Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVPN. It is Thursday, 04/03/2025. We are live from the Temple Of Technology, the fortress of finance, the capital of capital. This show starts now. We have a great show for you today.
Speaker 1:It's a terrible day in the market. Stocks have plunged. The dollar sinks after Trump's tariff blitz. The Nasdaq down 4%. S and P down 3%.
Speaker 1:Dow Industrials plummets 1,300 points. Bad news, but we're gonna take you through it. And it's a little bit of a defense day, a little bit of a manufacturing day. We're calling it America day. America day.
Speaker 2:That was the best word we could find for it.
Speaker 1:We got a bunch of people joining the show. We're gonna kick it off with Chris Power over at Hadrian. He has been beating the drum on American manufacturing. A lot of people thought he was crazy, thought it could never be done. Now he has a pretty sizable advantage.
Speaker 1:It's kinda crazy to watch. So excited to hear him talk about what the tariffs mean for his business, what they mean for other businesses, and break down how he's taking advantage of the new tariff regime. Then we got Deleon and a ton of other, defense investors.
Speaker 2:We got some absolute dogs, John.
Speaker 1:We yeah. We also the the CEO of Plaid's coming on talking about the fundraise that just brought dropped today. And, of course, Scott Wu from Cognition is coming back for his second TBPN appearance.
Speaker 2:This is a guest record for us, John. Think do we have 10?
Speaker 1:I think we have 10. It's all in a hard day's work. JD Vance, chimed in on the tariffs. He says, we need change. He's he has a quote here.
Speaker 1:He went on Fox and Friends. Says a lot of people have gotten rich from American companies moving overseas, but American workers have not gotten rich. And frankly, American companies have not gotten wealthy from increasing growth of foreign competitors manufacturing overseas. And so this is kind of the trade off. Like, I think we'll go through this again and again and again, but, you know, most economists would say that these tariffs are net harmful to humans or, the global economy.
Speaker 1:But, of course, there are always winners and losers within these whenever these rules, like, you know, pencil out. And so, yes, Nike is getting hit really hard. They manufacture abroad. They sell to Americans. They're gonna be be hit particularly hard.
Speaker 1:Yep. But if you've been running a business that's making shoes in America and the only benefit you had was just you'd throw the Made in America logo on there and hope that people bought them, well, today, you have a serious economic advantage. And so you're probably pretty happy and you're a winner. And Trump and JD seem to be saying, you know, that's who we're speaking for. That's who we're representing with these.
Speaker 1:There's also this argument that over the long term, this will be better for America. Maybe this is even better for humanity as a whole. We're gonna hear from various people, hear them out, and see what they have to say. I think you and I were talking about this when we were working out this morning. Just that, you know, it's I'm not entirely black pilled on these.
Speaker 1:I'm also not entirely we're in a golden age. A lot of the timeline seems to be much more split than we are, which is kind of odd. I mean, I feel like I I felt
Speaker 2:like It's one of those things. Nothing is gonna ever be as bad or as good as you think it is.
Speaker 1:Yes. But to to on my point, it's like, I experienced the Studio Ghibli moment very much in tune with the timeline. Like, the timeline was like, this
Speaker 3:is the greatest thing ever and that's what
Speaker 1:I felt. I was like, this is the greatest thing ever. I'm having so much fun. I'm in tune with Yep. And then and then as the as the mood shifted to, like, what is the meaning of this slop?
Speaker 1:Is there are are there negative consequences? I was engaging with that too, and I was and I was Yeah. Interested in those arguments. And I don't know if I agreed with all of them, but I was I was here for it. And with the tariff stuff, I feel a lot more split.
Speaker 1:And and a lot of the hot takes that I've seen, I haven't been like, oh, this is this is my belief. Like, this is now my take.
Speaker 2:It's it's one of those things. Gotta
Speaker 4:go through
Speaker 2:clearly running an an experiment on the economy.
Speaker 3:Yep.
Speaker 2:And we haven't seen the results yet.
Speaker 1:Yep.
Speaker 2:So it's dramatic.
Speaker 1:Yep.
Speaker 2:It's thrilling. It can be scary.
Speaker 1:Yep. But we're gonna
Speaker 4:find out.
Speaker 1:It's the largest drop in the stock market in more than five years.
Speaker 2:Since March of twenty twenty.
Speaker 1:Yeah. Yeah. Since COVID. And at the same time, I remember those drops and they were more significant and more and more scary and crazy in my opinion because there wasn't as much signaling going into them. Yeah.
Speaker 1:Like, this is very much a human decision that could be reversed, whereas COVID was felt like something that couldn't be just, oh, yeah. Actually, we're we're we're changing course, and so the stock market should immediately go up. It it wound up going up really quickly and bouncing back.
Speaker 2:Well, yeah. And the wild thing is the market is the S and P 500 is up 4.3% over the past year.
Speaker 1:Mhmm.
Speaker 2:So we're still
Speaker 1:Over the past twelve months.
Speaker 2:Over the past twelve months.
Speaker 1:But it's down this year, right? This year has not been good so far. Sure. Because we had the Trump pump
Speaker 4:at the end of
Speaker 2:20 It's down 4% over the last six months. Sure. And 7% over the last month, but for the prior twelve months, it's up.
Speaker 1:But just this one move wiped 2,700,000,000,000.0 in market cap off of the Dow Jones and and The US market broadly. And I think that, you know, what JD is trying to say is like, yes. That the 2,700,000,000,000.0 was eviscerated and eliminated from the market caps of these companies, but we hope that more than 2,700,000,000,000 is distributed in the forms of better and high payer more high paying jobs for Americans. It's an experiment. We'll see how it goes, and we will hear everyone's
Speaker 2:Interestingly, NVIDIA was is down almost 7% today even though It
Speaker 5:was a
Speaker 2:terrible even though some well, semiconductors are excluded. Okay. Probably a smart exemption, but still lot these things have feeling the
Speaker 1:kind of second order ramifications where Yeah. You know, a company that does business abroad is going to be more conservative, so they might buy less GPUs because they're like, you can play all this out to, you know, lot of lot of goods that are Chinese are bought on Meta, and so maybe Meta makes less money because there's people advertising less ecommerce products because ecommerce is hit so hard by this, and there's just a whole bunch of different knock on effects. So very complicated. But, Max Meyer had a good, the, what is this? The Norman Rockwell painting of the man standing up saying something contrarian.
Speaker 1:Says putting 17 to 34% tariffs on high quality industrial machinery from Japan, Germany, and Israel, Holland, etcetera, will hurt American reindustrialization and make it more difficult to operate factories and produce goods in The United States.
Speaker 2:Hard to argue with
Speaker 1:this one. We gotta talk to, to Chris about this because he he buys the Hormley, like, CNC, the six axis thing that he that that they have, like, copy pasted 25 times in their in their massive facility. And I'm sure the prices of those machines are gonna go up, but maybe there will be a carve out at some point. Again, this was just one of those, like, here's how we're thinking about it. A lot of it did go into effect very quickly, but, all this stuff is always up for negotiation.
Speaker 1:It's the art of the deal, baby. This was a funny one from AF Post. So, apparently, Trump has levied a 10% tariff against the Heard And McDonald Islands, which are inhabited only by penguins. And so if you're a penguin in in the McDonald Islands, good luck selling goods
Speaker 2:to Penguins. I mean, the
Speaker 1:because it's gonna be 10%
Speaker 6:more expensive.
Speaker 2:Legacy media has taken a victory lap on this one. USA Today says penguin, seals, and other wildlife. Yep. Only inhabitants of two islands hit with Trump tariffs. NPR I mean Trump's tariffs are so far reaching.
Speaker 2:They include several remote uninhabited islands.
Speaker 1:Yep. I'll come out and say it. But hey. I will say it.
Speaker 2:If you're if you're Switzerland Yeah. And you just got hit with 31% tariffs, maybe we'll see Rolex move some manufacturing out to the herd McDonald Islands.
Speaker 1:Yeah. I mean, I I think that it's a little bit edgy to say, but Penguin have been free riding on American hard work for years, and they gotta pay their fair share. So if you're a penguin, get ready to pay some taxes. The external revs revenue service is coming for you. Anyway, very, very funny story.
Speaker 1:I liked Atlas Creatine Cycle.
Speaker 2:Is good one.
Speaker 1:Get ready to learn how to put together iPhones, buddy. I love it. It's just
Speaker 2:really funny. Can't wait. The thing is if you can put them together, if I could know how to put this thing together, I could also know how to potentially take it apart.
Speaker 6:Yep.
Speaker 2:And then I could swap the battery out so
Speaker 1:everything why they outsource manufacturing. They don't
Speaker 2:want to replace you replace your own battery. Yeah. Yeah.
Speaker 1:Yeah. I get it. That's a good that's a good conspiracy theory.
Speaker 2:I like that. So we go through some of Joe Weisenthal.
Speaker 1:Joe Weisenthal dropped a a beautiful blog post in the iconic orange Bloomberg, font because he, of course, is delivering his newsletter, not just through email, but also through the Bloomberg terminal as any self respecting financial journalist should. We should really start syndicating on the Bloomberg terminal. That would be the ideal deal.
Speaker 6:I don't
Speaker 1:know what it takes, but we gotta make it happen. He says, once again, I'm just gonna list random thoughts that are going through my head right now. I wanna start with Nike, actually. At the time of this typing, the stock is down 14% premarket. As far as I'm concerned, Nike is the perfect specimen of American capitalism.
Speaker 1:The profitable design work is mostly done in The US. The manufacturing is done in countries like Vietnam, and the whole brand exists as it does because The US is a global powerhouse for exporting culture like star athletes. It just makes perfect sense for the stock to get nuked like this as both its basic business model and the American brand values get trashed. Other American apparel brands like Lululemon and Deckers are similarly getting clobbered this morning. Speaking of Nike and Vietnam, in his chart book today, Adam Tues notes that 50% of Nike's products are made in Vietnam.
Speaker 1:And, of course, the Vietnam shift, Ryan Peterson pointed this out that a lot of companies were trying to be proactive about Yeah. Relocating from China. Also, manufacturing China
Speaker 2:has got more expensive. That wasn't just tariff risk. That was geopolitical risk as And
Speaker 1:just and just economic factors in China. Like Yeah. The like, as China has
Speaker 2:Got more skilled.
Speaker 1:Yeah. Got more skilled. Like, it's more expensive to manufacture there. So Yep. Stuff has moved.
Speaker 1:AirPods are made in Vietnam, famously. And that there are half a million people in the country working for the at at at least a 55 factories that make Nike goods. Now we're slapping massive tariffs on them, but the question is to what end? Do we think there are hundreds of thousands of people in The US eager to work in sneaker and T shirt factories at the wages that sneaker and T shirt factories pay? T shirt factories pay?
Speaker 1:Are there people eager to work in sneaker factories even at good wages? Do we think that The US has the level of robotic capability to replace these factories without having to hire a lot of workers? And if not, what is the administration trying to accomplish? I think the steel man here is like is like there's a learning curve to the robotics capability where if you don't have the facility in America at all, it's very hard to get the reinforcement learning data to train the robots. And so, yes, it makes sense to potentially, in the very long term, if you're super a AGI pilled, you should overpay for human training data essentially.
Speaker 4:Yep.
Speaker 1:And and, yes, maybe those maybe because of American working conditions, the output would be lower, the prices would be higher. But if the tariffs lead to a situation where you're willing to take that trade, that puts us on the learning curve to develop humanoid robotics. Again, I'm just steel manning here. I'm not I'm not fully convinced of that.
Speaker 2:I think broadly, and and this is what I'm hoping to get from a number of our guests today Yeah. Is for America to re industrialize, we need to lead with innovation. Right? We don't have the skilled manufacturing labor base that is gonna allow us to onshore all this stuff overnight even if, you know, you could immediately snap your fingers and
Speaker 1:Yeah.
Speaker 2:Have the facility. So it needs to be Yeah. Innovation led.
Speaker 1:I heard a very a very hot take at some sort of re industrialized conference where someone was saying, like, I'm extremely bullish on American manufacturing, but I don't think it's ever coming back. I think we're going to rebuild it with robotics from the ground up, and we will be a manufacturing powerhouse, but it's not gonna be American labor led. It'll be innovation and technology led.
Speaker 4:Yeah.
Speaker 1:And that's an interesting like, that has its own problems you gotta grapple with, but I thought
Speaker 2:it was interesting. Anyway And to be clear, that still creates jobs because somebody needs to oversee the facility and it's not you're not you're not gonna have end to end autonomous factories.
Speaker 1:I mean, OpenAI employs thousands of people.
Speaker 2:Yeah. OpenAI is still hiring software engineers.
Speaker 1:Yeah. Yeah.
Speaker 2:Same with Anthropic.
Speaker 1:Yeah. And you could imagine a lot of different higher leverage operations where you're puppeteering 10 robots at a time and doing teleoperational. A lot of interesting paths to making American manufacturing great.
Speaker 2:So he says
Speaker 1:Oh, you wanna keep going on this? We have two minutes.
Speaker 2:Okay. We can keep
Speaker 1:to, Shiel. He says $1 was worth €1 at the beginning of the year. The dollar is declining in value now worth the €90 cents. Your European summer just got more expensive.
Speaker 2:Well, hopefully, for the VCs that were planning trips, they can get another fund closed before then and just make up for it. Yeah. Management fees.
Speaker 1:Should we talk about Jeremy Tsai? Very successful entrepreneur who runs a company that the whole plan was direct from the factory Yep. To delivery to American consumers. So why buy the Hermes bag when you could buy an identical bag from a Yep. Facility that was built And
Speaker 2:it's even less. Hermes is maybe not the right example. Yeah. But it's like
Speaker 1:Luggage and stuff.
Speaker 2:Restoration hardware towels.
Speaker 7:Sure. Sure.
Speaker 2:You know, we'll give you the same towel
Speaker 1:Yep.
Speaker 2:Or the same quality of towel Yep. For a fraction of the price.
Speaker 1:And so he says consumer prices are built with percent targets, not absolutes, meaning cost increases are exponential. If the cost is 10 and the price is 50, to maintain product margin, a $1 cost increase equals a $5 price increase. A $5 cost increase equals a $25 price increase. These are multiplicative. And so he's he's arguing that this will lead to consumer inflation, which, of course, is is a risk.
Speaker 1:Pete taking the other side of this argument, Sean Maguire, he says, that this is the first long term thinking president in my lifetime. He's obviously, supportive, and it seems like he's excited about it. I'm excited to talk to him about how he's processing this and and playing
Speaker 2:that playing into, you know, short term pain Yep. Long term gain. And that's what, you know, you gotta be oriented around if you believe these are good policy decisions.
Speaker 1:And Paul Merlucky came out in support as well. He said unprecedented embrace of protectionism, they say. No. Reciprocal tariffs are the opposite. The whole point is to encourage free trade rather than lopsided free trade we currently have with so many countries.
Speaker 1:It's very simple. If they charge us, we charge them. And so this would be an interesting long term play. What if this triggers a reduction in tariffs and and and Trump says, yeah. We're gonna stick with reciprocal.
Speaker 1:And as you lower your tariff, we'll lower ours, and all of a sudden, we go to a truly free that would be a very interesting outcome. I don't think a lot of people are expecting that or pricing that in, but, I I think Palmer's saying that that that that could be a potential outcome here. Anyway, we got, we got Chris Power coming in the building. I wanted to play this video first. Do we have the video?
Speaker 1:We're cultivating Chris Power. Yeah. We're cultivating Chris Power in America. Wanted to hear Howard Lutnick talk about the tariffs and give us a little breakdown, and then I think Chris could get could do some analysis for us. Let's see what else is going on.
Speaker 1:There's some more posts here. Tyler Cowen did not love Liberation Day. He said, Trump's reciprocal tariffs impose hundreds of billions of dollars in new taxes on Americans without public congressional input. So arguing that this should not come from the executive branch. They're based on secret Okay.
Speaker 1:I think we got the video. Let's play it on the show now.
Speaker 8:What happened to the world is the global governments have backed taking our factories away from us. I mean, there's nothing about Taiwan that they should be making semiconductors. There's nothing about Korea they should be making all of the appliances and the electronics of the world. What's happened is they had a policy of their governments to let's back our companies, and let's take this business from America while America's not paying attention. So our factories went overseas, but what you're going to see is the most modern factories of the world come back here.
Speaker 8:We are going to start on one of the great training programs of the world to teach our employees what tradecraft is, you know, how to build factories and not the old kind of factories. I'm talking the most modern, the most high-tech factories. When you say HVAC, what we're talking about is cooling a high-tech semiconductor plant, probably one of the coolest jobs you can have. Right? Mechanics, fixing robotics.
Speaker 8:That's what's coming to America. The coolest factories, the highest tech factories, they're all coming home, and Donald Trump's bringing them home, and he's gonna create a renaissance of high-tech manufacturing in America. That's why America's gonna win.
Speaker 1:He's newsmaxing. He's on newsmax, and he's, given the pitch for why these tariffs are good. We're gonna hear from Chris Power, who's in the temple of technology, talking about these tariffs. How are
Speaker 9:you doing?
Speaker 1:Back. We're cultivating
Speaker 9:Great guys. Would argue that we are sitting in a high-tech factory, but it's nice to see you on the show again.
Speaker 1:Fantastic. How did you process the news? Give us the high level breakdown.
Speaker 9:I I think it's incredible for all manufacturing businesses, and I think the pushback you're seeing from people who've got crappy ecommerce businesses built on the backs of, Chinese Tmall textile facilities are are the problem. I mean, what happened since the seventies through the nineties is we offshored all manufacturing to developing countries because we didn't wanna deal with it. And all great power conflicts hang off the back of commercial manufacturing being able to pivot to defense when it really matters.
Speaker 8:Wow.
Speaker 9:And Ludwig is absolutely right. And what people miss is China, especially, but all developing countries are not just cheaper in labor. They've been actively subsidizing, you know, basically to make it free, energy, capital equipment, labor. And when they export manufactured goods to The US, often they are you know, they're getting refunds of the government of 30 to 50% through this kind of export tariffs. So this is not, you know, us raising tariffs unfairly.
Speaker 9:It's just leveling the playing field of what's already been happening. I mean, often what we see with competitive Chinese prices for CNC machining is that the cost of the raw material we can buy is more than the part that Chinese selling to a US manufacturer, and that's just all through subsidies, right, of all these key areas and these export tariffs. And what that's done to the country is you can think about this as kind of like a balance sheet. Right? It's kind of like what, you know, DeepSeek is doing.
Speaker 9:That obviously doesn't cost a cent per query. They're subsidizing it so they draw the consumer into that platform. They gain all the leverage over OpenAI. It's the exact same thing with manufacturing. And then what happens over three decades is you offshore all the skills and the capital equipment to developing countries.
Speaker 9:And then when we go into a conflict, they've got all the manufacturing capacity. So I think this is a very accurate response to the forced deindustrialization of The US through aggressive trade policies from China over the last forty years, and this is just barely making it even. Now, yes, are some goods and services gonna be more expensive? 100%. What this is gonna cause, though, for American manufacturing and bear in mind, I would say 90% of what American manufacturers buy, even if their revenue is on the Nasdaq, is offshore.
Speaker 9:So we're flowing 90% of the volume from Nasdaq revenue or Nike shoes to developing countries and paying them to do our stuff, and then they're subsidizing it by 50 or 60%. So what you'll see from here is this forced reindustrialization of The US because now we're gonna have to build more factories, more factories, more factories, more factories in The US, which is gonna cause this now huge boom in manufacturing skills and talent to serve those factories. And because our skilled labor in the country is aging out because, you know, we told all the kids in the eighties and nineties that if you didn't have a four year college degree, you're an idiot, is now we have to build factories that are highly advanced, use the tens of the people, and are exciting for kids to get into. And it's not about replacing jobs. It's just gonna be different jobs.
Speaker 9:You know, you're gonna be a robotics technician. You're be running 10 machines at once versus, like, you know, doing absolutely everything with your hands. And this is the way we prepare for, you know, 2029, and this is this is the strategy. Right? As you tariff everything, we bring back manufacturing to The US.
Speaker 9:In the next four to five years, you're gonna see the greatest reindustrialization of the country so that we actually have the skilled trades on shores that, you know, god willing, we don't get into a conflict. But if we do, we might have a hope of doing it because you can a dishwasher facility and mess up factory pretty quickly. And I think everyone who's kind of complaining about this is, like, you know, kind of part of the problem where, oh, we don't wanna deal with manufacturing here. Oh, my, like, team who my my, you know, shitty rapper over team who made commerce business. Yeah.
Speaker 9:That's the you're part of the problem. You've been, like, trading dog and cat pictures on the Internet for thirty years, and we gave away the farm to China. Like, what are we talking about? This is a real country. You know?
Speaker 9:We're gonna make stuff in America. We've been pushing through this through Naya and, obviously, through Hadrian for for a while, and I think the administration has got it absolutely correct. The second thing I think people miss of I've heard a lot of complaints about targeting Vietnam, targeting Taiwan. What people miss is a lot of the Chinese manufacturing volume, so they get out of the, you know, kinda export controls, because
Speaker 6:they just ship it across the
Speaker 9:bridge to Taiwan and then sell it to an American company. It's kinda like fentanyl coming from China through Mexico. So this whole cluster of Southeast Asian manufacturing, often behind the scenes, you know, it's like a Taiwan CNC is kind of a a dodgy wrapper over Chinese CNC, you know, to use the technology. So I I think, yes, it's going to hurt some industries that have based their business on selling high priced goods to consumers while they've got a cost of goods of $5 in China or Vietnam. Yeah.
Speaker 9:100%. But for the country, it's an incredibly good thing, and the jobs in the Midwest and in places like Ohio are gonna go through the roof because we're gonna have to industrialize based off this valve and trade equation. It's just massively correct. I think it's an incredible thing for the country. It's certainly an incredible thing for the business, and I can't say enough good things about seriously the administration is taking the industrialize of the country and not through subsidizing companies.
Speaker 9:They're just recreating the dollar cost of the market to incentivize all these global companies and American companies to invest in manufacturing. Because now the price equation is such that people need to buy American and then let the private markets invest behind that market signal. I think it's a brilliant strategy. Because otherwise, they would have had to spend a, you know, a trillion dollars subsidizing a handful of companies to build in America. Now they kinda get that investment for free, and you're gonna see this huge multiplier effect of every hundred people who work in a factory.
Speaker 9:Great. You need a coffee station. You need, like, support and trade services. You know, you're gonna get towns built around these factories and more housing and more construction, and that plus deregulation is a huge boom.
Speaker 2:What do you in your world, you know, obviously, semiconductors were excluded from the tariffs, but a lot of industrial machinery from places like Japan, Germany, Holland weren't excluded. Do you think that that kind of those kind of products should be excluded from the tariffs to order in order to help? You know, Hadrian obviously purchases machinery from from countries, outside of The US just because you have to.
Speaker 9:We have to. I don't think anything should be excluded. Know, we said this in the last show is that, you know, why does US not make CNC machines or foundry machines anymore? We offshored it because they got subsidized. So, like, what's that?
Speaker 9:You know Mhmm. For our business, yeah, my CapEx just got 15% more expensive. But our CapEx is kind of free because we just use leverage debt and financial engineering anyway. But I think people miss the fact that, you know, American manufacturers are somewhere between 40200% higher than China. Right?
Speaker 9:And we see this because a lot of our customers do source things to China and they competitively bid us. If they can't, you're gonna force to manufacture it in America. Right?
Speaker 1:Mhmm.
Speaker 9:And right now, we are, as a business, because we're highly automated, often 30% more expensive than China. So you add the tariff back on that, and now you've got, like, a $20,000,000,000 machining TAM in The US now becomes a hundred because all The US companies are going, well, why wouldn't I reshore this? Because now my pots just got 50% more expensive. Yeah. So, like, let's just bring it back to America.
Speaker 9:You know?
Speaker 1:How are you thinking about polymarket has the chance of a US recession just jumped to almost 50%? There's kind of a narrative that, like, the best case here is maybe it's we're taking some medicine, short term pain, long term gain. Is that a reasonable framework to think about this, or do you think that there's a way that we avoid any of the short term pain other than, of course, the the the the market sell off today?
