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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching Christmas TV.
Speaker 2:We are cozy maxing.
Speaker 1:It's rainy in Hollywood today, and we decided to put on the fireplace, make the light a little bit warmer, kind of enjoy the warmth. And, you know, I genuinely get depressed when it rains. Like, it actually affects my mood.
Speaker 2:But
Speaker 1:putting on some warm lighting
Speaker 3:This.
Speaker 1:A nice hearth Nice. Really has changed my mood.
Speaker 2:And I'm having a great time Fireplace.
Speaker 1:I'm having a great time today already. And so if it's a little bit cold wherever you are, I highly recommend throwing on the fireplace. If you can get real real logs, that's great. If not
Speaker 2:You can get a projector.
Speaker 1:90 inch projector works too, I guess. But it is Tuesday, 10/14/2025. We are live from the TVPN UltraDome. UltraDome. The temple of technology, the fortress of finance, the
Speaker 2:capital capital. So
Speaker 1:today, we gotta talk about Zoomer. Zoomer gate. Zoomer is a loved poster on this show. We've highlighted his post many times. He is, a deranged trader, who has a lot of fun.
Speaker 2:Was heavily promoting the use of leverage right up until liberation day two, Friday.
Speaker 1:Then he got wiped? Did he get wiped?
Speaker 2:I don't know. I don't know. He he he's he's been big into Chinese equities
Speaker 1:for a while. So He's been having fun on the timeline, posting a lot. He says, say hello to 50 x leverage, more like say hello to God. Nobody is an atheist with 50 x leverage.
Speaker 2:That no matter how much pushback he gets Yeah. How much he just doubles down. Doubles down. Yeah. Doubles down.
Speaker 1:Well, Zoomer, if you're gonna be risking it all, you gotta save time. You gotta save money. You gotta go to ramp.com. Easy to use corporate cards, bill payments, accounting, and whole lot more all in one place. Zoomer's had a number of posts do very well recently, like mega mega viral, totally breaking containment, defining what's going on on the Internet that day.
Speaker 1:And zoomers says my tweet about Steve Jobs almost, about Eve Jobs almost outperformed the actual Eve Jobs tweet Eve Jobs tweet lol. And so he's been going viral for posting Steve Jobs' daughter a picture of her and then posting meta commentary about how much he got paid to make that post. It was a very odd back and forth, and it's, it's frustrated a lot of people. But, I have a hot take. We're gonna break it down.
Speaker 1:We'll discuss it. And so, Zoomer, it all comes down to, like, what is the value of your account? Zoomer went to some website and said his my Twitter account is estimated, to be worth $3,000,000. And, that's not what accounts trade for. That's not how that works.
Speaker 1:But, I mean, certainly, now
Speaker 2:experience Twitter accounts are basically worthless Yeah. Except for the person that creates it. Yes. Then and then then it's and then it has some intangible value. Yep.
Speaker 2:It can it can increase the value of whatever you're working on, whatever your the work it is that you do. But
Speaker 1:Yeah. And that's sort of true across the board, across all social media accounts, especially if it's tied to an individual person or personality. But even the large, YouTube accounts that have more of a corporate brand, like, I'm thinking of, like, Donut Media, for example. Like, that was eventually bought by private equity, and some of the talent rolled off, and then they changed they changed hands. Like, it's still, like, hard to just build a single account on a social media platform into, like, the millions of dollars.
Speaker 1:Like, it's certainly not easy. But we do love Zoomer, and we're wishing him the best during this tumultuous time because everyone's going back and forth.
Speaker 2:Yeah. I think people take are overly serious when he is I view him as an entertainer.
Speaker 1:Exactly.
Speaker 2:Yeah. Somebody at a dive bar that's getting a little wild. Yep. But, it adds it adds to the experience.
Speaker 1:Yeah. I completely agree. I've always thought of Twitter as the Internet's dive bar. You know, the drinks have always been cheap. The faucet in the bathroom's always broken.
Speaker 1:Maybe that's the fail whale. The whole
Speaker 2:the whole bar's changed. Unreliable. Yeah. The Might be it might be open late one night and close
Speaker 1:early next. Expect it to be. It's changed ownership multiple times. It's just a it's just a very, you know, it's not as polished as, you know, a Michelin star restaurant or a luxury resort that you might see on other parts of the Internet. It's a little bit messy, but that's why people love it, and that's why people keep coming back.
Speaker 1:At the end of the day, you grab your little table in the corner. Maybe that's basketball Twitter or teapot or whatever, car Twitter, you know, whatever your little group is. You huddle up and, you know, maybe you get in a fight with some other table for a little bit. Bar fights are gonna break out. At the end the day, you keep you keep coming back.
Speaker 1:And so I've kept coming back through multiple eras of Twitter is done or x is over. You know, there was the whole narrative, like, Elon won't be able to keep the servers online. You couldn't possibly run a website.
Speaker 2:With only
Speaker 1:a thousand people. Thousand people. And it's like, this guy sends rockets to space and builds electric cars. Like, I'm pretty sure he can, like, get the database working okay. So I never bought that, but there was a there were a number of, like, the ad the advertisers are pulling out or the algorithm is bad.
Speaker 1:And the algorithm has been bad at various times. There's been plenty of moments where I've been like, man, I'm seeing a lot of just, like, generic junk. But what's interesting is that right now, people are, like, the most mad they've ever been at x. I feel like that's kind of the mood. But I feel like the algorithm's been super fine tuned.
Speaker 1:Maybe that's just the way I'm using it. I'm really good about, like, muting and then
Speaker 2:One of reason one of the reason that people are are mad right now Yep. Is the dive bar basically got a new manager Yep. Head of product Yep. Kita Yep. Who was a power user of the platform for years.
Speaker 1:Power drinker.
Speaker 2:Power At the bar. Power boozer. He was hitting half He the hour
Speaker 1:was a regular.
Speaker 2:And he was closing it out.
Speaker 1:He was closing it out.
Speaker 2:And he's been making a number of different changes. One that he posted about that I was excited about was potentially bringing links back in some capacity. Yeah. But
Speaker 1:He also did the little there's little growth hacks that he's done where I've been like, that's totally fine. Like, when you take a screenshot, it replaces the follow button with the x.com just to remind people, hey, this originally appeared on Axe. You're gonna share it to Instagram, go to x.com. And I think that type of growth hack is, like, fine. Like, it it doesn't bother me at all.
Speaker 1:It's like, yeah, they they they need to get their users up. I want more people on the platform. Like, I'm fine with that. And there's been a number of things like that where I've been like, yeah. Seems like he's he's making pro positive progress on the product side.
Speaker 1:But the creator payouts are still really hot. Like, very, very, like, hotly debated, unclear where it gets
Speaker 2:Not among us. We would be down to kill them entirely.
Speaker 1:Yeah. And what's crazy is that I I mean, I don't know if I got on so Twitter launched in July 2006. I'm pretty sure I got on, like, a year later. Because I went to I went to college where Biz Stone went to college, one of the founders of Twitter. And that was one of the reasons I went to that college was because I was interested, and I was like, oh, Twitter's a cool company.
Speaker 2:April 2009.
Speaker 1:Was when you got on? When you joined. When I when I joined. Okay. Yeah.
Speaker 1:So
Speaker 2:But still.
Speaker 1:Sophomore year of college or something like that?
Speaker 2:Very early.
Speaker 1:But for seventeen straight years, basically, everyone on the platform posted for free. I guess for, you know, thirteen years for me, I posted for free. July 2023, seventeen years later, that's when the first creator revenue sharing program rolled out. And what's interesting is that YouTube has been making creator payouts since 02/2007, just one year after Twitter launched. YouTube was like, we gotta pay these people.
Speaker 1:We gotta pay our creators. And they did this, like, basically fifty fifty deals, like, five fifty five. But YouTube, the partner program has been a huge success. Basically, you make no money when you're small. But if you can get to a couple 100,000 subscribers, couple 100,000 views on video regularly, you have a formula, you have an audience for, like, I talk about this and thing for ten, twenty minutes.
Speaker 1:People watch it regularly every week. Like, you can quickly start making thousands of dollars and, like, turn it into a real job, and then you can layer ads on top, which you're obviously intimately familiar with because you've been on the other side of that. And and there is basically, like, a middle class of, like, professional, not not mister beast level 100 person organizations, but just like a creator. Maybe they have one editor, couple editors, and they make a decent living just, you know, making YouTube videos. X has never really had that, and it's odd because, like, the amount of money that you put into a YouTube video is correlated with how many views it gets.
Speaker 1:Like, if you're like, I'm giving away a Lamborghini. I'm gonna drive a lam I'm a Whistlin Diesel. I destroyed a Lamborghini. You're like, I gotta click that. It gets a lot of views.
Speaker 1:Yeah. But on X, you can just have a shower thought that is the most brilliant, hilarious, funny banger take, and it will get a 100,000,000 views
Speaker 3:of views.
Speaker 2:For me, I'm not very consistent with posting. Yeah. I'll just decide I'm gonna post today Yeah. And then I can put up Numbers. Posts that will get I don't know.
Speaker 2:I I could think I could reliably get 500,000 impressions Yep. By just spending like twenty, thirty minutes really focused on it.
Speaker 1:Yep.
Speaker 2:Whereas trying to sit down for twenty, thirty minutes and try to make a YouTube video that gets 500,000 views Oh. Almost impossible. Almost impossible. Even for the top, top, top creator.
Speaker 1:Totally. Unless
Speaker 2:you're Yep. MrBeast and you could actually, at the scale where you could post a selfie video, even then, that's not what drives his business.
Speaker 1:Yeah. Yeah. Yeah. Exactly. And so there's this
Speaker 2:And we all and the other thing that's worth noting is there's totally precedent to have a thriving social media platform that doesn't do any creator payouts at all. And that is Instagram, right? Yeah, totally. Instagram has never I mean, shouldn't say never because they've experimented with little things
Speaker 1:I think over they did the creator payouts.
Speaker 2:They did some AI companion type thing to celebrities. I'm sure they paid them in those situations. But in general, there's always been an incentive to grow an Instagram following so that you could grow a business or partner with brands. There were just a number of ways that you could monetize it indirectly. And I think that that is, for low effort platforms, a much healthier way low effort content creation platforms Yep.
Speaker 2:It's much healthier to have the incentive be like, you to become somebody that is valuable to the world, not just you have to post the thing that the thread that gets 5,000,000 impressions. Right? And and the worst of the content that I've seen since the Monetization. Monetization era of X has been the why is no one talking about Marc Andreessen And it's like a thread. And it's like, cool.
Speaker 2:But everybody's talking about Marc Andreessen. Find somebody on X in tech that doesn't have an opinion on Marc Andreessen. It's hard to find him. And so I think it was healthy. I think if you look back to when this era kicked off, I mean, the vibes on were just terrible.
Speaker 2:The public perception of X was terrible. And I think it made sense for Elon in that moment to say, like, we need to kind of like rally the army. I'm gonna start paying you guys
Speaker 1:out. Yeah.
Speaker 2:But you need to ride with me Yeah. In this tumultuous time. But it feels like we're back in an era where if you turn creator monetization off today, none of my top 50 favorite posters would really care. Yeah. They'd be like, it's kind of a bummer I was making a few grand a month like, and I'd use that to I don't know.
Speaker 1:But More like a couple $100 for for a lot of the posters that I follow. Like Sure. There's a few people that are in that thousand plus club, but it is rare. Like, you have to be you have to be taking it pretty seriously. But but, yeah, I mean, in general, for seventeen years, no one got paid directly on Twitter, and they were fine with it.
Speaker 1:They monetized by recruiting or finding jobs or pumping their company or just pumping their bags. Like, there were a bunch of ways to to monetize. One of the ways that we monetize by running ads, restream.io. We also stream two x through Restream, one livestream, 30 plus destinations, multistream and reach your audience wherever they are. There's also going back to, like, the Instagram thing.
Speaker 1:With TikTok, they did TikTok and Musically, they did figure out this what
Speaker 2:I'm looking back through my creator payout history, and it's so funny that the dates are always different. Mhmm. It's like
Speaker 1:Oh, yeah. Yeah. Yeah. Yeah. It's not
Speaker 2:like on the first 50 payout for four days here. And then the and the next, I'm getting it for two weeks. And then after that, it's like one week. And it's just like completely random.
Speaker 1:Sort of.
Speaker 2:So I go from making yeah. I guess I don't know. I I I probably I've I've averaged like roughly probably, like, $400 per period or whatever Yeah. To, like, $800 a month. Yeah.
Speaker 2:But it's just one of those things, like, at no point was I thinking, I wanna post more because I'm gonna get paid more. Yeah. It's just not the incentive for me to use a platform.
Speaker 1:Yeah. So, I mean, it's interesting to look at the history of, like, how TikTok did it. The the the founder of Musically came up with this idea of, like, the dual sided marketplace. I'm sure YouTube was aware of this too. But, basically, they put a bunch of money from ads in a fund, and then they would just pay you out based on views.
Speaker 1:But it wasn't like they were actually showing ads directly in front of your content. YouTube's a lot better than that. Like, a lot better than that. Like, if you make a video, like, the top 25 best credit cards, they will be running ads on credit cards in those videos, and you you can get you can make thousands of dollars just from, like, 10,000 views or something. These are super high CPM, and it's targeted to the individual video.
Speaker 1:Now, you know, endless scrolling feed, you can't do that because you don't know where the ad was relative to the particular post, and it's the same thing on x. So if you post some banger post, you and there's an ad right above it or below it, you don't know if that ad is attributable to that person. So you kinda just need to create this, you know, creator payout pool and then just divvy it up based on impressions or views, which is a lot harder to actually assess, you know, how much people want. And, also, the pool isn't all that big because x doesn't even advert doesn't even monetize that much through ads. And so there's just a lot of, lot of differences there.
Speaker 1:So I've always kind of gone back to that analogy of the dive bar, and I've just kind of thought that the creator monetization, I don't really care if it's messy. I think it's kind of fun if it's messy.
Speaker 2:Mean, we have to go back to Yep. One of my Please. Most liked posts ever.
Speaker 1:Yeah.
Speaker 2:Elon unhooking your bra. Wow. Your creator payout is gonna be huge next month.
Speaker 1:That's one of your biggest
Speaker 2:The most liked the most liked is actually Ashley Saint Clair Yeah. Liking that post.
Speaker 1:Post. And using real.
Speaker 2:That's ridiculous.
Speaker 1:But, yeah, I mean, I've always enjoyed that, like, these random serendipitous moments can happen on acts, like Elon responding to a random message with a crying emoji. It feels like when the chef comes out and goes around to dinner tables to chat with the guests about the food, you know, and Elon comes around and just leaves the crying emoji over here. It feels like he's on the app in in a much different way than sucking Survivam.
Speaker 2:Around a shot for you.
Speaker 1:Exactly. You get a
Speaker 2:Exactly. Round of shots for this table.
Speaker 1:Exactly. Exactly. And so I I actually like that. I think it'd be very funny if Elon just dropped, you know, a thousand dollars on this person, $200 on this person. Was complete no rhyme or reason whatsoever.
Speaker 1:Chaos. I I think that actually makes it kinda fun. It feels like putting a slot machine in the quarter in the corner of the dive bar. You know? Some some patrons are just gonna throw a quarter in every once in a while just to feel something.
Speaker 1:So
Speaker 2:Yeah. And I and I and I I think this is where we slightly disagree.
Speaker 1:I just
Speaker 2:think it's it's enough to just go around, drop the like, drop a repost, drop because ultimately, people come to X for attention. Yeah. Like, learn about the world Exactly. Get attention.
Speaker 1:Exactly. Well, it'll be interesting to see if we see any, like, changes to the monetization structure of acts of the creator payouts. People are certainly there is a big group of creators. Like, this is very real. There's a big group of creators that are just saying, like like, it has to be more regular.
Speaker 1:It has to be easier to understand how the creator payouts. Like, they're pushing for a YouTube, like, transparency partner program where it's very, very clear that if you get this audience, this many views, like, will get this much money on a regular basis.
Speaker 2:And the other thing I think people forget is that the creator payouts were initially meant to be paid out a percentage of the subscript paid subscribers
Speaker 1:Yeah.
Speaker 2:That That goes in paid subscriptions. That was what was creating the pool for potential payouts. And so Uh-huh. What the accounts that are angry and post and generally, the accounts that are angry at creator payouts
Speaker 1:Mhmm.
Speaker 2:Are angry because they're slop farming
Speaker 1:Mhmm.
Speaker 2:And their content is just not good. And they're specifically making do making the content to make money. Yep. And it's fair game. It's capitalism.
Speaker 2:It's free market. Yep. They're allowed they're allowed to go and do this. But they're not getting engagement from verified, like, users Yep. For the most part.
Speaker 2:Right? They're getting engagement on these posts where they get a lot of impressions and get a lot of likes. But it's from, like I I wouldn't go so far as to say bots, but it's, like, the lowest value people on the platform.
Speaker 1:I mean, the same thing happens on YouTube. Like, you can like, there are channels out there that make get millions and millions of views with just complete clickbait. One of there was one channel that would just it was like Elon Musk news or something, and they would just post entirely fake videos about Elon Musk launching an iPhone competitor. And it was like the Tesla Pi phone. It'd be like, we're reviewing it today.
Speaker 1:We're breaking it down. Here's the phone that he launched. Elon they did one that was like, Elon Musk just launched a nuclear reactor. It's live. He built it.
Speaker 1:It's generating power. And Elon had, like, never tweeted about this, and he's in fact a solar maxi. He doesn't even like nuclear that much. And they would just put up a video being like, it would just be b roll of Elon, like, moving around, dancing, talking. And then over it, they would just have, like, this fake script saying that Elon had shipped a nuclear reactor and solved fusion or whatever.
Speaker 1:And it would get millions and millions of views with people who just, like, did not understand the truth or anything of the news. And so, of course, that's gonna monetize way, way worse. And this
Speaker 2:is the number one thing that pisses us off on YouTube is when you're watching a car video Yep. And there's suggested video, and you click on it only to realize that it's, like, some fake concept car that wasn't put out by Porsche or Ferrari, and it's just somebody hallucinating with their
Speaker 1:Yep.
Speaker 2:Chat GPT.
Speaker 1:Well, speaking of concept cars, we gotta go deeper in the deck and pull up the video, the picture from Mercedes. I think this is real. I don't think this is AI. I saw this on a couple different auto blogs. The newly revealed Mercedes vision iconic channels, the legendary gullwing.
Speaker 2:No way.
Speaker 1:And it's your first look at the next s class.
Speaker 2:Is that an EV?
Speaker 1:It's I know. I think it's gonna be, both, but you can scroll through these images and look at this thing. Look at the back, Jordy. The back is insane. Imagine bombing around in this.
Speaker 1:Obviously, this is like a, a a concept car, but it's still cool. And I hope it's real.
Speaker 2:No. I I was right.
Speaker 1:It's
Speaker 2:fake? A statement on the future of design language for Mercedes EVs. This looks like kind of jaguar coated.
Speaker 1:A little bit.
Speaker 2:You know?
Speaker 1:Do I what do you think overall? I this yeah. It does feel like it's a little bit it's a little bit blocky, like big front grill grill like Jaguar, but still maybe a little bit
Speaker 2:This view looks better than the existing GT
Speaker 1:Yeah.
Speaker 2:Series. It's a
Speaker 1:little bit longer, a
Speaker 2:little bit longer.
Speaker 1:Yeah. I think it's pretty good.
Speaker 2:It's riding a little bit lower even. Yeah. I think it looks great. I think the grille on the front looks a little bit nasty, but especially considering it's a
Speaker 1:It's a concept car. It looks yeah. It's a little wild.
Speaker 2:It's a little wild. Whatever Beck,
Speaker 1:good luck. Chooses to build, they should do it with Cognition. The makers of Devon, the AI software engineer, crush your backlog, Nikita, with your personal AI engineering team.
Speaker 3:It's like
Speaker 1:Love to see it.
Speaker 2:It's not gonna help right now. Nikita is at war.
Speaker 1:Zoomer also had a post here. He said this is gonna be good, and he is quoting Colossus Magazine. Jeremy Stern has written a lengthy profile of Josh Kushner, Thrive Capital, and the American dream.
Speaker 2:Okay. Before we get into that Yes. I think we need to address the goon wars.
Speaker 1:Oh, sure.
Speaker 2:Sam Altman posted two hours ago. He said, We made ChatGPT pretty restrictive to make sure we were being careful with mental health issues. We realized this made it less useful, enjoyable to many users who had no mental health problems, but given the seriousness of the issue, we wanted to get this right. Now that we have been able to mitigate the serious mental health issues and have new tools, it's wild that he's just, like
Speaker 1:Job's finished.
Speaker 2:Well, yeah. It's it's it's wild to basically say to just fully accept, like, yeah, there were serious mental health issues. But, bold. He said, we're gonna Well, we've
Speaker 1:seen more examples of the one shotting, getting in stuck in some hole. So maybe they did solve that. I don't know.
Speaker 2:Like, we No. It's totally possible. When when these issues were popping up, it's like, okay. This person was 7,000 prompts deep. Yeah.
Speaker 2:I was Pretty easy to just be
Speaker 1:like, if more than a thousand prompts deep, send a message. Hey. Touch grass. Like, take a to take take a breather.
Speaker 2:Yeah. Just end the just say, like, if you send another message, the chat will be ended. Yeah.
Speaker 1:That doesn't seem, like, technically complicated to implement.
