Subscribe
Share
Share
Embed
Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVPN. Today is Friday, 04/25/2025. We are live from
Speaker 2:the Temple Of Technology, the Fortress Of Finance, the capital of capital.
Speaker 3:Oh, I,
Speaker 1:was in a particularly brutal board meeting with a venture capitalist. Got ugly. We've talked about how board meetings should be more confrontational. There should be a threat of physical violence.
Speaker 2:That's right. Brings out the best in people.
Speaker 1:It really does. It really does. Oh, you want me to pull forward my revenue projections? Are you willing to die for that? Let's duke it out.
Speaker 1:Let's
Speaker 2:go. To the test.
Speaker 1:Let's go to a foreign country that allows duels, and let's duel to the death. This is the future of technology. Technology is not for the weak.
Speaker 2:Big opportunity for Praxis is enabling Yes. Duels.
Speaker 1:Yes. Right? Yes. Yes.
Speaker 2:Many people would like to duel.
Speaker 1:I completely agree.
Speaker 2:But they don't have the legal framework to really do it here in America.
Speaker 1:There are I I have looked this up before. There are countries where you can go and duel to the death legally. It's a little complicated. You gotta fly out there. You have to get some permits, but you can do it.
Speaker 1:It does exist. And maybe we should bring it back. You never know. It would certainly make tech more interesting. It would make our job reporting on tech more interesting, But nothing's more interesting than earning season, baby.
Speaker 1:Can I get a sound effect for earning season? Google's earnings power holds up in global turbulence. Google parent kill. Alphabet reports solid earnings, but tariff impact on second quarter results is still unclear from The Wall Street Journal. Google's earnings power held is holding up well.
Speaker 1:They're making money. They're printing. They reported operating income of 30,600,000,000.0 for the first quarter on Thursday, solidly beating Wall Street forecast of 28,700,000,000.0. Revenue rose across the company's business units, but was largely in line with analyst estimates. Capital expenditures reached a record 17,200,000,000 in the quarter.
Speaker 1:Let's hear it for CapEx. We're gonna be training bigger models.
Speaker 4:Manager mode.
Speaker 1:Manager mode. For sure.
Speaker 2:Sundar might be goated. He might be goated. He might be back.
Speaker 1:He might be goated. He doesn't do a lot shows. He doesn't do a lot of media. He's starting to go direct. He's to post an x a bit more.
Speaker 2:Yeah. People were saying if he resigns, does the stock pop? He did it while staying in place. Yep. And he deserves all the credit for it.
Speaker 1:He does. So congratulations to everyone at Google, all the shareholders, all the employees, the founders.
Speaker 2:And this was breaking news yesterday. We announced that we are joining the war against big tech
Speaker 1:Yes.
Speaker 2:On the side of big tech.
Speaker 1:Yes. We are joining the war on big tech on the side of big tech. Yeah. And yeah.
Speaker 2:It must be protected.
Speaker 1:It must big tech must
Speaker 2:be protected turn little technology companies into big tech Yes. We still support big tech.
Speaker 1:Yes. Yes. And we have we have a reverence, a reverence
Speaker 2:for big Be very clear about that.
Speaker 1:So the stronger bottom line showed Google's resilience in a quarter that was marked by fears of an impending trade war and the effect that could have on the global economy. Alphabet share price rose 5% in after hours trading. Again, this is like a trillion dollar
Speaker 5:Coming kill.
Speaker 1:That's $50,000,000,000. That'll get you 100 of of Sergey Brin's yachts, which cost 500,000,000. Yeah. So he could buy a hundred of those if he owned all of all of Alphabet. Well, and Alphabet should.
Speaker 1:They should get 500 corporate yachts if in in my opinion, 500 foot yachts. But those worries
Speaker 2:remain every VP. Yeah. If their VPs are anywhere as good as Ben Yeah. They all deserve
Speaker 1:100%.
Speaker 2:Half billion dollar yachts.
Speaker 1:Yeah. Everyone talks about the perks of working at Google. You get the sleep pods. You get the nap room. You get the free lunches.
Speaker 1:Like, let's take it up a notch. The all that stuff
Speaker 2:the only perk that matters
Speaker 1:Yeah.
Speaker 2:Which is yacht. The yacht.
Speaker 1:Yachting. Yes. Real I mean, it's so played out. They've they've they've hit the they've hit what feels like the logical conclusion of perks. Right?
Speaker 1:Yeah. Oh, yeah. Free lunch. Oh, we'll walk your dog for you. Oh, there's yoga classes.
Speaker 1:Oh, there's a Google
Speaker 2:class.
Speaker 1:Told you I
Speaker 2:spent a summer
Speaker 1:just What about the Google yacht?
Speaker 2:Google cafeteria. Yeah. One of my fraternity brothers Yep. Worked at Google for a summer and he spent the entire summer trading crypto Fantastic. As windows.
Speaker 2:When he would take a break while working for Google, to be clear. Fantastic. And oftentimes around dinner, he'd say, hey, do wanna come have lunch? And I enjoyed every
Speaker 1:I've had lunch there too. Good.
Speaker 2:Every salmon dinner that I had on Google's
Speaker 1:Yeah. Dime. You know, people people were people were upset about the Google bus that took Google employees from San Francisco down to the Google headquarters in Silicon Valley. Should have just cut out the whole Wait.
Speaker 2:Why were
Speaker 1:they upset the Google yacht that takes you from because it could take you down the bay.
Speaker 2:That's right.
Speaker 1:The Google yacht would be so much better. And the whole thing where they were vandalizing the Google buses, but it's so much harder
Speaker 2:to And maybe they could have hit some of their climate goals by using a sailboat. Love this.
Speaker 1:Yeah. No doubt. No doubt. Just sailing to work. There are some people that actually sail across the bay if they live in Marin, which is pretty sweet.
Speaker 1:They ride their bike and then take the boat. And it's not a
Speaker 2:sailboat, but
Speaker 1:it's, you know, it's nice.
Speaker 2:It's ferry.
Speaker 1:Anyway, people are still worried. People don't think Sundar can do it. Google doesn't issue financial projections with its quarterly reports, which leaves it unclear how just how just how its business was affected by president Trump's April second announcement of high tariffs, but the turbulence that has followed amid the ever changing status of those tariffs. And the company's earnings on, chief business officer, Google's chief business officer said it's too early to comment on trends for the current quarter. Now Google doesn't manufacture a lot of stuff generally.
Speaker 1:Of course, they have consumer products. They have Google Home devices. Those might be made in China. They have Google Android phones generally. But They have
Speaker 2:a merch store too. Andrew Reed. Yeah. Merch.
Speaker 1:Merch store.
Speaker 2:Yep. The Google has merch.
Speaker 1:Yeah. Which And so I'm sure they have operations in China, but they are seem much less exposed to Chinese tariffs than Apple. Yeah. Right? And so if Apple is hurting, the iPhone does wind up going to $2,000 a phone, $3,000 a phone because of tariffs, well, that will probably drive even more people to buy Android phones even if the Android phones are more expensive because on a relative basis, they would be cheaper.
Speaker 1:And, also, the phones seem to have been unaffected. Ben Thompson was talking about, Tim Cook, and there's they're kinda dancing around this issue of, is Tim Cook the right CEO for Apple? He's 64 years old, so he's getting close to reasonable retirement age.
Speaker 2:I was gonna say close to hitting his prime.
Speaker 1:Hitting his prime. I agree. And I actually I think I disagree with Ben Thompson on this. He was very shaken by the there's something rotten in Cupertino report by his cohost of of what what what is this other podcast? Is it yeah.
Speaker 1:Daring Fireball.
Speaker 3:Yeah.
Speaker 1:And so there's this big question about the big miss on on Apple intelligence. Should that be serious cause for concern that if Apple's not getting AI correct, do you need new leadership if AI is the most important thing in the world? But I think we learned from the tariff situation that, in fact, supply chain is maybe the most important thing in the world, and Tim Cook is world class at supply chain, and so it makes sense that he is at the helm. And Yep. I think any discussion of Tim Cook stepping out of Apple is too is too too premature.
Speaker 1:I think maybe getting new product leaders to push Apple intelligence more aggressively makes sense.
Speaker 2:Supply chain expert Yep. At a point in time where we're dealing with, you know, really complex Yep. You know, tariff policy Yep. And uncertainty. He's the perfect guy
Speaker 5:Yep.
Speaker 2:To be in at the helm right now. Yep. Maybe not the perfect guy for five years from now Yep. But we can just, you know, center
Speaker 1:on Which would affect more which would affect Apple worse? If they truly lose the AI agent, Siri, you know, AI assistant landscape to the point where they need to open it up and they need to say, you can map your Siri button to any any app, and we're actually auctioning it off. And Google's gonna bid just like they did for the default search in Yeah. Safari. And OpenAI is gonna bid.
Speaker 1:They'd probably make a ton of money from that. Maybe not capture all of it, but they'd capture a lot of value from that. And that might be a loss strategically for them that they wouldn't own consumer AI in the future. Obviously, consumer AI is something that you wanna own. But so if they lost that, it wouldn't be good.
Speaker 1:But compare that to getting the tariff issue wrong, getting the supply chain wrong, not being able to deliver the product, delivering the product at three times the price, that is actually catastrophic versus, hey. There's this massively incremental technology, and we have to partner with other big tech companies on it like we did in Search. I don't think it's that big of a deal. And so I'm I'm pro Tim Cook in this case, at least for now. We'll see.
Speaker 1:Yeah. But it's fun to watch it unfold. So Alphabet's operating income per quarter, just a hair off of peak. Of course, the q four season, I believe, is always strong, but they are rocketing towards over $30,000,000,000 in operating income every single quarter. You love to see it.
Speaker 1:Their advertising revenue rose 8% to 66,000,000,000, while cloud revenue jumped 28 year over year to 12,300,000,000.0. Let's hear it for them. Congratulations to everyone at Google. Both were declarations from the grow decelerations from the growth rates seen in the fourth quarter, but Google isn't blinking in its plans to invest in aggressively in generative AI. The company maintained its plan to put $75,000,000,000 towards CapEx this year, more than double its annual average over the past five years.
Speaker 1:Of course, there's an acceleration there. The business grown a lot, and they are risk on. Correct. A plus work on the sound board today, Jordy.
Speaker 2:The natural the natural evolution of this is that I have a sound board with with thousands of effects and I just don't say any words.
Speaker 1:You don't say anything. It's the only thing. You just you just move from from front office to back office.
Speaker 2:I'm just wearing an Apple Vision Pro,
Speaker 1:and I'm just, like, getting the That's great. Reactions. So the the Google didn't exactly face a high bar coming into Thursday's results. Alphabet stock has been flat over the past twelve months, lagging most of its medic mega cap tech peers on worries about its position in AI and the loss of two federal antitrust cases that could ultimately result in the company's breakup. Of course, everyone was saying OpenAI is the disruptor to Google search.
Speaker 1:Maybe Perplexity is gonna take a run at Google, but people are still Googling stuff. They're Googling stuff, and then they're doing deep research reports separately. And and maybe that's chipping away, but it doesn't seem to be chipping away at earnings. Google seems to be Lindy in this case. So Alphabet also commands the lowest valuation multiple of the multiple of the major tech giants with the stock trading at just 18 times projected earnings for the next four quarters compared to Microsoft at 28 times.
Speaker 1:The company said Thursday that it would boost its quarterly dividend to 5% to 5% to 21¢ a share, which comes a year after it initiated the payout. This, of course, was the famous criticism that Peter Thiel levied at Eric Schmidt on stage at that Fortune conference years ago. Do you remember this?
Speaker 2:I had another thought jump into my head that's
Speaker 1:Help me with the other thought.
Speaker 2:Which is Netflix trading at a PE ratio of around 50. 50. How frustrated do you have to be as Google management when you look at Netflix and you're like intense competition Mhmm. From a bunch of different players.
Speaker 5:Totally.
Speaker 2:Obviously, you know, they basically own the entire market. Yep. They have everybody signed up. Yep. The strategy now is just to just increase prices and and and reduce costs or or keep costs as is.
Speaker 2:But but ultimately, when you look at the sort of underlying quality
Speaker 6:Yep.
Speaker 2:Of these businesses, it just really says that the markets firmly believes
Speaker 3:Yep.
Speaker 2:That Google is at extreme risk of disruption of the core business model. But when we talk to people like Logan, which who we had on the show Monday, who runs Google's AI studio, it's hard not to be generally bullish on what Google is doing in AI.
Speaker 1:Yeah. No. I agree. It's interesting, the Netflix comparison, because by all accounts, you would have to assume that YouTube is just a better business. It is the final form of all the best content goes there.
Speaker 1:The algorithm sorts it all out, sifts the wheat from the chaff. The really low effort videos get a couple views. They make a couple dollars, but the MrBeast videos get a hundred million, five hundred million views Yeah. And the other and generate millions of dollars in ad revenue. And it's all decentralized.
Speaker 1:It doesn't have any oversight, so there's no overhead there. There's no negotiation. They're, oh, we lost this particular video. The videos go up. They get Yeah.
Speaker 1:Like clockwork.
Speaker 2:They have a subscription plus ad based business model. They do.
Speaker 1:It's the same as
Speaker 2:The the other thing that I think is worth noting on on Google is, yes, ChatGPT is a threat. Yes, there are people that are, you know, chatting with ChatGPT as an alternative to, you know, punching something into the Google search bar. But I look at it much more in the context of, you know, TikTok and Instagram. Yes. TikTok, you know, has taken away sort of usage from Instagram and other meta products.
Speaker 2:Mhmm. But it certainly didn't kill either of them and they've still been able to find growth there. So
Speaker 1:Well, speaking of Google's ad business, they're making tons of money running ads. We're making money running ads, and you can make money running ads on AdQuick. Out of home advertising made easy and measurable. Go to AdQuick.com. Let's kick it over to Intel.
Speaker 1:Intel cuts Outlook, says layoffs are are in store. You hate to see posted a quarterly loss on Thursday. They are the old guard. I think Intel and Google both raised money from Kleiner Perkins, I'm pretty sure. Maybe Sequoia is in both of those, but, similar venture capitalists, very different stages of life as big tech companies.
Speaker 1:The company posted quarterly loss on Thursday and gave a weak revenue outlook, said it would lower its operating expense target this year by $500,000,000 and re and would reduce it by a further 1,000,000,000 next year. This is on the tale of new chief executive officer Lip Bu Tan beginning a turnaround effort, and, we are excited to see what he does and how many pages he takes out of Strathecari printouts because, Ben Thompson has been playing armchair quarterback for the last decade, and maybe it's time for Intel to implement some of the Ben Thompson playbook.
Speaker 2:Not a bad idea at this point.
Speaker 1:Tan said to a letter you know, in a letter to employees that layoffs would start this quarter and continue over several months, although he quantify how many employees would be affected. That's pretty rough. That's brutal for
Speaker 2:the team. Some people are
Speaker 6:Yeah.
Speaker 2:We're gonna be doing layoffs over a few months.
Speaker 5:I mean,
Speaker 1:I guess it's like no surprises and, hey. This is gonna happen, and maybe you telegraph it early. They're also reducing capital spending by 2,000,000,000 down to 18,000,000,000 in total CapEx. They're getting into for this entire year. I mean, now they're spending less on CapEx than Google is spending per quarter.
Speaker 1:They they spend less in a year than Google spends in a quarter. And it's like their whole business should be CapEx, in my opinion, since they should be a fab mostly. But, of course, they also invest in design of semiconductors as well. And so there's been a slowdown in a gigantic manufacturing expansion undertaken by Tan's predecessor, Pat Gelsinger. Finance chief said tariffs were affecting the company in two ways.
Speaker 1:Customers rushed to buy electronics in anticipation of the tariffs contributing to higher than expected revenue for the quarter. But looking ahead, he said costs would increase and the market would contract as consumers and businesses face an uncertain economy, and Intel's stock dropped by about 7% in after hours trading. The revenue was flat.
Speaker 2:We are so far from the rumors last year that Elon was in the mix to potentially buy Intel Yep. That companies.
Speaker 1:Such a
Speaker 2:great timeline to be I
Speaker 1:still think it would have been so cool if if the CHIPS Act was basically just, you know, structured as a as a, you know, debt financing for an LBO and take over, take private of of Intel with with Elon at the helm, I think that could have been a really, really great ending. And it would be so much less it would be very it would be very easy for people to rally around from an American perspective Yeah. Because it's it's it's so much less controversial than, oh, what's going on on x? It's the public square. Is it left wing?
Speaker 1:Is it right wing? Like, this culture war effort, is is, it it regardless of where you stand on the issue, it's clearly, causing friction between Americans. Whereas if you get Elon and he's just off making semiconductors and the semiconductors are getting cheaper, it's like, who is this a left wing or right wing ish? We don't even know. It's like, yeah, he's cutting some jobs there, probably, making it run more efficiently.
Speaker 1:But ultimately, the goal is cheaper semiconductors. I think that's something everyone can get behind.
Speaker 2:But it's not cars. Yeah. And And then those got burning them down.
Speaker 1:Yeah. So, yeah, maybe anything's possible. Who knows? Anyway, sales rose 8% in the division that sells chips for data centers and AI, obviously, a rare bright spot amid the gloom. Sales in its personal computer chip division, its largest segment, fell 8% to 7,600,000,000.0.
Speaker 1:Its contract chip making business reported 4,700,000,000.0 of revenue, up 7%. Intel also gave a forecast of roughly 11,800,000,000.0 in revenue for its current quarter, lower than Wall Street's forecast of around 12,800,000,000.0. And so lot of uncertainty. They are signaling to the market, hey. We're going through a transformation.
Speaker 1:We're gonna be cutting costs. Revenue might dip, but, hopefully, we will emerge stronger. And we're rooting for you over at Intel. We would love to see Intel, become a fantastic tech company as it has been throughout
Speaker 2:the industry. I might need a new name. The American Supercomputer Super Corp.
Speaker 1:Super corp. I like that. Yeah.
Speaker 2:I think it really needs to, you know, fall into modern steps of, you know, some of our new hard tech companies.
Speaker 1:Well, we'll see what Lip Buuton winds up doing. Maybe he'll need to take out some ads to make the company I wonder if he'll be again. If he does a rebrand, he's gonna have to buy a bunch of ads, and we gotta do an ad. What's our next ad for? Bezel.
Speaker 1:Oh, fantastic. We've done some risk checks on various on various semiconductor CEOs. We've seen, Lisa Su over at AMD rocking a rollax.
Speaker 2:She's a collector.
Speaker 1:She's a collector.
Speaker 2:Just say the least.
Speaker 1:Lip Buuton, I know you're I know you're listening. Get on Bezel. Pick up a watch. Go to getbezel.com. They got a bezel concierge for you, Lip.
Speaker 2:If Lip is not at Hill and Valley Yeah. That is bearish for example.
Speaker 1:Get out there to DC. Hopefully,
Speaker 2:he's there. We'll talk to him.
Speaker 1:He should be wearing an FPG1.
Speaker 2:Yeah.
Speaker 1:Or Richard Mill.
Speaker 2:That's right. A one of one. A one of one.
Speaker 1:A piece unique, ideally. Yes. Piece unique with the semiconductor right in there.
Speaker 2:That's what
Speaker 1:I wanna say.
Speaker 2:That's right.
Speaker 1:Anyway, we're
Speaker 2:moving on to surprised nobody did a Blackwell watch yet. I know. It's like, I don't need the time. My phone tells the time, but I just want you to know that I have a, you know, I have a Blackwell on my wrist.
Speaker 1:Blackwell on my wrist. That's really good. I mean, did you see the the NVIDIA purse? That was pretty
Speaker 4:cool.
Speaker 2:That was cool.