Speaker 9:I I think we're gonna take some short term pain, but I I think that's really like, do you care about the S and P 500, or do you care about what actually underpins g d a GDP, which is jobs in, like, the American heartland who, like, you know, can't get food or, you know I mean, look. I'm Australian. Right? But, like, here's a great example. American farmers have not been able to export beef to Australia.
Speaker 9:Haven't sold a dollar of it because it's banned. We, as a country I'm saying this now. America imports $29,000,000,000 of Australian, you know, beef and cattle products. So, okay. Well, the American farmers are getting screwed.
Speaker 9:So, like, I don't know. We should probably be eating American beef. Realistically, though, knowing knowing the administration, I think what you're gonna see is they are forcing a very hard reset to reset the economy, which means deregulate, tariff up, rebuild United States so we have the productive capacity. But bear in mind, the interest rate is extremely, extremely high, right, right now.
Speaker 2:Mhmm.
Speaker 9:It hasn't really been leveraged down. And inflation and and by the way, reindustrialization is a deflationary event. Yes. It might make some goods and services come up. What you'll see is, like, wage growth and jobs growth behind it so that the balance of inflation comes down a little bit.
Speaker 9:What I expect to happen is that everyone complains for about three to six months, and I don't know what the interest rate is sitting at now. But bear in mind, I think it's, like, four or 5% on the Fed rate. You can notch that down one, one and a half, maybe 2% over the next kind of three, four quarters, and you're gonna we're gonna get back to ZERP mode. Mhmm.
Speaker 6:And then
Speaker 9:the S and P will come up as, you know, everyone puts their cost of capital in the spreadsheet. So, yeah, I think we're taking some short term trade. I think we've been I think the, you know, Federal Reserve and the Bureau of Labor Statistics have been lying to the American people for a better part of two to three years. I think we're already in a recession. It's just like we're fudging with the numbers and not talking about it.
Speaker 9:But, realistically, no, I I think with the boom starts in, like, two quarters or so, as federal budget gets covered with Doge, people are going back into the economy and being productive. Tariffs come up, there's a bunch of volume and activity happening in the country that's producing real GDP, like jobs and factories. And then I think he took down the interest rate, like, one or 2%. I think you got three years of, like, ZERP mode of cost of capitals going down. All the valuation's gonna go up.
Speaker 6:I I think it's gonna
Speaker 9:be a banger. We just gotta, like, sit here for a quarter or two. It's gonna be great.
Speaker 1:It's great.
Speaker 2:Is is part of the issue that tariffs and trade balances are just so complicated that it it's almost impossible for anybody to fully understand much less somebody who's just sort of passively reading the news or not involved in it because I've gotten messages today. You know, I got a message from my mom who is who is, you know, just basically seeing everything read. She's being like, this is bad. Yeah. You know, and so like there's this sense of this, know, people are gonna have this emotional reaction to the market because it's the most like real time of of sentiment.
Speaker 2:But do you think the administration could do a better job sort of communicating? Know, J.
Speaker 6:D.
Speaker 2:Vance was on TV earlier, certainly, and I think he had some some pretty good comms around tariffs broadly, but do you think there needs to be better communication on Yeah. Why this is happening and and how there there might be some, you know, you know, it very well could have a, you know, very positive long term impact.
Speaker 9:Yeah. And I I I think they can be communicating to the American people a little bit better. I think the communication come out is actually pretty good. It's just that it hasn't reached many people, and you're right. I just see, like, stock go down.
Speaker 9:You know? Mhmm. But I think over the next six to nine months, I think it's gonna be incredibly positive both for, you know, S and P and Dow Jones and Nasdaq and for the actual underlying real economy. But yeah. You know, it's like you feel pretty bad going to the gym for the first four weeks when you're a little bit overweight, then you start feeling good.
Speaker 9:And in the first four weeks, feel pretty bad because you're like, wow. This is really tough. And then you realize, like, hey. I'm just out of shape.
Speaker 2:Know, we're gonna be repping two plates.
Speaker 9:Yeah. You gotta and then we'll be repping plates. You know, Jay Powell will drop the fucking hammer, and we'll
Speaker 10:be we'll
Speaker 9:be we'll be dead lifting. You know?
Speaker 1:Yeah. Jay Powell's
Speaker 10:the creative team. Market. Yeah.
Speaker 2:How is that? Your has your phone been ringing off the hook from investors that maybe passed two years ago saying reindustrialization is not gonna be a thing? Anybody anybody could put
Speaker 9:you later? Comment on whether all whether or not we're getting calls from customers trying to resource massive volumes from China accelerating our factory build outs, and I also gonna drop in a minute. And I'm not gonna make any comment about future or potential fundraisers in case the SEC
Speaker 11:Yeah. Yeah.
Speaker 9:Wax me on the head with the band on that.
Speaker 1:Yeah. It's been great having you. We we yeah. We gotta have you on more regularly to kinda track this story as it develops. This is fantastic.
Speaker 1:Thanks so much for taking the time to join and
Speaker 9:hop Great having you on. Thanks for having me back to Capital to Capital.
Speaker 1:Keep cultivating Chris Power over at Hadrian. We'll talk to you soon. Bye. In the meantime, let me tell you about Ramp. Time is money, save both.
Speaker 1:Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place. Head over to ramp.com. And we have a Ramp investor coming on the show next. Delian Asperhov is joining, partner at Founders Fund, co founder of VARTA. He'll be joining
Speaker 2:Many people have called him a global export expert on Yeah. Tariffs, trade wars
Speaker 1:Yeah.
Speaker 2:Real war. Yeah. You know, the list goes on.
Speaker 1:Yeah. I mean, he's really dialed in.
Speaker 2:He's not.
Speaker 10:He's he's
Speaker 2:dialed in.
Speaker 1:He's also an investor in Eight Sleep. Nights that fuel your best days, turn any bed into the ultimate sleeping experience. Go to 8Sleep.com/TBPN for an Eight Sleep.
Speaker 2:Do it.
Speaker 1:Get a get an Eight Sleep.
Speaker 2:Oh, I put up
Speaker 1:It's fantastic.
Speaker 2:I put up a hundred last week.
Speaker 1:You did? Yeah. You're killing Jordy.
Speaker 2:I really
Speaker 1:Well, we gotta ask we gotta ask Deleon how he'd do, how he did because I know I know he's on one and I know he hasn't been traveling. I got a 95. I was a little bit low on time.
Speaker 2:Proof of work. At this.
Speaker 1:I got the eighties. Ninety five. Ninety five. You got a hundred? Hundred.
Speaker 1:Yeah. Hundred. Oh.
Speaker 2:Look at this. Look this. I was like
Speaker 1:a hair's breath away. If I'd gotten two more minutes of sleep, would have gotten a hundred. Two more minutes. But, you know,
Speaker 2:had to keep the Cope. Had to
Speaker 1:keep the alarm at 05:40AM. Gotta get up. Gotta get in the gym. Gotta
Speaker 2:start repping. Wait. You get up an hour after me.
Speaker 1:An hour after you. Yeah. But you go to bed two hours before me. Yeah. You know, works out.
Speaker 1:True. Anyway.
Speaker 2:Somebody's gotta be up late just texting to get 10 guests on a single episode. Yeah. It's not easy.
Speaker 1:Exactly. It's hard work. Anyway, we we Yeah.
Speaker 2:One thing I wanted to ask Chris that we didn't get to was what does Nike do here? Do they figure out how to make shoes in America? I know they have probably some American made shoes, but it's certainly it's gotta be less than half a point of of their revenue.
Speaker 1:Okay. Delian is out. He we we just messed up the invite, got double booked, but let's go through more tariff reaction because I want to talk about Tyler Cowen's Liberation Day post, because I think he gives I mean, obviously, Chris Power at Hadrian lays out a very, like, a very reasonable and bullish scenario. And as someone on the ground building a factory, it makes a ton of sense. Like, it's his thesis that he's had for years.
Speaker 2:And the thesis wasn't actually predicated on massive
Speaker 1:Correct.
Speaker 2:Global tariffs. Right? No. It was more so predicated on we should make things in America, specifically products necessary for defense manufacturing.
Speaker 1:Yep.
Speaker 2:Right? Yeah. Aerospace Yep. Sort of super critical industries.
Speaker 1:But it's interesting to hear the other side of this kind of the more buttoned up economists take. And so Tyler writes that markets have responded accordingly with the Canadian currency hit especially hard in S P A S P S and P futures sinking immediately, and we saw the market actually did sell off quite a bit. I'm not exactly sure where it is now. Maybe you can hop on public.com and check that out. Investing for those who take it seriously.
Speaker 1:Go to public.com and sign up. Because I I actually would love to know, like, what how is the market trading during the day? Obviously, we saw it opened down 5%, and some stocks were hit very hard, but I'd like to know overall how things played out.
Speaker 2:S and P is down 4% today.
Speaker 1:4%. So a little bit of a pop off the bottom, maybe bouncing along the mean, NASDAQ is The dead cat bounces, they call it, potentially. It's interesting. You know? Be greedy when others are feel fearful, potentially, or maybe get everything out while you can.
Speaker 1:Who knows? We don't give you financial advice here. We just, yap and you make up your own decisions. Anyway, with president Trump, one never quite knows what one is going to get, says Tyler Cowen. So any assessment needs to be provisional, but that is a big part of the broader problem.
Speaker 1:High and persistent uncertainty about the basic rules of the game. And this was the question that I was gonna ask Chris if had a chance to stay on longer was, okay. I understand that you're excited about the current, like, what happened yesterday, the breaking news. And to be clear,
Speaker 2:it's phenomenal for Hadrian.
Speaker 1:Yeah. Of course.
Speaker 11:Of
Speaker 2:course. I am sure they will have more customer inbound today 100%. Than probably any other point
Speaker 1:100 in history. Because, I mean, they're they're they're our young company. They are using American labor. They're based in California. Like, things are expensive.
Speaker 1:There are a lot of places where even though Chris is great, he's a really great founder, like, are just structural elements that make his product less price competitive, and he wants to get there with software and automation and eventually get to a place where he's completely price competitive. He's always differentiated on pace of play time. If you're in Southern California building a defense tech company
Speaker 2:Or an aerospace.
Speaker 1:An aerospace company and you need a part tomorrow, Hadrian will stay up all night, get it done, and you won't have any of the shipping times. That's been the key differentiator. But now it seems like he could potentially be more price competitive. But the question that I wanted to ask him and what we were talking to Ryan Peterson about yesterday was, is there is is what's going to happen with this rose garden and this reciprocal tariff framework you might have seen some of these, mathematical formulas floating around. Like, is this enough of a framework to bring confidence to the market?
Speaker 1:Because there's a there's a huge difference between, okay. It's it's 20%. It's bad. We're ripping the banding off Band Aid off, but you know that this is the end of the story. It's 20 forever.
Speaker 1:You can plan for that. You can update your Excel models, your financial models. You can plan for that. Versus it's 20% today, then it's 10%, then it's 15%, then it's 50%, then it's 10%. Like Yeah.
Speaker 1:Chaos and
Speaker 2:uncertainty. Pointing a gun at each other, you know, sort of waiting. No more no more yeah. The the James Bond Day is over.
Speaker 1:James Bond
Speaker 4:Day is over.
Speaker 2:Put the squirt gun down. And, anyways, it's like, who who's gonna sort of make a move first?
Speaker 1:Who's gonna blame first? Yeah. Yeah. And and what's interesting is that I think that I think that this is potentially enough of a framework to understand where, okay. All all I need to do is monitor, you know, what is the reverse tariff?
Speaker 1:How much would it cost for me to import my product to the country that I'm making in it making it in? And then I can expect that that will be the tariff that goes the other direction. The question is just like, is this a will these tariff rates stick around for years, for four years at least, or maybe eight years? Who knows? Or or is this gonna be something where literally every single one of these countries comes to the table and starts renegotiating immediately?
Speaker 1:And we're seeing tariffs jump around all over the place week to week, and we're seeing, oh, turns out, like, Swiss Switzerland came to the table, and they cut their tariffs so that now Swiss Switzerland rates are lower and, like, all of these different things happening. Like, you you imagine that there's going to be big discussions between China, Vietnam, like the major countries, but it could be all of the countries. And so Yeah. That uncertainty, I think, is something that businesses really really detest because it it makes it really hard to plan especially things like CapEx. Right?
Speaker 2:Yep. So this is a good line. Like a game show host, Trump announced a series of tariff rates on many of America's major trading partners. How did he come up with the rates? It seems by a crude formula.
Speaker 2:A given nation's trade deficit with The US divided by the nation's exports to The US. There's a base rate of 10% to be applied to The UK, Costa Rica, and some other friendly nations. For India, it is 26%. For Japan, it is 24. And for the European Union, it is 20%.
Speaker 2:The most incomprehensible are those on Vietnam. The new tariff rate is 46% Sri Lanka, forty four % South Korea, twenty five % Cambodia, forty nine % in Taiwan, Thirty Two Percent. Are those not some of the major countries we are expecting to hold China at bay? Do we not want Chinese manufacturing to end up moving to those in other countries so we are less dependent on the Middle Kingdom? What could possibly and and again, Chris was highlighting that, you know, some of these countries are basically sort of producing goods and then, you know, passing them through China.
Speaker 1:And Yeah. Yeah. Yeah. He was making the argument that it was that some of these countries are kind of fronts. I would be skeptical about the about the idea that, you know, like, 80% of what we import from Taiwan is Chinese made at the source, but I think his point is probably correct that Yeah.
Speaker 1:There is some amount of of Yeah. Product
Speaker 9:passed away.
Speaker 2:What he says, what could possibly justify the fact that Taiwan, which is a US ally being threatened by China now faces almost the same tariff as China, Thirty Four Percent?
Speaker 1:That is a very, very good question.
Speaker 2:Trump calls these reciprocal tariffs, and the claim is that we are taxing foreign nations at only half the rate they are taxing our imports. The numbers are illusory. However, some of them apparently made up Brazil at only 10% and others counting a VAT as a net tax on American imports, which it is not. Any case, we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances. The tanking of the stock market and other possible asset price repercussions may tip America into recession and increased joblessness.
Speaker 2:This is perhaps the worst economic own goal Tyler has seen in his lifetime. I cannot think of any credentialed economist, economist colleague, Democrat, Republican or Independent who would endorse it. And I haven't even mentioned the risk that some foreign nations will retaliate against American exporters damaging our economy all the more.
Speaker 1:Pavel Asperuhov had a great tweet about this. He said, texting all my close friends to go f themselves so I can learn to be more independent. Short term painful, but there was literally no other way. And it's a good it's a good it's a good take that it's like, we're not making a lot of friends with this policy, folks. This is gonna be rough.
Speaker 1:Yeah.
Speaker 2:One could argue that if you truly are America First, that means putting America above Yeah. Our even people that are allies. Yeah. Yeah. Pavel's point is that at some point in, you know, when he was starting his company, he basically had to tell his friends to f themselves.
Speaker 2:So he could
Speaker 1:was joking there, but
Speaker 2:Yeah, of course.
Speaker 1:But yeah, mean, I mean, there was a little bit of that for sure. I I I think this gets to this interesting idea of, like like like, this America First stuff is is not just people people think of it as, like, you're either, a nationalist or a globalist. Right? Like, you're either, like, you should be able to manufacture anywhere. It doesn't matter where the jobs go.
Speaker 1:Have every company be completely global. It doesn't matter where the jobs are. And then there's the other side, which is, like, everything needs to be made in America. Like, I don't care about Canada. I don't care about The UK.
Speaker 1:But then there's this there's a there's a pretty wide middle here where you have something like the five eyes and, like, all the different allies between I mean, we we sell nuclear submarines of France. Right? Like like like, they're a very, very close ally. And and this is what Alex Carrf talks about at Palantir, like, the idea of the West and the idea that, like like, yes. Like, if if if America goes it alone and China builds a bunch of allies through the Belt and Road and not only has more than a billion people, but also has a much larger economy when you bundle them together with Russia, Iran, all of Africa, a bunch of other countries, North Korea aside, and, like, tons of other countries are like, well, if partnership with America is off the table, all of a sudden partnership with with China seems a little bit more reasonable, then America could get really, really smoked.
Speaker 1:Right? And so there's this question of, like, how important are these alliances? How important is it to have friends in the global community? I'm obviously all for making American jobs viable and and lucrative and fantastic. But, I mean, there there is a cost to some of this that I think, Tyler's right to point out.
Speaker 1:Yeah. So where do you fit where where did you leave off at, damaging our economy all the more?
Speaker 2:Yes.
Speaker 1:Okay. So you might think there is something to be said for a reciprocal reciprocal approach to tariffs. Usually, it consists of cutting off your nose to spite your face, but it can sometimes work. It requires a president and congress who is predictable and trustworthy. That's now how that's not how foreign nations view the current administration.
Speaker 1:If you're wondering about the trade treatment of Canada and Mexico, that remains cloaked in mystery. The threatened 25% rate on those two nations from earlier in Trump's term violates the NAFTA redo that was negotiated by Trump Trump himself. Why trust in reciprocity here? Oh, and did I mention that tariffs according to the constitution are supposed to be the province of congress, not the president? Congress did voluntarily turn some of this authority again, and we will be in for yet another round of tariff musical chairs.
Speaker 1:But it's not a game. There is real money and therefore real lives at stake here. And so he was not a fan. And I think that I think that the tariff musical chairs could potentially be the bigger issue and the bigger fear here.
Speaker 2:Bill Ackman Yeah. The activist man posted earlier, sometimes the best strategy in a negotiation is convincing the other side that you are crazy. And Oh, yeah. It is very possible that Trump is being very effective there. Logan had an interesting point.
Speaker 2:He's Oh, yeah. It was basically a meme that said, I'm adding tariffs. And it's a guy with a make America great again hat that says, this will create jobs. Trump. And then it's, I'm removing tariffs.
Speaker 2:He goes, art of
Speaker 1:the Art of the deal.
Speaker 2:I'm adding tariffs. This will create jobs. I'm removing tariffs. Art of the deal.
Speaker 1:And I mean, there are the like, it it's it it sounds really crazy and copey, but like, how many times have you been in negotiation where there's back and forth? Like, this does actually happen in real life. Like, it sounds stupid
Speaker 2:when you say it that Classic negotiation strategy is to start and just be, you know, completely extreme and then know that you may be
Speaker 1:Do you on negotiation strategy, do you buy into that philosophy? I I I have found, and a lot of negotiation consultants that I've talked to have kind of advocated more for, come in with something that's first, build vision. Make sure you're talking to the right decider, like the person who can decide. Yeah. Build a really clear vision of what you want the partnership or the deal to look like, and then come in with something that's reasonable that you would accept.
Speaker 1:Never bluff and get a deal that actually sticks instead of just wildly oscillating and saying, I I think their budget's a hundred bucks, so I'm gonna open with 300 and be prepared to negotiate down. That's actually like a harder way to get a deal done, but I
Speaker 12:don't know.
Speaker 1:What do you think about negotiation generally?
Speaker 11:I Strategy.
Speaker 2:Aim for deals that I think are fair and great for all parties involved. Yeah. And then I'm very explicit if I feel like it's drifting in into a territory where it doesn't make sense.
Speaker 1:This is another thing interesting from Ryan Peterson. Eliminated from all countries as soon as the systems are ready. And so we talked about this a little bit with the TIMU de minimis shipping tariff from China, but apparently, it's being eliminated from all countries. And so this idea of, oh, well, if we can't do the TIMU exclusion in China, we'll just do it in Mexico Yeah. And still slide in under that de minimis shipping threshold.
Speaker 1:Well, it seems like it's off the table entirely. Yeah. The market's crashing. We're crashing our streaming software, but we're back up. Thanks for paying attention.
Speaker 1:Thanks for sticking with us as we continue to run the show. Do
Speaker 2:you
Speaker 1:know
Speaker 2:if this charger is working?
Speaker 1:Yeah. It was working for me.
Speaker 9:You should you should go.
Speaker 1:We go. We're back. So there's a quote from JPMorgan. I don't know if we wanna read through this. It's pretty interesting.
Speaker 1:On a static
Speaker 2:basis Yesterday, which is
Speaker 1:Yep.
Speaker 2:More or less a lifetime ago.
Speaker 1:Yeah. On a static basis, today's announcement would raise just under 400,000,000,000 in revenue or about 1.3% of GDP. Static basis meaning, like, if all the goods stay the same and people just pay the taxes, which would be the largest tax increase since the Revenue Act of 1968. We estimate that today's announced measures could boost PCE prices by one to 1.5% this year, and we believe the inflationary effects would mostly be realized in the middle quarters of the year. The resulting hit to purchasing power could take real disposable income growth in q two slash q three into negative territory with the real risk of consumer spending could also contract in those quarters.
Speaker 1:This impact alone could take the could take the economy peril perilously close to slipping into a recession. We, of course, saw in Polymarket that the probability of recession is now up around 50%. Yep. Headlines about retaliatory measures about by US trading partners are already coming out, and we expect to learn more in coming days. The somewhat confusing nature of today's news coupled with the uncertainty, over how long these tariffs will remain in place should make for an even less friendly environment for investment spending.
Speaker 1:We mentioned that with the CapEx stuff, though that is one way to narrow the saving investment balance imbalance and hence narrow the current account deficit. We plan to revisit our forecast later this week. So JPMorgan is not very
Speaker 2:optimistic. Joe Weisenthal highlighted a chart Yeah. From Polymarket. It's he says the odds of US recession in 2025 just jumped from they were sitting at 40%, jumped 25% to
Speaker 1:Did you see the Restoration Hardware CEO reacting live?
Speaker 2:Oh, yeah.
Speaker 1:Finding out their stock is down 25 So there so Restoration Hardware was having an earnings call after the market closed as one does, but it happened to coincide with this tariff, announcement, which, of course, Restoration Hardware, probably sources from all over the world, will be very seriously hit by this. And he just, has some expletives. Okay. Oh, oh, s h I t. Okay.
Speaker 1:I just looked at the screen. I guess the I guess, you know, the the the the the stock went down, you know, based on some of the numbers we reported, and then it got killed because of oh, oh, really? I I just looked at the screen. I hadn't looked at you know? It got hit with I think the tariffs came out.
Speaker 1:And, you know, I think everyone can see in our 10 k where we're sourcing from, so it's not a secret. And we're not trying to disguise it by putting everything in an Asia bucket. You know? And he's just, like, having a really bad day. Rough.
Speaker 1:Ugh. Very rough. Logan Bartlett took us back a couple months ago from a quote from Stanley Druckenmiller Miller, the billionaire investor. Stanley Druckenmiller believes Trump's reelection renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses. Quote, I've been doing this for forty nine years, and we're probably going from the most anti business administration to the opposite, Druckenmiller said on CNBC Monday.
Speaker 1:We do a lot of talking to CEOs and companies on the ground, and I'd say CEOs are somewhere between relieved and giddy. So we're a believer in animal spirits. That was certainly the case during the Trump pump shortly after inauguration and and the election. But then things have been cooling off, let's say, potentially in free fall because of how how rough things have been. Rough.
Speaker 1:You like this post, by Trevor Scott. Tariffs on Bangladesh slash Vietnam are like a hedge fund manager fighting with his cleaning lady to get the right back to clean his own toilet, saying that, like, a lot of the jobs that we've sent over there, America doesn't want. That's always that's always that's always up for debate because when when America does something, we do it a little bit differently. We still wind up producing the product. Obviously, we use a lot of automation and the things that are made here.
Speaker 1:And and and there's been there's been a shift to bring Yeah. You know, auto manufacturing back to The US and a lot but although a lot of that's still done in in Mexico and Canada. But it but it but it is interesting to see, you know, if there really is big onshoring efforts, what will those new factories look like? I would imagine that they are highly automated, at least at least hopefully.
Speaker 2:Yeah. That's wild. Apple's also down I saw that. 9% today. So far, still just barely over the three t mark.
Speaker 1:Rough. But hopefully it doesn't affect Tim Cook's comp package because he was just scraping by.
Speaker 2:Yeah. Right? Poor guy.
Speaker 1:Yeah. Poor guy.
Speaker 2:Poor guy.
