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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 Today is Friday, 06/06/2025. We are live from the TVPN Ultra Dome. The temple of technology.
Speaker 2:The fortress of finance. The capital of capital.
Speaker 1:We have an exciting show for you today. Folks, we're gonna be continuing to react to the Trump Elon breakup. I haven't seen a ton of new news, but we'll cover anything that's popped up most recently.
Speaker 2:No facts, but there are vibes.
Speaker 1:Yeah. There are there are definitely vibes. Plenty of them. But I wanted to give a little recap on what's happening, what happened this week on TBPN, because we are launching a new product every week. We will be doing a a recap video, trying to boil down the fifteen hours that we produce into something that's, you know, one hour, two hours, something like that.
Speaker 1:Yeah. Groundbreaking. Digestible TVPN. And so this week, what were the top stories? What were the most interesting things that we learned?
Speaker 2:One Different interviews.
Speaker 1:The the the Ukraine drone attack. That was huge. Yep. Operation spider web, a whole ton of of drones were smuggled into Russia in shipping containers. They emerged and went out and attacked bombers.
Speaker 1:We had Soren Monroe Anderson from Niros on the show to break that down for us. We also talked to Connor Love at Lightspeed who does a lot of in defense tech investing. And, of course, a couple weeks ago, we had Eric Prince on the show, the founder of Blackwater, and he had kind of predicted that the Ukrainian military was perhaps under rated. And Yep. And we might be seeing like something like this in the future.
Speaker 1:And so that was interesting to see to see play out. So we will take you through those kind of interviews, recap some of those. Then, obviously, we had the absolute meltdown between between President Donald Trump and Elon Musk. That unfolded on X and Truth Social. The two leaders Dueling Dueling social social platform.
Speaker 1:Exactly. And although it's a highly political story, there are big business implications.
Speaker 3:Totally.
Speaker 1:Talking about what's gonna happen in space between NASA, Boeing, different launch providers.
Speaker 2:Yeah. The implications for Tesla, SpaceX Tesla. Rivia. Neuralink, even The Boring Company.
Speaker 1:Right? There's a lot of stuff
Speaker 2:that makes are heavily regulated.
Speaker 1:Yep.
Speaker 2:And, the potential impacts are substantial.
Speaker 1:Yeah. Then we also, had had, some earlier stage founders on the show. Roy from Cluly came on and went pretty viral, put on a show.
Speaker 4:You're surrounded by journalists. Hold your position.
Speaker 1:Clearly is a a service help you cheat on everything. Yep. We got to actually try the app. Someone was asking that was pushing us to try it and see how good the product is. But, regardless of the product, he's also a phenomenal marketer and he came on
Speaker 2:and put on absolute show. And, he's printing apparently.
Speaker 1:Yeah. He's doing great.
Speaker 2:He can't spend all the money that they're bringing in.
Speaker 1:And, we'll give you an update on Roy and see where that business is. And then, Kian
Speaker 2:Of from
Speaker 1:nucleus came on in to launch nucleus embryo, which he calls the ever genetic optimization software that helps parents give their children the best possible start in life.
Speaker 2:Quite a lot of controversy there on the timeline this week. Lots of people hate it. A lot of people love it. Yeah. And we'll let you It's been kind of decide for yourselves.
Speaker 1:And then, we had a whole bunch of AI experts on the show from Google, OpenAI, and Anthropic. Got to
Speaker 2:the front
Speaker 1:leading edge of the debates around AI AI LL Poor John yesterday.
Speaker 2:You were fighting as long as you could. You didn't wanna talk about drama. You got dragged into it. But we did get some great coverage from Mark Chen at OpenAI as well as Sholto over at Anthropic.
Speaker 1:Yeah. It was a lot of fun. Anyway, let's go into ramp. Time is money. Save both.
Speaker 1:Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. No. Let's go into the secondary reaction to the Trump Elon meltdown. There's not
Speaker 2:a lot. Tesla's up 5% today.
Speaker 1:After being down they were they were down 17 or
Speaker 5:they closed down?
Speaker 2:I mean, they're down They were down. 12 and a half percent over the past five days.
Speaker 1:Okay.
Speaker 2:So still not a great week.
Speaker 1:Okay.
Speaker 2:Just hovering on that hovering under that $1,000,000,000,000 market cap.
Speaker 1:Got
Speaker 2:it. But, could be worse.
Speaker 1:And, there's, you know, the the timeline is still filled with Trump, Elon Post, Jason Kallikanis from the All In Podcast. It's a must listen episode this week. This is this is what they were built for. He posts just a dejected meme. Although, don't even know, is this from Mountainhead?
Speaker 1:Is this a screen screenshot from Mountainhead? This this post by Jay Cal? With the Yes.
Speaker 6:The dejected
Speaker 2:How do go That that I think is the character that Jay Cal most sort of sees himself Okay. Okay. Got the friend in the group that It's funny. So this friend in the group has like a meditation app
Speaker 1:Yeah.
Speaker 2:And one of the other characters acquires it for 2,000,000,000 to get him into the billion dollar club.
Speaker 1:Wait. And is Jay Callan investor in Callan? Callan. That's hilarious. Wow.
Speaker 1:That's awesome. Congrats to them. Fred Delicious says, reminder that this all started with him carrying a sink. Shows Elon carrying the sink into X and
Speaker 2:then he One thing led to another. Gotta say he looks younger and happier Yeah. In that photo than we've seen him in a while. It was it was Politics will wear on you.
Speaker 1:Definitely ages. You've seen those photos of like Barack Obama before and after. Yeah. It's like eight years and he's like gone gray.
Speaker 6:Yeah.
Speaker 1:He's like he's bored.
Speaker 2:Absolutely brutal.
Speaker 1:This was this was a fascinating This was genuinely a fascinating Yeah.
Speaker 2:Back when we were live yesterday Yeah. We were covering, in light of the president's statement about the cancellation of my government contract, SpaceX will begin decommissioning its Dragon spacecraft immediately. We had Deleon react to that. And some random tiny account that just looks like I guess they're verified. So it's a real account.
Speaker 1:Yeah.
Speaker 2:Says this is a shame this back and you're both better than this. Cool off and take a step back for a couple days. Elon says, good advice. Okay. We won't decommission Dragon.
Speaker 1:It's so great that he's just reacting to this. I mean, the funniest thing about all of this is that, you know, it was like it was like, this is the only new story. Like you have to react to this. This is the most important thing. And I was like, oh, like we get the Financial Times every day.
Speaker 1:Like if this is a business story like it should be on the cover. Right? It's not. Yep. The top the top the top story in the Financial Times today is Trump and Xi Jinping dialed down rhetoric and agreed to new round of trade talks.
Speaker 1:US president says meeting will be soon. State invitations extended. Investors remain cautious. And and then also, there's a story in here from the failed startup builder AI owes cash to intelligence firm and litigation lawyers. And so, know, the the global economy marches on while
Speaker 2:Yeah. Mean, was something else The
Speaker 1:the kings of drama in in
Speaker 2:I mean, the fact that somebody was calling this, I I forget the account, but they said, we effectively had the political equivalent of a tactical nuke
Speaker 1:Yes.
Speaker 2:Yesterday. And the S and P is up almost 2% over the past five days.
Speaker 1:So wearing
Speaker 2:one, it sits for it. We're celebrating our IPOs today. Let's give it up for the stock market. Two
Speaker 1:individuals coming on, two guests coming on to talk about
Speaker 2:Yeah. We didn't we even talk about our white suits. Yeah. The Circle IPO
Speaker 1:Circle
Speaker 2:IPO It's been
Speaker 1:way up.
Speaker 2:Tremendous success. Huge demand for coins. You know, very very excited IPO window is open least if you're a pure play stable coin company. I believe Circle is now valued at about a of Coinbase Yep. Which is fascinating considering that a large amount of Circle's revenue actually goes to to Coinbase.
Speaker 2:Yeah. But that's Absolutely. Great for Circle and the whole team and good for the market. And I'm very excited to talk with Jeremy in a little And
Speaker 1:if you're designing the next product to that you plan on taking public, go to figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. Get started at figma.com. Simone Saeed says, deeply hope someone remembered to put Luke Feritore at a shopper out of Saigon.
Speaker 1:Let's hear it for Luke. Scroll respecter. You know, he's gonna be on to something bigger and better soon. Out of the swamp, into the valley.
Speaker 2:At this point, I think he could do a 100 on 500
Speaker 1:Oh my god.
Speaker 2:Out the gates. Like, I think he could get that round done. I think he could get that round
Speaker 1:somehow like, I don't know, too humble to do that.
Speaker 2:No. He's not. He's a humble humble guy.
Speaker 5:But he
Speaker 1:But he could. Really could.
Speaker 2:All that matters is that he could. Yeah. So.
Speaker 1:It'd be amazing. And so, there's a couple Poly markets that we should pull up. I I have a screenshot
Speaker 2:here Bigger.
Speaker 1:But I'd like you to pull up
Speaker 2:the The bigger news. We gotta give it up to the Poly market team. Poly market is the official prediction market of x.
Speaker 1:Very exciting.
Speaker 2:We had heard something like this was in the works, but I didn't
Speaker 1:Well, it went back to the of there was a Kalshi rumor, and then it it wound up
Speaker 2:Well, no. It wasn't a Kalshi rumor. Kalshi preemptively announced something that they were gonna do it. That's a retracted it. Okay.
Speaker 2:Okay. And x from the main accounts said, we are not partnering with Kalshi.
Speaker 1:Okay.
Speaker 2:And then a week later, they announced this big partnership with Wow. With Polymarket. So Well Congratulations to the Polymarket team. I'm super excited to see how this gets Yeah. Yeah.
Speaker 2:Integrated into the product.
Speaker 1:So I want you to pull up, will Elon Musk unfollow Donald Trump before July? That's an interesting market. Also, there's a market on will there be a reconciliation by the end of the week, I think. And then the other interesting one is, does this make it more likely that Elon becomes stays CEO of Tesla or less likely? I saw the market spiking yesterday to above 20%.
Speaker 1:Seems like he might have more time on his hands to focus on Tesla. So we'll see how that one goes. So pull up some of those Poly markets and I'll read some more post. There's a whole bunch of silly posts in here. Elon Musk rushing home to have a generational crash out in in the and somebody put a cyber truck I guess in GTA or something.
Speaker 1:That's fun. Who gets custody of Joe Rogan? I think he's the perfect moderator for all.
Speaker 2:I mean, in the youth, there were so many of these went extremely viral. You had who gets custody of David Sacks
Speaker 1:Who gets custody of J. D. Vance.
Speaker 2:Of J. D.
Speaker 1:Vance. J.
Speaker 2:D. Vance actually came out yesterday, you know, and was pretty clearly picked a side which I think is Yeah. Is good. Right? You should probably Yeah.
Speaker 2:You know, side with the guy that you're in the White House with
Speaker 1:Of course.
Speaker 2:Then and then work behind the scenes to kind of massage Yeah. Yeah. Improve
Speaker 1:the improve the relationship. I mean, the the the coverage of this has just been fascinating to me. So the Wall Street Journal has an entire entire article dedicated to just One one post. Quote. Quote.
Speaker 1:Okay. So, yeah. Let let thank you, guys. Let's let's look through some of these poly markets. Will Elon Musk create a new political party by December 31?
Speaker 1:Twenty 4%. I wonder I mean, he could put up the same amount of capital as some of the major parties. Right? But when was the last time America had a party? Like, seems unfathomable.
Speaker 1:Yeah. And also, I was talking to somebody about this who had one of my friends was predicting that the Elon Musk and Trump relationship would sour. And I was like, I don't know, maybe it'll wind down soft. I was kind of a I was a soft landing guy. I look really stupid in hindsight.
Speaker 1:But but he was but he but I was I was wondering like, just in terms of like, not necessarily political capital, but like popularity. Like, who's more popular? Trump or Elon?
Speaker 2:Think Trump is Right? Wild wildly more popular.
Speaker 1:Wildly more popular. Just generally, right? And they do polling Yeah. On these things. Because yes, you have the tech people that like Elon, but that's a much smaller segment of the market than I I think there were a lot of folks, like one of the weird things about the election was that, like, you would have like a tech guy voting alongside like, you know, like a MAGA supporter from '20 Yeah.
Speaker 1:'16. Who who was told to be skeptical of Elon Musk.
Speaker 2:Trump is a very successful social media entrepreneur. Right? He has a billion dollar Sure. Multibillion dollar social media app.
Speaker 1:He has 2 and a half billion in Bitcoin treasury in that company now, I think.
Speaker 2:Mean It does. Yeah. You you you Yeah. Called this morning or or texted. I don't even remember at this point.
Speaker 2:But yours you you know, your big question was, you know, who's more AGI pilled?
Speaker 1:This is the big question.
Speaker 2:You had, you know, a pretty clear answer. You said that your thesis
Speaker 1:Yeah.
Speaker 2:If if I can if I can Please. Spell it out is that Trump is not concerned with the deficit because he read AI 2027. He's a fast takeoff guy. Yeah. And in his mind, he's like, with, you know, AGI, you know, just a quarter away Yeah.
Speaker 2:It it's very likely that the the 2028 deficit and the federal sort of debt broadly just Immaterial. Immaterial.
Speaker 1:Yeah. Right? Immaterial. And you just play it out. So so, yes, there's a huge increase in in spending and there's not a commensurate increase in Massive taxes.
Speaker 1:Returns. Right? And so the government is gonna be spending more money than it's making and that's gonna result in in a budget deficit. And over time, that grows and grows and grows. We're gonna be spending trillions of dollars on interest.
Speaker 1:But if you truly believe in AGI, in super intelligence
Speaker 2:Yeah.
Speaker 1:You're going to see 10% of electricity being used on AI. You're gonna see an incredible amount of economic value created by these AGIs.
Speaker 2:Yep.
Speaker 1:And the government will be able to tax that like any other income like the rest of the economy. Yep. That will drive, you know, Satya Nadella said, hey. I'm waiting for GDP to grow at 10% a year.
Speaker 2:Yep.
Speaker 1:If that happens, if you believe that happens, if you're AGI pilled, you don't need to worry about the deficit. Yeah. And so I remember
Speaker 2:what this Stargate guy. Right?
Speaker 1:He is. He's big in the He
Speaker 2:announced Stargate. Right?
Speaker 1:And so I think what this reveals is that potentially Trump is more AGI pill than Elon.
Speaker 2:It's very possible.
Speaker 1:You wouldn't expect that to have been the result of this dust up, but I think that's what we learned. Totally. I think
Speaker 2:that's a definitely a big takeaway.
Speaker 1:Definitely a big takeaway. Else The Street Journal has a whole has a whole write up but we've covered most of this. Once allies, they had a public flaring out after Musk criticized Trump's legislative agenda. Musk attack attacked Trump alleging his name appears in the Epstein files and suggesting he should be impeached. Trump responded by threatening to cut off government contracts to Musk's companies.
Speaker 1:Just six days ago, senior Trump aides swallowed their irritation with Elon Musk and planned a chummy Oval Office send off to him. They briefed the president on allegations of Musk's drug use, so Trump should be ready to defend the billionaire if reporters raised the issue at his goodbye event. As late as Wednesday evening, Trump played down any conflicts with Musk in a meeting with Republican senators according to people familiar with his remarks even though the billionaire had spent the past few days disparaging the president's legislative agenda over the weekend after Trump dumped Musk's ally as the head of NASA. So that feels like maybe one of the turning points in this whole the whole kerfuffle. The president made it clear that he wasn't planning a high profile confrontation with his former adviser according to a person who talked to the president.
Speaker 1:That goodwill disappeared on Thursday. Thirteen minutes into an Oval Office meeting with German chancellor, Friedrich Mersh. The poor German chancellor's just sitting there and being like, wait, like Wait. What's going must be about Germany. I I was I'm here to pitch Germany.
Speaker 1:And now, you're talking to me about now now you're talking to me about Elon Musk drama. Like, I just wanna talk I just wanna talk about German stuff. Cars, Mercedes, or how are gonna sell more Mercedes in America?
Speaker 6:Yeah.
Speaker 1:Let's keep it focused. Let's not put the attention on Tesla. Let let's talk about the Taycan. How are we getting more of those over here? How we doing?
Speaker 1:How we getting EQS's over here?
Speaker 2:Yeah. Yeah.
Speaker 1:Anyway, Trump laid out his frustrations with Musk marking the start of a whirlwind day in which two of the world's most powerful men went from friends to foes. By Thursday night, Trump had publicly toyed with cutting off government contracts to Musk's companies, said the billionaire went crazy and suggested that he is suffering from Trump derangement syndrome. It is it is it was very hard as an ex user to actually understand what Trump was saying because the Truth Social screenshots were so easy to fake. And and the community notes was like a little bit slower. And so, it was always hard to understand.
Speaker 1:You kind of had to read for it and and kind of read through the lines and understand, okay, this is clearly a joke. But Elon Musk kinda closed it out by saying, whatever. Keep the EV solar incentive cuts in the bill even though no oil and gas subsidies are touched. Very unfair. But ditch the mountain of disgusting pork in the bill.
Speaker 1:The in the entire history of civilization, there has never been legislation that both big and that both big and beautiful, everyone knows this. You either get a big and ugly bill or a slim and beautiful bill. Slim and beautiful is the way. And so Elon's kinda closing it out with like what he wants to
Speaker 2:Donald's posting style there.
Speaker 1:Yeah. Yeah. Yeah. I do I do wonder like like how how big of a deal is the is the is the government spending thing? Like, we've we've just been hearing rattling about these like, the deficit hawks have been pushing on this for decades.
Speaker 1:Like, going back to, the Bitcoin people. Right?
Speaker 2:Like Yeah.
Speaker 1:The like, when did Michael Saylor start talking about this? Like, and so it's a little bit of like, whenever I hear tech people say this, it's always like a little bit of like, boy who cried wolf. I'm I I get I get convinced very easily by Joe Wiselythe Hall saying like, we issue debt in dollars, we print dollars, like we could inflate the debt away. There's like a million ways out of this and like America's still the number one economy. And I'm just kind of like, okay.
Speaker 2:Yeah. The chart is deeply concerning.
Speaker 5:It's the
Speaker 2:kind of chart you wanna see in an investor update.
Speaker 1:Yep.
Speaker 2:Not, you know, tracking debt. Right? It's exponential. And
Speaker 1:Yeah. It's rough. Anyway. Anyway, let's tell you about Vanta. Automate compliance, manage risk, improve trust continuously.
Speaker 1:Vanta's trust Continuously. Platform takes the manual work out of your security and compliance process Let's give
Speaker 6:it up.
Speaker 1:And replaces it with continuous automation, whether you're pursuing your framework or managing a complex program. The Wall Street Journal goes on to write, the Trump Musk blow up was long predicted. Even people close to both men privately believed that their relationship was destined to implode, but the fast paced rat a tat escalation still came as a shock to a White House that has grown used to curveballs and a president who often defended Musk as his aides grew frustrated. White House officials and other allies of the president spent the day refreshing their social media feeds watching as the situation escalated and texting Musk's post to each other. It was a matter of time before all this shattered because two giant egos can't be there together, said Mark Short, who is chief of staff to vice president Mike Pence.
Speaker 1:It's hard to imagine seeing it collapse as fast as this, but you can't be surprised by this. Mike Pence went
Speaker 2:to The only the only person that that had the truly perfect call on it was Yeah.
Speaker 5:The kid.
Speaker 2:Guy working Oh. Analyst.
Speaker 1:Young young guy.
Speaker 2:I got in trouble once before for calling a 24 year old a kid. And I believe he's exactly 24.
Speaker 1:Oh, no.
Speaker 2:So I
Speaker 1:mean, wise beyond his years. He's clearly has the chops of a Perfect call. Grizzled 60 year old political analyst. And so, congrats to him for the perfect call.
Speaker 2:The perfect call. Really? You didn't see it yesterday. I think it's working the account is working analyst Yeah. On x.
Speaker 2:And
Speaker 1:He crushed it.
Speaker 2:John, production is asking you to move that out of your screen, by
Speaker 6:the way.
Speaker 2:Sure. Thank you, guys. And, he basically called back in October of last year that that, the partnership would result in the largest Twitter battle in And yesterday was it was a very chaotic, crazy day on X.
Speaker 1:It it certainly was. It's very entertaining times. The fissure has reverberated inside the White House. Musk's top aide longtime Trump advisor Katie Miller left the White House with him last week according to people familiar with the matter and now works with Musk. Miller who held who held special government employee designation, was with Musk at almost all times in the White House.
Speaker 1:She didn't respond to request for comment. Her husband, Steven Miller, is one of Trump's most loyal invisible aids. He has defended Trump's legislative agenda and from broadsides in recent days, and Musk unfollowed him on x this week. The Millers have spent had spent extensive time with Musk even outside the White House. The public clash between Musk and Trump also jeopardizes the Department of Government Efficiency, the billionaire's trademark cost cutting effort, Doge affiliated staff, some of whom were responsible for pushing out thousands of federal workers, texted one another on Thursday about whether they would be fired next according to administration officials.
Speaker 1:The blow up Thursday caught top White House aides off guard. Shortly before noon, Trump sat down in the Oval Office with MERS to chat about predictable topics, the NATO alliance, the war in Ukraine. There really is so much else going on too. It's a it's a chaos. It took about thirteen minutes for the president to unload about his billionaire benefactor expressing irritation that Musk had been critical of his legislative agenda as too costly.
Speaker 1:It started gently. I've always liked Elon, said Trump when asked about Musk's criticism of his big beautiful bill. I'd rather have Elon criticize me than the bill. But before long, Trump ratchet up ratcheted up his rhetoric. Elon and I had a great relationship.
Speaker 1:I don't know if we will anymore, Trump said. And, yeah, there's this interesting take that, like,
Speaker 2:Elon them recovering. Yeah.
Speaker 1:I could
Speaker 2:see bad right now.
Speaker 1:Yeah. We'll see.
Speaker 2:Dialed it back. I'm glad I'm glad they've both at least dialed back the posting today. Yeah. Yesterday. Quiet.
Speaker 2:Basically refresh.
Speaker 6:Yeah. And you
Speaker 1:said you close.
Speaker 2:Firing. But today is the eighty first anniversary of d day of the And
Speaker 1:And we got a fantastic poster from Anderol. We should share a picture once we take a good one, but they sent us one. And so thank you to the Anderol team for sending that over. Anyway, let's tell you about Linear. Linear is a purpose built tool for planning and building products.
Speaker 1:Meet the system just for modern software development, streamline issues, projects, and product road maps. Linear. That a is that a golden retriever right here? Nothing
Speaker 2:makes me bark like efficient product management and product planning. And that's what you get out of linear.
Speaker 1:I love linear.
Speaker 2:It's great. Yeah. When John's using linear, this is all you hear.
Speaker 1:The sound is getting crazy. It's amazing. There's some posts from Donald Trump here. Elon, these are from Truth Social and they've been posted in the Wall Street Journal. So I believe that they're real.
Speaker 1:I I'm very skeptical of the screenshots I see.
Speaker 2:I was actually pretty disappointed with people just just making I I guess I shouldn't be too disappointed with fake
Speaker 1:news. But but It's nothing new.
Speaker 2:Yeah. Nothing really new. But Yeah. But yeah. It's it's good.
Speaker 1:Elon was wearing thin. I asked him to leave. I took away his EV mandate that forced everyone to buy electric cars that nobody else wanted, that he knew for months I was going to do, and he just went crazy. The easiest way to save money in our budget, billions and billions of dollars is to terminate Elon's governmental subsidies and contracts. I always I was always surprised that Biden didn't do that.
Speaker 1:Is there an EV mandate that forced everyone to buy electric cars? Like, I don't remember that ever being a thing.
Speaker 2:I mean,
Speaker 1:I thought it was just subsidies and and you would just get, like, 7,500 if you bought an electric car. But I don't remember there ever being a mandate. Maybe maybe at
Speaker 2:the city There's a bunch of state and local subsidies at the city level across a bunch of the different companies.
Speaker 1:Yeah. I guess there's, like, EPA stuff where automakers need to have a blended m p g across their entire fleet. And so you see that that funny there's that like Aston Martin
Speaker 7:Yeah.
Speaker 3:Smart car that they
Speaker 1:So I can give
Speaker 2:a quick break here Yeah. Break down to the different companies. So with SpaceX, they have 10 different NASA awards
Speaker 1:Mhmm.
Speaker 2:And a bunch of DOD launch and then lander awards through 2031. There's $22,000,000,000 roughly under contract. Trump could put pressure on the Pentagon, NASA to kind of slow roll things. Right? There's there's a bunch of or, you know, push push them to give contracts to rivals like Blue Origin, ULA, etcetera.
Speaker 2:Yeah. Tesla, they have clean car credits. Mhmm. Apparently, it's about 1,200,000,000 a year in potential lost EV tax credits.
Speaker 1:Trump's saying that like like, I always was surprised that Biden didn't do it. I thought that Biden was like very much in the process of doing it. And so part of the reason why Tesla stock like moon so much after the election was that there was the expectation that those wouldn't be canceled.
Speaker 2:But Yeah.
Speaker 1:Like that that that was that was in the plan before.
Speaker 2:Yeah. Alright. Starlink What else? Already has up to 3,000,000,000 in rural broadband subsidies
Speaker 1:Oh, really?
Speaker 2:That that that are kind of pending. Mhmm. And then this is smaller, but both Neuralink and The Boring Company obviously are are Yeah. FDA regulated. Yeah.
Speaker 2:FDA and then Department of Transportation and then a bunch of other
Speaker 1:So you don't exactly want enemies in the in the White House?