Speaker 1:That was great. And so someone took a NVIDIA GPU and turned it into a purse that you can purchase for the for the technology sister, for technology girlfriend or wife. Great gift. Absolutely. Anyway, we're moving on to probably an even more important story in the tech world.
Speaker 2:Yeah. This is big.
Speaker 1:Story about a man who built a house with room for 21 of his Porsches. Yep. He actually had one house
Speaker 2:I can't tell you how many people
Speaker 1:sent us to us. Yeah. Are in this scenario. Is great.
Speaker 2:Well, sent us his article and said, one, you have to cover this.
Speaker 1:Yes. Yes. Yes. And The show wouldn't be complete without it.
Speaker 2:That's right. It wouldn't be a Friday show without something like this
Speaker 1:in the mix. So
Speaker 2:Exactly. Here we are.
Speaker 1:So, he wanted room for 21 of his Porsches, so he built a second house across the street as one does. Near Palm Springs, California, Architect Steven Harris spent millions designing a modern house equipped with an underground garage of his sports cars. He's a highly successful architect of houses and apartments, and his husband, Lucien Rees Roberts, a prodigious interior designer, which we'll get into later. The interior the interior design game is fascinating. There's trade deals happening all over the place.
Speaker 2:Big deals.
Speaker 1:Big deals. They spend most weeknights and and the lifestyle of these two bros is top notch. So they spend most weeknights in an elegantly appointed loft in the Manhattan in Manhattan's Tribeca neighborhood. For weekends, they have a house called Galloway Hill. Always a good sign when your house has a name.
Speaker 1:You should always be naming your house. That's in Kinderhook, New York. For vacations, There's a compound on an island in Croatia and a restored mid century modern house in Rancho Mirage, California, 8 miles southeast of Palm Springs. So they got they got, you know, their fingers in every single pie.
Speaker 2:Croatia is very underrated. Have you been?
Speaker 1:I haven't been. I've been to Greece. Feel like Croatia's kinda knock off Greece. Is that is that the case? I don't know.
Speaker 2:Our two Croatian
Speaker 1:Listeners
Speaker 2:size lords are gonna Fuming. Fuming. Giving you death threats.
Speaker 1:I don't know. I don't really leave The United States. I don't go into any of these, like, backwater developing nations regardless of how scenic and luxurious they are, but, good luck to them. I'm glad they, built a compound in an island out there. For years, they were happy with those options, especially, Harris says, because Rancho Mirage and their part of Croatia have perfectly reciprocal climates.
Speaker 1:That's pretty smart. Meaning that if it's the wrong time to visit if it's the wrong time of year to visit one, it's the right time at the other, which is really smart. But there was more real estate to come. In 2016, a one acre lot directly across the street from the Rancho Mirage house came up for sale. They purchased it for 800 k with no plan, Harris says, other than to prevent someone else from building something hideous.
Speaker 1:I love it. It's like, how bad could it have been? Like, it's probably just gonna be a normal house, but they're like, no. It needs real issue.
Speaker 2:Needs design driven. Yeah. I mean, don't necessarily control your neighborhood.
Speaker 1:Architects and and so they're like, we're not gonna let you build some McMansion up there. Not gonna put the fake, fake blinds on the outside. So they found themselves wanting to spend more time in California where their neighbors include theater folks like John Robin, Robin Bates and Joe Montello and television personalities Kelly Ripa and Mark Consuelos. And they had solved one of the logistical problems of being bicoastal. And this is the art of the deal, folks.
Speaker 1:If you're not doing deals like this, you are gonna be left behind in the modern economy. This is golden retriever maxing literally. Taken literally.
Speaker 2:So So
Speaker 1:You wanna break it down, Jordy?
Speaker 2:These two guys designed a client's private jet for free. Many of our listeners know and have gone through the process. When you know, when you buy a Gulfstream, you're not gonna sort of necessarily take this sort of stock interior. So they designed a client's jet for free in exchange for a promise to fly their yellow Labrador retriever, Zoe, between New York and California for the rest of her life. And one of the two guys Will travel
Speaker 1:with her.
Speaker 2:Always travel with her.
Speaker 1:And And so this is why in the modern economy, you don't just wanna be golden retriever maxing. You actually want to be a Labrador retriever.
Speaker 2:Need to be working out deals that allow your Your dog to fly private. Fly private whenever they want
Speaker 1:Whenever they want.
Speaker 2:Rest of their life in exchange for a one time
Speaker 1:One time service. That really has no cost because it's it's you're just designing it. Yeah. So you're just, like, picking things.
Speaker 2:It's really just your time.
Speaker 1:It's just your time. So you swap
Speaker 2:the is potentially one of the greatest investments It's one of the greatest investments. Investments.
Speaker 1:Yes. We were talking about this. So with companies like Loyal, Celine Yeah. Who we've talked about on the show. Loyal is working on life extension for dogs.
Speaker 1:And so, you know, how do you underwrite the price of private flights for a Labrador retriever for the rest of their life? Well, you probably pull out an actuarial table like you're doing life insurance. Right?
Speaker 2:That's right.
Speaker 1:Labrador retriever, how old is Zoe? You know, five years old. Probably lives to 10, 15. But with modern advances in science and artificial intelligence, dogs could be living hundreds of years. Yeah.
Speaker 1:Thousands of years. Yeah. And so this could add up played out in two months. Billions of dollars of value. This could be the greatest interior design project ever
Speaker 2:Of all time.
Speaker 1:Of all time.
Speaker 2:100%. A value capture.
Speaker 1:From a value capture standpoint. It's genius. But it's also gonna be incredibly inconvenient for whoever's private jet that is because imagine that the dog wants to get from New York to California on Tuesday. You're trying to take a meeting in DC. Now you take off from LaGuardia, and you're heading to you're heading to LAX just to get to Reagan International.
Speaker 1:The
Speaker 2:dog basically runs your life.
Speaker 1:The dog runs your life.
Speaker 2:I don't know who agreed to this. It's absolutely insane. Yeah. They basically said this interior design service that I that I'm a billionaire and I could just pay for is so priceless to me that I'm gonna offer up my my jet Yeah. To the end of my days.
Speaker 2:I I would expect the dog at this point to outlive the the client himself. So, anyways, going going back to the house situation
Speaker 1:Yes. Yes. Because the cars are equally important. There's 21 of these vintage Porsches. They bought the the house they had bought is historically important, so they couldn't modify it.
Speaker 1:And there are the pictures of the Porsches. And I love this because so this garage is specifically designed, '21 Porsches in the collection. You don't have to move a single car to select any of them. None of them are double parked. And so if you wanna take the nineteen eighties air cooled nine eleven out, you just grab those keys, you're good to go.
Speaker 2:Good to go.
Speaker 1:If wanna take the GG3RS
Speaker 2:In your path.
Speaker 1:You take those keys, you're good to go. You don't have to shuffle them around. You don't need a your personal valet. Shuffling. You're all good to go.
Speaker 1:There's no stacking. There's a lot of people Hoovie's Garage. Have you ever seen Hoovie on YouTube? He has his garage stacked three high, basically. He's clearly not doing it right.
Speaker 1:He should have just built a 21 car garage where you can pull out any of them at any time. And so the new house would have two things. The old house didn't have a studio complete with skylight. A third generation, Reeves Roberts is a third generation painter, and he would be painting in the studio with a skylight. And an underground garage where Harris, a serious collector of vintage Porsches, could store 21 of his favorites, all nine eleven RS models made by the company from 1973 to 2024.
Speaker 1:Wow. So it's a it's it's the nine eleven I guess it's the nine eleven RS every single year. So wow. Unreal. Incredible.
Speaker 1:And such dedication. I mean, Steve Jobs had the same dedication where he would buy a new nine eleven every single year. Right? And there's but, I mean, I guess he
Speaker 2:would, like, rotate that. I was in The Middle East once and got to see a private collection, and the collector had basically around 10 full scale warehouses on his property. Yep. And he would not just get, you know, a Range Rover every year. He would get every color that they made it from the manufacturer in that year.
Speaker 2:So it was literally like a rainbow collection where you'd walk into one of the warehouses, and it's just every single
Speaker 1:Yeah.
Speaker 2:Color of car in that year. And then you would do it for
Speaker 1:next year.
Speaker 2:You do it for Range Rover. You do it for Land Rover. Wow. You do it for Ferrari. Yeah.
Speaker 2:It was
Speaker 1:just So that's true wealth because the depreciation on a Range Rover is insane unlike some of these Porsches.
Speaker 2:Some of them
Speaker 1:Some of them some of them some of them do pop. But, so in the new house, he can slip away to his studio when he wants, and Harris is able to keep more of his 50 prized vehicles in California where he likes to take them out for early morning jaunts. He said he drives every one of his Porsches. We'd love to see us a car collector
Speaker 2:Fully committed.
Speaker 1:Puts miles on the cars. Doesn't just keep them in the plastic. You gotta be dailying your Countach, your LMO I mean, fun
Speaker 2:it it is a funny dynamic.
Speaker 1:Daily your supercars.
Speaker 2:If you have 50 cars in your collection Yep. It's actually hard to put a meaningful amount of miles
Speaker 1:Oh, totally.
Speaker 2:Spreading the love.
Speaker 5:Of
Speaker 1:course. And I mean, it's not like he's taking the car to LA. He's probably just driving around the neighborhood.
Speaker 2:Full time mechanic. Like, having a collection once you get into that range and above.
Speaker 1:Yep. You talk about it. Jay Leno has, like, a whole team just for registration because there's new registrations, like, every year. Well, you have 50 cars that's every single week you're doing registration stuff. It's crazy.
Speaker 1:So even just one of his Porsches, '19 the nineteen eighty four nine eleven SCRS, he's been offered more than $3,000,000 for. He said, no. He said, I'm dating Yep. So they have no plans to live in the Palm Springs area until they helped a cup they had no plans to live there until a couple of friends, until they helped a couple of friends locate and renovate a house at a country club. And, then in '9 in 2015, they heard about a house for sale and decided to buy it after admire at after admiring its mid century modern forms on Google Earth.
Speaker 1:They later learned it was designed by the prominent Palm Springs architect Donald Wexler. When they renovated the 1957 house, they returned it as closely as possible to the original appearance, a reverence for the classics. This guy seems like the man. The new house across the street is more than just luxury for the two men. It embodies everything Harris has learned in more than forty years of designing gracious modern residences, everything Reeves Roberts has learned from furnishing them almost always with a mix of important vintage pieces and items of his own design.
Speaker 1:The two men work together on about three quarters of their projects. Each also accepts separate commissions. I love that. It's like, we'll work together, but you're paying us both.
Speaker 5:It's not not a
Speaker 1:package deal. And also, our dog's gonna fly private forever. Logged. It's the best. I love the journal for for profiling these people.
Speaker 1:You just you know, where else would you find this story? From the outside, the house is deliberately unimposing. There's no fence. The pool doesn't require one because the whole country club is fenced. Harris explains, Breeze Roberts and his landscape design partner, David Kelly, added topography to the previously flat site to match that of the golf course.
Speaker 1:They even gave the pool the shape of one of the courses nearby water hazards. The result is that the adjoining fairway seems to continue right to their front door. The club thinks of it more as a golf course, and we think we have more lawn. Just more golf. The club thinks of it as more golf We think of it as we have more lawn.
Speaker 2:Just don't do a long, you know, sort of phone call pacing around
Speaker 1:the backyard. Might get smacked in the head. I like this. He calls it visual borrowing. And so when you blend your backyard into the golf course, it just feels like your backyard extends endlessly.
Speaker 1:Very, very cool. Inside, the house is light filled thanks to the oversized windows. To complete the landscaping, they splurged on over 100 palm, olive, and fruit trees at the cost of more than 300 k. You love to see it. He's 72 years old, and he designed a lot of the furniture himself.
Speaker 1:Fantastic.
Speaker 2:Cool little backstory here. Harris says, I don't think of myself as rich during his childhood in Northeastern Florida. He says it was hard for his parents to scrape together his high school tuition of $700. Some nights were spent flounder gigging a method of fishing that involves wading in knee deep water with a car battery in a wash tub. This is amazing.
Speaker 1:And you're building a chat GBT rapper, and you think you're scrappy. This guy This is different level. He did.
Speaker 2:From flounder gigging to every single Porsche nine eleven. You said you said I gotta repeat this. Yeah. A method of fishing that involves Waiting. Waiting in knee deep water with a car battery in a wash tub attached to a tractor headlight on a pole.
Speaker 1:Can we get the founder mode sound? Founder. Founder mode. It's so good. So he he went to architecture school at Princeton on a full scholarship and then thirty four years he lived in a rent stabilized loft on Harrison Street in Tribeca where the rent would never went above $300.
Speaker 1:That's so insane to be pulling in, like, millions of dollars collecting, like, oh, yes. Every single new Porsche nine eleven RS I buy, and my rent is $300. 3 hundred bucks.
Speaker 2:3 hundred bucks.
Speaker 1:The landlord eventually asked him to leave, but also hired him to convert the building into condos. Among other things, he created a brand new penthouse that sold for over 18,000,000. Wow. Reeves Roberts grew up in England and spent summers in the Spanish artist colony, where he was fascinated by the work of Peter Harndon, an American architect who was modernizing old fishermen cottages for expats. He had undergraduate and graduate degrees from University of Cambridge.
Speaker 1:The two men working together in 1985, they married in 2013. Together, Stephen Harris Architects and Reeves Robertson Partners have about 40 employees. What a small organization to create such a fantastic outcome. That's how many can fit in their Manhattan office buildings on Chambers Street, which is right across from the street, right across the street from their loft. So the men don't plan on letting their firms get any bigger.
Speaker 1:While pouring millions into the new Rancho Mirage house, Harris says, my biggest fear is that we would like the old house better. But according to both men, that hasn't happened. The new house owes a lot to the old one, but it works much better for us. You'll love to see it. Fantastic.
Speaker 1:And, you know, in that house, what type of bed should they be sleeping on? I think they should be sleeping on Eight Sleep. Nights that fuel your best days. Every Eight Sleep guarantees an overnight success. They have an overnight success guarantee.
Speaker 1:Go to 8sleep.com. Clinically backed sleep fitness.
Speaker 2:And me guess, John. You don't even wanna look at your
Speaker 1:sleep score. Seen the new app, by the way? They shipped it. The new the the new Eight Sleep app is actually incredible. You should download it if you have an Eight Sleep.
Speaker 1:Make sure you're updated. I think it's a way better design. I got a 91 last night. Not bad.
Speaker 2:I got a 96. 90 six,
Speaker 4:of course.
Speaker 2:And we were just texting with Brian arm Brian Johnson
Speaker 1:Brian Johnson.
Speaker 2:Because he's coming on the show in a little bit. And I sent him my sleep score from yesterday and he said, great job.
Speaker 1:Do you Brian Johnson, is that the Liver King?
Speaker 2:No. That's the other That's the other Brian Johnson. There's two Brian Johnsons.
Speaker 1:Yes. Oh, that's right. That's right. Well, we should have them both on.
Speaker 2:The sleeping
Speaker 1:I would would love have
Speaker 2:the liver king on. Yeah. But telling having Brian Johnson
Speaker 1:When you posted that, I was like, this is the most dangerous post you've ever shared because he is normally so critical. And I was like, he's going to roast you for not being at a hundred. I mean, I hit You'd be like, proof of work.
Speaker 2:No, was a hundred.
Speaker 1:Oh, it a hundred. Yeah. But I I had a feeling like he dig into Yeah.
Speaker 3:Yeah.
Speaker 2:That's like that's not like
Speaker 1:I thought I thought he would dig into one of the sub metrics and be like, secretly, you're gonna die tomorrow unless you change everything because he's normally just like so
Speaker 2:on top of He could just rip us to shreds
Speaker 4:once he's on
Speaker 2:the show. I bet it'll be entertainment.
Speaker 1:Good. Yeah. Anyway, let's move on to another, story in the mansion section of the Wall Street
Speaker 2:Journal. Favorite section, by the way.
Speaker 1:Is the highlight of my week. Gene Simmons of KISS lists his Beverly Hills house for $13,995,000. He's giving it away. But this is why it's funny. So he says he he listed the house, but he's not gonna sell to just anyone.
Speaker 1:He said, well, you have such wonderful times there. You don't want some schmuck in the place you call home
Speaker 2:after you sell it. This is his quote. No drugs. No alcoholics. I don't want anybody coming in here who's gonna destroy the place.
Speaker 2:Yes.
Speaker 5:And I
Speaker 2:love he's selling it, but he's not letting go of control.
Speaker 1:Yes. Yes. Yes. And I think I think we should enforce the exact same rule. If you're an alcoholic, if you're on drugs, do not listen to TVPN.
Speaker 1:Unsubscribe. We
Speaker 2:That's a little bit hard. If you are any of those things As I chug Celsius. Get help, and you're still welcome to listen to the show while you get on the right path.
Speaker 1:Yes. Yes. Yes. We're rooting for you. But don't try and bid on Gene Simmons' house because he wants you to clean that house before you spend Yeah.
Speaker 1:$14,000,000. It is hilarious because
Speaker 2:It could be an awesome arc if you if you
Speaker 1:are Who is in who is who how can you have $14,000,000 to buy a house and also be a schmuck? Like, it's very weird.
Speaker 5:You have
Speaker 1:to be a very, very high functioning alcoholic. Right?
Speaker 2:Back there. There's a lot of high functioning drug abusers in the world. I suppose. I suppose. I hate to break your golden retriever mindset.
Speaker 2:But
Speaker 1:It's been said I have the mind of a golden retriever, and maybe I got this one wrong. Anyway, the house is beautiful. Four bedrooms, roughly 7,740 square foot home, sits on a hill with views of Coldwater Canyon, Century City, the Pacific Ocean. And so if you're in the market and you're gonna join us in Los Angeles, we are super bullish on Los Angeles. Work we're we think it's the future of media.
Speaker 1:We think it's potentially, if things go right, the Silicon Valley the of entertainment. Could be the home of entertainment if when we're done.
Speaker 2:Then quote,
Speaker 3:check it
Speaker 2:out. Simmons says, I'm the most blessed human being on the planet. These hard times, you don't wanna say I have too many houses, but we have too many properties, said Simmons.
Speaker 1:They have a house in Whistler, Canada, 2 homes in Malibu, Two houses for their children, and they will be spending more time at their additional properties. Visiting quote, whatever wifey wants, certainly. Certainly, happy wife, happy life. Gene Simmons just sending it, talking to a Wall Street Journal report. Journal.
Speaker 1:Just be like, just yapping. Me an outdoorsy. Amenities include an art gallery space where he hangs his own artwork and a soundproofed home theater where Simmons said he screens movies for his production company, Simmons Hamilton Productions, which released the movie Deepwater in 2022. The home is outfitted with high end smart home devices. It's like a twenty second century house, said Simmons.
Speaker 1:He's truly living in the future. I had to go out and buy a simple microwave so that I could press one button and heat things up because the coffee maker, the cappuccino maker, the time machine, all that stuff was built into the wall. Voice activated, I might add. It was so complex. I couldn't make it work.
Speaker 1:He bought he was like, yeah. Just, get the nicest stuff. Was too complicated for him.
Speaker 2:This is what I've been saying about smart homes. Yes. We want dumb homes.
Speaker 1:Rip it out.
Speaker 2:I would invest in a dumb home startup.
Speaker 1:Dumb homes. Bunch of knobs Knobs.
Speaker 2:All Physical. Yeah. Yeah.
Speaker 1:Get a teenage engineering in there.
Speaker 2:Like, yeah. I wanna be able to set
Speaker 1:up temperature in my home.
