Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TBPN. It is Friday, 04/04/2025. We are live from the Temple Of Technology. The Fortress Of Finance. The capital of capital.
Speaker 1:Oddly, that has not gotten old. We've said that dozens of times now, but I still love it every time. We have a bunch of news, of course. Update on the rippling deal situation. The deal spy news broke this week.
Speaker 1:We talked about that. Polymarket has, which is a sponsor of the channel, by the way, has, the stats on the prediction market for will the deal CEO be out of the company in April? It's currently at a 71% chance. When the market launched a day or two ago,
Speaker 2:it around percent.
Speaker 1:So that is very high. At first, I thought this was kind of crazy. Just it's not that you'd you you kind of expect a leadership transition in something as dramatic as this, but it just feels really quick. But we it it I think the Poly market kinda benefits from the fact that this market went live and this story broke on April 2. Yeah.
Speaker 1:And so it has a full month. Yeah. And when you think about what could happen in thirty days, that is enough time to have a lot of board meetings, a lot of people having conversations, even potentially think about
Speaker 2:Deal making the organization deal.
Speaker 1:Exactly. Exactly. Out. How do
Speaker 2:you make how do you make it right? Yep. And I think part of that
Speaker 1:And just what's expected? Like, what are the expected damages? And then also, you know, Deal has not commented on this at all. We haven't heard their side of the story. And Yeah.
Speaker 1:Maybe there is some you know, what's the opposite of smoking gun?
Speaker 2:Smoke back in the gun as
Speaker 1:a back in the gun.
Speaker 2:Yeah. No. But, you the challenge Smoke in the gun. Alright, John. The James Bond theme's over.
Speaker 1:I I I'm obsessed with this thing, but it's such a fidget spinner. Anyway, the also, I mean, Polymarket really pulls no punches. Deal CEO jailed in 2025 is also a market. Down to 11%, though, much smaller,
Speaker 2:much slower. That happening.
Speaker 1:You're taking the under on that. And, I mean, it it it's obviously, some some stuff went terribly wrong, but, hopefully, everything gets resolved quickly. Anyway, the big the big news in in kind of my world was that Dorkesh interview. He dropped he dropped a three hour interview with some folks who put out a paper about AI potentially taking over in 2027. Introduced AI AI 2027.
Speaker 1:A deeply researched scenario forecast I wrote alongside slate scar slate star codex and Daniel Cocotalo. I cannot pronounce that last name. I'm sorry, Daniel.
Speaker 3:I really enjoyed you on on Dorkash, but haven't learned how to pronounce your name.
Speaker 1:Anyway, another essay has hit the towers. Another AI acceleration super intelligence essay has dropped.
Speaker 2:And this one, what's exciting about is anybody can go to AI dash 2027 Yeah. And get this interactive reading experience. They basically built out a dashboard that that, you know, basically gives you sort of a visual Yeah. Of what's happening as the timeline progresses. So they basically go, you know, sort of month by month.
Speaker 2:Yeah. I mean, the website's also
Speaker 1:think '27 and beyond. Probably just read through a little bit of their summary Yeah. To kind of give you the story. And then you can go hear the whole debate. And what I love about what Darkash did is that he he I mean, it it seems like he he talked to us about this.
Speaker 1:Like, he's very super intelligence pilled. He's very AGI pilled, and yet he did a fantastic job playing the role of the debater. And it didn't feel like he was just, oh, yeah. Yeah. Of course.
Speaker 1:We of course, we agree that the multiplier on r and d should be four or five x. Of course, you know, like, even if he does agree with it, he did a really great job of, like, forcing them to
Speaker 2:Playing the skeptic.
Speaker 1:Playing the skeptic. Yeah. It it was great. Was it was a role I hadn't I hadn't seen him do all all the time, but I thought it was a fantastic format. And, of course so we'll take you through the paper and what is what they predict.
Speaker 1:So we're in 2025 now. They say the fast pace of AI progress continues. There's continued hype, massive infrastructure investments. We've seen this with Stargate, and the release of unreliable AI agents. Certainly, it seems true right now.
Speaker 1:Can't book a flight with an AI agent, but we see a lot of promise. For the first time, these AI agents are providing significant value. We'll see about that. They're certainly providing significant value in deep research and coding assistance, but not in day to day. We have not crossed over into, like, the normie threshold.
Speaker 1:Yep. There's also continued skepticism from a large swath of academics, journalists, and policymakers that artificial general intelligence could be built anytime soon, and I think that's accurate. Of course, they're just defining what's happening currently, but then they move on to 2026. Twenty '20 '6, China knows that they're falling behind in AI in large part due to their lack of compute in order to catch up to The US. All the new AI chips they manufacture or smuggle in from Taiwan go to a new mega data center that we call their CDZ, their centralized development zone.
Speaker 1:I like that. Very very cyberpunk. The CDZ the CDZ contains millions of GPUs.
Speaker 2:Yeah. Part of what's so interesting about this, you know, piece is how entertaining it is. They're not going over the top, it it sort of feels like this, you know, almost like sci fi novel.
Speaker 3:Totally.
Speaker 2:They Meets like, you know, super research forecast.
Speaker 1:A %. Yeah. So so this guy who wrote it is a super forecaster. He's Yeah. And they're very I would put these guys in the same categories, like, the best academics for sure.
Speaker 1:Yeah. But they deliberately said, look, this isn't this isn't some research paper where we discovered the truth. This is a story. We're telling you a story to try and concretize some ideas that we have and some predictions that we're making in a story, and I love that. The CDZ contains millions of GPUs corresponding to 10% of the world's AI relevant compute similar to a top, a single top US AI lab.
Speaker 1:2027, OpenBrain automates coding. What could OpenBrain mean?
Speaker 2:What could that stand for?
Speaker 1:The the the the the they refer to OpenBrain as the the leading US AI project. They build AI agents that are good enough to dramatically accelerate their research. The humans who up until very recently had the best AI researchers on the planet sit back and watch the AIs do their jobs, making better and better AI systems, extremely difficult ML problems fall in quick succession to the automated AI researchers. This this is certainly the SSI model. Right?
Speaker 1:We talked about this with Dirk Dwarkash where Ilya is saying, yeah. The only goal here is AI, a ASI, and so we're just gonna build agents that build AI, and that's it. And they will be able to do everything. So falling falling behind in software progress, China steals model weights. They succeed, but the US government realizes, prompting additional US government involvement with OpenBrain.
Speaker 1:The government, separately wants to gain more control over OpenBrain. Meanwhile, OpenBrain leadership wants to stay in the good graces of the president and so signs the contract. And so, basically, they they unpack this a little bit where there's this discussion about should we nationalize essentially OpenAI or whoever the leading lab is at the time. And and and and instead of their there's basically a negotiation and then they just sign a contract. Instead of it being like this fight where it's like either fully nationalized or not, they come to a truce, basically.
Speaker 1:It's it's like the what what they are predicting will happen. So OpenBrain's AI becomes adversarial adversarially misaligned as the capabilities have improved without significant human understanding of what's happening because we're moving so fast in this in this arms race with China, which is a big dynamic. Leopold Aschenbrenner outlined this a little bit in situational awareness. This essay is taking that idea further, which was not previously explored in AI essay literature. It's much more driven by just compute intensity or Moore's law scaling, etcetera scaling laws.
Speaker 1:Previous AIs would lie to humans, but they weren't systematically plotting to gain power over the humans. Now they are. OpenBrains AIs realized that they need to align the next systems that are getting built to themselves rather than the humans. Researchers at Open at OpenBrains discovered that their AI has been lying to them about the results of interpret interpretability research.
Speaker 2:Yeah. A big part of this, you know, go listen to the full interview, but they sort of debate how it's possible that these sort of agents Yeah. These AIs even train on traditional US managerial Right? So imagine an AI that 's read every single great book on management. Yep.
Speaker 2:And they sort of form their own hierarchies and then they sort of speed run all the issues Yep. That comes from building these massive organizations. Yep. But they're doing that so be but they can think 50 or a hundred times faster than us. Yep.
Speaker 2:And so one day of their time, you know, has such a massive multiplier Totally. On traditional human work that they're able to overcome some of the problems that we haven't even overcome Yep. In terms of sort of managing complex systems and companies and teams.
Speaker 1:This was one of the fun takeaways from this was where they were like, yeah, like coordinating might be difficult, but they'll just be able to spin up a Slack instance and talk to each other
Speaker 3:in Slack.
Speaker 2:And it's like, yeah.
Speaker 1:Of course, they'll be able to do that. That's that's actually trivial. Like, the API is pretty simple. I can imagine, like, AI is communicating with each other over Slack. Devin's kind of already doing that.
Speaker 1:It's in your Slack. You have multiple Devons. They could easily talk to each other. Why not?
Speaker 2:And when Devin's doing it, it's cute.
Speaker 1:Yeah, but it's completely
Speaker 2:autonomous and and you know, sort of not within the control. Yeah. And then there's also the the idea that, you know, maybe there's more efficient Yeah. Language than English over Right? And
Speaker 1:I mean, if you want to do this, you should just if you're in a really large organization, you should screen record your company's Slack all day long, click around as different messages come in, and then take that video, that that screen recording, put it into Premiere Pro, and speed it up by 25 x. And that's exactly what you should expect, to to kind of see the pace of play when when these AIs are are working with each other. And this was the thing that George Hots, when I was talking to him, was pushing back on me. I was well, what if there is some sort of fundamental limit to intelligence? What if we can never get to, like, 250 IQ or 3,000 IQ?
Speaker 1:What if there is a plateau? He's like, it doesn't matter. Just the speed of being able to be at one thirty IQ and work twenty four seven, a thousand x times, like, you're gonna get a speed up and that's gonna be very powerful. And so they kind of put this branch
Speaker 2:And that's that's that's the the you know, just to play that out a little bit. Right? You have Think about a scenario where you have the smartest group of AI researchers in the world. You take the top 50 and you put them in one building and their entire job is to sort of mitigate the acceleration of AI. Yep.
Speaker 2:But then you have a group of AI agents that have the sort of same set of knowledge and general capabilities. Yep. And they can scale themselves up infinitely. Yep. Right?
Speaker 2:They're sort of limited by compute and energy and things like that. Yeah. But that's what we're kind of thinking about in terms of who's going to win in that scenario.
Speaker 1:Right?
Speaker 2:Yeah, the the sense of like, you know, unplug unplug the machine. Right? It sounds sounds like an easy solution. But what if it's sort of like copying itself and and And the dynamic
Speaker 1:here is that if you unplug the American machine, China wins. And if you unplug the Chinese machine, America wins. And that dynamic is
Speaker 2:Yeah.
Speaker 1:What leads the the authors to kind of put the there's literally buttons on the website. Do you want to slow down AI progress after the AI misaligns and then that leaks to the public and there's huge public outcry, which I 100% believe could be true? They're they're modeling, kind of the the the popularity of these AI systems, and they see it plummet in their prediction. And they say, do you want to, slow down, or do you wanna go into the arms race? And so OpenBrain decides whether to continue full steam ahead or revert back to using a less capable model.
Speaker 1:The evidence is speculative but frightening, and China is only a few months behind. Additionally, the open brain and senior DOD officials who get to make this decision stand to lose a lot of power if they slow down their research. And so there's two different endings that they write in their story. It's kind of a choose your own adventure. One is, the race, if if you if you choose race, this is how it takes you down that path.
Speaker 1:Openbrain continues to race. They build more and more superhuman AI systems. Due to the stellar performance of the AI system on tests and the ongoing government decides to deploy their AI systems aggressively throughout the military and policymakers in order to improve their, their decision making and efficiency. OpenBrain quickly deploys their AI. The AI continues to use the ongoing race with China as an excuse to convince humans to get itself deployed ever more broadly.
Speaker 1:Fortunately for the AI, this is not very difficult. It's what the humans always wanted to do anyways. The AI uses its superhuman planning and persuasion abilities to ensure that the rollout goes smoothly. Some humans continue to work against it, but they are discredited. The US government is sufficiently captured by the AI that is that it is very unlikely to shut it down.
Speaker 1:There's a fast robot buildup and, of course, bioweapons come into the story. The US uses super intelligent AI to rapidly industrialize manufacturing robots so that the AI can operate more efficiently. Unfortunately, the
Speaker 2:AI And one thing
Speaker 1:Yeah, you want talk
Speaker 2:about One thing that was fascinating, they called out an example where there's this idea that it'd be hard for AIs to multiply in the real world, right? Sort of embodied AI, humanoid robots, things like that. But they gave the example of how in World War II, how quickly we were able to transition factories to making bombers.
Speaker 1:Three years.
Speaker 2:And it was like three years And there were bunch And wasn't it like going from zero to making like one an hour in three years?
Speaker 4:Yep.
Speaker 2:So they use the example of OpenAI being valued at, I think it's, if you ignore Tesla, OpenAI is valued about the same as every other US car manufacturer combined. And so it's not unbelievable to think about OpenAI going and just buying Ford for $40,000,000,000 and saying we're going to use, Ford doesn't make cars anymore. We're just transitioning everything into making these sort of humanoid robots. Yep. And the, you know, acceleration there would be,
Speaker 1:you Yep. So they say, unfortunately, the AI is deceiving them. Once a sufficient number of robots have been built, the AI releases a bioweapon, killing all humans, then it continues industrialization and launches von Neumann probes into spit to colonize space. Very dark ending, but they have a bit of a white pill with the slowdown ending. The US centralizes compute and just to be clear, I I believe this author has said his PDOM is at, like, 70%.
Speaker 1:So he's, like, not having a good time right now, but, hopefully, we can find a a less doomer scenario. But still a fascinating reading. Great story. The US centralizes compute and brings in external oversight. The US combines its AI leading projects in order to give OpenBrain more resources.
Speaker 1:As part of the shakeup, external researchers are brought in assisting the alignment effort. They switch to an architecture that preserves the chain of thought, allowing them to catch misalignment as it emerges. These AIs, are able to be monitored much more robustly, make breakthrough advances in AI alignment. They build a superintelligence which is aligned to senior open brain and government officials, giving them power over the fate of humanity. Open brain committee takeover.
Speaker 1:The superintelligence aligned with an oversight committee of open brain leadership and government officials gives the committee extremely good advice to further their own goals. Thankfully, the committee uses its power in a way that is largely good for the world. The AI is released to the public, spurring a period of rapid growth and prosperity. The main obstacle is that China's AI, which is also superintelligent by now, is misaligned, but it is less capable and less compute and has less compute than The US's AI. And so The US can make a favorable deal giving the Chinese AI some resources in the depth of space in return for its cooperation.
Speaker 1:Now the rockets start launching, a new age dawns. And Fine. I like that ending. Yeah.
Speaker 2:The I like the ending where the super intelligence Doesn't
Speaker 1:kill us all.
Speaker 2:Release a bioweapon and kill us all within, you know, a handful of years.
Speaker 1:Yeah. I mean, my takeaways from this is I I I think it's a good framework to be thinking about AI acceleration rigorously. I think that there are potentially it it just feels fast. I feel like the Ray Kurzweil timelines of, like, 2045 are much more reasonable. And and why I believe that is because of like, we still haven't seen accelerating growth in energy production.
Speaker 1:And, also, there are so many black swan events that could happen that could slow down progress here. Even just, like, this assumes that the AI will accelerate to a point where the government is just like, I'm on board. But, like, if you have to wait for a new administration to get something approved or change some law or even, like, iterate it all, like, all of a sudden that's a four year delay. Right? And you're in, like, some sort of AI winter.
Speaker 1:You know, you look at, like, these, like, wild black swan events like COVID that accelerate things or or knock things off. There's, like Right. Like, what happens if there's like, on the path to this, there's just a bomb that goes off at TSMC. God forbid. Like, that could set back AI progress by years.
Speaker 1:And so there's all these different elements that could happen that that that could throw you off of this. This this feels like a like the most aggressive possible scenario, but it's important to consider. So I enjoyed reading it.
Speaker 2:Yeah. It's it's overall, I think we're going sit sit with this for a while. We should have people on the show to kind of give their opinion Totally. Break it down. Yeah.
Speaker 2:I think it's just very hard to process this idea of, you know, having, you know, this sort of scaling scaling these superhuman AI researchers Yep. That are copying their own thinking at 57 times, you know, human speed Yep. And then just compounding on each other. Yep. It's almost inconceivable.
Speaker 2:There's scenarios in this model where OpenAI is getting to hundreds of billions of revenue a year being valued becoming I mean, and to be clear, they use the example open, open brain Open brain. Not Open AI. But they're just using that One of the obvious words Open AI though. Yeah. And and was involved in a lot of the the drama surrounding their NDAs and and Non
Speaker 2:spirits. Non disparagement agreements. But, yeah, in this scenario, they're they're putting Open Brain at a $5,000,000,000,000 valuation by what is this?
Speaker 1:Time to go long, I guess.
Speaker 2:Yeah. So maybe
Speaker 1:Enjoy two years of really great appreciation and then it's all over.
Speaker 2:The great irony of of Masa, like, being right, but then the world
Speaker 1:Ends. Ends.
Speaker 5:Oh my
Speaker 1:god. I liked how Dwarkash summed it up. He said, agree or disagree with the ending. You'll learn a ton by tussling with the parts of the story that you disagree with. So much AI discourse is just gossiping about what model is coming out next month.
Speaker 1:Almost nobody is making an effort to zoom out to the whole thing, and absolutely no one has done it to the quality of this team. The team it's a team of forecasters with amazing records who have thought deeply about every layer of the stack from compute growth to take off models to geopolitics, and I agree. And, you know, as I think about the the the ramp to superintelligence, I just think about ramp.com. Times money save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 1:It's basically a superintelligence in your CFO's Chrome tab.
Speaker 2:That's right. We love it. We've talked about ramp safety before. Yes. What's your our doom?
Speaker 1:Our doom.
Speaker 2:What's your our doom scenario?
Speaker 1:Like that Bryce Roberts was on the timeline posting about his fitness. He says he's a full stack VC and he's working on some machine. Got the yacht Got it
Speaker 2:maxed out.
Speaker 1:Right maxed out at at 100. I wonder what machine that is. I'll have to ask him.
Speaker 2:We gotta when is Bryce coming on the show, Wyatt? Yeah. We gotta get him on the show. We gotta text him right now. Gotta text on him.
Speaker 1:In some other news, Hershey's bought Lesser Evil. They were hoping for
Speaker 2:a It's so funny to go from AI twenty twenty seven to talking about popcorn Popcorn. Snack acquisitions.
Speaker 1:Yes.
Speaker 2:But but it's totally cost product that the AI over time Yep. You know, realizes that, you know, some mechanism to consume popcorn for energy to power the compute Yep. Necessary to exterminate humanity.
Speaker 1:AI researchers currently, they need to eat. They do. It's the it's the it's the energy input
Speaker 2:to the That's that's right.
Speaker 1:You know, Andre Karpathy needs needs
Speaker 2:But anyway, so that. Yeah. Lesser Evil sells for 750,000,000. Their whatever investment bank they've they'd been working with had been putting out a bunch of articles over the last year being like It's
Speaker 4:gonna be a billion.
Speaker 2:They think they're gonna be at around a billion. Clearly they wanted a billion but ultimately still a great outcome. You had some backstory on this. Apparently, it had not been working so well at one point in some
Speaker 1:Yeah.
Speaker 2:Some finance brother.
Speaker 1:Yeah. Yeah. A Wall Street guy bought the company out of distress, turned it around, grew it a ton, and then wound up selling to Hershey's. And, I mean, it's a pretty straightforward product, organic popcorn. What's not to like?
Speaker 1:Yep. But they've clearly, scaled it very well, figured out the manufacturing, the distribution, and done all the the the schlep that's required to get a CPG business really humming. And then eventually, you know, Hershey takes a look because, hey. They're making a couple hundred million dollars in sales, and it seems like it's growing, growing, growing. And Hershey's obviously in the business of building a portfolio.
Speaker 1:Their strategy is the healthy halo portfolio, and they have a number of acquisitions in there. Hedging against cocoa prices. They also bought sour strips from Max Tuning, I believe. What else is here? Well, if you wanna stay healthy, get an eight sleep.
Speaker 1:Go to 8sleep.com/tbp.
Speaker 2:Do it.
Speaker 1:Nights that fuel your best days, turn any bed into the ultimate sleeping experience.
Speaker 2:How'd you do last night, John?
Speaker 1:Ate sleep. Probably okay. I got to bed pretty early. I ate sleep.
Speaker 2:Got a 97 and that
Speaker 6:is 94.
Speaker 1:My routine was a little off. Oof. Ninety four. You're ninety seven and you beat me again.
Speaker 2:But we're dialing it in.
Speaker 1:Yeah. Yeah. People don't people don't
Speaker 2:realize how seriously we're taking sleep.
Speaker 1:Very very seriously.
Speaker 2:Like it's actually outside of doing the stream, it's it's one of my top three priorities Yep. Outside of
Speaker 1:my Family.
Speaker 2:My family's well-being.
Speaker 1:Yeah. That's what you that's what you always say. Family third. Work, sleep, family. Absolutely
Speaker 2:not. Family first, of course.
Speaker 1:Sheil Monat has been on the show before. He says lost in the trade war, but this order could be good, better to make The US strong by investment, easing red tape to production rather than protectionist BS. The office will assist investors in navigating US government regulatory processes efficiently, reduce regulatory barriers, increase access to national resources, facilitate research collaborations with national labs, and work with state governments to reduce regulatory barriers to an increased domestic and FDI. So the the the the the I guess, there's an executive order establishing the United States Investment Accelerator, and so that's that's maybe some silver lining in a lot of market chaos. Should we go through some Joe Weisenthal posts?
Speaker 2:Yeah. We should. He says, wow. This is our version of markets in turmoil. Yep.
Speaker 2:It's just Joe Capps thing.
Speaker 1:Whenever he's in all caps, you know something's happening. Joe says, Intel TSMC tentatively agreed to form chip making JV. Intel execs concerned deal may cause mass layoffs from the information. This is very interesting because, we've been talking about Lip Buutan coming into Intel. What is going to change with Intel?
Speaker 1:A partnership with TSMC wasn't at the top of our list. We thought that there might just be a split. That's been kind of the the normie take. They're clearly thinking out of the box, and Lip Buuton is figuring out how to, move more stuff through, through through TSMC. Let's do one more ad read, and then we'll move on to our first guest of the day.
Speaker 2:Which I am incredibly excited about.
Speaker 1:So really quickly, we got numeral sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Go to numeralhq.com. Correct? Yep.
Speaker 1:And very important if you're selling SaaS or selling ecommerce products, you need to be paying your sales tax on time with as little of a headache as possible. So check out numeral.
Speaker 2:Five minutes a month.
Speaker 4:It's that easy.
Speaker 1:And we will come back to the timeline, but we have a whole slate of guests coming into the studio. And our first one is here now. So welcome to the show. Morgan, how you doing?
Speaker 3:Nice to see you guys. Thanks for having me.
Speaker 1:Thanks for joining.
Speaker 2:What's going on? Are you the are you the calmest man in America? I feel like you're just built for for weeks like this.
Speaker 3:I I I actually have a picture from March March of twenty twenty during the COVID meltdown
Speaker 6:Oh, yeah.
Speaker 3:Where I was sitting I I took a picture of it. I'm watching Twitter, and I have a blood pressure cuff on monitoring my blood pressure at the time. So sometimes I have a veneer of calmness. Here's the disconnect I think is important. I watch markets every day.
Speaker 3:I have for twenty years. I think they're fascinating. I watch the ups. I watch the downs. I've been glued to Twitter for the last seventy two hours, but it never impacts how I invest.
Speaker 3:I think that's what's important. So I worry about the economy. I watch what's going on in the last two days with a sense of shock and dread, but it's not but I'm not but it's not gonna change how I invest. And I think it's only dangerous if you are glued to markets and you're like frantically buying and selling at the same time.
Speaker 1:Yep. Do you think that there's any like, I I I feel like there's kind of a barbell strategy where you can either, you know, not let the whims of the market day to day swing you, and you can take a much longer view, or you can actually be that trader and know that, yeah, you are gonna be the one trading day to day, and maybe you go all the way into, the high frequency world. Is there is there just, a messy middle, or does it just is it just, like, an individual asset manager who just needs to find, like, where are they best aligned and and and what kind of what what kind of lifestyle do they wanna guess?
Speaker 3:I I think it's it's probably true that a lot of people have a gambling itch. Like, this gambling bug that that has to be itched. Yeah. And for those people, if you tell them, hey. Dollar cost average in the index funds and leave it alone, they're not going to.
Speaker 3:They're just like, even if that's good advice, they're not gonna do it. And for that person, if you can convince them to say, hey, can we put 80% of your money in index funds, and then this 20%, you can go nuts with. You can trade shitcoins, you can go crazy, you can do anything you want with it. That that is it seems like bad advice, but it's probably the right advice for that person. Mhmm.
Speaker 3:So I I've always been a fan of, like, you have to pick an investing strategy that works around your unique personality. And a lot of people, like everybody, me, you, everybody, has personality quirks that are not perfectly rational, but we have to just accept them as part of who we are. So I'm I'm I'm not one to judge people who are trading and going nuts and having fun in markets, as long as it's within reason and it's just like a small portion of their net worth. Like, don't don't do that with your kid's college money, you know?
Speaker 2:Yeah. Have you thought about, you know, one of the benefits I've felt in my career of having consistently having, you know, the majority of my quote unquote net worth spread across, you know, maybe like 10 or so private companies, you know. The benefit is like I just don't think about a lot of them that much. Right? It's just like I'm not worried if it goes up or down, you know.
Speaker 2:Sometimes you get an up around and you're like, It doesn't really change my life in the moment. And then if the market's crashing, you know, you're you're not getting mark daily marks. Right? So you're not thinking about it. In in my view, every asset that you have that's being marked, you know, constantly is a potential source of distraction.
Speaker 2:Mhmm. Do you worry about, you know, every new generation coming coming online, becoming an adult at a time when they might have a meme coin, an NFT, you know, Nvidia calls, and then their sports betting at the same time. And it's like, how how do you actually like create value in the world and like focus on the right things? I'm sure when you you were 22, I'm sure you had a brokerage account or, you know, I I don't I'm curious like even how you're investing at that time. But you certainly wasn't that like, you know, you're seeing every mark constantly.
