.
Speaker 2:Or architectural digest. Yes.
Speaker 4:Or a Connie Ash Traveler would be another one. Or you need to be really nailing a specific niche where you have a loyal audience that's willing to pay.
Speaker 1:Mhmm.
Speaker 4:And and and, you know, ad supported only? Tough. That's that's if if you are if you have a brand where you're investing in the journalism, you have to make significant investments in journalism, supporting that just with advertising is is a tough place to be. But if you've got, you know, really content that people are willing to pay for Mhmm. Then But to do that, don't get caught in the middle.
Speaker 4:Yeah. That makes sense. Place to be.
Speaker 2:The devil wears Prada's The devil wears Prada two, box office hit. Do you expect that to be a pretty major catalyst for for Vogue?
Speaker 4:You know, it's it's actually it's actually been a catalyst for Conde Nast,
Speaker 5:broadly.
Speaker 4:You know, the obviously, the movie is, you know, based on Anna Wintour, and the company is based on Conde Nast. And but, you know, I was I was talking to our chief revenue officer a couple weeks ago, and, like, you know, we had a really good first quarter. We exceeded budget, and second quarter was looking strong. And I asked her, like, you know, what's driving the strength? And she stopped for a minute and she said, the movie.
Speaker 4:I was like, what? Wow. Like, that's driving even other brands. I think there's just more interest in Condie Nast in general. Now, I think it's more than just that, but, you know, I think the movie has created a lot of intrigue, and and it's been fun.
Speaker 1:I imagine it's good for hiring, but can you zoom out and talk a little bit about the hiring pipeline? There's so much uncertainty in the job market. Should you become a software engineer? Are there gonna be no software engineers? AI can write stuff, but can't really do investigative journalism, but there's still a lot of anxiety.
Speaker 1:Like, how are you seeing the next crop of great journalists develop right now? Yeah. Or advice that you give to, like, new grads who wanna work at CogniNast?
Speaker 4:Well, you know, we we hire journalists and we hire software engineers. Yeah. Course. And it's it's it's different.
Speaker 1:And everything in between, business and finance and legal. Sure.
Speaker 4:Look. You know, I I remember my mom growing up, she always said, there's always room at the top. Right? And that was good advice. Like, if you can be That's a great best of what you're doing, there's always gonna be room for you.
Speaker 4:That's remarkable. Moms have the best.
Speaker 9:So good.
Speaker 4:So for us, you know, journalists who really excel Yeah. I think they'll always have a home. Mhmm. You know, in terms of software engineers, you know, we we brought in a new head of product and technology
Speaker 1:Mhmm.
Speaker 4:Really fortuitously in December. And December was really you guys covered this Yeah. Very well. Moment. A step function change.
Speaker 1:Yep.
Speaker 4:And so when he started, you know, I told him, you need to question everything we do. Mhmm. Start with a blank sheet of paper, rethink everything that we're doing, how we do it, and how we can use AI. And the first thing he did is he started some small pilots. Three or four people on a team, eliminating certain roles that would have been on a much bigger team Mhmm.
Speaker 4:To create new products. And we he ran the pilot six or eight weeks, and, like, there was enough information already where he said, okay, let's go make big changes now. Mhmm. And so we just, you know, last month made big changes in that in that org really centered around how we use AI at the core of not our content, but how we develop technology and products. Mhmm.
Speaker 4:So, you know, the the result of that is there there were whole departments that we no longer needed. Mhmm. Like, we used to have a it might be a team of 10 or 12 people on a big project. When you have that big of a team, you need a technical project manager. Mhmm.
Speaker 4:You need QA engineers. You need, you know, product analysts and all these other things. Well, we just redesigned it and said, actually, you have a product manager and they're going to be the product analyst also. Mhmm. Maybe there's a designer and there's an engineer and we're going to have AI create the software and also do the QA of it.
Speaker 4:And so these teams that were 10 or 12 people became three or four people, they moved at three times the speed. Mhmm. So what does that mean if you're a software engineer? It means there's going be fewer jobs for entry, without a doubt. Mhmm.
Speaker 4:Fewer jobs for now. But, like, if you're a product manager, you can do things that you could never do before because you could actually create the code yourself
Speaker 2:Yep.