Speaker 2:That would be super cool. Like an odometer style thing where you just, like
Speaker 1:Yep. Outside the half acre lot, it has a solar paneled 40 foot black lined infinity pool and 1,800 square feet of patio space. He said he likes sitting outside with his children and significant others. They eat popcorn and hot dogs and play the adult card game cards against humanity.
Speaker 2:Of course, we laugh our heads off, he said.
Speaker 1:It's amazing. I love this. They they call, they they they're describing his career. They the Kiss cofounder. He's the cofounder of the of Kiss.
Speaker 1:He's not just, like, in the band.
Speaker 2:Also known as
Speaker 1:The demon. He's known for wearing black and white makeup, spitting blood on stage. In addition to his work as a magician, he has a restaurant chain, a record label, reality show, and other ventures. In the fourth quarter, luxury single family homes, and he probably
Speaker 2:sold $300 to hundred that, like, you know, metal Oh, yeah. Enthusiasts, you know, become consumed.
Speaker 1:Totally. No. No. No. He's just like, no drugs, no alcohol.
Speaker 1:Yeah. I'm gonna go wear some crazy makeup and spit some blood on stage and break out. The demon. They call me the demon, but I really wanna play cards against humanity with my kids and eat hot dogs.
Speaker 2:And laugh my freaking head off.
Speaker 1:It's amazing. Anyway, last, let's do one more ad, and then we'll move on to another ad for a Mississippi home in 14,000,000, it's selling for $14,000,000. So let's tell you about Numeral. We've called it before we called it AGI sales tax, god, magical sales tax intelligence from the heavens. Let's take a moment to say thank you to Numeral.
Speaker 1:Get on Numeral. And my company, Lucy, is officially a Numeral customer. I can't recommend it enough. We're dog fooding it here. Golden retriever style.
Speaker 1:So, anyway Thank you. The $14,000,000 home in Mississippi that you probably have your eyes on, it's being listed by Brett Favre, the legendary quarterback, Green Bay Packers.
Speaker 2:If you're looking for acreage, this is the spot they have 465 acres Yeah. For only $14,000,000.
Speaker 1:Yeah. And, you know, there's a lot of there's a lot of hubbub about new cities, new startups, start startup cities across the globe. You don't have to go to the across the globe to build your
Speaker 2:You can just buy bread
Speaker 1:hundred acre compound. You can just buy this for the
Speaker 2:40 mango seed.
Speaker 1:Yeah. Honestly, that's the that's the strategy. Head to Silicon Valley. Head to Sand Hill Road. Hey, we need 20 mil.
Speaker 1:We're gonna build a new city. And then buy this and then just go live in it and be like, mission accomplished. We did our job.
Speaker 6:Well
Speaker 1:We built the new town.
Speaker 2:Get residents to come in and pay you, you know, $5,000 a month to be part of the city.
Speaker 1:Yes. Yeah. Yeah.
Speaker 2:Citizenship flat tax.
Speaker 1:Yeah. Oh, so just like throwing parties?
Speaker 4:Get your
Speaker 2:a no. Basically, get your ARR Okay. You know Yeah. Into it's not like well into the 7 figures. So
Speaker 1:So it's not a complete fraud.
Speaker 2:Yeah. And then and then I I imagine you could do, a lot of other things.
Speaker 1:So Brett Farv is 55 years old now. He's the star quarterback. Played 16 seasons of the Green Bay Packers, followed by one with the New York Jets and two with the Minnesota Vikings. Wow. Nineteen seasons He
Speaker 2:was definitely sleeping on an eight sleep.
Speaker 1:Oh, yeah. For sure. For sure. Prototype, I would have been. He retired in 2010 with one Super Bowl ring, and he joined the Pro Football Hall of Fame in 2016 just shortly after retiring.
Speaker 1:Pretty great. He grew up in Mississippi, and, they used this roughly six, 465 acre property called Black Creek Farm, another named house. We love named houses on this show, as a primary residence since the late nineteen nineties. And there's a little bit of interesting history here about, how they built this up over the last twenty years. And so the parcel was undeveloped when FARV bought it, said Callahan.
Speaker 1:Among the first things they built was this, was a structure with horse stables. We've been seeing a lot of folks in the technology journalism industry get into building horse stables because of all the generational wealth. And then a lot of post exit founders also now following in the footsteps of the technology journalists getting into equestrian dressage, etcetera. And so he built a structure with the horse stables on the first level and guesthouse on the second level.
Speaker 2:So smart.
Speaker 1:Yeah. This I mean, this is this is is top tier. This is the playbook. Exactly. He's run he's run top tier plays for Green Bay.
Speaker 1:Now he's running top tier plays in the real estate market. And so they lived in the guesthouse while building the gated main home. That was 20,000 square feet, a very reasonable number. That was completed in 02/2002. And then they build another house, 5,000 square feet for the mother-in-law.
Speaker 1:You'll love to see it show in love to the rest of the family.
Speaker 2:Do you think this ends up getting a premium? I mean, to put this to put the price $14,000,000 Yep. For the 465 acre estate, that's only 329 Tesla Model threes, which just feels very low to, you know, buy the home of a former hall of fame, you
Speaker 1:know, a quarter fan. The same price, you could also get the the demon's house. You can get the demon's the demon's Can we get the Ashton Hall sound? The demon's house is But also this
Speaker 2:I mean, these are really
Speaker 1:But also, Brett Favre's house is
Speaker 2:Somewhere out there somewhere out there, somebody's gonna, like, just, you know, basically make a call. Alright. Have 14,000,000 to spend on home.
Speaker 1:Yeah. Which one are you going with?
Speaker 2:The demon going to Mississippi. Yeah.
Speaker 1:Brett Favre has a nickname, but Pat McAfee got in a lot of trouble for calling him this. Do you remember this story? I do. He called him the sticky finger bandit because of some legal trouble that Brett Favre got into, but Brett Favre denied any any wrongdoing and the case is ongoing. So we will not be calling Brett Favre the sticky finger bandit.
Speaker 1:But I love these nicknames. I love that we can say the demon. I don't know if I wanna call Brett Favre the sticky finger bandit, because I don't know anything about the case, and I don't know if he's guilty.
Speaker 2:Don't know anything about sports, John.
Speaker 1:Thought thought you
Speaker 2:thought took place in in a circle.
Speaker 1:I did. I did. But I've learned a lot more, and I love the United Fistocuff championship now. I'm a huge fan. I like the punching.
Speaker 1:I like the kicking. I like everything else that goes on in the hexagon. Anyway, moving on. We, the way, we have two pawns.
Speaker 2:Bo Nichols is gonna be calling into the show Fantastic. Early next week. He's got a big fight on Yeah. May 3.
Speaker 1:I can't I I already have my questions ready. I'm gonna be like, which one was better? UFC three seventy five or UFC five twenty four? You know? I've been doing the deep dives.
Speaker 1:I'm gonna get the answer from him. I'm gonna have him break down the greatest moments of the last thousand UFCs and, tell us how it all works. So this house has two ponds, one spanning roughly 3.5 acres and the other spanning two acres. Those are pretty big ponds. Farv enjoys recreational hunting on the property.
Speaker 1:That's pretty cool. Has a array of wildlife, including white tailed deer, wild turkey, and dove. So awesome.
Speaker 2:When you get so into a story that that you're like, okay. Actually, we need to go back.
Speaker 1:We we got we we you can't just leave us
Speaker 2:hanging. This home and not talk about the pawns.
Speaker 1:Anyway, speaking of FARV, let's do an ad, then we'll tell you more about the NFL. We'll bring it back to Netflix. So Polymarket. Get on Polymarket. We're gonna be doing a Polymarket deep dive later in the show.
Speaker 1:Stay tuned for that. We're reviewing the top eight Polymarket markets that we are tracking in technology. Anyway, the information has a deep dive. The big
Speaker 2:read the information, I think of sports. Sports. And so that's why we're gonna be talking about this article today. Yeah. I'm very excited.
Speaker 1:Yeah. People people often call the information like the it's like the tech crunch of sports. Right? Yeah. The NFL loves Netflix, but does Netflix want to love the NFL?
Speaker 2:Assumption has been that the streamers will need sports as much as the leagues need the streamers. The reality is more complicated. We talked about f one US
Speaker 1:Same thing.
Speaker 2:Trying to sell the The US television rights to Netflix. Netflix kind of balking at the price and saying not interested.
Speaker 6:Yep.
Speaker 2:Who knows? A deal could still happen. But it seems like there's a mismatch between the league's expectation from a, you know, pricing standpoint and what the streaming platforms are are willing to pay given, again, that they're sort of at peak set market saturation. There's Yep. You know, babies are being born that will someday sign up for Netflix.
Speaker 1:Yeah. We cover this in Netflix earnings. Yeah. Like Netflix has great penetration and sports are important, but sports historically have been the thing that keeps people from cutting the cord. Yeah.
Speaker 1:And if you just include it in Netflix, it's not that additive. So there's a big question of what is the true value of live sports for Netflix. Now Hulu went really big into live sports. They have a whole campaign around that, of course, owned by Disney now. And but Disney also owns ESPN.
Speaker 1:So there's a whole flywheel there. So there was a gathering in at the Breakers Hotel in Palm Beach, Florida where the NFL was hosting its annual owners meeting. The conclave is a big deal for the league, an occasion for it to hatch hatch out its multibillion dollar business deals and discuss what the future may hold. The latest gathering, which lasted over four days, had a notable first time guest, Ted Sarandos, the co CEO of Netflix.
Speaker 2:Is there
Speaker 1:An absolute dog.
Speaker 2:Is there another tech company anywhere near the size of Netflix that has co CEOs?
Speaker 1:It's very rare.
Speaker 2:Very rare.
Speaker 1:It's very, very rare.
Speaker 2:Public, but they're private.
Speaker 1:Yeah. Exactly. But I would put them in the same league as Netflix in terms of just overall amazing
Speaker 2:Market dominance.
Speaker 1:Exactly. He came for a panel discussion about sports on streaming video services like Netflix, and the league revealed that Netflix would air two Christmas games two Christmas Day games in 2025 just as it did in 2024. Everyone knew Netflix would do at least one Christmas game as part of a three year deal that began with a pair of Christmas matches last year. The the first NFL games ever broadcast on Netflix, but the deal requires Netflix to air one game per year. So now they're doing two, so they're going a little bit deeper.
Speaker 1:The media world saw the decision to have two games as Netflix's acknowledgement that it's interested in nurturing its nascent relationship with the league after decades of resisting live sports. For the league's part, it couldn't be happier. We're now in a world where there are some platforms that are doing one deal, that that are doing one deal. You tap into global scale, the NFL's chief media and business officer said. Netflix is one of them.
Speaker 1:Amazon is certainly becoming that, and YouTube is certainly becoming that. Right now, the league is trying to find a marquee home for an opening week game on September 5, September 5 in Brazil. And while it might go to a t TV network, a streamer like Netflix is probably more likely since those companies have greater interest in international audiences. We talked about this with Netflix Sure. Adding users internationally and more money to spend.
Speaker 1:And that's that is a change in the sport world in the sports world that is upon us. And for us, it comes at a good time as we think about global distribution. And so it'll be interesting to follow what happens with all of these different sports leagues and where they end up. I do think that eventually they have to each each each sports league has to find a home on a streamer just because I don't see young people ever going back and uncutting the cord and getting on cable. Right?
Speaker 2:Traditional cable.
Speaker 1:Yeah. And so it it will either be the the Gen Z kids never get into sports, really, or the stream or or the leagues figure out
Speaker 2:how to testosterone has been
Speaker 1:Yeah. Cut by eight Yeah. Cali means is really not mincing words of the younger generation.
Speaker 2:Gen alpha.
Speaker 1:He was coming for them.
Speaker 2:Not so alpha as it stands.
Speaker 1:But Yep. Anyway, is there anything else you wanna cover on the NFL and Netflix?
Speaker 2:No. I'm interested to see how this plays out. I mean, right now, it feels like a pretty bad fan experience if you're having a kind of like bounce around. Yep. You know?
Speaker 1:But And Netflix has a lot really cool I mean, Netflix has a lot of really cool technology. Did you ever watch what was that called? Boulder Dash or something? Boulder Snatch or something? They they had a choose your own adventure Right.
Speaker 1:Video. It was kind of Black Mirror. I think it was directed by the Black Mirror team or something.
Speaker 2:You're saying Netflix should allow sort of create AI generated fan fiction of games where you can create a reality where your team wins every time. Is that what you're about
Speaker 1:to say? Yeah. Exactly. Exactly. No.
Speaker 1:I mean, on on a serious note, are Our
Speaker 2:team's just losing and it's like, do you wanna see the final five minutes where they win? And then, yes.
Speaker 1:You can do that? Maybe.
Speaker 2:That would save a lot of households, You know?
Speaker 1:It would. It would. Oh, like, yeah. Husband's not Dad dad's gonna be in a bad mood unless unless the packers win. Let's just put on the the good ending.
Speaker 1:Yeah. No. I mean, I I I do think Netflix has embraced technology in, obviously, a very, you know, unique way. And there are interesting things that you can do over a streaming platform that you can't do over the air. And so that's things like letting the user choose the camera angle, letting the user choose, you know, even subtitles, dubbing, these different things.
Speaker 1:I I made a I I made a YouTube video a couple years ago about how with the advances in artificial intelligence and wave to lip, which is a an AI model that remaps the lips of, to a waveform. I think this is what tie Tyler used to make Dalian speak Chinese.
Speaker 2:We gotta can we pull that video
Speaker 1:up by Yeah. We pull up the the Dalian speaking Chinese on TBPN? And, yeah, drop it in the bangers tab. But I was very bullish on on Netflix in particular being able to redub every single piece of content with matching lip movements because I'd watched a German show about time travel called Dark on Netflix, And I was just too golden retriever brained. I couldn't get into it because I didn't wanna read the subtitles, but the dubs didn't match up with the lips, and so it was very jarring.
Speaker 1:And so there's always this big debate about dubs versus subs. Dub are you dubbing the the the words over, or are you using subtitles? Let's see Dalian. Think
Speaker 5:Like, the lips mapped mapped up
Speaker 1:really well.
Speaker 6:It's really funny he gets
Speaker 1:to the chat GPT thing too because he keeps, like, not it it doesn't translate those
Speaker 2:to say, Dalian, Let the audience figure out what that means.
Speaker 1:Yeah. And so I was really bullish on on Netflix basically doing exactly that, what Tyler was able to do probably in an hour.
Speaker 2:I doubt knowing how correct Tyler
Speaker 1:is. It's probably five minutes, honestly. But, but doing that for every Netflix show, and, mister Beast has been doing this with localization of all of his content. Netflix is in is in a unique position to do that for all of their content and make it even more accessible internationally. That's obviously an incremental, an incremental source of revenue for them.
Speaker 1:And then there's a whole bunch of other things that you could imagine Netflix offering unique experiences to NFL fans, whether that's, you know, the ability to switch between different games very quickly. Like, have you ever watched NFL Red Zone? This there was, like, a specific channel Yeah. That would switch from one game to an it's all the channels. So it'd switch from any game that has an exciting moment.
Speaker 1:It would just cut over to that. And that's something that they were able to do. It's just a team managing all the streams. But you can imagine Members of the community that are versions of that. Members of
Speaker 2:the community that are huge NFL fans are gonna be like, oh, great. So John's explaining red zone to me.
Speaker 1:Yeah. Yeah.
Speaker 2:This is,
Speaker 1:like, this is This great. This is great. Anyway, why don't we move on to an ad and then we'll move on to explaining how SPVs work. So before after the SPVs happen, the companies go public. Oh, I hear the sound of f one.
Speaker 1:Oh, is that Public.com? The latest sponsor of
Speaker 2:Of Aston Martin.
Speaker 1:F one team.
Speaker 2:Love to see it.
Speaker 1:Go to Public.com. Go to the website. Create an account. Transfer some money in. Get set up.
Speaker 1:And then start hunting for those Aston Martin cars. They're not easy to find, but if you dig around, you can definitely find them, and you can enter to win. And so get on public.com. Anyway, before companies go public, they are private, and they're doing a lot of SPVs. And The Wall Street Journal has a has a little piece about a side hustle for friends of Elon Musk selling access to stakes in his private companies.
Speaker 1:Lucrative stock deals have allowed SpaceX to avoid public scrutiny even as it has grown into one of the largest, companies in The United States, and we might have to put this in the truth zone. But let's break it down because there's some interesting things here. So Antonio Gracias and Elon Musk go way back, the Valor Equity Partners founder and family, and his family spend their Christmases with Musk and vacation with him in The Bahamas and Jackson Hole, Wyoming. For for Gracias, it has been a lucrative relationship. He has become a multibillionaire in part by investing in nearly all of Musk's companies over the years according to public filings and court documents.
Speaker 1:Now Gracias and his firm have found another way to cash in on his status in Musk's inner circle by selling wealthy outsiders access to tightly controlled shares in Musk's privately held company. Jordy, do you wanna give us a little one zero one on how SPV hustling goes down? I've heard it's very much like club promotion. Is that an apt analogy?
Speaker 2:Yeah. So an the average SPV promoter Yes. Is similar to a club promoter
Speaker 1:Okay.
Speaker 2:Where they hit you up and they say, hey, coming around later? You want a want a you want a bottle? You want a table? What's going on? Now, I I think that analogy is accurate for some SPV leads, but Not at this level.
Speaker 2:Not all not for all. And, yeah, I I just thought this the the attacks are, you know, continuing to rain down on Elon from all over the Internet. Yes. And I thought the idea that, you know, the the the dynamic that's happening here is a very similar dynamic to what happens at pretty much every single private company
Speaker 1:Yep.
Speaker 2:In which management teams and CEOs prefer to fundraise from people that they have Yep. Long standing relationships with, oftentimes personal relationships with. And so nothing about this article should be surprising. Yep. I mean, I think that, again, over time, people have joked about the idea of an I'm an I'm an investor in SpaceX and you're an investor in sort of like layers SPVs.
Speaker 2:Layers SPVs with high fees. Yeah. And ultimately, the SpaceX has performed so well that you're still up massively unless, you know, you were unless you were really, really layered. Totally. And so I think investors have done fine in this.
Speaker 2:And I think that in general, this is just a function of there being so much demand for SpaceX shares that that, you know, these types of fee structures work. Yep. The other thing I the only thing that stood out and that was interesting is that Valor was sort of bundling SpaceX and XAI shares in a single vehicle Yep. Offering, you know, basically doing a $1,000,000,000 raise. 200 about 25% of that was XAI.
Speaker 2:So Yep. I think that could be more of a function of there just being outsized demand for SpaceX and less and basically forcing people to say, like, you you don't really have an option.
Speaker 6:Like, you're
Speaker 2:buying both. That's at least the way I read it. I don't have any inside information.
Speaker 1:I think there's kind of two points on SPVs that are interesting. One is that at the ultra growth stage, centicorn level, the fundraisers are the same size as large venture capital fundraisers. And so you might go raise a $2,000,000,000 growth fund, and that might be a huge size gong moment, and you deploy that over a number of years. It's a ten year fund, and you're expected to have a diverse range of investments across the portfolio. But when you're talking about raising $2,000,000,000, you're talking to LPs that are writing huge checks, and those LPs might be fine making effectively a direct investment into a SPV.
Speaker 1:They treat it just like a growth fund, and they're just saying, yes. I'm I'm I'm writing a billion dollar check. I'm writing a hundred million dollar check. But instead of going into a growth fund, I'm just going into SpaceX with this. And so that makes sense.
Speaker 1:On the flip side, the I think why SPVs get a bad rep sometimes is that they're assigned at the lower level. If you're doing a $1,000,000 SPV into a $10,000,000 raise, there's just a question about, like, wait. There are many venture capital firms that could just fill out this entire $10,000,000 round. Like, why do we need an SPV? Yeah.