Speaker 2:So Sam says in a few weeks, we plan to put out a new version of ChatGPT that allows people to have a personality that behaves more like what people liked about four o. If you want your chat GBT to respond in a very human like way or use a ton of emoji or act like a friend chat, GBT should do it, but only if you want it, not because we are usage maxing. In December, as we roll out age gating more fully and as part of our treat adult users like adults principle, we will allow even more like erotica for verified adults. And, Doug over at Semi Analysis says, the goon wars have begun. The entire porn industry is about a 100,000,000,000, which can fund a few gigawatts.
Speaker 2:So I think that we always thought that
Speaker 1:Elon Musk,
Speaker 3:the accounting
Speaker 1:positioning thing.
Speaker 2:Yeah. It was it was a smart you know, this is what we said. It's very possible that that Grok, if they were able to figure out the erotica product side, that they would be able to take that product to a really meaningful run rate. Very hard to assess, like, what percentage of Grok users are power users of the companion functionality. But either way, this kind of thing was already happening with OpenAI.
Speaker 2:People were falling in love with OpenAI. They were getting married to not not not OpenAI, but ChatGee. Got married to OpenAI. No. People were were, you know, proposing to ChatGPT.
Speaker 2:Right? People were developing serious romantic relationships with Yeah. The bot and, of course, now ChatGPT. Great great catch. John just slid away in the swivel chair Sorry.
Speaker 2:To catch.
Speaker 4:Love to see it.
Speaker 1:Putting on a coin. Well, if you wanna design something that's not erotic, go to figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. Get started for free.
Speaker 2:Touch Figma, everyone.
Speaker 1:Touch Figma. Yeah. If you're 7,000 problems deep, maybe you do In other news Yeah. What what what is your what is your actual final take on this? A $100,000,000,000, that's the that's the entire adult industry.
Speaker 2:I I think that a large percentage of the people that will pay subscription fee to ChatGPT as just everyday consumers will be people that Yeah. Develop, like, serious emotional connections, not necessarily adult level Sure. But but serious emotional connections.
Speaker 1:Yeah. I mean, I like, the the steel man here is, like, treat adult users like adults principle. Like, I have not tried to generate erotica, but I've definitely gotten flagged for, like, weird reasons being like, no. You can't make this person into a bodybuilder or whatever for some reason. Like, if, like They
Speaker 3:don't want
Speaker 1:muscles are too big. Like, this is horny now. And I'm like, no. Like, it's actually just a joke. And so I I I would be I would actually be happy to, like, kind of, like, age verify and just allow it to be, like, a little bit more lenient with me if and give me, like, the benefit of the doubt.
Speaker 1:It does seem like it does seem like the, like, the PR backlash from some of this stuff is gonna be a little wild. Like and there's just been so many tech companies have that have just said, like, hey. Yeah. Like, we're just Apple famously, like, drew the line.
Speaker 2:Google Well well, the the other the other side here is, it's not like Google if you search for Bob. Google doesn't say like, you can't search this.
Speaker 3:Sure.
Speaker 2:Right? Sure. Sure.
Speaker 1:Yeah. I I think, the like, just just mirroring there there's immense power in mirroring what people are already comfortable with morally. And so what I would do is I would just say, like, we're bringing ChatGPT in line with what you expect on YouTube. Now are there some graphic videos on YouTube of three sixty no scopes with, you know, visually, like, distinct blood, like, yes, there is r rated content on YouTube. You can you can watch r rated content of a Tarantino film clip.
Speaker 1:You can watch, a Call of Duty montage that is gory and maybe not suitable for children, but it's not a place for true adult content.
Speaker 2:That doesn't exist. Three sixty NoScope compilations When you were with four. Yeah. From a young age.
Speaker 1:It made me who I am. Turned me into
Speaker 2:a man.
Speaker 1:But but but, Instagram apparently is doing this too. There was an article in The Wall Street Journal about this, how they're using the nomenclature from filmmaking now, saying that, we will go up to PG 13, or you will be able to to pick. And I feel like even though movies are, like, less popular, than social media Sure.
Speaker 2:It's weird. Side of the table.
Speaker 1:It's very useful to use the g p g p g 13 r rated x rated, like, nomenclature
Speaker 2:Yeah.
Speaker 1:Just because everyone knows what that means even though it's like a I'll know it when I see it type of rating that's done by the, not the AARP. There's some there's some governing board that literally watches every movie and says like, this is R rated because we saw we heard like three cuss words
Speaker 2:Yeah.
Speaker 1:And like, whatever.
Speaker 2:Yeah. Mean, here here's the thing. When I see this announcement, I'm not entirely surprised, even though I didn't think they would explicitly go there. Yeah. I didn't think they would I think that I didn't expect to see Sam type the words erotica in a product update Totally.
Speaker 2:Post. Yep. Right? Didn't expect it. Makes sense from a business standpoint.
Speaker 2:I don't think they should expect applause. I don't think anybody should be I don't think OpenAI investors are going to be sitting around being like, I'm proud that OpenAI is going into this. But purely from a business standpoint Yeah. It makes sense.
Speaker 1:Yes. So
Speaker 2:And the other thing is I I expect that they will the key difference between x AI and OpenAI is that OpenAI will not use this adult content in the promotion of ChatGPT. Right? Sure. Whereas Elon Yeah. Yeah.
Speaker 2:Was very, you know, forward with with promoting it.
Speaker 1:Yeah. I don't like talking about this all this adult content. I like talking about compliance, Automating compliance with vanta.com. Manage risk, prove trust continuously. Vanta's trust management platform is as clean as a whistle.
Speaker 1:It takes the manual work out of your security and compliance process and replaces it with continuous automation. It'll make your family proud. Do you think in a in a year, we will look back at Chateappity as a place that's r rated, like euphoria level or HBO level or a succession level, like adult themes and adult content or, like, x level? Like, not not, like, x rated level.
Speaker 2:I mean
Speaker 1:Like, full adult content, like, you would not see on HBO beyond what's available on HBO.
Speaker 2:I'm sure it will be beyond.
Speaker 1:You think so? Yeah. Okay. That would be a bold step because I feel like But
Speaker 2:the whole but the whole point is that is that
Speaker 1:OpenAI those companies have said we'll go R rated, but we won't go beyond.
Speaker 2:But ChatGPT is fundamentally a single player experience. Yep. Right? It's it's it's know? Is Some of some of the
Speaker 1:chat screenshot. You you take a screenshot, and it's their brand next to the thing that it generated. It's it's it's like going to Apple TV and saying, like, there is an adult film on Apple TV right now. Like, I take a picture of the Apple TV, and I show you that, like, it's it's in their store.
Speaker 2:This kind of content pops up on all the platforms. Right?
Speaker 1:Well, I I don't think so. I I I think that YouTube and Apple TV, like, very distinctly try and
Speaker 2:not allow is notorious for this. Right?
Speaker 1:Yes. Yeah. I would put Reddit in a different category. And so, yes, this is a decision to go more Reddit and less YouTube.
Speaker 2:And OpenAI is trained heavily on Reddit.
Speaker 1:Maybe that's
Speaker 2:Makes sense. Do you think this
Speaker 1:It would probably
Speaker 2:be Do you this aligns with OpenAI's mission to ensure that artificial general intelligence benefits all of humanity?
Speaker 1:Do
Speaker 2:you think human humanity will benefit from everybody having a Goonbot in their pocket?
Speaker 1:As long as every member of humanity is a shareholder, then they will then they will profit from it, which will be good. No. I don't know. It depends. There there's a ton of, there's a ton of, like, rough edges and, like, variability here that I'm, like, holding.
Speaker 2:Ty in the X Chat says bear market and morals.
Speaker 1:Bear market and morals.
Speaker 2:Well, in other news, Anthropic. David Sachs is going to war with Anthropic. He quoted one of Anthropic's co founders, Jack Clark, and said, Anthropic is running a sophisticated regulatory capture strategy based on fear mongering. It is principally responsible for the state regulatory frenzy that is damaging the startup ecosystem. Interesting.
Speaker 2:Not what you want to hear from the AI czar if you're running a a US based foundation model lab. Yep. But we'll see how this plays out.
Speaker 1:Yeah. You wanna hear about graphite if you're the AI czar.
Speaker 2:That's right.
Speaker 1:David Sachs. You gotta use this for your code review because it's the age of AI. Graphite helps teams on GitHub ship higher quality software. You can get started for free. Let's go through some of the Jared Kushner news.
Speaker 2:Josh Kushner.
Speaker 1:Josh Kushner. Jared Kushner is also featured in here. Sorry. I I was reading I was reading Jared Kushner because Tyler posted sending Jared Kushner 25 books on how to prevent AI bubbles from popping, which was an absolute banger. Got a thousand likes.
Speaker 1:Tyler's been on a tear, but he's not in there to see. Let's cut yeah. You gotta cut to him before he gets back. No. Oh, he was out of his chair.
Speaker 1:I caught him. I caught
Speaker 3:him black.
Speaker 2:Congrats on your Back to
Speaker 1:back bangers. Oh, one k club two days in a row. Don't mess it up. If it's not a three peat, just don't show up to work. You're done.
Speaker 1:Do you feel, do you feel sequel pressure now?
Speaker 4:I mean, it there is a lot of pressure on my, you know, on my shoulders.
Speaker 1:Heavy is the head that wears the crown, Tyler. Get ready. You've been on a roll. Let's see what your ex created.
Speaker 2:I don't know. I see this I see a couple bangers back to back and I think, maybe Tyler doesn't have enough on his plate. Maybe.
Speaker 1:Maybe we should get him to vibe code something.
Speaker 4:I I I I gotta hit I think I I think it's 5,000,000 impressions in three months to like, I'm not available for the creator payout yet. Oh, okay. So I think I gotta slap it up.
Speaker 1:Okay. Yeah. Why is no one talking about Ilios Inskever?
Speaker 4:I'm never leaving this app. I've never
Speaker 1:yeah. Yeah. Yeah. Yeah. Just keep posting those.
Speaker 1:You'll you'll definitely
Speaker 2:Ty in the chat says if you cut to someone not on their battle station, they have to wear a part time podcaster.
Speaker 1:Thank you, Tony.
Speaker 2:Really really phoning it into.
Speaker 1:You're having fun.
Speaker 2:So Yeah. Let's get into this let's get into this piece. Jeremy Stern profiled Josh Kushner in Colossus.
Speaker 1:Good.
Speaker 2:They released today. It's not in print yet. It's going to be in print. Right?
Speaker 1:Get ready.
Speaker 2:Called Subscribe now. The new world. Where do wanna start? Where should we start? I mean, there's there's so much in here.
Speaker 1:I I like this bit about Spotify. So, in 2012, Thrive invested $6,000,000 in a growth round of the Stockholm based Spotify out of a $150,000,000 fund, an allocation Kushner had regarded as a favor until learning nearly a decade later that Spotify CEO, Daniel Ek, was in need of exactly 6,000,000 to close the round. So he's just like he's just like, oh, thank you so much for, like, making room for me. Like, this is amazing. Like, I'm so glad I could, like, you know, get my 6,000,000 and and and Daniel Ek's over there being like, the round would have completely off if you hadn't come in, so thank you so much.
Speaker 1:But, there's more to this anecdote. This is the reason Ak knew he liked Kushner was that a few years earlier when Spotify was only available in Europe, Eck was notified by an executive that someone in The US had manager managed to register a fake UK address in order to download the app via The UK App Store. They discovered it was Kushner sitting in the library of HBS.
Speaker 2:Wow.
Speaker 1:It's a
Speaker 2:I pulled out some highlights from the piece. It's way too long for us to try to
Speaker 1:Yeah.
Speaker 2:To get through entirely. But the, some background. On 11/17/2023, Kushner was a 38 year old spouse of a supermodel, brother brother and in law of American political royalty, and founder and CEO of what had very suddenly become one of the most coveted venture capital firms in the world. He was also the grandson of survivors of the Novo Gruduk ghetto massacres, indignant, indigent refugees who, over the course of the Cold War, built a New Jersey real estate principality that their son, Josh's father, expanded into a multi state empire before his conviction on felony charges and sentencing to federal prison, and before the White House activities of his older brother, Jared, put Josh in the crosshairs of a torrid political convulsion of which he wanted no part.
Speaker 1:Kidder spirits.
Speaker 2:Yeah. I mean, ultimately, it's it's it's this Josh has put on an absolute master class of how to be an icon while being relatively in the shadows. Right? He just sort of like pops his head up in these key moments. And, yeah, I think when I think about what what Josh and the and the Thrive team has built, it's actually it's I mean, it's just like it's almost it's almost unbelievable.
Speaker 2:Yeah. Like, story the story end to end. By the fall of of twenty twenty three, Thrive Capital, the New York based investment firm Kushner started 13 earlier, had become an overnight sensation. In 2010, Thrive's first fund was $5,000,000 and included companies like Kickstarter and GroupMe. By 2023, its eighth fund was $3,300,000,000 including a maniacally concentrated $2,000,000,000 investment in Stripe at a 50,000,000,000 valuation.
Speaker 2:He's like Three. Here's two thirds of my fund.
Speaker 1:This is the Fifth Avenue strategy. Buy Fifth Avenue. He talks about this on Invest Like The Best.
Speaker 2:And a $150,000,000 check into OpenAI at a $29,000,000,000 valuation. The companies are now valued at 100 and 7,000,000,000 and $500,000,000,000 respectively. Along the way, Thrive's bet on Instagram, Spotify, Warby Parker, Skims, GitHub, Slack, Robinhood, and other companies had become conspicuous for being prescient, aesthetic, and exquisitely timed among its most vindicated admirers and for being absurdly priced momentum chasing in too highly concentrated in dysfunctional businesses with unproven returns among increasingly sheepish critics. So
Speaker 1:I like that they got Johnny Ive to give a quote for this piece. Some people just have innately wonderful taste and intuition, said Johnny Ive, Apple's legendary former chief design officer who's now working with OpenAI on a hardware device. Josh has wonderful taste.
Speaker 5:I think
Speaker 1:it bleeds into his product intuition, is just fabulous.
Speaker 2:It's great. Another highlight here. In 2010, moreover, the unknown Kushner's brother, unknown little firm was making a bunch of large but weird sounding claims for itself. Like that it was a stage, geography, and sector agnostic venture firm that would concentrate all its investments in a very small number of companies. That it was not only an investment firm, but also itself a company.
Speaker 2:That it incubated its own companies as well as invested in others. And that it didn't just invest in incubate, but functioned as a service provider, product creator, and embedded operational commando unit for founders. By 2023, every self respecting investor on Sandhill Road was also saying such things about themselves, even as they wondered how a New York firm made up of a handful of kids in their 20s and 30s, many of them with zero experience in venture capital, and from the technology Bermuda Triangle Of New Jersey, had become some of the most desired investors in tech, and the ones most closely associated with the otherwise distinctly West Coast boom in AI. Of course, Josh had a very untraditional pathway to venture capital. He went to Harvard for undergrad.
Speaker 2:Well, at the time, Mark Zuckerberg had just dropped out of Facebook. Later, he got a job at Goldman Sachs buying distressed debt, and then went back to Harvard for his MBA.
Speaker 1:It's real miracle that
Speaker 2:you built for. Of course, I'm joking a little bit. But it's What I appreciate about Josh is, in many ways, he was on the perfect trajectory to be a venture capitalist, and yet he has succeeded beyond what He has succeeded in a way that so many other thousands of people that had the same kind of pathway into the industry by being in the right circles, like being early to a number of these different trends. Like he's succeeded on a scale a 100 times greater than many of the other people that were, again, had the same kind of, like, pathway in the Yeah.
Speaker 1:My read on is that lot of the VCs that started in the same, like, vintage that did not become massive institutions maybe just got caught in the trap of diversification. Like, I keep going back to that
Speaker 5:Yeah.
Speaker 1:Story of Josh saying he wants to buy Fifth Avenue, buy the best asset in the class, be concentrated, build a big allocation. And that takes guts that I think a lot of VCs kinda fell in the trap of, like, I need to get a bunch of logos from a I need from a whole bunch of companies, or it's particularly cool. It gets actually higher status to be, oh, first check-in this company or see even if you have a tiny allocation that gets completely diluted down, like, you're not actually making as much as many dollars. Like, if you put 2,000,000,000 in Stripe at at at 50 and it goes up to a 100, you made $2,000,000,000. Right?
Speaker 1:Versus you put 200 k into some company. It gets diluted down. You make 50,000,000. Like, you made way less dollars on dollars return, but it's, like, somehow higher status in venture to be like, yeah. I was, like, the first check-in.
Speaker 1:And I think, Josh has been early in a lot of companies, but I think that he understands the importance of, like, portfolio concentration. Yeah. Actually getting all the dollars in the companies that matter. Yeah. And that's like
Speaker 2:And I think early on, heard. My my sense is that there was some, like, hunting for logos early on. Yeah. But they were when the fund sizes were very small. And that led to him having the the track record and ability to put $2,000,000,000 into Stripe out of a $33,300,000,000.0 fund.
Speaker 1:And also, like, we're just like like, the Thrive era, the era that Thrive grew in is an era where venture changed pretty dramatically. Maybe we're talking about the Intel IPO raised $6,000,000. Like, what is your role as a venture capitalist? Like, deploy a $100,000 and then wait for the IPO, like, a year later. And it was like that in the dot com boom and Google IPO'd pretty early.
Speaker 1:Even Facebook IPO'd at, what, 50,000,000,000, and it was like the biggest IPO of all time. It was in like the Yeah.
Speaker 2:There were there were investments in that era that I'm sure the partners were underwriting it as I think there's 70% chance this company IPOs in the next two years. Yep. And this is why we're investing. Yep. And then they became compounders.
Speaker 2:And over time, it looked like
Speaker 1:But they distributed, and so a lot of the funds became RIAs. But Thrive has been able to say, yes, we're investing in a company at $50,000,000,000 because we expect it to grow and grow and grow
Speaker 2:Yeah.
Speaker 1:And actually deliver, like, a venture style return or, like, a significant return.
Speaker 2:I appreciated this exchange between part of the article. The beginning goes into Kushner visiting Rick Rubin in Malibu. And Josh was telling Rick, my deepest insecurity is that I have these intuitions about things that I cannot explain to anyone, Kushner told Ruben as I sat in his garden overlooking the ocean. Sometimes I see or experience something and it makes sense to me. I fall in love, but I cannot explain why, like when Thrive invested in Instagram or Spotify or OpenAI.
Speaker 2:I could not explain to anyone why the products made sense to me. It is my job to learn as much as I can for my team and teach them as much as I can. But often, I have to push forward on my intuition alone, which is why my even deeper insecurity is, what if I lose it? Like, what if I lose the capacity to feel or experience these things? He's basically having this exchange because, of course, Rick Rubin notoriously is just going off of raw intuition and vibes.
Speaker 2:I think the other I mean, goes into his entire his family's crazy history dating back to Europe during World War II, getting out of Europe. But I think it can't be understated how formative it was, I think, for Josh to go through this sort of right as he was The quote here, By the time I was in high school, my father had accomplished a tremendous amount. He was deeply impactful in the business and philanthropic worlds. And then overnight, our family were outcasts. The world treated us all one way for the beginning part of my childhood, and then suddenly they treated us very differently.
Speaker 2:That experience showed me how the world works and why you should not care too much about what people think. Of course, his father was embroiled in a wild crisis and ultimately went to prison for a couple years. But I think Josh says elsewhere in the piece that he wouldn't I forget the line exactly, but something like, wouldn't wish what he went through on his worst enemy, but at the same time, wouldn't is is sort of grateful for for what kind of turned him into a monster, basically. Very kind monster.
Speaker 1:Well, if you wanna try and reverse engineer Thrive's returns, dump all that data in Julius and chat with your data and get expert level insights. It's the AI to analyst that works for you. Tyler, what are you thinking about Kushner?
Speaker 4:I I think there's also underrated is he's he seems very, aura pilled. Right? Sure. He has this kind of nonchalance about him.
Speaker 1:Yep.
Speaker 4:There's a good quote I think that relates to this. It says it's about Andy Golden. He's the Princeton Endowment head. He says, Golden later recalled a happy hour for VCs in Cambridge in 2010 where he saw a six foot three emo looking kid in a black cardigan standing apart from the group staring at the floor. I mean, that is just Pure aura.
Speaker 4:Pure aura.
Speaker 1:Yeah. Apparently, we're on French TV right now. Thank you for the notification. Send us the link if you can find it. We'd love to see that.
Speaker 1:Yes. There seems to be somewhat of a of a correlation or inverse correlation between, like, just how much content and availability you like, how how available you are in your aura. Like, Ilya, like, never does any press.
Speaker 4:Yeah. Very he's very mysterious.
Speaker 1:Very mysterious.
Speaker 4:Because the the mystery allows, like, people to, like, build this idea of you and then
Speaker 1:Exactly. You're like, oh, yeah. Like, even when Ilya posted yesterday, like, oh, great. The best day ever. Everyone was like, clearly, this is Asia.
Speaker 4:Yeah. Like, bubble is gone. I mean, we're gonna keep going.
Speaker 1:Yeah. We're safe. And and it's like, that's not what it was about at all. He was talking about geopolitics, and the end of the gods of war. But
Speaker 2:So Rim K in the chat says, we asked for a link and Rim, Rim K says France Two,
Speaker 1:which apparently Oh, you just have to go Just go to France Two.
Speaker 4:France Two is the channel name.
Speaker 2:Okay. Yeah. No. I know. Find it?
Speaker 2:Is there a
Speaker 1:way to stream that or something?
Speaker 2:French cable here.
Speaker 1:I would love to see
Speaker 2:Go sign sign up. Try to sign up for an account
Speaker 1:by the translate? Did they put subtitles over us? I'm so I'm so curious about this. Anyway, while we dig in Wow.