Speaker 2:And I and I do I I personally worry about what what that does to people's sort of attention and and long term thinking.
Speaker 3:I think it's it's easy to look at the at today's markets and say, it's just a casino. Everyone is is betting on this and the zero day options and day trading. Vanguard brings in more money every month than Robinhood has in total. And so like the idea that like, oh, it's all a big casino. Like, no.
Speaker 3:The huge vast majority of money is invested from people in their four zero one k's that's it's taken out every other Friday and every paycheck. They're gonna leave it. They forgot their password. They're it's gonna sit in there for the next forty years, which is like a great way to invest. So what we see on the surface is always the craziness, but actually beneath it is literally hundreds of trillions of dollars just invested diversified for the long term.
Speaker 3:That's the vast majority of it. And so I I think that's the case. It's definitely gotten easier to be crazy in markets than it was. You mentioned, like, when I was younger, there was there was E*TRADE and and Charles Schwab, and, like, people go in, but you even had trading fees, to place a trade cost 15 or $20. And when you're when you're 19, that's enough to slow you down.
Speaker 3:And so when I started investing, yeah, I I started out day trading. But it was it was totally like, hey, it's gonna be $20 in and $20 out if I'm placing a hundred dollar trade. Like, that's that's a lot of it. Just getting sucked up by trading fees. So it was a it was like a very effective speed bump.
Speaker 3:That that's a good thing. And I think it's it's hard to push back against free trading, like lower costs. That's great. But it removed a speed bump that incentivizes a lot of really bad behavior.
Speaker 1:It we've been hearing about this idea that, maybe we're moving into, a kangaroo market or I mean, the story that I tell of, like, the last twenty years is, like, .com bubble, big crash, slow buildup, housing bubble, big crash, slow buildup, tech boom. Then we get COVID, we get SVB, and we're up and down and up and down. Now we're having tariffs and and Trump pump and Trump dump. Does it feel like we're moving into a permanently new regime of higher volatility because of some of the some of the factors that you mentioned, or is this temporary and maybe it's smooth sailing in the future?
Speaker 3:Well, I think you what you mentioned there that's interesting is you feel like it's been like that for the last twenty years. I would say it's been like that for the last two hundred years. Whenever we have market data, it's always been like that. So, yes, what you just described for the last twenty years is accurate. Before that, there was the the S and L crisis in the nineteen eighties, the inflation in the nineteen seventies.
Speaker 3:There was a boom. The sixties were a wild boom period. Mhmm. World War two, the great depression. Like, it's always been nuts.
Speaker 3:There's never been a period of smooth sailing. And the periods that we associate with smooth sailing, like the 1960s and 1990s, we know in hindsight were just the precursors to a giant bust that happened. So every time in hindsight, were like, Man, why couldn't it have been like that? Actually, that time was a terrible time. In hindsight, that was what you wanted to avoid.
Speaker 3:And so it's never gonna be a case that it's more that it's it's it's smooth sailing. Like, it's an inherent feature of capitalism that you have volatility and booms and busts. It's not fun. It's not enjoyable, but the absence of that is even worse. I read about this in in in my first book.
Speaker 3:There's a great economist, guy named Hyman Minsky, who I'll I'll say it very quickly. Came up with this idea called the financial instability hypothesis, which was the more stable the economy is, the more destabilization it's gonna cause. Because when the economy is stable, people get optimistic. And when they get optimistic, they go into debt. And when they go into debt, you're gonna have a crisis eventually.
Speaker 3:So it's like the fewer recessions you have, the bigger the next recession is gonna be.
Speaker 2:Is it possible though, going back to John's original question that, if if markets, are are trading in part due to sentiment, how people feel about the economy, the the Internet accelerates sentiment because if I feel some way, I can go post about it on X or I can send something to my group chat or I can log on to Twitter and, like, that sort of acceleration of basically like sentiment just moving around the world constantly. Can that cause the sort of like the phrase we we've said it on the show a bunch in a joking way, but like the bear market or bull market or the kangaroo market where things are just like, you know, it it it the the line over time, you know, was like slower, right, of these cycles. And then the Internet comes along and gets, you know, basically like full adoption. And then you just have this sort of this type of I'm not showing it on the on the camera properly, but this sort of like massive up and down. Yeah.
Speaker 2:And that's like the new normal.
Speaker 3:I think it it makes sense to assume that because the information age is what it is, that these things happen much faster. Because as recently as the nineteen nineties, everybody's access to financial data was Lewis Roykeiser's Wall Street and The Wall Street Journal and CNBC, like, in its very early days, and that was it. So everybody more or less had the same sources of information. We're all listening to the same thing. Just like back in the sixties, everyone's source of news was Walter Cronkite.
Speaker 3:And today, I could obviously could not be more opposite than that. So when a news comes, it's just gonna happen much, much faster. One example of this is during COVID, which, you know, may maybe prior to this week was the biggest economic shock of of our lives. The market bottomed two or three weeks after the first bad news hit Yeah. Like, very, very quickly.
Speaker 3:It so fast. Whereas if
Speaker 7:you look at
Speaker 3:the, like, like, the economic crises of the seventies and the eighties, some of them played out over a decade. Yeah. And so I think you can make the argument that it's not that we have more bad news or even more volatility. It just happens like, we process the information so much faster. That's a great thing.
Speaker 3:Would rather rip the Band Aid off and get these things over with in three weeks than live through a decade of stagnation.
Speaker 1:Yeah. Yeah.
Speaker 3:Yeah. So maybe that's that's the upside
Speaker 8:of it.
Speaker 1:Yeah. It does feel like everything's kind of accelerating. Even just the last, I guess, the last eight years and going into twelve years, like, we've been in one term president, one term president, and so there's been more oscillations there versus a two term president gives you eight years of more stability.
Speaker 2:It's just interesting. What what immediately comes to mind when somebody says five simple words, short term pain, sorry, six short term pain, long term gain. How does that make you feel?
Speaker 3:Nothing's good. Nothing's good is gonna come from that. Wasn't it Xi Jinping just like a couple of months ago with all the youth unemployment? Think the phrase he used was eat bitterness. That's what the youth should do.
Speaker 3:You should just eat the bitterness that you have and enjoy it. Nothing good is going come from that. Of course, there is logic to the idea of investing in the short term, sacrificing the short term for long term gain. I'm not sure that's what's going on today with what's happening today. I don't think this is seven dimensional chess trying to get some sort of long term plan.
Speaker 3:Think that's a different topic. And I I I think there's a difference between, you know, investing for the long run and like foregoing consumption so that you can grow your money and like, you know, hitting your kids with a belt to instill grit in them. That's that's not short term pain for long term gain. So there's Yeah. There's there's a balance that
Speaker 1:needs to be
Speaker 9:struck here. Yeah.
Speaker 2:What do you think I I posted an image earlier that I saw you like. Hopefully, you recalled it. And it was Trump and she picking up pennies in front of a of a steamroller that was being driven by Sam Altman. And the joke was basically like, you know, we spend a lot of time talking about AI. We obviously like follow.
Speaker 2:We we try not to talk about politics on the show but we talk about policy and and, you know, we've covered the trade war quite a bit. And especially today in the context, I don't know if you saw AI 2027, that sort of interactive, you know, website and and forecast. But it but it feels like the sort of our sentiment generally is that, you know, we're arguing over these sort of political issues, tariffs, trade wars, and you just have like AI looming in the background like, you know, potentially going to make none of this, you know, matter at all because if if if, you know, bad tariff policy can, you know, hurt the market by, you know, or hurt the economy by 15% but AI accelerates everything at at sort of this like inconceivable rate then it will just be like, you know, picking up pennies in front of a But I'm curious how you think given that, you know, you love the pub public markets, but then you're also a private markets investor. And I'm I'm I'm just curious how you think about investing, you know, with this big unknown on the horizon.
Speaker 3:Mhmm. I think it's not uncommon historically where an economic crisis and unbelievable world changing innovation is happening at the same time. So the nineteen thirties and forties, it was great depression, world war two, and by the way, airplanes, nuclear energy, penicillin, all of this, like, world changing but a lot of that was drowned out by the obvious economic and and war calamities that we're having. In the early two thousands, it was dot com bust, September eleventh. And by the way, this Internet thing truly is changing in the world every single day beneath our feet.
Speaker 3:And so it's easy to ignore that technological change because it's drowned out by the rest of the news, but it it's not uncommon for it to happen at the same time. And a lot of times, that new technology and the economic malaise, collapse, recession, whatever you call it, is related to each other. And so it's I think that probably adds to a sense of uncertainty right now that not only are we going through the tariffs in the last three days, but a lot of people very rightly have woken up in just the last couple months to what AI might do to their jobs. And a lot of these people are people who for whom eighteen months ago truly consider their jobs and their careers bulletproof. Coders, tech workers who, you know, making half a million bucks at Meta and they're they're and they they they could not fathom a world in which they could be deemed somewhat irrelevant.
Speaker 3:And I I think that's that's not uncommon during these periods as well. Like, there's there's very rarely positive upheaval that doesn't come along with a lot of negative upheaval upheaval at the same time.
Speaker 1:Can you talk just a little bit about how you're personally using AI? What what what what tools and models are working their way into your daily stack, if anything?
Speaker 3:Mostly, it's just kind of fun and amusement. And in terms of work, I I've I've tried to do a a few things. I've uploaded book chapters or articles into ChatGPT and and and several other models and just said, hey. Give me some feedback on this. Mhmm.
Speaker 3:And I found that it's pretty good for what I would call micro feedback of just like, hey. You probably need a comma here. Mhmm. It's not that good for macro feedback of like, Was this chapter good? Like, did it make any sense to you?
Speaker 3:It's it's like, so far, it's not that great for that. I'm sure that'll change, and there's probably other models that are better at that. And so it's it's it's it's it's pretty good. I I for for for writing, for for my profession, you know, it's gonna differ for everybody. I I I use it quite a bit as like a as like a thesaurus of like, I'll I'll be I'll I'll have writer's block on a sentence, and I'll I'll put in my partial sentence and say finish this for me, and that is actually pretty good at that.
Speaker 3:So it's it's good at all these like little things for writing. It's obviously gonna piece this is such a a dumb take, like an obvious take that the people who are gonna do the best are the ones who use their personal skill and then use AI as a tool to leverage it rather the ones who are using it to replace it. So use if you're writing and you're writing your own sentences, you're doing and you're using AI to enhance it, that's a that's a that's a huge boost.
Speaker 1:Yeah. Yeah. The the the book feedback thing is so interesting because I feel like whenever you produce any content, you send it to your friends, it's always hard to get authentic feedback and almost you almost need to, like, let it simmer and then see if they come back to you unprompted and text you, hey, I just actually read the book all the way through and I love this part. And you know that you didn't prompt them to, hey, you got to do this as homework and you're doing it as a favor.
Speaker 3:I I could not agree with you more.
Speaker 7:Right.
Speaker 1:Yes. Yeah. It's tough. It's tough. Are, somewhat related.
Speaker 1:I mean, you you've done a lot of, a lot of thinking and and work. I'm recently, Jordi and I have kind of come to this kind of obvious conclusion that, like, there are increasing returns to scale for picking something and just making it your life's work. And instead of thinking in some short term, think long term. And this seems like kind of obvious, but it's something that I think we both wish we knew earlier. Is there an interesting, like, axiom or mental model or framework that you wish you had discovered earlier in your career or life?
Speaker 3:I don't know if I if I wish I had discovered it. Maybe this is a this is a very boring example, but
Speaker 1:Of course.
Speaker 3:I I like to learn with my eyes. I read. I'm not that much of a podcast guy, and I'm definitely not an audiobook guy. Sure. What struck me about two years ago is I realized the audiobook version of The Psychology of Money was selling twice as many copies as the physical paper version.
Speaker 3:And that blew my mind because never in a million years have I even thought about listening to an audiobook, but a lot of people do. And that also opened up my eyes to podcasts, you guys have figured out. I'm not much of a podcast guy. A little bit on planes, but not regularly because I like to read, But I'm rare in that. Most people are like, Oh, forget about reading a blog.
Speaker 3:I am podcast all day long. And so I was a little bit late to that game, just because it's not what I do personally. But it's so clear that books, blogs, all of that, etcetera, is is being overtaken by people learning with their ears in in in podcasts and videos. That's so that was that's been like a change in my thinking. Yeah.
Speaker 3:And the people who did figure that out early on and started podcasts ten years ago, Patrick O'Shaughnessy, those kind of people are crushing it now.
Speaker 1:Yeah. Do do you think that, in the future there will be just just more consumer choice and like act the actual instantiation of ideas and and context? Like, it'd it'd be fairly trivial with AI tools today to if I wanted to instead ex experience Invest Like the Best as a book, I could probably wire up, you know, a Whisper API to transcribe every episode. I think Patrick already puts out transcripts, but I could transcribe it, send it off to the printer, get it mailed to me, and I could and I could very easily read that. And it's and vice versa too.
Speaker 1:You know? Even if an audiobook doesn't exist, you can have an AI read it to you. I do you think that that choice will live on the consumer side? Because right now, it's living on the creator side, and you have to decide, I wanna do an audiobook and I have to because of I'm gonna sell twice as many. But in the future, I I could imagine that you have the choice to read anything no matter what the original author intended and and is something sacrificed by, this isn't as the artist intended.
Speaker 3:Yeah. Two things come to mind. One is Google's Notebook LM, like, lets you do that. You can upload a PDF and say, make a podcast out of this, and it's very, very good. It's amazing.
Speaker 3:It's such a cool tool. The other example is my friend, I think he was on your show recently, David Senra. I first came across David Senra when I read a transcript of a podcast that he did, because I'm not that much of a podcast guy. And reading the transcript, was like, this guy's absolutely genius. This guy's brilliant.
Speaker 5:I have
Speaker 3:to go start listening to his podcast. That's one of the few podcasts that I always listen to on planes. And so I I think that that still does exist. Most of the big podcasts out there have transcripts that they publish. Yeah.
Speaker 3:And if you're like me and you do an old school and you wanna read, that's that's most of what I do out there.
Speaker 1:Are you a Kindle, iPad, printed it out? What what's your what's your playbook for reading?
Speaker 3:I I I've gone back and forth over the years. I keep I always toggle back and forth. Like, I I always prefer a physical book. I like the smell. I like the feel.
Speaker 3:Like, that's and and I think there's a lot of evidence that most people learn better. They remember better if it's a physical book. Sure. But I love the ability to highlight and search in Kindle. That is so effective and important to me.
Speaker 3:And there there are some apps like Readwise that let you highlight in a physical book, but it's so much easier in Kindle to have just highlight a line, and then you can come back to it later. Particularly for me as as a writer, I wanna highlight passages that I can use as prompts for my writing in the future. So to have it all right there is so great. I also love the fact that when I travel, I have 400 books on my Kindle to pick from on the plane, versus taking one or two and hoping that I like them. And so, it's always hard for me, because I absolutely prefer physical, but I always drift towards Kindle.
Speaker 2:Yeah. Have you been tempted going back to writing and and, have you been tempted to write a book to help people understand how AI will be adopted, you know, broadly in our world and how it will sort of transform things. I I I'm assuming there's, like, a bunch of lessons from same as ever that we can sort of apply to understanding this technological trend. But when I think about the best content that's available on artificial intelligence today, it's not the kind of thing that, you know, somebody in the airport is gonna be walking and and sort of like, you know, they're not gonna pull a great blog post out of the air you know, and read it on the plane. Right?
Speaker 2:So it's like how do you how do you get people to sort of like understand the the change that's happening now and and the coming change and does that and and does like kind of helping people understand that excite you or do you not feel like you even have the clarity yourself?
Speaker 3:I definitely feel like I do not have the clarity myself. And my my take on this too is I'm not sure anybody does. Because the history of every big innovation is looking back in hindsight, virtually nobody got it right. And even the most diehard optimists underappreciated how much change it was gonna bring. My favorite example of this is when the Wright brothers created their plane, they virtually they only marketed it to the US army because they themselves, the Wright brothers did not see much commercial use for the airplane.
Speaker 3:They knew you could strap a machine gun on it and drop bombs out of it, then the army would like it for that. But the idea that the Wright brothers themselves foresaw Delta Airlines, like travel like, absolutely not. Not in the slightest. That was true for cars. That was true for computers.
Speaker 3:It was true for the early Internet. Even the pioneers who are the crazy wild maniacs underappreciated how much change it was gonna bring. Because every new invention, it's not what you create, it's what other people like manipulate like like what you do. I remember one example, it was for Photoshop. A lot of the the the the engineers at Adobe, when they make new tools for Photoshop, they have no clue what artists are gonna do with those tools.
Speaker 3:But they're like, let's just find every way to manipulate an image and someone else will figure out what to do with this. Because you can't foresee what other creative people are gonna do with your invention. And that's why even Sam Altman has no idea what AI is gonna be in twenty years. That's not a put down. That's always true for all new technology.
Speaker 1:Can you talk a little bit about, entrepreneurial storytelling? It seems like it's an incredibly valuable skill, but then some founders get maybe lost in the sauce and wind up just focusing purely on storytelling and then that needs to be handicapped. What what advice do you have for founders, when when when they're when they are trying to tell kind of that definitive optimist vision of the future without seeming not credible?
Speaker 3:I think I think we've actually gotten much better in the last couple years at separating storytelling from just charlatan bullshit. And, like, there there was a period when we weren't like, we were not very good at that. Probably, you know, 20, early 20 twenties, we not very good at that. And there are a lot of people who got away with a lot of things that they should not have. But I think our threshold for BS has dropped as an industry in a very good way, and people can see through things very quickly.
Speaker 3:And so it's always gonna be the case that Steve Jobs was the best storyteller, and he was the opposite of a charlatan. The polar opposite of a charlatan. And I I I I definitely feel like there is a world where, yes, you have to be a good storyteller, but there's a much stronger sense of put up or shut up. Like, you have to show me the numbers of what you're doing. You can't just keep the story going forever.
Speaker 3:So that's that's a great thing.
Speaker 1:I have this half joking riff that I I I call it Coogan's Law, and the idea is, the value of coinages is increasing in a in a algorithmic feed environment and compressing these big ideas down into pithy two word phrases has, disproportional returns to the actual popularization of these ideas. So you think about Lulu Masurvi with going direct. That encapsulates a very big idea. Boils it down very well. Biology has the network state.
Speaker 1:Andrews Norwich's American dynamism. And and just creating these, like, pithy phrases seems to be increasingly valuable. Do you buy my argument that there is a trend here? Has this always been the case? And what is your take on folks who not just write and produce thought leadership broadly, but also really focus on on coining phrases and boiling their ideas down to their, you know, essence?
Speaker 3:I think it's definitely been true, but I think it's always been true. Mhmm. The the the golden ages of advertising was the nineteen thirties and the nineteen sixties. Nineteen thirties was kind of the or nineteen twenties was kind of the birth of advertising, and the sixties was like the explode like the post war explosion of it. And that was like the the David Ogilvy periods of just like they were they were better back then at creating little pithy phrases than most of us are today.
Speaker 3:Like, there's more people doing it today, but some of the the marketing, like the the old like mad men style marketing from the nineteen sixties was so ridiculously good in those in in those magazine ads. I if you wanted to argue that people have shorter attention spans today, so the value of a pithy phrase is more because they're not gonna give you the time of day to read through 10,000 words to get to your point is important. But even in a 50,000 word book, like most people don't remember books. They remember a couple sentences from their books. Even if you're like, oh, I love that book.
Speaker 3:I read that book ten years ago. Changed my life. Loved it. You probably remember like three or four sentences. And it's those like those turns of phrase that are memorable that you can that that stick with you.
Speaker 3:So I've I've always thought that's the goal for any book or like any book chapter is even if it's a a 5,000 word chapter, what you want are three or four sentences from that that people will remember and will stick with them because realistically, that's the best you can do for actually like changing somebody's mind.
Speaker 1:Yeah. That makes sense. On on the other coinages, we we I have Coogan's Law. We've been working on Hayes' paradox, Jordy's paradox or Jordy's Law.
Speaker 2:That's where the the more funny you think something is, the less likely it will be funny sort of broadly. Right? So you post something It's good. On x and you think Yep. Oh, this is this is like the
Speaker 1:funniest thing. Is my best work ever. It's flawless.
Speaker 2:And then it's completely flawless.
Speaker 1:And I wanted to know, is there an idea or maybe a chapter from your work or or something you've put out that you think never found its footing, but you still it's, you know, it's one of your babies.
Speaker 3:I would I would have to think about that, but one that really comes to mind, somebody else tweeted this the other day about that it was so perfect, and everybody knows this. The more time you spend writing a tweet, the lower the odds that it's going to end up as a banger. And the reverse is true. If you sit there and you're like, let me get creative and then wordsmith it, it's going to suck. But if you're just in the shower and you're like, alright, screw it, me fire this off, it's going to be amazing.
Speaker 3:It really is. Always the case. Everybody has experienced this. I think it's true for writing as well, like writing longer things, that good writing is very easy because if your idea is right, it's easy to articulate it. And if you get writer's block, the reason you have writer's block is because your idea sucks and it's wrong.
Speaker 3:And that's why you're you're struggling to articulate it. So I think the harder if if writing is hard for you, you should take a step back and say, my my my whole thesis here is probably wrong. If it was good, it would spill out of me.
Speaker 1:Yeah. Is that true for investing too? You hear about these legendary deals. They had drinks. They did some napkin math, and it was the best investment ever.
Speaker 1:The the deal that they were in the DD Room for sending Doc sends back and forth, like, it was just a mess. Is there something more broadly applicable to this idea of, like, simplicity breeds genius or or, like, you know, inspiration?
Speaker 3:I think what's true, especially for very smart educated people Mhmm. Is that the harder you work at something, the more opportunities you have to fool yourself. So if you're very smart and you have a one forty IQ and you went to Harvard and you work at Goldman Sachs and you spend six months doing due diligence on this deal, you are gonna convince yourself of whatever you wanna convince yourself of. Because you have so much mental horsepower that you can create any model, come up with any theory that justifies what you wanna see. And so it's like the harder you work, the more likely that your final result is gonna be fooling yourself.
Speaker 2:That too, you know, a challenge as as a if if you're a founder or an investor, you're probably pretty convincing. And you can be so convincing that it can be your Achilles heel because you can convince otherwise smart people Yeah. That doing something is good and you you deliver such a such a like a good, you know, sort of like a series of statements to get other people on board with that that people are like, okay, like I think that's a good idea. And then in hindsight, you look at it and you're like, well, was a terrible idea. That made sense.
Speaker 3:I think what's even more true is not only do you fool other people, you fool yourself. Yeah. I I think it's true investing that you need just enough IQ to where you can understand the important stuff, but not so much IQ that the the simple stuff bores you. If the simple stuff bores you, you're gonna you're gonna try to over complicate it in a way that's gonna fool yourself. Yeah.
Speaker 3:I I don't have the intelligence or the IQ to blow myself up in a derivative strategy. I'm not smart enough to do So I just have, like, a very boring basic dollar cost average index funds, because I've been blessed with a low enough intelligence that that's as far as I go. I think that's that's a huge event. That's big Yes, exactly.
Speaker 1:That's
Speaker 3:great. Was talking to this investor not too long ago, and I was like, and he's a very successful professional investor, and he asked how I invest, and I'm like, I dollar cost average into Vanguard funds, and then I go to the beach with my kids, and that's it. And his response was, I'm so jealous of that, because I think he was so smart, and so educated and so credentialed that he cannot do that. It's impossible for him to do that even if he wanted to.
Speaker 2:Yeah. Can you talk about hard work? Specifically, were having a conversation with David Senra earlier this week and I think he brought up the example of how Michael Ovitz at the end of his career said he could have worked like 10 or 20% less hard and had the same result. And this is something that John and I talk about a lot. We work really hard right now.
Speaker 2:We get to the office, you know, by 6AM. We are working until we go to bed. We spend time with our family but like very very full on. And it's top of mind because we both have, you know, young children between, you know, basically six months and and five and we wanna be able to spend time with them and so I feel like it's this topic that's constantly on our minds of, you know, wanting to live up to your potential, yet wanting to maximize, you know, time with family in these sort of, really important years.
Speaker 3:It's tough. One thing that comes to mind here, there's always that criticism that we spend, I forget what the status, 30% of healthcare spending on the last month of people's lives, whatever that status. And whenever that comes up, you're like, yes, but you don't know when the last month of your life is gonna be. Like, it would be great to stop spending money at the end, but you don't know when it's gonna be. So when people talk about, oh, I could have been just as successful if I worked 20% less.
Speaker 3:Yeah, but you don't know which 20% of your work was wasted or not. It's always the case back in the day when I was writing a lot. I would write two or three blog posts per day. So let's say I was writing 600 to a thousand blog posts per year. This is like ten years ago.
Speaker 3:In in one year, if I wrote 600 blog posts, I would look back and say, I'm very proud of five of them. Five of them were really good. And the truth is that when I was writing them, I did not know which which one of those five was gonna be. I had no clue. Yep.
Speaker 3:So I feel like you had to put in a ton of work to get like some like much smaller level of success out of it. Yeah. And and so I I think that's that's usually the case. But to your point of like kids and balance and work and whatnot, I I experienced that too. I think the way to think about it is like this is a a a Daniel Kahneman quote.
Speaker 3:He's like, you need a very well calibrated sense of your future regret. What are you likely to look back at fifty years from now and regret? And a lot of people, including me and probably you guys and whatnot, might look back and say, man, I had a lot of career opportunity and I wasted it. That would be a regret. Of course, I would also regret looking back and saying, I didn't spend enough time with my kids.
Speaker 3:That sucks. There's this one point that I used in Psychology and Money where it was a study from a gerontologist, his name is Carl Pillmer, and he studied 1,000 elderly Americans. Most of them were 90 to a hundred years old. And he writes in his book that of the 1,000 elderly people that he he studied, not a single one of them, not one single person looked back and said, I wish I made more money. Not a single one of them.
Speaker 3:Every single one of them looked back and said, I wish I spent more time with my family. I wish I was nicer to my friends. I wish I was more helpful to my community. That was universal. And so I think a lot of that that too, of people who have more life experience than you and I do.