Speaker 1:It makes sense why you need an SPV for SpaceX if they're raising 10,000,000,000 or something that, you know, you don't wanna suck up an entire growth fund.
Speaker 2:And and to be clear, Valor and some of the other firms that do this are providing a service in a way to SpaceX because SpaceX doesn't wanna have
Speaker 1:Tons of shareholders.
Speaker 2:Of individual shareholders that are gonna say, hey. Like, what's the update? How are things
Speaker 1:going? Just that. It's also legal. So one of the ways SpaceX has been able to maintain its private sat status is by limiting its investor base. Once there are 2,000 record holders of record, not including employees who own shares through stock compensation packages, a company is legally required to disclose financial information similar to a public company.
Speaker 1:And so there was always a fear that if you raised money from a VC and then, they you you you you ran your company for ten years, they distribute the shares out, and they have more than 2,000 LPs. I think this number might have been lower earlier too. But if they distribute to the LPs and you wind up with 2,000 holders of record because you've done so many different raises and so many different party rounds that you wind up with 2,000 holder record, you could be running a small company that now has to disclose financial information similar to a public company. That could be very problematic. And so Yeah.
Speaker 1:SPVs have always been a way to kind of tie a bow around a group of holders and then layer these, structures. And I think that it's overall fine and doesn't seem like a big deal, but, obviously, it's of interest and newsworthy because SpaceX is an interesting company. Yeah. Elon Musk is an interesting founder. And Yeah.
Speaker 1:What the journal often doesn't get exposed.
Speaker 2:Yeah. What the journal doesn't mention is that even if these investors were just investing directly, SpaceX can't do general solicitation Yep. As a private company
Speaker 1:Yep.
Speaker 2:And nor nor and the other factor is you you still have to be an accredited investor even to invest in these SPVs. And in fact, I think these SPVs probably have much more firm accreditation checks than
Speaker 1:Yep.
Speaker 2:Other SPVs that might be investing into Figure as an example.
Speaker 1:Yep. Right? So, yeah, there's some little bit behind the scenes text from the Twitter deal. Venture capitalist David Sachs text texted Musk in 2022, after Musk asked if he would invest in Twitter. I am I'm personally in and will raise an SPV too if that works for you.
Speaker 1:And so good good communication there from the investor saying, hey. I I'm open to doing an SPV. I would love to do that for you, but only if it's helpful. And then on the flip side of that, Musk accused Twitter investor Jason Kallikanis of marketing SPV to randos during the first Twitter fundraise. SPVs are how everyone is doing these deals now.
Speaker 1:Callicanus responded, but, tensions were flaring at that moment, but it seems like they have resolved. And so these, the sale of these SPDs generates fees, of course, and and UBS is also getting in on the action because
Speaker 2:Yeah.
Speaker 1:UBS, Swiss bank
Speaker 2:Yeah. Market is still through It's much less
Speaker 1:of an article
Speaker 2:if the article was UBS and Valor Equity offer shares in SpaceX to their client base.
Speaker 1:Yeah. It's not even tied to a new mark, which would be more interesting to hear about, oh, well, like, you know, there's new revenue numbers or there's new new on the back of some change in the business, the the company's worth more. It's more just like,
Speaker 2:hey. SpaceX does these a couple times a year.
Speaker 1:Yeah. Right? Yeah. I mean, Elon's been a master of of ensuring fair liquidity to early employees because we've talked to a lot of the early SpaceX employees and investors, and they've been in the company for twenty years now. It's a 02/2005 company.
Speaker 1:And so even if you're totally bought in on SpaceX and you worked there for a decade from 02/2005 to 2015, you took immense risk. You got comped for that in in stock. At some point, you're gonna wanna put your kids through college or buy a house. And so having some liquidity makes a ton of sense.
Speaker 2:Or start a three d printing company.
Speaker 1:Yes. I love that. Let's recycle the capital and let all the SpaceX alumni go build fantastic companies. They're very, very interesting. Let's do it.
Speaker 1:They also profile, Luke Nosek, SpaceX board member who worked with Musk at PayPal before joining, Peter Thiel's Founders Fund in 02/2006. He and Musk remained close, sometimes attending game nights in Austin where they played werewolf, which pits villagers against monsters according to a person who knows them. Someone leaked to the journal that they're playing essentially board games. Very fun. Nosek founded Gigafund in 02/2017 and has purchased roughly 1,000,000,000 in secondary sales of SpaceX shares.
Speaker 1:Probably a great fund in that case. It's pretty good.
Speaker 2:Gigafund. Best name so far.
Speaker 1:Gigafund is a great name. It's a great name. This is interesting. Myspace cofounder Berman is getting in on the action. Don't The Berman, Myspace mafia very often, but he frequently gets slugs of shares when SpaceX sells them on behalf of employees and earlier investors.
Speaker 1:His firm Troy Capital invested, part of a $47,000,000 fund in secondary sales in SpaceX stock in 2022 when the company was valued at roughly 127,000,000,000. And so that investment is probably doing very well. Fischner Wolfson, an early investor in SpaceX and a friend of Founders Fund founder Peter Thiel, another close associate of Musk, all off also often gets SpaceX shares for his fund, $1.03 7 Ventures Management. And so
Speaker 2:fantastic to see the
Speaker 1:boys ripping some SPVs. You love to see it. And you love some capital flowing into important companies that are doing great things in space and beyond.
Speaker 2:Love it. Should we talk about some markets?
Speaker 1:Yes. Let's let's go to our poly market analysis for the day and debate some of these. The first one is the largest company at the April, and Apple seems to be running away with it. It's April 25. Only five more days if Microsoft wants to catch up.
Speaker 1:But it was a knockout, drag out fight. Mid mid month on April 10, Microsoft was actually expected to be the number one biggest company.
Speaker 2:And what did Tim do?
Speaker 1:He cooked.
Speaker 2:He cooked.
Speaker 1:He cooked. And so everyone else is left behind. The options are Apple, Microsoft, NVIDIA, and Amazon. What would it take for Microsoft, NVIDIA, or Amazon to flip Apple next month? I think you gotta see crazy tariffs on Apple that actually stick and hurt iPhone prices and sales, And you need to see increased AI demand for NVIDIA to do it, something with Amazon.
Speaker 1:I'm not exactly sure what would Yeah. What would be the catalyst there. NVIDIA is the one that could pop, I feel like, if all of a sudden there's, oh, a news of a GPT-five where where the the whole the whole rumor about the pre training scaling wall and GPT 4.5 not being that great. It's like, if all of a sudden the game's back on, scale's all you need, bitter lesson comes back in the meme, in the meta, and all of a sudden it says, no. You actually do need to build the $500,000,000,000 data center.
Speaker 1:You need to build a $5,000,000,000,000 data center, and everyone is taking it seriously. Everyone is scale pilled, AGI pilled. You could see NVIDIA maybe pop. But this is not financial advice. We're just debating the markets.
Speaker 1:I don't know. Anyway, the next News. The next market is
Speaker 2:What do we got?
Speaker 1:Michael Saylor say during strategy q one twenty twenty five earnings call? And I like this because they're they're it's not just that he'll say Bitcoin. It's that he will say Bitcoin more than 100 times in a single earnings call. They know he's gonna say Bitcoin, but will he say Bitcoin 1 hundred times. And there's a 20% chance according to Polymarket that Michael Saylor will say Bitcoin 1 hundred times more.
Speaker 1:It's Bitcoin. Bitcoin. Bitcoin. Bitcoin. Bitcoin.
Speaker 1:Bitcoin. Bitcoin. Bitcoin. There is a 9% chance that he will say 50 times or more. Crypto at seven plus
Speaker 2:I've actually said that you've listened
Speaker 1:to Sailor call?
Speaker 2:Strategy We
Speaker 1:should have call. Oh, wait. Is it no longer micro strategy?
Speaker 2:Is it just strategy? Drop the micro. Drop the micro a large macro strategy. It's a giga strategy.
Speaker 1:China is at 50%. Inflation is at 56%. NVIDIA is at 34%. Lots of lots of people getting on the action. Some of these are very low volume.
Speaker 1:Interest rate is just $374. But Like, if you go to strategy,yougot.com,
Speaker 2:by the way. Yep. It's just a bunch of basically, it's basically a big ticker that shows their market cap, their share price, their six month
Speaker 1:or three month return. Be.
Speaker 2:And Yeah. It is interesting that focused on
Speaker 1:stuck with it in the face of Bitcoin ETFs and wide Bitcoin availability. There there was a big discussion for a long time of, like, how do how do the public markets get access to Bitcoin? Maybe MicroStrategy is just a wrapper around that. It's okay. Yep.
Speaker 1:But he's he's stuck with it. And so it'll be fun to see what happens with the with, his earnings call. The next market is, asked by us, actually, TBPN. Will ChatGPT reach 1,000,000,000 monthly active users in 2025? The volume started small.
Speaker 1:It's climbing. It's now at $76,000. You can go on Polymarket and, and express your
Speaker 2:Yeah. And they've your view. Numbers have been, kind of all over the board. Sometimes they talk about weekly actives. Yep.
Speaker 2:A lot of people like to look at, SimilarWeb and other data sources for Yep. Information. But, ultimately, I think this will be such a significant milestone that they will come out
Speaker 1:and announce themselves. And and I would like to hopefully, market gets it matures, and then hopefully, people who interview Sam towards the end of the year will just ask him. Like, hey. Are you over or under a billion MAUs in 2025? Did you did you hit this this milestone?
Speaker 1:And this does seem like a milestone
Speaker 2:that might Yeah. And he said he said I think he said recently that somewhere around 10% of the world uses ChatGPT on a monthly basis. Yep. That's 800,000,000.
Speaker 1:Right?
Speaker 4:So we're
Speaker 1:getting close. We're in hell hair's breath.
Speaker 2:And this is just such an impossible number almost.
Speaker 1:Yeah. You add another Studio Ghibli moment where it onboards a bunch of people. You you just add more viral loops of sharing. Maybe they do the social network thing. And we actually do have more OpenAI news that we're tracking here.
Speaker 1:Will OpenAI acquire Windsurf before August? It's at a 52% chance Lower Fifty fifty.
Speaker 2:I would have thought. Yeah. But again, the the headline that was initially reported was not a confirmed deal. That was
Speaker 1:Yeah.
Speaker 2:A publication kind of like front running something, and this happens before. Yep. It's very common for media outlets to basically get word that a deal is in the works Yep. And then just announce it. Yep.
Speaker 2:And it's not necessarily a dumb d done deal. Sometimes a term sheet hasn't even been signed. And so it can actually put a lot of
Speaker 1:We saw this with Wiz where where there was rumors of an acquisition that happened earlier, and then they denied it, and it wound up not happening. And there's been other times when companies have it feels like they've maybe deliberately leaked news to to Yeah. Kick off a fundraising round. There's a bunch of different things that can go staying in the AI model race, which company has the best AI model by the June? Google is at 45%.
Speaker 1:OpenAI is at just 25%. And it's a little bit odd because, the reviews of of of GPT o three four point five have been remarkably good.
Speaker 2:Well, this is June 30, to be clear, not April 30. Yeah. Yeah. So Sure.
Speaker 1:So so we're two months out. And you get a little bit of like a yield curve when you compare these different these different time periods. And so a lot of it's driven by when developer conferences happen, when new releases are expected to happen. So if if Google, for example, has Google IO in mid June and you know that they're gonna drop something then
Speaker 6:Yeah.
Speaker 1:Well, might be a new model. Well, they might just
Speaker 2:Also, you know that
Speaker 1:blow out the benchmarks.
Speaker 2:Meta is sitting at two percent right now, and you know that Zuck is just absolutely fuming every single day not having the best model.
Speaker 1:Especially since this is based mostly on benchmarks. I don't think this is based on Vibes. Vibes. This is of Certainly not based some of the benchmarks are kind of vibe based, like Ellen Marina seems to be like a measure of vibes kind of. But it's a big market.
Speaker 1:Over 1 and a half almost 1 and a half million dollars in volume on the poly market for which company has the best AI model on
Speaker 2:Yeah. It's interesting to just watch the graph and just see like, okay, on a longer time horizon, it just becomes very unpredictable.
Speaker 3:Mhmm.
Speaker 2:You know, who's gonna actually be in the best spot. Well, we have the CEO of Linear coming in.
Speaker 1:Let's bring him in.
Speaker 2:He is our most recent partner. What's going on?
Speaker 1:How you doing?
Speaker 6:I'm good. Thanks thanks for having me, Sean, on the show.
Speaker 2:Of course. Great to have you. It's great to have you a partner on the show as well. It's fantastic.
Speaker 6:Yeah. I've been, like, following you guys along from the very beginning. I I think, like, you really have, like, an interesting concept. And, like, I think, like, some people are going for that third the three hour podcast, but I think like I like you guys are going for the more like shorter content as well.
Speaker 2:Three hours a day. There's something for everybody. Yeah.
Speaker 1:Yeah.
Speaker 2:It's fantastic. Well, yeah. There's tons of stuff to talk about. I think we'll probably see you up in in in SF next week potentially.
Speaker 1:The week after.
Speaker 2:Yes. The week after for for Figma's event. But but yeah. Why don't why don't you give a quick introduction for everybody that that's not familiar that maybe hasn't used linear in the past like us, but, and then we'll go from there.
Speaker 6:Sure. So, yeah, I'm Karis Arnan. I'm the CEO of Linear, and and Linear is basically this purpose built tool for planning and and building software or or products. And we've been building this the last five years, and what we're really doing for their product organizations and companies is that we are helping them with the end to end workflow from, like, going from customer discovery, like, collecting cost customer request into planning road maps, planning projects, then executing on those projects and and tasks. So we we try to, like, be this like, really understand the customer's workflow here that what it takes for these different people in the organization to do their job well, and how can we streamline it or make it make it easier for them.
Speaker 6:And today, we have about over 10,000 companies as as customers, and, like, these can be anything from, like, ambitious startups to major enterprises. And I think, like, if you think anyone building something cool today, they're probably building it with Linear. So OpenAI, scale, your sponsor ramp, I think Mercury, probably the lot of logos that you see at the bottom of the screen. Yeah. There are customers as well.
Speaker 6:So I think, like, for me, it's it or for us, it's been really exciting, like, work from with this very forward looking companies. And, like, they're always, like, thinking, like, how they can do things better. And I think, like, you probably talk about this a lot on the show that I think AI is the topic that, like, AI is changing the way we do work or how we like, how people do it, their personal work, but also, like, how the organizations operate. And I think, like, a lot of execs and CEOs and CTOs are now pushing it to their companies that, hey. We need to use more AI because we do we do believe that it it can make us more productive and and more efficient.
Speaker 2:When when did you know you wanted to start linear? You were founding designer at Coinbase, and then you're over at Airbnb. I imagine you were pretty frustrated with the tools at the time and and had a kind of concept for what you wanted to build, but I'm curious at what point it really clicked.
Speaker 6:I I mean, in the end, it it clicked with my my cofounders. I think we're all kind of frustrated at the same time. So I think we we had this, like, a time where we all worked on in our companies for, like, four years or so, and we're like, well, what do we do next? And I think, like, we're also frustrated that each of the companies we ever worked at, these tools never felt that good. And, especially, it didn't feel feel good for builders like us.
Speaker 6:Like, when we like, maybe that the tools were okay for the management and and the, like, the some of the other people in the company or but, like, for designers and engineers.
Speaker 2:Yeah. It's very different if you're just kind of, like, looking at a dashboard as an exec and you're just kind of like monitoring the situation. But when you you're the person that has to you sort of like use the tool constantly and sort of be generating the content in the tool, it's just a dramatically different experience. I I remember my last company when our first employee joined, this this guy Brandon Jacoby, who'd been at Cash App in in Square and joined to lead design and product. He literally set up a linear account on the first day because he was just like, we're never we're not gonna use anything else.
Speaker 2:It would just be insane. So I'm curious. We talk a lot about venture markets broadly. I think you guys have taken a pretty unique approach in in sort of like building, you know, being a sort of default tool and I'm sure over time getting an immense amount of pressure from investors to take on more and more and more capital. Yet I feel like you guys have have had kind of like a efficiency ethos from from day one.
Speaker 2:Can you talk about your kind of just, like, mindset when it came to when the right moments were to to raise and and what went into that?
Speaker 6:Yeah. So so I think the ethos of the company is, like, what we're really trying to do is, like, we want to be the best tool for this purpose in this market. And I think that's the way we win, and that's kinda like the strategy we have. And for me, being a best tool means that you also need to be a quality tool, like a high quality tool. I don't think, like, you can be the best tool if if it's, like, the the the quality is kinda low.
Speaker 6:So to to do that, I think, like, sometimes companies get themselves or startups get in, get themselves into this stage where it's like, you just have to, like, work on the growth metrics because you need to raise the next round. Like, we were fortunate that we didn't have to do that. Like, we could hit the we hit the market pretty well, and, like, we got, like, companies starting to use us, like, in the first year, and and we started getting revenue pretty quickly. And then given that we also had this quality mindset, like, we always saw that we worked at the Airbnb and Uber and Coinbase that that, like and the amount of people doesn't generate the quality. A lot of times when we actually build trying to build something new or something really, like, good is it was a small team.
Speaker 6:And so we all we took that lesson that, like, hey. Can we just build better with the smaller team? So that that's great. So, like, situations, like, our costs are lower. But then also, like, we were able to, like, start generating revenue so that we actually started we we became profitable the the second year, and we've been profitable ever since.
Speaker 6:So than the last, like, four years or so. And so what what it what it creates is, like, we can have a little more control of our destiny of, like, we don't have to work for the round. The the the round all of the rounds have happened because we felt that, like, there's now, like, a good moment of bringing someone new in. Like, we are in this new I think with the with the seed, I think, obviously, there's some, like well, we should, like let's say Sequoia light our seeds. So I think there's some, like, a brand aspect of that.
Speaker 6:Like, hey. We are, like, a real company now, and we have, like, real backers. And then some of the other, like, series a and b has been about, hey. We are now, like, entering this new segment. It's a little bit uncertain, like, what's gonna happen.
Speaker 6:We are getting these larger customers, and maybe we need to invest more into sales. So, like, I don't I don't the profitability is not the, like, the number one goal of the company. Like, still, the growth is, but what it what it allows us is, like, it gives us a little more, like, flexibility. How do we go after it versus, like, well, I'm running out of money, like, in six months now. I have to, like, go figure out how do we put the numbers up so I can like raise a good round.
Speaker 2:One unique part of your company in that it feels very core to the culture. You guys are remote remote only. Mhmm. And then you simultaneously I think probably one of the reasons that works so well, you guys focus on hiring very, very senior people. Do those two things go hand in hand, or are they sort of separate and and both have their own reasons?
Speaker 6:Yeah. And I would say, like, there's some some link there. And I I think, like, it kinda, like, from the perspective we wanted to have more, like, kinda, like, a talent density, so you have smaller team and, like, better talent. So I think that that talks about like, that kinda goes into this more like senior people. I think remote, it it is a type of mode of working where you have to trust the employees to, like, figure things out on their own.
Speaker 6:And usually, that develops a little bit later in the career. It doesn't mean that, like, junior people wouldn't couldn't have that, but it's, like, just more just happens more and, like, as as you get more experience. I think it's today, we are, like, hiring more more trainers, and I think the the in the end, like, the remote to me is just that there's a lot more focus on the actual work. Like, I think, like, when you're in a company, in an an office, there's all kinds of things going on, and people have, like, crazy ideas all the time. Some of those ideas maybe aren't very good, but sometimes people end up or start up might end up kind of tacking a lot.
