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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.
Two major stories bunch of major stories, but the big one, Facebook got a movie, another movie. Actually, a third movie. If you count the documentary, there's been The Social Network, The Social Dilemma, and now The Social Reckoning. Only two of those are movies. The Social Dilemma is a documentary, but it's very interesting.
Speaker 1:And the anthropic got a fable, and there's been a ton of reaction. Ben Thompson was writing about it to the rollout there at The Wall Street Journal. The announcement should have been like the really good model launches, and people are amazed with what it can do, but they they put the title Anthropic puts curbs on AI models. So the well, I'm sure you've seen this on the timeline, but we'll take you through some of the debates over how restricted the model is in certain areas. Bio is a big one.
Speaker 1:Cyber is another one. There's a bunch of funny examples. There's a bunch of reasonable arguments for doing this type of stuff. So we'll go through all of it. So I wanna kick it off with the the Social Network Sequel.
Speaker 1:I wanna watch the trailer for The Social Reckoning because Jeremy Strong is playing Mark Zuckerberg. I've heard people say, hey, he looks he looks like Zuck, like the styling is there. The one critique is Jeremy Strong looks a little bit older than Mark Zuckerberg did in 2011. He's calling
Speaker 2:him unk Or
Speaker 1:It just it just it just doesn't I think it'll color the movie a little bit in the sense that the the film is telling the story of this like very difficult whistleblower situation and and it's different when it looks like a, you know, a mature adult versus someone who was young and running running into these problems for the first time. So let's pull up the tree.
Speaker 3:Listen, before I go on, I wanna make something clear.
Speaker 1:This is how it starts. Okay.
Speaker 3:I have a hunch you're not a fan of Facebook, but I am. I am here to help Facebook, not hurt it.
Speaker 4:Okay?
Speaker 3:You send me a message. What would you like to talk about?
Speaker 5:The chairman gavels a session to order.
Speaker 4:You'll read your opening statement, which we'll skip past for now. That's a separate session.
Speaker 5:And we'll move to witness question ing.
Speaker 3:Spell your name and state your current occupation for the record.
Speaker 1:Is it not a r
Speaker 6:k u c k e r b e r g. Let's see.
Speaker 3:And your occupation?
Speaker 1:Zuckerberg. Oh, it's co produced and directed by Aaron Sorkin.
Speaker 3:Groups where 30% of content hits multiple risk factors.
Speaker 6:Hang on. I don't I'm handing piece to the social
Speaker 3:I'm a tech reporter? Ish.
Speaker 2:Ish? Is this Mike Isaac?
Speaker 3:Counting on the next round of professional test Jeff Horowitz. I'm happy to lend a hand, but I think you're doing
Speaker 1:He wrote broken code. He was journalist at the Wall Street Journal. He is a journalist at the Wall
Speaker 3:Street He's a journalist
Speaker 1:and Broken a number of global news stories. Including the Facebook files.
Speaker 3:The fire hose of bad information, you are injecting into the air supply. It's becoming jet powered.
Speaker 6:I'm a free speech absolutist. I'm not the one who's lying, and I'm not stopping them from seeing someone who is.
Speaker 3:It's not
Speaker 1:a bad Zuck impression. He's got the voice tone pretty down.
Speaker 3:Worse as a result time spent on the platform. Senior leadership knows and is doing nothing. I know there are easier enemies to make. The mafia would be an easier enemy to make. So what would you need?
Speaker 3:To stand up the story? The internal documents. This is a material violation of my NDA. We're twice as big as the biggest country on Earth. We're not fighting with Congress or post government around here.
Speaker 1:Twice as big as the
Speaker 3:biggest country on Earth. Have one hundred and two hours together.
Speaker 1:From a
Speaker 2:from a user standpoint
Speaker 1:Oh, okay. Users.
Speaker 3:I don't wanna be made an example of by a guy with unlimited resources. Harm, I promise you is imminent. Enough.
Speaker 6:People around here understand that when I say no, that's the end of the debate.
Speaker 7:I'm not two years out of
Speaker 8:a dorm room anymore, Charlie. Look around.
Speaker 1:Man, if they were trying to go as inspirational as the Social Network, they really missed the mark there. What happened? Yeah.
Speaker 2:So that their intention was to try to fire up the next generation of entrepreneurs that I do.
Speaker 1:Seems like they missed
Speaker 2:the To inspire them.
Speaker 1:To uplift the You can
Speaker 2:build any business out of your dorm room.
