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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TBPN. Today is Monday, 11/03/2025. We are live from the TBPN UltraDome, the temple of technology, the fortress of finance, the capital of capital. The timeline has been in turmoil over the Brad Gerstner podcast with Satya Nadella and Sam Altman. Interesting dynamic.
Speaker 1:Lots of hype. You know, people continue to, call tops on bubbles, and there's a whole bunch of other stuff On the topic of BubTalk, you know, you wanna get ready for the collapse of the bubble, you gotta save time and money. That's right. Go to ramp.com. Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 1:Get started for free. There was this article in Bloomberg. The AI build out is so big, even a haunted house owner wants in. The co owner of Pennsylvania's Pennhurst Asylum has big plans for a data center about an hour's drive Northwest.
Speaker 2:We gotta get through Halloween, and then I'm all in on AI.
Speaker 1:It is funny that Halloween is
Speaker 2:We gotta get through spooky season.
Speaker 1:I mean, that's basically what's
Speaker 2:going all in.
Speaker 1:I think that's basically what's happening because what what what's that famous Halloween store? You know what I'm talking about? Spirit Halloween? Is it spirit? Like Yeah.
Speaker 1:It pops up. You're like Pops up. It comes into town for, like, a day or a month, and then it disappears. And it's always like, how do they even set up a store so quickly? But they're clearly just really good at, like, short term leases.
Speaker 2:You ever been to a spirit Halloween, like, at, like, 6PM on Halloween? No. Is it packed? It's an absolute nightmare.
Speaker 1:Oh, it's probably crazy because because they just let
Speaker 2:it get destroyed, basically. Like, the employees are just like, alright. It's basically over.
Speaker 1:It's over. We're gonna pack up and leave tomorrow.
Speaker 2:Like a stampede of horses just Yeah. Through it.
Speaker 1:It's interesting that you can't ride that into, like, spirit Thanksgiving, spirit Christmas. They just gotta get in and out around Halloween. But, apparently, haunted houses are converting into data centers. We actually heard Missus Bullock. This.
Speaker 1:We heard a rumor through, the makeup artist that did the makeup on the Friday show that there are a number of Hollywood sound stages, studios that have been set up in Atlanta,
Speaker 3:I think she
Speaker 1:said, Georgia, and they're not monetizing well as studios. And so they're converting them into data centers. And it's sort of the same crypto boom.
Speaker 2:She basically said she knew somebody that was walking around one of these lots Mhmm. And poked her head in the door
Speaker 1:And it was all
Speaker 2:a bunch of racks.
Speaker 1:Or maybe they were filming the social network too. You don't know. Or the open admin.
Speaker 2:You don't know. But the the greater conspiracy theory there is they were using the tax incentives provided to the film industry in order to Yeah. Just
Speaker 1:Well, I mean, they're generating Sora, that should count as film Maybe. In tax deductions. You're like, we need to film it. We need to film the social network too. Or I I do hope that a lot of the OpenAI documentary takes place in the data center.
Speaker 1:I hope it's about the minutiae of racking the servers to do the GPT three training run. I wanna know that's the core drama. I wanna know were the were the GPUs seated properly? Were the racks working? Was the power continuous?
Speaker 1:Was the delivery continuous? Or were there brownouts? Were their blackouts? What was going on in the data center? That's where I want the most of the tension to occur.
Speaker 1:And then I want them to take the movie and restream it.
Speaker 2:I want them to
Speaker 1:put it on restream, one livestream, 30 plus destinations, multi stream, reach your audience wherever they are. So it's here where real estate developer Derek Strine has been scaring locals for years. His haunted attraction, Pennhurst Asylum, every fall hosts tens of thousands of villi visitors for a well controlled fright. But Strein has a new idea for the property, one that some locals even more that has some locals even more disturbed. He wants to turn the nearly 130 acre grounds into a world class data center, the kind of massive service server facility that is central to the artificial intelligence boom.
Speaker 1:Never mind that his first foray into never mind that this is his first foray into such an investment, one that would require more cash than any of his past projects. He's also not fretting about corralling the necessary electricity, which would be enough to power as many four as as many as 400,000 homes, and he can even see past the
Speaker 2:So I was a little bit skeptical of people just hardcore pivoting.
Speaker 1:Mhmm.
Speaker 2:And we're having the CEO of Iron on today Yep. Who was doing Bitcoin mining, had a lot of energy Yep. And now just signed a nearly $10,000,000,000 deal with Microsoft that got announced this morning. Yeah. Stock's way up.
Speaker 2:The CEO will be on, the show around in about an hour. So I'm excited to meet him.
Speaker 1:Well, let me tell you about Privy. Wallet infrastructure for every bank. Privy makes it easy to build encrypted rails, securely spin up white label wallets, sign transactions, and integrate on chain infrastructure all through one supply pay. Okay. He he you know, I think he knew that people were gonna take shots at him.
Speaker 1:Oh, what are you doing pivoting from a haunted house to a data center? And he said, how do you eat a whale? One slice at a time. Right?
Speaker 2:Is that a is that a common phrase?
Speaker 1:It's a real quote. What I've heard is how do you eat a dinosaur one bite at a time? That's that was the SpaceX motto when they were saying they're going after the legacy industries, and it's going to take a huge amount of time to actually unseat NASA or if you're Anderol, to unseat Lockheed. Like, it's just it's not just gonna happen over like, it's not like the Internet distribution where you're trying to displace all of these systems and structures and and political incentives and voting blocks in
Speaker 2:certain Contracts.
Speaker 1:And contracts and and manufacturing prowess. Like, it just it's just not an overnight. It cannot be an overnight success even even if you have a stats team. We're still gonna play for you. So you have to eat the dinosaur one bite at a time.
Speaker 1:But I just think it's fun Eating
Speaker 2:whale one slice at a time.
Speaker 1:One slice at a time. It's it's much more visual. It's very funny. A horde of investors, developers, and speculators are racing to put picks and shovels in the ground for a technological revolution. Are betting is here to stay.
Speaker 1:Artificial intelligence infrastructure spending could surpass $3,000,000,000,000 in the next three years by one measure. Trump hailed more than 92,000,000,000 in AI and energy deals from the likes of Blackstone and Brookfield during a visit to Pennsylvania this year. Many say there's too much money flooding in, but our intrepid haunted house proprietor, sees the challenge as part of the value proposition. His bet is that if he does the grunt work, getting a grid connection and securing the town's blessings, another developer will pay a premium to come in alongside him. That, he expects, will bring in new equity and expertise.
Speaker 1:We're gonna derisk for the deep pocketed guys, he said. The big value play is getting this ready for a hyperscaler to go vertical in less than a year. So he's just setting it up. He's just setting it a little layup
Speaker 2:for seen enough. He should backed based on his Halloween revenue
Speaker 1:For sure.
Speaker 2:And then use that capital to, to to go all in.
Speaker 1:Oh, some of this stuff's crazy. Anyway, very, very fun story. He should also be vibe coding. He should, also
Speaker 2:He's gonna need to get over to Google
Speaker 1:AI Studio. He should, he should head over to Google AI Studio, create an AI powered app faster than ever. Gemini understands the capabilities you need to automate and automatically wires up the right models and APIs for you. Get started at a i.studio/build. Let's go through the timeline.
Speaker 1:Bugou Capital Yeah.
Speaker 2:Did you wanna read your post to give some context?
Speaker 1:Yes.
Speaker 2:Start there.
Speaker 1:So my question was, how sticky are these deals? So, the timeline's going pretty crazy on the BG squared. Although, is he gonna rebrand the Brad Gerstner? BG. Yes.
Speaker 1:Maybe just BG. Or he could or he
Speaker 2:could mirror he could just have two videos of himself. And then I guess.
Speaker 1:Was good that two Brads. It feels like a sequel. He can do the prequel, just the BG one maybe. Yeah. But he had Satya Nadella and, Sam Altman on the show, and everyone is debating whether or not a $14,000,000,000 revenue company, OpenAI, can afford to pay 1,400,000,000,000.0.
Speaker 1:And Brad asked this question directly. And it was kind of a crazy moment because a lot of people were saying like, well, he's an investor. This should be, like, the softest ball interview possible. He's, like, deeply conflicted. Like, a lot of journalists were like, how how is this happening?
Speaker 1:Like like, how how is it that Sam Altman's, like, getting, it's like a harder interview with a direct investor than with a traditional media journalist, which is just interesting. Yeah. But
Speaker 2:Yeah. And I don't I don't
Speaker 1:think it was I don't
Speaker 2:think Brad meant meant for it to be a tough question.
Speaker 1:Yes. I agree.
Speaker 2:Like, the whole interview was a layup. You could argue you could argue that it was it was Yeah. Like, Brad is like you said, he's heavily aligned with OpenAI. This wasn't meant to be a gotcha. And Sam just might have woken up in a bad mood that day because the answer that he gave was absolutely horrible.
Speaker 1:Yeah. Well, so what's interesting is that I think that are you familiar with that story of JFK and Nixon, the debate? No. So there's a presidential debate, between JFK and Nixon, and it was right around the time Tyler, do you have the actual, like, date or details of, like, of, like, when this happened? But it was right around the time that they first started televising presidential debates.
Speaker 1:And so
Speaker 2:So this was 1960?
Speaker 1:1960. So 1960, JFK and Nixon j JFK and Nixon are are going at it at the presidential debate. But what what what happens? Nixon didn't want makeup or something?
Speaker 4:Yeah. So yeah. It's like one of the first televised ones. Nixon doesn't wanna wear makeup because, like, I think
Speaker 1:He just he's,
Speaker 4:like, anti makeup.
Speaker 1:He's anti makeup. Okay.
Speaker 4:But he, like, looks really bad because he had been doing he he had some speech the like that day and he was
Speaker 1:like So he's tired.
Speaker 4:So he like looks not great.
Speaker 1:Okay.
Speaker 4:And then JFK is like this very like preppy guy. He like looks very nice. Yep. And then so it's like the whole thing is like some people hear the the debate just on the radio or just or on TV. Yep.
Speaker 4:And then their ideas of who won is, like, totally different based off like, JFK, like, looks way better physically.
Speaker 1:Yep. And so so it was this famous moment where, like, JFK mogged in the visual medium, but Nixon mogged in the audio medium. And when I first listened to the BG squared podcast, I was just listening to the audio and I was like, oh, like, that's like a totally reasonable answer. But when you watch the video and you see the body language and you get into all that, I feel like
Speaker 2:Issue is Sam
Speaker 1:a whole extra layer.
Speaker 2:Sam got pressed, he went.
Speaker 1:See? You don't you don't hear that on the audio. You don't hear that on the audio. And so you see what I'm saying? How like you can win in one medium but lose in another?
Speaker 2:Anytime I'm anytime I don't like something you're saying, John, I'm just gonna go.
Speaker 1:Well, well, the audio listeners won't know. Yeah. Won't know. And and the timeline was also fixating on this fact that, at at some point, Brad takes a step back from the microphone. They were reading into that.
Speaker 1:Like, that's something that just doesn't come across in audio. And so you hear it and you're just like, okay. Yeah. This actually sounds like pretty reasonable.
Speaker 2:And Satya Satya's just sitting back laughing basically.
Speaker 1:Yeah. Exactly.
Speaker 2:It was like the it was this The one
Speaker 1:of the most strange
Speaker 2:I was actually surprised that that they released it. I was surprised that like nobody basically caught or at least like they could have easily Edited
Speaker 1:it or killed it.
Speaker 2:I think it's good that it was released. Yeah. Because this is the question that is on everyone's mind.
Speaker 1:Yes. Yes.
Speaker 2:Everyone's mind. Right? And Sam's answer, I summed it up by saying his answer, he says, how will you afford 1,400,000,000,000.0 in spending with only 12,000,000,000 of revenue? And Sam was like, actually, we have more revenue than that. Yep.
Speaker 2:Of course, they lost 10 or so billion dollars last quarter. So they have a lot of revenue. They have a lot of losses. Sam's answer was basically, sell your shares. Yep.
Speaker 2:We're automating science. And we're gonna release a hardware device. And we're gonna need a lot of compute for that. Yep. Which was like, you know, obviously, I'm summarizing, and he he was more drawn out than that.
Speaker 2:But but I I can't think of a more, poor answer when people deserve to have a I think a bit more clarity around it.
Speaker 1:It does feel like it's getting to point where stuck.
Speaker 2:The the new deal with Amazon that got announced this morning. Yep. Right? I think the question that even all these different partners are running calculus on is, like, how how real are these commitments? Right?
Speaker 1:Yep.
Speaker 2:Because I don't think that, like, Sam is smart enough to not sign up for $1,400,000,000,000 of, like, liabilities. Right? He Yep. There there is a world where he can thread the needle
Speaker 1:Yep.
Speaker 2:And and spend all this money Yep. That he's sort of soft committing. But everything has to go perfectly. Agenda commerce has to has to be massive. Ads need to be massive.
Speaker 2:Yeah. Subscriptions need to keep growing at the same rate. People need to not churn off of their $200 a month plan because they realize they can get a very similar product experience for $20 a month elsewhere, free elsewhere. Mhmm. And so a lot of things need to go right, and it was just a really weak answer.
Speaker 1:Yeah. And
Speaker 2:here's the other thing. The only person that I saw defending the answer and the whole interaction was Brad.
Speaker 1:And one of his colleagues.
Speaker 2:Two people at Altimeter.
Speaker 1:Yeah. Not not yeah. Not a lot of people.
Speaker 2:I I did not see there was not even a single other opening eye investor that was like that's willing to stick their neck out and say, like, here's how we actually can
Speaker 1:Okay. Well, you know, it's that time. We gotta steel this thing. We gotta steel man this thing. It's the only way.
Speaker 1:This is how the show works. We can't we can't be we can't be one-sided. This is a this is a is a cool and
Speaker 3:embarrassing show.
Speaker 2:Can you bring me the tinfoil hat?
Speaker 1:We're just dropping this in. Okay. So so first off, cognition makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team. Okay.
Speaker 1:So I really need to get a better, like, strap because this thing just flips back like this. The more I
Speaker 2:Just put the strap
Speaker 1:on. I guess I could oh, if I balance it, maybe it feels better. Okay. Anyway, so first off, okay. So Sam said that the revenue is incorrect.
Speaker 1:It's not 14,000,000,000. It's higher. That's point one. Point two. Okay.
Speaker 1:So so so so so so so that it's worth it's worth never missed projections. They've never missed projections.
Speaker 2:It's worth noting that the losses are dramatically greater than the revenue.
Speaker 1:Yeah. But that doesn't matter for the for the deals because you pay the you pay the deals from the revenue. Like like the the when you bring in the revenue Yeah.
Speaker 2:Yeah. Sure.
Speaker 1:That's what you need to pay
Speaker 2:factoring in stock based contracts.
Speaker 1:Well, the losses are from the are from the contracts. Like like like, you don't need to find new money to pay your cloud bill because, like, that's the reason there are losses. The losses exist because they're paying these deals. Like so it's not really fair to be like like, yes. Of course, if you're a shareholder, you want higher you you want profits, obviously.
Speaker 1:Like, that that makes total sense. Yeah. But I think But if you're Amazon, like or or if you're if you're Azure and you're like and you're like, how are you gonna pay me a billion dollars? It's like, well, if they bring in 2,000,000,000 of revenue, like, I'm at the I'm at the top of the capital stack. I'm at the top of the I'm I'm higher than the than the debtors.
Speaker 1:I'm higher than the equity. Like, I get paid out first because I'm I'm a supplier. I'm sending
Speaker 2:you real live invoices.
Speaker 1:I'm cogs. Yeah. I'm cogs. So I'm I'm above everything. So so I I I think that that that matters a lot less, genuinely.
Speaker 1:Satya Nadella said that opening eyes never missed projections. They've never they've never put a projection forward that they haven't beat. So if history repeats, you're good. Also, OpenAI's revenue growth has been insane. Look at this ramp.
Speaker 1:Look at this ramp in 2020.
Speaker 2:This is this is this is the thesis that I that I like.
Speaker 1:This is the bullish this is the most bullish thesis. Okay. I'll I'll run you through.
Speaker 2:It's just
Speaker 1:I'll run you through. Extrapolate. Extrapolate. So look. In 2020, how much did OpenAI make in revenue?
Speaker 1:3,500,000.0. What they do next year? 28,000,000. What they do the next year? 200.
Speaker 1:Then 1,600,000,000.0, then 3,700,000,000.0, now north of 14,000,000,000. What are they doing? They're tripling revenue every year. Do you understand the value of compounding?
Speaker 2:I do, John.
Speaker 1:So what happens if you compound OpenAI's revenue at 300% for a decade?
Speaker 2:They get into the quadrillion.
Speaker 1:They get into the quadrillions. That's right. And so the question you should be asking is not how can a $14,000,000,000 company pay for 1,500,000,000,000.0 of of
Speaker 2:How can a multi quadrillion
Speaker 1:How can a multi
Speaker 2:business quadrillion not pay for
Speaker 1:a simple 1,400,000,000,000.0? 0.1% of the revenue will go over there. It's not a big deal. It's not a big deal. If you get into the quads, you're good.
Speaker 2:And they're automating science.
Speaker 1:And they're automating science.
Speaker 2:And they're gonna launch a hardware device.
Speaker 1:But but but but truly, like like, the the revenue ramp has been insane. It really has been insane. And so it's not that crazy to actually think that, like, it will continue to grow. And and so a lot of it is, like, how fast will it grow relative to how fast do these contracts grow? And so if the growth continues, like, the cloud deals really can work out, but the question is how perfectly do the next few years have to go?
Speaker 1:Because, interestingly, revenue growth right now is accelerating. They are growing faster, at least according to these basic numbers. Like, 2025 will be higher growth than 2024. Because in 2024, they went from 1.6 to 3.7. That's, like, 200% growth or, like like, they basically, like, a little over doubled.
Speaker 1:Now they're more than tripling. And so they've actually in they're actually accelerating revenue. Now if that's if they're continue if they're, you know, expecting continued acceleration forever and there's a hiccup, It could be an issue. But it's not that crazy because they have so many irons in the fire. There's a whole bunch of things that could hit.
Speaker 1:You got Chateapiti could grow. API business can get big. It already is. It can get bigger. Sora, Agenic Commerce, Scientific Discovery, new hardware.
Speaker 1:Some of those feel crazier than others. Like, the API business, you're not gonna like, oh, there's no way they can make a billion dollars off of API. It's like, yeah. They're gonna no problem. They're making more than that now.
Speaker 1:New hardware, it's like that could be three years out, and it could be very slow. It could be a complete flop.
Speaker 2:Yeah. I just I didn't like the saying we were gonna have a hit consumer hardware device is not doesn't make me feel that comforted Totally. When when you're becoming too big to fail. Right? You have many different businesses Yeah.
Speaker 2:Where their market caps are riding on their partnership with you Yeah. And you're just saying, yeah, we're going to just hit a grand slam with a new consumer hardware device. And every other attempt at it so far has not managed to make anything even really that useful. Yeah. So I'm excited I'm excited to I'm excited for OpenAI's hardware device.
Speaker 2:I think it will be I I expect it to be somewhat like Sora Yep. In that you're taking not necessarily the most transformative, like, Sora was an app, but at least it had it it and it was a feed and you could create content with it, but at least it had some, like, novel, some novel things about it, specifically the Cameo feature was like novel and great and viral and cool. And I expect their consumer hardware device to be like a fresh take on on on an exist somewhat existing form factor. Yeah. And I expect it to be cool.
Speaker 1:The hardware ramp feels so hard.
Speaker 2:Like Don't worry about a a $13,000,000,000, you know, given the benefit of the doubt, like $20,000,000,000 revenue revenue run rate Mhmm. Company committing to 1,400,000,000,000.0 of spend. Don't worry about it because the the product that we haven't launched yet is gonna be such a smash hit that we're we're good for it.
Speaker 1:Yes. Yes. If there really is a scenario where all of these other bets have to hit in some epic parlay, like, that is extremely nerve wracking. I agree with you. But the question is, how solid are these deals?
Speaker 1:Like, I remember we were live on Liberation Day. Remember April 2? Like, it was the largest global market decline since the COVID era twenty twenty stock market crash. And at the time, it seemed like a complete disaster. Remember Jordan from China talk coming on being like, this is the end of the world, basically?
Speaker 1:And I was like, but what if Trump just reverses it? And he was like, oh, no. No. This trade war is gonna be way worse. And, like, he was kind of right.
Speaker 1:Like, the trade war was more significant this year than the previous administration. But at the end of the day, it really was possible for Trump to just roll back a lot of the tariffs, and he did that. And so the question is, if if if if OpenAI doesn't accelerate to a trillion dollars in revenue or quadrillion dollars in revenue, and all of a sudden, there's a whole bunch of folks who are like, wait a minute. Like, how are you gonna pay us for our cloud stuff? And they're able to say, okay.
