Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TBPN. It's James Bond, Danny. It's Tuesday, it's Wednesday, 04/02/2025. We are live from the Temple Of Technology. The Fortress Of
Speaker 2:Finance, the capital of capital.
Speaker 1:We are enjoying these these pistols. Yeah. Apparently, you don't get a gun if you're a spy for a b to b SaaS company, but you do get a gun if you're a podcaster. So that's fun.
Speaker 2:And you do get cool code words.
Speaker 1:Yeah. We're gonna be busting out lots of code words
Speaker 2:you
Speaker 1:gonna wanna
Speaker 2:see Send that watch to London, John.
Speaker 1:Send that watch to London. We love a good a good a good tech spying story. We've covered it before. The allegations that Deal implanted a spy or recruited a spy from Rippling, the rival b to b SaaS company that that handles HRIS and payroll, amongst other things. We've covered it when the story broke a few weeks ago when I was in Washington, DC.
Speaker 1:Now we're back in the temple of technology, and we're covering it again. And it's fascinating because the spy so to give you just a little bit of background, Guy works for Rippling. Deal is a rival. These two companies are very similar size and scale, but they've been bitter rivals for years funded by different sets of a v of venture capitalists. Guy from Rippling gets an you know, starts applying for a job at at Deal, maybe thinking about jumping ship or starting some consulting and doing some work with Deal, the rival company, winds up messaging with apparently the CEO of Deal and, and sending over secrets and potential clients and strategies that Rippling is using to win the HRIS market.
Speaker 1:And, it's a fascinating story because you think about spying as being much higher stakes and maybe reserved for the Palantirs of the world or something that SpaceX would need to worry about or maybe Andoril needs to worry about it. You don't think about it in the context of your payroll provider.
Speaker 2:The lesson is no one's safe.
Speaker 1:No one's safe. And so, I think, we will go through the affidavit, which we shared on X this morning. Parker Conrad, also the CEO of of Rippling, also chimed in with his analysis. But I thought Everett Randall summed it up very nicely. You gotta hold it in camera.
Speaker 1:Boom. Boom. Boom. We got these water pistols.
Speaker 2:Timu blocks.
Speaker 1:T MOO blocks. But they look very I mean, you spray you spray paint this black and, you know, that's gonna be an issue.
Speaker 2:That's gonna be an issue.
Speaker 1:But they're they're they're they're fun. They actually click when you when you click them.
Speaker 2:Anyway, so Fun. Everett quoting
Speaker 1:Everett summed it up really well
Speaker 2:with Parker's
Speaker 1:meme. Parker's post. So can pull up the Everett Post? Everett Randall over at Planet Perkins, you're not familiar. He's a friend of the show.
Speaker 2:There was a deal spy. The deal founder told him it'd be like James Swan. Spy was directly on founder's payroll through sloppy payment trail, which we'll get into. Founder's dad, also the CFO and chairman, set up a code language to make it feel more like a spy movie. I honestly am gonna be using these lines for a long time.
Speaker 2:My favorite is send that watch
Speaker 1:to Send that watch to London is going to be in the canon of tech phrases forever. It's gonna be like Sweet Baby Ray's or, you know, the cat is in the bag, the bag is in the river, that whole phrase. I'm trying to think of the other like iconic senator, we sell ads, that tonight. I'm I'm I'm not I'm not I don't I'm not doing it for the money. What was the Sam Altman quote?
Speaker 1:Like, it just became like a meme forever. There's a whole going direct founder mode. Send that watch to London. You know it's gonna be iconic. That is going to be an iconic phrase.
Speaker 1:Yeah. But let's start with let's start with our post, and then we'll do some reactions. And I'm sure there was some more reactions that are happening on the timeline right now. So I will run through a little bit of this. Jordy, feel free to
Speaker 2:scroll the So we covered this story the morning that this was all breaking Yep. The original Parker Conrad post. It was very explosive. At that time, it was unclear. Right?
Speaker 2:The spy, we talked about this, is sort of caught in the middle in a weird way. Right? Nobody he's not not really on anyone's team at that point.
Speaker 1:We had so many questions.
Speaker 2:You know, just in the past month, he'd been paid by both Rippling and Deal. Yeah. But now, he's out in the wilderness by himself, right? And so there's this big question of which side is he going to take Yep. Because that obviously gives a lot of leverage to the the side that he sort of like says, this is my team.
Speaker 1:Totally.
Speaker 2:I'm riding with them. And so
Speaker 1:And it even seemed like he was ready to remember, he was like, I'm willing to take that risk. Yeah. And it felt like he was like, rider ideal. And then all of a sudden, he flips. Yeah.
Speaker 1:And goes and he starts cooperating with Rippling. And so, well, why don't I why don't I do some some reading? We'll just kinda trade off the post that we highlighted this morning.
Speaker 2:So the affidavit is basically step by step all the different sort of sections to the story.
Speaker 1:Remarkably readable. 12 pages.
Speaker 2:And Well, yeah.
Speaker 1:And it's like, it's not total legalese. It's very much
Speaker 2:plain English.
Speaker 1:It's in plain English. You can just go read it. We posted it. We shared it. It's at the bottom of of our main thread on the Deal Spy.
Speaker 1:And, of course, one of the most fun exchanges here comes very immediately. And it's the reason we are in James Bond mode today with our pistols. It's because, so this all started in September of twenty twenty four. Alex, the CEO of Deal, who will need to remember his name's Alex because we're just gonna be him Alex. We're gonna call Parker Parker, Rippling.
Speaker 1:There's a lot of people moving around. But, Alex and the spy, his name has leaked, but I think we're just gonna keep calling him the spy, because I don't know. Why why draw more attention to this guy than he needs? Yeah. Alex suggested that the spy and him consider discuss career considerations, kind of a normal recruiting cycle.
Speaker 1:They talk on WhatsApp. They had a phone call, and they they had exchanged messages on LinkedIn and WhatsApp. Very normal.
Speaker 2:So the backstory here is the the spy was working for Rippling.
Speaker 1:Yep.
Speaker 2:They applied to work at Deal. Yeah. Didn't receive an offer. Which is normal. And so he reached out to he reached out to Alex to get feedback Yep.
Speaker 2:On the application process. And Alex said you you kind of bombed your presentation.
Speaker 1:Yep.
Speaker 2:But they built a relationship from that point on. Yeah. Allegedly.
Speaker 1:Yeah. Yeah. All of this is alleged. This is a signed affidavit. So I think if he's lying in here, he could be Committing another crime.
Speaker 1:He's committing another crime. But let's just be honest, like Deal has not responded. Maybe they have some amazing response and like we're we're we'll we'll hear them out if that comes It'd be super interesting. It'd be a crazy plot twist and we love plot twists. Yep.
Speaker 1:And so he takes a WhatsApp call with Alex from a meeting room in Rippling's Dublin office while he's at work and Alex told him, I have an idea. He suggested that he remain at Rippling and become a spy for Deal, which is in quotes. So he must have said the word spy, not just like he could have been, like, you know, dog whistling and said, hey. Like, you know, we would we we would love for you to, like, give us competitive intelligence. You know?
Speaker 1:No euphemisms. Just straight up spy. And then and then he says he suggested that I remain at Rippling and become a spy for deal, and I recall him specifically mentioning James Bond, which is hilarious. Hilarious to be like, you're you're this is the opportunity to be James Bond in B2B SaaS. He said I asked him what he meant.
Speaker 1:He said he offered me a monetary reward if I agreed to spy on Rippling for deal. I told him I'd have to think about it. And so communication immediately starts spinning up between the spy, Alex and Philippe, who's Alex's father and Deal's CFO. So it's a father father son son combo kinda running the company. And they move from WhatsApp to Telegram.
Speaker 1:So, of course, they're unencrypted and probably disappearing messages. And so a lot of those probably won't enter the record at any time. Later, they talk about how, like, a few videos and sort of Well,
Speaker 2:later than spy, to be clear, breaks his phone with an axe. Destroys his phone with
Speaker 1:an axe. Which as we know destroys all the information inside for sure.
Speaker 2:Exactly.
Speaker 1:Maybe. Who knows? Yeah. He also flushed it down the toilet. He really like went after it.
Speaker 1:It's it's it's just iconic. This is, like, some one of the best tech stories in history. So fun. So they have a three way call between Alex, the dad, who's Deal's CFO and the spy. Alex asked me if I was agreeing to his offer.
Speaker 1:Once I agreed, Alex said we should move the conversation to Telegram, and so he sets up Telegram to engage in secret communications. Now this was something we were very interested in hearing was how much was the spy paid because it feels like extremely risky to do this. It seems like it's extremely illegal, maybe criminal. It's like a lot of risk, and and these are very high flying companies. Like, the top people at these companies are making millions of dollars.
Speaker 1:Right? Like, they're getting huge comp packages, huge equity bonuses. You would think that to do something that's so risky Yep. And so and also moves the needle for deal a lot. Like, if they if they poach, like, one or two of rippling clients from this, like, that creates He
Speaker 2:needs an agent.
Speaker 1:Millions of dollars of value. He needs an agent. And he should be capturing 50% of that. I would yeah. If we were his agent and and this was all legal, let's say, we would never advise him on that.
Speaker 1:We would have said, hey. You're gonna put up some historic numbers for deal with with what you're doing. You're creating some massive shareholder value for deal. You need 50% of that. So, like, it's gotta be a hundred k a month.
Speaker 1:But it wasn't a hundred k a month. It was 5,000 a month, which feels very low and it
Speaker 2:feels like Well, and the thing the
Speaker 1:thing thousand euros. The thing
Speaker 2:that makes this whole thing so serious is that some of these customers would have potentially, you know, not gone with rippling or switched from rippling to deal. Yep. And those contracts, even if you land a few big logos, could be worth tens of millions of dollars
Speaker 1:Over the lifetime? Over the lifetime.
Speaker 2:And not to mention that, but there was also, you know, the the spy was was allegedly passing information on the superstar talent
Speaker 3:Yeah. Sort
Speaker 1:of top Yeah. Also poaching. And I mean, superstar talent is a context someone like that. I mean, what's a recruiter fee? 50 k.
Speaker 1:Right? 30 k. Something like that. And so, you know, he's gonna he's gonna feed some superstar talent and get 5 k.
Speaker 2:Yeah. Yeah. So to put this into perspective, though, €60,000.
Speaker 1:6 thousand euros. Or 5, it's 5,000
Speaker 2:Sorry, 5,000. 60 thousand a year and you know Yeah, yeah, $5,000 annualized. Is spying. Is what a general practitioner, like a doctor makes in Ireland. Oh, interesting.
Speaker 2:And so it's actually like Okay. Put this into the equivalent of like, he's basically, if he was in The US, he'd be getting paid like $300,000 a year.
Speaker 1:Okay. Sure. Sure.
Speaker 2:Sure. Like the entry Yeah. Yeah. Salary for a doctor. So it's not inconsequential.
Speaker 2:Yeah. It's very possible that he was making more Spine. This arrangement than his actual
Speaker 1:because he wasn't super senior at Rippling. Just had access to all the systems because he was on the team. And man, they must be redoing their security like crazy at Rippling right now.
Speaker 2:Yeah.
Speaker 1:Good bull market and IT jobs over there.
Speaker 2:Well, the the the the there's so much irony in this whole story, but the great irony is that Rippling was selling payroll with IT. Mhmm. And it seems like they were able to use their own product to catch the spy.
Speaker 1:Yeah. Yeah.
Speaker 2:Yeah. Which is a great
Speaker 1:Yeah.
Speaker 2:Sure they'll use that as a case study basically forever Yeah. On why you should use RipPoint.
Speaker 1:Yeah. And so initially, he wants to be paid in fiat because he's worried about volatility in crypto. And so he asks that payments be made through Revolut. But over time, he asks to move over to crypto, which deal CFO incorrectly believed would leave no trace. And in fact, it leaves the most trace.
Speaker 1:Permanent public one. In fact, anyone can trace it. It's on the blockchain.
Speaker 2:Well, in this case, I think he was getting paid to a centralized exchange.
Speaker 1:Yeah. So probably not. But, like Privacy. Know, you can easily subpoena blockchain.
Speaker 2:What happened. He's claiming that the payment came from the wife of the COO of And the reason that that becomes an issue is if it's true, it just ends up incriminating basically the entire exec team, the CEO, the COO
Speaker 1:It's like every single person was involved. Yeah. And then the lawyer come the the the general counsel comes in later too. Deal's lawyer.
Speaker 2:And so there's like That was unclear to me.
Speaker 1:I couldn't
Speaker 2:tell if it was external counsel Sure. They brought in. Yep. But it seemed at least one lawyer
Speaker 4:Yeah.
Speaker 2:From Deal was like, you know, actively working on on trying to fix this issue that that seemed to be internal.
Speaker 1:Yep. And so he would get the crypto. He'd get Ethereum for in his blockchain.com cryptocurrency wallet, and and then he would liquidate the funds and transfer it. But it's again, it's so funny. We've talked about a little bit insider trading before.
Speaker 1:Like, the most obvious thing is just like, oh, like, I don't want this payment to show up my account because I'm working for a deal. Like, I'll I'll have to use someone who's like arm's length for me. And it's like your wife who's like clearly tied to you. Yeah. It's not like it's some, oh, yeah.
Speaker 1:Someone that you are not even connected with on social media. No one could possibly Like, You cross paths And the issue is children love each other but you never talk. Is the issue is It's so obvious.
Speaker 2:If in this situation, if the spy had said, deal's my team. Yeah. I'm riding it out with you guys. Yeah. He like, all this stuff makes it so much harder to for for them for deal to spin.
Speaker 2:Right? Because you go onward where the spy is giving a record of the code words and phrases they use to coordinate payment, which Philippe, the CFO and chairman would say would send a picture of a watch to the pay the spy would send a picture of a watch to their payment chat and Philippe would say, send that watch to London. And then he would respond, the buyer is very happy. And so they were sort of communicating and you know, trying to imply that like there was I guess some type of like watch transaction and that was the payment. Yeah.
Speaker 2:That that's how I read it. So They wanted some plausible deniability that like they were just trading watches with this guy.
Speaker 1:I think that's I I think that's what they wanted to paper over a little bit.
Speaker 2:This corporate espionage is brought to you by
Speaker 1:Bezl. I mean, as
Speaker 5:soon as
Speaker 1:I
Speaker 2:sound We're gonna we're not gonna monetize this.
Speaker 1:This is set. Monetize this. But, yeah, mean, seriously, you should not you should not be doing fake watch transactions. You you should be buying real watches instead.
Speaker 2:That's right. Work
Speaker 1:hard, make make legitimate money.
Speaker 2:Yeah. So the crazy thing invest in The crazy thing is that Deals CEO would allegedly would message this spy multiple times a day. And if the spy didn't respond quickly, would follow-up and sort of double and triple text.
Speaker 1:His texting style is wild.
Speaker 2:He's Yeah. Honestly, sounds seems like pretty cool. Throwing the word boss around. Yeah.
Speaker 1:Yeah. It's funny because, like, he's the CEO of a multibillion dollar company, very successful. And and and he has this spy who's, like, clearly on like, many levels below him only making 60 k. Is there a reason you're pointing gun
Speaker 2:at me constantly? No.
Speaker 1:Sorry. It's very threatening to just during an interview. Jordy's like this at me, like, just just
Speaker 2:Under the table. Under the table.
Speaker 1:John. Don't say don't cut me off.
Speaker 2:Don't say what you're Never. Don't say what you're about to say.
Speaker 1:Never cut me off. Never cut me off while I'm talking.
Speaker 2:Airwon Airwon Coffee in one hand. This And then
Speaker 1:you see it on the other screen. But but he texts in all lowercase, which has been a contentious issue on the timeline for a while. Yeah. But he always refer he always addresses he always he always addresses the spy as boss. So he'll say, hi, boss.
Speaker 1:Or, hey, boss. Can you search for this? And Alex would frequently message me on Mondays with, hey, boss. Good weekend? With two question marks, which is something I don't normally do.
Speaker 2:Casual and fun. And, hey, let's give him some credit. He wasn't calling him bud.
Speaker 1:Yeah. It could've been a lot it could've been a lot worse. Could've been a lot worse. I like boss. I I I think I think it's a good good way to address.
Speaker 2:I'm solid. Yeah. Chief is Respectful. Sorry.
Speaker 1:Take it on the other side.
Speaker 2:Can't stop pointing the
Speaker 1:He keeps pointing the gun at me.
Speaker 2:Water gun at John.
Speaker 1:Anyway, so what did Deal actually want the spy to search for in rippling systems? Well, we heard about tiny bird before, but we also know that they were searching for Tom Brady. We don't know why, but I think maybe Tom Brady is building a startup and needs HRIS, maybe? Do you think that's
Speaker 4:what it is?
Speaker 2:Trying to I was trying
Speaker 1:to maybe they were gonna do a sponsorship or something?
Speaker 2:Anything we'd say here I think would just be pure speculation. Iran seems pretty obvious.
Speaker 1:Yep. Because there were there were, like, allegations that that deal was being used in sanctioned countries, I believe. There was, like,
Speaker 6:a Yeah.
Speaker 1:There was a there was a rumor going around and there was some reporting by the information that maybe some clients and and this is the nature I mean, I don't wanna be too too harsh. Like, this is the nature of, like, online platforms. People try and abuse them all the time. Sometimes it's Yeah. You're doing everything you can to stop abuse and you still get a little bit.
Speaker 4:Yeah.
Speaker 1:But the allegations were that they weren't really doing that much.
Speaker 2:Yeah. And who who knows? But clearly, he wanted to know if rip if people at Rippling were were talking about Iran Yeah. And probably in the context of deal. Yeah.
Speaker 2:Interesting. But who knows?
Speaker 1:And then, yeah, they was also asking for superstars.
Speaker 2:What what was up with Tiny Bird?
Speaker 1:I don't know. I don't know what tiny bird is. It was mentioned in the previous, thing.
Speaker 2:And I
Speaker 1:think it was like wasn't it wasn't it the wasn't the leak of the, it was it was something that was it was like wasn't it like the honeypot? It was like there was an article that was gonna go out that was gonna mention Tinybird. And so and so Rippling sent an email to the executives at Deal and said, hey. There's this hit piece coming out that's in implicating you and it's about this thing called tiny bird. And then they they knew that they searched for it and they would have no way to know that that was the keyword that was gonna be in that article unless they had read that and then passed it to the spy, which is exactly what
Speaker 2:they did. Tom Brady though, could there's potentially a Tom Brady of b two b sales, you know.
Speaker 1:Oh, yeah. Maybe that's it. You're looking for a superstar. You wanna know who the the GOAT. Who the GOAT goes.
Speaker 1:Rising up the Yeah.
Speaker 2:Looking around.
Speaker 1:The next Sam Blom. Tom Brady. The next Sam Buck. The Sam Everyone who's good in b two b SaaS sales, Sam b, always.
Speaker 2:Yep.
Speaker 1:Sam Blonde. Sam b. The CEO and Spy were friendly and enjoyed talking about sports. Alex, the CEO of Deal, was also just chatting it up about Paris Saint Germain football club, the soccer team of Paris. He reached out to me multiple times a day to request information about rippling.
