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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 TBPN. Today is Wednesday, 12/10/2025. We are live from the TBPN UltraGolf. The temple of technology, the fortress of finance
Speaker 2:The capital of capital.
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Speaker 1:Do them a favor. Stocking stuffer.
Speaker 2:It can go under the tree. Yeah. It can go anywhere.
Speaker 1:So NVIDIA can sell h 2 hundreds to China now. It's a big reversal from the chip controls of a few years ago, which actually started during the Biden admin. We were really pushing to not allow big you know, the best and the best and most amazing chips to go to China. Well, all of that's changed with this h 200 news. Now NVIDIA can sell to China, but they gotta pay 25% to Uncle Sam.
Speaker 2:The big man.
Speaker 1:The big man, Uncle Sam. And so the estimate for you, the taxpayer, assuming you're an American taxpayer, is that you will be $5,000,000,000 richer because NVIDIA is estimating that they will be able to sell $5,000,000,000 of chips to China every quarter.
Speaker 2:That's
Speaker 1:right. 25% of that, of course, is 5,000,000,000 per year. But it's unclear where this will actually pan out. I'm not sure where it will land. It is an interesting question because there's been a lot of there's been a lot of diversion.
Speaker 1:There's been a lot of engineering that's happened in China to work around the frontier. But then also, they might have gotten their hand on some black well. There's a whole bunch of crazy headlines going back and forth. One interesting story so there's a bunch of good there's a bunch of good arguments on both sides and there's bunch of terrible arguments as well. But we should go through some of these.
Speaker 1:So the best argument that I have heard for allowing an American company, NVIDIA, to sell h two hundreds to Chinese companies is basically just free trade. Keep the government out of the boardroom. NVIDIA is over 30 years old. They make computer parts. If you don't believe in nuclear level AI capabilities, then why would you be so worried about AI going to China?
Speaker 1:It's just autocomplete. It's just better SaaS. Yeah. It's not you
Speaker 3:know, yes, it might increase their GDP, but there are tons
Speaker 1:of things that we sell to China that does increase their GDP. We bring the business of manufacturing iPhones there. Right? We You bring them
Speaker 2:quite a lot of business.
Speaker 1:We sell soybeans. We sell all sorts of food. They sell us stuff. Like, free trade has happened for decades. Like, yes, there is a little bit of a decoupling.
Speaker 1:But for the most part, the modus operandi of the American geopolitical system has not been try and reduce GDP growth in all of our geopolitical rivals at full stop. Right? No. That's it's never been that way. And at the end of the day, if you're an American company, you like, I am sympathetic to this idea that Jensen is just like, look.
Speaker 1:I'm just trying to build a big company. I wanna sell my stuff everywhere. I think my stuff's good. I don't think it's dangerous. I don't think I'm making nuclear weapons.
Speaker 1:I didn't get in the nuclear weapon business, and now I'm being treated like I'm selling nuclear weapons. It doesn't quite make sense. I understand that there are other
Speaker 2:It's hard for him to argue go over there or go to Washington and argue. It's not it's really not that important. It's just kind of like an extension of the existing software paradigm. Yeah. It's just SaaS.
Speaker 1:Well, yes. Yes. Yes. Yes. You're right.
Speaker 1:It's hard to
Speaker 2:sell this too. And then also, you know, continue to sell this.
Speaker 3:Yes.
Speaker 2:Did we just lose power? What's going on, boys?
Speaker 1:Yeah. What's going on with the lights? It's crazy.
Speaker 2:Probably a nation state as usual.
Speaker 1:Who knows?
Speaker 2:Trying to take us offline. Indeed. Well Continue.
Speaker 1:Privy. Privy makes it easy to build on crypto rail securely, spin up white label wallets, sign transactions, integrate on chain infrastructure all through one simple API. So there are other factors in the trade relationship. One one sort of gigabrain take is, you know, if you believe that AI slop will one shot people, it will reduce the birth rate because people will be so obsessed with AI avatars, romantic companions, well then and if you are anti China, maybe you should export as much as possible. Right?
Speaker 1:I don't see anyone making those those arguments today. But I do wonder if there's someone, if you are doom pilled in that way where you think that AI is bad, but you also think China is bad, do you have to argue in favor of the export of the H 200? Maybe.
Speaker 2:Let them have.
Speaker 1:I don't know. Anyway. Everything. There was something interesting because we don't we also don't know exactly how big of a deal this h 200, you know, unbanning is because last time there was news on this front, the CCP basically said like, hey. We don't want our Chinese companies buying these even if they are available.
Speaker 1:We don't want them. We don't want them here. And the CCP, you know, kind of doesn't want Nvidia chips filling up Chinese data centers. It feels like China at the very least has been somewhat receptive to this idea that they don't want to become dependent on the American tech stack. Right?
Speaker 1:Yep. But clearly, Chinese companies do want NVIDIA. We saw this with the deep sea teams figuring out how to get some Blackwell apparently. And and it's actually going further than that. There's some Chinese nationals that have been recently risking legal consequences from the American justice system.
Speaker 1:This is very interesting. On Monday, the US attorney's office in Houston revealed something called Operation Gatekeeper. Very exciting name.
Speaker 2:Government is weirdly great at naming Yes. And coining some of its operations.
Speaker 1:Interestingly, when you Google when you Google Operation Gatekeeper, you get something about building a border wall. And it was but it but from the presidency of Bill Clinton. So Operation Gatekeeper originally was a measure implemented during the presidency of Bill Clinton by the United States Border Patrol, then the INS aimed at halting illegal immigration to The United States at The US Mexico border near San Diego. It was the and so they I guess they had they they constructed a wall on the beach in the nineteen nineties. He literally built a wall, which is crazy to me because I thought that was like a Trump era thing.
Speaker 1:Anyway, the new Operation Gatekeeper
Speaker 2:The operation for that Canadian snowboarder is called Operation Giant Slalom.
Speaker 1:Giant Slalom. That's a good name too. So the new Operation Gatekeeper has nothing to do with the, you know, domestic immigration across the across The U. S.-Mexico border. It instead is focused on AI chip smuggling.
Speaker 1:And this particular operation has just uncovered a $160,000,000 worth of illegal AI chip smuggling. Very, very interesting. So a 43 year old Chinese citizen named Fan Yui Gong was living in What? Yeah. His name's Gong, Which I mean, we love Gongs here but I don't Before we figure out the
Speaker 2:bad stuff that he's doing, let's let's give a quick
Speaker 1:fantastic That's So he so this guy's living in Brooklyn, 43
Speaker 2:Okay.
Speaker 1:And and also separately a Canadian citizen from China. They independently conspired with employees of a Hong Kong based logistics company and a China based AI technology company to circumvent US export controls. Basically, they bought a ton of NVIDIA GPUs, then they would send them to a co packer like a fulfillment center, remove the NVIDIA labels, put new labels on the chips that would say Sandkyan, sand k y a n. I'm not exactly sure how to pronounce it. Once the chips were packaged back up, they would ship them.
Speaker 1:Oh, I said chip them. I need to change that. Probably already went out. They would ship they would ship them to China or Hong Kong under a generic classification of generic computer parts. And so everyone involved faces significant legal consequences.
Speaker 1:Now, couldn't figure out exactly what the consequences are. I'm not sure if it's like years in prison, but it doesn't seem good. You know, you're responsible for diverting
Speaker 2:Very good.
Speaker 1:A $160,000,000 worth of chips. That's rough.
Speaker 2:The question then becomes how did it get in their hands initially?
Speaker 1:Oh, because they they were just like, hey, I'm a Brooklyn guy. I wanna buy some Nvidia.
Speaker 2:I know, but a 160,000,000, it's a big company. They do a lot of revenue. But you would think, oh, what's this address that we just got this order from?
Speaker 1:You'd be
Speaker 2:like, is that a
Speaker 1:It'd be like, yeah, I'm shipping it to a company in Brooklyn. It's
Speaker 2:probably like a coffee shop or something like that.
Speaker 1:Yeah. Maybe maybe it's like, you know, I want to have an accelerated, know, design studio in Brooklyn or something. I don't know.
Speaker 2:I know. I know. But there the the seems like a KYC failure.
Speaker 1:Potentially. Yeah. I mean, I don't know. There was one of the guys involved, it was technically a Canadian citizen who was from China. And so you stack these all these up and you have like, okay, well, I'm shipping it to Brooklyn and the guy's a Canadian national and, you know, at a certain point, you're like, and it could have been through some sort of reseller.
Speaker 1:I don't know. I'm sure we'll find
Speaker 2:out Last name is Gong.
Speaker 1:Name is Gong.
Speaker 2:VPN hits a Gong a lot. It's probably
Speaker 1:They probably got too excited and they're just like, wait, we sold how we sold a $160,000,000 today. Let's ring the gong. They just got fired up. But the mister Gong will unfortunately not be hitting any gong soon because he might be going to jail. Very unfortunate.
Speaker 1:But it's like one of the worst it's it's so stupid because he could've just done nothing in one. Like, because today, what he did is not illegal anymore. Like, you can actually export They
Speaker 2:were h two hundreds?
Speaker 1:I don't know if they were h two hundreds. They were they haven't said exactly the mix of the GPUs. But in general, it's like this happened year or two ago.
Speaker 2:Why would why would So it's not
Speaker 4:like he
Speaker 1:was getting black well.
Speaker 2:It's not like he would have been buying h two hundreds in Brooklyn. They would have been even more like, wait, you realize we have an American version of this?
Speaker 1:No. No. So so so the the h 200 is the American version. You're thinking of the h 20, the nerf Sorry. So Yeah.
Speaker 1:So we initially were selling the nerfed one. Then now with this new with this new Trump rule, you no longer have to sell the nerfed version. You can just sell the real American version. Which of course is
Speaker 2:like, great for actually
Speaker 1:Blackwells are shipping now. And so we're still like, the The US policy is still keeping China one iteration behind. Yeah. And maybe that will be the ongoing decision here, the ongoing strategy. I'm not exactly sure.
Speaker 1:It doesn't like, the the administration hasn't really laid out a philosophy of this at all. I mean, originally, what was it? Lutnick said, like, we're not giving them the best we have. We're not giving them the second best we have. We're not even giving them the third best we have.
Speaker 1:We're giving them the fourth best we have, like, the the h 20. It's, like, super nerfed. But now it's like we really are giving them the second best we have. So I don't know. That seems like a shift in policy, but we shall see.
Speaker 1:And so what's interesting is that now that Nvidia is approved for export, I'm interested to understand where will sales to China land. Like, they've said, if there were no geopolitical considerations, we could sell $55,000,000,000 a quarter, 20,000,000,000 a year, which is it's not a drop in the bucket, but it's not exactly, you know, half of their revenue. I think they did 60,000,000,000 last quarter or something like that. So you're looking at like a $200,000,000,000 company. This is like 10% of their revenue is gonna be in China next year if they really take the take the Yeah.
Speaker 1:Take the handcuffs off, take the gloves off. So but the big question is, like, how much smuggling was actually happening? Like, we know a 160,000,000 was happening because we caught them. But was there a billion happening? Because you don't catch 100% of what's going on.
Speaker 1:Right? So in theory, there could be like a couple billion, maybe 10,000,000,000 that was happening. And so, you know, how much what what is demand actually for NVIDIA GPUs in in China? I would imagine it's higher, but then, of course, you have the dynamic of the CCP. There was also this debate about
Speaker 2:Yeah. It seems like netting at around 10% of global sales makes sense given they're projecting 210,000,000,000 or that sort of consensus for next year and nearly 300,000,000,000 for 2027.
Speaker 1:I would expect, you know, I would would expect something more like thirty, forty, 50% of China's really trying to like keep up and win the race and this is like the best supplier. But, you know, the the I guess it does take time to build up a local industry that actually can support that level of investment in AI chips. So there's a lot of debate over this particular deal, the decision to sell h two hundreds to China for 25% tax. There is there's some debate over, like, whether this should be some sort of, like, you know, big picture trade deal where we sort out the the rare earth element picture in Taiwan, and we also work through the soybean issue, and we work through, you know, a whole bunch of different export things all at once instead of just doing like one off one deal after another in isolation. I'm not that nervous about that.
Speaker 1:I I I I don't I don't really feel like I I really need it all to be resolved once once and for all. I feel like it's fine to have this happen and then watch the consequences of that and see how the chips stack up and how valuable is this. Because does China really are they gonna be breathing a sigh of relief in six months? They're be like, okay. Well if you gave us this we really do like the chips.
Speaker 1:We're very thankful to that. And in exchange we will be loosening export restrictions on rare earth elements for example. I don't know that it has to all be done within one deal. But regardless of whether America wins from this or China wins from this, it's clear that NVIDIA wins and also that smugglers lose because the smugglers are going to jail. Yeah.
Speaker 1:So we'd like to them. Don't break the law. Stay compliant. Get on Vanta. Automate compliance and security.
Speaker 1:AI that powers everything from evidence collection Christmas. And continuous monitoring to security reviews and vendor risk.
Speaker 2:Without further ado, I think we bring in our first guest Fantastic. Brother Joe.
Speaker 1:We have Joe Wiesenthal. Joe Wiesenthal. In the studio. How are doing, Joe? Good to see you.
Speaker 5:I'm good. Thrilled to be here on this wonderful Fed day.
Speaker 1:Yes. Well and, also, is it not the
Speaker 2:Did you have a
Speaker 1:ten year anniversary? Was that yesterday? When when did the party The party was last night?
Speaker 5:Yeah. The party was last night. I'm sorry. It didn't align with one of your hopefully increasing the number of trips to New York City.
Speaker 1:I can't wait. I can't wait. Yeah. We're gonna be there all the time.
Speaker 2:2026 on the IPO front is looking
Speaker 1:Yeah. I'm shocked. I I'm glad I'm glad you were able to to get out of bed sober up by 2PM eastern for this for this press hit.
Speaker 2:For the rate cut.
Speaker 1:For the rate cut.
Speaker 5:It's very impressive that I was that I'm here right now. Yeah. Of course. Yeah. Everyone should be very impressed that I'm coming on TPPN today given the circumstances.
Speaker 1:Yes. Yes. I'm sure it was I'm sure it was a lot of holiday cheer and a lot of revelry. It was. And and it's a massive it's a massive moment.
Speaker 1:Thank you. And and, again, just congratulations. We've said it before.
Speaker 4:Thank
Speaker 1:you. But what a what a generational run with Odd Lots. Ten years. That's Fantastic. That's not easy.
Speaker 1:A lot of people give up. And and you've stayed the course. You just built and built and built. It's fantastic. Yeah.
Speaker 1:And everyone is clapping for you because we're all
Speaker 2:That's We love you. That's right. Let's hear it.
Speaker 1:Let's hear it. It. Let's keep going. Let's keep going. Yeah.
Speaker 2:Well No
Speaker 5:reason to stop. Let's just make
Speaker 1:this one too fast. Anyway Did
Speaker 2:did you see did you see our post? Henry on our team hit the timeline. It said, Fed word scissor hands. The Fed just cut interest rates by 25 basis points.
Speaker 1:I like how
Speaker 2:you're entitled. Anyways, breakdown
Speaker 5:How have we gone this long without anyone making that? I've I've heard a million Fed puns Yes.
Speaker 1:Over the years. Inspiration I think that's the
Speaker 5:first time I've heard that one. Genuine novelty.
Speaker 1:I think it is
Speaker 5:the first one.
Speaker 1:Novelty is important. But explain to us what happened Yeah. And how are you processing the news? What does it mean?
Speaker 5:It's very interesting to think about this cut in the context of some recent developments. So I think I would start by saying that, you know, two or three weeks ago, the market didn't even think the Fed was gonna cut. If you looked at implied odds from various instruments in which traders trade the short end, it was below 50%. So I think that's an interesting place to start. The fact is it seems like Powell had to probably had to do some politics to bring the Fed around and actually make the case because there are crosswinds.
Speaker 5:We know that the unemployment rate has been creeping up
Speaker 2:Mhmm.
Speaker 5:But inflation is certainly not back to target. And I think, actually, if you look at the statement from the Fed, one of the things they noticed they they noted is that inflation has has been elevated since the September meeting, that it's actually gone up. They're still not back to their 2% target. In fact, it's actually drifted higher. Now you could say, okay.
Speaker 5:Well, maybe this is a tariff effect, and so you look through that. But I still think it's quite notable that we've had basically five years of the Fed not hitting its inflation target. It's still warm, and yet they Powell got through a cut, but you could so one might look at this and say, you know what? The Fed is doesn't take 2% inflation as seriously as it used to. In fact, a lot of people on Wall Street are saying this.
Speaker 5:Maybe there's a soft, you know, 2.8 inflation target right now, which maybe the trade off is worth it because you don't want unemployment to snowball. You don't want that to run away, so maybe tolerate higher inflation. But look, think fundamentally you could ask, does the Fed take 2% inflation as seriously as it used to? But there's something else an important dynamic, which is that as we know, you know, Trump is going to appoint or announce a replacement for Powell very soon. Trump would like to see more faster rate cuts than we've been getting.
Speaker 5:Mhmm. But, you know, there were three dissents, and so the president of the Kansas City Fed, Schmid, the president of the Chicago Fed, Goolsby, they voted for no cut. The other dissent was Stephen Myron who voted for a 50 basis point cut. But this is really important because whoever yeah.
Speaker 1:Whoever Yeah. 50%. Did anyone did anyone was anyone brave enough to call for a 200 basis point cut or maybe a 500 basis point cut? Let's go in negative.
Speaker 5:Let's just go straight back to Zurp Zurp in one shot.
Speaker 1:Yeah. That's what need. Venture can we get a venture capitalist in there? Is that possible?
Speaker 6:Do you
Speaker 1:need do you need credentials, to be honest?
Speaker 5:We need a venture capitalist, and we need, like, the most overleveraged real estate developer that you've ever met. Yeah. It's good. Them on the board, and they would slash it to zero. Yes.
Speaker 5:That's important element. No. No. No. Not at all.
Speaker 5:There's an important element here, though, which is that, like, you know, we know that Trump is not thrilled with Powell, but Powell is good clearly at getting the votes on-site. Sure. Sure. And so it raises some interesting questions, which let's say Trump were to appoint a real estate developer. He's like, you know what I want?
Speaker 5:Like, that 500 basis point cut right away. It's not a I mean, let's let's do something less hyperbolic. Let's say, you know, let's say he appoints someone who wants a very aggressive sequence of cuts. That person has to win votes. That person has to win the credibility from the other FOMC members to get to make that decision happen.
Speaker 5:And so what it's saying already, there's already a significant number of dissents. It's not clear how much a Powell replacement will have the credibility or the political standing within the FOMC to actually get that increasing pace of cuts. So I know that Trump is not thrilled with Powell. Whatever. That's his prerogative.
Speaker 5:But another way to look at this is he has a man in the chair position right now that could deliver cuts, period, when it's not obvious that most of the members of the FOMC are thrilled with further easing. And, yeah, it raises some question about even if there is gonna be a more dovish Fed chair come 2026 to the degree that he'll be able to, like, you know, get those cuts through, it's not guaranteed.
Speaker 1:Yeah. Can you can you help me, like, zoom out and and and understand the mindset of the of the Fed with regard to understanding that trade off between unemployment Yeah. And inflation? Because Sure. I it I could understand it if I'm a politician.
Speaker 1:And just personally, it feels like inflation's something that everyone feels. Unemployment is something that you either feel it or you don't. Right? Because you're either unemployed. If you're unemployed, you are
Speaker 3:Yeah.
Speaker 1:Upset with the government. And if you're employed, you're like, it's not great that my, you know, my brother doesn't have a job right now, but at least I do. Yeah. Whereas inflation, everyone feels it. And so if I was purely in in politics mode, I could understand that trade off.
Speaker 1:But how does the Fed think about the that trade off? Because it's little bit different. Right?
Speaker 5:No. I mean, the way you described it is is absolutely perfect. And it's interesting. You know, look. Like, if you're just going back a a few years to sort of the worst of the pandemic.
Speaker 5:You know, if you think back to, like, spring twenty twenty, you know, people were thinking, is this gonna be another great financial crisis? Right? Are we gonna have another period of, like, terrible unemployment, etcetera? Now it turned out that the job the labor market bounced back very quickly, almost much faster than almost anyone had anticipated. So we might sit here and say, look, you know what we avoided?
Speaker 5:You know, we avoided sustained 10% unemployment. We avoided another great financial crisis, but I don't think, like, most people really, like, think about their life in terms of counterfactuals. And so to that like, the main phenomenon of those times was significantly higher prices, higher prices that at least for some time was were significantly outpacing wage growth Yeah. Etcetera. And so we know that was, like, incredibly popular.
Speaker 5:You know, I think the thing to think about is that one of the phenomenons that recurs over and over again in the economy is they talk about unemployment increases tends to increase in a nonlinear fashion by which you get these small increases, you go a little bit up every month, you get a little bit increase in the unemployment rate, and then suddenly it snowballs. Mhmm. Because it has this snowballing effect. I lose my job. I start spending less.
Speaker 5:The various stores and restaurants and services that I was consuming, they then have to cut workers because people are spending less at their establishments. So unemployment has this tendency to snowball Mhmm. To go from modest being modestly worsening to rapidly worsening.
Speaker 1:Mhmm.
Speaker 5:And once it rapidly worsens, then it's very hard to reverse that. Then you have to ease massively, and it takes years potentially to get back to where you were. Yeah. So from the Fed's perspective, what they're thinking about right now is, yes, inflation is too warm. It's not at our target.
Speaker 5:People don't like it, but it'll be really bad if we let employment snowball. And so the only way to avoid that is to sort of cut in advance to try to get ahead of it. And so that is that is the balance, and it's a very difficult balance, obviously. And we know that very few people have, like, sort of called this cycle correctly. I mean, people have been predicting an imminent recession for a long time because you have all these signs.
Speaker 5:It's like, oh, are we right there? Is it is it all sort of one day away from falling apart? And so they're trying to thread this very difficult path here where they're aware of warm warm inflation, but they really don't want that sort of they wanna get ahead of the employment collapse.
Speaker 1:Yeah. I wanna know more about inflation. Sager and Jetty did Odd Lots. Everyone should go listen to that episode. It just came out a week or two ago.
Speaker 1:He's coming on our show on Friday. I know he's gonna try and pin the inflation on the AI data centers. Is there anything to that? Have you seen any data that helps understand what's going on at a lower level within the inflation numbers? Because, I mean, I was at Target last week, and I feel like they were selling TVs for, like, $40.
Speaker 1:And so stuff's still getting cheaper in certain segments, but then other things are getting more expensive. What's actually happening within inflation if you try and unpack it a
Speaker 7:little bit?
Speaker 5:I basically, if something is made in China, it's getting cheaper. Like, that is like the phenomenon of the maybe the last twenty five years, which is that you can break down things that China makes Yeah. And things that China doesn't make. So China makes TVs, the prices have collapsed. Does China make your child's day care center?
Speaker 5:No. Unfortunately, it doesn't. So child care costs. Does China build your homes? Yes.
Speaker 5:Unfortunately Cars. And so the price have gone up.
Speaker 2:Yeah. Cars are a good example.
Speaker 1:Once the once the robots, the humanoid robot is taking care of your kids and the teleoperator is in China, then it gets cheaper.