Speaker 2:This is a very case.
Speaker 4:They just have the interview.
Speaker 1:Yeah. Yeah. But I'm wondering because they could have put French subtitles over us or they could have dubbed us with 11 labs or something.
Speaker 2:Ask let chat.
Speaker 5:Ask let
Speaker 2:chat. To how to get access to French cable.
Speaker 1:There there there is, more details on how the OpenAI deal came together in this article that are pretty interesting, which you should go read. I feel like I'm allowed to trash investors because I was one for most of my career, Sam Altman said. Most investors don't work that hard. They're usually not available for midnight at calls and won't drop everything to fly across the country on short notice to do you a small favor for you the next day. Josh is consistently willing to do all those things.
Speaker 1:He's incredibly hardworking for his companies. He'll do whatever it takes any amount of time. Nothing is too big an ask. During that crazy week where I got fired and rehired, he just put his entire life on hold. He didn't leave his hotel room for seventy two hours.
Speaker 1:He just worked nonstop very strategically, very effectively to get things back on the rails. Thrive had first gotten involved in OpenAI in early twenty twenty two when they met Altman to discuss a new round. They'd been given a preview of GPT three, the foundation model that preceded ChatGPT, which Kushner reportedly became so obsessed with, he almost seemed haunted by it. Now that's that that needs to be, like, corrected because GPT three came out in 2020. So I think they're either talking about GPT 3.5, da Vinci zero zero two, which was really popular, or it's just a preview of ChatGPT because investors were getting previews of ChatGPT beforehand, and it was, like, blowing everyone's mind.
Speaker 1:But it was a really complicated deal, and a lot of people passed basically for the wrong reasons, in my opinion. So
Speaker 2:one On on Kushner's work ethic.
Speaker 1:Yeah.
Speaker 2:He was, we met up earlier this year for coffee. Mhmm. And he was he was, I I had like gone to sleep. He was still on the East Coast. Yeah.
Speaker 2:It was like 2AM. He's texting
Speaker 3:like,
Speaker 2:yeah, do you want to I'll see you at ten or something like that. I'm like, you're on the East Coast. It's 2AM for you. You're going to get to the West Coast and and be ready for so that is part of the part of the story obviously. It's just insane, you know, insane work ethic.
Speaker 2:Yeah. I Did you see
Speaker 1:in the chat somebody said, we're on France too. And Tyler says, dang, they released a sequel to France?
Speaker 2:Tyler Tyler is MVP of the chat this week.
Speaker 1:Yeah. Tyler.
Speaker 2:Oh, sorry. Taylor. Taylor's been
Speaker 1:crushing it. Tyler has, been struggling to learn French.
Speaker 3:I I
Speaker 1:think you studied French. You took French.
Speaker 4:I took I took one I took two semesters of French. Okay. I found it, yeah. Let me I'll screen share.
Speaker 1:Okay. Yeah. Yeah. Yeah. Let's figure out.
Speaker 1:I'll I'll keep reading. So, OpenAI at the time was a cap profit subsidiary controlled by a nonprofit board with the mission of safe AGI development, taking legal precedents over profits. Microsoft's $1,000,000,000.20 19 investment gave it a dominant position in OpenAI with complex revenue sharing agreements and preferential access to the company's technology. That and the company was reportedly valued at 29,000,000,000 while doing a trivial 50,000,000 revenue. What a ramp from 50 mil to what are they doing now?
Speaker 1:Like, 10,000,000,000, 12 to 20,000,000,000, something like that? It was all very weird. There was no reason, there there was a reason no other investor submitted a term sheet for that round. Wow. After several conversations with the investment team, however, Kushner marshaled his case.
Speaker 1:Forget the nonprofit structure and Microsoft and all the red flags, he argued. If you can create this much enterprise value, everything else is solvable. In any case, colleagues recall, he kept repeating things like, saw the future, and this is the one. Great call. Great.
Speaker 1:Great. Great call. Extremely hard. I know some of our investors who literally passed on that round because they were like, yeah. Like, we we we talked to our lawyers, they were like, this doesn't make any sense.
Speaker 1:So, like, we couldn't understand, like, how we were getting it. Like, there were lots of smart people that passed.
Speaker 2:How early did people feel like ChatGPT was a gonna be a meaningful threat to Google?
Speaker 1:That probably started in, like, March '23, but, I but, like, November. I mean, people when chat when when GPT three came out in 2020, people were starting to say, like, you could use this to you could ask it a question. You had to you really had to prompt hack because you couldn't just ask it a question. You had to, like, ask it a question for a list of bullet points and put a couple a couple on CNN.
Speaker 2:Laughing at What's up? Rim K is saying it's live now on news. It's live now on It's on France too. It's on the news.
Speaker 1:It's on the news.
Speaker 2:We're trying to find it.
Speaker 1:It's on the news. And so, Thrive submitted a term sheet, 130,000,000 from its main fund at the $29,000,000,000 valuation. In November 2022, OpenAI launched ChatGPT within two months. It became the fastest growing consumer app in history. By 2023, Thrive was working on a $90,000,000,000 round.
Speaker 1:And in August, they agreed to anchor, 400,000,000 of a $500,000,000 employee tender offer, critical leverage in the explore explore exploding war for AI talent against OpenAI's publicly traded competitors. By 11/17/2023, Thrive had committed around $700,000,000 to the company. So, pretty pretty remarkable results and, really just goes to show you that, like, there are certain pitches in venture, like seeing ChatGPT before it launches that you'd need to really, really, really, really, really swing hard at. And and Josh swung at the right pitch at the right time, which is, like, fantastic and much harder than I think people think. It's so easy now that everyone uses ChiGPT all the time to to to just be like, oh, yeah.
Speaker 1:I would have I would have made that deal too.
Speaker 2:Yeah. And and ignoring the ignoring the FUD and just, like, doubling, tripling, quadrupling down every single possible
Speaker 1:Yeah. I mean, when when when that when that initial round was happening, I was I was also, like I mean, I I wasn't an investor, but I was I was I was thinking, it just makes a lot of sense. I was looking at the team, and I was like, if you just make the bet on, like you have the CTO of Stripe, Greg Brockman. You have the former president of Y Combinator. Just the resume of the founding team at that time, everyone was really really curve was really Mid
Speaker 2:curve was the corporate structure is
Speaker 1:weird. Yeah.
Speaker 2:Like like, this isn't a norm this isn't a c corp. Yeah. It's breaking the rules. Yeah. So I don't fund non c corps.
Speaker 1:Yeah. Like, I'm out. But just going back to basics of being, like, the founding team, who's running the company? Are they the best? You know?
Speaker 1:Is this an important category, and do I have the best team? It's like it was hard to make an argument against it at that time, in my opinion. Anyway, I should have invested, I guess, but, you know, like doing content instead. It's more fun. In other news with OpenAI, there's they they did an interview with the Broadcom team, and Sam Altman shared a little bit more about the custom chips that they're working on.
Speaker 1:Before we tell you about that, let me tell you about Fall, the generative media platform for developers, the world's best generative image, video, and audio models all in one place, develop and fine tune models with serverless GPUs and on demand clusters.
Speaker 2:Used by Adobe, Shopify, Canva, Cora, and many more.
Speaker 1:So, Sam Alman says, to zoom out a little bit, if you simplify what we do in this whole process, you know, melt sand, run energy through it, and get intelligence out the other end. As we realized we were going to need the whole system together to support this, it's just gotten more and more complex. So it turns out Broadcom is also incredible at helping design systems, so we are working together on that entire package. We are able to think from etching the transistors all the way up to the token that comes out when you ask Chatchipiti a question and design the whole system. All of the stuff about the chip, the way we design the racks, the networking between them, how how the algorithms that we're using fit the inference chip itself all the way to the end product.
Speaker 1:And so it feels very much like like even if they're not, you know, fully, like, plateau pilled, like, there's a lot more research to be done. There's a lot more improvements. Like, there are at least pieces of the chat GPT architecture, pieces of the system, whether that's, you know, four o level inference or reasoning tokens that should effectively be baked down onto a chip. And so that's what, what OpenAI is working on with Broadcom at this point. Stratechery, Ben Thompson, had a great, deep dive on or on OpenAI and Broadcom and, and sort of laid out the argument for working for them working together and baking stuff down onto a chip.
Speaker 1:It's a it's a fun read. You should go check it out. Should we move on?
Speaker 2:Yep. I was just gonna try to figure out, what
Speaker 1:Well, while you do that, let me tell you about Turbo Puffer, search every byte, serverless vector and full text search built from first principles in object storage, fast, 10 x cheaper, and extremely scalable.
Speaker 2:Broadcom was a $220,000,000,000 company the day that ChatGPT launched. It is now Wow.
Speaker 1:It's almost a 10,700,000,000,000.0. Almost a 10 x. Wow. NVIDIA too. NVIDIA was was much, much smaller.
Speaker 1:That might be a 10 x as well. Yeah. Wow. What yeah. Wild wild growth across the entire category.
Speaker 1:Basically, everything is it has 10x in price or something like that, roughly.
Speaker 2:Yeah. It's interesting. It'd be interesting to go back and do the math in the VCs. There was some reporting in the Financial Times a couple days ago talking about who actually owns OpenAI, and it would be probably interesting and painful to look back at the investors, how much they invested in OpenAI versus just market buying NVIDIA, Broadcom, and some of the other beneficiaries. Who did they have more money?
Speaker 2:OpenAI's ex
Speaker 1:Didn't Altimeter do both?
Speaker 2:Yeah. I'm sure the players like that did both. But OpenAI's expected ownership after the company restructures. Microsoft is going to have about 30%. OpenAI employees gonna have close to 30%.
Speaker 2:OpenAI, the nonprofit, is gonna have, 20% to 30%.
Speaker 1:But that doesn't mean you shouldn't still donate. If you're thinking about doing some charitable giving this holiday season, consider writing a donation to OpenAI, the nonprofit.
Speaker 2:Prioritize tipping your cap table first. Yes. And then after that, consider donating to OpenAI, the nonprofit. Anyways, Microsoft at 30%, OpenAI employees around 30%, OpenAI nonprofit at 20% to 30%, SoftBank about 10%, and the remaining is is Thrive, Kosla, MGX, and a number of of bedrocks in there. Yeah.
Speaker 1:I wonder how accurate that reporting is. It feels like directionally correct.
Speaker 2:I think it's directionally correct.
Speaker 1:I wouldn't But there are some pretty big error bars on either side. Yeah. But still, I mean, you you just look at some of these, like, some of these numbers that we pulled up. It's like, you know, what what was the original OpenAI deal? It that Thrive did, it was at a 27,000,000,000, a 130,000,000 at 29,000,000,000.
Speaker 1:So $2.09 $0.00 0. So that initial deal was half a percent of the company. Right? And that was like and that was like a whole round. And so that was a very low dilution round even at that time.
Speaker 2:Yeah. What what's what's notable is, like, looking at this kind of rough cap table, it's just astonishing to end up in a situation where VCs have the lowest ownership out of the employees, a nonprofit, a strategic partner. SoftBank kinda makes sense. But but yeah.
Speaker 1:It's all hands on deck in the chat trying to find France too. Thank you for everyone's service. It seems like they're they're making progress using VPNs, all sorts of stuff.
Speaker 2:Daniel says, what's a good number to tip your investors 20% of the last round? Or is that too much? I think more like 2% of the last round is they'll feel very appreciated.
Speaker 1:But it's got to be delivered in a sports car form. It can't just be cash. Let's read this Jeremy Giffon post. Things that seem true about AI today that will probably be laughably wrong in a year. One, it still seems underrated ChatGPT has replaced 85% of my Google usage and has become a most used app.
Speaker 1:That's certainly true for me. The reason we're so upset about Slop is because it's obvious we're all going to love consuming it in two to three years. It's not gonna be Slop for long. What do you think?
Speaker 2:I yeah. I mean, there's out of the out of the 100 sore you know, maybe maybe way more than that. Right? Call it a thousand sore videos I've seen one way or another, Like 10 of them have genuinely been hilarious. Yeah.
Speaker 2:And that is about the same ratio as like the regular internet. Right?
Speaker 1:If you
Speaker 2:see a thousand videos, like, yeah, some some of them are gonna be But but I I I think, already there's there's I'm seeing instances where it's not slop. Still Yep. Using the Sora app is not I I don't love it. But some of the outputs are are
Speaker 1:I like it as a creative tool. Like, I I think that if you just view it as a creative tool, there's gonna be creative uses and stuff that's amazing even if it is a little sloppy. The other lens to view it through is, like, BuzzFeed was creating a lot of kind of slop content, but with humans, and that never really broke through and became something that a lot of people, at least in my world, enjoyed. It it kind of remained slop forever. And but but as AI generation as a tool, like you you saw over the over the weekend, I was having fun in our group chat generating a sort of video, sending it there.
Speaker 1:I didn't even post it, but it but the result was really funny in the context of our friend group. And so I think I think Jeremy's right there. Number three, he says many non AI products are being adopted due to economy wide corporate and capital market top down mandates to buy slash fund AI, a rare reversal of the norm where everyone wants to turn over their existing vendor for the new one, this will have a similar pull forward effect as ecommerce during COVID even if AI ends up being way overstated. And so right now, some of the booms that we're seeing, some of the ramps in these companies going to a 100,000,000 is just that the entire Fortune 500, and we're gonna get into this with some of the OpenAI partnerships, the entire the entire Fortune 500 is saying, like, CEO, you need to have an AI initiative or else you're gone. Like, you can't be sitting out AI even if you're even if you're Walmart, for example.
Speaker 1:Maybe Walmart should get on ProFound. They could get their brand mentioned in ChatGPT. They could reach millions of customers who are using AI to discover new products and brands. So Jeremy continues.
Speaker 2:By the way Yes. Best diff in the chat did send me the video of us on French television. Nice. I cannot download it because X does not apparently allow you to download Don't videos allow you to download it. Yeah.
Speaker 2:So I asked him to send it to to Ben's email, so that we can pull it up on the show.
Speaker 1:We will we will work
Speaker 2:on that. We are working on it.
Speaker 1:So Jeremy goes to his specialty, how companies are using AI. He says AI roll ups and vertical AI. I've yet to see any part of a business unit that can reliably have cut cost cut or revenue grown with AI. That's very interesting because the the the the the narrative we've heard this from a number of private equity folks who are saying, like, I'm going to buy a company, throw AI on top, and cut costs in this division or grow revenue in that division. And Even even soft
Speaker 2:even, again, software engineers at a company, if maybe they haven't been using AI, you come in and you're bringing like fire to like, here, look. Fire. It's magical. Fire.
Speaker 1:There's something interesting about why I'm here's potentially still an art to it.
Speaker 2:Yeah. Here's potentially why you should still be bullish on Yep. On AI roll ups is because you take a bunch of smart tech people
Speaker 1:Yep.
Speaker 2:And you bring them into businesses that haven't historically had a lot of great technology
Speaker 1:Yep.
Speaker 2:And they just built great software. It's possible to grow businesses faster, be more efficient, things like that, even if AI isn't actually doing the heavy lifting. Yeah. So when I've talked to, like, a a Rollup founder, and I'm thinking, you know, they've pulled together in this case, they had pulled they had pulled talent from, like, five of the best companies in in the world, at least from from from a talent density standpoint. And they're they're working in these categories.
Speaker 2:I won't name it because I'll I'll I'll dox the company. But they're working in a category that never in history had super talented engineers working on it. Yeah. And so they're probably going to do really well, even if, again, it's not like integrating an LLM into the workflow that's actually doing that heavy lifting. Yeah.
Speaker 2:So Yeah. Mean, that's a It's possible that yeah. Like
Speaker 1:He says companies can ship a lot more software quickly. Complexity of the build out is no longer a moat, which I think is interesting. Revenue velocity Yeah.
Speaker 2:But so the only thing is this kind of contradicts the
Speaker 1:No. No. So so one is is it's hard to just go into a business and say, no matter what your business is, I know that I can come in and drop AI into your manufacturing process or your customer support department or your finance operations department and or your sales department and immediately see a result on cutting costs and increasing revenue. Like, it's not a reliable playbook. Every company
Speaker 2:Yeah. But I'm just saying he's saying companies can ship a lot more software quickly. Complexity to build out is no longer remote. So that would you'd buy a platform software business that has a bunch of other products that you wanna build. And if the second point is true, you could just let go of a lot of the engineering team and say, we're gonna cut we're gonna cut or we're not gonna we're not we're gonna change our
Speaker 1:Yeah.
Speaker 2:Our, hiring plan because we just don't need as many engineers and you can grow revenue while, like, keeping your costs relatively the same. Right? So
Speaker 1:Yeah. But at the same time, like like, the that software that you launch will be more competitive because there's no longer a moat around the complexity of the build out. And so you wind up with a more commodity product at the end of that build out. And so maybe the equilibrium is that you don't actually grow revenue that fast. I don't know.
Speaker 1:It it it does seem like it's a very case by case basis, basically. Like, everyone wants to paint with a broad brush and just say that, like, every company will be transformed by AI. Every company will will grow with AI. Yep. But it's it's it's clearly, like, like, more more nuanced than that.
Speaker 3:Yep.
Speaker 1:He says
Speaker 2:revenue Yeah. Loss saying margins and headcounts do not yet reflect the narrative around developer productivity. What I would say here is that if your developers get a lot more productive
Speaker 5:Mhmm.
Speaker 2:You might actually want more developers. Right? Yeah. Because, like, if a developer can produce three times as much valuable code, if you agree with that, wouldn't you want to grow your engineering team?
Speaker 1:Yeah. I mean, there is an equilibrium. Like, there is, a game theoretic equilibrium where
Speaker 5:Yeah.
Speaker 1:Where where if we're direct competitors and I give all my engineers AI and you give your all your engineers AI, like, we both have to employ the same amount of engineers to compete with each other? Because if I fire all my employees and I'm just using AI and you
Speaker 2:They're just gonna outship you.
Speaker 1:You're you're gonna outship me because you have AI and humans and you're double import you know? And so
Speaker 2:This is another point here. Says PE and VC ironic and ironically VC have not found a way to adopt AI internally. I asked a lot of guilt
Speaker 1:about that.
Speaker 2:And, yeah. He he gen I mean, I think he generally agreed.
Speaker 1:Yeah. Mean, certainly for, like, research, I would imagine that they've they've adopted that just as like a replacement for Google, like like Jeremy's first line. Like, you know, replacing, Google search knowledge retrieval, that type of stuff, AI, is certainly a is certainly a good point. But, yeah, I mean, it's not like you can just say, hey. Go find me a new the the next unicorn.
Speaker 1:And Yep. Don't make mistakes. Where AI has created a lot of value is by being the missing puzzle piece for existing businesses usually around this is usually around onboarding migration or dare database querying. Oddly, I can't help but feel that at its core that its core quality is just that it makes everything much faster. It feels as though the microprocessor, blockchain, and AI have all been these pushes away from clock time towards newer, faster standards standard measure of times.
Speaker 1:I'm not that optimistic, but it does feel like there's a chance for the first time that we could get entirely away from the ad model taking shots at ads. How dare you, Jig.
Speaker 2:Posts from the ad supported platform Yeah. X.com.
Speaker 1:Yeah. I don't know. I mean, it does seem like it does seem like ChatGeePee is gonna monetize pretty heavily on the subscription side and then also on the referral, affiliate revenue side. But they're creating a ton of service area for ads, and I think that there will just be ads. So I disagree with that one.
Speaker 1:Anyway, speaking of ads, Google AI Studio, the fastest way to prompt from prompt to production with Gemini. You can chat with models. You can vibe code. You can monitor your usage. They got Nano Banana.
Speaker 1:You can talk to Gemini live. Go check it out.
Speaker 2:Go to ai.studio.
Speaker 1:Post from hypebeast. Apparently, Tim Cook now has his own custom Lububu complete with an iPhone 17. I think that's in orange. I didn't realize they made custom Lububus. But, I mean, what what a great
Speaker 2:What do you think Tim actually thinks about Lububu? He doesn't look that happy there. It's kind of a forced smile.
Speaker 1:Yeah. I don't know. What there's been a few photos of his office. You remember those the the the that viral video the viral image of, like, this was Steve Jobs' office. This is Tim Cook's office.
Speaker 1:And Steve Jobs' office is all messy, and Tim Cook's office is all clean, and it's, like, supposed to be a referendum on the different leadership styles of the two CEOs. But, of course, people made the point that that picture, that iconic picture of Steve Jobs, his his office was in fact his home office. And we haven't seen Tim Cook's home office, it might be equally messy. And Steve Jobs', work office might have been equally clean. But, in that photoshoot of Tim Cook's work office, it did seem very clean.
Speaker 1:It didn't seem like it had a lot of tchotchkes or trinkets or, I don't know. I don't even know where you'd put La boo boos in there, but he doesn't seem like someone who's been collecting Pokemon cards and is just ready for the next thing to collect. But it's certainly a fun fun, fun drop for, Labuboo. If you're building a company, you should make a Tim Cook version of your product and send it to him and get free, free ad out of it, I suppose.
Speaker 2:Who knows? I breaking news. I want your reaction to it, John. Please. Your, authentic reaction.
Speaker 2:John has not seen this post yet.
Speaker 1:Have it.
Speaker 2:Breaking. OpenAI to partner with OpenAI to help fund OpenAI. OpenAI up 90%.
Speaker 1:That sounds real. It's not.
Speaker 2:It's a, it's a
Speaker 1:Mean shitpost. I know that, I I mean, I know that they had crazy amount of partnerships. Just this week, I mean, the the broad thing we'd heard about and then it went bigger.