Speaker 1:Yep. Yep. If the goal of this film is to really, really take the viewer inside TBD and meta super intelligence and what's going on with Nat Friedman, Daniel Gross, Alex Wang. Like Yeah. Didn't see it.
Speaker 1:Feels like they just dropped the ball.
Speaker 7:Yeah. Like, I didn't see, like, anyone that even resembled Yan Lakun.
Speaker 1:That is crazy. The Llama four moment, that could have been the crescendo. Yeah. Behemoth. Behemoth and all the You drama around want drama.
Speaker 1:You want Hollywood drama. You want Oscar bait. Llama four, Behemoth. That story is gonna get put butts in seats. That's right.
Speaker 2:No. More seriously, it's hard for me to it's gonna be really hard to not look at Jeremy Strong and and
Speaker 1:OC Kendall. Kendall. Yeah. Because you're a succession guy. So this is the sequel to The Social Network.
Speaker 1:Instead of chronicling the birth of Facebook, it's the story based on the 2021 Facebook leak by whistleblower Francis Hougen. It's gonna be dramatic. It's not gonna make people like Facebook more, and it's probably gonna make Americans even more distrustful of tech. What's interesting here is that if you stop a random tech person on the street and ask them, like, what is the social reckoning about? They might say Cambridge Analytica because that was another drama moment.
Speaker 1:And I I was sort of like, is it Cambridge Analytica? Is the is it the Haugen thing? And a lot of people don't even remember what the whistleblower story was. Little refresher there. It was an internal document leak.
Speaker 1:The Facebook files showed that it that Facebook internal employees were aware of harmful societal effects from its platforms yet persisted in prioritizing profit over addressing these harms. Now Nikita Beer chimed in, who now works at X, a rival platform to Threads, and said, Zuck makes a lot of mistakes, but this isn't one of them. Meta literally had multiple teams of $1,000,000 per year engineers working on teen mental health, and they had the agency to override big product decisions. They're probably a thorn in Nikita's side because he's trying to maximize click through rates, maximize attention, and he's getting pushback from, hey, there's guardrails here. And he says, the story this movie is about is actually a product manager who didn't get a promotion.
Speaker 2:So The only thing with argument is like you could make the same argument as like the cigarette company has million dollar doctors and researchers focused on making sure cigarettes are as healthy as possible. Yeah.
Speaker 1:Yeah, yeah. And especially with the new fertility data, I think that there's a new cycle brewing of exactly how bad is social media. I still don't really buy the addiction thing just because I'm familiar with addiction defined in nicotine, which is extremely addictive. It's chemical, and you have cravings. If you forget your phone, do you have the same cravings?
Speaker 1:It's sort of different. But there is a very serious discussion going on around social media, and its effects, and fits
Speaker 2:thing is is like very real. Is I was at I was at an event last night and they required everybody to put their phones in these sort of like locked bags so you could go outside at any point And you felt sick. I didn't feel sick.
Speaker 1:Physical, but
Speaker 2:I noticed probably like 20 times throughout the night, I was thinking of going for my phone. Yeah. I didn't start having like physical withdrawal symptoms.
Speaker 1:Yeah, but the craving was there.
Speaker 2:Yeah, I just started thinking about it. It was like phone was like phone noise, right?
Speaker 1:Phone noise, yeah. This is real. Is real.
Speaker 2:I was having some phone noise.
Speaker 1:Yeah, yeah, yeah, yeah. Okay. So yeah, that's legitimate. So the question that I had really quickly is like, what is the impact on Meta? Like, we can pull up the stock chart.
Speaker 1:It's a $1,500,000,000,000 company. They're trying to raise more equity for the AI build out, hire people. Like is this good, bad? What does it look like over the short, medium, long term? So short term, I think this was amazing timing.
Speaker 1:They really got lucky because as we will talk about, like the fact that this trailer dropped the same time as Anthropics Fable five was incredibly fortuitous because Fable just took over the timeline, and no one was really talking about this in tech. Tech insiders won't really see or talk about the social reckoning this week. Case in point, I put it second in the newsletter when I wrote it up. Medium term, I think Jeremy Strong is going to drag Mark into like the bad group of AI leaders while he's on his Oscar tour. Like there was a version of Facebook strategy, a meta strategy that's just like, hey, we're like Amazon.