Speaker 1:It seemed constant. It had been a few hours since he had heard from me. He would reach out. And then the level of detail here, like, the management I mean, you join an organization, it's it's usually pretty hard to get FaceTime with the CEO. But you come in as a spy.
Speaker 1:You're gonna get direct access. You can chat them up. You can you can get all the mentorship you want. Maybe this is That's right. The path to career acceleration.
Speaker 1:If only it was legal.
Speaker 2:Yep. So here's where it gets particularly spicy. So at the February 2025, Alex told the spy to search Rippling's Slack system for the channel hashtag d defectors. And remember, this was part of the honeypot operation that that Rippling was running to try to prove that Deal Senior Management was coordinating with the spy.
Speaker 1:Yep.
Speaker 2:The spy ran the search immediately and began to look at the results. Within minutes, Alex had messaged him and told him not to run the search because he believed it was a trap. The spy told Alex that by the time he got his message, he'd already done the search and Alex said, oh, s h I t.
Speaker 1:Wow.
Speaker 2:And the spy said, I told him that deed effectors had Matt Plank, Rippling's chief revenue officer in
Speaker 1:the channel.
Speaker 2:Not here you wanna find
Speaker 1:him that virtual world of like of like walking into a room and like the big guy is just there and be like, how about you have a seat? Like, we the jig is off.
Speaker 2:The jig is off.
Speaker 1:I wasn't expecting HR to be here.
Speaker 2:Yep.
Speaker 1:I told him I was frightened, but he said, don't worry. Thereafter, he continued to press me to pass him information from Rippling, which is extremely bold. Like, you think it's a trap. It looks like a trap. It went in.
Speaker 1:You went in and looked around, and it was like, only this chief revenue officer is there. No. The like, the thing that you expected was not there. It feels like a trap. You suspected it.
Speaker 1:He's like, don't worry. Let's just keep buying. You're good. Like, they should have cut it down then in February.
Speaker 2:Yeah. Who knows? But it it was probably already too late. Yeah. So maybe he ran the calculus of Yep.
Speaker 2:You know, let's just
Speaker 1:Should we talk about the escape attempt?
Speaker 2:I don't even think he attempted. I mean, obviously Yeah. When he was confronted Yeah. In his office, this is the spy. The spy made a bunch of excuses and said, oh, my phone and my laptop are down here.
Speaker 2:He had them. Mhmm. He said he went to the into the bathroom and he flushed the toilet a few times. Yeah. But I don't think he flushed anything or that's what he implies.
Speaker 2:And where it gets particularly interesting is that the apparently Asif deals in house lawyer was, you know, at this point starting to talk to him and said that he was speaking in a personal capacity. Rippling has nothing. And Asif suggested that the spy and his family fly to Dubai that night Yeah. Saying, we all need a holiday. And We
Speaker 1:all do
Speaker 2:need a has, I don't believe, has extradition agreements with anyone, do I
Speaker 1:I don't think that's true. I think they do. I don't think it's non extradition. I think it's just hard to find someone if they're there, laying low. I think you to go, like, way, way more obscure, but I don't know.
Speaker 1:You can look it up. The spy proceeded to smash his phone with an axe. He also deleted his LinkedIn account. Like, that would do anything, but it's very odd.
Speaker 2:They do. They signed an extradition treaty in actually late twenty twenty four.
Speaker 1:Ireland in control. Yeah.
Speaker 2:Yeah. They were ahead.
Speaker 1:It makes sense. I mean, there's a lot people that go there. It'd be weird for it just to be like a free for all of criminals. Right? And so he smashed his phone with an axe and put it down the drain at my mother in law's house as Deal's lawyer as as the Deal's lawyer had advised.
Speaker 1:That that evening, deal's lawyer spoke to his wife for forty five minutes on an to an hour on a telegram call reassuring her and corroborating what I had told her that Rippling was lying and making all of this up. My wife later expressed concerns to me about the call with Deal's lawyer. She said that what he was saying did not add up, and she felt he was being pushy. And so this this spy finally decided to cooperate with Rippling after getting a text message from a friend that said the truth will set you free. And so, family members were advising him to just tell the truth and that it was the fastest way to move past all of this.
Speaker 1:And so, he realized that he was harming himself and his family to protect Deal. He was concerned and I'm still concerned about the wealth how wealthy and powerful Alex and Philippe are, but I know what I was doing was wrong. After I spoke to my solicitors, I started to feel a sense of relief. I want to do what I can to start making amends and righting these wrongs.
Speaker 2:Yeah. And I'm not surprised now getting his side of the story that he very quickly flipped Yeah. To team Rippling.
Speaker 1:Yeah.
Speaker 2:It just doesn't it's hard to imagine. Like, seemingly if he went with Deal and this was the situation that it was gonna be hard for him not to go down with the Deal ship. Now there's a lot of different stakeholders and players involved here. There's there's deal and its management team. There's deal shareholders.
Speaker 2:Right? And then on the other side, have rippling and rippling shareholders.
Speaker 1:Mhmm.
Speaker 2:And it's gonna continue to be extremely messy. But and and to be clear here, like, the spy, nothing about this makes the spy look any better. Yeah. In fact, it's like he knew what he was doing the entire way and repeatedly made the choice to commit crimes.
Speaker 1:Yeah. Steal. Like, there are gray areas for some
Speaker 2:not like There's not a lot of gray areas.
Speaker 1:Gray areas generally in not in, like, corporate secrets, but in, like, strategies. Like, if you go if you if you go and work at at, you know, some high growth company and then you're recruited somewhere else and you leave, like, yes, you can't you can't export GitHub code. Everyone knows that. But can you call up someone that you got drinks with and maybe you met them in a corporate context, but then you became friends and then you get them as a client? Like, probably.
Speaker 1:Or or can you just say, hey. At my last company, we worked really hard, and we had this fast paced thing, and this was our strategy. So why don't we implement that strategy here? Like, that stuff happens all the time. That's the reason why VCs love to back, like, former Stripe operator now doing a start up.
Speaker 1:It's because it's like, well, we hope that you're going to kind of steal the Stripe culture or copy it in some ways and bring that to bear in your new organization. Now the line is drawn at, like, stealing secrets, IP, contacts, connections, and then also and then obviously way, way further. But the whole thing is that, to your point, this wasn't even framed as anything like that. It could have been framed as like, hey. Like, you have this you have this depth of experience at a rival company.
Speaker 1:We would love to get you out of there and then put you to work in a much higher growth scenario very quick very very quickly. Take advantage of this, all the expertise that you learned over there. Obviously, don't steal anything, but you're going to hit the ground running very quickly here as opposed to if you came from a company that has nothing to do with this industry. That happens all the time. Right?
Speaker 1:Yeah. So but it doesn't look like that at all. And the fact that they, like, literally kicked off with, hey. Do you wanna spy and beat James Bond?
Speaker 2:Yeah. Not good. To be clear, we don't have any insight into Rippling's employment agreements. Yep. But there's things like IP assignments and things like that.
Speaker 2:And and there there's
Speaker 1:There's no spying clauses.
Speaker 2:Yeah. There's gonna be plenty of documentation around that that would make it very obvious that that by giving company secrets and IP to to a and getting paid by a direct competitor is just gonna be Yeah. Yeah. That that's that's the thing that's sort of unclear with the case so far Yeah. And how this is gonna shake out is like there's the civil case Yeah.
Speaker 2:There's potentially criminal cases. The way this is shaking out now, mean, we saw like, I think it was JD Ross said, never seen anything like this in tech. These guys are all going to jail and deal will likely die as a business. I don't know.
Speaker 1:That's aggressive.
Speaker 2:Very aggressive. I don't know if either of those are true. There are so many layers of irony in the story. It's hard to even know where to start, which I do agree with. But that's the first part is it's hard for me to imagine how Philippe and Alex stay Yep.
Speaker 2:In management roles or or the COO. Right? Like Yeah. Seemingly like they all probably have to go for the company to move forward. Will they go to jail?
Speaker 2:It's unclear. I think that, again, it will kind of be on Rippling and Rippling shareholders whether Rippling wants to. Right now, I believe it's a civil case. Right? And so that doesn't mean that, and and there there will be if that were to proceed, there would be sort of penalties and and, you know, a number of consequences for that, but it could switch to being a criminal case.
Speaker 2:And at that point, you know, who knows? There there could be jail time. But before you get to that, you'd have deal and deals, you know, board and shareholders broadly that could go to Rippling and say like, you know, this was clearly, you know, a big mistake. Here's what we're gonna do to correct it. Yep.
Speaker 2:There's probably a massive settlement associated with that.
Speaker 1:Yep.
Speaker 2:It's it's very possible that Rippling could basically get like a series e done here to move forward. Yeah. Yeah. Non dilutive series e type of thing.
Speaker 1:Yeah.
Speaker 6:You
Speaker 1:know? Yeah. Just like, hey. If you want this to go away, you're gonna have to pay us a hundred million dollars or something like that. That would be crazy.
Speaker 1:It's possible. The the the thing that I was talking about with you earlier was was, okay. So if deal winds up paying Rippling a huge settlement to make this go away, well, now they have a new problem on their hands because their investors should be upset about that because Yeah. That was a massive liability that was not disclosed to the investors. That could be considered securities fraud, and they might have a case there.
Speaker 1:And so you're kind of fighting a war on two fronts. You wanna keep rippling happy, but then you also wanna keep your shareholders happy. And if you can't do both, you're gonna face pressure legally. And how how that will manifest? I don't know if it's if it's criminal.
Speaker 1:I don't know if it's civil, but like you're gonna face pressure and there's gonna be unhappy people on one side or the other and that's a really, really tough
Speaker 2:spot to be It seems like no matter how much control Alex and Philippe and the COO have over the business today
Speaker 1:Yeah.
Speaker 2:Just purely from a corporate standpoint Yep. I don't see how they make it out of this. Yep. You know? I I agree with you.
Speaker 2:Still running the company. Yes.
Speaker 1:I I completely agree with that. There is the bigger question of like, this could be a where there's smoke, there's fire situation where like there's other problems with the business, and there's been, like, rumblings about that and reporting. But let's assume that
Speaker 2:Yeah.
Speaker 1:Deal has, you know, huge book of business and a lot of companies that are, you know, relatively happy with the product, and they run their payrolls on time and do HRS stuff. And they're just, like, happy with it as a SaaS product, and they couldn't even tell you the name of the CEO if they tried. You know? Like, we use, you know, Shure microphones here. I can't tell you the CEO of Shure.
Speaker 1:If Shure was embroiled in a conflict or some controversy, like, I wouldn't be aware of that. And so it's totally possible that a lot of deal clients just don't know that this is going Yeah. And they don't care. They're like, well, get my employees okay.
Speaker 2:You gave the example earlier off air Yeah. Like tires. Like if you went to the like Yeah. People in tech, this is the biggest story.
Speaker 1:It is the biggest story.
Speaker 4:It's so The
Speaker 2:the year so far. Yep. Even even though, you know, Monday night you get this like $40,000,000,000 biggest venture round. Yeah. Yeah.
Speaker 2:Who knows if that's, you know, completely real Yeah. Or not. But still, like, this is the craziest story ever. It's YC on YC violence. Yeah.
Speaker 2:Right? It's crazy. Like, talk about talk about being in a rough spot. If if you're Y Combinator right now, you're you're looking at two of your darlings just sort of duking it out in a very sad way. But but the example you gave was tired.
Speaker 1:Kinda disagree with that, actually. Because oftentimes competition is for losers. You want one power law winner. So I mean, maybe value the value of a single really concentrated winner might be higher and higher margin. Anyway, sorry.
Speaker 2:Yeah. Yeah. Yeah. But I I again, I I don't believe that a deal with hundreds of millions of dollars Yeah. Of revenue is going anywhere.
Speaker 2:Yeah. Like they they have tons of, you know, massive multinational companies working with them. Yep. It's gonna be a big, business, I think, for a long time.
Speaker 1:My example of the tires.
Speaker 2:Yeah. So the tire example I thought was good. If you go if you work in the tire industry and Michelin and Bridgestone are doing corporate espionage on each other, you're like, this is crazy. We've never seen anything like this. Like, it's like, you're fixated on it with your friends.
Speaker 2:But then if you go to like, if I went to my mom and I said, hey, mom, like, I saw you have Michelin tires. Did you know that Michelin was stealing from Bridgestone like their rubber and you know Yeah
Speaker 1:yeah yeah.
Speaker 2:Supply chain you would just never would be like, okay sweetie, like that's good.
Speaker 1:Like, you know,
Speaker 4:like Yeah, exactly.
Speaker 2:You know, I'll keep that in mind. Then she's replacing her tires in a year and she's like, doesn't even remember.
Speaker 1:Yeah. Unless it actually affects the client, like the way FTX locked your funds or Theranos is giving you the wrong information. But if there's just chaos at the top and you never even knew who the CEO was, you might just be like, hey. I'm not gonna rip out my HRIS system. I'm just gonna stick with what's working.
Speaker 1:At the same time, it's gotta be the best time in history to be a rippling sales rep. Can you imagine sending those emails? Hey. I saw that you're a deal client. Did you see the latest affidavit about the spying thing?
Speaker 1:I'd love to hop on the phone and tell you about rippling service. Like, they must be having a blast selling this product.
Speaker 2:The sad thing here, and I'm sure the frustration for the deal team Yeah. And the shareholders is that Diehl, despite the spying, ignore the spying, has executed phenomenally
Speaker 1:Yeah.
Speaker 2:And has built a one of it's one of the most impressive revenue ramps
Speaker 1:Yeah.
Speaker 2:That we've seen in the last ten years. And they had a big lead over Rippling. Sure, I don't know what their growth rates look like exactly. But the spying thing reeks of desperation and it didn't feel like they were quite in a desperate situation yet. Right?
Speaker 1:No. I I I in the midst of
Speaker 2:good take. These markets are huge even if rippling and Deal just feasted on ADP Yeah. And and Paycom and all these big Yes. Payroll providers. They could have each eaten, you know, another, you know, 500,000,000 of ARR a year for a very long time
Speaker 1:Totally. Both been Totally.
Speaker 2:Fine. And now it seems very unlikely that that, this company is gonna be founder led, you know you know, by by, you know, the end of this month, I imagine. I just don't know how you how you let this go.
Speaker 1:I wonder if there were any any sir like, I wonder what deal was doing against ADP. Like, what was their strategy to beat Paycom, Paylocity? Any of those, like, larger public payroll companies. Because to your point, I think that really is somewhere where you could just, like, feast on the market cap for a very long time and probably not as aggressive of a counter espionage effort as Parker Conrad who who clearly has taken deals seriously as a competitor for a very long time. Yeah.
Speaker 1:He's like the yeah. He's the hornet's nest you
Speaker 2:probably Yeah. When you look at their product strategies, right, Rippling is the original compound startup. Yep. They they did r and d for years, I think, before they actually, like, went to market with their product. And RIP, deal started with a simple simple idea, enable glo global payroll.
Speaker 2:Complicated, you know, sort of, actually underlying product and infrastructure to do that. But then they both were just converging back. You know, they sort of started in their own lanes Yep. Got up to hundreds of millions of revenue, and then started aggressively converging onto the same core opportunity. Right?
Speaker 1:Yep.
Speaker 2:And, yeah. So these companies were just always destined to Collide. Collide.
Speaker 1:Collide, they did. I like Will Minitis' take here. He says, talking about deals CFO using code words and phrases to coordinate payments with the spy, send that watch to London, the buyer is happy, etcetera. Will says it is a useful law of human behavior that whenever you're engaging in something your heart knows is wrong, your brain tries to rationalize it in narrative terms. The second you find yourself using code words, you're doing something wrong.
Speaker 1:Speak simply and speak truthfully. I thought that was a good take.
Speaker 2:Good take, Will. But code words can be fun. Okay. Especially when you repurpose other people's code words Yes. For your own.
Speaker 1:Well, those are just memes then.
Speaker 2:I liked Andrew Reed's post. He said, paid man's and eth on blockchain.com sounds like straight out of a UK rap song.
Speaker 1:You can I can always count on UK rap to tell me how many people were in the car? That's funny.
Speaker 2:You like UK rap?
Speaker 1:Yeah. Stormzy. We were listening to the Stormzy in the studio last season.
Speaker 2:Paid Mans and Eth on blockchain.
Speaker 1:It really is so silly.
Speaker 2:Yeah. Josh Pacini says
Speaker 1:This one went super viral, by the way.
Speaker 2:You're like James Bond, but you only make 60. You don't get a gun, and you steal B2B SaaS secrets. Not not the best Not
Speaker 1:the best.
Speaker 2:Trade. Yeah. But, yeah. Europe Europe honestly came like, took some brand damage here.
Speaker 1:Yeah. If you're willing to spy for 5 k euros a month, gotta get the economy going, Risking
Speaker 2:it all. Risking it all. Yeah. What are
Speaker 1:you doing?
Speaker 2:But yeah, I'm sure DealSpy massively regrets his actions. Yeah. And I'm sure everybody involved does
Speaker 1:Yeah. Except Parker. Always Yeah. Whenever there's a crime Parker. The wartime wartime CEO for sure.
Speaker 1:Yeah. Whenever there's a crime, like, you know, there's always, you know, there needs to be accountability. But at the same time, I think there needs to be some empathy. Like, this is a frustrating and sit and and difficult situation for all involved. And I think, you know, I just hope that there can be a resolution that where, like, there's some sort of resolution and and we're closing the book on this chapter of tech industry in a meaningful way across the board.
Speaker 1:Yeah. But I'm sure there'll be a lot more news related to this over the next few weeks and next few months. The story is moving incredibly fast. This whole thing started just five months ago, and then it broke just I mean, the the honeypot happened in
Speaker 2:February. And
Speaker 1:then in March, boom, the story dropped. And so everyone's been moving very quickly here. And it's been it's been fascinating to follow.
Speaker 2:Moving quick. Alright. Well, we should move in to the next story.
Speaker 1:Yes. Tesla's global vehicle deliveries sank 13% in the first quarter. Recent surveys have shown an erosion in the brand's appeal, especially among Democrats in The United States. And so Tesla was putting up massive numbers for the last two years, somewhere between 900,000 vehicles every quarter. In q one of twenty twenty five, Tesla delivered 336,000 vehicles.
Speaker 1:Still a lot of cars, but a 13% fall is nothing to ignore, and so you gotta dig into it. And I was always wondering if there was gonna be you know, obviously, there's a there's a decline in in interest from Democrats. Would that be offset by Republicans who now like the brand? Oh, well, we kind of have the answer at least right now. The that demand has not The issue
Speaker 2:is the average Republican that that has switched and said I'm a, you know, turned to an Elon fanboy Mhmm. Loves Ford Raptors. Yes. And that's the big challenge. Yeah.
Speaker 2:It's like no matter you know, even if they they think they're on team Yeah. Elon now, the Ford Raptors still probably
Speaker 1:the greatest truck. I still think that's an opportunity though because there's no reason why Elon and Tesla couldn't build something like a Ford Raptor or Ford Raptor r, like a lifted truck.