Speaker 1:Should we go to Ryan Peterson? He says, remember that these duties are on top of existing duties. So for China, you have the original duty of seven and a half to 25% duty from section three zero one, then 20% from earlier this year, then 34% today, and 25% for China's purchases of Venezuelan oil. So it's over a % just in the past few years, based on on Chinese products, and so we should see that work its way through the economy. I do I do wonder.
Speaker 1:I mean, a lot of Chinese products, like, they're just so cheap that even if you double the price, it's like, well, a DJI drone is still gonna be cheaper than a GoPro drone because, like, they were never price competitive to begin with. Yep. But it will be interesting to see, like, this is all just news right now. It's not really something we're feeling. But the next time I'm, like, walking around a Best Buy or scrolling on Amazon, I wonder if the prices will actually shock me.
Speaker 1:It it's it's kind of unclear. I don't think of myself as like shopping that much generally, let alone shopping for international goods. But again We'll ask. So much stuff Yeah. Comes from abroad.
Speaker 1:But a lot of times, the things like I mean, these water pistols that I bought, they were probably like $2. And if they go up to $4, like, it's hard to notice that. You're still just like, wow, that's the cheapest thing I've ever seen. Like, a lot of the prices were suspiciously cheap, honestly. Like, we we talked about this with Timu where Amazon launched a clone, they were saying like, okay, guys.
Speaker 1:If you're gonna sell couches, the couch can't be more than $25 to be on this app. And it's like, I don't know if anyone would wanna sit on a $25 couch. Like, that doesn't seem safe. They're like, guitars can only be $8. It's like, I feel like a guitar is like a hundred dollar item.
Speaker 1:Right? Yeah. So, like, if that doubles to $16, would people still notice it? I mean, sure certainly, there would be an effect on the economy. Like, people would buy less guitars.
Speaker 1:This is just supply and demand. Obviously, the demand for guitars is not fully price inelastic, but it is just very funny that some of these prices were so so low. I mean, Nike, you know, obviously, the the cost of goods is gonna get is gonna go way up, but I I feel like Nike shoes are a hundred dollar plus. And so if those go Yeah. Up, you know, people are still gonna wanna buy Nike maybe.
Speaker 1:I I I'm it's unclear to me. I mean, it certainly hurts their margins, certainly hurts their business, but it's unclear what it actually
Speaker 2:It's just interesting. Again, it's hard because Nike react with how many shoes they need to make and then not having Yeah. If if this was going to be if these tariffs were gonna be steady state Yeah. Indefinitely Yeah. They would have to make, you know, massive, massive changes.
Speaker 2:Yeah. But if if they think they're gonna be rolled back, you know, it's just it's so
Speaker 1:I was thinking about ways to capitalize on this and I think the price of billboards in America probably unaffected by these tariffs.
Speaker 2:That's So
Speaker 1:you should go to adquick.com, Out of home advertising made easy and measurable.
Speaker 2:All tariffs.
Speaker 1:Say goodbye to the headaches of out of home advertising. Folks. Only ad quick combines technology, out of home expertise, and data to enable efficient seamless ad buying. And, yeah, I mean, if you have an American made product, like, you really should buy a billboard right now and you should tell everyone because it used to just be, yeah, rah rah America America
Speaker 2:Yeah.
Speaker 1:Fourth of July, like, we're we're made in America. There are plenty of companies that have been beating that drum for a while, but now is, like, really, really the time it'll drum up investor interest. It'll drum up employee interest. If you are if you are long America, like, it's it's a great time as we saw with with Chris and Hadrian. Anyway, there's another post in here I wanna go through.
Speaker 1:I I wanna finish out some of Joe Wiesenthal's thoughts. Yeah. Let's do that. So okay. So this is Joe continuing writing in his Bloomberg newsletter.
Speaker 1:He says, okay. Well, maybe we shouldn't set economic policy for the whims of the stock holding class. Yeah. I'm down with that. But what's interesting to me too is just how reviled all of this seems to be across the board with the only real specific voice of support, the old legacy industrial unions, which are not a big part of the economy.
Speaker 1:Again, go back and look at the comments from the manufacturers in the latest ISM. They all hate it. Or go back and look at the comments from the latest survey of oil and gas companies by the Dallas Fed. It's it's just really hard to find a major material constituency for this level of trade. And the reason it's hard to find big supporters of this policy is because the logical or sequential link between trashing trade and creating new wealth is very hard to see.
Speaker 1:What are the new growth industries going to be? Who is going to finance the redevelopment? China famously crushed its own real estate and Internet sectors a few years ago, but at the same time, it directed its banks to lend more aggressively to its hard tech and manufacturing sectors. And so I think Chris would say, yeah. Like, that's exactly what we wanna do.
Speaker 1:We we we we want to we want the government to direct the banks and the venture capitalists to lend it more aggressively to hard tech and manufacturing sectors. And we're kind of seeing that, but it's interesting because we I don't think broadly in America people believe in the American dynamism movement.
Speaker 6:Yeah.
Speaker 1:I think in BC, people think it's cool. It's I and and I feel this way where it's like Yeah. We're we're talking to a kid from Stanford today who, like, makes laser weapons. And I was just like, that sounds awesome. But when I really think about it, I'm like, look.
Speaker 1:I don't know if you have a real business yet. You probably don't. You're you're young and you're just figuring it out. And I don't know if there's, like, a program record and a really good, easy way for you to scale this business up and create a power law company, blah blah blah blah blah. But I just think it's cool.
Speaker 1:And I think that's how a lot of people perceive these hard tech and manufacturing projects. They're like, it's a cool science project. I don't know if it's gonna work out, but I wanna support it, I'm just going at it. Whereas I think I think China was a lot more rigorous about this is a good financial bet for us. Gonna lose a lot of money in the short term, but we're gonna gain a lot in the long term.
Speaker 1:And I don't think as a country we're thinking like that yet. Yeah. There's lot of people that go to the re industrialized conference and they're like, this is awesome. I hope it happens. Yeah.
Speaker 1:But like, I'm not really going to pull my money out of FAANG do Right? I'm not gonna move, you know, a hundred billion dollars over for this. There needs to be the AI narrative for to get, like, the Masas of the world to do it. And then even when Masa does it, you have plenty of people that are like, this is a top signal. This is too crazy.
Speaker 1:It's impossible. And I don't think they were saying that in China Yeah. Which is interesting.
Speaker 2:No. And it's it's a fascinating situation right now where so many people in our, you know, industry Yep. And in our corner of the Internet broadly think this is just a terrible idea.
Speaker 1:Yep.
Speaker 2:We we have some people that think it's great. Yep. But a lot of smart people think it's a bad idea. And I'm sort of sitting here hoping that the admin, you know, as somebody that ultimately wants America to win Yeah. And thrive, I'm hoping that, you know, we're at a very crazy time right now, but I think I'm sort of hoping that the the admin has a crystal ball that the rest of us don't have and is, you know Yeah.
Speaker 2:Clearly they're they were convicted enough in in this initial decision yesterday to to go out and and do this press conference like It's the time that you Yeah. That's true. It's also true. But but
Speaker 1:Let's continue with Joe. In fact oh, I I I think we got our next guest coming in. But first, let me tell you about Bezel. Go to bezel.com. Get bezel.com.
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Speaker 1:Thank you to Bezel. Coming into the studio, we have Akhil from Shield Capital. I'm very excited to talk to him, Mike. Boom. Yesterday.
Speaker 1:How are doing?
Speaker 13:Hey. Good, John. Good, Jordy. Good to see you guys. Thanks for having me on.
Speaker 1:Yeah. Thanks so much for taking the time. Would you mind just giving us a little brief overview, maybe some of your history, what you're doing now, and, just kinda generally how your week's going?
Speaker 13:Yeah. Absolutely. And a great discussion, prior to, I think, a good tee up to what needs to happen by 2027 and what needs to happen by 2020 by 2049, when it comes to our own national industrial base. But by way of background, Akhil, yeah, from from Buffalo originally, did RTC in college, wanted to go serve, Had the opportunity to serve in the marines as a infantry and special operations officer. Left my time in active duty in 2019.
Speaker 13:Like many other vets, Brandon included, that you'll have here soon, both amazed by the type of technology we had that The US and its allies could provide and also incredibly frustrated by the lack of some of the basic commercial tools and had the opportunity via some mentors to, to connect and and help build a new fund, a new venture capital fund, Shield Capital, where our focus is this nexus between commercial technology and national security. We cover early stage, you know, so as as early as a dream in a team on on day zero across autonomy, cybersecurity, AI, and space.
Speaker 1:That's great. Jordy, you want me to
Speaker 2:I mean, I'd I'd just be interested to get your immediate reaction to the to the news yesterday and yeah. And then and then there's, you know, we we got bunch of other questions to go into. Did you have an immediate reaction yesterday? Our point of view, I'm I'm sure you heard is, you know, it's hard. Some stuff is gonna, you know, go poorly.
Speaker 2:Some stuff, you know, some some groups and companies and industries will benefit, but I'm curious what you thought.
Speaker 13:Totally. Yeah. I guess I'll I'll reemphasize the point that I that I made to start off. It is we had to look at this near term 2027, this Admiral Davidson window, for those who are familiar with it, how do we protect our interest in the Asia Pacific region, and how do we look at it in 2049 structurally. Right?
Speaker 13:So tariffs, whatever you want, has immediate near term structural effects, but a lot of that's not we're we are going to have the industrial base we have by 2027. Right? That's not that. That's eighteen months from now. So we have to figure out what we can do with the capacity we have.
Speaker 13:And I'm always reminded by Churchill's quote, while America might be first, the only thing worse than fighting, without allies I'm sorry. Fighting with allies is fighting without them. Mhmm. So there's an aspect to that. But, ultimately, how do we make the the structural changes long term?
Speaker 13:So as we look at this 2049, particularly as, again, looking at this in the national security context, how how do we beat and win out technologically, geopolitically against the the PRC, what that structure looks like far beyond four years worth worth of tariffs.
Speaker 2:Can you break down, the significance of 2027 and why why we need to be sort of, like, orienting our our defense planning around that date just for obviously, people in the industry, you know, understand it, but a lot of our listeners are, you know, in in other industries.
Speaker 13:Absolutely. Well, you know, this comes originally from, admiral Davidson who used to, prior to his retirement, run the Indo Pacific command. So this is the Asia Pacific four star command that's really in charge of protecting US interests and deterring would be adversaries, namely the PRC from conducting actions, whether that's Taiwan or or or elsewhere. And '27 2027 came about as this sort of potentially vulnerable moment in which we as a nation and those that willing that are willing to support us to be ready to defend our interests. And so you'll see that a lot in in the narratives, and you'll see that a lot in terms of what capabilities can we really deploy at scale and at speed, to defend our interests come 2027.
Speaker 13:And that stains obviously, that's super near term
Speaker 6:guys. Right?
Speaker 1:Yeah.
Speaker 13:You know, only so much can get done within that period. And so there's this two horizons just like any, you know, coming from the venture world. Right? You you you want entrepreneurs to be looking at multiple horizons, near term one, but then also look for what that long term structural changes will be. And so that's the 2049, and really that's that aligns with the, you know, hundred years of, of the Chinese Communist Party.
Speaker 1:Can you talk a little bit about, Chinese competition with regard to robotics? There's some high flying startups in America. There's some just young hacker kids building cool stuff. Lot of awesome demos, but it feels like the financial markets aren't taking humanoid robotics as seriously in America as they are in China. Is that a mistake?
Speaker 1:What are you seeing in humanoid robotics?
Speaker 13:Yeah. Great question. And I'll tie it together with AI just because there's there's so much intersection between
Speaker 1:Totally.
Speaker 13:The digital AI world and then AI applied to hardware. Right?
Speaker 1:Yeah.
Speaker 13:I grow increasingly concerned that we are just frankly behind
Speaker 1:Yep.
Speaker 13:In terms of the model development, the application of hardware, and the synthesis, therein both from a a hardware standpoint, from the software standpoint, and then critically, the ability to test. Yeah. I mean, part of it is just let's get the things out there. You know, as as a primary, I'll I'll always remember, you know, we get taught in in sort of military history class. You know, the French had better tanks when World War two started.
Speaker 13:But who tested them better? It it was the Germans. Right? They just got them out there, and they they just started testing with them and experiment them at a pace and scale that was far greater than anyone else. And so you see this environment now, and, you know, a lot of the things that need to happen are actually regulatory in nature.
Speaker 13:Right? How do we reduce the barrier for folks to actually go go go out and test either all sorts of robotics applications? Right? It doesn't actually have to be pure humanoids. It can be autonomous systems too.
Speaker 13:And then how do you combine that with actually getting some of these deployed, you know, at a scale that you need to? The last point I'll say specifically around, robotics and autonomy, is that I don't think, well, let me say, from a capital deployment perspective, I think there's a real interest in in you had some folks come on last time last week when we talked about defenses is being willing to make some really big bets, and be able to buy the necessary capital to help them deploy at speed and scale. Obviously, we're a we're a early stage small fund to start off with. We have big dreams, but we wanna be a part of that journey, particularly if that journey is here in The US.
Speaker 1:That's very cool. Can you talk a little bit about logistics and, just how how can we increase resiliency there and what startups are kind of tackling that, or how how should they even think about tackling that?
Speaker 13:Yeah. Great great question too. Let me start framing it by I look at the defense national security space. And, again, we at Shield, we think pretty broadly when we when it comes to national security. Right?
Speaker 1:Mhmm.
Speaker 13:So that is anything that touches autonomy, AI, cyber, and space that has an application to build. Mhmm. When I think about the national security context, it's how do you sense, make sense, affect, and sustain. Mhmm. Sense is easy.
Speaker 13:Right? That's that's satellites like Topher came on, one of our portfolio companies. Right? He's sensing the environment and making sense of it. How do you affect it?
Speaker 13:So what are you actually gonna do about it? And that could be something physical. That could be branded and and Chile I drones, or that could be nonphysical, digital in nature. And there's this and then there's a sustainment part. And I think this is just such a huge opportunity.
Speaker 13:There's a lot of companies working on it and so much more to do. And I specifically call it sustainment, not logistics for a couple reasons. One, this term of contested logistics, while important, doesn't get to the root of the issues, which is how do you both operate in a constrained environment. So how do you do things when you know you're gonna run out of fuel or you're have these certain constraints? And then what are you gonna how are you going to sustain it more broadly, not just from a physical movement?
Speaker 13:So there's two aspects. There's a there's a very physical hardware component to it. We need just more munitions, and we need more capacity here to do it. Knowing though, back back to the two two horizons, by twenty twenty twenty by 2027, we may not have all of that. So you just need to be able to digitally operate and be more efficient with the things that you might have now or within eighteen months.
Speaker 13:And so I think there's just so many opportunities here in terms of how you deploy at the edge. So what capabilities do you decide to go produce, you know, in, in the edge being some location where it's just easier to get to? How do you combine the the two together? And then how do you use artificial intelligence to actually optimize it all?
Speaker 2:Mhmm. How do you think about 2027 as a wedge for new defense tech, you know, companies that are emerging? A lot of companies come in and they're just focused on legacy systems. Like, I want to build a better version of this missile, and I think I'm gonna be able to get a contract because the, you know, the DOD doesn't want extreme vendor dependency on, like, one or two old primes versus, you know, looking at twenty seven twenty twenty seven in Taiwan and saying, hey. We wanna build a capability for this specific, you know, potential conflict.
Speaker 2:And is that an opportunity, or or do you know, is that not even the right way to think?
Speaker 13:Yeah. I mean, a lot needs to happen in eighteen months. Right? But that's not the only timeline. I thought you brought up some great points in the group that came last week about, you know, trying to build a feature within the defense space.
Speaker 13:There's only gonna be so many. Right?
Speaker 1:Yeah.
Speaker 13:There's only be so many that can that that can speed and scale. Now do I think there's more opportunity to do so? Absolutely. That's why we're in this business. It's not the only business, though.
Speaker 1:Mhmm.
Speaker 13:I think there's a lot of enabling features to to your question. Some of the most interesting things that I found from, say, their conflict in Ukraine weren't necessarily the the missiles and drones. It's how did they move their their physical their their administration to a digital environment using outposts and snowballs to actually make sure that the state functions. Right? You wouldn't necessarily think that it's, like, core national security, but to me, that absolutely is.
Speaker 13:Right? Half half the challenge with a lot of the AI applications is you don't have the models accredited. You don't have the models deployed in a way that they can actually be used. And, obviously, that has a compounding advantage the more times you can get hardware, the software, and the data together. But directly to your to your question, I mean, I still think there's a ton of room.
Speaker 13:Right? There's a really unique moment in time, especially now with the desire to want more startups within the ecosystem. And my colleague just testified, to the senate, panel with regards to CBR reform. So how do we actually use our small business innovation research dollars to actually incent, not necessarily just small business or ones that are churning that through, but the ones that actually wanna go and scale it and go scale to something bigger, like a traditional pilot program should be.
Speaker 1:Can you talk a little bit about Edge AI? We've seen, like, the Studio Ghibli moment. We've passed the touring test. Waymo's are driving around. Like, is there something that we should we've seen those drone shows that seem like, okay, that's a weapon system.
Speaker 1:What what AI kind of Studio Ghibli moments are we waiting for in defense? Is there anything that you're excited about in Edge AI?
Speaker 13:Yeah. You know, with you guys at at Founders Fund, we're investing in a company together called Armada. Yeah. And it's really kind of giving me a new glimpse into what not just Edge. So Edge being where am I gonna deploy compute.
Speaker 13:Again, go back to the sense, make sense of the environment. Mhmm. But how am I gonna connect together with some cloud based. Right? It's always going to be some disaggregated network there.
Speaker 13:But what I'm excited about is, I mean, there's just so much can that can be done with smaller models and with reasonable compute, knowing that we're only gonna get so much compute. I mean, we we talked about tariffs earlier. Right? There's there are all those bottlenecks that exist. We're not gonna produce the best in semiconductors overnight, so we have to be able to do more, in in those environment.
Speaker 13:You know? Androle is a early pioneer at that, right, in the national security space. How do you bring computer vision and other aspects of sensor fusion with other modalities to together? And that's just only the start. So I'm super excited by that.
Speaker 13:And I think it meets a lot of the customers where they're at, not just for national security. Right? People are worried about cloud bills. Mhmm. People are worried about how much like, what am I actually getting for AI return on investment with all the compute that goes into it.
Speaker 2:Yeah. Do you think there's enough private capital going into defense tech broadly? You know, there's been talk of, you know you know, we've seen over the last year investors that have no background in national security, you know, sort of FOMO ing into the category, but maybe that's actually good for America because we just should have more private investment coming in?
Speaker 13:Yeah. I guess as a let me first say, I'm glad that there's more people interested. Mhmm. I mean, I don't think you need to have a military background to do this. I think there's amazing American patriots that just wanna get involved, and they have really core technical skills elsewhere.
Speaker 13:I think it's helpful that, you know, folks came from the visceral operating experience, but that's not necessarily necessary nor arguably is that is that why you should go pursue that path. Right? Go serve because you wanna go serve, and you wanna go defend the nation. It just so happens that I came out of that experience having some really, you know, interesting insights that I thought I could go leverage and go help out, you know, with within the space, and be able to support. Actually, my the I love most importantly, I love when nonmilitary, nonnash security, just amazing entrepreneurs and technologists just wanna go tackle these problems, and we're able to help them out.
Speaker 13:I'm not the best when it comes to, you know, what's next in computer vision or distributed models. But you know what? I can help you find the right customer set or identify the right contract vehicles. That's what our fund does. And so that part's actually most exciting is how do you get, you know, the folks who may go to Snapchat working on Mhmm.
Speaker 13:You know, some background filter to actually work on some, like, really cool problems within that security space that have the same technical aspects.
Speaker 1:I I I I think our audience is probably familiar with the idea of, like, if you're starting a defense tech company, you might start with some SBIR money, then you're kinda sprinting towards program of record. Maybe there's the valley of death where you have something that's working, but you're not ready to really start producing it at scale. What are the other pools of revenue that defense tech entrepreneurs should be thinking about? And can you give us a little more granularity or sense of scale of, you know, how should I be thinking about an SBIR? How should I be thinking about a program of record and everything in between?
Speaker 13:Yeah. Absolutely. I'll keep it quick because I know, you know, we're on on a clock here.
Speaker 1:Let me Yeah.
Speaker 13:Let me give you a financial answer and a nonfinancial answer. I think both both both are important.
Speaker 6:That's great.
Speaker 13:The first is right. It's not just CBERS and program of record. Right? And you saw the Secretary of Defense's memo around use of the newer software acquisition pathways and specifically other contract vehicles or other transactions to help facilitate this. That's exactly what organizations like Defense Innovation Unit are there for.
Speaker 7:So Yeah.
Speaker 13:There's this middle ground that I think is being tapped now far, far greater, by the new entrants within the national security space. I'll give you a nonfinancial answer too. Sometimes an unpaid pilot is super helpful.
Speaker 1:Oh, yeah.
Speaker 13:Going on a CRADA, which I think, you know, Ceronica and others had had done in their early days, access to data, access to testing environments is just as important, particularly for those within the autonomy space. Right?
Speaker 7:Mhmm.
Speaker 13:That need to go test and validate, get access to the right data, or just have ranges where you have at least at least a little lower barrier to entry when it comes to flying, certifying, etcetera.
Speaker 1:That's great. Last question?
Speaker 2:No. This is great.
Speaker 1:Yeah. This is so this is awesome. Thank you so much for stopping by. Yeah.
Speaker 2:It's great to have you.
Speaker 13:Thanks, guys. Thanks for having me back too.
Speaker 1:Yeah. We'll have to have you back on soon. Thanks so much.
Speaker 13:Yeah. Would love to.
Speaker 1:Cheers. Talk to you soon. Well, next we got Phil Ehrenstein from Dirac coming in the building. We'll see when he gets here any minute now. Do you remember my brutal mispronunciation?
Speaker 1:Oh yeah. What was that?
Speaker 2:Never again.
Speaker 1:What was it was it that you mispronounced his name or was it that you called him a kid and he was upset about that? There was
Speaker 2:something I think it was probably both.
Speaker 1:Now is your opportunity to say you're sorry, Mayaculpa.
Speaker 2:I did. I did. Yeah. We made we made up.
Speaker 1:Never apologize. Always claim victory. Always
Speaker 2:claim always claim victory.
Speaker 1:More correctly than you pronounce your name. Phil. No. I love Phil. I met him must be a couple years ago, probably through Augustus.
Speaker 1:And I I think he moved out to El Segundo. He like, sleeping in the factory with Augustus, getting the company off the ground, but has, done some amazing work building out his business, and we're excited to talk to him today. So welcome to the show, Phil. How you doing? Boom.
Speaker 11:Living life. Life's good. We're rocking and rolling. We're out here in New York.
Speaker 1:Oh, nice.
Speaker 11:Very apt introduction. Thank you, mister Kootigan.
Speaker 1:Yeah. I heard you're in the the Empire State Building. Is that right?
Speaker 11:That is correct. Fantastic. We are in the Capital Building of the capital city of the empire. Know, what better place to help rebuild the American empire. If I, take my camera and pivot behind me, you can kind of see overhead.
Speaker 11:Oh. That's the Wow. View. I love it. That's what's in yards back there.
Speaker 1:That's lovely.
Speaker 2:Little bit
Speaker 11:of a foggy day, but
Speaker 4:Yeah. On a clear day,
Speaker 11:you can actually see New Jersey.
Speaker 1:Oh, very cool.
Speaker 11:Intentionally positioned it such that, you know, we can keep an eye on them, make sure they don't invade.
Speaker 1:Okay. Okay. Yeah. Yeah. A little Manhattanite nationalism.
Speaker 2:I I like it. You thought about getting yeah. Have you thought about trying to get logo rights on the building?
Speaker 10:Yes. Throw a
Speaker 11:Funny enough. Big sign up. If you text like one of those five digit numbers, can actually get daily updates on how they'll change the colors for
Speaker 1:the building. Really? Okay. Let me start.
Speaker 3:Yeah. We're you
Speaker 11:know, we got something cooking.
Speaker 3:You know?