Speaker 1:We're like Microsoft. Like, yeah, we have bets in AI, but we're not like we're not deciding the frontier. Obviously, Mark has made the decision to hire some of the greatest researchers, invest very aggressively, and this puts him sort of at the center of the conversation around, well, what will the effect of AI be on our society? On kids? Should kids be talking to LLMs?
Speaker 1:Psychosis. All these different things will come up, just as we saw four-zero psychosis and then clogged code psychosis a little bit pop up and people are talking about that. Like you're priming the pumps for the next wave of like, oh, a bunch of people went into the Meta app and like they'd had a bad time and now we got to talk about that. So I wouldn't be surprised
Speaker 2:to What see that do you think Mark is going be more annoyed about this week? The fact that SpaceX is going to be valued meaningfully higher than Meta or this trailer. It's actually a tough one.
Speaker 1:I don't know.
Speaker 2:It's actually a tough one.
Speaker 1:I mean, I think the real one is Fable five. If Meta was using a ton of anthropic models, and then the new model comes out and says you specifically can't use it in MSL, the most important initiative in the company, that's a pretty rough thing where you're like, oh, I've been working with this company to develop my models for my family of apps.
Speaker 2:And now I can't use them they do Meta is spending billions of dollars a year with Anthropic. They have been for a while. Oh, ARR, but yeah. Yeah. They will spend billions of dollars this year.
Speaker 2:And the question is, if Anthropic does allow Meta to use their models for Meta's AI research, what does it say about what Anthropic thinks about Meta's potential in
Speaker 1:Secretly love ads this whole time. No, I don't know.
Speaker 2:No, to me, it would be them not feeling like they had a The AGI. Ability to get to the fresh
Speaker 1:Totally, totally. And that's an ace that's up their sleeve at any time. They can always just take the guardrails off and be like, Hey, more AI, more intelligence on demand for everyone. So I think the fallout of the medium term, Jeremy Strong is going go on this press tour for the Oscar, and he's going to have a bunch of like really emotional, pithy sound bites and then also be like just viral because it's funny to see him doing this impression. And he's very good at like drawing.
Speaker 1:He's already gone viral for his Mark Zuckerberg impression in the past. So I wouldn't be surprised to see the next version of a Bernie Sanders press release about AI highlight Dario, Sam, and Zuck instead of what has historically been the order, which is Sam, Dario, and Demis. So it's always based on perceived industry power and negativity around personal brand. So they have to have a scary quote, and then they also have to have a lot of power in the industry. Zuck's power in the industry is rising.
Speaker 1:And also with this movie, like, there's more ways to to to take shots at him, like, look at what he did with the Facebook files. Remind yourself of that because a lot of people don't really remember the details. They're going to after they see this movie. Then you can then you can say, well, this guy is also building crazy data centers, and look at how he handled this. If they if handles the AI thing like that, it's gonna be bad.
Speaker 1:Right? So that so that's like a little bit of a risk in the medium term. Long term, I don't think the social reckoning is gonna matter all that much for Meta. People will complain about Meta's data centers.
Speaker 2:Why did they not get Jeremy Strong like a wig?
Speaker 1:Because also, he is Oh, playing yeah. An older remember when he had the Caesar haircut? Yeah. So it's a different time. So people will complain about all this stuff, but they'll do it on Meta's family of apps.
Speaker 1:I don't think there'll be churn. And certainly, advertisers won't pull out. It's impossible to pull out of Meta because it just drives it just drives up the r the ROAS, the the return on ad spend for smaller companies. And a bunch of small businesses will just jump in and say, oh, great. Like, you know, some big company pulled out and is boycotting Meta.
Speaker 1:That's great. Ridge Wallet's gonna jump in or somebody else is gonna jump in.
Speaker 2:Advertisers have tried to boycott.
Speaker 1:Yeah. You can on Facebook. It's impossible. So the business is just too strong. And I also don't think Mark will be singled out by a regulatory hammer should it come down hard.
Speaker 1:Like, if there's a data center ban, I don't think it's gonna be uniquely focused on meta. Or only Dario and Sam have, like, true scapegoat risk because they run pure play labs and have been so noisy about AI, and they have the biggest revenues in the category. There might be a day there might be data center regulation, but it won't unfairly target meta. So anyway, that's my social reckoning take. Let's move on to Fable, which launched yesterday.
Speaker 1:And the model seems like incredibly impressive. I I've been seeing these like vibe coded games that look really, really good. And for some of those, I haven't seen the vibe coded games hit really well on social media because you take a video of them and you show the example of what it built. You share the time. Yeah.