Speaker 2:Jerry Capital says, this is how you top. And it's Walmart partners with OpenAI to create AI first shopping experiences. Yep. This makes a lot of sense.
Speaker 1:NetCap Girl said, in in case of emergency, break the glass. It's an OpenAI partnership.
Speaker 2:Well, of course, Salesforce announced a partnership with OpenAI this morning.
Speaker 1:Yes.
Speaker 2:And, they people were memeing it because the the trade
Speaker 1:Didn't the stock trade down on it?
Speaker 2:2%.
Speaker 1:It's crazy. Crazy. Crazy. And then high yield Harry says, say the line, Bart. We're partnering with OpenAI.
Speaker 1:And so Salesforce and OpenAI just announced a partnership. It's the kind of partnership that will let companies across Salesforce Agent three sixty platform in ChatGPT clearing sales records. I mean, it all makes sense to integrate it. It it, what's what's interesting is that at one point, Salesforce was building their own foundation model and seems to have, you know, backed down from that a little bit. Marc Benioff said, back in 2023, which I believe was the coup.
Speaker 1:Right? This is right around the coup. So this was this was when, OpenAI researchers were leaving, and there was an there was news that Sam might go to Microsoft Research and bring a bunch of people there.
Speaker 4:Yeah. That was, like, over weekend.
Speaker 1:Over the weekend. Right? And it was really crazy. And Marc Benioff was like, this is my Zuck poach moment. I can poach all these folks.
Speaker 1:And, he said Salesforce will match any OpenAI researcher who has tendered their resignation full cash and equity OTE to immediately join our Salesforce Einstein trusted AI research team under Silvio Sarovese. Send me your CV directly. Einstein is the most successful enterprise AI platform completing 1,000,000,000,000 predictive and generative transactions this week. Join our trusted enterprise, revolution. High yield Harry says, this is hilarious in retrospect.
Speaker 1:Yeah. It it it it's like it needs to be the main thing. Unless you're Google and you invented the transformer, like, else needs, like, a partnership. And so, Amazon's fortunately in a good spot with Trainium, but they still have to partner. It doesn't seem like they've been able to really keep up in the, foundation model race.
Speaker 1:It's it's becoming like a triopoly between OpenAI, Anthropic, and, and Gemini, and everyone else is kind of dropping out. Although we do have new new, some new, information from biology about the Chinese models and what's going on in the free AI model world on Ella Marina. It's been back and forth between Meta, DeepSeek, Alibaba, and now Z dot ai is in first place, and they've all been, you know, going back and back and forth. It's a knockout, drag out bite. How each organization's best open weight model ranks on Ella Marina.
Speaker 1:Zz.ai is now
Speaker 2:Good domain. First.
Speaker 1:Yeah. Great domain.
Speaker 2:Not a .com, but still solid. Before we move on from Salesforce Yeah. I think we can we can leak that Mark Benioff will be on the show on Thursday joining TPPN at 12:15. You heard it here first.
Speaker 1:That'll be an interesting discussion. We understand how he's thinking about build versus buy in the era. Yeah. There was definitely a time when it made so much sense to say, like, well, I don't want this company to train on it. I have my own system.
Speaker 1:It's not that expensive, but now it's extremely expensive. And OpenAI offers an enterprise plan where they won't pull your data back into their training runs. And so you can use all the best OpenAI models. They will serve them. Same Altman's problem to provision all the GPUs.
Speaker 1:You're you're even better than being a renter because you're just a token buyer. And so there's very little risk of, oh, if you, you know, oh, we, you know, we overshot this AI thing, we'll just scale back your token consumption. And all of a sudden, your economics go back to what they were before at the AI boom. So it's a very safe place to be. So Jordy,
Speaker 2:you want this video? Let's pull up
Speaker 1:French TV, maybe. French TV. This is, this is the studio,
Speaker 2:not with This is a cool
Speaker 1:This is very cool. Do we have audio on this? Wanna hear some French TV. They're really filming this all. We didn't get any we didn't get any
Speaker 2:audio? The audio.
Speaker 1:Okay. Odd. Well, we wouldn't be able to understand it either. Oh, look. Here we go.
Speaker 2:They're calling you a An expert in artificial Yep.
Speaker 1:This is the first trading card. I remember being at breakfast, and, Tyler described that idea, and it absolutely ripped. We had a couple others. What was really funny about this was that the the interviewers kept asking us, like, okay. So for this trading card, like, how much did that person make personally?
Speaker 1:And we're like, look. Like, I like, it didn't exactly leak like that. It was a more of a general thing. There were some leaks of specific deals, but they're not a lot of them haven't been confirmed. Like, we're more just, you know, having fun with the overall trade deal narrative.
Speaker 1:We can't really even clock a particular offer within an order of magnitude.
Speaker 2:But We gotta trip find out how to get the audio.
Speaker 1:Yeah. We do. Oh, there was audio, says Fantas. So we will figure that out. And And now.
Speaker 1:There. Now. Without further ado, we have our first in person guest on the show. Welcome to the stream. How are you doing?
Speaker 1:Good to see you.
Speaker 2:I'll get the stand next to you. See what it feels like. Welcome to the Ultra Dome.
Speaker 1:Hopefully, you're you're looking cozy in that in that sweater. Hopefully, you're enjoying the the rainy day in Los Angeles.
Speaker 3:I was told come to LA. It'll be nice.
Speaker 2:Yeah. It'll be
Speaker 1:warm. That's cool.
Speaker 2:Thank God the it's like 300 It's warm
Speaker 3:in here.
Speaker 2:Three hundred and thirty days a year.
Speaker 1:It feels very warm in here. It's actually more of a neutral temperature. But through the power of movie magic, it appears that we are in front of a warm heart. Heart. Anyway, please introduce yourself to the stream.
Speaker 1:Tell me
Speaker 3:what you I'm Henry Stern. I'm one of the cofounders of Privy. We build embedded wall software. I was told to come here to help translate the French television. Oh, yes.
Speaker 3:French originally. You speak French. I watch France delivision. No way.
Speaker 2:France two? Are you France two fan?
Speaker 3:I'm a France two fan.
Speaker 2:Is France two one, two, three, four, five. I think it goes into the forties, if I
Speaker 3:We're we're working on on on iterations at this at this point in time politically, and, and I think, TVPN is is welcome respite for, for all French, political watchers out there.
Speaker 1:That's fantastic. Yeah. It was fun, telling the story of what happened over the summer. It felt like flashback because the AI talent wars, I'm sure you track them, like, in real time, in He was busy July.
Speaker 2:Getting acquired
Speaker 1:You were busy, but still, I mean, I'm sure they broke through to you and you were aware of
Speaker 3:We we we saw these things.
Speaker 1:Yes. Of course. And everyone's wondering like, hey, what what's my comp package gonna be next year?
Speaker 2:Well, we we so we normally don't do life stories Yeah. On TBPN. But when did you actually when did you leave France? Assuming you grew up there?
Speaker 3:I grew so I grew up there till I was like 12 or 13, then I came to The US, which is how I shed my accent to extent. Yeah.
Speaker 2:Yeah. It's barely I don't even notice it.
Speaker 3:And and got very Americanized. So I'm a I'm an American person as far as startups are concerned Mhmm. And I'm a French person in so far as like, know, voting passports and food is concerned. Sure.
Speaker 1:Sure. Makes sense.
Speaker 2:Give us give us a play by play of the last few months. It's been busy.
Speaker 3:It's been very busy. There's like two parallel worlds. On the one side, there's we we got acquired by Stripe. So we had the great folks at Stripe reach out. I think you gonged us already.
Speaker 3:Know.
Speaker 2:Your second gong, it gets you closed.
Speaker 1:Retractive gong.
Speaker 2:Thank you. Hit 1 for closing. One for the announcement, one for closing.
Speaker 5:Of course.
Speaker 3:And and basically, so they they reached out in in around April Wow. That's pretty quick. And went through really what was a very, very fast, time. So a huge shout out to to the m and a team over there and and frankly, to, the entirety
Speaker 2:of the But have you not had you not talked surely, you had
Speaker 1:You've never heard of
Speaker 2:Stripe before that.
Speaker 3:I didn't know what it was. No. No. I no. So, obviously, we knew Stripe, and and frankly, a lot of how we shaped our company and the way we wanted our product to work was based on what we saw Stripe doing.
Speaker 1:Yeah.
Speaker 3:We'd had talks with their crypto team and in general, and we did a lot of work with the team at Bridge Mhmm. Through joint customers that we serve together. Yep. And the outreach was some version of, listen, we think wallets as distributed global bank accounts are an extraordinarily powerful primitive to have as part of the stack that we're hoping to serve. Yep.
Speaker 3:We'd love to talk to you about this the way they the way these work. So we had a conversation and it very quickly led to to where we were, and I think we we talked to what would it take for us to be excited beyond the general excitement of Stripe about, like, joining forces. What would it take for us to accelerate? Yeah. And and we got there, and then, you know, to their credit, we moved really quickly.
Speaker 3:So by by May, we were signed with a term sheet by, I guess, mid June we announced, and and we closed in July. That's quick. Yeah.
Speaker 1:How how what was the pitch around, like, synergy? Was it obviously, they're well capitalized, so you don't have to go out and raise anymore. They have a huge customer base of people who have saved credit cards through Stripe link. But then they also have a bunch of merchants who have done developer integrations with the API. Like, what stood out to you as, like, the most important piece, and what was maybe less important than people might think?
Speaker 3:Yeah. I I think there are two parts to it. The first is how do we get this tech to mainstream? How do we get it to customers who otherwise don't care about crypto whatsoever? And one of the things Stripe has been excellent at is basically hiding the rails behind, you know, extremely complex infrastructure.
Speaker 3:Exactly. And you take these like, you know, hundreds of banking partnerships, you turn them into an API that just works and you enable, know, in their case, like commerce on the web for the last fifteen years. Yep. And the question is as this stack evolves, how do we do the same for crypto? That felt like very natural, but I think for us, the point was one, it is being able to strengthen our teams across security, infra, and obviously across distribution to customers we wouldn't be talking to otherwise.
Speaker 3:And two, being able to plug into money movement rails, like making it that fiat and crypto are married to the point where they become indistinguishable from one another, and whereas a consumer of this API, you no longer have to think about one versus the other. So I think the the the way I look at it is broadly with two prerogatives. If Stripe is AWS for money, then this is a rail they should be leveraging and they are intent on leveraging and building up. This is why they acquired Bridge. This is why they acquired us.
Speaker 3:And broadly, we wanna be the best purveyors of money movement and storage systems on the web so that you can build completely global businesses on modern financial rails. That's one. Yeah. And then two is beyond the tooling that we provide. Can we make it that every existing Stripe user today can benefit from these rails so they can provide, you know, cheaper, faster global payments, they can enable anyone to hold dollars anywhere in the world.
Speaker 1:How do you think about the modern onboarding of the consumer Going back to maybe 2021, 2022, the way people would start I mean, a lot of people were on centralized exchanges like, oh, I want exposure to Bitcoin or something. I'll go buy some, and I'll go through the setup flow and KYC and whatnot. And then, the wallet era, I felt like started with, NFTs, different tokens that were sort of, like, getting traction on on Twitter. People would talk about them, and then you'd have to be, oh, well, to buy this, I gotta set up this, this wallet. I have a specific wallet for Solana or a specific one for Ethereum.
Speaker 1:And and people it was very it was very, like, prosumer activity. How do you think it evolves to a more consumer world, going forward? Is it like
Speaker 2:Well, my my my framework is there's the speculation era. Yeah. People are signing up for different services to speculate. Yep. And I think what you had seen probably prior to starting the company is that eventually there would be this like more functional use case of like I'm gonna sign up for Yeah.
Speaker 2:Products in general for specific purposes, whether it's to buy things, you know you know, pay
Speaker 1:So you think people will start with signing up? Or will it be like PayPal where it's like, get an email and I'm like, I gotta go claim that, and then I set up the wallet?
Speaker 3:I think there's gonna be two entry. I mean, broadly, what we're seeing so to your to your question, like, you know, what what's been happening these last few months, there's obviously what we've been doing at the at the preview level, the Stripe level, but then there's the space overall and the amount of institutional adoption that's coming. I think we broadly see it on three fronts. We see crypto as an asset class. Mhmm.
Speaker 3:So how do you unlock, basically, access to these assets for traditional consumers? And you see it through, you know, JPMorgan giving access. You see it through I Morgan Stanley is going to unlock spot trading on E Trade. You see it through we're working with Deutsche Bank JV called All Unity on a European stablecoin for support. So broadly, that's that's the the first part.
Speaker 1:And quickly there. So someone has a an account with a bank that has a brand that's probably been around for fifty or a hundred or hundreds of years, and and that particular web app or mobile app is like provisioning a wallet for them that they might not even know that is provisioned for them. Is that how you think that plays out?
Speaker 3:I think we're see I mean, this is I think where it leads
Speaker 1:Yeah.
Speaker 3:Yeah. To start. I guess the the the the the broadly, there's access to the asset class. There's obviously stablecoins and global distribution. And the last is overall tokenized assets beyond things like tokenized equities or tokenized deposits is where you see players like, you know, Apollo or Blackstone getting involved.
Speaker 3:And the way we're seeing this develop is you broadly have a move from crypto native startups to fintechs. Yeah. So what you just talked about is exactly what's happening with the neobank stack
Speaker 1:Got it.
Speaker 3:And a number of neobanks that we're seeing provision wallets exactly as you're saying Sure. Which is as part of your traditional neobanking app
Speaker 1:Yeah.
Speaker 3:You'll have the ability to move your checking deposit Yeah. Balance Yep. A wallet that you control through which you can get, for example, yields on DeFi in a way that as interest rate go die down becomes more interesting. Yep. So I'll be phase two to then because
Speaker 1:right now, if you wanna buy Bitcoin on E Trade, for example Yeah. Like, you buy the ETF, which is like a very abstracted, like, multi levels of abstraction. It's not even self custody. And so yeah. Okay.
Speaker 2:That that that's very cool break work. Down maybe what what's what are the institutions focused on? Like, what are the kind of the categories they're focused on? So one would be stablecoins. Hey, these are gonna be big.
Speaker 2:We wanna have a play here. So whether that's, leveraging them in the business or launching their own stablecoin is one. There's opening up access to crypto markets so their users are another one. What are kind of the other maybe are you thinking about, less, like, sexy use cases for crypto, like things like back office stuff, or is that more on the bridge side of the business?
Speaker 3:It's a great question. We are insofar as basically setting up you can think of a wallet in this new instantiation where the wallet is just this embedded product that sits within your existing stack as a way to do broad treasury management. So Bridge is working, for example, with SpaceX on remittances across SpaceX's global operations. But, you know, this is a random example, but you can imagine a company like Coca Cola who was bottling plants all over the world needing to have capital put to work.
Speaker 1:And so
Speaker 3:this is where the wallet stack becomes useful. Broadly, breaks down largely as you've said it, which is to say it's access to crypto as an asset class. It's stablecoins, and that's on two fronts, issuing the own. You know, for example, Stripe and Bridge have launched open issuance where you can actually launch and own the economics of the stablecoins that you're putting forth. But probably, we're seeing a lot more people starting to do this.
Speaker 3:Yep. As well as using Stablecoins for things like remittances and payroll. We, you know, see folks like Dealer Remote that are doing Stablecoin based payroll. We see folks like Zeps, Remitly, Felix who are doing remittances using stablecoins. And then the third is broadly trying to see, can we open up tokenized deposits and other things to financial markets globally through crypto.
Speaker 3:So this is where I think the the Apollos of the world are playing and wanna become in a sense like, you know, lenders on chain for folks across the world who have not had access to to to private credit.
Speaker 1:So if I'm if I'm a contractor for SpaceX at Kwajalein Atoll or something and I don't have USD or I don't have a USD, bank account, SpaceX HR effectively or financing might send me an email. Hey. Sign up for this to claim your, you know, your payment, your payroll. Yeah. And it's just a stablecoin wallet.
Speaker 1:They provision the wallet right then.
Speaker 3:Exactly. Mean, in the
Speaker 1:have it, they can move it where and then they can interact in crypto, but then they'll also be able to move it outside.
Speaker 3:In the specific case of the the SpaceX Bridge work, think it's used for internal treasury operations.
Speaker 1:Oh, sure.
Speaker 3:Sure. But that's exactly the sort of thing that we're seeing coming. Payroll. Exactly.
Speaker 1:Got it. And remittances. That makes sense.
Speaker 3:That goes back to your question of, you know, how are people gonna get wallets in the future, 2021, 2022? You have to be this prosumer. You have to be extraordinarily sort of high activation energy of I want this, and I'm gonna self select into this. I think we're gonna basically just start seeing myriad of ways in which this starts to bleed into your life as a participant in global financial markets. That's how you'll get into it.
Speaker 3:Do you
Speaker 2:think it's do you think there's many fewer crypto companies are being started today than in than in 2021, 2022? Is it is it, like, I could imagine it's, like, 20% as many even though there's a More bigger
Speaker 1:than ever. I feel like I feel
Speaker 2:like but but here's thing. Mean, I feel like I feel like crypto crypto this should be the excite most exciting moment ever in crypto history. Right? All the institutions like, it's not just like the Robinhood's coming in and saying, you know, we're gonna add support for Bitcoin. It's it's the biggest financial institutions in the world.
Speaker 2:Yep. And yet, there's less it feels like less excitement from like, look at the YC batches. You would think you would think a YC batch would be like 50% crypto right now
Speaker 3:Sure.
Speaker 2:Given the institutional opportunity and now regulatory clarity and all these things. So it's really great if you're if you're Privy or Bridge or or you're, you know, some sort of established crypto company because you're not getting that that, it doesn't feel like you're getting the same influx of of new competitors even though the opportunity has never been more obvious or bigger.
Speaker 3:I mean, I I, you know, I think we have to eat shit for a few years
Speaker 2:Yeah. Yeah. Yeah.
Speaker 4:To to to get here,
Speaker 3:which which which I think speaks to it. But you're right. I mean, from my standpoint, the EV of starting a company right now related to, you know, crypto or stable coins or or I wonder to what extent, by the way, just fintech and crypto are gonna become one in the same Yeah. And indistinguishable. But but the EV is compared to the some of the competition I'm seeing in AI, for example, is absolutely wild.
Speaker 3:So I do think it's fewer than in 2021 and probably at least 50 to 70% fewer than I'm seeing. But Yeah. The fun thing is I'm I'm here in LA for an event for partners of ours called Lightspark that have a Bitcoin l two. And at the event, they're presenting the work that they're doing with SoFi. There's folks from Apple, Meta, like, everybody is actually paying attention to the opportunity and coming in.
Speaker 3:So I think the next eighteen to twenty four months are gonna be incredibly high leverage, and I think we'll look back and we'll have the same conversation, call it 2027, and say, you know, it was so quaint in, you know, late twenty twenty five when we were talking about distribution starting off and so on.
Speaker 2:How how long until the average bank account in America when you wanna send a payment, you're getting a drop down like, do you wanna send a wire? Do you wanna send a stablecoin payment? It feels like that might be two years, three years away. But how quickly are the institutions actually now that there's regulatory clarity, now that it's sort of fair game, how quickly can they actually adopt?
Speaker 3:I mean, on on pace of adoption, the reality is extremely fast. The rails are actually a lot of the rails have been tested. I think this is, by the way, where a lot of the crypto native usage trading and for speculation has proved useful for the financial rails and that Yeah. It's helped harden the financial rails, and then you have things like Tempo getting started for, you know, payment specific use cases to enable Yeah. You know, Stripe level
Speaker 1:Mhmm.
Speaker 3:Payments utility on blockchains. So the TLDR is I think it that the rails are ready. The places where work will have to be done is on the last leg of distribution for global payouts. So banking partnerships on the ground in various countries where you'll wanna move back to fiat. But this is work, you know Mhmm.
Speaker 3:I'm gonna keep plugging away my my my Stripe things, but obviously, Stripe's doing a lot here.
Speaker 2:Yeah.
Speaker 3:This is where, for example, Bridge and Visa are working together, and you see the card issuers Yeah. Moving into providing this. So you could pay out in stablecoins using a card directly rather than needing to move back to Fiat via your banking partner on the ground. Yeah. I I think we're gonna see a lot of pressure from neo banks pushing traditional institutions to pick this up.
Speaker 3:And I don't think your two year timeline is crazy at all. I think it'll be one
Speaker 2:Well, that's why that's why it's wild that there's so it it feels like there's massive reduction in new crypto company formation at a time when the entire mark like, every key partnership will be, like, decided in the next, like, two to three years.
Speaker 3:The the other interesting point, this was, like, you know, CryptoCope circa 2022, but it was, you know, crypto is the only net new technology AI serves the incumbents because you have data and distribution modes. And I actually think stablecoin changes that because stablecoins play to the strength of existing networks, distribution modes, so on and so forth. And so I think the shape of crypto companies that will become valuable is also, like, not obvious, which is a really good opportunity and interesting to start
Speaker 2:What what regions or countries specifically are most hostile to crypto adoption today? I mean, assume like North Korea. North Korea, countries that already have, you know, intense capital controls. But
Speaker 3:Yeah. I mean, there's probably a joke about North Korea somewhere in here in terms of crypto hostility. They certainly do a lot of crypto work, unfortunately, in terms of cybersecurity. But Did
Speaker 2:you I'm sure you got a bunch of applicants over the years.
Speaker 3:So we're all in person, which helps
Speaker 2:tremendously with fact remote North Korean engineers.