Speaker 1:Well, let's actually wind this back or let's stretch this contract out. Let's this five year contract, let's make it a ten year contract. Like, if all of that can happen smoothly and efficiently with just the stroke of a pen, like, it's not that big of a deal. It can
Speaker 2:Except if you're Oracle and you spend tens of billions of dollars building infrastructure that you ultimately can't monetize in the way that you thought you were gonna monetize. And if got to. And they have massive debt. Yep. And so the reason I'm wearing the tinfoil hat is I would like to propose the the glut theory, which is that I believe I believe there's a chance Yeah.
Speaker 2:That Sam actually wants to create a massive overbuild
Speaker 1:Yeah.
Speaker 2:So he can he can ultimately
Speaker 1:He predicted a glut.
Speaker 2:Because he controls the demand.
Speaker 1:The show. Yeah. He's glutpilled.
Speaker 2:He's glutpilled.
Speaker 1:He said
Speaker 2:And he's gonna he's gonna
Speaker 1:know if it's gonna happen in '26 or '27 or '28 or '29 or something, but he was like, it's coming.
Speaker 2:And I would just say, like, I think OpenAI will be a beneficiary of a compute glut.
Speaker 1:It certainly seems like that. It doesn't seem like they have a lot of debt. It doesn't seem like I I we don't know. We that that's the thing is that we don't know how these contracts are are written. Like, there could be a an easy mutual out.
Speaker 1:It could just be, like, for for convenience. These contracts can be revocable for convenience. Yeah. And it's like, okay. Well, then it's completely different conversation than than if you don't pay your AWS bill, OpenAI, there's 37,000,000,000.
Speaker 1:Yeah. If you don't pay it, we own the company. You go into receivership. You go bankrupt. Like, they're wildly different contracts, and we don't know.
Speaker 1:There's there hasn't been any reporting on where where
Speaker 2:I think Sam Sam is smart enough to know that he's like, I'm gonna give you this commitment. Yep. And your stock's gonna pop massively. Yep. And you're gonna be able to use that to This raise
Speaker 1:is the tail is rolled out.
Speaker 2:More debt.
Speaker 1:Everyone loves press
Speaker 5:releases.
Speaker 2:And because I know what I'm gonna do for you Yeah. You gotta give me an out.
Speaker 1:Yeah. And Everyone loves press releases. That that just doesn't it doesn't tell you
Speaker 2:Press release economy.
Speaker 1:But it doesn't actually tell you anything about the the the where the risk sits. So we don't actually know. We don't actually know. We just know that, like, you know, if the revenue if AI revenue slows down, it's gonna be bad for somebody.
Speaker 2:But it but it's worth noting that OpenAI, I believe, will be a massive beneficiary of a glut and an overbuilt.
Speaker 1:Maybe. Not in the case where they're the yeah. Well, yeah, where where where they go into receivership and Oracle and
Speaker 2:Yeah. And I just I I think every I think the people around the table are smart enough to know how much leverage they have right now and wouldn't be signing up deals that require the company to burn a 100 to $200,000,000,000 a year and not have any way to get out of that. Like like, eventually
Speaker 1:I don't know. I don't know. It it it I it's it's I mean, Sam has a lot of leverage. So these could be these could be very favorable deals for OpenAI. At the same time, it could just be, you know, a very rough deal, and it and it could wind up being a situation
Speaker 2:where I think Sam went from having low leverage pre ChatGPT Yep. Which is how you get these and and, you know, needing 10,000,000,000 doll needing to do a $10,000,000,000, training run. Yeah. Low leverage. That's how he gets into this deal with Satya.
Speaker 2:Right? Where he's giving not only is he's gonna spend 250,000,000,000 or says he's gonna spend $250,000,000,000 with, Microsoft, he's gotta give Satya 20% off the top first. Right? So that was the interesting that this interview was just absolutely wild because they're both they're both, you know you know, you have Brad in the middle who's like, I'm I I I'm I'm friends with both of you guys. I'm I'm I'm sure he's invested in in both companies.
Speaker 1:Literally one of them It's good one. Someone in on that podcast is the crying Wojak with the smiling Wojak face on.
Speaker 2:And it was Sam.
Speaker 1:Maybe. I don't know.
Speaker 2:I mean I mean, it's certainly wasn't Satya.
Speaker 1:It might be Brad. You don't know. It all depends on how it plays out. And Satya said Satya. Satya said one mean, Ben Thompson take is that it is Satya.
Speaker 1:That's the Ben Thompson take right now. The Ben Thompson take is that is that Microsoft should not be winding down this partnership. They should not be
Speaker 3:getting out They are
Speaker 1:getting out of it. They have all these clauses that allow them not to have access to the technology in the future post AGI or post 2032. Like, they can just wait. Like, e even if even if the the the tech just plateaus and and there's no AGI and expert panel never says AGI, like, in 2032, it just becomes OpenAI's property. And and and once they pay their $250,000,000,000 cloud, which is crazy, but let's say it happens, then Microsoft is just a shareholder on the cap table.
Speaker 1:And from Ben's perspective, he's like, there is an opportunity for Microsoft to have a much deeper relationship with this company and have them be like a really solid r and d arm for the business, like, forever. That was on the table, and that was not taken. So Yeah.
Speaker 2:Remember that that was a scenario during the during the Yeah. During the coup Yeah. Which we'll get into Oh, yeah. We have good read. Table reading of of some of the deposition.
Speaker 1:Yeah.
Speaker 2:Yeah. But that was an was a scenario where it seemed like a lot of the OpenAI team and Sam were gonna land at Microsoft and just keep working on a lot of the same things.
Speaker 1:Oh, yeah. That was a crazy moment.
Speaker 2:The a couple other things that, stood out. Satya had a quote. I I wrote it down. I I may it may not be perfectly accurate, but it was something to the effect of, how he was deciding which of OpenAI's compute kind of wishes they would prioritize. And he said something there's certain he basically was like, there's certain requests that make sense for OpenAI that doesn't make sense long term for Azure.
Speaker 2:And so these are he gave the example of, you know, building a data center data building a data center for a specific training run Mhmm. Which he has done in the past. But as you scale these things up, he's like, I want fungibility of the fleet. I want diversity across Yep. Geographies.
Speaker 2:Yep. Right? He's trying to set up Azure for the long term. He's clearly extremely ROI
Speaker 1:focused. Interesting. Yeah.
Speaker 2:What I read into that is like, there's very there's a very real scenario where Oracle is massively levering up, doing things that are to get in the AI game Yeah. Because they were somewhat sidelined. And they're gonna do things that are really good for OpenAI
Speaker 1:Mhmm.
Speaker 2:And maybe not so great for Oracle over the long term. But
Speaker 1:Yeah. It's the job of the CEO to be the fox, not the hen. This is the job. Should we play any clips from the actual podcast? I realize we should be Let's play this.
Speaker 1:Let's let's pull up this
Speaker 2:post from Buco Capital right at the top.
Speaker 1:It's just a reaction video. Right? What does this guy say?
Speaker 2:He says Sam Altman if you ask him how a four one point four trillion is spending with only
Speaker 1:What the fuck is that? Push it. This is rude. Let me go to an ad read. Figma.
Speaker 1:Think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free. Let's play the actual clip. I I I wanna play the one that, compound compound two four eight.
Speaker 2:Can a
Speaker 1:with 13,000,000,000 in revenues 13,000,000,000. May have the number one on time. Trillion of spend commitments. You know? And and and you've heard the criticism.
Speaker 1:4 trillions.
Speaker 6:Well more revenue than that. Second of all That's not
Speaker 1:such a red flag.
Speaker 6:I'll find you a buyer.
Speaker 1:This is sort of a I I just such a just laughing.
Speaker 6:You know, people are I I think there's a lot of people who would love to buy OpenAI shares. I don't I don't think you
Speaker 1:Including myself. Including myself.
Speaker 6:Who talk with a lot of, like, breathless concern about our compute stuff or whatever, they would be thrilled to buy shares. So I think we we could sell, you know, your shares or anybody else's to some of the people who are making the most noise on Twitter, whatever, about this very quickly. We do plan for revenue to grow steeply.
Speaker 1:The other step back is
Speaker 6:growing steeply. We are taking a forward action. It's gonna continue to grow.
Speaker 2:So pause pause for a second. Thing is I think it's possible to still have a lot of questions on the 1,400,000,000,000.0 of spend and not be bearish on a OpenAI at 500,000,000,000.
Speaker 1:Totally.
Speaker 2:And so I think when I when I, Sam is entirely right. He's actually smart to say Totally. Focus on let's focus on demand for the stock. Yeah. Right?
Speaker 2:If you wanna get out, I'll help you get out.
Speaker 1:Yep.
Speaker 2:And, I think there's some people on the timeline that are seeing this answer, and they're bearish on OpenAI at 500,000,000,000 when I don't think that's I don't think that's necessarily the
Speaker 1:right rate. Like, if you comp OpenAI to Palantir, it's, like, remarkable. Just on terms of top line growth and market cap, like, you get to 500,000,000,000. No problem. No problem.
Speaker 2:Yeah. And Palantir is trading at 666 times earnings.
Speaker 1:And OpenAI is losing money, so infinity PE.
Speaker 2:There we go.
Speaker 1:So it's it's like it's terrible. But, I mean, it's just like a crazy, crazy revenue ramp, and I think that I think that's what has everyone, like, so excited. And and there's, like even if I I people are just so like like, underwriting the 500 the 500,000,000,000 is, like, pretty, pretty simple because you can just say, okay. If it just keeps growing
Speaker 2:Yeah. And and and I think if you're an investor of with in any of the companies Yeah. That Sam has announced these spend these, like, press releases with, it's totally fair to say, I'm not bearish on you, Sam. I'm bullish on OpenAI.
Speaker 1:This is the interesting hypothetical.
Speaker 2:I'm bullish on OpenAI, but I have capital deployed in all the companies that you've committed spend to.
Speaker 1:Sure. Sure.
Speaker 2:And I wanna know
Speaker 1:Oh, yeah. Brad yeah. Brad's a big NVIDIA holder too. Right?
Speaker 2:He I'm sure he's invested in all these
Speaker 1:He's probably invested across
Speaker 2:So it's a fair question to say, what's what's the there were so many other ways to answer
Speaker 1:this question. Interesting. Yeah. Yeah. Yeah.
Speaker 1:Yeah. It could be like it could be like, are you gonna nuke my portfolio? And I'm gonna be fine on your deal, but all the rest of my portfolio is getting cooked. That's kind of a funny But the outcome yeah.
Speaker 2:That's that is the that's
Speaker 1:That's the risk. That That's one risk.
Speaker 2:That's why that's why people wanna know about
Speaker 1:this. Sure. Sure.
Speaker 2:Sure. It's it's what how real is the backlog? Right?
Speaker 1:Sure. Sure.
Speaker 2:Like, is is is this Oracle 300,000,000,000
Speaker 1:Yeah.
Speaker 2:Commitment, how much actually comes through?
Speaker 1:I mean, no one knows. It's predicting the future. Like I know Sam has his prediction.
Speaker 2:When companies would come together Yeah. And announce a deal like this
Speaker 5:Yeah.
Speaker 2:There is is is a lot more like, you could have done a few of these press release press releases, there wouldn't have been as many questions. Like, there's a lot of big numbers that you could throw out
Speaker 1:Sure.
Speaker 2:Before people are, like, would say, like, OpenAI's revenue ramp is insane. They have the biggest consumer product
Speaker 1:Yeah.
Speaker 2:Created in the last
Speaker 1:Yeah.
Speaker 2:Ten years.
Speaker 1:Yeah.
Speaker 2:Everyone people love this product. Right? It is it is entirely mainstream. It is magical. Totally.
Speaker 2:It's the first real thing that can compete with search. And I just think that it's still like, when when you announce a $100,000,000,000 deal, a $200,000,000,000 deal, another $100,000,000,000, a $50,000,000,000 deal, and then less than seventy two hours after this Internet interview releases, there's another $38,000,000,000 deal announced. Sure. And now is now is a is an appropriate time, I think, for people to just press press them harder on this because the the joke of, like, OpenAI is holding up the stock market is incredibly real right now.
Speaker 1:I mean, it I I don't know what more people want, though. Like, it it is it is like, the, like, the logic is there. There Which is just like we've been growing three three x every year. We project that we're gonna continue to grow three x. The quadrillion number is a joke, but clearly they back of the envelope to being a hyperscaler.
Speaker 2:So say that. Don't say we're automating science. Sell your shares. Like Yeah. You didn't have to answer like, I I think that the fact of the matter is is Elon There
Speaker 1:might there might have been a better way.
Speaker 2:Elon does very similar things. Right?
Speaker 1:Yeah. Totally. We're gonna go to Mars, and we're gonna have a flying car, and we're gonna
Speaker 2:And how we're gonna do data center space. Data center is that Elon
Speaker 1:Humanoids.
Speaker 2:Elon is probably 10 to 50 times more likable than Sam. Mhmm. And I'm just saying that based on the timeline. Like
Speaker 1:Well, it's it is Elon's app, but yeah. Like
Speaker 2:I I think in general Yeah. People, like, you know
Speaker 1:Yeah. Yeah. I mean, it's hard to tell. Like, you could go in the comments of the Rogan episodes because they both done Rogan. I mean, Rogan clearly likes Elon more than Sam.
Speaker 1:Like, if you listen to the Rogan interview with Elon, Elon's been on a bunch and he's like, he's he's he's echoing that sentiment. There are certainly people that like Sam more than Elon. But
Speaker 2:Sure. Sure. Sure. Sure. I'm just saying like Yeah.
Speaker 2:In general
Speaker 1:Yeah.
Speaker 2:Elon is more likable, and so people give him the benefit of the doubt. He also has a longer Yeah. Like, longer track record of delivering on you know, there's the there's a thing of, like, Elon, you know, gets the timing wrong, but he delivers.
Speaker 1:Yeah. Yeah. Yeah. Yeah.
Speaker 2:So I don't know.
Speaker 1:I don't know. It it's weird because, like, I I do feel like there's a benefit to, not going, like, private equity guy mode on this answer and actually doing the Elon mode and saying, like, curing cancer and new hardware device, and we have these really great ambitions. There is a different flip on this, which is just like like yes. Like like, revenue's been growing. We expect that it'll compound at, you know, 50% and then 40% and then 30%.
Speaker 1:And so we projected our revenues and we projected our COGS. And it looks like in five years, our revenues will be 500,000,000,000 and our COGS will be 300,000,000,000. And so where are we gonna get the COGS from? We're gonna get the cost of goods sold from Amazon and Oracle and and AWS and Azure. And so we went and did deals to supply, you know, our infrastructure for those.
Speaker 1:Like like, that's a totally reasonable, like, spreadsheet answer. But, like, it's just going to
Speaker 2:be boring. I just think I just think that we're we're gonna cure cancer answer. We're automating science answer Yeah. Isn't good enough anymore at this scale when there's this many trillions of dollars on the line.
Speaker 1:I mean, yeah. It does it does feel like a pivot away from just like, hey. We're just gonna make a ton of money off of ChatGPT. Because, like, I I I feel like there's a world where it's like, hey. Yeah.
Speaker 1:Actually, like, ChatGPT is gonna make the same amount of money as Google search. Like, it's gonna be at that at that tier, at that in that league. And and that justifies the investments. Google spent a ton of money on CapEx. I mean, Google's spending all the hyperscalers are spending $60.70, 80,000,000,000 a year.
Speaker 1:So he could have just like, there is a world where he just says, hey. Look. The reason you're seeing all these numbers is because we're building a hyperscaler, and our our products are gonna make the same amount of money and get the same amount of attention, have the same amount of users as Facebook and family of apps and Google and all the different Microsoft products. And so we need servers to serve those up, And so we went around and got all of those. And you know how all of those other hyperscalers spend, you know, $50.60, $7,080,000,000,000 a year?
Speaker 1:Yeah. We're gonna do that too. And so you add that all up, and you get to 1,400,000,000,000.0 over the next decade. And that's the plan.
Speaker 2:But he's projecting more spend than that.
Speaker 1:1.4 over the next five years, something like that? We don't even know.
Speaker 2:So he's growing faster, much lower revenue base.
Speaker 1:I mean, it's like, how much are they on the hook for some of these? Like, I was looking at the, I was looking at So so that's of the breakdowns. That's the thing. Included included in the 1,400,000,000,000.0 is Stargate, which is, like, straight up not on OpenAI's balance sheet. Yeah.
Speaker 1:It's like just a new it's an entirely new company, new thing, new project. Like, OpenAI has some some Yeah. Some loose structure to it. Counting counting. Yeah.
Speaker 1:But, basically, it's like, we are at we are at a like, I I I agree with you on on on the assessment of the timeline, but we are definitely in a moment where every single time one of these deals gets announced, you they just everyone mentally just takes the headline number and puts it as liability on OpenAI's balance sheet. Yeah. And that's just, like, not the way these
Speaker 2:things are structured.
Speaker 1:Because they can be like, they can have get out of jail free clauses.
Speaker 2:Think so so here's one thing. It's certainly Yeah. Going private equity guy answer and just laying out all the numbers. Yeah. Then there's the kind of more product oriented answer, not the hand wavy, like, we're automating science and we're gonna have a hit consumer product.
Speaker 2:But there's, like, hey. Like, Agenta Commerce, we think is gonna be is a multi trillion dollar opportunity. And we're not monetizing there yet, but we will be soon. Mhmm. That kind of asks the follow-up question of, like, okay, well, like, what if it doesn't pan out?
Speaker 2:Mhmm. And I'm not betting against AgenTek Commerce. Think that people are gonna buy a lot of products through ChatGPT.
Speaker 1:Yeah.
Speaker 2:But it it opens up a follow-up question of, like, okay, well, what if that doesn't happen? Are you on the hook for all this all this spend? And then Sam can say, like, if he answered honestly, he'd have to say, well, I imagine it would be something to the effect of, like, we have certain minimums that we have to hit, but we're not on the hook for, you know, the full deal sizes. And that's what people want. Nukes I'm I'm just saying, like, every every hyperscaler involved, every company Yeah.
Speaker 1:Yeah. Because you don't get credit for fake PR, like, for fake press releases. Right? Yeah.
Speaker 2:So so the Amazon Seriously. Deal Amazon Amazon announced a deal. It's $38,000,000,000 over seven years. Yeah. Stock went up a 150,000,000,000.
Speaker 1:What? So
Speaker 2:so it's a press release.
Speaker 1:Yeah. Wow. Okay. So, I don't know. It's yeah.
Speaker 1:It's it's odd because it's like these games are clearly working in the public markets.
Speaker 5:Like Yeah.
Speaker 1:There are investors. Like, the marginal investor on Wall Street apparently thinks the value of $1 of OpenAI revenue is $10 or something like that. Right? What what was the ratio you said? It went up a $130 or something for for 40?
Speaker 1:100 so so they're they're applying, like, a three or four times multiple on a dollar of OpenEye revenue, which again is only 30% margin. It's only 30% margin. Like, it's not it's not 99% margin. I I think it's, like, 30, maybe 40. So so it is very weird to apply
Speaker 2:Let's pull up this post from Grant Hawkins.
Speaker 1:What?
Speaker 2:How can a how can a company with 13,000,000,000 in revenues make 1,400,000,000,000.0 of spend commitments? Brad, if you wanna sell your shares, I'll find you a buyer.
Speaker 1:A low tam banger, 13 likes. I'm gonna throw a
Speaker 2:like that Grant. At
Speaker 1:12. We're we're we're liking it while we're
Speaker 2:Hey, man. How are you gonna pay for the 1,400,000,000,000.0 of spend you've promised proceeds to crash out?
Speaker 1:I mean, the time line, the memes are are fantastic.
Speaker 7:They're on.
Speaker 1:They're in Packin' World today. You know what else is impeccable? Vanta, automate compliance, manage risk, and accelerate trust with AI. Vanta helps you get compliant fast, and we don't stop there. Our AI and automation power everything from evidence collection to continuous monitoring.
Speaker 2:Compound248 was just going off.
Speaker 1:Oh, yeah.
Speaker 2:How can we afford it? Who knows? But what I do know is you can sell your shares.
Speaker 1:It's so ridiculous. What a bizarre what a bizarre clip. Yeah. I don't know.
Speaker 2:Les Shrubs says, I'm sorry, Brad. But if CEO of one of my holdings spoke to me like that, I wouldn't be a quote buyer. I would be a seller of all my shares.
Speaker 1:That's a weird like vibes based analysis. Yeah. Don't I don't like that one.
Speaker 2:I I've invested in a lot of companies. Yep. Post investment, I have realized that some of the CEOs Yep. I don't like. Sure.