Speaker 1:And people just sort of believe it. It could be embellished. But in general, these feel like pretty solid. Of course, making a great game is a great mechanic, and there needs to be multiple levels. And a single demo of a forest putting in is not quite there, but really, really useful.
Speaker 1:And I'm sure we'll see a bunch more examples of like games as memes, simulators, and these things are going to get easier to build. That's really exciting. Of course, there was a bunch of debate on the timeline yesterday and it's bleeding into today around the latest model, Fable five, the first mythos class model that both seems remarkably good at long horizon tasks like software development and knowledge work, but rejects requests related to biology, cybersecurity and frontier LLM development. Interestingly, I haven't seen anyone rejections around anything else. Like, do they remember to reject, like, build me a nuke?
Speaker 1:Because I haven't seen anyone try that. And it'd be very funny if it was like, oh, yeah, just we didn't get around to that. Or there are so many other things. But I think a lot of those other things that you should reject, queers that you should reject, have been ironed out in previous iterations. So going back, say a slur was a big one for a while or say something rude
Speaker 2:And or it's a make different a political political Pausing pausing a chat, basically just like shutting down a conversation versus like switching you to a less performant model.
Speaker 1:Yeah. And it creates this like screenshot that went viral pretty much continuously yesterday. And so this aligns with Anthropics focus on safety. But as many people have pointed out, it's also just good business. You don't want competitors using your products to directly create competitors, and you also don't want financial liability or negative headlines from bad actors using your models to for nefarious purposes.
Speaker 1:Ben Thompson called it true alignment. The take safety seriously culture aligns with business value creation, which is very, very rare. Oftentimes, the like be good or your culture limits what you can do and actually hurts your business, but it's something that you do in favor of brand like Apple would probably be more profitable if they were using like diesel generators for all of their data centers. They went clean energy because they wanted to have an environmental brand. And over the long term, it's helped them, but in the short term, it's been rough.
Speaker 1:Of course, inexpensive. So Ben Thompson writes, What is so fascinating about Anthropic, however, is that while I'm sure some executives of the company are thinking this way, I also totally believe that the employee base broadly also happen to believe that they are doing the right thing. It's fascinating to observe. Me, the rational business analyst, sees a hard nosed but understandable decision to cut off would be competitors, anthropic employees and advocates. The true believers see a regrettable but understandable safety decision that ensures that responsible and thoughtful people themselves, of course, will be the ones guiding our AGI future.
Speaker 1:This is true alignment and it's an incredible accomplishment. Facebook has tussled with this a bunch and we already talked about that. But to be clear, the Fable five rejection threshold really does feel way too low from what people are saying. Tons of examples on the timeline of a biologist just saying hi to the model and getting kicked down to Opus. I saw you shared someone just said cyber with the devil horns, the purple devil horn emoji, and it's like, we can't do it.
Speaker 1:We're not going further. Of course, like bringing down like a broad hammer, you can always dial it back over time. But every rejection is this implicit invitation to hop on the phone with an anthropic sales rep and get on the Mythos enterprise plan, and that's where the real dollars are, too. The time line is unhappy because the idea of democratizing science, technology, all of this is very alluring, but the pool of dollars available from all the biohackers in the world probably isn't close to the budgets available from big pharma. And so you again, you're in this like rational business analyst situation and you fail to see how this is that damaging, except to like the hacker community.
Speaker 1:The real tricky part is how AI frontier AI research is handled. Instead of outright rejecting the query and bumping the user down to Opus, the model appears to answer but quietly gives a degraded answer. And this was disclosed in the model card, which is interesting. So this is, again, reasonable to
Speaker 2:Yeah. But it's not disclosed in the product they're paying
Speaker 3:for it.
Speaker 1:Which a which is a different path than Yeah. Bio and cyber. So if you if you go LLM frontier research devil horns, it will actually give you an answer apparently. It won't bump you down immediately. But so it doesn't disclose that, which is odd.
Speaker 1:Outright rejecting requests for AI research and just saying, Hey, user. Sorry. This model doesn't work for that type of project. Please share. Please use another model or contact sales if you want help with this, would have been much more in line with the bio and cybersecurity strategies.
Speaker 1:And it's also possible that they just didn't need to disclose this at all. They could have just released a model that was intentionally nerfed on AI research. It would have shown up in the benchmarks because people would have benchmarked it on some sort of AI research bench and been like, Oh, weird. It's really good at all these other things, but it's bad at LLM research. And maybe that would have been a bit of a brand hit maybe, but users might never know that the model was intentionally degraded around this category of work.