Speaker 1:Yeah. You gotta get, like, an iconic colorway for the company so that when you throw it up on the building, everyone knows these guys are working late tonight. They threw their colors up on the building. You know, like, ramp owns yellow, y c owns orange. You need to pick a color.
Speaker 11:We're it's probably gonna be you know, we're building the blueprint to the future. So Yeah. So maybe blue? Some variant of blue.
Speaker 1:I love it. I love it. Give me just I mean, we jump right into it, but can you give a little background on, like, the company, what you're building, where you are in terms of, like, kind of stage and and size?
Speaker 11:Sure. Sure. I'll give everybody a little bit of background about myself.
Speaker 1:Yeah.
Speaker 11:Background's originally in electrical engineering and robotics.
Speaker 10:Mhmm. I was
Speaker 11:over in Northrop Grumman for a
Speaker 2:little bit,
Speaker 11:you know, got TS clearance, worked on some pretty cool radar stuff over there. Mhmm. Did a little bit of EE work, a little bit of MEK E work, a little bit of technician work. Over there, I just got to see how absurdly archaic all of the infrastructure was in the manufacturing side of things. I was starting to get the feeling that the West was forgetting how to build great things, and I wanna make sure that that didn't happen.
Speaker 11:So Mhmm. Got my best friend
Speaker 4:and cofounder, and I went up
Speaker 11:to go start the rack. So as a company, we are building the first automated work construction plan. Sounds like a very vague, very niche thing, but turns out everybody actually has had experience with work constructions. If you ever built like IKEA furniture.
Speaker 1:Oh yeah.
Speaker 11:A little paper instruction book that tells you how to build a thing. Turns out that is actually basically how they make missiles and cars and everything in between. So that process is like imagine you're doomed to factory. Somebody says here is a CAD file or a three d model of like an engine. Go figure it out.
Speaker 11:Like literally go figure out. They will like pull this assembly apart. They'll figure out what order to do the assembly and super duper make manually. Take hundreds of screenshots or photos, and then throw all that together into a several hundred page document or, you know, Word doc or PowerPoint over the course of weeks or months. Super brutal, super manual, sounds as awful as it is, almost as bad as being like a McKinsey analyst with like a hundred page PowerPoint.
Speaker 11:It's like making an IKEA slideshow by hand.
Speaker 1:Yeah. Yeah. I think we saw this week, some videos went viral of, folks painting artillery shells by hand, and the the artillery shell moves from one station to the other. And, there's Yeah. The basic commentary was like, how are we still doing it like this?
Speaker 1:This is not great. But you could imagine some work order system was built at some point for that, and that that that kinda concretizes what you're building. So so, yeah, how's it going? Where is the business now? Are you live in public beta?
Speaker 1:How much does this thing cost? Like, how does the business actually work?
Speaker 11:Right. So what CAD, you know, CAD software was for mechanical engineers, we're building basically that twenty first century update to the process for their blue collar counterpart, personally called manufacturing. Got it. We price pretty similarly. We price 5 k per seat per year.
Speaker 1:Okay.
Speaker 11:It's like a seat based system. We actually great timing for me to come on the pod and chat with you guys. We actually just went live and announced BuildOS v one yesterday. You know, fully live. We are now enterprise grade.
Speaker 11:Congratulations. I talk to clients. You know?
Speaker 6:That's true.
Speaker 1:I talk to clients. We love an iTalk company on the show. Congratulations.
Speaker 11:Ah, epic. Thank you, fellas. So, yes, we can now deploy on prem to defense customer.
Speaker 10:Mhmm.
Speaker 11:We're already working with some defense companies. We're
Speaker 6:working with
Speaker 11:a bunch of automotive companies. We love tier one to three suppliers, OEMs. Got a bunch of really cool companies that are not just, you know, aerospace and automotive. These are, like, the two the only two industries that apparently most people think exist. But, you know, we're working with, like, agriculture construction manufacturers.
Speaker 11:Sure. These are companies that, like, recent recent one that we just started working with. Super cool company called Sputnik. These guys make the potato harvesting equipment that you
Speaker 10:have behind the It's Sputnik.
Speaker 1:It's a Sputnik moment for potato farming apparently. They're saying. Yes.
Speaker 11:So we're we're off to the races. Product is live. We're deploying. Congratulations.
Speaker 1:What what what is it like deploying on prem? Does that mean you have to package your software up and send them, a CD or something or floppy drive? Like
Speaker 6:Not the CD.
Speaker 11:The the caveat here is that they have to have their own, cloud based resources themselves.
Speaker 1:Got it.
Speaker 3:It's a So
Speaker 1:can still interface with APIs as you need to.
Speaker 9:Yeah. Yeah.
Speaker 11:It's a it's a little bit more complicated than that, but I'll I'll sort of leave it at that. Like,
Speaker 4:they have
Speaker 7:to have
Speaker 11:some sort of, like, cloud based infrastructure Okay. Deploy it via Terraform. This is a thing we can
Speaker 2:now do, ladies and gents.
Speaker 1:Oh, cool. Yeah. It's just there's
Speaker 2:really a process for I'm sure you've been talking to your customers constantly as one does, but what's their broad reaction been over the last twenty four hours? Are people, I imagine some of your customers are super excited about the tariffs, others unsure, others negatively impacted in varying ways, but give us the update there.
Speaker 11:Yeah. So on whole tariff thing, man, so some of our customers are a little bit upset because prices are gonna go up for them. It sort of depends where you are industry wise,
Speaker 6:where you are
Speaker 2:in That's yeah. So that's that's like the input costs are gonna go up because maybe they're sourcing
Speaker 1:In the short part.
Speaker 11:In the short You know, they're they're pretty upset about that on a on a couple of different vectors, but it again depends like if you look at the what's really cool about, like, our company is we get to see, like, the wise varieties of, like, the coolest CAD files, coolest assemblies you'll ever see. Mhmm. And so, you know, if you look at, like, the hierarchy and the structure of a CAD file, it's very true. And so that hierarchy of, an assembly of sub assemblies and sub assemblies of sub assemblies really neatly mimics the supply chain of that product. Mhmm.
Speaker 11:There's some really, really neat novel insights that we get to see. And so if you are, like, a one of those subassemblies, you're called, like, a tier one to three supplier. If you're making, the top level thing and you're, like, you know, an annual or a Toyota, you're an OEM. Mhmm. The OEMs are a little bit more upset than the tier one to three suppliers Mhmm.
Speaker 11:As from what I've seen. And so more broadly, like, materially put costs are, like, closer to the tier one to threes than, like, the OEMs. The OEMs get, like, the final markup, which is sort of like a a pain. And so that's kind of what we've seen. But I think by and large, people are short term, like, upset, long term, pretty excited because what it means is it's gonna force a lot of capital to be allocated towards rebuilding domestically, which is honestly what a lot of the folks that we work with want.
Speaker 11:Right? You want your supply chain proximal to you. You wanna have expectable lead times. Mhmm. Know, that's been, like, one of the one of the worst things that a lot of folks we work with have seen.
Speaker 11:So
Speaker 2:For a company for an at scale company like, you know, like a prime like Northrop, what percent you know, for the average product at Northrop, do you have any sense of what percentage of the parts that go into a specific end product are American made today? And do you think that companies at that scale are going to, you know, feel like they need to react and even invest in some of these tiered suppliers?
Speaker 11:So I I don't have a perfect number for you, but what I do know is that companies like Siemens, companies like, Stellantis, these are companies that are global in nature and actually not, like, traditionally headquartered in The US. And we're seeing a lot of them shift more of their production to The US immediately. Like, over the past, you know, couple of months, we've seen huge announcements from Siemens and Stellantis to move production to The US and open up new facilities, triple down on, you know, American based production. Because if you are selling to the American market, you want your cost to be as low as possible. And so it only makes more sense to have your production be domestic.
Speaker 9:So yeah.
Speaker 2:Yeah. How do how do you think about, I feel like one of the bottlenecks to Dirac's growth. I said that right. Correct?
Speaker 4:Dirac.
Speaker 2:Dirac. Dirac. I'm gonna get it this time. It's Iraq with a d. One of the bottlenecks to Dirac's growth is gonna just be having enough if you're selling by the seat, having enough manufacturing engineers.
Speaker 2:Right? I I don't I I wish I knew more myself. How how do you think about kind of like the talent equation to solving, know, to re industrializing?
Speaker 11:So there's okay. I I can get on my soapbox. There's like a cup there's like two to three pieces
Speaker 9:of this.
Speaker 1:Get on it. Get on it.
Speaker 9:Get on it.
Speaker 11:You see, you know, broadly, kinda interesting. The number of manufacturing I I I'll give you little bit of like a history lesson Please. Blueprint in general. So, basically, until, like, the, like, early seventies, mid seventies, engineers and manufacturers were connected by one thing,
Speaker 3:and that
Speaker 11:was the blueprint. Right? Like, classic cyanotype blueprint that you imagine in your head when you say blueprint. And then, like, the lit you know, late seventies, early eighties, CAD software emerged and became ubiquitous. Mhmm.
Speaker 11:And basically, all of the mechanical engineers were on the shop floor, super well integrated in production. They were more blue collar than white collar, generally. All of them basically moved to the back office, went from being generally blue collar to white collar. And, basically, since then, like, manufacture like, the mechanical design had become, like, totally divorced from reality. You often now have, like, mechanical engineers never go into shop floors, oftentimes designing systems that are generally, like, not manufacturable.
Speaker 11:And so the blueprint was basically like fractioned into two parts. Mhmm. CAD software on the design side, work instructions on the build side.
Speaker 1:Yep.
Speaker 11:CAD software got a ton of upgrades for fifty years, work instructions never did. That's what we're working on. And so when that happened, you also saw like the, you know, the archetypal mechanical engineer also fracture, you know, fracturing to two different people. Like the mechanical engineer that's like your your more typical like design engineer and a manufacturing engineer. So actually, if you look like statistically The US, they're actually roughly the same number of mechanical engineers as there are manufacturing engineers.
Speaker 11:Mhmm. So there's, around 300,000 of these folks in The US. Wow. I mean, globally. So it's actually, like, a really big popular job.
Speaker 11:It's just like,
Speaker 9:you know,
Speaker 11:this is where you you would, like, get a mechanical engineering degree and, like, you know, half the time people would just, go into manufacturing engineering. Mhmm. And so there was an enormous so back to, the the portion of, like, labor base. These are the folks who will get a CAD file and, like, figure out how to put this thing together. And their documentation systems suck.
Speaker 11:I mean, it is like oftentimes if it's not PowerPoint or Word, it's a post it or like the back of
Speaker 10:their head.
Speaker 2:And
Speaker 11:so what we've been seeing unfortunately is, you know, especially post COVID, you know, a lot of these folks are retiring. A lot of these folks have all this information locked up in the back of their heads as tribal knowledge. And so, yes, like, we're automating, like, a good chunk of the groundwork of making work constructions. You know, we take a CAD file in. We automatically figure out how to put it together, automatically generate 80 to 90% of the work instruction.
Speaker 11:But that 10 or 20% that we can't automate, that is like the tribal knowledge component.
Speaker 1:Mhmm.
Speaker 11:And that is what we serve as like a data aggregation platform for.
Speaker 12:Mhmm.
Speaker 11:So a lot of what we see is, you know, average age of the American manufacturers, like, somewhere between, like, 45 and 55. I like to say 55 just to be a little bit more precautionary. And, you know, in The US, we do not want
Speaker 9:cheap labor. Right?
Speaker 11:We want smart labor. That's what we wanna be advocating for. We wanna build new technologies. We wanna build new manufacturing systems that take advantage of automation. But we do not want to, like, replace people in general.
Speaker 11:We want to augment and aggregate as much of their tribal knowledge and bake it into the systems that we use for the next generation of American manufacturing.
Speaker 1:Mhmm.
Speaker 11:Like, that's kinda how we see it. However, what we've seen, like, for our customer base, generally speaking, is, you know, the the the classic question of, like, oh, like I buy like some direct software now because I can do the work of 10 people with one person, I can lay nine people off. And it's like, no, no, no. It's actually that,
Speaker 1:you
Speaker 11:know, because nine of your people retired, you're still left with one. Now I don't have to shut my manufacturing facility down. So like Yeah. That's where we see a lot of the value add and value generation. But also, more broadly as a company, we're not just staying in work instructions.
Speaker 11:That's just, you know, where we're interjecting.
Speaker 2:What do you what do you think about MBAs, you know, buying small manufacturing businesses
Speaker 1:Good one.
Speaker 2:Rolling them up?
Speaker 1:Last question.
Speaker 11:Oh, brutal brutal as a concept. Awful idea. I'm actually generally pro engineers and manufacturers rolling up, like SMBs, like mid market manufacturers. This is, you know, I think a very interesting concept as a whole. If you were to, like
Speaker 6:you
Speaker 11:know, if you as a, as somebody with a, like, a hardware background had a very specific, like, search fund for, like, pumps or valves and you, like, really knew who to like like, where the optimizations could be generated. If you came in and you were like, we're going on Google Drive, guys. Like, no more, like, writing stuff on Post its. Like, that could be very interesting. That's useful.
Speaker 11:But, like, an MBA comes in. They look at the P and L, and they're like, ah, like, cut everybody over 50. And it's like, no, the tribal knowledge. That's like where
Speaker 3:those guys knew how things fit together. You didn't write it down.
Speaker 11:And now your factory doesn't know how to build
Speaker 4:shit anymore. And now we're
Speaker 11:a Serbian and we're kowtowing to China and it's over. It's over. But we don't want that to happen.
Speaker 1:Never kowtow. Never kowtow. Well, thanks for coming on the show. This is fantastic.
Speaker 2:This is great.
Speaker 1:You gotta come back when you have more news. I'm sure there's gonna be a ton this year. It's a crazy time, crazy year, and we're excited for what you're doing out in New York, keeping Manhattan safe from those New Jersey folks.
Speaker 11:Yes. Thank you guys for having me, and I will catch you guys later.
Speaker 1:Looking forward to the
Speaker 2:next one. Cheers. Hello,
Speaker 1:Phil. Quick dude. Always a
Speaker 2:What a guy. Very well spoken.
Speaker 1:Yeah. Just high energy. Knows his business. Lots of good takes. Tapped in.
Speaker 1:You'll love to see it. Well, speaking of Tapped in, we got Zach from Plaid coming That's right. Next.
Speaker 2:He had some big news today.
Speaker 1:Fascinating story. Fascinating company. If you ever authenticated an OAuth with your bank, you've probably seen the Plaid pop up, and he is here now. I'll let him explain his business because he probably knows him way better than I do. Zach, welcome to the show.
Speaker 6:Hey, guys. Thank you so much for having me.
Speaker 2:Great having you.
Speaker 1:Yeah. Can you give us a little background, maybe brief introduction of the company I think most people know? But then, specifically, what are you announcing today?
Speaker 6:Totally. So, Plaid, we built infrastructure for digital finance broadly. The core thesis is banking was built for a world that didn't envision the Internet. Yeah. We wanted to help people be able to get loans, open bank accounts, pretty much do anything in their financial life online.
Speaker 6:So we created the API for your bank account. And you probably utilized it when you linked yours, let's say, Wells Fargo checking account to the Venmo app. And, any bank account that you links to pretty much any fintech company, we build the the plumbing for all of that. Increasingly, it's not just fintech companies now, but it's the big banks. The way that you open a checking account with Citi goes through Plaid, and then a ton of enterprises.
Speaker 6:So the way that you pay your rent with invitation homes or a bunch of those, all that stuff's going through Plaid. Last few years, we had a big change to our business. We, historically just focused on bank account linking. Now we're very focused on kind of utilizing a lot of the the aggregate data that's coming through our system to build things like a new version of fraud scoring. If we can see your patterns, you see that you committed fraud in Robinhood.
Speaker 6:We can tell Venmo that you committed fraud. We can tell your bank that you committed fraud, so on and so forth. We built a credit scoring division that that builds alternative credit scores. We built much tooling to do better bank bank payments. So it's been a big evolution for the business over the last two years or so.
Speaker 2:Yeah. Yeah. Talk about the the time period. I guess it was, like, late twenty twenty two, '20 '20 '3. Everybody just said, okay.
Speaker 2:Fintech is over, but you obviously have, like, more better data than everyone. And so you could see that, like, no. In fact, like, Fintech was not over despite VCs, you know, maybe.
Speaker 1:Opining on podcasts.
Speaker 2:Yeah. Yeah. Talking on podcasts. I'm sure you never lost faith, but I guess, like, talk about, you know, where we were a couple years ago versus now.
Speaker 6:Totally. I mean, look, I I fintech had a winter. Crypto has winter as fintech definitely had a winter. Mhmm. Basically, there's a crazy amount of fintech demand pulled forward into 2020 when people couldn't go into their bank.
Speaker 6:They need to figure out a way to do financial services online. Twenty twenty one, zero interest rate environment. You had you had things growing like crazy. You had tons of ad budgets, so on and so forth. First half of twenty twenty two is kind of a continuation of of all of that.
Speaker 6:And then interest rates started going up in the second half of twenty twenty two. And in large part, the fintech market wasn't prepared for that kind of change, certainly not that kind of change at the speed with which it changed. A lot of fintech businesses were were predicated on lending, and lending slowed down quite significantly. And a a lot of them were predicated on on investing or crypto, and those markets slowed down quite significantly. And so, you saw a slowdown of fintech in the second half of twenty twenty two and then, kind of, like, a bit of lethargy throughout, kind of the first half and almost in the second half of twenty twenty three.
Speaker 6:And a lot of that was, the businesses themselves, like, retrenching, going in and focusing on profitability. It was no longer growth at all costs. You gotta build a model in which you're actually profitable. You're you're you're you're not just gross margin profitable, but you're operating margin profitable. A lot of it was also, like, retooling from focusing just on, you know, investing in crypto, to also doing things like core banking and a bunch of other services.
Speaker 6:And so you saw this whole rebuild of all of the fintech companies. And then going to 2024, there was a rebound. In 2025, you know, we've seen very much a fintech spring, as I like to call it. Mhmm. So things are moving really quickly.
Speaker 6:There's a ton of startup formation at the earliest stages. In the mid stages, these companies have retooled. They're now back to growth. At the late stages, you're about to see a couple of IPOs. So Klarna is coming soon.
Speaker 6:We think we've heard that China's coming soon. I've heard that a bunch of others are coming soon. And so, you know, it is very much a sense of optimism right now. But you're going through these cycles of difficult times. I think it makes companies and, in our sense, I think an industry a lot stronger, but I can't say it's fun to go through.
Speaker 1:Yeah. Can you talk about, stablecoins? How are you thinking about that in general? It seems like there would be some cross pollination there, but also, like, it's a wildly different industry in many ways.
Speaker 2:Yeah. And and specifically, you know, you don't need to speak to this, but we were covering the the circle Circle one. Briefly and
Speaker 1:and lot of news about
Speaker 2:like they benefited from some amount of a monopoly temporarily, and maybe that's fading, but just creates more opportunity for other fintechs, SMBs, and and banks.
Speaker 6:Totally. Well, I I haven't read the Circle s one yet, so I wish I could comment on it.
Speaker 2:No. Don't don't comment on that, to be clear.
Speaker 6:Yeah. Like, broadly stablecoin is, like, a huge opportunity. Yeah. You know, in The US, if I wanna send you money over the ACH system, it takes three days. That doesn't make any sense.
Speaker 6:Yeah. We have this whole new thing that's rolled out over the last few years called same day ACH. Great. I can send you money the same day. There's an RTP system, real time payment system, where I could send you money theoretically instantly, except, not every bank accepts it.
Speaker 6:It doesn't work universally. Like, there's still some issues with it. And stablecoins, I can just send you money really easily. And so there there is no question in my mind that Sablecoins are gonna grow quite massively. I think there's still a question on, like, consumer utilization.
Speaker 6:How is it gonna get actually into consumer payments where Yeah. You know, no one's gonna walk into a Starbucks and buy a coffee with their bank account. No one's gonna walk into a Starbucks and buy a coffee with a stable coin. Certainly not for any amount of time that I can think about, you know, may May maybe ten, fifteen years in the future. But for a lot of the core, you know, business to business, especially cross border where it's really messy types of transactions, I I I expect it to grow quite a lot.
Speaker 6:So, definitely an area that we're we're participating. We're working with a lot a lot of companies on, and we're excited to, to support.
Speaker 1:On on that topic of, like, the slow ACH transactions, that feels like something that I I understand the value of crypto, but also, like, databases are fast now. Is there a world where if you were put in charge of, like, Doge for finance, DOFE or something, and you just had, like, carte blanche the government, you could speed it up, or or is it not like a personal issue? You can you think you could do it?
Speaker 6:Yes. One
Speaker 1:of would that actually work?
Speaker 6:It's like, the the the Federal Reserve has a system called FedNow. Yeah. And FedNow is actually just like instant bank to bank transfers. Yeah. And they're cheap.
Speaker 6:The interesting thing is, it's actually a new revenue line, so the bank bank would make processing revenue from this. So there haven't been a lot of new new revenue lines, for the banks recently. Yeah. The issue is, like, getting banks to install it, getting banks like, setting up the right incentive systems to get banks to actually set it up. There are, like, you know, a few hundred banks, and they're mostly small banks that are using it.
Speaker 6:I think there are, like, four or five easy changes. You change the incentive structure. Mhmm. You create a mandate that every bank has to support it. They're, like like, this this the small set of changes that you could get in Citibank payments running in The US very quickly.
Speaker 6:Now it's a question of, like, does the government have the appetite to force things upon the small banks? And, like Sure. It is costly for the banks to implement it. Like, it's it's not crazy costly, but it is not zero cost. Sure.
Speaker 6:And so does the bank does the government actually have the appetite for something like that?
Speaker 2:That's really helpful. What what are you it feels like there's so much to build still. I had to go to the bank yesterday to send a large wire and it's still like, every time you do that, you're like, you know, they're looking at your phone and they're like writing down the wire instructions and they print it out and they're like, can you confirm it again? And then you they're like, can you sign this and can you sign that? And then I gotta text the, you know, recipient and the whole thing
Speaker 1:still Do not copy and paste your account number twice. You can copy paste it in the first box No. It's like feel like
Speaker 2:I feel like this is such a beautiful time for Plaid. You're, you know, run company. Yeah. You have incredible distribution. Yeah.
Speaker 2:And there's still so much yet to build, you know, sort of what what gets you most excited in terms of, I'm sure you just spend a lot of time like talking to big bank CEOs and startups and your position is just like, how can we enable you to do what you wanna do or or improve existing products? But kind of what what are you most excited about in the, Plaid ecosystem, or
Speaker 10:I get
Speaker 6:I get to have the most fun conversations in the world with our customers and with the banks. I get to go ahead and say, hey. What frustrates you about the financial system? And they will just, like, talk for thirty minutes. I'm like, amazing.
Speaker 6:We can't solve all that. We can solve these things. And we can work together to solve those things, and, like, maybe over time, we can, as an industry, find find find a way to think better. So they're incredibly, fun conversations. To your point, like, financial services is just barely becoming digital.
Speaker 6:And, you know, it it's crazy to say that, because, you know, you have online banking and, you know, maybe you use Venmo and maybe you buy some Bitcoin or Coinbase, and you can make a trade on Robinhood. That seems really easy to you. But to most people in The US, most of their financial life is still not fully digital. And so I think just the core the core of our business, like, has a a lot of room to grow, a long way to keep running. Like, we gotta get rid of that.
Speaker 6:Like, hold your phone up, like, type in your account number. All that stuff can become instant and easy. I would say, like, the two big areas that we've really been investing in that I think will be game changers kind of over the longer term. So, obviously, the core business matters a ton, but the the two new areas. The first is fraud detection.
Speaker 6:So online financial fraud, is going up at somewhere between 2025% a year off of a gigantic base. Deepfakes are having a big impact on this. A lot of AI tooling is having a big impact on this. I mean, there's the like, you you probably heard of, like, the pig butchering stuff that's going on where, like, people are, like, you know, calling folks and and and tricking them into sending Xcel payments to to crazy places and so on and so forth. But that is at an all time high end going up really quickly.