Speaker 5:And then the robot's major. That is the phenomenon of our time. Look. I think the data center story is very important. They're all kind you know, I you guys I don't I assume you guys talked about it yesterday.
Speaker 5:I thought the the Boom Aerospace story was super interesting because Totally. All of these different aspects of the supply chain are being repurposed towards AI. It's like this is worth more. Their their technology, at least at this point, might be worth more in a AI data center to make natural gas turbines than in a plane that might or might not exist one day.
Speaker 1:The the narrative over the last over, you know, Crusoe and Yeah. The Core Weave and so many of these neo clouds. I mean, they started out as Bitcoin miners. That's right. And and the highest and best use switched, very quickly, these these became AI factories, AI based Yes.
Speaker 5:So what I think is there are a lot of resources Mhmm. That are being, you know what? This we could reallocate this better to AI. And that means that there it that creates an element of tightness in the supply chains certainly in key categories. I think by and large, it would be hard at this point to actually draw a line, however, between what's happening in data centers
Speaker 1:Yeah.
Speaker 5:To measured inflation. And even electricity prices, which would be the most direct one, because we know electricity prices have gone up quite a bit. The link between electricity prices and data center build out, it's pretty tenuous Yeah. At that point. It's not really enough to be meaningfully moving the dial.
Speaker 5:There are other drivers of higher electricity prices, including just maintenance on the wires, which has gone up for just sort of garden variety inflation reasons.
Speaker 1:Yeah. I feel like the Boom Supersonic if Boom did release a fleet of supersonic planes, that should be deflationary to Right. Air travel in theory, even though it's gonna come in at the super high end. Just having more planes is a supply and demand, equation, and you're going to see deflationary. If they move over into focusing on AI and it pushes out their time of course, Blake at Boom is arguing that this actually accelerates their time line because and they can I'm and I'm sympathetic to that argument.
Speaker 5:But Me too.
Speaker 1:But it was it was fascinating to see that, like, okay. There were there are companies that I could see pivoting to AI. Boom was pretty low on the list
Speaker 5:for me. You didn't think that the airplane startup No.
Speaker 6:Was gonna dip it to
Speaker 5:AI, but but it makes sense. Right? Like, if there's I mean, it's intuitive. I mean, this is one of the ironies about sort of talking about inflation on on the big scale, which is that what do you how do we get things more how do we get things cheaper? Well, we need more supply side capacity.
Speaker 5:We need more plans. We need more wires. We need more all this. In the meantime Yep. That all costs a lot of money and it absorbs a lot of resources, etcetera.
Speaker 5:So supply side expansion sounds really nice because that's ultimately how society moves forward and things become more affordable, etcetera. However, to get there, that is a resource intensive process. And so it's not the kind of thing that, like, hey. None of that disinflation will happen tomorrow or the next week or the next year even. Yeah.
Speaker 5:And in the meantime, it creates tightness Yeah. Across the supply chain, which would potentially inflate.
Speaker 2:Yeah. The the I mean, the the other thing anecdotally, I I know a number of companies that were just like, oh, we have tariffs now. I'm gonna pass this on to consumer Mhmm. The consumer. And they just immediately raise prices.
Speaker 2:And so that Yeah. That factor is very real. How how is how is Wall Street in general thinking about the tariffs just being deter determined to be unconstitutional? Yeah. There feels like that Wait.
Speaker 2:Do you
Speaker 1:mean the Nvidia 25% tax?
Speaker 2:No. No. I'm not talking about tax. Yeah.
Speaker 5:The risk that the supreme court Yeah. Says the tariffs are null and blood. You know what I think? Like, I think Wall Street would just love to not have any more headlines about tariffs. Because look, the stocks are stocks are basically at all time highs Yeah.
Speaker 5:Even with the tariff announcement. Yeah.
Speaker 2:No more headlines. No more No moratorium. Call them
Speaker 1:off. Moratorium.
Speaker 5:And presumably,
Speaker 6:if the
Speaker 2:supreme a court day forever. That's all we want.
Speaker 5:Yeah. Presumably, if the supreme court strikes down these tariffs, the the assumption is that the administration will come up with new tariffs under some different rule. Like, they'll come up with some different argument that's not national security related.
Speaker 2:Tariff jujitsu.
Speaker 5:But then we have more tariff headlines. So it's like, think that in theory, yes, maybe it's better for stocks in the market if the supreme court strikes down the tariffs. In reality, I think people are just like, oh, we just let them be. They have the stock market's at all time highs, etcetera. The last thing we need to do is to find have yet another liberation day where Trump unveils a new reason to have tariffs under some other statute, some other technicality of the law.
Speaker 5:I think that's the last thing investors wanna see right now.
Speaker 2:Yeah. Yeah. How how much are you paying attention to the to the tenure now in the near in in the near term? It obviously dropped on the news, and then it's just climbing climbing back up.
Speaker 5:I think this is actually very important, again, thinking about who is when we think about the Fed in the future under any chair. Right? Because what is the ten year yield? The ten year yield is the average overnight yield for the next ten years. That's how to think about it.
Speaker 5:The Fed directly controls the overnight yield, but let's just say, okay, let's say the Fed cuts aggressively. Let's say we get that 200 basis points cut of people's streams, etcetera. Well, intuitively, that would be inflationary. Right? You set off another boom.
Speaker 5:You set off the animal spirits again. Suddenly, get more inflation and people are looking out, wow. There's gonna be more inflation over the next ten years. What does more inflation over the next ten years equal? Well, probably means rate hikes sometime down the road.
Speaker 5:So there is this tension where and so then the ten year goes up. And so there is this tension where you like, cuts at the short end do not mechanically by any means do not mean lower rates at the long end, and lower rates at the long end are what the Jews are at. Lower rates at the long end are what affect mortgages and credit cards and corporate borrowing and all this stuff. So this is another thing that I think the next Fed chair and the administration has to think about, which is that you could cut rates at the short end and not get any juice in terms of the actual lower rates from the parts of the the curve that actually affect the real economy. And so even cuts don't necessarily lead to the kind of monetary easing that you would like to see.
Speaker 1:Last question from my side. We'll let you get back to nursing your hangover.
Speaker 2:I thought that you just assumed that Joe had, like, such a wild night.
Speaker 1:I thought it was people I imagine there was a lot of people surfing going on. Yeah. I like that. Yeah. People surfing on all the all the fans in the tenure.
Speaker 1:Do do you read anything into consumer confidence from Black Friday? We we were covering it a lot, like, with our friends who run ecommerce stores. And, like, there were a lot of good signals there, but it's hard because it's, like, one ecommerce store that we know and they're doing well. It's not like the broader economy.
Speaker 2:And it's a broader trend of Black Friday just moving online and Exactly. Ecommerce Yeah. Hard to get. Yeah.
Speaker 5:You know, it's hard to get a read. You know, JPMorgan actually, they presented at a conference yesterday. They said they're starting to see a little bit of cracks in the consumer. I don't wanna I don't remember the exact term.
Speaker 1:Yeah.
Speaker 5:But they did call out potential frailties there, so that was very notable. It's so hard to get a read on confidence because for the last five years, we've been getting the most dis the surveys, we've been getting the most dismal consumer confidence measures in going back decades.
Speaker 1:Yeah.
Speaker 5:We get people still like spend like crazy.
Speaker 1:It's the obsession thing a little bit, the Kylie
Speaker 5:Stanner and Lime. It's hard to get a read on confidence, but by and large, yeah, there was a I think that you have to take that those comments from JPMorgan seriously because they have, like you know, they have a great read on they have just so much business everywhere that they could see into these things. But by and large, there isn't a ton of evidence yet that, like, oh, there's a real deceleration happening
Speaker 1:Yeah.
Speaker 5:In consumption.
Speaker 1:Yeah. Yeah. No. That makes sense. Jordan, anything else?
Speaker 1:No. Thank you so much for coming on
Speaker 5:the show.
Speaker 1:Merry Christmas. Can we play some Christmas? Overnight success. Christmas music.
Speaker 4:That's right.
Speaker 1:Play some Christmas music to let Joe go about his day. Christmas. Have a good
Speaker 2:Good to see you,
Speaker 1:Joe. Weekend. We'll talk to you soon. Turbo Puffer, serverless vector in full text search, built from first principles on object storage, fast 10 x cheaper, and extremely scalable.
Speaker 2:The the air horn over the Christmas music. Yeah. Not something I've ever heard before.
Speaker 1:Turbo puffer.
Speaker 2:Anyways, should we get into this post from Matt Levine? Absolutely. He says the Warner deal will take a while. Said something similar last week. I'm sure he will have it.
Speaker 1:And Levine's also coming on the show on Friday.
Speaker 2:Very excited.
Speaker 1:But let's give everyone a taste of his
Speaker 2:He's news M and A AI data, trillion dollar IPOs, good TV is bad for stocks.
Speaker 1:We're really doing Bloomberg Day.
Speaker 2:Warner It's perhaps worth saying that Paramount's offer for Warner Brothers Discovery Inc is not exactly a classic hostile tender offer. Warner has signed a merger agreement with Netflix in which Netflix would buy most of Warner for about $27 per share in cash and stock, leaving Warner shareholders with a bid of the company worth somewhere between $1 and $5 per share. That merger will take a long time to complete. For one thing, Warner shareholders have to vote on it, which means that Netflix and Warner need to put together a proxy statement and prospectus for the deal, file it with the SEC, and hold a shareholder vote that could take months. For another bigger thing, the US Department of Justice will need to review the deal for antitrust concerns.
Speaker 2:Those concerns are significant, and Netflix and Warner have budgeted at least a year for that review. That jump was an the the that deal was announced last Friday, and on Monday, Paramount jumped in with an all cash $30 per share offer to buy all of Warner Mhmm. Which we discussed on Monday. It took the offer directly to Warner shareholders. It launched a tender offer scheduled to expire on Jan eighth to buy those shares.
Speaker 2:The two deals operate on different timelines. Warner plans to ask its shareholders to vote on the Netflix deal, but that vote will happen long after Jan eight. And if Paramount buys all the shares before the vote, then the question is moot.
Speaker 1:Oh, because they'll own all the shares, they'll vote. No. Yep. Interesting.
Speaker 2:If the shareholders all sell their shares to Paramount in January, they can't vote on the Netflix deal in March. And if 51% of the shareholders sell to Paramount, Paramount will control Warner, vote down the Netflix deal, and acquire the company itself. Interesting. That is the classic benefit of the hostile tender offer. It's fast.
Speaker 2:If Paramount's tender is more appealing than Netflix's merger, then Warner shareholders will sell their shares to Paramount before the Netflix vote and Paramount will win. If the deals are roughly equally appealing, if shareholders are more or less indifferent between the two bids, then the speed of the tender offer is a real advantage The to
Speaker 1:headline here is that this is this deal is gonna take a long time. And here he's saying it's fast.
Speaker 2:Well, let's see where he gets
Speaker 1:I'm hooked.
Speaker 2:And the speed of the tender offer is a real advantage. Yeah. Shareholders think, I don't care too much, but if I tender to Paramount, I'll get this done faster. So I might so I might as well tender and Paramount wins. Or that is a classic theory, but it hard to achieve in practice and it's not really true here.
Speaker 2:Paramount's offer says at the top that it expires on Jan eight, but it's not like it will buy it, but it's not like it will buy the shares on Jan nine. Even if 51% or or for that matter a 100% of Warner shareholders tender to the Paramount's into Paramount's offer, the offer will not close until two can other conditions are met. One, Paramount's deal also requires antitrust clearance. It is not legally allowed to buy the Warner shares until it gets that clearance
Speaker 1:Interesting.
Speaker 2:For a combination of fundamental and Trump y reasons, Paramount thinks it will have a much easier time getting antitrust clearance than Netflix But
Speaker 1:I remember seeing that the Netflix team was arguing that from an antitrust perspective, Paramount has a lot of watch time as well. And so Paramount plus, even though it's a much smaller streamer, you put everything together and they were like, it's really not that it might even be more total watch time across everything. I'm not sure that that pans out. But but but it but it was it was an interesting it was an interesting point that just from creating the monopoly perspective, like, maybe it's the fourth biggest, the fourth most controlling stake. But there but there is an argument there, so it does need to go through review.
Speaker 1:And so that will hold things up.
Speaker 2:Yeah. Paramount's proposal expects to receive regulatory approvals likely within twelve months.
Speaker 1:That's long time.
Speaker 2:Faster than Netflix's expected timeline, but a lot slower than Jan eight. Mhmm. Two, Paramount's deal is by its terms conditional on becoming a friendly deal.
Speaker 1:In
Speaker 2:addition of its offers that Warner Brothers shall have entered a definitive merger agreement with Paramount and the purchaser substantially in the form of the merger agreement submitted by Paramount to Warner Bros. On 12/04/2025. That is Paramount does not just want to buy a majority of Warner's stock and block the Netflix deal that way. It wants Warner's board to abandon the Netflix deal, pay that $2,800,000,000 reverse termination fee, and sign a deal with Paramount instead.
Speaker 1:Interesting.
Speaker 2:The deal is too big, and the antitrust approvals and financing are too complicated to do as a purely hostile deal. Oh. Paramount will need Warner's help to close its deal. In some sense then, the then the Paramount deal is not a real tender offer, one that depends only on the shareholders, one that shareholders can accept even over the board's objections. The Paramount deal is a pressure tactic, a way to get shareholders thinking, hey, would rather get $30 in a year than $27.75 in eighteen months and telling the board that.
Speaker 2:If the shareholders all would tender into the Paramount deal, then it's hard for the board to stick with the Netflix deal as a matter of fiduciary duties and shareholder pressure. But it's not like if those shareholders all do tender into the Paramount deal, it will just close. It's a jumping off point for negotiations. And so Bloomberg's Lucas Shaw reports that Paramount and Netflix are girding for a battle they predict will stretch well into 2026. Lucas says
Speaker 1:Well, if you wanna follow along with Paramount or Netflix, go to public.com. Investing for those who take it seriously, multi asset investing, entrusted by millions. And, yes, Netflix is on there. Paramount's on there. Warner Brothers is on there, at least for now.
Speaker 2:Take to the
Speaker 1:public and private.
Speaker 2:Luca Shaw says Warner Brothers was given ten business days to respond to Paramount's hostile. $30 a share bid for the company on Monday since that offer was already rejected once. The Warner Brothers board isn't planning to cancel the merger agreement signed last week with Netflix according to people familiar with the company's thinking. Doing so would require Warner Brothers to pay Netflix a 2,800,000,000.0 termination fee. That puts the onus on Paramount to make the next move in what everyone expects to be a drawn out affair lasting months.
Speaker 2:Paramount can follow through on its tender offer to buy Warner Brothers shares from investors at $30 each on Jan eight. It can also extend the bid too to stop the Netflix deal or increase the terms. Shareholders of Warner Brothers, one of Hollywood's biggest film and TV companies, are hoping for a bidding war that further boosts the price of the deal. Both companies have communicated that they have the ability to increase their offers. And the Financial Times notes, some WBD shareholders expect Paramount to lift its bid before the tender offer expires after Ellison's company said in a regulatory filing that $30 was not its best and final Oh,
Speaker 1:going up. Well, you get another sovereign in or something like, you know, spread that across everything.
Speaker 2:How many more sovereigns do we got? We got Go for big we got the big three.
Speaker 1:There's always
Speaker 2:He's gotta go to Norway. Norway would be cool. A bunch of people Paramount is privately weighing an increase or whether to instead add sweeteners intended to give WBD's board greater confidence in its regulatory prospects versus Netflix. And Matt goes, yeah, you don't go around saying on television as Paramount did that your offer is not best and final if you want shareholders to tender so you can close next month. They know there's a lot of negotiation to come.
Speaker 2:Yeah. I yeah. It's, this position that the Ellisons are in where feels like every other week they have to offer a higher price. It's like, how do you how do you it's kind of a vicious cycle.
Speaker 1:Yeah. It's it's pretty pretty crazy to have them, yeah, going back and forth here. I I feel like it's going to land with Netflix. I don't know. I mean, I this is the first time I've tracked one of these this closely in my entire life.
Speaker 1:It's it's also just sort of an unprecedented deal because of the scale and and all the political stakes and whatnot. But it just feels like the breakup fee is real like, the fact that there's a massive multibillion breakup fee on both sides, that's, like, material to their market cap, material to their to their you know, you you you have to pay, you know, essentially 1%, 2% of your market cap in the event of a breakup, that that feels like like like Warner Brothers and Netflix were like, let's actually make this happen. Let's be really sure this is gonna happen. Let's make sure it makes it through antitrust. Let's make sure like, I don't know.
Speaker 1:Then then again, like, the Adobe Figma thing, I was shocked when that broke up because that felt like a crazy breakup fee. But 1,000,000,000 was still lower than what when Adobe was trading at at the point. It was less than 1%. This is higher on a percentage of market cap, breakup fee to market cap ratio. So I don't know.
Speaker 1:It feels like it feels like Zaslow probably, like, thought about it a lot. But we have some more folks coming on the show today to talk about this. We can answer a lot more questions. We have Ben Smith from Semaphore. He's a cofounder and editor in chief at Semaphore.
Speaker 1:He's joining in just fifteen minutes. While we move on to our next story, let's tell you about graphite. Dev code review for the AI age. Graphite helps teams on GitHub. You have higher quality software faster.
Speaker 1:So much clapping going on across the studio and the soundboard
Speaker 2:that Should we get into this piece on Meta?
Speaker 1:Absolutely.
Speaker 2:From Eli Tan over at the New York Times.
Speaker 1:What does it say?
Speaker 2:Meta's new AI superstars are chafing against the rest of the company. Chafing. It's chafing. We've established this. Eli writes an Us versus them mentality has emerged between Meta's top artificial intelligence team and longtime lieutenants to Mark Zuckerberg.
Speaker 2:Yes. Eli writes, when Mark Zuckerberg revamped Meta's AI operations this year, he recruited a new leader, former guest of the show Alexander Wang.
Speaker 1:Let's go.
Speaker 2:A 28 year old entrepreneur to build a team of top researchers from rivals like OpenAI and Google. Yes. That team called TBD Lab Yes. For it to be determined was placed in a siloed space next to mister Zuckerberg's office at the center of Meta's headquarters surrounded by glass panels and sequoia trees. Mister Zuckerberg wanted to separate the new AI group from the bureaucracy of the company which owns Facebook, Instagram, and WhatsApp.
Speaker 2:Said two people familiar with the matters. I'm glad those people know that Facebook owns Instagram. No. I'm just kidding. Five months later, that divide has become more than physical.
Speaker 2:Meetings this fall, mister Wang has privately told people that he disagreed with some of mister Zuckerberg's longtime lieutenants including Chris Cox and Andrew Bosworth, chief product officer and CTO respectively. Briefly. So yeah. So this you're gonna you're gonna be interested in this, John. So in one case, mister Cox and mister Bosworth wanted mister Wang's team to concentrate on using Instagram and Facebook data to help train Meta's new Mhmm.
Speaker 2:Foundation model to improve the company's social media feeds and advertising business.
Speaker 1:Let's go.
Speaker 2:Which is you've been wanting this this whole time. Yes. It's like do this whole thing, personal super intelligence and then just make Just deliver products better. Make the ads better. Totally.
Speaker 2:You know, grow grow the business in So that
Speaker 1:what did mister Wang say?
Speaker 2:He argued that the goal should be to catch up to rival AI models from OpenAI and Google before focusing on products that people said. Makes sense. Right? This makes sense for Wang. I don't know that it makes sense for the company.
Speaker 2:I would like I would like from everything that we've seen so far, it feels like Meta could
Speaker 1:Mhmm.
Speaker 2:Like, a trillion dollars to its market cap by just focusing all this incredible talent on just making the core business better. But Wang and the rest of the team are gonna be a lot less motivated by that than having the biggest data centers, doing the biggest training runs, having the best model, competing on the global stage. And so I can see why Wang is pushing the other direction.
Speaker 1:Okay. So let me tell you about Adio, the AI native CRM. Adio builds, scales, and grows your company to the next level. But, you know, like, let's actually unpack this because, like, if if, you know, Mr. Wang here, he says he's developing the model, he argues that the goal should be to catch up to rival AI models from OpenAI.
Speaker 1:Like, if they wind up having a model that is, you know, actually be in the same league as as as Claude and Gemini and OpenAI and XAI. And it's this, like, you know, closed source. It's an API. It does well on MMLU. It does really well on the benchmarks.
Speaker 1:It's like, what value does that really bring? Because like
Speaker 2:That's what I'm saying. Even on the benchmarks. You could just go and get a model off the like, if you wanna compete in search
Speaker 1:agree.
Speaker 2:Knowledge retrieval Yep. So even even agentic commerce, can take models off shelf Yeah. In in the same way that in the same way that Apple's doing.
Speaker 1:Yeah. Oh, it's good enough for Apple, but not Meta? Interesting. Interesting.
Speaker 2:Yeah. So I'm I'm just trying to think you you make the best model in
Speaker 7:the world. Yeah. Are you gonna
Speaker 2:go compete with so we've seen this we've run this with xAI, right? They are trying to build the best model in the world.
Speaker 1:Yes.
Speaker 2:And it's now becoming clear that just having a great model does not automatically give you a meaningful amount of market share.
Speaker 1:Yeah. No. No. You need to productize it. And OpenAI has productized very well with a viral like, it is synonymous with AI, consumer AI.
Speaker 1:Everyone has the app mostly on their home row. They're using it a ton. They have a billion DAUs. It's growing, you know, doing great, or MAUs. But then you have Google, just so much surface area to actually stuff knowledge retrieval AI in knowledge retrieval products.
Speaker 1:They are you're already trying to do that with Google Search. So you do AI searches. You do you know, the you stuff Gemini in Sheets and Docs and all the different products. Makes a ton of sense. Anthropic, super focused on code, super focused on on on b two b.
Speaker 1:Facebook doesn't have a b two b team. Like, they they they're they're they're not, like, a hyperscaler like that. Might make sense for Amazon to be like, hey. We wanna get you know, we wanna we want we want to take that approach. And then x AI is sort of the same thing.
Speaker 1:At least they have, you know, x to distribute through. But being the fifth the fifth, like, hottest, even if the model is is for this week, like, the number one. Right? It's like no one can really tell. It's very hard to be, like, definitively number one for seven months straight.
Speaker 1:Like, it just doesn't Yeah.
Speaker 2:I get excited to look at benchmarks and have people on to talk about them.
Speaker 1:But it
Speaker 2:Does it change my behavior?
Speaker 1:And does it stick? And does it stick? It it rarely sticks because it's like, you know, what what did we see? Gemini three was at the top of all the benchmark. Then OPUS 4.5 comes out.
Speaker 1:That's at the top. Now we're seeing 5.2 from OpenAI probably coming, probably going to beat on a number of benchmarks, probably going to be better in a bunch of different ways. But is that going to radically change consumer behavior, even radically change business behavior? No. And so I don't know.
Speaker 1:I I would be I would be very focused on on what can what can be done within Instagram and Facebook and and WhatsApp to a lesser extent. The the flip side, the the other question is
Speaker 2:I think there are some
Speaker 1:Just the
Speaker 2:reason the reason to be excited about that Yeah. As a Meta shareholder
Speaker 1:Yeah.