Speaker 6:Like, they're, like, constantly changing the direction versus remote. It's a little bit the management is a little harder. Like, it's harder to, like it's almost, like, hurting people to the direction. So you have to do it more like, this is the plan and this is the strategy, and then you need to let the people to execute on that. And so you kinda have to trust people's judgment.
Speaker 6:So that's what we try to hire for is, like, hire people in all positions that, like, if we if we get no instructions from us directly, then, could you figure this out? And could you, like, make something good?
Speaker 1:About a decade ago, I was running an engineering organization. I think we were using Trello or Asana. I'd love to know kind of, like, what is what what does your battle card look like today, and what what was the feature or or pitch to get organizations that maybe already had some sort of product in place to switch over? Like, what was the killer go to market motion?
Speaker 2:I think part of it, not to jump in, is that if a if a designer or a product manager moves to a company that doesn't use linear, the first thing
Speaker 1:they do,
Speaker 2:they they tell the hiring manager, I won't join unless you commit to switching the linear. Kari, go for it.
Speaker 6:Yeah. I mean, that that's I think the in the end, that's kinda like it. Like, it's the the word-of-mouth. So I and I like I think, obviously, that hap doesn't happen in just automatically.
Speaker 1:Yeah.
Speaker 6:So, like, it it's it's been, like, interesting that there hasn't been necessarily, like, just one thing, but there's some some kind of these kind of tools are, in some ways, simple and some ways complex. It's there's, like, a lot of things that people do different things people do in a product, different roles it. So, like, a lot of things needs to go right. And I think our lessons, like, using these tools for a long time is, like, one is, like, speed. It it's, like it's it's really annoying if things are slow.
Speaker 6:Like, if you're trying to, like, do a little task and it takes like, every time, it takes, like, a minute to do it Mhmm. Or you are confused to even how to do it
Speaker 1:That's perfect.
Speaker 6:Means, like, you you probably won't use the tool that much. Like, engineer will just well, whatever. I'll I'll go there once a week to update my status.
Speaker 1:That's the worst, having, like, dead project management software or product management software that's like, hey. We we paid for this. We have it. It's my dashboard into what's going on, and no one's updating it. You gotta go around and be like, everyone, you gotta update.
Speaker 1:Yeah. Bad. Jordy, you got a question?
Speaker 2:You guys had a an agent focused launch recently. I'm I'm curious to you guys are a company that historically is is less fixated on sort of chasing trends. Right? Like, you know what you're building, the best platform to plan and build products. And so when a new trend pops up, you're not sort of automatically piling into it at the same time.
Speaker 2:So so in that context, I think, you know, having this new focus on agents is probably a reaction to what you're seeing from customers, what you guys are doing internally. I'm curious how you kind of to get your thoughts on on where agents are today in a sort of workplace environment and kind of how you see them evolving over time just because you guys are in a position again where you're not, you know, trying to raise a billion dollars selling, you know, a dream around agents. You're just trying to build great products. And so I I think it's more real grounded context.
Speaker 6:Yeah. I think, like, we definitely have fault that, like, AI, what what's been happening and experimenting on things. But we we like, a lot of times, we we do ask talk to the customers, and and that's kinda, like, what we're seeing now that there is a lot more interest and demand for this. And and then also, I think the in the last couple of years, the models have gotten better, and we are now, like, starting to see, like, this, like, agent like, companies building agents. And, like, agents, I I think people are fighting, like, what the actual definition is.
Speaker 6:But I think to me, what it means is that this kind of AI model or system can take some kind of form and or, like, a shape in these tools and or outside of the tools, and they you can start delegating things to them. And so, like, in a in our context, it could be, like, obviously, there's a bug being reported. Maybe the agent can see that this is a bug that can they can solve pretty confidently, and they could just say, like, hey. I can solve this, and then someone some human, like, approves that. Or, like, as an engineer, like, ICE control individual contributor can can just look at their task and say, like, hey.
Speaker 6:I'm I'm gonna try to delegate some of these tasks to to the agent, and then I go work on my own task, like, whatever is the most complicated one.
Speaker 1:So Yep. Oh, yeah. I I was wondering if you could talk a little bit about the trends in management philosophy. I remember agile, Kanban, Toyota management, all these different terms. There's books written on these.
Speaker 1:What's the latest and greatest? And is there I I remember a lot of companies were kind of aligned with one strategy or the other. What are you long? What are you short now in terms of, like, management philosophy?
Speaker 6:Yeah. I I think the I think a lot of this, like, systems are, like, agile or safe or some of this, like, other, like, frameworks. I think I I generally short frameworks when it comes to any kind of management, like, systems. So I'm I'm more like, I I'm long enough, like, the first principles of, like and and think, like, in the end, it's like, what it what any kind of organization is about is, like, how do you generate the output? It's like, it doesn't really matter how do you get there.
Speaker 6:And so with Linear, I think the idea always been is, like, can we make it simpler? And I do see, like like, if you, like, franchise can Airbnb, they have this founder mode idea, and then I think Prex had, like, had, like, a similar shift that, like, hey. Let's try to simplify the system, like, the framework. So I think, like, the simplification kinda I think why why it helps is that, like, it makes the makes the real things more visible. Like, it's easy to, like if you have this, like, very complicated framework or system, it's easy to hide in the corners of, like, yeah, we're kinda, like, moving things along, but nothing is actually happening.
Speaker 6:But I don't know. It's interesting questions. Like, what does the agent system does? I I think in some ways, it's it's one thing I think, like, it's, like, interesting, each individual contributor kinda, like, maybe becomes more like a manager because they have this, like, almost like paralegals working for them.
Speaker 1:Yeah. You have to imagine that there's more focus on, like, CI and less, like, waterfall monolithic monorepos in the age of AI, but I don't know what you think about that. Does that track?
Speaker 6:I think it could track in a way that it's it's if building things, implementing the code becomes a lot cheaper and faster, you can I think, like, today, we have this waterfall processes partly because the engineering is expensive? So you do the thinking and the design before you start building because the building part is kind of, like, the bottleneck or or expensive. But if that equation changes, so now we can just start, like, what we see with a lot of this, like like Yeah. Website builders or something is, like, you can just try something out and see if it that that's, like, actually, like, useful. So I think that's it does flip the system, but I think, like, you still probably need to go back to the planning a little bit.
Speaker 6:Like, think why are you doing these things? But you can maybe, like, start experimenting more internally directly with code and and not not, like, try to have this, like, very waterfall process.
Speaker 2:Yeah. How are you thinking about partnership partnerships in the context of your agent, you know, support? I imagine you got you guys have your own sort of agentic workflows, but then over time, I imagine some, you know, coding agent will come to you and say, hey. Can we get sort of plugged in so that, you know, instead of delegating a a specific issue to an engineer, you just delegate it to us? But then that introduces kind of a vector where I feel like linear is about, like, surgical sort of precision and perfection with product.
Speaker 2:And so adding this sort of external agent who's now sort of becoming a part of the product, even though they're sort of in some way mirroring what what an external engineer might look like. But but I'm curious how you think about that.
Speaker 6:Yeah. I mean, our view is that there's gonna be, like, hundreds of agents, maybe, like, thousands. And I don't think we can we can hold it back, and, like, I don't think we should. So so what what we're doing is, like, we're kinda fully leaning into that, hey. Linear is a platform for for agents.
Speaker 6:So this might be, like, third party companies building Maybe we build our own agents. Maybe our customers build their own internal agents, and they wanna bring them on. And our job there is to, like, figure out, like, what is the right way to like, what is the kind of interaction layer like? Like, how do you actually use these thing like, use these agents? How do you delegate the work?
Speaker 6:How do you monitor it? How do you review the work? Or how do you, as an organization, kind of just generally monitor the the security or the usage or the cost, for example. Mhmm. So we we just think that, like, there will be a lot of at least in the short, medium term, there will be, like, a lot of different agents, and we should just, like, support that.
Speaker 6:Mhmm. And so so that's that's like already have two at at least two that people are using, like, Devin and CodeGen that they that that exist on the platform. You can assign issues to them today, and they will try to fix them. And we actually seen, like, a lot of devil like, other developers, and we are launching something in a couple weeks. So I think there will be, like, more launch partners there.
Speaker 2:That's awesome. Yeah. It actually I mean, it just gets me really excited because historically, using linear, there's just so many sort of the issues that you create that are assigned to a junior engineer. Yep. They take a crack at it.
Speaker 2:Yep. Hopefully, get it right. Sometimes they don't. And then you bring in other people to actually get it resolved. And so it's just like such a natural workflow, but it's also exciting because June even more junior engineers will learn sort of how to manage Yeah.
Speaker 2:Engineers just by managing agents.
Speaker 1:I'm excited to run the show on linear. Project one ticket, bigger Gong.
Speaker 2:Bigger Gong. Yeah. We're gonna need a
Speaker 1:bigger More tinfoil hats. More soundboard effects. Can we get a founder mode sound
Speaker 2:effect to kick it off? In talking with your team, I mean, one of the one of the like, everybody that that watches the show knows this. We're trying to make the show, you know, 11% better every single day. Yeah. Sometimes it's in different ways.
Speaker 1:We really do have so many projects, new studio, new lighting. Like, I have 20 projects in my mind and and, like No. But they don't perfectly map to It's a different
Speaker 2:You know, a lot of people think of content as, like, you know, it's a camera Yeah. Yeah. Yeah. And a microphone. But if
Speaker 1:you're not improving it And
Speaker 2:you're editing, but it's more so, like, the the show is an ever evolving product. Totally. Totally. So anyways, excited to hang. Yeah.
Speaker 2:This is fantastic. Thanks for coming in. Always welcome. And, yeah. Yeah.
Speaker 2:We'll talk to you soon. Mhmm.
Speaker 6:Yeah. Thanks for having me.
Speaker 1:Bye. Cheers.
Speaker 2:See you.
Speaker 1:Next up, we got Sean Frank coming in the studio.
Speaker 2:The wallet man himself.
Speaker 1:But we're gonna tell you about Ramp in the meantime. Time is money. Save both. Get on ramp.com. Switch your business to ramp.com.
Speaker 1:Also, find your happy place. Go to wander.com. Book a wander with inspiring views. Hotel great amenities.
Speaker 2:What does wander always say? Find your happy place. Find your happy place.
Speaker 1:Thank you.
Speaker 2:Thank you.
Speaker 1:Thank you. Thank you. Well Thank you. We got we got Sean Frank in the studio, the wallet salesman here here to break it down, talks tariffs. Great to have you on the show, Sean.
Speaker 1:How are doing?
Speaker 5:Dude, I'm excited to be here. You know, I typically watch at two x speed, and I got, like, two or three screens going. So Okay. You know, I feel I feel a little bit ahead of the curve here. I I think I know what you guys are gonna say next.
Speaker 1:Oh, yeah? What's that? Yeah. What are we gonna say next?
Speaker 5:I mean, you guys are gonna compliment my suit, I assume.
Speaker 1:It's a fantastic suit. There we go. A fantastic suit.
Speaker 2:He's got a suit. He's a suit. He's got a suit.
Speaker 1:Let's go.
Speaker 2:Anyway Looking great. Looking great. I
Speaker 1:I wanna run through a bunch of stuff.
Speaker 2:Yeah. There's so much to cover. How are you doing, first of all?
Speaker 1:Was the how was the private equity conference at, Jefferies? I thought it was a literate a little derivative of the TBPN format. You said you spent the day talking to 20, to 14 different firms, thirty minute meetings, speed dating style. We do thirty minute segments on this show. What's going on?
Speaker 1:Are you copying us? What's what's happening?
Speaker 5:Dude, it wasn't me, but, Vinay, the senior vice president of Jefferies, is a huge TBPN fan. Okay. Okay. He's like, dude, I'm a day one listener. I'm in chat.
Speaker 5:I stole this from them. Don't tell them about it.
Speaker 1:So Well, maybe we can have a truce then. That's great. He can he can borrow from us, the the the the official creator of the thirty minute segment over here. Totally good. But, yeah, how how was it?
Speaker 1:What did you learn? Who'd you talk to? Can you break it down for us?
Speaker 5:Yeah. So it was a mid market consumer conference. So to break that out for the audience, I'm sure everyone here knows what that means. You're probably a lot of LPs and funds, but mid market is, like, a hundred million to, like, 500,000,000 in revenue. Mhmm.
Speaker 5:They're typically deploying checks of, like, 25 to a hundred million dollars. Mhmm.
Speaker 2:It's it's On the equity equity side, right? Obviously, not the total
Speaker 1:round? So businesses are doing between 100,000,000 and $500,000,000 Is that right?
Speaker 5:Yeah. Typically, that's the valuations that they target. Right? And then their their equity checks in are, you know, 25 to a hundred and 50,000,000, something like that.
Speaker 1:Yep.
Speaker 5:These are smaller private equity funds. They're typically a billion dollars raised and deployed.
Speaker 2:Yep.
Speaker 5:And this is, like, the first professional layer for private equity. Right? Like, small market private equity is very scrappy. It is like guys who look like us, like, out there grinding it out trying to find deals where these these people are are professional bankers through and through. So they're they're gonna go to good schools.
Speaker 5:They're gonna have, you know, five to ten years in the industry. And, yeah, so, like, this is not your your mega funds. These people are not deploying $5,000,000,000 checks. The fund size will be under $5,000,000,000 And they're very targeted on consumer, so anything consumer discretionary. What we've seen is that that segment of the market has been destroyed probably since 2022.
Speaker 5:It got really, really hot in 2021. There was a bunch of SPACs in the space. Famously, have Warby Parker, but then you also have solo stuff that just got delisted on Monday. So, I mean, there's a lot of great smart people, and there's people who are on the Solostove deal. So Solow got taken public by Summit, but Summit's like a a little bit bigger than a mid market fund.
Speaker 5:The first check into Summit was Bertram. So Bertram Capital, really great firm based in The Bay. So they found Solo when Solo was doing 60,000,000 in top line. Right? They put a check-in at, like, a hundred million dollar valuation.
Speaker 5:They probably owned 40% of the business, maybe more, and then they sell it to a different fund. So that's typically how mid market works. You're gonna be selling to a different fund to take them public. So Bertram made a ton of money. They sold all of their shares to Summit.
Speaker 5:Right? They maybe they had a little bit more that they sold in the IPO, but then, you know, a a larger cap fund is going to take a company public. So what's happened in this space? They are cold on consumer, and the only categories that are interesting for them are services. So, like, I talked to a lot of funds who are buying, like, roofing roll ups and, you know, they're trying to buy plumbers, like, that type of shit, like, because it's nondiscretionary spend.
Speaker 5:If your roof fucks up, like, you're gonna get a new roof. And they're really into the pet space. Like, pet is still really hot. I have a friend, Bill, who just announced today he sold his company to Morgan Stanley in in the pet space. And it's on Twitter.
Speaker 5:You guys can engage with it. So you check out Bill. He he's crushing it.
Speaker 2:Yeah. I saw that. He's been grinding for a long time, so that was great to see. Yeah. It's funny.
Speaker 2:There's there's a guy who works in in mid market PE who knew that I was friends and and and and associates associates with with Sean. And he basically would email me once a week for, like, three years asking asking for an insurance. Amazing.
Speaker 1:I wanna say I I wanna stay on on solo stove. You broke down, what happened. Is it a casualty of tariffs? Is it mismanagement? We've talked about it a little bit before, but can you give us the full postmortem, post NYSE suspension, which we hate to see here.
Speaker 1:We wanna see more IPOs, not more delistings.
Speaker 5:Yeah. Yeah. It's it's a lot market activity in the wrong way.
Speaker 3:Yes.
Speaker 5:So what's happening with solo? So there's, like, the bigger third thing. And, actually, I mean, I'll I'll break some news. I talked to the corporate dev buyer at Yeti who was at the conference yesterday. Mhmm.
Speaker 5:And I asked her, I'm like, oh, so are you going to buy a solo? And she's like, even if you gave it to me for free, I don't know what I'd do with it. She's like,
Speaker 1:why is that? Isn't it making, like, 500,000,000? We looked in the numbers recently. It seemed like it was like, even if revenues are declining, even if there's tariffs, there are people buying stoves. There must be a way to make some money out of that company, right?
Speaker 1:Am I crazy?
Speaker 5:Yeah. There's a lot of debt. Okay. And people there's two main problems. One, it was like the biggest COVID trend of all time, There was a two year period where all of
Speaker 1:us
Speaker 5:were stuck inside, couldn't travel. We all discovered the great outdoors. They sold a lot of stoves, and there's a negative flywheel for that business.
Speaker 3:Sure.
Speaker 5:If you sell one stove, you're never gonna buy a second stove. Like, it actually it removes the buyer from the market, so now it's harder to sell the second stove. So it's a horrible problem with that business. The second is massive tariff risk. They are 100% sourced in China.
Speaker 5:They are very tight with the manufacturer there, and you just cannot get stoves right now. So you have a situation where their growth solution the past two years has been to go to mass market retail. They're in Costco. They're in, you know, Home Depot, whatever. And then those retailers won't let you raise prices.
Speaker 5:So you you have a contract to sell it to whatever price. You're direct importing from China. You have stuff on the water, and now your inventory is essentially toxic. Right? Like, are you gonna they cost $75 to make.
Speaker 5:Are you gonna give the government a hundred and $25? Like, probably not. So That's rough.
Speaker 1:Okay. So casualty of tariffs then or mismanagement or
Speaker 2:Well, I mean, we talked about this months ago. Remember? We were we were kind of looking, and and it at first, it was a debt issue, and that issue was looming regardless of tariffs happening or not. It it seemed like it was
Speaker 1:So it seemed like this was predictable from day one if you were really clear eyed about that fly that inverse flywheel you mentioned and then also, like, the COVID dynamic
Speaker 2:going Chubbies, though? Chubbies has to have some some broader you if you buy one pair of shorts,
Speaker 1:you like them, you buy more, and then you're replacing those shorts every year. Right?
Speaker 5:Yeah. Look. And I love all these guys. So Kyle, the founder of Chubbies, is awesome. He's building a software product.
Speaker 5:Won't plug them. They got they they gotta pay for that, but really, really smart founder. And Chubbies is a good business. Like, Chubbies does a hundred million dollars a year top line. They do $10,000,000 in EBITDA.
Speaker 5:Like, that business is worth something to somebody. But John Maris was the CEO of of Solo, and his idea to solve the negative flywheel was to bolt on acquisitions. He's like, I'm gonna you know, I'll I'll fix my company wide LTV by having Solo customers buy chubby shorts. And that just didn't happen. Right?
Speaker 5:Like, they they could never integrate it. It somebody likes the outdoors doesn't make them more likely to be a Chubby's customer. Right? Yeah. It would make more sense if Chubby's, I don't know, started selling beer pong equipment or something.
Speaker 5:Right? Like, there could there could be some sort of, like, you know, positive flywheel there, but their solution was to broaden the overall product offering with just, like, very distinct businesses that have no cross sellability.
Speaker 2:So Yeah. Can you talk about I I people have this idea that, oh, I'm gonna like, I feel like everybody's in love with the idea of a consumer product holding company because, like, people just like consumer goods and they're like, oh, we have we're good at selling this. We'll be good at selling that. But then when you when I, you know, understanding, you know, that your focus and Connor's focus over the last, you know, coming up on a a decade and not too long, the idea that somebody could compete in the wallet space with you guys while being part time is just, like, insane. Right?
Speaker 2:Mhmm. Because you guys are best in the world at what you do, and you're just able to put more time into it than anyone else. Is the idea is the consumer product holding company model just, like, generally flawed? Is it is it not something that people should be going after, or is it just more about actually having, like, distinct businesses and ultra competent management in place in each of them?