Speaker 2:It's like, basically, Elon has more exposure than anyone on Earth to a hostile government.
Speaker 1:Yeah. Yeah. Yeah.
Speaker 2:Yeah. Which is why I just I I seriously hope it doesn't matter if you like either of them. You know, I I hope they can work it out because I would hate to be sitting here doing moments of silence Yeah. For any of these companies.
Speaker 1:Or their shareholders.
Speaker 2:Or their shareholders. Yeah. That's right.
Speaker 1:For sure. Trump was taken aback by Musk's escalation according to his advisers. Trump told advisers he didn't believe he was harsh about Musk in the Oval Office, and he was surprised at how aggressive Musk became. Trump's aides spent some time Thursday trying to figure out what Musk's goal was. The president told advisers Musk was just being a child according to White House a according to a White House aide.
Speaker 1:Around the same time, Trump walked into a White House meeting with the federal fraternal order of police and made remarks. He ignored reporters questions and didn't and didn't mention Musk. White House staff huddled with Trump in the early evening. Yeah. I remember that that I I remember seeing a clip of he's he's there to celebrate the police department and they're immediately asking him about about Elon and he has to move on.
Speaker 1:As of late Thursday, the shiny red Tesla that Trump purchased during a high profile photo op with Musk was still in its parking lot just yards from the Oval Office. White House aides joke Thursday evening that they hadn't decided what to do with the vehicle. So interesting to see where that goes. What a saga. What a saga.
Speaker 1:Back to work. Back to build. It's time to build, baby.
Speaker 2:I will remember yesterday Yeah. Forever because we were live sitting exactly like this. And I could tell you had no real idea of what was going on and I was coordinating with like 50 different people Yeah. The production team, other people were texting me.
Speaker 1:I'm too AGI pilled
Speaker 2:for this We're getting angry messages. I'm so AGI pilled. That I care about being like, I do not care about AI.
Speaker 1:And I'm like, I do. I do.
Speaker 2:I actually just Well, John and and Sean does. But
Speaker 1:AGI is this is the situation of the of the the the steamroller and these guys are now now it's Elon and Trump picking up pieces of legislation in front of the steamroller that is artificial intelligence.
Speaker 2:Yeah. Well, in other news, AnySphere, the startup behind AI coding tool, Cursor, has surpassed 500,000,000 in annualized revenue and has raised 900,000,000 in series c funding So from Thrive, Excel, Andreessen Horowitz, Huge,
Speaker 1:absolutely huge week for Cursor. Very interesting media roll out here.
Speaker 2:So Well, this round has gotten announced like five times by now. That's true.
Speaker 1:Okay. So that's why Kate Clark at Bloomberg is writing about the the the revenue instead of the raise because the revenue milestone is the new data point and we already knew about the raise. But there were a bunch of stuff. I mean, was this Bloomberg piece. The CEO of Cursor went on Ben Thompson and did an interview.
Speaker 1:Was fantastic. And Ben spends half the time just marveling at how young the founder is
Speaker 2:Yeah.
Speaker 1:And trying to kind of relate because No.
Speaker 2:It's so crazy. Yeah. Think about, it felt like six months ago
Speaker 1:Yeah.
Speaker 2:We were talking and people were saying, Sam Altman should be Gen z. Right?
Speaker 1:Like, where's where's
Speaker 2:our sort of Gen
Speaker 1:I said that. Where's our
Speaker 2:Gen z Decacorn? Where's our Gen z Decacorn
Speaker 1:CEO? I mean, Alex Wang. But but but there just aren't as many, and it just it did feel like Gen z was taking a while to find its footing in the in the private markets.
Speaker 2:Find find their footing until they get to a billion dollar revenue run rate.
Speaker 1:Let's go. That's that that's the expectation
Speaker 2:in this No. And and that the other data point, the two other data points, they're already being used by more than half of the Fortune 500 Wow. Including NVIDIA, Uber, and Adobe. And they say, this scale will help us push the frontier of AI coding research. I mean So
Speaker 1:I wanna know what's going on at the other at the other half. Like, are the are the other half on Windsor for the other half like just raw dogging their IDs?
Speaker 2:I mean, they could be using I mean, there's GitHub Copilot.
Speaker 1:But they better be using something.
Speaker 2:Somebody Swix was saying earlier this week that GitHub Copilot is also at a at a At
Speaker 1:a $500,000,000
Speaker 2:run
Speaker 1:That's crazy. Yeah. That that that's public company if it was if it was out in the market. It's pretty remarkable. But, yeah.
Speaker 1:Ben Thompson was talking to the the the Cursor CEO and and they're talking about how he got into software engineering. He's like, oh, well, like, you know, I was a kid and I wanted to build I wanted to build video games specifically mobile games. And and Ben Thompson's like, I'm like, this is a huge mark for like how young you are because there's tons of entrepreneurs that got into programming through video games. Oh, I was playing, you know, like this was played Counter played Counter Strike, I built a PC and then I would like modify the levels and modify the skins and the spray paints and like edit some config files and then eventually like scale up from there. No.
Speaker 1:Cursor CEO started started with mobile games. And he actually built one that was like really, really viral and really successful amongst software engineers. And so he's had a
Speaker 2:he's got story career. Stripe account. Yep. Yeah. Killer.
Speaker 2:What was their what was the activity in their Stripe account when they were in high school? Yeah. That's the investment thesis.
Speaker 1:I mean, yeah, it would have been a good one. Who is who is the investor in Cursor? Wonder. We gotta we gotta figure that out.
Speaker 2:But Great. Neo was early.
Speaker 1:Oh, yeah. Neo. That's right. But Thrive, Excel, Andreessen Horowitz, and DST are all in this series c. There is 900,000,000
Speaker 2:was also super early.
Speaker 1:David Tisch. Let's hear it.
Speaker 2:Let's give it up for David Tisch.
Speaker 1:Let's go.
Speaker 2:Round of applause.
Speaker 3:To hear it.
Speaker 2:He's not gonna post about being early as much as the rest, but we are we're gonna we're gonna talk about it.
Speaker 1:Absolutely.
Speaker 2:Absolutely. And, of course, Sam Bankman Fried, also early into Cursor.
Speaker 1:I thought it was Windsworth, but it's Cursor?
Speaker 2:No. It's Cursor. Oh my god. Wow.
Speaker 1:SPF, what a a picker. What a stock picker. I really wonder, like
Speaker 2:So, yeah. FTX had a
Speaker 1:Had a Had a stake.
Speaker 2:Had invested, I guess, 200 k.
Speaker 1:Oh, yeah. We heard about this. It had, like, insane valuation. Right? Or insanely low valuation.
Speaker 1:But it was kind of rumored, and the deal might have changed hands a few times or, like, the stake might have
Speaker 2:changed But I invested 200 k, and they sold the position for 200 k.
Speaker 1:Yeah. I wonder how well
Speaker 2:this Which is gonna be reliticated or fund. Right?
Speaker 1:If that if if if you just looked at the FTX private markets, like, startup investments as a VC fund, like, they probably did pretty well. What was the other one? Had a ton oh, Anthropic. Yeah. They had a huge stake in Anthropic.
Speaker 2:They were also in Worldcoin.
Speaker 1:Oh my god. Wow. Sam. Should've just should've just raised a fund, not not had to deal with any of the dealing with crypto. Should have just gotten out of crypto.
Speaker 1:Pivoted to crypto to AI. Yeah. Could have done it.
Speaker 2:Yeah. Or told FTX users, do you want to be in part of Sam's slush fund
Speaker 1:Yeah. That was rough.
Speaker 2:Instead of
Speaker 1:Anyway, I think the story with him is not over. We'll see as as it evolves. Apparently, did get in a ton of trouble for that podcast he did from jail. Apparently, you can't just podcast from jail. Yeah.
Speaker 2:That that was wild.
Speaker 1:Crazy. He did that. Anyway
Speaker 2:Numerous this post.
Speaker 1:Says sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Numeral HQ.
Speaker 2:The golden retriever gets on That's true.
Speaker 1:Weird. You wanna go to Will? Or
Speaker 2:Yeah. I just thought this was hilarious. Will, obviously of OpenAI fame says, this was the motivation I needed. Thanks SFO Airport. It's just it's just like, billboard, win the AGI race.
Speaker 2:Dominate the leaderboard. Win vibes. He's just standing seriously in front of it. Yes. It's laugh.
Speaker 4:Win the
Speaker 1:AGI race. Don't care about the budget. Don't care about the pork. AGI does not concern itself with pork.
Speaker 2:The lion does not concern himself with deficit spending.
Speaker 1:Absolutely not. Absolutely not. We we we can skip this semi analysis post because of course, Dylan Patel from sell semi analysis is coming on the show today. And we will ask him about Jensen's new math rules and have him break it down for us. This is a very fun post.
Speaker 1:But anyway, let's move on to Uber is evaluating stablecoins potential for payments, CEO Dara Khoshar, he says.
Speaker 2:Yeah. I wanted to throw this in here mostly so we'd remember to ask Jeremy about that. Oh, yeah. Like, all these different massive companies looking to adopt stables.
Speaker 1:Yeah. Yeah. Apparently, payroll companies should, might be adopting stable coins for for like all of these different wire transfers that they do, both to speed up payroll, which is already pretty fast, but there's also a whole bunch of stablecoins that the if you put stablecoins inside a payroll company, you should be able to earn yield on the on the the the the the all the dollars that you're holding. Now you don't actually hold that many dollars just from running payroll because it comes out of the company's bank account, goes for like one day into the payroll company's account, and then it goes out to the employees. Right?
Speaker 1:It just gets split up. So there's not actually that much float there. But for tax withholdings, there actually is a ton of float because every paycheck you're taking out a thousand dollars and you're gonna send it to the IRS, but you send it to the IRS nine months down the road or six months down the road on average. Right? Yeah.
Speaker 1:Because you're you're you're you're you're waiting, you you only pay taxes once a year, so then, you know, half the year you're like on average, sometimes it's you're holding it for twelve months, Sometimes you're holding it for one month. But on average, that's like six months of cash and it's a lot. So Interesting. So right now, that's that's held in accounts. But with stable coins, you could potentially get more direct exposure to the to the underlying treasuries.
Speaker 1:And so there could be some sort of boon for stablecoin or or for both stablecoin providers and payroll companies. So b two b SaaS, undefeated, another beneficiary of modern technology. Just wait until quantum computing hits. Once quantum computing hits I
Speaker 2:mean, every payroll company, especially global Yes. Payroll companies are, you know, are really at the forefront of quantum.
Speaker 1:Oh, yeah. This is another thing. So what does the Elon Trump desktop tell us about Elon's quantum computing timelines? Because as you probably are familiar, quantum computing can break encryption. So guess what happens when quantum computers are ubiquitous?
Speaker 1:Oh, there's Epstein files. Everyone's gonna have access to them. And so and so if he really believed it
Speaker 2:Quantum socks should be down tremendously today. Exactly.
Speaker 1:This is the trade. Stay out of Tesla. Stay out stay out of Rivian and Ford.
Speaker 2:You gotta look at the order
Speaker 1:You gotta look at the and order effects. What does this tell us about quantum timelines? Probably that they're further out than we think. Because as soon as they crack those, boom. Who's the who what's the what's the file you're decrypting?
Speaker 1:The the Epstein files, obviously.
Speaker 2:Of course. Course.
Speaker 3:Of course.
Speaker 1:I like I like Mike Salata's post about that. He's like, I honestly can't believe that we didn't know that already. Like, it just felt like internet lore that like of course Trump was in there because there's like pictures. But I guess like, it's I want one thing to be in the files than be in a picture. But the pictures seem more damning.
Speaker 2:I got home yesterday Yeah. Sarah was like, hey, how was your day? And I was like, did you see the news? And she was like, no, I've just been with the kids like all afternoon. She's just been bouncing around, swim lessons, music class, all that stuff.
Speaker 2:And I was like, oh, well, like, Elon, you know, accused Trump of, like, being in the Epstein list. She was like, wait, like, I thought, like, there's a bunch of everybody's seen the pictures of, like, them hanging out, like, having, you know.
Speaker 1:Yeah. There's video. There's video of them playing a party together. It was just kind of like assumed I thought. But, you know, anyway, anything to get the to to get the the Internet riled up.
Speaker 1:Elon's master. Master poster. He owns it. Anyway, regardless of your view on quantum computing, you know, you can express your view on it on public.com. Investing for those tickets seriously.
Speaker 1:They got multi asset investing, industry leading yields. They're trusted by millions. Go to public.com. Let's go to Naval. He says, the majority of voters are retired either by age, disability, or make work jobs.
Speaker 1:Paying for mass retirement requires crushing taxes, mass immigration, or rampant inflation. The only way out of a risky bet is on tech driven growth. AGI will save us. But, yes, the make work jobs is interesting.
Speaker 2:AGI pilled lion doesn't concern himself with deficit spending.
Speaker 1:Or or or unemployment. True. I mean, this is one of my questions for most of the the the the truly AGI pilled people. I try and formulate it as US unemployment over or under 10% by 2030. Because The US has rarely had higher than 10% unemployment, but AGI seems like something that could do a lot of jobs.
Speaker 1:And so even in the Tyler Cowen model where, yes, medicine is resistant to AGI. Yes. Like, you know, farming and and land and plumbing and all these different things are maybe resistant to just like LLM based agents. Right? But even with that scenario, you should you should experience some some pretty significant dislocation.
Speaker 1:And this is what that latest Dwarkash debate with Sholto was all about. How quickly can white collar work be automated? Some people have very aggressive timelines, some people don't. But I always try and formulate it in like, let's put it in a con in concrete something that's measurable 10% by 02/1930. And a lot of the AGI pill people when they go when they really unpack it, they start thinking about like, well, wait, like we're really good at creating fake jobs.
Speaker 1:Like like, we could just have 10 more TSA type programs and all of a sudden people are, know, still employed and it's like, yeah, my job is pretty chill. I I mostly just like watch YouTube and like oversee an AGI that does my job. But I still get my paycheck that way.
Speaker 2:You did a speed run to leadership consensus Yes. Here in college. Right? This is some incredible lore. Yeah.
Speaker 1:This was I mean, the government's fantastic at this. So during the two thousand eight recession, there was a desire to pump money into the economy. More in the the modern way we do that is basically with UBI and just sending checks to everyone, but it wasn't always that way. We used to have to come up with an excuse. Schemes.
Speaker 1:Schemes. And so
Speaker 2:So this scheme was basically counting. Counting. It was a counting.
Speaker 1:Counting scheme. It wasn't an accounting scheme. It was a just a counting. It was a government It was a accounting Yes. And so, the census in February, the economy was ripping as the Com boom.
Speaker 1:And so, all the census workers were basically volunteers. My mom actually volunteered, went around and asked people in the neighborhood. It's actually kind of a nice thing to go meet your neighbors and ask them like, hey, like fill out the census form. Like, we'll be able to get more votes for you know, the upcoming election. And and it's very nice to use people and people are happy to do it.
Speaker 1:But in 02/2008, the the economy had just crashed. 02/2010, the economy was in in the sham in in in shambles after the after the recession. And so they decided to pay everyone like $20 an hour to do a job that people were previously doing for free, and throw like way more resources at it to get like better census data. But of course, you you can only spend so much. And so I wound up getting like a management job there and getting paid a ton of money to do like basically nothing.
Speaker 2:You were managing hundreds of people at
Speaker 1:Not quite hundreds, but dozens. Know? And it was it was actually my 20 birthday. And I remember going out and being like, yeah, guys, like I can't really like fully take advantage of this and like drink that much tonight because because you have a lot of responsibility. To work tomorrow.
Speaker 2:Gotta look after your team.
Speaker 1:And and do an orientation for 40 people that range
Speaker 2:And scaled counting operation.
Speaker 1:From five years older to me than 50 older than me. Yeah. Like, there was truly no one even close to me. It's still in school.
Speaker 2:I I would pay a lot of money to have a video of you up in front of all of them talking.
Speaker 1:It was a wild time. Wild time. Learned a lot about the government. Anyway, we have, Patrick Blumenthal in the studio. Let's do one more ad read.
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Speaker 2:Wrong screen share. Wrong screen share.
Speaker 1:But we can talk
Speaker 2:Eight Sleep too.
Speaker 1:Let's let's get
Speaker 2:You had
Speaker 1:a pod five ultra. Pod five has all this night sleep, didn't I had a brutal night sleep. It's been chaos. I think I think the two I think the two one year olds took the Elon Trump breakup really really hard. Yeah.
Speaker 1:I think the four year old as well, very, very difficult. It it clearly like, he he can't really articulate if he's a Trump guy or an Elon guy, but he didn't let that on. But it it it was it was a dark moment
Speaker 6:for him.
Speaker 2:Well, they're all America guys.
Speaker 1:Exactly. Exactly.
Speaker 2:So, it was an embarrassing China won.
Speaker 1:Yeah. China won. The
Speaker 2:twins' two China won.
Speaker 1:China won. Yeah. Yeah. They're they're disappointed.
Speaker 2:Dada China won.
Speaker 1:Yeah. But rough night of sleep, I got like a 64. He crushed me.
Speaker 2:I mean, I didn't do much better during You got 73. If you wanna get on the official matches of TBPN
Speaker 1:Go to aidslip.com/tbpn. Got a five year warranty, thirty night risk free trial, free returns, free shipping. Let's bring in our guest, Patrick Blumenthal. I've been on a podcast with him before. We went we were we did Pirate Wire together.
Speaker 1:Good to have you here in the studio. Welcome to the show. Long overdue. How are you doing?
Speaker 6:Thank you so much.
Speaker 1:Break us down oh, actually, let's kick it off with an intro. What are you doing? Where are you? Are you in America finally? Last time I was on a podcast with you, think you were halfway across the world.
Speaker 6:I am in New York City right now
Speaker 1:Cool.
Speaker 6:For the illustrious, decadent, incredible New York City Tech Week.
Speaker 1:Oh, fun.
Speaker 2:How is it? Fun fact, I created New York Tech Week.
Speaker 1:Co founder right here. Oh.
Speaker 2:Yeah. Yeah. Years ago. Passed off to Andreessen Yeah. After the year.
Speaker 2:But but, yeah, the very New York Tech Week was by yours truly.
Speaker 6:One of the biggest Still on still on in the lane.
Speaker 1:Yeah. Break it down for us. What what what have the best events been? Is it mostly VCs, entrepreneurs? There are a lot of pitching?
Speaker 1:Is there how are the ads? Are there good sponsorships?
Speaker 6:There's a lot of ads, and I think the, like Good. Attendee to event ratio has, like, shifted massively compared to previous years. I only went to two events, by the way. So everything that I say, take it with a grain of salt. Yeah.
Speaker 6:Yeah. I'm actually just in New York, and then it happens to be during tech week.
Speaker 2:Cool.
Speaker 6:There's a lot of events, a lot of sponsors virtually for every single industry. Like, there's a million NatSec events. There's a million Interesting. Ad tech events.
Speaker 2:It's, like,
Speaker 6:virtually every industry, every type of person.
Speaker 1:What's the reaction
Speaker 2:You seem a little tired Yeah. Patrick? Were you up a little late last night?
Speaker 6:I've been up late a lot this week and the previous week and the week before that, to be honest. New York is an exhausting city. It's not quite, the same as San Francisco.
Speaker 2:So you sleep more when you're in Ukraine or New York?
Speaker 6:Dude, I actually sleep really well in Ukraine. I find the food to be so much better too, so you can, like, somehow smoke a bunch of cigarettes and drink a lot and still sleep really well. It's a true meme. The meme is real.
Speaker 1:Nice. Interesting. What's the reaction been in at these cocktail parties to the Trump Elon news?
Speaker 6:It's a good question. It came up a lot last night. It wasn't actually a tech week party, but Yeah. You know, part of the it was a it was a couple of dissident right events, we might call
Speaker 2:it that.
Speaker 6:Yeah. I think I think, people don't care as much as Twitter, to be honest. No one no one really had, like, any strong takes. No one's taking sides, I guess.
Speaker 1:Yeah. There's just not that much to go on. Like, it's it's it's still like it it's like crazy He said
Speaker 2:she said.
Speaker 1:In and out in a few minutes, but certainly something to track. But let's move on to the reason we wanted to have you on. Can you give us your reaction and breakdown to the Ukrainian operation that I believe happened last weekend? We covered a little bit on the show, but I'd love to get your take and maybe just introduce exactly what happened, and then we can go into some of the history and implications.
Speaker 6:Yeah. So at a high level, what happened, obviously, you haven't heard about it. But, you know, specifically, Russia had a very, very big part of its, like, nuclear triad, get degraded. So they lost, like, 33% of their kind of air launch cruise missile capacity. Mhmm.
Speaker 6:It's a bunch of strategic bombers that they manufactured during the Soviet Union. Mhmm. Completely irreplaceable. Yeah. And so one of the kind of big asymmetric advantages of Russia during the war has been that they can just launch a massive amount of stuff from really far away, like, beyond the range of Ukrainian fighters, Ukrainian air defense systems.
Speaker 6:They use cruise missiles, which obviously have a, propulsion on the munition, so it goes much further, than it otherwise would. And they also have glide bombs that they've been using for the last, you know, three years of the conflict, which is basically just taking dumb bombs and making them fly much further than they otherwise would. And so, really, all Ukraine has been able to do is destroy the platforms. Like, there's just no way that they're they're gonna shoot down every single cruise missile. They're not gonna shoot down every single shahed.
Speaker 6:And so, this is essentially the best thing they can do. It's just, like, go to their airfields and blow things up when they're still on the ground.
Speaker 1:You mentioned the nuclear triad. So these bombers that were destroyed were actually capable of carrying and dropping nukes even though that's not directly relevant in this conflict,
Speaker 2:but it's not yet They're
Speaker 6:all nuclear capable or a lot of them. Yeah. And so, you know, you have ballistic missile submarines. You have, strategic bombers.
Speaker 2:You have
Speaker 6:ground launched ICBMs.
Speaker 2:Yep. That's a
Speaker 6:good And, ideally, you want all three. Yeah. Because the idea is essentially that you have too many nuclear assets in too many different places that, you know, you want essentially deterrence. So even if The US were to were able to strike with, you know, hypersonic missiles every single ground silo that Mhmm. The the Russian Federation has, they'd still have a bunch of strategic bombers on station, a bunch of submarines on station.
Speaker 6:So we would still be screwed, basically.
Speaker 1:I it's crazy to think of Russian nuclear submarines, like, just trolling around the ocean. I feel like they've been, like, so pushed back, so contained. But, of course, that's obviously
Speaker 2:Well, that's the point of nuclear submarines. You can go, you know, and just hang out for quite a long time. How, what do what do you think the, is this type of attack a one and done? They operated it on cellular networks, which was a surprise. Do you think that Russia will make changes that make that a lot harder in the future?
Speaker 2:What's your kind of, reaction there?
Speaker 6:I think the reality is that, Russia is a very porous country. Like, it's exceptionally easy to get things in and out to their advantage and to their disadvantage. Like, people don't realize how many western components are in, like, every single Russian drone. Mhmm. Like, they're still heavily, you know, using western companies and components for virtually everything.
Speaker 6:They get in through a wide variety of ways. But to our advantage, obviously, the Ukrainians can do the same thing as they've demonstrated in this case. I think, you know, the future attacks are gonna rhyme. They're not gonna be exactly the same. Like, what Russia is probably gonna do is improve their, jamming operations at airfields that, traditionally have not been subjected to Ukrainian drone strikes.
Speaker 6:Mhmm. They're gonna change their procedures around daytime operations. So, generally, one way attack munitions, both on the Russian and Ukrainian side happen at night.
Speaker 1:Mhmm.
Speaker 6:It's kind of random that, like, on a Sunday morning, basically, you know, there were a couple 100 Ukrainian drones hitting all these airfields. It's, like, quite uncommon.
Speaker 2:Mhmm.
Speaker 6:And we don't know where the failure was on the Russian side. Like, were the jammers online? And the Ukrainians just knew what frequencies the jammers were working on. And so they just operated outside of that. Was the Russian jamming guy who just sits there with a big red button just not at his station at the time because he wasn't expecting it?
Speaker 6:There's kind of a lot of open questions around that, and I'm sure there's gonna be, like, procedural changes. But when you when you kinda step back from this this specific attack of, like, big trucks with garden sheds that are containing all these drones near air bases, And you just look at the basic kind of formula there, which is civilian infrastructure near military assets. The attack surface is just really wide. So, like, it could be a rail car. It could be a truck.
Speaker 6:It could be a van. It could be a ship in a port. Right? The military facility doesn't have to be an airbase. It could be a factory.
Speaker 6:It could be the Kremlin. It could be any logistics depot. It could be a base. Mhmm. And so when you multiply all that complexity, basically, across the 11 time zones that Russia has territory with hundreds of critical facilities.
Speaker 6:It's it's it's kind of unstoppable, to be honest.
Speaker 2:Yeah. That's interesting. How are how are you thinking of investing in drones as a category? You've been on the ground in Ukraine. You've seen, I'm sure, a lot of the stuff that they're doing, which is evolving constantly.
Speaker 2:I'm sure you've met a lot of the American drone startups, and, obviously, you know, there's a huge range of players from Niros to, you know, Anderol to, you know, counter drone startups like, ACS. But how are you how are you looking at the category, and and and where where do you think it's investable?
Speaker 6:So I think Ukraine is interesting specifically, and then I'll I'll answer your question. Ukraine's interesting specifically because you have a lot of, like, consolidation around the same exact ideas. So, like, I've seen a lot of drone factories spread out around Ukraine. They're all making generally the same stuff within FPVs at least. And, like, you have different components like, oh, this FPV, we're gonna use fiber cable for it because this area is jammed.