Speaker 2:Is that AI is such an obvious tailwind for Meta's business. Right? It's it's you know, talk to Sean Sean Frank from Ridge. Right? He's creating he's having to create hundreds of new ad assets a week.
Speaker 2:Yeah. If AI if Meta can help him create thousands, he will spend a lot of incremental dollars on Meta. Yeah. Right? Yeah.
Speaker 2:He can get better at targeting. Yep. He can better get better at serving content. Right? And and, that will ultimately, over time, provide even more resources for these sort of, like, moonshot style projects.
Speaker 2:Yeah. Meta's been pushing, you know, this personal super intelligence narrative. The only problem with that is that I don't know what that means. Right? It sounds awesome, but, and I'm I'm happy to wait and see, but they've been having you know, there's been a number of employees kind of churning out already.
Speaker 2:Mhmm. And it's possible that that there's that they don't necessarily know exactly what that means themselves yet. Right? Yeah. They're running it like a startup internally.
Speaker 1:Yeah. Let me tell you about fin dot a I, the number one AI agent for customer service. Automate the most complex customer service series on every channel. So I agree with you. What does personal superintelligence mean?
Speaker 1:I feel like there is room for product led innovation in AI, new instantiations of the underlying, like new ways to interact with the fundamental like, you know, we're having this AI moment, and then we get video models, we get image models, we get image editing, we get knowledge retrieval, we get agents, deep research, we get coding agents. Like, we've had three or four or five, like, really cool instantiations of it. And not every lab is frontier at every single instantiation. Anthropic doesn't have an image generator. Right?
Speaker 1:Other labs like their obviously, OpenAI really thrives in the consumer and has created just a great app that is reliable and answers your questions reliably. Other companies have struggled to hit that instantiation. It would be very, very cool to watch the Facebook team figure out what is a way that they can bring AI to bear inside of Instagram in a cool way, in a new way. The problem is is that Facebook and Instagram don't really have that DNA. They sort of tried it with the Vibes app.
Speaker 1:But also, as soon there's very low, like, ROI on that because as soon as you as soon as you like, let's say that they do come up with, like, the next stories. And it's like, oh, wow. Like, you take AI and you stuff it in a social app and you do this one special thing and then everyone loves it. It's great. It's not just like Well, they didn't
Speaker 2:create that.
Speaker 1:No. Know. Know. I know. But let's say that they did.
Speaker 1:It's like it's gonna get copied everywhere anyway, so it's not really that much like, Yeah. They really should just wait around for everyone else to do their R and D. They should wait they should be Evan Spiegel, are doing? Come on. Invent something for us.
Speaker 1:And so I can actually see Alex Wang's pushback on like, hey, you want to use Instagram and Facebook. You you wanna you wanna do something more incremental. But, like, what are we gonna how are we going to do something great in AI in those in those ecosystems? Like, I don't know that there is that much. Because, again, the actual, like, feed ranking team, that's not the Gen AI team.
Speaker 1:That's not MSL. That's not TBD Labs. That's core AI. Team is cooking. They've been using GPU accelerated algorithms for a long time.
Speaker 1:They're doing fine. They're shipping ads. And also all the advances in AI, they're showing up in their financial results over there. Like, the ads are definitely getting better targeted. They're showing people more ads.
Speaker 1:They're showing people reals
Speaker 2:that they like better tiered of 50,000,000,000
Speaker 1:Yes. And a lot of that is an AI story. And they're not getting credit for that because it's it's core AI. It's not it's not Gen AI. And Gen AI is the cool one because it's like, well, picture, video, awesome music.
Speaker 1:Yeah. Yeah. But what do think, Tyler?
Speaker 8:Yeah. I mean, I I feel like a Nana Banana Pro product in Instagram is, like, very obvious or, like, Sora is also just, like, in Instagram. Yeah. If they just made that Yeah. It's, a killer product.
Speaker 1:So I had this pitch kill. Yeah. I I had this pitch during the the Studio Ghibli moment. I was, like, they should figure out how to Ghiblify every single person's profile picture in Instagram. So you just the next time you open Instagram, it just says like, hey.
Speaker 1:We made a cool cartoon version of your profile picture. Do you wanna share it on your story? Do you wanna make it your profile? Do you wanna share it to your grid or whatever? Here's he let let's just preload this because it's clearly very resource intensive.
Speaker 1:They but they could have done it on some sort of cron job. It runs in the background, burns a bunch of GPUs, but it gives you a bunch cool outputs, it just gets people into the, oh, wow. Like, AI filters are here. Clearly, there's a lot of work to be done on the AI frontier, like the actual developing the model. Doesn't seem like they have a nano banana quality image generator model.
Speaker 1:Also, I don't know if they have the GPUs to actually, you know, release that to a billion users. And then at the end the day, I don't know if it makes any sense because it's like everyone opens Instagram, they're like, oh, cool. You did something nice for me. You spent a dollar.
Speaker 3:And then
Speaker 2:it's like making great AI generated content elsewhere
Speaker 1:They'll just bring it up. They'll bring
Speaker 2:it over and host it.
Speaker 1:Yeah. So it's a little bit a little bit disappointing because it's like, oh, you wanna do these things, but you can just they're in the do nothing win scenario. And and what do you think?
Speaker 8:I mean, it feels like Google is getting like a massive like they've in the past like what two months Yeah. Like Google stock has gone crazy because And like, oh, they're actually are playing in AI. Yeah. So it's like if Instagram basically takes all the people that started that got a Gemini subscription because of NanoMinute Pro, which is like probably a fair amount Mhmm. If they just move them back to Meta, you know, products.
Speaker 1:I don't think people will think about it that way. Like, I think people see Google and Meta very differently. I think people see Google as like, it's Google for work. It's my workplace. It's where I do research.
Speaker 1:It's where I learn things. It's where I organize my life, my data, my files, my spreadsheets, my slides. And on Meta, it's like, that's the place where I look at Reels. It's an entertainment platform.
Speaker 8:Yeah. I think also, for a while, I don't even know if they still have them, but Instagram had the companions, and that seemed like extremely half baked.
Speaker 1:Are you talking about stepmom?
Speaker 8:Yes. Was like a egg
Speaker 1:you could talk a cow.
Speaker 8:Yeah. It might have been on Facebook, but
Speaker 1:it was like
Speaker 8:extremely like not well implemented. Dialed.
Speaker 1:But it was also not their team. Right? Wasn't it wasn't it like a
Speaker 8:No. That was not MSL. That's what
Speaker 2:I'm saying.
Speaker 1:Like No. No. Not only was it not MSL, it was, like, a feature that was released by a meta team that then anyone could go in and create a personality. So it wasn't like a Facebook employee was like, oh, I I bet people wanna talk to a cow. It was like it was like, I'm going to release into the wild the ability to talk to anything, and then someone was like, oh, I have an idea.
Speaker 1:I, as a user, will do UGC. Was it was UGC. Part
Speaker 2:part of what maybe we haven't discussed Sure. So far is how TBD will tie into Reality Labs. Mhmm. Right? Is it possible that they need in order to fully realize the Reality Labs vision of having a pair of glasses that see and process everything that you see Mhmm.
Speaker 2:That can provide you that personal super intelligence. So Yeah. You're walking around, it's like, oh, I forget that purse you know, it just pops up like a name tag for somebody. Right? You see an item in the real world and you're like, you know, you do this and you buy it.
Speaker 2:Right? So it's very possible that they need to get eventually get that on device in order to be fast enough in order in order to be super valuable. And so they do need this internal competency.
Speaker 1:Yep.
Speaker 2:And so I would there's, of course, stuff that we're missing here. But ultimately, I can see why Boz and Chris Cox were like, hey, why don't we just figure out how to make an extra $50,000,000,000 a year Yeah. By taking some of the best researchers in the world Yeah. And applying them to the core business.
Speaker 1:Also, mean, I I like that I like that philosophy. I like I they're bought in on the metaverse, the AR, the XR, XR, all this stuff. But, I mean, they do gotta buy time. It just feels like they need to buy time because it feels like it's still not at some sort of inflection point where, oh, yeah. This is gonna be the iPhone moment.
Speaker 1:Everyone's gonna be using these augmented reality glasses next year or the year after. It's like it's still very niche. I was in a Best Buy. I saw the Meta the Meta Ray Ban displays, I believe, there, and it would they were not they were certainly not being swarmed. So I don't know if we'll ever get any data on how many pairs they sell sold, but it it I'm not seeing it on a lot of lists of, like, the hottest tech items this year.
Speaker 1:I'm not seeing a lot of people buy them, gift them. It it still feels like, okay. They've created something really cool, which is a you know, technologically, it's a heads up display. It looks good. It's cool.
Speaker 1:But, like, there's a lot of work to be done to actually educate people, create software for it, make it seamless.
Speaker 2:I think it'll be a popular gift. I'm planning to
Speaker 1:gift But to what degree? Like, 10,000,000 units or a million? I don't know. It's a it's a big question. But I know people are gonna be giving each other cognition.
Speaker 2:That's right.
Speaker 1:Time with the AI engineering. Devin, crush your backlog clearing all the
Speaker 5:way. Your personal
Speaker 1:AI engineering team. Well, without further ado, we have Ben Smith from Semaphore joining. He's in the Retream waiting room. Ben Smith, good to finally have you Thank on you
Speaker 6:so much
Speaker 1:for joining us.
Speaker 4:It's good to finally be
Speaker 7:on. Yes.
Speaker 2:Overdue. Nice to be
Speaker 1:here. We were confused. We were confused because early early in the show about a year ago, you broke a story about a a a group chat, Chatham House, and we were very confused because we assumed that Ben Smith was a pseudonym because it sounds like the name that goes on every kid's fake ID. If you don't want someone to know who you are, you make up a name. John Doe, Ben Smith.
Speaker 1:This is just a name that you pull off the shelf. But it is in fact your real name. Correct?
Speaker 4:Wow. That's a really insightful observation. But, yes, it is my real name.
Speaker 1:Fantastic.
Speaker 4:Well, maybe I should have used a pseudonym. A lot of people were mad about that story.
Speaker 1:They were they were upset about that. But I thought it was an I thought it was an insightful piece. That was a fun little peek behind the curtain of the Chatham House. But, anyway, we are here to talk about the Warner Brothers discovery news. First, can you can you actually, introduce yourself since it's the first time on the show?
Speaker 1:We'd love to get up to speed on the a little bit of the semaphore journey.
Speaker 4:Yeah. Sure. I mean, I've been a political and media reporter for my whole career. Was at Politico when we founded that, and then ran BuzzFeed News for eight years.
Speaker 1:Oh,
Speaker 4:yeah. Was media columnist for The New York Times. And so I've had like a real front row seat on how insane the media is in in all sorts of ways. But but and also how frustrating it is for consumers right now in particular, how overwhelmed people feel and how hard it is to figure out who to trust. And that in semaphore, that's what sort of the core impulse was to try to create a platform that thinks a lot about just for how you make yourself trustworthy Sure.
Speaker 4:By being really straightforward and transparent. And then how you just try to cope with the fact that everybody's overwhelmed by incoming and there are great new outlets popping up all the
Speaker 9:time Yeah.
Speaker 4:That you wanna be across, and there is garbage all over the place that you want to avoid. And how do you help an audience? And really, most the people who are most driven insane by this are the most sophisticated consumers. Like, how do you help people navigate this?
Speaker 1:That's We yeah. We'll we'll
Speaker 8:Well, a
Speaker 2:big a big problem right now, part of the chaos is on X specifically, there's, like, thousands of accounts that are, like, headline accounts. Right? They're just acting they they all they do is post headlines. They do breaking, just in, all this stuff. And so now there's a whole new crop of accounts that are purely fake news, but they use the same formatting.
Speaker 2:And so now I just Yeah. Never I don't some of the stuff I'm like, I'll I do think it's put media in an interesting position because in some ways, if you're legacy media, think newspapers, cable networks, things like that, seem to have their durable edges, they have monopolized the truth. Like I I I still of course, they put out fake stuff now and then by accident or they just get the reporting wrong and they'll issue a correction. But it still seems like a lot of headlines happen online and I'm just like, I'll wait till Yeah. An account from a company that has existed for more than like ten years post it.
Speaker 2:Because until then, I can't really verify it.
Speaker 4:Yeah. I mean, X, you know, X was this incredible machine, I thought, a long time for just figuring out like what is going on in the world. And had lots of other problems and got very politicized, and you could have people, you know, tell you to kill yourself all day and stuff like that. But, like, it was a decent place to know, like, what is happening, and it definitely kind of rewired my brain. I feel like I now there's nowhere and honestly, to some degree, this is what we're trying to do in our newsletters.
Speaker 4:Like, there's not somewhere you can log on and just be like, what is happening in the world?
Speaker 1:Interesting.
Speaker 4:And and and confident that you're getting an accurate read on that.
Speaker 1:Yeah. Do you think there's a difference between, like, the the the opinion and the fact finding side? I feel like with a lot of the legacy media outlets, people maybe still believe that like that's a good source of truth, that's a good source of facts. But they might not agree with like the conclusions or the contextualization or the opinions that are wrapped around those facts. But most people still have faith in the traditional media actually following fact finding guidance.
Speaker 1:But at the same time, there has been an immense amount of pressure maybe on the back of people's disagreements about their opinion section that has led to the questioning of their fact finding sections.
Speaker 4:Yeah. I mean, this is, like, truest in coverage of technology, Like, you guys feel it most intensely because there's been this, to me at this point, like, kind of boring and repetitive war between journalists who who, particularly post Trump, saw everything bad they thought was happening in America as the fault of Meta. And then on the other hand, technologists who felt that they were, like, just there trying to build companies and being persecuted by these psychotic journalists. And I don't know. But, like, I having been part of that on on the journalism side, like, there's a lot of truth to both sides of that.
Speaker 4:Yeah. But I do think that we're also in a world where consumers, like, are just not going to take a single view, a single perspective. Don't want that. Want diverse perspectives. And so, like, just literally what we do at semaphore is we, like, break the stories up into here are the facts Yeah.
Speaker 4:And here's the journalist's opinion, which is transparently displayed, and here's somebody else's opinion, instead of, in the traditional way, trying to kind of weave those together. Yeah. And I think people would rather disagree with you openly and disagree with your analysis than kind of feel like you're sneaking it in.
Speaker 2:Yeah. No. Yeah. That's a good approach. Sense.
Speaker 1:Have you been processing the the the Warner Brothers story? Like, long have you been covering this? Have you been covering Zaslav, like, the entire time? Because there's been there's been, like, the the writing on the wall that, like, this was being packaged for years. Correct?
Speaker 4:Yes. I mean, I think that, you know I mean, this is incredible. I mean, Warner is obviously this kind of cursed company that has been acquired and sold, and the acquirer regrets the whole thing. You know, Warner mean The
Speaker 2:brothers were never split up, though. The
Speaker 4:It is also the you know, it's the great Hollywood studio. Right? Yeah. And and and when Zaslav, this sort of unbelievably audacious acquisition of Hollywood gem by this kind of garbage reality TV cable conglomerate of discovery, you know, doctor Pimple Popper was buying HBO, was this incredible bit of, you know, cable business magic and financial engineering that then just immediately destroyed enormous amounts of value and stock went down to like, what, 7 or $8. Yeah.
Speaker 4:I mean, as a pure financial story, it's amazing. Right? Like, the value destroyed and now created in this bidding war that that Zaslav has created. But also, obviously, a story about movies and politics and power and all the other stuff wrapped up
Speaker 1:in it. Yeah. Did you did you think that the bidding war was fake? Or that were were you expecting the bidding war to materialize in a way that felt real?
Speaker 2:We were talking about a friend who has had an incredible career in media, who I won't name, but he was like, I don't think there's a war here. I think I think a deal will get done, but I think this, there's only one person who's a real or or one group here that's a that's a legitimate buyer. This was, again, maybe six weeks ago at this point. Certainly hasn't been I out that
Speaker 4:would have said exactly the same thing. I think Netflix did either, like, a very convincing head fake or changed their mind. And I think no one thought they're at least I didn't think they would seriously bid. I thought, you know, WarnerMedia is both a bunch of interesting, but like quite challenging to operate cable businesses, CNN being like the most culturally important. And then and then and then a studio, a movie studio.
Speaker 4:And and there were a lot of people who really wanted the movie studios. As Love was gonna, you know, spin out the cable assets and then sell the movie studio. And that seemed on track. And so, when Ellison came in and just said, I'll take the whole thing, yeah, I did I I definitely assumed, like, no one else really wants that. And and and he's and Ellison isn't really an he's sort of a noneconomic actor here.
Speaker 4:He's, you know, fundamentally, like a kid who wants to buy a movie studio. And so how do you how do you bid against that?
Speaker 3:Yeah.
Speaker 4:And the history of the house is being bought by people whose motives aren't economic.
Speaker 1:Yeah. Kind of like sports themes. Right?
Speaker 4:Yeah. Totally. How do
Speaker 1:you think about That's
Speaker 4:a great analogy.
Speaker 1:How how do you think about this from Netflix's perspective? Like, obviously, as a tech company, Netflix has been, like, such an incredibly performing stock, became so big. Was at one point FANG, which was basically MAG seven before there was MAG seven. But from my perspective, I've been a subscriber of Netflix forever. I I I don't really see myself ever turning, but I just there's only a few things that have really broken through.
Speaker 1:Like, I know Squid Game. I know Stranger Things. There's, like, a few moments, and it's hard for me to picture the staying power. There's not as much FOMO TV as I look over the last decade of my entertainment watching career. It's like, oh, like I couldn't have missed Game of Thrones.
Speaker 1:I couldn't have missed Succession. There's like all these important moments that only came from HBO. They only came from Warner properties. And so from my perspective, maybe it's expensive, but it felt like this was a way to backfill some really, like, legacy assets that you just can't create overnight for no amount of money because, you know, it just takes fifty years to create Porky Pig, I guess.
Speaker 4:That's that's an amazing assertion. Yeah. But I think you're yeah. You're you're basically totally right. There's something about the staying power in the in the cult, the even just sort of, like, internal creative culture at HBO that has had this string of high impact things.
Speaker 4:And then also write a library that includes Harry Potter, that includes, like, North by Northwest, Three Days of Condor, Lord of But, like, just, you know, decades and decades of amazing TV and cinema. Columbo, I think, is in there. Right? Like, the the Steve Scalm movies are
Speaker 1:in there. Rambo.
Speaker 4:Like, sometimes you wanna watch that. Yeah. So, there's a logic to there's a logic to that. Netflix already also spends, I think, hundreds of millions of dollars licensing stuff from And so, there's some logic to I mean, there's there's some, you know, some actual synergies there.
Speaker 1:Yeah. Yeah.
Speaker 2:Does cable end up with does the cable business end up with Paramount Skydance either way? Netflix doesn't want it. Clearly, Allison the Ellisons really would like the whole the whole Yeah.
Speaker 1:I was sort of confused.
Speaker 2:But if the cable business just stays out in the ether, what it what it is it just gonna
Speaker 1:Does blow Allison just pick that up?
Speaker 2:Bunch of debt? Do they not do they do they really only care about what's your read?
Speaker 4:So, you know, I don't know. I mean, I think my the basic thing that people would always say at at at Paramount is CBS News is 5% of the company 5% of the revenue and 80% of the headaches. And the way in which the news business has gotten swept up into this is that that's what Donald Trump cares most about him. He also wants a remake of Rush Hour four, by the way. That was a scoop one of my colleagues had recently.
Speaker 4:Oh, a 100%. He has this has been confirmed. He told Larry Ellison.
Speaker 1:That's crazy.
Speaker 4:I want I want rush hour four. There's only been three. I want four. Jackie Chan is like 71, so it's challenging. So These days, they shoot his fight scenes like in the dark.
Speaker 4:Yeah. But but, no, that's Brett Ratner's making that movie because Donald Trump wants And but but mostly what Donald Trump wants is favorable coverage of Donald Trump. And by the way, however favorable it is, however favorable you're making it, that is not favorable enough. He wants it more favorable than that. Mhmm.
Speaker 4:As the Ellisons are now finding, like, they've, I think, softened CBS's approach a bit. And all Donald Trump is gonna do is yell at them about negative coverage of Donald Trump. Sure. So it's like a bit of a slippery slope there among and also a disturbing thing that the president is Yeah. You interfering in regulatory matters to
Speaker 2:affect Does the president get a the president get a report every day of like, here's the different takes? Because I'm assuming he's watching Fox. And I am assuming he's dailying Fox. So is he getting like a deep research report? Do you think he's running like a query in in chat GBT?
Speaker 2:It's like tell
Speaker 8:me what's
Speaker 6:He's watching a
Speaker 4:lot of TV. He's he's got a bunch of screens up. He's switching between them, and then he has an aide who has an iPad who brings him things that are of particular significance Sure. That are that he then watches on
Speaker 1:a different screen, you can
Speaker 4:you can see Yeah. He's he's watching a lot of television. Don't worry.
Speaker 7:Yeah. What happened in case
Speaker 4:the CNN the CNN part of this and I don't I think the Ellisons do care about news. Particularly, they're very, very pro Israel, and they were disturbed. They felt CNN got CBS got too anti Israel. Mhmm. But and I think they would like I I do think they are sort of ambitious about CNN and and there's always been a thought that CBS and CNN would make a good combination.
Speaker 1:Sure.
Speaker 4:But the driving force here is the movie business. Interesting. And the news business is implicated as a way to make Donald Trump happy.
Speaker 1:Yeah. And is that just David Ellison's, like, passion for movies? I mean, he did I I think something that's getting lost here is, like, he founded a movie studio twenty years ago. Like, he's not, like, new. This isn't, a pet project that he picked up today because Oracle stock popped.
Speaker 1:Like, this is this has been his life's work. Now he's had, you know, a massive advantage with his dad, but, like, it's not like he's was he it's not like he was doing a basketball thing last month, and now he's doing movies. He's been doing movies the whole time.
Speaker 4:Yeah. No. Totally. And in fact, like, lots of rich people dabble in the studio business. And he's built something totally real and made movies we've all seen.
Speaker 1:Yeah.
Speaker 4:Top Gun. I mean, like, know, like, really, like, big stuff. And and Skydance has been, like, a successful important part of Hollywood. And he's also, I think, importantly, of, like, learned a lot. Like, he's not a newcomer to this weird business.
Speaker 4:Totally.
Speaker 1:Yeah. What do you what do you read into the text message? He says he says, you know, he he said he sends this message to Netflix to say, we, you know, we we had dinner and we we you know, you will find out that we are who we were at that dinner. If he's buying the company, is that is that a you know, is that setting the expectation that they'll be continuing to work together for five years, ten years? Or is it just like in the course of this sale process, we'll be good people?
Speaker 4:I mean, I have no idea what that text message was. It was sent, I think, hours after his lawyers had sent, like, some kind of flaming letter Okay. To the board saying, you guys are screwing us and our play you know, and our our refusing and aren't negotiating on in good faith and giving a sweetheart deal to Netflix. And then sent a kind of to me, like, kind of hapless and plaintive message to Zaslav saying, really, I love you.
Speaker 2:Yeah. I was It's good cop, bad cop. Classic strategy. Yeah.
Speaker 4:I guess so.