Speaker 2:Well, it's
Speaker 1:a Cybertruck. No. Not the Cybertruck because it needs to have it needs to have an
Speaker 2:It needs have a lift.
Speaker 1:Combustion engine for sure. Yeah. And it needs to have you know, you you need to have an option on the Tesla configurator to say, like, I wanna check the I'm rolling coal button, and then it just has the massive smokestacks out the back. It needs to have a really a really aggressive engine note. These things are important to the new customers of Tesla, I think Tesla needs to adapt.
Speaker 1:But let's dig into it at The Wall Street Journal. There's further evidence that a growing consumer backlash against the brand is hurting Tesla's business. The analysts were expecting 396,000, shipments. It came in at $3.36, much lower. Tesla shares were up 4% in midday trading Wednesday following the release of its latest delivery figures.
Speaker 1:Fascinating that it went up, but I guess the the the market was expecting even more of a sell off. Musk's active role in the Trump administration and vocal support of for far right parties in Europe has made Tesla a target of political protests and boycotts in recent months, including in some cases by once loyal Tesla owners.
Speaker 2:Yeah. It's Yvonne's probably looking around like now watching the stock pop 5% being
Speaker 1:like, interesting.
Speaker 2:But it's possible this is more of a reaction to
Speaker 1:China.
Speaker 2:No. Oh. The news that that he may be leaving the White House.
Speaker 1:Oh, sure. So if he goes Which which if he goes deeper into just like, I'm back in just the tech world, that would certainly offset things. Yeah.
Speaker 2:It seems clear that there's a limit to his there's some sort of limit to how much he can multitask. Yep. And I would imagine that Tesla shareholders will benefit from him shifting focus out of the government and back onto
Speaker 1:sort of So we saw this from Joe Wiesenthal. He took a picture of a computer showing Bloomberg, and there's an article in Politico that says Trump tells inner circle that Musk will leave soon. Obviously, just kind of rumor mill at this point, but, but interesting if true and unclear what that would mean for Tesla. Could the Democrats who have been buying Tesla's kind of forgive and forget and move on and
Speaker 4:Yeah.
Speaker 1:Come back to the to the, to the brand? I cert I certainly think it's possible. If Elon wanted that, he could go on he's very he's a very good communicator. He could go on a press tour and say, you know, like, hey. Like, yeah.
Speaker 1:I'm I'm actually just really focused on cars right now. And, you know, I I was thinking about this. Like, Tesla should be the most nonpartisan vehicle in the world because it's it's electric, so it appeals to Democrats. And it's built in America, and so it appeals to Republicans. And he could if he was purely focused on that and didn't care about the politics stuff, he could have he he probably could have gotten the Tesla brand to a position where it was loved by everyone in the same way that, like, Nike is loved by both or Apple.
Speaker 1:Like, these are very bipartisan brands, nonpartisan brands. But I think he really did think that this I think he was a true believer in the in this idea that the twenty twenty four election was deeply important, and it was worth him coming off the sidelines, risking everything to move Washington in a different direction. And he did that. Now he kind of, you know, there's gonna be some like, we were talking to I think we were talking to Senra about this. Like like, what is the net effect of Elon's going political?
Speaker 1:Like, will it be good or bad for him? Like and it's like, okay. What are we talking about here? Like, aggregate net worth? Like, some of his companies might do better.
Speaker 1:Some of his companies might do worse. We have to,
Speaker 2:like I think all those he was running the calculus, it would be like, this is probably short term bad. Yep. But if I can be effective and sort of change the course of history with the country Yep. Then it will be net good in the long run.
Speaker 4:Yeah.
Speaker 2:But certainly, it would have been hard to argue that going in short term was just gonna be default good for everything.
Speaker 1:Yeah. I mean, you you could even imagine it's like, okay. So what if the work that he does winds up streamlining the FDA, speeding up Neuralink development, and Neuralink, every single person winds up getting one and they cost $50,000 and all
Speaker 2:of a news today too, by
Speaker 1:the Oh,
Speaker 2:really? They're opening up a patient registry.
Speaker 1:Fantastic. But
Speaker 2:there's two poly markets I wanna look at.
Speaker 4:So right
Speaker 2:now, Elon out of Trump administration before July sitting at 50%.
Speaker 1:Fifty %.
Speaker 2:And then out of the admin in 2025, you know, sort of basically by the end of the year is at a 76% chance.
Speaker 5:Wow.
Speaker 1:So I also wonder what that will mean because it's totally possible that so people have been predicting, like, the Trump and Elon relationship is going to dissolve and blow up. It's gonna blow up. Like, they're two they're they're both two hard charging, aggressive figures. It doesn't make sense. They just can't last.
Speaker 1:That's been the narrative. Right? Yeah. But it's possible that they that Elon is no longer a member of the staff of the White House. Like, he doesn't have a dot gov email, but they're still friends.
Speaker 1:Yeah. That that is a that is a possibility. I don't know if that's where it's going. I really can't predict any of this. I've not really tapped in in DC.
Speaker 2:So very shortsighted for both of them to blow up the relationship.
Speaker 1:Yeah. I think so. It seems like it's been pretty mutually beneficial. I don't know. I mean, no one expected them to win and then they did.
Speaker 1:So, you know, it seems like it's good. Sales from China, which exports to foreign markets fell 49% in February but fared better in March after it started delivering the refreshed Model y. I saw the first refreshed Model y on the street the other day. It looks in China. According to China Passenger Car Association, the company sold 78,000 China made vehicles in the month, down 11% in the same period last year.
Speaker 1:Despite the decline, Tesla climbed back to third place in sales in the Chinese car market after dropping out of the top five in February. And they have some stiff competition that I'm actually very excited about. I I think just from a consumer perspective, seeing some of the demos of the cars and the way the Chinese car companies are pushing things forward is awesome. Have you seen that demo of the adaptive suspension? So you're going around a corner super hard, and it's and it and it's tilting the car so you're it's perfectly flat, they have a wine glass on the center console.
Speaker 1:It's not spilling. Amazing. Or like going over bumps and and the car is like adapting to the bumps so it's just perfectly smooth. There's all these like they do all these like weird features. Like there's a car that floats.
Speaker 1:We talked about that.
Speaker 2:Yeah. There's there's a bunch of simple features that just make sense. Yep. They have hand tracking, so you can be like this Yep. And then it'll pull down.
Speaker 1:There's even, like, this LED bar on the back of some of these cars so you can send a message to someone in front of you or behind you being like, like, sorry, like, I I I was on my phone. That's why I didn't go when it was green. Like, could send that. And I think that's It's all these funny weird things. There's this explosion of of innovation and, like, testing weird things.
Speaker 1:And I like that. Puts pressure on
Speaker 2:our Catalyze that.
Speaker 1:Totally. Yeah. Tesla did the same Simple stuff. Noise. Yeah.
Speaker 1:Fart features. Yeah. Or like playing video games or playing Yeah. You know, all these different things. Tesla very much did that.
Speaker 1:And while I absolutely want American companies to win, I do like the idea that there's now pressure to say, okay. We really need to
Speaker 2:step up. Innovation good. I want to see Mercedes execs look at these videos of these Chinese manufacturers and be like, okay. They're, like way ahead of us on so many dimensions. Yeah.
Speaker 1:We need to catch up. I mean, I'm pretty sure that,
Speaker 5:I don't
Speaker 1:know if it's a Yangon U8, but the CEO of Ford was driving a Chinese car like daily for like weeks because he was like, I need to understand what's going on over here and like we need to figure this out at this country. Yeah. Yeah. Yeah. A little bit of little bit of that.
Speaker 1:So in Germany, home to Tesla's European factory, new vehicle registrations fell 76% in February compared with the same period last year according to the country's Motor Transport Authority. In The US, sales fell 2% in the first months of the year according to, research from firm Wards Intelligence. And so that's not that much of a drop considering that I think of Elon as being more politically controversial in America than I mean, maybe in China, maybe in Germany, but it seems like it's a little bit more distant there. But I don't know.
Speaker 2:I think people make car per I think these purchases are super considered
Speaker 1:Mhmm.
Speaker 2:Outside of somebody's home. It's one of the most expensive decisions Yeah. That they make. And, you know, are costly sort of products that they buy. And if you're looking at buying a car, you're looking at the cost.
Speaker 2:If it's an EV, you're looking at the range. You're looking at the features. Yeah. Maybe you care a bit about the founder, but that's only one factor. Right?
Speaker 2:And so right now, Tesla is basically giving away these cars. You can get a you can get a Tesla Model Y for $300 a month.
Speaker 1:Through your phone bill?
Speaker 2:Yeah. It's it's not far off from your phone bill. So it's an extreme and and who knows if that's at all profitable.
Speaker 1:Yeah.
Speaker 2:But it's and it's extremely solid offer in the market. And the reason for the sales decline is despite these sort of massive incentives, every other manufacturer has overproduced EVs, they're also giving these things away. Yep. You could get a Rivian pickup truck last year for like 500 It's
Speaker 4:great.
Speaker 2:They're giving these things away. Yeah. And and so, yeah, it's a amazing time to be a buyer in the car market. You have a lot of options and the sales decline decline like I'm sure was anticipated by analysts. Right?
Speaker 2:Tesla basically had a monopoly on quality, cheap EVs for a period of time.
Speaker 1:It also felt like they were reaching Like, every car on the road in LA is a Tesla. Like, at a certain point, like, I understand the monopoly power that accrues to the iPhone and the integration there. And everyone wants the blue bubbles, and everyone it's nice if I have an iPhone, you have an iPhone, we can do Yeah. AirDrop. Cars, it's a little bit less so.
Speaker 1:And I feel like cars are still a little bit more of, like, the status symbol, what it says about you, the difference of the the Ford Raptor driver versus the Audi r eight versus the Lamborghini. Like, they all say slightly different things. And at a certain point, if every single person is driving a Tesla, which is like this appliance car, there's just going to be some people in the world that say, you know what? I I will accept a lower quality of car even on a price per power or horsepower, any any ratio that you wanna measure, like, quantitatively a worse car, just to express myself and actually say something about myself and say, hey. I I have a convertible.
Speaker 1:Like, and that says something about me. Or I I I have a I have a truck. And even if I don't need that space, I have it because like it it makes me feel like a cowboy and I like that. And like if Tesla's not offering that brand feel, that will
Speaker 2:drive Tesla. Cars are emotional Totally. That people use them. Like a handbag for women or watch guys as a way to express yourself. Some people still just say, I'm gonna be practical.
Speaker 2:I'm gonna buy the cheapest best option. Other people, you know, do what I did at one point and bought a lifted Ford Raptor because I just like wanted to live out my childhood dreams. Exactly.
Speaker 1:Exactly. It's great.
Speaker 2:And I had a great time with it. Then I it was so funny driving a Raptor because I felt like I'd go to a meeting and if if the person I was meeting with saw me pull up in the Raptor, I had to like explain like, well, I'm actually, like, driving it, like, kind of ironically. I'm kind of driving this more for, like, my, like, 10 year old self more than my current self. I just want you to know that.
Speaker 1:I'm not, like, really a Raptor guy, but, like, I kind of respect you. Completely murdered out
Speaker 2:and it's tinted and Yeah. Anyways.
Speaker 1:Yeah. That's great. So in California, where Teslas are among the best selling vehicles, the new vehicle registration of Teslas fell 11.6% in the state. Obviously, California is like a d plus 30 state, and so very democratic, maybe more affected there. But, also, there's saturation happening.
Speaker 1:The market cap of Tesla reached a high of 1,500,000,000,000.0 in mid December. In the weeks after the inauguration, the shares, the price per share returned to pre election levels. What's that? Also been vandalization.
Speaker 2:That was their all time high?
Speaker 1:Yeah. And so, now Musk is trying to refocus of investor attention away from car sales and onto its driver assistance software, which it calls full full self driving supervised. And its Optimus humanoid robot technologies, he has claimed, could one day boost the automaker's market value to as high as $30,000,000,000,000. You'll love to see it. The humanoid robot market, it's it's also fascinating because everyone is so skeptical about it.
Speaker 1:Like, the the the anti Elon people are like, it's teleoperated. It's a guy in a suit. Like, it's nowhere near any commercial scale. And, like, that's probably true. Like, the like, the optimist does not seem to be something that's gonna be shipping anytime soon.
Speaker 1:But at the same time, like, we've seen the Chinese humanoid robots. Like, they work. You can just buy one. Like, it can't do everything, but, like, it's out there. It exists.
Speaker 1:It's not some sci fi. We have no idea how to do time travel, and it's like people are writing academic papers about how one day you might be able to make a humanoid robot. It's Boston Dynamics exists. You can see the Atlas robot running around. You can see the And
Speaker 2:you can actually get a UniTree robot dog for under $3 on Amazon.
Speaker 1:Yeah. And so and so, like, Unitree is shipping these things. They're not great, but it's like, can can Tesla copy that and just copy paste that? Absolutely. Can even Figure, Brett Adcock, like like, can they just set up a plant that copies Unitree?
Speaker 1:Like, that doesn't seem that crazy. Even the legacy car makers were eventually able to make electric cars that were in the same ballpark as Tesla's. Like, the Ford Mach E is Yeah. Like, it has similar range, similar performance. Like, a a Tesla fan would say, like, oh, it's, you know, too expensive for the power, and you don't get the self driving stuff.
Speaker 1:And it's like, yeah. That's all true. It's it's but it's 80% of the way there or 90% of the way there. And there are some electric cars that give you a better experience than Tesla in certain Yep. In certain categories.
Speaker 1:Like, the Rivian. The Rivian has a full size SUV. Tesla does not. Like, they they have a crossover. And so and and even, like, the the Taycan.
Speaker 1:The Taycan comes in a in a wagon configuration. Like, Tesla just doesn't have a a wagon.
Speaker 2:Which I think looks fantastic.
Speaker 1:I like it a lot. And and also, like, Tesla doesn't sell a convertible. Like, if you want a convertible electric car, like, you're out of luck with Tesla. And so Yeah. There's all these ways where where where where you could kind of, like, slice up the market, figure something out.
Speaker 1:But, like, you know, these, these humanoid robots, like, they do exist. And so even though it feels silly to think about Tesla as like, oh, yeah. They're gonna win in humanoid robots. It's like, well, they're probably gonna do something there. And they're probably gonna make it Yeah.
Speaker 1:They're probably gonna make something work. And so I'm I'm I'm very interested to follow it. It's it's it's fascinating to see how this pencils out. It'll be interesting to see how Elon kind of reintroduces the company or if he does. He had Trump, you know, pushing, like, hey.
Speaker 1:Go buy a Tesla. He there was this note cards. You saw that? The notes of, like, the Tesla costs $60,000. This and that.
Speaker 1:Is there a way that he can beat the Ford Raptor at its own game without putting an ice engine in, which I think might he might need to do.
Speaker 2:That would that would go crazy. Cybertruck Yeah. Internal combustion engine.
Speaker 1:He needs a Hellcat competitor. He needs a Dodge Charger competitor. He needs something that trades. I mean, one of the problems with with Tesla Size gone. I I I'm sure one of the problems with Tesla is, like, is, like, there's too much technology in that, so you can't really, like, trade it on Facebook marketplace just like, here are the keys.
Speaker 1:Like, I don't have a title because, like, whoever act actually owns it will be able to just like it has LoJack basically because it's so connected, and they could just disable the car. But if you if they take some of that stuff out, they put in a v eight and maybe throw some superchargers in there.
Speaker 2:Yeah. Really get the secondary market pumping.
Speaker 1:Get the secondary market pumping. Get the thieves involved. Yeah. Anyway, we're having
Speaker 2:some fun. That was always a good bit of ours. Yeah. Yeah. You gotta get it Well, Tesla sells products online.
Speaker 2:Yep. They sell cars, but they also sell stuff like merch. They'll sell tequila from time to time, but you know, bunch of, you know, hats, things like that. And what should they use for sales tax compliance and auto
Speaker 1:Numeral baby. They should go
Speaker 2:to numeralhq.com. Benchmark series a.
Speaker 1:Sales tax on autopilot spend less than five minutes per month on sales tax compliance.
Speaker 2:They work with thousands of high growth companies. Yeah. And if you were selling products online or you're a SaaS business, go sign up for Numeral and just for old time sake, tell them the technology brothers sent Yeah. They'll know they'll know what you mean.
Speaker 1:And this is really is five this is states
Speaker 2:Yeah. That are taxing software sales. Yeah. If you have any type of scale with your SaaS business, I'm sure you're dealing with this already. So go go check out Numeral.
Speaker 1:And this monitoring feature is is actually genuinely very interesting if you're a startup and you're growing because oftentimes, you don't have to pay sales tax until you hit some sort of threshold. And so their example here is, like, they're monitoring your sales in New Mexico. When you hit a hundred thousand dollars, you're gonna need to register and start paying. But as long as you're under that, the the the the state doesn't care, which is great because the state you it's cumbersome to file these new tax Yeah. These new sales tax reports.
Speaker 1:So they're gonna they're gonna, you know, track that and then help you file that as soon as you need to. So, I mean, I've been caught so many times that, like, I can't even count where it's like, oh, I you know, we we hit the threshold, then we had to go pay a lawyer to figure it out, like, do all those things. Like, this is a really great product. So go check it out. Numeral HQ.
Speaker 1:Anyway, let's move on to Vastra. Watch news.
Speaker 2:Big watch So we got Quaid
Speaker 1:We got Quaid coming on.
Speaker 2:Cofounder of Bezel. He's calling in today. We're gonna be breaking down what's happening at watches and wonders.
Speaker 1:Basically, every watch company launched new watches. The one that I wanna highlight here is, Vacheron Constantin, has released the most complicated wristwatch ever created, the Solaria Ultra Grand Complication featuring 41 complications and 1,521 components, eight years of research and development, 13 patent applications, and it tells you everything, like, you know, sunrise, sunset, moon phase, day, month, year, time. You you set alarms, like, all these different things on it. And the funniest thing is I'm sure this thing costs, like, a million dollars. But I was looking at this, and I was like, yeah.
Speaker 1:Like, that's actually, like, really useful stuff. Like, I need this. That was my reaction. Was like, yeah. This is, like, totally justifiable.
Speaker 1:Like like, this is this would just, like for a high Just practically.
Speaker 2:Yeah. Just practically. High output, you know, podcasting, live streaming. You just kind of need this level of performance.
Speaker 1:Yeah. I was like, I'm sure they charge a lot, but, like, look at all the complications. Like, you kinda need this. I need to know where the tides are on my wrist. And I didn't even with a mechanical device.
Speaker 1:I can't use my phone for that. But, I mean, this is a fantastic watch, and it looks very cool. And it's also pretty huge. And on the back, they have constellation charts. So do you see this?
Speaker 2:It's insane.
Speaker 1:You can see where where the what the night sky looks
Speaker 2:saying this, but Vasheran is, we believe Yes. Going to go on a generational run.
Speaker 1:We think so.
Speaker 2:It's already on the run. It is. It's fantastic. Well, I'm excited to have Ryan on. He is going on with Kramer Mad man.