Speaker 6:And so we built built a set of tools that look across all the data in our network. They ingest a bunch of third party data. We have customers reporting fraud data back to us. And you can kinda think of it like Palo Alto Networks for Mhmm. For financial services.
Speaker 6:So, like, how do we notice if something is weird over here and then tell everyone over there that they should maybe be on alert for it? So Mhmm. That's one big area that we've been focusing on. The second big area is around credit scoring. So right now, if you get a new job tomorrow, your income goes up by three x.
Speaker 6:It will take a very long time for that to show up in your credit score. Right? And, you know, because you have to get loans, you have to then repay the loans, and, like, the whole for the whole thing to trickle through the system, it doesn't make any sense. But you are a better credit risk today because you've got that new job. And so we've built a series of tools, including our own our own credit score, that looks at real time data and brings it into the model and then increasingly will allow more and more people to get loans that are based on, you know, today's data, not five years from now's data.
Speaker 6:So that's what I'm excited for.
Speaker 2:Yeah. On AI specifically, in Plaid, just in fintech generally, do you think it's it it certainly hasn't felt like the most hypes category be and and maybe that's because, you know, ten years ago, people were promising those sort of, like, AI based lending and all that stuff. And maybe it was AI, maybe it wasn't. Do you think it's getting enough attention? I'm sure you guys are taking it seriously internally.
Speaker 6:It would take it very seriously internally. Look. From an internal efficiency standpoint, like like, leaning in hard, and frankly, a lot of the banks are leaning in hard. And so I think that'll be a big step forward. I don't need to talk to you about that.
Speaker 6:You've talked to everybody in the world about that kind of stuff. From a financial services product specific lens, other than, like, you know, AI causing fraud and then using AI to fight fraud, but, like, from a, like, core banking product standpoint, I don't think you're gonna see a lot of changes fast. I think behind the scenes, if you go to a bank and you talk to a teller or more likely, like, you do a Zoom call call with, like, a wealth adviser, they're gonna have an AI dashboard and a bunch of AI tools that are real time telling them, like, hey. What's what's what's going on with John's portfolio? You know, what recommendations should he be making?
Speaker 6:You know, how might it be different? But you're not gonna get that direct, like, AI bot style interaction for, I think, a long time, mostly because there's so much regulatory overhead, so much trust overhead that goes with it, that I think the bank's gonna be hesitant and and slow to launch. Look. I'm on the furthest edge of this. Like, I would love to have a, like, set of AI bots that just, like, move my money across my accounts, like, leave it in treasuries until the minute that I needed to pay, you know, whatever bills I need to pay.
Speaker 6:And then if I had excess leftover, like, move it back into treasuries or balance across my loans to pay the lowest interest rates. But I'm probably, like, way on the furthest edge of that.
Speaker 1:I have two questions. Out of the big bank CEOs, who's the best DJ?
Speaker 6:Well, you know, only one of them plays a covella. So The data
Speaker 1:is solved. Data solved. But on a serious note, I feel like there's this interesting dynamic with Plaid where you guys have it's a financial infrastructure company, but you take design incredibly seriously. Where does the design chops come from? Like, how did that become so instilled in the in the company?
Speaker 6:So from the earliest days, our mission has been unlock financial freedom for everyone. Like Yeah. It is a consumer centric mission. Like, our our goal is to help consumers and small businesses, that have a greater amount of financial freedom, have more control over their financial lives, and be able to do things that they wanna do, that are out there. And so, like, we took the position that we need to fight for the consumer even though we build a b to b product.
Speaker 6:Thus, we're b to b to c or, like, b to b to small business. And with that in mind, we knew that we need to build a brand that resonated with consumers. It doesn't need to be the loudest brand, but, like, in a lot of senses, we take inspiration from Visa. Like, a lot of consumers don't know what Visa does, but they certainly know that it helps them make payments. Alright.
Speaker 6:Well, we wanna learn from that. Like, we would like every consumer to know what Plaid does. We're also realistic to understand that not every single one is necessarily gonna fully understand it, but we want them to have tools that come from us. We want them to have trust in us. And so we focus a lot on building that type of consumer experience.
Speaker 6:And then you see us also, like, in the press and the media, like, try to go fight these battles on behalf of consumers. So fighting the open banking battle, like, fighting the against the debanking stuff that's going on, like, being very public about saying, hey. We believe that every consumer should have access to every financial product that they might want. And, like, we think that if we continue to live up to this, like, this somewhat idealistic view that consumers should be financially free, that that's gonna drive a lot of value for the company. And that that then flows through into the products that we build, the way that we act, the design design sensibility, so on and so forth.
Speaker 2:Last question on my side. Do you have any advice for founders in maybe defense tech or AI that are sort of like riding the high that fintech maybe felt in 2021? Like, is it time to, you know I'm curious because, like, you know, this is such an amazing moment for you and the team to come back. You obviously, you know, that the company's been marked up. You have a bunch of, you know, a world of opportunities, but you had to go through a couple darker years.
Speaker 2:Any any words of advice?
Speaker 6:I mean, as the saying goes, things are never as good as they seem nor nor as bad as they seem. I would say that the dark times, honestly, it's my favorite, and it's the time that really forms the company, and it it lets you know who you are. It lets you know who's really on your team, and it it forces you to make, like, the the the most important decisions. Nothing's ever gonna be easy in startups. Nothing certainly is ever easy for Plaid.
Speaker 6:But knowing that we've, like, formed kind of an amazing team, a good set of of of customer relationships, like, we've made good product decisions in the times that are really hard and allow us to go fast in those times where where it gets a little easier. So I don't know if I have any specific advice other than, like, just keep on keeping on.
Speaker 1:It's great. Yeah. I mean, that is the best advice you can give, I think.
Speaker 2:No. I'm genuinely excited and I can't wait for you guys to build more products because every time I use Plaid products, it's a breeze. Every time I use Anything from from a legacy banking world, it's absolutely brutal.
Speaker 1:So much trash about all those partners. We love the banks and our goals. We're very
Speaker 2:thankful for everything we Make the banks better.
Speaker 1:Good luck and congratulations on the round.
Speaker 6:We'll ring
Speaker 1:the bell.
Speaker 2:It's great having you on.
Speaker 1:Great having
Speaker 10:you on.
Speaker 2:Always welcome. And congrats to the whole team.
Speaker 1:We'll talk to soon.
Speaker 6:Thanks for having me. And Thanks,
Speaker 1:Bye. Next up, we got Nathan Mintz coming in from CX two. Very excited to talk to him. Going back to defense tech, had to give you the update because there's some breaking news about Plaid. Not a defense tech company, but still got still snuck into defense tech question, Jordy.
Speaker 1:I like how you did that. That was very good.
Speaker 2:You gotta bring it back. No. It's just that we're we're at this moment. You know? Yeah.
Speaker 2:Plaid was started, you know, got to, you know, form itself when when fintech maybe wasn't so hyped and then went through this period of exuberance and, you know, insane valuations. The same multiples, we were seeing in AI today, fintech companies were getting, even lending companies were getting.
Speaker 1:Yeah. Well, we're talking to a veteran of defense tech, Nathan. Welcome to the show. How are doing?
Speaker 12:Hey. Good, John. Good. Good to be here with you. I was just listening in, and I'm I'm bummed that I don't have as good a hair as Zachary or around
Speaker 1:He has fantastic hair. You know, we get some compliments on our hair every once in a while, but he blew us out of the water, I think. So, you know, the fans are just gonna flock over to the plaid now. Yeah. But but, yeah, how how are you doing, and can you give us a little intro on yourself and some background and what you're building now?
Speaker 12:Doing great, Yeah. So, you know, right now, it's sunny and 72 degrees outside in, in El Segundo. And, you know, it's it's it's a great day to be in defense. We're seeing just, you know, it seems like every hearing that I watch of these appointees for this new administration, seem to be echoing our talking points. So That's right.
Speaker 12:It's kinda nice to know that, the last few years of of pushing for a transformation and and the way we do our force mix and and how we fight wars is actually, someone's actually been listening. Mhmm. So as you know, I've been in defense for about twenty years. I started out, at the big, Soviet tractor factory primes. I spent fourteen years at Boeing and Raytheon, as a radar systems engineer, electronic warfare, engineer.
Speaker 12:I worked on, you know, programs with names like next generation jammer and the the radar for the f 15 and the f 18 and a bunch of space programs and stuff. And then in about 2018, an old friend from college, Joe Lonsdale, called me up and said, hey. We're starting a defense vertical. Do you have any ideas? And I came to him a couple months later for with the idea for what turned into Epirus, which is a high power microwave to kill drones and other electronics.
Speaker 12:So got that started, ran that for a couple of years, then moved over into the automotive radar space, started a company called Spartan Radar Mhmm. That does, you know, software that makes automotive radars have higher resolution. That one, we ended up selling to a, a major equipment OEM, in the past year, and so we've we've exited that one at this point. And then about a year ago, I got together with, my cofounders, Mark Trapgar, Porter Smith, and Lee Thompson, and we started CX two with the goal of transforming the way that The US fights warfare in the electronic warfare domain. So that's where we are today.
Speaker 12:The company is about 24 people. We're here in based here in El Segundo. We're backed by ATVC and Andrei Skorowitz.
Speaker 6:Great.
Speaker 12:And right now, the office is pretty empty today because most of my team's out, participating in an exercise. So, exciting times abound.
Speaker 1:Yeah. You know, you see those viral videos of the Chinese drone displays where it looks like a dragon, and everyone immediately quotes it and says, like, that's a weapon system. At the same time, as scary as that is, it feels like between Epirus and Andoril and, you know, Allen Control Systems is just pelting bullets, and we're talking to a company today that's building laser weapons to take down drones. There's a lot of different companies that have addressed this. Is it as dangerous as we think, or is it more of a solved problem maybe than we already know, or is it just like we need to scale up the systems we have?
Speaker 12:So I'll give you a couple statistics. When I was over in Krakow at the NATO Innovation Summit last year
Speaker 3:Mhmm.
Speaker 12:The Ukrainians threw out a statistic that thirty percent of the of the casualties that they were experiencing were due to drone strikes. Wow. I think today in the Kursk Offensive for the Russians, it's the majority, if not almost all of them for certainly for the tanks and vehicles. So it's become a a mainstay of modern warfare. Yeah.
Speaker 12:And right now, that's where we are today is just the beginning. Most of the systems that we see used, it's these FPV first person view with some guys sitting there with goggles like he's playing a video game, but it's very one v one. Mhmm. Well, in the next few years, it's gonna become one v many. Yeah.
Speaker 12:And at that point, those command and data links that today are essential for that drone to get there, and we're figuring out how to make them work more autonomously because there's all these countermeasures like you mentioned to try and jam that data link or deny it, it's gonna become even more vital because, one one person suddenly, that archer is gonna be firing a hundred arrows. Right?
Speaker 7:Mhmm.
Speaker 12:We're trying to state taking a step past that at c x two, and we're trying to develop the systems that shoot the archer, not the arrow, with that in mind. And a lot of it comes down to finding the drone controller, which becomes an increasingly harder problem as the cat and mouse game continues, in modern warfare.
Speaker 1:So what, what does the device look like that's sending out the signal to find the drone operator? Are you putting up your own drone, or is this something that can be tracked from satellites or UAVs or any sorts of other devices, or can you even talk about
Speaker 12:Yeah. So we're building our own, electronic warfare stack, to find, fix, and finish on those emitters of interest. And that starts with a, a drone that does, SIGINT and finds and fixes on those signals. We call it Wraith. It's a it's a group two drone with about, you know, forty five minutes of later time or 40 kilometers of range depending on how you think about it.
Speaker 12:That takes off and geolocates those emitters. And by that, I mean, it finds the position of those emitters. It's a little different from systems on the ground today that mostly kinda give you a line of bearing and say it's out there. We'll actually give you a fix on it and identify what it is. From there, through our Nexus operating system, we'll hand off to an attack drone called Banshee that'll go out.
Speaker 12:It's a loitering munition with a home on emitter seeker that'll go out and take that emitter out. So you go find the controller, and then you you have another, drone that follows it and and actually takes it out kinetically. Right? So that's that's the current the the the full when I talk about the full attack stack that we're building. Right?
Speaker 12:And alongside that, we've actually built an FPV kit with a version of the Banshee seeker that can snap on to another drone. We call it Beidris that will actually go out and seek that emitter out, and it provides an overlay so the FPV user sees a a line of bearing and kind of the strength of signal on you. You're getting warmer. You're getting colder. No.
Speaker 12:No. No. Fly left. Fly right. And can hone in on a particular signal?
Speaker 12:So the the that's kind of our product mix. Wraith, Banshee, Badrius Nexus. You're kinda seeing a halo theme in here.
Speaker 1:Yeah. I like it. Very cool. You have a question? Or I I I have another one.
Speaker 1:I can
Speaker 2:Yeah. I I as you're talking, it feels like there's some there's plenty of, you know, companies in in the Gundo and just Defense Tech broadly that can just sort of, like, think long term about capabilities and trying to win these bigger programs. It feels like you have to take a much more iterative approach because things are kind of evolving in real time. And potentially, that's like the the gonna be the case for the entire life cycle of the company. Right?
Speaker 2:Where you're just always trying to stay always trying to stay whatever a step ahead of adversaries. Is that different than you think, working at, you said, Boeing and and Raytheon back in the day, where they're just sort of thinking in sort of big programs and big capabilities, and and you're now having to be, like, nimble and and constantly trying to stay at the edge?
Speaker 12:Yes. Absolutely. The way that we used to do product development in aerospace was very much a bell curve with a long tail of sustainment. Right? So pretty much all the effort would culminate around critical design review.
Speaker 12:And then at that point, most of the systems insurers and stuff would roll off, and the program would go into manufacturing to sustain that. Whereas if you look at software products, if I was to look at how Facebook does a rollout or, you know, Google or any of these others, for instance, it's much more of kind of a a a logarithmic plateau. It gets up to a certain point. There might be a little bit of a hump and effort once the the the posts are kinda put in on the house, so to speak. And at that point, there's a software sustainment tail that's much more much larger that takes place over time.
Speaker 12:And that's what we see in Ukraine with, like, the drone manufacturers that are over there. There's, like, 200 drone companies in Ukraine that are out building the million or so drones that they're putting to use, you know, right now. What what they're able to do is that they're able to rapidly iterate using commercial, you know, CICD commercial oh, is it constant integration, constant delivery type of processes? The the most extreme report I've heard of this is they they had cases where the Russians were rapidly changing tactics and employing new systems, where they were updating software at a rate of six times a day. And, like, with with the systems I used to work on, I mean, the missiles would get software updates so infrequently, they called them tape updates because they had to manually go out there.
Speaker 12:Yeah. And so, you know, they were lucky if they had an update every two years, much less, you know, six times a day. So the way that we do software acquisition in the DOD has to fundamentally change. Mhmm. There's been some good signs in that respect with the rules of the SECDEF has pushed out for software acquisition pathway, where they're saying we really need to buy software using commercial processes as a default as opposed to still using the traditional waterfall.
Speaker 12:You know, I call it the Soviet tractor factory way of of procuring things. Right? And and, you know, I think on the hardware side, we eventually need to move that direction as well. It's a little harder when you're building a multibillion dollar aircraft, I mean, just realistically than just building a drone. But let's start with software and iron that out because that's where the most palpable need is right now.
Speaker 1:I love I love all those phrases. They're they're gonna stay in my mind forever. Can you can you break us down, can you break it down for us about DJI? There's a lot of fear that we're never gonna catch up. There's also just a general fear of, like, are all the DJI drones gonna rise up one day and attack us?
Speaker 1:You you've probably seen, like, the internals of these drones. You know how to probably take them over at the drop of a hat. You could probably do it on your phone if you wanted to. How much of a risk is DJI? We've had other guests on the show say, maybe we should ban the importation entirely.
Speaker 1:Where do you stand on DJI?
Speaker 12:I mean, you know, we already have export or import controls in place, and, like, they're banned from use from US government agencies, for example, with with exceptions. Yep. The solution is we gotta build our own drone, you know, industry here in The States. I think we're doing a good job in that. The CX two is part of that.
Speaker 12:Mhmm. But we're also partnering with Ukrainian drone firms. I don't know if you saw there was a big piece in the Wall Street Journal talking about us and and Skyfall Cool. Which is a Ukrainian drone firm. And so, like, partnering with the guys that are already building a million drones a year overseas and trying to take their lessons learned and scale it over here is one cheat code that we can apply to catch up faster.
Speaker 12:Right? The the big advantage that the Chinese have is they applied consumer scale technology and manufacturing to the drone problem, and they took advantage of our own regulatory, you know, blockers that we're putting in place. I don't know if you're aware of this, but to fly a drone in The US, you had to have a I think it's a FAA type one zero nine license.
Speaker 1:Yeah.
Speaker 12:That's what it's called. And the Chinese got around that by labeling what they were doing a toy. So anytime that The US drone manufacturers you know, we've been building FPV drones since 02/2005, '2 thousand '6 Yeah. But nobody could get funding to actually scale it because of these regulations and the fact that, oh, it's too hard to train the pilots. It's not scalable.
Speaker 12:The Chinese, on the other hand, found a loophole, and they scaled up as a result. Right? So our own barriers from our own regulatory infrastructure are what need to be revisited, and that'll unleash US innovation and allow us to to compete with them toe to toe.
Speaker 1:Got it. Are there any considerations for, INDOPACOM versus what's going on in, Eastern Europe? Clearly, you're very focused on Ukraine, but are you looking ahead to any other theaters?
Speaker 12:Yes. I mean, in INDOPACOM, the ranges are just a lot larger. Yeah. So you're gonna have bigger drones with, you know, larger scale. Right?
Speaker 12:That's the main difference. Also, the Chinese are just more likely to, to bring out, you know, more sophisticated systems. I mean, you know, the Russians for all the talk about, you know, the zoo 57 felon, the reality of it is is they fielded all of 12 of them. The Chinese j twenties and j 30 ones are starting to get into the hundreds. That's their, quote, unquote, fifth generation stealth fighter.
Speaker 12:I can make an argument that it's not quite fifth generation, but anyway and then and then just their the amount of drones that they're talking about bring at scale. They they recently disclosed that they have an order for a million Kamikaze drones that they're putting forward. Right? In INDOPACOM right now, our plan is to deploy a whole bunch of legacy Battlestar Galactica assets with names like Riva Joint Compass Call that are mostly on older aircrafts. Some are on seven o sevens.
Speaker 12:Some are moving into Gulfstream fives to do a lot of these capabilities, and they're gonna be pushed way back from the Taiwan Strait. The only thing we have that can really get close is the Growler, and all of our missiles that we're using to do this mission cost millions of dollars. That's what we're seeing over in, you know, Gulf Of Aden right now. You need a $6,000,000 missile to take out a $20,000 drone. So we're here to help bring the cost parity back.
Speaker 1:Well, thank you for everything that you're doing. We certainly appreciate it, and we appreciate you stopping by. You gotta call back in when there's more news, more updates. Those are some
Speaker 2:great tips.
Speaker 1:Yeah. We could keep talking to
Speaker 6:you for another hour.
Speaker 1:I'm sure we're just gonna go into I mean, it's the it's the most fascinating geopolitical situation, the most fascinating technology. And, yeah, we thank you for taking the time to chat with us today. And I'm sure we'll
Speaker 9:have what
Speaker 4:you do.
Speaker 1:Again soon. So thank you.
Speaker 12:Yeah. Absolutely. Happy to be here, and thanks for having me on.
Speaker 1:Have a great day.
Speaker 2:Talk soon.
Speaker 1:Talk soon. And we got Brandon from Shield coming in to the studio in just a minute. I believe he's here. Let's bring him on in. We got one minute.
Speaker 1:If you're not familiar with Shield AI, develop, test, and deploy autonomy faster than ever. Autonomy for the world, another defense tech company, and he is here now. Brandon, welcome to the show.
Speaker 3:What's up, guys? How are guys doing?
Speaker 1:We're doing great.
Speaker 2:How are you?
Speaker 3:Doing great. Fantastic. Thursday afternoon.
Speaker 1:That's great. Yeah. Thanks for taking the time to be with us. For those who don't know, could you just give, like, a little intro on yourself and the company?
Speaker 3:Yeah. Sure. Quick intro on myself. Mechanical engineering background. I went to the US Naval Academy, became an engineering officer onboard a ship, deployed to the Arabian Gulf on that ship, then laterally transferred, became a US Navy seal, and did three deployments, two to Afghanistan, One to The Pacific.
Speaker 3:Got out in 02/2015 while concurrently going to business school, started Shield AI with my brother and have been at it for the past ten years. That's background on myself. Quick background on Shield AI. Mission is to protect service members and civilians with artificially intelligent systems. In pursuit of this mission, we've been building the world's best AI pilot.
Speaker 3:Easiest way to think about an AI pilot is self driving technology for unmanned systems that enables them to, maneuver without GPS, without communications. It enables them to maneuver without remote pilot, enables the concept of swarming or teaming. Notable milestones along this journey were the first company in the world to put an AI pilot on the battlefield in 02/2018. We put it on a quadcopter. Would go inside buildings ahead of special operations forces that was deployed to Iraq, Afghanistan, Syria, most recently used in Israel to rescue hostages, which was really cool.
Speaker 3:Have the text messages back from Israeli counter terrorism forces during from October 2023. And then, also, we were the first company in the world to put an AI pilot on an f 16 and fly an f 16 autonomously. We won the DARPA alpha dogfight in 2020. In 2022, did the first f 16 flights. In 2023, we did the first ever AI piloted f 16 versus human piloted f 16 dogfight.
Speaker 3:And then in 2024, the secretary of the air force flew our AI piloted f 16. We're finalists for the Collier Trophy, which is given to the greatest achievement in aeronautics or astronautics. Wright Brothers won it. Chuck Yeager won it for breaking the sound barrier. We were finalists and lost to some NASA asteroid mining thing.
Speaker 3:Cool. Whatever.
Speaker 1:Yeah. But yeah. He's paying attention.
Speaker 3:Yeah. I
Speaker 1:mean, it sounds like an overnight success, the type of overnight successes we like to highlight it on the show. Of
Speaker 3:overnight success.
Speaker 1:That's always the way it goes. All the all the greatest overnight successes take decades in my experience. Yeah. Yeah.
Speaker 2:I mean, it's a seventeen year overnight success if you count the the naval experience.
Speaker 1:Yeah. Yeah. Exactly. Yeah.
Speaker 2:What's it like going having your your first, you know, real startup, you know, become a multi billion dollar company. Most founders have the benefit of, you know, starting a couple things that don't maybe, you know, little ideas or things like that. Is it, you know, going back ten years ago at this point, guess, nine years and eleven months, did you feel like you knew what to do from the beginning or you had good people around you? I'm curious, you know.
Speaker 3:One is you don't know what to do in the beginning. You wanna surround yourself with great people just to be directly responsive to those aspects of the question. It's I I don't think too much about, like, you know, that that aspect of like, the aspect of, oh, it's now a multi billion dollar company, principally because it's a knife fight every day. It's a lot of pain and suffering. I tell everybody that, like, when Jensen Huang from NVIDIA talks about pain or suffering, when Elon talks about the pain and suffering that goes into building these these types of businesses, it's absolutely true.
Speaker 3:And so, like, there's a massive amount of stress. There's a massive, like, number of times that you fail. There's a massive amount of embarrassment, like, when you fail in front of customers or when you disappoint customers along that ten year journey. And so, you know, I think the you know, one of the reasons I think we've been successful is the the resiliency, the ability to keep moving forward, the ability to pick yourself up once you get brought to your knees, like, when you get gut punched, and it certainly happens. And so, you know, in in that sense, you know, I think we have that when we started.
Speaker 3:I I experienced that in the SEAL team, so I was, you know, grateful to have those experiences and and basically used to the life of suffering. So, you know, that's that's paid off well over the past several years.
Speaker 1:Can can you talk a little bit about the path to full autonomy for fighter planes? We saw this with chess where, you know, Deep Blue beat Gary Kasparov, but for a long time, a combination of AI and human would outperform. They called it like centaur chess. Yep. Some people say we're in the centaur era of AI image generation, or a lot of people use ChachiPT, but then they're editing it themselves.