Speaker 1:Good cop, bad cop. Well, what do you think are some of the the, like, the the the the outsider interpretation of the deal? A lot of people are are worried about, you know, just Warner Bros. Getting sold. It feels like some people are anti Warner Bros.
Speaker 1:Getting sold to anyone because they're like, no matter where it goes, they're going to cut jobs or they're going to pull back from movie theaters. How are you interpreting
Speaker 2:the And I do think the people that are like, oh, well, you probably subscribe to Max and Netflix, and you'll be able to cut one of them. Yeah. But I just don't buy that Netflix wouldn't just they might give you a sweetheart deal for a couple years until everyone forgets. And then it's like, hey, we have like by far the best portfolio of content in the world and we're
Speaker 3:You might even
Speaker 1:call it a bundle.
Speaker 2:We can we're bundle maxing. We're back to the bundle. And as a consumer, I am annoyed enough at having different accounts and bopping around. I'd be happy for just one I'd I'd be happy for a rebundling. But I I just don't buy that it's like such like a a win for consumers and even in the medium term and probably not at all in the long run.
Speaker 2:Mhmm.
Speaker 4:You know, I don't know if it's not a win for consumers because that thing you said, like, it's so annoying. This landscape is so annoying for consumers. You realize, oh my god, I signed up for MGM Plus two months ago to watch something and it's still billing me. And Yeah. Everybody is living in this world of, like, or three streamers you feel like you have to have, three or four others that you forgot you signed up for.
Speaker 4:Yep. And and it's not a tenable situation. And and I think that that that kind of consumer push is pretty real and is the kind of, like, the obvious like, in the and media is a boring straightforward business. We're not, like, trading credit default swaps here. Like and and I think that just obvious consumer sense that it's time to bundle max again is what's driving this.
Speaker 4:To to have the number the the notion that you solve it by basically having the number one and number two merge with each other is like is not the obvious solution to that, I think. And I totally agree with you. Obviously, means prices grow up. I mean, the people who are most freaked out though are the sellers. Right?
Speaker 4:Are the the issue with, like, is this a monopsony or, like, the, you know, are the movie makers, the actors gonna take a haircut because there's only one buyer left? And they're very and Hollywood is obviously very concerned about that.
Speaker 2:Yeah. If you have one buyer, you have you're a price taker.
Speaker 1:Yes. Yes. Yeah. It's funny. Was on the consumer side, I agree with you.
Speaker 1:I was looking for posts about the deal potentially being a monopoly. And I found multiple posts that were like, miss when Netflix was a monopoly and they had everything in one place. Now I have to go to six different streamers. And I was like, that's funny. But, yes, on on the buyer side, that is obviously more of the the risk.
Speaker 1:I I wonder how are you interpreting the rest of the big tech companies playing in Hollywood right now? Because it feels like Apple has a lot of money to spend on buying media assets and buying movies and producing stuff. Amazon as well. Who knows? Maybe Mark Zuckerberg buys the rights to UFC for VR, then eventually he starts getting into movies.
Speaker 1:It feels like there's a lot of money chasing media generally. Do you think that we're going to see more of, like, a pullback from the other big tech companies? Or do you think they'll go harder than ever? How are you interpreting the rest of big tech's role in Hollywood changing?
Speaker 4:You know, it's a great question. I mean, Amazon and Apple, in particular, both spend a lot of money. Yeah. Neither have quite fig built the I mean, I'd say almost the creative culture that Netflix did manage to and that and that HBO is really the, you know, the best at, which is a kind of willingness to take these cultural risks. Like, not a tech business.
Speaker 4:It is a business of taste and of relationships and of all this stuff that's hard to hard to scale. Apple Apple's made a lot of, obviously, like, wonderful stuff that has some cultural impact, but they're also incredibly careful about their own brand Yeah. In a way that I think is ultimately, like, makes it really hard to do to do the things that really cut through culturally.
Speaker 1:I I I talked to a filmmaker years ago right as Apple TV was getting spun up and Apple was starting to take it more seriously. And he said, like, no way. It's not gonna work because Hollywood is a hits driven business. It's a venture capital style business. You have a lot of f minus movies for that one a plus movie.
Speaker 1:It's all about this high risk. And Apple does not like having, you know, egg on their face for a bad result. And so Apple, everything has to be at an a minus level, basically, to get out the door. Yeah. And if you have that if you have that brought to to to Hollywood, like he was saying, like, that wasn't really the cultural thing.
Speaker 1:Then I think what he was missing was the fact that Apple probably wants to distract from the services monopoly. And so there's a whole but there's a whole extra incentive to continue saying, like, wait. What what what App Store revenue? What are you talking about? When we say services, we mean Ted Lasso.
Speaker 1:Like, we have we you know, we have this. So I don't I don't know
Speaker 3:if you buy that.
Speaker 2:Brad Pitt.
Speaker 1:But I I've always I've that conspiracy theory, cropping up over this year, just this idea that Apple but we how how how have you interpreted it?
Speaker 4:I mean, I love the I love the idea that movies are venture capital except without the returns.
Speaker 5:Yeah. What's the It's like
Speaker 4:you get the risk, but you don't get the outsized. But but like at best, you don't get the outsized returns.
Speaker 3:Yeah. Maybe that'll
Speaker 1:be Roelof Boto's next business. Yeah. He wanted he wanted venture
Speaker 4:capital return turn
Speaker 1:free risk.
Speaker 4:But, you know, yeah. And I mean, the risks are also as you mentioned, Ted Lasso, like, instance, one thing that cannot that you will never see in an Apple TV production is anybody throwing or damaging an iPhone. Yeah. Like, there's just like it's just like you're living in their world, and there's smooth edges to it. Yeah.
Speaker 1:The smooth edges are crazy. I saw this I saw this whole conspiracy theory about how the lighting in Ted Lasso and Severance are both very high key, very flat, not a lot of contrast, and that that would potentially, like, prepare you for this metaverse where you're in the Apple Vision Pro because the Apple Vision Pro looks like this. And it's all like it's like the Apple brand brought to cinematography within their, like, media assets. And it was like, maybe it's just their culture bleeding over there, but also maybe it's something more about like their view on the world and like their their opinions. It was very, very interesting.
Speaker 1:But
Speaker 4:Yeah. At least what shows are beautiful.
Speaker 1:They are beautiful. Yeah.
Speaker 4:The shows are beautiful.
Speaker 1:But they
Speaker 4:are little plastic.
Speaker 1:Think.
Speaker 4:Yeah. They're not They're not grungy. They're not divisive. They're not divisive. Good good culture, good art is always divisive in some Totally.
Speaker 1:Mean, even Game of Thrones, I remember, like, watching season one and being like, oh, this is this is, like, maybe going too far. Like, this is, like, can this be on TV? It's, like, edgy. It's, like, it's, like, there's a lot of, like, you know, the the adult content, the violence. Like, it it definitely pushed boundaries even though it was, like, you know, r rated, I guess.
Speaker 1:It was, like, aggressive. And you just don't expect that from Apple. But so, yeah, maybe you're back to monopsony. If you're selling something that's going to be for mature audiences, where are you going other than Warner Brothers, Discovery, Netflix, you know, this this conglomerate?
Speaker 4:Yeah. And so I think, like, Hollywood, it's always very torn because they they really hate Trump, and they hate the idea that Trump's friends are jamming this thing through with threats of kind of illicit regulatory pressure. And on the other hand, they hate Netflix. So it's like a tough
Speaker 1:Rock in
Speaker 4:a hard place.
Speaker 1:Yeah. Rock in a rock in a hard place for sure.
Speaker 2:Let's switch gears to something they hate they hate even more, which is AI. Yeah. I'm curious I'm curious like how you guys have been trying to focus your coverage, how you personally feel about it. If you could snap your fingers and make it disappear, would you? Or or do you enjoy it personally?
Speaker 2:I'm I'm curious, like, just kind of
Speaker 1:Oh.
Speaker 2:Yeah. I'm curious on on your your kind of semaphores kind of view and how you've even been approaching coverage because our a lot of our coverage is obviously positive. We use AI. A lot we work, We we get a lot of value from it. But at the same time, we're well aware that most it feels like most of the world at this moment is using it, but even sort of like hate using it, which has happened Yeah.
Speaker 2:Quite quickly.
Speaker 4:Yeah. I mean, know, I guess I mostly see it as just the greatest story. Like, it's just, you know, it's an incredible story right now in of politics, of economics, of of and of technology. And, you know, we're just covering it obsessively. Reed Elberghatti, my our our tech reporter, broke the story two days ago that that NVIDIA is gonna be selling you know, allowed to sell h 2 hundreds to the Chinese.
Speaker 4:I mean, you know, it's just it's a story that is pulling everything in. You have this, you know, American economy that is limping along except for AI, which is driving all the growth. I, know, you talking to yesterday, interviewed governor Shapiro of Pennsylvania. That's all he wants to talk about. I mean, it's just a fascinating political.
Speaker 4:Mean, I mean, I use it. And we use it, I think, probably, I bet the way you guys do in, like, for the most boring stuff. It's, like, incredible for video production, transcription. Yeah. You know?
Speaker 4:And essentially, like, think the way a lot of companies are using it, which is just to take out cost on extremely boring things that you're happy to have software do.
Speaker 10:Yeah.
Speaker 4:But yeah. But I think, like, we yeah. We we're mostly thinking about think the story that I'm obsessing about now is really the the coming political backlash. Like, was just talking to a Republican consultant here in Washington who's essentially shopping for a candidate to lead the anti AI president. He basically sees thinks there's this big lane, I kind of buy this, against J.
Speaker 4:D. Vance. Like, he's the front running Republican nominee, and the attack on him will be this guy is a tool of the tech industry. He's a tool of these AI guys who wanna take your jobs, poison your children's brains, and build like these weird boxes in your neighborhoods.
Speaker 1:Yeah.
Speaker 4:And it's just not it's not a popular it's like not popular. And one of those strange things is that, you know, Trump is just unbelievably AI. It's where the most important decision this administration made is that David Sacks really persuaded him, came in day one. He's with Sam Altman. He's with Elon, like, all in for AI.
Speaker 4:But he didn't campaign on it. He hasn't really, like, bothered explaining it or selling it at all. And so I think we're just set up for a huge backlash that you're gonna see in the midterms.
Speaker 1:Yeah. It's a fascinating story. I mean, I agree with you about AI touching just like everything. Can look at it from what is it doing to your kids to, you know you can be sci fi and say in a thousand years the robots are gonna control everything. You can talk about jobs.
Speaker 1:You can talk about taxes and all this stuff. But
Speaker 2:Yeah. And for for consumers that aren't working in tech, they're like, I it's cool to make a video of a cat surfing, but I'd rather just keep my job and Yeah. Keep the cat surfing video.
Speaker 1:It's just fascinating how Yeah. Much tech missed this. They like, they didn't even with social media, like you pointed out this whole thing about, you know, the the the war between media and tech around Facebook, maybe stealing the election, that type of stuff. Right? It's like, well, at least everyone kind of enjoyed social media for, a decade.
Speaker 1:Like, from 2006 It's so nice. '16. Like, yes, people were like, there's some, I saw a bad picture or, like, oh, you know, I found out some bad information or something. But there was it was it was mostly like, oh, cool. Instagram.
Speaker 1:I saw a photo that my, you know, aunt posted. Like, this is nice. People had a pretty good time with it for, like, years. Years. Years.
Speaker 1:Years. And then eventually turned. And now we've grappled with it. We talk about the the pros and cons, but we all kind of use it and we're all, like, okay with it. With AI, it was like, on day one, I hate this.
Speaker 1:I hate everything about it. It looks ugly. I don't like it. I I don't trust it. And and, oh, by the way, go do some research.
Speaker 1:The people who are making the AI, they've been talking about how it's gonna kill everyone for, a decade. They've been writing books about this for like a decade.
Speaker 2:Yeah. So you know, mean,
Speaker 1:that Well, what do they think in Silicon Valley about this stuff?
Speaker 2:Yeah. We kinda created the crisis because, yeah, some of these videos pop up and you're like, wait. This was four years ago. Four years ago? They Paper said clipping.
Speaker 2:And there's a you know, someone at a lab is on record saying, it's very likely that AI on a long enough time horizon will kill all
Speaker 5:of them.
Speaker 2:And it's like It's like
Speaker 1:no one was saying that on social media. You go back, and no matter what you think of Mark Zuckerberg, you go back and you find the the scandalous video of him before he was so powerful. It's like, yeah. He's drinking a beer out of a solo cup with a journalist in an interview. It's like, it's pretty harmless.
Speaker 1:It's pretty harmless. It's like a little sloppy, but it's like not it's not him saying, like, yes. I believe this will definitely swing the election in ten years. Mark my words, and then it does. It's ridiculous.
Speaker 4:Yeah. We skip straight to skip straight to the apocalypse. And it is totally Sam Altman's fault slash an incredible feat of marketing that you say, like, I have this new product so incredible that it's gonna kill everyone. Definitely got people's attention.
Speaker 1:Yeah. I mean, there there is a long lineage of technology millenarian technologies actually being, like, it's easy to marshal resources around them. I mean, in many ways, SpaceX is of the same cloth in the sense that the you know, Elon Musk was out there saying, like, if we don't go multiplanetary, all of humanity could be wiped out. So there is this existential crisis Yeah. That if an asteroid comes and hits Earth, it's over for humanity.
Speaker 1:But if we build my company, SpaceX, and we get to Mars and we put a Mars colony there, then we have a backup plan. And if the and if the asteroid comes and destroys one of those planets, well, the other one still got some people on it, we can rebuild. And so it was it was an apocalyptic, scenario in some ways. It wasn't the backbone of the business, but it was a piece of his rhetoric. But it's still more positive because it's not the rockets that are going to destroy us, it's the rockets that will save us.
Speaker 1:But it's still conjuring the idea of an apocalyptic scenario in some way. So I always found that interesting.
Speaker 4:Yeah. And I mean, I do think that that, you know, by the end of the social media era, all these CEOs, and it's still true, were so, like, kind of beaten down by being grilled by Congress and hated the media and felt like everyone was out to get them. They're still, like they had all when they don't want, like, talking to the media. They, like, all all you guys all live in your signal group chats and, like, feel that everyone is out to get them. But, actually, the successful CEOs of this moment now have talked to everybody or back to being these kind of mad visionary prophet types who, as you say, like, millenarian Yeah.
Speaker 4:Figures. And I think if you look at, like, you know, Dario or Altman or any of these guys, it's sort of a throwback to an earlier style of maybe overselling, but of being very, very interesting when they talk about their products not being sort of embedded in the culture wars.
Speaker 1:Yeah. I mean, like, you you just you you you go back to the story of, like, Amazon and Jeff Bezos. And it was, like, finance guy delivering packages. Then he's hosting some web servers. Like, there was never really this, like, world consequential thesis that bubbled He's done some great interviews.
Speaker 1:He's been inspiring in many ways. But he's never brought that, like, world historic consequences to bear in his rhetoric. And I don't know. Maybe that's benefited the company. The company has certainly done well, so maybe it didn't hurt.
Speaker 1:It would be funny. It'd be like, if we don't deliver this package in two days, everyone dies. We need to do Prime. We have to. The entire fate of humanity rests on you getting diapers in two days.
Speaker 4:Yeah. Well, that's that's how I feel about the podcast industry.
Speaker 1:Yes. Yes. How do you see the the the podcast industry evolving? What's your take? I mean, you mentioned like the consumers being unhappy with media.
Speaker 1:And I think I could think about a bunch of different instantiations of that, but like the fragmenting media landscape, like how are you thinking about what it means to be like independent, this like the micro NimCel community? Like do you think that there's like a pendulum swinging and we'll see reconsolidation, rebundling? Or do you think it's just going to diffuse and be smaller and smaller operations forever? How are you thinking about, like, the new media landscape?
Speaker 4:Yeah. I mean, you know, it's it's gosh. It's been like new media as long as any of us can remember about it. Someone was calling the verge
Speaker 1:new media or or legacy media, And and I'm like, they're that, like, they yeah. They felt very new me. It was very funny. Anyway,
Speaker 4:sorry. Yeah. Like, I was a I sort of was a blogger when that was new media. Right? Yeah.
Speaker 4:So it's feel like I've seen and but, know, the core I do think there's, like, still a nostalgia for a twentieth century media that's, like, not coming back because that was because you needed a broadcast tower or a printing press to reach a lot of people. And that was and there's been a tech and I think when people people in my business, in the East Coast media, often try to figure out like what went wrong. You know, was it when the CBS News got something wrong about Bush in 2004? Was it when the New York Times put up its paywall too soon or too late or something? And, like, no.
Speaker 4:These there was a huge technological shift around distribution that kind of swept away a lot of this old stuff, and it wasn't it wasn't something they could have tactically really avoided. Like, was just a huge technological change. And so, they'll never be that kind of or not in our lifetimes, that kind unless the government opposes it, reconsolidation around a very limited number of resources. Like, you got to go to North Korea for that. But but but that said, I think we are because it's driving consumers crazy, the pendulum has swung out.
Speaker 4:So, you know, they say media only bundles and unbundles, and we're out at the unbundled moment.
Speaker 1:Yeah.
Speaker 4:And you can just see it swimming back. Like, Fox is rolling up right wing podcasts. Sure. MSNBC is about to roll up a bunch of left wing podcasts.
Speaker 1:Mhmm.
Speaker 4:But are we still calling these things podcasts? Like, it's TV. Yep. Yes. True.
Speaker 4:And and everything is converging on this tell this very familiar, but kind of boring television format that will start to get juiced up and become a game show with 19 boxes and whatever. And and we're all gonna have to start spinning.
Speaker 1:I can't tell
Speaker 4:if you're talking about this. No.
Speaker 10:You know what
Speaker 4:I mean?
Speaker 1:We also
Speaker 4:produce a podcast that like I think looks fine, but I can feel the pressure to raise the production values.
Speaker 1:Sure.
Speaker 4:Sure. Sure. Like, two years ago, we could all been, like, in our pajamas, in our and it would've been fine. Yeah. Yeah.
Speaker 4:So I think there is this convergence. And the audience is gonna expect it is gonna be competitive. It'll have to look better. It'll have to be tight more tightly edited, I suspect. People are going to want that.
Speaker 4:And it won't look it won't look like old TV, but I do think you're going to see consolidation around all the advantages you get when you're consolidated. You have a central guy selling all the ads. You can build subscription technology. You can cross promote. Like, there's all these again, media business is so unlike the tech business and unlike the finance business and how uncomplicated it is.
Speaker 4:Sure. And and I think, like, you're gonna just see consolidation for all these really dumb and obvious reasons that Yeah. That have to do with and also, it's sort of exhausting to run a small business for a long time, and people who start them will I don't know. How are guys actually, I'm curious because you're in this. Like, how how are you feeling about it?
Speaker 4:We You wanna stay independent? You wanna be consolidated?
Speaker 2:Well, I would say the the best way to think about is we we like being the talent side. We're not in this to run a we don't we don't have any interest running a multi 100 person organization. We don't really even care that much about scale. We're very okay with our niche. We think it's like a couple 100,000 people in the world that are really going to enjoy this content.
Speaker 2:And millions more will see the content in different forms. But knowing It's also created
Speaker 1:friendly environment. Like just earlier on the show, we had Joe Weisenthal from Bloomberg. Like, we're not trying to poach him to do the Joe Weisenthal show on Right. The TBPN network because like the whole network Not terrible. Joke.
Speaker 1:It's just a show. We and so I'd much rather, you know, Joe just does Odd Lots, which is a fantastic show, and then comes on our show when he feels like it and it makes sense.
Speaker 2:We can Yeah. The question going back to saying MSNBC Yeah. What MSNBC is doing with podcasters and what the cable networks are doing with podcasters. When you look at the revenue that these cable networks basically, the revenue streams that they built up over time, getting $1 from every home that is subscribed, etcetera, per channel, It depends on the network. But it's so hard to rebuild that with independent creators and get back to the scale.
Speaker 2:Basically shifted to the streaming. You need a website. A website or an app is now the distribution. And so I think that we understand this huge bifurcation between the platforms and then the individual creators that can command attention. Right?
Speaker 4:But if somebody came to you and said, like, you know, I heard you I heard you guys say on TV just the other day with Ben that you wanted to be talent. And, like, you know what? Like, we'll just just, like, we'll take all this off your hands. We'll pay you a salary. We'll commission you in some way on the but you don't have to worry about anything else.
Speaker 4:We'll get you hair and makeup, like, whatever, you know, fly business class, whatever you want, you know, and treat you as talent. You just don't have to run a company and worry about all that stuff. Like, think that's gonna be the pitch to people who are getting exhausted, who are super successful creators, but are sick of running a small business, don't really Sure. Aren't I mean, you guys are actually entrepreneurs, so it's
Speaker 1:a little different Yeah. Weird because I don't know. I I don't believe anywhere.
Speaker 2:I've only Yeah. So we've built out. We hired
Speaker 1:But understand that from a lot of perspectives, for sure.
Speaker 2:We hired somebody I've worked with in the past, Dylan, who started his career back at CNBC, worked at HQ Trivia, understands media really well. We've built out a team around us that allow us to do that and allow us to work on the stuff that we really enjoy. One thing that's been interesting is how many traditional journalists have gone independent. But historically they were in the scoop business. And then they go independent, and they realize when you're a part of a bigger media company, you can get one crazy scoop every three months.
Speaker 2:And you're like, from my view, you're killing it. You're adding a lot of value to the organization. But when you go independent and you're getting a scoop every few months, are you creating enough value to justify having people give you a lot of money every single month? I think yes But to some I think you'll see a rebundling in certain niches around, let's say, a bunch of scoop driven technology journalists that say, hey, we all went independent, but we should actually kind of rebundle together because it'll just create more incentive for somebody to subscribe because they know like on an ongoing basis, I'm gonna be getting. And that's what obviously So like,
Speaker 4:doing this. TPN roll up of like Alex Heath and Casey Newton.
Speaker 2:Wouldn't want to we wouldn't want to do that, but I'm No.
Speaker 4:I'm joking. But but I could I totally see what you're saying. I mean, in a way That's what you're that's
Speaker 2:kind of what you're doing.
Speaker 4:Totally. This is a kind of scoopy, aggressive Yeah. Reporters, basically what I am
Speaker 3:Yeah.
Speaker 4:Who who wants that who I think I want. People want that kind of direct connection with an audience and Yeah. Authenticity and transparency that you get with Substack. But also, there are features of that kind of reporting that it makes more sense to be part of a newsroom. And we've tried to create a space that is that is the best of both of those worlds for journalists.
Speaker 2:Yeah. I think when a journalist goes from being able to spend all their time obsessing over a company or an industry or in getting scoops to then, Okay, have to do all of that still to put food on my plate, but then I also have to, like, develop an ad sales business.
Speaker 1:That's right.
Speaker 2:And I have to, like, figure out and I have to manage a podcast editor, and I have to hire another editor, and and I gotta do my taxes and things, you know. Like it just really adds up and then are you gonna be as elite of a journalist if you're doing all those things and there's a very real scenario where someone else just join takes your job that you had previously and ends up out competing with you on Scoops because they don't have to worry about any of that stuff. So I think that's something that a lot of people will have to figure out.