Speaker 2:Later today. Yeah. And so I think we should help him workshop some just crazy
Speaker 1:Crazy bangers, crazy Yeah.
Speaker 2:You just wanna go big. You wanna go extreme when you're on there.
Speaker 1:Yeah. I mean, we should set set the table a little bit. Basically, Trump is giving an a a press conference today at 4PM eastern. So in exactly one hour, this should starts, this should start. Tariffs are looming, but, Trump has called it liberation day, but the the stock market is up, maybe calming fears that there will be really, really aggressive tariffs.
Speaker 1:The yield on the ten year treasury note ticked up as well on pace to snap a three day streak of declines. Gold prices rallied, sending the precious metals towards another all time high. Trump has declared April liberation day for US trade policy. He is due to announce the contours of a sweeping tariff plan at 4PM eastern in a Rose Garden address. The Wall Street Journal will stream the president's, tariff comments live.
Speaker 1:The tariff fight has ignor ignited worries about a slowdown in economic growth, driving a steep sell off in shares of small companies after weeks of unease about how Trump's tariff plan will shake out and which industries they will reshape, investors and business leaders around the globe are hoping for more clarity. And that's the big deal here is just clarity. People want to know what to expect. You can't move a whole factory in a day. Yeah.
Speaker 1:It takes years to reshor manufacturing capacity, and the bigger the company, the harder it is
Speaker 2:to be. This was this was Sean Frank's, you know, big point, was, you know, even if I wanna react to tariffs, it's gonna be, you know, damaging to my business and every other ecommerce business in the short term. And so Trump clearly wants to make big, quick change.
Speaker 4:But
Speaker 2:there's still, you know, a lot of companies caught in the crossfires in the short term.
Speaker 1:Cool. Well, we got Ryan in the studio. Welcome, Ryan. Ding ding
Speaker 4:ding ding ding
Speaker 1:ding Are you not traveling?
Speaker 4:Was yesterday, I'm back.
Speaker 1:You're back. Congratulations. Enjoy. Home sweet home. First, mean, we gotta ask you.
Speaker 1:Are there are there any spies? How are you dealing with counterintelligence, counter espionage these days?
Speaker 4:There's always spies. Yeah. We're good. We, we try to make sure that our code base is super buggy, so if you steal it, it
Speaker 1:just won't
Speaker 4:work. That's my
Speaker 1:Yeah.
Speaker 4:Bad tactics.
Speaker 1:Do you think this is a symptom of, like just just zooming out from, you know, the the the deal rippling thing and anything that's happening at Flexport, like, do you think this is a symptom of, like, tech becoming a little bit less greenfield, a little bit less positive sum? There's, like, two or three major backed companies in the exact same category now, and it's less of, like, the anointed power law winner who's going up against some company that's so sclerotic that there's just it's just it's just oh, you're just stealing billions of market cap all day long, and it never really matters. So you're not not it's not so so much of a knockout, drag out fight. Like, how do you think about this in the context of, like, the history of Silicon Valley and, like, your career?
Speaker 4:Oh, I don't know. I mean, you know, our our issue was, like, I I think very different than deals. Like, that was, like, few arch rivals going at each other and, like, someone you know, that that was that's crazy. I just read the deposition.
Speaker 1:It's crazy. Right?
Speaker 4:Really crazy. Our issue is very different. There's a couple of employees who just, like, making bad decisions down Of course. A lot of stuff on their way out, and the company they started is pretty insignificant. My my general view is never never punched down.
Speaker 4:But when you see someone committing ultimately a crime
Speaker 1:Yeah.
Speaker 4:Yeah, there's a sense of moral righteousness that needs to happen, some justice in the world. So Yeah. But it's quite different. I mean, we're not this company is not a threat to Flexport the way maybe deal is to Rippling or vice versa. I don't know.
Speaker 4:But
Speaker 1:Oh, yeah. Yeah. Yeah. It's very different. So yeah.
Speaker 1:I mean, on tariffs, like, what are you expecting? What are you looking for? What do you how do you think it's gonna go down in an hour?
Speaker 4:It's yeah. I don't know what to expect. I feel a little bit like, you know, maybe you're in Florida waiting for a hurricane and about to hit. Florida, man. I don't know.
Speaker 4:We should get our American flag out and stand in the wind and Yeah. Enjoy the show or be horrified and go, you know, get in your car and try to drive a thousand miles away.
Speaker 2:There's no escaping in your business.
Speaker 4:Yeah. There's no escaping. It's gonna hit hard. It's really ugly for our customers already. I mean, they've already on the the China tariffs, it's hard to imagine how they go much higher, really.
Speaker 4:Yeah. Because of the they they added 20% to what was already 25%. Mhmm. And then the Venezuela stuff hit today, I think, which is another 25% on top of that because China imports Venezuelan oil.
Speaker 1:Oh, wow.
Speaker 4:What am I? 45 plus 25, 70 percent tariff. And then if you do steel or aluminum, which if you have that component, you're you're pushing into 80% duties. Go a little bit higher. I mean, at some point, you're just like, oh, okay.
Speaker 4:So I don't know how much worse China can get. It can get worse. They can they can do whatever they want, I suppose. The tariffs on other countries is the big wild card here. What other countries get you know, you've already seen Israel and Vietnam both went to duty free on American imports.
Speaker 4:So we'll see. My my impression from having talked to a cabinet secretary last week that what he told me was that this would be April 2 today is the start and not the end Mhmm. Process. And he means that, I think, in a positive way for companies that they're gonna come out with a big bang today. It's gonna be ugly, and then he would expect that countries will come to the negotiating table and make deals to bring the tariffs back down.
Speaker 4:But they wanna show send a very clear message that they're dead serious about, you know, that they they mean business, and then he expects countries will will will come to the table. But somebody somebody read it the wrong way and kind of retaliate with their own tariffs, and then the administration may escalate further. We've seen that as a pattern. So my advice to all the presidents of the world is to go read the art of the deal and not that hard to figure out how these guys work in my No.
Speaker 2:That it's like similar to FF. It's like how does FF make investments? You know? Read zero to one. Yeah.
Speaker 2:That's basically it. Yeah. It's all out there.
Speaker 1:They're still doing the playbook.
Speaker 2:Are you do you think is this already happening or is it going to happen? Companies sort of dying before they can onshore manufacturing? Is that is that something that you're super worried about or are people just battening down the hatches like you said Florida style and just figuring out a way to, you know, obviously everybody wants to survive. But are we seeing sort of like an ex an extinction level event within ecommerce yet specifically?
Speaker 4:Certainly not yet. I I it's very hard to say. I mean, the the reality is tariffs alone won't do won't bring most of these industries back to The US. The the US dollar is just too strong. I was talking with a company yesterday that imports garlic.
Speaker 4:Mhmm. I was like, wait. I thought California, like, has the best farmland in the world for growing garlic. Like, why do we need to import it from China? But it's just even with the tariffs, it's cheaper to import the stuff from China.
Speaker 4:And it's the you know, our soil is better than there. It's like California is the Gilroy. It's like the garlic festival. I mean, it's the best place in the world to grow garlic. So but the US dollar just being so strong as the reserve currency makes it like, no matter what you do almost with tariffs, it's still cheaper to buy from another country.
Speaker 4:So I think that tariffs alone won't do it, and and nobody's there's no political will to make the dollar cheaper. But if you want manufacturing to come in The US, The US just can't it just can't be that we're that much richer than everybody else on a dollar basis because it's kinda vague. Yeah.
Speaker 2:But haven't haven't some people argued that with extreme enough tariffs, it would, you know, get people to, you know, try to just move off the dollar? Maybe it's impossible.
Speaker 4:There's gotta be a number. Yeah. Might move off the dollar, which might actually cause their problem not the way they intended to.
Speaker 3:Yeah.
Speaker 1:Is there
Speaker 4:I'm not like I've always been a macroeconomic skeptic. It was I'm either too smart or too dumb to for macroeconomics. I'm not sure which. I couldn't figure it out. They'd have all these advanced it all seemed more complicated than they were making it out to be.
Speaker 4:So
Speaker 1:You never studied I s ISLM, all the different charts and graphs, that interact interact
Speaker 4:Like the only class I ever got a bad grade in in college was macroeconomics.
Speaker 1:Yeah. Is there is there a hope that I mean, seems like obviously there's like the micros, like what is the actual tariff rate in the country that I'm operating in? But then the real hope from the market, at least in companies, seems to be, give me a framework and a real understanding of what the future is going to look like. And does is is there a chance I mean, it sounds like we're maybe even just starting that process of really understanding how the business community can respond to, like, a a larger trade policy strategy. And, like, is that what people are pushing for?
Speaker 1:Is that is it really is it really more about just clarity over the long term?
Speaker 4:For sure, business needs certainty and clarity, and it's really hard. These supply chains are multiyear, maybe Yeah. Ideally decade plus investments that you're you're making and how you're gonna set up your supply chain. And If you if it's changing every single week, like, you're just paralyzed. You can't make any decision at all.
Speaker 4:I think Canada stuff's pretty harmful in that way because if there's gonna be tariffs on Canada, then there's gonna be tariffs on Malaysia, Vietnam, India, and everybody else. Like so it makes it really hard to to make any decision. Let's say a company finally says, okay. It's very clear we're gonna have to move our manufacturing out of China, this administration. And the Biden administration, by the way, was also ratcheted up the first Trump administration's tariffs on China.
Speaker 4:They didn't lower them at all. Yeah. So both parties are aligned on that. So if that's clear and you're ready to make that move, then you go, okay. Where do we move it to?
Speaker 4:Unless you're ready to move to The US, there's no ability to make a decision at all right now.
Speaker 1:Do you think it'd be better to take a more gradual approach to implementing these, tariffs? I'm I'm just thinking, like, instead of saying, hey. There's a 24% tariff coming in in on this country. It's like, no. We're gonna raise the tariff 1% per month for the next two years.
Speaker 1:And so you know exactly where it's going. It's not gonna just just destroy your profit margin today. But if you don't figure it out in two years, like, you probably will be done. And so you're signaling to the market exactly where it's gonna go, but it seems like I've never seen a policy like that rolled out.
Speaker 4:Yeah. I've heard they they were talking about that. Mean, I think that was one of the things that Trump or Lighthizer, one of the admin people across the administration said they were gonna do during the campaign. No. It was think it was Bessette who said that, treasury secretary.
Speaker 4:Would make sense to me, or even just giving people, you you know, six months notice of this is coming a year notice. You know, like, some of the policies they've been inactive have said, okay. This kicks in tomorrow or next week, and you're just like, oh my god. Like, I have a friend who's importing stuffed animals, and he bought a hundred thousand dollars worth of stuffed animals. And while the container was on the water, the duty rate went up, and he got hit with his $20,000 bill.
Speaker 4:He didn't plan. Know. Like, brutal. You know? And so brutal.
Speaker 4:You need some notice period that they haven't done that this time around. Mhmm. I think, yeah, gradual ratcheting it up. Ultimately, it's providing clarity, like, where we're gonna be. It's it's also the ultimate challenge of The US system is you know, here, at least, the two parties are mostly aligned.
Speaker 1:Mhmm.
Speaker 4:At least when it comes to China, we'll see about other we'll see what policies they actually roll out. But the two parties are mostly aligned on trade. They both hate trade right now. And so at least you have some longer term view of what it's gonna look like if but in The US system where it can totally flip overnight, it makes it very makes us very hard to deal with
Speaker 1:Mhmm.
Speaker 4:As a country. I mean, I, I think this is one of the things that has made it difficult for a deal like with Russia, for example. I mean Yeah. The two parties are just polar opposite in policy. So how do you how can they make a deal with either party when it might just flip in four years to someone who's got who won't hold up the deal?
Speaker 1:Yeah. I've seen I've seen the, like, the Flexport seven forty seven. There's one right behind you. If if onshoring really happens and there's major, major production shifting to The United States, what does that look like for Flexport? Are you gonna get into, like, more rail, more trucking?
Speaker 1:Is is is the market even big? How how would you think about that? I would imagine there would be an expansion of The US opportunity, but, like, what what does that look like for Flexport specifically?
Speaker 4:Yeah. Winners and losers in different parts of our business for sure. The air freight we air freight business, a lot of our we do a lot of ecommerce products from China to The US.
Speaker 1:Of course.
Speaker 4:That's about 50% of all the air freight in the world now is coming out of the Chinese ecommerce. And so that that is at major risk, and the price of air freight will probably collapse. There. That that'd be bad for our air freight business. Our customs business is already booming as we help we provide a lot of advisory services to help country companies figure out what this means for them, how to mitigate, minimize duties, be compliant, get refunds on duties.
Speaker 4:Every year, even before all these new tariffs, $7,000,000,000 is going unclaimed in refunds that people are owed. That's right.
Speaker 1:That's crazy.
Speaker 4:We we we got people a hundred and $40,000,000 worth of that last year. Or, no, that's our goal for this year. But that's still a big market. You know? It should be 10 times bigger or or even more than that.
Speaker 4:So that part of our business is booming. Trucking, we do about 200,000 truckloads a year Mhmm. Domestically, moving trucks, that have nothing to do with the international freight. That will probably grow. We'd wanna get more we will be getting more into kind of trade with US and Latin America, US and other parts of the world.
Speaker 4:I I I don't really worry too much about the macro. Like, we're still pretty small. We estimate our market share is about 0.25. Wow. We got room too.
Speaker 4:Right now. So, like, okay. Even if the market shrunk in half Yeah. We've we okay. Now we're 0.5%.
Speaker 4:You know, hold on to the business we have, but Totally. If come to all of it. So I I I'm too worried.
Speaker 2:Yeah. I have a question about a a market I'm sure you've thought about. So we've been having a bunch of diff you know, there's a bunch of new defense tech companies emerging. You know, they have to move big expensive flammable, you know, things around all the time. Is that a vertical that like you guys have looked at at all?
Speaker 2:Because I think it's obviously, you know, bunch of compliance issues. It's it's
Speaker 4:Yeah. A little bit. I think you tend to wanna be more those guys wanna work with people who own the assets.
Speaker 2:Interesting.
Speaker 4:More tighter control, security wise. Like, actually, I heard about this company that does trucking for the DOD or for big defense contractors, and they ship missiles. And it's, like, a very lucrative business, but they own all the trucks. And we don't own we try not to own any assets. Sure.
Speaker 4:Very hard to maintain to provide the kind of, like, ultimate security that one of those company needs if you're not asset heavy. So they'll it's a it's a it's a cool space, but probably not one that we're best suited to play in right now.
Speaker 2:Yeah.
Speaker 1:What about what about self driving trucks? I feel like we're seeing so many just like the Studio Ghibli moment, the ChatGPT moment. Like, AI feels so big, and yet the self driving trucks aren't really here. What are the dynamics, and do you have a timeline for that actually affecting the market? What's kind of the impact?
Speaker 4:It'll be huge. I mean, it's, the Waymo's here. My Tesla mostly drives itself now. Yeah. And Tesla's making a truck.
Speaker 4:So but I don't know how many of those Tesla Semis they've really shipped. And the and there's two different problems of the electric truck and the self driving truck that maybe you wouldn't have been conflated. Like, because I think the electric truck actually has more problems than the self driving truck, it seems like. Yeah. Just because of, like, charging and range and different things that don't make that much sense for a from what I've heard.
Speaker 4:I'm not I'm not that close to the physics of it, but the recharging network has just, like, not been there for it. Yep. It's gonna be really huge, though, and a massive impact on a a lot of things. You know, right now, transit time even. Like, a a truck that drives twenty four hours a day can cross the country.
Speaker 4:I think the loss is you can only drive eight hours a day. So crossing three three times faster. Today, you would need three drivers, and they charge you a huge premium
Speaker 1:Yeah.
Speaker 4:For that team trucking, it's called, where you have multiple drivers running shifts.
Speaker 1:Sure.
Speaker 4:And, like, it's a shitty lifestyle, like, overnight, like, never getting out of the truck as you cross the country.
Speaker 1:That is crazy.
Speaker 4:And but you could it would be very competitive. You I once drove across the country in fifty three hours with four friends just taking turns.
Speaker 1:Were you doing cannonball?
Speaker 4:In hardcore for for broke college kids.
Speaker 1:There's something about that that sounds like amazing with your boys once, but I hear I take your point on
Speaker 4:We've been talking We've
Speaker 2:we've been talking about it.
Speaker 1:Yeah. We wanna do a race, try and get across the country. I think the record is something like twenty two hours, which is crazy. Yeah. It over a hundred miles an hour the entire time.
Speaker 1:Very illegal. Very controversial.
Speaker 4:From Maryland where I'm from to Oklahoma. And actually, only reason we stopped, the car broke down. We were gonna go the whole way without stopping.
Speaker 1:Yeah.
Speaker 4:But our our broke down, we had a and we and so the fifty three hours, actually, there was a stint while the car was in the mechanic. Okay. I'm ignoring that part.
Speaker 1:Okay. Yeah. Yeah. Yeah. You cut that out.
Speaker 1:Yeah.
Speaker 4:Yeah. Cut the Grand Canyon and, like, looked around for little while.
Speaker 1:Yeah. Yeah. Yeah. The real cannonball is from the Red Ball garage in Manhattan to the Portofino Hotel in California and it's been done for years. Alex Roy was the famous guy who did it originally and then Ed Boleian destroyed the record during COVID when there was no one on the streets.
Speaker 1:A fascinating story. You should go check it Oh, okay.
Speaker 4:Well, yeah. This will be big in trucking. Yeah. Oh, not to you know, jobs aside, it's like, think truck driving is the most number one profession in 34 states
Speaker 1:Yeah.
Speaker 4:By number of people doing the job. So that'll be massively impactful. And, yeah, like, I think there's a lot of positives for the industry and productivity and stuff, but certainly it's an interesting problem for the for the society.
Speaker 2:Yeah. Going speaking on AI, you know, something we've been talking about on the show is, like, you had this Ghibli moment last week where something that was historically super time intensive and expensive and costly. Like, if you wanted this sort of, like, beautiful hand drawn animation style, Yeah. You could go on Upwork or Fiverr and get that kind of thing done. It's not gonna cost a ton.
Speaker 2:Most people wouldn't even bother to do it. And I think that we are racing towards like the Ghibliification of like all goods. Right? On like a long enough time horizon like automation, robots will just you'll have sort of an idea for something that you want. And in theory, like, you know, you just you know, something could be made with no human involvement, and that could really drive the cost down.
Speaker 2:Now if the cost of a lot of goods goes down over time, then in theory, there would also be a lot more sort of like a Jevons paradox dynamic where like if things get cheaper, people want more of them, which means that like we we there's a scenario where like we're we're ordering 10 times as much Chine stuff from China in, you know, ten, twenty years. How do you think about just AI? Like, it's easy to see how AI is, you know, gonna Flexport a better business by rolling sort of systems out internally and building these sort of customer facing experiences. But have you thought at all about, like, how automation broadly can actually sort of, like, impact, like, the flow of goods around the world at sort of a more macro level?
Speaker 4:Well, actually, just coming back to the amplification of everything. So I'm a I'm a I'm a published children's book author. You guys may know.