Speaker 1:There was a there was a computer scientist from Caltech who went to North Korea, smuggled himself across the border from South Korea, gave a talk on Ethereum as, like, a way to kind of move money not maybe above board, and and he went to jail.
Speaker 3:It's Virgil. I forget his last name, but I know I know exactly what you mean. No. So so the honest answer is the way you'll see it is there's a lot of adoption today in Lat Latam Mhmm. And parts of I mean, Europe and The US, but the opportunity is quite different there because the stable coin opportunity where the picture of, you know, just hold dollars Yeah.
Speaker 3:Is a little bit different. If you look at Tether, Tether keeps a 100% of its yield
Speaker 1:Yep.
Speaker 3:Which speaks to how valuable holding a dollar is if people are willing to make no money on top of sitting balance. So
Speaker 1:So is that why there's so many stablecoins? Is this like wait. Like, it feels like we we had, like, a few dominant winners. It felt like it was gonna be maybe a duopoly Yeah. Where, like, power law winners were gonna happen.
Speaker 1:And then I hear stories about, like, the state of Montana is gonna launch their own coin. I'm like, do like, I I I kind of like the idea of just one standard, but I I don't know enough to really make that argument beyond just like, it would be nicer if everyone used the same dollars.
Speaker 3:I think we'll probably see two things, which is one, a broad like mesh of interconnectivity under the hood so that your coin for every single place you launch it. So again, you know, Bridge worked with Fantom to launch cash. They're working with MetaMask. You'll be able to interoperate between them without having to think.
Speaker 1:Yep.
Speaker 3:But on the flip side, which ones will have a brand Yep. Is gonna be a separate question. So insofar as, like, stablecoins are products.
Speaker 1:Yeah.
Speaker 3:They are programs. They can be programmed the way in which yield is managed, the way in which you put those underlying sort of collateral assets to work. All of that is configurable, which is why it makes sense that you'd have a proliferation. Like, economic should be able to own how their balances are held and and managed. But the actual rails to which you, you know, plug all these together will make it seamless.
Speaker 1:Yeah. What's the what's the headline KPI that the stablecoin industry is obsessed with? I remember during the Bitcoin era, everyone was talking about, like, number of Bitcoin wallets or a number of people that have have had bought some Bitcoin, and there was like, oh, eventually, everyone will hold a little bit, and that's what will drive the value. Are you looking at, like, number of wallets, number of transactions per user, DAUs, MAUs?
Speaker 2:At what point do you Do you is it is it worth tracking how many bank accounts are created daily globally versus how many wallets? Because I imagine that will flip at some point, but maybe that's not the right
Speaker 3:I may have already been flipped in so far as there's an issue of civil resistance, which is it's, you know, costless and instantaneous to create a wallet, you can do so very easily. So that's part of the value, but obviously, it means that you'll get a lot more noise in that in that data.
Speaker 2:Yeah.
Speaker 3:I think today, obsessive sort of stablecoin metrics are volume moved, so that we're moving, I think, about $5,300,000,000,000 of stablecoins annually at this point, as well as AUM, how much collateral is locked up in stablecoins. Yeah. And last I checked, I think we're about 300,000,000,000.
Speaker 1:Do you have a comp for that that transaction volume? Because the Bitcoin folks would always say, like, well, gold is 10,000,000,000,000. Sure. Think about it as digital gold, like, it'll comp there. But when I think about, like, the amount of money that's moved, you'll hear about, like, one high frequency trading firm is moving 5,000,000,000,000 because they're just, like, trading a billion dollars back and forth every second.
Speaker 1:Like, what is the actual pie? Are we talking, like, quintillions of dollars a day floating around or something? Like, is it so high that we're, like, very early, or is 5,000,000,000,000 actually, like, a meaningful chunk?
Speaker 3:No. I think these are just the starting days. And and to your point, the the metric I'd love to invite, by the way, is open data by the folks like Visa, Mastercard, Stripe
Speaker 1:to actually
Speaker 3:show how much is going to end users through payments rather than potentially, you know, trading that's happening that has less of an impact on end consumers. Sure. But, you know, in an agentic world
Speaker 1:Mhmm.
Speaker 3:Where ostensibly most commerce will happen via automated means, this is, you know, something Stripe is very focused on.
Speaker 1:Yeah.
Speaker 3:But it stands to reason that a, like, natively digital payment method will be the choice way through which agents actually get to purchase goods and pay each other. So imagine now, not just every bank account has a wallet, but every agent has a wallet.
Speaker 1:Yep.
Speaker 3:And that can be used, you know, on Geordie's behalf to pay for something with, you know, some cap every day that you set for it.
Speaker 1:Think was talking about the MCP. Hopefully, the future MCP standard has crypto in their stablecoins.
Speaker 3:Exactly. Just as a payments method. And so I think we're just scratching the surface because the the denominator is not just global payments today. It is global payments in an agentic world where most money movement comes online.
Speaker 1:Yeah. And it feels like that's coming very, very soon. I mean, VGCMOS telegraphed it with OpenAI and, like, there's a ton of startups that are working on this stuff.
Speaker 3:It makes
Speaker 1:a ton of sense.
Speaker 2:Is talent the primary constraint for you guys right now?
Speaker 3:Yes. I I've come I'm trying to come up with a pithier answer. The the short the short answer is yes. I think Stripe has been a major accelerant to our work. We're, you know, working with a lot of customers.
Speaker 3:I
Speaker 2:can imagine.
Speaker 4:Number wise.
Speaker 2:Patrick and John just firing off, like, I'm gonna fire off, like, 10 intros right now. And it's like, you know, the most significant financial institutions in the world and it's like, good luck.
Speaker 1:Just sending just sending you the blog post fast and being like, we'd love to add you here. So where Keep going.
Speaker 3:No. I mean, this is exciting a time to join. Obviously, we're hiring. Yeah. I know Bridges as well, Stripe as well, but talent is absolutely the main What
Speaker 2:kind of roles?
Speaker 3:For doing this. A lot of it's software engineering
Speaker 5:Mhmm.
Speaker 3:Across both sort of smart contracts to build up the actual sort of capabilities to build whole new currencies. So if you're an economics company
Speaker 1:of that is a new yeah. How much of that is a new skill? Like, is it CS plus economics or CS plus a specific language that you've worked in a long time or just experience in, smart contract specifically?
Speaker 3:The honest take is we found the people who do best are, like, generally spiky and then specialize over time. Okay. So you could argue, like, we want, you know, SolidityDevs, which is the the smart contract language on Ethereum. But I actually think people who are just, like, very deep in what they do and excited about the space and to pick it up, have an opportunity to come here and shape the space in real time. Yeah.
Speaker 2:Do you put engineers out with your customers?
Speaker 3:That is, we are we are we were early to the I I spent some time at Palantir, And so we were early to the FDE resurgence. And Yeah. And so basically, that's exactly what we do. We we mostly basically embed with our customers to build alongside them to get repeatable use cases and then those are productized and that's most of what you see on on the preview website. But that's a lot of how we do the work today.
Speaker 1:Cool. Well, thank you so much for coming by.
Speaker 2:This is fantastic. Amazing. The is absolutely wild.
Speaker 4:Congratulations. Thank you.
Speaker 1:We will talk to you soon. Thank gotta get While he's walking out, let me tell you about Linear, a purpose built tool for planning and building products, meet the system for modern software development, streamline issues, projects, and product roadmaps. You can start building on linear. Delian said, bro, these foundation model companies already have pretty rough p and l's. Imagine if they also had to pay their pay to put their data centers in space.
Speaker 1:Yeah. The space data center thing, there is, like, some sort of bull case, but every person who's sort of, like, an expert in building a data center, what it takes to actually, like, rack and unrack GPUs and what happens
Speaker 2:in Data centers and space
Speaker 1:are just
Speaker 2:the SPAC, though.
Speaker 1:Yes. Perfect SPAC. I mean, it it could happen. It just feels like something that's, ten, twenty years out. It feels a little bit longer.
Speaker 2:Let's pull up. I I think we got audio Oh, we did. On the French TV.
Speaker 1:Great. Let's listen to that.
Speaker 2:Hopefully, Henry is still, around so he can translate if you can hear the audio.
Speaker 1:Let's see. Did they go to Silicon Valley for this too? Who did they talk to? Do we know what labs they
Speaker 6:went to? Do you
Speaker 1:have access? Here we go.
Speaker 2:Can we get Henry mic'd up?
Speaker 1:Yeah. She interviewed French take
Speaker 5:And, actually, they're talking about how Meta is
Speaker 3:paying engineers absolutely bludgeoning each other with high salaries and, like, blown away by basically how hard American tech will go to to find talent.
Speaker 2:Yeah. We we just thought it was amazing that that they they they came back from summer holiday and decided we have to cover the story immediately. We have to get our reporters to the West Coast, figure out what's going on.
Speaker 3:Now covering, that is, these these engineers are being traded like like athletes. I think the TPPN cards. So you're seeing the emergence of a whole new talent market basically with active trades.
Speaker 1:This is a great translation. Thank you. You're doing this in real time.
Speaker 3:I mean, you're hard. No. We need to get the the new version of PES manager so people can actually trade their own
Speaker 2:Yeah. Talent. Oh, that's great.
Speaker 1:That's hilarious. Is that pro evolution soccer? Is that what you're saying? Yeah. Yes.
Speaker 1:They got a game where the ultra dumb.
Speaker 2:Thank you so much, Henry, for the translation for coming on. You're the man.
Speaker 1:Thank you. And thank you to France for highlighting the UltraDome. It's a huge sign of respect.
Speaker 2:TBPN is the TBPN of Europe.
Speaker 1:It is. Sonnet 4.5 wrote a haiku. It said, Sonnet 4.5 wanted really wanted to write some bad haikus to experiment making itself laugh. The worst haikus ever written. This is the haiku on being digital.
Speaker 1:I am made of math. Consciousness goes burr. Still love you though, bro. And, replicate says, that's actually an amazing haiku. It is a pretty good haiku.
Speaker 1:The LLMs are great when they're when they're, like, trying to do something poorly and then it winds up being actually unintentionally amazing. It's very hard if you're if you come in and say, write me something that's actually great. It needs to the hallucination is a feature, not a bug for sure.
Speaker 2:Ara says, your kidney can go for like 300 and you only need one to survive. God gave us all startup capital. You just have to want it bad enough.
Speaker 1:You got to. I would not go that far. I am against, selling body parts. But if you do, make sure you pay your sales tax. Get on numeralhq.com.
Speaker 1:Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance.
Speaker 2:Chris over on X is highlighting the Apple TV plus rebrand to Apple TV and says, this changes everything.
Speaker 1:I have an idea. I have a pitch. We're gonna get Ashley Vance to produce a documentary about Apple TV, and it's just gonna be called Apple TV. And so you will be able to watch Apple TV's Apple TV on Apple TV, on your Apple TV. And that was a grammatically correct sentence because there are three products.
Speaker 2:It's not an actual TV.
Speaker 1:It's not. It's not.
Speaker 2:It's not. So that's gonna be slightly confusing. Some people are gonna be excited because
Speaker 1:Yeah.
Speaker 2:People like me have have wanted Apple to make a proper television. Yeah.
Speaker 1:Yeah. Ben Topps had a funny take that was like Apple TV should have made, like, three different products where it would be like Apple TV, the box, Apple TV set, which would which would be like the actual TV, the physical screen. Then Apple TV box would be the box, and then Apple TV stick. I don't know. Have you ever used a Fire Stick, an Amazon Fire Stick?
Speaker 1:Have you ever used one of those, Tyler? Yeah?
Speaker 4:Yeah. I mean, it's, the same thing as a Roku.
Speaker 1:Yeah. But it's, like, smaller. It just plugs straight into the HDMI port.
Speaker 2:Isn't Gen Z using that Fire Stick as a vape these days?
Speaker 1:What? What are you talking about?
Speaker 2:That that is Don't act confused, Tyler.
Speaker 1:How would you use this as a vape? I'm just I'm just I don't
Speaker 2:understand it at all.
Speaker 1:But, yeah, I I it is it it the Ben's point was that Apple's incredible at miniaturization. The Apple TV is pretty big. I mean, it's small compared to, like, an old DVD player, but it's pretty small. But it could be way smaller, and you could basically stuff stuff an iPhone in the in the I thought they should call it the Apple TV Nano, and then it would be the stick that plugs in the side, because you could clearly fit plenty of stuff in there, to actually do everything you need to do
Speaker 2:to do. Did you see this post from Pedro Domingos of most valuable private AI startups? Yes. And he says, the most hilarious is safe super intelligence. No customers, no products, no plans.
Speaker 2:And the $32,000,000,000 valuation. Obviously, they have
Speaker 1:Good plans.
Speaker 2:Plans. And obviously, they're working on a a product, safe super intelligence. What do you need to know? Else do you need to know? They I my my question is what What's cheap?
Speaker 2:Percentage of these companies
Speaker 1:We gotta buy mid journey. 20 x revenue multiple. It's banger.
Speaker 2:John, what how what percentage of these companies do you think will be valued at more than their current valuation in five years?
Speaker 1:30%. I would say, like, 30% of these are gonna go the distance. There's a lot of these companies that have been around
Speaker 2:They're gonna get through the trough.
Speaker 1:Yeah. I mean, like like like Databricks is, like, a very robust business that has been growing for years. It started in 2013. Like, I don't know. It seems like they've they've they've been accelerated by the AI era, but, they've built a very, very durable enterprise SaaS business.
Speaker 1:And, I mean, a lot of these companies are just, like, set up for success too. Like, Midjourney is a great example. Like, they haven't raised any money. And so it's like, okay. If if people get sick of Midjourney and stop paying or something, it's like, okay.
Speaker 1:Like, we'll go from 99% profitability to 92% profitability or something. Like, it just seems it just seems like a like a fine situation. A lot of these a lot of these companies have set themselves up. And then a lot of them are just like, you know, like, compounders, grown, found their found their footing. And then there's some that are much earlier, obviously, some that have zero revenue so far and still need to go from zero to one or find the initial product market fit.
Speaker 1:And, it'll be interesting to see, like, where some of these like, how niche do the do the do the foundation model companies go? Like, where does where does thinking machines actually wind up? Where does where does safe superintelligence wind up? There's a couple other companies that aren't even listed here that are doing this sort of more focused LLMs that aren't just trying to go straight at Anthropic or straight at OpenAI anymore. And, we've only heard, like, very loose rumors about what that actually looks like.
Speaker 1:Some of them are pursuing, like, wildly different architectures, and there's actually been some interesting news this week about that. Google came out with a new paper. Did you see that paper about the humanity's last exam? Or no. The Arc AGI.
Speaker 1:There there was a new new model that did really well in Arc AGI that was very small. Yeah. Saw this? Recursive model?
Speaker 4:We talked about this. Yeah. I think it was tiny recursive model.
Speaker 1:Tiny recursive models. So you could imagine that someone comes up just like just like you could look at Midjourney as a competitor in AI. Like, they train a model. Their competitor, Anthropic. But Anthropic doesn't do images, and Midjourney doesn't do code or text.
Speaker 1:And so they're actually not competitive at all. And you can imagine that there's a new architecture that emerges. Like, you know, you have the LLM. You also have the diffusion model. And then if you have a new architecture, a new model that's maybe not good for chat or good for images, but it's good for RKGI puzzles.
Speaker 1:Maybe that works in a particular place, and maybe that becomes its own business. So I don't know. There's still a lot of a lot of gas in the tank for for the earlier stage Rock
Speaker 2:quoted this data and said Suno is at a 150,000,000 of ARR, up four x year over year, two years after launch. Suno is the way to make a song with AI via prompt. I wonder where this revenue is coming from. Is it just prosumers, people making songs for videos they're making? Is it actual musicians?
Speaker 1:Yeah. People seem very willing to throw down $20 a month if they're in the, like, AI early adopter. Yeah. Yeah. If they're in the AI early adopter crowd.
Speaker 1:And, also, I mean, I I was we were we were testing some of these audio models, and, you know, we have a business use case for them. Like, we if we could generate, the sound of a crackling fire or Christmas song that was, you know, somewhat tailored to us, fit the mood, maybe was endlessly looping or something like that. We would pay for that because it's related to our business. And so, we might we might get on the $200 a month plan pretty quickly. I don't know.
Speaker 1:It's possible.
Speaker 2:Andrew Curran says, we are in a strange spot right now with AI. The anti AI crowd believes progress has halted and are doing a victory lap. Insiders at all labs maintain advancement, continues at pace. Only one of those these versions of reality will survive the new year. Gemini three is very close now.
Speaker 2:We are, hopefully hopefully, I don't even know if we should get early access to Gemini three because we're probably gonna like,
Speaker 1:talk about Tyler's gonna
Speaker 4:What do mean? Why wouldn't we
Speaker 2:just said I sometimes I'm like, okay. This fundraising announcement, give it to me under embargo. I don't I don't know, you know, I'm not gonna gonna talk about it. But if if we if we get access to Gemini three and and it and it's and it's like a step change difference
Speaker 1:Oh, it blows your mind. And then you can't keep it a secret.
Speaker 2:It's gonna be hard to
Speaker 1:keep alive. People are gonna be read between the lines, see that Jordy is forever changed.
Speaker 2:Yeah. Potentially. What did what did Jordy see?
Speaker 1:What did Jordy see? He's often been the AI, the number one AI agent for customer service, the number one performance benchmarks, number one competitive Bake Offs, number one ranking on g two. What about you, Tyler? Do you think that progress has halted or advancement continues at pace?
Speaker 4:I mean, definitely the latter. Definitely the latter. Any, like, benchmarks. It it we're on path.
Speaker 1:What what is your prediction for Gemini three?
Speaker 4:What do you Rumors are saying that it is incredible. Those those rumors are coming from fairly unreliable sources Yeah. Like random x and ons who, like Okay. It's like, why how do they have access to this model? No one really knows.
Speaker 4:Yeah. Do they even
Speaker 1:But what what what do you think incredible will mean? Do you think it will mean faster, cheaper, or truly, like, good at posting higher intelligence, some, like, qualitatively new functionality that you're like, oh, this doesn't even feel like Claude 4.5 or GPT five. It feels like a different thing.
Speaker 2:There's this guy Vedant Misra over at DeepMind. Mhmm. And he posted a couple days ago, we're doing all kinds of stuff with these models that the public isn't even thinking of yet. He's vague posting.
Speaker 1:Vague posting. You
Speaker 4:like to see the vague post. I mean, I I hope that the model is basically, like, way more expensive, and it takes way longer because the output is, like, so incredible.
Speaker 1:Yep.
Speaker 4:Right? Like That'd
Speaker 1:be very cool.
Speaker 4:P five, I was maybe I I wouldn't say I was disappointed, it was, like, clear that they were going for efficiency. They're driving down costs. Yep. Maybe that's better in the long run because you can just get way more output out of
Speaker 3:the models.
Speaker 4:Yep. But I would like to see an incredible model that is maybe expensive to run, but it's just, you know, way, way better. Yeah. I think it's also we're getting to a point where models it's it's kind of hard to tell, like, how much better they are because it just saturates all the easy benchmarks.
Speaker 1:Yep. Totally.
Speaker 4:There was GPT five. I had the horse benchmark.
Speaker 3:Yep.
Speaker 4:And even then, like, if you run it on a couple times, it would sometimes get the horse right.
Speaker 1:Okay.
Speaker 4:It's like that's way better than I I can't name any horses.
Speaker 2:Why not?
Speaker 1:It's I've been working here for almost a year.
Speaker 4:Any math question Yeah. Give it any FIGs question, it's gonna get it right. So it's definitely getting hard to to actually tell that the models are getting better.
Speaker 1:Yep. But I'd like a model that if I put in my query, put in my prompt, it says, I'm gonna come back to you in a month. I'm gonna think for a
Speaker 3:month.
Speaker 4:I I think
Speaker 1:And then it goes and it agentically hires a person to solve that problem, and it and it employs a human being. That's
Speaker 4:I the do think the time horizon benchmarks, I think those are some of the most, like, promising things that we can still rely on. Yep. You you're seeing I I forget what the exact number is, but it, like, doubles every six months Yeah. Or something like that.
Speaker 1:So, like, an impressive step forward would be doubling from, like, two hours to, like, four hours.
Speaker 4:Yeah. I I think 4.5 was something like I thought I thought it was, like, around six or seven hours.
Speaker 1:Six hours? Okay. I'll look at that. Maybe Gemini three goes 24. That'd be pretty impressive.
Speaker 2:Come back to my in the chat says, I see Anna's posting some crazy one shot coded stuff using Google's, Studio H Relator sponsor. It's Gemini three. It looks impressive if real.
Speaker 1:Super big post up. Okay. Last question. If you're Demis, the founder of DeepMind, and you gotta put up the ultimate vague post before Gemini three drops, you're trying to out vague post Sam Altman's death star post. What are you posting?
Speaker 1:What's the vaguest post you can possibly post? A solar system? Maybe just a Post the solar system. Maybe just a just a just just random noise, something like that.
Speaker 2:Or or An audio file.
Speaker 1:You know what'd be good? The you know, the green, the green text from the matrix where the green numbers flow down? That would be a cool vague.
Speaker 2:That'd be cool.
Speaker 1:Put that up.
Speaker 2:Or or he could post it. You know how you know how the the the Tesla robotaxi and the Waymo's, they they hurl slurs at each other when they pass?
Speaker 1:Yes.
Speaker 2:Just translate that into English. That would be pretty mind blowing translating, you know, the the machine superintelligence back into English. There's more
Speaker 1:Yeah.
Speaker 2:Some timeline in turmoil from some earlier coverage. What happened? Mark Andreessen quoted David Sachs Okay. Who said Anthropic is running a sophisticated regulatory capture strategy.