Speaker 1:It's not a pure AI creation. It's not pure human. Are we in the Centaur era of air supremacy right now, or are we getting there, and how long do you think it'll last?
Speaker 3:I I I think at this stage in the game, autonomy is at superhuman levels of performance. And so I don't yes. People will always augment machines and make those machines better and more useful to the people. Mhmm. But the level of involvement in doing that is becoming miniscule in terms of, like, what's required.
Speaker 3:And so, look, I you know, that journey, right, for us to flop starting to fly an f 16, unfortunately, in 02/2015, when you're, you know, three person founding team with zero money, zero track record, they don't hand you to the keys of the keys to the f 16 right away. And so we had to earn our right, you know, our path, you know, our right to fly that aircraft. That took a long time, and we stair stepped our way to get there. Right? It took seven years before first flight to f 16.
Speaker 3:Proving it on a quadcopter, proving it in simulation with the DARPA alpha dogfights, proving it on our VBAT aircraft, and eventually, you know, they you know, more and more people now are giving us, quote, unquote, the keys to their jet aircraft. Yeah. But it's I yeah. I'll just say, like, autonomy is a really, really hard problem. It's also a really, you know, valuable thing to create.
Speaker 3:And we're at the stage now where, you know, I yeah. I'm I'm a big believer. I think the entire future is gonna be an autonomous future. I think I agree with Elon Musk when he says there's gonna be, you know, millions of autonomous systems in the world. His goal is to put a billion humanoid robots on the planet.
Speaker 3:You know, we'll have millions of self driving cars. I believe there will be millions of self driving aircraft and millions of other autonomous systems in Shield AI. Our objective over the next ten, twenty years is really to enable that future.
Speaker 2:Can you talk about the developer platform that you guys were building? I know that's part of the that that was part of the announcement that you did with the new round at the beginning of last month.
Speaker 3:We asked ourselves the question, you know, how do we put a million AI pilots into customers' hands in the next ten years? We spent ten years building the world's best AI pilot. For all the reasons I mentioned, I feel like we've checked that box. And then it became, how do we how do we put a million AI pilots into customers' hands? And the answer was we have to we have to supercharge the aerospace and defense market.
Speaker 3:We have to supercharge the autonomy industry. And we took a page out of Amazon Web Services playbook. Right? If you're unfamiliar, Amazon Web Services, they had basically built a great internal product. Team said, hey, what if we, you know, brought this to market?
Speaker 3:What if we commercialized it? It? Would it be valuable for other people? All this infrastructure, these data pipelines, these developer tools, and obviously, the rest of this history massively valuable for Amazon Web Services, most profitable business unit they have. And so we basically said, let's package up all of our developer tools, our infrastructure, our pipelines, and enable the rest of the defense industrial base, and, again, the rest of the the autonomy industry and those interested in autonomy to actually develop, evaluate, test, deploy autonomy.
Speaker 3:And so spent, you know, the better half of last year or more than last year really focused on building that product and rolling out to beta customers, and we're going to general availability here in May for that product. And the response has been game changing. It essentially enables you to reduce the number of engineers, reduce the time to actually build autonomy and take it to market by 10 to 50 x. So it's just massive improvements. We're we're flying first flights on a jet aircraft to engineers in six weeks.
Speaker 3:Right?
Speaker 1:Wow.
Speaker 3:If we had these tools back in 02/2015, they may have let us fly, the f 16 right out of the gate. So it's, it's incredibly powerful.
Speaker 1:Yeah. Speaking of the f 16, what is actually the hardest part of flying an f 16 in a military scenario? I can imagine that dogfighting feels like the most intense, the most high stakes, but then, it also sounds really hard just to fly an f six f 16, like, into the theater for six hours straight. You get tired. And then landing on an aircraft carrier in, like, stormy seas, that seems really hard.
Speaker 1:Are are you trying to do it all? Is there is this the idea, like, self driving? You kinda turn it on when you're on the highway. Yep. What's the most difficult?
Speaker 1:So
Speaker 3:just to be clear, the work on the f 16 was to burn down the technical risk for this next generation of uncrewed fighter jets. Yeah. But in terms of, like, what the you know, the most technically hard like, the technical technically hardest part about it is actually around safety and certifiability. Right? Sure.
Speaker 3:The US Air Force, the US Navy, they're not putting up 20,000 pound aircraft in the air, right, that are just going through, like, not perform. Right? Especially in a, you know, in the dogfighting scenario when we have relative closure rates between two fifteen thousand pound aircraft going 1,200 miles per hour closure rates within, like, you know, call it 50 meters of each other, you have to be able to say, can guarantee the safety aspect of what's going on here. Yes. There's risk, but this is how it's been burnt down.
Speaker 3:This is why it's safe. This is why we believe it's gonna do exact or why we know it's going to do exactly what it said it's gonna do. So as people think about you know, and I think that's where Shield AI has really shown is our understanding of not just, like, the autonomy aspect, but that intersection of autonomy, jet aircraft, safety, reliability, certifiability. That's where Shield AI stands out.
Speaker 1:Do we need a
Speaker 3:I spent a long time working on.
Speaker 1:Do we need a new Top Gun movie where the protagonist is a software developer?
Speaker 3:It probably won't be as entertaining as, as Maverick too, but we're you know, or or as Maverick, but we're I'm open to it. Yeah.
Speaker 1:I'm open to it. I'd love
Speaker 2:How do you how do you think about, M and A going forward? I think you guys have made a couple or at least a couple, acquisitions to date. There's now a ton of new investment, but you guys have spent 10 years winning customer trusts, you know, winning, you know, contracts, etcetera. And I imagine there's gonna be some companies that develop, you know, cool technologies or have great talent, but don't quite reach the where you guys are, you know, how how do you how do you look at that opportunity going forward?
Speaker 3:Certainly, we we built an acquisition muscle and acquisition arm in our in our company and we are constantly looking at opportunities And there's just a very, very it has to be go through a lot of different wickets for us to say, let's let's get serious about something. Right? Ideally, it's strategic because it takes up a lot of executive time if it's truly going to move the needle for the business. At the same time, you'll see us do smaller acquisitions. We'll announce, like, a really you know, a smaller IP type acquisition here in the next several weeks.
Speaker 3:And so there's that range, but in the ideal world, you know, strategic needle moving for the business, and, know, gives us better market access, gives us enables us to build a better product, one that's aligned with our strategy road map, with our product road map, with our vision for the business, and so we're always on the lookout for new companies.
Speaker 1:It's fantastic. Last question or we're good?
Speaker 2:No. That was it. I mean, come back on when you have when you have news.
Speaker 1:This is fantastic. I mean, such a fascinating business and, like, such a entertaining and just dramatic in so in so many ways. I mean, we could go way deeper, but thanks so much for taking the time to talk to us. Really fun conversation.
Speaker 3:Thank you, Brandon. Thanks, guys. I'll see you.
Speaker 1:We'll talk to soon. Bye. Jordy's hitting the bathroom, but in the meantime, we have Peter from Roon Technologies here. Let's bring him in, and I'll have him do his intro, and then Jordy will hop on in just a second. So, Peter, are you there?
Speaker 1:Can you hear me? Hey, Peter. How are doing?
Speaker 7:Hey. I got you.
Speaker 1:Cool. Yeah. Thanks so much for joining. I've heard a lot of great things about the company. I actually haven't gotten a chance to really dig in too much.
Speaker 1:So could you just give me a brief intro on you, your backstory, and kind of what the company does today?
Speaker 7:Yeah. Absolutely. Absolutely. Happy to give you an intro and then tell you more about the company.
Speaker 9:Great.
Speaker 7:So myself, I'm I'm the CTO of Roon. I lead the product engineering team here. And before Roon, was at Adderall for four years as a software engineer. Had some incredible opportunities there with some amazing teams. And before that, I was at Facebook for three years.
Speaker 7:Facebook data research.
Speaker 1:You're the meme. You're the meme of, like, you were building ads and then Palmer said, hey. Come do something meaningful with your life and you
Speaker 6:weren't getting it. Over by Walmart.
Speaker 1:I love it. Yeah. It's amazing. It's real.
Speaker 7:And, actually dropped out of college to join Facebook when I was 19. Cool. Interned in London at the time. And, I'm originally, from Austria, so I'd like to consider myself the most patriotic Austrian American since Arnold Schwarzenegger.
Speaker 1:Arnold Schwarzenegger, was gonna say.
Speaker 7:Exactly. But, yeah, had the opportunity to come here when I was 19 and, you know, participate in the American dream, and I'm grateful for that ever since.
Speaker 1:That's fantastic. What yeah. What what what about Roon? Can you tell me?
Speaker 7:Yeah. So about Roon, so, you know, in short, we're a military logistics technology company.
Speaker 1:K.
Speaker 7:And really the, you know, the realization was that, you know, over the past few years as defense technology companies have emitted on on drone swarms and hypersonic missiles and autonomous submarines.
Speaker 5:Mhmm.
Speaker 7:You know, what they haven't had to focus to think about is, you know, well, if if that drone breaks down in the fight, you know, where do its spare parts come from? Right? Or if you shoot one hypersonic missile, where do the next 30 come from? Or if you had a collaborative combat aircraft, where does the fuel to charge the battery to get it off the ground come from? Right?
Speaker 7:Those those logistical considerations. And, you know, as I as I look more into logistics, I realized that it was sort of the forgotten part of the military, especially at the tactical level. And I realized there was an opportunity to bring, you know, the great innovation that other companies have brought to intelligence and command control and fires, now bring it over to to logistics because, you know, I also knew that, you know, the great quotes of amateurs talk tactics and professionals talk logistics. And, yeah, I knew how much logistics mattered to Patent's third army. And so it was just such a stark contrast between logistics really matters.
Speaker 7:But then when you look at a lot of decisions in the field, they're using whiteboards and Excel spreadsheets and, you know, scraps of paper, and there was a gap. And that's where we found it written to fill that.
Speaker 1:Yeah. I don't know if you ever played, like, hearts of iron four, but it's very funny that, you know, Call of Duty is wildly popular, but hearts of iron four is this, like, intense military simulator where you can spend twelve hours just optimizing, like, the flow of oil to the front line. It's very logistics based, and people
Speaker 7:Yeah.
Speaker 1:Say it's like, never never play the game because it's too addictive, and you'll just be playing it all the time. But you're playing it in the real life. Can you can you talk to me more about, what contested logistics mean? I've heard that term thrown around, but I don't really understand it. Is that is that relevant to your business?
Speaker 7:You know, it's an interesting term because when I when I, you know, started out with Arun, I also really tried to dig into what does contested logistics mean because that, you know, it's it's a buzzword that's out there.
Speaker 1:Yeah.
Speaker 7:The more and more I spoke with logisticians, they actually laughed when they heard that term because all the logistics and military they've overdone is Right? The military operates in contested spaces.
Speaker 1:Yeah.
Speaker 7:So the pre contest logistics is is is really not you know, it's actually not necessary. It's just logistics. So, you know, what we're what we're building is not software for contested logistics. We're building software for logistics.
Speaker 1:Got it. Can you take me through some of the history of, logistics? Obviously, it was, like, pen and paper, and, I don't know. Even before that, probably, like, Carrier Pigeon. But then, of course, you know, we've heard that, like, Microsoft has actually been a great partner to the DOD, and they've vended in everything from Microsoft Outlook to Excel.
Speaker 1:And those tools, although they seem silly, they're probably very helpful in terms of just understanding, like, how many bullets do we have in the bear in the in the armory or how many rations do we have? But but has there been, what what has the progression of technology and the adoption of technology look like over the last twenty years, like, post, global war on terror?
Speaker 7:Yeah. I mean, you know, logistics always has mattered. Right? And there's actually a great quote all the way back from Alexander the Great where he he called his logisticians a humorless lot because they were the first to be slaughtered if anything went wrong. Right?
Speaker 7:So it's mattered. It's been important. You know, when it comes to technology, one thing that's interesting about the global war in terror is that logistics wasn't actually really the focus there because, you know, we we really had air superiority. So every shipment from, you know, Germany or The US that had to get to the Middle East made it there in one piece.
Speaker 6:Right?
Speaker 7:It really wasn't the primary focus. And it's really now more so as we're looking towards Ukraine and, you know, future conflicts with your peer adversaries, logistics are starting to matter again the way it did in past large scale conflicts.
Speaker 1:Mhmm.
Speaker 7:Right? And, you know, seeing, know, Russia, for example, really almost fail at taking Kyiv, in large part because of logistics, where they kinda want people up to that problem again. Now in terms of the technology, you know, there's been less focus on it. And, you know, of course, you know, Excel and PowerPoint are great general purpose tools. But, you know, with logistics is a really, you know, focused, you know, specialty with lots of doctrine and, you know, tactics and procedures.
Speaker 7:And so, you know, you can solve any problem with PowerPoint
Speaker 1:Yep.
Speaker 7:But that doesn't mean you should. And so, you know, the software we're building is really focused on what does a logistician need when they're in the field and solving their problems.
Speaker 1:Yeah. How how do you think about the trade off between flexibility of the the design of your system versus, creating something that's more deterministic, more enforcing rules on the user? You obviously, like, the worst thing when you're building software is like, yeah, we did the demo, we did the install, and then a week later, they fell back to Excel. Right? I'm sure you wanna avoid that.
Speaker 7:Yeah. You know, working with with, your customers, it it's often a back and forth between understanding their current workflows and supporting them, but then also showing the order of possible of what new technology can bring to the into the fore. Right? You know, what you can do in Excel, you know, isn't isn't what you can would do with AI, for example. And so it's actually showing them as possible as well as supporting their current workflows, you know, at the same time.
Speaker 7:And, you know, when it comes to generalizing the software, that's where you know, we we work with a lot of different service branches now, you know, with the army, with the marine corps. You know, we're looking, you know, looking very closely at the air force and their branches. And so looking at how logistics is done in different parts of the military helps us build really general purpose software that could even scale beyond just the military one day. Right? And disaster and rescue, you know, oil and gas also have similar logistical needs.
Speaker 1:Mhmm.
Speaker 7:And, you know, also comment you mentioned earlier, you know, Microsoft, there's also something that, you know, is a unique realization for us is that, you know, the military doesn't always have perfect infrastructure available when it comes to its Internet bandwidth and whatnot. And so we we've also really focused on, you know, building the software to run on a laptop in the jungle, in The Philippines, in the trenches. And the way you would write your software in that kind of environment is very different than in a stable, you know, data center with infinite bandwidth and infinite resources. And so, you know, supporting that tactical, you know, trench warfare kind of environment is also what's unique about what we're doing.
Speaker 1:So you're not melting GPUs every time you fire up a query in ruin.
Speaker 2:Yeah. It's to me, the interesting thing is, you know, if you look back at the start of the Iraq war, the iPhone didn't release for years after that. Right? So I'm interested to think about how you think about mobile and now there's just like Mhmm. In theory, like, an order of magnitude more devices out in the field that theoretically could be used for, you know, to to make what, you know, the sort of logistics operations more efficient.
Speaker 2:So is mobile, like, you know, sort of widespread with these systems to date or is it or is it again, like, you know, the the sort of laptop scenario in in the jungle and and just yeah. I'm curious how you think about mobile broadly.
Speaker 7:Yeah. Mobile is popping up a lot, especially at the lowest levels where you really have, you know, soldiers or marines with their phones typing in logistical reports. That's that's happening right now, and we're working on projects to integrate with that. But, you know, what what's I think even more interesting is how do you get away from humans even doing the county right now? So Mhmm.
Speaker 7:Be very honest, the way the military right now knows how much fuel is in a certain place is that you have, you know, private dipstick in and see how far up it goes. Right? And so, you know, that's how it's done right now, and your phones get you to, you know, reporting that perhaps more quickly. But what we also wanna get to is how do you not have a human loop in there at all with, you know, sensors to just measure that, know, whether it's ammunition in a in a base or a fuel. You know, ideally, that's all automated.
Speaker 1:How do you How much
Speaker 2:oh, sorry. How much, you talked about Ukraine, and and learning, you know, maybe what not to do from from the Russians. How much do you think that The US has to learn in Ukraine around logistics? Or is is is Ukraine doing anything really well? Are we being sort of efficient there?
Speaker 1:From a logistics standpoint making a million drones a year already, so it seems like there's some industrial capacity there. Yeah. And then I've also heard those reports that, like, Russia was, like, ripping, like, semiconductor chips out of, like, washing machines and, like, old Ford f one fifties because they were so out of, like, supplies. And I I don't I I I never know what to believe with these stories, but I'd love to hear your take.
Speaker 7:Yeah. No. Yeah. I certainly think that United States, you would have fared better in Ukraine. Right?
Speaker 7:The way we fight is different. But, you know, what's not too different is how we track logistics at the tactical level right now.
Speaker 1:Mhmm.
Speaker 7:You know, Ukrainians are using, you know, papers and whiteboards, and that's why there largely isn't data at the tactical level and what they're actually consuming. Mhmm. And the United States military isn't too different from that right now. So, you know, even when it comes to tactical logistics, you know, the US military has a lot you can modernize on that front and, like, you know, that's what we're interested in doing right now. Mhmm.
Speaker 6:And
Speaker 7:so, you know, that's that's what our focus has been.
Speaker 2:Do you find who who do you connect with most on the customer side? Like, are are there people, you know, within the DOD that are just clearly logistics nerds and you guys just like, you know, have a thirty minute call and end up going two hours and it's just like, you know, you finally are like, yes, like you
Speaker 1:got A logistician.
Speaker 2:Because I feel like if you're, you know, anybody that's a true sort of student of history, you know, could get to the point where they're like, yeah, I'm actually I care less about, like, the sixth generation fighter and more just, like, the basics of, like, how we get one thing from point a to point b.
Speaker 7:Yeah. You know, honestly, from from the get go, the one thing we've never had to convince somebody of is is that what we're tackling is a problem. Everybody understood that logistics matters. Everybody understands that, you know, the the technology that logisticians have in the United States military is not where it where it's supposed to be. And you know, there's obviously the logistician branch, of the military.
Speaker 7:And when we work with them and they've been, you know, our closest design partners so far, you know, they understand these problems because they live in them every day. But even other warfighting functions and other, you know, military members understand the problem as well. They they sometimes need to be, you know, they need to understand why logistics needs to matter to them. You know, when you're talking to an auxiliary officer, for example, you know, they do sometimes have to, you know, be allowed to understand how can AI for logisticians allow them to be more lethal. Right?
Speaker 7:Because they're gonna have munitions when they need them before they need them in the right place. So that's sometimes, you know, something that we show the art of the possible. But in general, everybody understands this really matters.
Speaker 1:How are you thinking about the go to market and, like, the revenue side of the business? Is this, the standard, like, get some SBIR money, then make it through the valley of death, land at program of record, or is there just, like, a very different model because you're selling software in logistics?
Speaker 7:You know, the good thing is that, you
Speaker 12:know, over the past few years,
Speaker 7:the military has woken up to logistics really mattering a lot. So, you know, there's a lot of buzz around it now. And, you know, in terms of what that allows us to do is, one, we can both go to operational units in the field who actually need the software. Right? They'll most often be our design partners and help us develop.
Speaker 7:That's not gonna be the big dollars, but it's really important for us to build the best product. And then we're also going to the innovation labs. You know, across the services, there's organizations that, you know, help field technology, you know, from from the innovation stage. And then there's also the program offices themselves. And, you know, across the services, there's very large projects or programs underway that include sustainment now.
Speaker 7:They maybe wouldn't have two years from, two years ago, but they do now. And so it's really across the board from the largest modernization projects in the army to the innovation labs to the operational units. We're, you know, going to all of them and having success with all of them as well.
Speaker 1:What kind of skill sets are you hiring for right now? It feels like AI would be really important, but maybe not today. What's like the kind of the the type of engineer that fits in really well at Roon today?
Speaker 7:Yeah. You know, obviously, we've we've been, you know, scaling rapidly. We're 12 people now, and we I've had an engineer onboard every single week for the past four weeks.
Speaker 6:Nice.
Speaker 7:You know? So that's that's been really exciting growth for us. We're actually now looking for more product minded individuals or product managers that, you know, have lived the dream and, you know, perhaps were, you know, better as themselves, but now wanna build technology and understand that as well. So we're looking, you know, to scale our product team right now. You know?
Speaker 7:And as we grow, you know, further, you know, engineering will always be our greatest asset. So engineers that have you really cared about the mission before. Right? You know? We both care deeply about the mission of what we're building for as well as, you know, having the right engineering skill sets.
Speaker 7:So engineers that identify with wanting to, you know, like I did, not build ads anymore, but, you know, build military technology, you know, that we're always gonna be looking for those. Doreen, you
Speaker 1:got anything?
Speaker 2:That's it.
Speaker 1:I I had one more question about kind of, just on the data integration side, is it important for you to build, integrations into different, data lakes, data warehousing? Is it important to just do really great, like, PDF ingesting? How are you thinking about actually getting I mean, I'm sure as you grow and scale, like, there will be times when you run into, like, okay. There actually is a lot of data here. Let's bring it in and and onboard it.
Speaker 1:Is Palantir a piece of all this? Like, how do you see Rune playing into, like, the broader ecosystem of, like, military data broadly?
Speaker 7:Yeah. So it's important about logistics that it it does really require very holistic decision making. And then you you can't just know what you have on hand, but also what transportation you have to get it from a to b, along which routes, with what crews to actually move that equipment. If you don't have any of those pieces, you're not making a holistic decision, and it might actually just, you know, break down when it comes to the real world. So we're very, you know, interested in in integrations.
Speaker 7:We have a super, you know, open architecture that lets us integrate with programs of record and other systems. You know, we're talking to lots of other companies that wanna integrate with us.
Speaker 6:Mhmm. And then
Speaker 7:we're also allowing, you know, manual inputs as well. You know, like you said, whether it is, you know, like PDFs or Excels or your manual inputs too, it's kinda like a mix of of, you know, other integrations, manual input, and you're combining all of that to give that, you know, real world recommendation that connects all those pieces that I just mentioned.
Speaker 1:Yeah. That's great. Well, good luck to you. Thank you so much for stopping by. This is a wonderful conversation.
Speaker 1:We'll have to have you back when there's more news.
Speaker 4:Yeah. Yeah. Thanks, Sam.
Speaker 1:Great to
Speaker 6:meet you. Yeah.
Speaker 1:Have a great Very cool. We got Sam. We're switching gears here. We're going into from defense tech into hard tech impulse stove. So I wanna talk to Sam about what Big Stove is doing in reaction to the tariffs.
Speaker 2:Well, before we get into this Yeah. You know what somebody that's selling stoves online should use?
Speaker 10:Oh, I
Speaker 2:know. I think you know, John.
Speaker 1:Numeral,
Speaker 2:baby. Numeral. For sure. Put sales tax on autopilot. Yes.
Speaker 2:They put it on autopilot for thousands of leading e commerce and SaaS businesses. It is the platform for sales tax
Speaker 9:Yeah. Compliance You don't
Speaker 1:want a guy like Sam spending any more than five minutes per month
Speaker 2:Five minutes is is honestly the perfect amount. It's the perfect amount. Dialed in. You want to be paying attention
Speaker 1:to want this guy?
Speaker 2:You don't want to be overinvesting.
Speaker 1:Searing a stake and posting a great video. Yeah. And doing interviews. You don't want him wasting time on sales tax as he sells tickets all over the We
Speaker 2:film an ad Yeah. Where we give an ad for numeral
Speaker 6:Yep.
Speaker 2:While searing, you know, a stake.
Speaker 1:You could probably do your sales tax faster than searing a steak on it.
Speaker 2:That's right. Could maybe make it a ritual. Could make it a ritual and just say every month I'm going to spend five minutes on sales tax compliance. Yeah. And while I cook a steak.
Speaker 1:And you know where I expect to see a lot of these stoves installed?
Speaker 2:Where is that?
Speaker 1:In wanders. For sure.
Speaker 2:That's
Speaker 1:right. Check into a wander. You find your happy place. Find
Speaker 2:your Your happy place. Find your happy place. Book a wand.
Speaker 1:Put Inspiring views, hotel grade amenities, dreamy beds, top tier
Speaker 2:cleaners, 247 Let's get some impulse stoves and wanders.