Speaker 1:That's right. Yeah.
Speaker 2:There we go.
Speaker 1:Big ship in the little digger.
Speaker 4:I wrote this myself. It was not written by Chattypiti. It was not illustrated. I didn't illustrate it. I just wrote it.
Speaker 4:Yeah. You can write a children's book about forty five minutes. I
Speaker 1:love it.
Speaker 4:And but the design took a long time. My designer who used to work at Flexport did this. Yeah. Great.
Speaker 1:He's It looks great.
Speaker 2:Beautiful.
Speaker 4:Yeah. It's a wonderful story. Took him, like, man, the better part of, like, six or eight weeks to do that.
Speaker 1:Yeah.
Speaker 4:I when ChatGPT released their new image model last week, I was like, oh, I'm gonna write a new children's book. And I did it in an hour. And on on my phone, I could have done it faster if I would have been on desktop and had parallel tabs open or whatever, but on the phone, ChatGPT app didn't let me. But in one hour, I was able to create a really cool book.
Speaker 1:Yeah.
Speaker 4:And and and, like, I think I could publish it and be done.
Speaker 1:It's also so cool the customization, being able to, like, make it about your kid.
Speaker 4:I'll make these really cool iconic flex port posters. We have 40 offices around the world and one for each office that like
Speaker 1:Oh, that's super cool.
Speaker 2:Well, yeah.
Speaker 4:So using Like iconic from the golden age of like ocean ocean travel liner good prompt for that. And it I asked the same designer to do it for me. One of these posters, like, know, I asked him six months ago, and he quoted me something I couldn't afford. And and it use it children's effort. And that's made them all last night in, an hour, and I'm
Speaker 2:gonna Yeah. So let's use a children's book as an example. My son is obsessed with reading. He's three years old. He could easily burn through five, six books a day.
Speaker 2:Like, he would happily read he'd probably read 20 new books a day if we had 20 new books available in the house.
Speaker 4:And he'll read I bet you he'll read even more if the protagonist of the story
Speaker 2:Yeah. Exactly. So if like he's a protagonist, it's customized to his interest Yeah. It's perfectly matching his level. But I also don't want him on screen.
Speaker 2:So like there's a world where if like the cost of producing the books drops, books are, you know, 80% less because there's it's just generated. There's a world where I'd I'd order five times as much, and that means that you're gonna be shipping, in theory, like, lot more goods. And that's just, like, for one category. Right?
Speaker 4:Could be. Yeah. And and there'll be categories like that. I I you know, if I wasn't so busy, would definitely try to set the Guinness Book of World Records right now for whoever wrote the most children's books in the world. Right now, before they
Speaker 2:send In a twenty four hour in a twenty four hour period. Yeah. 2,000 children's books.
Speaker 1:Alright. Can we hear a little history of the Flexport Lion and the generative AI stuff? And is the Flexport Lion coming back? Or
Speaker 4:Yeah. Yeah. Shows like Well, when Dolly first came out, I Yeah. You know, think every company should have a mascot.
Speaker 4:Yeah. Ours is the lion because Mhmm. It's king of the jungle. You know, lion probably kill any other animal in the world, so that should be but, you know, I wanted to claim that and make it really know, we're the lion. You can be something else.
Speaker 1:Like, it's
Speaker 4:like, we're the lion. And so, yeah, I probably I, like, went a little crazy on Dolly when it first came out making lion in a shipping container or in port, whatever.
Speaker 1:Yeah.
Speaker 4:Yeah. So you should expect to see more Black Sport lions out there.
Speaker 1:Yeah. I remember you got
Speaker 4:the access. Every company could have a children's book for your marketing. It's great marketing. Kids love it. Parents love it.
Speaker 4:And then, then you should have a mascot. The best of this is, by the way, Duolingo. Like, apparently, their owl is like
Speaker 5:Oh, yeah.
Speaker 4:Their owl has, like, 50,000,000 followers on the different apps.
Speaker 1:That's amazing. Yeah. Yeah. We need to instantiate the the Flexport Lion with its own.
Speaker 4:Yeah. I need to I need to make few people know about it.
Speaker 1:Yeah. It can be posting.
Speaker 4:It's not an obvious shipping reference. I don't even know if lions are good at swimming or anything. But
Speaker 1:Well, I mean, you do you do shipping over land as well. But, yeah, it's not a pack animal and it's not It's of the seas. I would expect it,
Speaker 4:you know
Speaker 1:If an octopus tentacles everywhere.
Speaker 4:Who knows? Are
Speaker 2:there any transportation platforms is probably not the right way to think about it, but things like airships, you know drones that you're excited about. We had a founder on earlier this week who's building sort of Conoplans. Yeah. It's like a a seaplane Sea drone for like short term transport. Know, if you
Speaker 5:Is that the one that
Speaker 4:went viral? Are they like five guys that made it in their living room or whatever?
Speaker 2:Yeah. Yeah. Yeah. David David Zigdemov. Co founder.
Speaker 4:I think Seed it. Sweet. If you like forgot something at home and you lived by a body of water, you
Speaker 1:could Yeah. Yeah.
Speaker 2:There and
Speaker 4:quiet yourself. I don't know.
Speaker 2:Yeah. But, yeah, like, I've been pitched airships, you know, there's been a bunch of attempts, you know, at that. I'd be curious to think as you think about the future ten years out, what's what's exciting to you, and and are there and is there a white space?
Speaker 4:That definitely. The, actually, the, man, I'm forgetting the name. It's Eli Dorado's a backer over to this, airships company.
Speaker 1:Yep. Yeah.
Speaker 4:I got one. Pretty high potential. I met with the founder recently, and I I I originally was very skeptical. I'm like, I don't think anyone needs this. It sounds really complicated, whatever, but he walked me through it.
Speaker 4:It can carry the same volume as a seven forty seven, take three days to cross the ocean instead of fifteen hours, but, like, three days is pretty fast compared to a ship. Compare container. So if you get to a price point in between air freight and ocean freight, that's very compelling.
Speaker 1:Just a new tier, and so some people opt into it for a certain class of goods.
Speaker 4:That will be very compelling as a replacement for air freight.
Speaker 1:That'd be cool. Well, does that kind of unblock the port system? Because we have a new new set of ports we could go automated from day one
Speaker 4:to one. What really cool about his model is that his idea anyways is that it would just go straight to your warehouse, not go to a port at all.
Speaker 1:That's amazing. Land
Speaker 4:at your where wherever your warehouse is. And not even trucking or any you know? It's, like, land on it's pretty cool. Yeah. Hopefully, somebody awesome funds it because it's not cheap to go launch these things.
Speaker 4:And Yeah. Yeah. That's what real venture capital should be. Right? Take some risk and do some badass stuff like that.
Speaker 4:So rooting for them. Yeah. I think the self driving ship, I see that all the time. It's really stupid idea. Mhmm.
Speaker 4:Just because there's only ships are, like, 20,000 containers 20 guys. Like, there's just not that much labor savings here. And most of those guys are doing maintenance. Like, they're like painting it painting it and Yeah. Doing engine maintenance.
Speaker 4:Like, you still need them even if it's self drive. There's one guy driving the ship like Yeah.
Speaker 2:Well, yeah. You you you've we've had pretty good autopilot and boats.
Speaker 1:Yeah. Kinda drives itself anyway.
Speaker 4:So I think the self painting ship is kinda interesting. Oh,
Speaker 1:that's cool.
Speaker 4:Just kinda painting itself as it goes.
Speaker 1:What about those crazy ships that have sails or nuclear power, different different modes of power for ships?
Speaker 4:Yeah. The nuclear power, I think, is gonna be probably regulatory problem more than anything else. Like, nobody really wants that your nuke sailing into their harbor. It's been probably the problem there. I've seen some cool ideas where, like, the ship the mother ship would stay offshore, like, 200 miles and then deploy, like, little baby ships that would bring the cargo to support so that it never had to get within your coastline.
Speaker 1:But it's still a a ways away. What about the sails?
Speaker 4:Yeah. So I've also seen there's a really cool company called Clipper Ship, a really tiny seed round company, so but with a big vision of little autonomous drone sail ship sailboats
Speaker 1:Mhmm.
Speaker 4:That would carry, like, five or six containers worth of stuff. And, again, like, sail not to your warehouse, but to, like, a little tiny port, upriver or something and set up their own network of ports. They're they're trying to go live soon. I all of this stuff's pretty cool, and I have no idea. You know, it requires venture capital, and it's it's very interesting.
Speaker 4:You know, Founders Fund's the obvious one, but, like, it's really interesting to see when do they get excited Yeah. About something. It's not everything could be the next SpaceX. And Yeah. SpaceX was a crazy vision until it worked.
Speaker 4:Right? Yeah. And could've lost a lot of money if it didn't.
Speaker 1:Yeah. What about SpaceX point to point? Yeah. I mean, obviously, the first the the the first, like, beachhead is, like, the most expensive, like, private jet traveler needs to get to Tokyo in, like, an hour from New York. And so they're like, yeah.
Speaker 1:50 k? No problem. But but where do you see that technology going over the long term?
Speaker 4:The problem is that, like, flying in the can it can SpaceX launch, like, in bad weather and it's raining or something? Like, you're
Speaker 1:No. Not really. I think they need pretty clear skies, but they're in Florida and Texas. It's pretty clear most of time.
Speaker 4:Don't scratch too many. I think the from a cargo standpoint, it's probably not worth any premium because cargo doesn't care that much. If it gets there in fifteen hours or in thirty minutes, it's basically the same for most most everything. For military, it's a big those are very big differences. Like, if you need to get supplies to some soldiers on the ground in thirty minutes, like, that can be life or death versus fifteen hours or whatever.
Speaker 4:So, like Sure. Military applications are huge. Rich people Yeah. Care a lot more about their time. So, yeah, I would be certainly bullish on that, but just like car the cargo doesn't care that much if it takes fifteen hours.
Speaker 4:Very rare that you would spend that much extra for something to get it there that fast.
Speaker 1:I mean, maybe we would shorten down your trips, which would be nice.
Speaker 4:The one that I'm very excited about is Zipline
Speaker 1:Oh, yeah.
Speaker 4:Which is I can't figure out if they launched or didn't launch yet. They're supposed to launch any day now in Dallas.
Speaker 1:Mhmm.
Speaker 4:And you'll be able to buy anything that's for sale in a Walmart on a drone delivery Wow. In less than five minutes.
Speaker 1:It's amazing.
Speaker 4:Out of it, there's 25,000 items in a typical Walmart, and 24,000 of them are small enough to fit inside their drone.
Speaker 1:Wow.
Speaker 4:And then I understand they're gonna go live. I don't wanna reveal anything I'm not supposed to, but they're gonna go live with some restaurant chains.
Speaker 1:Oh, cool. Get your burrito delivered.
Speaker 4:Able to get, like, a burrito in five minutes.
Speaker 2:This is That's hilarious. One of those things, like, you know, they they had the early hype where like everybody was like, oh, this is the future. And then like they had to do the thing and like actually like make it work Got
Speaker 4:about it.
Speaker 2:To the hype like dies down and then suddenly like a burrito lands in your backyard in five minutes and you're like, we are so back. Yes. Last last question for you. How do you think about sort of managing like the team and the company at a time when you're running a business that's, you know, most companies have the benefit like, if you're running payroll software, you can be like, let's ignore sort of politics and what's going out.
Speaker 4:Just play on each other?
Speaker 2:Yeah. Let's ignore the world and just focus on our business and our customers. But you're in a business where in thirty minutes, they're gonna announce some news that's gonna be very impactful to your customers. Like, you know, how have you messaged everything with the team? Like, do you got are are you gonna be, like, you know, doing a war room as as the news breaks out?
Speaker 2:What does that look like? I'm curious.
Speaker 4:We always there's we do we have war rooms as we call it too in in their Slack channels, basically, where we get together to go run OODA loops and observe what's happening in the world, orient ourselves. Who needs to know about this? Make decisions, take action, and and our our ultimate you know, my message to the team is is what my dad used to tell us when we go camping. It's you don't have to outrun the bear. You just have to outrun the the the campers in the next site over.
Speaker 4:That's great. And our competition, we've just gotta be better. We can't outrun this bear of tariffs or geopolitics, terrorists blowing up ships in the Red Sea or
Speaker 1:Yeah. Yeah.
Speaker 4:Where it might be. But we we can be better at responding to this than any other competitor, and it's a moment for us to actually double down on being the most customer centric. You know, like and tech gives us a huge advantage here. When when the new tariffs hit, we will be ingesting that into our databases and publishing it to our customers within minutes. Right?
Speaker 4:And our account management teams within the hour will have a plan, a script, and start calling down and letting people know what it means for them, how much it would have cost them, like, start setting up advisory appointments to talk through. You know, things like your in tariffs, it's your value of your goods times the tariff rate times the duty rate. Well, there are a lot of perfectly legal compliance strategies you can do to reduce the valuation of your goods Mhmm. That nobody bothered with when it was time zero. Mhmm.
Speaker 4:And you can get refunds, as I was saying before. So it's all about how do you respond to these things. And, yeah, we think we have a big advantage there. So it's fun. That's why Flexport's the most fun business in the world.
Speaker 4:Yeah. I don't wanna sit there and run payroll for other company. It's boring. Get out there and see what's happening.
Speaker 1:It it's an entertaining time to be in payroll. You picked a bad day for that analogy because it is high stakes. It's James Bond out there. Analogy. It's my analogy.
Speaker 1:We the guns in the studio straight from China. The team
Speaker 4:Oh, wow.
Speaker 1:Pistols. They're water pistols, but we're having a lot of fun today. We got James Bond on the soundboard. We're having a great time. But thanks for stopping by.
Speaker 1:This was fantastic. Always great talking to you. Good luck on January 3 tonight.
Speaker 4:See what happens with these shows. Maybe I'll maybe I'll need to come back and talk through when we actually have some.
Speaker 1:Yeah. Yeah. That'd be great. We'll have you back, of course.
Speaker 4:Yeah. Bye. Have fun later.
Speaker 1:We'll talk to you later.
Speaker 2:Great to
Speaker 1:see you. Always an entertaining interview. Thanks to
Speaker 2:An absolute dog. Speaking by. So we got James.
Speaker 1:An absolute
Speaker 2:lion. An absolute lion. We got James from ProFound calling in. We are gonna be talking about I I spoke with James yesterday for the first time.
Speaker 4:Mhmm.
Speaker 2:What he's doing is absolutely fascinating. Yeah. He's helping companies understand how they are appearing Cool. In LLMs.
Speaker 1:Okay. Yeah. Let let's bring him in. James, how you doing?
Speaker 2:Boom. What's going on? We got you. You live? Can you hear us?
Speaker 3:Yeah. I can hear you. Yeah.
Speaker 2:There we go.
Speaker 1:Fantastic. Hey,
Speaker 2:we're live. What's going on? Cool. How are doing?
Speaker 1:We're good. Can you start with just, like, a brief introduction of yourself, your company, and what you're doing?
Speaker 3:Yeah. I'm James, cofounder, CEO here at ProFound. We're a New York City based startup. Yeah. We we're we're building a marketing platform that helps brands understand and control how they show up in AI responses.
Speaker 3:Mhmm. We launched in August August seventeenth of '20 '20 '4 and kind of, like, came sprinting out the gate. We we raised a 3 and a half million dollar seed round that was co led by Keith Roboy, Coastal Ventures with Saga, sort of co leading. And, yeah, we've we've been growing pretty fast, pretty quick. We have built this platform that's relied on by brands like MongoDB, Indeed, Mercury, Rippling, Ramp.
Speaker 4:Ramp. Ramp. Yes.
Speaker 1:We Ramp here.
Speaker 2:There you go. Yeah. Talk about talk about like the genesis of the idea because I think what what you're doing and we'll get more into how it works. But what you're doing is now like blatantly ob like it's a blatantly obvious idea. Right?
Speaker 2:Because you all you have to do is kind of compare like as search became a big market and companies sort of rapidly realized like we need to understand and control how we're showing up in results. There's a lot of parallels to now. But I I thought your backstory of kind of like how you guys discovered the the opportunity in the first place at the beginning of last year was cool.
Speaker 3:Yeah. I mean, it's it's it's you know, it would myself and my cofounder Dylan, we were at South Park Commons, which is like a VC incubator accelerator. They have one in SF, One in New York. We were lingering around the one in New York, spending our time trying to figure out what business we wanted to work on. And there was this kind of sort of ironic moment where as we were thinking about other businesses to work on, we kind of realized that we had just been using perplexity all day, every day, for weeks or months on end without actually going, you know, doing traditional BlueLinx search.
Speaker 3:And, yeah, that is again, it's one of those ones where, you know, it seems more obvious now, but this is back then but even at the start of last year, ChatGPT didn't have web retrieval, so it was no good at search. Perplexity, it it felt like this streaming to CDs type moment, and we just went all in on that inflection point. We said, hey. You know, either Perplexity is just gonna take everything here because this is so good and it this makes AI answers, makes so much more sense than BlueLinx search or everyone else is gonna jump on board and do the same thing. And probably closer to the latter is the way it unfolded.
Speaker 3:Yeah. ChatGPT introduced web introduced web retrieval. I I mean, Adobe did this huge study that they released like a couple of weeks ago. It's based on a trillion web visits on American retail. And it's like, I think 40% of consumers now are are trying AI search for shopping for commercial purposes.
Speaker 3:So it's definitely Yeah.
Speaker 2:Had somebody we had Aiden from OpenAI on yesterday who said that he just anytime he wants to buy a product, even if he's just buying hand towels, he just does like a deep research
Speaker 4:Deep research, everything. Report.
Speaker 2:And he's like, it's worth just waiting five minutes to figure out like what's the best product based on On any category. My interest. I'm curious like how aware it makes sense that companies like Ramp are using these tools every single day and they start to realize like, hey, this is a product discovery mechanism. We should get on top of sort of understanding how Ramp is is appearing in results. But for how aware are legacy companies, you know, sort of like multinational public companies aware of how, do they realize this is almost like a hair on fire problem yet?
Speaker 2:Or or do you have to kind of explain to them like, hey, by the way, you know, 20,000 people are searching about your products every single day and like, you have no grasp of of how you're appearing or or what that's causing people to do, etcetera?
Speaker 3:They're all over it. I I like reject this thing of the I think the incumbents all had their lunch stolen in the early two thousands. Mhmm. And I think that everyone's like wiser now when, you know, they can sniff a platform shift. We work with some really big companies.
Speaker 3:Like, I know everyone's got the, you know, the the founder yet, but we genuinely work with some of the biggest, like, Fortune 100 companies in the world. I just can't say their logos because they just don't like that. Yeah. But, yeah, they're super clued up. They're super wires to what's going on.
Speaker 3:They may be a bit slower in terms of the workflows because understanding is very different to, like, taking action and, like, trying to improve the results. But, I mean, as an example, to give one of our customers who I won't say who it is. They're a big company, 12,000 plus employees. They did like a a big global PR push around this new product launch last I think a week a week or two ago. And they saw a a 50% increase in their visibility on that Like, their visibility in answer engine responses.