Speaker 4:You know a lot about newsrooms. That is so much about the way we were thinking about founding some before.
Speaker 1:It's hilarious because I don't think have you ever been
Speaker 2:I've never been in a newsroom, but I just but but I mean, yes. So so much of Yeah. Part of a lot of the success of of the reason that we've been able to break through this year is we're not trying to do anything else besides besides media. Right? I mean, you've seen how many people have you seen build a tech media company and become a venture capitalist as soon as they have any amount of
Speaker 3:I gotta get out of this.
Speaker 2:I gotta get out of this. Yeah. I just enjoy I I there's there's very few things on earth that I love more than advertising. So I love I love media. There's very few things on earth I love more than talking with John that about business and technology most.
Speaker 1:So
Speaker 2:we know we know our life.
Speaker 1:Anyway, final line around. What's the biggest fish you've ever caught?
Speaker 4:The biggest, like, fish fish?
Speaker 1:Yes. Like fish fish
Speaker 2:a fish fish. Fish.
Speaker 5:A fish. Fish.
Speaker 4:Went out with my uncle and the I go out fishing for stripers with my uncle in the middle of the Hudson River.
Speaker 1:Cool.
Speaker 4:And we got like a 45 pound striper. And probably it's probably 40. I'm like, I'm it's grown since I caught it.
Speaker 2:Nice. We're hit we're hitting the gong for you. Alright. Thank you. Thank you.
Speaker 2:Last last question.
Speaker 4:Gong for scoops, but I'll I'll take it.
Speaker 2:We'd love to hit the gong for scoops. But I'm curious if you think that kind of blowback against widespread gambling will be at all a part of the next election cycle. Do you think it'll be something that certain politicians kind of like latch on to and realize that there's a large number
Speaker 1:Yeah. Of the AI thing, it feels obvious right now, but the gambling thing, it feels like maybe that's coming soon.
Speaker 4:Yeah. I think, you know, whenever there's something where you're like, it's crazy that this was ever illegal. We like, why why did the idiots of the past why were they ever against this? We should obviously just legalize it, then, like, brace for backlash. There was probably a reason.
Speaker 1:Yeah.
Speaker 4:And and totally. Yeah. I mean, I think lots and lots of people, lots of religious people, lots of non religious people are, like, gonna get pretty are getting pretty upset about this. And there's gonna be there have been these sort of small scale b list athlete corruption scandals
Speaker 1:Oh, yeah.
Speaker 4:But we're gonna have our, you know, Chicago Whites, Black Sox moment. Right? For sure. And that'll be the thing that drives that, I bet.
Speaker 1:Yeah. Yeah. Yeah. Yeah. Yeah.
Speaker 1:That makes sense. That that would definitely be, like, more of a national story. Nothing's really broken out and been, like, the current national story for, like, a full week.
Speaker 4:But, I mean, imagine how much money you could make fixing the Super Bowl.
Speaker 1:Exactly. Yeah. That'd be crazy. And that would really yeah. That'd be really depressing to a lot of fans.
Speaker 1:But not me because I don't watch the Super Bowl. Anyway
Speaker 4:And actually, it could just be like a parley where, like, you fixed, like,
Speaker 3:piece of
Speaker 4:know, how many how your were tied in the second half or whatever. Yeah. Maybe
Speaker 1:the Anyway, thank you so much for coming on the show.
Speaker 2:Great to meet you. Yeah.
Speaker 4:Thanks for Yeah. Nice to meet you guys. Thanks for thanks for coming up.
Speaker 1:This is lot of We'll talk
Speaker 2:to soon.
Speaker 1:Bye. Let me tell you about numeral.com compliance handled. Numeral worries about sales tax and VAT compliance so you can focus on growth. Our next guest is Matt Hicks, the CEO and president of Red Hat. We've been keeping him waiting too long in the restream waiting room.
Speaker 1:So let's bring in Matt Hicks to the TVPN UltraDome. Well, when we have a second, I'm sure he's been tuned out because we had him.
Speaker 2:There he is.
Speaker 1:I'm sorry for keeping you waiting, but thank you so much for joining the show today. How are you doing?
Speaker 7:Hey, I'm doing great, great. Thanks for having me.
Speaker 1:Yeah, really happy to have you here. Would love an introduction on yourself a little bit. I know that you became the CEO in July 2022, but I'm more interested in understanding the landscape of the business today, how you see how you describe the shape of Red Hat and all the different business lines that have developed over your tenure to become what the company is today.
Speaker 7:Yeah. We've you know, I've been at Red Hat for a long time, actually over twenty years now. And so I started at Red Hat, actually, in IT success. When it was just it was just RHEL at the And and if you if you fast forward to today, we have RHEL, we have OpenShift, we have Ansible, we have Red Hat AI. I like to describe it as like when I started Yeah.
Speaker 7:In open source, you really only had an operating system that was there.
Speaker 4:Mhmm.
Speaker 7:And today, you have any software that you could create any company idea Mhmm. To help you do that. And and we try to cover that that gamut, everything from operating systems to, you know, clustered capabilities with Kubernetes to AI capabilities in smaller models. So it's been a fun fun ride for a couple of decades here.
Speaker 1:Yeah. I I'd love to just jump into the the the AI side of the business. How are you thinking about bringing a Red Hat appropriate product to bear in AI? I mean, are you it sounds like you're not training your own huge model, trying to compete with the big foundation models, but I'm sure there's a bunch of ways that you can plug into your client base. How are you thinking about shape of the AI business over the next few years?
Speaker 7:Yeah. I think for us, and this is how we use things internally, we think you're going to end up using frontier models and the capabilities there In addition to smaller open source models. And I I often describe it. If you go back to like when Google search was invented, you had this feeling like it was gonna change everything in business.
Speaker 4:Mhmm.
Speaker 7:But you didn't apply a Google search appliance to everything you did. Like, you still had relational databases. You still had specialized applications because you needed that control. Frontier models to me are sort of like Google search. They're gonna change everything.
Speaker 7:It's gonna be pretty incredible. We don't know what'll happen there. But they show possibilities. Small models for us are the things that you can train. You can specialize.
Speaker 7:You can run them in a factory or a space station, or you can run them as a mere mortal yourself Mhmm. In your own data center. And that combination is really powerful. Like, that's what we use internally. So our business is squarely in that smaller open source models.
Speaker 7:When I say smaller, it's still pretty large compared to traditional computing, but compared to those frontier models, they're just a very different tool.
Speaker 1:So, yeah, walk me through what a customer might experience if I come to you and I say, I have a business problem. I have a whole bunch of, like, flowing in images that I need to OCR and transform into JSON or something. Like, I have a defined business problem that transformer based large language models will be good for, but I want something that's five nines of reliability, that's I control the ownership of the code. It's economical. What do you bring to bear to help the customer achieve their goals?
Speaker 7:Yeah. So I think if you have that use case, and I often talk about them as like the three Ps. We use frontier models to understand what's possible. Once you know it's possible with frontier models if it's not possible with frontier models, it's like, just stop there. Yeah.
Speaker 7:It's not gonna translate that well.
Speaker 1:That's
Speaker 7:good. But if it is Yeah. Then your second p is production, and your third p is profit with it. The models we look at are about a 100 times smaller
Speaker 1:Mhmm.
Speaker 7:Just in size. And so generally, you could say, if you can run them well, they're gonna be a 100 times cheaper
Speaker 4:Mhmm.
Speaker 7:To answer those questions you're gonna ask it. And so we work with customers to really find that use case. It doesn't always fit every aspect. But how many of those pieces can you move to something that is a 100 times cheaper with it. And it requires some you know, you're competing with the Googles of the world or Microsoft's in terms of operational discipline.
Speaker 7:So you have to be able to run these things well. And this is word you hear inference that pops up. We help enterprises with inference. Just normal, mere mortal data centers, GPUs, NVIDIA, AMD, and running these models efficiently. So you can start to decompose that problem into what are the areas we can optimize and really control ourselves.
Speaker 7:So that that's one of the use cases we have a lot, but that's a a popular one because
Speaker 2:So, yeah, getting getting more specific. Company comes to you and they're saying, like, I'm I'm spending $2,000,000 a month with this with the on these, like, frontier models. And and how where where do you go from there? Are you, like, breaking down exactly how they're exactly what those tokens are being used on and then basically saying, like, hey. We we can actually break out the spend and reduce the cost by this amount.
Speaker 2:Obviously, Red Hat has a margin. But but how do those conversations go specifically? And how much spend today on frontier models really shouldn't even be going to frontier models and should be going to some of these smaller, more more specific models.
Speaker 7:Yeah. I think if you look at, not overly simplified, but we sort of live in the world of text on it. So if you said, hey. My use case is video generation on all of these capabilities. That's not really our wheelhouse.
Speaker 7:That that often isn't in that space where a lot of your business is gonna operate, understanding policies, understanding numbers on it. So that's the first thing we look for as does this fall into that classic enterprise use case? Because there are things you'll keep on frontier models. The second part for us is where do you wanna run these? You can rent space at a CoreWeave, for example, to get GPU capacity, or it might be data sensitive if you wanna host it yourself, and then you're in a hardware purchase.
Speaker 7:But for us then, it's about going one by one. Sometimes it requires changing the data a little bit, but it's making those use cases run efficiently on it. When I look at what's that mix of what we use these big models for that we just don't need to, I think it's gonna be really similar to cloud spend. In my role, they're really powerful. I love the learning experience people are going through and using them.
Speaker 7:But I'm gonna bet there's a seventy thirty, eighty twenty split of where we could take things that we're paying more than we need to and be able to optimize them. And it's just in that balance. Cloud was really good at learning a new operational mechanism and skill set. We're going through that same phase, but I think we'll be able to optimize a lot, the majority, to smaller models, even if you start in what's easiest and shows you what it can do in the larger ones.
Speaker 1:How have your thoughts on the relationship between building a for profit business in and around open source technology changed over your career?
Speaker 7:It's so I started at Red Hat as I loved the open source model. I was actually a consultant at the time. Sure. And, you know, I had worked with Linux in college. My first experience, like, I couldn't be stopped when I was working with Linux.
Speaker 7:Because if it wasn't working for a customer, I could change it. I could figure anything out. I didn't have to be dependent on someone. And I love that that feeling, that power that came with it. Just open sourcing things and assuming a business will happen, I think is also pretty flawed with it.
Speaker 7:Like, you you have to do something different that customers value that the open source community doesn't do. And then in our case, open source communities is a great innovation model. They move really fast. We help customers that they can't keep that pace and speed of open source. They want the innovation model, But once they've built their app, they need someone that's gonna help support it for ten years.
Speaker 1:Yeah.
Speaker 7:And that's that value we do that communities just don't care about. They're on to the next feature. And so it's been a really nice balance of we work with a community, we complement it, but we provide enterprise value. I think that's what's gonna shake out in this world with AI of how do you find that symbiotic relationship where you can leverage open source, you can, use innovation models for other areas, but you still provide a concrete value to customers where they know what they're paying you for.
Speaker 1:How have you been processing the fact that it feels like Meta's pulling back from large scale open source efforts. China seems to be running away with it. Is there any other nuance to is it just like a business model problem that we haven't seen like the red hat of AI kind of crop up or stick around in the case of OpenAI as they've kind of evolved their business model, although they do, of course, have GPTOSS. And MetaLama is still a real product. But it does feel like China has just taken open source AI way more seriously.
Speaker 1:And I'm wondering if you have any read on, like, was that always the way it needed to happen? Were there alternatives? How did you interpret the open source AI LLM war play out?
Speaker 7:You know, I put it in two buckets. There's a race to AGI. Yeah. Personally, I'm not a big believer in that, but, you know, it's gonna produce some incredible things on that journey. Yeah.
Speaker 7:We'll see if we get there. But I think a lot of the big players, when they talk about these billions of dollars that go into training models, they're in the race for AGI at that point. And that's a new and exciting domain for them to chase. And I think Meta's in a similar boat there. What they're investing I love the fact that they open sourced it, but they're in that AGI ish camp and race.
Speaker 7:The number one innovator in open source models, I would say, is academia at this point. It China has always been strong in open source. The US is very strong. Europe is very strong. But if you go look on Hugging Face at the sheer number of specialized tools we have out there, it's more than you're gonna understand how to use well today.
Speaker 7:So I often the coaching I give customers is I don't think we necessarily need a lot more. It's just that stability in a few. So I worry less about China's created some pretty impressive innovations like in the Quinn model on training. But as long as those are shared in academia, we'll see the next Mistral pop up with options there. But that's how I separate the two.
Speaker 7:There's an AGI race. I don't think the the financial mechanics are gonna work out for open sourcing there.
Speaker 1:Mhmm.
Speaker 7:But then there's an academia led ecosystem that already exists that's incredibly vibrant that is not chasing AGI, that'll fit really, really well with the the boring enterprise use cases. And, like, how do you run a company a bit more efficiently? How do you chase the next engineering innovation more efficiently? That doesn't necessarily have to be those big guys.
Speaker 1:Last question from my side, then we'll let Jordi ask anything he has. But I'm interested in advice for we talk to a lot of founders, a lot of startups that are kind of building the red hat of x. They're thinking about open sourcing a great piece of technology, building an open source community. We often talk to Y Combinator founders that come on and tell us, I have 5,000 GitHub stars already. I'm raising money.
Speaker 1:I'm gonna build the next And they're not going after Red Hat directly. They're just they're they they wanna learn as much as possible from you. So do you have any advice for founders who are earlier in the journey? They might have built something great, a useful tool, a piece of software, and they really want to get the red hot model correct. They want to have an open source community and then they also want to build a great for profit business on top of it.
Speaker 7:You know, I think mistake I see the most is I wanna use it for a marketing tool and then keep all the control
Speaker 1:Mhmm.
Speaker 7:Myself. Almost always those fade out. You can you can do that. You can get a lot of eyeballs with open source. But if you don't know who your community is, it could be a user community, it could be a contributor community.
Speaker 1:Mhmm.
Speaker 7:But if you don't know the value you provide them and they provide you, that marketing effort of stars only will fizzle. Mhmm. And it is very tough to give up some control and product roadmap to your competitors to build a contributor community, but it's what you have to do. We work with our biggest competitors side by side in Kubernetes. Yeah.
Speaker 7:So I think for founders really knowing is it the right time for them to give up that control and being authentic of their model, it'll give them staying power in open source. It's a savvy ecosystem. No one's gonna get tricked into like a star count, and then you build a durable forever business off that. But a lot of options down there, but I think knowing those and putting some thought into that is a really important first step.
Speaker 1:Makes a ton of sense. Jordy, anything?
Speaker 2:What do you think working for one company for twenty years is underrated? Feels like
Speaker 1:Company man.
Speaker 2:Maybe some of the people that are coming on the show will end up Satya Nadella. Yeah.
Speaker 1:Of this.
Speaker 2:Satya. But what are some unexpected positive elements of being deeply embedded with a company for as long as you have?
Speaker 7:You know, I think when I walked into Red Hat as a joining the IT team to port Perl applications to Java, I didn't really see myself in this seat fifteen ish years later. I didn't I was lucky enough to be involved in OpenShift in the early days. I didn't really see that. But the tenure, especially working in IT, seeing every part of the company, working in a startup in Red Hat with OpenShift, and just the pain and struggle that goes into bootstrapping something in a pretty successful company. It's what lets me do the job that I'm doing now.
Speaker 7:Because I I have the depth and breadth to push on things in a different way than if you were an outsider. And I think it's really powerful. It's, you know, people bounce around. There's there's there's a lot of learning to begin with that. But for me, I certainly use every day my twenty years of, you know, the challenges and, you know, benefits, things that have worked, things that haven't to guide my decisions day to day.
Speaker 7:So that's you know, I still pinch myself every day. I'm like, I'm surprised I'm sitting in this seat, but but it's been a, you know, it's been a great run up to it, and I don't think I could do a good job without that that depth of experience.
Speaker 2:How do yeah. How do you help a lot of people are impatient for the raise, impatient around the the new title. What Yeah. Like, what kind of framework do you give to somebody that comes to you, maybe at a different company, and says, Matt, I'm at this company. I've been here for three years.
Speaker 2:I just got an offer that'll I'll immediately make more money. I'll have a more senior title. Maybe the company happens to be the other com the company making the offer is growing faster. Maybe has more capital. There can be a lot of reasons to jump ship.
Speaker 2:But what's your framework for helping people make that decision?
Speaker 7:One, always warn them, it's a personal framework. I'm like, it's worth what you paid for it, which is is nothing on it. But but for me, my driver has been, am I learning something new in this space? If I'm learning things, I can be patient for the right opportunity to leverage it. And I also tell them, like, you have to be accepting there's some luck in the game as well.
Speaker 7:Like, just being in the right place at the right time with the right skills. You can't always manufacture that. But for me, I always look at opportunities of they're gonna come with some pain and challenges. But if you learn a tremendous amount, you're gonna leave that being more valuable than you came in to it. And, you know, I take that into this role.
Speaker 7:It's why I, in limited hours, I'm still learning AI myself to not just delegate it down the org, but to really build that hands on experience. But that learning dimension has always been the most important dimension for me.
Speaker 1:Well, thank you so much for taking the time to come on the show.
Speaker 2:Great to meet
Speaker 1:you. Great to meet you.
Speaker 2:Open source champion of the world.
Speaker 1:Merry Christmas. Have a great rest of your day. We'll talk to you soon.
Speaker 7:Yeah. Love love the show. Appreciate you all having me on.
Speaker 2:Thanks. I'm back on
Speaker 1:again soon. Much. We'll talk to
Speaker 3:you soon.
Speaker 1:Cheers, Matt. Goodbye. Let me tell you about Figma. Think bigger, build faster. Figma helps design and development teams build great products together.
Speaker 1:Gyms are coming to airports.
Speaker 2:This is big.
Speaker 1:This is big. Will you work out
Speaker 3:on your
Speaker 2:next Consumers have been saying the other passengers aren't sweaty enough.
Speaker 1:Yeah. So this is for We
Speaker 2:gotta have gyms in right next right next to the gate.
Speaker 1:We we have another we have another guest joining in just a minute, I wanna riff on this for, ten minutes. This is hilarious because it it seems to be a collab between the the, secretary Kennedy, who's the health and human, services secretary. So there's, like, HHS crossing over with DOT somehow, and they're like, let's let's let's make the airports healthier, which is, like, a funny thing. I feel knows. It's coming back the top.
Speaker 1:I feel like these, like, labs don't happen before, but they're happening now. I don't know. The the the idea of working on an airport, it's kind of crazy because if you are all sweaty and then you have to and they also said, like, you should dress up when you go to the airport. And if you're dressed up and then you are all sweaty, that seems pretty rough. But I don't know.
Speaker 1:I I like the idea of doing something new in airports. I think it's cool. I think it's good that there's some some opportunity for some sort of grant program.
Speaker 2:I guess the question is the $1,000,000,000 grant program with how much it costs to make? Like, is this, like, 10 gyms?
Speaker 1:Well, so I don't know. Because, like, there's a world where you build, like, a proper gym in the 10 most premier airports that has, like, a sauna, showers, like, full laundry. Like, you know, you're good to go. You can spend, like, a couple hours in there, really get a serious workout in. Or it could just be, a couple pull up bars, you put one in every in every terminal in America.
Speaker 1:I don't know. Depends on how how like like, can you imagine if it's just like, okay. Yeah. Like, you know, turns out JFK put in an awesome, awesome application. They got all 1,000,000,000.
Speaker 2:Little calisthenics sound.
Speaker 1:They got it all. I don't know. It's a it's a very funny story. Anyway, let me tell you about Fall, the generative media platform for developers, developing fine tuned models with serverless GPUs and on demand clusters. And we have our next guest in the Restream waiting room, Steven Schwartz from WAP.
Speaker 2:There he is. Steven, what's going on? Yo. What's up, man? How are you?
Speaker 2:We are great. It's great to, great to have you back on the show. You're you and the team have been insanely insanely busy, it seems. Give us give us the update from the last few months.
Speaker 6:Yeah. So I think we talked in March. And since then, things have been really crazy. I I think the best way to put it is that at this point in time in our company, in order to even grow the business by 50%, we have to add more than a billion dollars in earnings on our platform each year. And I guess just to put in perspective what that looks like, if we were to onboard 1,000 businesses that do a million dollars a year, which those are not small businesses.
Speaker 6:That would only grow our business under 50%, which is pretty bad. So I think that the story of our of our recent months has been, how are we gonna really 10x this thing? And that requires us to think a lot bigger. So we've been expanding pretty aggressively internationally. We we have been partnering with really amazing platforms.
Speaker 6:We had an announcement earlier today. Yes. And I think that there's a lot of stuff that breaks when when we when we grow, but the year's been pretty nuts. There's a lot of stuff coming out soon, and I'm really excited.
Speaker 2:And and how big is the team today? The core team, you know, people w two'd by WAP? Because I imagine that part of the benefit is everyone on the platform has some incentive to grow the platform and support. But I'm curious what the core team looks like.
Speaker 6:It's about 75 people. So it's actually a pretty similar slot. Think that everyone's going at a really high RPM. I mean, we we like to have our our team really lean, and and everyone has a lot of autonomy and and almost no bloat anywhere. So I think it's we're definitely underwater right now.
Speaker 6:And there's about 75 people total.
Speaker 2:Wow. So talk about talk about the shape of the business. The you know, you guys had a a post going viral this week. Somebody was saying, team talking about grinding. The team's grinding because you guys are generating billion.
Speaker 2:There's billions of dollars flowing through the platform and only 75 people working on the team. But the the criticism the common criticism would be like, you know, WAP is, you know, a course platform. And obviously, like, some of these partnerships you're announcing, like, the bigger, broader vision, I think, is certainly starting to crystallize for me. But talk about the shape of the business and really, like, where where this is all going.
Speaker 6:Yeah. Well, I think it's really funny how how many people get offended when when these teams that are hard at work. I think it's it's obviously, like, results are are the most important, and I think that that is not really the the intention is is nothing to to about trying to rage bait anybody or or even to seek a necessary attention. I don't even think Cameron expected that to go down viral. But I think that the at the end of the day, mean, when when our team is is excited about something, people are gonna be working hard.
Speaker 6:And given the nature of our team, we have a lot of former founders, a lot of former entrepreneurs that are are really driving huge parts of our business forward. And I think that the the the common people know bot for so many different things. Right? We started in in Sneaker bots, and then that naturally progressed into more a broader variety of different desktop software. And then people are like, hey.
Speaker 6:Can we sell chats with the software? We're like, yeah. That sounds like a good idea. Let's make sure you can do that. And then people are like, hey.
Speaker 6:Can we drop the software entirely and just sell chats? And we're like, that sounds pretty cool. Paid chats. Let's do it. And then people start to do that.
Speaker 6:And then they're like, can we also add long form video? And that made sense. People used to make the long form video as a way to explain how to use the software. And pretty quickly, people are like, wait. We don't even need to sell software or chats.
Speaker 6:We can just sell long form video, and that's where the course is. And I I don't think that we ever set out to be a course platform at all. We really focus hard on on the primitives that are necessary for the future of work and and for the future of commerce generally. And I think that the one of the lowest way lift ways to start a business is making a course. And I think that when you look at our business today, I mean, I think we probably do more more than $1,000,000,000 a year in paid groups and educational programs.