Speaker 6:But at at at a high level, every FPV in Ukraine is, like, exceptionally attributable. It's, like, three d printed. Very cheap components from China are now some sometimes domestically produced, but, like, very, very cheap. Those are not really what I think of as venture backable. You also have all obviously, all the added unique risks of their factory might get blown up by a cruise missile.
Speaker 6:The founders, in many cases, are also active duty soldiers.
Speaker 1:Mhmm.
Speaker 6:So you have to kind of underwrite the additional risk of them getting killed on the front. Not to be so morbid, but it's true. In The US ecosystem, more like a traditional startup, obviously, like, are no founders who are active duty in The US. There isn't exactly the same set of risks, and they're much more focused on selling to kind of the creme de la creme customer, the DOD. So the capabilities are just much more exquisite.
Speaker 6:And so there's a lot of stuff to bite off because The US, similar to, you know, Russia operating in 11 time zones, The US operates in every time zone because we have bases literally all over the world. And so every single climate, every single, potential adversary, Iran, China, North Korea, Russia, etcetera, they demand different solutions in each theater. They demand different solutions for different operations, during different times of the day, different weather, like, all these different things. And so the reality is that there's actually a lot to invest in. Specifically with drones and counter drone stuff, I think the future of, like, the integrated air defense system, like, you know, we think of as, like, the iron dome, it's gonna be much more heterogeneous.
Speaker 6:Right? So, like, Israel now has, like, five or six different types of missiles they use. They're testing lasers. They're testing a kind of other couple stuff, but it's, like, a much more stationary and static type of system. The integrated air defense system of the future is gonna be, like, three or 400 different things.
Speaker 6:Like, this is gonna jam this one thing. This is gonna intercept this one thing. This, you know, is just hitting an FPV, so it can be a small gun, like in the case of ACS. And then other things, you know, you need, ballistic missiles to destroy other ballistic missiles. So you basically are gonna have this system, like a command and control system that senses all these different things and then essentially triages.
Speaker 1:What is, Russia doing on the FPV drone side? We've heard that Ukraine is producing, I think, millions a year now. It seems like really, really mega scale. Has Russia been able to match that at all, or do they take a different tact?
Speaker 6:I don't know where the official numbers are, to be honest, but I would be surprised if Russia was producing less, to be honest. I mean, I think certainly within the same order of magnitude. Obviously, there's very poor fidelity on the Russian side. Mhmm. But one thing that you can just look at, and this isn't just FPV drones.
Speaker 6:This is just drones broadly. One of the things that you can look at is, like, how many Shaheds are attacking, Ukraine every single night.
Speaker 1:Sure.
Speaker 6:It's in the hundreds. Like, they're literally just lobbing hundreds of shahed drones at Ukraine every single night of the week. And so I don't know if you guys saw, but they did their, quote, unquote, retaliation last night. It was basically like any other night. They just lobbed a bunch of drones at Ukraine.
Speaker 6:You know, the Russian economy now is, like, literally entirely a war economy. Like, I don't know what it would look like as, you know, defense as a percentage of GDP.
Speaker 2:Like That's that's one of the big issues with peace, at least, on the Russian side is what happens to the economy if you no longer need to be producing, you know, huge volumes of tanks and drones and missiles and all these other things.
Speaker 1:So depressing. So many great mathematicians there. They should just be building hyper scale data centers and racing for AGI. You know, they're they have the talent and they're focused on, you know, kinetic warfare.
Speaker 2:Death. It
Speaker 1:sucks. Fighting the last war.
Speaker 6:Well, that's probably gotta end the war so that we can do joint AGI development with Russia.
Speaker 1:Exactly. Exactly. And the workforce. Yeah. Or maybe just more brain drain.
Speaker 1:I wonder if there are more Russian scientists that are leaving because of how crazy the war effort is and if that'll make it easier to recruit, you know, brilliant scientists.
Speaker 3:There's a
Speaker 6:lot of people just hiding too, mostly on the Ukrainian side because Ukraine obviously has the draft, but a lot of Russian scientists left in the few days of the war Yeah. Through, like, Georgia and Armenia, and now they're just, like, refugees. And then a lot of Ukrainians within AI and tech, obviously, a tremendous amount of them have joined the military, and they're now developing drones. But Mhmm. There's still a lot of Ukrainians who are just, like, hiding in their houses, basically.
Speaker 6:And their wives just do all their errands for them. Yeah. Like, they're they're not allowed to leave the house because they're gonna get conscripted.
Speaker 1:Yeah. So their
Speaker 6:wife gets groceries and everything.
Speaker 1:Can you talk to me about what is actually involved in visiting Ukraine right now? Is this something where you need to fly to a different country and take a train in? Is the airspace dangerous? Do you need a visa? What does the state department think about visiting Ukraine right now if anyone in the audience is considering going?
Speaker 1:What's the what's the vibe on the ground? Where do you stay? How do you actually get connected? Can you walk me through your experience visiting Ukraine?
Speaker 6:Yeah. It just kinda depends on what you wanna do. So, I don't know how specific I should be about my next trip, but, the more east you go, the more difficult things become, obviously, in both in terms of getting approvals, but also just, like, transportation and then also your risk tolerance would have to go way up. So, like, you know, hypothetically, if I go to Kharkiv, which is very close to the Russian border, it's basically on the Russian border, the risk considerations are just very
Speaker 1:different Yeah.
Speaker 6:Both in terms of what to expect every night from Russian strikes, what to expect in the context of the war. Like, there is always some kind of an offensive going on around Kharkiv. And so you do have to be careful. You know, what I would say is that, I obviously have high risk tolerance. What I would say is, it's not as dangerous as people think statistically.
Speaker 1:Mhmm.
Speaker 6:So, like, you know, the likelihood that you're gonna get killed even in a drone strike when, like if you're in if you're in Kyiv, let's say, or Kharkiv and they're striking at hundreds of times per night, these are big cities. You know? So likely that you actually get hit by anything is pretty low. Mhmm. In terms of getting it in the country, you have to fly in through Poland, basically.
Speaker 6:So you go into Poland, and then you drive into, Ukraine. And it's a big country, so it's, like, fourteen hours from Poland to to Kyiv.
Speaker 1:Yeah. I mean, we've heard I mean, we saw during the global war on terror, like, there were plenty of journalists that made it in and out. Obviously, it's extremely dangerous, but it is it is doable if you're if you're careful enough. Can you talk about the public relations strategy around the Ukraine Attack On Russia? I found it interesting that we were getting like high fidelity video, really detailed analysis.
Speaker 1:It felt
Speaker 2:like party video.
Speaker 1:Exactly. And and the sentiment in the early war was very much like support Ukraine. Then there was recently some pushback about, are we spending too much on this? Is this is this even our war to be fighting? And that was a kind of of political football that went back and both on the left and the right in some ways.
Speaker 1:This makes this feels like, it, like, it feels like the takeaway is that the Ukrainians are innovative and they're and they're adapting and they're not letting down. And so maybe it's not time to back down in supporting of them. Is that deliberate? Where do you think this goes from here in terms of support from America?
Speaker 6:I think there's, like, different groups of people that the Ukrainians want to kind of attract or get attention from. These kinds of attacks and the reason why they're so public about it, posting footage, is that they're trying to basically convince the rest of the world that they're worth supporting in a very pragmatic way. It's like, forget about the fact that Russia started the war, that Ukrainians are being killed. Any any of that's kind of irrelevant. The main calculus is, hey.
Speaker 6:Yes. We are, you know, 1 the population of Russia. We have a much smaller economy. You know, we have manpower issues. All these things are true.
Speaker 6:You know, Russia, historically, you don't wanna fight a land war against over an extended period of time.
Speaker 1:Yep.
Speaker 6:We do these operations. The Ukrainians do these operations because it's a way of showing that they've essentially found asymmetric ways to offset it. And that if you send them money, if you send them weapons, if you provide intelligence support Yeah. They're gonna keep finding new ways to do it. Mhmm.
Speaker 6:So it's it's just them basically showing every six months, really, we're gonna find a new way to reinvent ourselves and, like, keep Russians on their feet, basically.
Speaker 1:Very cool. Well, good luck on your next trip. Stay safe out there, and enjoy the rest of New York Tech Week.
Speaker 6:Appreciate it. I will. Yeah. Thank you guys so much.
Speaker 2:Be safe. We'll talk to
Speaker 1:you soon.
Speaker 2:Great talking to you. Bye.
Speaker 1:Next up, we have Jeremy from Circle.
Speaker 3:IPO on the horizon.
Speaker 1:I'm so excited for this. I I'm I'm still learning about quiet periods and when folks can talk but
Speaker 2:Well, certainly not in a quiet
Speaker 1:we're so excited to have Jeremy on the show. Welcome to Hey. TBPN. How are you doing? How are you feeling?
Speaker 1:Congratulations. Thank
Speaker 8:you. Thank you. I'm I'm feeling good. It's it's been a it's been a a really intense couple weeks and obviously a really exhilarating last couple days.
Speaker 2:Did you get any sleep last night?
Speaker 8:I did. I did. I I managed to my my family was able to join me
Speaker 4:Oh, great.
Speaker 8:For the for the ceremonies here in New York and got dinner with my family and got some Yeah.
Speaker 1:We we talked to Brian Armstrong about the initial rollout of the Circle partnership years ago. This has been a classic overnight success very clearly.
Speaker 8:Probably your overnight success.
Speaker 1:Yes. Yeah. But Overnight success. We love an overnight success on the show. But can you give us a little bit of the the the history and the story you told about the company when you were taking Circle public?
Speaker 8:Yeah. Absolutely. I mean, look, you know, my my background prior to this had been building internet software platforms and infrastructure from programming language developer tools, digital media platforms, and I was always interested in how the open internet and open networks could change the way different parts of society work. That was what animated me and in 2012 I got deeply into the technology behind crypto and 2013 really formulated this idea that you know it would become possible to build a protocol for dollars on the internet where you could issue a what I thought of as a full reserve dollar digital currency
Speaker 1:Mhmm.
Speaker 8:That could be made accessible in a protocol like HTTP. So you could have a a protocol for dollars on the internet and I believe that we could do that on these blockchain networks which were super nascent at the time and there's no legal framework for any of this and it was like, you know, totally crazy. But we believe we could do it and you know, I think the the the the belief was that over time these networks would become scalable, the infrastructure would work, we could come up with laws and regulations. Yeah. And that once we achieve that, that basically the storage and transmission of value would become like a commodity free service on the internet and money velocity would explode.
Speaker 8:And then in particular, I was really excited at the founding of this idea of programmable money and smart contracts which was like ideas on napkins at the time. And that ultimately not only would you just sort of have this explosive way to and low cost way to move value around, but actually the utility of money could increase dramatically and that you could actually rebuild the financial system into an internet financial system, which is how we founded the company Circle Internet Financial originally. And so we've just been pursuing that and now it's actually happening. The infrastructure works. There's laws and regulations.
Speaker 8:We have these full reserve digital dollars that have central banks and prudential regulators looking at them and and the technology is sort of starting to kind of go into the background. It's no longer crypto. It's stable coins and it's digital currency and so and we've, you know, we've built I think right now a a really interesting business to to to bring that. And so that's sort of the origin of it. And so kind of it's been, you know, it's been a long road for sure.
Speaker 1:Congratulations. I have like 12 more questions.
Speaker 2:I know. We don't have a we don't have a ton of time. I, you know, I I wanna get into, you know, some of two angles, how you're thinking about partnerships on a go forward basis with institutions and partnerships with other large public companies. Seems we saw Uber in the last twenty four hours headline talking about, you know, exploring stablecoins.
Speaker 1:Payroll companies potentially A 100%.
Speaker 2:Yeah. I feel like this gives every you know, I, my last company was a fintech company. We enabled use stablecoin investing Yep. With USDC. And so I've been a big, you know, believer for a long time.
Speaker 2:But, you know, you guys being public now, the market reaction to it, it feels like it gives every single institution in the world permission to say, hey, let's adopt this technology in a meaningful way. So it truly feels like you guys are on day is like
Speaker 8:I hope so.
Speaker 2:Day zero.
Speaker 8:Yeah. I mean, I think I think this is like a mainstream moment for the adoption of this technology. We're classically crossing the chasm, right, from early adopters to like mainstream acceptance, technology usability, the laws and regulations. Having a publicly traded company like this, I think it really does matter to trust transparency, compliance, governance, things that really matter when other major companies want to figure out who to build with. At the core of our business, our whole model is we're a market neutral infrastructure company.
Speaker 8:We're like a platform that people can build on top of. We have banks and neobanks and payments companies and and fintechs and exchanges, custodians, like every type of institution we work with already. And they face us as a march market neutral platform and that's really really important. We're not competing for end users. We're not competing for businesses.
Speaker 8:We wanna let other people build on top of both the kind of public utility that we put out on the internet like our public protocols and like the the kind of market infrastructure of the money issuance side of it. And so it's now it's definitely getting to a point where, yeah, I think major public companies, commerce firms, internet firms, financial institutions of all types really can build on this now. It works. It's liquid. You can connect to it around the world And we have the ability through innovations like CPN, recent product that we launched, to abstract away from an end user perspective a lot of the things that tend to be barriers to entry and make it work compliantly as well.
Speaker 8:So it is a really I think, significant moment. I do think that, you know, lots of mainstream companies can now really feel like they can do this and there's a and there's a great platform company to work with.
Speaker 1:I'm wondering about other real world assets on change programmable money. A lot of the conversation around I want something that's low cost, high speed, programmable Yeah. And stable supply, that makes me think gold, stable gold coins, basically.
Speaker 2:Yeah.
Speaker 1:I'm sure you've gotten this question before, but why didn't the market evolve that way or even, that original, like, 1999 Peter Thiel talk about
Speaker 2:Yeah.
Speaker 8:You're gonna
Speaker 1:be able to transfer $1 worth of S and P 500 Right. To someone else. And there seems to be some demand for that type of stuff, but we the market didn't just break that way. And so what's actually
Speaker 8:Well, mean, look, I mean, the the dollar itself has has extraordinary network effects. Like, 65% of trade is settled there. Sure. And frankly, like a huge driver in our business right now is demand for digital dollars around the world. People, households, firms want to hold these safe, full reserve digital dollar instruments that have the utility of the internet.
Speaker 8:It's like when people woke up and said, hey, I can use WhatsApp and I can communicate with others. I don't have to pay my carrier these SMS fees and it's over the top internet money. And so people have figured that out and and people want dollars even though there's a sell America trade or whatever you wanna about or there's a fiscal cliff or whatever it is, like all these things that are there, people still want a unit of account and they want the power of the internet as a medium of exchange. And and relative to almost every other fiat currency, the dollar still remains super preferred. And so I think that's that's certainly gonna be the case for for a while.
Speaker 8:And and so I think that's there. But the programmability piece is the really exciting next step, right? What, you know, how can you intermediate financial arrangements, commercial arrangements, labor arrangements, arrangements between AI agents, like all of these things that can be machine mediated with provable code, you know, tamper resistant provable code on the internet which is what smart contracts give us. We're just starting to see the unlocks there, and it's gonna be an entrepreneur and developer driven phenomenon for sure.
Speaker 1:That's amazing. You you mentioned AI agents. Ben Thompson was reacting to the Yeah. The MCP standard and the lack of a payments layer in there, at least in this version of the specification? Is there is do we need a v two?
Speaker 1:Is this something that
Speaker 8:we can payments? It's a great question. We're working with all kinds of teams on agentic payments. I'll tell you, you know, we worked on a new a new standard. Actually, it's reusing an old standard.
Speaker 8:Mhmm. We worked on it with Coinbase and a couple of others, is x four zero two, which is essentially an it it a protocol extension of HTTP, which was originally a protocol extension to support payments native to HTTP. Wow. No one ever did anything with it. Yeah.
Speaker 8:And so it is essentially the payment request, like, feature of HTTP. So that's been reincarnated and Cool. Where stablecoin is the payload. And so now you actually have built into HTTP an extension which is a stablecoin payload. And so it's like literally designed for AI
Speaker 1:agents
Speaker 8:agents
Speaker 1:Yeah.
Speaker 8:That need to basically, you know, handle these and and it kind of abstracts away what chain you'd use underneath. And so Yeah. It's it's pretty cool and we're pushing it into our dev products, so it's Coinbase and others. And so I think actually, like, that was part of, like, you know, early on Marc Andreessen
Speaker 1:about to say.
Speaker 8:Yeah. Mean, that's the famous thing. Hey. We had this thing there. No one did anything with it.
Speaker 8:Well, now we have something to put in there.
Speaker 1:Yeah.
Speaker 8:And now we have the demand, which is like machines that talk to each other. And so it's it's interesting how a lot of these things kind of come together at the same time.
Speaker 1:Yeah. Do you have a view on, that idea of micropayments on the web? It just feels like Yeah. We have micro transactions that happen across APIs. They just get bundled and reconciled at the end of the month.
Speaker 1:There's still a ton of value in in stablecoins. I'm not saying that, like Yeah. The narrative is bust because that might not be the endgame. But we saw this with Bitcoin where people were saying, oh, there's four different ways that this could break privacy blah blah blah. It wound up in having a very strong narrative.
Speaker 1:It Yeah. It kind of narrowed down the focus, but it's still a wildly successful technology.
Speaker 8:Well, I mean, look, at at a high level rate, we think about the the TAM here as legal electronic money and then narrowing that down a little bit, you have cash and non interest non interest bearing demand deposits which globally is like $60,000,000,000,000 of the money supply. And so if you can have a digital cash instrument that has the superpowers of the internet and and the like that can basically move and transact at almost no cost, there's an enormous amount to to grow into. Now the other part of the TAM is all of the different utilities that we have for storing it, moving it around, and those are being reconstituted on chain. And so you you start to think about like, okay, you know, cross border payments is one that we talk about a lot and we're seeing a lot happen there. The kind of point I like to make is like, when's the last time you sent a cross border email?
Speaker 8:And sort of like, well, that doesn't make any sense. Yeah. We're we're like we're entering that era with
Speaker 1:money. Right?
Speaker 8:Where basically like stablecoin money. And that could be a business that's got a $10,000 payment to buy something from someone in Asia to, you know, get product in Latin America. It could be an investment. Right? I wanna make a $10,000 investment in a startup in in in an emerging market or in The US or it could be And as we see today, like the biggest electronic trading firms in the world are moving hundreds of millions of dollar transactions over blockchains using USDC to settle bilateral trades.
Speaker 8:The exact same transaction is being used to to buy a 25% digital a 25¢ digital object in a web three game. And it's the same. Right? Just like if I send you an email with a picture of my breakfast and you send me an email with a CAA dossier, it's the same payload. It's whatever it is.
Speaker 8:25 byte or, you know, byte of data or whatever. You know, it's the same thing. And so, you know, that's the cool thing about this. Very, very scalable. And so you don't need like streaming payments or micro payments as like a a, like, killer use case.
Speaker 8:You just need to be able to support all these different kinds of of of value exchange just in an Internet native architecture.
Speaker 1:Can you talk a little bit about the the geopolitical environments internationally that are most receptive to stablecoin adoption? You could see demand for crypto products track and or correlate with authoritarianism, but then you have the pushback of a lot of authoritarian countries might wanna ban or restrict or make something illegal. Yeah. So so will we see more count almost counterintuitively or, like, as a order effect, will we see more stablecoin adoption adoption in more democratic countries
Speaker 8:Yeah. Well, what's interesting is the the demand for for stablecoin money is very global.
Speaker 3:Mhmm.
Speaker 8:And and we do see it, for example, in in in countries where there's weak regimes or the banking system isn't as adequate or there's not as as effective access to dollar banking.
Speaker 1:Sure.
Speaker 8:And and so that's a that's a valuable thing for the people and businesses in those markets. Mhmm. But but it is sort of this, again, this over the top phenomenon like, you know, WhatsApp came over the top and, like, all of a sudden everyone was a Facebook customer and then you're dealing with Facebook for whatever issues in in your country. Or, you know, the Arab Springs were an example of like, hey, everybody could like share media with each other and like, woah, we just lost control Yeah. You know, of things.
Speaker 8:And so I do think there are geopolitical dimensions to this. I think we're in the very
Speaker 2:you guys have have partnerships in Japan that allow you to launch USDC there,
Speaker 8:which is part of philosophy, right, is if a government is going to have rules around, you know, stablecoins in their in their society, you know, we we wanna make sure that, like, those rules are are fair, obviously. And and and we want, you know, that stablecoins that are allowed to be used to be held to really high standards, right?
Speaker 1:Mhmm.
Speaker 8:High standards of trust and transparency and compliance and governance and and things like that. So that's important. And what we're now seeing is in markets where stablecoins have exploded, Korea, Brazil
Speaker 1:Mhmm.
Speaker 8:Turkey, South Africa, Kenya. Like, all of those governments are working on stablecoin right now.
Speaker 1:Yeah. And
Speaker 8:you you know, so I I think it's it's a it's a space where that's intersecting and and so, yeah, we've dealt with this in the history of the Internet. Right? It was when the Internet started, like, you needed a broadcast license to have a radio show in Italy. Right? It was like an or there were national monopolies that were the only Yeah.
Speaker 8:Entities that could actually do radio shows in Italy. Yeah. Well now, here we are. Right? So I think there are these kind of transformations in society ultimately votes, you know, on on what they want to adopt, but it is still a political economic negotiation and monetary sovereignty is not something that the Internet has really faced off against, you know, in a big way.
Speaker 8:But people talk about Bitcoin as doing that as this non sovereign store value, but then when you have exportable digital fiat, then it does become a slightly different issue.
Speaker 2:Can you talk quickly about the competitive dynamics on a go forward basis? This IPO, was massively successful. It seems like they're at at, right now, from my point of view, infinite, excitement for for Circle and USTC. That's obviously gonna inspire a lot of different groups whether it's early stage startups to other institutions to compete. And and I can imagine myself why you guys will continue to dominate, but I'd be curious to hear from you.
Speaker 8:I mean, look, I think the way we think about our business is that we've built a stable coin network and it's an internet scale platform and network utility. And we take very much like an internet platform mentality. Wanna build open public infrastructure. We want developers to build on it. And developers build applications that integrate it to it, which adds utility, which then expands interoperability.
Speaker 8:And so you create these really great classic developer flywheel effects. And that's what we've done. And we've done that with liquidity as well. Like, it's gotta be available, the digital dollars, etcetera. So this is a, you know, it's a business that has network effects.
Speaker 2:Yep.
Speaker 8:And and it's and and those are, I think, strong network effects. And then it's it's a business that there are these very significant hurdles we've had to work on for ten years to become licensed, become regulated, to become supervised, to become trusted, to integrate into these different government regimes and and and and the like. And and that that's a lot of work and it's definitely work other people can do. So I have no doubt that given the TAMs that we're talking about that there are gonna be a lot of great, you know, companies and the what I've sort of said is I think this is a winner take most, not a winner take all market And Yeah. You sort of see that in the market structure a little bit today.
Speaker 8:And I expect that market structure to persist. And I think three to five years from now within that, you know, set that market structure, there's probably a couple players that don't exist yet but will exist and will be double digit players. Right? So it's just hard to know exactly, you know, who that's gonna be. I I I think at the end of the day, like, we wanna build things that are useful for end users, for developers, for businesses and and and provide that and and keep innovating.
Speaker 8:We're a product led company, a technology led company, so we wanna just keep doing that. And as long as we do that, I think we can we can continue to grow and and thrive.
Speaker 2:Yeah. You guys are in a incredible position. Personally, John, bought a car, this week, and, were the dealer able to accept stables. He probably it would probably be getting delivered today. Brett, but the start, it'll be Monday.
Speaker 2:I I actually
Speaker 1:met people internationally with stablecoins years ago. Was a fantastic It was in Argentina. I have one last question.
Speaker 8:Once once you once you've had stables, you'll never go back. Right? Like, wait. And and I can't believe this.
Speaker 5:Yeah. I have
Speaker 1:I have one last question then and then we'll let you go. Sorry for going too long. But I I I wanna understand the shape of your business. I'll give you some examples. There's the the Silicon Valley muscle.
Speaker 1:There's the there's the Washington DC muscle, and there's the the Wall Street muscle. And when I think about the Bitcoin project originally, it was almost entirely technology, no regulation, no financial financial work. Yeah. The grayscale Bitcoin ETF was very little technology, almost all lobbying and regulation and Wall Street financial. Are you a perfect blend of all three?
Speaker 1:Is there is there some focus? Has it shifted over time? Are you out of woods on the DC stuff and you know it's just finance from here on out?
Speaker 8:Well, mean, look. I mean, you know, look, the the best way to look at a company is to look at its OpEx and within its opex, you know, the largest piece of it is labor. And so when you look at the labor opex of Circle, like approximately 45% is product and engineering. So we are we are very technology driven and that is leadership from amazing, you know, engineering and product leaders, mostly out of Silicon Valley, mostly based in Silicon Valley. And and so that's that's by far the biggest because we're operating this infrastructure and platforms and software and and the like.
Speaker 8:And then the biggest, which is, you know, maybe 20% is what I'll broadly call like our control functions. And so that's like risk, governance, compliance, you know, you know, financial controls because we're like this digital currency
Speaker 1:Yep.
Speaker 6:You know,
Speaker 8:market infrastructure. Right? So the control piece is really, really key.
Speaker 1:Yep.
Speaker 8:And and then and then you have like, yes, we have we have a a legal policy and regulatory team that is much larger than a tech company. Yeah. And and and and is expanding because we're now needing to work with and collaborate with governments Other governments. World.
Speaker 2:Yeah.
Speaker 8:Yeah. So so that part doesn't slow down. Think as this as this scales, like
Speaker 1:Yeah.