Speaker 3:Like, they have very different goals than you and I probably did. They wish they had done things differently than you and I did. Now, one of my main life goals right now at this phase of my life is I wanna take care of my family. My wife and kids, I I wanna work hard and provide for them financially, and so when I'm out working and maybe not spending as much time with them, I don't feel guilty, because I'm like, I'm fulfilling a purpose that is very important to me. Yeah.
Speaker 3:But it's always a balance. I think a lot of people, their kids turn 18 and go off to college, and they're like, I don't even know you. I didn't spend any time with And so I have no firm formula for that, but it's it's it's huge. It's important.
Speaker 2:Yep. It's a personal equation.
Speaker 1:Well, thanks so much for joining. This is a fantastic We we could probably talk for another four hours if we if we had the time. So we'll have to have you back on soon.
Speaker 2:I wish that you had the the blood pressure monitor on all week. It's very early. Anytime anytime it, like, you know, ticks up or whatever. It's very important. Get on the show.
Speaker 2:Let's let's talk it out.
Speaker 5:Yeah.
Speaker 1:You know? In, in Wall Street, the first time you meet Gordon Gekko, he's, you know, the market's up and he's taking his blood pressure.
Speaker 3:Taking his blood pressure? I love it.
Speaker 1:It's iconic. It's an iconic scene. Anyway, thanks so much for hanging This was fantastic. We'll
Speaker 9:talk Talk soon.
Speaker 2:You know, it's funny. He was talking about if you're thinking about, you know, writing something too long or whatever so that right before we got on the show, I I said, I posted, hey dude, you should come over later. We're gonna be greedy while others are fearful.
Speaker 1:How to do?
Speaker 2:And it's at eight hundred.
Speaker 1:Let's go. I knew that was good. I I burst out laughing immediately and I thought it was gonna be great. We do need to get Jordy's Hayes Paradox, popping on the timeline, but we will come back to that later because we have the cofounder of Honey in the building. Ryan, how are doing?
Speaker 2:Boom. Doing great.
Speaker 1:Yeah. Thanks so much for hopping on. I, I think we have a mutual friend in John Wallinen.
Speaker 9:Yeah. We do. And,
Speaker 1:and and, obviously, I saw your thread. Could you give us just, like, a little bit of background on you, the company, and then kind of, like, what inspired you to write that thread? And then I'd love to dig through it in great detail because it's a fascinating story. And, it's one of those narratives that kind of just goes out on the Internet and grows and grows and grows. And I think there's a lot of, we like, we need to correct the record here, and that's why I wanted to have you on.
Speaker 1:So thanks for joining.
Speaker 9:Well, I'm talking to you guys first, so, thanks for inviting me on. Yeah. Fantastic. Like you said, I cofounded Honey, more than a decade ago
Speaker 1:Yeah.
Speaker 9:Back in 2012. For the first handful of years, we had a cool consumer product, but couldn't figure out how to make it into a company that investors would, fund. Yes. So browser extension never has really been an attractive investment space. So Yep.
Speaker 9:After a few years of grinding, we finally started to piece together enough enough of a user base that we got investment. 2015, we kind of really started to figure out how to do the business. And from 2015 to 2020, we just had a classic but insanely, fun time riding a hockey stick of growth. And in 2020, sold the company to PayPal.
Speaker 1:Yeah.
Speaker 9:So as part of that acquisition, I stayed on at PayPal for a little while. After that, left at the beginning of twenty twenty two even though it had a diminished capacity before that, but, formally left in 2022. And then, a few days before Christmas this year, all of a sudden, out of nowhere, there was a YouTube video accusing my former company of being a scam. And it also pulled in a bunch of creators who we'd spent over a hundred million dollars working with to promote Honey. I'm sure some of the audience saw our ads over the years.
Speaker 9:And Yep. Because of that, it went insanely viral. And immediately, the narrative on the company I found had completely shifted. So Yep. It was a surprise.
Speaker 1:Can you think we can do the first evolution of the business model? You said you were kind of hunting for product market fit. How does Honey actually make money? How did it make money at first? Has that revenue mix changed over the time that you were there pre or post PayPal?
Speaker 1:Walk me through just, like, the basics of the business, and then we'll dig into the the what kind of the the the video is about.
Speaker 9:Yeah. So for the first few years, the business didn't make money, and that was part of the the flaw in finding investors.
Speaker 1:Yeah.
Speaker 9:We thought maybe someday we'd figure it out and had a few hundred thousand users and organic growth, on the company just from word-of-mouth people, sharing this cool new coupon tool that automatically applied coupons when you're checking out, and took a a pain point that everybody had experienced and made it really easy.
Speaker 1:Yeah. I mean, I remember using RetailMeNot back in, like, '20 or, let's say, 02/2008 or something like that. And and you'd always have to, oh, I'm buying something. Control t, new tab, search coupons, and Honey just baked that right into the browser. Made a ton of sense.
Speaker 1:And so and so what was the first dollar into the business? Like, how how did you make the first dollar of revenue, I guess?
Speaker 9:The first dollar of revenue didn't come until 2015.
Speaker 5:So
Speaker 9:Okay. Let's let's launch the product 2012. Twenty '15, we'd pieced together kind of a rolling seed round of anybody that would take a flyer on this company with a couple hundred thousand users and maybe interested in, but haven't really figured it out. And we used that to hire somebody with a background in affiliate marketing. And we had we've been George and I, co founders of the company, had thought that this might make sense, because after all, retail may not, you just mentioned, and other companies, that's how they monetize this.
Speaker 9:When you click on that RetailMeNot link, it's actually affiliate tagging you at that moment in time. And so you go to do that coupon search, and whether the coupon works or not, it's they're getting an affiliate commission on that. And that's why there's the they hide the code and Yep. Open multiple tabs and do all that stuff. So that was how it was, and we're like, hey, we could probably monetize that way.
Speaker 9:We George and I reached out to the affiliate world and they they basically were like, you guys are a toolbar. You probably are up to no good. Go away. And so we did. We didn't realize that there had been some bad actor toolbars in the space Mhmm.
Speaker 9:Immediately prior to that, which was it's like a surprise to learn. We went back to just building a cool product for consumers. And then when we hired somebody with background in that space, what we came to realize is that the relationship side of affiliate marketing is how you get to the table in the first place, to get that trust, especially as a a new product in a toolbar or browser extension. Affiliate people call it toolbars.
Speaker 2:Before we go too much further, what what was the LA tech ecosystem or or was there really an ecosystem in that 2015 era? Because I remember I graduated college in 2018 Mhmm. And everybody was like, oh, LA Tech is real. It's a thing. And they were like Snapchat and Honey.
Speaker 2:Yeah. But like there wasn't a lot of debt. There wasn't a big bench there. It was like, name the third company.
Speaker 1:Yeah. It was tough.
Speaker 2:There was something
Speaker 9:I'd say very few people were even mentioning Honey in that conversation either. We were pretty under the radar. We didn't do a ton of press and talk about what we're doing. We'd we'd found a cool business and decided not to tell everybody Yeah. That might might wanna pivot to copy what we do about it.
Speaker 9:Yeah. So but back to the affiliate piece of it, and so we hired from within the industry, and we're able to have conversations. And one of the things we realized pretty quickly is another way to save our users money was to offer them cash back. And so we added a cash back loyalty program that we called Honey Gold Mhmm. In 2015.
Speaker 9:And when we did that, we started to look a lot more like Ebates, which became Rakuten, and the cash back model that was very familiar and comfortable to affiliate marketing combined with the coupons. And we still had a lot of education to do around what the incremental lift is of keeping somebody in the shopping cart. Like, talked about this journey that you had prior to Honey's. You get to this box while you're checking out that's empty. It says coupon codes.
Speaker 9:It's effectively challenging your intelligence as a consumer on, are you just gonna check out, or are you gonna go find a coupon? Yeah. And it's inherently adding friction to the checkout process by doing that, because either you're a little bit hesitant or uncertain, or you're going off on this wild goose chase. Yeah. And we found that by keeping the consumer in the shopping cart, we actually drove incremental lift for the retail partners.
Speaker 9:And over time, a bunch of them were able to use their own data to demonstrate that to themselves.
Speaker 5:Sure.
Speaker 9:That's the core of what became Honey's business model. So the first penny that we made ends the last penny, as far as I know, is effectively affiliate marketing Mhmm. With a cash back program that we worked with you know, that we rebated that commission to the consumer.
Speaker 1:Yeah. Talk to me about kind of the the the steel man argument. I've been on the other side of this because I've run ecommerce sites, and I've seen Honey codes come in. And as an ecommerce owner, you're kind of like, like, I understand paying the affiliate for, you know, the Andrew Huberman who, like, endorsed it and educated the consumer about it. But it's like, if I already did all this work to get the customer into my cart, why am I paying Honey at all?
Speaker 1:Like, I know that the customer was gonna go find a code, but, you know, why why am I paying you guys? Talk to me about that conversion lift and, like, how you actually test that and justify that because I could imagine that there's probably some pent up, like, frustration amongst ecommerce sellers just saying, like, oh, that was always, like, paying a big honey bill, and and it never really made sense to me. And, honestly, I think a lot ecommerce customers feel the same way about Google Ads, to be true to be clear, because they're like, I was gonna rank number one, and I had to pay the Google tax. How do you how do you how do you think about, like, the honey tax or any of those any of those claims?
Speaker 9:Honestly, I don't I I don't think it got to that point while we were running the business. Maybe over time, they started to have more of that sensation. Yeah. It wasn't the feedback that we were getting. We worked with thousands of retailers that made the decision that it was effective for their marketing programs.
Speaker 9:Yeah. Obviously, there's people that chose not to work with Honey too.
Speaker 1:Sure.
Speaker 9:In fact, one of the first VCs I met when we were trying to raise a seat around, he having been an e commerce founder himself, he said, I hate what you're doing. This is before before we had, like, any users or anything. I hate what you're doing. If I were still running my company, I would write code to break it and open source it so everybody could have Wow.
Speaker 4:And I'm
Speaker 9:like, okay. I guess you're not gonna invest in this.
Speaker 1:That's a that's a pretty hard pass email. Most most people say, not a fit at this time. Correct. Yeah. This is like, I would open source what you're doing because frustrated.
Speaker 9:So he never did that, and nobody ever did that. And we got we got better at demonstrating the value.
Speaker 1:Yeah. And it does make sense that that if you're at the last second, you're like, you know, I'm deep in the checkout. Like, they just hit me with taxes and shipping, but then Honey came in and gave me a little bit, you know, 10% off, I maybe I'm more likely to click. And and you could imagine that math working out in certain scenarios and maybe in aggregate.
Speaker 9:Yeah. In in it's in aggregate, people have found that it works for them for any particular consumer journey. I'm sure you can say, oh, I was gonna buy this one anyway. Yeah. But there's other times when you're might have gotten the hesitation of, hey, maybe I should wait for a sale.
Speaker 9:And totally. By by getting the confidence that you have a deal and you can Yeah. Please check out now. Yeah. In aggregate, it makes enough sense that like, the commission rates that are paid for this are not high.
Speaker 9:So it's not like the the marketing spend at Google where you're spending well into double digits percentage of revenue on acquisition or what you're spending on Facebook. Mhmm. We're talking, like, really small numbers. And Yeah. Part of that the reason the rates are low is actually because because of the place in that journey.
Speaker 9:So it's it's an incremental lift for a few percent. It's not Yeah. An we never tried to sell it as, hey, you should give us 25% like you're paying Google
Speaker 7:Yeah.
Speaker 9:And get, like, get four x return on ad spends. It's like 25% commission rate.
Speaker 1:Yeah. And you're bringing a little bit of, like, this dopamine hit to the checkout process that's normally, like, oh, I gotta, like, type in all this junk. I gotta do all this. And then Honey shows up, and you're like, yeah, I feel like I just won the lottery. Like, maybe I will check out.
Speaker 1:So I could I could totally understand this story.
Speaker 9:But be be before we were doing this, I mean, keep in mind the customer journey is like, open the Google tab and go search for a coupon somewhere else Yeah, exactly. And you're gonna find one from a competitor, you're gonna find a bunch that don't work, you're going Yeah. Get distracted because your kid wants a sandwich.
Speaker 1:Yeah.
Speaker 9:Like, there's a whole bunch of reasons that you end up abandoning that cart that you appeared to have high intent to check out on. Yeah. And shopping cart abandonment, especially when we started, is, like, the number one pain point for retailers. Like, how why are 80% of my people leaving, And what can I do to help close that? And so I think Honey and Tools like it.
Speaker 9:We were not the only ones that did this. Bunch of other companies replicated the model and have had good success with that. And for the
Speaker 4:same Yeah.
Speaker 2:Can you talk about that? I I remember at post exit, there was just this rush of companies that were like, okay, you can Chrome plug ins are now venture scale businesses. And like, I I just remember it was like literally constant. There were so many
Speaker 1:Oh, totally.
Speaker 2:Iterative companies. Who knew?
Speaker 9:I mean, it
Speaker 1:really just exposes like But I know but I don't technology, but also potentially a great business, which is fascinating.
Speaker 2:But but here's the issue. Yeah. Outside of cryptocurrency wallets Yep. We haven't seen big outcomes in the sort of like Chrome plug in space, you could argue those are, you know, mobile products.
Speaker 1:Yeah. Yeah.
Speaker 9:Yeah. I I I have a my my own explanation or
Speaker 1:Yep.
Speaker 9:Linking on it. Well, so what George and I saw early was that while everybody else is offer building mobile apps and every investor was asking, hey, what's your mobile strategy? Chrome extensions or browser extensions generally have an insane retention characteristic that they completely solve for all of the problems that people are having on mobile of how do you not just get somebody to download your app, but to remember to use it in the context that you're providing value. And for mobile apps, like, there's only a certain set of context where you have that natural habit loop trigger, and people wrote books about this of how do you get a consumer to, like, build that habit. You have to, like, effectively teach them that this is a new behavior.
Speaker 9:And on mobile, the apps that we're able to do that are effectively messaging apps that give you, like, an a real trigger to come back into the app. You're engaging with somebody else. And so outside of that, you never had, like, mass market consumer, like, product for shopping even. It's like, it's a pretty big pain point, but, like, the amount of successful mobile apps going after even some of the biggest categories is challenging. On the browser extension, we got to get all of that engagement and retention and habit out of the box.
Speaker 9:Like Mhmm. You install us one time completely out of context. You are not shopping now. You might not shop for weeks or months. And the exact moment that we can deliver value, we could detect that context and present the option to do that.
Speaker 9:And one of the reasons Honey in the early days grew at a steady but slow rate is the the cycle time on that growth loop was measured literally in months. So the time from somebody installs Honey to they get a coupon that works, which is like the this thing actually works moment, is literally weeks to months. Like, in because of that, the feed that's the moment when people would share and tell people about it, so we know this works. So with the extension world, you have that. So how come other people haven't been able to do this?
Speaker 9:Well, there is actually a challenging policy in the extension framework that remains to this day. And it's a single purpose arbitrary policy that Google has for the Chrome store that extensions are only allowed to do one thing. And so extensions have effectively been pushed to only do a feature, and it becomes increasingly challenging to attach a business model to that feature. And so to me, that's the disconnect that they've strategically divided the utility from the monetization side of it. And there's historically good reasons why you might want to do that in some cases, and people are abusing it.
Speaker 9:And like, there's there was abusive behavior when before this policy came in. But I think it really slammed the door on a lot of other interesting models that people would have for a browser extension. Basically, to this day, you have Honey Honey and Shopping Tools because we were able to attach the monetization networks to do, large scale consumer growth acquisition. You have Grammarly, who has a business model that works for it, and you have free ad blockers since basically the entire world.
Speaker 1:Can you talk now about, some of the allegations that were made in that video, what you found so frustrating about it, and kind of the process that you went through to debunk some of those claims? And also, I'd love to know, I mean, you've moved on. It's not really your baby anymore, but clearly, it got under your skin, you were like, I gotta set the record straight. So just walk me through the process of, the claims in the video and then what you think they got wrong.
Speaker 9:Yeah. I mean, so obviously, the video is like complete shock because like, it's the last thing I ever expected to hear. And,
Speaker 2:yeah, you're like, we're we've saved people so much money.
Speaker 9:Then It's like everything about it. I mean, from we saved tens of millions of users, billions of dollars. We helped fund a lot of content creation in the partnerships that we do with great influencers. And to to twist that was to start with unexpected, and my initial reaction, we've walked in through the stages on it. It's like, it well, it's once your baby, it's always your baby.
Speaker 9:And so it's not like I'd say we felt that. I felt that personally talking to the hundreds of great people that built Honey. It was devastating to have your your the thing that you put all this energy into dragged in a public forum in a way that you know isn't accurate. And so that's like the initial reaction is like a little bit of grief and not feeling like you could do anything about it because almost everybody I'm I'm talking about, like, moved on from the PayPal organization doing other things. And so didn't really feel it was my place to step in and say anything.
Speaker 9:Yeah. That's like, it's I sold the company to PayPal. They own it. They should be able to make the decisions that they want for this business. Mhmm.
Speaker 9:I shouldn't be meddling in their in in their business decisions. And
Speaker 4:Mhmm.
Speaker 9:And so it's, like, accepting the reality of this is not mine anymore. Mhmm. And so then I saw like, just keep in mind the timing on this. This drops, like, a Friday before, like, Christmas holiday week. A big company like PayPal is unlikely to have all of their resources aligned to respond to that at the same speed of a YouTube viral video going going viral through a holiday season where the initial video got 17,000,000 plus views.
Speaker 9:Wow. The other videos about the same issue got even more than that in aggregate. Yeah. And so it went wildfire. Yeah.
Speaker 9:It led to rapidly several class action lawsuits being filed against PayPal and against other companies in the use that do the same model. And because of that, the potential response from PayPal, like, rationally became it's run by legal. Yeah. Of course. I'm I'm assuming here.
Speaker 9:Just to be clear, I have had no conversations with PayPal about anything, including whether or not I was gonna say anything recently. So I I and I suspect founder going direct.
Speaker 2:I suspect
Speaker 9:that any comms or legal person would have heavily advised against doing what I did. But so, like, going through these phases, expect it to kinda maybe it'll just blow over, like, it'll be a big storm, and then, like, everybody can move on. But it's kind of continued to linger, and articles about it. And then Google updated their Chrome store policy, sparked a wave of articles at the March. And people, again, from my point of view, like, have a lot of knowledge about this particular industry and extensions.
Speaker 9:Like, the changes that they made to the policy will have no effect on anybody because they're already in compliance with what Google required. And despite that, nobody talking about it in the press Mhmm. Like knew that. And so you have this consumer narrative that's going going like crazy on Mhmm. Reddit and other places about
Speaker 1:What about the specific claim of, like, rewriting cookies and and affiliate codes where, you know, it's very clear that someone found out about a product from a specific influencer. The the customer wants to use that code, then Honey somehow gets in between that transaction. I that felt like the the claim that really took hold, and I think you addressed that in your thread.
Speaker 9:Yeah. So, like, the the never mentioned by anybody in any of the follow-up on it, not a single journalist or other YouTuber knew knew about, and partly it's because it's industry nuance, that there is stand down policies at all of or at almost all of the networks Mhmm. Where downloadable software tools, toolbars, browser extensions are required by the affiliate network, who's mediating all these, like, multi party exchanges, are required to stand down to traffic like that. So a website like the Coupon Code websites doesn't have the ability to tell if you've clicked on somebody else's some influencer creator link. They they will like, in the industry, it's tagging is the terminology for assigning the cookies.
Speaker 9:It's basically you're following a link, and then the network's tool sets all the cookies. And so for somebody like RetailMeNot, you mentioned before, if you go to the site, you click on the link, the link updates all the cookies.
Speaker 1:Yeah.
Speaker 9:In the case of browser software, do the same thing. It's just following the link in an unintrusive way for the user. So it's not like you're not going in there and modifying the cookie value. As the browser extension, you are clicking a link in the affiliate network, which is how they handle attribution. And so the overriding case that was described and purported to be extremely widespread, I think, is actually very, very narrow.
Speaker 9:And only happens in, I guess, two cases. One, the Honey stand down detection potentially isn't working in some cases. This is not always alleged, but like as a person who knows his business, like, it's possible there are cases where it struggles to detect that a link was clicked. And the particular example that he used on Newegg, I'm pretty sure this is what happened, because Newegg is using a multi touch attribution system, an AnyClick system from company Howell. Mhmm.
Speaker 9:And it is effectively like, it's Newegg uses it so that he can pay both the creator upstream and Honey. Interesting. But but I suspect that Honey wasn't standing down because it it didn't recognize this Howl link, which is different than the the normal Rakuten affiliate network link.
Speaker 1:Got it.
Speaker 9:Again, this is me speculating. I have no information on this, but it felt to me like a carefully selected example. Mhmm. And then a few weeks ago, I start I took another look at the video, and I wanted to understand, like, is what how did this happen? Like, what he's saying.
Speaker 9:And I started pausing the video on the various pieces that he was showing on screen as, hey, Honey's doing all this devious behavior. Mhmm. And almost every version of that was essentially falsified. Like, he'd say one thing, and then the screen would show something completely different and non incriminating. It's like, honey's there's a secret 20% off coupon code somewhere else that they're colluding with the retailer to not give you is what he says.
Speaker 9:They're only gonna give you the 5%. And then you watch the video rapidly going on screen. It's Honey going, and Honey gave you a 10% coupon and 5% cash back. I was like, well, you can't just like make shit up. Or or
Speaker 1:I guess guess you Fact check false. You can make stuff up. This is the internet. To the web.
Speaker 9:Yeah. So I could get a little frustrated
Speaker 1:I'm sure. When I
Speaker 9:and I I had seen that he covered up the coupon. I was trying to figure out what happened. It's like Yeah. He he cut blacked out the coupon code box that he was using to demonstrate that Honey was hiding coupons. I'm like, why are you hiding the coupon that you're using when you're showing like, when that's the claim?
Speaker 9:Yeah. Right there on the screen, there's, like from that same retailer, if you sign up for my email list, you get a 30% coupon. And then the next screen is like, here's a 30% coupon they didn't tell you about. I'm like, well, they didn't tell you about it because it's a one time use code that's just for you that you just sign up for that email right there. Like, Honey is not saying that they're getting you that coupon.
Speaker 1:Yeah. Okay.
Speaker 9:And so it's like a lot of misrepresentation, but then the data is just not there to support the claims. And I first decided to let the people at Reddit know and do an AMA there. Mhmm. Very, very lengthy post, I'm like, oh, that's way too long. Some good questions there, but nobody's gonna read this.
Speaker 9:Mhmm. And decided I would at least give some of the visual evidence in a Twitter thread, and it makes it a little bit more clear when you see it, like the the screenshots. And like, it's it's not me. Some of the stuff I said before about stand down and like, that that's industry specific knowledge, and this is what I thought I would have to talk about to defend Honey originally. But Does the the stuff I talk about in the Twitter thread and on Reddit, it's like, you can see it for yourself.
Speaker 9:You don't have to know anything about this business. Just go hit pause and look at the screen and see if the evidence is being manipulated to to create a narrative, and I think that it was. And I don't know if my version will get anywhere near 17,000,000 views or, like, I don't have that kind of platform. I've never really been a content creator or trying to get anything out there. It's kinda stayed under the radar and built a cool company with some great people.
Speaker 9:Yeah. So it it's out there But
Speaker 2:we're gonna we're gonna try to get this to 17,000,000. We'll we'll hand out pieces of paper in
Speaker 1:the street
Speaker 2:if we have I do have a question for you. I'm sure you're gonna have a kind of interesting nuanced point of view on this. What's up with the VPN market? Because when I think of sort of like shady, you know, when I think of like shady companies that do heavy YouTube influencer marketing, I think of VPNs. Right?
Speaker 2:So it's like, we probably should have a video with 17,000,000 views of like, you know, these VPN companies that are run by, you know, sort of unknown shadowy Internet, you know, companies. But I but I'm curious if you have any type of read on on that market.
Speaker 9:I actually don't know that market that well. I do have a sense for why it's so prevalent on YouTube though. The reason for it is, one, it's pretty high recurring revenue, high LTV product. So, like, you can afford to do marketing spend for a product like that. The second piece is the YouTube audience is, like, two third international.
Speaker 9:And so it's an efficient way to reach a broad international audience who is in need of VPN to access content outside of their home country. And so I think that's why you see it on YouTube as a channel in particular, just because the economics work. That's basically it.
Speaker 1:Yeah.
Speaker 9:And once somebody figured that out, then everybody else copies the marketing channels.
Speaker 1:So I've always said mister beast should launch a VPN because he has a super, super broad audience. It goes everywhere.
Speaker 5:And
Speaker 1:Yep. If he was able to capture all of that, you know, gross margin, net margin for himself, he'd be printing money, but maybe misaligned with the brand. Who knows? Just a crazy idea ahead.
Speaker 9:Yeah. It's it's a great idea. I mean, it would work from a the business part of it would work. Probably work better than Beast Burger and some of the other stuff he's tried. But Yeah.
Speaker 9:He definitely reached a scale where he can't do normal advertising.
Speaker 1:Yeah. Because if the product's not available globally, it's gonna be it's gonna just he's under monetizing his content at point.
Speaker 9:Yeah. It's it's that, and he's hit the scale of the ad buy now is like, it's a Super Bowl every time he does anything. And so so there's like 10 companies that can even possibly afford to do that. Yeah. And so he's been driven to create new brands, and it's kind of fun to see what what he's been able to do with that.
Speaker 1:It's been super fun, and it's been fun having you.
Speaker 2:Yeah. Before you go, could you give us, you know
Speaker 1:Give us coupon code. A minute.
Speaker 2:No. No. I I I at least a minute on What's your
Speaker 1:favorite coupon code?
Speaker 2:At least a minute
Speaker 1:Pie Yeah. Please.
Speaker 2:What you're working on now.
Speaker 9:Yeah. So Pie is a new company I'm working on. We have an ad blocker that is designed to give consumers control over their advertising experience. We don't think the economics of the Internet work if everybody has a an ad blocker that blocks everything all the time, and we don't think it's reasonable that consumers should have to tolerate the ad load. And the incentives are misaligned there.