Speaker 6:We probably do almost a billion dollars in in agency services that are sold on the platform. We'll we'll do maybe do $304,100,000,000 dollars of pure software sales. And any on the emerging side, I think we even have more than $50,000,000 of physical product sales each year now. So I I think that the when you go to our homepage, we do a pretty poor job showcasing a lot of the supply. That's not been a huge priority of ours today.
Speaker 6:We are very focused on our infrastructure for the sellers and and for the the platforms now that are integrating with our product. So I I think that there there's a the core sellers are generally the loudest because they're very good marketers, and Yeah. They typically run out. I think a lot of the the other stuff in the platform people know well well for clipping and and things like that, which are also really awesome ways to to make money. But, yeah, the the the core stuff is is funny.
Speaker 2:Totally. What's going on on the actual infrastructure side? You guys used to work with Stripe on the back end. You killed that part. You moved on from that partnership at some point.
Speaker 2:How are you guys processing payments today on all these different verticals? And I'm I'm assuming that's like a core part of the offering for these individuals, businesses that are coming out of the platform, and you're giving them a variety of ways to monetize.
Speaker 6:Yeah. So you can kinda think about the core value prop of WAP to be payments and distribution all out of the box. And I think that we never really set out to be a payments platform. I think that's pretty boring, and I think there's a lot more that we can do. I I'd say that today, is is much more commoditized than it was ten years ago, and especially on the payments front, we don't think that that's a a real long term way to to create value.
Speaker 6:And I think that when we look at our ecosystem as a whole, the the mentality is like, how can we bring all these parts of the Internet together in a way that makes it really easy for retail and for general consumers to actually get what they need to start a business? Right? You have and when people think of payments today, they really only generally know Stripe. And and after that, it's a huge falloff. There's no one really can generally name even another company that's similar to Stripe.
Speaker 6:You you may have Shopify in the picture, but they're very, very focused on physical and and larger shops now. So for us, it's really, really important that everything is extremely tightly integrated. And when you're asking about infrastructure, the way that we look at it is is we have people earning about $200,000,000 a month on the platform today. So part of our infrastructure is dedicated to to thinking about how can we get more functionality delivered to those merchants so they can do a lot more with their money. Today, just for for reference, the process is almost universal across every merchant.
Speaker 6:They'll make money, and then they'll drop to their bank, and then they'll go invest on on Meta and TikTok ads or or whichever ads platform of their choice, and then they'll invest in in crypto. And I think that it's really exciting right now on the infrastructure side because we're about to let merchants do a lot more with their money. So you can imagine, you make money, you invest it into ads, you go invest it into quick Bitcoin, you go place predict best on Polymarket, you go and and do a lot more with your money. So we're we're doing a lot to bring a lot of our activity on chain and and to tap into the broader financial application layer that exists today. So that that's one part of our infrastructure side.
Speaker 6:And the other part of our infrastructure side is on on the the advertising front, I think it's it's distribution is critical. And and we've recently partnered up with a number of different, for example, games on Discord or publishers writing blogs that will actually render products that are listed on WAP. And that means that anybody selling on our platform gets to take advantage of pretty immediate distribution. So so those are the things I think I'm pretty excited about in the infrastructure side. The the move away from Stripe, I think I mean, I've been building on Stripe since I was 12 years old, and I love Stripe so much.
Speaker 6:I think that we're we're still partnered with Stripe, and and we still use Stripe. And I have nothing but great things to say about Stripe. I think that when you're looking at our mission, which is to deliver everyone a sustainable income, there's certain primitives that need to be, available, and those are simply not available on Stripe. So, I mean, getting paid out in Venmo, getting paid out in crypto, and and other emerging markets throughout Africa is very, very important to our operation. Interesting.
Speaker 2:So so talk more about the partnership with MicroOne that you guys announced today. That is I'm I'm curious, like, maybe break down MicroOne and their business for people that aren't familiar and then and then how you guys are integrating.
Speaker 6:Yeah. So MicroOne is a really cool business. They basically partner with AI Labs to offer general public access to prerecorded videos and situations that the general public can weigh in on and say, what would they interpret the most likely solution to any set of visual problems to be? And the AI labs will use that as fuel for their training data. And MicroOne is essentially aggregating all those opportunities and delivering payouts at scale to the general public that's paid for by the AI labs.
Speaker 6:So when we're thinking about WAP and what the partnership means to us, there there are so many ways that people can earn income on the Internet today, and it's only gonna get crazier and crazier. So we've invested a lot over the last few months in our public SDK and our developer infrastructure so that platforms can tap into our network. And that's exactly what what MicroOne is doing.
Speaker 1:That's pretty interesting. Did you did you think about getting into data labeling earlier and in a direct way? Like or or yeah. I mean, did you ever think about, like, just offering data labeling tasks to the current community of people on WAP? Because didn't didn't DoorDash, like, launch the or Uber was gonna launch, like, the ability to do data labeling tasks while you wait for your next thing or something?
Speaker 1:Like, anyone with a pool of huge human capital is is looking at this right now, right?
Speaker 2:Yeah. I mean, like, how how do you think about the different eras even? It felt like Yeah. The twenty tens where if you had a cell phone, you could make money Yeah. In the real world.
Speaker 2:And now it's kind of the continuation of that is like if you have an Internet connection, you guys are trying to just enable somebody to open an app and Yeah. Make maybe, you know, may maybe they're not gonna immediately make some, you know, incredible income, but it's a most of the apps, you open them, they suck your attention and money and and all that. You guys are trying to have an app that you can open and and have the opposite Mhmm. Effect.
Speaker 6:Yeah. I I think I I grew up on Facebook all day every day in Skype, and I think that there's two ways you could have gone on the social media platforms. You could have maybe sat there and and just read and watched videos and what the kids call brain rot today. I think the other way is to try to get as much productivity and and value out of the network as you can. Meeting people and maybe finding customers and whatnot.
Speaker 6:And and for for me and and the people that I met early on in the Internet, we focused on the latter. And I think that the the goal of BAP is to bring together all of the pieces of the Internet that are super scattered right now and and hopefully make it a place that's a lot more worth your time to spend. And I think that the the money is is one part of it, but I I'd say it's also, like, the idea and dream of starting your own business is very much an aspiration to a lot of people. And we we think that if you open the app and and you can you can start a business, you can find ways to to make money by providing value to other peers on on the network. You can meet people in chats, and it's a very much expansive expansive application that I think I I think it's it's makes it difficult for people to understand what we do.
Speaker 6:Yeah.
Speaker 1:Yeah. So with with with MicroOne, are you you're just providing the, like, the payment back end. They're actually gonna source the experts to do the data labeling. Is that right? And then they're also handling the relationship with whatever lab they're selling the data to?
Speaker 6:Yeah. So to answer your question, have we thought about going into that type of market?
Speaker 1:Yeah. I
Speaker 6:think for us, we really try to stay on on what we're good at. And and I think what we're good at
Speaker 1:is Rails.
Speaker 6:And and how we how we handle payments, how we handle payouts, how we handle what you can what else you can do with your money as well as distribution. And we don't know as anywhere near the amount of of industry expertise at MicroOne does, and I think that that that's why we wanted to partner with them. And we don't have any we don't have that's not our forte. So I don't think we we really have thought much about going to that. I we did the clipping stuff and the content reward stuff, and now, I mean, there's actually a lot of other platforms that are starting to implement our SDK as well on that front.
Speaker 6:Because, again, like, we built that app in two days as a test case to show what you could do with the WAP ecosystem. And it obviously blew up. I think we still pay out millions of dollars a month to people all over the world that are clipping, but there's also other platforms now that are integrating that stack, and are able to focus really, really hard on making sure that's an amazing product.
Speaker 1:Yeah. I feel like you sort of live in the future, because you're so tapped into young entrepreneurship broadly and such a wide swath of individuals. Can you help me get up to speed on how the next generation is thinking about sports betting and gambling? Because I feel like there was, like, the drop shipping wave. There's the course wave, the clipping wave.
Speaker 1:Like, is sports betting in a is it going through a boom right now? Because in tech, with the prediction markets, I think everyone's, like, starting to be a little bit more top of mind, but they might forget that, you know, we had we had the CEO of DraftKings on the show yesterday, and I think Google invested in that company in, like, 2017. And so it's not new, but it does seem like it's growing a little bit. But I'd love to know, like, how are you
Speaker 2:Capital g invest, I think, in Flutter or FanDuel.
Speaker 1:Oh, that's right. Okay. Sorry. Yeah. So so so, like, obviously, like like, sports betting is not a new invention, but it does feel like maybe it's going through a renaissance.
Speaker 1:How are you seeing, like, the the the trend within that industry? Like, what what are the trends that you'd even describe?
Speaker 6:Yeah. It's a good question. I mean, sports betting has been around since, like, Coliseum days and even before that. So I think that it's just it's a really good way for people to be literally bought into what they're watching. And I think that what's happening now is is you're seeing a lot of entertainment, a lot of social, and a lot of integration between all of that on top of sports betting, which makes it a lot more fun.
Speaker 6:And I think when when you imagine somebody to be watching a a football game betting alone, it's it's a lot less fun than betting with your friends. Okay.
Speaker 5:And I
Speaker 6:think that when when people think of sports betting and WAP, a lot of a lot of that notion is around the communities that are on the platform talking about sports betting and participating in sports betting, but they're not really participate they're not really betting on our platform. And I think that the I mean, people very much love to to bet, and I don't think that's gonna change. I think that the the types of bets will evolve. And, I mean, I'd say that sports betting in the February was probably more popular for retail than investing in stocks, which is definitely changing now with Robinhood and all of the other more retail friendly applications. So I think that people like to invest in in things and and to put their money where their mouth is, and and I'd say that that trend is gonna continue on, and we're seeing during this four seasons.
Speaker 6:So right now, it's definitely popular.
Speaker 1:Yeah. I mean, like like, there has been a long history of folks, doing financial education, teaching you how to trade stocks. Trading forex has been a big thing that, there's been a lot of courses around. Are there courses around sports betting? Are they, like, roughly the is that the same size business, or is that, like, more niche because it's, like, more random?
Speaker 6:Yeah. Well, I think asking what kind of categories are on WAP is kinda like asking what categorical content exist on social media or Sure.
Speaker 1:It's just everything.
Speaker 6:Ephemeral and and it involves that maybe somebody will launch a sports betting community and build out a course to it. But it's not necessarily the core part of the product that that somebody's to other users.
Speaker 1:Sure. Sure. Sure. Yeah. I I'm just I I I I'm fascinated because I feel like a lot of tech people are like like, oh, there's like this crazy breakout moment.
Speaker 1:And I think a lot of people, if you zoom out, they see it as much more of like a smooth curve that's been happening for for for decades.
Speaker 2:How much do you do you and the team try to predict these sort of like future trends? Like, what is the next sort of trend like clipping? Is it more reactionary to the current moment and saying, like, let's build the best possible infrastructure for what's happening today? Or are you trying to looking in corners of the internet, maybe some subreddit that's gaining popularity or things like that, to try to predict these things and actually be ahead of them?
Speaker 6:I think that we lean on our existing customers a lot to build around them and to make sure that if they're onto something early, that our platform can support what they wanna do. I I'd say that every shift in what the predominant form of of way to start a business and way to to earn income on our platform has been trail based by a few subset of merchants, and then we've quickly built the product to better support that. So I actually don't think it's it's worth time to to try to predict it because it's getting really crazy. And I I don't think we're very tapped into to what the people are are doing, I think, in the in the trenches across the Internet, but it's very, very, very hard to predict and and rather kind of really focus on the primitives that we know are gonna be true throughout all these different trends.
Speaker 2:That makes a lot of sense. What are you most excited for for next year?
Speaker 6:Yeah. I think WAP is very underinvested in AI right now. And and I think that we're that's about to change. And the the platform is very complicated still. There's a lot of of components we've created.
Speaker 6:We're a very engineering heavy heavy team that's created a lot of infrastructure, but I think that we're we're now flattening a lot of that, simplifying a lot of it, and riddling AI throughout the entire platform. So I think that's gonna be pretty crazy, and and that's probably what I'm what I'm most excited about for next year is just making sure that you guys are actually on the app starting businesses and and find it worth your time to do so. So that's what I'd say.
Speaker 1:Amazing. Well, thank you so much for taking the time to come chat
Speaker 3:with us
Speaker 2:to get the update, and congrats to the whole team
Speaker 1:on Yeah.
Speaker 2:On a wild year. I I remember Yeah. What? We have we have a mutual friend, won't name him because he's anonymous. But I think he's he told us at the end he told us at the end of last year Yeah.
Speaker 2:Q four of last year, the company that he was most and this is like an institutional investor. He was like, the company I'm most bullish on that is most under the radar, most under hyped is WAP. And you guys have certainly delivered this year. So well done.
Speaker 6:Really appreciate it. Long long way to go.
Speaker 1:Fantastic. Job's not finished. Love to Cheers. Hear We'll talk to you soon. Have a good one.
Speaker 1:Let me tell you about ProFound. Get your brand mentioned in ChatGBT. Reach millions of consumers clearing orders inbound. Who use AI to discover new products and brands.
Speaker 2:Gavin Baker says, deeply amused by all the confident commentary that data centers in space do not work from a physics or engineering perspective. Elon operates two of the largest coherent GPU clusters in the world. SpaceX is responsible for over 90% of mass to orbit, and SpaceX operates the largest satellite constellation in the solar system. More than ten years later, no other company or country can consistently land and reuse orbital rockets. He publicly states that the lowest cost way to do AI compute will be with solar powered satellites.
Speaker 2:Maybe, just maybe, his pencil and paper analysis of the physics or the economics at play is superior to yours. There might have even been more than just a pencil and paper analysis of the subject done by some of the best engineers in the world. Perhaps they have thought of a cooling solution that has not occurred to the galaxy brain accounts here even after they took several minutes to carefully think about the problem. The CEO of Google also agrees that data center data centers in space will be normal within a decade. If you're not currently operating a large AI data center, a large satellite cluster, and have not landed a rocket that takes most, most of the accounts on x, maybe a little less quick to confidently assume that Elon and Google are both wrong on this topic, especially when they're working, albeit very small, data center in space today.
Speaker 2:Star Cloud's orbital setup just successfully trained in LLM. Great name, by the way. Yes, I am biased on these topics. And as ever, time will tell. Yeah.
Speaker 2:I think a lot of the reaction was just like, hey, like three to four years feels super aggressive. Ten.
Speaker 1:At the same time. I don't know. I was trying to put it in like where would I how would I quantify my position? And I would probably say, like, there will be under one gigawatt of capacity in space by the 2027. And by the 2027, I expect to see several gigawatts of, like, AI data centers online in terrestrial base.
Speaker 1:But maybe that's too conservative. And maybe that's not even what Gavin's saying. Maybe Gavin is targeting something more like 2029, maybe 2,030, something like that. But if you were to try and say, like, there will be a significant amount of compute, like 10% of overall compute or something like that in space in a
Speaker 4:year
Speaker 1:or two, That feels maybe more aggressive. But in twenty years, I don't think anyone disagrees with that. In two years, I think everyone agrees it's not there. So it really feels like we're talking about timelines here more than if. It's more when.
Speaker 1:But I'm not sure. I don't know.
Speaker 2:Elon responded and said, fools are determined to be fools. Trying to stop them from being so is futile.
Speaker 1:Hey, optimists get rich. Pessimists sound smart. Easy to be pessimistic on this.
Speaker 2:Should we pull
Speaker 5:up I this am
Speaker 1:optimistic about Julius AI, the AI data analyst that works for you. Join millions who use Julius to connect their data and ask questions and get insights in seconds. I'd love to pull up a clip.
Speaker 5:I Pull
Speaker 2:up this clip from Netflix.
Speaker 1:Oh, We
Speaker 2:go from 8% of view hours today in The United States to 9%. So we're still behind YouTube at 13%. And potentially worth noting that we would be behind what would be if Paramount combined with WBD, them at 14%. So we think that there's a really strong fundamentals based case here for why regulators should approve this deal. Yeah.
Speaker 2:This is percent of view hours today in The United States.
Speaker 1:So so, yeah, view hours, is that is that like a good metric? There's something he's definitely including YouTube in there and and and using view hours. At the same time, I think that's that's valuable. I I I don't know. It's it's hard to to kind of grapple with.
Speaker 1:As as a consumer it doesn't seem like it's it's oh no all of a sudden there's only one place to get content. Like that that's not what people are the most worried about. They're maybe worried about a one buyer scenario for the movies that they make. Anyway, you can always just make a movie and put it on Restream. One livestream, 30 plus destinations.
Speaker 1:You want multistream, go to restream.com. Restream.
Speaker 2:It's gonna stay independent. There's a post here from Julian. He says, if you thought paying for your kid's college tuition was nice, Larry Ellison is writing a 40,000,000,000 check for his son to acquire a movie studio and a television network. Yes. That, my friends, is father of the year.
Speaker 2:Totally agree. We should all aspire to one day write a $40,000,000,000 check for our children.
Speaker 1:100%.
Speaker 2:Each of them, actually.
Speaker 1:I can't. It's hard to think of a better use of, what 20% of the net worth than picking up a movie studio.
Speaker 2:Doing a deal with your son.
Speaker 1:It seems fun. It seems like, Larry is definitely in the conversation. He's at the dinner. You know, he's hanging out. He's he's part of this even though David's obviously driving the story.
Speaker 1:Larry Larry is very much there, right, in the show, but also participating.
Speaker 2:Joe commenting on
Speaker 1:We already talked about that on the show. Yeah. Let's skip ahead. Let's go to this data on a quiet year for venture capital. Bryce Roberts posted it.
Speaker 1:Looks like it's from the information, but the source is pitch book. So there's a couple things going on here. But, terrible. Terrible. I thought we were so back.
Speaker 1:I I with the AI boom, I am shocked by this data. Are you shocked by this data? I'm shocked.
Speaker 2:It certainly hasn't felt like that.
Speaker 1:I thought it was gonna be higher than ever. It feels like there's so many new funds. There's so many new massive funding rounds. But are we still working through the 2022 glut of capital or something? Like, what's going on?
Speaker 2:Sentiment was that AI saved Venture. Private markets
Speaker 1:Yes.
Speaker 2:Venture capital. Yes. Because it it was a we we were on a crazy sugar high Yeah. In 2021.
Speaker 1:And we've had so many folks come on the show that just yesterday, I yeah. I raised $500,000,000 seat. It's like, that's gotta come from somewhere. But apparently, only $50,000,000,000 flowed into venture in 2025.
Speaker 2:Well, yeah. So so these funds are deploying capital. Some of them might still be deploying hopefully, there's still some not all of obviously, the the funds that were raised in 2022, it's not like they just were like, I'm gonna deploy this all this year. It's like that it trickles out. Yep.
Speaker 2:The other thing the reason that this is surprising is that some of these big headline deals that the industry has been focused on this year are sovereigns going direct, they're they're hyperscalers making these big equity investments in labs. Yeah. So Particular deals. That kind of yeah. That's kind of, you know, NVIDIA.
Speaker 2:I think we've had I mean, you're also just seeing way less venture funds being formed. Maybe that's healthy, right?
Speaker 1:Katie Roof, who broke the story, says, Venture fundraising is the worst it's been in at least a decade. And I don't mean for startups, which are seeing an AI boom bubble. The firms themselves are often struggling. We are seeing the lowest number of venture funds raised in at least ten years. I'm fascinated by this.
Speaker 1:I wonder if we're going to see venture funds close down or is this just a function of the everyone gets a fund phenomenon sort of pulling back? Because maybe it's really that 2021, 2022 were just complete deviations from the norm because, I mean, it really was a time when everyone got a fund. It was crazy. Anyway, let me tell you about Linear. Meet the system for modern software development.
Speaker 1:Linear streamlines work across the entire development cycle from road map to release. We also have a venture capitalist joining the show. Sam can break it down for us, and I'd love to know his thoughts on this bombshell report from the decision that says,
Speaker 2:you're cooked. It
Speaker 1:says, you know, if you're in venture pivot to, you know, toiletry. Not that toiletry.
Speaker 2:Plum. Electrician.
Speaker 1:Become a Become an electrician because it's all over. Do you think it's over? Do you think venture capital the game's over?
Speaker 11:Guys, the game is it's never been better. Think
Speaker 1:Let's go.
Speaker 2:We
Speaker 1:Let's go. We will
Speaker 11:We will wonder. Thanks for having me on.
Speaker 1:Venture capitalist. It's never been better. Put the headline up. I love it.
Speaker 11:Raylock turned 60 years old this year, so this firm started investing before the Internet. The original partners would find
Speaker 3:companies Wait.
Speaker 1:How many years old? Six 60?
Speaker 11:Six zero.
Speaker 1:Six zero?
Speaker 6:Yes.
Speaker 1:What? That's so old. I had no idea. I thought it was, like, 10 years old. That's crazy.
Speaker 11:No. Congratulations. We're the oldest firm in The US.
Speaker 1:Overnight success. I love it.
Speaker 11:Yeah. Overnight success. And we're in our seventeenth fund. I would tell you our the company quality we see right now, we've never seen anything like it. I I mean, there's there of course, there's a lot of things that are crazy going on, but if you just look at the overall secularity of what's happening Yeah.
Speaker 11:I can I I really think the game's never been better?
Speaker 1:Yeah. But you're in a unique position. You a name brand like crazy. Like, you know,
Speaker 2:Does not seem insane that that we raised there was more money raised in
Speaker 1:'21, twenty two eighteen, twenty Yeah. So so so help me understand it because Great Lock is in a great position. It's a great brand. It's a name that everyone knows. Been around for sixty years.
Speaker 1:It's crazy. You can get into the companies that are doing really well. If we are witnessing, like, you know, monopolistic markets, more winner take all bets, more, okay, the the champions being crowned in this category, everyone's got to get in. You're gonna be one of the funds to get in. A lot of people are not gonna get in.
Speaker 1:Do you think that's what's driving the lower amount of new funds that are being raised? Is that what's going on? How how are you interpreting the fact that that the number of funds seems to be going down year over year for the past four years?
Speaker 11:I think we had and you guys were talking a little bit about this, but there was almost this, like, onetime anomaly in the market structure
Speaker 2:Yeah.
Speaker 11:In the '21 period where you saw, like, an explosion of new funds.
Speaker 1:Yep.
Speaker 10:And on the
Speaker 11:one hand, was, like, super exciting, all these solo GPs, new funds, new guard, etcetera. And then I think, like, once you hit an air pocket and you realize, like, life is not just straighten up to the right, but these cycles have ups and downs. And even the best companies have ups and downs. I mean, I think about the companies we've been a part of from when they got started, the most recent success case being Figma. Like, it took Figma several years to get the product right and start accelerating sales, and they became one of the fastest growing companies of all time.
Speaker 11:Entrepreneurs want firms that are in this for the very, very long run. And so what you're gonna see is a reconcentration to a small set of firms that are like, venture capital is a 100% of what they do. Yep. They don't have any other jobs. It's not a side gig.
Speaker 11:And those firms are gonna raise more capital and be stronger partners to the best companies. It wouldn't surprise me if, like, the net number of firms goes down because most firms don't perform. But but but I think if you think about it on an aggregate basis and, like, what lies ahead for venture, it's there's good reason to be extremely optimistic.