Speaker 1:So that leaves this third more worrying position, intentional degradation without disclosure in the model card. There's no evidence of this, but it's possible that other workflows might be nerfed and there's no law or even convention around disclosure. Again, maybe good business, but a weird situation to be in. So probably bullish for evals if you're building a business on top of a big lab. You can imagine like a legal AI company who want to be really sure that the models they're using aren't degrading unexpectedly and not telling them.
Speaker 1:It's different if you're like, Hey, I've been a bio researcher for a while. I'm using this. And I know that this model was never intended for me. Or I've been using it, but what you don't want is like, I'm using it and now it's leading me astray in my work. And it's also not telling me that it's going to lead me astray, which would be like sort of an odd outcome that I I I think they'll probably address in the near future.
Speaker 2:Anyway. Yeah. That aspect triggered Dean Ball. Yes. He my last observation, the anthropic secret sabotage safety policy is that it undermines actually good safety policy.
Speaker 2:How? First, it is very plausible to describe this as anti competitive behavior. Even if you're maximally sympathetic to Anthropic here, must admit this and it is behavior being justified in the name of AI safety. If you believe as I and many Anthropic staff do that it may end up being critically important to relax antitrust enforcement so that the frontier labs can cooperate and collaborate on some areas of AI safety, Anthropic just undermine the case for that in a large way. Overall, this is this massively and profoundly raises the status of the argument that AI safety has been hyped to justify monopolistic behavior by labs.
Speaker 2:I continue to believe that AI safety is a real and serious issue that is growing in importance rather than diminishing. If you agree with me, this incident is a setback, maybe a serious one. And third, says, I have observed elsewhere Anthropic's official corporate policy is structurally identical to the fact pattern alleged against them by the Department of War. I still think DOW acted both falsely and wrongly in that fight but it is no longer possible to defend Anthropic with a full throat after this incident. This raises the case for heavier handed regulations.
Speaker 2:Anthropic is making awfully good case here that their product ought to be treated as utilities and thus their alignment practices should
Speaker 1:be a matter Oh, counter of carrier thing.
Speaker 2:Public policy rather than private property. I am starkly opposed to this sort of state power grab but Anthropic is doing more to justify it than anyone else. Thus, significant damage has been done to community and entire approach to AI governance. It was done unilaterally by Anthropic likely motivated largely by self interest and justified within the internal psychology of the firm through the lens of safety. I suspect this is fixable in the economic and legal senses for Anthropic, but I fear that trust has just been broken and the goodwill extinguished will take very much time
Speaker 1:to repair. Just to level set on Dean Paul, he wrote the AI action plan, but then also came out very publicly in support of Anthropic during the conflict with the Department of War, saying that the Department of War is completely overstepping by pushing towards supply chain risk designation, putting pressure on Anthropic for not wanting to work with the government in that particular way. Obviously, there's a whole bunch of new data that's been released and stuff, that conversation has evolved. But I I it doesn't strike me as some, like, crazy hater. Anyway, Doug O'Laughlin was also sort of mixed results on Fable.
Speaker 1:He says, when it works, it's brilliant, but the unilateral guardrails make me frustrated beyond all belief. He has a folder of health information with like one hundred days of Aura Health data. This is a very logical thing that people would do with Codex or Cloud Code, gather up all your health data. I actually talked to a very, very prominent person in tech about how they got into vibe coding and CLIs. One of the first things they did was reanalyze some WHOOP data, reanalyze some health data.
Speaker 1:And he correctly detected sleep apnea and went and got it treated. Like, that is it's not a cure for cancer, but that's, like, incredibly awesome and like very, very good and exactly what you want to see. And who knows? Maybe the thing that you detect early could lead to an increased risk of cancer in the future. And that would be a really, really big win for our society.
Speaker 1:And so a little bit tricky there. He says there's a private investment in the life sciences tool space. Guess what? It's not safe. Doing some code scanning for vulnerabilities, not safe.
Speaker 1:I get the safety, but it feels incredibly out of touch for a group of a few 100 a few thousand people, making total comp in the millions, telling me what is and isn't safe. Dario worried about inequality, I think he has to realize that he is the inequality and the unilateral gatekeeping feels whack as hell. I don't like it. Yeah.