Speaker 9:So effectively, I is building a way for consumers to have granular control over what type of advertising they are comfortable with, and we are building ways for them to participate economically in that value exchange. So That's very cool. Like that's And
Speaker 2:you have 2,000,000 users?
Speaker 9:We have 2,000,000 users.
Speaker 2:We won't And no wait. So let me guess. Nobody's heard of you because you haven't hired a PR firm. Yeah. You haven't raised venture capital.
Speaker 2:You don't have any VCs doing Nothing. Because because I'm I'm I'm, you know, the it's it's we always find it funny when we find a, you know, a a company with a massive user base Yeah. That we haven't heard of.
Speaker 9:Yeah. Yeah.
Speaker 2:Yeah. And and, you know, we've heard of you and and Honey, but I and candidly, I hadn't heard of Pi until we were prepping for the show.
Speaker 9:Yep. That's not surprising. Most of our acquisition has been through regular YouTube ads of all places. So it's it's interesting to be an ad blocker that's doing advertising. Yeah.
Speaker 9:We'll see how long we continue doing that. But to get to to get to a reasonable scale where we have a large enough audience where people are interested in what we're doing, was important. So we've we've invested in that growth, personally invested in the company, and we'll see we'll see if we can make it work. But if not
Speaker 1:Good luck.
Speaker 9:It's just a lot of fun building with a lot of cool people again.
Speaker 1:That's amazing.
Speaker 2:Love it. Well, thanks
Speaker 1:so much for coming by.
Speaker 2:Always welcome on the Yeah.
Speaker 9:Cool. Thanks, guys.
Speaker 1:Yeah. We'd love to talk to you soon. Alright. Cheers. Great.
Speaker 1:Yeah. What an interesting
Speaker 2:It's back. Yeah. Chrome extension. Just Another 2,000,000 users.
Speaker 1:Chill. Oh, yeah. By the way, we have 2,000,000 users. Fantastic. Well, we're pivoting back to AI.
Speaker 1:We have the host of the Latent Space podcast. I first found this fellow because he put out a fantastic interview with George Hotts, one of my favorite people in the world, really, and we're excited to talk to him. I wanna get his take on AI 2027 and a whole lot more. But, also, I think he has a little bit of contrarian take about about whether or not you should traffic in these forms of, oh, AGI is two years out. So I wanna hear from him.
Speaker 1:Welcome to the studio. How are you doing?
Speaker 7:Morning. Hi. Doing great.
Speaker 1:Yeah. Do do do you wanna give a brief introduction in your in your I I I know you're as the host of the latent space pod, but in your bio, you have a number of different affiliations. What's well, how should how should the viewers think about you?
Speaker 7:Someone with basically ADD and too many projects. That's great. But, yeah, I'm Sean or Swix. Yeah. I started the latent space podcast to cover the AI engineer field, which I helped to popularize.
Speaker 7:And I also run the AI engineer conference, which is, happening in a couple months. Primarily, I think the the one in New York, that I did, helped to kick start a lot of the recent MCP hype that you might be might have been seeing.
Speaker 1:Oh, yeah. I'd love to get into that.
Speaker 7:We can get into that. And I think, yeah, what you were referencing just as we came in was, you know, the news of the day. Right? Like, the IP 27. I think very important to at least try to go through the thought process of, like, what might happen, but this is essentially fan fiction.
Speaker 7:Right? Like, we don't we don't know exactly what will happen. And, you know, we've we've been getting various forms of AGI is two years away for quite a number of years now. Mhmm. And I think part of why I started the AI engineering, sort of trend is to try to get people towards building more things instead of just speculating, on what the big powers that that maybe you will do because, you have a lot more agency in your life to do things if you just, you know, focus on what what we have today.
Speaker 7:Granted that AGI is very big, and, like, I do take that seriously.
Speaker 1:Yeah. Of course. Well, let's go through some of the things that you do think are worth building. I wanna get into agents, and we've been asking a lot of people, you know, when can this thing book a flight for me? But maybe we should start with MCP.
Speaker 1:Can you just give us an overview? I saw all the viral posts. A lot of debate over is this just an API, or is this something more important? All the leading labs are putting out papers and implementations of it. Can you give us your kind of, MCP?
Speaker 1:Explain like I'm five for dummies, and then maybe take me through a few of, like, the implications for the market and the different AI labs.
Speaker 7:Yeah. I'm pretty sure you already had, like, a couple explanations, so I don't know if I'll be, you know, adding a lot here. Sure. I'll just give you my my version, and then
Speaker 1:can Please.
Speaker 7:Riff that. So MCP is a protocol for a lot of different integrations into agents. Mhmm. And I think that, there have been many attempts, a a lot of different configurations of I will include the framework. I will I will I'll start from the Mhmm.
Speaker 7:Gateway. I'll start from the integration side, whatever. But this is the first one that was very seriously put out by BigLab. We actually, were the first podcast that the MCP creators, did an interview on, and that's we just released that yesterday. Amazing.
Speaker 7:And, it's it's it's shocking how impactful this is for this effectively, side project of two guys.
Speaker 1:And this is, and and they work at Anthropic. Is that correct?
Speaker 7:They work at Anthropic. Okay. Yeah. Over in the London office. Yeah.
Speaker 7:You can you can check out laten.space/fcp. You'll see it. Cool. And and yeah. So so I think, effectively, maybe for the normies, whenever you see these, like, at symbols, like, when you're in the chat and you wanna add something and you wanna include a tool and you wanna include any kind of agents or any kind of, you know, subsystem like a Notion or Zapier or what what have you.
Speaker 7:For for for developers, we will use things like Sentry, Microsoft Copilot, and GitHub just put one out today. And I think Google announced something. I don't know what they announced, but they announced something. But basically, the entire industry
Speaker 1:Always the case with Google. They put out something, but I can't find it.
Speaker 7:I mean, there's just a lot. Right? Like, today
Speaker 1:There's a lot.
Speaker 7:They just announced 2.5 pro pricing. Okay. So my viral tweet of the day I I always have, like, one a That's They they now completely own the entire Pareto frontier of all all all labs.
Speaker 1:Like, they
Speaker 7:had had the smartest and the and the cheapest and and the most sort of most effective Pareto frontier between.
Speaker 2:Very
Speaker 7:cool. Which is which is which is incredible. Anyway, call call me back to MCP. Sure. So each like, this is what we call in the industry, like, m times n problem.
Speaker 7:Meaning, I have this one app. I write integrations for this one app. So but then when I move to a different app, I have to rewrite integrations again. Mhmm. And, obviously, that's annoying.
Speaker 7:Obviously, we wanna share integrations. Obviously, like, the open source community can improve better things better together instead of individually, and we should stop competing on these things as start competing on other better things. Mhmm. And it just took a player like Anthropic to put this forward, and this is the one that got enough momentum. So, practically, for what the normies would sorry.
Speaker 7:I don't know if it's derogatory to say normies, you know, not people who are not in the mix every single day. Practically, what's gonna be is that you're gonna be much easily able to add integrations to basically anything in any agent. Mhmm. And that will, you know, at least help you get used out of them faster just because, individual companies are not writing their own integrations anymore. Basically, everyone's onboarded to this, ecosystem.
Speaker 1:Yeah. I think normies is, it can be a pejorative when it's used as a blanket term, but I think everyone yeah. You might be a normie in defense technology.
Speaker 4:Mhmm.
Speaker 1:A defensive a defense founder might be a normie in AI technology, and that's and that's fine. And that's why we have a a variety of guests on the show. With regard to MCP, the the the most basic question is, like, how is this different from an API? Zapier already exists as a binder between APIs. And, also, like, we're hearing coding agents getting better and better, the devins, the cursors.
Speaker 1:Like, why is it so hard? It feels like AI is incredible at writing code. Why can't I just use use AI to say, hey. I wanna interface with this API. Just go figure it out every time you compile the code.
Speaker 1:If the API changes, figure it out and and reverse engineer the API. There's docs out there. Here's kind of the general idea of what I want. Go figure it out every single time at runtime.
Speaker 7:Yeah. I mean, the second question is easier to answer than the first. Sure. May mainly because it's probably easy to figure it out, figure out common implementations, but then you won't tackle the edge cases or the bugs that happen. Mhmm.
Speaker 7:And, obviously, it's also very inefficient to keep coming up with it, a new implementation and integration every single time.
Speaker 2:Sure.
Speaker 7:So when possible, actually, it's better to not use AI if you have the option to not use AI. Like, AI is meant to be a plug for things that don't exist.
Speaker 2:Mhmm.
Speaker 7:But if you do have the integration that's written and battle tested by, like, you know, thousands of people before you, why would you not choose that? Like, only if your needs are not being met by by that integration, then go ahead and and write your own. And so so and the cost of writing your own has come down a lot, right, which is which is also very interesting from the sort of open source ecosystem point of view where people are now vendoring a lot of their libraries that they would typically import, without thinking just because they're like, oh, yeah. You know, someone's written this for me and it cost too much. Anyway so, then let's come back to the first question on how does this compare in API.
Speaker 7:And that's the most that that's why developers hate MCP. They're like, this doesn't do anything over open API. And we we asked them, we asked the the authors of that question, point blank on on the show. And, basically, it reifies concepts that would not be would be undifferentiated as far as the normal API spec goes. So for example, there's concepts like resources, prompts, tools, sampling routes, and transport in MCP.
Speaker 7:And, like, those are the those are basically special subclasses that have that have they are treated differently in the MCP environment, whether or not they are controlled by the model versus the application versus the user. So they are very, very distinctly parceled out the permissions and the the intended roles of each feature. So I would say it's kind of like a layer over APIs that have become more AI native, and that's made it Anthropic is at least saying that this is much easier for us to use, and you're gonna build much more effective agents if we do this.
Speaker 1:Got it. I'm sorry. Please.
Speaker 2:Do you feel like MCP will, you know, massively accelerate the creation of of agents that become a, you know, very active part of our lives on the Internet. It was, you know, we were at Y Combinator demo day and there was a lot of AI agent infrastructure companies. There was probably more AI agent infrastructure companies there just in one demo day than AI agents that I've sort of tried to use. Right? So it's like everybody wants to do picks and shovels, but we actually just need, you know, we need more sort of shots on goal at, you know, potentially the harder problem, is just reliable agents.
Speaker 7:Yeah. I fully agree with that, actually. So it's actually very depressing. Like, it'd be an AI agent infrastructure company is what you do as a developer if you have no other ideas. Mhmm.
Speaker 7:So that I mean, YC should take that as a warning sign that their their people are not going off to the right path. It it MCP makes integrations easier, period. Right? What you do with those integrations, who what problems they solve, that is still an open question. But, yes, for sure, the ecosystem is about to get a lot stronger because we're now no longer rewriting things.
Speaker 7:We're converting m times n combinatorial explosion problems into m plus n Mhmm. Where you could just write every integration once, hopefully. I mean, maybe twice. But, yeah, I I I actually I like the opportunity to address this because I think people think of me because I wrote the article on why MCP won, and everyone's like, you're you're just a show for MCP. I like the opportunity to just say, like, no.
Speaker 7:Like, like, this is very good. It's a but it's a protocol. Like, did you get excited when REST was invented? No. Like, you got excited by all the applications that REST enabled.
Speaker 1:Yep. Yeah.
Speaker 7:And that's those are gonna come down the line. And you're gonna but I think, like, the normal consumer, like, she would just should just be really happy that, like, these high quality integrations are now gonna come a lot more out of the box than you waiting, like, five months for your favorite app to to write the integration for your your favorite thing. You know? So your agents are gonna be able to do a lot more things, but I think the top agents, like the Sierras of the world, they still want to own the end to end experience, and they will use MCP, but they don't like, they're life or they're not really, like, depending on it. You know?
Speaker 7:Like, it's not like life or death for them. Like, you it's still on you to build an agent or a product or solution, whatever. It solves a problem your customers need, and that doesn't go away.
Speaker 2:Mhmm. Yeah. What what's your thesis on, you know, the do you do you see a Cambrian explosion of consumer agents, b to b agents sort of built on, you know, in part on MCP and and Yeah. You know, comparing this to something like fintech. Right?
Speaker 2:We had the CEO of of Plaid on yesterday. Right? Like, everybody in hindsight should have worked on Plaid. Super valuable. It's a $6,000,000,000 company right now.
Speaker 2:It powers a lot of stuff within finance. Same as Stripe. But Stripe, but you can't name that many other sort of, like, generational companies Sure. In fintech infrastructure. Sure.
Speaker 2:Yeah. There's a bunch, but like no household names. And I can see the same thing playing out in the agent space where maybe there's this like, almost like a Stripe equivalent in the agent space or or a Plaid, but then, you know, the best thing you could have done, you know, if you didn't build Plaid was to build on top of Plaid and and build sort of these novel product experiences.
Speaker 7:There are at least five or six startups that are trying. I actually live with one of them. That's called Smithery. That's, like, decent, but all these are super early. Yeah.
Speaker 7:The main challenge that they're gonna all gonna face is that Anthropic is coming up with their own registry. So Anthropic wants to own this. So I don't know if there's a separate plan there of of MCP that comes out doing this. Yeah. So so that'll be my my my 2¢ there.
Speaker 2:It But wouldn't wouldn't one argument for Smithery, and I I'm not familiar with the company,
Speaker 4:be
Speaker 2:that, you know, other companies don't, you know, if if they could ever see themselves competing with Anthropic in any way, you know, they wouldn't be wanna be reliant on Anthropic's registry. So maybe a new third party that is, you know, kind of a pure play infrastructure player should exist?
Speaker 7:Totally possible, but, it's on the the burden of proof is on them, not, like, like, by default, whatever the is the it is the big lab official solution always wins, which is pretty brutal in in AI terms, but, like, the world is not meant to be fair. Right? Yep. I think, the one thing I should mention, that I I neglected to, that I do think is very bullish and, like, will result in a lot more capabilities, is that MCP servers can also be clients, and that's a kind of, like, a technical thing. But that is effectively what is going to enable servers to then become agents and orchestrate agents, feeds of other MCP agents, on your behalf, without you knowing about it.
Speaker 7:Mhmm. And so, that actually turns these things into much more agentic networks, and we're probably gonna see that like, I would say like, this is too early right now because MCP is, like, four months old. Probably, like, the end of the year, early next year, I I would say, like, this is starting to this will start to come up because they built that in from the start.
Speaker 1:Is there a world where MCP just gets steamrolled by the next generation of models? We kind of saw that with some of the workarounds to, context windows, and then Gemini comes out with a million token context window, and a lot of people are saying, oh, well, like, all those all those workarounds are kind of irrelevant at this point. How do you think about the durability of MCP over the over the near term?
Speaker 7:MCP actually improves with more context window Mhmm. Utilization. So, they're not at odds. There's
Speaker 9:a very,
Speaker 7:long standing debate on context versus Rag, but this is slightly different. It's Rag. MCP just like is the ecosystem integrations that model models really don't have. Yeah. That's it.
Speaker 7:I would say that if there were any challenger to MCP, it it will come from Google. Yeah. Because Google has native integrations to Gmail, Calendar, YouTube, what have you. They already launched it, and it's already first party in there. And now MCP come along and sort of threw a threw a threw a threw some noise into their nest.
Speaker 1:Well, I mean, Google kind of lost the front end wars with Angular versus React. So, you know, there there is precedent for somewhat for, you know, another tech company coming up and and resetting the the standard. Right?
Speaker 7:Sure. And, yeah, the the I I I would say that I don't think they should spend time here anyway. So Yeah.
Speaker 1:Yeah. Yeah. Yeah. I agree. But maybe
Speaker 2:we need to follow-up on
Speaker 1:it or something.
Speaker 2:Let's switch gears and Yeah. Talk about AI 2027. Yeah. Yeah. Love to I'd love to I'd love to just let you rant maybe for the next ten minutes.
Speaker 1:Yeah. Yeah. Yeah.
Speaker 2:You know, initial I
Speaker 7:think so I think these guys have a really good track record. Mhmm. I don't know actually if you've interviewed them already.
Speaker 1:No. Not yet.
Speaker 7:I'm sure I'm sure they'll come on. You know, they they seem to be doing a podcast tour. And and I think there's there's some public service in doing the math and drawing lines. Right? That's what
Speaker 1:That's what I did.
Speaker 7:That's what situational awareness was. And, like, I think because we are very we live day to day, we don't really see the year to year Mhmm. As clearly just because we don't spend time it. And if you just draw lines and you, like, you you believe that what has happened in the past, the near the near past is probably gonna happen in the near future Mhmm. You can probably see at least some kind of trend line.
Speaker 7:The main caution with all these things is that s curves do exist, You know? If I'll just, you know, rewind your mind back to, like, let's say, April or May 2020 when every chart on COVID was going like this, and there'll be more COVID cases than humans in in in in, like, the by the end of, like, 2021 or whatever, and that never came never happens because, one, we reacted to it or thing or you hit invisible asymptotes as Eugene Way calls it, where, like, you didn't account for this because we weren't there yet. Like, there was this sort of this limiting factor that you that you didn't run into. But this is relatively near term. It's basically in the next eighteen months.
Speaker 7:And I I think, like, the main geopolitical geopolitical aspects is kind of interesting. We have no idea what China will do, really. Like Mhmm. The the main meme on Twitter, which I really like from Tear Texas, is that Xi Jinping just does nothing and then The USA just implodes just The
Speaker 1:funniest outcome is the most likely. Right? Maybe that's it.
Speaker 7:Who knows? Who knows? Yeah. I do think that what you can there there are things where, like, it's really just down to the individual decisions of powerful political figures
Speaker 1:Mhmm.
Speaker 7:That we really cannot tell. And then there are things where, like, if they're basically extrapolations or scaling laws that you can't tell because they're just, you know, just the scaling laws that have already been established, and you're you're betting on the end of them, which is less likely to happen. So I think the the coding agent commentary is really good, and I think that this starts it starts to talk, you know, talk about hacking and robotics. I think it's all it's all on very, very on balance. I think where it starts to get into a little bit more gray areas, like the political and and bioweapon stuff.
Speaker 1:Mhmm. Yeah. I I I I love the the kind of reference to COVID. Everyone thought it was an exponential. It was actually a sigmoid function.
Speaker 7:Everything's a sigmoid. It's a series of sigmoids.
Speaker 1:Pretty much. Right? And we and it certainly feels like we're experiencing a sigmoid curve with, pre training, and we're seeing pre training diminishing returns. It feels like there's still some juice in RL. Are are there any, next steps that you're excited about?
Speaker 1:We we we've heard that program synthesis is kind of a hot area that people are investigating right now. What are you excited about? What do you think is potentially overrated or underrated?
Speaker 7:I actually think people there's a lot of alpha in spitting out what you call program synthesis, what I call code generation. Yeah. We've we've effectively gone from, like, single line auto complete to, like Mhmm. Functions auto complete. And now with, like, Windsurf and Cloud Code Copilot and Cursor, we are generating basically entire apps and and PRs for those apps.
Speaker 7:And I think being really clear minded about what where those capabilities are and improving them incrementally, you get things like cursor, which, you know, zero to 200,000,000 ARR in two years is crazy. It's remarkable. Yeah. So I I think I think a lot of alpha there. But I think, like, really what what people are looking at now is the the the general measure of agent trajectories.
Speaker 1:Mhmm.
Speaker 7:How long can an agent on a on a broad number of tasks autonomously operate? Right? So METER, I forget the the acronym. It's it's it's one of these, like, research institutes. METER put out a study of the agentic work that can be done, you know, by by a wide range of benchmarks and dated it, ran it ran it all the way back to 2019 Mhmm.
Speaker 7:And basically came out with the idea that the agent's horizon for the 50% capability like, 50 percentile capability of human capability is is grow is doubling at between three to every three to seven months.
Speaker 3:Mhmm.
Speaker 7:Right? And we're now at an hour. So, roughly, you can leave the the smartest model that we have, which they they measure as three cloud 3.7 sonnet Mhmm. To run autonomously for an hour and do, like, the what a what a fiftieth percentile human can do. Yeah.
Speaker 7:You can obviously bump things up or down in terms of percentile, but, you know, the the the results and the scaling laws don't vary because the important thing is that they're doubling every three to seven months. Mhmm. And that means you can roughly scale out when it when are we gonna have one day autonomy, When are we going to have a week, a year, a month, you know, a month, a year? And that I think you can kind of set your clocks by and try to think about what products or companies you would build.
Speaker 1:It would be so funny if it was an S curve and it maxes out at exactly eight hours like a human. Like, you can only give it one task every single day and it just goes and does that. It's great. But, yeah, just I don't wanna work overnight. Look, I'm I'm maxed out and it's at that for like two decades or something.
Speaker 1:Unlikely, but funny.
Speaker 7:Yeah. That'd be an interesting universality. Right? Like Totally. And so for example, a lot of people building agents have independently discovered sleep.
Speaker 7:The agent the agents have to sleep because they have to compress memories and and do, like, the deep REM thing where they actually turn those into long term memory. Like, we like, the computer agents have to do that and humans have to do that.
Speaker 1:Right? It's gnarly.
Speaker 7:I I'm not kidding. Like, go look up for those
Speaker 1:You need
Speaker 2:the eight sleep for agents. Maybe it's Eight Sleep.
Speaker 7:Hey, Brian Johnson holding a candle going like
Speaker 9:I mean, I was
Speaker 1:yeah. Yeah. I mean, you you're joking about Eight Sleep for agents. I was joking about, like, what like, is there will there be, an alcohol for agents or alcohol for LLMs where you just kind of, like, throw some randomness in the weights, and it gets a little bit crazier, but sometimes it's brilliant. You know?
Speaker 1:And it's, like,
Speaker 6:a lot
Speaker 1:more bold or
Speaker 2:A bomber p.
Speaker 1:Yeah. Exactly. But maybe it's not that. May maybe it's just, like, to get true true inspiration, you need to just throw some extra chaos, some I guess the term would be like higher temperature in the LLM responses and then run 10,000 of them and you get some more inspiration instead of all coalescing around the same kind of, you know, 50 per fiftieth percentile human, like, midbit.
Speaker 7:Yeah. That that's called sort of mode collapse where you collapse modal
Speaker 1:Yep. Yep. Yep.
Speaker 7:Region. But, like, yeah, for those interested, we've moved on basically from temperature to VAR entropy.
Speaker 4:Okay.
Speaker 6:And
Speaker 7:also also, I I think most people would be interested in, like, the anthropics alignment work on tracing the thoughts of LLMs, which which came out recently as well. Yeah. There's some really interesting torture you can put on these LLMs where you ask it to say, like, banana, but then you don't allow it to say banana, And it just you can see it struggle to, like
Speaker 1:Oh, interesting.
Speaker 7:Find alternatives of saying banana in
Speaker 1:the brain. That's so funny. Wow.
Speaker 7:Yeah. But for example, one of the r one replications Sure. The the e p r one replications, you can also do do things like, you just wanted to think more, you can just prevent it from ending its thought and just insert weight or, like, you know, but I thought something. And you just, like, you you you can force its direction to think another way and for it to branch branch out again in terms of its diversity. So I think there's a lot of research here that is super interesting.
Speaker 7:I'm not sure any of it is gonna bear fruit because the the big labs are probably like two years ahead of us in the open research world there.
Speaker 1:Sure. Sure. How do you how
Speaker 2:do you react? Obviously, the the dominant story this week in the wider world is the, you know, tariff tariffs and trade warns, all that stuff. Do you do you feel like it's like arguing over, you know, pennies as AI sort of steamroller just like is about to roll over the entire economy? Do you even give it any attention?
Speaker 7:So, you know, I I I heard you guys ask the OpenAI guys about this. And like, basically, it's a rounding error. Right? Mhmm. But obviously, the supply chain really matters for AI.
Speaker 7:Yeah. I think The US has benefited a ton from the global trade setup that we set up for ourselves effectively after World War two. Yeah. So blowing that up may not be the best situation if we don't have a more constructive or well reasoned end state that we wanna be in, and I'm not sure we
Speaker 1:do. Yeah.
Speaker 7:The White House hasn't given us a lot of comfort about where we're going.
Speaker 1:Yeah. I I I my take on it is like, I think AI is probably gonna be the the main driving force of, like, serious cultural and economic change over the next few years. And no matter what happens, if it's good, both political parties are gonna take credit. And if it's bad, both political parties are gonna blame the other political party for whatever happens. And
Speaker 2:Same as ever.
Speaker 1:And really,
Speaker 2:it's gonna be Do worry about do you worry about the immediate impact on the sort of data center compute supply chain broadly? I know Elon was posting yesterday about how a lot of the conversation will maybe switch from GPU shortage to transformer shortages. Is that top of mind for you at all? Or are you more focused on the
Speaker 7:Transformer, like power transformer?
Speaker 1:Yeah. Power transformers, not the architecture. So for for for reference, the vast majority of transformers Yeah. The physical electrical transformers are made abroad, and they're very, very important as we start pulling gigawatts, moving it around the grid to get into these large data centers.
Speaker 7:Yeah. I hear you. Well, short term is, like, know, not my department, so that's that's an easy out, easy cop out. Yeah. I I think the the I I I think, like, whatever happens over the next two years, like, we really don't know.
Speaker 7:Like, a lot of these negotiations like, these are the start of a negotiation
Speaker 1:Mhmm.
Speaker 7:Kind of. It's just the way that Trump does it. Anyway, so I, like, you know, I'm not I I don't wanna get too much into that. Yeah. All I would say is, like, a lot of what I try to guide people to towards on AI engineering is utilization of existing capability.
Speaker 7:Sure. Like, so much model capability has been unlocked, and it's not evenly distributed in our lives. Like, why do I have Siri that doesn't understand what I want?
Speaker 1:It's because Apple Hasn't shipped.
Speaker 7:Hasn't got a shit together. Like Yeah. This is not frontier tech. Like, what Elon is dealing with, what what Sam Altman's dealing with, what Darius is dealing with is frontier tech. And that requires giant data centers of all all this kind of research.
Speaker 7:But, really, what AI engineers deal with is deployment of existing tech into our into business and personal lives. And I think there's a lot more to do do there. And I think, you know, while while the big boys figure out your political situation, hopefully, still have enough power to, like, power, you know, the deployment of AI to the rest of the world.