Speaker 2:But that doesn't mean I'm actually bearish on the company. True. Sometimes it's just like kind of a personal judgment, and I think I I think it's okay to be invested in a company with with a with a management team you're not necessarily a fan of.
Speaker 1:But I don't think I don't think Brad was offended by how Sam answered the question. Not at all. Like, I I think I think they were kind of I don't know. They they they're they're trying to have a public conversation about the relationship of a CEO with an investor. Like and they're it's almost like they're they're like there's some realness there, but then there's also some, like, we're trying to show what our what our perception of each other is.
Speaker 1:It's a very complicated dynamic. It's an it's very it's it's it's ultra neomedia. It's neocorporate media. I don't know. There's something weird.
Speaker 1:It's a very it's unprecedented. It's a very interesting interesting piece of content. Do you wanna read any of, Brad's breakdown? It's pretty interesting. He says he says people are reading too much into Sam being feisty.
Speaker 1:Yeah. Who would spend thirty minutes on a show talking about this? It's, like, not that big of a deal. I love I love that about him and in our founders. We laughed about it afterwards.
Speaker 1:If you listen to his words, here's what he said. A lot more than 13,000,000,000 revs in 2025, which is insane considering they were doing less than four last year. They're gonna quadruple revenue, quintuple revenue, half of a $4,000,000,000 base. Like, that is crazy, but so are the spend commitments. $100,000,000,000 100,000,000,000 revs sooner than people expect.
Speaker 1:So they gotta get there pretty quick because once they get to a 100,000,000,000, that's still they have to do fourteen years at a 100,000,000,000 to pay for 1,400,000,000,000.0 if that's what they were actually on the hook for. Spending commitments aligned with revenue expectations, risk of too little compute far greater than risk of too much. At that growth rate, could be 200,000,000,000 revs in 2030. Match that against 200,000,000,000 of CapEx, and you have an absolute juggernaut. Agree.
Speaker 1:If revenues come in slower okay. Tyler, we need to map these against, our our different projection, our different timelines. So so we need the Brad Gerstner tab of the spreadsheet, next to Leopold Osschenbrenner's projections, next to what we've heard from OpenAI in the past. Do know what I'm talking about?
Speaker 4:Yeah. Yeah. We EGI 2027 has that too.
Speaker 1:Yeah. I think we also need a quick exchange rate between dollars of CapEx to gigawatts to flops and and be able to exchange rate between all of them to really understand in apples to apples. Like like, is this is this more is this is this more bullish than what we were hearing before? Because I'm I I feel like the general vibe is a deleveraging of the bullishness in the AI economy. Every time I hear a new number, it's always, like, pushed out a year and, like, a little bit less than the previous projection.
Speaker 1:And so we're getting and we saw this first with, like, the we could reach superintelligence in a few thousand days. Soft singularity. Right? Like, that felt like a stepping back in the aggression. Right?
Speaker 1:And so so I feel like there's a lot of these things where where the actual read on this could be, oh, yeah. Like, they're gonna hit they're gonna hit 200,000,000,000 revs in 2030. Like, that could be way off of the previous projections based on, like, exponential fast takeoff. Right? What do you think?
Speaker 4:So e jet 2027 has a $100,000,000,000 revenue by June 2027.
Speaker 1:It's like, let's make it happen. It's gotta happen. Wait. A 100,000,000,000 across all the labs?
Speaker 4:No. That's just like well,
Speaker 1:so in that story, that's like the
Speaker 4:big it's like open brain or
Speaker 1:100,000,000,000. Wait. 100,000,000,000 rev 2027?
Speaker 2:Yeah.
Speaker 1:That actually seems pretty doable.
Speaker 4:It's totally reasonable.
Speaker 1:Yeah. Know. You're you're Bullish. Yeah. Because Bullish.
Speaker 1:Because, wait, if if they're tripling if they're tripling this and and they're gonna close 25 at twenty, and then they're gonna close they're gonna close 2026 at sixty, they're gonna be at a 180. Yeah. Extremely bullish.
Speaker 4:Yeah. It's I mean, it's Dude,
Speaker 1:take Pretty five hundred days off the Singularity clock. The Singularity is only two thousand days away now.
Speaker 2:Yeah. I mean, what it comes down to is that whether or not, like, whether or not Brad like, Brad obviously is is Yeah. Like, from what I know about Brad, he's not he's not he's like, I can't it would we would be in such a dark place if Brad was trying to offload OpenAI shares pre IPO. Like, things would be so bad. Right?
Speaker 1:Yeah. Yeah. Like I do think this this this But
Speaker 2:it has nothing to do with but the question is not again, the question is for people that are not invested in OpenAI Mhmm. But invested in all the companies that they're partnered with.
Speaker 1:Sure.
Speaker 2:Yeah. Yeah. Yeah. Yeah. Yeah.
Speaker 2:Sell your shares is just not a good
Speaker 1:Game of musical chairs. That would have been an interesting way to flip it around. Would be like, hey, Sam. I'm still bullish at 500 on open air. I'm still a buyer, but should I be bullish on Broadcom or or Oracle?
Speaker 1:Like
Speaker 2:Yeah. This just goes back to my overbuild thesis of, like, who's a beneficiary of the overbuild.
Speaker 1:Yes. The Jordy Hayes overbuild thesis trademarked right now when it happens. We're gluttoning. We're taking a bit We're gluttoning. We're also gonna tell you about graphite dot dev code review for the age of AI.
Speaker 1:Graphite helps teams on GitHub ship higher quality software faster. Not gonna lie. If a CEO's response to, hey. How are you gonna pay for all this stuff you don't have cash for is you're welcome to sell your shares. You should probably take them up on that offer.
Speaker 1:Lots of the the timeline is just going crazy. Gotta give it to Altman, very forward thinker, itching to go public for the sole purpose of crushing the hypothetical short sellers that don't exist yet. Can't wait for the s one. I love that. I mean, I it's a I I thought the short seller thing was was was fine.
Speaker 1:It was good good point. People Crazy. This Woah Jack, this is a crazy who is this kind of thread? So you're doing 11,000,000,000 or 13,000,000,000 in revenue, but making $1,400,000,000,000 in spending commitments. How does that work?
Speaker 1:First of all, we're making 13,100,000,000.0 in revenue. And second of all, short seller. That's hilarious. Yeah.
Speaker 2:There was not there was not no one came to Sam's defense on this one.
Speaker 1:Okay. Okay. So from a media perspective, I am interested in this because, I do I have this right that that Altimeter is a hedge fund? They're they're not, like, long only buy back the founder, like, never sell your shares, hold forever. Like, they like, it is a different type of fund.
Speaker 1:And so there is like, if you do, if you do a podcast with a portfolio company and you're a series and you're a series a founder and you walk into a podcast that's run by a venture capital firm, like, there's no scenario where they, like, walk out of that podcast and they're like, we gotta sell this. I mean, maybe a little bit, but, like, not there isn't that there isn't that tension. Like, in general, the critique of of fund media is that they're long only. And so they'll never they're they're only
Speaker 2:They'll never give you an accurate view into the company.
Speaker 1:Exactly. Because they're just always they're always they're turbo bowls or, turbo longs or whatever the word. Perma bowls. They're perma bowls. But altimeter is not.
Speaker 1:Right? And so you could wind up in a situation Yeah.
Speaker 2:Doing If you're altimeter.
Speaker 1:Podcast and you actually walk out of that meeting and you're like, oh, wow. Like, he's sold after that. Like AI. Figure that out.
Speaker 2:So altimeter and It's making
Speaker 1:me so bullish
Speaker 2:on There's me gonna yeah. So I love Brad. Yeah. I love Altimeter. I and and there is a class of funds right now
Speaker 1:Mhmm.
Speaker 2:That like, there are gonna be plenty of funds that don't make it through the AI CapEx trade. Like, we're in the midst of the AI CapEx trade.
Speaker 1:K.
Speaker 2:If you get this wrong and you get this wrong enough, you just won't you'll you'll there there will be funds that shut down over being being long into Mhmm. Into a correction.
Speaker 1:Mhmm.
Speaker 2:And so I view this this question, in my view, is is for more so for the hedge fund community to try to get a sense of, like, okay, what what actually happened? You know? And, obviously, they have other sources besides listening to a to a podcast.
Speaker 1:Yeah.
Speaker 2:But what happens in a scenario where OpenAI can't can't meet the meet the kind of soft commitments it's made to all these partners? Like, if OpenAI growth, like
Speaker 1:So so I believe that if OpenAI came out and said, hey, guys. Actually, everything all of our special bets were we're not gonna do the hardware device. We don't like that. SOAR is not really working. We're taking it out of the App Store.
Speaker 1:We're doing the $200 a month plan, the $20 a month plan. We're basically guidance for next year. We're gonna do 15,000,000,000, and then maybe next year, we'll do 16 and then 17. And, like, it's gonna be like an $820,000,000,000 run run rate business. And so we're canceling all the spend commitments.
Speaker 1:I believe that the market would just retrade right back to where it was. And I believe that that Amazon, if they got a 130,000,000,000 of they just lose that. And we just see exactly what happened at Liberation Day.
Speaker 2:Yeah. So Oracle traded up 30%.
Speaker 1:Yep. And I and I think it trades down 30%. I don't think it trades down 60
Speaker 2:Now they have a a five x the debt.
Speaker 1:They they don't have five x the debt. That's just not true. They didn't actually
Speaker 2:go in issue. Maybe it's not five x, but they have have significantly more No.
Speaker 1:No. No. No. No. It's not even significantly more yet.
Speaker 1:Like, it will be, like, little a drip of debt, like, every quarter more and more and more. It's not just gonna pop up all of
Speaker 2:a sudden.
Speaker 1:Like, it's not just like, if you go and
Speaker 2:you have a 100,000,000,000 You're you're basically saying
Speaker 1:it's just getting it, like, overnight. Like, I mean, there's this news about about Meta. Like, Meta is also doing this, and and they, and and, like, they so they Meta increased, spending on CapEx 71,000,000,000 up from 69,000,000,000 previously, and their guidance is that they will be notably larger in '26 than '20 than '25. And so, like, yes, that's, like, a couple more billion. That's significant, but it's a big company.
Speaker 1:And so they're doing this bond deal. It's 30,000,000,000. That sounds huge. So it's a $2,000,000,000,000 company.
Speaker 4:It's like 10 AI researchers.
Speaker 1:Exactly. It's like nothing. It it it really is, like, not that big. Bank of America tallies 75,000,000,000 of AI related public debt offerings in the past two months. So in the past two months, 75,000,000,000 of AI AI related debt offerings total.
Speaker 1:Like, it's a lot, but it's not like it's not like destroy the global economy yet. It's just not there.
Speaker 2:AI AI Morgan Stanley had AI AI CapEx related debt is already between, like, 1 and 5,000,000,000,000. So there's there's over a trillion dollars of debt already tied to
Speaker 1:I think I think people are reclassifying. It's like it's like when people change their .com to .ai, and they're like, oh, okay.
Speaker 2:I'm an AI company.
Speaker 1:I'm an AI company. It's like, actually, this is an AI loan. This is an AI debt debt instrument. This is an AI this is an AI debt instrument. Okay.
Speaker 1:I I have I have a few more things. One, I got some bad news from Polymarket. There's a 36% chance of a US recession by the 2026. So, we could be looking basically, 3036% chance that it's, 1999 right now, which I don't But a week.
Speaker 4:What's the definition of recession?
Speaker 2:Yeah. What's their definition? Because it doesn't need
Speaker 1:to be It's seasonally adjusted. So you you have two consecutive quarters of negative economic growth. So less than zero point zero GDP growth. So GDP goes negative in real GDP terms, so not inflation adjusted. So infl inflation adjusted basic basically.
Speaker 1:So you're taking economic growth for two consecutive quarters in real terms, not in not in nominal terms. It needs to be negative for two quarters, and it also is seasonally adjusted so you don't get, like, a little Christmas bump. And this data will come from the National Bureau of Economic Research, and they will publicly announce that a recession has occurred in The United States at any point during 2025 or 2026, with the announcement made. So, the NBER, they just they call it when they call it, but it's based on, economic economic contraction, basically. And you can't contract for just one quarter.
Speaker 1:You get one free one before you get called a recession. So you can have a little blip in your economy for one quarter. As long as you make it back the next quarter, you double down, you parlay, you do something crazy to get out of the hole, then you're good. But if you go down two quarters in a row, you got a gambling addiction, and you're putting the recession hole. You gotta get back in.
Speaker 1:Anyway, I wanted to share that. Then I wanted to talk about Buco Capital blokes assessment of this. Sam breaks people's brains. Just like Elon, there's bin line
Speaker 2:AB in the chat says don't believe the recession hype until the price of a Nautilus drops to sub a 100 k. I think that is
Speaker 1:That's incredible. Great analysis. A b, welcome to the stream. New name, but fits right in here, honestly. Thank you for chiming in.
Speaker 1:Also, if you're looking for a Nautilus for under 100 k, you gotta go over to get bezel.com. Your bezel concierge is available now to source you any watching the plant seriously and you're Might be
Speaker 2:able to get a boy's size Nautilus for under a hundred k. But
Speaker 1:Yeah. Yeah. Ladies Nautilus. That could go.
Speaker 2:Yeah.
Speaker 1:So Sam breaks people's brains just like Elon. There's a thin line between grifter and visionary, and creating true believers to harvest their capital requires rhetoric that makes nonbelievers recoil. Sam hates Elon hates Sam be not just because he stole his company, but he stole his whole playbook. And so I always like this idea of is is Elon Barnum and Bailey the circus man, or is he Thomas Edison or Nikola Tesla? Well, he's both.
Speaker 1:And why he has such a power loss, such an incredible impact on the economy is that not only is he the inventor and the and and not only can he lead engineers to invent the thing and build the thing, but then he can also promote it, and he can promote it really, really well. And so he's both the grifter and the visionary. He's both the real deal and the fake guru. Yeah. And when you put those together, it's really, really powerful.
Speaker 1:Sam seems to be doing something similar. The question is, in the Tesla and in the this is this is my question for Maybe it is different. I know I know that your position is that it is different. But in in the in the build out of Tesla, in the build out of of SpaceX, there was never a moment where it was like, if if Elon goes bust, everything is dead. Right?
Speaker 1:It was never like, if Tesla doesn't hit earnings or continue to grow, like Ford and all these different supply chain companies will be out.
Speaker 2:Economy will collapse.
Speaker 1:Yeah. Exactly. Elon has never
Speaker 2:really held company. Two is, like, one, going back to the likability thing. Like, you know, not not saying this from from, like, speaking generally. Elon is more likable than Sam. He has also made tens of thousands of retail investors so much money for believing in him.
Speaker 2:Right?
Speaker 1:That's
Speaker 2:true. And so not only is he just generally people listen to him and they like they like listening to Elon talk more. Yep. But so many people believed in the Elon crazy vision and a lot of it has come true. Some of it hasn't.
Speaker 2:But at least tens of thousands, maybe 100 thousands of people have, like, made money because of Elon's vision Yeah. And believing in him. And so Sam doesn't have the benefit of having, like, there's no retail army defending Sam. Even the v even even that the thing that was notable is
Speaker 1:Brad is retail army.
Speaker 2:Brad is a one man retail army.
Speaker 1:He's a one man retail
Speaker 2:and so there was not a single other VC that I saw that stood up and said, no. Actually, they're they're good for their 1,400,000,000,000.0. Here's how they're gonna hit it. Yes. Like, put their
Speaker 1:So Sam actually did say that one of the reasons why he maybe wants to go public is to actually have a retail army to basically was it is it what you were gonna say? Yeah. Yeah. Yeah. Yeah.
Speaker 1:Bring it down. What what
Speaker 2:is it?
Speaker 4:Yeah. I mean, basically, they were talking about IPOs and then because there was that thing, I think, from from Reuters about how they were maybe planning on IPOing mid twenty twenty seven
Speaker 1:Yep.
Speaker 4:Or or late twenty twenty seven.
Speaker 1:Yep.
Speaker 5:And then Sam was like, oh, that's just like
Speaker 4:maybe in the future. But one of the reasons we
Speaker 1:He I don't know why people write those pieces. And it's like, dude, everyone knows whether they write them. It's amazing. It's so entertaining.
Speaker 4:Yeah. But basically, he says, like, one of the reasons he would want an IPO is so that he could basically bring, you know, not just venture capitalists, but the entire economy with him, you know,
Speaker 1:and Yes. Yes. Going up.
Speaker 4:So he clearly he wants the retail army.
Speaker 1:Yeah. I mean, it it is UBI. Everyone should get one share of OpenAI in the in
Speaker 2:the He prices if the IPO gets priced too high, he'll get a
Speaker 1:Yeah. Everyone just needs to be riding with him. Anyway, let me tell you about Julius, the AI data analyst. Connect your data, ask questions in plain English, and get insights in seconds. No coding required.
Speaker 1:The undefeated king of the application layer, Rahul, from Julius. Go use it. They have a Slack agent, so you can ask your data questions in Slack. Highly recommend Julius. Elon and Sam were also beefing on the timeline.
Speaker 1:This is interesting. So Elon says, you stole a nonprofit. Sam Altman says, I helped turn the thing you left for dead into what should be the largest nonprofit ever. You know as well as anyone a structure like open what OpenAI has now is required to make that happen. You also wanted Tesla to take over OpenAI, no nonprofit at all, and you said we had a 0% chance of success.
Speaker 1:Now, you have a great AI company and so do we. Can't we all just move on?
Speaker 2:Somebody was giving pushing back a little bit of the can't we all just move on because Sam, like a day earlier with yeah. Giving was was saying a tale in the next post. Yeah. Vittorio posted 911 9911, I'd like to report a murder. And it's and it's Sam Yeah.
Speaker 2:Sam basically giving shit to Tesla No. Not being able to do a refund. And so the follow-up to you stole a nonprofit, and you forgot to mention act four where this issue is fixed and you received a refund within twenty four hours, but that is in your nature. So, again
Speaker 1:Elon refunded him. They Refund confirmed.
Speaker 2:Yeah. So Sam obviously keeps poking.
Speaker 5:When you
Speaker 1:hear the the Dark Souls overlay refund granted of Elon paying Sam. No. Why why this was interesting to me was that the nonprofit I was told that OpenAI was going to convert from a nonprofit to a for profit, and I feel lied to because what we actually got was the nonprofit is still in existence, and there's now a new for profit, and they're actually separate. I wanted the nonprofit to fully convert, and now you have this nonprofit that's sitting there with a $136,000,000,000 of OpenAI shares. I wanna finish the job.
Speaker 1:Let's go back to the nonprofit. Let's convert it to a for profit. Let's take that public as an OpenAI holdco so you have a 136,000,000,000 in the treasury. Let's get that ripping in the public markets while we wait for the real OpenAI I IPO. What do you think?
Speaker 2:Two IPOs.
Speaker 1:Two IPOs. You can have two companies, and then they could merge, and then they could demerge. It is interesting.
Speaker 2:Two is a bigger number Yeah. Than one.
Speaker 1:So there's this funny thing that, like numbers. Sam keeps saying, like, oh, the nonprofit is, like, gonna be so well funded. Like, it's the, you know, it's the largest nonprofit ever, but he hasn't really unpacked, like, will it be a what kind of nonprofit will it be? Will it be a good nonprofit or a bad nonprofit?
Speaker 2:Because there's some bad nonprofits out there.
Speaker 1:I I don't I I really think that people are skeptical of nonprofits now. Like, people do not just assume, oh, it's nonprofit. Everything's gonna go perfectly for sure. 100%. Oh, good.
Speaker 1:It's nonprofit. Nothing bad can happen. It's ridiculous.
Speaker 4:I think the best case for the nonprofit is they kind of create some sort of, like, research arm, and then they start making products and then, you know, maybe maybe it'll become like a consumer product
Speaker 1:Yes. That they can Yes.
Speaker 4:Just the nonprofit.
Speaker 1:I love it. I love it.
Speaker 4:And then they can turn into a for profit.
Speaker 1:Yes. The the the nonprofit is basically just spinning out endless for profit companies. This is
Speaker 2:That could be the greatest nonprofit of all time.
Speaker 1:That would be the greatest nonprofit of all time.
Speaker 2:Yeah. A lot of lot of I mean, there's so many
Speaker 1:But they really should wind it down. Like, I was promised a for profit conversion. I feel lied to. Anyway, get over to fall, the generative media platform for developers, The world's best generative image, video, and audio models all in one place, developing fine tune models with serverless GPUs and on demand clusters. There oh, speaking of cars, there's a review for the new Porsche nine eleven.
Speaker 1:It's a hybrid. And the review in the Wall Street Journal in off duty says, yes. It and it's the fastest, most powerful, best handling nine eleven yet. And, Jordi, his as a former Porsche nine eleven Turbo S owner, I want your review of this review, and I'll read you some of this. So it's a hybrid nine eleven.