Speaker 5:So it's just really fallen out of vogue. So very famously in the past two weeks, Hermes became the largest, most valuable company in the consumer space. There were 300 whatever billion, and they surpassed LVMH. So LVMH is the holdco model. Everyone wanted to be a holdco because LVMH was.
Speaker 5:And then Curing became a holdco. They have Gucci, a bunch of assets. Well, Gucci just put up their earnings. They're down 25% year over year. That came out on Monday.
Speaker 5:Right? So, like, the holdco model is just falling out of favor in favor of Hermes, single stand alone band, super valuable. Lululemon set the trend. Lululemon is worth more than Honda. So Lululemon makes awesome leggings that we all love.
Speaker 5:They trade more than with the best car company or one of the best car companies. And then on running is also I broke this trend. Right? So on running is worth $10,000,000,000 today. Single brand, just making shoes.
Speaker 5:So right now, the markets are valuing beautiful brand, super clean focus, owning a category. That'll change again. There's really great holdcos out there. The people behind Crocs. Crocs owns, hey, dude.
Speaker 5:They're becoming a great hold holdco. Deckers is another shoe company. Yeah. They're crushing it in the holdco space.
Speaker 2:But isn't there something about even the way that LVMH has approached their holdco, which is, like, we we never share kind of creative resources across brands. Like, there's very distinct kind of like firewalls in place. Is there something to that? Is that what you think, you know, is does Deckers sort of benefit from scale as just being like a massive shoe manufacturer? And then it's like when it when it comes to the kind of individual brand level, like, let's just make sure that people are ultra focused on on the sort of the the the purity of the brand and sort of scaling that?
Speaker 5:What I think LVMH does beautifully, LVMH calls them houses. Right? So they're houses, but they're in the same neighborhood. Right? And what they're able to do is they have Elle Catterton, which is like they're picking up.
Speaker 5:They like, imagine this is, like, basketball. There's, like, amazing high school players. Right? Elle Catterton is signing those high school players. Elle Catterton is their private equity arm, very much owned and controlled by the Arno family.
Speaker 5:So, you know, Chrome Hearts is the the greatest American accessory brand that's in the Elle Catterton portfolio. At some point, they get called up to the major leagues, then they get integrated into LVMH. And then LVMH has the spotlight light approach. So, of course, Louis Vuitton is always going to be the the best branded in the spotlight. But when there's a challenger, like Off White, they can put that in the spotlight for a little bit.
Speaker 5:And then that becomes their star player, and they cycle out to somebody else. They just got caught flat footed that they don't have a good star player right now. So, like, that's the challenge with LVMH. Curing tried to do that. Right?
Speaker 5:Richemont is the other big holdco in the European fashion space. Richemont's crushing it because they own Van Cleef and they own Cartier. Those brands are very, very hot right now. So LVMH is trying to take over Richmont because they want to be in the spotlight. So that is the inside baseball, the inside basketball, if you will, of the luxury space.
Speaker 5:You need to have recruits, and you need to have a star player you can cycle out. And LVMH just doesn't have a hot brand right now.
Speaker 1:I I I I like this idea of the pure play. You know, it aligns with, like, the founder mode, the life's work entrepreneur, just not getting too scatterbrained and focusing on one thing. What is the postmortem on some of the pure play companies in the fashion space that weren't able to reach escape velocity? I'm thinking of, Allbirds and a few other brands in that space. Is it is it just, doing too much too early, or or is it just, like, missing some fundamental insight?
Speaker 1:Or is it more of, a market segment and this maybe works in the high end luxury market, but it doesn't work when you're more, in that hundred dollar range competing directly with Nike. What what what's your take on that?
Speaker 5:Well, you can't be cool forever. So that's that's, like, that's the biggest challenge.
Speaker 3:Mhmm.
Speaker 5:Allbirds was really cool, but San Francisco famously horribly dressed people. Right? Have they have no sense of fashion. Why do we think they're gonna tell us what's cool? Right?
Speaker 2:I
Speaker 5:agree. And they were betting on a sustainability wave. Right? So, like, Nike is able to like, they just benefited from people caring about athleticism. Right?
Speaker 5:That was that took them from a billion dollar stock in the eighties to a hundred and 80,000,000,000 today or whatever. Right? But we're already seeing
Speaker 2:They were caught flat footed by wellness. Right? And that and if effectively, Nike was of of the brand for sports enthusiasts, everything from fans to athletes, but then wellness kind of came out of nowhere, took the alo, you know, the the alo crowd whenever they're Lululemon even running in many in many ways. Lululemon, obviously. So it seems like Nike missed the wellness trend, and that was, again, probably the biggest miss.
Speaker 1:Yeah. What what yeah. What's your take?
Speaker 5:Well and their stock suffered for it. Right? I mean, like, Nike is down massively from all time highs. They're down from their five year mark. Right.
Speaker 5:And it's because they missed that trend, and and they didn't pivot in fast enough. The other thing that's happening is that's happening in beauty right now. So if you go to Sephora, you're either a celebrity brand or you're a wellness brand. That's all the newness going into Sephora. So Sephora and beauty in general is going through this wellness craze right now as well.
Speaker 5:Like, skincare is taking over everything. So we're gonna watch more of those waves happen. Consumer trends change over time. You can't be cool forever. So the whole thing like, and this is the biggest problem with venture capital coming into the consumer space.
Speaker 5:Coca Cola is the most popular drink in America, and it doesn't even have 20% market share because people like different drinks. Right? Now Uber is a service that is just great for everybody. They'll have 100% of, like, the the ride market. Right?
Speaker 5:Google, it's just the best, so I'm gonna Google everything. There's no second player. In consumer taste, it's just the outcomes.
Speaker 1:There's no monopoly outcomes. They're just inherently oligopolistic markets. Interesting. So if you if you go back to the founders who do they focus on the pure plays.
Speaker 5:Well, I
Speaker 2:have a good I a good example of something you brought up before. I mean, Chromehearts
Speaker 1:I was about to ask.
Speaker 2:Needs to be studied. And and one of the reasons why, you know, right now it's like they've never been they've never been hotter Mhmm. But they've gone through periods where they certainly weren't nearly as hot. And I'm curious what you think they've done right. I think to my knowledge, they've stayed mostly family owned or certainly majority family owned.
Speaker 2:And is that do you think allowed them to kind of like ride different waves and and not if at any point they were overly fixated on just pure scale, you know, maybe they would have not been able to kind of come back in the way that they have. But I'm curious what your take is.
Speaker 5:Yeah. I mean, the creative minds behind Chrome Hearts, they're artists. They're gonna do what they're gonna do with or with or without you. If you think it's cool, if you don't think it's cool. Like, Cher was wearing Chrome Hearts in the nineties, bro.
Speaker 5:Like, they're owned by the Sinatra family. Like, they're gonna do what they're gonna do, and it it'll come in and out of Vogue, but they don't care. Right? So that that that's true authenticism. Like, they've never chased revenue.
Speaker 5:Like, they'll make pants that are, like, a hundred and $12,000 because that's what they would that's what they choose to do that day. And then you know who buys them? Drake. It's like
Speaker 2:Well, I've heard they I've heard they they basically they'll mock Drake too. They'll be Drake, like, Drake will be like, I want some new pants. And they'll be like, cool. Like, get in line. Like, other people want the pants too.
Speaker 2:And then Drake has to, like, you know, try to cozy up with the Yeah. You know, the essay. But That's hilarious.
Speaker 5:Yeah. So it's just like a commitment to the craft that like I mean, this is the reason why the Europeans are so good at fashion is because they will do it for fifty years making no fucking money. Or Goyard. Goyard's another amazing brand. They just don't have a website.
Speaker 5:You can't buy on their website. Now it'd be awesome. They would make way more money. And if private equity owned them, they would open a website immediately. But then they're like, no.
Speaker 5:We want you to remember where you bought the bag. That's important to us. So, like, you have to go wait in line, and you have to you can only buy what we have that day. And it just creates, like, a very personal relationship with the products that is people are longing for in the Internet age. So, yeah, the the Europeans are the best at this.
Speaker 5:I talk a lot of shit about Europe, but they do have this figured out.
Speaker 1:Yeah. I wanna go to tariffs. I saw a viral thread yesterday by Ramon Van Meer. He says everyone says they'd pay more for made in The USA. I tested it.
Speaker 1:We make a $129 filtered showerhead manufactured in China with tariffs surging to 170%. We explored reshoring. We found a US supplier. Our costs nearly tripled. I ran a clean AB test.
Speaker 1:You had two options. There were 25,000 users that did this, the exact same landing page. You can choose made in China for a hundred and $29 or made in The USA for $239, and they had zero conversions on The US version. The add to cart rate for The US version was less than 1%, and over 3,535 people bought the Asia made version. What how how did you process that news?
Speaker 1:There's some community notes on it. I wanna know what you think.
Speaker 2:Yeah. I think overall, it was a flawed experiment. But it's a good story. But what do you got, It's post.
Speaker 5:Yeah. We've seen this play out with sustainability, right? So people had two options on their website, sustainable packaging and we'll buy carbon credits versus not. And people won't pay more than 5% for that. So it ends up being there's tons of cheap goods in the marketplace, and there's tons of substitute goods in the marketplace.
Speaker 5:And what you need, you need value props to stand out. So Ridge has you know, best materials. We have a great warranty. We have tons of reviews. We have social proof.
Speaker 5:These are just value props. Mhmm. Made in The USA can or cannot be a value prop. Right? And if he ran that experiment with a Japanese audience, what you'd see is the Japanese audience is more willing to pay for made in America goods.
Speaker 5:And if you go to Japan, there's entire stores built around made in The USA. Right? If you go to Dubai, it's the same thing.
Speaker 1:Let's hear it for the Japanese. Shots of love for the Americans. Yeah. Yeah. And so and so, paint me a broader picture about how the tariffs are affecting e commerce.
Speaker 1:Is it bloodbath? Are people figuring out ways around it? Is it or is it
Speaker 5:gonna put companies out of business? Are people gonna lose jobs? With so without a doubt, it's the most challenging self imposed regulation we've ever seen. Right? Like, we went through COVID.
Speaker 5:That was hard for a lot of reasons. That that was external forces. Right? We went through iOS 14. We're we're peons in that.
Speaker 5:We have no idea. We can't control that. Consumer demand has been up and down for fucking years at this point. I have a lot of friends who will go out of business because of the tariffs. And a lot of people on the internet are celebrating that.
Speaker 5:They're like, Well, fuck them for buying for China. But here's the thing. A year ago, it was encouraged. It's very hard to actually produce things in America. I've tried for years.
Speaker 5:I've put millions of dollars into it. So the government basically gave you a free pass to buy international goods and then import them. And then all of a sudden, it's it's became very, very difficult to get anything in from China. And I don't think small independent businesses should suffer for that. I've publicly appealed to JD Vance.
Speaker 5:I'm like, look. I totally get you want to incentivize made in The USA stuff. Like, don't just steal our money in, like, a massive tax. I have shit on the water. You're just making me give you money.
Speaker 5:Like, this is the government getting more revenue and getting bigger. Let's put it into a fund where if if, like, I owe you that money unless I invest in American business.
Speaker 2:Yeah. I thought this I thought this was a really good take and a and a really good kind of concept, especially to kind of basically extending out the timelines. The policy as it stands today is just like pure pain now. Like, you're you're being, like, you know, punished versus what you laid out. So maybe extrapolate on that a little bit.
Speaker 5:Yeah. Like, look. I mean, I I understand the goals, and this this is hurting China more than America. Like, I think I think people in America are wanting and complaining because, like, t n shipments or or or t moo shipments are more expensive. I'm like, look.
Speaker 5:I do business in China. I talk to Chinese people. Factories are shutting down, and you have youth unemployment of 25% in China. Like, it's going to hurt them way harder, way faster. We'll feel it in thirty, sixty, ninety days when shit in Walmart gets more expensive.
Speaker 5:They're feeling it right now. And there is ports that are just shut down. And hasn't been good in China for five years. It's been a very difficult economic situation over there. So it will hurt them way more.
Speaker 5:But the flip side is we don't want to also bankrupt a bunch of American businesses. What we want to do is incentivize them to either nearshore or onshore production capacity. That takes three to five years and takes millions of dollars. So look, charge me tariffs, but give me an out. If I take that money and I bring it to American manufacturing and I hire workers and I open factories, I don't have to give you the money.
Speaker 5:So it's like a one to one duty deferral to incentivize US investment. Mean, do you guys want the government to get more money, or do you guys want fucking more investment and factories built or whatever? So that's that's that's my pitch to everybody.
Speaker 1:Makes sense. I wanna get your reaction to the Slate Auto launch. Have you seen this truck? TJ Parker was talking about it. Finally, someone built a simple, cheap, utilitarian truck, 20 k, made in The USA.
Speaker 1:No touch screen. Lots of people are talking about it. Did you see the launch? Did you watch the video?
Speaker 5:Hell, yeah, man. That guy's been working on it for a long time. I think he's been documenting on YouTube. So hell, yeah, brother. I love to see that.
Speaker 5:And I was in China A Year ago, and I was at a big, like, electric vehicle, like, you know, potentially sales summit. Like, have 50, a hundred brands all competing to sell little tiny electric vehicles, and those actually can't pass US safety standards, so they're only sold to Africa. So it was me and a bunch of African buyers walking around and, like, you know, they sell for $5.10, $15 or whatever. Now if he can actually hit American safety standards and ship a $25,000 truck, I mean, this guy's I mean, he'll he'll he'll do $10,000,000,000 the first year, maybe more. Right?
Speaker 5:Like, it's a sales gong.
Speaker 1:Let's do it. What do we got?
Speaker 2:Oh Oh, the sound effects board is down. Brutal.
Speaker 1:Brutal. Founder founder in founder mode. Brutal. I I I wanna talk about the ad. People were very happy with that.
Speaker 1:Dynamic for a second. Clear initial framing in the first five seconds. Curiosity gap in the first eight seconds. Frunk disarming anti ad. Humor, founder CEO curiosity gap.
Speaker 1:In term you you obviously make a lot of ads. You buy a lot of ads. What did you think of the actual launch video?
Speaker 5:Look. People are saying inside that frunk, there's actually ridge carry ons. So I'm not gonna confirm or deny, but there could be a cameo
Speaker 2:from ridge carry ons. I did see that.
Speaker 1:Yep. Those are great.
Speaker 2:Are great. Love to see it. Love to see it. Fantastic. Yeah.
Speaker 2:How do you what what would your complete guess on what their what their margin profile could look like on a $20,000 made in America truck? I know the $20,000 is, like, allegedly due to some EV incentives, but but, ultimately, what what how much are they actually gonna make on on something like that?
Speaker 5:Yeah. So I think I think they said it's 27,000, and then you get a $7,000 credit if you buy an EV from a new manufacturer. I think they're gonna lose about $3 for the first million of them they make. And that's just how auto manufacturing works. Right?
Speaker 5:Like, the cost set them up. You have all these fucking machines. You have to depreciate them over time. Rivian still loses $20,000 in every Rivian they sell. So it's a it's a different model to a higher price point.
Speaker 5:Right? They're gonna lose 3 to $10 for each one they sell. And if you guys ever sit at the auto market, the amazing thing about Tesla is every car manufacturer loses money on every car they sell. They only make money off of the parts and repairs.
Speaker 1:Services.
Speaker 5:Tesla found out a way to not do that. Tesla found a way to actually turn a profit on the actual purchase of vehicles. Ferrari makes $80,000 per car they sell. Tesla makes, I don't know, I think it's like it's like $5 or whatever. Every other car manufacturer breaks even or loses money on the actual purchase of the vehicle.
Speaker 5:It's all about financing. It's all about parts. It's all about service. So I it'd be it'd be crazy to think they're making any money on these things, but the demand shows that, like, they could make money over time.
Speaker 1:I think they'll have trouble because if you have $20,000 burning your burning a hole in your pocket, you could get 200 Ridge Wallets or something. Right?
Speaker 5:That's true.
Speaker 1:Yeah. So, I mean, it's like a tough So the trade
Speaker 2:off, 200 Ridge Wallets are a little truck.
Speaker 1:Yeah. You could buy every product on the Ridge website.
Speaker 5:For sure.
Speaker 2:Well, yeah. It's it's an interesting dynamic where it's like, has to show so much demand that he can justify, you know, potentially raising
Speaker 1:Lots of money.
Speaker 2:5 to $10,000,000,000 over time in order to just, like, actually get these to scale. But I think the thing looks awesome. Yeah. And I might interested in
Speaker 1:I'll interested in this one. Support it. He's also in Rivian. The Bezos
Speaker 2:is I'm surprised I'm actually surprised they didn't go with a slightly higher reservation price point just given the history of Tesla charging a hundred reservation? It's $50.
Speaker 1:50 bucks.
Speaker 2:Okay. Tesla charged a hundred bucks, you know, had this big demand signal, and then obviously Not
Speaker 1:many people showed up for
Speaker 3:a semi
Speaker 2:truck. Yeah.
Speaker 1:Show up. It's expensive.
Speaker 2:It's a much different price point. Yeah. And I think this is a car that people would just buy as, like, I I would just get one and park it outside of my house and maybe do coffee runs in it, go surfing. I
Speaker 5:would put the $20,000 deposit down today. Like, if they if they if they made skip the line, give us $20 today, I would totally do it.
Speaker 1:Well, I would do it if they put a naturally aspirated V eight in it. I don't know about the electric stuff, but I would be very pro this vehicle if it had a really loud exhaust note. It was kind of like a more affordable Raptor. That's what I'm looking for.
Speaker 5:Yeah, man. Well, you know, today, I'll publicly announce, if you buy a Slate, I'll have a partnership with them. Mhmm. Free Ridgewelds for every Slate customer. We can get one to That's it.
Speaker 5:You go,
Speaker 2:Let's go.
Speaker 1:And thank you for coming on. Hey. I've got some It's
Speaker 2:great to have you, Sean. Awesome.
Speaker 1:We'll talk to you soon, I
Speaker 2:love you. You're looking great in the suit. Don't take it off after this call. I'm gonna our we're gonna we're gonna have our paparazzi, you know, outside your house confirming, oh, Sean Frank just puts on a suit to go on TBPN. Make it a part of your brand.
Speaker 2:Okay?
Speaker 5:Dude, it's custom too. So you guys didn't even ask, This is custom. Alright. See you guys later. Maybe you listen to too.
Speaker 5:Bye.
Speaker 2:Later. Thanks. Good to see you.
Speaker 1:That was fantastic. Always a great time having Sean on the show.
Speaker 2:Sean is
Speaker 1:one my favorite entrepreneurs. He's one of my favorite wallet salesman. Yeah. He's up there with the best wallets.
Speaker 2:Definitely up there with the best.
Speaker 1:The world. Next up, we got Semel Shah coming in from Haystack. Semel, welcome to the show. Good to have you here. How are you doing?
Speaker 3:Doing great. I'm really excited about this because you're, I've had, like, a hundred friends telling me that they love this podcast.
Speaker 1:That's amazing to hear. Yeah. I'm so glad I'm so glad that we're we're breaking through. We've been spamming the timeline, spamming everything on X. We've learned, that slop is the future and, and and volume wins, pace wins, speed kills, and we've been trying to do all of the above.
Speaker 3:Also, in a in a previous life, you know, I used to work in the podcast industry, and I love the medium. This is way before it really took off. Yeah. And I I I love media, and I love TV shows, and I always felt like there should be, like, a live tech VC segment. You know?
Speaker 3:So I just Yeah. It's probably crazy
Speaker 1:idea to do, a live daily show for just for technology, but it's been a lot of fun. It's been working out. I'd love to start
Speaker 3:Did you ever look at Cheddar
Speaker 1:back in the Yeah. We actually talked to the CEO earlier this week. Yeah. I was I was familiar with it. Where they took that business was, much more I mean, they actually wound up owning ratemyprofessor.com.