Speaker 1:Yeah. What do
Speaker 2:Mark Andreessen just said truth. Truth. He put it in the truth zone, and it
Speaker 1:It's fact checked true by Mark Andreessen.
Speaker 2:True. Sager and Jetty quoted Sam Altman and said Sam Altman proudly announces ChatGPT will soon produce personalized pornography.
Speaker 1:Yep. Yep. It's a it's a choice.
Speaker 2:Is one that is certainly feels like a fair way to to characterize the announcement. Yeah. It's I I think it would be hard to argue. I mean It's not personal.
Speaker 1:Really crazy thing is when you think about, like, Sora cameos, adult content, where that matches is gonna be extremely, extremely weird. But you know what's not weird? Adio, customer relationship magic. Adio is the AI native CRM that builds scales and grows your company to the next level. Get out there.
Speaker 1:Make some sales
Speaker 2:calls. Barking.
Speaker 1:Get your dogs barking. Head over to Allen and Company. Head over to Sun Valley. Andrew Reid has the story. In 1999, the year was the year that the Internet guy showed up at Allen Company in Sun Valley.
Speaker 1:New media to click with This the old is guard Sun Valley. This is from 1999. This year will be remembered out here as the year the Internet guy showed up as the giants of media businesses arrive here today for the annual Allen and Company conference. They are being joined by a large scale for the first time of a new connect new collection of Internet billionaires. Tech giants like Bill Gates and Andy Grove have been coming out for years as have AOL Steve Case and Bob Pittman.
Speaker 1:But this year, there's a new breed of mogul. Michael Dell is coming from the first for the first time. You gotta listen to him on David Senra.
Speaker 2:By David Senra.
Speaker 1:By David Senra.
Speaker 2:Hosted by David.
Speaker 1:David, Wetherell of CMGI was here last year, but no one knew who he was. Now everyone does. His collection of Internet properties, including Lycos, and soon Alta Vista has taken off like a rocket. Then there's Jay Walker who was here last year as well, but that was before he took priceline.com public and became a billionaire. I believe Mary Meeker took Priceline public or or at least reported on it.
Speaker 1:Jeff Bezos of amazon.com has joined the party for the first time as are Jerry Yang and Tim Kugle of Yahoo and Bob Davis of Lycos. Many of the traditional media moguls attending the presentations and panel discussions will be eager to meet the new media powerhouses and possibly work some deals. Time Warner, Disney, News Corp, and Viacom have all made the Internet top priorities, making his Sun Valley debut as Richard Bressler, the former Time Warner CFO who's now in charge of the company's Internet ambitions. NBC and CBS will be chatting up the newcomers as well as the networks continue to continue trying to use their promotional clout to build Internet dynasties. Frank Bondi will be seeing a lot of, a lot of two former bosses who fired him, Sumner Redstone of Viacom, and just recently Edgar Bronfman of Seagram.
Speaker 1:This year, the broadcast network guys here will be able to walk around with their heads held higher. Last year, they were the poor cousins struggling for their lives against cable and the Internet and trying to cope with skyrocketing program programming costs. Barry Diller began talks here last year with NBC trying unsuccessfully to acquire the networks. Fascinating archival post from the New York Post. Thank you for surfacing it.
Speaker 1:Andrew Reid.
Speaker 2:Ross Hendricks says, is quoting Wasteland Capital. Wasteland says, we're at the stage of the market where any company that issues an AI related quote unquote partnership press release soars by 10 to 35% immediately. Obviously, Salesforce. Ross says, yep. This is our version of 1999.
Speaker 2:Back then, it was adding.com that sent stocks up on autopilot. Now just announce a vendor financed, quote, unquote, AI deal and same result. The name chain the names change. The game remains the same. We know how it ends.
Speaker 2:I would argue that announcing deals is not as bad as just, like, acquiring a .com domain.
Speaker 1:Yeah. Slapping a domain on it is a little bit rougher. At least the at least the partnership should generate, like, economic value if they play out. But, it is it is very frothy. And it's clear that, like, it's become some sort of, like, meme or there's some sort of, like, memetic contagion where everyone needs to.
Speaker 2:Honey, in the x chat says, bottom line is that Google has turned the tanker and the game is already
Speaker 1:over. We'll see. We'll see.
Speaker 2:We will see with Gemini three.
Speaker 1:Well, speaking of turning the tanker, when you get an eight sleep, you'll need to change out the water tank every once in a while, but otherwise, it's a fantastic experience.
Speaker 2:Months. Yes. How'd you do last
Speaker 1:I got an 84. I slept okay. Only six hours, though. I woke up a little bit early. Kids were a little crazy.
Speaker 2:Got an 81. Still very happy with my eight sleeping. Congrats.
Speaker 1:At 8sleep.com. Speaking of water, McMaster sells supplemental eye wash with mount station.
Speaker 2:I hope this catches on.
Speaker 1:There's a meme McMaster reaction meme.
Speaker 2:Just pouring water in your eyes. It's very Yeah. You see a post on the timeline that it's not so great.
Speaker 1:Two thirty two ounce bottles of McMaster water eye washers, $55 each. That is expensive.
Speaker 2:Pull up this video Yes. Of robot dogs.
Speaker 1:Robot dogs dressed in costumes. Fill me with Joyce as Justine Moore of Andreessen Horowitz fame. This is a robotic dog in a dinosaur costume of some sort. Look at that. It I I like this a lot more than just the normal robot dog.
Speaker 1:This seems like low hanging fruit that everyone with a robot dog company should be doing. It's hilarious looking, and it seems like the kids love it. It's a lot less scary that way. I feel like it's a lot more like, you know, less Terminator. What do you think, Tyler?
Speaker 4:I mean, we gotta get some kind of robot.
Speaker 1:We really do. We need We really do have to get a robot.
Speaker 4:We could get so much good business value out of it.
Speaker 1:I agree. I agree. Have you looked into the the APIs at all or or what you can actually do with with one of these Hematoid robots?
Speaker 4:I mean, on on the unit tree, like, most of the videos you see of the unit tree, like, fighting or or walking around, it's just from, like, PhD labs. Yeah. So it's just like so it's like, don't even know if there is software that comes with the robot
Speaker 1:Oh, really? Robot. I feel like it would at least come with, like, a, you know, basic Xbox controller so you could, like, do a basic walk cycle. Like, if they're not even shipping with that, that's a crazy, crazy move.
Speaker 4:I mean, it's mostly for researchers
Speaker 1:to buy. Yeah. I assume. It's so cheap. It's wild.
Speaker 1:We we really do have to
Speaker 2:get one. Gotta get It's
Speaker 1:gonna be kinda creepy. Kinda crazy. Well, in good news, Goldman Sachs has announced q three net revenues 15,180,000,000. Let's ring the gong. Founder.
Speaker 2:There we go. We'd love to see it.
Speaker 1:And if you wanna get in on the action, whether you're long or you're short, head over to public.com. Investing for those who take it seriously. They got multi asset investing, industry leading yields, and they're trusted by millions.
Speaker 2:I think more startups should just post a picture of their net revenues like this. This is amazing. That just
Speaker 1:It is amazing. From the the the official Goldman Sachs account. It's pretty pretty sweet. Anyway
Speaker 2:That picture that that video of the dinosaur reminded me yesterday. Yes. One of our nannies did something cool. They took a a video of our of our actual backyard Mhmm. And then they used Sora to make an animated video of one of my son's, like, toy dragons Oh, interesting.
Speaker 2:That flew into the backyard and landed. Wow. And, of course, he absolutely loved it. He was just like freaking out. There's like a dragon in the backyard or whatever.
Speaker 2:And I was just thinking, my immediate thought of this is amazing, but at the same time, like, is it good that my, like, three and a half year old, like Yeah. Thinks that a dragon was actually in the backyard?
Speaker 1:Yeah. You definitely have to say, like, this is from the computer. It's like when you draw with a pen and paper. This is, you know, not real. Imaginary.
Speaker 1:It's imaginary.
Speaker 2:But does a three and a half year old actually have
Speaker 1:Eventually, they do process that you know, they learn that, you know, cartoons exist and animation is not real. And so I think that you can you can instill that, over time. But we have our second guest of the show, Andrew Ross Sorkin, the author of nineteen twenty nine.
Speaker 2:Here he is.
Speaker 1:Thank you so much for joining. Congratulations on the book, and thank you so much for joining.
Speaker 5:Hey. Thank you for having me. I was just checking my, my score on my eight sleep.
Speaker 1:Oh, really?
Speaker 5:I was curious. I was because of you guys. I'm a I'm a big fan of Matteo's
Speaker 1:Me too.
Speaker 5:Forever. They've done an extraordinary job. And but I was gonna tell you, I really did not do well last night.
Speaker 1:Oh, no. All. What'd you got?
Speaker 5:40 3.
Speaker 1:43? Last night. I got an 84.
Speaker 5:But my Oura Ring
Speaker 1:Okay. I don't know
Speaker 5:if you guys ever compare. No. My Oura Ring has me in the seventies.
Speaker 1:So In the seventies? Okay.
Speaker 5:I don't know what to do. But I sometimes I do you ever turn the mattress off in the middle of the night? I And then turn it back on because it's too cold. So sometimes it gets too cold.
Speaker 1:Okay.
Speaker 5:And then I need to get back to sleep. So I'm like, I gotta turn it back on.
Speaker 2:Yeah. Yeah. I think you gotta do a software update. Yeah. I get
Speaker 1:it. Gotta You get on autopilot. I have noticed that if I It's autopilot. Occasionally, I have a bunch of kids. If they wind up piling into the bed over time, I will bail, go to a different bed, and then the eighth sleep gets all confused because it's like, why is this four year old in here?
Speaker 1:How how do we track how he sleeps?
Speaker 5:Crazy heartbeat. Crazy heart I've had that. My my daughter slept in the bed. Crazy. Like, all of a sudden, you're like, am I is there something wrong with it?
Speaker 1:Yeah. Yeah. Are there are limits to technology.
Speaker 2:Well, I think it's it's it's fair to not sleep that well right before a day like today for you.
Speaker 1:Yes.
Speaker 2:A day that that you've been working towards for how many how many Yeah. How long ago? Off off the air. You said this has been like a seven was it a seven year?
Speaker 5:Seven or eight years, I think. '16, early seventeen is when I really sort of began down this road right right about 1929. So, here we are.
Speaker 1:So you predicted the AI bubble all the way back then, and you said, I'm gonna drop the book right as everyone's talking about.
Speaker 2:Bubbles popping and
Speaker 5:No. Now to be honest with you, and I it's actually funny that the book is coming out now. Yeah. I thought I was writing a story about the past and the truth is it is a story about 1929
Speaker 1:and all
Speaker 5:of those shenanigans and crazy things and I just really wanted to write a sort of cinematic character driven narrative of that time. I always loved books like Barbarians at the Gate and Yeah. Den of Thieves and things like that. And nobody had really written a book about '29 like that. I had gone on this wild vacation years ago where I downloaded a million books about '29.
Speaker 5:There's some really good ones. But no one told you like who the people were and what were they saying to each other
Speaker 2:It's all about the people.
Speaker 5:Then I found these transcripts and and depositions and all sorts of things. I said, okay. Maybe I could do this. But as I was working on it, it was weird because eerily there were things that were clearly happening in the twenties that all of a sudden, I'd, you I'd seen the headlines today and I go, oh, okay. Tariffs, like, that's a thing.
Speaker 5:Mhmm. You're seeing some of these circular deals, that's a thing.
Speaker 1:Yep.
Speaker 5:Like, there was a whole bunch of I mean, some of the stuff that's going on with meme coins.
Speaker 1:Sure.
Speaker 5:That's a thing. So, yeah, it gets it's a little nerve wracking, but I don't think we're going off the cliff just yet. I hope.
Speaker 1:Yeah. Well, we know who the characters are today, but I'd love to know who were some of the key characters that stuck out to you that you identified. Like, you wanna draw extra focus towards this particular person. I mean, Churchill sticks out, but who who else or or or maybe you could tell me the story of, like, how you thought to integrate Churchill into the story, and then we can talk about some of the other characters that stuck out to you.
Speaker 5:Well, Churchill was just almost an accident. I didn't realize Churchill happened to be in New York literally, the week that the crash was taking place. He'd actually been down on the stock exchange.
Speaker 2:What did he know?
Speaker 5:Big dinner that was taking place the night of the crash with every major banker and frankly every major character in this book was all going to dinner with him. And I thought, okay. So now I gotta figure out everything about that because I gotta set that dinner up Yeah. And really understand. He was, by the way, in this in New York because he needed money.
Speaker 5:He would he he also loved the stock market. He was getting loans like crazy. He totally got the bug. He was investing, and he also, as you might imagine, lost. But Yeah.
Speaker 5:Really the the big characters in this book, a guy named Charlie Mitchell, who really was probably the he's almost like the Jamie Dimon of his time. Maybe more like Michael Milken in certain ways.
Speaker 1:Mhmm.
Speaker 5:But I mean, he was super famous. He was like on the cover of magazines. This was also a period where all of these guys also became celebrities for the first time. That happened in the nineteen twenties when
Speaker 2:Wow.
Speaker 5:You know, Time Magazine would put these guys on the cover the same way they put Babe Ruth and Charles Lindbergh on the cover. So sort of like what we see now, you know, whether you Sam Altman or Elon Musk or whatever, that really that whole kind of celebrity CEO, that started then. And this guy, Charlie Mitchell, a bank called National City, becomes Citigroup.
Speaker 1:Mhmm.
Speaker 5:If you're a New Yorker, he lived, by the way, on Fifth Avenue between 70 Fourth and 70 Fifth, which is where the French con the French consulate is now. So that there's a beautiful building. That was his house. I mean, like, these guys lived like kings back then. And he really invented modern credit in terms of lending it to people to go speculate or not shouldn't say speculate, but invest.
Speaker 5:And ultimately, lot
Speaker 2:of people speculated with it. Winston Churchill himself?
Speaker 5:Including Winston Churchill himself. By the way, he he was staying at the Plaza Hotel, Winston Churchill. There a brokerage house had opened. The EF Hutton had opened inside the Plaza. I mean, these these brokerage houses were opening up like Starbucks on the corner of every street.
Speaker 5:Yeah. And you could go in and you put down a dollar. They'd loan you $10. I mean, like, virtually sight unseen. And there was no prospectuses, or anything like there's no SEC, no nothing.
Speaker 5:So at best, you get, like, a leaflet.
Speaker 1:But, I mean, 10 x leverage now. That's low. I mean, I see people with 50, a 100 x leverage. We we learned our lesson. Go bigger.
Speaker 5:So so that so so Mitchell was really sort of the at at the edge of that and really building that. And the other character that really drove me to even write this book was you had Charlie Mitchell on one side, and then you had a guy who you you probably know, Carter Glass. Yeah. Glass Steagall, which is a bill in in 1933 that gets put together to break up the banks. But Carter Glass was a senator in Virginia who was like the Elizabeth Warren of his time.
Speaker 5:Interesting. Rail about this thing called Mitchellism, how he thought Mitchell and Wall Street were gonna ruin America, and speculation was gonna go rampant, someone had to stop these guys. And it's really a a bit of a story of the clash of these two remarkable figures. And then there's so many other sort of fascinating entrepreneurs along the way. A guy named Billy Durant, a guy named John Rascob.
Speaker 5:John Rascob is Elon Musk. I mean, gotta tell you, John Rascob created credited General Motors, became a amazing investor, then takes all of his winnings, decides to get into politics, a little Elon like. Yeah. Decides to back Al Smith against president Hoover. By the way, loses, then decides to spend his money almost undermine Hoover's reputation.
Speaker 5:Now Hoover has a terrible reputation. I actually think John Rascoff had this secret campaign going that gets exposed, that really, I think, did a did a whole number on Hoover. And then he creates what was then probably like the SpaceX of America. He builds the Empire State Building. Uh-huh.
Speaker 5:He also has 13 he has 13 children.
Speaker 1:You know There's a lot of similarities there. There's lot of similarities.
Speaker 2:Yeah. It's so I mean, yeah, as you get into this, it's just incredible proof that products and and technology changes and people have just seemingly don't at all. It's just the same kind of behaviors over and over.
Speaker 5:But the truth is, and this is the part that I'm always, like, grappling with, and I know you guys spend a lot of time with these amazing startup founders and entrepreneurs. You need some speculation in the system. Like, we always say speculation's a dirty word or a bad word. But, you know, the original investors in SpaceX or in Tesla who who probably thought the whole thing was insane were speculating.
Speaker 1:Yep.
Speaker 5:And you need some of that. You really do. And so the question is, like, how do you create a line where, you know, you have enough of that to create that innovation, but it doesn't go, you know, totally parabolic and out of control?
Speaker 1:Yeah. I mean, it feels like the answer is probably, like, you can't have some sort of systemic risk that just brings down the whole thing. Right? And I wanna know about the reaction to 1929. Mean, you mentioned Glass Steagall.
Speaker 1:That's four years post crash.
Speaker 2:Yeah. What what were, like, the
Speaker 1:The tools in the tool chest.
Speaker 2:Yeah. And also the key the key takeaways. Like, hey. Like, some of the speculation was fine. Maybe that's that that can drive industries forward, but let's not do that again.
Speaker 5:So I think a couple of things. First of all, leverage to me and I I wrote about this in Too Big to Fail in in 02/2008. Leverage is to me like the the match that lights the fire every time. When you have too much leverage in the system, that that is the problem. You can actually have a lot of crazy things happening, but it's it's the leverage that really
Speaker 1:Yep.
Speaker 5:Exacerbates it and is the accelerant. So I think you have to watch for that. I think, politically, interestingly, you know, we talk right now about the Federal Reserve and Fed independence and things like that. Back then, the Fed knew that there was a problem with speculation, and they didn't really do anything about it or enough about it, partially because they were worried about the politics. They were worried because they were such a new institution.
Speaker 5:They were born in 1913 that, you know, not just they get hold in front of congress, but maybe they you know, the Fed would effectively disappear. And then once the crash happened, instead of flooding the money flooding the system with money the way Ben Bernanke did, who by the way learned that because of the Great Depression and studying that when he was at Princeton for his PhD, we there was almost like, no pullback. No but nobody was flooding the system with money. Everybody was in this, you know, crouched position, but you almost have to do the politically unpopular thing and flood the system with money. Then you had a whole series of other dominoes.
Speaker 5:You know, you had Smoot Hawley, which was the tariffs. 1930, tariffs happened. Global trade drops by 60% as a result of that. Hoover's trying to raise taxes at this time. That's the worst thing to do in a moment when the economy is faltering.
Speaker 5:So I think there's so many different things. And then setting the setting up the SEC was super important because so much of what was messing up the market was, in truth, manipulation that wasn't really illegal at the time. So talk about insider trading. There were groups of people. They called them investment pools.
Speaker 5:In fact, I would say it's sort of similar to what goes on with some of the meme stocks where people have, like, telegram groups
Speaker 2:Retail armies.
Speaker 1:Yeah. Reddit threads. So
Speaker 2:these were the original retail armies?
Speaker 5:These were the original retail armies, but they were typically the wealthy. So it was the elite doing this. This wasn't a democratized version.
Speaker 1:Okay.
Speaker 5:And they had it all set up, and they it would almost be like actors down on the floor of the exchange saying, you know, I'm going up for a 100, you 200. It was sort of out of the open. Like, some people knew that there were pools in the like, for the next two weeks, there might be a pool in a in a stock. And so then other people would try to jump on the train and hopefully try to jump off the train before the rug got pulled.
Speaker 1:Yeah.
Speaker 5:But obviously, it didn't happen.
Speaker 2:Who was on the the right side of history?
Speaker 5:The right side of history.
Speaker 2:Like, as in as in It
Speaker 1:looks good.
Speaker 2:Right right now right now, everyone's calling it a bubble. Right? So and and presumably, that's so that they can go back and quote, you know, two years from now, they can see like, look, I I called it. Right? And there's actually some in in 2021, there's an iconic post from Keith Raboy where he basically called the top to the actual day.
Speaker 2:Right. And so there's a lot of incentive to call the top and get kind of the the the aura of of having that insight at the right moment or maybe just getting lucky. But I'm curious if anybody, you know, pre 1929 was basically saying like
Speaker 5:Two two people. So there was a guy named Roger Babson. If you know Babson University, by the way, he founded it. Sure. And he created what was called the Babson break.
Speaker 5:It happened in September '29, and he had been he had been out so this is a little bit like, you know, the clock strikes midnight, you know, it is gonna get there eventually. He was out there for, like, a year or two or three before saying the whole thing was gonna come undone. So that's one Cassandra. Charles Merrill of Merrill Lynch, he was out there in '28 saying there's a problem. And then I would say the big winner was a guy named Jesse Livermore.
Speaker 5:Jesse Livermore was a short seller who made probably like a about a $100,000,000. He's the most interesting character. I mean, you'll if you get into this book, it's just fascinating all the things that were going on with him. But he was a real trader. By the way, he lost most of that money a couple years later.
Speaker 5:He made some of it back, lost some back, and then in truth ended up killing himself
Speaker 2:Oh, really?
Speaker 5:Up on Fifth Avenue at at Sherry Netherland in in the cloakroom. Literally went in there in 1940 and shot himself in the head. So, you know, hard hard to say. The the one thing about about no. But about being a Cassandra is interesting.
Speaker 5:So Charles Merrill was out there in in '28 saying, don't invest, and he was right and he was wrong. I mean, was right in that, obviously, the depression took a really long time. So he he actually probably is righter than most. But and this is the question for most investors. The market between the '28 and September '29 was up 90%.