Speaker 8:The work the work that we need to do with governments only increases. The control infrastructure, the product engineering should kind of kinda chug along. But yeah, that's Well,
Speaker 2:I think about compounding advantage of yeah. You you can compete with us. Just, you know, get interact with every government on earth.
Speaker 1:It's perfectly regulated regulated and You
Speaker 8:know what though? I I say this which is like you know I I've done the yeoman's work of like legal bills for like a decade. And so like you know everyone gets to ride on top of all the legal and regulatory.
Speaker 1:Yes. Toshi had it so easy. Sure. But the regulation, elegant algorithm. So Toshi had no legal bills.
Speaker 1:Well, thank you so much for coming on.
Speaker 2:Congratulations. Excited for you and the team.
Speaker 1:Yeah. Is
Speaker 2:fantastic. Classic ten year
Speaker 1:overnight Love to see it.
Speaker 3:Thank you,
Speaker 1:guys. Have a great rest of your day. We'll talk to you later. Awesome.
Speaker 2:Bye. Cheers, Jeremy. Hey. Come back on soon.
Speaker 1:We have Anastasios from LM Arena. We're gonna get to the bottom of what the best LM I'll let you kick what the best LLM is. Welcome to the stream. Anastasios, how are you doing?
Speaker 5:Pretty good. How are you?
Speaker 1:I'm great. Congratulations. You have news. Can you introduce the company, the news, and, and, everything that's going on in your world?
Speaker 5:Sure. So Ella Marina is an open platform for evaluating AI via human preference. Mhmm. What it is is you can go to the website ellamarina.ai and you can type in your prompt and what you'll see is responses from two anonymous LLMs. And the LLMs are, you know, some of the best Gemini from Google and ChatGPT from OpenAI and Clawd from Anthropic, and they're sort of randomly sampled from a pool.
Speaker 5:And not only do you see the responses, but you can also battle them against one another to see which one sort of win for your vote. And then if you choose, you can vote for the one that won, and then we use that data in order to construct leaderboards. Mhmm. So we have a leaderboard of, you know, the performance overall, but also in subcategories like math, coding, instruction following, creative writing, and so on.
Speaker 1:Yeah.
Speaker 5:And we sort of see it as like the people's voice on AI progress. Right?
Speaker 1:Because Yep.
Speaker 6:You can
Speaker 1:go there, you can
Speaker 5:express your opinion. A lot of the tasks AI is doing is subjective. And by doing so, you can sort of guide the field.
Speaker 1:Yeah. So you raised money recently. Is that correct?
Speaker 5:Yeah. We raised a 100,000,000. Wow. Congratulations. That was yeah.
Speaker 5:Thank you so much. It just speaks to the strength of our community and our duty to continue to improve the product for them.
Speaker 1:Yeah. What is the business model? Yeah. What what is the business model? Because I think people might not be so familiar.
Speaker 1:There's a lot of benchmarks out there, but you're actually building a huge business around this.
Speaker 5:Absolutely. The business model is to help you know, one of the biggest problems that we see with AI driven software today is people just don't know how to build it reliably. Mhmm. They don't know how to pick the right model that to use for them. They don't know how to build like an agentic system with multiple subcomponents in such a way that they're gonna be able to ensemble it together into a piece of software that's like reliable and performant.
Speaker 5:And it's hard even to define what these words mean Mhmm. Because a lot of the job of AI is to interact with humans.
Speaker 6:Mhmm.
Speaker 5:And so when you're interacting with humans, you know, a lot of the responses that people give are subjective. So how do you make sure that you are using your model in a way that like ends up satisfying your users? Ends up making your product better and better. Yeah. You know, we're hoping to be able to address that problem because we have such a big community.
Speaker 5:Millions of people coming to the site and giving their preferences, and we have a whole competition landscape of all the different models against each other on all sorts of diverse tasks, not just in tech, but also in, you know, medicine and real estate and school and
Speaker 1:so on. Yeah. So talk to me about the death of bent of traditional benchmarking and the rise of big model smell. Have you been able to quantify the unquantifiable yet?
Speaker 5:Sure. So I wouldn't really describe it as the death of traditional benchmarking. I would just say that benchmarking is entering a new age where there are different types of benchmarks that are needed. So what does a traditional benchmark do? Just zooming out.
Speaker 5:What you do is you say, hey, here's like a particular vertical that I want to evaluate. Let's say I want to evaluate image classification. Well, then I'm going to collect a bunch of images. I'm going to classify them. And then I'm going to basically give models a test.
Speaker 5:I'm going to grade them based on how well they do on like a held out set of classified images. So what is the problem with this in the current day and age? Well, these days the way people are using AI is like so broad that you could never annotate all of it with data sets. You could collect a data set, it's going to evaluate that thing, but not everything. And you could collect 20, and that's going to evaluate 20 things.
Speaker 5:But really, there's a million different things that you should be evaluating. And arguably, even every individual has their own point of view on all these subjective tasks. And so that's why things like Alan Marina come in as sort of a different orthogonal signal. Yeah, maybe it's still useful to say, how well is my model doing on image classification or multiple choice question answering? But maybe I also wanna know, you know, whether people like this model, why they like this model, whether they're using it in the ways that I intend it to be used, which in which parts of the space is it good and bad.
Speaker 5:And our perspective is those are the questions that we can answer by gathering a massive dataset of human preferences and then going backward, basically inverting the problem and saying, let's mine that data for all the analytics that we can get so that we can tell you which model is best for you and for your use case. And that's where I think the power is in this sort of new age of benchmarks.
Speaker 2:What about humor? Can we expect, any type of, benchmarking from LM Arena around, just making the user laugh?
Speaker 5:That's a great idea. We should have a leaderboard for that.
Speaker 2:Because I think I I that that's
Speaker 1:good idea.
Speaker 2:I I think that that's like a a potential trap that humanity can fall into is is LMs get so good that you just refresh the button and laugh over and over and over and over. And then and then, you know, all productivity is lost and it's just the laugh button, you know.
Speaker 5:Yeah. If you're people happy, you know, making people laugh, that's not a bad thing.
Speaker 2:Yeah. Sometimes
Speaker 5:I I also scroll YouTube like looking at my favorite comedians and I think they're they provide me value.
Speaker 1:Totally. Have I have a post here I want I want your reaction to. I said, now that AI can beat every every intelligence test, we need new evals for the other human traits. Specifically, I'd like to quantify courage, fortitude, gallantry, mirth, equanimity, yearning, stout heartedness, gravitas, panache. This would help me pick what LLM to use.
Speaker 1:How close are we to be able to being able to, quantify courage in an LLM?
Speaker 5:I love that so much. We need your vision. Yeah. I don't know how close we are to courage. Maybe we need them to we need to up the stakes.
Speaker 1:Yeah. Don't
Speaker 5:have to be in the real arena where they have some risk. We have some chips on the table. You know?
Speaker 1:Yeah. Yeah. Our our intern said, you could probably do this using control vectors. And I said, I don't wanna put the courage mask over the Shoggoth. I want to understand the base level of courageousness for the Shoggoth as a whole.
Speaker 1:Is that still a so we went back and on that. We're getting we're getting biblical here. I love it. Yeah. Yeah.
Speaker 1:It's great.
Speaker 2:How how where where are you guys gonna be? You obviously raised a $100,000,000. Yep. Where where are you gonna be investing? What what are kind of some things coming down the pipeline that that you're excited about?
Speaker 5:Well, the majority of our effort these days is going towards taking the platform that we already have and making it a lot better for our community. Mhmm. Basically, more people in because as you can imagine, how does our platform work? Like, people come to the platform. At this point, millions, but we're hoping tens of millions or more of people will come to the platform and vote for the ads that they like best, and then we take those votes and turn them into a number.
Speaker 5:Mhmm. Right? So what's the most important ingredient here? Is getting people into the platform and loving the platform to play with all these different AIs and like ranking them and toying with them and and so on and so And we wanna build great product features for them so that they continue to continue to love it and come. So just investing in elamarina.ai, that's like where we're really targeting a lot of our energy.
Speaker 1:We have Dylan Patel coming on next. He recently dropped the AI Mandate of Heaven tier list. He's got OpenAI up at the top, followed by Anthropic, DeepSea, Google
Speaker 2:Okay.
Speaker 1:X AI down at b tier. Meta and Apple are struggling a little bit lower down in d tier and l tier. Does that track with you? What have you been most excited about in the recent developments out of the Foundation Model Labs? What do you think is like underrated right now amongst the various Foundation Models?
Speaker 5:Well, I think, in general, the thing that excites me most is that there's a lot of competition these days. And there's also a lot of new modalities that are coming out.
Speaker 2:Mhmm.
Speaker 5:So, like, you know, all the time we're seeing that the models are improving, improving, improving, and the pace is not slowing down. Yeah. These things are getting way, way better. Mhmm. And there's a lot of the most brilliant people in the world that are just here, like, in the crucible developing, like, the best AI models.
Speaker 5:And then we're going beyond text. Right? It's going from text to people who are now doing audio, People are doing video. And I don't know. There was a, you know, a big video model release, you know, last week with v o three.
Speaker 5:That was huge. Yeah. And Are you
Speaker 1:are you already doing, tests against the different video models? Because right now, I mean, I've I've put the same prompt into Sora and v o three and it wasn't even close at this point. Obviously Right. The next iteration will be maybe more competitive. But it feels like we're we're kind of too early to do those types of evaluations where people would just immediately identify a v o three video.
Speaker 1:But then there are some other labs out there like Runway that are doing cool stuff in video, maybe it's harder to tell than people think.
Speaker 5:So we have an initial cut of a video arena that we're going to continue improving that was built by some awesome graduate students at Berkeley like Oh, cool. We we have that. We're gonna we're gonna continue building it. But, you know, I think one benefit of some of these strategies like arenas is that they can actually provide kind of a a touchstone for the field to come together and say, hey. Here's what we're going to try to improve.
Speaker 5:Let's go. And then maybe it would motivate some labs to actually continue to, like, build better and better video models because they want to, you know, they want to be winning the game. Mhmm.
Speaker 1:What what has been your take on the the the llama journey? There was some accusations of, like, benchmark hacking. A lot of people have been saying, well, it's, you know, like, never bet against Zuck. He he has a he has a capital cannon and a huge incentive to stay in the game. And so we could be seeing some exciting things out of meta, in the coming weeks or even coming months.
Speaker 1:I mean, all this stuff moves so fast. The leaderboards are constantly shifting. What's your reaction been there?
Speaker 5:So I would just say that we should all be gunning for Meta. We should all be rooting for them.
Speaker 1:Mhmm.
Speaker 5:Because they are releasing open models. Yeah. And so it I think open models are really great for the ecosystem. So I think I and everyone else should want them to succeed.
Speaker 1:Mhmm.
Speaker 5:Now, you know, there was a little bit of weirdness in the last release. I think it's okay. You know, they have a big group of really talented people. They're gonna move on. And, you know, the models they released, they're good.
Speaker 5:They're getting better. And I hope the trend continues for them.
Speaker 1:Yeah. How has this AI safety debate shifted recently? It feels like Meta almost could have had a little bit of an out by, you know, years in years past when a model wasn't performing, up to standard. You could never really tell if the foundation labs were, really worried about safety or they just didn't wanna release the product yet. It was an easy kind of out.
Speaker 1:We didn't see them take that this time. They we didn't see them say, hey. We're we're we're delaying because of of of safety concerns. Has that kind of melted away from the discourse in your community? Or do you think that there's a world where what you're building could be used to evaluate safety?
Speaker 1:Because there's so many different dimensions of safety now.
Speaker 5:I completely agree, and we definitely want to make safety a priority in evaluations. We have a red team arena now that, you know, has been out for a little while and it's still a little bit a prototype, but we're gonna keep working on it. And I think it's really critical. I don't know about the initial question about whether or not that's used as an excuse or not. That's kind of, I don't know, that might be above my pay grade.
Speaker 5:I don't hear a lot of those internal conversations.
Speaker 1:Mhmm.
Speaker 5:But I certainly think that, like, subjective evaluations are going to be important for safety.
Speaker 1:Mhmm. Jordan, anything else?
Speaker 2:No. This is great. I'm excited.
Speaker 1:Yeah. Thanks so much for coming on. This is fantastic.
Speaker 2:On the milestone. Excited to see Brad.
Speaker 5:You and keep in touch.
Speaker 1:Yeah. Yeah. Come back on
Speaker 2:again when you have news.
Speaker 1:See you
Speaker 5:guys later. Bye.
Speaker 1:Cheers. Really quickly while we have our I feel
Speaker 2:like humanity has a duty to everybody should be required. It should be forced. You gotta go on Huge. Helamarina Huge. Daily, five minutes a day Yeah.
Speaker 2:Every every person on earth. Yeah. What do you got,
Speaker 1:John? We got Bezel. Get bezel.com. Your Bezel Concierge is available now to source you any watch on the planet. Seriously, any watch.
Speaker 1:And, our next guest is here, Dylan Patel from Semi Analysis. We'll bring him in. Welcome to the show, Dylan. How you doing?
Speaker 2:Boom. What's going on?
Speaker 3:Dude, this live audience is fantastic.
Speaker 1:Yeah. I mean I mean. We actually do have a bit of a live audience. We have four people in the studio today. But we also have a soundboard going.
Speaker 1:A giant gong.
Speaker 2:Let's go.
Speaker 1:If you wanna drop a big Yeah.
Speaker 2:You have any big numbers to throw out, we'll hit this gong. Why don't you just hit it, John?
Speaker 1:Just tell us Dylan's been on a generational run. Yeah. Yeah.
Speaker 2:Just hit
Speaker 1:it Just give us a big number.
Speaker 2:Hit it for semi analysis. There we go. We got the dog cam.
Speaker 1:The dog cam. It's so loud. I'm sorry.
Speaker 2:What's happening?
Speaker 1:How are you? To meet you.
Speaker 3:It's it's it's fantastic. I'm having a fantastic day.
Speaker 1:That's awesome. I I really enjoyed your China talk episode, the the update to the AI lab tier list. I wanted to I asked I asked some folks about that. I have I have some follow-up questions, so maybe that would be a good place to start. OpenAI, I mean, it sounds like they're they're they're not backing down from bigger and bigger training runs.
Speaker 1:But can you give me a little bit more insight into what it means to do a big training run now? Because they're still pretraining. Like, the RL stuff is scaling up. Like, what is the shape of the next big run, if that's even the right term to use in this era?
Speaker 3:Yeah. So there's there's efficiency gains on multiple layers. Right? So pretraining, you're not you're not simply just gonna scale it larger and larger Yeah. As your only avenue of spending resources, but you are constantly getting efficiency gains.
Speaker 3:Right? Something that lets your model be 10% more efficient to run or train but but involves changing the algorithm. So people are still doing pre training constantly, but they're not know, OpenAI's Orion or GPT 4.5 was a run so large that they literally can't scale it up any larger until, like, end of this year when Stargate starts being operational. Right? They literally just don't have a cluster that's bigger.
Speaker 3:So so it's primarily them evolving their model architecture, continue to get efficiency gains. Right? So for example, GPT 4.1 was an efficiency gain over four o. And they're gonna do another one of these sort of efficiency gains step up in model size somewhat, but not as far as 4.5. So that's on the pretraining side.
Speaker 3:But all the eyes are on the reinforcement learning side. Right? Mhmm. That's where they're doing all these crazy things or cool things. Right?
Speaker 3:Whether it be, you know, o three specifically for just regular reasoning and o four is coming out soon enough Mhmm. Or it's deep research or it's multi agent systems. There's tons of work they're doing, spending training compute on training larger and larger models in terms of more compute spent on RL, not necessarily model size. Right? Because your model size is baked in at pre training.
Speaker 1:Yeah. With with Stargate coming online, is, like, is there really no other way around that? Like, I feel like AWS is really big. There's, like, other big clusters out there. Can they just not get access to those?
Speaker 1:Or do they truly not exist? And will Stargate be of its kind?
Speaker 3:You know, I think it's funny that my little autistic obsession became the most political thing in the world. Right? And so you have you know, obviously, US, China, now Middle East. Like, there's all these geopolitics here. It's great.
Speaker 3:But, of course, like, the politics are between the companies too. Right? Yep. So there's the whole, like, OpenAI Microsoft breakup. Right?
Speaker 3:There's a reason Stargate is not in Wisconsin. Right? Microsoft had a huge data center they're building in Wisconsin. That's where it was going to be. But now, Stargate is in Texas.
Speaker 3:And it's not being done by Microsoft because OpenAI and Microsoft had all these politics, right? A lot of which were really well reported, but a lot of which have been sort of silent. And it's like, Okay, well, is Amazon going to give OpenAI compute? Absolutely not, right? Is Google going to give OpenAI compute?
Speaker 3:No way, right? It's like there's companies getting bought by OpenAI. The deal hasn't even closed, and they're cutting office cutting off access, right? Sort of with the whole windsurf thing. So it's like these things are so political.
Speaker 3:And and and little nerdy autistic boys don't know what to do with politics.
Speaker 1:Yeah. Yeah. How how much of that dynamic is driven by just like true AGI pilling at the top level of the hyperscalers versus just this is potentially a multi trillion
Speaker 2:dollar dog.
Speaker 1:Yeah. This is potentially multi trillion dollar outcome and, like, we need to have a player. We need to cut off a competitor. What is there a dynamic there?
Speaker 3:I mean, I don't think those things are mutually exclusive. Right? Like, whether you're, like, truly AGI pilled, like, open air anthropic type people where, you know, you want it for the benefit of humanity Mhmm. Or you're like you're like Andy Jassy or, like like, Satya Nadella or, you know, whoever it is. Right?
Speaker 3:You're you're you're you're you know, whoever you are at the hyperscalers, at the end of the profit is AGI. If you have AGI, you hope you can profit off of it. The people at the labs would be like, well, I don't know if AGI would let us profit off of it. But in the meantime, as we're building towards AGI, that is a trillion dollar, $10,000,000,000,000, multi trillion dollar thing that you're you you you have under your control.
Speaker 1:Yeah. Do you think we'll be able to tax the profits of AGI even if we can't reap them? Because I was looking at the Trump Elon breakup, and I was wondering, what does this say about their AGI timelines? Because if you really
Speaker 2:pilled lion does not concern himself with deficits
Speaker 1:Yeah. If you believe AGI 2027 or AI 2027, like, we're the budget deficit doesn't matter. Right? Like, we're gonna be printing 20% GDP growth. We'll be able to pay back trillions of interest in just a couple years.
Speaker 3:So I I think it's I think it's quite funny. You know, this this opening or sorry. This Elon and Trump sort of drama, like, you know who's you know who's, like, sitting there like, yes. Yes.
Speaker 1:I know who.
Speaker 3:Sam Altman is like, Let's go. Because he's like, for a long time, Elon was like, I'm not going to allow OpenAI to become a or become a for profit, right?
Speaker 1:Yep.
Speaker 3:And he's suing them, And I'm sure part of his calculus for, like, going all in on Trump and, you know, saying he loves him more than a man can love any other man. Like Yeah. Yeah. You know, four months ago was, like, him thinking he could, you know, convince Trump and the IRS to not let them convert. Right?
Speaker 3:Yeah. Like, it's, like, very obvious. Like, what's the impediment? Like, they're gonna get a gonna be able to convert
Speaker 2:to the poor profit. Time, Trump was always a Stargate guy. He's a big Stargate guy. He announced some projects. Right?
Speaker 3:Is is that something you're be is a big number guy. Right? Big number guy. Yeah. You get get the 100,000,000,000, and he's like, hell yes.
Speaker 3:Hell yeah. Just because this is this is what it's about. Right?
Speaker 1:Yeah. Yeah. Wait. Before we move on from the OpenAI, the next big run, how real is the narrative of, like, they're going to pull ideas from deep seek? The I think it was, like, FP eight was one of the innovations.
Speaker 1:There were a bunch of other innovations. Some of those were specific to the restrictions of chips, but it felt like some of them might be generalizable to just more efficient training runs. Are there real learnings for the American labs that aren't GPU poor or GPU restricted from DeepSeek?
Speaker 3:So I think I think there's certain things that DeepSeek did that the rest of the industry had already done in terms of, like, the OpenAI's. Right? Mhmm. FPH training was one of them. Right?
Speaker 3:OpenAI's been doing FPH training since at least 2023 Mhmm. Perhaps earlier. Right? Now on the flip side, there are certain things that, like, DeepSeek did that were a bit beyond what the labs had done. Right?
Speaker 3:And so, one of those things is, like, how sparse a model it is. Right? Mhmm. You know, you have a mixture of experts model. You have you have so many experts in the model, but you don't activate all of them for every forward pass of the user.
Speaker 3:Right? Mhmm. And so g p d four was 16 experts, two of them active. Right? So that's a one to eight ratio.
Speaker 3:G p d four o ended up being, like, a one to 32 ratio. But DeepSeek actually went even further. They were one to 64. Mhmm. I wouldn't say that that's something that, like, the labs weren't planning to do, but definitely DeepSeek did leapfrog a little bit.
Speaker 3:Right? Went a little bit further as far as, like, publicly available models. And I know I know Google's models aren't as sparse as as as OpenAI's. Right? And so everyone is headed that direction, but DeepSeek definitely went a little bit further.
Speaker 3:So I think it's like I think some of the more interesting stuff that DeepSeek did was around sort of, like, you know, making it open what the reinforcement learning, verifiable reward paradigm is. Making it open how how to do really efficient inference systems. Right? These are the sort of things that I think DeepSeek did that a lot of people can learn from. And also, are special attention mechanisms.
Speaker 3:There's some interesting work there. Even as far back as mid last year when DeepSeek released a paper, everyone was like, wow, this DeepSeek company has really good research. Right? So I think there's things people can learn. But also, there's a lot that the labs had already done.
Speaker 3:They just weren't like maybe they didn't go as far, or they did it, but it wasn't like they were passing on all the cost savings to the user, right, because they like to have margins.
Speaker 1:Yeah. How much of the deep sea narrative around, like, it happened because China banned high frequency trading is real? And should we ban high frequency trading in America if we wanna pull AGI timelines forward?
Speaker 3:This is this is great. I think, like like, some of the most cracked people I know at Anthropic and OpenAI are ex, like, Right? Yes. Like, Anthropic's best performance engineer who, like, writes all of the, like, perf like, you know, improves the performance of their whether it's Trainium or TPU or GPUs. He's he's from Chain Street.
Speaker 1:Right? And it's like They're they're they're missionaries. The they're still mercenaries over in the high frequency trading bucket. With a few laws, we could move those mercenaries over. I'm not saying we should do it.
Speaker 1:I'm just saying, I wanna know your take. Are you there?
Speaker 3:Yeah. I think I think I I think that the with with, you know, with the mercenaries, right, it's like, well, the labs could just pay more money. Right? Sure. And they do.
Speaker 3:Right?
Speaker 1:And Sure.
Speaker 3:They're luring over the people they want with these crazy, salaries.
Speaker 1:Mhmm. I think we're kind of going back and on the, can you hear us okay? We good? Yeah.
Speaker 2:Can hear you.
Speaker 1:Okay. Perfect. Yeah. Let let's, maybe let's move on to Google. What was your reaction to, the Google IO news?
Speaker 1:And, and and, I mean, you put them in a tier. They have this, incredible v o three model. How much of that is due to the cornered resource of YouTube? Is that a durable advantage? We kind of saw the open web get scraped by every single LLM, foundation model company.
Speaker 1:We saw all the code in GitHub kind of get exfiltrated one way or another. Is is that something that is going to be a sustainable advantage for them, at least in video generation?
Speaker 3:So so to some extent, it's like everyone trains on YouTube. Right? Mhmm. Like, every company takes makes you takes YouTube into makes it into transcripts, trains on it, or even takes the videos and trains on it. Right?
Speaker 3:Every video model company is ripping stuff from YouTube. This is, like, very well understood and known. But, you know, there's there's limitations on how much you can steal from YouTube. Right? Right.
Speaker 3:I think my favorite sort of clip of all time, one of my favorite clips of all time is, like, when someone's like, hey, Mira, did OpenAI train on YouTube? And she's just like, if you know you know the meme, you know the meme.
Speaker 1:Yeah. There's definitely some data that got out. But but but there's the scale of data. Like, with YouTube, it feels like just in if you were to tokenize it and then compare it to GitHub's tokens, like, you're looking at orders of magnitude, and that seems important in terms of just Right.
Speaker 3:Right. I don't I don't think you can just rip all of YouTube like that. Right? Like, they have they have protections against that. Right?
Speaker 3:Sure. You can get engineer ways around, like, pulling some videos. But, like, YouTube gets five hundred hours of video uploaded every is it like every minute?
Speaker 1:It's like
Speaker 3:Like, it's like an
Speaker 1:or something. It's insane. Yeah. And and I mean, just the storage costs alone, like, you would be able to see the storage center for the copied YouTube like from space.
Speaker 2:Well, speaking of scraping, I'm curious. So so Reddit and Anthropic are in a lawsuit right now around Anthropic scraping Reddit. I was surprised that they didn't have a deal in place. Do you think there was, you know meanwhile, Gemini has a deal. OpenAI has a deal with Reddit.
Speaker 2:Do you have any insight into why Anthropic would, you know, not even make something happen when clearly it's sort of a valuable and important platform to to train on?
Speaker 3:I mean, like like, the data's the vote. Right? And if if you can get away with using the getting the data without paying for it, then you're gonna do that. Right? Mhmm.
Speaker 3:And I think, like, you know, I don't know about the legalese, but, like, isn't OpenAI's deal with Reddit like $100,000,000 a year or something insane?