Speaker 1:That was interesting. They also owned TVs on college campuses. And I do think we have a bunch of college, students in the audience, but, definitely, we have focused more on, you know, insider baseball in Silicon Valley and and stuff that's not quite as general audience. But who knows where it goes? You know?
Speaker 1:This is still an early project. It's evolved a few times, and, you know, we'll see. Anything's possible.
Speaker 3:I love it. Well, thank you again.
Speaker 1:Yeah. Well, I I actually would love to start with your experience in the podcasting industry and and and what you were doing and kind of what lessons you learned just because I'm curious.
Speaker 3:Yeah. Just real briefly, it was kind of in the twenty twelve, thirteen, fourteen time frame. And the entrepreneur at the time who was a repeat entrepreneur who's a a technologist and a mentor of mine from Stanford and was on the faculty had this idea of, like, a personalized audio. So if you you know, I don't wanna date myself here, but imagine you ten years ago or so, you opened Pandora on your phone and you're going in the car. What would what would the AM version of Pandora be?
Speaker 3:That was kind of the vision. And so
Speaker 5:That's cool.
Speaker 3:We really spent a lot of time curating the initial set of of things that would come on to the platform. You know, the big categories for commute were news, spirituality or philosophy. Comedy was probably the biggest one on the nighttime Cool. Drive. And then it was, like, giving the person the opportunity to skip.
Speaker 3:So now if you're in a Spotify playlist, for example, we just take for granted that we can just skip to the next song or in a Instagram, we could flip to the next reel. But Yeah. Users didn't really have that amount of control back then. But, ultimately, the cost of acquisition at that time, you know, was really, really difficult, and there wasn't as much podcast content. It was mostly kinda radio or TV content being ported over.
Speaker 3:You know, this is pre Joe Rogan and all that kind of stuff. So eventually, it was acquired by Apple primarily for the technology of streaming, the ability to stream from server across different telecom networks.
Speaker 1:Interesting. I'd love to know, your kind of venture origin story. One fun question is like, what was the deal that you where you caught the venture bug? What were some of the early deals that stuck out to you as, hey. Maybe I wanna turn this into a real career.
Speaker 3:Well, it it really started because I was working as a consultant for a lot of different firms. I was working in industry, and I was writing a lot online and doing lots of media stuff just for fun.
Speaker 2:And Yeah.
Speaker 3:A lot of people who happen to be investors in LPs read it, and I thought, oh, I'd be you know, I was helping a lot of friends raise capital. I thought, of course, one of these funds that is employing me as a consultant will give me a job. That did not work out. And so Haystack was born literally out of desperation of having nothing else to do. And so it started with a $1,000,000 fund, and then the first eight months wrote seed checks into Instacart, Envoy, DoorDash, and HashiCorp.
Speaker 1:Wow. Banger after banger after banger after banger.
Speaker 2:We love it. Good for you.
Speaker 3:And and I knew in the first the first two funds, took about three years, I I knew that I would enjoy it because I had been around it a lot, and so it was a lot of fun.
Speaker 1:Mhmm.
Speaker 3:I did not realize how much I would love it. Mhmm. And then the other the other component, I was called luck and love. Like, Mike Maples has a great line, which is like, you gotta get hit by the lucky truck. Yeah.
Speaker 3:You know? And I got hit by the lucky truck a bunch in the first
Speaker 5:three years.
Speaker 3:So That's amazing. It was very fortunate. You know? But it was it was a different era. Like, I could never raise as much as I wanted to for for funds, and I would have to beg, borrow, and steal to make, sort of ends meet at home, you know, separate long time.
Speaker 1:Yeah. Imagine you're seeding, foie gras on the $1,000,000 fee structure.
Speaker 2:Yeah. It's 200 k over ten years.
Speaker 1:Over ten years.
Speaker 3:Brutal. I don't take any fees really in the first three funds. I'm sorry. Yeah. And yeah.
Speaker 3:That's great.
Speaker 2:Are you surprised today when you see managers without much of a track? I mean, you know, you listed off a few of the companies that you invested in the first fund. Yeah. You would think that that kind of portfolio would would get you a you know, if you had that today, it would probably get you a $500,000,000, you know, fund two type of thing. Are are you when you talk to, you know, upcoming managers today and they're they're sort of complaining about sort of the challenges of of raising money, yet they're still raising, you know, 50 plus million dollar funds.
Speaker 2:Do you Yeah. I'm assuming you don't have a ton of I mean, you have empathy, but you're also Well,
Speaker 3:it's a it's a very astute question you're asking, especially since we don't really know each other because that that is that is a very astute question for two reasons. One one is that the the rational answer to your question is that it kinda makes sense because, you know, back when I started, people didn't really know how big Uber could be or Palantir could be. It was like, well, I'll just wait to see what happens. I mean, a lot of VCs just passed on Palantir for rounds and rounds and rounds and rounds. And Uber was like, you know, just kinda blew people's mind of how fast it grew.
Speaker 3:So now I think a lot of LPs and a lot of people around the world are like, hey. The tech startup ecosystem is a place where I need to have some money at play because, you know, people who come on your show, like, I mean, Kari, I have a great story about Kari, by the way. So we think we gotta jam that in.
Speaker 2:Yeah. That's good.
Speaker 3:Yeah. People like Kari are, like, coming here from, you know, Europe and, like, doing amazing things and, like, you find one Kari in a career, you know, or in a portfolio, it's amazing. So I kind of understand that more LP dollars are coming here. America is more attractive. The American entrepreneurial ecosystem is an attractive place to park some money and put it in the ground.
Speaker 3:It totally makes sense. And when your choices are billion dollar plus funds charging you 30% carry and and they're going in a little bit later, it's kinda like, well, okay. Do I you know, which burning building do I wanna fall off? Mhmm. You know?
Speaker 3:Now the the more micro answer and why
Speaker 1:I thought that was the
Speaker 3:dispute question is that a lot of people come to me and ask for advice or help with LP intros or how to, like
Speaker 1:Sure.
Speaker 3:Design their fund or do stuff. And I've learned, you know, from, like I had amazing access to people, and that cannot be shortchanged. Like, I was very lucky to have access to, like, incredible, incredible VC people, you know, VC creators and fund creators that you would all know by name. I had direct access to them and still do. So I try to pay it forward by helping with LP intros and doing all that stuff.
Speaker 3:But occasionally, I do get that, oh my god. Like, you know, I need to raise a fund of this size to pay myself. And I always come back with, who who says you need a who's who owes you a salary to deploy the money? And and that's really the line I always come back to, which is it's a little bit unfair because you could have a really qualified person who doesn't have access to capital. And part of the game of a VC is to aggregate capital for the entrepreneur.
Speaker 3:That's part of the game. Yeah. So if if you have a unfair capital relationship or an asymmetric relationship where you can aggregate capital, all of a sudden, you're in the game, but then you have to access the founder. So it's that you gotta aggregate supply on both sides, high quality supply on both sides. But this idea that, like, the fund should start paying you is a luxury in my mind.
Speaker 3:And, of course, if you have access
Speaker 2:But even isn't
Speaker 3:to pay the fees, like, you can get paid.
Speaker 2:Yeah. Isn't today, though? I feel like from from my understanding, if you go to LPs and you're trying to raise a small fund, let's say $1,020,000,000 bucks, and you say, I'm not gonna have any any fees or or may maybe a very small admin fee to cover the cost, Isn't that given that they're just so used to paying fees everywhere, is that even, like, a selling point, or does that send the wrong message to
Speaker 3:That's a fair that's a fair question. I think that LPs are happy to have their GPs if they wanna work with them, pay them in some fees. I think the point is that when you're starting and you're trying to hit a target or you're spending a year or two trying to fundraise, the idea that, like, you're owed a salary philosophically to me is kind of bankrupt. And and that, like, you can you can say you're gonna do that, but at the same time, it is a market, and LPs vote with their feet. And sometimes they make smart decisions, and sometimes they don't.
Speaker 3:Yeah. But, yeah, I would say that somebody going into market with that 30,000,000 fund should have a budget for how they want to pay themselves. But also, like, sometimes you have to cut deals when you start. Like, you know, a lot of people who wanna raise in a hundred million dollar fund, maybe the market only gives them six or eight. You know?
Speaker 3:And it's like, that's where you should start, but a lot of people don't wanna start there.
Speaker 2:Yeah.
Speaker 3:And it's it's a little bit unfortunate because AngelList, which kinda came up when I was coming up Mhmm. Created a whole new pathway for me too. Like, that's available to you now. You know? And so a lot of people do use it, but I think a lot of people want to aggregate more and more capital before the market's ready for it.
Speaker 1:What angel list products were you leveraging most aggressively on the come up?
Speaker 3:Oh, yeah. We've heard lot of This could be its own this could be its own pod, deep dive pod.
Speaker 1:Break it down.
Speaker 3:I mean, I went I mean, first of all, they're all gene genius, you know, and really was helpful to me. But, essentially, there were couple of, like, public products and couple of off book products. The the public products were that you could do these kind of, like, software click and subscribe SPBs.
Speaker 1:Yep.
Speaker 3:You know? Where if you could aggregate from your following or people who were following you and say, okay. I have overcapacity in a deal. You know? There I've got a 50 k allocation in a series a that I did a seed in, and I I don't even have the money.
Speaker 3:Right? Sure. You could do that and then set the carry. You could even do little things like portion out the carry based on, you know, people who are helping you on the deal or other people you wanna give a little gravy to. Mhmm.
Speaker 3:Then it turned into, like, these rolling funds or angel list funds, which are very popular, you know, eighteen, nineteen, 20, 20 one, and are kind of industry standard today. And then the I hope Nivalu doesn't mind, but, like, the off book thing, he he did me a solid for because I had known him for a long time, and he he is just incredibly helpful and savvy. But he had raised a private pool of capital and an SMA from a I can't really disclose who, but let's just say a large sovereign Mhmm. That wanted to basically pump a lot of money into the ecosystem and he picked four, you know, early managers to kinda white list. And he chose me and told them just do whatever he does.
Speaker 2:That's good. When you're I'm curious. How long should someone wait to get hit by the lucky bus
Speaker 3:before they before they should,
Speaker 2:you know, hang up the cleats? Because I I really do feel like in in my personal experience, if you're in venture seriously and you don't get a true banger in the first five years, like this the your your job just becomes infinitely more difficult in every conversation you have from LPs to entrepreneurs to other managers that you might be co investing with, but I'm curious how if you've seen examples where, like, you know, year eight Yeah. They finally, you know, get the banger.
Speaker 3:They're so good. Is that's a very, very good question. I mean, I I should be back on this pod at some point because you guys are asking, like, the right awesome detailed questions. It kinda depends, I think, your to answer your question based on what fund you're at and what stage you're investing in. Mhmm.
Speaker 3:So let's say you're at a larger fund and you're doing kinda like a classic series a where you're joining a board or you're putting $78,000,000 plus in a deal. Maybe you're doing b's at 2025. Mhmm. You you can only do in a in a high quality sense, maybe two to four of those per year. Mhmm.
Speaker 3:And everyone that's your partner or who's around you or the bigger heads in the in the fund, they'll ask you to report on your portfolio on a monthly, quarterly basis, and they'll have a sense of an underlying, like, what's happening there. Mhmm. Sort of, like, a few times a year. They're now obviously, the boards are gonna be using AI. Sorry.
Speaker 3:The funds are gonna be using AI to, like, track the board. So it's not just about the relationship with that investor, but, like, sometimes the investor in the old days could say everything's going fine, but underneath the hood, it's on fire. Mhmm. They'll have more of a record of what's happening. And so, generally, the people who are running the funds will watch and see, like, what are the underlying metrics, who's gonna follow your deals, right, as a proxy for quality.
Speaker 3:And so all those things are under a microscope. I think when you're a seed investor like like myself, where you're in that early part of the ecosystem where you're not investing $7,000,000 per deal, but it might be 200 k, 5 hundred k, a million dollars, you can take a lot more shots on gold. And people suspect that some of those things are not gonna work, and you only need a couple to work. Right? So you have more you have more surface area to get hit by the lucky truck early.
Speaker 3:The trade off is that you don't own as much as you would if you did a rifle shot later. But, yes, I think five years is actually too long. And there's a couple heuristics here. Like, it used to be in venture when you would join, a really good fund. They would they would hand you a later stage deal that already had a board in place and already had some momentum underneath it so you could learn the ropes and have, like, a good kinda chip to put on the mantle to start.
Speaker 3:But if you think back, I don't know if you have come across Matt Koehler, but Matt Koehler was a GP at at Benchmark for twelve years. Mhmm. And this guy's hit rate at series a was incredible. Mhmm. And even he doesn't even get credit for certain deals that he sourced, but he just doesn't care.
Speaker 3:Yeah. You know? But, you know It's major few people are going to have that rifle shot selection Yeah. That Matt did. You know, someone today who I would mention would be like Mamoon at KP.
Speaker 3:I mean, you look at the guy's track record, it's absolutely insane to pick off the money round.
Speaker 2:How common is it for you? Because I I'm I'm assuming you're LP in in a ton of different funds at this point. How often do you see, like, a $50,000,000 fund these days that's fully deployed in a lot of winners, but just not, you know, kind of a dud of a fund just because of concentration issues, pricing Mhmm. Etcetera.
Speaker 3:Well, I I do lots of small investments in friends and, like, other people to support them when they're starting funds, so it's relatively small. The the funds are relatively small. And when the funds are a little bit bigger, those managers have already had experience around portfolio construction.
Speaker 2:Yeah.
Speaker 3:So so so you can get away with kinda shittier portfolio construction when it's a smaller fund because you're just really chasing the alpha in that. But I would say the the broader point I would make here is that the idea of portfolio construction and the math around it, it's it's no more complicated than basic algebra. Yeah. And I would say I probably spent a lot of time trying to learn it and around a lot of other investors to deeply understand it, and it was still probably the hardest topic for me to, like, grok or or, you know, years
Speaker 2:Yeah.
Speaker 3:For for me to grok. And I think that's why a lot of LPs like to fund people who come out of these bigger funds because you're served that every week when when people are doing partner meetings and portfolio reviews and the people running these funds know it. So it's very hard to learn from scratch.
Speaker 2:Totally. I wanted
Speaker 1:to follow-up on a talk we had with Sam Lesson yesterday. He was saying that the unicorn factory is broken, and it sounded a little bit like he was complaining that just like the big funds, you know, the crossovers have squeezed the growth investors. The growth investors mess up all of the early stage markets because they're just like, oh, $10,000,000 series a. It doesn't really matter. And then the series a investors mess up the seed markets and the seed markets mess up the angel investors.
Speaker 1:How real is that dynamic? Are you feeling pressure? Are you optimistic? Yeah. What's your takeaway on the broken unicorn factor?
Speaker 3:I gotta watch the Sam episode. That guy is full of full of amazing
Speaker 1:Yeah. He's a hot takesman.
Speaker 3:He is a hot takesman. Very artful. Yes. I think Sam's exactly right. K.
Speaker 3:You know, everyone is on everyone else's long. You know? And so, yeah, it's definitely a concern. I still feel at the end of the day, and maybe this sounds like Pollyanna, but, like, the game is can you meet great entrepreneurs every week, every month, and you're not bogged down by other BS that your partners throw on you or that you go to stupid conferences. Like, we all have, like, a ton of time every week.
Speaker 3:Mhmm. And we should all be meeting awesome founders as much as we can. And, like, can you connect with them? Can you get to know them? Can you take a bet on them?
Speaker 3:And I still think you can because a lot of investors have ADHD, and they go to stupid conferences, and they go to stupid meetings. And so that's my kind of view is that, like, you're not gonna catch everybody. There's no way to meet everybody, but, like, there's plenty of people here that you can take a bet on, and you can get paid. Know, if you're only chasing hot deals and everything's priced at perfection, we all know where that goes. Mhmm.
Speaker 3:So the other thing I will say is I've been seed investing, you know, in this part of the market for twelve years now. And every single year, with the exception of, like, a few six month periods of, like, COVID or dislocation or something, every year, people complain there's too many smart people starting companies. There's too much money in the early stage market, and the round sizes and the valuations are too high. Yep. I hear that every single year.
Speaker 3:Yep. So I just don't know when that's gonna stop. Like, maybe a meteor will hit the earth. I don't know.
Speaker 1:No. I I I got to Silicon Valley in 2012, and and, I got a big sit down speech. We are in a bubble. And I was like, yeah, we were for another decade.
Speaker 2:Yeah. I I mean, one of the things that makes me so bullish on America is just we spend every single day talking to bright entrepreneurs. And at a macro level, it's obvious that there's bubbles in different, you know, kind of sectors and industries. Right? Yep.
Speaker 2:People say, oh, manufacturing isn't investible. And then you talk to an entrepreneur who's, like, developed Actually, cracking. Six years developing, like, a proprietary method for manufacturing metal. And you're like, yeah. You're gonna sell billions of dollars Yep.
Speaker 2:Of of of of this product. I wanna ask you about two archetypes of Mhmm. New fund managers. And I'm and I wanna get maybe the advice that you kind of like give them as they think about raising. So the first one is the angel investor who's sort of casually locked into maybe investing in a bunch of winners while they weren't taking investing seriously.
Speaker 2:And I think this is fairly common. Somebody's like working at a great company, or they're a founder and they just happen to invest in let's say they invest in 15 companies, couple of them end up being unicorns and they decide they wanna become a fund manager. And then the second archetype is somebody who's at a big fund, gets hit by the lucky bus maybe, but doesn't really realize the kind of dynamic in which enabled that investment, which might have been the fund's brand or it might have just, you know, a variety of factors. So I'm I'm curious how you talk to those types of managers, both both of which believe that they deserve a $50,000,000
Speaker 1:Mhmm.
Speaker 2:Seed fund and deserve they should be, you know, able to kind of like win deals and and they very possibly can. But it's not necessarily a walk in the park.
Speaker 3:The for the angel archetype, I mean, let's not forget, like, Eli Gill was, like, a super angel and then turned into, like, his own growth fund as a brand. I mean, it still amazes me to see, like, the entrepreneurs, you know, when they create their Coachella banners for their
Speaker 2:Oh, yeah.
Speaker 3:Huge fundraisers. It's just still Elad Gil. Andreessen Horowitz, Elad Gil.
Speaker 4:Elad Gil.
Speaker 3:Okay. That's pretty awesome.
Speaker 4:It's awesome.
Speaker 3:Yeah. So, you know, he was born from that. I think that, like, the the pattern going back to your question is, you know, hey. You you've been doing this as a founder and stuff. I would think about a couple things.
Speaker 3:One is, like, when you have a founder, especially a founder who's like or operator who's like very, very connected and just kinda angel investing for fun, a sophisticated LP now he the the the problem is here to do a $2,050,000,000 dollar fund. That person could just call his or her friends. You know? But let's say if you're going to, like, a sophisticated family office or institutional investor or fund of funds and all these managing merging programs or managing manage emerging manager programs are popping up, That LP knows that they're trading off access that this person may have that's unique for that portfolio construction and discipline of building the basket. And so that person I would advise to say, like, two things to watch out for is how are you gonna get smart on the portfolio construction and and build a model that works and kinda stick to it?
Speaker 3:You can you can deviate from it a little bit, but you wanna show consistency. Right? Because as you build up your track record, literally, when we raise funds, you know, we're we may or may not be in the middle of that right now. They take your whole bank ledger. Like, every dollar that comes in from an LP and every dollar that's wired to a company is just in an Excel spreadsheet.
Speaker 1:Yeah.
Speaker 3:And so everything is recorded. Mhmm. And so, you know, you go too wild by a second or third fund when an LP is really looking at you, they may say, like, love to see this smooth out a little bit. You know? Mhmm.