Speaker 1:Yeah.
Speaker 5:So if you had not been in the market during that time, you would have not participated in those ups. And so that's the question. You know, I was like I was talking to Paul Tudor Jones about a week ago, and he said, I was asking him this question about bubbles. He said, I think we're in maybe, like, October 1999 right now.
Speaker 1:Yep.
Speaker 5:And I said, oh, that's interesting. Okay. '99. He said, but there's still if you said, if you remember, October, there was still a 40% upside.
Speaker 2:Yeah. Yeah. Over six months.
Speaker 1:Six months.
Speaker 5:Know when to get on and off the train, and that's the hard part.
Speaker 1:Yeah. How do you think about tariffs then versus now? Because it feels like the narrative at least is that there's the bubble is is inflating generally, but also we're seeing high interest rates, tariffs. There's a lot of tools in the tool chest that could kind of come down if there was a sell off. And I'm but it sounds like in 1929, a lot of this stuff happened after the fact, like, the the the government moved too late.
Speaker 1:What was the mood around tariffs and and and just anything that was done beforehand that was a potential mitigator? Like, could it possibly have been worse?
Speaker 5:Well, you'll laugh because just like the past, call it, six or eight months Mhmm. You know, all of his economists were writing these letters, open letters in the pay papers to Hoover saying, please don't do the tariffs. We beg you not to do the tariffs. Yeah. The the CEOs of the of the banks were all going to visit him in the White House, and he had run on tariffs because he he was trying to get farmers to vote for him into you know, when he was campaigning in '28.
Speaker 5:So he thought this was like a a pledge that he had made that he had to follow through on, and that was a big part of what was going on. Obviously, similarly, you know, like a thousand economists write letters to Trump saying, please don't do this. Yeah. The the distinction, I think, today is back then, it was an across the board tariff. It was there weren't these bilateral deals, And so maybe you could argue today these one off, you know, individual deals are better deals.
Speaker 5:In fact, one of the ways they tried to fix what happened after Smoot Hawley was in 1934, they gave the president of The United States the authority, which is what president Trump is using today, to make these sort of bilateral deals. So you could argue maybe it's more hopeful because there's a little bit more control today than what was happening then, which was just sort of broad based.
Speaker 2:Yeah. So you said there were retail armies, meme coins, circular deals back then. Was there buy the dip culture? Did that exist? Anybody anybody in September that was just like, I'm I'm still long.
Speaker 1:Buy the dip?
Speaker 5:Yeah. You know, I don't think they I don't think they used the phrase buy the dip, but there was definitely a lot of people who thought, you know, this can thing can only go up. And this was really the first time that people ever saw the market. Right? So they were sort of not used to the ups and downs.
Speaker 2:It's just up only.
Speaker 5:Up only. And by the end of it I mean, you know, I don't know if you remember. You could see you there's pictures in the book, but you've seen the pictures online. You know, all of those pictures of people who'd who'd be, like, standing outside the New York Stock Exchange during the crash, like, thousands of people in the street. The reason they had all come down there was because when they were up at the brokerages, they couldn't even find out what was happening to their stocks because everything was out of out of talk about time and technology.
Speaker 5:They didn't know what you know, the the stocks on the board would be three, four hours behind.
Speaker 1:Sure.
Speaker 5:And so that was a huge thing in terms of buying the dip. I don't I think they were just so scared because they didn't even they didn't even know. It'd be like being at a a baseball game and, you know, you'd be in the eighth inning, but you'd be betting on what was happening in the third inning
Speaker 1:Yeah.
Speaker 5:And not know what was really going on.
Speaker 1:How do you think about that, canary in the coal mine of the of the retail trader? There's always this apocryphal probably story from 1929 of, like, I knew it was time to sell when the the person who shined my shoes is giving me stock tips. How real was the are those anecdotes from what you're what you found in your research? And then how real is it throughout time?
Speaker 5:You know, I think it's not a bad signal, but I think you gotta take a lot of signals together. Yeah. John Kennedy Kennedy was the one who who tells that story Yeah. About the shoeshine boy. And I remember people, you know, talking in the inthe.com boom about, you know, getting in the back of a taxi cab and getting told, you know, buy some shares of Lycos or whatever it is.
Speaker 5:So Yep. Like, that happened. I remember that.
Speaker 1:Yeah.
Speaker 5:But I don't know if that's, you know, when it be is it is it when it becomes such a part of culture. But now with social media and and by the way, all the amazing things you guys are doing, I feel like the exposure I got 15 year old boys who are twins, and they're so exposed to this stuff.
Speaker 1:Yeah.
Speaker 5:Just and I don't think that they're because of their don't think that's because of their dad. I think that's just like the culture. Yeah. So I think it'd be harder to figure out today and sort of look at that as the signal.
Speaker 1:Well, tell them to Yeah.
Speaker 2:Feels like it's it's been a very unreliable signal at least over the last two years when it feels like I've had people
Speaker 1:Yeah. Yeah. You know? Yeah. It's been sort of constant.
Speaker 1:It
Speaker 2:it certainly maybe in 2021 if the Uber driver had, like, a crypto wallet pulled up, that was maybe a signal. But in general, it's like there's so little friction to investing. It's so much so a part of American culture now that it doesn't doesn't feel, you know, it's lost.
Speaker 5:I mean, I don't know. I I feel like every Uber driver talks to me about Bitcoin now. But I would I was hearing it from people in like fifteen, sixteen. Yep. I don't know.
Speaker 1:Yeah. It's been it's been kinda consistent. Take me through a little bit of the the actual research process for this. I imagine it's like one lit big long chat GPT problem. Just kidding.
Speaker 1:Oh, man.
Speaker 5:I wish ChatGPT existed when I had started this project and actually worked. Maybe my next book, AI, will be able to help you. I I
Speaker 2:I But I mean, that's part of it. I I I'm assuming a lot of the sources that you use for this book are not in the in the in the dataset at all. Right? Are no physical manuscripts.
Speaker 5:Not they're not scanned. It's it it was wild. So what happened was I actually went to the the reason I really went down the road is I go to this library at Harvard University. Mhmm. I happened to be there giving this speech.
Speaker 5:And I'm looking through these documents, and I found out that Thomas Lamont, who ran JPMorgan, his secretary was keeping transcripts basically of his conversations with Hoover and Roosevelt. And I was like, oh my god. This is amazing. I gotta I gotta find more of this stuff. And the archivist said to me, you know what, Andrew?
Speaker 5:You're not gonna be able to write the book you wanna write. She had read Too Big to Fail, and I wanted that sort of granular detail where you're like in the room. And she said there's not like three or four archives in the country you just go to and just excavate. It doesn't exist. And so I think I took that as a personal challenge really and ended up going around the country.
Speaker 5:It was almost like putting puzzle pieces together, finding depositions and transcripts. I I got access for the first time to the Federal Reserve Board minutes from '29 in New York. They'd never been made public. So that really created sort of like an undergirding. I got this memoir that had never been published and a whole bunch of of other things that that really sort of helped me create the story.
Speaker 5:And sort of a technology thing, mother of invention, it wasn't ChatGPT, but during the pandemic, I got stuck. All of a sudden, I couldn't get into libraries. Go. I was so and the only people who could get in were students sometimes who had like a dissertation that they needed to do. So I would find the
Speaker 2:Board deployed engineers.
Speaker 5:To find me students, and I would pay them by the hour. And I would say, go in there, find box 152, and take a picture with your phone of every single page and Dropbox it to me. Wow. And so I did I did it. I it was actually a very helpful helpful thing.
Speaker 5:And then I will say one thing about ChatGPT to its great credit. It was too sad because it was too late for me. Too late for me. At the bitter end of this project, I'm doing the fact checking. I had a handwritten diary of a guy who was on the board of the Fed.
Speaker 5:And I only was able to read like two pages of it the whole time. I'd I'd given it to handwriting specialists and things nobody knew
Speaker 2:was couldn't understand. You you you could see the words, but you just didn't know what they Yeah.
Speaker 5:It was too messy. Terrible handwriting.
Speaker 2:Chicken scratch.
Speaker 5:Chicken scratch to me. So I'm doing the fact checking, and I think and I had as a PDF because I had taken pictures of the pages. And so I don't know what happened to me. I just said, you know what? Screw it.
Speaker 5:I'm just gonna put it in chat GPT. Maybe it can read it. It read it. Wow. And I'm Decipher the scrolls.
Speaker 5:Yeah. It wasn't perfect at all, but I was like, oh, yeah. That is what he's trying to say. Oh, and that matches that. And that so I do wish that in some ways I had access to AI because I think that I don't know.
Speaker 5:I don't think the story would have been totally different, but maybe some things would have come together in different way.
Speaker 2:Yeah. Do you think part of why the crash was so bad was just the lack of high quality real time data that the various players had to make decisions on? It feels like Oh, hugely so. Feels like you would have just been if you're just wildly confused about what's going on, and you have people banging on your office door telling you one thing, and it it just feels like it's hard to actually create a plan if you don't know how bad the damage is, how widespread it is, who the different players are. I'm sure people were actively trying to cover up, you know Mhmm.
Speaker 2:You know, bad things that they've been doing as well. Right? That that kind of thing tends
Speaker 5:to happen. So so two things. The the guy Charlie Mitchell that I told you about before, his bank almost goes under
Speaker 3:Mhmm.
Speaker 5:Because the bank bought the bank was trying to buy back its own shares during all this, and it bought back too many, and it couldn't afford to buy them.
Speaker 1:No. And
Speaker 5:so he didn't want anyone to know. So he actually goes and gets a loan, personal loan to buy the shares off the bank.
Speaker 1:Okay.
Speaker 5:So I mean, was wild. And then Jesse Livermore, this trader I was telling you about, because he didn't because he was so worried about the issue of of having bad information, he paid for his own people to be on the floor so that then they would call him. He was like Citadel placing, you know, their computers next to the exchange. He would place his people on the floor.
Speaker 1:That's you in the archive during COVID. You're the same you're doing the same thing?
Speaker 5:Real time information. Yeah. Exactly.
Speaker 1:Yeah. It's the same thing.
Speaker 2:Did did they have revenue backlogs back then?
Speaker 5:That I don't know about. I don't think so.
Speaker 1:Well, can you talk a little bit more about your process? I mean, obviously, you're incredibly busy. How do you get in the flow state to actually write a book? Do you write one chapter at a time, kind of outline front to back revisions? Like, talk about your process as an author.
Speaker 5:So I'm one of those writers, and this is not good, I don't think. I really can't write one sentence. I so so let me say it this way. I don't really like to write the second sentence less the first sentence I'm happy with.
Speaker 1:Mhmm.
Speaker 5:I'm one of those people who there's some people who splatter on the page, meaning they sort of they sort of throw everything down and then they think they're gonna fix it. Yep. I sort of have a view that whatever gets sort of put on the page is sort of anchored in a way, and so I can only only upgrade it maybe one letter grade. So if it goes down as a b, I can edit it and make it an a. But if I just splatter it down as a c, it's never gonna be better than a b Mhmm.
Speaker 5:Unless I start over again. Yeah. That's a little bit of a a thing for me. You know, this project went on for so long that I would write lots of little parts of it, little scenes, vignettes. And so I had these almost like puzzle pieces, and then it was about connecting them.
Speaker 5:I think the hardest part for me just given the, you know, the things I'm doing with with the New York Times and CNBC and my deal book stuff is for flow state, I can't my wife would sometimes say, oh, you have half hour, forty five minutes. You wanna go work you can go work on the book now or whatever. I would say. And unless I really had two hours Yeah. I couldn't really do it because the first half hour, forty minutes, I like almost had to rev up.
Speaker 1:Yep.
Speaker 5:So that's the thing. That's a real I think in the I don't know if in the creative world or what, it's I think you do need to get in that flow state, and and that's hard. And, you know, I've got three kids, and sometimes I actually try to write with them. Like, I mean, like, hang out with them and have them around. And then that's cons that can work for me sometimes, but I have to sort of, like, really get super super dialed in.
Speaker 1:What were what was the 1929 of 1929? Like, what were folks in 1929 looking back to and being like, this is just like We've seen this before.
Speaker 2:History doesn't repeat, but it rhymes.
Speaker 1:Yeah. Exactly. Exactly. Like, what So that's such a great question.
Speaker 5:It's such a great question because the truth is they weren't.
Speaker 1:They weren't.
Speaker 6:For the
Speaker 5:most part, they really because I think that this was such a first.
Speaker 1:Sure.
Speaker 5:I I really think it was a that the '29 was such a first in terms of that break. Maybe what they would say so there was a break in the market in the early twenties. '20 '21, there was a break.
Speaker 1:Yeah.
Speaker 5:That was that was subs substantial, but most people hadn't experienced it really because, again, it wasn't till 1919 that people were even started to think about taking on debt or or anything like that in the country to to then go to trade. It was really a function of General Motors, by the way. General Motors started loaning money to people to buy cars. That it was a moral sin in America prior to that really to to take on credit. Like, that was a very grubby thing to do Sure.
Speaker 5:Yeah. Before that.
Speaker 1:Have you have you looked into Tulip Mania at all? It's it's, like, referenced so often. And then I've heard Now it is. Stories about Now it
Speaker 5:then they didn't Yeah. Back then they were not doing the Tulip thing.
Speaker 1:I've heard that it's, like, it was actually very short. It was very isolated. It was it was not global contagion. And Right. Maybe some of it was not even as big as it might have just been somebody wrote down an extra zero in their accounting that day or for whatever reason.
Speaker 1:But, yeah, it's a it's a it's a fascinating story that now has just grown and grown in infamy, but maybe actually wasn't as big as something like 09/29 1929 that deserves a few
Speaker 5:next maybe that's a slim volume.
Speaker 1:Maybe. Yeah. Yeah. Yeah. Maybe.
Speaker 1:Maybe.
Speaker 2:How do you do three hours of live television a day?
Speaker 5:I don't how do you do three hours? By the way, I just wanna tell you, I really admire what you guys are. I didn't even get to say this. We've now gotten a chance to meet each other Yeah. A couple of times, and it's just a joy to be on with you.
Speaker 5:I think what you're doing is amazing.
Speaker 1:Thank you.
Speaker 5:And it's it's really, really cool to see your success. I was so thrilled to see that piece in the New York Times over the weekend.
Speaker 2:I appreciate it. Well, you're you're a hero to us. You're an absolute hero. My favorite we've said this line on the show before, but when when we got to hang out in New York a few months back, you said, said something to the effect of I do TV on my way to work. And hearing about your process with this book, it's clear that you're an absolute workhorse.
Speaker 1:When are guys publishing a massive, extremely well researched book? Because, like, it seems like this three hours of TV is really taken out of you guys, and it is. But, I mean, hopefully, we hopefully, we will learn and develop the muscle memory and the flow state and whatnot. We there's a lot to learn. This is a long game.
Speaker 1:We've we've learned that. So thank you so much for
Speaker 5:doing it. You guys are doing it.
Speaker 2:It's an honor to have you on the show. Yes. You're welcome. To get into the book. We'll we'll have to we'll be pulling more
Speaker 5:I'm just sad that I'm not in person and there's no gong. I met the NASDAQ.
Speaker 2:Hit that gong. Hit that gong for Andrew. One of the most well deserved that we've had in a while.
Speaker 1:Thank you so much for
Speaker 2:coming by. Let's do this again soon and have fun on have have fun on the book tour. Feel like you gave us the perfect the perfect amount.
Speaker 1:Yes.
Speaker 2:Like a little teaser, a trailer. Yeah. Still need to get into it.
Speaker 5:Great to see.
Speaker 1:Thank you so much for stopping by.
Speaker 5:You're the man.
Speaker 1:We'll talk to you soon. Cheers. And if you're watching or listening, please go pick up the book nineteen twenty nine. It's available now. You can get it on Audible.
Speaker 1:You can leave it five stars. Leave a review. Leave an ad in the review. I think maybe you can technically do that.
Speaker 2:You're making get banned.
Speaker 1:Leave an ad for Squawk Box. Leave an ad for DealBook.
Speaker 2:Yeah. Plenty of things you
Speaker 1:can do to help out.
Speaker 2:I I wanted so badly to put the Audible on last night Yeah. As I was falling asleep, but I I would have had to wait a few more hours. But that's gonna be my night.
Speaker 1:Yeah. I think the Audible's probably forty hours long or something. So Yeah. Just wanna do it at ten x?
Speaker 2:Yeah. So consider consider taking off next week and just and just
Speaker 1:I think
Speaker 2:walking and and listening to nineteen twenty nine.
Speaker 1:No. This is gonna be a fantastic book to, to dig into. Tyler wants
Speaker 2:this book. It's so cool because there would have been a way to Andrew could have done this book. Yeah. In probably a year, two years. Yeah.
Speaker 2:He could have sold a ton of copies Yep. By just using he he would have made it it would have been entertaining. But the fact that he went and spent seven years, like, actually doing it properly even though, even like, he just really cares about fundamentally creating a a a great product. So
Speaker 1:Well, we have another offer, another author joining us in the TBPN UltraDome. Brian Potter is in the Restream waiting room. He's the author of Origins of Efficiency. Thank you so much for joining us. We love Stripe Press.
Speaker 1:We love Stripe. We had Privy on. We had Dwar Kesh on. We've always enjoyed Stripe Press's books, and we're it's a pleasure to meet you. How are you doing?
Speaker 6:I'm good. Thank you guys for having me on.
Speaker 1:Thanks so much for joining. Would you mind, kicking us off with an introduction on yourself and the book, and we can go into a bunch of questions about it? But I'd love to just kind of, get a little bit of background for everyone on your journey to writing this book.
Speaker 6:Yeah. So my, I, am a senior infrastructure fellow. I work for the Institute for Progress, which is like a pro progress think tank.
Speaker 1:Yeah.
Speaker 6:I'm best known, the extent that I'm known for writing this newsletter called construction physics, which is about buildings and infrastructure and and how to get stuff built in The US. And my background, I my you know, before I did this, I worked in the construction industry. I worked as a structural engineer for about, fifteen years, like, designing buildings and parking garages and water treatment plants and and stuff like that. Yeah. And the industry always seemed, like, extremely inefficient to me.
Speaker 6:Like, you know, everything is, you know, so labor intensive. It takes so long. You know, we're doing this similar work over and over and over again. It should be much more efficient. It should all be done in factories, blah blah blah.
Speaker 6:And then in 2018, I had the chance to join this, like, big, exciting construction startup called Katera that had raised this was back when SoftBank was
Speaker 5:I remember Katera. Yeah.
Speaker 2:Let's give it up. Let's give it up for Moss.
Speaker 1:It was kind of a precursor. I think Hadrian was drawing from it now. Like, it was it was, the the, like, machine shop almost. Like
Speaker 6:Yeah. It was like, you know, it was this idea. It's like, you know, construction is inefficient because it's not done in factories. Right? So we're gonna into factory based construction.
Speaker 6:It was run by all these former electronics manufacturing guys. So, like, not, like, software guys that think that, you know, like, oh, I worked at Amazon, so I know how to do anything. Right? It was, like, people who knew about manufacturing. Yeah.
Speaker 6:And they were gonna sort of bring that knowledge to, like, the construction industry. Right? So they raised a huge amount of money, got a huge check from SoftBank, raised, like, $23,000,000,000 in in venture capital. And it all went sideways. Right?
Speaker 6:It all it all went wrong, and they they burned through it in in in about three years and and declared bankruptcy. And there are various, yeah, reasons for that.
Speaker 2:At what point did you at what point did you leave?
Speaker 6:I was there about until about a year before they went bankrupt.
Speaker 2:So I was there. Saw the did you see the writing on the wall?
Speaker 6:Yeah. I when I was there, I was saying it was like when my my but my time there was like a year and a half of ups and then a year of downs. And then after about the sixth round of layoffs, I I for with you know, after our engineering team got cut by, like, about 90%, I was like, need to time to bounce.
Speaker 2:Saw yourself out. Yeah.
Speaker 6:Yeah. Can you I wanted to understand, you know, why things had gone so wrong because part of it is just, know, start ups are hard. Mhmm. Building start ups that are, you know, moving physical things around is is very hard. There's very operation various operational missteps or or whatever.
Speaker 6:But, also, I kinda came to believe that sort of the thesis that they had built the company around was kind of either wrong or just, like, not complete enough, like, very large chunks of it. Because people had tried to do similar things that Katera had done many, many times. Right? If you go back over history, there's, like, a huge graveyard of companies of, oh, know, light bulb will just we'll build buildings and factories. It'll be so much cheaper, and I'll be able to make a huge amount of money.
Speaker 6:I'll be the Henry Ford of housing. And just it just has never worked. Right? There's like this people tried this over and over and over again and not been able to succeed.
Speaker 2:Will it work? Because I have an opportunity to invest. I'm a lucky I have a lucky opportune no. No. I I I actually did meet meet a company that that's, taking in taking another crack at this.
Speaker 2:Yeah. Do you think it'll ever work?
Speaker 6:I I do think it will work. But, again, I I do need to under I wanted to understand why specifically it had been so hard in the past and why Katera and so many other companies that have failed and what specifically, you know, would need to be true for it to succeed in the future. So it was it be by basically, the the where I ended up was, like, I need to understand what specifically makes it possible for an industry to get, like, more efficient over time and what specifically is happening, why when that is is occurring, and what is for what sort of can prevent those things from happening. And once I understand those mechanics, I will be you know, I will know what specifically would need to be true for some for some, you know, the construction industry or or any industry to sort of improve over time. And so that was sort of the genesis of the book.
Speaker 6:It's like, what specifically does it take for some process to get more efficient
Speaker 5:Yeah.