Speaker 1:Yeah. Yeah. Gemini is like 60 Yeah. They're like They're both around $100,000,000 a year, and that makes up about 20% of Reddit's overall revenue. But, of course, that revenue is super high
Speaker 2:140,000,000 a year.
Speaker 1:Yeah. From from both.
Speaker 2:Google, 60.
Speaker 3:Yeah. Okay. Right. So so, like, if if that's the case, like, what is what does that, like, lend you? Right?
Speaker 3:Like, $70,000,000 a year is is a ton of either you know, it's it's, like, 70 researchers. Right? Or it's, like, it's, like, thousands of GPUs. Right? So it's, like, you know, which would you rather, you know, like, YOLO and and just not pay for the data?
Speaker 3:Yeah. And now, like, Anthropic can probably just, like, you know, fight it out in court for a couple years before they finally pay Reddit.
Speaker 1:Right? Yeah.
Speaker 3:Then are they gonna have to pay as much as Google and and OpenAI? Well, that would seem unfair. Right? So, like, they're kinda gonna get away with, like, having not spent the money. So maybe that's a good good sort of view.
Speaker 3:Obviously, there's also the view of, like, well, it's not actually, like, stealing data because it's, like, training on it, you know, whatever.
Speaker 1:Yeah. Yeah. Yeah. Totally. That's an interesting one.
Speaker 1:On x AI, you put them in b tier. There's a world where Elon being on the outs with Trump draws more scrutiny to some of his companies like Tesla and, and SpaceX. X AI feels like completely off of the political agenda in Washington. So maybe this is a bull case for x AI because they have Elon has more time to focus on it if he's not spending less time in Washington. What's your view?
Speaker 1:Have a say that
Speaker 4:right now.
Speaker 3:I have a fun anecdote. Right? Please. So, I have a buddy who works in, like, manufacturing optimization, at Tesla of, like, specifically how they, like, press the steel parts and, like, you know, make make the body. Right?
Speaker 3:And he's like, dude, I haven't had a meeting with Elon in, like, nine months. I'm fucked. Right? Like, I just, like, what am I gonna do? Like, he's gonna come in.
Speaker 3:So the thing is, like, Elon's amazing because he comes in and he's like, why are you doing it this way? Yeah. Why? Why? Why?
Speaker 3:Do it this way. Yeah.
Speaker 5:And then
Speaker 3:and then you you have to, like, either do it that way or come up with a really freaking good reason why not. And he's just such a principles thinker. But now, but but for like nine months, it was like, well, I'm gonna continue to drive down the path that I think is best.
Speaker 2:Yeah. Ideally, you want that rapid iteration. Right? It's like you want him to come and just like get angry at you every day Yeah. Instead of once every nine months.
Speaker 2:Is actually better.
Speaker 3:I mean, depends. Right? Maybe it's not every day. Maybe it's not every week. But there is a level of, he comes in.
Speaker 3:He resets all your priors. And you reset your roadmap, kind of. Yeah. And the flip side is for the employees, it's like, well, I might now have to go back to working one hundred hours a week, whereas when he was gone, I could work forty to sixty, right? And it was great.
Speaker 3:So I know Tesla definitely had a lot of neglect. I know Neuralink had a little bit. XAI saw some, but xAI still had quite a bit of interaction from Elon. But obviously, that's just going to grow more. And so I think it's probably a good thing that these companies have Elon coming back and devoting all his time and effort.
Speaker 3:The flip side is that XAI does have a government facing sales, as does Anthropic, as does OpenAI. And now, XAI is going to lose out on those sort of government sales? But at the end of the day, government sales are, like, pretty small relative to private industry.
Speaker 2:Where where do you expect most of XAI's revenue to to come from a year from today?
Speaker 3:That's that's a great question. I don't think it's consumer. Right? Because probably most of their revenue today is, like, the Twitter subscription. Right?
Speaker 3:Yeah. I guess because x a I is x now. Right? So is
Speaker 2:that gonna be categories that matter, it's, like, consumer, developers, and then traditional enterprise. Right? And is there like
Speaker 1:People don't seem to be plugging Grock into Cursor or Windsurf and we haven't seen people then Grock, but it's just so early that maybe they could win in certain you need anti woke receipt processing or something. Yeah. So it's just like
Speaker 2:at at some point, you know, there there's gonna need to be a lot of revenue on the x AI side. You can't, know, x, you know, x the everything app can do a lot of work. Yeah. Maybe they add payments and things like that. I'm curious I I'm curious if you think that the merger is actually net good for x, the social media platform in the long run because my con my concern is that it's actually the x, the social side of the product that will really suffer
Speaker 1:Mhmm.
Speaker 2:Over the next few years. But I'm curious how you how what your read is.
Speaker 3:I think I think it was clear before the acquisition that x had a lot of debt, and they had they didn't they didn't generate enough profit to pay it off. So their EBIT was, like, bad or not EBIT. Sorry. Just their earnings, period. Obviously, before interest and taxes, it was fine, but they just had so much interest payments.
Speaker 3:And so that's why that's that's why I think x AI acquired it. It it is beneficial. Right? X AI does get access to a data source that no one else has. And, like like like like, the fastest data source out there, right, x is way faster than any other data source out there.
Speaker 3:So I think that's that's hugely beneficial. But as we think about, like, what is the highest value ways of organizing the world's information and acting upon them? And it's like, today, everyone's sort of highest revenue thing is is code. Right? Cursor just hit 500,000,000 ARR.
Speaker 3:Right? And and, you know you know, all these other Windsurf just got bought for this crazy amount of money. Right?
Speaker 2:Like Anthropic is growing revenue.
Speaker 1:Even Yeah. Even Copilot at GitHub at at Microsoft and GitHub apparently isn't doing 500,000,000 a year in run rate.
Speaker 3:Yeah. But code is where all the money's being made today. And the question is, I think all of the labs, least OpenAI, Anthropic, especially Anthropic, believe that code agents, software agents is where the most money and most progress is going be made over the next six months. I think xAI also believes this to a large extent, but they also believe some other things, right? But I think automating businesses and helping them become more efficient is going to be where most of the money is made, not consumer.
Speaker 1:So, yeah, I mean, I I guess you can I can maybe guess your answer, but do you think Anthropic needs a dance partner or any dance partners? Because you could see them going out and getting Pinterest or Snapchat. I don't know if that would be valuable, but they're kind of the one LLM that doesn't have a huge consumer front door to their product. And maybe that doesn't matter on the revenue side, but maybe it matters on the data side.
Speaker 3:Yeah. So I think I think they're just too AGI pilled to think consumer matters at all. Right? Like, they don't care about voice modality. Right?
Speaker 3:Like, they just don't think it matters. And it's like voice matters a lot. Right? At least for consumer applications. They don't care about image generation.
Speaker 3:So it's like, do they need a dance partner? There's a really good Mexican song called Asia by La Solo. And so I don't know if you don't,
Speaker 1:but got
Speaker 3:a freaking trumpet and everything. It's such a good song. And it's like, no. They're gonna they're gonna stay they're gonna dance alone.
Speaker 1:They're gonna dance alone.
Speaker 2:Are you staying in the Elonverse, are you worried that cheap robotic arms will take the jobs of humanoid robots?
Speaker 3:So so I think, like, colloquially, like, everyone just talks a lot about humanoids. Yeah. Humanoid robotics. But it's like most of the applications that I think are automatable in the next two, three years do not require legs. Right?
Speaker 3:Like, if I go to a warehouse, if I go to a data center, if I go to a factory, the floor is a flat slab of concrete.
Speaker 1:Yep.
Speaker 3:Right? I do not need to spend all this weight and energy and power on legs when I could just throw wheels on it, dude. Like, come on. And so, like, that's one side of it. And the other side is human manipulation.
Speaker 3:It's actually funny. AIs are going to be way better at us than software than they are going to be at just manipulating, right? Like picking things up, right? Like hands are freaking incredible. We aren't even close to human level hands on a physical basis, let alone the AI that we have in our brain that's developed over thousands and millions of years versus the language capabilities which have only evolved over the last five thousand.
Speaker 3:So I think it's going to be hard for humanoid robots to take off immediately. But there's tons of applications where, you know, humanoid robots will still be able to do basic things, things that are capable like, low low risk of getting it wrong so you can try again. And then the other aspect is, you know, what about what about, like, I cut the cost of a humanoid robot in 1 because I have wheels, and so I cut weight down dramatically, and it's way more efficient. And instead of having fully formed hands, I just have, like, three gripper fingers. Right?
Speaker 3:And that's all I need for, like, you know, data center automation. Just gotta plug in things and take them out. Right? Unscrewing things. Maybe my arm is just a screw, then the other one is, like, a three finger.
Speaker 3:Right? And it's like, this is way, way cheaper and specialized to the task than a humanoid. Not that I'm, like, against humanoids, but as far as, like, you know, robot arms, yes, that's part of it. Right? Like, a lot of tasks, it could be a stationary robot arm.
Speaker 3:Mhmm. But the important thing to consider here is that literally all of this will be made in China, and none of it will be made in America.
Speaker 1:Why is that?
Speaker 3:The supply chain for Chinese robotics is
Speaker 1:Sound boring, bro. We're very familiar here.
Speaker 2:Yeah. The the audience is very America pilled.
Speaker 3:It's sad, but it's like the supply chain here is like China's China makes more robots. If you go back five years ago, China made as many robots as roughly Germany, South Korea, Japan, and The US, Now, China makes more robots than all of them combined, Right? And the cost that they do that at is way lower. And, like, will the Japanese companies argue that the Chinese robots are shit? Yeah.
Speaker 3:But, like, you speed run up, like, quality faster than you speed run down on cost. Yep. And, like, the same applies to, like, Germany, although Germany sold some of their best robotics companies to China, and all the tech got transferred. But, like, you know, it's like, we we don't have the manufacturing supply chains to turn, you know, raw goods into motors or into actuators. And if we can, or when we do, it's like it costs 10x as much.
Speaker 3:And so it's just like, it's impossible, at least without some huge industrial policy for The US to compete here.
Speaker 1:So, I mean, it seems like there's almost an analogy there to the semiconductor industry where China has been lagging there for decades but has done a lot to at least catch up to the lagging edge. Are there any policies that that or investments or industrial policy that China did to at least stay in the game to the degree that they did that we should be stealing from them and doing here for robots and manufacturing?
Speaker 2:Ten five year plans back to back.
Speaker 1:We need ten five year plans.
Speaker 3:I think the funny thing is that when you look at industrial policy Yeah. The way China does it sometimes is more capitalistic than the way we do it. Now, obviously, like, you know, giving a bunch of money to an industry is not capital capitalistic. But the exact policy mechanism of the CHIPS Act versus what China does is so much better. So China does, oh, you just get x subsidy for manufacturing a certain amount, rather than, oh, it's a company by company deal, and this company gets this money for this plant.
Speaker 3:Right? Or or like, hey, we're just gonna subsidize the land in general for this. Or, hey, if you build a fab that is 28 nanometer, you don't have taxes for ten years. Right? And so stuff like this is what China's done, and that's had them, like, dramatically increase their semiconductor spend.
Speaker 3:You have things like the National Railway Company is now making power semiconductors because they make profit. And they're like, well, if I make fabs, then I can blow all my profits from the railway in that. And then all my fab profits will just be profits without tax. And so now, their largest railway company is the largest power chip company in China and top 10 in the world. And over the next few years, they're going to be top five, period, across the whole world.
Speaker 3:So I think things like this are interesting industrial policy. And probably, we can get the car companies and various John Deere and all these mechanized things to get them to start pushing into robotics, right? Because BYD's pushing into robotics. And obviously, everyone knows about Unity Tree. Xiaomi is making cars and getting into robotics.
Speaker 3:All these companies are getting into robotics in China because of industrial policy. And they did the same with autos, or EVs. They went into EVs because of industrial policy. Or they went into semiconductors because of industrial policy. Like, America doesn't have that.
Speaker 3:Right? Like, we just have maybe you know, we have the startups who are mostly just buying Chinese equipment and repackaging and pretending like they make it here, like Figr. Or, you know, like
Speaker 2:test we have American VCs who put American flags in their offices. That's gotta count for something.
Speaker 1:You know?
Speaker 3:I mean, I I'm not saying it's not noble.
Speaker 2:It's just No.
Speaker 1:I'm I'm just joking. On on unit tree, what do you think the perception of unit tree is in China? Because if you're if you're a believer in the wheels and the different actuators, it feels like they could be more like China's Boston Dynamics where it's like, oh, bunch of cool videos, but not a lot of actual applications. But the reaction in America to unitary videos is, oh my god. There's this crazy wave coming.
Speaker 1:But but maybe that's a misdemeanor.
Speaker 3:That every video of them is just, like, doing war things. Like Oh, yeah. Really wanna scare the West? Like Totally. Why don't you just have it, like, petting bunnies?
Speaker 3:Like, know, trust us. The Chinese robots are not dangerous.
Speaker 1:They should be doing that. Yeah. I was wondering, like, I I fully expect that there will be one of those, like, North Korea style military marches with a 100, like, a 100,000 humanoids, and it will just be terrifying even if the capabilities aren't actually there for real war fighting, just the demonstration.
Speaker 3:Did you see the, humanoid, marathon in China?
Speaker 1:Yeah. Yeah. But
Speaker 3:anyway, so to answer your question, right?
Speaker 1:Sorry.
Speaker 3:Unity Tree, yes, we see the humanoids, robot dogs, but they've actually released a robot dog but with wheels. And so it's just like two it's like sticks and it has wheels. And they're releasing a humanoid with wheels. Actually, they just showed it off at this conference in Singapore that one of the guys on my team was at. And so, like, they're coming with the mobile manipulators.
Speaker 3:But also, have to recognize, for the cost that they make in $10,000, Western companies make in $75,000 or $100,000. So the quality of hardware they can make. So that's also an important consideration.
Speaker 1:Yeah.
Speaker 2:You said you said something earlier around all the, you know, the next value in models coming from automating businesses is the right framework for that agents. Is that how you how how someone should conceptualize it, or is it an entirely new paradigm that that's less about, you know, agent human kind of collaboration and more so just like full autonomy?
Speaker 3:Yeah. I mean I mean, the the dream is always multi agent systems. Right? Many different agents working together and just doing the job. But today, the time horizon for human model interaction has been growing rapidly.
Speaker 3:Initially, it was seconds. It's getting to minutes. If you use deep research, thirty plus minutes. And and and this is gonna start extending to many places like code. You know, if you use Claude code, you know, the the time interaction is, like, minutes, not not second not seconds.
Speaker 3:And so I think it's and it can even extend to tens of minutes. I think I think these agent systems will it'll be it won't be like a hard, like, hit. Right? Like, everyone's expecting sort of like, oh, we have chatbots. Now I have agents.
Speaker 3:But really, it's gonna be like a blended curve of like, yeah, know, like, just like the amount of interaction the human has with the system, it becomes less and less and less over time.
Speaker 1:That's a good framework. Sorry to move back to China. But Alibaba, Quen, what I I I mean, it seems like they're just pumping out, like, a million different open source models. What's the reaction been to the American research labs? Have we actually learned anything from that?
Speaker 1:We've had some folks on the show who have been just generally excited to play with so many different research tools. But are they trying to commercialize that? And I guess my big question is, what is the actual chatty pity of China right now? What the consumer front end?
Speaker 3:So on the latter point, the consumer front end, is DeepSeek offered through the clouds? So some of the cloud companies like Baidu, Tencent, etcetera, offer DeepSeek the model but through their own platform rather than through DeepSeek. And some of them will offer it through DeepSeek themselves directly. But the interesting thing to note here is that we have a very big dichotomy here. Part of the reason DeepSeek costs so much less on inference than US models is because the speed of deep seq's models.
Speaker 3:And there's this curve of how fast does the model respond to you versus how many users you can batch together. So if I have and it's a system, and I'm only serving one user, it's going to be screaming fast. Mhmm. Right? But if I'm serving hundreds of users, each individual user is gonna be slower.
Speaker 3:Now, the total collective number of tokens I'm generating is much higher. But this is interesting because when I use OpenAI, I get 100 tokens per second. I get 200 tokens per second. Right? Same with Google, same with Anthropic, XAI, etcetera.
Speaker 3:You type the query, and it goes maybe twice as fast as you can read so you can skim it. But if you do that to DeepSeek, it's 20 tokens a second. And I can read faster than the model outputs. And that's a conscious decision because they're limited on compute on, hey, want to serve as many users as possible. And so the chatbot style applications are actually very bad.
Speaker 3:And that's why Chinese people tend to use OpenRouter a lot to access OpenAI Anthropic models in China, even though they're not supposed to, or accessing other companies' models through other methods. So I wouldn't say that there's truly a one consumer front end. Rather, it's that the as soon as DeepSeek came out, the the governments started pushing all the companies to offer DeepSeek. But there there still isn't a good consumer experience, right, in China. Moonshot is probably the most popular one, but their models aren't that good.
Speaker 3:Right? So it's like they're I don't think it's won out yet.
Speaker 1:Yeah. How much of an how much of an issue is owning the application layer if you're an independent country that doesn't want to rely on American or Chinese foundation models like what we've seen with Mistral and LeChat. There's this world where you spend all this money to build this data center in your country. You spend all this money to train a model. Maybe you're not at the frontier, but you're you're you're close.
Speaker 1:You're in the game. But everyone just, by default in your country, just goes to chat.com. And so unless you're willing to ban ChatGPT and you're not going that far, like, you haven't truly won in terms of deploying your model with your view on free speech into your populace.
Speaker 3:Yeah. So I think I think that's that's gonna be challenging for like, there there are sovereign AI efforts in all these countries. But like you mentioned, right, Le Chet is not, like, that successful in France. Yeah. You know, there and and this and and Mistral is the closest of any, like, sovereign AI besides China and The US.
Speaker 3:So you're going get all these models, but people are just going to use the consumer. It's like, am I going to use Google's models are so popular in India. Or Perplexity is ridiculously popular in Indonesia for some reason. I don't know why, but these are just frontier models instead of from American companies rather than domestic model that could be made. So I don't expect any sovereign AI effort so that to, like, truly succeed on the model level, I do think that, like, you know, sovereign AI can mean many things.
Speaker 3:It could mean I'm making a bunch of data centers. It could be mean I'm making a big neo cloud company. Or it could mean, like, I'm gonna make the full stack with the model. But at any point, if it doesn't get economical, you can always just rent out most of the cost of the GPUs, you can just rent them out to someone else, right? And then try and recuperate your cost.
Speaker 1:But you can't really do that with a foundation model that you've trained that has mediocre weights, Right? So that is kind
Speaker 3:of Right. It's like it's like you just you burned all this money and flops on something that's effectively useless because Meta's open source model and DeepSeek's open source model and Alibaba's open source models crush you.
Speaker 1:Yeah. Yeah. Speaking of Meta, I'm try I've been trying to work through what's going on there. There's obviously kind of the dust up around Llama four launches. But, somebody asked me, like, what is the bull case?
Speaker 1:And everyone always says, like, oh, recruiting or, you know, some beneficial thing or benevolent thing. But I was wondering if there's a reasonable case to be made that if you try and just project out what Meta's LLM spend would have been on other vendors o in five years, it would have been so big that even if they're constantly on the lagging edge, they're still recouping the investment in training llama just because they will be able to serve it internally. Is that a reasonable, like like, thesis, or is there something else going on there? Like, what what do you think of, like, the the motivations and and problems with that project?
Speaker 3:I mean, they have, like, internal LAMA models too that are trained on their internal code base that they can use internally. Right? So that sort of stuff is, like, something they could just never get elsewhere.
Speaker 4:Yep.
Speaker 3:But I think it's I think it's a a multi factor thing, right? The bull case is obviously a personalized AI assistant on my glasses. And that's just always on my head, always serving me up slop. But like
Speaker 1:So truly waiting in the consumer use case. Right. Truly, the
Speaker 3:consumer use That's the real bull stock. Yeah. That seems to be what Meta's actually going for. But as far as today, they roll out WhatsApp, Instagram, and Facebook models, Meta Llama models to everyone. And they claim they have 500,000,000 monthly active users, right, which is a lot.
Speaker 3:Right? Now imagine if they didn't offer that. Right? Would people start using ChatGPT instead, and now they're out of that a meta ecosystem? And their screen time goes down, and they get look at less ads.
Speaker 3:Or does, like, Apple Intelligence become more powerful? People go to Apple Intelligence for their AI because that's the that's the AI that's most accessible. And now all of a sudden, Meta, who already has been screwed by Apple multiple times on advertising, is now getting screwed even harder because all of the like like, more and more of the data keeps going to Apple, and there's no way for Meta to get access to it. So it's like, there's an existential threat here too. Right?
Speaker 3:And so I don't think I think it's, like, prudent that Meta spends on these models. I'm also, like, a lot more bullish on Meta long term than, like, most people are. People are, like, looking at llama four as, like, a single point in time of, like, wow. This really sucks. Yeah.
Speaker 3:But there's, like, two models there. Right? There's, like, Maverick and their scalp. One of them is really bad, and one of them is pretty good.
Speaker 1:Right? What about Behemoth? Isn't that another they don't have a Rough name.
Speaker 3:Yeah. But they didn't release it.
Speaker 2:Rough name. They didn't release it. But yeah.
Speaker 1:Yeah. Yeah. It it is a weird name because it's, like, very demonic, it's like you're unleashing this demon.
Speaker 3:But Well, the funny thing is the architecture is super similar to GPT four.
Speaker 1:Oh, really?
Speaker 3:But, like yeah. It's it's it's, like, extremely similar.
Speaker 1:It was just, like, a very funny naming scheme because, like, the Behemoth is, like, the untamable beast, and, like, they couldn't tame it to get it out the door. And so, like, the name really mimics, like, what happened with that project. But so, yeah, I mean, what are are are they gated by scale? Are there I mean, the CapEx spend seems to be growing, but similarly to all the other hyperscalers, is there anything that's unique about Meta over the next couple of years that could kind of give them a compounding advantage there and and allow them to kinda come from the side?
Speaker 3:I I do think they are still spending less on Gen AI than other hyperscalers. Mhmm. Note that, like, 60%, 70% of their GPU spend is on recommendation systems and, like, standard business. And, like, nowadays, that means, like, creating Gen AI ads, and those have more click through rate. Like, that's the that's the holy grail for the next six months for them.
Speaker 3:Yep. So it's not like there there's no Gen AI in there, but, like, a lot of it is on their classical business. But generally, they are a player to be reckoned with. OpenAI has Stargate. Meta has their Louisiana project.
Speaker 3:I don't know if there's a fancy name for it. And everyone has their big projects. And so when we get to '26, 27, everyone's going to have these gigawatt scale data centers with close to a million chips. Right? And the game continues to fight on.
Speaker 3:I don't think that this is a temporary setback for Meta, but they continue to recruit. They continue to have good talent. They'll be reorganized. Without pain, you don't get better. So this is a learning experience for them.
Speaker 2:So on Meta and Scale, they partnered with Constellation on this sort of basically agreeing to purchase nuclear energy from Constellation for the next twenty years. What what's your updated take on nuclear? We obviously have these new EOs to help support it, yet it still feels pretty far out at least for bringing new energy online. How how are you thinking about the category?
Speaker 3:Yeah. So, like, even even, like, in general, building new nuclear reactors is still gonna take a really long time. And if you're a believer in AI '27 or AI 2032, whatever the number is, that's too long of a time scale to matter. Right? Like, you know, this is this is still in the deficits can be largest possible time frame.
Speaker 3:I think I think with regards to, like, nuclear, that's the case for standard, you know, gen four reactors. But when it comes to, like, SMRs, they didn't ease the most important regulation, right, which is that, like, the concrete containment zone, you this containment zone for the SMRs still has to be monumentally big, right, even though it's a much smaller, much safer thing. And so they didn't ease that regulation. So I'm not that bullish on SMRs yet either. And basically, yes, you can sign these deals for nuclear power, but that's nuclear power that was already being used by residential.
Speaker 3:And now those residential or industrial, whatever it was, just turns to gas. Or on the flip side, if you look at Louisiana, Meta's data center uses gas. Or if you look at Stargate, it uses gas. Or if you look at Memphis, Tennessee XAI, it uses gas. You look at Amazon's Indiana facility, Project Rainer, it uses gas.
Speaker 3:Everyone just uses gas.
Speaker 5:That's Are
Speaker 1:the ESG commitments that the hyperscalers made in the prior era informing any of are they acting as handcuffs or shackles or leg weights going into this next energy build out?
Speaker 3:So the funny thing is some of them have backed off a little bit. Like Meta and Microsoft have backed off some. But the other thing you can do is just pretend like you're still green. And so what you do is you do this thing called a PPA, which is a power purchasing agreement. So you can set up solar panels a 100 miles away, and they'll generate power only during the day.
Speaker 3:But that power generated during the day is enough to cover the entire night of the data center as well. But the actual electrons being consumed are not from the solar panels. Right? The solar panels are just selling it to the grid, but you purchased it and sold it to the grid. Whereas the power that you're buying from the grid is, like, coming from a gas plant, the actual electrons you're consuming are from there.
Speaker 3:So then you're pretending to be green because you have this solar PPA backing it up or you have this wind PPA backing it up. But in terms of actual electrons being consumed and new plants being built, it's gas.
Speaker 1:Yeah. Let's talk about some
Speaker 3:I think this has their their their regulatory ESG stuff is, like, malleable enough that this is allowed.
Speaker 1:They're working through it. Let's talk about some of the other sci fi concepts for energy generation. People are starting to talk about data centers in space. People are talking about data centers in the middle of the ocean with tidal energy. Basically, go where the energy is basically free, or you get something for free.