Speaker 2:Review of the review.
Speaker 1:Still seething now smoother, more refined. A few days before I left Spain, I got a note from my name, from my friend Dave Scrivner, a producer for the television show MotorWeek. Did I want to share a car on Porsche I wanna share a car on Porsche's nine eleven Turbo S test drive? I'd love to. I knew from past outings that Dave is not only an exit is not only is Dave excellent company, he's a father of 12, funny as hell, but a superb driver.
Speaker 1:Let's hear it for Dave. And on this trip, he'd put he'd put on a master class. With me in the right seat looking like Chewbacca in the asteroid field, Dave utterly thrashed the Porsche nine eleven Turbo S Cabriolet assigned to us attacking the granite tooth switchbacks of the Andalusian hill country like he hated them. We actually went faster and harder getting to the Circuto Ascari Racetrack than we did when we were on it. I have pretty good car control.
Speaker 1:I can generally
Speaker 2:It's gonna be pretty quick.
Speaker 1:Yeah. It's crazy. But Dave, the tell the senior driver for the television, show Motor Week and pro and pro level road racer is fearless, death defying even. I might have preferred not to test the Turbo S's biggest ever carbon ceramic brakes while pointed over a cliff at a 100 miles per hour. Dave reasons, when else would they matter?
Speaker 1:To the untrained eye, the Turbo S might look just like another nine eleven, one of dozens of variants with inscrutable nomenclature, GT two, Carrera four s, Cabriolet. But this, dear friends, is the big one. The quickest, most powerful, most versatile, most luxurious car in the nine eleven lineup. The legend, the prefer the proverbial gorilla in a tuxedo. Did you ever refer to your car as a gorilla in a tuxedo?
Speaker 1:Maybe what it
Speaker 2:happened black. It was black on black on black.
Speaker 1:We never introduced it as the gorilla in the tuxedo, and that's why you were like, I gotta get out of this thing. And now it's a hybrid, notwithstanding the 200 mile an hour top speed. The goal
Speaker 2:I'm actually about to crash out.
Speaker 1:You are. Okay. Break it
Speaker 2:Because I was not aware until we were reading this that the they were making the Turbo S a hybrid.
Speaker 1:Okay. And why are you crashing out? Why don't you like it?
Speaker 2:We're gonna have it. I mean, no Porsche owner is sitting there being like, I want them to make the cars heavier, and I want them to depreciate. They hold their value so well. I want them I want them to depreciate. I want you to make it give make it a hybrid.
Speaker 1:Okay.
Speaker 2:Anyways, continue, and then and then I'll get more thoughts.
Speaker 1:So so I can give you some more details on the actual impact of this move. So, it still has a twin turbocharged 3.6 liter flat six, and it has, and it has it's a brand new engine. It has fuel injectors all the way up. With no belt driven accessories, the unit is a few inches more compact. The turbos themselves are also smaller.
Speaker 1:These adjustments make just enough room on top of the engine for the pulse inverter and the DC DC converter. I don't know why they I'm I'm I'm I don't know enough about, engines to understand what's going on there. But I will tell you that, Porsche invented an entirely new flat six, just, different bore diameters and everything just to clear 11 centimeters under the engine cover. But it's not like the engineers had a choice. Nobody was gonna tinker with the Turbo S's silhouette, were they?
Speaker 1:Likewise, the eight speed PDK transmission is totally changed. Wrapped inside the transmission housing is an electric motor, 80 horsepower, a 139 pound feet of torque connected to the crankshaft via a dual mass flywheel. There's some more information here. These can add up to there's also electrically powered turbochargers. These add 38 horsepower of electric boost on their own as well as recovery energy from engine braking.
Speaker 1:The car's 590 pound feet of electrified torque is sustained from 2,300 RPM to 6,000 RPM. The acceleration is terrifying. It can get up to 701 horsepower shaking its fist at the sky. The eTurbos so this is this is the point that I want you to react to. Purists that sounds like you, Jordy.
Speaker 1:Are you a purist? Purists may sniff that the hybrid Turbo s weighs a 187 pounds more. Fair point. But what is also staggering? It's fourteen seconds faster around the Nurburgring.
Speaker 1:And they say, hell, the audio system probably weighs more than a 187 pounds. So what do you think? You get fourteen seconds faster around the track, but you get a 187 pounds heavier. Why is this so upsetting to you?
Speaker 2:I think you just feel the weight Mhmm. As a driver. Sure. It doesn't matter if it's, like, slightly faster Mhmm. In a straight line or improved in a number of different ways.
Speaker 2:Like, driving a super heavy car fast
Speaker 1:Yeah.
Speaker 2:Is just I don't know. It's less it's less enjoyable. I it's hard because this this is the most dentist coated car I've ever seen in my life. A white Turbo S with
Speaker 1:Pulling the top down while you're driving though. It's pretty sick.
Speaker 2:So I mean, I I I really dislike the I I really dislike Cabriolets in general.
Speaker 1:If this is the car that getting a dentist gets you,
Speaker 2:I think No. No shade to dentist, but this is a great car. If you were if you're buying a sports car to drive to work at your dentist's office, this is a great option. But in general, I I it would have been cool to see them test something
Speaker 5:more traditional.
Speaker 2:But no. My my issue here cab.
Speaker 1:I'm I'm like, this is gonna be a good teeth
Speaker 2:So, yeah. I guess, true.
Speaker 3:But
Speaker 2:my my issue here is that this is not what customers want.
Speaker 1:Well, we'll see how it sells. We'll see the depreciation. I don't I I think I disagree with you in that, like, the depreciation shouldn't be nearly as extreme as it would, like, the fully electric cars. Like
Speaker 2:Yeah. But but we've already seen that hybrids depreciate horribly compared to S 90. S f 90.
Speaker 1:True. Yeah. Good point. Yeah. I mean, yeah, it it does feel like it's is is the is the rationale here some sort of a blended, emission standard?
Speaker 1:I've heard I've heard that's a big thing in in Europe where you need to have a variety of cars. Do you see that? Like so it's like 10% of your cars that are on sale need to be electric or or 30% need to have better than 20 miles per gallon, something like that. So, like No.
Speaker 2:They are certainly getting
Speaker 1:And it's
Speaker 2:have a gun to their head. Yeah. And they're saying, ruin, take away everything.
Speaker 1:So you realize that this is just an option. Like like, the the nine eleven is not a hybrid now. The nine eleven has hybrid option. The Turbo s, you can just get a I'm pretty sure you can just get a normal Yeah.
Speaker 2:Refresh nine nine two dot two. Interfuse is a hybrid powertrain.
Speaker 1:So you cannot get it without one?
Speaker 2:Is hybrid the new Turbo S is hybrid only. Oh, that's not gonna be So this is not an option. You're forced into doing this.
Speaker 1:Oh.
Speaker 2:And so I'm sure it's still gonna be amazing driving experience. Yeah. Like, it's one it's probably the greatest car in history That's rough. All around. But, it's not what customers want, and it's unfortunate that
Speaker 1:You know what customers do want? They really want turbo puffer. They wanna search every byte. They want serverless vector and full text search built from first principles in object storage. They want it fast.
Speaker 1:They want it 10 x cheaper, and they want it extremely scalable.
Speaker 2:We
Speaker 1:That's why they go to Turbo Puffer. We
Speaker 2:Yeah. We will we'll see Okay. On this run. You we were we were at the track yesterday. Yes.
Speaker 2:And seeing there was there was a there was an interesting group that was also at the track, taking a different approach to their track day. They would It seemed like they were I mean, they were having fun. But watching that Turbo S go around the track Yeah. It made me never wanna buy a Turbo S again. Interesting.
Speaker 2:It just didn't look it was somebody had a red Turbo S that they were tracking, and it just was the most I
Speaker 1:mean, it was one of the craziest, like okay. I I I have put I have put a decent amount of value on, like, sports cars and just, having a fun car to drive daily or on the weekends. And seeing a track car truly was like, there is no value in sports cars at all, actually. Track cars are the only thing that matters. Yep.
Speaker 1:They are 100% the only thing that you should ever get if you want a fast car or have a fast car experience.
Speaker 2:Yeah. The Jeep just just comparing. There was a there was also GT four RS Yeah. That was going around at at at at some of the same times as the Turbo S. Yeah.
Speaker 2:And it and it sent it looked and sounded remarkably
Speaker 1:Such a half measure. Even even the I I was talking to our our new friend about the the the Formula Mazda series where Mazda makes the engines, and he was saying, you can get one of these race cars for I think it was, like, 20 k, and the entire season is, like, 10 k to run or something like that. And, it and, like, just the speed, the actual handling, like, the track times are just way better than any Yeah. Street car. Yep.
Speaker 1:It's it's just night and day. So yeah. But speaking of cars that might be able to do well on the track, I want Chad your review.
Speaker 2:M w y m w l m says play it. Play a clip of a GT three RS with a Gintani exhaust. I would love to. I think it might blow out everyone's ears. We'll, we'll save that save that for later.
Speaker 1:Missed that. Anyway, the speaking of cars, Elon Musk teased on the Joe Rogan experience Absolutely wild. That the Tesla Roadster will be a flying car. He danced around it. He didn't say that exactly.
Speaker 1:He would fly. But he did say, my friend Peter Thiel says we should have flying cars, and I think we should give him one, which is about as clear an indication. Let's play this clip. Let's play
Speaker 2:this clip.
Speaker 1:We gotta get better about playing the clips before we just run run into it. But let's play the clip from the beginning, full full audio. Are you still doing the Roadster? Let's go.
Speaker 5:Yes.
Speaker 1:Let's do it. Eventually?
Speaker 5:Eventually. We're getting close to demonstrating the prototype.
Speaker 1:It's been
Speaker 5:Like, don't think this
Speaker 2:will be
Speaker 1:Look at that.
Speaker 2:I I I one thing I
Speaker 5:can guarantee They did. Is that this product demo will be unforgettable.
Speaker 1:I love it.
Speaker 5:Unforgettable.
Speaker 1:How so?
Speaker 5:Whether it's good or bad.
Speaker 1:Whether it's good or bad. It could be unforgettable. Can stakes for me? Or it could be really bad. Well, you
Speaker 2:know, I think about You
Speaker 5:know, once reflected that the spook the future was supposed to have flying cars, but we don't have flying cars.
Speaker 1:Amazing. So you're be able fly?
Speaker 5:Well, I I mean,
Speaker 2:Joe's face.
Speaker 5:I think if Peter wants a flying car, we should should build that one.
Speaker 2:Okay. Pause it right there.
Speaker 1:It's like the, the the the PR team. I don't even know if there is
Speaker 2:a I mean team.
Speaker 1:But, like like, whoever's Andy L. Norbert is like, please don't leak the full road map right now. Usually, I'm
Speaker 2:What if it just actually is a flying car?
Speaker 1:It could be. It could be. Totally.
Speaker 2:Okay. I wanna keep talking about
Speaker 1:Get your brand mentioned in ShutGPT.
Speaker 2:There you go.
Speaker 1:Millions of consumers who are using AI discover new products and brands. What do you wanna talk about, Jordy?
Speaker 2:We gotta talk with, Dan, CEO of From Iron? Coming in right now. In.
Speaker 1:From the recent deal. Dan, how you doing?
Speaker 2:What's happening?
Speaker 8:The show. Hi, guys. Good to see you. Thanks for having us on.
Speaker 2:Great to Shortness. See Massive, massive day today. Saw you announced a pretty big deal and so we said what better day to have you on the show.
Speaker 8:Yeah. Yeah. That was a big weekend. So a lot of sleep deprived iron bodies around, but it's it's super exciting.
Speaker 1:Amazing. Give give us the headline number. We like to ring the gong around here when there's a big deal that gets inked.
Speaker 8:Alright. Iron and Microsoft, 200 megawatts, $9,700,000,000 in revenue, 2,000,000,000 in annualized.
Speaker 2:Absolutely massive. Absolutely massive. Breakdown breakdown the year for us. We we've we've covered, Iron's rise a little bit. We kind of figured you had some type of deal like this in the works, but what what catch us up to speed, on the last sort of six months.
Speaker 8:Yes. Look, it's been super busy. So AI popped up really in force probably last April. And since then, we've been building out our, GPU cloud business, which basically involves us buying the GPUs and providing access to those via cloud rather than an alternate model, which is colocation where you build the infrastructure and you allow one of these tech giants to lease it back. So we believe in owning the compute and providing that to the end customers.
Speaker 8:It's been a journey talking to a number of the, the large global technology companies, but really happy to consummate it with Microsoft.
Speaker 2:Yeah. I remember it was earlier this year Satya had a line that something to the effect of, I'm happy to be a leaser. And so, I'm sure you guys you guys picked up on picked up on that.
Speaker 1:Can you
Speaker 2:give us the What what Sorry. So so I want the history. Yeah. One thing that Satya's, I guess, been saying over the last couple years is maybe not couple years, but over the last years, he feels like he's more, energy constrained than he is, GPU constrained. What kind of advantages has Iron had, on the on the power side that that made a deal like this possible?
Speaker 8:Yeah. That's absolutely right. And I think it's almost a little bit more nuanced than just power constrained. I think it's actually data center constrained as well, but let me come back to that. I think when my brother and I set up this business seven years ago, our underlying thesis was that the real world can't keep pace with the digital world.
Speaker 8:So the digital world is driving all these exponential demand curves. Adoption goes from zero to one overnight, whether it's Bitcoin, nothing fifteen years ago, to $15,000,000,000,000 today, whether it was AI, not really spoken about two years ago, to the latest humanity defining technology. And at the center of that is this exponential growth and demand, but the ability to service that is constrained and limited by the real world. So when we started this business seven years ago, we explained to people, it sounds simple, you can't plug a computer into a high voltage transmission line. It takes years and years of permits, approvals, dealing with risk adverse utilities, giving you access to that network.
Speaker 8:So, yes, having access to power and having put in the groundwork very early is now paying dividends, but it's actually going a step further than that where you might have access to power, but do you have the framework to go and build the data center? Do you have the governance regime and the flexibility of a corporate to give you that decision to go and build and start building ahead of the curve? Do you have the internal know how on how to build these new generation data centres? Because fundamentally, they're a different asset class. These are not metropolitan data centers providing corporate shared drives, doing cat videos.
Speaker 8:Like, they're fundamentally different.
Speaker 1:How do you think about the, like, the the predictability about the shape of compute workloads going forward, how important is it for you to project those out? I'd love some, like, history of, like, what was the first compute workload that you were doing? Because I imagine it wasn't LLM inference. There was probably crypto mining in the business. There's all these different workloads that were super valuable at certain times then changed.
Speaker 1:Now we're in the reasoning era. We might be in a completely different paradigm. How much do you wanna bake onto ASICs? How much do you wanna, you know, use NVIDIA GPUs, more generalized chips versus flexibility? Like, how do you think about projecting out the future?
Speaker 8:So I would just bring it back to a really big picture and say, as society, do we believe that we're becoming more digitized? Do we believe that we're going more online? And that's going to grow. And, again, during our seed investment round, we quoted movies like The Matrix, like Ready Player one, Wreck It Ralph. And, directionally, I think humanity is heading that way, which is going to drive this appetite for high performance compute.
Speaker 8:None of us have a crystal ball. We don't know what's going to be next. We had AI in our C deck. We also had a whole heap of other stuff that hasn't eventuated.
Speaker 1:Sure.
Speaker 8:But what it means for us from a business perspective is a number of small scaled bets along the way creating optionality. To go and pay an option fee on 500 hectares of land in West Texas is a really, really small exposure. To go and pay $1,020,000,000 dollars to get the grid connection is now a relatively small exposure for our business. So it's right sizing your bets to a point where you get to sign a Microsoft deal underwriting $9,700,000,000 of revenue. You go, okay.
Speaker 8:That justifies more CapEx.
Speaker 1:Yep. Yep. That makes a lot of sense.
Speaker 2:What other are are are you looking at other opportunities and sites in in other areas, or is Texas the focus going forward?
Speaker 8:Look, Texas was the focus early on because we did the lap of the world, worked out the best place to get power, low cost excess renewables, lots of land, cheap power, ease of grid connections, lots of fiber backbones, now the world's there. We do have additional sites. We've publicly announced three gigawatts, but we don't talk about development sites that aren't 100% secured by virtue of a connection agreement. So there is a multi gigawatt pipeline behind that outside Texas and globally.
Speaker 1:Yeah. How how do you think about the, like, the current playbook for companies that are doing partnerships with hyperscalers or OpenAI? Like, what are the dos and don'ts of announcing a big partnership? Because we're hearing so many of them, and I think a lot people are
Speaker 2:having trouble. Of a press release economy right now.
Speaker 1:People are having trouble handicapping them. Like, you can just throw out a big number. You could you could date it a hundred years in the future and get really crazy numbers. Like, what does
Speaker 2:the market actually wanna get out of process? Feels significant
Speaker 1:Yeah. This
Speaker 2:some ways because Satya has been so much more conservative than other, let's say, like an oracle. Totally.
Speaker 1:Totally. Totally.
Speaker 8:Yeah. Look, I think it's good to be skeptical. Right? The world works in memes and headlines and public markets. I come from a private market background, infrastructure funds management.
Speaker 8:And going into the public markets, there is a lot of narrative. There is a lot of hype. We've tried to keep it very limited to binding contractual deal announcements. So this is binding. This is real revenue.
Speaker 8:Sure.
Speaker 2:Just like we don't for real revenue.
Speaker 1:That's amazing. Yeah. I I honestly think that needs to be clarified, but thank you. Like, they that that is very, very helpful.
Speaker 2:Yeah. We're in an there's so much incentive for for two parties to announce the biggest possible number without any real underlying commitments. And so, yeah, I was excited to see you guys get this done and announce it with such a great, counterparty.
Speaker 1:Yep. Well, we'll let you go. We know you have a busy day, but thank you so much for stopping by the show.
Speaker 2:Yeah. Congrats to the whole team. Massive massive milestone.
Speaker 1:We'll talk
Speaker 8:to you soon. Thanks, guys. Goodbye, Dan.
Speaker 1:Elon Musk says a large solar powered AI satellite constellation would be
Speaker 2:able Would fix him.
Speaker 1:Prevent would fix him. Would be able to prevent global warming by making tiny adjustments in how much solar energy reached the Earth. That would be I wonder how much how much CapEx does that cost? Yeah. It it it's interesting that Elon I I don't know.
Speaker 1:There's just like, when he says something like that, it hits just as, like, sci fi techno optimism, and it doesn't it doesn't hit as, like I mean, people still trade the stock off of this. Like, news. People will look at this and be like, oh, well, like, you know, like like, maybe Tesla will get a piece of that. Right? And it becomes a little bit of a narrative, but people don't, people don't dig in that far.
Speaker 2:We have one thing one thing that was, super notable to me, or standout kind of section of the, Elon was on all in Friday, and he was talking about the the shareholder vote around his compensation, but also the the voting power that'll have. And one of the things that he said was, I don't wanna create a robot army if I don't have if I can be, like, fired by ISS surrounding these voting groups. And I thought that was I mean, it's just like the most Elon way way to to
Speaker 1:Who should control the robot army? It's a good question.
Speaker 2:He's like, He basically was saying, I don't wanna be fired for political reasons.
Speaker 1:Typically typically, armies are controlled by democratically elected leaders. Like, we have a system for electing who is the commander of chief of the army. Very interesting question. If you actually wind up with a company that has control over a robot army, that's a that's an interesting philosophical question. Also, you know, you're gonna need to manage that army.
Speaker 1:You gotta get on linear. Linear is a purpose built tool for planning and building products. Need the system for modern software development, streamline issues, projects, and product road maps.
Speaker 2:We have I'll leave Mark Gurman Yes. Coming on in just a few minutes. Yes. We had a question message to us. I thought it'd be good to get into, kinda break it down.
Speaker 2:So here is the question. Advice for my friend's company. He has around 400,000,000 DAU, but he's been diluted by 90% since the IPO. He still has full control of the company, but he can't sell because of antitrust. Should he bail?
Speaker 1:I I think no. I think stick it out. I don't know. There's nothing about that that's identifiable. I think that you stick with it.
Speaker 1:I think it's gonna be fun to run such a big company with that many DAU. Even if you've been diluted, you know, you're you're probably rich. You've sold a lot along the way. You're you're post economic, but it's better to be post economic and have control over an interesting organization than post economic and just kind of retired. That's my take.
Speaker 2:My mind's just racing on what what company could this possibly be. And it feels like at 400,000,000 DAUs, it's gotta be Snap.
Speaker 1:Maybe. Could be some
Speaker 2:Somebody should look into it and see if see if see what the dilution has been like over there. I think Snap is a company that I think if you run the numbers, it's like every ten years, they just give away the entire company to the team.