Speaker 4:Using AI.
Speaker 2:Well, And Conde Nast is a unique company because you guys don't sell technology. You sell content. And so you want to make great technology to serve the content, but it's not the core. Not the thing that you sell. Whereas, yeah, we've we've noticed something is that we basically we hired a full time software engineer Mhmm.
Speaker 2:Early in the company, Tyler, sitting over there. Hey, Tyler. And we're we're the kind of employer that never would have hired a software engineer historically because it for a small podcast at the time, why would you why would
Speaker 1:Build software.
Speaker 2:Yeah. Why would you build custom software? And so there's job creation happening by companies that never made sense to hire software engineers but now they can.
Speaker 5:Mhmm.
Speaker 1:Yeah. Cool. How are you thinking about I I imagine that at almost all the publications, there's essentially no AI doing writing or or creative work. But how have you had to confront anything on the advertising side? Like, imagine if I flip over the back of the New Yorker, I'm sure I've seen a three d render of a watch at some point.
Speaker 1:Will I be seeing an AI render of a watch? Very Does that matter? Does anyone care?
Speaker 4:It matters. What you know, last June Yeah. There was an ad that was run-in Vogue Print Magazine, and the ad used an AI generated model.
Speaker 1:That's right.
Speaker 4:And it blew up. Yeah. But people who are angry, they were angry a little bit at the advertiser. Yeah. They're mostly angry at Vogue.
Speaker 4:Interesting. And I loved it. I thought it was fantastic because it reaffirmed what I had hoped was gonna be the case, which is our audiences want human generated content.
Speaker 1:Yeah.
Speaker 4:They wanna know what they're reading and seeing is real and not AI generated. Interesting. So to me, that was a really important indicator of, frankly, our future
Speaker 8:Mhmm.
Speaker 4:That our future strategy about using AI in many, many places to drive efficiency, to reach audiences faster, speed up the velocity of what we do, all to enable us to invest more in human generated content. That that was a really
Speaker 2:Especially clothing is really interesting. There's a slippery slope where, let's say you generate, you know, you have a a real piece of clothing and you say put this on this, you know, even if it's a real model, but put this on this model. And then what happens if like, you know, you could just prompt it and say make make it fit like slightly different. It's like, well then now you're that's not the product that you're selling. Selling a product that doesn't really exist anywhere.
Speaker 2:So there's certain certain certain categories that I think will Yeah. And just yeah. It'll be a brand decision and I think ultimately that that is why that is why I think Yeah. Lots your brands will will endure because there will be plenty that make the opposite decision. We're going to lean into it but there's always there's always room at each end of the barbell.
Speaker 1:Yep. So lots of care with regard to AI advertising. Zooming out, are are ads a bug or a feature if I open up a copy of Vogue?
Speaker 4:Well, in a print magazine,
Speaker 1:it's Yeah.
Speaker 4:Absolutely a feature.
Speaker 1:I think so.
Speaker 4:Yeah. Without a doubt. I think for for digital, it can be both. Sure. You know, programmatic display ads may be more of a bug than a feature.
Speaker 4:Yeah. You know, real
Speaker 1:Yeah. High Because it quality
Speaker 2:disrupt it's just it really it's mostly the visual disruption of like I'm reading this like beautiful I actually like it integrated sort of a native ad from the publisher that was, you know, considered. But anything that becomes, you know, display ads, just the
Speaker 4:So our biggest advertising category is branded content. Yeah. And it's it's great because it it it leverages a big competitive advantage we have. Sure. Our brands, our audiences, but our creativity.
Speaker 4:Yeah. And so, that's a that to me is a is a really great place to be in our business Mhmm. And to see the growth of that every year. You know, of course, we have display ads. We have print ads, some of which can be branded content.
Speaker 4:A lot of video, video ads. Yeah.
Speaker 1:Yeah. Anything else, Jordy?
Speaker 2:No. This was fantastic. This was fantastic. Really glad so much. This work.
Speaker 1:We'll we'll wrap the show right now. Leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter, tbpn.com. We will see you tomorrow at 11AM Pacific. Sharp.
Speaker 1:Goodbye.