Speaker 1:Would love that.
Speaker 2:People are gonna be begging
Speaker 1:for be able to filter for it. They have a bunch of filters you can filter for. Great Wi Fi, has pool, king bed, all these different things.
Speaker 4:You want
Speaker 1:I wanna know if there's an Impulse stuff. Anyway, we got the founder of Impulse coming into the studio. Welcome, Sam.
Speaker 2:Boom.
Speaker 1:How you doing?
Speaker 4:Great great to great to chat with you guys live.
Speaker 1:Yeah. Yeah. I'm so glad to hear. We've I I think we featured your post before. We've talked about you.
Speaker 1:We've always said that it's, it's interesting that I feel like in some ways, Impulse is kind of like a dividend of Andoril. It's not Andoril for stoves, but it's something that, like, people didn't think that you could start a new stove startup in a few years ago, and now you can. And so, give us the pitch. Yeah.
Speaker 4:Yeah. So, basically, for context, though I think I overheard you guys talking about me before, but, basically, we make a stove that's about 60 times seven times faster at boiling water than most other stoves. So, like, you can boil, like, 10 cups of water in, a minute and a half or something crazy. So, like, your mac and cheese is immediate. Yeah.
Speaker 4:But then it also lets you set an exact temperature sort of like an oven. So it's like instead of low, medium, and high, you can turn our, like, cool magnetic knob to an exact number, and Yep. You don't get smoke. You can, like, fry with seed oil without seed oils for all of your esteemed health conscious followers.
Speaker 2:Oh, yeah. So there's lots of fans. And
Speaker 4:you can buy it right now at impulselabs.com. We ship about twelve weeks.
Speaker 1:That's amazing.
Speaker 4:And you can lock in, you know, you know, current pricing at that point. I'll I'll joke about that later.
Speaker 1:Cool. And, and and and just, like, the technological innovation here is that there's, like, a massive battery power there.
Speaker 4:Battery inside. So, basically, it's, value prop is you get this cool stove, and it has all these capabilities you you can't get in the inner stove. It's like a a a a fundamental leap in performance, but it wedges a battery into your house. Cool. And once we install enough of these, we actually deploy a decentralized battery network kind of across the grid.
Speaker 4:And you can actually get, like, more distribution of batteries than, like, Tesla Powerwall relatively straightforwardly if you essentially intercept the, like, 55,000,000 major appliances sold every year in The United States.
Speaker 1:Mhmm.
Speaker 4:So, like, there's been, like, 400,000 total Powerwall installs in The US and Canada, apparently. But, like, there's always an appliance installation truck on your block, like, every couple days. So, like, it's it's actually this really interesting thing of you can actually deploy a a crap ton of battery storage that way.
Speaker 1:Yeah. And so that's that's the big vision. Right?
Speaker 4:Yeah. And then we've actually figured out how to get the distribution unlocked. So one is you could buy the stove at impulselabs.com. It's awesome. But we're also partnering with a bunch of major appliance OEMs to get the tech in there.
Speaker 11:Cool. And so it means that you can go
Speaker 4:to some random appliance showroom like Joe and Bob's appliances, buy a brand you already know, and it might come with impulse inside. And so I'm starting to roll that out over the next year.
Speaker 2:Are you thinking about even I'm sure you've thought about this, but I'm curious if you're doing it partnering with people that are building homes because it's a big Yeah.
Speaker 4:So it turns out interest rates being high means that that's a little less, like like, high volume. It turns out that, like, you wanna intercept the, like you wanna intercept, like, where expensive appliances are made at the start because you you you're putting a battery in it, and, like, we managed to push the battery cost down substantially, but it's it's still something where it's like, there's an item that's not in the bomb of a normal stove. Mhmm. And so you kinda wanna start high end very similar to Tesla and all sort of stuff. But then where the high end appliances sold kind of diffusely, so getting into these brands.
Speaker 4:Having a standout brand of our own, but then also getting into brands that people are already buying lots of Yeah. Is is is is the way to do that. And, like, I then have to talk to, like, 10 different OEMs versus thousands of developers, basically. It's actually and then and then you monetize the battery the same way either way. Like, once the battery's on once the thing is installed, the battery's under our software control.
Speaker 4:And so we can sell that battery to utility. We can rent that battery to utilities for grid services and stuff like that. So we get access to fascinating. Revenue either way.
Speaker 2:Awesome. Wait. Talk more talk more about that. Like, talk about the grid integration and and and, you know, getting that extra leverage and specifically recurring revenue.
Speaker 1:I mean, is the is the base is the base value prop even beyond, like, selling energy back to the grid? Is it is it more just, like, if the power goes down in my neighborhood, this stove could potentially power my house for a couple hours a day? What am I thinking?
Speaker 4:Stove itself works, and it's got an inverter so it can share power with rest of your house. So if you've got, like, whole home backup, it will support that whole home backup. Wow. So it'll add, like it's like a quarter of a Powerwall, basically. And so the vision is once we've rolled this out to multiple appliance categories and multiple brands, like, you could just turn this thing on and you'll have, like you won't have to have a Powerwall.
Speaker 4:You'll just have this tech
Speaker 2:already in your How do I love the design of the product. How do you think about making smart tech stupidly sort of easy to use, right? I have this I I got a Yeah. I have
Speaker 1:an app on my phone.
Speaker 2:I'm not No. The other the other We don't
Speaker 4:have an app.
Speaker 2:No. So the other day the other day, I I walk into my bedroom Yeah. And I and I go to, like, raise the the blinds Yeah. And it doesn't work. And I asked my wife about it and she's like, oh, yeah.
Speaker 2:We need to charge the blinds. I'm like, what do you mean? And I I look up, there's like a cord. I gotta, like, charge it once a year. I'm like, give me a break.
Speaker 2:I don't I don't wanna think about charging my blinds. It's hard enough keeping this thing charged. Yeah. Yeah. So I think like, we're we're entering into like, was like the last ten years have been like the smart home era.
Speaker 2:Yeah. But everything in many ways home. And we need to get smarter but also dumber
Speaker 1:Yes.
Speaker 2:At the same time.
Speaker 1:Yes. We've been in the midwit the midwit home era.
Speaker 4:Yeah. Midwit home. It's the midwit home. It's the midwit home. It's like it's it's like, okay.
Speaker 4:Does your smart home require someone who's like an IT expert to set it up? And then you don't wanna touch anything because you'll, like, disconnect your light switch. Yep. And then, by the way, like, Google Home still doesn't have an LLM to it, and it still doesn't know how to set an alarm properly. Yeah.
Speaker 4:And, like, if I ask it to play a certain piece of content, it thinks that I mispronounce it even if I always request that content. Like, it is actually crazy how bad this stuff is.
Speaker 1:Yeah. It's wild.
Speaker 4:What we realized was, like, okay. People hate these touch panels on the stoves and stuff like that. So we we we figured out a way to do knobs where, like, they're magnetic and removable so you can clean all the gunk underneath them.
Speaker 1:Oh, that's cool.
Speaker 4:If if so so that was pretty cool. But then, basically, the UI is really simple. It's like you it's it's the same as, like, a gas stove. It's like you basically push in and twist and you get you get heat. Like, it's not like any sort of Yeah.
Speaker 4:Any sort of crazy. It's like it's like and then the smart feature we realized was make it hold temperature accurately. So instead of, like, you can say low, medium, high, we still have that, but, like, you also can say three fifteen degrees, and then, like, your eggs come out exactly the same every day. Mhmm. And the butter doesn't burn.
Speaker 4:Maybe it lightly browns. If you don't want the bottom of the egg to brown, you can set a lower temperature. But, like, basically, we just give you, like, direct control over the thing that people actually want to do, which is not playback a smart recipe and, like, be on rails with New York Times cooking. It's like, no. I just wanna be able to do the thing that good chefs are able to do by, like, hovering the pan over the burner and, like, doing all the right motions that
Speaker 2:they teach think about what's your vision for humanoids in the home? Because I it's not hard to imagine, you know, my my humanoid going, grabbing the steak out of the fridge, slamming it on the impulse, and then, you know, just, like, you know, doing that. But but maybe they don't even need to touch the knobs. Right? If you just have the integration, like, they're
Speaker 4:just like You don't really have to touch the knobs with our thing either because you just turn it on once, and then it's just like it's just like at the temperature. You don't have to mess with it. But, like, I realized that the number one automation in cooking was actually just holding temperature consistently on a on a pan. Mhmm. And if you can do that, you elevate a midwit cook to a decent cook.
Speaker 1:Mhmm.
Speaker 4:And so do that, and then that's the that's kind of the eighty twenty of that's the eighty twenty of fish and automation. Like, I I cook at the office. I made some, like, crazy braised thing. It was, like, super simple. I made rice without a rice cooker.
Speaker 4:Like, you don't even need these accessories.
Speaker 2:Do you have a rule with your team where it's like you can't order out? Like, you have to use the product every day at lunch?
Speaker 4:Yeah. I gotta I gotta tell everyone that the tariffs are, you know, cutting into the lunch budget now.
Speaker 2:Yeah. Yeah. Let's talk about the tariffs and and your supply chain. I'm sure you're impacted. It's impossible not to be at Yeah.
Speaker 4:Yeah. And and one, one thing I'll I'll leave with is, like, we're we're in an interesting space because all of our competitors are also impacted. So, like, basically, even The US made appliances. Like so if you go to, like, a Whirlpool factory, all the circuit boards in there are actually, like, made by, like, German or Chinese companies.
Speaker 1:Mhmm.
Speaker 4:And so we're a German company in China in many cases. So it's like, basically, if you tear down any induction stove, you pretty much, like, see Chinese and German components inside even if it's made in The US. And so for that reason, it's like, okay. We're we're building our stuff overseas. We're gonna figure out, hey.
Speaker 4:What the lowest tariff regime is, you know, make it in Vatican City or whatever whatever whatever whatever works. Good
Speaker 1:to speak. Hopefully, by the public.
Speaker 4:Yes. Yeah. Yeah. We can we can commiserate over our Italian heritage. But, but the, our shared Italian heritage.
Speaker 4:But but, basically, but bay basically, the point is, like, everyone's gonna be impacted because inputs are impacted. So, like, even if I go in if I build a factory in in, let in, let's call it, like, Phoenix, Arizona, I'm not like, my sub suppliers haven't onshore yet in volume. Like, an example is, like, I'm, like, I'm an investor in Hadrian. Like, Hadrian, like, does not have enough CNC machines to make all the world's iPhones yet for for instance. Like, it would take them it would take them a second.
Speaker 4:I'll I'll I'll I'll I'll I'll I'll overestimate. I'll I'll I'll be optimistic here, but it'll take them at least a second to to to to get that capacity up and running, and this is gonna happen across the board. So, like, the lesson from the last wave of tariffs was Vietnam. Basically, Vietnam was this, like, kinda quote, unquote loophole country that now is seeing, like, 45 plus percent tariffs or whatever. Yeah.
Speaker 4:But Vietnam was the tariffs were only on China. There's a lot of Chinese manufacturers that just basically just drove across the border and set up a factory. And all the all all the engineering staff, Chinese, like, they're just flying in. It's kind of like two hour flight, one hour flight situation from Shenzhen, but effectively, it's a Chinese run factory.
Speaker 10:Mhmm.
Speaker 4:Now to get them made in Vietnam, you had to actually get make some of the components there. Mhmm. But what this meant was all of the large format injection molding machines because when people move there first, televisions. They moved all the t these t like, $600 TVs and stuff like that. They moved them there, but that meant all large format molding machines are just completely occupied.
Speaker 4:Mhmm. And so, like, if we want plastic parts like our, like, induction coil assembly or something like that, we wanna do that in Vietnam, we probably couldn't find the machine. We'd have to import that part from China regardless Mhmm. Because the machine would be occupied. And then there's a back order of those machines and, like, all sort of stuff.
Speaker 4:So it ended up like, even to get to this point where a ton of consumer electronics from, Samsung, LG, Meta, etcetera, moved to Vietnam, it took, like, six year or five or six years
Speaker 1:Wow.
Speaker 4:From when those tariffs kicked off. And so if you want a, like, a preview of what, like, US reshoring would look like, it's gonna be something of that nature. More prices are just gonna go up a bit, and people aren't putting in the putting in a line item at checkout. So, like, weirdly enough, it's like we're insulated from this a little bit by making a high ticket item that's cool. And, like, maybe we'll get permission to raise prices by by other folks or whatever.
Speaker 4:I don't wanna be the leader in that space because I think that that would stick my neck out. But it's something where then additionally, like, as a component supplier to all these appliance OEMs where we actually make our money in software and recurring revenue from the battery storage, we're very insulated in that respect to the business. But it's something where, like, I had kind of a reaction to this being, like, it would be really cool if, I I would have a different approach to reshoring manufacturing in The US. It would be more around, like, making it legal to build a factory in San Francisco again and stuff like that and stuff or the Bay Area the San Francisco Bay Area again without getting, like, angry nimbies on your your ass, or having to build a tent in the parking lot like Elon did, like, five times. I mean I mean, Elon's the only guy who did it because you have to basically operate in this, like, legal gray area.
Speaker 1:Yeah. Yeah. Yeah. Where else are you seeing the most opportunity in home appliances or just, like, tech for the home? Ovens seem adjacent.
Speaker 1:I don't know what
Speaker 4:you take on You can heat it in ninety seconds. You can do that with the battery really well.
Speaker 1:You think so? That's fun. Anything else come to mind?
Speaker 4:Yeah. So, I mean, I think there's actually there there's some interesting the home tech and the humanoids come to mind is, like, I think just making a laundry machine that folds stuff at the end Yeah.
Speaker 6:Would be sick.
Speaker 1:That'd be amazing.
Speaker 4:People would spend, like, $5 on a laundry machine if it did that.
Speaker 1:Totally. Yeah.
Speaker 4:And and we basically reprice the whole, like, laundry market if you if you just like I think and I think the tech for that is gonna exist, like, next year.
Speaker 1:Yeah. I think you just spawned, like, five YC companies with that company.
Speaker 4:Yeah. Yeah. Then they can go license p like, PIE's models or whatever.
Speaker 1:Yeah. But I'm excited for that. That that sounds amazing.
Speaker 4:Yeah. But so so you can do that. We're we're actually thinking, like, I want to be the index startup for anything with a power cord effectively. Mhmm. So anything with a power cord realize that, like, most appliances are used intermittently.
Speaker 4:And even within that intermittent use, they're not used at full power. Like, you're you're not, like, blasting a turkey fryer level of power, which we can do. We can actually fry a turkey indoors on our thing. But you're not even when you're frying a turkey, you don't need full power all
Speaker 9:the time.
Speaker 2:You just
Speaker 1:need it oil.
Speaker 4:And so and so I'll be able
Speaker 1:to blow dry my hair in two seconds. And it's just like
Speaker 4:There's a problem with, maximum temperatures and, you know, you don't wanna burn your hair and stuff like that.
Speaker 2:They've tried it. They've tried it.
Speaker 1:They've tried it. But yeah.
Speaker 4:But basic basically, I I I think that there's this play where you can essentially realize that energy is used super intermittently, but the grid is sized for peak use all the way around. Yeah. Think our companies had a really good explainers on a bunch of these things as well. But, basically, we solve a similar set of issues kinda, like, even at the more hyper local level than even at the home panel or something like that.
Speaker 1:Sure. Sure.
Speaker 4:But, it turns out you can basically any device that kind of has, like, high peak, low average drop, shove a battery in it and have an inverter in it. When the device is not active, it's able to share the battery with the rest of the And so that's the vision. Get that into as many devices as possible. Turns out stoves are a kind of juicy target to start, and then then go from there.
Speaker 1:And why don't you just drop the link one more time for the fans who wanna pick one up? Where do they go?
Speaker 4:Pulselabs.com. And if you order it now, it ships in, like I think it'll ship, like, early summer. And we just got most of our compliance certs all, like, officially granted, and the rest of them should come first, like, a moment early. So it's legal to install in your house as well, which is exciting.
Speaker 1:Fantastic. Well, thanks so much for stopping by.
Speaker 11:This was fun. Thanks hosting.
Speaker 4:I'll be around for Peanut Gallery on tariffs and trade and all sort of stuff whenever you want.
Speaker 1:So Fantastic.
Speaker 2:That'd be great. You you got you're a take Smith. I can tell.
Speaker 1:Yeah. Yeah.
Speaker 4:A take a take Smith. That sounds terrible. Okay.
Speaker 2:It's a good thing.
Speaker 10:It's a
Speaker 2:good thing. You got good takes. Got good takes.
Speaker 1:Ready to fire them off.
Speaker 2:Yeah. We need to slap an impulse. We're getting a new studio soon.
Speaker 4:I guess I'll just put the stove in the middle and you guys can do some hot pot or something. It'll work.
Speaker 1:Yeah. Yeah. I just wanna be, yeah, eating steak all day long throughout the show. I think that's my future for sure.
Speaker 4:And do we know if you want one down in LA? Can
Speaker 1:I Yeah? Yeah. Yeah. We'll figure it out. Awesome.
Speaker 1:Awesome. Thanks so much, Sam. Great to talk to you. We'll see you soon. And we got Scott Wu from Cognition coming in to the studio.
Speaker 1:He's not here yet, but I did get an interesting question for him. I posted tune in to TBPN today at 01:45 Pacific for our interview with Scott Wu. If you have any extreme, extremely complicated math problems you want him to do in his head, leave it in the comments, and we got one. Someone said Aaron? No.
Speaker 1:No. No. No. That that that was more of a joke. Brian Chao says, ask him if he really did cheese IOI twenty fourteen problem six.
Speaker 1:He'll know what I mean. Scott, welcome to the show again. Great to have you back. We will get to the amazing Cognition news, but I gotta know. Did you cheese IOI twenty fourteen problem number six?
Speaker 10:You know, I I can't answer that question actually, but, but, no, it's great to be back, and it's great to see you guys again. How are you guys doing?
Speaker 1:We're doing great. And, I mean, congratulations on the launch. Can you break it down for us? What what is different about Devon and Cognition today?
Speaker 10:Yeah. Yeah. Absolutely. And so what we rolled out today is essentially an agent native IDE. What that means is you know, I I think there are lot of great products out there that are about really accelerating you in a synchronous workflow.
Speaker 10:What we've always built DevRun for is to be truly asynchronous and to be able to delegate and to have your own team of devons that's taking on tasks, you know, and to to be able to manage several devons at once or to be doing other things while you're working with devons at the same time. And what we're rolling out essentially is a is a way to really cleanly interactively work with your devons as you're using And so it's it's a it's a full IDE experience. It's a collaborative planning experience at the start of each at the start of each session, and then, you know, some of these other features like devin devin search and devin wiki that we've been rolling out.
Speaker 1:Mhmm. What else do you have? I wanna I
Speaker 2:I I have a question. No. No. Go go into it.
Speaker 1:Then I'll Well, well, I I I wanna just get into your overall thesis for AI and why, and how the market's moving broadly. Almost ten years ago to the day, Sam Altman posted a blog post called Bubble Talk where he said, everyone was saying we're in a bubble. Here, let's format it as a bet. And he said, the top six US companies in terms of unicorns are Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX. They're currently worth just over a hundred billion.
Speaker 1:He thinks that, in 2020, those companies would be worth over 200,000,000,000. There's a few of those companies that are worth over 200,000,000,000 alone. Yeah. He also said Stripe, Zenefits, Instacart, a bunch of other companies will be worth more than 27,000,000,000. And he was I think he was off but only by a few weeks.
Speaker 1:And it was this interesting thing where everyone felt like it was a bubble. He formulated into a bet. He was correct. But how are you how are you feeling about the overall, like, murmurs about, oh, is AI a bubble?
Speaker 10:Yeah. Yeah. And I think he was forecasting, a three x or something in just a few years. And so whether he was, like, barely off or or not quite you know, it's or or barely made it, mean, I think it's like, you know, certainly, if you just hear that list of companies, you know, Uber and Airbnb and SpaceX and Stripe and all you know, it's it's I I think the point was very clearly there that those companies did have real merit and real value, and they proved out a lot more of that actually. I mean, it's almost comical to it's it's it's been ten years now since then
Speaker 1:and to just think, wow.
Speaker 10:Like, these are these are some of the the great public companies. Right? And I think that you know, I I was we were talking about this, but I I was thinking about it a lot because it's been almost exactly ten years. And it's also I mean, it's super cool. Sam was running YC at the time, which is why he put that out.
Speaker 10:Obviously, now he's running OpenAI. But but, yeah, I mean, I think people talk about Bubble so much in AI, and and I it's it's almost I I I feel I I feel almost the exact opposite where the the value that we are suddenly proving out in AI is almost underrepresented in in what we're seeing and and and what is what what is going on. You know? And and did you see this in all these different spaces? And, you know, I think as we were saying earlier, like, the code is one of the first ones because it's it's it's so nicely automatable.
Speaker 10:There's a clean feedback loop and and all of these things that you can really train models to get really good at code. But I think we're really starting to see it basically everywhere. And it's a it's a crazy thing to think think about, but a lot of these businesses that we just mentioned, you know, these are really, really amazing businesses and really powerful businesses. Right? And and a lot of what they do arguably is, you know, they make particular flows of your life 1% easier.
Speaker 10:You know? Something like that. Right? They come in in this, like, particularly painful process and solve that hard part for you and and deliver this. Obviously, these are incredible, incredible businesses.
Speaker 10:This is less about the businesses and more just about just how how big the world is out there, you know, and how much value that there is to provide. Right? And and now when we're talking about AI and we're thinking about what AI can do, you know, for consumers, it's, you know, an AI assistant that does all of your work for you. You know? It does all your hobbies and takes on all these things.
Speaker 10:Right? And and in enterprise, obviously, you know, we're talking about multiplying every single person's output by, like, five x. And so I I I think that the it's it's it's I I was thinking about it especially because, you know, it really does feel like across a lot of these different layers, you know, the the foundation model layer, the application layer, and so on. It's sure. It's it's a tough question to decide which which one is gonna succeed, which one is not gonna be, you know, and only a few companies get to be the Google and Amazon, and then a lot of companies, obviously, you know, have a tougher time.
Speaker 10:But if you just ask the question overall is is AI as a space going to deliver massive, massive value and is it going to build these multi trillion dollar companies? I mean, I think at this point, it's pretty clear that it will.
Speaker 1:Yeah. Can you talk a little bit about the Studio Ghibli moment happened last week? And I'm wondering, like, with the Levels.io flight simulator vibe coding, Andhra Karpathy coined that term, it kind of took fire. It really, it really was a great term for something everyone was kind of dancing around. Are you expecting a Studio Ghibli style moment for programming?
Speaker 1:Because I think what was so magical about Studio Ghibli was that it took the it took the onus of of creativity out of the process and it made it personal because you could just take any photo from your camera roll, any selfie. You could take your own dog or your own profile picture, type one word, and you get something that feels cool and different. Is there a world where we get something where it's like, hey, make a video game about my life or something and Yeah. And it just does it? What what would a what would a mass adoption moment for AI driven programming look like?
Speaker 10:For sure. Yeah. So I think there's two kinda different categories, I would say, within within AI coding. And one is, you know, I'll call it kind of the more general purpose, like, let's say, single use software type or or more hobbyist type work, right, where you, you know, you wanna build a cool website, you wanna do this, you wanna make a nice game, or you wanna put a lot of these elements together. And I think that's going to I mean, it's honestly, it's already taking off pretty pretty massively.
Speaker 10:It's you know, you don't have to know how to code anymore, and you can put together, like, a really cool website and, you know, set things exactly as you want them and so on. Right? And I think there'll I I I'm sure there will be more exciting moments to come where, you know, as we cross these new tiers of capabilities, you know, the interface is going to change for that and and the set of things that you can do. On the other side, I would say, is kind of the the the the the massive kind of just software engineering industry, which is a little bit more obviously, is is is a little bit more oriented towards, you know, a lot of big companies that are spending maybe millions of hours of of, you know, software engineering time developing, like, really, really great software, right, and making it super resistant to to all the different things you can think of, you know, figuring out all the little details of architecture and so on. And and I think on that side, you know, I think for the time being, that's going to be primarily focused on software engineers.