Speaker 1:It was a billion in stock based comp last year, something like that.
Speaker 2:And it's a what what is
Speaker 1:company. So giving away 10%. Absolutely crazy.
Speaker 2:Well, we have Mark The legend, the Gurmanator in in the waiting room.
Speaker 1:Welcome to the show. Welcome to the show. Mark Gurman, how are you doing? Thanks for having me. Thank you so much for joining.
Speaker 2:You know
Speaker 1:we I'm glad to be on here.
Speaker 2:This has been you're kind of like our like, this is the guest we've been waiting for since the very beginning. The best moment. We you were we were like, we've been waiting for this moment for so long. So, we're super excited to have you on.
Speaker 3:Yeah. Here I am.
Speaker 1:Thank you so much. May maybe since this the first time we've actually met, I'd love to go a little bit back in time just to set the table. Like, how did you land on Apple? How did you become, you know, so focused on Apple? Was this like a gradual thing?
Speaker 1:I mean, I I know you from your reporting. It's been fantastic for as long as I can remember, but I imagine that there was a time when you were you had to make a decision.
Speaker 3:Well, I was an Apple fanboy back in the day. I remember when I was very young. I wanted an m p three player for the holidays that year, and I was lucky enough that, you know, my parents were able to to get me one. And the the local mall, there was a mall in LA called the Westside Pavilion. It's it's actually closed now, and and Google, I think, actually bought the mall to turn into headquarters in LA.
Speaker 3:Cool.
Speaker 1:And then
Speaker 3:the whole place fell apart. The whole deal fell apart, but it's neither here nor there. Outside of, I think, Bloomingdale's or Macy's or whatnot, they had a cart, a Dell cart, believe it or not. And they were touting at the time what they called the Dell DJ, and that was the m p three player of of Note at that time. And so I wanted a Dell DJ for Hanukkah that year.
Speaker 3:And so I was gonna get a Dell DJ, and so my dad, you know, went to Best Buy. What now? He's like, forget the Dell DJ. He got me a a blue iPod mini instead.
Speaker 1:Okay.
Speaker 5:Wow.
Speaker 3:And I got that iPod mini. It was my first Apple product, and I fell in love with it. So over time, became an Apple family. Got an iBook. Then, you know, it became an iMac and MacBook Air and and whatnot.
Speaker 3:And so I just fell in love with Apple. I was a huge Apple fanboy, always glued to the forums and the rumor mill and whatnot. I was a commentator and sort of fell in love with it and started wanting to do my own reporting on it. And I joined a website back in the day called nine to five Mac. It still exists.
Speaker 3:I left that at when I graduated from Michigan in 2016 and joined Bloomberg, and I guess the rest is history.
Speaker 1:That's amazing. Incredible. How do you think you're perceived by the folks at Apple? Because in one way, like, you know, you're promoting Apple, you're a real fanboy, but at the same time, it feels like every time you get a scoop, I'm like, oh, they must not be happy.
Speaker 2:Yeah. It's a hard company to be a critic of. Yeah. Even even a critic that wants the best for the company. Yeah.
Speaker 2:Because I feel like they I I just have this sense that that they're like, they kinda want you to ride with them no matter what. But what's I
Speaker 3:think they love me, personally. I mean, they they should love me. Yeah. I mean, I'm here talking about their products all the time. Yeah.
Speaker 3:I think I usually have a pretty good attitude about it. I think I'm balanced and realistic. And, know, I try not to go down the angle of, you know, the sky's on fire, everything is burning. Tim Cook should be out of there, as, you know, some other news outlets like to do, whether it's fair or not, talking about their products, keeping people interested in their products. And, you know, clearly, some people there are like me because, you know, this information just doesn't come off trees.
Speaker 3:Right?
Speaker 1:Yep.
Speaker 3:So definitely, I think it's nuanced.
Speaker 1:Do you think Tim Cook's underpaid?
Speaker 3:Do I think Tim Cook is underpaid?
Speaker 2:So he barely he barely makes about the same amount as this baseball player that plays for the Dodgers Yeah. Annually.
Speaker 3:Well, maybe the question is, are athletes overpaid? Right? I mean, LeBron is getting, like, 55,000,000 a year on his contract, and then you think about how much money do they bring in from ticket sales because of him. They're probably making, I don't know, 2 or 300,000,000 a year because of him. So, you know, what's the margin?
Speaker 3:What should a margin be? Right? And you have Tim Cook. He's what is he making? 70,000,000 a year?
Speaker 1:75.
Speaker 3:He was make 75. He was making 100,000,000 a year a few years ago. Then everyone flipped out, and he had no choice but to cut his pay because they were kinda sick and tired of the backlash. Right? So he was making a 100,000,000.
Speaker 3:I mean, what is the value that he brings to the company? I mean, obviously, it's multiples of billions.
Speaker 1:I completely
Speaker 2:agree. We we were very close to taking a break from the show and going and just doing a hunger strike outside in Cupertino
Speaker 1:Racist pay.
Speaker 2:Would get his pay up because we're on your side. We think he's clearly created
Speaker 1:Just the trade war. Like, just the fact that he's been so masterful in not becoming a target or staying out of politics, like, that level of
Speaker 2:The only real critique you could remarkable. You could make in my view Yes. Is the way he waved the f one flag. Like, it just wasn't That was It was somewhat it was somewhat lackluster.
Speaker 3:I saw that.
Speaker 1:Was just a
Speaker 2:rough wave. You know?
Speaker 1:He was he's off there thinking about supply chain. You know? Maybe he's focused on work. His mind's
Speaker 2:at work. He's not His mind was elsewhere.
Speaker 3:Thinking about he's thinking about how was that flag produced? Yes. Could have, like, gotten better pricing on it.
Speaker 2:Exactly. Exactly. Okay. What what what's what's your update updated take on the new suite of iPhones? John and I, I had a very funny experience because I ordered my phone.
Speaker 2:I I tried to just order a phone online, walk into the store, be able to pick it up immediately, Wasn't able to. I I paid and they said they were gonna ship it to me. John, like a week later, just walked in the store and bought one here in LA. I was like I was like, what is going on? And we've both been, we're not really case guys, and we've both just been amazed at at how they could release a phone that that just gets damaged so intensely, so quickly.
Speaker 1:Wait. Wait. So so you have a case. What case is that?
Speaker 3:It's the Apple Clear case. I I rotate between the case and not using case. So here's what happened. Case. So last year, they f'd around and found out, launched this terrible AI service, Apple Intelligence, that didn't really work well.
Speaker 3:And what they found out is that it didn't resonate with customers as much as prior iPhones. This year, they did not f around and find out. They did exactly what customers want. Market research data, man on the street conversations tell you what customers want. They don't want their phone to overheat.
Speaker 3:They want the camera to be incredible. They want the processing speed to be fantastic. They want battery life to be better. And so what Apple did for the phone this year is they focused on the core competencies. Battery life is through the roof.
Speaker 3:The phone doesn't require you to use an oven mitt to hold it for extended periods of time. The camera is amazing. I think they hit them hit right on target with the colors. I think the new design is terrific. They did everything the consumers wanted.
Speaker 3:They did everything customers want in a phone upgrade. It came at the right time, which is five years after the COVID influx. You know, I get a new phone every year. You guys might get a new phone every every year. Your viewers may get a new phone every year or two.
Speaker 3:Mhmm. That's the majority of people aren't getting new phones for four every four or five years. And so they set themselves up for a pretty nice upgrade cycle, and you're gonna see that with their first $140,000,000,000 quarter when they report at the January, early February. So I think all things considered, it's terrific.
Speaker 2:What about the iPhone?
Speaker 3:Still at the center.
Speaker 2:Yeah. What what about the iPhone Air? Were you were do you expect it to sell better than it has, or were you always kinda bearish?
Speaker 3:I've been extremely bearish on on the iPhone Air. I don't think that there's a significant market for it. You see, Apple, because of their large numbers, have reinvented what a significant market is. For Apple, the iPhone Air is not a significant market. If that was a Google phone I mean, Google would be a lot to to sell pixels in the numbers that the iPhone Air is selling.
Speaker 3:Samsung would be happy if their iPhone Edge sold in the quantities the iPhone Air is selling. It's a beautiful piece of technology, but that's what it is. It's a technology exercise to really set the stage for an eventual foldable iPhone. Mhmm. They have to create thinner form factors, thinner batteries, more advanced materials like titanium for the casing in order to create something like the foldable phone to compete where Google has been for three years, where Samsung has been for seven years.
Speaker 3:And so the iPhone Air gets you on that trajectory. But in terms of overall sales, they didn't even really mention the iPhone Air as a key driver, and nor is it mentioned in their 10 k
Speaker 2:That makes sense. Key driver. The follow-up question would be how how important do you think the foldable market is?
Speaker 3:I think it's, TBD. I think they don't know yet. I think Apple is in a position right now where they basically have to pull every lever possible to keep people in the ecosystem. If you somehow have a market of, I don't know, ten, twenty million people who demand foldable phones, and they're willing to leave Apple to Google or Samsung because they want a foldable phone, that is a bad thing for Apple, not because you're losing those 20,000,000 customers on that one device, but because Google has an excellent ecosystem now with all sorts of peripheral products and operating systems. Samsung has the same.
Speaker 3:The Chinese players have the same. So if you lose a customer because of one product, you risk losing them across the board. You risk losing them for for entertainment services. You risk losing them for your laptop, your tablet, your smartwatch. Because everyone has everything now.
Speaker 3:You kind of need everything.
Speaker 1:Mhmm. Yeah. How do you think about the change from titanium to it's aluminum on the new phones? Does that fit within the framework of, like, revealed preferences, man on the street interviews? People say they wanted an iPhone that doesn't scratch.
Speaker 1:But in practice, they'll just put on a case, or is there more thought to that?
Speaker 3:It's okay. So people aren't asking for aluminum. Yeah. But aluminum is tried and true. They've used it on laptops for many years.
Speaker 3:The benefits of titanium is the durability. If you've seen a bend test of the iPhone Air, that thing does not you can't manipulate that.
Speaker 2:I have a I have a story I have a story you'll appreciate. We, we were having dinner, with a group a couple weeks ago, and, one person in the group had a iPhone Air and was bragging to the whole room of how strong it was. They were saying, this is the most durable iPhone ever made. It's it's impossible to break. And he's going like this.
Speaker 2:He's like, he's showing showing the group. He's like, I can't even bend it. He's like, I dare anyone in this room to try to break my phone. And this guy raises his hand and takes the phone and puts it down here and just
Speaker 1:breaks it. Shatters it. In a second, and the guy's just sitting there
Speaker 2:in disbelief saying, like, I'm gonna I'm gonna email Tim Cook right now. This is this this is ridiculous.
Speaker 3:Well, first of all, I I I love that story. I'm all for stuff like that. But to your point Yeah. You know, aluminum dissipates heat so much better, and it was, like, a big mistake that they moved to titanium with the 15 Pro and 16 Pro lines a couple of years ago. You could do some interesting color treatments on it.
Speaker 3:They had some cool colors like the natural titanium, the gold titanium, stuff they're not doing with the
Speaker 2:aluminum pumps.
Speaker 3:It looked nice.
Speaker 2:I like that I could drop it without a case onto cement, and it would be
Speaker 1:barely scratched.
Speaker 2:It was absolutely incredible.
Speaker 3:But the durability was great. Yeah. And that's why I used it for the iPhone Air. But if you have to make that trade off, which clearly there is a trade off. Yep.
Speaker 3:Titanium, more durable. Aluminum, you know, it's not as durable. You drop this thing, you're gonna get a big dash in it. Yep. The way the color is anodized, it doesn't stick like it does on titanium, but it's not gonna overheat.
Speaker 3:And as the performance of these things improves, as the chips get better, you need better and better heat dissipation. And so this was a reversal that they had no choice but to make. We
Speaker 1:had this framework for Apple's, strategy right now, which is do nothing win with regard to the AI race. Like because people have said, like, yes. They lost, and you mentioned it with Apple intelligence. And I agree with you. I've taken that.
Speaker 1:I've been like, ah, Siri doesn't work as well as I want. It doesn't even it doesn't even have Whisper APIs. It can't
Speaker 2:even dictate the fact promising But this magical experience Yeah. And everyone being underwhelmed. The one thing they over delivered on was humor. They're the first AI company to reliably laugh through the summarization of iMessage. Very funny.
Speaker 1:But but, basically, they didn't get over their skis. They didn't invest a trillion dollars in CapEx, and it's a $4,000,000,000,000 company now. Like, they've done nothing in AI, and they've won, basically. But is that narrative click with you? Is that taking hold in Cupertino?
Speaker 1:Are they happy with the way it's played out?
Speaker 3:I think they recognize that it's been a disaster. I mean, still the biggest thing to me is they were completely caught off guard by ChachiPT, Gemini Copilot Yep. Back at the at the '22 into 2023. And a company that does this much research, a company that has supposedly this kind of understanding of where the world of technology is going to just completely, it's like they had no idea the Internet was coming. It's Sure.
Speaker 3:Completely unbelievable to me. It's sacrilegious that a company like Apple could have had that bigness. Apple Intelligence, like, they brought it out, and their marketing scheme is always just like, we're the best.
Speaker 1:Yep.
Speaker 3:We're Apple. We're gonna do it better. We're correct. Everyone else is wrong. And that's sort of the message they put out about AI when they launched Intelligence.
Speaker 3:But it turns out, no, Apple. You are completely wrong. And I think any observer would have understood that people want chatbots. They like chatbots. It is a winning formula.
Speaker 3:And to date, they have been completely anti chatbot, which I think has been a very big mistake. The integration of ChatGPT into Siri is very much subpar.
Speaker 1:Yep.
Speaker 3:Still, they support all the chatbot apps, but they really need first party stuff. The big AI thing for Apple is the revamped Siri coming out in the spring. They're using a Google Gemini model to power it, which I think is going to make it pretty top tier. I mean, Gemini's models are, you know, pretty excellent as we know for anyone who's used, you know, the Google AI services. But what really you you have to understand is that the brand damage that has been done to the Siri name over the last fifteen years, there's a big question with whether or not it's insurmountable.
Speaker 3:In my viewpoint, if they've get gotten Siri to a point where this thing actually meets the promise of this AI voice assistant, they have to change the name. On the other hand, Siri, as damaged as the brand is, it is still a ubiquitous name. So I'd be curious to see. I don't think they're gonna make a name change, but, they should.
Speaker 1:So Gemini powering Siri under the hood. Who pays who in that scenario?
Speaker 3:Apple is paying, Google. Apple will pay stays that way forever
Speaker 1:because Google provided a wonderful search engine in the Safari iOS browser, and and Google paid Apple for the right to do that.
Speaker 3:Well, it's more of a revenue share for the the payments there in the search engine. So this is completely separate. This is like you're developing something for me. You're my supplier
Speaker 1:Yep.
Speaker 3:And I am paying you for it. Yep. Like, I'm paying you for it. Yep. Whereas the revenue share, because Google is making a ton of money by getting people through the Apple interface.
Speaker 1:But won't that be the won't that be the long term state of affairs with these
Speaker 3:I don't believe so.
Speaker 1:You don't think so?
Speaker 3:This is this is no. I think oh, what I know is that this is an under the hood white labeled model. They've developed the model here. But if it wasn't for my reporting, no one would probably know that this is this is a Google model. You can be Sure.
Speaker 3:Pretty sure that Apple's not gonna advertise this as a as a Google model. Sure. You can also bet at some point, they'll probably figure out their own model to replace the Google thing. So I don't think it's a long term bet.
Speaker 2:Yeah. How how competitive was that process? I remember it was probably your reporting talking about how was in the running as well, and they wanted probably it was a bake off. They and wanted a huge number for it.
Speaker 3:Wanted multiples of billions. I believe starting in a billion in year one and doubling every year thereafter, at least for the next three years. OpenAI wanted things like an investment and a stake and all sorts of stuff. And so, know, they originally were talking to OpenAI, then they were talking to Anthropic, then they were talking to Google. They did a bake off of all three.
Speaker 3:I think they kicked OpenAI out of the running pretty early on. Until about two months ago, it was going to be Anthropic. And then once they got into the financial terms, it quickly pivoted to to Google. My belief is that the quality of the Google engine and the Anthropic engine are pretty much on par.
Speaker 2:So I think
Speaker 3:So what what do think is
Speaker 2:the is this, in your view, a threat to ChatGPT usage? Is the ChatGPT Siri integration gonna exist after this next release? Are people gonna be using this as as a replacement for web search
Speaker 1:and Because even though the ChatGPT Siri integration's a little weird, if there are people that are love that, then you take that away. That's like
Speaker 3:They're not they're not taking that away. They're not taking it away. So again, it's an underlying under the hood model to enable the existing Siri functionality and the new Siri functionality. So Apple let's talk about what is the new Siri.
Speaker 2:Yes. So the new Siri is what I'm getting at because if I can suddenly use Siri
Speaker 1:What is new Siri?
Speaker 2:Deep research and do web searches and stuff like that, that feels pretty significant.
Speaker 3:Yeah. So so what is what is the new Siri? Well, the new Siri, so far what Apple's announced is three things. One is on screen awareness. So you see something on your screen, you can ask the voice assistant about it.
Speaker 3:The second thing is personal context. So the ability to ask questions and have it search through your personal data in order to answer those questions, like make an itinerary based on conversations I had with someone who's visiting me in town. And there's a few other bells and whistles related to the new Siri that Apple has previously announced. What they haven't talked about is AI web search. And so the new Siri is also going to have a ChatGPT perplexity competitor for things like deep research and summarizing search.
Speaker 3:That is going to be an Apple built,
Speaker 2:the companies Yeah. Are
Speaker 3:So this is Apple going after ChatGPT perplexity, at least for web search.
Speaker 1:Yep.
Speaker 3:I think it's going to be pretty useful. It's very necessary. It's one of the main use cases.
Speaker 5:Mhmm.
Speaker 3:And you'll see them eventually embed things similarly into Safari and and other parts of the iPhone operating system. So it's gonna be a big year for Apple AI. And Sure. That's just the beginning with the rolling out in March, April.
Speaker 1:You think able to pull off.
Speaker 3:You think
Speaker 2:do you think there's any Yeah. World where Apple wants to monetize commerce off of this assistant? They obviously because because that's I can see the exact same thing that ChatGPT wants to do. You serious?
Speaker 1:Me a new pair of shoes. Order me some Book
Speaker 2:a towel. Yeah. Find me find me find me yeah. Exactly.
Speaker 1:Book me a hotel.
Speaker 3:Book me a flight, Siri. Is not good enough. You're not gonna so it comes down to this. Will Uber, Postmates, Uber Eats, Amazon, whatever?
Speaker 5:Right
Speaker 3:now, you can integrate all of those apps. It's called an extension into Siri. In fact, this has been a feature for ten years. Nobody uses it because it's unbelievably terrible and unreliable. You cannot trust your iPhone to call you an Uber via Siri.
Speaker 3:Like, you'd have to be out of your mind to need to call an Uber in a pinch and use Siri versus using the app.
Speaker 2:And so there's really no from point a to point b with Uber. Yes. Taking you to Antarctica. You cannot
Speaker 3:cancel really there's really no way for Apple and these companies to come to some sort of financial agreement around that. That's why they haven't yet. Sure. But when this new series starts working, when it has those upgraded technologies that mean that I can call an Uber from my phone and know that it's actually going to happen, then they'll be able to come to those financial agreements because people are gonna start using it. Right now, there's no point in monetizing $0, but once the real money starts flowing through, in Siri, you're talking about a big business for Apple and AI and really what the future of apps and and services revenue is for the company.
Speaker 1:Yeah.
Speaker 3:I'm I'm pretty bullish on this.
Speaker 1:Yeah. No. That makes a ton of sense. I I guess the question is just, like, it it feels like Apple the reason Apple is paying Google is because they don't want a situation where I click the Siri button and say, hey. Order me an order me some paper towels.
Speaker 1:And then Gemini under the hood says, yeah. We'd love to process that through Google payments and Google Shopping and all of our under the hood stack. And then they start monetizing. Yeah. That's not what's happening.
Speaker 3:How It's it's it's like just hold on one second. It's like you guys are really, really good at what you do, so I'm paying you to to to write my to create my podcast for me.
Speaker 1:Sure.
Speaker 3:But you guys have nobody knows I paid you to do it. Sure. And I'm the presenter and everything.
Speaker 1:Pure pure white label. Yep.
Speaker 2:How Yeah. What what's your been your read on Apple's kind of m and a strategy? They've bought a number of companies this year. Almost all of them are are I think to my knowledge very small companies that are probably talent focused. There had been some rumors that I have to imagine were were kind of like leaked by perplexity that Apple was like taking a look at that.