Speaker 1:Maybe you get cooling for free or land for free. Is any of that relevant to what you've been focused on?
Speaker 3:So Microsoft's tried putting a data center in the water before for cooling. Right? And that didn't work. And it's the same reason why space data centers won't work anytime soon.
Speaker 1:Okay.
Speaker 3:And as far as tidal energy, tidal energy is interesting. I think it could work. But it's a bit of ways. The main thing on why data centers don't work, whether you're sticking them underwater or you're sticking them on a barge in the middle of the ocean or you're sticking them in space, is that GPUs are really, really unreliable. So we've done a bunch of testing of GPUs.
Speaker 3:We reviewed 40 different clouds, up to thousands of GPUs, in fact, in some cases, but hundreds usually. And was called cluster max, where we tested 40 different clouds, including, like, Amazon, Google, etcetera. Everyone's GPUs are unreliable because they're inherently unreliable. And what happens when a GPU is unreliable? Sometimes it's as simple as, oh, turn off the server.
Speaker 3:Turn it back on. Right? Sometimes it's unplug an optical fiber transceiver and plug it back in. Right? Sometimes it's like, take the GPU out of the socket, put it back in.
Speaker 3:This is like the vast majority of fixes. I don't know why you need to do this, but that's how tech works. Right? You unplug it. You plug it back And you need people to do that, right?
Speaker 3:Yes, robots could potentially do it, but we're not there yet. The space of a data center, the physical size of it isn't that large, really. They're big in an individual basis, but they're not even covering a basis point of American land even in a decade. Right? It's like they're very small.
Speaker 3:So GPUs are really unreliable, which we've proven with cluster max. And then the other aspect of space, data centers, that's really dumb is how does heat get removed? Heat gets removed because you have atoms contact the heat. Whatever's hot, they take the heat away, and they're more excited as they leave. You're taking cold stuff.
Speaker 3:You're making it hotter, you're sending it away, whether it's water or air. But at the end of the day, you're radiating that heat out of an evaporation tower or chillers or whatever into the general air around you on land. But in space, there's no medium for you to like, how many particles are hitting your spacecraft and carrying away heat? And also, particles that are hitting your spacecraft are generally quite excited anyways, But there's just very few of them. And so there's no way to radiate heat away.
Speaker 3:And these things consume tons of power. So they're unreliable. They consume tons of power. Power is cheaper in space. Solar panels, you can have them constantly having sun.
Speaker 3:But it's like, you know, what about the fact that, like, you got to radiate the heat away? That's People people try and put, like, tiny little piece computer chips in space and satellites, and they have a hard time cooling those. So it's a problem that I don't think is feasible something that's feasible in the next sort of within the deficit spending is Okay time frame.
Speaker 1:I like going back to that.
Speaker 2:Are you bullish at all on new consumer hardware, you know, dedicated hardware for AI, you know Johnny Ive joining joining friend.com. You might be calling in from a Rabbit r one and we don't even know. Are are you excited at all about kind of a device outside of the phone or the the computer?
Speaker 3:Yeah. I think like the Johnny Ive Sam Altman video is so cinematic. It's so good. I'm excited for the product simply because the video is so good. Yeah.
Speaker 3:The quality of it. But like like I don't know. Like, there's I've seen I've seen the like, this Apple device that has, like, a it's it's an it's basically an AirPod with a camera. Right? And, like, that that's pretty cool.
Speaker 3:Or, like, the AR glasses, right, with the cameras on them, like the Metairie bands or, you know, all of the other iterations of that. I I think that a new device is definitely coming. With how good AI is getting, it means that the form of human computer interface can change. And it can be more natural and more seamless, right? It's not going to be typing on a computer in front of a on a desk.
Speaker 3:It's not going to be you're still going to have that. You're still going to have your phone, right? But really, I think this hands free compute device is coming. And it's enabled by AI. Now, Meta win?
Speaker 3:Will Apple win? Will OpenAI and Johnny Ive win? Yeah, I like Friend. The founder's really cool. Will they be a runner at all?
Speaker 3:It's hard. It's it's a hard space. But I think, like, there's three companies that, like, seem to have a shot. And it's like Apple, Meta, and maybe OpenAI Johnny Ive.
Speaker 2:Yeah. And Avi, of course.
Speaker 1:Yeah. And Avi coming from
Speaker 2:behind. Domain is just gotta give it up for the domain.
Speaker 1:The domain is so good.
Speaker 2:Friend..com.
Speaker 1:Gotta appreciate it. He spent a fortune. It's worth every penny. On Apple, you put them in l tier. If Warren Buffett can learn to love Apple at age 75, can we AGI pill Tim Cook at age 65 or however old he is?
Speaker 1:Is it possible? What needs to change for Apple to become dominant? They have so many advantages. They've tons of
Speaker 2:line time to It's the AI that's made me laugh more than any other
Speaker 1:That's true. The the the the tech summaries that go crazily wrong and hallucinate weird things, very entertaining product. Seriously underrated as a consumer product. But what's your experience? Break down what's happening at Apple, what changes you predict, what changes you would recommend.
Speaker 3:So I think they're clearly not AJI pilled. They haven't spent a ton on data centers and things like that. Now, they do have hundreds of megawatts going online in the next two years versus the hyperscalers have gigawatts. Right? Yeah.
Speaker 3:So it's like, Okay. They're still an order of magnitude off in how much they want to fume. And then the flip side is that Apple has started building an accelerator that hired some of the best people from Google. They already had a good chip team anyways because their chips for their phones and their Macs were good. Yeah.
Speaker 3:But it's like it's like getting the talent they didn't have. They're partnering with certain companies, and they're like, they hired some of the best people from Google, including their head of rack design, right, like rack architecture. So Apple's definitely keeping far enough behind that at any point, they could leap into action. But the challenge is always going to be, how are you going to get people to join this company? And so this is sort of my bull case for or not my bull case, but a possible scenario for thinking machines is that they just get acquired by Apple, Right?
Speaker 3:Like Nice. Because at some point Apple will realize, oh god, we need talent. And it's like, there's no talent out there for us to hire. When we try and hire, they're like, no. Screw this.
Speaker 2:And Tim Tim barely makes 70 he doesn't even make 75,000,000. He 74,600,000.0, which is like a junior OpenAI researcher if they joined two years ago. So it's like, how can they compete?
Speaker 3:Dude, that's that's OpenAI's janitor, bro.
Speaker 1:Yeah. Exactly.
Speaker 2:Is Lisa Sue cooking? She acquired Brium earlier this week. Can you break down that acquisition? Yeah. Was it exciting to you?
Speaker 2:What's going on over there?
Speaker 3:Yeah. So so they actually acquired two companies
Speaker 1:Okay.
Speaker 3:This week. They they acquired Brium, which which is more like LLVM compiler people. I think it's more of like an acquihire. Like 10 people or something like that, I think. It's not that crazy.
Speaker 3:But it's more a commitment that they care about acquiring software talent.
Speaker 1:Yeah.
Speaker 3:And what's funny is when they acquire Acquihire a company, the people at that company are getting paid a fair salary, right? You know, like a very good salary. Whereas, like, sometimes their hiring process, they don't pay people enough, which is why they don't always get the best talent Sure. Which is something that we've sort of mentioned. But, yeah, yeah.
Speaker 3:So Bream's like an ML compiler and things like that. And then Untethr is another one, which is like making an AI chip. And they acqui hired them as well, mostly for the staff on the hardware side, I imagine. Because they just need to move faster to be able to release chips as fast as NVIDIA's. Because NVIDIA's just like clockwork spinning out new chips.
Speaker 3:They're trying to go to that yearly cadence and such, right? So I think Lisa Su is waking up to how important this opportunity is and that she needs to spend a lot more. But note, they're still spending a ton of money on buybacks when they could be spending I mean, so is NVIDIA. But, like, NVIDIA is also making, like Yeah. You know Tons.
Speaker 3:Godly amounts of money. AMD is making good money. And then they could turn around and reinvest that, but they're not reinvesting as much as they should. I think, you know, these are good acqui hires, both on Tethr and Brium, which are, like, both acqui hires. They also bought, like, Nod AI, right, a while ago.
Speaker 3:Nada AI is where AMD's sort of, like, god of GPU AI software is. Anush, he came from there. Like, he's the king. And and that acquisition was really good because they have, like, again, like, really good software talent that they were able to pick up. It's just, you know, we need them to move faster if we wanna take them, like, you know, super seriously.
Speaker 3:Yeah. But the right direction.
Speaker 1:What do you what was your read on the NVIDIA earnings and kind of the lack of guidance around the training to inference switchover. Do you have a better idea of what's going on? It seemed like they had quoted a 40% number earlier. They didn't include a new number. But this seems like an important narrative or maybe it's not around, the actual workload shift.
Speaker 1:And then I wanna know if that's, like, relevant to AMD at all. Is there an opportunity there?
Speaker 3:Yeah. So I think that NVIDIA is going to have a hard time knowing Mhmm.
Speaker 1:Oh, really?
Speaker 3:How much compute is going to inference versus training. It's actually just hard for them to know.
Speaker 1:Sure.
Speaker 3:Right? They don't get to know what workload their customer's running. They can guess. They have the most data to guess, but they can guess.
Speaker 1:Would people not want to tell NVIDIA? I feel like if you're buying 100,000,000 H200s, you might just be like, yeah, sure. I'll tell you what I'm doing with them right now. No problem. I'll fill out your survey.
Speaker 3:Here's my NPS. I think these companies are very secretive, right? Okay. People OpenAI won't tell NVIDIA what their model architecture is. Even though if they just told them what their model architecture is, NVIDIA could optimize their next generation chip to it way Interesting.
Speaker 3:And so NVIDIA just has to guess, Right? Interesting. And like hope that they know what OpenAI is doing, but they don't. Right? Like Interesting.
Speaker 3:They they have a good idea. Right? And so like, I think I think that's one aspect of it. The other aspect is that the lines between training and inference are blurring. Sure.
Speaker 3:Right? In the days of pretraining, your cluster would be training, training, training. And then you deploy in inference clusters. But now, with reinforcement learning with verifiable rewards, one interesting thing is that traffic is not usual. It oscillates.
Speaker 3:And actually, on the weekends, chat GPT is used very little relative to weekdays. During work and school hours, chat GPT usage is huge. Yep. During night, it's not really, right? Except for when, like, Ghibli Slop is, like, trending.
Speaker 3:Yeah. And it's the only time you have, like, usage you know, higher during non peak hours, which is like workday.
Speaker 2:Yeah.
Speaker 3:Right? And so what's interesting is that these clusters have lower utilization, but now I can turn around and start using these clusters at night. For example, I can spin down a percentage of them, and I can turn them to reinforcement learning to verify how it'll work. I can generate a bunch of data, verify it, see if it's good or not, you know, whether it's math problems, coding, or some other reinforcement learning, paradigm like computer use. I can do it, and then I can throw I can I can keep that data then?
Speaker 3:If I ever need to switch over to back to inference as users just picking up, I was like, okay. Stop. You know, no more of that. Here's you know, put the normal model on there and start doing inference. And that can take, like, a minute or less.
Speaker 3:Right? Like so it's like, there is a blurring of lines of what is training versus inference. And then the other aspect is, can AMD get in
Speaker 2:there,
Speaker 3:right? What's interesting is that AMD has generally taken this approach of, hey, we're 80% of the cost, and we're the same performance. Right? That's sort of where MI 300 shakes out. Some scenarios, it's higher.
Speaker 3:Some scenarios, it's lower. But we're like 80% of the cost. Now, when you look at this new generation of GPUs they're launching, I think, next week, MI three fifty five, it's twothree of the cost of NVIDIA's Blackwell. But performance wise, is it twothree? Or is it less, right?
Speaker 3:Or is it more, right? And so this is going be a challenge. It's going rely a lot on their software. Meta's really excited about it, but not too many other customers are. And so the question is, can AMD get in there?
Speaker 3:They're targeting inference mostly. But NVIDIA's moving the game really fast, right? They're coming up with these new software libraries that don't just like it's not just CUDA. Right? It's like they're building the entire inference engine.
Speaker 3:Right? And AMD can't plug into that. It's called Dynamo. So what NVIDIA is doing around Dynamo is really locking AMD out from inference at the non hyperscalers and labs because it just doesn't make sense for anyone else to try and replicate the software that NVIDIA is giving away for free on NVIDIA GPUs.
Speaker 2:Mhmm. What do you hope to see out of companies like PrimeIntellect over the next one to two years? I I believe you're an investor in Prime Intellect. Is that correct? But but so I'm sure a little bit conflicted, but but, yeah, talk
Speaker 3:about the But, like, to be clear, like, our imp I'm pretty impartial. We had this ClusterMax review, and we didn't give them the best review, even though I invested in them personally. But I think what they're doing, I'm really excited about. AI is super centralized. Right?
Speaker 3:And and this is the only path I see forward mostly for central is like that AI continues to be more centralized. There's fewer and fewer players. They have more and more control over our data, over automation of the entire world's economy. You know, this is this is potentially quite scary for someone who likes decentralized power systems and capitalism and such, is that centralization begets tyranny. Not that I'm being that dogmatic, but their technology is mostly a technology reason.
Speaker 3:Right? They had cool demos around decentralized training. They've trained models in a decentralized way. They've done reinforcement learning with verifiable rewards now in a decentralized way. I'm very excited about the research they're doing there.
Speaker 3:And they're open sourcing everything, which is the cool thing. You can just go look at what they open source. You don't have to trust anything. They have some pretty good software. I'm hopeful that there's a path to all AI and power not just continually being centralized until we, you know, are, like, enslaved by the machine god, but,
Speaker 2:like, put Except if semi analysis were to centralize it, I feel like, you know
Speaker 1:That'd be an exception. Know,
Speaker 2:should be able to trust you. You know, benevolent sort of dictator Yeah. World leader. I could I could see that.
Speaker 3:Call me Lee Kuan Yew of AI. Yeah. For sure.
Speaker 1:I I wanted to go more into the the those like Studio Ghibli moments. When when people say Quick quick. Oh yeah. Please.
Speaker 2:Fire off. Would you hire somebody with a Studio Ghibli profile picture, or is that a negative signal?
Speaker 1:No. That's good. That
Speaker 3:was good. In our in our Slack, someone has a Studio Ghibli profile.
Speaker 1:Okay.
Speaker 2:Yeah. Okay. But I like it. But Yeah.
Speaker 3:And his public his public profiles are also a Studio Ghibli.
Speaker 2:Okay. Yeah. Wow. That's good. Wow.
Speaker 1:But, you you know, whenever there's, these big meme moments, like, they everyone says the GPUs are on fire. Obviously, they're not literally on fire, but what is breaking? Because is it is it that there's actually more unplugging and plugging it back in in the data center? Like like, when when we see Studio Ghibli go out and, like, you know, the queries are clearly failing, what's what what is it what do you think is happening internally? Is it just too much load?
Speaker 1:Because I feel like the chips are under incredible load during training. Right? So, like, that can't they're used full times, but but why are we seeing so much failure during these, like, spikes? What like, what's actually going on there?
Speaker 3:With with training, we know what's happening. Right? We're saying, hey. In this iteration, you're gonna process this many tokens.
Speaker 7:Mhmm.
Speaker 3:You're gonna update the weights. You're gonna exchange them all. Okay. Here's more data for you to train on. Right?
Speaker 3:And you just keep iterating, you know, many, many times. You know, every fifteen seconds or thirty seconds or sixty seconds, you update the weights, and you do it again. And you know how much data you're sending. With inference, you know, you have these clusters, and it's like it's that curve again. Right?
Speaker 3:If I just have one user, it happens really fast. Great user experience. If I have tons and tons of users, happens really slow. And
Speaker 1:while
Speaker 3:I am serving more users and I'm getting more output, each individual's user experience is worse. But at some point, it gets so bad that you either run out of memory or, hey, a GPU does break. Now all of a sudden, you're dropping requests constantly. Right? So not only does the user experience get bad because it goes from fast to super, super slow right?
Speaker 3:Like, look at how fast Ghibli is processed now. Right? It's, like, crazy fast compared to what it was initially. Yeah. But also, like, when something bad does happen, you can't just be like, oh, take all these requests, route them to this other GPUs.
Speaker 3:Right? It's, oh, all these queries fail. Oh, I got more requests than I'm able to handle. Well, these users, I'm just not to start processing their requests and say, sorry, it doesn't work. And so that's when the GPUs are on fire, that's what happens.
Speaker 3:Now, also, I think I think it's mostly it's mostly that dynamic of, like, you add at that incremental user and things break. Or if something breaks, all those users now have their stuff broken.
Speaker 1:Mhmm. Well, thank you so much for coming on. Everyone in the audience should go to semianalysis.com if you're not already subscribed. We would love to talk to you again. This was fantastic conversation.
Speaker 2:Super fun.
Speaker 3:A million. A billion. A trillion. I wanna count.
Speaker 2:A billion. Hey. Add a add a yeah. Hit the size go add a add a new plan on semi analysis, 5,000,000 a year. Yeah.
Speaker 2:And we'll we'll ask some of our VC buddies that just have a bit too much
Speaker 3:We will
Speaker 1:shame them into oh, you're not on the pro plan yet?
Speaker 4:Yeah.
Speaker 2:Yeah. The max The presidential the presidential plan.
Speaker 1:You're on semi analysis ultra max? Wow. You must not be serious about artificial intelligence.
Speaker 2:Oh, I oh, you're not you don't really invest in AI.
Speaker 1:Oh, you're not about the AI thing. You're you're you're more just like You're of a I Yeah. You're of a tourist.
Speaker 2:Yeah. Yeah. You're b to b SaaS guy.
Speaker 1:Yeah. It's cool. It's cool. It's great.
Speaker 6:I'm sure
Speaker 1:you make a good living. Sure you make a good living. But anyway, this is fantastic. Talk to you soon.
Speaker 3:You guys for having me on. Super fun.
Speaker 1:We'll talk to you later. Soon. Bye. That was a lot of fun.
Speaker 2:Alright. You're gonna love this, John.
Speaker 1:I think
Speaker 2:you were too locked in. We're gonna have Blake from Boots Supersonic. Calling in at 02:15, forty five minutes to talk about the new EO.
Speaker 1:Oh. Oh. Is it political? You know I can't I can't pay attention to politics when I'm talking to an AI person. You know, I just get too too locked in.
Speaker 1:But that is fantastic news. Very exciting. I see your post. Blake will be joining TBPN live at 02:15PM PST to discuss the new Supersonic EO. Very excited to talk to him.
Speaker 1:And we have Dana Suttle from Greycroft coming in the studio. How are you doing, Dana? Good to see you.
Speaker 9:Hi. Great to see you too.
Speaker 2:What's going on?
Speaker 1:Thanks so much for joining. Very exciting times. The IPO window is is is squeaking open and it's opened more every day. We talked to the founder of Circle today. Very good showing.
Speaker 1:We would love to talk to you about that. What's going on in the markets? What you're investing in today? But would you mind, introducing yourself for the audience members?
Speaker 2:For anybody that's been living under a rock.
Speaker 1:Yeah. Living under a data center, as you like to say. Yeah.
Speaker 9:Thank Thank you. Yeah. Dana Suttle, co founder and managing partner at Graycroft. Been a venture capitalist for a very long time. Started out in 1998 on Sand Hill Road.
Speaker 9:So Wow. Seen a few cycles. Yeah.
Speaker 1:What what what was the what was the big deal that you kind of really, really tracked or invested in or followed? Like, were you were you tracking like
Speaker 6:Yeah.
Speaker 2:What what deal allowed you the right to be a VC for more than maybe four years? Right? Because it's, you know, the four years, it's kinda like Gotta make a break. You can make some bets, but eventually, you know, there needs to be some results.
Speaker 9:It's a it's a good question. So, you know, when I started Inventure, we were investing in all kinds of things, but more you know, it was like networking equipment and semiconductors and storage and, you know, sort of that was building the the, last, you know, the really, generation of the Internet. And so some of the companies, from that era were are are no longer exist. They're actually bought by much larger networking equipment Sure. You know, companies, etcetera, but a similar dynamic, you know, where we would invest.
Speaker 9:I didn't wasn't expecting this question, so I'm basing it on the name of this company, but literally, it was like, you know, from oh, Qterra. God.
Speaker 1:Oh, Qterra. Yeah.
Speaker 9:Optical equipment company. And it was, you know, in, like, eighteen months sold for $2,000,000,000. Yeah.
Speaker 1:Wow. Wow.
Speaker 2:There we go. That's amazing.
Speaker 1:Yeah. It is be clear,
Speaker 9:though, I was, you know, I was the number two on it. Of course. Of course.
Speaker 1:Yeah. Yeah. But that's great. That was Yeah. It is fascinating how much the networking equipment space has kinda come back into focus with the AI boom.
Speaker 1:We talked to Kevin Weil over at OpenAI. He's on the board of Cisco now. Right? Yeah. And and so and we've talked to another founder who is working on, optical cabling in the network in the data center because as we scale these models.
Speaker 1:And so everything old is new again. Totally. But what is most new for you? What have you been focused on? What's been Yeah.
Speaker 1:What's been in the news in the last couple weeks?
Speaker 9:Yeah. Well, I mean, in terms of what's new and what we're investing in is certainly in all of the, you know, sort of AI, everything from infrastructure up through applications. Yeah. So that's not nothing terribly surprising there. But it is interesting to really look back to the history, you know, sort of history of the Internet and see how much things are repeating Totally.
Speaker 9:Right now in terms of what's being built. The other thing that we do is we actually have a sustainability fund, and we've done that in partnership with some strategic partners, so Coca Cola and eight of their largest bottlers globally. And what's been so interesting about that is we are there's such a huge intersection essentially between AI and sustainability. People don't really think about it. But Yeah.
Speaker 9:You know, if you look at energy consumption doubling by 02/1950, I mean, something's something's gotta give.
Speaker 1:It's all oil and gas right now. Yeah.
Speaker 9:I think that's where we see a lot of a lot of opportunity, not just in renewables, but actually in, like, the, you know, software and hardware for sort of reimagining how all of that's consumed.
Speaker 1:Yeah. You imagine that all the hyperscalers are gonna need to kind of reevaluate the ESG mandates. There's already a lot of companies in the space like, Crusoe Energy started by flaring natural gas plants. There were Yeah. There was wasted energy, and, there's obviously a ton of news in in solar and nuclear and all all sorts of stuff.
Speaker 1:The energy landscape has been, fantastic. Would you mind taking us through the the the latest IPO experience? How was that? I'd love to hear that story Sure. Kind of from start to finish because, it we like, there's so many VCs that have been in the game for a long time and not actually been through that process because, the companies love staying private.
Speaker 2:Well, other reasons too.
Speaker 1:Probably plenty of other reasons.
Speaker 3:For sure. But there's a lot of there's been
Speaker 1:a lot of pressure to stay private. Right?
Speaker 9:Well, it's really interesting. I mean, I don't know. That's like a whole other tangent, I'm kind of obsessed with it because Let's talk about it. It is really interesting if you look at, you know, the what the public markets are today Totally. Which I think is really interesting.
Speaker 9:It's just really different. It's almost going back to
Speaker 6:Mhmm.
Speaker 9:Potentially what it what it used to be, you know, where it was like smaller IPOs, it was, actually, you know, access to growth opportunities to more retail investors.
Speaker 1:Mhmm.
Speaker 9:So, so anyway but but our most recent IPO is a company called Mountain. And it's a pretty amazing story, incredible founder, serial entrepreneur, technical background. And really, you know, he essentially started the business. I mean, we invested actually in 2011. This gives you a little bit of a sense
Speaker 1:of Overnight success.
Speaker 9:The New York and the Patience.
Speaker 1:Overnight success. We have a soundboard here.
Speaker 2:Yeah. Like
Speaker 1:that. It's every founder we talked to. I mean, we talked to the Circle founder and it was the same thing. He's like, yeah. I've been doing for a decade.
Speaker 1:You know, today is
Speaker 4:the focus.
Speaker 9:Well, it's funny to see Jeremy Allaire, you know, talking about I mean, I remember when he had a video search startup in the last
Speaker 1:Wow.
Speaker 9:You know, generation. And so it's really interesting to see these, you know, things sort of come full circle. Incredible entrepreneur.
Speaker 1:No pun intended. Yes. Sorry. Didn't But anyway, back to the story of Mountain.
Speaker 9:Back to the story of Mountain. So so Mountain, Mark Douglas, you know, really, again, incredible founder. He had started one type of an ad tech business essentially, back in sort of the display days. And when we invested, just to give a sense, it was a $4,000,000 series b.
Speaker 1:Wow. No way.
Speaker 9:Just think about, like, what that means today.
Speaker 1:Now it's like 4,000,000,000.
Speaker 2:It's a series that's a round for ants.
Speaker 1:It's a round for ants. But, yeah, it needed the capital, and it worked.
Speaker 9:Yeah. And so and and really, you know, that market changed pretty dramatically when all of the regulation around around cookies, etcetera, you know Sure. Happened. And Mark had the foresight to take what was a 100,000,000 plus dollar revenue business, super profitable Mhmm. And essentially build an entirely new business, saw that connected television would be the next major ad platform.
Speaker 9:I mean, and again, seems very obvious now, but wasn't. Definitely wasn't consensus at the time. And he essentially just built that out of cash flow from the old business, sunset that business, and built this one up to now the company that went public
Speaker 1:two weeks. We're talking to the founder of AG One, next. I'm interested to hear your take on celebrity partnership. There's so many different configurations, whether it's just, the celebrity investing just like any other investor, and then maybe they've add some value to cofounding the company, incubations. What is your view on the on the roles of of celebrities or people that bring differentiated value add in the startup ecosystem?