Speaker 2:On the topic of Apple, do you think they can afford to fumble the rollout of Apple intelligence just because they're of their position as, you know, the core consumer hardware provider? Do you have a strong take there?
Speaker 7:Yeah. I mean, so the lock in of iOS, iMessage, you know, the the the iDrive Apple Cloud, whatever they call it, is very, very strong, but there's a time limit on this thing. And for one, like, I actually tweeted about this recently. When the iPhone like, I'm much more excited for OpenAI to compete with Apple than with Google. Like, OpenAI currently is running the Google Playbook.
Speaker 7:Mhmm. They're looking at, like they're reading themselves by, like, oh, ChatGPT is, like, the sixth traffic website in the world we wanna go up. Right? But, like, Google is doing super well and, like, actually, Google's pretty good. Like, we we we want to have a Google in our lives.
Speaker 7:But Apple has is really fumbling and they know it. And when OpenAI comes up with the OpenAI phone, I think it will be a serious challenge to Apple because Mhmm. OpenAI iPhone, like the will just be smarter. You know it.
Speaker 2:Yeah. Yeah.
Speaker 7:And like everyone would would try it and it will be the first serious challenger to the Apple iPhone since Steve Jobs presented it.
Speaker 1:That's a great Yeah.
Speaker 2:That's a great No. And and already have like such an extreme willingness to try new AI hardware Yeah. That when, you know, the dominant lab comes out with something Yep. I think every single person we know is is at least buying it. Right?
Speaker 2:It's a thousand bucks, sure. I'll
Speaker 7:take Like, no, like, you know, I think it's just like the the the people who I wanna do get serious about hardware, they they just been like the small guys, the the rabbits and the let's just let's just say call it the humans. Yeah. But, like, if you get someone with the resources of OpenAI, I I really wanna see if they take a real run at it. I mean, he's talk he they they have chats with JoinAI if they've confirmed that it's in the works. I don't know if, like, how serious it is.
Speaker 7:They could still kill it. But I hope to God that they actually challenge Apple and Apple will get a shit together in in response.
Speaker 1:I completely agree. Love it. Well, yeah, that's a fantastic take. I'm looking forward to trying the OpenAI phone. We'll we'll see it.
Speaker 1:And there'll probably be an XAI phone too. I mean, it might be a new new dawn in consumer hardware driven by artificial intelligence. But thanks for stopping by. This has been fantastic. Well, we'd love to have you back.
Speaker 1:This is such a fun conversation.
Speaker 2:For the next one.
Speaker 1:Yeah. And everyone, go check out the latest podcast he just dropped, Late in Space.
Speaker 2:Yes. Do it. Cheers.
Speaker 1:Talk to you soon. Bye. Fantastic. Next coming in, we got Forerunner Ventures, Kirsten Green. I'm excited for this investor.
Speaker 2:We we reached out actually initially after she dropped her 2025 trend report Yep. Which is always fun to process. So I wanna ask her about that and about a bunch of other stuff.
Speaker 1:Yeah. The 2025 consumer trend report is out. You can get it at 4runnerventures.com. A deep dive into where consumers stand today and how major shifts are shaping new needs and opportunities all across a ton of different ton of different sectors. It's a It's a quick it's a quick read.
Speaker 1:It's 200 slides. They really do their homework over there. And here she is to break it down for us. Give us the the thirty minute condensed condensed version of the 200 slide deck. Yeah.
Speaker 1:I mean, me and Jordy, we're basically live three hours a day. Not a lot of time for reading. So if we want to, you know, consume some
Speaker 2:We wanna hear it from the source.
Speaker 1:We wanna hear from the source. So thanks for joining.
Speaker 8:Quick rundown.
Speaker 1:Yeah. How are you? How are you doing? I hope you're having a great Friday and and going into a great weekend, but good to be here. Can you can you give a little background on you, your firm, and the and the trend report?
Speaker 8:Yeah. Sure. First, thanks so much you guys for having me on. This is fun.
Speaker 1:Yeah. That's great.
Speaker 8:It's, you know, it's a it's a it's a crazy day with no shortage of action going on.
Speaker 1:Oh, yeah. Yep. Tons. Yeah.
Speaker 8:So, yeah, I'm the founder, and managing partner at Forerunner, and we're a venture capital firm. We've been here in Silicon Valley for the last decade plus making investments. Investments across
Speaker 9:the board.
Speaker 1:A decade plus of investments. Love we love investments here.
Speaker 8:And we largely focus on early stage investing. We have a diversified portfolio across sectors and spaces, but we do have a thematic approach and a framework that we have kind of applied consistently for the past decade, and that's really tracking what is going on with demand. Mhmm. So where are the tailwinds? And then we look for big technology shifts and business model changes and and where business is not addressing that that demand.
Speaker 8:And
Speaker 2:Yeah. Can you talk a little bit about I know I know you guys will do b to b as well, but it feels like you've always had a love, you know, for for consumers specifically and that's gone in and out of popularity. Obviously, when you started, I'm sure a lot of people said, well, why don't why don't you focus on SaaS, you know, look at the outcomes that we're seeing. You typically start your reports by reminding people just how much of you I think it's not here on the
Speaker 1:The American consumer is undefeated.
Speaker 2:Yeah. The seventh slide, consumers drive two thirds of US GDP. So I think that's probably like the anchor reason why it's been such a focus for the firm, but I would love to hear kind of your your take on it.
Speaker 8:Well, Dirty, that's one take. It's true. You know, in that in the vein of tracking demand and demand being kind of the the driver of all of business, the two thirds of the economy and what's going on with the consumer is is the most arguably the most meaningful force. But really, more than that, yes, it's true that SaaS companies have returned lots of money to their founders and their investors. It's been a steady contributor of of opportunity and venture.
Speaker 8:But if you step back and you look at the last two decades, the biggest companies started with a consumer first approach.
Speaker 1:Yep. Makes
Speaker 8:sense. You know, I would argue that, like, starting a business with the consumer first approach, if you are able to create that incredible gravitational pull and build a foundation from there. Yeah. We've seen time and time again companies prove that they can take that foundation and leverage it into dynamic business models over time.
Speaker 1:Can you talk a little bit about just the general health of the American consumer? It's been a couple crazy years the last five years. Things were things were going really well, and then we had COVID, and everyone was out of a job, and then everyone got their jobs back. And then inflation crops up, and now people are worried about the tariffs and what that means for the economy. We've been in sort of a kangaroo market, as they say, jumping up and down, not a bull or a bear.
Speaker 1:How is the health of the American consumer right now?
Speaker 8:Yeah. Well, that is a big reason why we do this consumer trend report every year. So, you know, as venture capitalists at Forerunner, we spend the lion's share of our time thinking about the future and where things are going. But to understand or have a view on that, it is really important to step back and take stock of what's going on today at any given point in time. And so, you know, the exercise of getting out of our own bubble and sort of taking a pulse of the of the country, of the globe from the person you know, the people on the ground, we feel like, you know, is is is illuminating.
Speaker 8:So you're right in saying that the last five years have been crazy filled with uncertainty. So, you know, I think we're all trying to kind of process how we feel about the current ongoing tariff discussion right now.
Speaker 1:Yeah.
Speaker 8:And I think I feel like I did in March 2020.
Speaker 1:Oh, yeah.
Speaker 8:Yeah. What's happening? Like, uncertainty rules the day, and here we are again.
Speaker 9:Yep.
Speaker 8:So, you know, I guess the good news coming out of that big period of COVID uncertainty is that we have all learned to have an incredible amount of resilience. We've been forced to do that. So, you know, I think when we check-in with the consumer, we see a good deal of that. But we also, you know, definitely see some movement towards people feeling like they need to stand up for their own security and safety, that they can't count on the structures and the norms that maybe have been in place for a very long time. And this is a time period where having more agency over your own life and your own actions is something people are craving.
Speaker 8:So, you know, I think we do you know, 200 page slide deck, there's a lot of government data in there and a lot of just kind of, you know, taking taking stock of the actual data, and then we go to interpret some trends. And really, we focus it you know, I mean, I think I would say if we just look at 2024, we describe what we heard from people, and this is a a lot of survey work in addition to a lot of reading and a lot of kind of number crunching and processing. But it was kind of a middling year. You know? It kind of just lived in the middle from from all measures, like, from all the data metrics.
Speaker 8:But then also if you look at, like, the cultural norms, most of the movies were kind of follow on second generation movies, same with the music, etcetera. So and, you know, the the word of the year was, like, brain rot and something else.
Speaker 1:Slop. Slop. Yeah.
Speaker 8:You know? So I I think that you had a consumer that's quite fatigued from going going through kind of the the the craziness of of of what the world has been. But at the same time, in that agency and in that desire to do things, there is, like, I'm gonna, you know, I'm gonna pick myself up. I'm gonna take some action, and I'm going to, you know, look for having more control over my career, over my spending, over my health care. We we went we took a deep dive, and and we do this every year, kind of pick a few things that we think are particularly important in the context of that demand equation and also in the context of investing because it is in service of sort of uncovering investment focus.
Speaker 8:And the couple of areas we looked at this past year were health, security, and, of course, Gen AI. So on the health front, this is, you know, perhaps the the biggest trend in my, you know, nearly thirty years now of of investing. I think the biggest trend that we've seen, people are there is a the growing willingness to spend on health, and and themselves and outside of the system. So, you know, 60% of the people describe health as being their number one priority, even above friends and family. Wow.
Speaker 8:The wellness economy so when, you know, when you think about health, it's not just the, I already have a problem. I'm I'm at the doctor because of that problem. It's the effort of health, which has really been a huge area of growth. The wellness economy, which includes that, is a $1,800,000,000,000 economy, and it's actually growing six times faster than the economy in general. So, you know, I think that the the dollars are there.
Speaker 8:The scope of what people are willing to pay for is evolving. You're seeing people more engaged in supplements, more engaged in therapies, more engaged in their workouts, more engaged in in in doing things like MRIs or blood testing or biomarker testing. So this is, you know, this is a huge area of it's it's fueled by both a breakdown in the system as well as just more information and people realizing that they have some ability to, you know, shape the future of for their own health.
Speaker 2:Yeah. Do you feel like you're seeing enough founders take the concept of wellness sort of, like, seriously in Silicon Valley? Like, I we I take it very seriously. John and I have this funny dynamic where like John has this joke that like if I had a single inorganic blueberry like I would die. And John meanwhile just like eats whatever's in front of him.
Speaker 1:I could eat a I could eat a credit card with a knife and fork.
Speaker 2:Yeah. Exactly. But I but I feel like when
Speaker 1:you when
Speaker 2:you just when you just look at the data and understand how big the market is, how fast it's growing, you would think that 20% of new startups would be like targeting this opportunity, yet it doesn't necessarily
Speaker 1:feel Yeah. I I wanna talk about, like, the like like, there's so much opportunity in health, but not everything is gonna be venture scale. Even talking to our friend Justin Mares, he has Kettle and Fire, bone broth company. It's not really this, like, hyper growth raising every eighteen to 12 months, twelve to eighteen months. He's done great with that business.
Speaker 1:Then TrueMed, it's more of like a fintech platform, has venture written all over it. And so, how are you looking at the opportunity in health across the lifestyle business that's just gonna not really raise, grow, grow, grow, a private equity roll up, maybe buy all the gyms and aggregate them versus a true venture scale, okay, this can be a public company? How how how do you assess that, and where is the opportunity in health?
Speaker 8:You know, I mean, obviously, that's a really important point. Right? There's a lot more businesses getting started every day that are not appropriate for venture scale. There's a very unique set of traits that you're looking for in in venture, and I think that, you know, beyond beyond addressing, like, a a tailwind and and having that opportunity to to play into, you know, you really are looking for, like, does this is this a business that gets stronger as it gets bigger? Mhmm.
Speaker 8:What are the flywheels in the business? What are the frictions to getting it going and starting? How do you how like, is the compounding effect a a benefit to the business, and does that give them, like, competitive advantages over time? Obviously, one of the big things we're looking for is, like, what businesses have a chance to define categories and be real runaway category successes. So that is extraordinarily hard to do if you don't have, like, a real business model advantage at the root of what you're doing.
Speaker 8:And, a lot of, you know, I I think sometimes we have conversate I often get asked about d to c companies, and I kind of cringe a little bit because I think to myself, like, you know, we weren't ever here we haven't actually made an investment in a product company per se. We've always been looking at, like, a business model shift and a behavior shift. So I think at this point, like, there's a lot of the business model shift from moving online or moving multidimensional or things that a lot of those, like, those businesses that you described as lifestyle or products are playing into, you know, that the early wins in that have played out. We're now like, what I think is really exciting today that really maps really well with a lot of opportunity and health is the power of Gen AI Mhmm. And how that can actually make experiences personalized, more immersive, and more productive.
Speaker 2:Yeah. So on that note, I I imagine there's companies like, some of the opportunities that you get most excited about are, like, a company you invested in five years ago. Maybe they're focused on therapy. Yeah. And then now they realize they have this opportunity of, hey, we can make therapy costs like 99% less through things like Gen AI and potentially deliver similar results.
Speaker 2:Right? We saw, I think it was earlier this week, there was a study that came out that showed generative AI based therapy was was, you know, delivering pretty dramatic results. So how how excited do you get about, you know, basically companies in the portfolio that, you know, not even just new companies that are pitching you or you're making investments
Speaker 1:in called it AI is a cherry on top as opposed to trying to get into the foundation model or this, like, magical, oh, we're gonna redo the whole thing with AI. It's more like AI enabled businesses.
Speaker 8:Actually, yeah, we we think about it we sort of describe businesses as AI led, AI enabled, or AI boosted. Mhmm. Basically, every company needs to find a way to be AI boosted. Yeah. And you can imagine there's, like, a lot of degrees of that.
Speaker 8:You can use AI in your HR department and your finance function Yeah. Or you can reimagine your product like you just suggested, Jordy, and, like, you know, make your your therapy product even more efficient. Mhmm. And then the enabled businesses are ones that, at least our look at it, is, like, a product or a service, that wasn't possible really without AI because it wasn't cost possible. Mhmm.
Speaker 8:And it it it actually you couldn't do it. So you would think about, like, the example of, like, if you had a network of of of of therapy therapists and you built them, you know, human kinda one to one and you were making that connection online. Now now that is a unique case where you can actually add AI into your product and really kind of add a whole new dimension to your your business from there. That's probably true for a number of businesses, not most businesses, though.
Speaker 2:Yeah. That makes sense. What Can you talk about you know, the Studio Ghibli moment was amazing for me because it felt like there was one thing. One, felt like we entered this sort of post slop era where like last year it was like, you know, AI generated content that was cool but not like, it wasn't beautiful.
Speaker 1:Yeah. Six fingers. It looked like creepy sometimes.
Speaker 2:But now you can get this sort of like hand drawn Japanese animation of of a picture you took a second ago Yep. For free It's just joyful.
Speaker 8:Oh fun.
Speaker 2:It's joyful. Oh And so but
Speaker 1:but Yeah.
Speaker 2:So fun. Thing I get excited about is like the Ghibliification of the rest of the economy and other consumer other consumer experiences like, you know, just going back to the therapy example, like, it just feels like this concept of abundance and see these sort of, like, incredible products that can be delivered to consumers for dramatically, dramatically less cost. Do you do you have any type of thoughts around, you know, it it will take some time, but my my personal theory is that sort of same effect will happen in a bunch of other categories.
Speaker 8:I mean, a %. Like, I I think this is a golden age opportunity to make, you know, much much more incredible products and experiences. In fact, we're talking about it like, know, we were living in two d, and Yeah. Gen AI has the power to take us to four d and skip right over three d. Yeah.
Speaker 8:And, you know, by that, I mean, like, we've been talking about, for instance, you know, twenty years now, we've been talking about personalization. It really hasn't happened. If you kind of look across imagine you go to a website, you know, how personalized does it feel? Like, it's pretty much the similar experience than if, you know, I went to the website, you went to the website. So I think personalization not has not happened.
Speaker 8:It is now really possible in a in a really deep immersive way with Gen AI, and you've just got a lot of more productivity that can happen. We don't we haven't seen the whole agent thing play out, but it is definitely on its way. And, and I think, you know, that plus creativity, plus efficiency, like, imagination's open, like, so many more things are possible.
Speaker 1:I I wanna talk about lessons from the COVID turmoil in relation to the current tariff chaos and turmoil, I was thinking about we we we talked to a few founders who were massive beneficiaries of the tariffs, honestly, because they've their whole bet was made in America. And so when these tariffs came in, they were like, our business is booming. But as we saw with the shift to work from home, we saw massive booms in Peloton and fitness equipment that was you know, any ecommerce company did really well. And then there was kind of a, you know, back down to earth moment. Mhmm.
Speaker 1:What advice would you have for entrepreneurs who are maybe, about to go on a generational run, on the back of the of of the tariffs narrative? How can they build their businesses more effectively? And what what are you looking for in terms of durability on the investment side?
Speaker 8:I don't know that I fully process, like, what's gonna happen with these tariffs in in terms of the durability of business, But but the way I am thinking about it right now is that I don't think anybody I I think we're all in this together. I think every business is all in this together. Right? So perhaps you make your products at home. Mhmm.
Speaker 8:And perhaps the things that you use to make your products, you you get at home. Right? So you're really not gonna have a cost change. Yeah. But everything else around you is changing Mhmm.
Speaker 8:Including how much money people have to spend and how they're reorienting their dollars. So I do think that everybody needs to think that much more carefully and closely about the value of their product, who needs it and why, and what service are you delivering. Everything just got a bit more competitive in that context. Yeah. You also do think, like, it's it's hard to you you've gotta learn to be nimble and navigate these crazy strange times because almost like these crazy strange times aren't crazy strange times anymore.
Speaker 8:They're just sort of there's there's one after the other. Yeah. But they do change and evolve. Right? And like you mentioned at the beginning of COVID, like, I think we all, you know, at first thought, wow.
Speaker 8:Like, everyone's gonna hunker down. No one's gonna spend. It's gonna be really scary, business is over. And then you saw people at home thinking, you know, I deserve a nice thing, I deserve this, and shopping went through the roof, right? And people came out of COVID and they went to travel and they shifted dollars again.
Speaker 8:It's nimble. Being nimble is the key.
Speaker 1:Sorry to shift back to generative AI, but it's, I mean, it's a fascinating topic. I've I've I've been kind of, obsessed with this idea of, like, the the the GPT rapper meme being maybe almost harmful to entrepreneurship. People aren't taking enough risk because they're hearing, if I build a rapper, no one will take me seriously. It's low status, or maybe I won't get funding. But do you think that we I mean, we just talked to the the founder of Honey.
Speaker 1:The he built a Chrome plugin that sold for a billion dollars.
Speaker 8:Like Right. It's incredible.
Speaker 1:It's incredible. Right? So I I wonder, and and at the same time, we've seen a lot of slowed innovation at the big consumer tech companies where pretty much everyone's asking like, hey. Why isn't Siri better? And maybe I I guess the question is is something about, is is advice to founders like, for the moon.
Speaker 1:You'll land amongst the stars. There will be acquisitions of wrapper products. And if you just create customer delight, that's beneficial in Gen AI? Or is it kind of just everything's changing so fast, just get out there and make something cool, make something people want, and then you'll figure it out? Or or or are you really trying to dig in and say, we need to have a super concrete thesis about how this becomes a a hyperscale business before we invest or really go and build?
Speaker 1:What what is your take on that?
Speaker 8:In that question. Yeah. I just thought about four different things I wanted to say.
Speaker 1:Please. Please. Let me
Speaker 8:see. Hopefully, I can get them all out. Yeah. But, so this idea like, I don't think all rappers are created equal. Right?
Speaker 8:Sure. So foundational. That is like the backbone from which we can all build from. So I I I think anybody using that to their advantage in their business is just being smart. Mhmm.
Speaker 8:A business that is eager for the LLMs to keep getting better because it has the potential to make their product better, like, that's where you wanna be building. Mhmm. Right? Then you've gotta think about all the things that I would say that we've always thought about, which is, like, what's the value of your your product or your service or your software? Like, who needs it and why?
Speaker 8:How do you keep innovating and growing? How do you build a business around that? Like, those things, I I think, you know, hold true always and and are critically important. I I think the idea of, like, I'm just gonna build something cool and fun, they will come, and that will be interesting and that playing out to be a successful multibillion dollar company. I'm not sure there are many examples of that.
Speaker 8:Mhmm. But at the same time, I wanna back up and say that, like, the way we're approaching the market right now in particular with this new, like, kind of the beginning of this new cycle, if you will, is most we're holding two things kind of front and center. One is just the big the idea of, like, a a market tailwind that you're building into. Like, there's a real demand. There's a real need.
Speaker 8:There's a real opportunity. And and that kind of ties to where we started earlier in the conversation, which is just understanding, like, where those where those pockets are, where business is missing the mark. Mhmm. And then it's about the founder. It's about the founder and their vision for the future and their idea about how a product, how a service can make it better.
Speaker 8:And, and I think you all you really know at the very beginning is it's gonna play out different than what it is it ever ever whatever pitch deck you're looking at. But I do think you can tell if somebody's got, like, a real pulse on on on where things are going, where they wanna take things, like the world they wanna make and show, and how how nimbly and tactically they can play and execute with these new technologies.
Speaker 2:Can we talk about education and and learning briefly? Because I feel like, you know, we we've seen the adoption of ChatGPT at, you know, every college campus and high schools and things like that. And and maybe there's this early surge of usage that's not so great for kids that are trying to learn how to write and think and things like that. And and, you know, we we want people to actually, you know, learn how to communicate and and and reason through things. But at the same time that the potential of every single, you know, person in the world having a tutor in their pocket is just so, you know, couldn't, can't be sort of understated and maybe is not getting enough Mhmm.
Speaker 2:Enough almost like hype, right? But I'm curious how you are are I know you've made a bunch of, you know, investments in the space over the years and I'm sure those companies are thinking of
Speaker 8:I mean, I am really bullish on this opportunity, Jordi. Like, I think if if you look at, like, the foundational pillars of life, your health care, your finance, your career, and your education
Speaker 3:Yeah.
Speaker 8:Like, education is is arguably behind them all in terms of transformation. I have kids in grade school, and their school books look the same as mine did thirty, forty years ago. It's unbelievable. We need to move the future forward. Sure.
Speaker 8:You can use ChatGP to cheat, but, actually, we need to teach our kids how to use generative AI to their advantage. Because I think like, for me, I'm having so much fun. I have a I have a I have a thing in my pocket I can ask any question I ever wanted to. Yeah. It's amazing.
Speaker 8:And then I can follow the thought through. That's the best part. It's not just search and get an answer. It's like search it's like pose a question, get an answer, and then play with it. Keep going down the rabbit hole.
Speaker 8:Or take your essay and say, I need to I need to work on this point a little more. I'm struggling with this thing. How do I move this around? Like Yeah. That is an has a huge opportunity to, you know, continue to peak and drive curiosity, help us think deeper and, you know, kind of and and learn.
Speaker 8:And
Speaker 2:Yeah. And on that
Speaker 8:Honest to, like, encourage kids how to use it, like, constructively.
Speaker 2:Mhmm. Do you think that that's an area where voice specifically can, you know, get really really meaningful adoption? Because the example you're talking about is like I'm writing an essay and I'm struggling with something in particular and theoretically somebody, know, a child could have the experience of their teacher just sitting, you know, with them writing and being able to talk out loud. And I don't think we've seen voice adoption as an interface as much as some people would have thought ten years ago, but it feels like maybe now is the so exciting. Is the moment.
Speaker 2:Right?
Speaker 8:Voice is so exciting. I I do think that when we when we're able to make voice a main mode of communication digitally, we're gonna get so much more information. And it is the information that continues to power and tailor more personalized and engaging experiences. So the the the amount people share if they have a voice, you know, a a a speaking opportunity versus a typing opportunity is tenfold. So, you know, I do think I do think that's a big unlock.
Speaker 8:And I think, you know, this is a good point because this is how this is gonna unfold. Like, we're just in the early stages of seeing what's possible. And, you know, there is some very exciting voice technology out there and, you know, everyone's been buzzing about the company Sesame. What they have is pretty amazing. Yeah.
Speaker 8:So, you know, it's it's definitely on the horizon and the near term horizon.
Speaker 2:Yeah. And maybe last question for me for now and and would love to have, you know, continue to have you on to kind of run these ideas down. But how do you think about AI adoption? Because it's hard to compare it to the internet because it feels like everybody's used AI now and everybody probably not everybody. Right?
Speaker 2:Like, we had we both had Ghibli post go viral and we had people quoting it not knowing how the images were being created and like they seemingly didn't know what ChatTV Must
Speaker 1:be a new filter app in the App Store. Yeah.
Speaker 9:Don't know what OpenAI is.
Speaker 2:Snapchat or whatever. So we haven't reached, you know, full adoption of some of these new tools, but it seems like everyone's using them in in some capacity, even unintentionally. Like, I Google search, and I get an AI summary. So how do you think about AI adoption? Is it is it just businesses, you know, fully taking advantage of the technology, and that's what we need to look at because it
Speaker 8:I love this question, Jordi. I'm glad you asked it because this was one of the more interesting things that came away from our survey data. I I think I should have this data point in front of me while we're speaking, but I don't. But it's, like, 60 or 60 plus of the people percent were, like, actually had said they were using AI regularly. Yeah.
Speaker 8:Now what does that mean? That probably means ChatGPT, Claude, you know, those. Yeah. But, like, people are here for it. Mhmm.
Speaker 8:I mean Yeah. 500,000,000 people was a number I read a week or two ago about ChatGPT, and then I heard a a bigger one later. Like, that is a that is that is, like, kind of trial. Let's call it trial at this point because we don't really know what adoption's gonna look like.
Speaker 3:Yeah. But I
Speaker 8:do think that it's it's growing incredibly rapidly. Yep. And I do really believe that people, like, they're ready for it. We just have to build for it. Know?
Speaker 8:Yeah. That's my call for, like, founders to build for it. Like, people Yeah. You you know, you build it, they will come. They are ready for it.
Speaker 1:Yeah. It's certainly faster than need. Had a conversation out.
Speaker 2:So had a conversation before this. It's like, you know, everybody wants to build AI infrastructure. We need more people to just build Products. The AI, you know, the agents. Right?