Speaker 10:Mhmm. Just because, you know, it's while we're still working with these layers of abstraction, you still really need to have all of these kind of concepts in your mind and the ability to to really just, like, reason with the computer architecture. Yeah. But there, it's kind of like, you know, we'll see like a five x there. So maybe maybe one way to describe it is like, I think there will be a a level of kind of programming and being able to interact with the world through code that everyone will have access to, which is super, super exciting on the one hand.
Speaker 10:And then on the other hand, I think for a lot of the deep technical work that we do, I I also think that, you know, engineers who are focused on that and working on that are gonna be able to do, like, five x more. So we're kinda seeing both those sides at the same time.
Speaker 2:How do you what advice do you give engineers that are just joining the Cognition team? You guys have such a ridiculous sort of, you know, sort of probably, I would I would assume the average engineer at at Cognition is a 10 x engineer in any other organization. And so you're looking for like, you know, there's there has to be this pressure of joining. You're you're building the tools that build the tools. Yeah.
Speaker 2:How how do you think about sort of ramping people to the sort of to the output that you wanna see out of engineers at every level of the organization?
Speaker 10:Yeah. Yeah. Was gonna say, I mean, there's very little advice that I can give because these folks are all way smarter than I am. But no.
Speaker 3:I mean,
Speaker 10:I think it's, you know, it's it's interesting. I mean, one one thing that that comes to mind is, you know, people ask me all the time, like, should should I even be studying CS? Like, should should I even be you know, to what how how do I even think about software engineering? And and I think the the main thing I would call out here is just, you know, as the capabilities change, the the the interface of AI product changes a lot as well. Right?
Speaker 10:And so it's one thing, you know, it's for example, like, you know, there there was a phase where where text completion was was the the main thing, and that was that was where the model capabilities were at. Right? And you could get a lot of value from just pure text completion. Right? And I think we're already past that and, you know, pushing into a lot of new things, but each new era that we get into in terms of capabilities is gonna unlock a new product experience in AI code.
Speaker 10:And I think that the main thing to call out because I think a lot of this is gonna happen so quickly is just it's really, really important to as an engineer to stay on top of all these tools and to to understand how best to work with them. I think at this point, it's you know, there's no shortage of things to do in code. You know? I I don't I don't think we're gonna out of things, you know, software that we wanna build anytime soon. And so I think it's more a question of how do you stay maximally effective Mhmm.
Speaker 10:At at at building software. And a lot of that is just, you know, really being up to date with everything that's happening and understanding each of the new waves and learning how to use these new technologies. Because it does take time to learn.
Speaker 2:How do you think about AI adoption among engineers broadly? Or Yeah. Has every, you know, there there has to be, you know, I I I think about the example of like the Japanese soldier that like didn't know the war ended and so they were just like on an island and like, you know, still like in like, you know, war fighting mode and there would been like twenty years or something like that. And so I think there has to be engineers out there that like, you know, that that maybe they don't know about cognition or they don't know about OpenAI or any of these other tools and but it has to be some like, would imagine like 90% of people that are just obsessively writing, you know, code every single day. 90% plus are sort of aware of these tools.
Speaker 2:But how how do you think about adoption broadly?
Speaker 10:Yeah. Yeah. For sure. No. And and I mean, think at this point, there's a yeah.
Speaker 10:I I mean, a pretty significant fraction of all the of all the top engineers in the world that are are using these AI tools every day, and they're getting a lot of value out of them. The main thing I would just say here is this is where, you know, and folks sometimes like to to get a little kind of wishy washy about, you know, AI is gonna come in and then suddenly all of our problems are gonna be solved. Right? Mhmm. And and I think one of the things that we're finding, you know, even in code is, yeah, there's just a lot of practical work to do out there in the world.
Speaker 10:Right? And so I think I think it's one thing to, you know, to be able to solve these theoretical problems in a vacuum. It's another thing to, you know, all of these different all of these different code bases out there, all of these different development environments, all these details. You know, there's a lot of COBOL out there in the world still.
Speaker 1:You know, there's
Speaker 10:a lot of all these various different languages or all these crazy idiosyncratic setups. And so I think one of the big things, honestly, that that that we're solving as a space is is actually not just the capability itself, but but just solving for for a lot of these practical constraints and and getting the technology to the point where it works for everyone and not just, you know, the subset of people who are building the latest and greatest apps in Mhmm. Python and TypeScript or whatever it is, you know.
Speaker 1:So Can can can you talk a little bit about the importance of multi multimodality and image diffusion and understanding images in the context of coding? I think a lot of people assume that, well, it's just code. You don't even need to think about the advantages of being able to process images effectively. But at the same time, it feels like the more data you throw at these models, the better they get even if it feels completely tangential. Just having, you know, the ability to not just know Python, but also speak Russian and Chinese and any any and Japanese and all these different languages, it seems to increase overall intelligence even though it's not the narrow set that you thought thought it was.
Speaker 10:Yeah. And by the way, it's actually a fun exercise to if you've never done this before. So, basically, you know, a lot of the the queries that we feed language models of just, like, raw massive blobs of text to try to do those yourself, like, as a human. And one of the things that you find is, like, wow. It's actually really hard if you're just looking at some massive chunk of text of just finding the thing that you want and getting the right thing.
Speaker 10:Like, humans naturally, you know, there's just, like, a lot of systems in how we process information visually and all these things. And and what I would say yeah. I mean, I think in terms of code, for example, the I I it's it's one thing for it to be call it, like, theoretically possible. You know, it's from the set of information I'm giving you, it is theoretically possible to extract out exactly what needs to be done. And, you know, you you could say this, for example, with with let's say you're trying to build a new feature and you just say, alright.
Speaker 10:Here's the entirety of my, you know, 1,000,000 line code base. Just tell me what I need to do to build the feature. And, obviously, no human can do that on the first try and just tell you exactly what needs to happen. And, really, and and and for most of these more complex tasks, no AI can either. You know?
Speaker 10:Mhmm. And in practice, you know, the the way that we solve these things is obviously through a much more iterative process that involves using all of our different tools. And, you know, it might involve, for example, running the front end locally and then clicking around on the website and seeing what happens. And, you know, you're trying to fix this button, so you go around and click on it, you know, and and you move around, and you see what errors come up in the logs when you do that. And so that's how you, you know, solve your problem.
Speaker 10:Right? And so a lot of it, I would describe it as almost like setting the the stepping stone instead of the the rock cliff face where you can make the incremental progress towards a solution. And, you know, this is what we do all the time in software engineering. Similarly, like, I think, you know, being able to use image or being able to interact with these other data sources is is what really gives AIs that same capability.
Speaker 2:Please. One question that you are uniquely suited to answer. Do you think we see an AI win an IMO gold medal this year? It was silver last year. Yeah.
Speaker 2:And I imagine we made some progress since then, but what's your take?
Speaker 10:Yeah. I'd be pretty surprised if we don't. We have a so so the the the greatest competitive programmer of all time is a guy named Torres. His his name is Gennady. He's from Belarus.
Speaker 10:And Yeah. He won't set Cognition actually. I mean, you can you can look this up. I've said true. It's true.
Speaker 11:It is objectively true. It's a
Speaker 3:It's objectively. And and
Speaker 10:and so Gennady, know, we we we have kind of a bet going internally on mainly the question of not of whether it will be like a, you know, like a, you know, top level high schooler, which is essentially what the IMO or IY gold medal is, but whether it will be Gennady who is, you know, the greatest of all time. And I think most folks think it's probably gonna happen this year. Yeah. And and if not this year, then then next year. Yeah.
Speaker 10:I think Gennady is he he he's he's pretty adamant that he'll still be able to do it. And so I I'm kind of looking for I mean, I I feel like we should have the we should do the whole show match, you know, Gary Kisparov style and and and do it
Speaker 2:with Let's do it live. Let's do it live on TV. Yeah.
Speaker 1:Well, can you give us the call to action? It sounds like Cognition and Devon are much more accessible. How can people get started? How can they sign up? How they can how can they play with this tool and and see if it works for them?
Speaker 10:Yeah. So we rolled out a whole new experience. And then on top of that, we've, you know, we've would really love to hear what folks think, and so we're we're making it a lot easier to try out. Mhmm. And so we have a a new plan that starts at a $20 minimum, And it's all available at app.devin.ai.
Speaker 10:So you can you can sign up immediately. It's fully generally available, and you can try it out on your code base.
Speaker 1:Very cool. Well Amazing. Hope those GPUs don't melt. Hope the servers stay online, and good luck with with with the next couple of months as I'm sure it's gonna be a continued rocket ship.
Speaker 2:Yeah. Awesome. Congratulations to the whole team.
Speaker 6:Appreciate you, We'll talk
Speaker 1:to you soon. Thanks a lot, Scott.
Speaker 2:Talk soon. Bye. He's like, yeah, he's actually on the team.
Speaker 1:Yeah. Well, I I I met Gennady because he he worked at Ramp. And I interviewed him. And a lot of what he said went over my head, if I'm being honest. But Yeah.
Speaker 1:He's a beast. And Well, it's crazy.
Speaker 2:So so on Polymarket, there's it's only at a 59% chance that AI wins an IMO 4,000
Speaker 1:for 59¢, folks. Not financial advice, but you heard it here. Like, it seems pretty obvious. Anyway, we got Michael from Aurelius coming in the studio. Welcome to the show, Michael.
Speaker 2:What's up?
Speaker 1:How are doing?
Speaker 2:How are you breathing today? You got the nose strip. Is the oxygen
Speaker 5:How you doing? Going well, dude. One of my nostrils like barely works. It's just all jacked up. I gotta I gotta figure that out
Speaker 11:at some point. But you're
Speaker 5:out for a while if you get like a like an ENT fix. Right?
Speaker 2:Oh, yeah. Yeah. Yeah.
Speaker 1:It'll be fine. I think
Speaker 2:I have the same thing. I've tried those I've tried the nose strips for sleeping at night. They're pretty they're pretty wild.
Speaker 1:This guy's the Alex Ramosie of laser weapons. Yeah. But Yeah. Oh, appreciate you.
Speaker 5:Gotta get a new thing then.
Speaker 1:Yeah. Yeah. I appreciate you DMing me. You just said, hey. Let's talk about laser weapons.
Speaker 1:And I was like, I've never heard of this guy before, this company, but I'm in. And, and and so I I I did a little research. I wanna hear about your experience at Stanford. I wanna hear the basic pitch for the company, your background. Can you just take me through kind of the the the one zero one level of who you are and what you're building?
Speaker 2:For sure. Yeah.
Speaker 5:For sure. So, I'm an engineer. Worked all across a bunch of different heavy industrial systems. I've worked in a lot of my time was spent in electro optic system development. I helped work at the biggest US laser company on laser weapon systems in an r and d capacity, and then I went into sales, and I sold a bunch of systems, including some components into a lot of the primes for the the big laser weapons that are that are out there.
Speaker 5:I didn't I didn't, you know, I didn't go to Stanford. But at we had a Stanford, we were essentially, when we first started the company, we were hiring the first round of engineers. We had sent out hiring calls to a bunch you know, among LinkedIn and x and stuff Mhmm. Also to a series of universities. And all of them were cool with it, except that we got kicked back from Stanford where the Stanford hiring board was like, you cannot, you know, post here because you have, like you're a weapons company.
Speaker 5:Right? And and, you know, that's really bad, I think, for Stanford students, but great for us because we just start posting it. We're like, dude, this is this is a BS. This this doesn't make any sense. And it's great.
Speaker 5:That was that was you know, Lars and Jensen made a made a bunch of posts about it, and we'd continue to to kinda chat about it and got a lot of interest on on that part, especially for hiring. Like, if people wanna work in defense, there's not that many companies in the one that's getting flamed because they make weapon systems. You know? If you wanna make weapon systems, there's a good chance you would fly to their company.
Speaker 2:Yeah. So Can you Silverlight. Can you talk about the history of lasers?
Speaker 1:I was gonna ask the same thing. You said the big laser weapon systems?
Speaker 2:Yeah. Yeah. Yeah. Yeah. Yeah.
Speaker 2:And after you talk about the the real history, maybe you can sort of talk a little bit about I have a big tinfoil hat here.
Speaker 1:It's like the Death Star is real.
Speaker 2:And now there's been a lot of con there's a lot of conspiracy theories about directed energy Sure. Weapons, space lasers, things like that. But talk about Yeah. Yeah. The the sort of the the the history from your point of view.
Speaker 5:Yeah. Definitely. Well, you know, the the Death Star doesn't exist yet, but the Death Star and stuff like that is how we become a, you know, like a trillion dollar company. But eventually, we become an orbital weapons platform company. So Yeah.
Speaker 5:Probably the only way that you do, like, low Earth orbit, translunar, or Trans Martian warfare is through light. You know, if you're gonna take the missile system up into low Earth orbit and there's 50,000 Chinese satellites, there's almost no way that you can do it shooting down in a cost effective way. But orbital weapons platform is great. But history of of directed energy weapons, you know, maybe forty years ago when laser just started to kick off in the in the, you know, commercial space in terms of cutting and welding and then also in the communication space, people like, wow. I can cut sheet steel with this.
Speaker 5:Can I shoot down a missile from, like, a thousand meters away? And that kinda kick started a bunch of effort and interest. Those systems haven't necessarily panned out over the last forty years. I think in the last ten years, we started to get a series of systems that are deployed by Lockheed and Northrop. And so, you know, there are massive warships that will have you know, when you're building the ship, have to build a laser weapon system turret into it.
Speaker 5:But we deployed I think there are eight ships that have a series of, like, multi hundred kilowatt laser systems on it, and you can cut the wing off of a plane from 10 miles away with those systems in about ten seconds. So they're pretty they're they're pretty metal. They're pretty red and that's what a lot of the the directed energy supply chain has looked like. That's what the directed energy R and D development has looked like in the country.
Speaker 2:Does blue is blue effective against lasers, the color blue? I know that that like, isn't there something about like a specific frequency of blue that sort of prevents damage from lasers? Am I making that up?
Speaker 5:To the the power density and the lasers we're talking about, like, you need some very, very specialty materials to kinda defend against them in any kind of, you know, scaled capacity. So, like, the color blue, I'm not sure about that. I mean, you could, like, you have mirrors that reflect the laser light. Right? But they're very small, and they have they have extreme, like, extremely expensive rare earth materials that are kinda doped in those mirrors for for reflectance.
Speaker 1:It looked like, one of the first things you were starting with was anti drone counter UAS systems. We've seen a lot of we talked to a lot of these companies, Allen Control Systems, of putting a gun on a truck. There's, electronic warfare attempts. We just talked to Nathan Mintz. Andoril has a a variety of systems for counter UAS projects.
Speaker 1:Why is that the landing? Why is that the beachhead for you? Why are laser weapons so effective against drones?
Speaker 5:Yeah. Definitely. So fundamentally directed energy systems, the the promise there is that if you are using electrons as your ammunition, then you have a extremely low margin cost to shoot down. Like, you bring the price to shoot down a drone. You know?
Speaker 5:If you're using a missile, it could be millions of dollars. Mhmm. If you're using an antiretrovil drone, it could be a hundred to $250,000 per drone shoot down. You know, that's an improvement, but it's still extremely expensive and you don't have a cost differential on your side. Mhmm.
Speaker 5:If you turn a lathe for three seconds to shoot down a drone, that's like 25¢ in electricity cost to to to shoot those down, essentially. So that's that's really that's really what we're looking at on on that front. And then your second question was and there was a second one.
Speaker 1:Oh, mean I mean, I I I just love to know, like like, it feels like this technology is still somewhat sci fi. I mean, you said that they've been deployed, but, you know, we haven't seen, like, videos of this. Like, oh, in Ukraine, it's changing the battlefield or, like or, like, with the, what was it? The the the the shoulder mounted rocket during the, during the Ukraine war when that broke out, we were like, like, there's not enough in the supply chain. Like, it it was, like, not just it's real.
Speaker 1:It's like it's having such an impact that they're using too many of them, and now we need to figure out the supply chain. I haven't seen any stories like that about laser weapons or directed energy weapons. So where where are we actually in the rollout of this technology?
Speaker 5:Yeah. So there are large like we were talking about earlier, there are large laser weapon systems that are deployed across, like, the navy, for example. Those are really, really big. Prime primes generally are interested in making extremely expensive bespoke systems. This is like
Speaker 10:the Android player. Right?
Speaker 1:Is Yeah.
Speaker 5:Is that that their business models do not do not allow them to to do anything other than, like, the particularly
Speaker 1:Expensive.
Speaker 5:Heavy expensive bespoke system. What what we're do what we're doing is we're coming from the bottom up saying, is the lowest swap? Like, what is the lowest weight? What is the lowest size?
Speaker 6:What is
Speaker 5:the lowest cost for a directed energy system coming from the bottom up and and doing it? We're approaching our target for we're approaching our target for distance very rapidly on our RD systems that will go out and we'll look to deploy early early to mid next year in in kind fielded capacity through some of the through some of the DOD units. I think a really salient part of what we do is, like, when you're talking about some systems like maybe microwave systems or radio frequency systems or even bullet systems, just the range is extremely limited. I mean, when you're firing a a a round out of a m two four nine, the bullet the muzzle the muzzle speed's, like, 700 meters per second. So you have to lead something.
Speaker 5:You know, when you get out to 700 meter, it takes one second for the bullet to land.
Speaker 3:So you're arching a bullet.
Speaker 5:The drone is flying dynamically. That's a very hard control problem. Are we are shooting things down at the physics limit, like the, like, the speed of action, essentially. This where, you know, when we shoot a a pulse of light at something a thousand meters away and it's moving left to right at maximum speed, say, at a hundred miles an hour, the the the drone moves at throws 30 microns, 20 microns in the period of time that it takes for the light to hit it. So we have some salient control benefits, and we also can continue to move out further and further and further, you know, as we kinda build out the system and build more products on top of it.
Speaker 5:The pathway that one, two, three, four, five kilometers is is right there.
Speaker 2:Have you, I'm curious you've thought about defending various assets against drones that are non military. So you could imagine if somebody has, let's call it an oil rig somewhere and it's threatened by drones for one reason or another and and or or potentially a better example is something like, you know, an NFL stadium that's worried about, you know, potential drone based terrorism. Can you have you thought about, you know, putting these, you know, turrets? Because one of the issues with with traditional kinetic anti drone weapons is you're sort of shooting bullets into the air. Those bullets are gonna land somewhere.
Speaker 2:Theoretically, with lasers, you could take the drone out without any, risk of, you know you know, undesired damage.
Speaker 5:Yeah. Definitely. So, you know, in an urban environment or at the border. Right? You know?
Speaker 5:Like, you're not gonna shoot a missile or a bullet, you know, in an urban environment at at some drones. But there are you know? I think that Super Bowl had had something like fifty fifty to 100, something like like, on on on unseated airspace, like, injections of drones where that we're not supposed to be there, and you couldn't really do any like like, DHS couldn't really do anything about it. Yeah. So, you know, we go forward, and we become an option.
Speaker 5:We're we're probably the only option in an urban environment where the laser isn't visible. It is silent. We can autonomously target, detect, track, and destroy drones in that is that are threatening civilian infrastructure. So that's a great point. That's exactly what that's exactly what we wanna do.
Speaker 5:And, you know, when we you know, when you focus the laser onto target to get a high density, there's a there's a small depth where you get a very high density. You also deconflict and defocus past targets. So we have this kind of depth where it's fairly lethal to targets, but then we can deconflict pretty easily as well.
Speaker 1:Interesting. Do you Yes.
Speaker 2:Sorry. Yeah. This this is sort of a scary thought, but do you do you expect there to be drone based, you know, terrorism, like some type of drone based terror terrorism event in the next five to ten years? It it seems like a huge threat that we don't necessarily have any it's not like a police officer standing outside some, you know, soccer stadium somewhere is gonna see a, you know, a drone coming in and and take it out with a handgun. So it doesn't seem like we necessarily have any defenses for that kind of attack.
Speaker 2:And and you don't need such a sophisticated actor to pull it off necessarily.
Speaker 5:Yeah. Definitely. I mean, there's almost certainly. There have been attempts that the FBI has toward it. So I think maybe three months ago, someone was planning an attack in Tennessee on a on a on a either a power plant or nuclear reactor.
Speaker 5:I forgot which. But they thwarted the guy in advance. They found him, checked his communications, and and and stopped it. Wow. But, you know, almost certainly, I think one of the main dangers and what people are afraid about with drone warfare is that it allows nonstate actors to inflict massive damage on trillion trillions of dollars of of human and infrastructure assets.
Speaker 5:So, you you know, I don't think that we're too far off from a major attack happening. Obviously, our our state defense apparatus is doing everything that they can to stop stuff, and they're fairly successful. But, like, if you miss one out of a thousand, it's that's pretty Yeah. Yeah. It that's pretty damaging.
Speaker 1:How are you thinking about the the revenue and growth side of the business? I can imagine pulling in some SBIR money. I can imagine this being kind of like a DARPA project almost. Long term, you probably wanna be a program of record, but how are you thinking about staging things out, and what does it look like so far?
Speaker 5:Yeah. You know, we have a lot of interest from a lot of the from a lot of the national labs, in terms of going straight to OTA, in terms of, like, procurement contracts. Mhmm. We are moving like, people didn't really think that this could be done. No one was looking at small scale, lightweight, edge deployed directed energy.
Speaker 5:And at this point, we're moving so quickly. Like, it'll like, by the time by the time a, like, is written for, like, exactly exactly what we're doing right now Mhmm. We'll be, like, a year down the line, and we'll be ready to produce, like, 50 to 100 units. So at this point, you know, our our customers are pretty pretty well receptive to that if you're deploying directly to if you're deploying directly to to DOD, and then we just have an unending list of people that want to want to demo the turret on their vehicle platforms. Like, so we can do vehicle companies, like, all the way, like, small startups, mid startups Yeah.
Speaker 5:Prime, stuff like that. And so I think we're we're trying to find that sweet spot where, you know, where do we deploy? We have it's like we have we've done a good job building per system. Everything that we're doing makes sense. And then what we're going at is, like, where do you go from here?
Speaker 5:Which of the which of the promising opportunities do you tackle with limited resources?
Speaker 1:Yeah. Well, I'm a I'm a potential customer. I'm big into big game hunting, and I'd love to take this on my next hunting trip.
Speaker 5:Dude, and it'll be cooked. It'll be cooked.
Speaker 1:Yeah. That's that's what I'm looking for.
Speaker 5:And shoot here, and then you can just, like, eat it right there. Yeah.
Speaker 1:That's that's exactly what I need. I'm sure Peter will love that. So thank you.
Speaker 2:It's great it's great to meet, Michael. Yeah. This a lot doing what you're doing.
Speaker 1:Yeah. Yeah. Thanks for the message, and thanks for hopping on. Really fun chat, and good luck to you.
Speaker 2:Thank you, guys.
Speaker 5:Thank you. Of course. Thank you so much.
Speaker 2:Yeah. Talk soon.
Speaker 1:We'll talk to you soon.
Speaker 2:Cheers.
Speaker 1:Well, what a fantastic tour of Defense Tech. I feel like I learned a lot about all the different companies and got to talk to some really interesting people. Do you have anything else that you wanna cover before we jump off for the day? America Day. America Day was a success.
Speaker 2:I just want to say that America Day doesn't end when
Speaker 1:The stream stops.
Speaker 9:When the
Speaker 2:stream stops. It's gonna keep going forever. Forever. Actually. Sort of a perpetual day.
Speaker 2:Yeah. Regardless of what the market's doing. Yeah. But now, I want to say thank you to Ramp Yeah. Polymarket, Public, Bezel, Numeral, Adquick, Eight Sleep, and Wander.
Speaker 2:They make this show possible. We are a % corporation supported. Yes. And we're very grateful for it.
Speaker 1:Yeah. Thank you everyone.
Speaker 2:We will see you tomorrow. Can't believe it's Friday tomorrow, It's
Speaker 1:crazy. Flew by.
Speaker 2:One more stream this week. Yeah. It's gonna be a rough weekend.
Speaker 6:It's gonna be great.
Speaker 1:Thanks, man.
Speaker 2:Thanks, guys. Cheers.