Speaker 1:Without giving away the secret sauce, can you just give us some general guidelines for how a company should think about steering, how they show up in LLM responses? Because you could imagine everything from, like, do more SEO stuff, get on Reddit, make sure you're in the next crawl in the in the pretraining dataset. Or you could even go and say, hey. There's some there's some inaccurate information about us. Let's just go directly to OpenAI and say, hey.
Speaker 1:Can you trim this out of the dataset?
Speaker 3:Yeah. So I guess there there's a sort of wide aperture or sort of a philosophical response to this, which is, I think, understanding that this that the the failure mode here is to think this is like traditional search where I mean, traditional search was essentially a marketplace system. You had the website and the end user, and the Google index just helped the end user, you know, come into a website, maybe top of funnel and, you know, thumb around in the ecosystem of eventually get pushed down the funnel into a conversion event. AI answers that there's three parties acting here where we have the the reset, the same website and the same end user, but sat in the middle is the answer engine. The answer engine changes everything because it's not connecting the two.
Speaker 3:It the answer engine is essentially for all intensive purposes stealing the relationship from the end user. Mhmm. Or stealing the the the stealing the relationship with the end user from from the brand. So I most brands don't aren't really grokking this idea yet, but most brands are about to lose the majority of connection they have with their end consumer.
Speaker 1:Mhmm.
Speaker 3:Because now when I'm researching a purchase, I
Speaker 5:go to
Speaker 3:ChatGPT, and if I need more information, I send a follow-up question to ChatGPT. There's no need to click out. And eventually, I mean, you know, if you read the article that came out, the interview with Sam, I think Yeah. This week or last week, you know, it's obvious that OpenAI are gonna go into shopability. So we're gonna see, like, agentic browsing, agentic shopping start to take place, and you will you will transact within these answer engines.
Speaker 3:You will consume media within these answer engines. You won't need to go we're going into a zero click future. So as a brand, the impetus, you know, going back back to that sort of philosophical point that the your impetus is how do I distribute information to these answer engines in real time accurately? The first step is, like, to just understand what the hell is going on. So, you know, if I'm ramp and I want to show up more in accounts payable, Cool.
Speaker 3:Let's, like, run a bunch of interrogations. Let's see how the answer engines respond when we send a huge variety of questions about accounts payable. Open ended questions, not brand direct ones about ramp. Mhmm. Let's see where they go, where which sources do they go to does ChatGPT go to or Perplexity go to or Copilot go to to get that information?
Speaker 3:And then from there, we can start building strategies. I mean, in RAM, you know, they we just published a case study with those guys, so it's it's public information. They increased their visibility by seven x in one of the indices that they were looking at by just looking at what was going on and what they could do about it. But then I guess, John, to give you a more direct response, like, you know, tactical stuff, LLMs.TXT. Our our our website, tryprofound.com.
Speaker 3:We get as our web our LLMs.TXT now is getting as much traffic as our site map, which is pretty interesting. Think for, like, very for rich extensive websites, you know, websites like, I don't know, Stripe as an example. We have tons of documentation. I think LLMsfull.TXT will be very interesting because it's just essentially cramming a huge t x t file of everything all onto one page because answer engines don't mind that. Mhmm.
Speaker 3:I think going, you know, just sort of cycling through other ideas, you know, things that we're seeing work are lots of structured data is very important. Like, you know, removal verbosity or creating content essentially for a retrieval agent to pick up, not a human. Mhmm. Images are useless. Answer engines don't care about images.
Speaker 3:So Mhmm. Like, kind of ignore them to an extent. Metadata, you know, needs to be very thoughtful. Like, you can essentially you can you can just spoil the whole article with your metadata, and that will often be, like, pretty effective. So, I mean, I could, like, I could go through I could cycle through
Speaker 2:this. What I have a couple kind of questions. You're sort of building in a what's a new category? Do you call it a AEO, like, engine optimization? Do you have you coined it yet?
Speaker 2:Obviously, you wanna own it.
Speaker 3:Yeah. It had the we I think you have to let the kind of market decide what it's gonna be called. AEO, AIO, LLMO, GEO gets thrown around, generative engine optimization gets thrown around a lot. Every considering we're all like techno optimists and, you know, Silicon Valley is meant to be full of techno optimists, it's the the desire to use heuristic is quite interesting to me. I've seen that so we as human beings, we love to use heuristic.
Speaker 3:We just wanna say this is SEO for AI. Yeah. But there's all kinds of, like, new surface areas that just, didn't exist before.
Speaker 2:Yeah. Can you talk about do do you have any type of vision of what paid ads in LLMs will look like? I had gotten multiple pitches over the last year of people that were building these sort of like ad networks to fit within, different LLMs. And my general read is like I sort of believed that, you know, paid ads would be heavily integrated into LLMs. But I sort of felt like it might I wasn't necessarily convinced that in a world where there's, you know, an infinite number of different answer engines that everybody has a different favorite, maybe this sort of global network makes sense.
Speaker 2:But then if OpenAI is getting like, you know, long term or Grok or whoever's like the sort of power law winner, if if they're getting 80% of the traffic, like, maybe they end up with more of like a meta style ad network where they just build it, you know, from scratch. But I'm curious what you think.
Speaker 3:I mean, I definitely I kinda think well, I I I believe there will be a more fragmented marketplace this time around. Think there's just more everyone knows what's at stake here. Google search has been the biggest monopoly in the history of the Internet, and I think there's more capital, more energy going into trying to ensure that doesn't repeat itself this time around. But answering the question, I I I think it's actually two things. I think it's generative advertising in a conversational user experience will be the the convergence of those two things will be one of the most powerful unlocks in the history of marketing.
Speaker 3:Language models are really good at language, And being able to synthesize net new ads on the fly that are perfectly tailored to that exact moment in the exact conversation in the exact way
Speaker 2:Yeah.
Speaker 3:That is it's compelling, I think, is about to melt marketers brains on on on the efficacy of, like, how how powerful that advertising medium is going to be. I I mean, I I'm I we want it to happen. We think it's very interesting, and we think it will speak perfectly. It'll be a very obvious next move for our business. I don't know.
Speaker 3:We're not holding our breath right now. I don't think you know, I'm not I'm not sure if it if if it will unfold like that, especially with OpenAI. You know, they have that corporates the the corporate structuring, I think, is a bit of a hindrance. Just the kind of Yeah. The the the values of the business.
Speaker 3:I can't I don't know. I your speculation is as good as mine, but yeah.
Speaker 2:Yeah. Well, very cool. I'm sure I'm sure you're going to be raising a lot in the next few years. So when when you're when you're ready to announce anything, come back on and
Speaker 1:Come back on. And Break it down.
Speaker 2:Send me keep sending me different learnings and stuff in the meantime. I think we we just have a ton of founders in our audience Yep. That probably aren't taking LLM optimization seriously enough now. So go DM James or or sign up for a demo or whatever. And it's great having you on.
Speaker 3:Thanks for having me, guys. Yeah. Congrats on everything. It's cool.
Speaker 1:Cheers for stopping by.
Speaker 2:Later. We got we got Quaid in the in the waiting room yet.
Speaker 1:We got Quaid coming in to the temple of technology, breaking down watches and wonders, which of course is it seems like the biggest watch event of the year. Every major watch brand announced new watches, and we're gonna get the update from Quaid. I'm very excited for this. We discussed the Vacheron complications watch that launched, but I wanna hear about Patek. I wanna hear about Rolex, Landweller.
Speaker 1:I wanna hear about everything Quaid has to say. So break it down for us, Quaid. How you doing? What's going on? It's James Bond Day.
Speaker 4:I hope you
Speaker 1:have your your your your gun because we're all secret agents today on the Internet.
Speaker 2:What's going on? What time is it over there for you?
Speaker 6:It's 09:48PM in Geneva. I'm in a tiny little Geneva hotel, so apologies for the background, but we're on the ground.
Speaker 1:You look great. Yeah. Break it down. What is going on? Why is everyone in Geneva?
Speaker 1:What's what's going on in the world of watches?
Speaker 6:Yeah. It's watches and wonders right now, so it's kind of like the biggest year or biggest week in watches for the year typically. Mhmm. It's when the watchful comes together, a lot of the brands come out and they reveal the new models, discontinuations, and everyone comes out here and nerds out together.
Speaker 1:So what what's making a splash? Like what are the biggest announcements? And then what are the are the announcements that I might have seen that are kind of overrated?
Speaker 6:Yeah. So it's it's typically a time when when brands like Rolex and Patek come out and they announce, like, iterative improvements on their models. Mhmm. I'm sure a lot of you folks have started to see a lot of the press coming out of it. We got quite a splashy year specifically around Rolex.
Speaker 1:Mhmm.
Speaker 6:It's not very common for them to come out and release a new model. And so they dropped the Land Dweller. And it's definitely like penetrating popular culture a little bit more. I was in LAX on my way here, and a bunch of people who clearly don't talk about watches were talking about the Land Dweller, and that excited me. But
Speaker 1:Yeah.
Speaker 6:So that was the big splashy one. First new model in the body is
Speaker 2:What's what's the hardcore enthusiast collector reaction to the Land Dweller? I look at it. I'm like, okay. You took, you know, the best of AP and you combined it with, you know, a Day Date and that seems like probably like it's gonna sell well. Right?
Speaker 2:I just look at the bracelet. But like as as a, you know, a very much like a hobbyist enthusiast, you know Yeah. I'm curious what the sort of on the ground reaction is to the new model.
Speaker 6:Yeah. I think there's, like, the consumerified reaction and then there's, like, the the nerd reaction. I think the consumerified one is, like, integrated bracelet, homage to the late seventies oyster courts. I think, Jordy, you're spot on there. Like, it's the first moment in a long time or maybe ever where I think Rolex is building a fully integrated bracelet that, like, really puts a model directly in the Royal Oak Nautilus category.
Speaker 6:And so Rolex has been largely dominant without doing that. And and so now that you have a bracelet where I'm wearing a royal love today, like, I haven't put on the land dweller, but does it make sense to have both in my collection? I think it's like you start to ask that question, which is is quite exciting. For the watch nerds, they released a new caliber with it, the seventy one thirty five, which has a new escapement in it. Mhmm.
Speaker 6:And so, like, for most people, they're gonna buy the watch because it's a hype new Rolex. I'm sure every every AD's line is getting blown up right now. But for the watch nerds, it's just a really efficient new escapement. It's pretty exciting to see it come out for the not watch nerds in the room. Like, the escapement regulates the hairspring.
Speaker 6:The hairspring is what you're winding to power the watch, and it's kinda being regulated and releasing, and that's what's driving power to the gears. And so super nerdy, but to have a moment where they not just make a new model and make it exciting, but they also invest in kind of the technology and and push the innovation forward in the watch perspective. And then to have the confidence to drop a new caliber and a new escapement in, like, a sport watch. I think it's just kind of a ballsy Rolex move. So I think the watch world likes it.
Speaker 6:I think everyone wants to like it.
Speaker 2:That's cool. I'm curious. How do you guys think about estimating how these things are gonna price? Obviously, as soon as an AD releases a land dweller from their hands into a consumer's hands. Some of them will get listed on bezel immediately.
Speaker 2:Do you have any sort of sense of how this is gonna price? It's a little bit different than seeing a new GMT, you know, release where it's a different color way, but there's it's certainly not a a new model.
Speaker 6:Yeah. It's it's it'll be interesting. And I think, like, it's very hyped, it falls, like, right into the hype stream. Everyone's gonna want this. I'm sure eighties lines are are getting absolutely blown up.
Speaker 6:It's also expensive at retail. It's a $14,000 watch, I I think, is the the retail on it. So, like, you know, it's $1,500 more to get a Daytona at retail. Granted, those are obviously impossible to get, so it's not even real numbers. Whenever Rolex drops a new model, specifically one that's desired, you pay a premium to wear it first.
Speaker 6:And so I'm sure if you wanna be courtside, you know, wearing your your first land dweller, you're gonna pay an insane premium on that. I would not be surprised if these things are are selling, like, well over double retail. That probably seems like the entry ticket even at a stable market, but we'll see. It's like, you know, there's not a lot of hyped Datejust out there. Even the hype Datejust are still trading in the mid teens.
Speaker 6:So it's certainly a new market, but I think it's gonna be pretty frothy with my guess.
Speaker 1:Can you talk about some of the other launches and how they've been received either this year or specifically at Watches and Wonders?
Speaker 6:Yeah. So I think, like, it's been interesting. Like, usually what ends up happening is, like, I I mentioned, you'll drop a watch. It'll be popular even if it's like a funky watch. Like, we saw the the Day Date with the emoji, you know.
Speaker 1:Yeah. Saw a Tetris one that was kinda wild.
Speaker 6:Yeah. Like it's crazy, but because there's inherent scarcity and it's hype, you end up seeing these things trade for insane figures.
Speaker 1:Sure.
Speaker 6:I think there's a lot of other really exciting ones that that dropped this year. It's they don't touch the land dweller, but Mhmm. It was kind of a theme of really interesting color dials. You had the the Sprite get kind of a big brother, the the green and black GMT that's a left handed. I never thought I, like, I thought they were gonna launch that model and then discontinue it because it just inherently was weird in Adestro.
Speaker 6:But we got a light gold version of it with the first ceramic dial that Rolex ever made. It's all green. It looks kind of hulky meets the Sprite. That's exciting. You got this crazy iron stone tiger iron stone dial for the full gold root beer, which is, like, gemology mix of tiger's eye and all these other crazy metal or or crazy stones.
Speaker 6:OP colors got some new ones. They brought in, like, a hyped turquoise dial in the Daytona. So it seems like they're investing in technology, but they're also playing, like, right into the hype cycle and giving colored dials and and things that are
Speaker 1:How are some of the holy trinity brands playing watches and wonders? I saw a launch from Vacheron. I saw some Patek news that you guys broke down on your ex account. Can you give me just an overview of, like, how big is this year for each of the Holy Trinity?
Speaker 6:Yeah. It's not it's not quite the level of Rolex, I would say.
Speaker 1:Like Mhmm.
Speaker 6:Obviously, Vacheron's had a big year with the '2 '2 twos Yep. Kind of riding that lightning. As far as Patek goes, we got the 6196 p, the the newest iteration of the Calatrava. Yep. The watch world loves it.
Speaker 6:It's kind of being hailed as the, you know, best modern Calatrava we've seen in a a really long time. It has that amazing salmon dial that the market loves. So still active, but I would say, like, more like a normal year than kind of Rolex having the standout new model.
Speaker 2:What is the general sentiment, like, industry sentiment right now on the ground? We obviously had the COVID surf boom and then things crashed. There's a lot of models that are down 50%. They're obviously still trading, you know, high you know, above retail. But is the sentiment good even though we're maybe back to, like, a new normal, but the new normal is just, like, you know, sort of higher than than, you know, 2019, let's say?
Speaker 6:Exactly. Like, I think the the hype models are still hyped. They're still trading well above retail. You know, Daytona, Fifteen Five retail is still trading in the low thirties. Mhmm.
Speaker 6:It's not a $55,000 watch anymore, but, you know, it's still trading at a meaningful premium, still very hard to get. And I think, you know, the correction that we saw over the last two years actually, in many ways, I think, accelerated the market. You have a lot of people that were watching the price of a Daytona being $55,000 and just feel prohibitive to enter the market there. Now all of a sudden see the watch at the low thirties, and they either feel like they're buying the dip or they just want the watch well enough that they are willing to make that price at that point. So Mhmm.
Speaker 6:We're seeing a lot of energy come back in the market. On our side, last month was the best month we've ever had ever.
Speaker 1:That's good.
Speaker 6:You know, continue to grow.
Speaker 1:Congratulations. We love growth here. It is. I have to
Speaker 6:shout that
Speaker 1:out. It's it's fantastic. It's fun to Congratulations.
Speaker 6:Thanks, guys. But yeah. So I think the market's still frothy, and it's there. A little bit less speculative than it's ever been. I think people saw the highs, and they saw the drop, and now they're, being more careful, but still a lot of watches to be bought.
Speaker 1:We love a little bit of froth. Not as big on speculation,
Speaker 2:but I love a little bit of froth.
Speaker 1:I love the froth.
Speaker 2:Is there anything else anything else yeah. Anything else that's been anything surprising from from this trip so far that or is is it all kind of expected?
Speaker 7:It's all
Speaker 6:all what you'd expect. It's always fun to see everyone in Geneva Rock rocking the most fire watches ever, and they're just casually on the street. I had lunch today, and I think I saw two crashes, a bunch of open works, like, all sitting in the same vicinity. So cool. And it's fun to see how this stuff regulates in the secondary market.
Speaker 6:Like, we're already seeing these celebration dials. Like, you know, they're they used to be trading in the mid teens. We have a seller that's opportunistically listing them in the thirties now trying to get this the speculative buyers to be ready to move. But then we're also still selling them, you know, in the low twenties. Right?
Speaker 6:So, like Yeah. It'll everything will shoot up immediately, and then it'll find its way down. And Yeah. If it's a hype model, the celebration model in or dial is inherently a crazy watch. Like, it's I people who rock it, hats off to them because it's an impressive watch to be able to pull off.
Speaker 6:But for the ones that have staying power and they're discontinued and have a lot of demand, obviously, the price shoots up.
Speaker 1:Can you talk about some of the smaller brands? What's going on with FP Journe and some of the more challengers, the up and comers, the brands that folks might not have necessarily heard of but are making big splashes in the last few years? What are they doing at Watches and Wonders, and what are they doing generally?
Speaker 6:Yeah. So I think most of the brands are here. Even some of the big brands, like, tend to be a little bit quiet even not just the independents. Like like, AP didn't participate in Watches and Wonders, but did, like, some quiet announcements of new ceramic colors and things like that. Yeah.
Speaker 6:I went today. There's a a small little Wait.
Speaker 2:Just one step back. Is that like interpersonal dynamics? Like they don't like who runs the show? Like why why why do you decide to not be at the biggest, you know, watch event of the year?
Speaker 6:I don't know if they I don't have like the nuance there. And and I don't know if like reps and them are not participating and things like that, but I just know, like, they're not making as big of a presence as as other brands are. And I think that's just, a selective choice. But, obviously, they announced they love the ceramics, and they announced a new blue ceramic that is aligned with the color of a specific sky in a Swiss valley, which is very AP and super cool of them. So, yeah, they're just doing their thing.
Speaker 6:And on the independent side, there's a fair actually next to Watches and Wonders. They're in the same little area by the Geneva Airport that is focused on specifically independents. And so I actually spent time there today, and you're kind of working with, you know, brands like Ming and and kind of these, like, new up and coming brands that are doing really cool stuff. So you get a mix where it's a fun moment where I think a lot of attention is brought into the watch world of Watches and Wonders. And I think, you know, rising tide rises all ships in in this kind of stage.
Speaker 2:That's awesome. Love it, dude. Well, thank you for joining at at 10PM your time. Have a great rest of your trip, and thank you for responding to John and I at all hours of the day
Speaker 1:with Every time we have a watch,
Speaker 2:but it's
Speaker 1:with, like, the most obscure risk checks. Hey. We we we we saw this VC with this watch. Let us know what it is.