Speaker 2:People are people are
Speaker 1:very, And like very Doug O'Laughlin is extremely optimistic about Anthropic. Like, he he recognizes the power of the models in the business and has been a very, very strong supporter. I I feel like a strong user. He was one of the first people to admit to Claude code psychosis, and he's unhappy with the current situation. But these things are very tunable.
Speaker 1:I'm optimistic. With more disclosures and more fine tuning and a smoother path, I think we can get to the good outcome here. Cremieux. Last last
Speaker 2:one, Cremieux says, tell me about It's the powerhouse of the cell, right? It's chat pause. No.
Speaker 1:The chat pause is rough. Yeah. It's a screenshot.
Speaker 2:But maybe the harness is just saying like, sorry, if you don't know that the mitochondria is a powerhouse of the cell,
Speaker 1:like It's not worth my time. I don't even want your time. I mean, that's the thing where like the good There
Speaker 2:you good know, there are
Speaker 1:Yeah. I mean, are expensive questions. And all of these screenshots are clearly from like $100 $200 a month plans. And I'm sure the GPUs are on fire, as they always are with any new model launch from a frontier company. And it can make rational business sense.
Speaker 1:And so when everything aligns, when you're like, Yes, we're maybe being a little bit too safe, but it's actually good for our business, it's very easy to say yes to that stuff. The big question is like, Where do you get tested where something there's a hard decision and it doesn't align with your business interests. That's always tough.
Speaker 2:The new data retention policies as well, that also has to do with like, does it trying to
Speaker 1:This one was funny because I assume that every tech company stores everything forever, basically. I didn't realize that they don't.
Speaker 2:Not for these like enterprise use cases.
Speaker 1:I know that the enterprises said that they wouldn't train on your data. But like when I go into any chat app, I expect to have my data from a year ago still there. Like I want in fact, one of my main critiques and frustrations with these apps is that when I go to them, want to be able to, instead of hitting the search bar, just go into the chat box and say, Hey, remember a couple months ago we were talking about CrowdStrike and I had you pull up some data? Can you just go refresh that, get the original thing? And a lot of times, these apps are like, oh, like I don't really have access to all your chats.
Speaker 1:But like the chats are clearly saved. So I I I understand people were upset about this, but it didn't fully clock for me. Why? I I understand the training thing, like the but Yeah.
Speaker 2:And they're very they're very explicit. They're not using the data to train.
Speaker 1:They're not. Okay. Oh, well, then that's good. So the the the steel man, I believe, was that you need to hold it for thirty days because companies, probably international companies, competitors, will set up a ton of shell corporations and send out like pseudo random queries over random times, over random accounts, through VPNs, and they will triangulate something that is useful to distill or learn from the model. And so by keeping it all, you can now run analyses and look at, Wait, is there a pattern where 25 different accounts that seem completely unrelated all seem to be triangulating the same question.
Speaker 1:That seems reasonable to me, but stay out of my data. I'm built different. I'm not distilling anything. We need to move on to the
Speaker 2:next Cannon says, the cashier at Home Depot just asked if I want to round up to support the SpaceX IPO.
Speaker 1:SpaceX IPO is gonna be big Friday. We might have a surprise guest. It's gonna be fun. Also, there's this crazy meta story going on. Not meta the company, but like story about a story behind Ty Morse.
Speaker 1:He's going all out trying to get an Elon interview, and it's been fascinating watching him build the craziest set in podcasting history. We're rooting for you, Ty. Good luck. Hopefully, you land it. Also, Bloomberg's reporting that the SpaceX IPO is four x oversubscribed.
Speaker 1:Do they know that already? Does do do you get that information at this point? That's really good news for the market, for this for the overall. There was an interesting article. I mean, we can go through some of this.
Speaker 1:I think this was in The Economist. Can the market swallow SpaceX, Anthropic, and OpenAI? Watch out for indigestion. But they talk about the float, the free float. This was very interesting.
Speaker 1:So obviously, the company might be worth $1,000,000,000,000 How much of that $1,000,000,000,000 is actually actively being traded? Like, sure, Fidelity might, at any point in time, have a price at which they're willing to buy more and a price at which they're willing to buy to sell their stake. But founders are often locked up. Founders often want to maintain control. Employees are locked up for a certain amount of time.
Speaker 1:Certain investors might be locked up, unless you're Bill Gurley. Don't try and lock him up. He he nobody can lock him up. He's a wild man. But the float is important because if it's a trillion dollar company and it's the CEO passed away a generation ago and there's all financial managers in, it's only owned by hedge funds.