Speaker 3:The other thing is just what I say network atrophy, which happens to everybody, which is, like, if you're not constantly replenishing your networks
Speaker 1:Yep.
Speaker 3:Not everybody are the Collison brothers. Yeah.
Speaker 2:You know, the big the big thing the big thing the big red flag for me on the angel side is, you know, as an angel, have 50 plus companies that I've put various checks in. Both of my, you know, true banger unicorns, I would not I got 25 k into. If I tried to do 50 k, they would have said, sorry. Like, you know, we have a bunch of people on the round.
Speaker 1:You had access, but not that much
Speaker 2:access. Yeah. Yeah. I had access, and I was intelligent enough to just give the founder money. But and and so and and and so if I if I were to go out and raise a fund, I it wouldn't be authentic to say like, oh, yeah.
Speaker 2:If I had see fund at that point, would have, you know, been co leading the round or whatever. It's just
Speaker 3:not You're you're talking about, like, the what happens with check size escalation. So, like, I'll give you a couple of things to noodle on. So for me, I had no choice but to crawl, walk, run. So I was incrementally increasing my check sizes in the same kind of rounds. So the same rounds I was doing twelve years ago, we're doing today.
Speaker 3:Mhmm. Now most people will just say, oh, I can go a little bit more. I tend to think if you talk to other seed investors, that kind of line is around somewhere between when you're asking for $2.50 to 500 k, it starts to get tight. Yeah. So so you could have an you know, one one model is you could have an aggressive angel who gets that right away and starts firing the million dollars instead of 25.
Speaker 3:And they still have a hot hand. They still have a good network. They still have good judgment and knows. Like, that can work. The problem is, like, you're gonna you're probably gonna light a lot of money on fire too because the deals are moving too fast, they don't have, like, that deal judgment going.
Speaker 3:But the the broader point you're making is a very good one, which is around, like, what check size can you really write in the competition set.
Speaker 2:Yeah. In the one in the companies that matter.
Speaker 1:This is fantastic. We definitely do have to have you back on. We could talk for another five hours.
Speaker 2:I gotta ask one more question. Please. Can you how how how do you think x is today in comparison to Good days. The good old days of Twitter? Think you were one of the first people I ever followed
Speaker 3:Yeah. Wow. On
Speaker 2:tech Twitter.
Speaker 1:Yeah. Same
Speaker 2:here. I didn't get I got on like somewhat late. Yeah. I was in college, but
Speaker 1:I mean, five letter username. It's no four letter username like
Speaker 3:t b p n, but it's pretty I'll see new people follow me and like Yeah. Usually it's just bots or people with like a, you know, an animated
Speaker 1:The anime profile pictures, there's alpha in those. Some of those folks are really great at AI engineers.
Speaker 3:But, like, recently, a bunch of people have, like, followed me, and I'll look at, like, recent followers, and they'll be like, Barack Obama.
Speaker 1:That's awesome.
Speaker 3:What's so funny? Yeah. If Elon, if you're I love X. I love Twitter. I've been on it for, I don't know, over fifteen years.
Speaker 3:I just want TweetDeck back. Interesting. Think TweetDeck being removed has disrupted my flow, and I've never I haven't been able to, like, find my footing again. But I think the content on there is great. It's just it's harder to find
Speaker 1:Yeah.
Speaker 3:Right now, and I tend to get the best tweets in my social chats, in my in my group chats.
Speaker 2:Yeah.
Speaker 3:And to me, that's a sign that, like, the interface is too much.
Speaker 1:Yeah. We talked about this with, Eric Torenberg a little bit. The a lot of the alpha has shifted to these big group chats, and there is a little bit of that that's lost. I mean, Twitter originally was, like, the global group chat for the world and for tech, and you had NFL Twitter and all the different Twitters. There's still a little bit of that, and we're bringing it back with
Speaker 3:the show. I think Elon and them can make more money by going back to TweetDeck, redesigning it. And then in each stream, you can have different ads just at the top. It's like such low hanging fruit.
Speaker 2:Yeah. Yep. Well, this is awesome. Thank you for coming on. See you again soon.
Speaker 2:Guys. Yeah.
Speaker 1:Thank you. Appreciate We'll talk to soon.
Speaker 2:You, man.
Speaker 3:Take care.
Speaker 2:Cheers.
Speaker 1:Let's bring in Dan from Chain Guard Boom. Announcing a pretty, really meaty medium sized round. I think it's just in a couple hundred million dollars.
Speaker 2:And by the way, did our did our 03:00 meeting get moved to?
Speaker 1:Oh, did it get moved?
Speaker 2:To 02:30. So we got even less time.
Speaker 1:Wow. Okay. Well, we might have to re reconfigure some of the agenda because a big meeting just got moved up, and it's all the way across town in LA traffic on a Friday. We are going to be in trouble. We will figure that out, but we will first have a chat with Dan from ChainGuard.
Speaker 1:Welcome to the stream.
Speaker 4:Thanks for having me on.
Speaker 1:Yeah. Thanks so much for joining. Congratulations on the hefty $356,000,000 series d. We'd love for you to introduce yourself, break it down, give us the news, tell us what's up.
Speaker 4:Oh, man. I was just on my roof ten minutes ago trying to get my Starlink to work because my internet was down for two hours and it came back on five minutes before this. So I'm so happy
Speaker 2:There you go.
Speaker 1:Wow. It's a miracle. It's meant to be.
Speaker 4:Yeah. Wait. Perfect time.
Speaker 2:Where are you right
Speaker 1:now? Yeah. Yeah.
Speaker 4:You off I'm in my basement in Rhode Island.
Speaker 2:Oh, nice. Nice.
Speaker 4:Yeah. Very cool. Awesome. Yeah. We're an all remote company.
Speaker 4:Cool. Yeah. We're about three and a half years old at ChainGuard. We got started during the pandemic, so there were no offices and we've kept it that way as we've grown. But we're building a safe source for open source software.
Speaker 4:Cool. Open source is this kind of like hippie software movement, that's been around for like thirty or forty years, but it's like anyone writes code and puts it on the internet for free and people use it. And everyone kinda gives back and trusts it and it and it mostly works. It's awesome. It's like 90 to 98% of the code that people use when they're writing, you know, their own applications.
Speaker 4:But when you're using code that's written by anyone on the Internet, it turns out not everyone on the Internet is a nice or responsible person. Yeah. And that leads to security issues.
Speaker 6:What was the
Speaker 2:what was the single
Speaker 1:I was about to say. The yeah. What what what's the exciting story? Is it SolarWinds? What what do you go back to as, like, the the the foundational story that we will be able to prevent in the future?
Speaker 4:Yeah. SolarWinds was, like, one of those eye opening moments. Sure. It's something I've been paranoid about for a while, though. There's actually this paper that was, like, written in the seventies by Ken Thompson called Reflections on Trusting Trust, And it was like a Turing Award winning paper.
Speaker 4:Like, it was his his paper after he won an award. Mhmm. And he kind of proved by pranking all of his coworkers at Bell Labs that if, like, there's a backdoor in a compiler a compiler is a thing that turns source code into, like, you know, the thing you're actually gonna run, Then you can't really trust any of the programs that are ever built with that or any of the things that are built with those things. And it's an awesome paper and then everyone just kind of blocked this out for like the next forty or fifty years, until SolarWinds happened basically, where somebody actually spent the time and did something like that and then had dramatic consequences as a result to all of those kind of downstream customers. But my co founders and I have been working on this stuff for a while at Google, SolarWinds was kind of the kick start to actually get this company going.
Speaker 1:Got it. So, talk to me about I mean, the ramp on this company is in crazy. What was the first customer? How what was the go to market? How did you scale?
Speaker 1:I wanted to hear all that.
Speaker 4:Yeah. We spent a while in the beginning trying to figure out what we wanted to do from a product side. Right? Yeah. Software supply chain security, open source security, it's a whole bunch of problems.
Speaker 4:It's not just one problem. And it took a while to figure out what which one people actually wanted to solve first. There was this topic everybody knew about after SolarWinds. There was an executive order from the Biden administration, that kind of thing. But nobody's really ready to take action yet.
Speaker 4:They're all just paying attention to and learning about the space. So we tried a bunch of different things. But this product that we have now, our our ChainGuard images product, we started on it pretty early and it took a while to get going, because, you know, there was a lot of software that we had to build to get to point where people could come to us and get whatever they wanted to run from us. We first started selling it like oh, sorry. Go ahead.
Speaker 1:Oh, yeah. I I I just wanted to hear, just finish that story and then I'll ask the question about,
Speaker 4:you know Yeah. We really first started selling it about halfway through calendar year 2023. We got the first couple of customers on board. We had a couple sales reps at the time. They reported directly to me.
Speaker 4:After it really started selling though and we we had a feeling it was repeatable, we brought in a VP of sales. Yep. Really started to scale that. But we've kind of been perpetually behind Mhmm. You know, growing our sales team as a result.
Speaker 4:The demand has made It's just like you're great. Yeah.
Speaker 2:Talk about I wanna ask you more potentially just a fun question, not too serious. Awesome. Talk about the brand. I think if you said twenty years ago that like a, you know, security software company would have such a fun, delightful brand, they would have kind of laughed at you. It just a is it just an extension of of, you know, the team and and your guys' internal culture, or or how did that come together?
Speaker 2:And and what's been the customer response to that? Like, because I imagine you're, like, at at this point, many of your customers are not just cool x native startups. They're, you know, really, you know, scaled enterprises.
Speaker 4:Mhmm. Yeah.
Speaker 1:I I think, you know, it's
Speaker 4:a reflection of, in some ways, our internal culture. Right? Like, security is really serious work. It's the type of security we do is really tedious work. It can be boring.
Speaker 4:It can be hard stuff nobody really wants to do. We try to keep it fun. One of our, you know, core values is we do serious work, but we don't take ourselves too seriously. And we we spend a lot of time on that one. We have fun in all hands.
Speaker 4:We do crazy stuff, summits, that kind of thing. And it helps keep the culture light, know, when when you're about to, you know, go spend eight hours trying to fix some tiny bugs somewhere and some piece of software you don't understand. It helps to laugh every once in a while. But, you know, it keeps everybody engaged, keeps everybody having a good time, especially when things get tough. And we try to, you know, reflect that in our social media and our branding and the events and all of that stuff we do.
Speaker 4:Yeah. I get cold called all the time. There's all these brands out there and, like, just some personality and authenticity really goes a long way in this.
Speaker 2:Totally. What what what are the the general risks in in in, you know, cybersecurity risks around software that that kind of, like, keep you up at night that aren't related to ChainGuard directly and what you guys are doing? So kind of, like, more at a macro level.
Speaker 4:I mean, this one sort of related to us, but it it it really is the one that keeps me up at night. We don't have a perfect solution to it either. So so I don't feel too unfair. But it's it the XZUtils attack at the start of last year, if you remember that one. Yeah.
Speaker 4:I think that's the one that probably should be keeping the entire industry up at night. Mhmm. It was this piece of open source software that had been around for, thirty years. It's this compression library that's used everywhere across the Internet. You know, as you upload, download things, it all gets compressed and decompressed.
Speaker 4:Just like from Silicon Valley, you know, the middle app compression kind of thing. It's everywhere and you don't even think about it. And it was maintained by just one person, like a lot of projects are for, you know, like a decade. And somebody else just showed up and started helping. And they were like fixing bugs, doing good stuff, cleaning up the old code nobody else got around to for like a year or two.
Speaker 4:And then the original person was like, you know what? I've been doing this for a long time. You're doing a good job. Why don't you just take over? And the original person just kinda left.
Speaker 4:And then three months later, this malware gets slipped in that was incredibly sophisticated. Wow. And it turned out it wasn't even a real person. It was just like a made up name on an email list.
Speaker 2:The name was started showing in.
Speaker 4:Chiyatan. That's not even a real person. Like there are people with that name and they had a terrible week getting harassed. But none of those were that Chiyatan. Wow.
Speaker 4:And it was luckily detected at the last minute and it was a a really close call. Mhmm. But that's not the first time that's happened. I'm sure it's just the first time we've noticed and that's definitely not the last time that type of thing is gonna happen. Yeah.
Speaker 4:It's about trust in the end. You have to trust the that are doing this and you don't know if they're a nice person on the internet. What's that old meme? You don't know if someone on the internet is a dog. Right?
Speaker 4:Yep. Yeah. I mean, a dog. Yeah. A dog, a Russian or North Korean hacker,
Speaker 3:you know?
Speaker 4:Yeah. Nobody on the Internet knows these So it's kind of related to what we do, so I don't but like it's a hard one. It's impossible to solve unless you know the identity of every single person and know their entire life history.
Speaker 1:Yeah. This is somewhat related. I could imagine there's a world where this is handled by the government. And if there's critical software that's identified, it's like, we're gonna find this person and verify who they are and basically do a background check. On the other side, the more futuristic Silicon Valley tech approach might be, hey.
Speaker 1:We have incredible software LLMs. We have AI agents. What if we just run an LLM over every piece of public code constantly? 20 every review every every get push or every pull request. Right?
Speaker 1:How are AI agents, effective? Is it just gonna be a, like, cold war of of both sides using AI to sneak ever ever more complex hacks in and catch them as a cat and mouse. How are you seeing AI and AI agents, helping or hurting in the future?
Speaker 4:I'm scanning the Internet right now while we're talking. Yeah. I'm vibe I'm vibe scanning the Internet. Let's go. Yeah.
Speaker 4:No. It's it's an arms race like everything in security. Attackers get better. They move around and find different ways in, and defenders have to have to keep up. Right now, I think we're losing that war.
Speaker 4:Right? We're getting a lot better at finding vulnerabilities in software and finding ways to exploit than we are at keeping up with that. I hope that changes. You know, AI adoption in security is has been pretty slow. Mhmm.
Speaker 4:And for a good reason, it's kinda of scary. You don't want to just run these things with direct access to all of your systems, but attackers aren't slowed down by that. They're running this stuff every day and every week as it changes. So it's going to be a kind of wake up call and catch up period as the defenders figure out how to use it as well as the attackers are.
Speaker 1:What's the what's the vibe in the security community right now? Just is it, I I remember I I, like, accidentally landed in Vegas during DEF CON or Black Hat and it was kind of out of my element one year. But what does it take for somebody to break into the industry? Where are the key pipelines? Are people even like, are universities relevant here anymore?
Speaker 1:I know there's a lot of hackers that just kind of do, CTFs and then become famous. But what what are the typical pipelines into either career at your company or just the industry broadly?
Speaker 4:Yes. Security is both really easy to break into and hard at the same time. Right? Like like you mentioned, universities aren't terribly relevant. There's no, you know, college that you you get a degree in cybersecurity from.
Speaker 4:Even programming in general. Right? You can learn this stuff on your own. I learned it on my own. I did mechanical engineering.
Speaker 4:I never took a programming class. But it's also hard because there's so much esoteric stuff. Like, there is no curriculum. You kinda just have to spend all that time on those forums and reading hacker news and reading all these different sources. So let's say there there's not a lot of credentialism, but there is still this, like kind of obscure dark knowledge base that you do kind of have to pick up on on your own.
Speaker 4:But it is incredibly welcoming. Hopefully, you had a good experience when you landed there in the desert Yeah. At DEFCON. It's always a fun crowd.
Speaker 1:Yeah. Totally.
Speaker 4:Vegas is It's way more fun than RSA.
Speaker 2:You never know what you're gonna get in Vegas. It might be the plumbers, you know, annual conference or an arms dealer conference Yeah. Or black cats. It's
Speaker 1:always different. But yeah, remember people were joking like, oh, like, like, don't even go near the DEF CON
Speaker 4:folks. Like,
Speaker 1:they'll hack your phone in two seconds while you're not even looking.
Speaker 4:No one takes a shower. Yeah.
Speaker 1:Like Yeah. That too. That too. Yeah. So what what's next for the company?
Speaker 1:I mean, you have a new war chest. You mentioned hiring salespeople, scaling that up. What are the new challenges? What are the goals for the coming twelve to eighteen months?
Speaker 4:Yeah. We're trying to be the safe source for all open source. You know, up until today, it's been pretty limited with just our container images. We're adding new products. We just announced a few a month or two ago.
Speaker 4:Mhmm. Virtual machines, language level libraries. You know, we're really just on the tip of the iceberg when it comes to open source. So we're scaling up our investments a lot in r and d, our automation, making this stuff easier for us to do as we continue to grow and scale, you know, the amount of open source that we have. It's moving even faster.
Speaker 4:You asked about this about AI. Open source is accelerating. Yeah. You can crank out code even faster now. Totally.
Speaker 4:Today, it's more people writing more code. All code has bugs. We haven't really made, an improvement dramatically that way in, you know, the the number of bugs per line of code written. And in fact, it'll probably go up as more inexperienced people start writing more and more of this. So the security gap is getting wider, and we have to get even faster at it.
Speaker 1:Yep. That makes sense. One one more question on AI, and we'll let you get out of here. Dario over at Anthropic just published a piece, the urgency of interpretability. Jordi and I were talking a few months ago about deep seek and this idea that even if it's open source, there could potentially it's a little sci fi, but there could potentially be a Manchurian candidate buried in the weights of one of those models.
Speaker 1:Yeah. Is that something you're thinking about? Is this pure sci fi? Is this a year, two, five, ten out? How should we think about auditing the output of open source LLMs?
Speaker 1:Because that seems like a really valuable target if I'm a hacker.
Speaker 4:Yeah. I've seen studies, not even just recently, you know, the last couple of years where if you could taint a percentage of the training data going into a model, you can control some of the output. Yep. This stuff is not possible to reverse engineer. Totally.
Speaker 4:Code is hard enough to reverse engineer and this is that scaled up by like a thousand Yeah. Open source models, you know, there is an open source definition for models and these wastes, but, you know, you can read source code. It's hard, but you can't read these ones and zeros in a, you know, a 40 gigabyte file. Mhmm. It would not shock me if it's in there and even not even just deep seq in any of these models intentionally or intentionally.
Speaker 4:Yep. We like to think that we can review stuff line by line and catch these bugs, but there's no possible way to do that with LLMs. The whole explainability piece is scary.
Speaker 1:Totally. Well, thank you so much for stopping by. Yes, We we we have to cut it short because we have to run to a meeting. But this was fantastic. We'd love to have you back on the show whenever Hopefully, there's never a big security incident.
Speaker 1:But if there is one, we'll be calling you.
Speaker 2:And we'll be playing this sound effect. Oh, no.
Speaker 4:You know where to find me.
Speaker 1:Thank you so much.
Speaker 2:Thanks for coming on.
Speaker 4:Good luck to you, gentlemen.
Speaker 1:We'll Cheers to talk to you later. Bye.
Speaker 2:See you, Dan.
Speaker 1:Fantastic. Well Sorry,
Speaker 5:we have
Speaker 1:to wrap up. We have one last ad. Linear, you heard from the CEO directly. It's the new standard for modern product development. Go check out Linear.Dotapp.
Speaker 1:Build with focus, ship with care, Linear.app. And thank you. We will wrap up there. We will be back Monday.
Speaker 2:We're sorry we have to run. It's gonna be a massive week next week. Massive be on the ground at
Speaker 1:Hill and Valley. In DC. We have a lot more planned, a lot more timeline, lot more top stories, a lot more real estate stories, hopefully.
Speaker 2:That's
Speaker 1:to break down some more mansions. We'll see. Anyway, thank you for watching.
Speaker 2:Thank you, folks.
Speaker 1:We will see you soon.
Speaker 2:Have a fantastic Have a
Speaker 1:great weekend.
Speaker 3:Bye.
Speaker 2:Cheers.