Speaker 2:And you're always the best.
Speaker 1:We appreciate it.
Speaker 2:And thank you.
Speaker 6:Watches, I'm I'm available 247.
Speaker 1:So Thank you. Yeah. It's been it's been fantastic working with you and partnering with you.
Speaker 2:You're the man. Have
Speaker 6:a great have a
Speaker 1:great rest of your trip.
Speaker 2:Yeah. Safe travels.
Speaker 4:Thanks, Talk soon.
Speaker 1:Bye. Good timing. So much watching news. I'm glad we were able to have him on as our official watch correspondent. I I love this stuff.
Speaker 1:Well, next up, we have Sarah Guo coming into the temple of technology talking about she runs a fantastic AI podcast if you're not familiar, also a big time investor. And, wasn't she the reason that, Andrew Reed joined Sequoia? Wasn't that the story? I think that
Speaker 2:was Yeah. It was the back the backstory.
Speaker 1:Yeah. And she's here now. Welcome to the show. Sarah, good to have you.
Speaker 2:Hey. Hi. What's going on? It's great to have you.
Speaker 8:What's going? Thanks for having me.
Speaker 1:What's what's new in your world? How did you process the Studio Ghibli moment? How are you feeling? I mean, you've been, you know, bullish on it for years now. What's how has it, like, updated your world model, and what's exciting going forward from here?
Speaker 8:Well, it's super cute. Right? Yeah. Start with that. I have a lot of I generated a ton of images of me and my kids and my family and my friends.
Speaker 1:So I need
Speaker 8:not be ignored, like, how much people actually do want to create. I think it should update a lot of people's world models in terms of how early we still are in quality. I think the fact that quality is a very broad term. I think the fact that you had image generators make things that were beautiful or realistic, I feel like people kind of thought that to some degree images were solved. Other domains were already more well solved.
Speaker 8:But like what I think the GPT-four point and Studio Ghibli moment taught us is, first of all, it's like a different technology for image generation, but it allows a lot of controllability and there's more knowledge of like why the image is the way it is. And so I think we're gonna keep seeing a ton of improvements in our ability to create different things that, like, surprise people.
Speaker 1:Have you gotten a chance to dig into how much of the I mean, it's clear that, this new model, whatever they're doing is much better. How much of it is just the design, the algorithm, the strategy versus, like, scale? And I I really hope that we have almost, a deep seek moment where we're like, oh, now it now these now it's a filter on Instagram, and it's just a button, and it takes one second. And runs on your phone where it compressed it down. That seems to be a trend in all of these models.
Speaker 1:Something comes out. It's really cool. It's really big. It's really expensive. Then it gets really cheap and quick.
Speaker 1:What are you expecting this year as this evolves? And do you think any do you think any of those trends will, like, unlock new, use cases?
Speaker 8:I mean, I think this system can do things that were really hard Yeah. To get right consistently before, And it is different, I mean, I don't work at OpenAI, but
Speaker 1:lots
Speaker 8:of people believe that GPT four point it's not diffusion based image generator. It's just starting with noise and you gradually cleaning it up the way mid journey models supposedly work. You're building images piece by piece, like sequentially, like you have tokens in a language model.
Speaker 1:Yep.
Speaker 8:Right? And if the image parts are more like words in a sentence, and you're creating the image one element at a time, so it's like technology brothers in a cyberpunk city with a blue dragon. It's understanding the request with language. It's connecting the words to visual concepts it knows, and then it's doing it step by step. And this is great because it's more controllable and it's really high quality, but it requires a lot of compute, which is why Sam is talking about servers melting and and, you know, it's it's still slow.
Speaker 8:Do I would take I would take, like, every bet that in general, all types of AI capabilities due to competition and continued investment and technical progress and distillate, like it all gets cheaper and faster. Right? So anybody who's building with this stuff or using it should expect that curve the way it has over the last eighteen months. And I think a lot of it will be open. Yeah.
Speaker 8:I mean, opening, I just said they were committed to this too.
Speaker 1:Yeah. Yeah.
Speaker 8:And and so, like, do I I definitely think that the the the data would would suggest that we should continue to see, like, new capabilities as the models continue to, like, invest in or the the foundation model companies invest in multimodality and continued scale.
Speaker 1:Mhmm.
Speaker 2:How do you what advice would you give to somebody that's doing anything around image generation of the app layer? I think that prior to last week if you were building like something that generates Facebook ads, you felt pretty good because you were like, well, we have great UI and like customers care about workflows and like, you know, we help with this sort of like effectively like, you know, baking in prompt engineering to get great outputs and then OpenAI releases something that like consistently one shots, you know, prompts with like three words and it's like a fantastic output.
Speaker 4:Yeah.
Speaker 2:Do you think that, you know, do you think if you're working on like sort of image generation or or ad generation SaaS that you need to like pivot to just having like new ideas and like kind of thinking deeper into the stack? Or do you think that there's, you know, do you think that you can still kind of like stay ahead by focusing on workflows?
Speaker 8:I I definitely think there's a lesson here of like, what the labs are doing. Watch what anybody who is doing like core research is working on, and you don't want to fly too close to the sun. Right? I do think one surprise might be what Anthropic and OpenAI explicitly care about is like AGI or ASI, whatever you want to call it. Right?
Speaker 8:And one might have argued that, like, image generation, voice, like, these things are not on the path to AGI.
Speaker 1:Yeah.
Speaker 8:Right? They're they're products you kinda get for free. Yeah. I I think there's, like, maybe two lessons here for entrepreneurs. One is well, these companies, they do care about making, like, end user progress and commercial progress in part because they need to build a business that requires consumer engagement to keep justifying the training cost and the research cost.
Speaker 8:Right? And so I think if they feel like there are capabilities that fit into a broader consumer engagement or, like, productivity platform, they're probably gonna pursue them. Mhmm. But I I also think that, like, the at least my experience with creative tools is that people want a huge amount of control, and, like, not one tool will serve everyone. Mhmm.
Speaker 8:And so, like, the things that OpenAI and the labs have produced are very democratizing. And yet that is lowering the floor for if you want something that looks like a decent ad. Also think there's a lot of room to continue working on the last mile and raise the ceiling and we're gonna have just like much better content, much richer content, more diversity, higher quality from people spending a lot less money and there is opportunity in that.
Speaker 2:Yeah, think last mile is just like an interesting framework where like, you know, the base models are gonna get you to like, you know, pretty great and then how do you get to excellent and there's like probably a lot of value that you can capture by delivering excellent.
Speaker 8:And I think you can make like reasonable predictions about what the labs care about. Right? Like let's just use some examples. Like do they care about code generation? Yes.
Speaker 8:They care about code generation. They think it's on the path to better reasoning. But do they want to build every workflow for a certain type of code base or migration, every workflow and serve it like in customer service or law or finance or accounting or even, I don't know, video capture and editing? Like absolutely not. They neither can nor want to do that.
Speaker 1:Yeah. It seems like there's been this trend over the last few years of maybe don't train a foundation model, stick to the application layer, and then go operate on highly protected datasets like legal or finance or investment banking, medical records, etcetera. And I'm wondering if there will be a version of that that relates to image generation. But do you think we're kind of at the end of that trend or do you think there's more niches that people can discover if they just think really hard about where the labs aren't building towards and then go find something really cool?
Speaker 8:I actually think we're still like pretty early in quality. Mhmm. Like in your like artists and advertisers and communicators, the the specificity that people have for what they want Mhmm. In an image, like you know, the concept here is controllability. Yeah.
Speaker 8:Like I think the ceiling is really high. And to the point at the beginning, like, I think people thought we were kind of done and we're not done. And so I actually think there's still opportunity for large companies here. And then relatedly, like, video is much harder than images and requires like different architectural change. And so if images are this expensive and slow to generate today, I do think also efficiency is going to matter here, and workflow is going to matter here, and collaboration is.
Speaker 8:And so I still think there is opportunity for other companies that are not necessarily just training pure text image models.
Speaker 4:Yeah. Oh, sorry. I was
Speaker 2:going to take it in a different direction, but if you
Speaker 1:I was going to ask, it seems like there's been this evolution of the value will accrue to the foundation model layer. Now it will accrue at least in the short term to the application layer. Every foundation model company kind of has a dance partner on the distribution side, whether it's Google, obviously, has their own distribution through their apps, and Meta has all the different social media apps. X and x AI are now part partnered and together. Even OpenAI has gotten so many people to install the OpenAI app and the ChatGPT app.
Speaker 1:Do you think there'll be an increasing trend of, hey. Yeah. It's not enough to just be a foundation model company. You got to find a dance partner on the distribution side if you really want to accelerate over the long term and remain relevant.
Speaker 8:I I certainly don't think it hurts, but the like, to the best example would still be OpenAI and ChatGPT. Yeah. They didn't actually like, their their distribution is their own. Yeah. Right?
Speaker 8:So it depends on how novel the capability is. So I think there's a deeper question in like maybe that you're implying that in what you just asked of like, well, are people going to build new experiences that are so different that they can create their own distribution?
Speaker 1:It is fascinating that they have this deep partnership with Microsoft. I've used Outlook for one email inbox for the last two years. Haven't seen any OpenAI products in there. I don't know if I just haven't clicked the right button, but doesn't seem like Microsoft is really pushing like, hey. We're gonna build these models.
Speaker 1:And although they've talked a lot about copilots and different office products. But, Jordy, what's your question?
Speaker 2:Do you think that it it almost feels like there's there's never been more hype for AI, but I almost feel like it's like under hyped. Like you shared an article yesterday or a study that shows like AI therapy like actually seems to work really well and the idea that like society broadly, everybody would have free access, infinite access to high quality therapy, should probably be, the top story in the world because of how transformative it could be if every individual could understand themselves better and sort of, you know, mature and and whatever they're getting out of therapy. It it feels to me like just AI broadly is still under hyped even by the cohort of humans that is like, you know, like fully AGI pilled?
Speaker 8:I think it's I I think it's wrongly hyped. Maybe that's the the answer. Uh-huh. Like, it is still underhyped, and the things that people are really excited about are not necessarily the right ones. Okay.
Speaker 8:Maybe I'll go back to the Microsoft thing for a second. This is not I mean, clearly, Saya has done an amazing job with Microsoft, but it's still a very large beast. And I think it is like kind of impossible to overstate how hard it is to get existing products in existing businesses to move quickly. Right? And all of this shit has happened so quickly.
Speaker 8:Yeah. And should there be intelligence in your email? Absolutely. Right? Like that technical capability exists today.
Speaker 8:But what does anybody who is a traditional email vendor, Microsoft or Google, navigating here. They're like, oh, what does our user agreement say about if we can process our date that data?
Speaker 1:Yeah.
Speaker 8:What is, like, the safety consideration around processing that data? What is the user promise around privacy? Right? Like, there's how much is it gonna cost? Does, like do we even have our infrastructure set up to share that data with model inference?
Speaker 8:I I think it's it's complicated to go deploy this stuff, especially at scale with organizations that by virtue of actually having users and customers are more conservative and so I think they're like people can go challenge it by
Speaker 1:Yeah. I mean staying on email, was setting up a new Gmail inbox and it's there's Gemini buttons everywhere, but they don't seem to do anything that I want to do. It's just like, oh, give me a two line summary of this email that I could already kind of skim. It feels like, you know, during the mobile era, there was this whole drumbeat of, like, Mailbox. I don't know if you remember that company that got acquired by by Yeah.
Speaker 1:Dropbox. It, like, went viral. Everyone was using it. It it introduced a couple different UI patterns that were really cool and then eventually adopted. And then it was never, like, a power law outcome, this massive trillion dollar company, but it was, a really cool product.
Speaker 1:People enjoyed it. It was probably a good outcome for the investors, the founders, the users. Everyone had a good time. And I feel like there's a little bit of a meme right now that, like, oh, you're you're just a jet jet GPT rapper. You shouldn't even go and try and build that.
Speaker 1:And and I've always wondered, like like, should we be telling founders, like, just go build and maybe don't even worry if it's aligned with venture capital necessarily. It's okay to go build something because there's there's so much opportunity with these new tools. You might become really big, but you also might just build, like, an okay subscription business, and people are paying $20 a month for it for a while. And then maybe you get steamrolled, but maybe you land somewhere great and you get acquired somewhere and it's all worth and at least we get the product. It just feels like again and again I think of a product and then I can reason my way out of, that's not a venture bet, but we don't get the product in the interim and I'm like, I just want the product right now as a consumer.
Speaker 8:Yeah. I don't think you can give entrepreneurs advice on things that are really about personal motivation.
Speaker 4:Sure.
Speaker 8:If they wanna just build the product, build the product. If they wanna build a hundred billion dollar company, they should think a lot about what's gonna make a hundred billion dollar company.
Speaker 1:Yeah.
Speaker 8:We're explicitly not going to back anything that's going to be a small outcome that
Speaker 4:is a
Speaker 8:tuck in, at least that we believe is, But I also think that there are spaces that people think of as very red ocean that people have creative approaches to.
Speaker 1:What does red ocean mean?
Speaker 8:Red ocean
Speaker 2:means like Like just overly complicate competition, blue ocean top The opposite
Speaker 1:of blue ocean.
Speaker 2:Yeah.
Speaker 8:Exactly. A lot of people are fighting over it. It's not like an unknown market. Like, you know, I think I'm pretty excited for Notion Mail. Lots of other mail services exist as you
Speaker 2:know. Sure. Yep. Sure. Have you I'm sure you've looked at a bunch or gotten pitched a bunch.
Speaker 2:Have you done any AI roll ups or do you have a broad thesis there? When I when I look at some of these strategies where where sort of, you know, startup people, like, basically are trying to reinvent the private equity playbook Mhmm. Being like, we're gonna buy businesses and make them more efficient. Like, it's sort of the same thing as like, you can make them more efficient with software or and now the narrative is is AI. How have you thought about opportunities like that?
Speaker 2:There's obviously a a bunch of them and I'm sure you've, yeah, probably seen them all.
Speaker 8:Yeah. We have something still in stealth in the portfolio that you might characterize this way. I I'll I'll I'll like talk about what I think the component parts of this thesis are and probably piss a bunch of people off by starting with I think that there are asset classes where finance people are pretty good at finance.
Speaker 1:Yeah.
Speaker 8:Hybrid equity is a mature asset class and, like, a bunch of engineers being like, you know what? We're gonna be really good at underwriting private equity. I'm like Yeah. Like, why? That's great.
Speaker 5:Why would
Speaker 8:you have any alpha in this? Like, I think you seem really smart, like a very good engineer. But but like the component pieces of I think it's really interesting when people just like discover other sectors that have existed for a long time and don't think about what the basis of competition is.
Speaker 2:Well, that's the classic Silicon Valley approach being like, I'm an outsider like I know how to do this better than you do and then it's like private equity is like the most optimized asset class ever where there's people out there that were like, I will buy this knowing that I will only get a you know 7% return, but that's okay because like I'm gonna do it enough times throughout the fun life cycle that it's gonna you know work or whatever.
Speaker 8:So I I I'm glad we're on the same page here or I'm like I'm I'm pretty skeptical of most of these things that start with like we're just better at finance.
Speaker 1:Yeah.
Speaker 8:But being, you know, I could imagine hiring or actually being good at the under, like the asset selection and underwriting piece of this as being like a baseline for a roll up type play working. And then the the other premises here are, like, we think that there are a bunch of sectors in the world that would benefit a great deal from technology or AI. And benefit being like, it shows up in the growth rate or in the EBITDA, right, pretty quickly. But they're not, by virtue of the industry structure, they're going to adopt these technologies very slowly. They're fragmented.
Speaker 8:They don't invest in technology. The the user base is really far away from Silicon Valley, and, like, sales is hard. Right? Yeah. Like, that's that's kind of the premise.
Speaker 8:And and, like, it and maybe there's some broader technical thesis about why working across these companies is interesting. I just said there there is something in our portfolio that you would characterize as a play on this, I would just wanna believe that these component pieces are true. Right? Yeah. That the team can be world class at finance.
Speaker 8:The team can be world class at the technology piece. And the technology piece is going to translate to something that is not, like, incremental, but fundamental to the quality of the business and your scalability in an industry or ability to compete.
Speaker 1:You heard
Speaker 4:it here first.
Speaker 1:HVAC roll up for
Speaker 4:sure.
Speaker 1:HVAC plus DocuSign printing money.
Speaker 2:How do you think about, as a GP, wanting to constantly learn and learn about new industries and and get enough conviction to make bets in areas where maybe you didn't have like a ton of context five years ago, while at the same time sort of like knowing your lane and like having areas that you're super confident in and having a deep bench of sort of like experts because like the thing that I think is, you know, every every VC became an AI investor over the last, you know, year and a half, two years. But also a bunch of people became defense tech investors and a bunch of and like for us, like we we angel invest, it's low stakes. If there's a founder we like, we'll we'll put money in and we want to support them. But then you're running a firm, you kind of have to know your your edge and your lane and I'm curious how you sort of like sort of balance that, like what and think about like your sweet spot.
Speaker 8:Yeah, it's a pretty core question. I was actually having this discussion with my friend Eric Vitria who's at Benchmark and he, you know, is like an infrastructure enterprise software person by background, more like me. And we're talking about companies that are out of domain. And his point, which I think is pretty aligned with my view, is if you are too familiar with the status now I'm going make fun of myself because I just said all the stuff about the private equity roll up. But if you are too familiar with the status quo, you the the experts in the field do not necessarily see the future.
Speaker 2:Mhmm. Yeah.
Speaker 8:And especially as you, like I I genuinely, I mean, believe that large models can extend to many domains that were not software before. Like I was not particularly interested in vertical SaaS or the legal industry before But I think Harvey's a really interesting company. I still don't know anything about the legal industry. I know like 1% of what I should as an investor here. But the point is the the TAM has massively expanded because we are not just doing some incremental little productivity thing.
Speaker 8:We're trying to take huge amounts of the profession and democratize it and raise the bar of expectation for
Speaker 1:what
Speaker 8:you from your lawyers. And and so like if that opportunity is large enough and I think the hammer is a really good hammer, like I am so excited to learn about the legal industry and work on for ten years. Yeah.
Speaker 2:Just got a legal bill like a day or two ago. And John was like, oh, maybe we should have chat GBT ed some of that stuff. And I was like, I think we're, like, in the last, like, maybe, like, few months before we're gonna have good enough, you know, legal AI
Speaker 1:I think we're going back to handshakes and and smoky back rooms and threats of violence because we can't handle these legal bills anymore.
Speaker 2:But but, yeah, going back to your question you said that I think is an interesting thing to pull out. You said, like, experts can't see the future, but they absolutely can see today. And it's like sometimes you like, you know, look and you you hear pitch and you're excited about it. And then you talk to a friend who like actually knows the industry really well and they just point out like, here's like the one reason like That
Speaker 1:works today.
Speaker 2:Not gonna work today. Very very different framing. Is it just you have to like step back and like almost kind of view things at a macro level and then ultimately make a founder bet?