Speaker 1:Let's talk about SPVs because I think that might be a piece of what's going on here. Do you does does Greylock historically have a policy around when to pull the SPV off the shelf? I know some firms, they never use them. They never have in their history. Other firms, you know, yeah, they use them as much as they want.
Speaker 1:Yeah.
Speaker 2:They're not even that special.
Speaker 1:They're not yeah. They're I just call them purpose vehicles. I don't call them special purpose vehicles. Just regular purpose vehicles. TV.
Speaker 1:Just internally, walk me through Greylock's thesis on SPVs.
Speaker 11:Our business model is very simple, which is we wanna partner with a small set of founders and be their most meaningful partner. We we keep everything else really simple. We have a single fund. It's a billion dollar vehicle. We've raised billion dollar vehicles consistently over the last fifteen to twenty years.
Speaker 11:Yeah. That billion dollars goes into a really concentrated set of core positions, something like 25 companies.
Speaker 3:Wow.
Speaker 11:And then if we do our job right and we partner with the right teams Mhmm. Some subset of those go on to become iconic public businesses. Mhmm. And the founders do really well. Our investors do well.
Speaker 11:We do well. We're not trying to, like, optimize at the margin and spin up an SPV here and spin up an SPV there. We think it, like, takes the eye off the ball. Like, the only thing that really matters is leading that first or second round in the in the great companies.
Speaker 4:Okay.
Speaker 1:Love that. Do you think that the fact that there are other firms spinning up a lot of SPVs for bigger and bigger deals could be just I'm trying to resolve the cognitive dissonance of, like, I'm looking at a chart going down, down, down in terms of money, and then every day, I'm hearing bigger and bigger numbers around the AI boom and the AI bubble potentially. And it just feels like maybe some of the dollars that are flowing into just tech and growth investments and high growth companies is maybe not being captured by traditional venture capital firms. It might be sitting outside of the normal system. Do you think that's possible?
Speaker 11:Yeah. I think I I think it is. So maybe two part answers. Yeah. Is power laws always dictate a technology and venture.
Speaker 11:Mhmm. AI makes the power law more extreme. Mhmm. So we'll as we're saying, there's gonna be a smaller set of companies, but also a smaller set of firms and capital pools that are involved with those companies and supporting those companies, and they will become larger than ever before. And I just saw the news about the most recent SpaceX tender.
Speaker 11:It's it's just the latest example of that. Yeah. But then the second is you're right. Like, a lot of the capital, especially at the very late stages, may not look like traditional venture. I mean, a lot of it is actually corporate capital.
Speaker 11:If you look at the role that NVIDIA just NVIDIA alone plays in AI financings. Yes. That's a big portion of dollars. SPVs are are for sure a piece. Yeah.
Speaker 11:Other capital pools that we wouldn't view as traditional venture capital firms, crossovers, the
Speaker 1:credit, debt. I mean, there there are there are companies where they're hard tech, and they'll see you'll see a big headline number, 100,000,000, 200,000,000 raised. And, actually, 80% of that's debt because, yeah, they're gonna be buying a building, and you don't wanna pay for that in in equity. And so, yeah, that's another maybe distortion to the the financing story.
Speaker 11:And as a as a as a as a founder, like, you wanna pick the most capital optimal way to finance a business at any junction in time. It's not always going to be traditional venture capital. If there's a that provider or strategic capital provider who doesn't think about ROI on the capital the same way a traditional venture investor would, like, that could be a lot more attractive for you at a certain point in the company's life. So I think it's probably overall healthy for the ecosystem and honestly great for founders. Yeah.
Speaker 11:But that could explain what you're seeing in the the report that you're referencing.
Speaker 1:Talk to me about Greylock Edge. How like, what's the pitch to founders? There's so many different ways to start a new business. I'm I'm I'm interested in how you carved out a unique product there.
Speaker 11:So one thing I love about Greylock is our history is defined by helping founders get started from scratch in our offices. Sure. If you rewind the clock twenty years, there are two companies that got started at adjacent desks in our San Mateo office. One is a company called Palo Alto Networks, which is a ballpark $150,000,000,000 cyber company today, and the second is is a company called Workday. Yeah.
Speaker 11:And since then, we've started other
Speaker 1:we've helped start Sorry. No. We're gonna be celebrating it. Yeah. Keep them going.
Speaker 1:Keep them going. We got two banger companies. Let's go.
Speaker 2:And Do you still have do you still have those desks? Like, do you do you keep them in, a glass box and pull them out pull them out?
Speaker 11:We have we have a variety of good luck charms from that office. I don't think we we've now elevated to the modern standing desks Yeah. Which I don't think were used back then. Mhmm. But but and then I'd say since 2005, we've had another eight or nine companies get started that way, including, you know, abnormal, which is late stage private and others.
Speaker 11:So with Greylock Edge, we took all of that, and we said, hey. Let's go take that to the market so entrepreneurs understand. When they get started, They can work with us before there's an idea, and we will work with them to help identify the right idea. Mhmm. We have nine senior recruiters on our team.
Speaker 11:They place an engineer at a portfolio company every other day, so we'll help build out their initial engineering team. And then we have a large customer development arm that sources, like, somewhere between 40 to 70% of the first two years of pipeline. Yeah. So it's kind of the way I look at it is we're an Ironman suit. You plug into the Ironman suit.
Speaker 11:Yeah. We accelerate you out of the gate. And then once you're on your own, you you kinda get rid the Ironman suit.
Speaker 1:Do you think it's particularly good for b to b enterprise companies? I mean, that that sounds like where because if I'm like, yeah. I'm starting a I'm starting a, like, a consumer company for, you know, Midwestern moms or something, I'm gonna be like, how how are you gonna help me go to market necessarily?
Speaker 11:Exactly. I I'd say our focus is horizontal enterprise software.
Speaker 1:Okay.
Speaker 11:And and what I mean by that is by the way, like, there's 20,000, 21,000 companies in the world that do north of 1,000,000,000 a year in revenue. They control, like, most of IT spend in the world. Yeah. So very simplistically, if you're not a price software entrepreneur Yep. And you can build something that can sell to those 20,000 Yep.
Speaker 11:You can build not just a public company, but a company of the scale of what I just spoke about.
Speaker 1:Yep.
Speaker 11:And for those, we have an understanding and ability to accelerate. It's not gonna apply to everything. What you know? But but for that shape of company, it's very, very successful.
Speaker 1:That's amazing. Cool. Jordy, anything else? This is great.
Speaker 2:Yeah. Do you do you guys have any kind of thesis around what's been happening to SaaS in in public markets? I was listening to the new Invest Like the Best episode yesterday with sorry. I'm blanking on his name. He's talked about space data centers.
Speaker 2:Gavin. Gavin Baker. Gavin Baker. Sorry. So Gavin Baker was on and talking about how he thinks, like, there there's a lot of these enterprise SaaS companies that are not really willing to cut into their margins and lean heavily enough into AI.
Speaker 2:What's your guys' general clearly, you're bullish on the enterprise for these companies that are getting off the ground? Then maybe even late stage companies, what is your general framework for how to think about how SaaS is evolving?
Speaker 11:I think in order to see a new rise in software, you need three things to be true. You need a new pricing model, you need a new underlying software interface, and you need a new data model. Last time that happened was in 2005 with cloud and the rise of those companies. That's happening again now. And in our view, it creates an op it creates the first opportunity.
Speaker 11:By the way, investors have been looking for this for a long time. Like, eight years ago, was mobile. And people were like, mobile CRM, mobile HR software, but that was just a new interface. It wasn't fundamentally disruptive. I think the confluence now with sort of the agentic era is fundamentally disruptive, and we are gonna see us, like, let's say, late stage in public software companies at threat from new startups that come in with an outcome oriented model and agentic based interface and operating directly on the unstructured raw data versus a structured schema.
Speaker 11:And it's it's very disruptive. Right? And, like, you know, we're we're for example, we're investors in a company called Resolve AI, which automates software operations on top of observability tools. Mhmm. But now when you have agents doing all that work instead of users and humans, you have to ask yourself, okay.
Speaker 11:Well, if I'm a large public SaaS co in that space, all of a sudden, I've been disintermediated from my end user. What does that really mean for my long term durability? And so we take, like, a very constructive view on it, which is really accept good for new startups and new companies. I think Gavin was making the comment that these late stage and also public companies, they're in a bit of a stuck between a rock and a hard place because they worry about short term margins. In order to really lean into AI, you have to be willing to take down your margins with the belief that over time, you're gonna drive value and margins will come back up as the unit cost drops.
Speaker 11:A lot of companies are not willing to make that long term investment, and in that dilemma creates the opportunity for startups.
Speaker 2:Mhmm. Makes a lot of sense. Well, thank you. Thank you for joining. Great to meet you.
Speaker 2:This
Speaker 1:is a lot of fun.
Speaker 5:Sure we'll
Speaker 2:be back on soon.
Speaker 8:Thanks for having me, guys.
Speaker 1:We'll talk to soon. Have a good day, and Merry Christmas. Merry Christmas. Gemini three Pro, Google's most intelligent model yet. It's state of the art reasoning.
Speaker 1:Next level vibe coding and deep multimodal understanding. We have our next guest in the Restream waiting room, Nicholas Kellis from X Lite. He's the CEO and the CTO pulling double duty. Some people work 996.
Speaker 6:What's going on? Two jobs at the
Speaker 1:same company. Is that right?
Speaker 9:That is correct.
Speaker 2:I Somebody's gotta do it.
Speaker 1:To me. What what does your day look like? What do you do? What are you building? But, also, walk me through the life of a CEO and a CTO all in the same one body.
Speaker 9:Alright. So a lot to unpack there. Please. So I'll I'll first start with what we're building.
Speaker 1:Yes.
Speaker 9:In order to do that, let me start with some context. So I think it's valuable to take a step back Yeah. And, you know, first recognize that semiconductors are an essential part of modern society.
Speaker 1:Yep.
Speaker 9:They're critical to our economic national infrastructure, you know, in terms of AI, you know, HPC, data, quantum,
Speaker 1:and
Speaker 9:they span all the way to, you know, virtually everything that's under the Christmas tree this year is gonna have semiconductors integrated. So they truly are, you know, probably our our most, you know, important commodity to this nation. And so what X is doing is we're building the world's most powerful lasers to transform the manufacturing of those semiconductors. Mhmm. So we make them better, we make them faster, we make them cheaper, and we make them require less energy to produce.
Speaker 9:Mhmm. So that's what we're doing at X Lite. Yeah. As far as my role, yeah, it's like, I think anybody in a startup, it it is wearing a bunch of hats. I actually get credit for a couple hats.
Speaker 9:Yeah. But, most people don't. So, yeah, we've been, you know, focused on building out the technology. And now, of course, with this LOI, which we're getting a lot of, you know, an out press around, it's really ramping up our efforts to build our prototype and advance to our first commercial products.
Speaker 1:How did you meet Pat Gelsinger? We had him on the show a couple months ago, a couple weeks ago, and it was amazing. A huge fan, but I would love to know about your relationship and how it's developed.
Speaker 9:Yeah. So so met Pat through X Lite. So he was, you know, I'm sure as he described to you, out looking trying to figure out what his next thing was gonna be Yeah. Exploring the world of venture capital. Sure.
Speaker 9:Happened to come to playground, but it was already aware of X Lite and, you know, what we're doing with light and and its applications, lithography. You know, that is something that is near and dear to Pat. Pat is a technical person at heart. He believes very strongly. And the need for this type of, you know, capability to drive the innovation that's gonna bring, you know, leading edge semiconductor manufacturing back to The US.
Speaker 9:So he he kinda sought us out, to some extent. And then from there, it just became, you know, an incredible relationship. Pat has had a profound impact on the company from, you know, just adding that kind of gravitas and cache and recognition of what we're doing through to being you know, he's taken on the undesirable role of trying to make me a better CEO. So he's done and he does everything in between. So I am eternally grateful to him, and I can't give him a high enough regard.
Speaker 3:And can you can you
Speaker 1:take me through the the the the US Department of Commerce announcement, the deal? And mean, I want to know like how the deal came together, how I should think about it from the perspective of is it more of like a venture capital style investment or like a contract to deliver specific things? Walk me through exactly what your relationship with the Department of Commerce will be over the next few years.
Speaker 9:Sure. And hopefully, extends beyond a few years. Yeah. First and foremost, I wanna recognize that, you know, this administration really did approach this with an incredible urgency Mhmm. And creativity.
Speaker 9:Mhmm. And I'll just kinda give a sidelight that I really believe that is going has to be an essential part of our industrial policy going forward.
Speaker 2:Mhmm.
Speaker 9:We cannot continue to believe that the status quo is gonna keep us competitive. Mhmm. So I'm really grateful for that. But I have to emphasize that that urgency and that ability to move quickly was premised on lots of incredibly, you know, diligent work that has done by the Department of Commerce. We've been engaged with them for over two years.
Speaker 9:Mhmm. So there's over two years of tech diligence, of commercial diligence, of financial diligence that they were able to leverage. So they moved quickly. They had a sense of urgency. They're acting creatively, but they there it's really rationally founded.
Speaker 3:Mhmm.
Speaker 2:So what is getting to the first commercial product look like, you know, more tangibly?
Speaker 9:So it it definitely goes through our prototype. So one of the key things that X Lite is doing is we're leveraging very mature technologies that have been developed in the national labs over decades. And so we take these mature technologies that have been, you know, operating in light sources for science, and we're commercializing them for semiconductor manufacturing. So we have the advantage of their mature and proven. We've, you know, taken the opportunity to apply some unique IP and how we bring that system together and how we apply it for semiconductor manufacturing.
Speaker 9:And so we're now in the process of building our first prototype. And this is not a, you know, proof of concept prototype. This is a basically kind of, you know, for lack of a better term, a show me the money prototype. The the semiconductor industry wants to see that, you know, you connect us to a scanner, you expose wafers, it works as it should.
Speaker 1:Mhmm.
Speaker 9:So that's that's the starting point. And then, you know, along that path, we're continuing to work very closely with our customers. Our customers are the fabs Mhmm. And building that, you know, value proposition so that the you know, as soon as we have that first prototype done, we're already gonna be building our first commercial system.
Speaker 1:Yeah. How how much of, your business is, like, capital intensive, actually, just, you know, dollars out the door, facilities, equipment versus human capital intensive? Like, over the next few years, how do you expect to balance the different costs in the business?
Speaker 9:Yeah. So it's a you have to be kind of calibrated when you talk about capital. So I came from quantum computing before this, and, you know, spent a long time building these types of facilities. So compared to quantum fusion, it's not capital intensive. But compared to, you know, SaaS or something like that, it's very capital intensive.
Speaker 9:So it's, know, to build the facilities in the, you know, few hundreds of millions of dollars. And just, you know, kinda getting back to my previous response, because we're leveraging mature technologies, it's you know, it we are able to, you know, kinda stand on the shoulders of a lot of work that's already been done. So from a personnel perspective, we're quite lean. Mhmm. But from, you know, a capital expenditure, it's it's all going in, you know, for the most part, into hardware and to infrastructure to build these facilities out.
Speaker 1:Yeah. That is amazing. Congratulations. I wanna ring the gong.
Speaker 2:We have to. We have to. Congratulations. Very, very cool. Yeah.
Speaker 2:Congrats again to whole team on on the grant. And, yeah, we're we're excited to follow the journey.
Speaker 1:And we will talk to you soon.
Speaker 2:The loop.
Speaker 1:Have a good rest of your day. Goodbye.
Speaker 9:You too. Thanks.
Speaker 1:Let me tell you about getbezel.com. Shop over 26,500 luxury watches, fully authenticated in house by Bezel's team of experts. Our next guest is the CEO of DuPont Registry Group. We I believe he's in the restream waiting room now. We will bring him into the TV panel drama.
Speaker 1:Welcome back. Back in the garage. Thank you for joining the show.
Speaker 10:Okay. How are you?
Speaker 2:Great to have you back.
Speaker 1:Fantastic. What are you in front of today?
Speaker 10:It's a five seventy five m from Ferrari.
Speaker 1:Very nice. Little roof scoop on there. I love that. What else is new in your world? Give us the latest update.
Speaker 1:What news is going on in your world.
Speaker 10:So the big news that we've been working on for a while is that we launched DuPont Registry Live, which is the DuPont Registry online auction platform. Yeah. Completely different value proposition. We are the only online auction platform offering a 100% sell through. Mhmm.
Speaker 10:If you come and you want to sell your car with us, we guarantee that the car will sell at the price that you decide. And the second thing is that for the buyers, we are keep giving fourteen day return policy. Mhmm. It removes buyers' remorse. You can buy that car.
Speaker 10:You can drive it. You can return it. We'll take it back.
Speaker 1:That's crazy. Is that extremely capital intensive? Do you have to raise a bunch of money to make sure that you're guaranteeing liquidity?
Speaker 10:Yeah. We did we did waste capital. We have a we have a bank partner at the moment. We raised $34,000,000 in working capital. Yeah.
Speaker 10:We're working on extending that line by the end of the year. Yeah. And it allows us to acquire the cars. Most of the cars today are own inventory, but we believe that a lot of dealers are gonna sign up as well as private.
Speaker 1:So, I mean, I imagine that there has to be a rigorous vetting process on the way in in that case. Right? You don't you can't just take any any old Nissan Murano cross Cabriolet and throw it on the site. There's a bar. How do you think about setting that bar for what can make it onto the DuPont registration?
Speaker 10:So so we do have a a big location in Nashville. We're actually moving into the location next week. It's a bigger location, 65,000 square foot. Mhmm. So we take ownership of the car.
Speaker 10:We're gonna ship the car to that locations. We're gonna do an inspection that will bring the DuPont registry certification to the car, and then we are taking nice picture of the car. We're pushing it online. Mhmm. And then we we
Speaker 5:make sure
Speaker 2:that our Have you have you guys been specifically acquiring inventory in order to launch platform? Or were you historically holding inventory? Because I I always have leveraged the platform just as a as a buyer, an enthusiast to just browse cars and and know that you guys are sourcing from a ton of different dealerships.
Speaker 10:Yeah. We're sourcing from our dealership partners. We're sourcing from private sellers. This has been going on for the past eighteen months. We're now transacting close to a thousand cars every month.
Speaker 10:Mhmm. And part of those now cars is is the new omnichannel strategy to be able to sell those cars to the potential buyers. We do have dealers today on our platform that are bidding for cars. We do have clients as well. This is the power of the DuPont Registry Group ecosystem.
Speaker 1:Mhmm. What's the most underrated car on DuPont Registry today?
Speaker 10:Right now, the only one that I would bid on for me, personally
Speaker 1:Yeah.
Speaker 10:I have my eyes on that Targa singer by singer.
Speaker 1:That's the one.
Speaker 2:It's a
Speaker 10:beautiful car.
Speaker 1:Yes.
Speaker 10:It's olive green. It's Targa. It's just amazing.
Speaker 1:Yeah. Yeah. It looks remarkable.
Speaker 2:It's Stunning. What what are you like, how how is the, I can understand, you know, having the having the guarantees, having that return policy, having the certification, that all makes a lot of sense. It's nicely counter positioned against other auction platforms, both new and old that are kind of relying on kind of winging it. But what are am I missing anything around like the other ways in which the platform is opinionated or differentiated?
Speaker 10:No. It's exactly that. Those are the two main differentiator. This is our secret ingredient. This is where how we are differentiating from platforms that are also doing online auction.
Speaker 10:It's it's very disruptive. A lot of people are asking us, how do you do it? This is our secret sauce. We have the platform, and we have the ecosystem to making us able to do these kind of things.
Speaker 1:Yeah. Yeah. I mean, it's a great great value prop. Makes a ton of sense.
Speaker 2:What are you what are you most excited about for 2026 in the industry broadly? How did you react to some of the regulatory changes here in The US? Are you expecting to be selling a bunch of mini, mini Toyota trucks? Or I don't know if those will meet the bar. But yes, what's most exciting to you broadly in
Speaker 10:the Yes. For me, the most exciting things, there is a report coming on Friday. It was it's a report done by Boston Consulting Group, and they they used our data and our audience to run the report. It's estimating the luxury car market in The US to be a $110,000,000,000, and it's a market that in the next ten years is going to double. Mhmm.
Speaker 10:We actually see that in the transaction we run now. There is a lot of potential. All the tariffs, etcetera, are actually fueling the luxury used car market at the moment. There is a lot of demand for those cars. And our buyers are really, really looking to have convenience to be able to transact online.
Speaker 10:And this is what we're building. Over the next eighteen months, you will see a massive technology transformation into Pawn Registry Group. And we will start enabling transactions online with the capacity for any buyer to buy the car from your phone, get it delivered.
Speaker 1:Love it. Question from the chat. How are you thinking about Chinese electric vehicles? We've talked about BYD on the show and Xiaomi. Do you think that there's promise there, opportunity there?
Speaker 1:Do you understand how your business might integrate with them? Because they're not being sold in The U. S. Yet, but do you have predictions for where that market might go?
Speaker 10:I mean, electric cars, some of them are amazing electric cars, and we've seen one of them beat the world record for the fastest cars on the road. Yeah. To me, thirty years from now, everyone is in a robotaxi. No one is driving for their day to day daily driver.
Speaker 1:Yep.
Speaker 10:And they're gonna drive on weekends to have fun.
Speaker 4:Yep.
Speaker 10:Would you drive a Chinese electric car or would you drive a manual dated Ferrari?
Speaker 1:Right? Great take.
Speaker 10:Yep. So our business, the business we're in, I think we're fine.
Speaker 1:You think you're fine. I love it.
Speaker 2:Do you think do you think there'll actually be a resurgence in kind of like track and and racing culture? I know there's some change of I don't know if this is public, but there's a a real estate developer that's currently buying a a racetrack here in California. I think there could be some renewed and if people no longer have to drive on their commute, I think there will be more excitement around track days and things like that. But does that align?
Speaker 10:Of course, it's completely aligned with our strategy. We have a lot of experiences today where we get people on the road, we are making sure that they can drive their cars in a very safe condition, but in the best condition. It includes track days. It includes rallies in the best places around the world. And I do believe that there will be more and more of that in the future.
Speaker 1:Yeah. Maybe that's the next filter that you add. I'm looking at DuPont Registry, and I see you you can filter by price, mileage, year, you know, transmission, drivetrain, track only. You gotta give us a track only, a filter, but hopefully soon. I I know the product's continually iterating.
Speaker 1:But thank you so much for taking the time to come chat with us.
Speaker 2:Yeah. Great to get the update. Congrats on on all the all the progress.
Speaker 1:Always a great time.
Speaker 2:Excited to start bidding myself. We'll talk to you soon. Great to
Speaker 1:see you.
Speaker 10:Thank you, everyone.
Speaker 1:Have a good one. Goodbye. Let me tell you about 8sleep.com. Exceptional sleep without exception. Fall asleep faster, sleep deeper, wake up energized.
Speaker 2:How'd you do last night?
Speaker 1:I think I've been picking it back up while I pull out my oh, I don't even know if my phone's around here. You pull up your number. Gonna tell you about adquick.com out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Play and buy and measure out of home with precision with AdQuick.