Speaker 1:This was the story of Take Two before Strauss Zelnick came in. Take Two, the makers of Grand Theft Auto. It was entirely held by shareholders, by financial investors. And they were unhappy with the management team, and the management team didn't have any equity. And so he was able to raise his hand and say, like, I'll run this thing.
Speaker 1:And they were like, Absolutely. Thank you. And they let him take over the company without really putting anything up. He didn't need to do a hostile takeover, like bring a bunch of capital to bear to get control of that company and become the CEO. And it's been a fantastic success for him and fantastic success for Take Two shareholders who stuck along stuck around for the Strauss Zelnick era.
Speaker 1:But the the the float matters. And and Microsoft, it's a 100% floated. The free float is a 100% because the founders have moved on and divested, and they're not locked up. At Apple, it's like 99%. Broadcom's also at 98%.
Speaker 1:NVIDIA at 96%. Amazon's at 91%. Only Jeff Bezos is considered sort of off the table. Alphabet at 90%, Tesla at 89%, and Meta is notably of the big tech companies, the lowest free float at something like 88%, 86%. The reason for that is because Mark Zuckerberg has a lot of control.
Speaker 1:If he sells his stake, he loses control. So no one's expecting him to sell even if the stock goes way up or whatever. Like, he's going to maintain his position because he wants to run that company. Now SpaceX is in an interesting, interesting place. So 13% of Meta's shares are owned by Mark Zuckerberg.
Speaker 1:SpaceX plans to release locked up shares in a series of tranches. If its IPO issues $75,000,000,000 of shares valuing the firm at its hoped for 1,800,000,000,000 valuation. The initial free float because if you buy the IPO, you're not locked up. You can sell the next day if you want. This means
Speaker 2:Technically, it's it's not like the whether whether somebody's like buying through, you know, investing through like JPM Yeah. Morgan Stanley Goldman. Or Goldman, all these Technically, you can go and sell. Yeah. They just might restrict you from other IPOs.
Speaker 2:So you would ex like serious. And and this happens like on all the different apps, you know, Robinhood, Public, etcetera. If you're buying into an IPO, they they basically are asking you nicely, do not sell, but people can't. And so with how many retail dollars are flowing into this, I expect a lot of people that are buying basically, buying the IPO
Speaker 3:Yeah.
Speaker 2:To start trading almost immediately.
Speaker 1:Exactly. But So it's importantly, it's only 4% of the free float. So only 4% of that $1,800,000,000,000 is a lot of money, but it's only 4% will be really free trading. And then, of course, during the IPO process, you're vetting investors and you're trying to get the people that will hold forever. And Elon has done a fantastic job of that with the indices.
Speaker 1:So he's gotten the NASDAQ, the S and P and a few others to commit. So although NASDAQ has already shortened the seasoning period before index inclusion to fifteen trading days, the Russell slashed its waiting time to five days. Most share indices weight firms in proportion to the value only of the shares released for public trading. And this is important because people look at the S and P five hundred and say, Wait, S and P five hundred, a $2,000,000,000,000 company coming into that, your weight, if you're just buying the S and P five hundred, is going to be more than 1%. It might be in the single digit percent.
Speaker 1:That's a lot. And we've been talking about the S and P four ninety nine for the bears, Right? In fact, the initial weight in the S and P five hundred will be around 0.1% because it's just that 4% free float. And then it increases over time as the shares get locked up. We actually have a chart here of how the lockups work.
Speaker 1:And it takes basically
Speaker 2:Yeah. There's a
Speaker 1:whole year, almost two, for everything to get unlocked. And it's also triggered based on share price appreciation. So if the shares trade up 30% or more, then more shares become unlocked and the road to 100% lockup ending happens slowly. And so just a little bit of an interesting deep dive into how the SpaceX IPO will fare. Anything else to talk about on that story before Apparently, we move
Speaker 2:Senator Warren Yes. Has urged the SEC to halt SpaceX's IPO, citing governance risks, Elon Musk's control, and potential foreign, especially Chinese investment concerns. She also highlighted SpaceX role as a US defense contractor. Beautifully Senator Warren has never met a business that she liked, I think, except maybe I don't know. Large financial institutions.
Speaker 2:Who knows? Think she she likes those.
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Speaker 2:Afternoon or evening of your entire life.
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