Speaker 9:Well, I think what you just said is the key, which is differentiated value add. And, you know, in the case of Mountain, we we did partner with Ryan Reynolds and and his marketing agency. And, you know, and that was sort of a fortuitous connection, but, you know, it really just I I actually was introduced to to Ryan and his team as they were sort of thinking about what to do with their agency. Mhmm. And it was just in this moment where I was like, wow.
Speaker 9:What you guys are trying to do in terms of really making ads that sort of, you know, move at the at this at the pace of culture? Yep. Like, I have the perfect platform for you. And, you know, really, Mark and Ryan just sort of saw eye to eye on on on really how to build this business. But, again, that was so really, authentic to Ryan and his team.
Speaker 9:It's just like what they wanna do. They wanna make really cool ads that really resonate with people, not to just make ads, but really, you know, to to sort of make them at the pace of culture, and Mountain is the perfect platform for that. And and that's why I think it's worked so well. And we saw literally I mean, the crazy thing is when you think about I think about celebrity or influence as being largely marketing.
Speaker 1:Mhmm.
Speaker 9:Right? I mean, it's in so if you sort of look for, like, a dollar for dollar replacement
Speaker 1:Totally.
Speaker 9:Mountain's inbound leads went from, like, 2% to over 60%.
Speaker 1:Wow. That's crazy.
Speaker 2:Well, it's also interesting to think in a in a b to b business like Mountain
Speaker 1:Yeah.
Speaker 2:Like somebody like Ryan Reynolds effectively acting as a sales rep and just, like, messaging a CEO and being like, hey. I'd love to set up a demo with you. And it's like that just that impact alone in terms of bringing spend on the platform.
Speaker 1:I mean, we've been curiously about this. We talk about ourselves as, like, enterprise influencers because all of our sponsors are basically b to b companies for the most part. And and and and and it's just like, it's kind of a new era, but it but it's working. And Ryan's clearly carved out just a very unique position. It's he's not just somebody you just pay to show up for an ad and
Speaker 9:Yeah.
Speaker 2:There are
Speaker 1:there are celebrities that have built great businesses on that, but he's taking a very different tact.
Speaker 2:I'm curious. When when you made the Mountain investment, was there any was there people maybe in in the investment committee or or other investors that were friends that sort of were writing off TV at the time digital was exploding? And now, you know, looking back, it's like TV advertising has exploded. It's continuing to grow even in The US. I think in '20 past sometime past 2030, it'll be well beyond, you know, a $100,000,000,000 in in Okay.
Speaker 2:Spend just here in The United States. So TV advertising is clearly not going away, but I could imagine ten years ago, a lot of, you know, you know, a a Facebook PM that became an investor would probably have written a memo that said, like, this market is gonna, you know, go away or or at least, shrink.
Speaker 9:Yeah. And and and I I would clarify, I mean, a couple of things. I think ten years ago, for for sure. I think TV advertising has has changed. I mean, this is largely advertising on connected television, streaming television.
Speaker 9:So, really, the distribution has fundamentally changed. But, yeah. I mean, we actually had investments in some companies that, you know, that, like, fifteen years ago that were actually, you know, improving the process for television ads. And we sold those businesses, gratefully, and made a profit on them. So but, but so when Mark proposed to this, I think what was counterintuitive is all of those businesses were subscription.
Speaker 9:I mean, the idea was not to have ads in those streaming services. Right?
Speaker 1:Yeah.
Speaker 9:And so what's happened in the last five years is now all of those streaming models have moved to where the majority of subscribers that are coming on. I mean, if you look at the public earnings, from, you know, Netflix and, you know, Disney, etcetera, that the majority of new users are coming on to their ad platforms.
Speaker 2:Yep. Yeah.
Speaker 1:Amazing. Do do you have I mean, I'm sure I'm sure, you know, investing and being in LA often, like, there's probably celebrities that come to you with like, hey. I wanna get into a venture. I wanna have exposure one way or another. And there's so many different models.
Speaker 1:Do you have any any recommendations for all the celebrities that are listening for for the the the best way to get it to get exposure to tech or or just patterns to avoid so that they don't get over their skis?
Speaker 9:Yeah. I mean, look, I think it's like anything. Like, whatever you're truly, really curious about and you really wanna dig into, I mean, that's where you should spend your time. Right? I mean, I I think if you're just sort of dabbling, I mean, I guess if you wanna have investments Yeah.
Speaker 9:To sort of talk about because you think it's, like, just in the zeitgeist, then great. Like, invest in some funds. You know?
Speaker 1:Exactly. I was gonna say more more slowly just LP. Yeah. It's, either LP or, like, be deeply involved in the But Exactly. Yeah.
Speaker 9:Or if you just want to, you know, kind of learn about investing, like, that's a great way to do it. Yeah. I think if you want to actually be, you know, direct investing, angel investing, you know, I think actually, again, just sort of following, like, your true curiosity
Speaker 1:Yep.
Speaker 9:In the areas where where also where you can really make an impact. And that's why I think, like, with you know, again, going back to Ryan and his team, I mean, they're amazing marketers. Mhmm. I mean, like, best in class.
Speaker 1:Yeah.
Speaker 9:And so, I think that's where, you know, I would just sort of, like, encourage any any celebrity to do what they're truly passionate about. And I think if you, you know, look at where things have really worked outside of, you know, Ryan, I mean, I think, you know, what Gwyneth has done with Goop, I mean, I think it's just these are just very natural to I mean, there there are things in Goop Kitchen, which is another, you know, sort of spin off from Goop. I mean, it's it's the food side of it, and it's, again, it's just what's so natural to her. It's what people expect
Speaker 1:her
Speaker 9:to be, you sort of recommending and excellent at. Right?
Speaker 1:Yeah. Yeah. Yeah. Totally.
Speaker 2:What about what's your how how what are your thoughts around the evolution of LA's ecosystem on a personal level? I think my last five LA County investments were in the Gundo, and, haven't done haven't done much outside of that. But, I'm curious, are you are you disappointed? Are you accepting? Are you still excited?
Speaker 2:Do you do you see a lot more growth here? It seems like San Francisco has certainly sucked a lot of the oxygen out of LA if you wanna be I I I had one portfolio company that was, you know, a consumer AI business that
Speaker 3:Yep.
Speaker 2:I know the in LA and just, like, had to bail, like, almost within two months just because of the the talent.
Speaker 1:A $350,000,000,000 company popping up in San Francisco will do that. But, yeah, what what is your been well, give us the temperature check on
Speaker 9:Yeah. I mean, you know, look, I think there's no question. I think there's a sucking sound back to to the Bay Area. And, you know, again, it's sort of like early days of any major technological shift. You know, I think that's naturally gonna happen.
Speaker 9:It's Silicon Valley. You know? So we actually opened an office up there for the time last We've hired a new partner up there, a team up there, and we're all spending a lot of time up there. Yeah. I I mean, for us, I mean, I love LA.
Speaker 9:I moved here. I did spend ten years in Silicon Valley before moving here, but I moved here almost twenty years ago. I think LA is an incredible market, and I think having access to this market and really having a deep understanding of a lot of the industries and network here is super valuable. But the talent density from a, you know, just technology standpoint right now, Silicon Valley is just a super important place to have a strong network. And so we're, you know, we're spending time both places.
Speaker 9:We've also I mean, we are spending time also in, you know, Lagundo and in other and, you know, on other things, which are certainly big growth areas in LA. We also led an investment that we think is super exciting, called Whatnot, which is LA based company, you know, fastest growing, largest live streaming shopping, you know, platform in The United States. So, I mean, we think that there'll always be great companies here and continue to be, but there's definitely AI talent density in in the Bay Area.
Speaker 1:I think we were talking
Speaker 2:about Gary When when whatnot exits yeah. When whatnot exits, it'll be like, LA's back. LA's back. And then people will be like, oh, I never lost faith.
Speaker 1:I never lost faith. Yeah. That's hilarious.
Speaker 9:Well, we had Scopely also last week.
Speaker 1:Scopely was fantastic.
Speaker 9:Was that's pretty pretty pretty great story and continued be here. Yeah. Service service time. Mountain. Space here.
Speaker 1:Yes. SpaceX. Yeah. There's a couple. It's not the worst place
Speaker 9:We're doing okay.
Speaker 1:Yeah. In the country. But if I I think LA kind of like surprises people when you dig into the numbers as opposed to it's not as loud because Hollywood is the thing. It's the it's the Yeah. Hollywood town that happens to be above expectations at in tech and hasn't made as much noise about it.
Speaker 1:Anyway, this has been fantastic. Thank you so much for hopping on.
Speaker 2:Super fun.
Speaker 1:Thank you. Congratulations on the Awesome. On the big win. We'll talk to you soon.
Speaker 9:Great to see you guys. Bye. Cheers.
Speaker 2:Have a
Speaker 1:good day. Any any other breaking news that we need to cover in between our guests? No. No. We're good.
Speaker 1:No politics? Yes. We're just back. Let's talk about AG Let's talk about consumer packaged goods. Let's bring in Kat from AG one.
Speaker 1:How are you doing, Kat? Good to see you. Welcome to the show. Boom. Jordan, I'm gonna let you take the intro.
Speaker 1:Thank you so much for joining.
Speaker 2:What's happening? How are you?
Speaker 7:I'm great. How are you guys?
Speaker 2:We're doing great. It's Friday. We wish it was Monday. We we like podcasting a lot here, so the weekends are always tough. But how are you busy?
Speaker 7:Sorry for your wind down. Know. Monday soon enough.
Speaker 2:I know. I know. I'm I'm sure you feel the same way. Why don't why don't you give a quick intro, a brief history. We don't like to do make this, you know, biography, but but but but love to to have you kind of give your background for the audience.
Speaker 7:Sure. I'm Kat. I'm the CEO of AG One. I have spent several decades, in consumer. I started opening franchises around the world when I was a teenager and had an incredible opportunities in restaurants, food and beverage, and franchising for the you know, twenty years of my career.
Speaker 7:By the time I was in my early twenties, I was
Speaker 2:Teenager teenager got a backup. What what were you doing as a teenager? You just sort of sprinkled that in there, but, I'm sure it's a good story.
Speaker 7:Yeah. I started working at Hooters restaurants as a hostess when I was 17. Wow. Putting myself through school. I'm the oldest of three girls.
Speaker 7:We left my dad when I was nine, helped to raise my sisters. And restaurants are very commonplace for young folks who need to work to start to work. And I used Florida. And so
Speaker 2:I used to pick, my my real job after soccer soccer refereeing was picking up cigarette butts at a nightclub in the morning. I would get there at, like, 6AM, and that was that was my job. So, very familiar with the the sort of restaurant grind and
Speaker 7:That's and it and
Speaker 2:it certainly it it it allows you to bring it's easy to bring the sort of service culture mentality into startups when you're, you know, responding to, like, tickets online, if you got your start in restaurants?
Speaker 7:Yeah. I mean, that that that closeness, that proximity to the transaction, to the customer experience, if you're paying attention, it never leaves your bones and your soul. And so I stayed in that industry for many years. I was with Hooters for fifteen years, helped grow that business around the world, and then moved on to a Rourke Capital, a really big private equity firm in restaurants and franchising owned portfolio company called at the time called Focus Brands. Took over Cinnabon when I was 30 years old as president to turn it around out of the great recession, and then built that business into a billion dollar global revenue business, then built a licensing CPG division out of that parent company, and eventually ran Focus Brands, the parent company.
Speaker 7:Couple billion, eight brands, 80 countries for four and a half years. So ten years at Focus total. And all throughout that time, I was just becoming more passionate personally about nutrition and fitness. I had kids later in life. I'm 47.
Speaker 7:I have a five and seven year old. My mom had breast cancer when I had my my daughter. And so health became this personal obsession. And so while I was running these big mass market brands, some of them were sweet treats and fun for you, but some were better for you. Jamba, Moe's, Schlotsky's, McAllister's.
Speaker 7:I wanted more, like, bleeding edge of health and nutrition, So I started angel investing and better for you businesses quietly on the side. That eventually coincided with when I left Focus after a ten year career running those global franchise businesses. I was introduced to the founder of then called AthleticGreens, AG One. Yep. I had been a customer for a few years, and, you know, here we are.
Speaker 7:That was four years ago.
Speaker 2:Amazing. What what was your pro personal process diligencing AG One, given that I'm sure, you know, you looked at hundreds of businesses around these sort of massive organizations? Well, I guess, what were the qualities? Because I think, if I remember correctly, the time you joined AG One was when almost everybody was writing off direct to consumer
Speaker 5:Oh, yeah.
Speaker 2:As a category Good time. Broadly. They just said it didn't work. The economics weren't there. You were giving all of your, you know
Speaker 1:You would eventually have to pivot to retail, and then that was just completely changed the business model, and you couldn't really get to scale.
Speaker 7:Yeah. There were a few things. One, I did similar diligence to some of our investors, which is we were customers. I was a customer for two years. And when you have a personal experience with a product and real passion, for me, it was energy immunity, gut health support.
Speaker 7:It made a big difference for me as a as a busy professional mom. So I was a bit of a fangirl of the product itself. Yeah. But that's just one layer. The was I actually advised the founder for half a year before I joined.
Speaker 7:And so talk about diligence. I had the opportunity to get inside the business, get close, meet the team, understand understand product, and as every layer I listed, what I learned was even better than I could have expected. And I had a bit of a ego moment where I'm like, oh, this company is so much smaller, you know, than the other ones that I've run. Is is this really what's right and best for me even though I love it? And very quickly, I got over that too.
Speaker 7:This is actually a brilliant time to jump on a health and nutrition rocket ship that's better than anyone knows and has incredible upside. So after advising, I joined in November of twenty one.
Speaker 1:So what were the challenges when you came in? It sounds like a lot of things were going right, but there's probably some area that you were focused on.
Speaker 7:Yeah. There I mean, there was a ton going right on the outside. Everyone said, oh, you guys are crushing it. We did this fundraise. Right?
Speaker 7:A 120,000,000,000 120,000,000 raised at a 1,300,000,000.0 post.
Speaker 1:Wow.
Speaker 7:It was still the end of the frothier era, like, end of twenty one, beginning of twenty two. And the business had done 160,000,000 that year in revenue and bootstrapped up to that point. So the founder was an incredible capital allocator, incredible subscription business, 90% subscription, growing at, you know, multiples, not percent. So that's what was good. That's what was great.
Speaker 7:Fresh round of capital, the only round of capital we've ever raised. Mhmm. And a lot of tailwind in the category, in the industry, and a clear leadership position. Mhmm. What was wrong is that we had scaled so quickly, and we only had one manufacturing plant in New Zealand.
Speaker 7:So all of that green powder was being blended in New Zealand and most of our business had grown in The US. Yeah. And so job one was scale the operations
Speaker 1:Mhmm.
Speaker 7:To support growth. I wanted to launch a few additional products sooner. I wanted to go into retail sooner. Yeah. But we had no business doing anything new until we really built the infrastructure, and that was expanding manufacturing to The US, which we did immediately to support The US business.
Speaker 7:So now New Zealand supports the rest of world. Other in
Speaker 1:Yeah.
Speaker 7:Source. We own our source source highest quality ingredients globally, then blend in those countries, and certainly that's helped us in the tariff volatility Yeah. Moment. And so that was job one. The was then it was very clear pretty early on that even though there were there were so much energy and tailwind and growth in the supplement category of wellness, and a lot of that was getting piped up and promoted on podcasts and with influencers and creators, and we were certainly a part of early very early in that trend.
Speaker 7:We were fortunate that some of our early customers became thought leaders and had famous podcasts. But it was very clear that science was going to be a critical part of marketing for this category where it historically had not been. So a few years in, shore up operations. actually pulled back marketing a bit and reinvest millions into double and sometimes triple blind randomized placebo controlled clinical trials, which take years to build a PhD team, to scope the trials, to conduct, to analyze, etcetera. And so those were the two things.
Speaker 7:Site operations, supply chain in particular, which includes, like, QA, maintain our NSF for support party certifications. There's a lot of, like, high quality standard we needed to protect as we move manufacturing and expanded it, which was a little scary as we put our product in the hands of other blending facilities, but the team did it beautifully. And then make massive industry leading investments that would take an annoying amount of time to be completed and pay off, and then use those two things as the foundation once we got them in place to then innovate. So we wrapped up last year 600,000,000 in annual revenue, one product, one channel.
Speaker 2:Yes. All gonna hit the. Crazy. Congratulations. Yeah.
Speaker 2:The scale is just wild.
Speaker 1:Let the
Speaker 7:dog have its waves. Yes. Yeah. We yes. We deserve it.
Speaker 7:Our customers deserve it.
Speaker 1:That's fantastic.
Speaker 7:But it is time. Yeah. And it it was time a year ago to make some thoughtful, large, focused moves outside of that single product, single channel model. So just this last week, we announced a direct to national partnership with Costco. So we are now a multi channel company.
Speaker 7:Went straight from no retailers to end Zero Costco. Of the of the largest.
Speaker 2:And I don't think I also don't think I don't think people realize how significant winning in Costco is Mhmm. Because I've I I'm an investor in a company that expects Costco, like, in the I think, eighteen months to do add 50,000,000
Speaker 8:Wow.
Speaker 2:Of revenue to the business. It's like
Speaker 1:It's totally
Speaker 7:pretty significant.
Speaker 2:It could easily be into the 9 figures. And so Absolutely. It's great if you can just go from one channel to adding retail as this individual channel that you
Speaker 1:can really Yeah. You're running a small CPG company, our recommendation is just go into Costco. Just win in Costco. Just win in Costco. It's easy.
Speaker 2:It's that easy.
Speaker 1:For anyone out there with like a $2,000,000 CPG I'm
Speaker 2:curious like how much Sweet Costco. I'm curious if you think like most of the issues in in d to c and consumer brands broadly are just operational. Because, like, when I think of the Structural.
Speaker 1:Versus structural?
Speaker 2:When I think of yeah. Versus structural where it's like, hey, you have a good product. Maybe a good brand and you're just or or or a brand that could be good. Yeah. Yeah.
Speaker 2:And and it's just a a lack of of pure leadership abilities internally because, like, we're very close with the the the Ridge Wallet team. And that's a business that, like, shouldn't be a multi $100,000,000 revenue business. Right? It was the the original product was a know, the the the in the early days, the LTV was, like, the LTV was, like, the the value of the
Speaker 1:That's it.
Speaker 2:Yeah. The purchase. Yep. Right? And so you would think there's no way this business could could really scale or or be massive.
Speaker 2:And and they have against against the odds. Yeah. But I'm curious as you look at other d to c businesses, how often are you thinking this could be great, it's just not like, it's actually just like a a operational lack Yeah. Effectively.
Speaker 7:You know, it's interesting in d two c is I I've seen both ends of the spectrum where something is actually demonstrating outsized growth
Speaker 1:Mhmm.
Speaker 7:But there's not a lot of there there underneath, and it's a window of time before they hit their CAC wall.
Speaker 1:Yep.
Speaker 7:And they end up having a lot of unit economic challenges. And it doesn't mean retail will solve those challenges Mhmm. In particular. And then you see others that have beautiful products, incredible retention, but just haven't mastered the art of ecommerce marketing. And so, for for us at least early on, I I think people gave us way too much credit for being amazing d to c marketers.
Speaker 7:Mhmm. We were not. We had a phenomenal product that it didn't matter what type of marketing we use to have people learn about it. Right? Any marketing is just awareness and trial.
Speaker 1:Mhmm.
Speaker 7:What keeps people ordering months and years I've got over 500 customers that have been with us for a decade. Wow. A decade. They've been drinking AG one. That is not because a podcaster told them something.
Speaker 7:It's not because of a billboard or sponsoring a sports team. It's their experience. And so I don't think we can remove consistent quality and that compounding resulting both growth from those customers individually, but the we call it the referral quotient. Our number one driver of customer acquisition or post purchase survey. How did you hear about us?
Speaker 7:How did you hear about us? Friends and family. Number one. By mile. Bigger than podcasts, bigger than bigger than influencers, bigger than television.
Speaker 7:We're full funnel. We're pretty well distributed from a marketing strategy. I was just listening to you guys talk to Dana. She's amazing, and their portfolio is phenomenal. And, you know, whether it's television or community and activations, it's all a part of our approach.
Speaker 7:But d to c really has to have that incredible experience to have its chance. I mean, we were rewarded for our focus. Right? Pretty unusual to get to 600,000,000 with a single product.
Speaker 2:Yep.
Speaker 7:And we weren't even on Amazon. This is just drinkag1.com. And that's unusual. And and I do think that might be part of a a challenge for some d to c businesses is if they don't get traction or they're not seeing that retention or the LTV they want, then they go wide. Like SKUs and offerings and you get distracted.
Speaker 7:But if you can focus and really differentiate, then that that traction is there and the unit economics perform to the best that they can as the algorithms change and as the structure of to your point of structure of digital marketing changes. On the other side, retail, yes, it's a revenue channel, but it's brutal. And your product is in the hands of someone else. Mhmm. And but it is marketing.
Speaker 7:Right? It is eyeball the shelf is a billboard. And so if you can do it well, I believe it is synergistic with d to c. Not the maybe predicted or feared cannibalization that some might think going into retail. I'm glad we didn't go in early.
Speaker 7:This is our time. This is the right time for us. But we have an unusual business and that people stick with with a g one for so long.
Speaker 1:Yeah. Do you have a reaction to the news this week or last week that Nike is going back on Amazon, sort of a pivot away from their direct to consumer strategy.
Speaker 2:Nike got a little too inspired by you guys.
Speaker 1:I think they might have probably been trying to copy you guys. They saw you putting up the They're
Speaker 7:like, h u one was the last holdout. They're the last holdout. If they're there, all bets are off.
Speaker 1:Yeah. Exactly.
Speaker 7:But Welcome back, Nike.
Speaker 5:Yeah. But but but
Speaker 2:No. They they they seriously said we're we're pull you know, we're not gonna do Amazon. Yeah. We're gonna focus on our own nike.com.
Speaker 1:And the direct response
Speaker 2:was marketing. And that's the other thing. You guys have blended. Yeah. You guys do, I'm sure, the vast majority of your budgets around direct response.
Speaker 2:But when you came on board, suddenly, the AG one brand was aspirational. Totally. It was like Mhmm. You know, cool. And it was leveled up.
Speaker 2:It felt like
Speaker 1:And that's been a critical part of the Nike brand is putting the celebrities front and, making the athletes the heroes, and that kind of fell by the wayside during the direct response era. Hopefully, they're getting back to it. People were talking about Caitlin Clark has is signed with Nike, but most people don't even know it because the particular shoe that she wears is, a limited release, and so they've gone this, like, very odd strategy. So just general lessons from Nike or reactions to the relationship with Amazon there.
Speaker 7:I mean, look, it's I it's similar to us, and, may we be a Nike one day. What a phenomenal brand. But they've had their bumps as all scaled companies do. And, we, several years ago, as part of that pullback in that lower funnel marketing and investment in human clinical trials to raise the standard in research, we also moved the marketing spend we protected to more upper funnel. Right?
Speaker 7:Building brand, brought an incredible CMO recently, former CMO of YETI. Mhmm. He's a a creative genius and really deeply believes in community. He always says niche to be mass. Like, go to your people, be deep, be there for them, and we're we have a lot more ground game happening now.
Speaker 7:And so that investment in full funnel marketing, you get a greater return if you're in workplaces, including the world's largest ecommerce retailer being Amazon. Yep. So for us, and I know this was a part of Nike and even some other brands calculus in either going off or never being on. For us, there was so much tailwind in organic search and growth. We didn't need to be there to grow the way we grew, and we could barely keep up with the growth that we had.
Speaker 7:Mhmm. It got to a point where three things changed for us, and I I can't speak for Nike, but I'm assuming this is a piece of the pie. One, there was a growth of counterfeits and resellers. And to protect our brand at scale. And, you know, this isn't a shoe.
Speaker 7:It's something people put in their bodies. That's a safety issue. That's a brand issue. Yeah. So when part of our thinking of getting back on was being the programs that Amazon in particular, Transparency and others, that they put in place to take down either of those fraudulent products, people infringing on IP, or, you know, unauthorized resellers.
Speaker 7:That was critical for us. We would not have come back on in the way that we did as in as big of a way if those programs were not in place for this category in particular. It's about quality. We added we had to add holograms to our box with with randomized unique numbers on all of our packaging. We did this pre Amazon because the you know, it wasn't just Amazon.
Speaker 7:All the marketplaces Gotcha. There were I'm I'm talking real counterfeits like weird typos and Grinch green powder, hot dark green powder getting caught by customs. Imagine getting a phone call from your general counsel, and she's like, we just got a call from the Fed's customs. Something that says NS e for sport. So Chicken dog.
Speaker 7:Brand
Speaker 2:You're being a very, you know, like a a politician about this. But when I talk to portfolio companies in the supplement space about Amazon, it is just their number one, one of their biggest pain points and and and just a massive source of of frustration around counterfeiting around, you know, all the sort of issues that you're
Speaker 7:we got back on, it was gone. Yeah. Gone. And now we're a meaningfully scaled business. Right?
Speaker 7:So they've they've really this is not being diplomatic. I had a ton of risk to my brand and it is now gone on that platform. That's those are the facts. Yeah. The other issue was that because the resellers were there, even if it was real product being resold.
Speaker 7:I couldn't tell you how old it was, the shelf life, the stability. So I still had a quality concern, but the as big of an issue for ecommerce marketing was it was driving my ratings into the ground. So our brand ratings on Amazon were awful. And so if you would search AG one on Google, you'd get these great ratings from our site or other sources, and then Amazon, two stars. Three star.