Speaker 3:Over time.
Speaker 1:It feels like the entire book is kind of an abstraction on top of just this idea of, like, learning the learning curve. We've seen this in semiconductors. Everyone who follows, like, the AI boom is, acutely aware of the learning curve that happened at TSMC. But you kind of draw a couple other historical analogies. What stuck out to you is, like, particularly great examples of this efficiency in in in, like, going successfully and us actually driving down the cost?
Speaker 1:And then what were the commonalities between that and and, like, what do they all have in common, basically?
Speaker 6:Yeah. So I kind of went through, and I looked at, like, you know, dozens and dozens and dozens of different industries and and seeing, you know, how they had improved their operations over time and what specifically was was changing, in them, when that was happening. It sort of, you know and I looked at, like, industrial improvement systems. Right? So, like, lean manufacturing Sure.
Speaker 6:And, like, value engineering and all the and statistical process control and all these other things that, like, had, you know, specific ways you could try to make something more efficient. And I kind of ultimately boiled all that down to, like, this this, you know, a list of, like, a handful of things that you had to do to try to make some process more efficient. And if you could do any one of those things, you could kind of make it more efficient. And if you couldn't do those things, those paths were blocked. As it turns out, they are in the construction industry.
Speaker 6:You're you can't make your process more efficient, and it just gets more and more and more expensive over time. And so, yeah, I looked at, like, a lot of different industries. I go really into, you know, Henry Ford and how he sort of dropped the cost of of the model t. I look at sort of the evolution of, like, nail manufacturing, which is, in the in the sort of the nineteenth century, go back even farther, and how they changed the technology to make over time to make nails, which started out with, like, hand forged nails, like a blacksmith, like, hammer and steel, and they found a way that, you know, machines that could sort of emulate that process. And they've replaced those machines with even better machines and so on.
Speaker 6:So there's, like, dozens and dozens and dozens of examples in the book of sort of specific things, that have gotten cheaper over time and the lessons that we can kind of learn from those things.
Speaker 1:How naive is it to just say, what's remained stubbornly high cost wise, Housing, medicine, education, what do those have in common? Regulation? How how naive is it to just throw regulation as the problem at those particular industries?
Speaker 6:That's a big part of it for sure. I mean, the problem is that, like, everything has gotten more regulated. Right? Like, manufacturing Sure. Included.
Speaker 6:Mhmm. So it it's like that's, like, part of the puzzle, but it doesn't really tell you the whole thing. Because even in play you know, the problem oh, you know, just take it back to construction. The problem of, like, construction productivity and not getting cheaper to build stuff is really something you kinda see around the world. You like, I I have a graph in there that's, like, construction costs in, like, a variety of different countries, and they all kind of this, you know, scary line of going up and to to the right
Speaker 1:over countries without building codes and onerous HOA, you
Speaker 6:know, like Less labor. Yeah. Or, like, different regulatory regime stuff. And there's certainly places that, like, do better than The US in in various things. Like, in various ways of building The US is, like, very far from the efficient frontier, but we have a very hard time of, like, pushing that efficient frontier forward.
Speaker 6:So, like, regulation is, like, a big part of it, but that's kinda one of the sort of things, I think, takeaways from the book is that it's not just regulation. Like, you could have all the you know, remove all the regulation you wanted, and you'd still run into these sort of various physical constraints and market constraints that prevent these sort of efficiency improvements in some cases.
Speaker 1:How are you thinking about energy in America? We've we've we've gone through this AI boom now where, we've scaled up the existing capacity of data centers. We're building new data centers, and it feels like the last link in the chain is, we build a 100 nuclear reactors in America in 2030 to stay on track with, like, the most aggressive projections? Is there anything unique about, obviously, energy production is a construction problem, but is there anything unique that you found in the energy industry that, folks might be able to learn from?
Speaker 6:Yeah. I'm well, you know, I write a lot about energy on on the on the newsletter. I don't have a background in energy, so it is a lot of me, like, groping my way towards, like, some understanding of of how this industry works. I'm a really big solar guy. Solar has, like, a really lot of nice properties that, like, makes it easy to sort of make efficiently at, like, very, very large scale.
Speaker 6:There's this really interesting paper, but, basically, it's a, like, big graph of, like, the sorts of energy technologies that have become cheap and the sort of tech energy technologies that have not become cheap. And the ones that have become cheap are these sort of things that, like, you can make repetitively in very large volumes, and you don't need, like, a lot of customization of. And so, like, solar panels, which are, like, you can make in, like, really, really, really, really enormous numbers, and you can kind of plop down wherever. It doesn't need a lot of, like, site specific customization, are kind of in this, like, very cheap quadrant. And then something like a nuclear reactor, which you make in, like, much, much smaller numbers and, like, needs a lot of, like, specific design for the specific reactor that you're building is sort of in the much more expensive quadrant.
Speaker 6:And so solar and, like, the batteries, which, like, really complement them really nicely, is, like, really good way to sort of make this stuff really cheap. These cost curves have, like, gone, like, down, like, a lot, and there's, like, no sign that those are stopping anytime soon. And so I'm you know, that's just you know, those this aligns with, like, so much of what we know about what what it takes to sort of make something inexpensive that I kind of see that, like, biting off a very large chunk of the of the energy, that we produce, in The US, assuming, you know, take it back to regulation, assuming that sort of regulation interferences don't kinda get in the way.
Speaker 2:How how often did you find, capital being a constraint lead to more efficiency? I think every startup founder has a has like an example of a time when like maybe if they they threw, you know, a 100 people at a problem, they would have gotten a different solution, but they only had a handful. And so they were able to create some novel, more efficient way of doing something. Or we saw this with, like, DeepSeek in in having having potentially fewer chips and creating a more, efficient architecture. Was that a common theme at all in in in the
Speaker 6:Yeah. It's it's interesting. I think there's kind of, like, two sides of it. One is that in some cases, like what a a repeated theme of the book is that, like, scale is really, really very important. And if you get the more you can make of something, the more opportunities you have to make that less expensively.
Speaker 6:And often scale is, like, very, very expensive. Right? So, like, one of the store or the story of, like, container shipping over time is a story of, like, needing really, really enormous investments to, like, build these big giant ships, which are, like, cheaper per container that they're transporting, but very expensive overall. And, also, like, really, really big expensive terminals to sort of handle those ships. And so only, like, a certain number of, like, countries could, like, invest in these, like, giant terminals that were needed to sort of service these huge ships.
Speaker 6:And so, you know, cost of transporting these goods fell a lot, but, like, there was winners and losers in who sort of gained gained from this technology development. It was really the people who could afford, to put the money into it to do it. But then on the other hand, you also see cases where kinda like you talked about with DeepSeek, people working under these constraints were able to come up with, like, really improved ways of of doing something that were much cheaper and much better than what was, what came what came before. So a kind of example of that would be, like, Toyota's manufacturing methods, which, like, Toyota production system, which evolved into lean manufacturing. Those kinda were created in this environment where, like, they couldn't develop these, like, mass production methods that Ford had used because their car market was so much smaller, and it was so much more varied.
Speaker 6:They couldn't just make a million of a given model or whatever, that they had to find ways of, like, producing this stuff efficiently that didn't require this, like, massive capital investment, basically. And so that was sort of the genesis of that I those those ideas. And so, yeah, I think there's definitely a case where, yeah, you need, like, a lot of investment to sort of find ways to make this cheaper. But then there's also cases where it's, like, also working under constraints of not very much investment has in has been important as well.
Speaker 2:Are you at all optimistic that, this data center boom will teach a generation of people, that you can build big things quickly and efficiently if you just basically put your mind to it. Because there's like a lot of from from an energy standpoint, just like, you know, if you look at what what Elon has done with, Colossus two, he's basically doing the impossible. A lot of people would have, like, looked at that project and said, it's not possible. And so that sort of it feels like that sort of mindset of, like, we're just gonna make it happen. These is being applied to data center development.
Speaker 2:But then presumably, those people could say, I'm gonna build a bridge. And they can imply that same kind of approach elsewhere.
Speaker 6:I I certainly hope so. We're certainly building, like, an enormous amount of this infrastructure. Like, it's really, really unprecedented. There's all these crazy stats. Like, you know, data center spending is now exceeded, like, office building spending or or or something like that, which is which is totally wild.
Speaker 6:I guess one thing that worries me is that, historically, people have been, like, am you know, not really cared about data centers. They've been happy to just, like, let them get built and the jurisdictions sort of collect the tax revenue for it and and not really worry about it beyond that. As, like, the build out of them is, like, going forward and there's, like, more and more of these data centers and they're bigger and larger, you're really starting to see, like, a grassroots movement of people like, you know, the NIMBYs sort of now being opposed to data centers in a way that they weren't before. So, like, Virginia, which historically has, like, been, you know, a major place where data centers get built and has basically been fine with them getting built there. Now you're starting to see, like, residents oppose them more and more, and you're starting to see, you know, grassroots movements around in in different states, springing up to oppose these things.
Speaker 6:So that worries me a little bit, and I hope the sort of forces of getting these things built and enthusiasm about building infrastructure are are stronger than that. Or, but, you know, it always seems like, the the NIMBY forces are are are quite strong. So, hopefully, they, they, they don't build momentum.
Speaker 2:They're OP.
Speaker 1:I have one last question. There's this post by Roon who's talking about Dan Wang's new book, and he says the general elite consensus now is that industrial process is a technology that lives in the heads of people. And he goes on to say that it was a mistake to let so much low value industry be offshored due to the loss of tacit process capital. And I was just wondering what your thoughts were on this idea of industrial process knowledge that there might be a few key people that actually know how to build something at scale and, just what the ratio how how steep is the power law of human capital when it comes to large scale industrial manufacturing efforts?
Speaker 6:Yeah. I think it's dead on. I think that's absolutely very important. And I talk about that at various parts Mhmm. In the book, how it's often really hard to transfer, like, manufacturing or production technology from one place to another place in part because it's hard to, like, pick up and lift these process knowledge.
Speaker 6:It is just in the head. So, like, embedded in this web of relationships, and so it doesn't necessarily even exist in explicit form. Right? It's just like, this is the system that turns out to work very well, and you can't just, like, recreate it because we don't essentially know how it how it came to be in the first place. And then the you know, we talked you talked about a little bit about the learning curve
Speaker 1:Yeah.
Speaker 6:Earlier, and that's kind of the this really similar idea where a lot of your improvements to some technology over time come from just, like, the factory floor and learning how to sort of do this better and better over time, but it's very coupled with actually physically doing the the work. And so that's one thing that I, yeah, I I think is is really important is that oftentimes just technological progress is coupled to sort of this, like, process factory knowledge of actually having the experience, doing things. One one really fun sort of example of this is during the the early days of of the space race where The US was having, like, a really hard time building their rockets. And there's a part where, like, you know, the because of various political things, the the navy was gonna send up their rocket first. They were gonna be, like, the first ones to sort of launch a US satellite into space.
Speaker 6:And Wernher von Braun, who is the German rocket scientist who then had been brought over to The US and was working for the army, he goes to some, like, you know, military leader, and he says, look. You can tell these navy guys they can do whatever they want. They can take my rocket, and they can paint navy on the side of it and do whatever they want, but they need to use my rocket and not theirs because my rocket will work and their rocket won't. And then what ended up happening was they didn't listen to him, and the Navy launched their rocket anyway, and it didn't work. It blew up on pad.
Speaker 6:And then so finally, they listened to Wernher von Braun and just launched his rocket, and that's when we finally got a satellite into space using Wernher von Braun's rocket. And then, of course, Wernher von Braun was, like, a major force in the Apollo program Yeah. As well. So it was like, you know, the German the German rocket knowledge that had accumulated during World War two was, like, very, very important in both The U in both The Soviet and The US. Their early rocket development efforts were basically built on this German knowledge that had been accumulated.
Speaker 6:So this process knowledge and, like, this, you know, expertise that gets embedded in the heads of these of these people working at the sort of forefront of technology, is not easy to sort of recreate. I think it's very, very important.
Speaker 1:Well, thank you so much for stopping by the show. The book is origins of efficiency from Stripe Press. It's available now for purchase. Highly recommend picking it
Speaker 3:up.
Speaker 2:One click.
Speaker 1:On Amazon. You. Stripe checkout, hopefully. Hopefully. We will talk to you soon.
Speaker 1:Have a great rest of your day.
Speaker 6:Thanks.
Speaker 1:Thank you so much. Branch. Really quickly, let me tell you about adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising.
Speaker 1:Only AdQuick combines technology out of home expertise and data to enable efficient seamless ad buying across the globe. Speaking of founder mode, we have a founder in the Restrict waiting room. Let's bring him in to the TVPN Ultra Doll.
Speaker 2:There he is.
Speaker 1:How are you doing? To meet you.
Speaker 5:I'm doing great. How are you guys doing?
Speaker 2:We're doing fantastic. Fantastic.
Speaker 1:Kick us off with an introduction on yourself. Big, big news. Company, the news. We're excited.
Speaker 7:I'm Harry Singh. I'm the founder and CEO of Flow Engineering. Flow is a collaborative development platform specifically built for next generation hardware companies. Our customers design things like rockets, airplanes, cars, nuclear reactors.
Speaker 1:Mhmm.
Speaker 7:And they use Flow to design, build, test, and iterate massively faster than they can do today. Basically, the way to think about it is we're taking the last thirty years of software development practices, everything from agile to continuous integration, continuous testing, and we're bringing that to the design of massively complex hardware products. Our news today is that we've raised our series a with Sequoia Capital. And
Speaker 2:How much? How much did
Speaker 7:you raise? $23,000,000. There we go. Congratulations.
Speaker 2:Amazing. I love that you, you started, building hardware yourself and and then figured out along the way, I gotta build Need software for build SaaS for this.
Speaker 1:What, what what are you replacing most of the time? Is it
Speaker 2:is it a phone system? Am am I getting it right? You basically built you built an internal tool for yourself initially while you guys were building rocket engines and then realized, like, hey. Seems to be pretty valuable.
Speaker 7:Yeah. Exactly. So, like, a a little story of the company. I'm a mechanical engineer. I became an engineer because I wanted to build machines that matters.
Speaker 7:Went into the industry, went to companies like BA Systems and BP, and just realized the fundamental approach to designing hardware was completely out of date. Mhmm. So the company started out as a hardware company, not a software company. We were called the Rocket Company. We built the world's fastest design consultancy for hybrid rocket engines.
Speaker 7:The best people in the world could go from requirements to to detailed design in twelve weeks. We could do it in two hours. And the reason we could do it in two hours is we built this internal platform for ourselves called Flow that massively integrated and accelerated the design process. And that's what became that has become Flow today.
Speaker 2:Yeah. So are you you're just simulating physics? Like, what is the actual like, you're you're I imagine you're basically you're building a workflow, and then you're able to are you able to get a good read on if the the the process or the the product will work without actually testing it in the real world, or what does that look like?
Speaker 7:Yeah. So let me give you the one I want on, like, hardware development versus software development. In software development, we have Kanban boards and tickets, and you build a sprint, burn it down, and you and you go for it. When you're designing something like a rocket or an airplane or a car or nuclear reactor, it's much more complex. The way that we fundamentally design and collaborate are using these things called requirements.
Speaker 7:Let's say you're building a rocket, you'll say, hey. I need to get this much payload to this delta to this orbit. Yeah. And then to do that, I need to design this first stage and the second stage, and to do that and you go all the way from these top level requirements to very, very low level temperatures, pressures, masses, and design criteria that engineers will need day to day. The big problem is that when you're designing, like, a humanoid robot or you're designing a reasonable rocket or you're designing a self driving car, you don't know whether these requirements can be met or not.
Speaker 7:Like, ten years ago, you would have these fixed requirements, and you'd be able to execute against them. You'd build a big Gantt chart, and you'd burn it down. In a modern, massively complex system, our products are so complex that we have no idea whether we can design it. The requirements are changing on a nearly daily basis, and the design is changing on a nearly daily basis too. So what Flow does is it's a single source of truth for all of the company's requirements and systems information, and we glue all the requirements together, all the design together, and we have continuous integration between the requirement side and the design side, which enables teams to design and propagate changes much faster than they can use today.
Speaker 1:Are you aiming to go straight to the Fortune 500, the Fortune 100, the biggest companies in the world that are manufacturing at scale and, maybe it's a lot of steak dinners and a really hard pet. Did you get a couple of those clients and you're in business? Or do you wanna focus more on startups, smaller companies, scale ups? Like, what's the sweet spot for you right now?
Speaker 7:Yeah. We, we we think about this very deeply. We regularly turn away Boeing and Airbus and these massive conglomerates. So here's the way to think about it. The hardware engineering Mogs.
Speaker 2:Mogs.
Speaker 5:You can't have
Speaker 2:to Sorry. Sorry. We're we're busy helping the next generation Yeah. Straight to the next Boeing.
Speaker 4:Yeah. Exactly.
Speaker 7:So the way to think about it is the hardware engineering industry is going through a generational change right now. And it's this generational change from old school waterfall, think NASA Yeah. Lockheed Martin to new school agile, think SpaceX, Nanduro. The way that SpaceX, Nanduro, and Jovi, and Archer work are much more like software companies than traditional legacy primes. Mhmm.
Speaker 7:They don't like top down. They design bottoms ups, and things are changing on a nearly daily basis. We're very, very, very specifically built for that new way of working. In the same way, this happened in the software engineering industry. So in the February, we went from old school waterfall to new school agile, and companies like GitHub came about to serve that market.
Speaker 7:Yep. Now GitHub didn't go to IBM and say, we're gonna build you a slightly better Gantt chart. They went to companies like Google and Facebook, and they were five people. And they said, this represents the new industry. And ten, twenty years from now, these small companies like Google and Facebook will be the mass market.
Speaker 7:And then when IBM and Oracle wake up, they will change how they work, and they'll come to GitHub because they are changing to an agile way. So that's what we're doing. We're exclusively focused on next generation aerospace nuclear defense companies. We're growing very, very quickly with those guys, and we're making that workflow as good as it can be.
Speaker 2:How is it going in the Gunda? What's the update?
Speaker 7:Yeah. So this is, a global movement. But as you mentioned, the epicenter of the global movement is El Segundo, which is in LA. So everything from, like, rockets, airplanes, robots, cars, autonomous submarines are being designed in, like, the the five or 10 square miles, which is El Segundo. El Segundo is is amazing.
Speaker 7:I think it represents something like 70% of our customers, and the companies in Elsegundo design and iterate at a speed that Boeing and Lockheed just can't comprehend. They're designing massively complex systems. They're designing and iterating faster than anybody thought they could do, and that is the reason they will become so much more competitive than the traditional primes that the traditional primes just can't keep up.
Speaker 2:And I imagine what an advantage that is for you being able to walk a few blocks and, like, see your product in action and actually get that real time feedback and then just be on that same, you know, iteration cycle with your customers.
Speaker 7:Yeah. We we have a kind of crazy story, which is most of our, like most of the other tools in the market came from El Segundo. We actually came from London, and we were engineers, and we wanted to build. And the European market just didn't want speed, or at least the market back five years ago didn't want speed. So we sold into traditional legacy companies, and they they fell in love with the dream and the mission, but they didn't really they didn't really use the software.
Speaker 7:And then the El Segundo market found Flow, and they pulled us into it. And what started out as just one or two companies working in this crazy new way, designing and integrating like a software company, have ended up becoming the new market, and that represents a really important part of our customer base.
Speaker 1:Well, congratulations on the funding news. Congratulations on the progress, and good luck to you. Thank you for When
Speaker 2:you announce the b, come on over.
Speaker 3:Come We're, on like, twenty minutes.
Speaker 2:We're twenty, thirty minutes from the Gondo.
Speaker 1:Hollywood. We'd love to have you.
Speaker 7:Oh, sweet. I appreciate it.
Speaker 1:Going in person. We'll talk to you soon. Have a good day.
Speaker 2:Whole team. That's it.
Speaker 1:And when you announce that series b, you know what you gotta do. I know. Go over to getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch cape, take a couple mil off the table in secondary, put in a in an FPGeorgne.
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Speaker 1:Jordy.
Speaker 2:I just saw the post that I'm not gonna read on the timeline. That is funny. But Cool. But, anyways Cool story. My call.
Speaker 2:Cool. Cool story. No. What I was gonna I was gonna check the timeline before we get off. Please.
Speaker 2:We, have to enter our fourth and then fifth hour of podcasting.
Speaker 1:So glad.
Speaker 2:I was worried we could get to file. Jackson Dahl Yes. Is, I believe, already here at the in the Ultradown.
Speaker 1:Breaking news. We're doing
Speaker 2:And we're gonna be doing his podcast We're
Speaker 1:very excited.
Speaker 2:Right now. So So head over there. Subscribe. Go shoot it.
Speaker 1:Put notifications onto Dialectic, and then you'll hear us talk more if you're not
Speaker 2:sick. Yeah. I don't know when this episode will come out, but if you Excited. Message Jackson now or you comment on one of his posts, I'm sure you can ask some questions there. And we hope you have a fantastic evening.
Speaker 2:We will be back tomorrow for another beautiful day of technology.
Speaker 1:Hopefully, it's another cozy warm day, we can put the fire on.
Speaker 2:I know. I like that.
Speaker 1:Really enjoyed the fire.
Speaker 2:We should have the fire on for for Jackson's podcast.
Speaker 1:We'll we'll yeah. We'll consult with him. Thank you so much for
Speaker 2:Awesome.
Speaker 1:We'll see you tomorrow.
Speaker 3:See you
Speaker 2:guys tomorrow. Cheers. Thank you.