Speaker 2:That never felt real to me. When you look at Apple's history and m and a, they'll buy they bought Beats for like one or like two times revenue. Like they they when they buy comp the the the only times that I've seen them buy a company that for a large price was, like, a relatively, like, conservative
Speaker 1:You don't just take swings at $20,000,000,000 companies with, like, a 100,000,000 in rev.
Speaker 2:It just doesn't have underlying
Speaker 3:Here here's what I could tell you. First, on the Perplexity one, I was the one who who broke that. That was real. That did not come from Perplexity. The idea there was Apple was sort of scared out of its mind that it was going to lose this Google search deal.
Speaker 3:Mhmm. There was a very real possibility the judge was gonna tear that thing up, and Apple would be out of billions of dollars. And so buying Perplexity when it wasn't as big of a a price tag as it is today for that company would have made sense. It could have been a pretty easy plug and play to replace Google search on the iPhone and and have a Apple revenue stream there.
Speaker 1:Oh, yeah.
Speaker 3:That's out of the picture because a Wait. Where would where
Speaker 2:would the revenue have come from?
Speaker 3:Oh, they would just integrate their Apple
Speaker 1:ad network perplexity.
Speaker 3:Yeah. And so ads in perplexity.
Speaker 1:Yeah. You go to in you go to default search on iOS, It hits Perplexity, and then there are a whole bunch of advertisers that are buying to be at the top of those results.
Speaker 2:So similar to the apps App Store. Yeah.
Speaker 3:Yeah. You know, it would have been a pretty buying Perplexity would have been a quick plug and play painless replacement for Google Search, But that deal wasn't torn apart, giving Apple more time to build its own in house AI web search product. In terms of the m and a strategy, so they really, to your point, have not veered from their strategy. Biggest acquisition to date, even post inflation, appears to be that $3,000,000,000 Beats deal back in 2014. Yeah.
Speaker 3:I do believe they continue to be on the hunt for smaller AI M and A deals.
Speaker 1:Mhmm.
Speaker 3:In addition to Perplexity, like, they looked at Mistral, which developed their own LLMs and related technology out of Europe.
Speaker 6:But But
Speaker 3:Mistral would never use anything like
Speaker 2:I I can't imagine France would be like, yes. Buy our national AI champion. We'd love to sign Well,
Speaker 3:stranger things have happened, but given the East situation with the EU, I'd be shocked as well.
Speaker 2:Yep. Yeah. What about what can you say about their reaction to the new Meta Ray Ban's release and and VR broadly?
Speaker 3:Well, the Apple Vision Pro, have you guys used one? Do you guys have one?
Speaker 1:I had one for two weeks, and then I returned it. But I did find it's like, it was remarkable in terms of screen fidelity, but content library wasn't there, and weight wasn't there. I like that they put the battery in a pack. There it was a it was a mixed bag. And at $5, it was like, why am I doing this?
Speaker 3:So I got the Vision Pro on the day it came out Yeah. Back in February 2024.
Speaker 5:Yep.
Speaker 3:A friend of mine for the first time got one. Does that make sense? It's been a year and a half, and finally a friend of mine got one.
Speaker 1:Totally.
Speaker 3:Totally. And so I had my first vision pro to vision pro FaceTime experience actually a few nights ago.
Speaker 1:Oh, wow.
Speaker 3:And we tried out this new Personas thing. Yep. You can literally, like, turn on a movie and sit side by side and see the person sitting next to you watching a movie together.
Speaker 1:Yep.
Speaker 3:It's freaking unbelievable. It's crazy. Here's the problem. Most people don't wanna put a pound and a half helmet on your on their head.
Speaker 1:Yep.
Speaker 3:Right? And so Apple is limited by a combination of price as well as people just not wanting to use that form factor. I also think they've done a pretty terrible job marketing it because I'm ingrained in this ecosystem more than anyone else I know and probably most people in this world. And despite the fact that I've had a VisionPRO, despite the fact that I'm totally tuned into this, I had no idea what that experience was like that I experienced the other night. And so all that tells me is they've just done a terrible job marketing these features.
Speaker 3:Obviously, they've done some, you know, executive interviews about personas in the last few days or whatnot. People don't really care about that. They care about TV ads, and they care about demos and what have you.
Speaker 2:So Yeah.
Speaker 3:They need to up their game. Anyways, long story short, they're full steam ahead on smart glasses. The first version won't have displays like the older metal Ray Bans or the base level metal Ray Bans.
Speaker 2:Mhmm.
Speaker 3:Those are coming out in 2027. I think they'll be out Wait.
Speaker 2:A nondisplay smart glasses without a display will come out in 2027?
Speaker 3:Yeah. Early. And I think it'll be early enough in '27 where there's a possibility they haven't decided yet. There's a possibility they'll be able to announce it before the end of next year.
Speaker 2:And people will wanna buy that because the Apple Assistant is so good that it's so nice.
Speaker 3:I thought you were gonna say because of the Apple brand, people are not gonna wanna buy it because the Apple assistant. But No. But theoretically unlocks that part.
Speaker 2:Totally. Because if it's not good, like, I don't need to wear a pair of glasses.
Speaker 1:But it's pitch is, yeah, you don't need to wear AirPods anymore. It's like a substitute for AirPods potentially.
Speaker 3:It's like AirPods with souped up battery life. I use AirPods in there. With cameras. Yep. Yep.
Speaker 3:You know, they've also been working on AirPods like I'm wearing with cameras in there as well. And so I think there's actually a bake off going on internally too.
Speaker 1:Yeah. Between the two four factors.
Speaker 3:Well, between the four factors or if you need both, I would bet that they'll do both. Weird. And then
Speaker 2:Well, yeah. Because if you if
Speaker 3:you need the displays.
Speaker 2:If you need glasses, like, for your vision, a pair of smart glasses that have a speaker built in, you can do phone calls, you have a camera, And you have prescription lenses like that. There's over a billion people that wear that need prescription eyewear. Yeah. And those people will probably be like, this is amazing. I get to wear Yeah.
Speaker 2:I I get to fix my vision, and I get all these added features. I'm already wearing glasses. I'll pay the $2,000 to where have another kind of, like, device on my on my on my person. Mhmm.
Speaker 3:And and But the bet is that the Apple brand is stronger than the Ray brand Ray Ban brand. And I would guess the Apple brand is stronger. And if you had to choose between Ray Ban glasses and Apple Glasses, especially with the context that Apple has severely limited the ability for the Meta Glasses to sync with your iPhone, and the iPhone and the Apple Glasses will sync perfectly Yep. I think most people are gonna lean in the in the Apple direction. But Meta deserves so much credit for creating a category Mhmm.
Speaker 3:And making a category so terrific. I have the Ray Ban displays that Meta gave me to test out. Those are amazing. And they're, like, two, three years ahead of whatever Apple's got.
Speaker 2:Do you
Speaker 1:do you Wow.
Speaker 2:So I was with the with the Ray Ban displays, I could imagine that being having, like, pretty real product market fit for people in the world that are dependent on WhatsApp and already need glasses. Like, they need to wear glasses for their eyesight. Because if you have those two things and you can get WhatsApp messages just like popping up, you can do phone calls, like that feels like pretty compelling. And so I can imagine the kind of person that is. Maybe it's a European executive or some Gen Z person in in Europe that's just a WhatsApp power user.
Speaker 2:But but I what what's your read on it? I know it's not your kind of cover.
Speaker 3:Well, they feel like a prototype. No. I cover all hardware too. They they feel like a prototype, if I'm being honest. But, like, a good prototype I think they're priced perfectly.
Speaker 3:I think $800 is totally reasonable for what their features are. You give it a generation or two, they're gonna be amazing. The trick for Meta is beating Apple by a year on something that's a bit lighter and better displays and and what have you. See, the current Metas, they have one screen in them. The the second generation version will have displays in in in both eyes, maybe making it a little bit more expensive, but Meta's onto something.
Speaker 3:They have a multiyear head start. What you're going to see is Google come into this space too. They're gonna launch, you know, their smart glasses with Samsung in a few months, their glasses with Warby Parker and a few other glasses brands in a few months. And there's gonna be a lot of competition in this space. I think this is gonna be really hot across '26 to '28.
Speaker 1:We have a question from the chat. Could you get us up to speed on the Jon Prosser situation? We haven't
Speaker 3:This one, I'm not this one, I'm not terribly read up on.
Speaker 1:Okay. Yeah. We'll we'll we'll we'll need to revisit it at some other point.
Speaker 3:How about this?
Speaker 2:What do you
Speaker 3:Put it this way. I I I lied. I'm very read up on it. I don't wanna get into it.
Speaker 5:It's not
Speaker 3:my it's not my, it's not my problem to deal with.
Speaker 1:That's totally fine. That makes sense.
Speaker 2:What did you what did you read into, their maybe you maybe this was your reporting. This is why we were so excited to have you on the show. It's like, it's been so many stories that you've originated. But Evan Spiegel and Snap Snap
Speaker 1:Oh, were
Speaker 2:saying they might be spinning out specs and raising capital for it. I was a bit surprised to see that given that, I haven't seen a pair of specs, you know, out in the wild, like, in years. And, if I'm an investor kind of looking at this category and you can you can get exposure to smart glasses through Meta, Google, and Apple, like, it's hard it would be hard to kind of underwrite. But I'm curious if you're more up to speed on on what they've been cooking on.
Speaker 3:I like Evan a lot. I'll I'll just tell you that. And I think that they're trying some pretty cool stuff, and their big differentiator there is what these glasses are going to be used for in the social integrations. In my mind, they might be just better off sort of lowering their r and d on these things by focusing on their hardware, partnering with a company like Google, and putting their own social layer over Android XR. Sure.
Speaker 3:But, obviously, they have their own SnapOS. They're trying to get this consumer version of the glasses out on the market next year. They look quite a bit different than what you've seen from Meta and Apple and some of the Google prototypes. So we'll see what happens. It's going to be a multi horse race here.
Speaker 1:Is true VR just kind of dying or something? Because you have, like, camera glasses at Snap. It seems like all the focus is on camera glasses at Meta and then Apple maybe pivoting away from Apple Vision Pro, and then Google's really focused on the on the, Samsung glasses that are again see through with a camera on there, maybe a little overlay, little HUD. But what is there anything exciting going on in just, like, vanilla VR? I wanna watch a IMAX movie on my face.
Speaker 3:Well, vanilla VR is just incredible. Like, there's no better video watching experience than what you get on Apple Vision Pro. Yeah. I've tried all the VR headsets. I've had all of them.
Speaker 3:I have all of them. It's just a remarkable category. It's only a remarkable category for the people who want it. I mean, there's very few people where VR, I think, works. I'm out and about all day.
Speaker 3:I have a family. I go to an office too. And when do I have time to put this thing on my head to watch a movie? The answer is almost never. Yep.
Speaker 3:Because I have people in my life, I have needs around me, I have things I need to do, and it just does not fit into my life. For people who can put on a headset and be secluded from the world for two hours, there's nothing better.
Speaker 1:Yeah.
Speaker 3:Glasses, you can wear them and use them throughout your day really no matter what you're doing.
Speaker 1:Yeah.
Speaker 3:That's that's the big difference. So there's nothing wrong with VR. It's just the use cases and the people who could use them is just quite a bit more limited.
Speaker 2:Last last question. I know we're over time, but do you think Apple thinks about OpenAI and their hardware ambitions a lot? Sam was pressed pretty hard on on his, spend commitments on Friday. And one of the justifications that he gave for why like, basically, like, how they were gonna be able to spend that kind of dollars was something to the effect of, like, we have a consumer device coming up, and we need a lot of compute for that. I'm kind of botching the the exact, language that he used, but he was seeming to imply, like, we have a hit consumer device coming and just kind of be right like, I can't say more, but he's he certainly is telling the market that they're really cooking, but I wonder what Apple's read on it is.
Speaker 3:Based on what he's saying, this device has to be so amazing that he's confident that they're really gonna need that compute. And to date, we have not seen a single AI device that has either not been a failure or has needed the kind of compute that these dollar numbers are talking about.
Speaker 2:That's what exactly what I said. That's exactly what I said earlier. I'm like, every single crack like, you can have the every single crack at this so far has not managed to be remotely as Yes. Good of an experience as, like, an iPhone with even a a physical headset. Like, if like, I use wired earphones.
Speaker 2:Like
Speaker 3:Alright. That's ridiculous. But the Meta the the Meta glasses are far and away the most successful AI device brought to market in this era over the last two or three years.
Speaker 5:Mhmm.
Speaker 3:And in terms of the users, probably is using, what, 1% of the of the amount of compute that Sam Altman is talking about here. Yeah. So we will see. In terms of Apple worried, I think Apple looks at this as something where they can be a fast follower. I don't I think there are hardware products that OpenAI can bring to market that are innovative before Apple, but I don't think there's a product out there that if Apple wanted to copy that it can't copy.
Speaker 3:So let's see.
Speaker 1:It's fascinating. Well, well, this has been a fantastic conversation. Thank you so much for taking the time.
Speaker 2:We would love to your reporting.
Speaker 1:The show soon.
Speaker 3:Anytime.
Speaker 1:We could have spent another twenty five hours talking. This is fascinating. I hope you have a great rest of your day.
Speaker 2:Yeah. I really enjoyed it, Mark. And thank you for thank you for thank you for all your hard tireless work. Yeah.
Speaker 1:Thank you.
Speaker 3:Yeah. Do you guys do in person? If you do in person, maybe we can
Speaker 2:You're are LA? You
Speaker 3:I'm in LA.
Speaker 1:Come by. Yeah. Let's get where where in LA? We're in LA. We're in Hollywood.
Speaker 3:Yeah. Okay. Okay.
Speaker 2:Bye. Next time. Yeah. Bye next time. We have a seat here.
Speaker 2:I'll get this Ready for you.
Speaker 3:Center seat.
Speaker 2:Yeah. Yeah. Can't wait.
Speaker 1:Alright. Okay. So I'll talk you soon. Mark Gurman. Alright.
Speaker 1:See
Speaker 2:you guys.
Speaker 1:Equivalent yappers. We love it. Love it. Thank you.
Speaker 2:Talk soon.
Speaker 1:Talk to you soon. Let me tell you about numeralhq.com, sales tax and autopilot. Spend less than five minutes per month on sales tax compliance. You can get started for free. Up next, we have Erica from Red Point Ventures.
Speaker 1:Very exciting news. Welcome to the show, Erica. How are you doing?
Speaker 2:Welcome. Hey.
Speaker 1:Happy Monday.
Speaker 7:You guys. Same to you. I have to tell you. I was watching the show from Friday this morning, and I can't and see your costumes. They're rocking.
Speaker 7:Like, very impressive.
Speaker 1:Having the hairline back is
Speaker 2:What was your read?
Speaker 1:For
Speaker 2:Mark. Did you think that John looked much more like Ilya than I looked like Mark? Because that was our read. I kept John moving
Speaker 7:think so. I think so. But I saw it start to crinkle up over time and I'm like, it was starting to
Speaker 1:have to I very it wasn't just falling off.
Speaker 5:It's a
Speaker 2:very weird thing to be under, like, 10 layers of just stuff. It's crazy. And just be inside this.
Speaker 7:She's getting out wearing makeup every day as a woman. What must that feel like?
Speaker 2:No. This is a level this is a level beyond that. We were in the chair for, like, three and a Three hours. Three and a half hours where they applied light. It was like they basically had spray paint.
Speaker 2:They were spraying, doing a layer, doing another layer.
Speaker 1:Literally spray painting. Anyway, thank you so much for hopping on the show. Could you could you give us a little bit of a little bit of backstory on on how you wound up at Redpoint? And then I have a bunch of particular questions about about Redpoint and and and the current markets. I
Speaker 7:I call myself an accidental VC. Mhmm. I do think venture is the best job in the world, but I actually had no interest in being a venture capitalist. Mhmm. I met my partner Satish Dharmaraj like seventeen years ago.
Speaker 7:He was building this company called Zimbra. I had a startup that was trying to sell we're trying to close them as a customer. It was like our first year of sales and he was the only customer we didn't close, which really pissed me off. And we became friends, stayed in touch. Funny enough, he introduced me to Satya Nadella, I know you had on last He was awesome too.
Speaker 7:And that like changed their trajectory of my company years and years ago. Wow. And then he called me and said, hey, I want you to to come to Redpoint. And I was like, no, no, that seems like a terrible idea. And, he'd done so much for me.
Speaker 7:He, like, convinced me to come and hang out with the team. I fell in love. I loved GitHub. I was COO there for a couple years and, never looked back.
Speaker 1:Incredible. You were COO at at GitHub, like, right around Copilot launching, right before you saw glimmers of of Copilot
Speaker 7:Oh, yeah. I was there when we launched. Yeah. So I came in following the Microsoft acquisition. I was there with Friedman, was there through launching Copilot and then Lyft specifically to to join Redpoint.
Speaker 7:Had had a couple companies.
Speaker 1:Was happening internally and you were like, the big tech approach is doomed to fail. I gotta go fund startups instead.
Speaker 2:Is that
Speaker 1:what happened?
Speaker 7:It was amazing to be part of Copilot. Everything here is
Speaker 1:a zero. I'm going out into the private markets.
Speaker 7:Startups are so much more fun. Early days are best.
Speaker 1:Notoriously easy too. But, yeah. I was saying
Speaker 2:I I I still I mean, I I still think Copilot is so I was saying this on the show. It's it's it's underhyped because they're not announcing a funding.
Speaker 1:Funding rounds. Yeah. Yeah. You don't realize how big this is because
Speaker 2:So people have no idea of like What's happening? You know, that was, you know, when when Carpathi was on Dwar Kesh and, like, saying, like, this isn't the year of agents. Like, one argument against that point was that you see this explosive growth of of products like Copilot. And in many ways, agents are working even if it's, like, primarily in a in a coding capacity. Yeah.
Speaker 7:Yeah. It probably doesn't get the the credit it really deserves for the reason that you mentioned. But I also think there's just been so much innovation in the ecosystem since then. A lot of changes on the on the GitHub side too. But it was a pretty remarkable thing to be a part of.
Speaker 7:And honestly, after we shipped it, I went through, like, a little bit of a a darkness. I have a son who's 12 who's, like, super into coding. And I'm like, what is my son gonna do? Like, what is what are his jobs gonna look like in the future? But it's been really transformative.
Speaker 7:It was it was very cool to get to be a part of, like, the early days.
Speaker 1:Yeah. We were we were spending the early part of the show reflecting on, Sam Altman and Satya on Brad Gerstner's show. And just this question of the 1,400,000,000,000.0 in spending commitments versus 14,000,000,000.
Speaker 2:And I'm wondering What did you think of Sam's answer?
Speaker 1:Yeah. I mean, that's a great place to start. But I do have more questions about impact for startups. But
Speaker 2:Not to not to yeah. Do you wanna I was looking for just one person besides Brad and the Altimeter team to defend Sam.
Speaker 1:What are talking about?
Speaker 2:I defended it. He put this he put the helmet?
Speaker 7:Yeah. I mean
Speaker 1:I have a steel man helmet. I can defend anything. Look.
Speaker 7:We are going through such an extraordinary period in human history. I think with every other shift we've ever seen, we tend to like overestimate how quickly it will change things and then underestimate the long term impact that it will have on society. I think there's a bunch we don't understand. I'm certainly not betting against Sam right now as being one of the major players in this space. And I guarantee you, there's so much detail in these contracts about like, you you know, outs and rolling things back and every I've seen what these things
Speaker 2:look I I just thought the question was not you could ask that question without being bearish on OpenAI. And, like, I look at that as I if I'm an investor in any of the company any of the counterparties to OpenAI
Speaker 1:Yeah.
Speaker 2:I wanna know. Like, how how are you how are you gonna do how are you gonna Let do
Speaker 1:me reformulate this. So if if if the if there is, like, risk of OpenAI not hitting 1,400,000,000,000.0, there's tactics that you could do if you're a hyperscaler who's on the other end. Right? Like like, the outs of the contracts. Maybe you don't build as aggressively if you don't think that the demand's actually gonna materialize even though you have a contract.
Speaker 1:There's a bunch of strategies that you could do if you're running those companies. What's less clear to me is what are you talking to folks in your portfolio about? What what advice do you have for founders where you say, hey. The future's a little hard to predict what how comp how this compute build out. There might be this big glut.
Speaker 1:Like, you don't wanna get caught in front of the steamroller. You wanna be drafting and riding the big wave and catching the wave at the right time. How do you how are you thinking about that with founders in the portfolio? Because we've interviewed some folks that you've backed. Legora came on.
Speaker 1:It's incredible. The the the the growth rates are so fast.
Speaker 7:Yeah. Yeah. Look. I I don't believe there's gonna be any time kind of material glut. I think there's just too much happening.
Speaker 7:I mean, look at what Yeah. Poolside's doing. Right? Building out their own data center. This was, like, a plan from the day zero.