Speaker 7:I mean, it's horrific. And so as soon as we got back on, resellers are gone, counterfeits are gone. We have a limited product assortment there so we can be there meaningfully, but keep d to c as the place for expansive SKUs. Ratings went through the roof because customers are having a better experience. So it's search.
Speaker 7:It's about search and discovery as well for us.
Speaker 2:Where is your team getting the most leverage from AI? There was news this week from Meta talking about wanting to be, you know, basically help advertisers actually generate ads.
Speaker 1:Dylan Patel was talking about that.
Speaker 2:And and in general, you know, when you talk to brands, like, the number one thing holding back their growth oftentimes and efficiency is Mhmm. Creative.
Speaker 1:Yep.
Speaker 2:So it's very exciting.
Speaker 1:Finally there with v o three where it's not at least a drop in replacement for some b roll or stock footage that you might pull off the so, yeah, that that's a fascinating question.
Speaker 7:It's god. The technology is unbelievable. It's it's unreal. For us, the place AI showed up in the business is our customer service and customer happiness. We partnered with with Sierra.
Speaker 7:We were very early Oh, cool. With them. And I have no affiliation with them otherwise, being a happy customer. And they partnered with us to craft what we needed. And what we got out of efficiencies, we redeployed into human resources for concierge programs, for loyalty programs, which we were actually very late to develop as a subscription business.
Speaker 7:So I used there there was a there was a financial benefit. There was a speed benefit for like, we learned that 50% of our customer inquiries were things we already knew this. We just didn't have the solve that Sierra helped us with. 50% were just manage my account. You know?
Speaker 7:Like, that that stuff can be odd. That's prime for AI. So for us, AI was there. Then we have tools that our team or supply chain team have brought in on transparency and tracing for ingredient sourcing since we own our sourcing. And so it's really helped us track and monitor and enable all because we have pretty rare high standard specifications of our ingredients and have unusual levels of testing of ingredients.
Speaker 7:And so to manage that through the supply chain has been very manual. And so AI has helped us there. Then to your point, marketing. We have some interesting thoughts on AI. We are using it for, as you said, digital background, digital b roll Mhmm.
Speaker 7:Anything that isn't supposed to be real product and real human. Because the supplement space
Speaker 1:So fascinating.
Speaker 7:Has both good actors and not Yep. We are holding ourselves to a standard of if we're putting a person on camera or if we're showing our product, right or wrong, it's gonna be real. Yep. And but everything around it, the enablement, the editing, we are bringing every AI tool we can to make that more creative, and more efficient.
Speaker 1:Yeah. We were talking to a food photographer earlier today who was, very nervous about artificial intelligence, and AI image generation, but was hoping that some of the rules around the way food is is photographed from the FCC marketed. Yeah. And marketed because you've seen those famous pictures
Speaker 2:of like McDonald's.
Speaker 1:Here's the burger.
Speaker 2:Able to
Speaker 1:I wasn't gonna say the name of the company that does it, you know, here's the here's the photo and here's the actual burger and they don't look anything alike. And you can imagine that being a big a big issue even if AI can be used in the in the post process. There's probably still value to showing the customer exactly what they're what what they're actually getting.
Speaker 2:Last question from my side for Do you think that do you think that people should be significantly more concerned with the supplements that they choose to put in their bodies? I I there's this obviously, in the Silicon Valley, the tech world, people will take any supplement if it's like, this is gonna make you 1% more focused today. They're like, I will buy this from some sketchy website and and take it today. And, you know, you keep coming back to this sort of like traceability testing, you know
Speaker 1:We've this with the creatine gummies.
Speaker 2:Yeah. There's That's on Amazon, but there's no
Speaker 1:creatine in it.
Speaker 2:But, I mean, if you test supplements, it's like, yeah. You could be supplementing lead and not knowing it. You know? And so I think that not every supplement company has the same standards, and I don't think people fully appreciate the potential consequences of that today. Yeah.
Speaker 7:I, you know, the the very fast answer is, yes. People should be incredibly discerning while there are truly so many companies doing the good work. party certifications, publishing certificates of analysis like us on their site Mhmm. All kinds of party labs. It there still are so many who, whether intentionally or not, on in the in the mildest form of of the issue, what is on the label is not what's in the product.
Speaker 7:Right? So you think you're supplementing with x amount of this ingredient and whether it degrades because of the shelf life and they are blissfully manufacturer pulled one over on them and they are unaware, I would say irresponsible in those cases if you're gonna sell a product. That that could be happening. And in that case, it's just an you're not getting what you pay for. On the other side, to your point, there could be ingredients that you don't want or don't know are in there.
Speaker 7:And so what I would encourage people to do, whether they're in Silicon Valley or anywhere, is recognize this is a huge industry and where there is growth, there will be both good and bad actors. And the great news is there are ways to know who and what to trust. You gotta look for party certifications. And don't just take the words that someone types, party certified. What party?
Speaker 2:Yeah.
Speaker 7:NSF for sport is the gold standard. They're incredibly expensive and a pain in our asses because if I change one thing in this formula, it has to go back through their process through shelf life testing to prove what's on the label is what is in that bag.
Speaker 2:You actually have to go you have to really verify too. I I helped start a company in the water filtration space, and we went through the full NSF certification process. It costs hundreds of thousands of dollars. And then we have competitors that will put the NSF badge all over their website, and they're, like, actively getting sued by the NSF for in legal battles. But they just keep it up because it increases conversion rate.
Speaker 2:But if you go That's surface, like there's just nothing
Speaker 7:That's right. Happening. Piece to for for people to think about too is this is unfortunate. Another layer of confusion is you also then have people doing what you just described, starting their own labs. And then they are testing product with some unknown methodology and then creating viral content around whatever they find.
Speaker 7:And that Mhmm. Just makes it harder for the customer to know. So I would just say that this is not and anything you put in your body should not just be a listen to someone and click and buy and put it in your body. Go to the website. Look at the ingredients section.
Speaker 7:Look at the research section. Do those supplement companies have any research on human beings Yeah. At all? And, I mean, you can imagine, you know, because you've got investments in the industry, having four double blind randomized placebo controlled clinical trials, with over a 100 people proving the same outcomes of supporting gut health, 10 x gut bacteria, beneficial gut bacteria covering nutrient gaps in four different populations. That's not cheap.
Speaker 7:And but we have to. Right? We're the leader. We don't make claims. We can't substantiate.
Speaker 7:I could have done two studies, and that's enough to say clinically backed, we did four. We're just we we have to lead because there is so much to be questioned with those in the middle. And I will offer, if anyone is starting a supplement business, and if they genuinely want know how to do this right, I will help them. My team will help It is bad for the industry for people who don't take this stuff seriously.
Speaker 1:That's amazing. Well, thank you so much for hopping us on super fun. Congratulations on the massive revenue numbers, all the progress. Yeah. It's amazing.
Speaker 1:Overnight success. We love to see it.
Speaker 2:Yep. Come back on next time you have news. This is super fun.
Speaker 7:Love to. Love to talk to soon. Thank you, guys.
Speaker 1:You're out. Bye.
Speaker 7:Great to see you.
Speaker 1:See you. We are shifting gears over to the supersonic world. We have Blake Scholl from Boom Supersonic. Is the speed limit lifted? Are we post speed limit?
Speaker 1:I wanna go 2,000 miles an hour tomorrow. Smiling. He's smiling. Something must be good happening.
Speaker 2:What happened today? We've been live for the last few hours.
Speaker 1:We got a text message. We gotta have you on.
Speaker 4:Yeah. Nothing nothing nothing big. We just actually we actually broke the sound barrier today permanently because the band
Speaker 1:is reversed. No way.
Speaker 2:That's a big John's gonna hit the John's gonna hit the gong. That's for you, Blake.
Speaker 1:Congratulations. We've been hoping for this for a long time.
Speaker 4:Yes. So so the rules are gonna change, and you can go supersonic as fast as you want long as the sound is a gong.
Speaker 1:Yep. Oh, that's great.
Speaker 2:A gong is gong.
Speaker 1:Happily let gongs ring upon the the fields of America from sea to shining shining sea. I'd love to see it. I mean, I know this news is breaking, but how did you find out about this? Was there expectation that this was gonna happen? Who are the folks who have been working on this?
Speaker 1:And then break down what actually happened.
Speaker 4:Yeah. Well, I mean, in a certain sense, people have been working on this for decades.
Speaker 6:Mhmm.
Speaker 2:You know,
Speaker 4:since 1973 when it went in place. Mhmm. And we've been working on it very intensely since February 10. Mhmm. Which is when we announced we could do we could fly supersonic without an audible boom.
Speaker 4:Yep. I think it was that that night, I left LA where our test flights were and went to DC. And by the way, it's horrible flight. Was much better supersonic. It was like like, left at 11PM, got it at like 04:30AM.
Speaker 4:It's awful. It should totally be supersonic. And then by the time I landed, they had an invitation to the West Wing. Wow. So the so we since then, what we did what to me felt like a very long, frustratingly slow campaign.
Speaker 4:But whatever he tells me in DC is actually supersonic. So a bipartisan bill dropped three weeks ago in the house and the senate called the Supersonic Aviation Modernization Act, which by the way, I think we should still pass because that locks in all of today's goodness. Mhmm. And, you know, and we just sort of continue to educate people on that. By the way, we don't have to have the boom anymore.
Speaker 1:Mhmm.
Speaker 4:And by the way, not all booms are created equal. Not all are bad. And that's something a lot of people can get excited about.
Speaker 1:So I I mean, I know a lot of the technology is about flying at very specific speeds at specific altitudes, doing all the math to make sure that the boom bounces back into the atmosphere or something like that. Yeah. What kind of speeds does that actually work at? What what are we what what are we expecting? Because supersonic goes well past.
Speaker 1:It goes basically infinite. Right?
Speaker 4:Right. Yeah. Exactly. So so there there's sort of two ways you can kind of tackle sonic boom. And like one one is what you're just describing.
Speaker 4:Make make it go away entirely by making it make a u-turn and go up to space. Mhmm. And the the the great thing about that is that there's nothing to argue about whether it's too loud. Mhmm. The the less the less great thing is it only works up to about Mach 1.3.
Speaker 3:Okay.
Speaker 4:It can go about 50% faster, but you can't go a 100% faster or 200% faster.
Speaker 1:Put that in terms of like a commercial airliner if I fly it like 500, 600 miles an hour, you're talking about 700, 800 maybe?
Speaker 4:Yeah. Let's talk about terms of flight times. Sure. This is so with with a 50% speed up, which is what's achievable routinely Mhmm. You can leave New York at 9AM and be in San Francisco at 09:30AM.
Speaker 4:So it's a three and a half hour flight.
Speaker 5:Okay.
Speaker 4:Wow. Which is like that's a w. Right?
Speaker 1:Yeah. That's Now,
Speaker 4:you know, if you wanna go higher than that faster than that, you have to convince yourself that some some way or other the boom is not a problem.
Speaker 1:Yeah. Okay.
Speaker 4:And I don't think people don't agree about the answer that. Mhmm. You know, I I wanna get out there, fly the airplane. I wanna hear some real booms. Mhmm.
Speaker 4:I've heard a bunch of booms in Mojave, by the way. Yeah. We were doing our test flights, booms are commonplace down in the Mojave Desert. The military makes them all the time. And there's some that kinda get your attention.
Speaker 4:You're like, wow. We probably shouldn't do that, at least not at least not at nighttime. That would be the at most, that's a daytime thing. You know, but there are others that, like, sound like somebody, like, dropped a book on the floor. And, you know, and those are you know, so think of it as like the wake of a boat.
Speaker 4:The bigger the boat, the bigger the wake. The closer the boat, the more the wake you feel. Yeah. And so if you have a right sized boat, it's sufficiently far away distance, it really ought to be considered a nonissue. So so, you know, we're I think we're still kinda taking in exactly what's the language of the EO, you know, but my my expectation is that this will be a one two punch Mhmm.
Speaker 4:Where, you know, if there's no boom, there's nothing to argue about.
Speaker 1:Yep. If there
Speaker 4:is a boom, there should be a way to sort of demonstrate that it that it was an it was an acceptable one.
Speaker 1:Yeah. Yes. Specific flight corridors where people are opting in or something like that
Speaker 4:and Yeah. I mean, that's it's just really the the the you will hear a knot if you're in kind of boomful mode Mhmm. That the boom corridor is actually like 50 or a 100 miles wide.
Speaker 1:Oh, very wide.
Speaker 4:So, I mean, you know, we can't build a railroad in this country.
Speaker 1:Yeah. Yeah. Yeah.
Speaker 4:Like, you know, it it would
Speaker 3:like Well, so
Speaker 2:the the positive thing is like, I imagine if when you're traveling over oceans, we can, you know, have a little bit more flexibility.
Speaker 4:Yeah. There there there has never been a restriction over ocean. So so that's the fortunately, there's nothing to do there. So so the way our airplane Overture will do this Yep. Is it'll fly boomless over land at, like, plus 50%.
Speaker 4:Mhmm. And then and and then when we get to the coastline, you know, you've done the throttles. Yep. And and then you go to full two x speed.
Speaker 1:Yeah. Yeah. Yeah. Yeah. And I'm sure that the economics change when you can do 1.3 Mach over land Yeah.
Speaker 1:Because that's an just a there's so much more overland air travel generally. So just a bigger market, so it justifies everything I'm the investment.
Speaker 4:It does. Yeah. And the economics are actually really interesting. You know? So if you fly sort of lightly supersonic, it's worse for fuel burn.
Speaker 1:Mhmm.
Speaker 3:But you
Speaker 4:can do so many more flights with the same airplane, you save a bunch of money on other things. And so go so on on Overture going right under the speed of sound and going boomless supersonic is actually the same, dollars per seat mile.
Speaker 7:Interesting. Like the
Speaker 4:and, like, the fuel slice gets a little bit bigger and
Speaker 1:then Yeah. The cost side.
Speaker 4:The cost side. Like, anything
Speaker 1:But the revenue is gonna be I'd pay 10 times as much to get from
Speaker 7:Oh, yeah. Oh, yeah.
Speaker 1:Revenue is
Speaker 3:obviously done. Three three.
Speaker 1:I mean, time is money. Save both. Ramp.com. Also, boom.boomsupersonic. You can go to both.
Speaker 1:Time is money. They're both they're everyone's gonna save you time. But if the boom comes down, reflects, bounces back up, and I'm in a plane there, is that gonna break my plane's windows? What what
Speaker 4:what risk there? Okay. So so a few people ask that question. It's a good question. The the answer is Concorde did that for twenty seven years, and nobody noticed.
Speaker 1:Oh, interesting.
Speaker 4:And and and one time they tried to test it. We know the pilots that were doing this. Yeah. They sort of arranged for, like, a seven forty seven to be here while Concorde's kinda passing overhead.
Speaker 1:Mhmm.
Speaker 4:And they they had told everybody on the seven forty seven that they might get to hear something. Mhmm. And they didn't hear anything and everybody was super disappointed.
Speaker 1:Okay. So it just doesn't really affect? Maybe
Speaker 4:you feel something that feels like turbulence. Don't It's like a it's like an it's a nothing burger.
Speaker 1:But it's not gonna blow the windows out, is like the worry, course.
Speaker 4:No. I mean, if if that was gonna happen, you know, Concorde would knocked out every other airplane in the sky.
Speaker 1:Yes, of course.
Speaker 4:Airplanes fly above.
Speaker 1:Yeah.
Speaker 4:Airplanes fly below. So so Concorde was booming for twenty seven years over the Atlantic, and like, nobody got hurt.
Speaker 2:Yeah. Wild.
Speaker 4:Look at this by the way is like the the energy intensity and some of the physics of sonic boom are very similar to thunder. Mhmm. Right? Yeah. So you could be like, oh my gosh, like, you know, could could boom over the water like disturb the mating habels of like, I don't know, the aquatic spotted owl or something.
Speaker 1:Sure.
Speaker 4:Well, anything that was going to be put out of commission by a sonic boom was long ago put out of commission by a thunderstorm.
Speaker 6:Sure. Yeah.
Speaker 1:Sure. Was there
Speaker 2:anything was there anything to you that was surprising about the EO? What what what what what what did you maybe not anticipate?
Speaker 4:I I admit I haven't read it word for word yet. Yeah. I read I read the
Speaker 1:fact He's huge sponsor.
Speaker 4:Kinda partied and Yeah. I need to, like, calm down and read it word
Speaker 1:for word.
Speaker 4:There's there's a lot of stuff in it that that appears to sort of, like, not just say, great. You should be able to fly supersonic, but, you know, advances r and d and, you know, there's I I I gotta read all of it. I wanna say what it says. Right.
Speaker 1:Yeah. Yeah. Yeah. I'm I'm sure there's a ton of work to be done on, like, the licensing and approval and and everything that happens with certification. Some of those things might need to change or speed up.
Speaker 1:Some of them might need to stay in place if it's a safety issue, of course. But what's next for the company? What's the next milestone that you're tracking?
Speaker 4:We're we're let's go. So we're we're building our engine.
Speaker 1:Okay.
Speaker 4:Or the you know, and that that thing is, like, 60%. The parts are in the manufacturing process.
Speaker 1:Mhmm.
Speaker 4:And, we'll go, run that bad boy later this year. You know, the the skeptics always say, as you the start up can't build a jet engine from scratch, so we'll find out. Yeah. And then we'll start building the full scale preproduction program over to next year.
Speaker 1:Very cool.
Speaker 4:It'll be roughly three years.
Speaker 1:Okay.
Speaker 4:Today to to be back in, like, there's a bird in the air. But, you know, last time that what we flew, it
Speaker 7:looked like a fighter jet.
Speaker 1:Yeah. Yeah.
Speaker 4:Next time, it's the it's the overture, which it looks like a it kinda looks like a Concorde in a July that had a baby.
Speaker 1:Yep.
Speaker 4:Amazing. It's got this little hump up at front, you know.
Speaker 1:Yep. You know,
Speaker 4:it's not a double decker, but Mhmm. But it's a really unique airplane.
Speaker 1:Not yet. We have to get the gold plated seven forty seven. Those are really hot right now. Lots of people giving them to their friends. And so, I could imagine, handing these out to world leaders being pretty effective.
Speaker 1:I
Speaker 2:have I have to ask Yeah. Did you have any did you did you get a chance to watch the rehearsal by Oh, yeah. Nathan Fielder? You you give me a blank stare locked in.
Speaker 4:I I I don't I I is is this sounds like a pop culture thing of which I'm ignorant?
Speaker 2:Yeah. Yeah. Yeah. Well well, the reason it's relevant is because this this sort of comedian Nathan Fielder go you know, has this show called The Rehearsal. He learns how to actually fly a commercial aircraft to demonstrate to the FAA some of the issues they have around safety.
Speaker 1:Specifically on pilot communication. He he identifies that vast majority of of of commercial air crashes that have happened over the last few decades have been the result of a a captain making a mistake and the second in command not having the kind of energy or
Speaker 7:Oh, yeah.
Speaker 1:Or confidence to stand up to them because we're meeting for the time. And so he dissects this in a bunch of hilarious ways, and it's very entertaining.
Speaker 2:From your answers is extremely bullish Yeah. Exactly. That you have no idea.
Speaker 1:There's a certain class of hard tech founder. Like, I I always know Scott Nolan. He he'll post, like he'll repost, like, their announcement, like, four days later because he's, like, so in the trenches that, like I'm like, Scott, like like, you you know you launched three days ago. Like, you should be re retweeting at least, like, a post because he's so offline. But, anyway, Spie, I have one last question about being online.
Speaker 1:You've been learning from Elon about manufacturing online. You had an interesting back and where you were talking about manufacturing parts. I barely followed it. Can you explain what did you learn from Elon about manufacturing? Yeah.
Speaker 1:And and yeah. Yeah. Break that interaction down.
Speaker 4:So so Elon has this thing he talks about called the idiot index. Mhmm. Just it's a beautiful Elon ism. Right? Yeah.
Speaker 4:Where it's it's sort of a like, you you you've got a final part and you divide it by the the part cost. Like like said, it's a turbine blade. It costs, I don't know, a mill a real world example. We've got a set of turbine blades. It costs a million dollars Mhmm.
Speaker 4:For a set of turbine blades. What is the raw material cost? Thousand dollars. So what's the index? A thousand x.
Speaker 4:Like, the cost goes a thousand fold in the manufacturing process. It's a sort of measure of, like, what's the what's the money efficiency of the manufacturing process. There's another thing that I think is actually even more important that we we call we call the slacker index. Yeah. And the slacker index is how long it takes to get something out of the supply chain divided by how long it actually takes to make it.
Speaker 1:Oh, so more time based.
Speaker 4:Right? Like, so we were getting these these three d printed turbine blades for our jet engine, and we go quote them in the stupid old aerospace supply chain. And the quote comes back, it's like, it's six months and a million dollars.
Speaker 1:Yep.
Speaker 4:And I was like, wow. Okay. Well, how long does it actually take to print the blades? Oh, like, twenty four hours. Like, so what's going on the other 179?
Speaker 4:You're like waiting for and I was like, it must be that the machine is like really hard to get and there are only a few. Well, no. Turns out the machines are off the shelf. They've got them in inventory. You can get one in two weeks.
Speaker 4:And by the what do they cost? $2,000,000. So for the price of two engines worth of blades, we were able to buy a three d printer and print our own blades.
Speaker 1:Yeah.
Speaker 4:And and so what happened by the way, it it compounds from there. Is if you if if engineers can only make a a new blade every six months.
Speaker 1:Mhmm.
Speaker 4:They, like, really work the blade design because they don't wanna get it wrong. Because if they get it wrong, it takes six months to fix it. Yeah. But if they print it in one next the day, then all of a sudden, the rate of iteration goes up, and there has an engineering hand ringing and trying to get it right the time goes away.
Speaker 1:Yep.
Speaker 4:Oh, you want low idiot index, you want low slacker index.
Speaker 1:I love it. I love it. Well, hopefully, this EO unlocks a lot of that, and we can bring down the idiot index, bring down the the, the slacker index and The supersonic
Speaker 4:light band definitely had a high idiot index. So I'm glad I'm glad that's been, deep six.
Speaker 2:Well Fantastic. One step closer to a supersonic podcast.
Speaker 1:I love it.
Speaker 2:And I cannot wait.
Speaker 4:Yeah. I haven't forgotten what you're on.
Speaker 2:I know. I can't wait. Know. It's happening. It's Well,
Speaker 1:congratulations. Enjoy the weekend. Hopefully, you can advance the technology but also celebrate a little bit. And we will talk to you soon, Blake. Thanks so much for
Speaker 2:hopping on.
Speaker 1:We'll talk to Bye. Bye.
Speaker 2:Let's give a little air horn for supersonic flight.
Speaker 1:Yeah. I love it. I can't wait to hop on a boom supersonic, take it to an exotic locale. Stay at a wander. Find your
Speaker 2:happy place. Find your happy place.
Speaker 1: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, folks. Any other posts we need to go through? We talked about Polymarket partnering with X. That is fantastic news.
Speaker 1:Shane Copeland has the news. He says, proud to announce Polymarket's partnership with X and XAI as their official prediction market partner. I'm very interested to see how this actually integrates. Obviously, Polymarket's gotten very good at sharing images with with a very catchy image and then the market, not just the like, the the Polymarket screenshots have been kind of a staple of x for since the election, but they've but they've gotten better at that. I'm wondering if we're gonna see the the data actually hydrate live like community notes So you can attach a Polymarket to a post, and it will stay updated.
Speaker 1:That would be very cool. So you could be tracking it on the post. It'll all be very interesting to see where that goes. What else should we talk about today before we leave? I think we covered a lot of it.
Speaker 1:Scott Belsky is coming on the show next week. Very excited for that. He has a post that I was just enjoying because it's about product leadership. He said, underrated characteristic of top product leaders' compulsiveness, obsessively capturing decisions, ideas that need to be taken, baked that would otherwise be fleeting. This is how I felt about reading this post.
Speaker 1:Incessively iterating over options in mind, morning till sleep. This is what the the golden retriever does. The golden retriever incessantly iterates over options. Should I get the ball? Should I get the snack?
Speaker 1:Should I should I roll over? Try and get a belly rub.
Speaker 2:High energy. High energy. Trying to be efficient. Not always getting it right, but doing their World
Speaker 1:class products are crafted via compulsion. There's no better example than the golden retriever.
Speaker 2:Golden retriever never says, nah. I don't wanna get the ball today.
Speaker 1:Yeah. No. Never. So go out. Get that ball.
Speaker 1:Enjoy. Be a golden retriever this weekend. Fantastic week. Timeline in turmoil. Lots of chaos in tech.
Speaker 1:But we're still here. Had an incredible IPO. We had an incredible IPO.
Speaker 2:IPO window is open.
Speaker 1:Yep.
Speaker 2:We had some drama.
Speaker 1:Some drama on the timeline. But who knows? It's a new week. We might see completely new things. And the and the relentless march of techno capitalism and artificial intelligence, well, it marches on.
Speaker 2:And, as always, we're Newsmaxing.
Speaker 1:Yes.
Speaker 2:Ben is standing behind the camera right now giving us a threatening look. He says, go leave us a five star review.
Speaker 1:Yeah. He does.
Speaker 2:Spotify, Apple Podcasts
Speaker 1:Yes, please.
Speaker 2:Does help the show a lot.
Speaker 1:Thank you.
Speaker 2:And we hope you all have a fantastic weekend. We'll see you Monday.
Speaker 1:See you Monday. Goodbye.
Speaker 3:Market clearing order inbound.