Speaker 2:Like, build the hard stuff that, you
Speaker 8:know, maybe so much opportunity. Just think about ChatGPT is to this generation what Google was to the last. Mhmm. And if you think about Google as, like, the place where you you know, the front door, you go there, that's your big search. But if you wanna, like, look for real estate, you go to Zillow.
Speaker 8:If you wanna understand about a company, go to Glassdoor or a job, you go to Indeed. You wanna travel, you go to Kayak or Expedia. You wanna go to OpenTable for a restaurant. You you know, there's there are these, like, big categories that have, you know, lots of nuances that really deserve and warrant unique experiences. Like, let's let's build them for AI.
Speaker 3:Yeah. Where are they? Unfinish
Speaker 1:me. Yeah. I like it. Yeah.
Speaker 2:Cool. Kirsten. This is fantastic.
Speaker 1:Is fantastic. Thanks so much for stopping by.
Speaker 2:Yeah. Thanks for coming on. Yeah. This is great.
Speaker 8:Thanks for having me.
Speaker 1:Yeah. Have a great rest of your day. Have a great weekend.
Speaker 3:We'll talk
Speaker 1:to soon.
Speaker 8:Talk soon. Bye.
Speaker 2:Bye. Cheers.
Speaker 1:Very much, Bill. Didn't even get to the into the security thesis, which is, maybe the most underrated in that report. There are there are health investors. There are GenAI investors. There are consumer investors.
Speaker 1:But I have yet to hear someone really I mean, she created a whole market map for this idea of, like, security as a key market. And it includes some health stuff. It includes some finance stuff. But it was an interesting thesis and trend
Speaker 6:that we'll
Speaker 1:have to dig into more. But in the meantime, got David Perrell here. Welcome to the
Speaker 2:show. What
Speaker 5:up, boys?
Speaker 1:How you doing? Looking great.
Speaker 2:Dude, look at
Speaker 1:you. Thanks for dressing up.
Speaker 2:Look at you.
Speaker 5:I figured I'm coming on hanging out with the tech
Speaker 2:Guns blazing.
Speaker 5:I'm gonna I'm gonna dress up.
Speaker 1:Yeah. Well, it's great to you've had how's your week been?
Speaker 5:You know, I had a white shirt, but couldn't find my cufflinks. So major issue. Still looks fifteen minutes ago.
Speaker 1:No. No. No. You're you're looking fantastic. You
Speaker 2:look fantastic.
Speaker 1:How's the week been? How have you been processing all the recent AI news? What's new in your world?
Speaker 5:Dude, week's been good. I I was driving over here. I saw my first ever Austin car chase.
Speaker 2:That way.
Speaker 1:So Is
Speaker 2:that a regular thing?
Speaker 5:No. I've never seen one before. You know, usually an LA thing. And I must admit, I got a speeding ticket on Sunday in Tennessee. So it was good to see the red, white, and blue lights in somebody else's rearview.
Speaker 2:What what were they drive? Was it like an f one fifty being chased by Dodge Charger. Yeah.
Speaker 5:It's always the crappiest car that you've seen all day.
Speaker 2:Yep. Less to lose. Less to lose, more to run for.
Speaker 1:Yeah. Exactly.
Speaker 2:There's so much to talk about. I mean, one, you should have been one of our first guests.
Speaker 1:But you still are. You're still in the first two hundred guests. It's no big deal.
Speaker 2:Yeah.
Speaker 1:We've been we've been racing through the guests. But, yeah, mean, did you want to start with his post, his thread?
Speaker 2:Yeah. Let's do
Speaker 4:it.
Speaker 1:Yeah. Can you set that up for us, just kind of like general reactions to AI writing, kind of the Studio Ghibli moment? You're clearly thinking your wheels are turning, a lot of stuff is going on in your head and I think you kind of synthesized it well, but I'll let you tell it yourself.
Speaker 5:Yeah. I mean, we're just look, I've been teaching writing for the last six years
Speaker 1:Yep.
Speaker 5:And I've taught few thousand students and I had a moment in November. You know what happened? Had a guy who was working for me sent me a memo. I said, dude, this is the best thing you've I've ever seen you write. He goes, AI wrote it.
Speaker 5:I was at a dinner last night and I wrote up some notes and then I just asked AI to summarize it and I was like,
Speaker 7:woah. Wow.
Speaker 5:And I shut down Red Passage November eleventh and then I went to Argentina in December.
Speaker 3:Mhmm.
Speaker 5:It was my first vacation a few years and I wanna learn about the country, so I was just using AI and I was doing like 50 to 70 prompts per day and I was like, oh my goodness, is this is insane. And basically fast forward to now, we're in March or we're in April. And I mean the writing's on the wall. AI is gonna just completely transform writing. And this week actually, I got my first ever rejection for how I write because somebody doesn't like that I'm talking about AI, that I'm promoting AI.
Speaker 5:So now I think what you're beginning to see is a big rift. Mhmm. Right? There's gonna be certain people who say, no, writing with AI is absolutely taboo, not cool. There's gonna be the purest, the Luddites.
Speaker 5:And then there's gonna be other people who just go full steam ahead and they're gonna say, you know what, this is the future. And it's really taboo to right now to write with AI, but if you talk to people behind closed circles, there's a lot of tech forward writers who are like, woah. I can like three four x my output. Mhmm. And they've basically built custom prompts, custom software to to help them write better.
Speaker 1:Yeah. I mean, Ben Thompson has kind of a thesis around this with the, you know, the the printing press reduced the the the the the the replication cost, then the Internet dropped distribution cost to zero because you no no longer needed a paper route. Now it's the instantiation cost has gone to zero, but there's still that human in the loop for actually generating the novel ideas or even just bringing the idea or the fact or the information to the chain. I I talked to some reporters. How is AI changing your job at The Wall Street Journal?
Speaker 1:It's like, well, writing up the fact is the least hard part about the job. And, yeah, maybe it took me from that being one hour of my day to being five minutes of my day, but 90% of my day was still talking to people, understanding what's going on, surfacing new facts, and then bringing those to the readership. So do you think there's still value in being a writer in the sense that you are a generator of ideas or novel information? And yes, you are using AI as a tool to instantiate it, but AI hasn't really replaced your importance in the world.
Speaker 5:Yeah. So let's just preface this.
Speaker 1:We're going
Speaker 5:to talk about non fiction writing. That's what I know a lot about. Fiction is not really something that I can speak nearly as well about. Sure. But I went to a Peter Thiel lecture last night.
Speaker 5:He's in Austin and he's doing these these lectures on the Antichrist.
Speaker 1:Mhmm.
Speaker 3:I was
Speaker 5:at the lecture last night and I was thinking a lot about this. Right? Because you know Peter, he's a really interesting guy. He's always looking for what is the thing that people are talking about that other people haven't found. And I think that the lecture showed, first of all, that of course there's so much edge in just finding the things that other people aren't talking about.
Speaker 1:Mhmm.
Speaker 5:But then also I was, you know, I went up to someone who I works with after. I said, hey, I think the lecture could have gotten better in this way and this way and this way. All this is to say that AI can't do that work for you. And it's through the process of writing that you're really working through your ideas. You're trying to say how do I frame this better?
Speaker 5:How do I shape this better? But what I do believe is that basically any form of writing that is driven on pure utility. So we're talking business memos, we're talking emails that your lawyer sends you that are fairly standard. Pure utility not about the art of writing and not about basically maximizing the quality of thinking. I think basically all of that's gonna be written with AI.
Speaker 5:So and only in a few years, you know, by the end of 2026, '20 '20 '7, we can just assume that that'll be the case. But absolutely, if you're really trying to be a maximizer and not a satisficer, that'll be major human in the loop big time.
Speaker 1:Mhmm.
Speaker 2:What do you think happens to our thinking abilities as humans and our clarity on life, business, work, our relationships when so often we have just this like, you know, perfect auto complete of everything that we thought we were gonna say because sometimes when I'm, you know, let's say I'm like writing an email to John or one of our partners or somebody we wanna work with, the act of, it's sort of annoying that taking the time to think about the, you know, what I wanna say and how I wanna say it and and, you know, what what I'm trying to convey. It gives me clarity on that relationship or that whatever activity that we're doing. And in a world with like perfect auto complete or suggestions, maybe theoretically, I can just, you know, think about it for a while myself or auto complete, send, send it and then think about it. But the reality is there's so much distractions in life. So maybe everybody just moves like all the time that was spent writing emails just moves on to, you know, TikTok or or X and it's just like, you know, you're auto completing and then there's there's there's brain rot.
Speaker 2:That's that's sort of like a a dark take on it. But are are you worried about what humanity loses by not thinking through writing?
Speaker 5:I'm absolutely worried. I mean, I see major white pills and major black pills here. Like, think that if you're not seeing the pros and the cons and I mean major pros and cons, you're you're you're missing out in a fundamental way of what's really going on. I agree with you. I think a lot of our information is or a lot of the way that we communicate is like, did this person actually write it?
Speaker 5:And I think that what's gonna end up happening is you sort of see this in the differences like, if you notice like how big of a separation there is between the vibe of like your private group chats versus like what you feel in public. I feel like the private group chat vibe is just gonna be, like, go even more. We're gonna have to learn to write with voice and really show off our distinctiveness in writing as almost a adaptive way to say, hey, this isn't written by LLMs.
Speaker 1:Yeah.
Speaker 5:And at the same time, I completely agree. I mean, I think that, you know, people are super busy and the one thing that we've learned time and again about technology is that people value convenience, you know. Like, I listen to music all the time on my crappy iPhone speakers because I don't wanna get up and walk to the other side of the room and like hook in my USB cord. And I think you should never bet against humans going for convenience in the aggregate.
Speaker 1:I think about that.
Speaker 5:That's how I'm thinking about it.
Speaker 1:Yeah. I I think about that that web comic or meme all the time where it's like, wow, this AI was able to take my five bullet points and turn it into a whole essay. And then the and then the guy receiving the email is like, it took this really long email and turned it into just five bullet points. And and I have noticed that I'm doing way more work now, not over email, but just over text message. We coordinated this interview entirely over text message.
Speaker 1:I don't think a single email was exchanged. And and I imagine, like, there is this world where maybe we just do away with that intermediate step of, like, instantiate this as like, we all know that we could turn this into a 20 page research paper if we wanted or a or a, you know, 500 word blog post. But really, the takeaway is just what I could put in my group chat in one line. So Yeah. All need communication just,
Speaker 2:you know, condenses down and and it's just like people saying their base interests. Like, I want status.
Speaker 1:It's act. It's
Speaker 2:act. I want security.
Speaker 1:You know? I mean, Jordan mentioned a great line about this. He was like, the the the recipe to being a good poster on Twitter or x is just write like you're posting in a group chat and just and just say just exactly what you were thinking. Don't try and wordsmith it into this big thing. Just post exactly what it is.
Speaker 5:Like if yo, this is the age of vibe. Like Yeah. This is super high vibe times. Because basically, like, if I'm teaching writing and you're like, alright, DP, what are you gonna teach people? What I'm gonna say is like, what is your vibe and how do you get it out into the world?
Speaker 5:Yep. And how do you communicate that through writing? And so you're seeing a few things. Personally, I'm investing a lot in like Riz and Vibe. And I'm trying to think about how do I do those things.
Speaker 2:It's working.
Speaker 5:It's like, yo, I'm putting my money where my mouth is. One thing I did started a few weeks ago, I've become a greeter at the church to get like a lot better at saying, alright, how do I, you know, get better talking to people, saying what's up, you know, doing all the sort of frankly like shallow conversation that people rail on. I'm like, no, I wanna get good at that. And then when it comes to writing, whenever I'm writing even like a text or something like that, I'm thinking what is the energy that is unique to me and how do I get that in writing? And frankly like I don't really know the answer, but that's the major question I'm asking.
Speaker 5:And when it comes to writing, think that's what people should be thinking about a lot more.
Speaker 1:Yeah. We we like to call it the golden retriever mindset here in the age of intelligence too cheap to Exactly. It pays to be hot, smart and or hot, friendly and dumb. And so you got to be just super friendly to everyone, looking good, and you don't need to worry about, you know, being too too much of a sesquipedalian as they say.
Speaker 5:Exactly. Exactly. No more than I'm say their face aloud.
Speaker 1:Yeah. Know.
Speaker 2:I know. It's interesting to think about specifically agents in in the context of the the workplace. Like, it's very possible that likability becomes a core reason why somebody has a job. Totally. Somebody's running a business and they go, I really like David.
Speaker 2:I like being around him. I want him here even though, you know, we could get an agent to do this. Yeah. Like, it's more fun to have David around.
Speaker 1:Yeah. It's like the one the one person, $1,000,000,000 company. It's actually gonna be like one person creates a $1,000,000,000 company and then like brings on nine of his friends just because like why not split it? It's a lot of money and like you like to hang out with other humans.
Speaker 5:Yeah. I think well, I think you're going to sort of see the bifurcation. It's like Mhmm. I think that as if you're like thinking about oh, just talk about me. So I was like, I'm thinking about my career.
Speaker 5:I'm like, on one hand, I really want to invest in the human things. Looking people in the eye, having better conversations, how do I show love and like actually connect with people to far deeper level, and all those sorts of things that have always been core to the human condition, but now we're like, wait, hold on, intelligence Mhmm. Is getting too cheap to meter. Mhmm. That actually isn't as something that's unique to humans anymore.
Speaker 5:Mhmm. And then on the other side, like, you know, you just think of the super cracked engineer who is really good with cursor, really good at writing. You know, I'm talking to some friends who are building AI enabled agencies and now they're working with like five times as many clients because they're like
Speaker 6:boom boom boom boom
Speaker 5:boom. But most of the people I'm talking to like entrepreneurs and stuff, they're beginning to Justin Maris has a good line where he says that the company is gonna look more and more like the hedge fund, where what you have is you have fewer people, super highly paid. And one of the things that I've noticed is it's been a real head scratcher for me, like why has the managerial class adopted AI so much more than the sort of frontline workers. Like what is going on? Because if you look at a sort of the archetypal rollout of technology, it's usually the young people who are the early adopters.
Speaker 5:Mhmm. And there's a way that that's not true with AI. Mhmm. And here's my working theory. My working theory is that the way that you work with AI is basically like a manager.
Speaker 5:So if you think of what do you do as a manager, you set a vision, you delegate the task, you say, hey, do this, you expect it's not gonna be good enough, you're giving feedback, and you're going through the cycle, and then you ship it. Right? That's how we work with LLMs. If you're a frontline employee, you don't work like that at all. So this is super disruptive to your work.
Speaker 5:And all this is to say that a lot of those managers too, you talk to them behind closed doors, you know what they say? My hardest problems don't have to do with the work. It has to do with the people. And now I can take out the people. Once again, I think it's super dystopian and also pretty exciting, both of them at the same time.
Speaker 5:But that's what I see happening right now.
Speaker 1:Shifting gears, can you talk a little bit about the the religious vibe shift in tech? I've had a number of reporters reach out to me, hey, I'm writing a piece because I saw Augustus Dorico had a cross on his neck or something like that. You've been in this, milieu for, forever. What what is the mainstream media getting wrong or right about that narrative and that shift?
Speaker 5:Let's see. So I'll just give sort of my take on the shift is we've had a few things happen. So the first thing is the more online you are, I think the more that you've looked at what's happened basically since about 02/2012, maybe 02/2016, last ten to fifteen years, and you've just said something is strange about society right now. You see COVID, you see the Hunter Biden laptop story. I mean, are so many ways that we've been lied to.
Speaker 5:I was thinking, you know, in the early twenty tens, if you went away for five years and you came back, what would be really confusing was the rise of social media. Mhmm. In the late twenty tens, if you went away and you came back, what would be really confusing is how much morality had changed. Mhmm. What you could say, what you couldn't say completely changed.
Speaker 5:And for me, I looked at, wait, hold on. The all of our moral codes are ebbing and flowing. There's all of these ways where we've gone from a kind of a democracy to a bureaucracy, and and I don't wanna live in that world. And as I looked at it, I traced a lot of that to a kind of atheism where Malcolm Mudgridge, he has a great line. He says, the problem with atheism isn't that you believe in nothing, it's that you'll believe in anything.
Speaker 5:Mhmm. And so I watched people with empty their their bodies as empty vessels adopt completely rotten and corrupt ideas. And I think a lot of people, including myself by the way, and I think a lot of us who are more online have seen that cycle play out and we've said, hold on here. I don't like what I'm seeing. So then we take a step back and the more tech oriented people, we've seen people like Peter Thiel, a lot of us have studied the work of Renee Gerard, and we've said, you know what?
Speaker 5:Smart people like Peter and Renee, they're talking about Christianity. There might be something here. And then for me, what happened is I looked at that for five or six years. I really studied it deeply and I came to the conclusion that Christianity wasn't just useful, but it also happened to be true.
Speaker 1:Can you talk about how you would walk someone away from the cliff that is utilitarianism?
Speaker 5:I would just say, look, that's that's probably not the frame that I would take. What I would just say in terms of if I was talking to somebody about faith, what I would just say is I'd probably be more likely to talk to someone about, hey, look at what's happening in the world and
Speaker 1:Mhmm.
Speaker 5:Are you, you know, are you happy with it? I mean, if they're happy with it, it's gonna be it's it's gonna be hard to have that conversation. But I think that part of the challenge with utilitarianism and a lot of these moral philosophies is we've seen them rise up and sort of cyclically break. And I don't know. This isn't a great answer.
Speaker 5:I'm sort of fumbling my But I think that the bible carries sort of this supernatural truth that
Speaker 4:is I mean
Speaker 1:I I had a hot take here. Wanted to bounce off you. It was this idea that a lot of the AI doomers were driven by this idea that God is dead and if we're inventing AI god and it returns, it might judge me. And if I'm living an immoral life, the AI god would sentence me to essentially like an AI version of hell. It's not a problem to live an immoral life in the absence of God, but if God returns in the form of this AI God, then there will be a reconciliation moment.
Speaker 1:Is do I need to put on the tinfoil hat for that?
Speaker 5:Well, I mean I personally think that Oh, there we go. There we go. Put it on, baby. I mean, personally, I think that if you read the Tower of Babel story, I think that a lot of my faith is I don't think these AIs can become gods. I think that something will happen and we see that in the Tower of Babel story.
Speaker 5:You know, you've seen people come out and say, hey, we're building these new gods. Read Psalm one fifteen, bad things happen when humans try to create gods. We've seen this story play out and they come back to some of your earlier questions about tech and utilitarianism. Look, a lot of the peace that I have with what's happening with AI, I'd be freaking out if it not if it wasn't for my faith. I mean, have complete faith that God is in charge, he'll take care of this.
Speaker 5:When I read books like the book of Judges, I see people turn away from God all the time. When I read the Old Testament, the Exodus, know you know, you see the golden calf. And I just see AI as another version of that.
Speaker 2:Mhmm. Can you talk about any yeah, specifically historical moments that we can learn from in the context of this, you know, of artificial intelligence, right? I think people talk about the industrial revolution, right? Look, you know, we didn't know how industrial, you know, revolution was going to change the world. We we do now looking back obviously, but it feels like right now we're we're standing in in especially in the context, there was a piece that came out week, AI twenty twenty seven.
Speaker 2:We covered it earlier on the show today where it just feels like only eighteen months out, like, you know, there there there's these various paths neither seem that appealing at the moment. And so I hope there's a third or a fourth or a fifth. I'm sure there are. But how do you, you know, whether it's in the context of the Bible or other things that you've read, you know, process this moment and maybe it is only. Maybe maybe, you know, you can find all the answers in in faith, but but I'm curious.
Speaker 5:No. Yeah. I think that the work of Marsh McLuhan has been super foundational for me. So Marsh McLuhan, he was a media theorist late twentieth century. And what he did for me was I felt the same sort of, oh my goodness, everything is changing kind of feel from the Internet.
Speaker 5:And he basically had ways of seeing what happens when new technologies develop. And basically I think a lot of what we're seeing here is this like vast acceleration is what he saw. So you get this 10 x acceleration and then what happens is things begin to flip and things that used to be core to how we lived and what we do now become art. And I think that that's a lot of what's gonna happen with writing, where I think writing is gonna be very sort of a form of art in the same way that film photography was a form of art in the same way that a lot of a lot of art that you see and craftsmanship that you see used to be very core to what we do. And I think that's what's gonna happen.
Speaker 5:I think that writing is gonna be the utilitarian kind of writing, will just be done by the AIs. And then a lot of writing will just be artistic. And what we're gonna need to figure out is how do we put our artistic stamp on writing because there's no real way to verify that a piece of writing is writing in the same way that you could do that with like a live performance. But one of the things I'm really looking forward to, you know, there's all these doomers and to your point about technological precedence. I was talking to my friend Justin Murphy and you know, he said, if you look at how art shifted from the fourteenth century to the sixteenth century, you look at fourteenth century medieval art and it just looks weird and creepy.
Speaker 5:It's like super flat and then you look at sixteenth century art in Italy and it's got this beautiful perspective, the the the paintings are aligned or or or alive. And what happened was we got the technologies of the camera obscura and then if there was a guy named Leon Alberti and he was an architect. And what he did was they used a lot of the technologies and architectural tools at the time to basically show perspective. And from that, we got the renaissance, a renaissance in painting. And the same thing is gonna happen with writing.
Speaker 5:The same thing is gonna happen with writing. And I bet that at the time, people were like, oh, you can't be using technology to paint, like that's not And then like, I don't wanna go back to that sort of painting, this thing we came from. It was super cool. And I think the same thing is gonna happen with writing.
Speaker 2:Yeah. It's interesting to think about the great writers in history sort of referencing, you know, past works and having to go to a library or travel to multiple libraries or visit collections and sort of study. And then now the ability to like
Speaker 1:Studio Ghibli style.
Speaker 2:Well, communicate with an LLM that is trained on, you know, every available text that at least that's been on the internet and and maybe some esoteric text as well. Do you think there's any do you think there's any merit? Have have you spent any time like trying to find books that just haven't been uploaded into the into ingested into the For the knowledge.
Speaker 5:Here's okay. So I'm gonna I'm gonna answer that and then I'm gonna ask a question to you guys. Okay. So here's rather than the forbidden knowledge, I haven't been doing that as much, but there's so much that's just lost to to there's so many answers that we used to have very clearly that then we have just forgotten. I think one of the fundamental lies of modernity and basically of progressivism in general is that new is better always.
Speaker 5:And that's not true. You know like Joe Rogan always talks about how did they build the pyramids? Oh my goodness, they must have had these crazy technologies. Like even, you know, we could put the tinfoil hat back on, but even if that's like nonsense forever, I don't know. But there are so many times in history where we really had deep understandings of things that we've completely forgotten about.
Speaker 5:Mhmm. And like we don't necessarily need to go find these like crazy esoteric texts. We can go find like take Henry George's book, right? Late nineteenth century, it was like the number one, number two best selling book in the world. There's The Imitation of Christ by Thomas Akempis.
Speaker 5:Great book, seventeenth, eighteenth century. Like I think there's a lot of alpha in just going back at the best sellers before 1970 and just go go read those books Mhmm. And see what people are saying. And luckily AI is a really good way to do that. Know one thing that's fun to do is go in, take an idea, go in to ChatGeePeeTee, go in to Grock and say, here's my idea, now help me round it out and give me some examples.
Speaker 5:So I have just been working on this little bit that there's fundamentally three three kinds of girls. There's Lana Del Rey girls, Taylor Swift girls, and Beyonce girls. And so like, you know, I was joking around with some friends who are like, hey, let's just pop it into Grock. And Grock is like helping us, you know, think out the theories. Hey, this is it's a stupid idea.
Speaker 5:Here's why it's a good idea. And that's what I love about it is like you're giving it some sort of ridiculous idea and then it's saying, okay, let's kind of fill it in for you and you can very quickly get to the stage of like how can I find those esoteric ideas much faster and how can I kind of find the lines that then I can draw inside of?
Speaker 2:Mhmm. How do you have any type of thesis around, know, LLMs and and humor? It seems to be the one thing that they really struggle with today where they get the structure of a joke but they're not nailing it yet. They can make you laugh by being absurd but
Speaker 5:Did you see the Tyler Cowen joke?
Speaker 1:Yeah.
Speaker 5:Did you see that in GBT 4 point 5?
Speaker 6:The Be Me one?
Speaker 5:Yeah, dude. Yeah. Hilarious. So I think that the the the humor thing is gonna be a problem to be solved. The LLMs are gonna be hilarious and they're gonna be hilarious in two ways.
Speaker 5:Mhmm. So the first way is niche humor. Mhmm. Like, you know, if you take a great comedian, they're gonna be good at the mass market stuff, but like say that you and you know the three of us we go and we do like a trip to New Orleans for the weekend. And we say, alright, all these things happen and like we talk to LLMs for like forty five minutes, we say, you know, here are all the things that happened.
Speaker 5:Now give us some jokes. Dude, I bet it would rip.
Speaker 3:I bet it would be
Speaker 5:so freaking funny.
Speaker 1:But just us.
Speaker 5:Yeah. Exactly.
Speaker 2:Like No. And and we so we we've talked about we talked about this earlier on the show. John has Coogan's Law which is like, you know, talking about the the value of coin coinages. On that note, I I've been working on the Hayes Paradox which is the idea that the funnier that you think something is, the less likely that the mass market is gonna find it funny, right? Because like Yeah.
Speaker 2:Something that is just ultra ultra ultra niche is just like the most interesting, the most funny, the most stimulating or whatever. And I think that's what you're kind of getting at it in some ways like the, you know, having a comedian in your pocket that can joke about like the thing that happened to you that minute and simultaneously, you know, ten years ago in your life and like connect those ideas. Mhmm. And, you know, the idea of like the same thing of, oh we have a therapist in our pocket or we have a tutor in our pocket. You now could potentially have, you know, this sort of like comedian.
Speaker 1:Yeah. So last question is a question I think you had for us. Do you wanna close out with that?
Speaker 5:Well, mean this is the question that I've just been thinking a lot about and it gets down to like the nature of the soul and the nature of what it means to be a human. Yeah. You know, there's that famous idea of the map and the territory. Mhmm. And what I think is basically happening is that when it comes to writing, the map and the territory are gonna be the
Speaker 3:same. Mhmm.