Speaker 7:You know, a lot of people think those guys just like got caught off guard. Oh, we need to go build this to get Yeah. You know, all over our own destiny. That's totally not true. Like, they have seen this coming for a long time.
Speaker 7:I think, you know, if you're at the model layer, the smartest thing to do is to have control over the full stack. And the reason I believe that's to be that's true is because people, there's gonna be so much demand, and it's so hard to get access to not just the chips, but the power that you need. Like, I am just not worried that we're gonna run into any kind of a glut. And at the application layer, what we're telling people generally is like, I know this is such a VC cliche. I don't care about margins at all right now.
Speaker 7:Like I care about winning in the market. Let's give
Speaker 2:it up for not caring.
Speaker 1:Yeah. Let's give it up for growth, for burn,
Speaker 7:Let's give it up for aggression. Know. I never I never I never thought I would be that person, but I I I genuinely believe that. I think like, it's very clear that we're at like day zero in figuring out Yeah. How to wield these super powerful instruments.
Speaker 7:The cost of inference are gonna come way down. We're getting better at building more efficient models for like task specific models. I think what you need to do is figure out like what is the UX? Like how are humans going to get work done? What does that look like?
Speaker 2:Mhmm.
Speaker 7:How can you build some kind of defensibility in your product? And I think we're seeing a lot of king making happening across the market in different categories where companies are just getting out in front of the market, raising a bunch of money, building their brand, and being seen as the winner even if the product is really early. And, you know, I know there's a lot of folks that are talking about the recklessness that's happening across VC. And on the one hand, get it. But on the other hand, I think in a market shift like this, you've got to play to win.
Speaker 7:And like, you know, you some of these are gonna flame out. But if you get one or two that really makes it, all of your crazy wild bets are gonna gonna have paid off.
Speaker 2:Yeah. The CEO the CEO of Fireworks AI came on the show last week and and said she was worried some people were gonna scale into bankruptcy.
Speaker 1:Scaling into bankruptcy was the quote, which is hilarious.
Speaker 2:It's probably a skill issue.
Speaker 1:Yeah. I mean, yeah, let's keep it focused on on on the advice for founders. I've been interested in this in this question of, like, in the previous era of Silicon Valley, like, the the the founders the founder archetype that you were looking for was somebody who could who could find a problem, build a solution, learn to code, and it feels like increasingly one of the skills maybe not the only skill, but one of the skills that we need to add to the portfolio of great founders is dealmaker, is deal guy, be deal girl, like, becoming really good at aligning incentives. We see this with Sam Altman, but we see this up and down the stack. Are you seeing that in your portfolio in the founders that are seeing breakout success, just the ability for them to walk into a much bigger company or much bigger, you know, financier and marshal capital or resources, get people around the table, and get everyone to say yes to whatever the plan is.
Speaker 7:I mean, yes to some degree. I think it depends on the category. I think go to market muscle and just sheer velocity matters a lot. And so from that perspective, the folks that can go out and start closing customers and like the storytelling behind it and the trust building, I think is super important. Mhmm.
Speaker 7:For most people above the model layer, I don't know that like deal making in the at least in the Altman sense of like, hey, we have to go secure data centers and chips and and, like, control our own supply chain. I think that's less important for most people. But I will tell you, we are more likely to back, like, really young, just insanely like high velocity founders that we think will like run through walls to win that just have such dogged determination Mhmm. And and and are willing to go at it so hard that they might not even have, the founder market fit that we we used to look for pretty consistently in founders. And we're seeing these crazy, you know, 20 founders who have never really had a job before that are building these companies that are scaling like crazy just because they're in at the right time.
Speaker 7:They can tell the right story and they just they just ship so fast.
Speaker 1:Yeah. And it's always Howard,
Speaker 2:you guys I've always enjoyed Redpoint's reporting on on SaaS specifically and and multiples and at at times, a disconnect between multiples in in the public markets versus the private markets. Yep. How are you, how are you what what's your view on that with with, like, how much do you guys read into, you know, traditional SaaS companies in the public markets being I think it's like the, average right now is like a seven x revenue multiple versus private markets. Obviously, if you're an AI native company, you're getting, you know, some some, you know, massive multiple on top of that. Probably like 40.
Speaker 2:Does that does that is that is that nerve racking? Is that, does that
Speaker 7:But make I mean, I'm on the early side, and so we're not looking at multiples as much as perhaps the growth folks that are coming in at later rounds. But I think the the really key difference here is most of the companies that we're investing in are doing, like, direct labor replacement. Right? This is no longer just, like, SaaS software that's gonna make people x times more efficient. It's you know, replacing an entire chunk of your workforce.
Speaker 7:And I think that those companies are able to grow so much more quickly because of the value that they can capture that that, like, the velocity of the businesses ends up priced into the rounds. And they're just growing, to your earlier point, so much faster than a traditional SaaS company. I think that's justified. We try to be, like, very first principle thinkers and just in terms of, like, how big can this business get and how quickly do we think it can get there. And, you know, we value companies based on that, not based on what's happening right now in the private markets with, like, legacy SaaS companies.
Speaker 1:We have to ask. Redpoint has been accused of manning the anonymous x account, r for rock. Is it true? Are you behind are you personally behind the r for rock account?
Speaker 7:Maybe we're all r for rock. No. Yeah. You're not. Not somebody at Redpoint.
Speaker 7:I we would It's
Speaker 1:not someone at Redpoint.
Speaker 7:We would not take kindly to that. But, yeah, we're aware of of the, the conspiracy theories.
Speaker 2:Yeah. I I would I would appreciate I think it's common to
Speaker 1:be accused of having that much insight into the whole market. I I I It could
Speaker 2:be it could be it could be a shared account. Right? It's like a handful a handful of partners.
Speaker 7:It's it's gotta be junior folks. It has to be associates because nobody senior would
Speaker 1:be Yeah.
Speaker 7:That stupid and reckless. And I will tell you one thing that has shocked me getting into venture from, know, the the builder side is like, there's almost perfect information spread. Like, everybody knows everything instantaneously. It's absolutely wild. I don't I don't know if we've ever been surprised by something that ended up on or for Rock, but we have been quite irritated when things have been leaked when they weren't supposed to be.
Speaker 1:Yeah. It it does feel like it's a little bit of a hassle if you're a founder and you're planning and planning to do, like, a specific PR push. But, also, there's this weird dynamic where it kind of takes some of the energy or some of the leverage out of the existing scoopers in the tech ecosystem. Yeah. Because they're they're they're losing scoops to r for rock, then they don't have as much, cache or power, soft power
Speaker 2:in the ecosystem. It might inspire some media companies to try to basically plant spies. Maybe. Like, plant plant a spy at at each tier one, and then you can just leak every single round.
Speaker 1:Yes. I I don't know. That might be that might be against, like, Probably extremely legal. I think
Speaker 7:it'd be better off, like, hosting a party and, know,
Speaker 1:just, like,
Speaker 7:punch or whatever.
Speaker 1:Yeah. Yeah. Just just grab some drinks with some people, get them to open up, and, you'll have some sleep in no time.
Speaker 7:Something else left. Yeah.
Speaker 1:Yeah. Well, thank you so much for hopping on the show. Yeah. Great.
Speaker 2:This was fantastic.
Speaker 1:We'd love to talk to you again soon.
Speaker 2:And, yeah. We'll talk soon.
Speaker 1:Have a great Monday.
Speaker 2:Wait. Wait. Before you leave, before you leave, you haven't hung up yet. What are are you in, like, a tower in a castle? Like, what what is
Speaker 1:Yeah. What what is Woah. This is awesome. What is this? This My
Speaker 7:home office.
Speaker 1:Home office.
Speaker 7:It is not a turret, though. I people think it's a yurt or a turret. It is it is neither.
Speaker 1:It is just the corner of a castle. I just live in a castle. Am a capitalist. I've done very well. And, you know And I I
Speaker 2:castle. I live in It's somewhat of an it's somewhat of a dome, so it makes sense to call a great sort
Speaker 1:of respect. We also we also record the show from a dome, the ultra dome.
Speaker 7:There you go. I did this in reference to you guys. Yes. Yes. That makes perfect for this moment.
Speaker 2:Fantastic. Amazing. Well, so so great to It's so great to hang up with that. The background. Yeah.
Speaker 2:Come back on again soon.
Speaker 1:We'll talk to you soon. Happy to hear.
Speaker 7:Seeing you guys.
Speaker 3:Bye. Take
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Speaker 1:Benjamin Witty from Recess coming in the studio. How you doing? Good to see you.
Speaker 2:Happening. Welcome to the show. We don't have audio from your side. Let's check-in with the production team.
Speaker 1:Let's check-in.
Speaker 2:Could be our fault.
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Speaker 1:How'd you sleep last night? You sleep well?
Speaker 9:I slept well, but I could sleep better with an eight Sleep.
Speaker 2:That's right. Thank you. There we go. Great to great to finally meet. We we, share, the day job guide.
Speaker 1:Fun fact. This is our second podcast together. Your first time on TVPN. Didn't we do a podcast together like ten years ago?
Speaker 9:Yes. But I forgot what but what
Speaker 1:It was like Lucy. Like me and David were in town and hung out with you. We did like five episodes of this thing. It was a total flop.
Speaker 2:That's right. No way.
Speaker 1:But I was was really to the neo corporate media
Speaker 2:didn't work. But yes, should Great great great to hang on the show. Why don't why don't you give a quick intro on kind of yourself and the company if anybody's been living under living under a rock?
Speaker 9:Yes. So, you know, I'll start myself. So I didn't come from the, you know, food or beverage industry. I actually started my career in Silicon Valley. So I was in San Francisco in the early stage tech world from 2010 to 2016.
Speaker 9:But I kinda knew I wanted to start a company in the consumer space instead of went out of my own in around that time and kinda was led to the, you know, origin of recess. And kinda my observation in that 2016 era was, you know, we were entering this new period in history driven by technology and was gonna leave us all kinda stressed out and anxious.
Speaker 1:Yep.
Speaker 9:And so I had this thesis that kinda led to to recess that, you know, in the future that we were entering, kinda people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax. And I kinda saw the, you know, the rise of these new types of functional ingredients such as, you know, magnesium, adaptogenic herbs, CBD at the time, you know, even THC. And kinda my conclusion was that they were gonna kinda, you know, serve as the inputs into this fundamentally new space, you know, of, you know, products that would emerge, you know, on the other side of kinda caffeinated beverages and alcohol focused on relaxation. And, you know, I didn't know a sink. And so the kind of the light bulb moment was like Red Bull for relaxation.
Speaker 9:But I took a much and a more expansive view of the space that would emerge in the different kind of subcategories that, you know, with the I could create a brand that could ultimately kind of extend into. And so I
Speaker 2:remember hearing you on a podcast back. It must have been in the kind of twenty teen 2018 era where you talked about how Red Bull I believe you talked about how Red Bull like distinctly, they didn't necessarily wanna make a drink that just tasted the best, but they wanted it to have like this specifical, sorry, specific flavor that just was like like extremely identifiable and like made you feel something and how you leverage that with with Recess, which I think you you did well from the very beginning. But, yeah, I feel like, you know, looking back, it's interesting that there were so many there were so many brands created during that that that initial boom, whatever, 2016 to 2020, kind of I look as like the heyday when you had everyone was like reading LeanLux and 2PM, you know, and and there was just like this this so much investment in the category. And to me, Recess stands out because it's the only the only brand in that era that like was kind of riding the same wave but didn't look like everything else at the Yeah. And yeah, just obviously yeah.
Speaker 2:Like even even the fact that like whatever pop up you did in in New York, during that era, like, still sticks out in my mind when I can't remember a single I can't remember any of the other kind of marketing that was happening during that period.
Speaker 1:Yeah. The Instagram sticks out to me like crazy. I remember the the the Instagram. Did that ever grow? Like, is that, like, the corner of the cornerstone of, like, the community?
Speaker 1:Is is that still because I remember, like, the the Instagram just popped up so quickly and grew so fast. Was was there Yeah. Like, did that turn into, a whole flywheel of the business?
Speaker 9:So what the twist in the business was, like, our first product line included CBD in it. And so we got off to this, you know, I never thought of the brand as like a CBD brand. I thought I always thought of brand as like a relaxation brand. And we did a lot of, like, I'd say, kinda groundbreaking kinda marketing, you know, activities in that first year in 2019, you from our content strategy, which we can talk more about the pop up in New York, brand collaborations. But what happened was, I saw the writing on the wall that the regulatory clarity for CBD was going to take a lot longer than everyone thought.
Speaker 9:And so I'd never so I basically accelerated the vision of becoming a brand platform and bet on magnesium as this ingredient that we could use that could deliver the same effect, you know, in a fully compliant way, which was this incredible bet. Our recessed mood line, which is what, you know, leverages that ingredient is kinda seeing velocities, you know, on par with poppy. And so that lines, you know, national at Target, Kroger, etcetera, etcetera.
Speaker 2:You were early you were CBD was an interesting category because there was so the growth of the category was so insane that even though you guys were early in terms of like a CBD beverage, I'm sure you just like, I remember you guys
Speaker 1:So noisy. It was
Speaker 2:so noisy. You guys did such a good job marketing that a bunch like, something about CBD is fascinating because people just think like you make a drink and sell it and it's just gonna work and Yeah. You just put it on a shelf and people buy it. And obviously, like, the actual logistics of scaling a beverage brand are so much harder than that that, like, so so few of the companies ever ever really, you know, even crack, a couple million of of revenue. But but, yeah, the timing on magnesium as well.
Speaker 2:I thought I was supplementing magnesium, like, or in that sort of 2016
Speaker 1:Mhmm.
Speaker 2:Beyond era. And then it was only, like, a few years ago that people started talking and saying, like, hey, did you know that the average, like, you know, seventy percent of Americans are deficient in magnesium? And to me, that had been just like, I I knew that because of our food system and there's way less magnesium content and and even vegetables and stuff today than there were, you know, decades ago. But it feels like nice and early to that and that's an like a hero ingredient that was quite a bit more durable in my opinion than this like initial CBD boom. And I don't you know, I could call it a bust maybe because there's I know a lot of people that have built brands, saw great revenue growth, and then didn't figure out a way to kind of, like, center themselves on a more durable kinda hero ingredient.
Speaker 9:Yeah. I mean, I just just to double click on that a bit, like, I think beyond the market the the smart marketing that we did in the early days that were about to, you know, reaccelerate in a big way. I think I had the right kind of category view of the how the space was gonna emerge and, you know, just a simple I inside, I'd always say, like, I've never heard anyone call Red Bull a caffeine company. It was an energy company just like we weren't a CBD company or not a magnesium company or or not even a mocktail company. I mean, the other amazing bet we made was on the RTD mocktail opportunity.
Speaker 9:And so we launched, you mocktail line in 2023. Kind of what I saw there was, you know, when the when kind of athletic brewing was recatalyzing the non alk beer space, you know, my observation was, like, beer was flat to declining, right, in alcohol. So it's kind of kind of fighting for share of a shrinking pie. What was growing, it was RTD cocktails and hard seltzer. So my thesis was there's gonna be like an RTD mocktail category, you know, on the other side of RT cocktails just like, you know, non op beer exist on the other side of alcoholic beer.
Speaker 9:And
Speaker 2:Yeah. You wanna bet on a feeling that humans are gonna want for a long period of time Right. Versus a single ingredient. Right?
Speaker 9:Yes. And so I just on one framework I had is stimulation, intoxication, relaxation. That this really represented the emergence of this fundamentally new kind of value proposition kind of in feeling that people would be seeking. And, you know, when I had the light bulb moment for, you know, what became recess, you know, Red Bull was started in 1987. Right?
Speaker 9:Like, you know, Red Bull, Monster, Starbucks all wrote this kind of secular tailwind of kind of consumers seeking stimulation. And again, my thesis was in the future that we were entering, you know, people would be basically figuring how to relax in the crazy world that we were living in. And that, you know, all these trends whether it's, you know, focus on alcohol moderation, stress relief, enhancing sleep, you know, focus are all kind of connected and a part of kind of consumers prioritizing their overall kind of mental well-being. And that's kind of why the Recess platform strategy has been kind of successful. And I think there's a lot more kind of we can do, you know, beyond this in the in the in the next phase of the business.
Speaker 2:What do you how how do you think about marketing and brand building going forward? It feel I I I don't know if I have this correct, but it feels like over the over the last few years, the focus has been, like, distribution, getting the right assortment of products, like, laying the foundation so that you are in a have the ability to scale. Because one of the challenges as a beverage brand, if you're doing people like to buy beverages in stores. So if you're doing, like, viral Internet marketing, that doesn't necessarily translate to the sales growth that you want unless you have the distribution. And, you know, my the the grocery store closest to my house has like recess.
Speaker 2:So I'll I'll I'll I'll grab some from there. But I'm I'm assuming it took a while to get the kind of saturation from a distribution standpoint so that you guys can have the confidence to, like, do a big celebrity partnership or do a TV campaign and start doing these things that, just are kind of a waste of money unless you have that distribution.
Speaker 9:That's right. Like I think that's one actually the best parts of the Recess story as I've been kinda transitioning the business beyond the original CBD line with the additional Mood and Mocktails. I've been focused you know, basic performance marketing to drive the Amazon business, and we're still 50% e com. And then we just get so much organic kind of word-of-mouth, you know, via, you know, basically testimonials. So we probably get, know, a 100 to a 150 organic tag post a day across, you know, Instagram and TikTok.
Speaker 9:Primarily women, which is our kind of core kind of consumer spreading, you know, the the the word on recess and that is super powerful. And so I look at this round, this next phase is fundamentally about, you know, scaling the team, scaling distribution and, you know, really re catalyzing brand marketing. Because, you know, John, what are you guys alluding to earlier, you know, the kind of groundbreaking content, the pop up stuff like that, really have turned off. And again, if you compare, you know, what we've where we are, know, compared to where Poppy, Liquid Death, brands like that, we've done really no levers on brand marketing yet. And so you're gonna start to see, you know, a lot more of that in this next phase.
Speaker 9:And, you know, just to talk about Red Bull a little bit, like, I always kinda thought of Red Bull as, like, a media company that monetizes through selling cans. Yep. And I do think beverages is very kinda underappreciated category, you know, especially it has some similarities to even, you know, tech companies. Like, when I, you know, when I had the idea for recess, discovered this amazing fact, which is, you know, Monster Energy was the best performing stock of the past twenty years. Right?
Speaker 9:It was a 7,000,000,000
Speaker 1:did incredibly well too. It's happened, like, four times in beverage and and energy specifically. Like, tons of great outcomes. Yeah.
Speaker 9:Exactly. And so it does have this, like, you know, if you bet on especially if you're creating a category or writing, like, a very large secular tailwind, like, as this compounding, you know, effect to it. And, you know, obviously, brand marketing plays a a critical role in that. And I think there's some, you know, a lot of new, you know, opportunities to do stuff in in in news new ways in this era with, you know, the role of, you know, Amazon and digital experiences even. I think there's a lot of cool stuff we can do in next phase of recess.
Speaker 9:So I'm excited to, you know, turn that back on.
Speaker 2:Yep. Yep. And you got a I don't know I don't know how much you you still work with day job, but if, if you sat down for an hour, brainstorm with with Ryan and Spencer, you could probably come up with, like, at least a 100 ideas that would
Speaker 9:Yeah.
Speaker 2:That would unlock that that next stage of growth.
Speaker 9:Yeah. They'll be back in the mix for sure.
Speaker 2:Well We gotta talk about the fundraise. We got a gong here that we would love to to hit on your behalf.
Speaker 4:How'd the
Speaker 2:round come together? Who who participated?
Speaker 9:Yeah. So the round was led by Kavu. It's a $30,000,000 series b. Kavu is no wonder what
Speaker 2:Voice drowned out by the gong. You said Scott used to you were getting into Kavu.
Speaker 9:Yeah. So Kavu was the main investor in Poppy, which they just sold to Pepsi for about $2,000,000,000 earlier this year
Speaker 1:and kinda where their beverage at. Right?
Speaker 9:Yep. Yep.
Speaker 1:He's a legend. He he was, like, top guy at vitaminwater, sold that to Coke for 4,000,000,000. Like, truly the crowning achievement of the CPG beverage industry at at the time and still today, one of the greatest bev deals ever. And then, he's been on Shark Tank. He's just like a legendary consumer packaged goods investor.
Speaker 9:Yeah.
Speaker 2:Quick lightning round of questions. I'm assuming that Kavu is not underwriting this, underwriting the business from with any type of AI lens. But are you getting are you getting any leverage out of AI? I would say like we we at this show, unfortunately get very little. Would say it helps with with some research and we build software internally that's that's helpful.
Speaker 2:But I'm curious if, the the chat was wondering if if it's been, help help move the needle at all.