Speaker 1:And, oh, there's my phone. Let's see how I did. Well, we have our next guest here live in the re in in the not the restream waiting room, the real stream waiting room, the TVP and UltraDome waiting room. We have Philip from Vercada. Welcome to the show.
Speaker 1:I wanna here, introduce yourself, but then get ready. Just go hit that gong right now. Let's do it.
Speaker 2:Let's do it.
Speaker 1:Let's do it. That you don't know you don't know anything about him or his company yet. But you know But you know he's here for a good reason because the company has of course raised money. But please introduce yourself, introduce the company, and then we'll get into the news.
Speaker 3:Sure. Yeah. So excited to be here. I'm Philip. I'm one of the founders and CEO of a company called Verkada.
Speaker 3:Yeah. And Verkada is solving a super important problem in the world, which is the problem of safety in the physical world. And we solved that problem with AI. Yeah. We solved that problem with software.
Speaker 3:Yeah. And we deliver that through devices like cameras, like door access controllers, alarm systems and so on.
Speaker 1:Yeah. So I mean, Anderol in some ways is physical security for the military flock safety at the municipal level. Are you at the b to b level, the b to c level? Who are your customers?
Speaker 3:Yeah. So think of think of enterprises. Think of schools. Think of buildings. Think of anyone and everyone in the world places you probably interact with every day.
Speaker 3:Sure. Airports, hospitals. If you go to the gym Airports in
Speaker 1:the gym. The gym's gonna be in the airport. You get two for one there. There you So you get two Do you for one that?
Speaker 3:But but let me make it real for you
Speaker 1:Yes, like
Speaker 3:an example. So, you know, we do like a 100 of the Fortune 500 users today. Okay. Wow. But to give you a sense
Speaker 1:And and and that's in their office buildings, other campuses
Speaker 3:Office buildings, campuses Okay. The
Speaker 2:400
Speaker 1:new ones?
Speaker 3:We're getting after them. Yes. So we'll get them all. But but yet to give to put it in perspective, I think you know, it's sort of like an example makes sense. Just in LA, recently we got a customer which is terawatts, right?
Speaker 3:They are a commercial vehicle charging station. They charge the self driving cars, the way most of the world, you name it. And their challenge is they've got you know kind of premises outdoors, parking lots where all expensive vehicles come in And they need to secure that. Yep. Right?
Speaker 3:And they don't want a guard on every parking lot. Yeah. And so what's their best next alternative? Well, up to this point it was you can put cameras and then you can hire people watching cameras. And cameras very expensive.
Speaker 3:And if you know anything about people, they're really bad at watching video. Oh, yeah.
Speaker 2:Especially because you could watch three hundred hours and there's only thirty seconds.
Speaker 1:Yeah. Exactly. And so you take out your phone one time to watch that one TikTok and then
Speaker 2:It was a really good meme.
Speaker 1:It was
Speaker 2:really good meme.
Speaker 3:And you miss exactly what's going on. You miss the guy jumping defense. You miss the guy stealing the cable or doing whatever. And so that's what we're able to do in real time.
Speaker 1:I imagine this product sells itself because if if if you don't have security, your salespeople can just go straight to the CEO's office. They'll just break right in. Okay.
Speaker 2:So you raised new money from capital G Yeah. Google, $5,800,000,000 valuation. Mhmm. You are it sounds like some some or a good amount of it was used for was secondary. Yeah.
Speaker 2:Mhmm. When did you start the company? I I think What were the first products? Yeah. What what were the first products?
Speaker 3:Yeah. Looks like I'm just give you like a brief on the business and how it's grown. Right? So the business is about nine years old, almost ten years old, you know, in its history. We started in 2016.
Speaker 3:Sorry.
Speaker 2:You can't you can't hear that. I just No. Just that.
Speaker 1:Is the overnight success one. But yeah.
Speaker 3:It's been ten years.
Speaker 1:Ten years.
Speaker 3:We're at 30,000 customers globally, 17 offices around the world. Like I said, a 100 of the Fortune 500. So that's that's kind of the journey of the business. Started in video security initially.
Speaker 2:Okay.
Speaker 3:So that was the first idea. And then from there, we expanded to a platform of physical security.
Speaker 1:Product video security, was that a white labeled video camera and then you were doing the the SaaS product, the software around it? Or were you building hardware on day one? How did that all
Speaker 3:Yeah. So of it like an end to end solution. Right? Like think of it almost like the iPhone of the video security and buy it from us. We guarantee it.
Speaker 3:It works. Yeah. You know, do the hardware. We do the software that runs on the hardware. We do the cloud software and we seamlessly integrate it all together.
Speaker 3:Yep. And that was the magic that our customers fell in love with from the beginning. Yep. That's where we started. So that's 2016 Yeah.
Speaker 3:2017 and we launched the camera. That goes really well. I mean the market
Speaker 1:Yeah.
Speaker 3:You know, loved the product when we launched Yep. It. A few years
Speaker 2:Was there any doubt or was it just up into the right immediately?
Speaker 3:Well, know, it's it's interesting. Like there was doubt at the very, very beginning. Right? Like in 2016, we were starting the company and people said, Philip, why are you doing hardware? Why not just do software?
Speaker 3:Just build, you know, just build back then computer vision. It wasn't even AI back then. Right? Were so
Speaker 1:many hardware Hardware failures around that time
Speaker 3:is hard. Right? Yeah. So I I get why people were skeptical. Yeah.
Speaker 3:But then once we got the product to market, people got it. Yeah. And it just worked well. The customer reception was phenomenal and it was one of those stories where it just took off. Yeah.
Speaker 3:And from there, you know, two three years into the business, we realized that the opportunity is much larger Right? Than Yeah. It's not just video security. Mhmm. It's actually this broader world of physical security.
Speaker 3:The customer base has a dream of an integrated system that solves problems. Yeah. So we started looking at access control. Think of all the badge readers how you buildings. We started looking at alarms, massive market.
Speaker 3:Every building that closes at night has an alarm system. Sure. Yeah. You know, all of those send you false alarms. They've been invented years and years ago.
Speaker 3:All it takes is a truck drives by, sensor shakes and you're getting a call at 2AM.
Speaker 1:Oh, sure.
Speaker 3:What is that about? Right? Yeah. Police stopped going to alarms because they get so many false alarms. So let's solve that.
Speaker 1:It's the same thing with car alarms on the street.
Speaker 3:Exactly. Car alarm. Car is
Speaker 1:going off. No one even just psychologically in our society really stops everything if they hear a car alarm going out.
Speaker 3:Exactly.
Speaker 1:If you're at a restaurant, you're not gonna be like, I gotta go check on that. Something serious is happening. You're like, yeah, car alarm.
Speaker 3:So you know, so that's where it evolved to.
Speaker 1:We Yeah.
Speaker 3:You know, we now have the full suite, full platform. I'm super stoked like one of the cool things is you know, we it's only been like four years, five years Yeah. Really since we expanded beyond physical security. Yeah. 77% of my core customers now Mhmm.
Speaker 3:Use two or more of our products. Right? Mhmm. 50% use three or more and so on and so forth. So this platform story is really Yeah.
Speaker 3:Yeah. Resonating is playing out really nicely.
Speaker 2:Will we see robots integrated into your platform? I've had this thesis that not not in the most original thought but this idea that like security guards are primarily there to just be a human that is like at least a human shaped thing that is on the premises Mhmm. Providing this sort of return effect. And I could see humanoid robots getting traction faster and just standing in places that need to be secured and being like having a physical presence.
Speaker 1:Sort of looking intimidating.
Speaker 2:Looking intimidating Yep. Before they're really good at like actually adding value in my home. Yeah. And I don't know. I'm sure you've like think about human
Speaker 3:I mean, I think you might have some of that. I mean, I don't know how close that future is. Right? But I think, know, fundamentally if you think about physical security, it is a human problem. And I think humans are not going away from the problem of solving physical security for other humans.
Speaker 2:Yeah. So
Speaker 3:yes, we might have robots. Yes, we might have sensors.
Speaker 1:Mhmm.
Speaker 3:But ultimately at the end of the day, I think you know, security personnel is going to exist and is going to address those human problems. Yeah. It's just the technologies that we're building technologies like humanoid robots will make that security personnel have a superpower in a way. Right? Yeah.
Speaker 3:It'll make them more aware. It'll make them do more useful things. It will save them hours of time watching mindless video or missing things focus them on actually resolving the emergency at hand.
Speaker 1:Yeah. It's interesting thinking about the the the role of the human security guard. Like, you can almost think about it as like a bundle of tasks or or or or jobs to be done. One is basically a camera that you can move, you know security Right. Guard can go look behind that gong and see if there's something But going on at the same time, like, you can just put a lot of cameras and Totally.
Speaker 1:Get coverage. Yep. But a security guard can also go and ask for more context. Right. Say, oh, hey, are you supposed to be here?
Speaker 1:Let's have a conversation about And that's something that we're not quite there with the humanoid robot. Right. And so are there any other formats that you're excited about like the the four wheeled robots or the drones? Totally. I mean, I saw doesn't Amazon sell a a drone camera on your house?
Speaker 1:Inside your house, which I thought was very odd. I don't know if that product's doing well. But how do you think about the other form factors that might be a little bit more economical, a little bit more tractable before we get to the full humanoid? I
Speaker 3:think look the reality of it is is I think you know the cost of sensors and the cost of being able to be aware of what's going on is just going down
Speaker 1:a Sure.
Speaker 3:Sure. It's not a new idea. Right? We've had sensors in the world you know, for decades really. We've we've had it.
Speaker 3:Right? And so, know, my sense is the ease of deployment of cameras, the form factors of cameras, it's gonna get easier. It's gonna get simpler. It's gonna be easier for the customer to use. Mhmm.
Speaker 3:And it will take all sorts of form factors. Right? It might be a camera that's drilled into the ceiling. It might be a camera that's running on solar power. It might be a camera that's on a drone.
Speaker 3:Yeah. And by the way, might not just be cameras. Right? It might be radar. It might be microphone.
Speaker 3:It might be other sensors.
Speaker 1:Yeah.
Speaker 3:I think the challenge becomes what do you do with that information and how do you effectively process that information Yeah. Ideally in real time, so that we can mitigate the situations. Right? Like you don't want to
Speaker 2:You don't wanna just
Speaker 3:be a historian. The fact, yeah.
Speaker 2:Same as this happens. So like, you guys do work with
Speaker 1:And we have great footage of you getting robbed. Right. It's amazing.
Speaker 2:Yeah. Do you do you work with museums?
Speaker 3:Yeah. So we we work with, you know, all forms of customers all around the world. I mean, you bring up museums which pops to my mind immediately the Louvre Yeah. What happened there? Which is crazy.
Speaker 3:Right? Yeah. I mean, in broad daylight, you know, people came with a, you know, with a lift and Yeah. Got in there. But it's actually a very difficult problem to solve.
Speaker 3:Yeah. Because if you think about it, they have to secure the perimeter of that building. And if you've ever been to that building it's a massive structure. If you literally had humans or even robots roaming around that building, that would be a lot of humans and a lot Right? And so one of the things we're excited about is camera technology paired with AI is now getting to the point where monitoring for things like that is is more reliable than humans doing it.
Speaker 3:It's faster than human humans doing it. And so in a situation like that we could totally alert the physical security response. Means like hey something suspicious is going on right here, right? Yeah. And we could do that in real time with very high accuracy without missing events, right?
Speaker 3:So those type of situations we think we can can solve.
Speaker 1:Yeah. Help me walk through how AI actually impacts like decision making on top of a sensor platform. Because I imagine, you know, the the first version was probably just some business logic. Yeah. If Movement send push notification or email or something, then you get to some sort of heuristic based, you know, linear regression or something.
Speaker 1:But now you actually could take a video and upload it to an LLM and ask it, does this look suspicious? And it would just tell you like, yeah, that does look suspicious or not. Yeah. Are we there yet? Are we using generative AI?
Speaker 1:Are we using transformer based models for this stuff? Like, what's the state of the art?
Speaker 3:Yeah. Look, so the the the state of the art frankly is it's amazing. And the the amount of progress in the market in the last two years Yeah. Has been just phenomenal. Yeah.
Speaker 3:Right? Like if you take a video clip and I don't know, take it and upload it into Gemini, Gemini will know everything that happened in that video clip and it just blows your mind. Yeah. Like five years ago that was science fiction, today that's reality. So you know we rely on some of that.
Speaker 3:Right? And and I think the way we think about that is you know we you know we try understand what's going on in all of these scenes Mhmm. In real time with particular sensitivity to things that might be security incident related. Right? And so if you think about that you know kind of premise like what is common to all security incidents or most of them.
Speaker 3:Well, mostly involve humans. They mostly involve vehicles.
Speaker 1:There's at least some motion in There's
Speaker 3:some motion going on. That was
Speaker 1:the basis, right? So
Speaker 3:ten years ago You
Speaker 1:don't need to just be uploading, know, oh there's ten seconds of video where nothing happens upload it to Gemini, pay the token, no way.
Speaker 3:Yeah. Yeah. Exactly. Well, so you're onto something. Right?
Speaker 3:So so so I think that's that's kind of the crux of it. Which is like processing all of the video from all sensors and all cameras
Speaker 1:Yeah.
Speaker 3:Today is still prohibitively expensive. Sure. And so you can think of almost as like a layered filtering approach. Right? Yep.
Speaker 3:We use different heuristics and different mechanisms.
Speaker 1:Yeah. Yeah.
Speaker 3:Some on the edge on the processor that's on the camera, some then in the cloud and some of like heavier models that we offload to. Mhmm. But with that full stack we're able to you know discern things that really matter and that might be something like you know a person climbing a fence.
Speaker 6:Yeah.
Speaker 3:Yeah. Right? Or a person carrying an object or an object left behind or you know soon enough a person pulling a weapon.
Speaker 1:Yeah. Yeah. Interesting. Is there a demand for sort of on premise inference for any security stuff like this?
Speaker 4:Well Do
Speaker 1:you see do you feel the
Speaker 3:I I think look at the as I said, I mean the whole thing is you know, how do you deliver this inference at scale Mhmm. At a reasonable cost that makes sense Mhmm. To you know, kind of the broad base of customers. And I think the only way to do that frankly is to do some of that inference on premise. Yeah.
Speaker 3:The way we think about that is we do that on the edge on our device. The two reasons for it, one is you know purely the inference cost. The second is, actually if you think about it most of the world is actually not connected with fast enough bandwidth Mhmm. To push all the high quality high resolution data in real time to the cloud to do the processing in the cloud. Yeah.
Speaker 3:And so that's yet another reason that we you know take this like you know, kind of hybrid cloud approach as we call it, where we do some processing on the edge. That's been phenomenal for our Yeah. Devices.
Speaker 1:How do you think about pricing for nonprofits, for more sympathetic audiences? When I think about like security for, you know, a big tech company, I'm like, they can pay the full price. But for a local school
Speaker 3:Yeah.
Speaker 1:Who might be worried about an intruder or some sort of, you know, a disastrous situation that could happen at a Sure. At a public school, you know, you don't want them it would just feel so bad if it was like Right. They they they almost said yes to the contract, it was just out of reach. Yeah. How do you think about making sure that you're delivering the product?
Speaker 3:Yeah. So look, we try to be flexible and understand our clients and their needs. In some product categories, we actually even have, you know, kind of special pricing for that, you know, for that. But you bring up a good point, right? Schools are a big customer segment for us Sure.
Speaker 3:Particularly in The US, k 12 education. And you know some of it stems from you know kind of the the very scary security issues.
Speaker 1:Of course.
Speaker 3:But what we're finding which is really interesting is you know the school might invest in our system to sort of you know prepare for these dramatic scenarios but then they're finding so many more daily uses
Speaker 1:Okay.
Speaker 3:Because we had made the software intuitive, right? Yeah. So we're solving problems like kids vaping on campus or kids bullying each other. Right? Or True.
Speaker 3:You know, I love the cases where like the principal sends us some video of like, know, these two kids got into into a fight and I was able to pull it up on my phone and and figure it out. Oh and by the way, could like on my phone, you know, quickly obscure the faces of other kids in the scene and share the two kids that were in trouble with the parents. Right? So
Speaker 1:things like that are
Speaker 3:you know, in my mind, it's Yeah. Yeah. Positive outcome. You're you're building it out because you're, you know, you're going after the very scary problems, but there are so many more positive externalities.
Speaker 4:It's a
Speaker 1:completely different lifestyle. Used to be able to
Speaker 2:You used able to say You used
Speaker 1:to be able throw down and get away with it.
Speaker 3:Well, let's be real. Kids are creative, right? So they will do fun stuff.
Speaker 1:That's amazing.
Speaker 2:What's what's next? You'll get the rest of the Fortune 500, the other 400. Are you gonna go public at at some point? You wanna stay private forever?
Speaker 3:Yeah. Look. I mean, I think we're a business that is definitely going to be a public company. If you think about it, we've got a market that supports it 55,000,000,000 a year in spend in the categories that we operate in today. That six product categories we're chasing other adjacencies massive customer adoption.
Speaker 3:Our customers are buying more from us every year. So a customer who buys Vercada twelve months later they double their spend. 24 later they triple and so on and so forth. So it's the kind of business that has the profile to be a public company. We're not ready to make that announcement today yet.
Speaker 2:Of course. Of course.
Speaker 3:But stay tuned and yeah. We'll keep you posted.
Speaker 2:Go for it.
Speaker 1:About like the supply chain? I mean, if you're building physical hardware, I imagine that the tariff, like Liberation Day was probably stressful to you. How are you thinking about what and also security is important. Right? This is, like, potentially critical depending on who you're selling to.
Speaker 1:How do you think about building out your supply chain for manufacturing?
Speaker 3:Yeah. Look, so yeah, lots of change in geopolitics. Obviously, we have a, you know, kind of Asia heavy supply chain. We started in Taiwan. We diversified away from Taiwan.
Speaker 3:So we've got, know, multiple regions in Asia where we manufacture Yeah. You know, our products.
Speaker 1:And there's also just different pieces like, you know, a plastic housing coming from China is different than a semiconductor coming from China. Right?
Speaker 3:Yeah. Yeah. Exactly. And then, you know, then the chips and the RAM and you know, all the different components. But Yeah.
Speaker 3:Look, I would say over the last couple of years, we've diversified our supply chain Mhmm. You know quite a bit. Yeah. So we feel you know like we're in a good spot as it comes to that.
Speaker 1:That's cool. Yeah. Any is there anything that you plan on like reshoring or you're thinking about or looking about making in America? Is that an interesting opportunity?
Speaker 3:You know, not at the moment. Yeah. Not at the moment.
Speaker 1:Mhmm. Yeah. Maybe maybe in the future. Don't know. Yeah.
Speaker 1:Maybe. Anyway, thank you. Do you have anything else, Jordy?
Speaker 2:No. Great to
Speaker 1:meet This is fantastic. Congrats on the whole team.
Speaker 3:You so much.
Speaker 1:Thanks for
Speaker 3:having us fun to be here.
Speaker 1:This is great. We
Speaker 2:need we need vodka.
Speaker 3:We do. We do. Let's get, like, let's get you
Speaker 1:Thank you so much for having me on the show. I'm gonna tell you about wander.com. Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home, but better.
Speaker 2:We got talk about
Speaker 1:up the show by just reading this post because I just thought of Tyler immediately when this post came out from Jonah Katz. He says, great job on that project, man. I really like the way you prompted Claude and did nothing else at all. That's
Speaker 8:Claude is a great model.
Speaker 1:Claude, it's a good model.
Speaker 2:Good model, sir.
Speaker 1:It's a good it's a good slop app that barely works.
Speaker 2:Well, we have to actually close
Speaker 1:show that you tell me. Really appreciate you.
Speaker 2:To actually close on this post from Charlie Puth.
Speaker 1:Oh, yes.
Speaker 2:He says, hi, Elon. These sonic booms have gotten progressively louder since they started launching the rockets in Santa Barbara. He's talking about van Vandenberg Yeah. Air Force Base. This one at 3AM today felt like a 150 to a 160 decibels violently shook our whole house and really frightened my pregnant wife.
Speaker 2:I hope they do not get Anyways, I I was far enough away. I didn't didn't hear anything. Given But the given the given the pace at which, I think the the number of launches
Speaker 1:You see this poses? You may wanna consider you may wanna reconsider living near Vandenberg. Launch cadence is about to hit a 100 per year from two complexes. So you're just gonna have sonic booms, like, every every 24 hours eventually. Bizarre.
Speaker 1:The there is a community note on this. People are kinda going back and forth. Says SpaceX does not launch rockets from Santa Barbara. They launch it from Vandenberg, which is 68 miles north. But he might be saying Santa Barbara County, or it might be going past Santa Barbara.
Speaker 1:But, I mean, the outrage from the Santa Barbara crew, if this is a real thing, is gonna be intense. You got
Speaker 2:mean, I it's really the Montecito
Speaker 1:Ellen DeGeneres is hanging out there.
Speaker 2:It's the Montecito crew that will really come down.
Speaker 1:Santa Barbara. It's the it's the it's the Montecito of of California. I don't know.
Speaker 2:No. You mean it's the Connecticut?
Speaker 1:Yeah. No. No. It's not the Connecticut. I don't know.
Speaker 1:I haven't I haven't mapped it. I actually don't know. It's the Catskills. Right? Isn't the Catskills Upstate?
Speaker 1:It's kind of Upstate New York coded.
Speaker 2:Yeah.
Speaker 1:Right?
Speaker 2:I'd say so.
Speaker 1:Something like that. I don't know. We'll have to get some resident New Yorker to break it down for us. But, yeah, people are people are going back and forth. I was I was digging into, is this even possible?
Speaker 1:Can it really get up that high? I feel like we need Brian Johnson to weigh in on this since since he is he's both you know, I believe he's like a big Elon bull, but he's also extremely sensitive to loud noises. And so I'm sure he'd get up
Speaker 2:there and discuss later. Final final post. Got We'll start with a black pill and then a white pill. Okay. On the topic of Southern California, this person Sam says, it's actually kind of crazy how washed LA is as a city right now.
Speaker 2:Lots and lots of closed failing restaurants. The wages here are shockingly low compared to cost of living. Film industry still hasn't recovered from that double strike two years ago. I've been saying, it's been kind of feel like Detroit energy lately.
Speaker 1:Don't come at me with that
Speaker 2:negativity, brother. Trevor Bring
Speaker 1:it
Speaker 2:says, things are definitely changing and will be painful for a bit, but the glass half full take is that all the boomers who held on to power for far too long are being shaken out. New blood pumping in every corner of the city. Next twenty years is going to be magic.
Speaker 1:Wow. What is this picture he's attached? This is hilarious. I like this.
Speaker 2:It's Randy Newman, I love LA.
Speaker 1:Okay. Okay.
Speaker 2:It's the music video.
Speaker 1:Yeah. Well, this is a this is a great way to play it out. I love LA. I love that song. Anyway, thank you for tuning in today.
Speaker 1:We will see you tomorrow at 11AM Pacific Sharp. Leave us five stars on Apple Podcasts and Spotify, and have a great day. Merry Merry Christmas. Merry Christmas to you. The holiday season is upon us, and we love you.
Speaker 1:We'll see you tomorrow. Goodbye.