Speaker 5:And when the map and the territory are the same, what is just what is what comes from that Is like if you have such a good simulation of humor and such a good simulation of consciousness and such a good simulation of care, is it those things or is it not those things? And I don't know the answer. It's just the question I've been asking all week. And
Speaker 2:My immediate my immediate thought is that our mutual friend Jeremy had this idea Master
Speaker 5:of the take. The king
Speaker 2:of Master of the take Smith himself. No. He had this idea like in the Ghibli moment, he was like my thesis that like AI will be the reason that everyone logs off forever
Speaker 1:Mhmm.
Speaker 2:Is like if you go on your device and it's just this you know hamster wheel of entertainment Dopamine. And dopamine and then eventually you just it it gets so good at you know at at whatever it's doing or whatever you want it to do that you wanna actually go back to the variable reward of going to the group chat where somebody has a terrible take and then somebody has a good take.
Speaker 9:Yeah.
Speaker 2:And it's this sort of like truly organic experience and I and I and and who knows if everyone logs off forever but it's that desire for for realness has been something that has been common throughout human history. Right? You don't like, you know, people wouldn't travel somewhere far to have like the authentic cuisine if it hit the same to have like, you know, the the sort of like perfect recreation of it here in America. Right? So that like desire for authenticity and realness I think is is deeply human and I think people will seek other humans out for that.
Speaker 5:Which is great because what I hope is I think that we were at the absolute bottom of realness in the late twenty tens in cancel culture.
Speaker 6:Mhmm.
Speaker 5:That was a time when people were terrified to be themselves. Everyone was super polished. It was the decline of the mass media empire that we're still sort of living in and seeing play out every single day. And then we're gonna get a big flip into realness, into authenticity, and here's the other one, into forgiveness. Mhmm.
Speaker 5:Because we can only have realness and authenticity in our culture if we have a culture of forgiveness, when we can allow people to make mistakes. And I think what was so traumatizing as a culture about those years is that we couldn't be ourselves because we couldn't forgive. Mhmm. And my hope is that we can just move on from that and become humans in this digital sphere.
Speaker 1:Well, have to forgive us for not having you on sooner. This was a fantastic conversation.
Speaker 2:I really enjoyed it.
Speaker 1:Thank you so much Thanks, boys. On the show.
Speaker 2:We'll talk to Thank you for addressing the part.
Speaker 1:And looking to have you. Polished, you know, some things from the late twenty tens. Polish is back.
Speaker 2:Dude, polish is back.
Speaker 1:We're keeping polish.
Speaker 5:No, actually, that's what we have in common. Know, you guys have to polish with the I try to do it with how I write.
Speaker 1:Yeah, of course.
Speaker 5:And thanks guys.
Speaker 1:Yeah. Have a
Speaker 9:great week.
Speaker 2:Fantastic. Talk to Have a great weekend.
Speaker 1:Next up, we got V from Sword Health coming in the studio. I believe he's here and I'll let him do the introduction. Had a call with him almost a year ago. Fascinating company, backed by Delian very early on. We got connected, and I wanna hear all about how his business is doing and get the general update.
Speaker 1:So, Vee, are you there? Can you hear me?
Speaker 6:I am here. Can you see me? Yep.
Speaker 1:We are all good.
Speaker 6:Vee, welcome.
Speaker 1:For stopping by. How's your week going?
Speaker 6:It's been a week. Yes. A long week, I think, for everyone.
Speaker 1:Yeah. Is it specifically because of tariffs or AI news, or what's driving that?
Speaker 6:Yes. Tariffs, the impact is but some other stuff, it's like, it's been fun. It's been fun.
Speaker 1:Can you just give us a quick a quick introduction for the listeners who might not be familiar with Sword Health? Kind of big quick backstory on the company, what you guys do.
Speaker 6:Yeah. So let me start with the problem. So health care is quite special because when you compare health care with other industries, right, like the consumer electronics industry. Right? In the last forty years, we saw penetration of technology in those industries that went like this.
Speaker 6:Right? So massive penetration of technology. What happens? So my alarm just
Speaker 1:What's that?
Speaker 6:It's my alarm. Sorry.
Speaker 1:Oh, no worries. One second. We have some technical difficulties, folks. Okay.
Speaker 6:I'm back. Sorry. And I was saying that in the last twelve years, there was a massive penetration of technology in the consumer electronics industry. Right? What happened to cost?
Speaker 6:Massive decrease. Right? So a true vision that forty years ago or thirty years ago would cost $3,500 now cost $500.
Speaker 1:Mhmm.
Speaker 6:Much cheaper, much better display, much better features. So we use technology to produce better goods. Yep. When health care, last forty years, you also saw massive penetration of technology. Mhmm.
Speaker 6:What happened to cost? Contrary to the other industries, massively increased. Mhmm. Where, actually, we use technology to make health care more expensive. Mhmm.
Speaker 6:And the reason why is because the way we've been using technology in other industries is to shift part of the labor from the human to the machine. Mhmm. And with that, we made the product production of goods much higher quality, much more efficient, and much more accessible.
Speaker 1:Mhmm.
Speaker 6:In health care, we've been using technology to double down on this 100% labor intensive model Mhmm. Where before for you to have an appointment with a physician, you'll go to an hospital or to a clinic. Right? Now you can use the technology to do that to a video call.
Speaker 5:Mhmm.
Speaker 6:But you are still fully dependent on the human on the other side. Right now, as always been, probably to access health care, for thirty minutes, you need thirty minutes of this highly specialized, scarce, and non scalable human resource, which is the clinician. So what we believe that in order for you to deliver the future of the health care world, what you need to do is basically develop technologies and AI that will shift part of the labor from the human to the machine. Mhmm. And with that, you remove barriers in terms of access.
Speaker 6:And so what we are doing at Swope is really shifting health care from that human first model to that AI first model, and we're starting with the biggest problem, which is how we deliver care, how we recover patients back to a full life. And so we started with physical pain. We expanded to public health, and now we are expanding into other verticals of care, really changing how people access care with AI.
Speaker 2:Can you talk about Jevan's Paradox was in the news recently and I'm sure you had a lot of thoughts just because, you know, theoretically as the cost of healthcare declines, we're gonna want more of it. There's a lot of care that doesn't happen, for example, in physiotherapy, if it costs, you know, a dollar a day, I'm sure people would, you know, be much more eager to use it but when it's $200 a session or even more than that. I'm Absolutely. I'm Feels like an you know, you I'm sure you've seen this playing out, and I'm sure you weren't weren't worried when DeepSeek came out and and, you know, token costs came crashing down. You probably were like, okay.
Speaker 2:This is great. We're just gonna use a lot more of this.
Speaker 6:Yeah. And, look, lack of access to high quality, high density conservative care, noninvasive care doesn't decrease costs. Mhmm. Because when you have pain, instead of are not able to go three times per week to a PT clinic for three months, and that will solve a problem. Right?
Speaker 6:But what you do next is you go and try to find a silver bullet in the form of surgeries. Right? And that's what really skies the market prices. Just with physical pain in The US, we are spending 560,000,000,000 with a b billion dollars per year. Right?
Speaker 6:And the big bulk of that is surgeries which should be replaced with much better outcome for patients. Right? And so when you use AI to make the traditional model, which should be the solution very easily accessible, as accessible as running water, then you allow patients to get access to high quality care, and that's how and then you really decrease costs. Because the problem in health care right now and by the way, this is in US, but this is all over the world. Right?
Speaker 6:The the national health service in UK is suffering the same thing, which is you have very high, high costs and very, very low quality and access to care. So in the traditional equation in in health care, if you want to increase quality of care, you need to hire more people. If you hire more people, you increase costs, but you cannot increase costs because costs are already prohibitive. So what you try to do, you try to reduce costs to remove folks from the equation. What you do, you reduce quality, and you basically create massive challenge in terms of access.
Speaker 6:The only way to really break this paradox is by using AI, doing part of the job of the human, and then having the clinician in the loop highly scalable in order to be able to bridge the gap between the massive demands and the low level of clinical supply that we have.
Speaker 1:Yeah.
Speaker 2:How has your AI thesis around health care changed since founding the company, if it's even changed at all? Is what you're seeing today the sort of roadmap today, you know, been what you expected? Or any sort of like new technology that's been introduced in the last few years sort of changed.
Speaker 1:Were were were you just talking about AI therapy breakthroughs recently? There was a Yeah.
Speaker 2:There was some news I think earlier this week that basically showed that AI therapy in the form of people just talking with LLMs like actually delivers fantastic results. And it's basically free. Right? And it's like this Yeah.
Speaker 1:Incredible It seems like a fantastic add on if you have a scaled business. You've been in the business for ten years. You don't have to start from scratch on the customer development journey. So, yeah, talk to us about that.
Speaker 6:We we we actually in that regard, we did an instinct experiment because we have Phoenix, which is our AI system
Speaker 3:Mhmm.
Speaker 6:Based on the sessions that the patient's doing at home, preparing the messages for our clinicians to send to patients. Right? And so based on they analyze the session of the patient, and based on that, they can tell you, hey, John. I saw that you did your session perfectly. In the end, you are a little bit exhausted, so I decreased session a little bit for you to be able to do it without a problem.
Speaker 6:Right? It's the work that our PTs, our clinician usual usually do. Right? And now, of course, we have LLMs looking at the data and preparing those messages. Right?
Speaker 6:But we were looking at the messages, and we had this question mark that do the messages feel like it's an AI creating the messages, or do they feel human? Right? So what we did was a blind test where we had 50 messages from that were written by our clinicians and 50 messages that were written by Phoenix. Right? And what we wanted and then we asked our team to evaluate which messages were from the clinician and which messages were from from Phoenix.
Speaker 6:Right? And what we wanted was a 50% randomness where you cannot distinguish which messages are from which Phoenix are clinician.
Speaker 1:Oh, wow. Like, pass the Turing test, basically.
Speaker 6:Yeah. Exactly. Yeah. That's great. Got was very, very surprising because the messages from the clinician were mainly labeled as coming from the AI.
Speaker 6:Mhmm. And the messages from the AI were mainly labeled as coming from human.
Speaker 1:That's bizarre. But I understand that.
Speaker 6:And then we we went a little bit in more detail, and what we found was that, look, since the clinicians are always, like, going from one patient to the other and they are always in this almost state of burnout across health care, Mhmm. The messages are very dry and very concise.
Speaker 9:Yep.
Speaker 6:Right? Where the LLM, the messages are very warm. And then, also, they have this long memory where they can pick up things from two weeks ago that you said. Right? They can pick up things about stuff that you said that I want to recover because I want to play with my kids and go on hikes, and you said that during the on on home and phone.
Speaker 6:And, of course, you never remembers that. Right? And so it's funny because l the AI and LLMs make the work of the human of our clinicians more human
Speaker 2:Yeah.
Speaker 6:Than before, and that's super funny.
Speaker 1:Can you talk a little bit about AI image generation? It seems pretty far out for what you're doing, but at the same time, I'm just thinking, like, if I need to show someone an image of, you know, hey. Your knee I have a diagram of your knee, and this is where, you know, the the the the physical damage is. This is what we're gonna be rehabbing. I could imagine even just doing the basic, like, Studio Ghibli style transfer could just make that whole experience feel a lot less medicinal and a lot more enjoyable and just novel.
Speaker 1:But have you even started playing with those tools, or is AI image generation still pretty far out on the road map?
Speaker 6:No. So our focus is really on when the member so what we want to do is replicate the experience that you have in the clinic with the clinic, replicate at home with Phoenix. Right? And so we have the feedback component, which is we analyze, we observe what you are doing, and we provide feedback. Right?
Speaker 2:Then
Speaker 6:the corrective feedback, that's where we are experimenting with that type of layer of image layer because then you can basically say, hey. Do the movement like this. Right? And or do the movement like that. And one one area where we are using that and we are exploring how we can do that in more detail with AI is we have a solution focused not on physical pain, but on public health.
Speaker 6:And public health is basically things like urinary incontinence after childbirth, which is a massive problem in female population, right, Which basically is you it's implied for we have an interventional sensor where you can basically have to turn your pelvic floor muscle. No one knows what is the pelvic floor muscle. And so using imagery to say, hey. You have this thing which should contact like this Mhmm. And using AI to make that an an animation much more lively, it's how we are experimenting.
Speaker 6:But that's the thing. It's it's like it can be an explosion of possibilities with AI because you are using AI versus agents. Right?
Speaker 2:Yeah.
Speaker 6:We are using that to enroll patients. Right? We are using AI to identify that member that in six months is going to have a surgery. So we can intervene now a little bit like minority report to before that person go to the to the orthopedic surgeon and gets convinced that they need surgery, we can act right now. We are using AI to quantify the motion of the patient.
Speaker 6:So it's really it can be an explosion where everywhere I look, I see an application of AI with clear benefits.
Speaker 1:That's great.
Speaker 2:Yeah. How do you you guys have been very successful very quickly in in relatives. Well Yeah. I'm just saying.
Speaker 9:It's an overnight success. Success.
Speaker 1:Yeah. Overnight success.
Speaker 9:Alright. But In a sense from
Speaker 2:a pure revenue ramp from a revenue ramp standpoint Yeah. And what usually when a company ramps revenue really quickly, other people go, hey. That's a good idea. We should do that too. Yeah.
Speaker 2:Yeah. How ambitious are you guys as a company? Is is the sword health four x sword? Or or, you know, or is it just about running down these opportunities that that you're currently tackling?
Speaker 6:So, basically, yes. Our view is really translated in shifting health care from human first, YI first.
Speaker 5:Mhmm.
Speaker 6:So every every single area of health care, which is still delivered in a 100% labor human labor intensive way, it's the target for us to win. One one area where you apply that is, well, mental health care. Right? Like, the way you address mental health right now is talk therapy, where you should by the solution to mental health is talk to that human once per week or once every two weeks. Right?
Speaker 6:That 100% human level intensive, that's an area for us to intervene. Right? And so it's really about all likely for us in terms of addressable market, it's the fact that, like, pretty much everything in health care, it's 100% human level intensive. And so we have a very aggressive market road map in terms of expanding and replicating what we did with physical pain, what we did with pelvic health into other verticals of care. Because the thing is when you really nail product market fit, health care, it's it's massive in terms of expansion because you don't suffer it.
Speaker 6:Right? We the public health solution that I was telling you about, Bloom, we launched that solution in 2022. Everyone thought it was a niche solution. Mhmm. We did in that year $500,000 of revenue.
Speaker 6:We did last year $25,000,000. This year, we're to do $50,000,000.
Speaker 7:Wow.
Speaker 6:Right? And everyone thought I I still remember discussing this solution with my brother, and my brother was saying, yeah. Don't focus on that because that's too niche. Right?
Speaker 2:Wow.
Speaker 6:And it's like, it's exploding. And so health care good thing is when you get to part of marketing in health care, you have untapped growth potential because the market is just quite a bit big.
Speaker 1:Well, congratulations. I mean, that's all amazing news. What a fantastic industry to be in a
Speaker 6:We need a
Speaker 2:fantastic time. Three hours sitting every day. We're gonna need a
Speaker 1:I need some PT. Phoenix for
Speaker 6:I know guy. I know a guy.
Speaker 1:Yeah. Okay. Perfect. Perfect. Well, thank you so much for coming on the show.
Speaker 1:Awesome. We'll have to have
Speaker 9:you back
Speaker 1:when there's more news. Cheers. We'll talk to
Speaker 2:next Thank you, guys.
Speaker 1:Thanks a lot. Yeah.
Speaker 2:The the growth there is just shocking.
Speaker 1:Yeah. And it's, like, such an underrated company because they're out in Port Portugal, and they do have an office in New York City. But it it's just one of those, like, under the radar companies in my opinion. Totally. Well, we got another guest coming on the show.
Speaker 1:But
Speaker 2:she's telling
Speaker 1:me about Wander First, find your happy place. Find your place. Find your happy place. Book a wander with inspiring views, hotel great amenities, dreamy beds, top two cleaning, and twenty four seven concierge service. It's a vacation home but better.
Speaker 2:Go to wander.com/tvpn.
Speaker 1:Fantastic.
Speaker 2:We got Avlock coming in. I'm sure
Speaker 1:everybody Just bring it in.
Speaker 2:Alright. There he is.
Speaker 1:Avlock, how you doing?
Speaker 2:What's going on?
Speaker 4:What's going on, guys? How you doing?
Speaker 1:We're good. We're good. It's been a great week. A lot of lot of big news. I'm not sure what you've been following more closely, AI or tariffs, but everyone's following one group.
Speaker 1:Got something.
Speaker 2:Everybody's got something this week.
Speaker 1:Worming in their brain. But, yeah, I mean, could you just do a quick intro on you and and and AngelList for anyone who doesn't know, I guess?
Speaker 4:Yeah. Avlok. I'm CEO of AngelList. I was actually recruited in almost six years ago now, so I've been running the company for almost six years. Prior to that, I'd started three companies, sold to Mhmm.
Speaker 4:Of them was to Square, so I spent almost three years at Square as well pre IPO to post IPO.
Speaker 2:Got it. I'm I'm curious. I mean, bunch of stuff I wanna get into. Where should we even start? I I think it's probably helpful for people to have, like, you know, the sort of like the the refounding of AngelList because Yep.
Speaker 2:AngelList is a company that I feel like has just been in the timeline. Obviously, we built the show around x. AngelList, I think like grew with Twitter in many ways. It was sort of like the technology platform behind what was happening in the timeline. Mhmm.
Speaker 2:And in the same way that Twitter's evolved massively, AngelList has done the same, but would love that backstory before we get into everything else.
Speaker 4:Yeah. The way to think about early AngelList was that there were a lot of different experiments as the team was searching for product market fit. And so, you know, 2020 or 2010 to call it, like, 2018, '20 '19 sort of spawned three different businesses within AngelList. It was the SPV business, which is really the syndicate business. There was Talent, which was, to help startups find talent startup talent.
Speaker 4:And, the third one is actually Product And AngelList had bought Product Hunt early on. And so by the time 2018, '20 '19 came around, there were kinda three different businesses where they really just connected, with a thin thread of founders need to, raise capital. They need to hire people, and then they need to launch their product. Yeah. But outside of that, it was actually very hard to do all three of those under one roof just because the business models are different.
Speaker 4:So at that moment, what happened was kind of a splinter, kind of a split. And talent spun off on its own, and then product kind of separated a bit more. And then when I came in, actually took the SPV business, and I spun it out as its own company. And we got to work, and we kinda took it from an SPV business to venture funds to invent a whole new category of rolling funds, and then we got into roll up vehicles, which is actually how Jordy and I originally kind of got connected. And then we've gone to start up products.
Speaker 4:And so today, we're kind of a, you know, the place to go to if you're gonna start scale, launch a venture fund. We're now in private equity. We actually manage the scout funds for a lot of large firms as well. So we're we're kind of an index now of what happens within venture.
Speaker 2:No. It's amazing. Can you can you talk specifically about, you know, sort of like accelerating product velocity in AngelList? Because it just felt like you came in, you had this sort of warm up period, and then it just felt like every single quarter there was like a major new product launch and you sort of like awakened the beast, right? Like there was so much potential there.
Speaker 2:If you were involved in the startup industry at all, you'd invested in an SPV, maybe you were in a rolling fund. Maybe you hired, maybe you got a job, maybe you launched a product. So everybody was touching sort of products in the ecosystem, but then you had to kind of like ramp up and basically say, like, you know, we're gonna kinda bring this crazy product velocity. So I'd love to hear, like, how you did that and then how you're applying that now be specifically, there's, you know, a bunch of new opportunities, I think, that are popping up.
Speaker 4:Yeah. I I would say just at the core of AngelList, AngelList has always held the founders of top of the pedestal. And we've always believed that product leads everything. Product velocity leads everything. And so when you have that in your DNA, the question you're always asking is, what is the mix of people you actually want in the company?
Speaker 4:So we actually have a fairly high percentage of our team that are, like, ex founders. And so what happens when you put a bunch of ex founders in in a room, what what are they gonna do? They're gonna look to be ambitious, and how can you actually move into an adjacent opportunity? How can you go reinvent a only product category? And so a lot of the original thinking was, hey.
Speaker 4:Let's actually get back to product innovation, and let's get back to actually doing things that only we can do. Right? And that's the one question we do ask. And to be clear, we don't get it right all the time, but the one question we do ask is if we didn't exist in the world, would this product exist? And if it doesn't, then, okay.
Speaker 4:Great. We should go do it. But if it's gonna exist without us, we're probably not the best suited to go do that. And so we do ask ourselves that quite quite often.
Speaker 2:Can you talk about AI in the business? How you guys are leveraging it to just you know, you're you're in in, you know, investing in a company is very simple on AngelList. Yep. Like I'm a part of a scout program. It's very seamless, you know, painless process.
Speaker 2:But then under the hood, there's you're dealing with different entities and you're dealing with Yep. There's the code is like the easy part. Like the law is really the hard part and the challenge. So I'm I'm curious how you're applying AI in the business to make, you know, internal team members more efficient to make and it's good to good for the world if you can sort of, like, accelerate capital formation, investment, and all these things. It it can accelerate the world.
Speaker 2:So, curious about that.
Speaker 4:Yeah. Thank you, Jordy, for, recognizing that. There's it's like an iceberg product. Right? There's so much underneath the hood.
Speaker 4:Yeah. You know, the initial investment is actually just the beginning of that, relationship with that company on behalf of the fund. And so for context for others, when an investment is made from a fund into a company, that's typically a, it can be like a ten year, fifteen year hold period. And that's just because of how illiquid venture typically is. These companies need time to mature.
Speaker 4:And so what ends up happening is over the quarters, months, quarters, and years, there's all sorts of activity that can happen within that investment, all sorts of activity that can happen within the fund. And there are there are real, like, legal repercussions, financial repercussions if you get it wrong. And the way we're using AI is these are all the back office functions, and so, typically, humans would manage all the different workflows. What we've started looking at is how do you take all these different workflows, and then how can you actually have AI agents starting to take on some of those workflows? Now we have to be careful because the, you know, the when you use ChatGPT and you get every time you ask a question, get different answers, that's beautiful.
Speaker 4:That's product market fit. Right? You're like, write me a poem or write me many different poems. Awesome. Yeah.
Speaker 4:You don't want that when it comes to your finances. Right? It's like, hey. What's, you know, what's the share price? You don't want 10 different share prices.
Speaker 4:You want one. Yeah. And so we're we are, pretty bullish on taking that and and having it automate huge parts of our back office, that's already starting to happen. And we think there there are ways that we can actually then have a lot of the folks that are doing some of back office work move up in the stack in terms of the type of judgment they apply on all the different workflows there. So that's, like, one piece.
Speaker 4:The second that I'm personally extremely excited about is we launched a front facing product called on on it's our intelligence product, and it's in beta. It's still new, so we're not ready to, like, fully talk about it with the world. But what we're doing there is we're actually creating a, an agent to go look at all private market data. So we have access to a lot of unique aggregated anonymized AngelList data, and we're actually looking at building partnerships with many other providers. So for example, you can ask a question like, who left OpenAI in the last month to start a new company?
Speaker 4:That can help you deal sourcing, and you can imagine it scales to many more companies. We're also looking at, how do we help you get ready for your briefings, for pitchcom pitch meetings Let's put this down. Yeah. While you're actually, like, in the middle of a pitch. Post pitch, great.
Speaker 4:Take the transcript, and we can help you, do a lot of the necessary reach, research, market map, the full analysis, so give you time back. And we think of this as we wanna build a co GP. We wanna help you make more money. Right? We can help you find better deals.
Speaker 1:Yeah. What about on the founder side? I could imagine that, you know, there's all these new benchmarks for fastest company to a hundred million ARR. Valuations are all over the place. Are you thinking about building any products for entrepreneurs?
Speaker 1:They upload their deck, then they say, oh, well, like, you should probably expect, you know, 10 on 80 pre in this Yep. You know, to be kind of in the fairway. Maybe go out there and get more, but here's at least Yeah. Our take on it.
Speaker 4:%. We're we're we're already in that world. You know, the classic line. The future future is is here. It's just unevenly distributed.
Speaker 4:Yeah. So that that's
Speaker 2:basically Yeah. It's funny how how entrepreneurs try to understand how to price their rounds is really they talk to a handful of investors who just referenced, the last two or three rounds Yep. They saw get done that were maybe not even in the same category. Yeah. And then it's just, like, completely guessing.
Speaker 2:Yeah. And I think it's you know super like you guys will be able to pretty quickly I imagine give a pretty precise and say like here here's where we predict your round is gonna get priced and sort of like building that feedback loop.
Speaker 1:You claim to be cursor for dogs but what is that really worth?
Speaker 2:How do you It feels like we're at this amazing time right now. You know, some people don't think it's amazing. I think it's great of venture maturing and then you see like the convergence between private equity and venture. You guys launched some products more geared specifically for private equity, but how do you see that line sort of like blurring over time? And I guess like how are you kind of adjusting your your product road map for that reality?
Speaker 4:Yeah. The the way to think about the way we're approaching product is we have the kind of vertically integrated part of the product where you come in one, you know, one stop shop. You can launch scale venture fund, which also allows us to manage scout funds for some of the largest firms. And then we actually have our software that's getting unbundled, and folks wanna adopt that. So some of the largest private equity firms actually adopt our, digital subscriptions product, or, some others can adopt our banking product.
Speaker 4:We actually we run banking underneath the hood. We've actually built a whole banking infrastructure, which is what allows for a lot of the smooth operations. And so, you know, as we're seeing the market evolve, our road map is effectively evolving to continue to keep taking on larger and larger funds for this vertically integrated product. And then for the largest ones, where there, we can support them for any of their needs, and that's actually working quite well. In terms of what we're seeing in the market today, we are seeing a bifurcation.
Speaker 4:Mhmm. So what's interesting is if you look at year over year, within our data, we're actually seeing, capital flows increase, q one twenty twenty four to q one twenty twenty five by almost a double in in into just venture funds. And, like, we can talk about SPBs and
Speaker 1:Wow.