Speaker 5:Mhmm.
Speaker 9:Not not yet, but I'm starting to have conversations with different groups kind of building kind of AI driven kind of content production. I'm very excited to figure out how we can leverage that. I mean, you have to pump out a lot of a lot of content, you know, running a beverage business or any consumer brand today.
Speaker 1:Yeah.
Speaker 9:And I think there's an interesting way for us to use it in a kind of a tongue in cheek way. I mean, the whole Recess story and antidote to modern times is kind of, you know, was in response to the implications that AI would have. Right?
Speaker 7:And I
Speaker 9:think so it's to, like, incorporate it into the content strategy. You know,
Speaker 1:I you could do something really fun with AI customer service where Yeah. The AI like, you need some customers or just people are gonna have questions about the product generally. There's gonna be a lot of back and forth. But you could probably do some crazy stuff with, like, fine tuning the LLM, bringing a unique brand voice in and kind of, like, go that just feels like recess stage.
Speaker 2:Also, I I can imagine, like, I I I would imagine a lot of the your distributor relationships today are still like somebody has to call somebody on another line, and a grocery store has to call the distributor when they're you know, and it's still like kind of analog, I can imagine some opportunities there. Another question from the chat. They're asking about the potential like, are you excited about drone deliveries? I can imagine, like, beverages, something that people like, when people wanna drink, they Yeah. You've built a big ecom business, but when people wanna drink, they don't typically think, let me go on my computer and order a drink.
Speaker 2:And we saw there was, I don't know if this company is still around, but there was a company that was started in the same era as Recess that Yeah. Tried to go really all in on on ecom. And I I I don't I think they they partner with Coke at some point and I don't I don't know that they're still around. Yeah.
Speaker 9:Was Todrat. Name's escaping.
Speaker 1:Isn't it lemon something?
Speaker 2:Lemon perfect. No. Not lemon perfect. Lemon perfect was like
Speaker 1:When there's lemon. 30 lemon. 30 lemon. Yeah. They had text messaging.
Speaker 1:They were like insanely good at e commerce.
Speaker 2:But, yeah, theoretically, if you can just, you know, say, like, I want a six pack of recess mood and hit a button on your phone and a drone just drops it into your backyard, that should increase velocity. But I'm curious.
Speaker 3:I mean,
Speaker 9:a big believer in just omnichannel. I mean, Instacart's a huge channel for us. GoPuff, DoorDash increasingly, kinda anywhere where kinda consumer products are sold, you know, we want to be. And so, you know, when that becomes a real a real channel, I think we'll we'll explore it for sure, but it's not it's not something I spend a huge amount of time thinking about.
Speaker 2:Yeah. Gotta stay focused. Awesome.
Speaker 9:Yeah. Walmart Walmart and Costco next before
Speaker 1:Yeah. Yeah. I mean, you get those and it's just like, okay. You've kind of won and then the, like, you you'll just be in the place to take advantage of whatever thing comes next. So Yeah.
Speaker 1:Yeah. Lots of opportunity. Thank you so much for stopping by the show.
Speaker 2:Yeah. Great great time to meet.
Speaker 3:Thank you for coming.
Speaker 1:We'll talk
Speaker 2:to you soon. Congrats to the team as well. Cheers.
Speaker 1:Have a great rest of your day. Let me tell you about public.com, investing for those that take it seriously. Multi asset investing, industry yields, trusted by millions. Let's go
Speaker 2:through Palantir speaking of stocks, Palantir earnings, Palantir according to CNBC tops estimates boost fourth quarter guidance on AI adoption. They issued a strong guidance, attributing growth to adoption of its AI. Government sales, have been central to Palantir's Ascent, grew 52% from a year ago. And, again, stock is not up a ton after hours, but we can dig into this more probably tomorrow. Did we want to try to do Ilya.
Speaker 1:Yeah. We gotta go through a little bit of this.
Speaker 2:We gotta do a little bit of a a
Speaker 1:I mean, we're just gonna go through sort of, like, random segments, I guess. But, basically, a the Ilya Sitzkiewer, who I dressed up as coincidentally, for Halloween, last Friday, he's the cofounder of OpenAI. He they have shared new details on the internal conflicts that led Sam led to Sam Altman's initial firing, including a memo alleging that Altman exhibited a consistent pattern of lying. There's a there's a deposition transcript that is going around that is now public from the Ilia deposition. Toucan kind of summarizes here.
Speaker 1:Ilia plotted for over a year with Mira to remove Sam. Dario wanted Greg Brockman fired and himself in charge of all research. That's Dario Amade, I believe, from, Anthropic. Mira Moradi told Ilya, that Sam Altman, pitted her against Daniela Amade. Ilya wrote a 52 page memo to get Sam fired in a separate doc on Greg.
Speaker 1:And there are some there are some clips here that are, absolutely crazy. The witness I believe the witness is Ilya. Correct? Correct. And the witness says, one thing I can say is that the process was rushed.
Speaker 1:And the attorney says, I was rushed. And Ilya says, I think it was rushed because the board was inexperienced. And the attorney asks, inexperienced in what? And Ilya says, in board matters.
Speaker 2:We should let's go through let's go through a little table reading here.
Speaker 1:Let's go do some other stuff.
Speaker 2:I'm on page 17 Okay. Of the deposition. Yep. Tyler is gonna be playing the attorney Agnolucci, and I will be attorney Molo.
Speaker 1:And what's the number in the top right?
Speaker 2:+1 68.
Speaker 1:Okay. So let's pull this up.
Speaker 2:Tyler, kick it off.
Speaker 1:You're the attorney Agnolucci? Correct. Okay. Okay. And I'm Ilya?
Speaker 2:You're Ilya. I don't even know if you're gonna be And you're Molo? I'm Molo.
Speaker 1:Okay. Let's go. But first, let me tell you about adquick.com, out of home advertising, easy measurable, significant benefits of out of home advertising. Only ad quick combines technology, out of home expertise, and data to enable efficiency in this ad buying across the globe. Okay.
Speaker 1:Tyler, go.
Speaker 4:Okay. Jordy, think you should actually start because it starts a little bit down the page. So start at line five.
Speaker 2:Okay. Line five. It certainly does matter how much.
Speaker 1:Keep
Speaker 2:going. What do you think the value of your equity at OpenAI was at the time Sam Altman was fired? And I have the same objection and I'm instructing him not to
Speaker 4:put a number on it.
Speaker 2:What did you think the value was? You can answer the question that he is
Speaker 4:saying is relevant here, which is whether you thought you were going to lose value.
Speaker 2:It isn't my question. I have the right to ask a question. You can object to the question. My question is what did you think the value of your equity in OpenAI was at the time of Sam Altman's firing? And I'm instructing the witness not to answer as to the money money value.
Speaker 2:Are you going to not answer? I mean
Speaker 1:Wait. Wait. What is this?
Speaker 4:John, that's you.
Speaker 1:Oh, I I'm answering. Okay. So, so you say, are you go are you not
Speaker 2:Are gonna are you are you going to not answer?
Speaker 1:I mean, I have to obey my attorney.
Speaker 2:Okay. So you're not going to answer.
Speaker 1:I'll do what my attorney tells me to.
Speaker 2:Okay. Were you concerned about possibly losing your equity at the time that I withdraw the question.
Speaker 1:Eventually. Keep going.
Speaker 2:Eventually, the board agreed to resign and restore Sam Altman, didn't it? Yes. When was that? Later in the week. And why did they do that?
Speaker 1:Tyler? Object to four. There was a question of why the board did it. Correct. Or is this a question of why I supported this?
Speaker 2:First, I'm asking you why did the board decide to resign and reinstate Sam Altman?
Speaker 1:Right now, my view is that with very few exceptions, most likely a person who is going to be in charge is going to be very good with the way of power, and it will be a lot like choosing between different politicians.
Speaker 2:The person in charge of what? AGI. And why do
Speaker 4:you say that? Objective form.
Speaker 1:That's how the world seems to work. I think it's very I think it's not impossible, but I think it's very hard for someone who would be described as a saint to make it. I think it's worth trying. I just think it's it's like choosing between different politicians. Who is going to be the head of state?
Speaker 2:Looking back at the process that that preceded the removal of Sam and Greg from the board, What's your assessment of that process? Objection. Vague.
Speaker 1:Calls for speculation.
Speaker 4:Okay. That that's the end
Speaker 1:of that scene, I think.
Speaker 2:End scene.
Speaker 1:We we need we we should have rehearsed this. Okay.
Speaker 2:Let's This is a this is a table reading. We're we're we're riffing it out.
Speaker 1:Okay. Should we go, to 26? Because we already did the board as an experience. Okay. Let's go to 26.
Speaker 1:Where's 26? 26 starts the witness. At least at one point, I expressed support.
Speaker 2:After Sam was removed, do you recall Helen Toner telling employees that allowing the company to be destroyed would be consistent with the mission?
Speaker 1:I do recall.
Speaker 2:And what was the context of that comment?
Speaker 1:The executives. It was a meeting
Speaker 2:why we have a
Speaker 1:We we we need to be southern. Every every law
Speaker 2:is southern.
Speaker 1:When it's in a southern twang. The executives. It was a meeting with the board members and the executive team. The executives told the board that if Sam does not return, then OpenAI will be destroyed, and that's inconsistent with OpenAI's mission. And Helen Toner said something to the effect of that it is consistent, but I think she said it even more directly than that.
Speaker 2:More directly than you've related here?
Speaker 1:Yes.
Speaker 2:Okay. And what was your reaction to that?
Speaker 1:I don't remember my reaction at the time. Did you Did
Speaker 2:you think that would be consistent with the mission?
Speaker 1:Object to form.
Speaker 2:Object to form.
Speaker 1:Object to form. I could imagine hypothetical extreme circumstances. That answer would be yes. But at the but at that point in time, the answer was definitely no. For me, it would not be inconsistent with OpenAI's mission to destroy the the the the business.
Speaker 1:Is that what he's saying? I'm kind of I'm kind of lost on what his actual stance here is. What is he saying? He says, do you think that was, so what was the original criticism?
Speaker 2:Hold on. Let's go to 28.
Speaker 1:Do do you know, Tyler? Do know what he's saying?
Speaker 2:Is he
Speaker 1:pro destroying? So the executives They were just asking what the board members thought. Okay. The the executives told the board that if Sam does not return, then OpenAI will be destroyed, and that's inconsistent with OpenAI's mission. And Helen Toner said something to the effect of that it is consistent, but I think she said it even more directly than that.
Speaker 2:So Yeah. So that it
Speaker 4:it doesn't have anything to with Ilya's position on whether the company being destroyed is consistent with the with the mission.
Speaker 2:And you say here there's reason to believe that Sam was removed from YC in the past for reasons similar to the one that you identify in this document.
Speaker 1:Well, who else has summarized this? I I I'm completely lost on the actual deposition. Let's go back to the timeline. Typed female has a, screenshot here. Says this is some social network type stuff.
Speaker 2:This movie the movie is gonna be incredible.
Speaker 1:We can we can go back into reading these because they're a little bit more, digestible. And what was your response to that? Ilya says, I was very unhappy about it. And the question for the why? Why?
Speaker 1:Why? Because I did not I really did not want OpenAI to merge with Anthropic.
Speaker 2:Why not? I just
Speaker 1:didn't want to. What? That doesn't that's actually not this is creating more questions than answers. GDP calls it the worst coup ever planned for a year without any PR strategy. As they say, if you go for the king, better get his head.
Speaker 1:First and foremost, skill that any leader needs is to be able to survive. No feel good management book will tell you that. Ilya is a great scientist and great human being, but not a practical leader. Ilya didn't have the skill to plot and survive and come out on top. Sama is the right leader from OpenAI employee perspective.
Speaker 1:You couldn't go this big without Sama, or I guess he's it it's so bad in so many ways, says Rune. I really hope one day Sam gets the credit he deserves. So they're saying that, like, if you can't pull off the coup, you probably can't pull off the act two of the company. And so it's that's a pretty reasonable, that's a pretty reasonable, stance. What else?
Speaker 1:We talked about the Amazon deal. We didn't get a chance to talk about wander, find your happy place, book a wander with Inspire Reviews, Hotel Great Amendes, Do your best. Talk to your cleaning in twenty four seven. Concierge service is a vacation home, but better. I like this post from Buck.
Speaker 1:We almost kicked off the show with it. OpenAI, the compute purchase order press release company?
Speaker 2:I think I think startups should start just announcing their their planned cloud spend. Just you know, startups always need like, the more the more times you can launch, the better.
Speaker 1:Definitely. So you Go through YC, get a $100,000 in credits, and then project out spend spend 10,000 of those credits the first month, then spend 20,000 the next month, then spend 40,000 the next month, you're almost out of credits. You've spent 90,000 of your 100,000 credits. Right? But you have exponential growth in your credit spending.
Speaker 1:You project that out a decade, and then you announce that based on the trend, we will be spending a quadrillion dollars with AWS if the trend continues. And then just show the data. Hey. We had 10 one month, 20 the next month, 40 k in the third month. Do the math, folks.
Speaker 1:It's exponential growth. That is a good hack. I have another hack, because, Sampar is in the timeline. Put the timeline in turmoil over whether he is a $40,000,000 Gigachad or a popper at 17,000,000. That's the debate, basically.
Speaker 1:Right? Yeah. Someone he he has said that he sold the hustle for 40,000,000. Someone quote tweeted him and said, it was actually only 17,000,000, and everyone was debating the nature of his acquisition. I thought it'd be interesting to to dive into, some of the claims.
Speaker 1:I don't really care that much about whether it's 17 or 40. Both are big numbers. Congrats to him. The interesting thing is just the nature of Aqua hires, acquisitions, how these different things can play out and how funky they can get. And, you know, he's in a unique position because he kind of has to talk about his business credentials be for his business.
Speaker 1:Right? Yeah. But, but the more the more interesting thing is, like, if you're negotiating with to sell a business, what are all the levers you can pull? Because there's a ton of them. So the headline number I
Speaker 2:believe was Strangely, like, the hustle acquisition was kinda it was like two deals rolled into one. There's like the core hustle.
Speaker 1:I guess it's seven deals. There's so many deals.
Speaker 2:Well, yeah. There's there's the core hustle business. There's the podcast
Speaker 1:Yep.
Speaker 2:Which was
Speaker 1:My first million.
Speaker 2:Imagine a decent chunk of the revenue. Yep. Then there's the talent. Like, the the podcast is not really valuable without the talent. Totally.
Speaker 2:So there's a talent deal. Yep. And I think he was just adding up, like, adding up a bunch of those numbers Yeah. Rolling them into one Yeah. And talking about that headline number.
Speaker 2:Yeah. And he broke it all down and explained it.
Speaker 1:Yeah. There's no there's no real, like, established way to calculate like, there's no real norms around how headline numbers and acquisitions are accounted for. Like, if you get acquired for, you know, a $100,000,000, like, half of it's on an earnout and you don't hit that earnout, like, you probably should go back and say, like, hey, guys. I know I sold my company for a 100,000,000,000 a 100,000,000, but it's actually it was only 50,000,000 because we didn't hit the earnout or or vice versa. And what it feels like happened was he sold the company for 17 but grew my first million so much that he kept making a lot of money from it.
Speaker 1:So the thing that he built wound up generating 10,000,000.
Speaker 2:Getting a lot of stock.
Speaker 1:And the stock went way up.
Speaker 2:He was counting some of the appreciation of that stock Yep. To get to the headline number. And I can yeah. He he has he created a podcast that is entirely focused on talking about wealth. Exactly.
Speaker 2:So I think you got
Speaker 1:Oh, yeah. The Hampton
Speaker 2:Yeah. He got a little carried away.
Speaker 1:The Hampton Show. Yeah. You have to you have to show the number. It is I mean, it's like headline grabbing. Like, if you want to go viral, especially on, like, YouTube, saying, like, I sold my company.
Speaker 1:There there's this guy whose, like, whole shtick is he sold this company for or he's, like, a $100,000,000 entrepreneur. Alex Hermozzi is, like, really big into, like, the $100,000,000 branding. I think he has, like, a patent on it or a trademark on 100,000,000 just because, like, that's a round number. And so he he will throw out, I have a $100,000,000. I sold my companies for a $100,000,000 collectively.
Speaker 1:Have a $100,000,000 this or that. And and that really it really works to get clicks. Like, it really works to get attention. Yep. If you wanna sell your company for 40,000,000, 17,000,000, I have a hack for you.
Speaker 1:So this is what you do. You oh, Tyler's Tyler's locked in. He's ready. This is this is the number one resume builder right here. Okay.
Speaker 2:So Tyler's not
Speaker 1:Here's what you do.
Speaker 2:Just listening. He's studying.
Speaker 1:You you you work maybe at some sort of podcast or something. You get together, like, $5,000 or something. Then you lever up to get to, like you need to get to, like, $400,000, I think. Once you get to, like, $400,000 in in in in debt, it doesn't really matter. You go and you sell your company, but you don't sell it.
Speaker 1:If you sell it for USD, the value of your bank account is only 400,000. And that's not gonna be like, oh, turning heads. So what you have to do is you have to sell you have to you know where I'm going with this? You gotta sell your company in a different currency in a different currency.
Speaker 2:Maybe, like, Guyanese dollar.
Speaker 1:Yes. The Guyanese dollar. So the Guyanese dollar trades at 210 Guyanese dollars to 1 US dollar. So if you have $400,000, US dollars, if you've created $400,000 of assets here and you can sell that in Guyanese dollars
Speaker 2:It's an amazing multiple.
Speaker 1:So 400 times two ten is, it's $84,000,000 in Guyanese dollars. So $400,000 in cash in US dollars is 84,000,000 in Guyanese dollars. And so what you do is you is you build your business to the point where you can sell it for 400 maybe with a bunch of leverage that'll have to get paid out. But Yep. You you sell it, the press release, we sold it for $84,000,000, and then you don't specify.
Speaker 1:No.
Speaker 2:But you can put in the fine print at the bottom of the press release. Super, super fine print.
Speaker 1:Guyanese dollars.
Speaker 2:The transaction occurred Yeah. Using the guai guaian guaianese dollar. Guaianese dollar.
Speaker 1:This is actually just a hack for everything. If you if you wanna become like a
Speaker 2:super guy should start doing this. They should start announcing all their deals in Guyanese.
Speaker 1:Wait. Wait. Wait. Maybe they
Speaker 2:have been this one time.
Speaker 1:What is what is 1.4
Speaker 2:Maybe that was the answer that Sam needed is he's just he
Speaker 1:He's he's pushing up on 300,000,000,000,000 Guyanese dollars.
Speaker 2:Yeah. Maybe maybe he
Speaker 1:should Sam, how is a company with only 14,000,000,000 in US dollars of revenue gonna spend spend 294,000,000,000,000 in Guayanese dollars? 294,000,000,000,000 in Guyanese dollars is his is his liabilities.
Speaker 2:Raghav says Zimbabwean dollars are the real unlock. That's how you get in the quadrillions.
Speaker 1:Yeah. Oh, the the other thing you should be like, oh, how am I gonna pay for how am I gonna pay for 1,400,000,000,000.0? 1,400,000,000,000.0. How am I gonna pay for it? Well, guess what?
Speaker 1:I got 2,900,000,000,000.0 in revenue coming in right now, buddy. Yeah. 2,900,000,000,000.0. Right now, that's my revenue. Right now, dollars.
Speaker 2:Guinee's dollars.
Speaker 1:But OpenAI will cross 3,000,000,000,000 in dollars. 3,000,000,000,000 revenue dollars this year for sure.
Speaker 2:Guinee's.
Speaker 1:70,000,000,000,000 guanese dollars. The guanese dollars great. You can't get on any other pocket. Good alpha because you can go do a press release and just take whatever you whatever you did, whatever you achieved. Maybe you're making 6 figures for the first time in your life.
Speaker 1:Convert it to Guyanese dollars. Now you're making 2,000,000 a year. You know? Oh, oh, you cashed out. You made a million dollars.
Speaker 1:How'd you make your first million? How'd you make your first 210,000,000?
Speaker 2:Startups, I I like to like to, you know, flex how quickly they got to a $100,000,000 run rate. Huge opportunity to get there with the Guinee
Speaker 1:210 times easier Yeah. With the Guinee's dollar.
Speaker 2:We should acquire some Guinee's dollars and just have a have a stack
Speaker 1:We should. We should. Have a The exchange rate will work in your favor. In your favor. Anyway Well There's a bunch of other posts in the timeline.
Speaker 1:We'll have to get to them tomorrow. We're on the road tomorrow, but we're still doing a show 11AM Pacific. We'll see you there. I don't think we'll be doing any guests. We'll see.
Speaker 1:It might be a little bit of a shorter show, but don't worry. We have a bunch of
Speaker 5:A lot
Speaker 2:of time line.
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