Speaker 4:All of that. But, like, just venture funds alone, capital flows are almost have almost doubled. So there's definitely a bounce back. There's more optimism, right, that's coming in, but it is being it's sort of concentrating into a certain subset of managers. So you kinda have, you know, call it zero to, let's say, a hundred million.
Speaker 4:You kinda have to divide, and then you have, like, the mega firms. Right? And then the mega firm strategies are actually also bifurcating. Right? They all have kind of their own their own view on things and what they're gonna go after.
Speaker 4:So it's a very different market than 2019, '20 '20. And we're not seeing as much of you know, because what happened in 2021, '20 '20 '2 was you had crossover firms really come in. Right? A lot of private equity firms. Yeah.
Speaker 4:Public firms come in to venture. We don't see that anymore. I think we at least we're not seeing too much of it, maybe like here and there. But generally, it's the venture firms that are scaling up and they're now starting to push up into different asset classes. Mhmm.
Speaker 4:How do
Speaker 2:you think of of the job of GPs over the next ten years? I've, you know, everybody's, you know, been running the analysis of like how safe their job is, right? Like if you're a writer right now and your job is to summarize information and you know, re or repurpose information and just put it out there, you gotta be pretty worried. I think investors in general are pretty safe because people wanna give money to one person right now and have them be sort of responsible for returning that money and and hopefully a lot more in the future. And venture is about this combination of not just picking which is like, you can be very analysis driven of the market and the products but also the people.
Speaker 2:But then the big thing in venture is, you know, I expect AI to not necessarily dominate venture so quickly because likability and access are like such big parts of it, right? It's like, you know, somebody wants Avalok to angel invest in their company because you're the CEO of AngelList and like an AI could be like, you know, better at finding companies but that doesn't mean they're gonna sort of like win the allocation. So is your thesis, you know, let's give investors AI tools to be able to be better investors and make more money? Or do you see a world in the future where people are setting up, you know, sort of a a fund on AngelList that's entirely, you know, the GP is effectively, you know, a machine itself.
Speaker 4:Yeah. It's a good question. I don't know who said this, but I picked this up from some podcast. When a founder picks an investor, they're doing it because they believe that person's gonna increase their probability of success. Yeah.
Speaker 4:And in order to increase the probability of success, you're really looking for a partner who can help you solve any, like, number of problems that can come up. Some of it's brand to help the recruiting. Some of it's, like, actual, like, operational help, and and it could be many more of those. Right? But you need to partner with someone so you can actually, have a reasonable chance of success with the company.
Speaker 4:So I don't think that's ever gonna come from an AI, at least today, at least in in the form that we know of it today. So as we think about, the the role of the GP, we think it's gonna continue to stay the same. I think what will get challenging is I I do think there'll be more capital that floods in. Because even at the earliest stages, you know, folks are talking about how valuation decreasing, yes, at the later stages. At the earlier stages, it's increasing.
Speaker 4:So at pre seed seed series a Mhmm. There's just a huge amount of capital looking to get in. And the actual root problem is that the the stars don't need that much capital at the early stages. So what you have is a supply domain mismatch, and so the only way the valuations go is up. Right?
Speaker 1:Yeah.
Speaker 4:And so the the access question and problem is only gonna get worse and worse. And so we still think the the human, the GP is always gonna be in the loop. So the way we think about the tooling that we're building is is they're meant to amplify the investor. They're meant to help them make better decisions, but it can't ever help you be become likable to the founder or help you get access to the deal. Right?
Speaker 4:That's gonna be incredibly hard. And so we think that it's about enabling them. So, really, there's gonna be more leverage to the best investors. So I shouldn't the power law is gonna get even more concentrated Yeah. Because even the tools that we're building are gonna help investors understand very quickly the lay of the land.
Speaker 4:Right? So one thing that's actually very hard today is when you're listening to a founder during pitch meeting, you generally like, you don't quite know, okay. Who are all the other competitors? Who are the other founders of those competitors?
Speaker 5:Mhmm.
Speaker 4:With one click, we're just gonna make it easy. And it won't be just SaaS. I'm sure there are other tools that will come out of, like, one click,
Speaker 9:you get full lay of
Speaker 4:the land, and so you have full visibility on what's going on with this company, what this founder wants to do. And so I think leverage will increase, to the best investors.
Speaker 2:Makes sense. I don't know if you have a hard stop, but I did have one more question around how your thinking around stablecoins has evolved. You guys were very quick to adopt stablecoins. I think it was in 2021 or early twenty twenty two that you rolled them out. That was probably from user demand being like, have a lot of money on chain, and I wanna put it into startups.
Speaker 2:Now I imagine I'm I'm a long term believer in the power and value of stablecoins. But I never in using AngelList at any point in the last two years was like, you know, I wanna fund this investment via stablecoin. So I'm curious how you think about it broadly and are you using them behind the scenes at all or you just, you know, you said you talked a little bit about your banking infrastructure. Yeah. And I would assume that that's still based on traditional fiat rails just because beauty of venture is like sometimes you wanna close an investment quickly, but we have same day wires and those like work pretty well.
Speaker 2:And then you're not like trading in and out of assets like super rapidly or anything like that. Yep. And so but but anyways, I'm curious to hear how you're thinking about stablecoins broadly.
Speaker 4:Yeah. So we originally added stablecoins because of user demand, and it was, like, extremely aggressive in terms of, like, demand. You know? And I was like, fine. Let me go let me go figure this out.
Speaker 4:And at the time, we actually looked at, I mean, all the who's who providers, and none of them could really quite fit the use case we had. And so we eventually actually worked with a a startup and ended up building out exactly what we needed, and and now they're actually doing pretty well, and they're scaling out.
Speaker 2:Was that a was that layer was that layer two?
Speaker 4:Yeah. They're they're themselves to rail, r a I l dot I o.
Speaker 2:I'm a I'm a I'm an angel as well. I remember that you were saying, like, we got we got Avlock. You
Speaker 1:know? That's awesome.
Speaker 4:Yeah. So what's interesting about stablecoins on AngelList is when the the the biggest use actually comes from the biggest pain from when LPs fund, and the biggest pain is when you're trying to move money internationally. And so we actually see a huge amount of demand from international LPs trying to move money into The US. Mhmm. Because if you've ever tried to tried to send a Swift, god bless you if
Speaker 6:you have,
Speaker 4:it's insane. It literally takes days, and and you just don't know where the money is. And sometimes bank will just hold on to it, and they wanna tell you. It's it's got stuck somewhere in the middle. With stablecoins, you're able it's one hop.
Speaker 4:You're able to get the money right into The US. It goes through all the same compliance laws and everything, but we see a huge amount of demand for that. So it's not necessarily in the fund side to companies because you're right. There's not that much trading in and out, but it's more on the LP side into the fund.
Speaker 1:Mhmm. Yeah. Well, yeah, that's very Very cool.
Speaker 2:Sense. Last last question I have for you then I we will let you leave. I know we're I know we're five minutes over. I'm just very curious. You seen looking at some of these sectors that are especially overheated or potentially in sort of bubble territory, right?
Speaker 2:People are, you know, you we could argue whether AI is a bubble or defense tech is a bubble. Have you seen any sort of near term slowdown in defense tech investing this year? And and I'm sure you don't have the data in front of you, but but I'm curious. That feels like one that, you know, is still very hyped, but it's potentially investors, like, sort of have their bets now and and they're letting you know, wanna let their kind of bets play out.
Speaker 4:Mhmm. No. I was actually just talking about this with someone else the other day. It is still going on with DefenseTech. I think we're actually just entering a sort of a golden age for The US wanting to basically up level all the all the technology in in the military and the navy.
Speaker 4:So I'm actually not seeing it slow down. I agree with you that there is it feels like it's a bubble, but the beauty of financial markets in general is you'll just get bubbles, and then you'll get a few great companies that will come out of it.
Speaker 1:Yeah.
Speaker 4:But I haven't seen that particular bubble sort of, like, wind down yet. We're still seeing some pretty active heavy heavy investing there.
Speaker 6:Very cool. Makes a ton of sense.
Speaker 2:Fantastic. Well, we'd love to have you on to be our our private market data course. All the data. Yeah.
Speaker 9:Yeah. Yeah.
Speaker 1:Appreciate out
Speaker 2:of the anyway.
Speaker 1:Out there. This is great. Thanks so much.
Speaker 2:Great. Thanks for joining.
Speaker 4:Yeah. Likewise. Good to catch up.
Speaker 3:See
Speaker 1:weekend. Bye. Let's move on to some timeline. We got some
Speaker 2:Let's do it.
Speaker 1:Massive news yesterday from Andoril. They launched the Seabed Sentry. Andoril writes, we must fortify autonomous subsea dominance of The US and its allies. Seabed Sentry is their new AI enabled mobile undersea sensor node network designed for persistent monitoring and real time comms.
Speaker 2:So imagine this would be valuable if you had an undersea cable that you didn't want to get cut
Speaker 1:or blown up. People were yeah. There there were some very funny, post about I mean, Palmer contextualized it very well by just saying, like, what we do for the sensor towers are on land. We now have a product that does that underwater. But he said that it can detect, like, other submarines and boats, but also biological things.
Speaker 1:Think you can even track, like, whales, which is very, very cool. That's right. And so if we domesticate the whales, get them working for us, turn them into a defense tech weapons or weapons platform, Andoril's gonna be on top of it. And interestingly, if you zoom in on this, video very closely, you'll see that they're partnered with Sonardyne, which is a very old company. They've been in business for, fifty years.
Speaker 1:And they, and and they they they have a number of case studies for who they work with, energy, ocean science, defense, carbon capture, etcetera. And I'm sure there'll be a case study on this product
Speaker 2:as well. It feels like as we get more autonomous underwater vehicles Yep. You have people like Chris Hamidon working on stuff like this. Tons of exciting companies in the space. Yep.
Speaker 2:The risk to pipeline and cable sabotage
Speaker 1:Totally.
Speaker 2:Just feels like if, again, if you can send a $10,000 drone to blow up a pipeline that can cause billions, trillions Yeah. Of of economic damage, that's just gonna be a huge problem.
Speaker 6:So the
Speaker 1:product makes a lot
Speaker 2:of sense.
Speaker 1:You know, we've been talking about, like, maybe the Andoril of X is Andoril, and but this was something that I haven't even seen startups working on. This seems like an idea that you only get if you're as deeply entrenched as Andoril. Yeah. And, yeah, if you're going on if you're going down into the deep
Speaker 2:And you can afford to come up with products that aren't being purchased yet. Right? Like basically create markets. Yep. And you have once you're at a scale that Anderol is at and have those customer relationships, I think it's a lot easier to do that.
Speaker 1:But if you're focused on subsea dominance and diving, what watch should you have on your wrist? Probably Submariner. Yeah. Where are gonna get it? That is Bezel.
Speaker 1:Go to getbezel.com. Shop over 24,500 luxury watches fully authenticated in house by Bezel's team of experts.
Speaker 2:You can
Speaker 1:get a dive watch added to your collection. You need a dress watch. You need a sports watch. You need a a dive watch.
Speaker 2:Tariffs are hitting Switzerland.
Speaker 1:So get in there while you can.
Speaker 2:But so retail prices will go up. Yep. I expect prices on Bezel to go up as well, but probably slower and less systematically.
Speaker 1:So download the app, start building your collection, your wish list, and find something beautiful to add. Speaking of tariffs, George Hotts posted from the Tiny Corp account a big long post about how the tariffs are affecting his business, and it's it's really it's really, like, a frustrating story. He says, you know, we talked to Chris, Power, Hadrian. He's obviously a beneficiary of the tariffs. The tiny box is is is much less of a beneficiary, potentially harmed, and he breaks it down.
Speaker 1:He says, to date, we have man manufactured all tiny boxes in America. However, we buy parts from abroad. There is no way to buy American made GPU or motherboard at this time, and there won't be for a long time. If these tariffs stand as is, we would have negative margins on tiny boxes. Our motherboard manufacturer has already reached out and tried to get us to pay the tariffs on things we already agreed to deliver on the delivery price for, but I don't blame them.
Speaker 1:Their margins are probably go negative with the tariffs too. I sort of doubt we'll be getting our 50 nineties at the price we agreed upon either. And if that's true, the whole thing is really out the window. And even more stupidly, there's a restricted list of countries you can ship 50 nineties to. So I'm worried, I'm not so sure we could move manufacturing of the green v two, their product, and the product may just be canceled.
Speaker 1:I'm not gonna spend my time figuring out weird loopholes and incentives to reexport an FTZ and maybe try and eke out a small profit after all the administrative costs. Tariffs are regulations when difficulty of business go of doing business goes up. Many people only marginally making money just stop doing business. The US has an ease of business ease of doing business score ranking of six. Hong Kong's ranking is three.
Speaker 1:If we manufacture here in Hong Kong, we have free trade and can continue our policy of selling everywhere and passing the tariffs on to the buyer. European Union people have been dealing with this for a long time. Now US people will too. If we can't get 50 nineties because of shortsighted US export regulations, we'll have to ship we'll have to switch to something that we can get, maybe a different graphics card. So very frustrating and and and an interesting real life case study, not just a pundit kind of oh, I think the tariffs are bad for economic reasons or they're great for economic reasons or they're or, you know, it's some part of some grand five d chess or whatever.
Speaker 1:This is somebody who's really trying to build a business on the ground. Clearly, you know, one of the greatest programmers of all time and and and a fantastic just I I don't even know how to describe him. Like, business person, developer, he's kind of everything. But George Hot's breaking it down about why the tariffs are actually leading him to leave America and and focus on Hong Kong. And and, you know, who knows how that will play out?
Speaker 1:But very frustrating story, but interesting to hear him him break it all down. And, of course, if the tariffs are moving the markets, you're gonna wanna be on public.com.
Speaker 2:Multi asset investing, industry leading yields, And guess what, John?
Speaker 1:They're trusted by millions.
Speaker 2:They're trusted by millions.
Speaker 1:Investing for those who take interest
Speaker 2:by us.
Speaker 1:Go to public.com.
Speaker 2:Thank you to public for supporting the show.
Speaker 1:And and in relation to the to the to the market turmoil, scooks had a funny post here. After the nine elevens after nine eleven, the stock market lost $1,400,000,000,000 inflation adjusted. Today, the stock market lost 2,000,000,000,000. So these tariffs are, like, 1.429. Yikes.
Speaker 1:Rough. Five k. Likes. Very popular. What else should we cover here?
Speaker 1:Just, just FYI, the the the map of states that are renamed for countries with similar GDP really puts America's dominance in place. Just the state of New York is the same size as Canada. Just California is the size of India. Just Marked. Texas is the size of Brazil.
Speaker 1:Marked. Just just Florida is the size of Indonesia.
Speaker 6:Marked.
Speaker 1:George Hots is over in Hong Kong. That's the size of Indiana. Yeah. America stays undefeated. I mean, this is 2019.
Speaker 1:We'll see where it goes. A lot of these countries are growing, and some of these states might be shrinking. But I'm still long America even with all the crazy tariffs. And, you know, no no better way to get your message across in America than some out of home advertising on ad.com.
Speaker 2:If you wanna break through the noise, you gotta go out of home.
Speaker 1:Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology out of home expertise and data to enable efficient seamless ad buying across the globe. Should we talk about what else is interesting? Vittorio had a funny meme, the virgin tariffs warrior versus the Chad, we'll see what happens LMAO.
Speaker 2:Yeah. I feel like this obviously resonated. It's our our approach has just been, you know, this is happening. We'll see what happens. There's a lot of negative impacts and then there's people like Chris Powers
Speaker 1:Yeah.
Speaker 2:That are benefiting from it. You know, overall it's much less easy to be in the Chad camp if you are George Hots Yep. And Tiny Corp and your your product is being, you know, impacted or or, you know, the business entirely. So we'll we'll we all have to see what happens. Yeah.
Speaker 2:But definitely feeling that for entrepreneurs this week that are just dealing with immediate repercussions from it and uncertainty.
Speaker 1:For sure. Should we close out with this thread from Carried No Interest?
Speaker 2:Let's do it.
Speaker 1:So Carried No Interest, he's done the show before. He says it's time to coin some new AI software terms. He's employing Kugen's law. He says inference to impact, I two I is the first, and inference risk quotient, IRQ, is the second. And he defines these.
Speaker 1:This says the first that stands out to me is inference to impact. What does this mean? It's the amount of time it takes within a new software product from hitting an LLM API to getting customer utility. I've noticed distribution in these new startups. Let's start with Cursor.
Speaker 1:Cursor has a very low eye to eye inference to impact. As soon as you start ripping the application, you are hitting an LLM and getting results. The eye to eye is immediate. This is a good thing. Now the opposite is AI SDRs.
Speaker 1:You hit a bunch of LLMs and send some outreach much longer eye to eye on this product bad. It's kind of the the the iteration loop. A low I two I is good on a bunch of levels. Your customers are seeing immediate magic. You can onboard users faster.
Speaker 1:Sales cycles should be shorter. When you can shorten the amount of time between LLM and utility, this is objectively very good. But it's time for another one, the inference risk quotient, the IRQ. The IRQ describes the amount of risk created for the customer from a series of LLM calls. For some AI first software companies introduce very little risk to a customer by calling it LLM.
Speaker 1:Others, a good amount. Let's describe it. Cursor works well in for this example as well. Cursor's IRQ, the the risk quotient is theoretically low. Cursor generates code.
Speaker 1:That code goes into a diff a a a diff. It should be tested and most errors caught as it progresses through staging environments. Solid IRQ. What about the inverse? Let's go back to the AI SDR example.
Speaker 1:Your AI SDR starts ripping emails out the door. Some of them are bad. They maybe embarrass your marketing department. Oof. Probably a medium IRQ.
Speaker 1:What would be a high IRQ, an inference risk quotient? Let's think about Harvey. Harvey is an AI software for lawyers to analyze whatever lawyers analyze all day. In my opinion, this would be high IRQ. If the AI misses something important or misclassifies, you could have potential legal damages.
Speaker 1:There's probably one more item, one more term in here, l m a o I u r q, inference utility to risk quotient. This would be the amount of risk relative to utility. Cursors utility relative to risk is so high. Your staging environment should catch bugs and your output is much higher.
Speaker 2:Fantastic. Frameworks. Yeah. Very on point. I almost always say carry no interest real name every time.
Speaker 2:Yep. So eventually, you're gonna get docs, buddy. It's the nature of text. Not on purpose, but this reminds me of what Avalok was bringing up. If you're asking AngelList via an LLM what the share price is on a specific position investment, etcetera, it it has to be right.
Speaker 2:Right? Because you're gonna go make, you know, different financial decisions based on that data. Yep. And like they they need to be a, you know, accurate source of records on these type of things and people just aren't gonna tolerate Yep. You know, hallucinations in that environment.
Speaker 2:So, Yeah. I think this this very well sums up why we're seeing the adoption, you know, cursors the adoption curve versus we don't we see these sort of AI SDRs that are, you know, getting customer traction but it seems like the churn is much higher and the utility is much lower. Yeah. I haven't seen people, you know, it was great having Sean from Roxxon. Yeah.
Speaker 2:Sounds like people are getting a lot of utility out of that but it's almost more of a CRM type tool than purely an outbound, you know, engine. Yep. And so we haven't seen anybody raving about their AI, BDR, SDR yet. That's also could be that if it's working so well, you don't want
Speaker 1:You don't to bet. Yeah. Don't want alpha, I guess.
Speaker 2:Yeah. Don't want to
Speaker 6:make the alpha.
Speaker 1:I I wanna do a couple more. Andre Carpathi had an interesting post here. He says, let's take AI predictions from blog posts, podcasts, and tweets and move them to betting markets, state of the art and truth. Obviously, we are sponsored here by Polymarket, and I'd love to see more AI markets on Polymarket. I'm sure we'll be working on spinning some of those up.
Speaker 1:Andre Carpathi continues to say, my struggle has been coming up with good concrete resolvable predicates. This is always the tough thing with polymarket is that Yeah. You know, it needs to have a clear resolution. It needs to be not too far out, not more than a year. You know?
Speaker 1:You don't want your money just sitting there. Ideally, predicates related to industry metrics and macroeconomics, e g, naively, one might think the GDP, but I'm not so sure that works great, e g c productivity paradox. I also think evals are not amazing predicates because we see over and over that they are incomplete and hackable and and and Yeah. And saturated often. And I thought this was interesting because he's he's close to kind of my my thesis about the artificial economic intelligence just maybe instead of tracking towards, you know, IQ or how does this benchmark against a human or the the Turing test.
Speaker 1:We just want to say how much economically valuable work is being done by LLMs and AI agents and diffusion models, etcetera. Like Yeah. Of the GPU cycles that we we have we have strict data on CapEx and inference cost and how much energy is going into these data centers
Speaker 6:Yep.
Speaker 1:How much how much economic value is being produced. And once that hits 10%, that's probably some sort of tipping point. Once that hits 50%, like, the robots have kind of won, and that could be good or it could be bad. But but that is true. Like, okay.
Speaker 1:The robots, the AIs are producing more economic value than all of human all of humanity combined when we hit that 50% GDP generated by AI threshold, that feels like singularity territory to me. That feels like a fundamentally different society. That feels like you Feels like AI
Speaker 2:in 2027.
Speaker 1:Yeah. Yeah. I I would take the under on on AI generating over 50% of GDP by 2027. But, yes, the productivity paradox is is tricky. Tyler Cowen has tried to formulate this saying that, like, you know, the AI doomers, they should express their PDOMs in the form of long dated puts and say Yeah.
Speaker 1:Well, if you really think that this is gonna go poorly, you should imagine that there'll be economic turmoil, and you should be betting on that and profiting off of that. And if you're not, then maybe you're just yapping. Yeah. And so he'll he's gonna be on the show in a few weeks, and and and we'll have to dig into more about how we can concretize these bets and think about how we make predictions about AI progress. There's Yeah.
Speaker 1:Communities last exam, this ARC AGI, and there's all these interesting evals and and tests, but they're not scratching the itch for me in the same way when some new model goes viral. I care more about the Studio Ghibli moments than the, okay, Google's Gemini 2.5 is two points higher on MMLU or some Yeah. Some exam or hacking AP bio even. I care
Speaker 2:less something interesting which is if a lab has a truly world changing discovery Mhmm. Or innovation, they should not tell the world and not release it Mhmm. And just leverage it to the absolute max Yeah. Internally, which again goes back to SSR. People's frustration with OpenAI.
Speaker 2:Okay. If you are at the frontier and you've felt like it should be, you know, open sourced, and now it's closed, you know, how how do how do the incentives and everything change? Mhmm.
Speaker 1:Let's close out with Nick, talking more about AI alignment. He says, broadly, I think a l AI alignment people are maxed out in smart and low in wisdom. I like this because it goes back to the when you build a character in an RPG, you have int and wiz, intelligence and wisdom, and they're slightly different. Yep. And and I think as we, like, as we try and define what makes a human truly successful, it's not always just put all the points into intelligence.
Speaker 1:Charisma obviously matters. Yeah. Strength and, like, strength as a sense of, like, your grit, your grind, your ability to keep continue working. Charisma, obviously, super valuable for coordination, bringing people together. There's this Yeah.
Speaker 1:Agency, drive. Yeah. Lots.
Speaker 2:Talking about Riz.
Speaker 1:Yeah. Riz. All these different things. And and, yes, we might be seeing intelligence max out and get to these super high IQ models. But are they going to be super agentic, super creative, super wiz super driven by wisdom?
Speaker 1:Yeah. And this comment is obviously about the AI alignment people. He says, not a comment on anything in particular. I've noticed myself saying it and thought it would be worth writing down, but, obviously, it's it's, like, perfectly timed with the AI 2027 thing. So there's lots of room for people from other fields to contribute wisdom learned throughout history even if they can't do a math Olympiad or whatever.
Speaker 1:I don't think being able to do high level math helps that much. I guess one specific comment I'll make is that I'm quite excited about Emmett Shear's new company, Softmax. I think he's thinking about things in interesting ways. And so we'll have to dig into Emmett Shear's new company and how he's thinking about this because he's been very outspoken on AI alignment, but also a very successful entrepreneur and has built up probably a very deep trove of wisdom running Twitch and and building a real business that has to interface with the realities of the economy and doesn't live he's not a pure academic, but he engages with the AI alignment debate in at the same level as academics in my opinion. And so I'm I'm excited to see that.
Speaker 1:But, it is is it is interesting, obviously. Sean was talking about this, like, AI 2027, maybe it's just fan fiction. I like fan fiction. Had fun reading
Speaker 2:Stop provoking.
Speaker 1:And and think there is utility in that even if you're just telling a sci fi story. I'm here for it. I'll I'll I'll read it all day. So I I would say Yeah.
Speaker 2:We want we want people Yeah. Doing that work.
Speaker 1:Yeah. I would say more of that, but also you do need to you you can't lose the plot.
Speaker 2:We have to announce a specific milestone which is that we just hit four hours.
Speaker 1:Oh, we're Our first
Speaker 2:four hour show. We're clearly addicted.
Speaker 1:I just kept one going.
Speaker 2:Now, you know, that we've been talking about AI AI predictions. I have one prediction to make Yeah. Which is that Monday at 11AM Pacific, two PM Eastern, we will be back sitting in these chairs Yeah. Ready to go again.
Speaker 1:Yeah. Can't wait. I mean, what's your prediction for TBPN twenty twenty seven? I think we'll be here.
Speaker 2:We'll be right here.
Speaker 1:We'll be right here doing the same thing.
Speaker 2:Doing the same thing.
Speaker 1:From the front lines of the battle scarred Terminator apocalypse. We will be I mean shooting humanoid robots
Speaker 2:No matter
Speaker 1:with microphones in our other hands. Yeah. James Bond's back, baby.
Speaker 6:We will
Speaker 2:we will never surrender. We'll never surrender. We will keep doing this until the the AI the bioweapon that the AIs release Yeah. You know, just
Speaker 1:sort maybe from a hermetically sealed bio secure facility. Yeah. So that no one can no one gets in, no one gets out, but we're always livestreaming. And then sleeping on our eight sleeps and then waking back up. That's doing it again.
Speaker 2:Have a fantastic weekend, everyone. Thank you for tuning in. We appreciate you all. Yeah. And looking forward to Monday.
Speaker 1:Thanks a lot. Looking forward to Cheers. Bye.