Speaker 8:I mean like why do we end up working in areas where we don't have deep domain expertise? It tends to start with like we love the founders. And there's some first principles view of like, it makes sense why like we should be able to restructure the industry or the technology is gonna be massively important. Yeah. Like the thesis just makes sense, Right?
Speaker 2:Yeah.
Speaker 8:And so at least my personal approach is like, I'm going to try to understand what every expert in the status quo believes. And usually if it's a good thesis, like somebody thinks it's viable, right? Yeah. You'll just get mixed opinions back. But I don't want to discover that there were obvious reasons it was not going to work.
Speaker 8:I would like to understand why everybody else believes it is not going to work and then like, you
Speaker 2:know Still believe. Yeah. Yeah.
Speaker 1:It seems like there's lot of I mean, obviously, there's a lot of money sloshing around in the AI deal making space right now. But at the same time, it's it's easier than ever to test an idea and see, oh, well, we got to a hundred million ARR in three months. Like, maybe there's something here. Can you talk about just, like, the pace of play in AI both on the deal making side and then on the actual revenue making side? Because it feels very different than the .com boom where companies were going public with, like, $2,000,000 in ARR, and they're trading at a billion dollar valuation.
Speaker 1:Some of these companies, they're at high valuations but they have a lot of money coming in.
Speaker 8:Yeah. I mean, if any of you guys are experimenting your way to a hundred million on run rate, please call me.
Speaker 1:My name is PhilConfiction dot com.
Speaker 8:I still think it's pretty hard. But maybe to your point, like people are doing it very efficiently. Mhmm. And I think it just speaks to like the technology, the magic box is very powerful. Yeah.
Speaker 8:And you don't necessarily need it's not like if you just think about the SaaS world, right? Like I need an army of engineers to implement the business logic
Speaker 1:Yeah.
Speaker 8:Of like how does payroll work in Slovenia? Yeah. What like I'm I'm turning the law into code.
Speaker 1:Yeah.
Speaker 8:And I think that the experiment like, the iterative nature of, like, I'm trying to make a model produce outputs that are great in these specific workflows, but the workflow is so valuable, enables some of these companies to grow in an unhinged way. Like the ROI is there. I think healthcare is a really interesting example of this. Because for like a ten year period, I was like, oh man, I would be really careful about, you know, with loved my friends who are healthcare venture capitalists. Masochists.
Speaker 8:It's not a super fast moving area. Huge part of the economy, very important. But it's just like, you know, it's not it's not like an early adopter industry. And yet, you have companies that, Abridge and others, that have massive revenue pacing, including the enterprise. And I think the basic answer is now people are making things that are worth buying quickly.
Speaker 8:So that Yeah. The fundamental piece is like pretty exciting here. I think the pacing for entrepreneurs and for investors is either also very exciting or very stressful, depending on your personality.
Speaker 6:Yeah.
Speaker 2:Do you think do you think some of the the sort of bad activity in this space like, is there so much pressure now on it? Like, the bar in AI has now been set that, if you're a general access product and you're not, like, two x ing every single month or like, know, not not every single month but like Basically like extremely quickly. Everybody's seen the charts of like, you know, Wiz and Cursor and Ramps and and and Deal and all these companies. It just feels like the pressure is now so intense that people are like counting c a r r as like, you know, or like trials demos. It's like
Speaker 3:do you
Speaker 2:find yourself giving advice to founders of being like, you know, ignore these sort of like, ignore the charts and just like focus on your on your customers because if you're too focused on like how do we just grow like best in class, then you maybe end up like not building, you know, building stuff that's not reliable or, you know, robust.
Speaker 8:Yeah. I I think people focus more on what's out there instead of what's possible for their business way too much. Right? Like I think it's a pretty, so there is something fundamental in what you said, which is like the world has become faster, and the Internet gave us the ability to distribute software products much faster than previously. Like, you were not gonna go to, like, a hundred million of run rate in a couple of months before you could discover things on the internet.
Speaker 8:Right? Like what are you going do? Like call somebody
Speaker 1:on the
Speaker 8:phone and be like
Speaker 2:Come here with
Speaker 1:the You can buy the CD ROM. The CD ROM. That's how SoftBank got started.
Speaker 8:I mean, or it was it was just like structurally a bit slower.
Speaker 1:Yeah.
Speaker 8:Yeah. So so I I think the the ambition for the number of connected people in the world, the number you you can serve, how quickly things can grow should structurally increase for entrepreneurs. And like an investor from the outside being like best in class is this company
Speaker 5:Yeah.
Speaker 1:Yeah.
Speaker 8:Yeah. Which has nothing to do with your company is not very useful. Yeah. If it is like if there is a data point in your customer segment of how quickly something can grow and you are not winning, that is relevant data. Right?
Speaker 8:Then the bar has actually risen, and, like, you should figure out how to win. But I I don't I I think there's also, like, an important question. Like, we talk about there's another investor who calls it chicken nugget revenue, but we just talk about revenue durability.
Speaker 2:Mhmm.
Speaker 8:Right?
Speaker 1:Yeah.
Speaker 8:Like, there there's a big difference between, like, deep usage, multi year contract, enterprise revenue with integrations. Yeah. And like people trying something with 30% a month churn.
Speaker 1:Is that what chicken chicken nugget revenue is is trial revenue basically?
Speaker 8:Yeah. I don't know if people like You trial or just like revenue that you know is perhaps commoditized.
Speaker 1:Yeah. Low switching costs.
Speaker 8:It's the novelty of people trying new things. Yeah. AI can do so many cool new things.
Speaker 1:Yep. That makes It's
Speaker 8:not really changing their day to day. Like, it's not like a three d seven behavior where I'm somehow working better or like playing more, being happier. Yep. And so I think people should figure out what the bottleneck to growth is in their business for durable revenue and then anything else they should treat as distribution.
Speaker 4:Yeah.
Speaker 8:And it's like I I don't know what to tell investors about that. Buyer beware.
Speaker 2:Buyer beware. Last couple questions. What introduction have you made that's generated the most enterprise value? Andrew Reed was on the show and and said that like I think he said that you connected him to Pat and and that's you know been pretty pretty good intro. Is there anything else that that comes to mind that that you're particularly proud of?
Speaker 8:I don't I don't know. I make a I make a lot of introductions. Yeah. I think Rita's a very good investor. No.
Speaker 8:I I think the I think, like, probably, like, accreted the most enterprise value. I think there are companies that I've been a part of, be it Figma or Harvey, where I'm like giving an investor friend a hard nudge and being like, I really think this is gonna work. Mhmm.
Speaker 1:And like,
Speaker 8:this guy or gal's like good, you should work with them. And that included, like Andrew Reed had the thesis at Figma, but I was also like, you should do this, right? Dylan and Andrew. And I think everybody's thrilled about that. I introduced my husband Pat to Harvey.
Speaker 8:I think that is making progress. I introduced a very close friend, Sinking Zeb, to Harvey at GV. And so I think I'm like excited about this company. Right?
Speaker 2:Well, I'm I'm excited like you know twenty years from now for the email screenshots from you of like all you know all the AI winners being like, yeah, made that intro. I made that intro. Last last question I had and then we'll let you go. I know we're out of time. Were were you did you did you ever on intent intend on being a solo GP?
Speaker 2:You hired, you know, Mike. I think that got announced last year. I'm assuming you just had this, like, thirty year master plan to like build a real firm or or or something like that. But but how did you think about When
Speaker 1:are you IPO ing? I've heard Andreessen's going out. When can we expect to buy some shares?
Speaker 8:I I don't think we have the ambitions for selling equity carrier scale. Okay. So I I think I would be much more interested in how high the hit rate can be.
Speaker 1:That's great.
Speaker 8:And how high the multiple can be
Speaker 1:and how Classic VC.
Speaker 8:Are by our entrepreneurs. So master plan. No, kind of the opposite, right? I had a very strong instinct that I like wanted to do. I wanted to do early stage investing in a concentrated way and I believe in partnership.
Speaker 1:Yeah.
Speaker 8:And then also, like, I was in a big hurry to, like, get going. We launched in October of twenty twenty two. If you'd, like, seen research previews or played with AI or thought about it for a number. It was accelerating, And so I thought that there was a window to go figure out what was going on and try to be in great companies. And so I just figured it would be better to start figuring it out and and, like, date very slowly.
Speaker 8:Right? The idea that the perfect partners would be immediately available right when I was leaving Greylock seemed, like, unrealistic.
Speaker 2:Yeah.
Speaker 8:And it took me a year to convince Mike that he wanted to work 110%, and I'm super thrilled to be working with him.
Speaker 2:That's awesome. Amazing. Thank you so much for coming on.
Speaker 1:Was great to
Speaker 4:have you.
Speaker 1:Was fantastic conversation. We'll have to have you back soon.
Speaker 8:See you guys.
Speaker 2:Have a great day.
Speaker 1:See you.
Speaker 2:See you.
Speaker 1:Thanks a lot. Coming in next, we got Nick from Lightmatter. Gonna go deeper on
Speaker 2:Nick Lightmatter himself.
Speaker 1:In Interconnect. It's a very interesting company that raised a ton of money, all focused on how we can improve these huge gigascale AI training runs. It's a fascinating company, very deep tech, basically. He's gonna have to do a lot of explaining for us because I'm not up to speed on his technology, but I'm excited to talk to him. So, Nick, are you here?
Speaker 7:Yeah. I'm here. Good to meet you guys.
Speaker 1:Good to meet you too. How are doing today?
Speaker 7:Doing great. Yeah. We just had a big launch event yesterday sharing our products and excited to chat and tell you guys what we do.
Speaker 1:Yeah. Yeah. Yeah. Why don't just start with a break breakdown of, yourself, your company, and what you announced yesterday?
Speaker 7:Yeah. I'm Nick. I'm cofounder, CEO of Lightmatter. Been building the company for about eight years now.
Speaker 4:Mhmm.
Speaker 7:We're based in California in Mountain View. And, you know, we're about eight years old, spin out of MIT. Mhmm. And we're looking at the future of computing.
Speaker 6:Mhmm.
Speaker 7:So our goal is to continue to make progress on the cost of computation, the scale of computation, and the energy efficiency in a time when computer chips are no longer making progress. You know, really, principally, the only way that chips get better these days is by if I wanna double the performance, I double the number of computer chips inside a package. And so you're seeing over the past ten years, these chips getting absolutely massive. Yeah. And then the next challenge is around how do you link them together, especially in the context of training these large language models for AI and that sort of thing.
Speaker 7:And and that's what we do is we build these optical links between GPUs to power foundation model training and and that sort of thing.
Speaker 1:So how does that interface with the rest of the products in the market? I mean, NVIDIA is known for NVLink. I used to have two, thirty ninety graphics cards that were kind of linked together over the PCI slots. Like, I imagine it's much more complicated on your side, but can you give us a little a couple more concrete examples of, like, how this rolls out, what the timelines are for this type of thing, what kind of performance gains we can expect to see?
Speaker 7:Yeah. So right now, in terms of timelines, chips are coming out this year. We've got big semiconductor partners that Mhmm. Will be releasing products this year based on our technology passage. And the way passage works is it's a silicon photonics engine.
Speaker 7:Mhmm. So it leverages all the semiconductor manufacturing supply chain that's used to build all modern chips today. So it's built in these big semi fabs. You hear about companies like TSMC, GlobalFoundries. That's where we build the stuff.
Speaker 7:And what we do is we three d stack GPUs and switches, these really, like, heavy data center AI products on top of our photonic wafer. And then you cut out the die size that you want, attach optical fibers, and now you can wire up these massive AI data centers. You know, you're hearing about x AI with a hundred thousand GPUs. Yeah. You know, Elon and team deployed that thing in, what was it, thirty days or something like that.
Speaker 7:Yeah.
Speaker 1:It's insane.
Speaker 7:Which is breakneck speed. We are the wires, the photonic links that connect up these massive data centers.
Speaker 1:Yeah. And the speed ups
Speaker 7:are are enormous. So we just announced yesterday a 14,000,000,000,000 bits per second. State of the art is about 1,600,000,000,000 bits per second. So about a hundred x.
Speaker 1:Wow. So There you go. Obviously, there's a lot of trade offs here. I imagine that you're yes. Thank you.
Speaker 1:The the Gong goes off when we hear a big number. I I imagine that there are trade offs probably at the early stage cost, but, are we just talking about speed, or is there also a a heat component that's important to to think about? I know heat dissipation is super important on these big, training runs.
Speaker 7:Yeah. I mean, on the heat point, so something to notice, like, at a global scale, we're building data centers. Humanity is building data centers that use as much power as the biggest cities on the planet. So five gigawatt data centers. New York City is 7.5 gigawatts.
Speaker 7:LA is 2.5 gigawatts.
Speaker 1:Yeah.
Speaker 7:So if you were to look at planet Earth through a thermal imager, the brightest objects you would see would be the mega cities, the deserts
Speaker 1:Yep.
Speaker 7:Under, sunlight, volcanoes, and these new data centers.
Speaker 1:Fascinating.
Speaker 7:That's the scale of of what's being built. Yeah. The real task at this point is how do you wire them up? How do you continue to drive performance and build bigger monolithic computers to train these AI models?
Speaker 2:Got it. How did you process the sort of deep seek moment? It feels like a decade ago at this point. Does. But it it it, you know, the narrative was that they had GPU constraints and so they found more ways to be efficient.
Speaker 2:Do you think the American vent, you know, sort of like tech world just hasn't cared enough about efficiency to date because it's all been about speed and we sort of haven't had that much capital constraints just because of how much investment is sort of pouring into the category. But I'm I'm, you know, sort of broadly curious how how you and the and the team processed it.
Speaker 7:Yeah. On the deep sea side, you know, what people are thinking is that you don't need as big of AI clusters to build a frontier quality model. And they had some innovations in how they train the model, and and some people suspect that a lot of that came from using existing LLMs to build the new model. Yeah. And that's not novel.
Speaker 7:Think about how we design computer chips. Like, the CPU today was designed using the previous CPU, and you're stacking up this ladder. That's how exponentials work. Yeah. So to me, it's like, yes.
Speaker 7:Obviously, that would that would happen. Yeah. I don't think it's really slowed things down. And I think that reasoning models are gonna require an enormous amount of computation, Yeah. And they require lots of links, like the kinds of photonic links that we build, so that you can take these models have you ever tried deep research?
Speaker 7:It's like twelve minutes to get the result back. Yeah. What if you could get it back in one minute? And what if the energy cost on communications was one fifth? That's what we enable.
Speaker 1:Can you talk about a a few of the other paradigms for fighting with Moore's Law and improving the speed of these models and inference? I've you know, there's ETCHED, which is baking the transformer architecture down into silicon. There's you know, if you look at the history of Bitcoin, they went from CPU to GPU to FPGA to ASIC. Are you, excited about in, data interchange in a world where, you know, the the latest and greatest DALL E three or four model is baked down into silicon into an ASIC. Is that still valuable?
Speaker 7:Well, the past thirty years have been a million x improvement in operations per second for GPUs and for ASICs. A million x in thirty years. Interconnect is only approved by about a thousand x.
Speaker 1:Oh, wow.
Speaker 7:Today, Interconnect is the bottleneck. Yeah. And the next thousand x in performance for AI training and AI inference will come from Interconnect. And that's fundamentally what we innovate on. So so that's the thing that we're excited about.
Speaker 7:I think if you look at ASICs, it's a spectrum. You start out with a GPU, which is relatively general purpose, and then you go to an ASIC that's like, okay. I'm gonna target AI training or AI inference. When you talk about etch, that's saying, like, let's go even further
Speaker 1:Yeah.
Speaker 2:All the
Speaker 1:way to
Speaker 7:the bottom. I'm gonna bake one model into this thing. Yeah. And, of course, you should be able to get efficiency gains that way. But these are architectural tricks.
Speaker 7:Sure. You could have built that computer thirty years ago if you wanted to. So it's a one off, sort of hit. Yeah. What you really need are new scaling laws.
Speaker 7:And at Lightmatter, we're focused on the fundamentals. Like, how do you make compute faster and more efficient? Are there new ways to do compute? How do you make the interconnect fast and more efficient? We need new scaling laws.
Speaker 1:Got it. I I I don't know if you've been following George Hots' journey with AMD, but some of the Foundation Model Labs and the folks who are working on these big AI AI models have been kind of banging the table saying, like, the cost per flop should be better with these other chip manufacturers, and yet I'm locked into NVIDIA's ecosystem effectively because of bugs and just go fix the do you have any pushback that you have to overcome when you're pitching a somebody who's building a big cluster to say, hey. Slotting us in is not going to create any extra overhead on your software engineering team?
Speaker 7:Yeah. That's, you know, that's one of the exciting things. We're not building processors. We're building the interconnects that link them together. It requires no change to any software, and thank god for that.
Speaker 1:That's amazing.
Speaker 7:There's there's no lift. Yeah. And the TAM for this thing is absolutely massive. 300,000,000,000 a year spend on AI hardware. Yep.
Speaker 7:About 30%, twenty five to 30 is networking, and that's where we play. So it's an enormous market that requires no software change. You can run CUDA, whatever you want. It's all fine. So
Speaker 1:what are the major hurdles or or, like, next milestones for you in terms of scaling up? Do we need new machines? Do we need new machines that make the machines? Is it just are you are you demand constrained, supply constrained? How are you thinking about the next roadblocks in the business?
Speaker 7:So I would say that the the ramps are happening now in terms of volumes. So this technology, silicon photonics attached to GPUs, attached to switches, it's happening now. You're gonna see a rollout in '26. Mhmm. Twenty seven, some of these big data centers are gonna be using it.
Speaker 7:Mhmm. And the trick will be, can we make sure that the supply chain can handle it if everybody comes online at the same time? Right now, I don't think that that's possible, but I think you could handle at least half of the world demand. There's about 14,000,000 GPUs or XPUs that are shipping per year. I think you could get at least half of that.
Speaker 7:And, you know, it's not too hard to imagine building out the capacity to get the rest of the way. But the tech's been ready for prime prime time, you know, for a couple years now, with us, and it's been an eight year journey. So it's not exactly overnight. We've been working on, you know, all the problems on every front for quite a while.
Speaker 1:How You're we're still gonna call you an overnight success when you Yeah. And finally, you know, deliver some massive quarter. We're gonna say, oh, yeah. Do you know? It just happened all of a sudden.
Speaker 4:Because we
Speaker 1:love we love overnight successes.
Speaker 2:How skeptical are you when you see new seed stage anything on the the hardware side of AI? People love to come out and sort of make these big promises, and then some companies actually can manage to get public just purely on big promises. How yeah. How like, do you think we need more founders coming in and starting to build at at the hardware level? Or is it just so hard that, you know, focus on the rappers and, you know Do
Speaker 1:we need, like, to start an activist short hedge fund? Because he seems like he knows the science here and can probably make some good calls, but I'm sure he's too nice to do any of that.
Speaker 7:Yeah. So I would say that the pitch early on so we started in 2017. That was the AI accelerator boom. You think about Graphcore, SambaNova, like, all of these companies, Cerebras, all coming out. Largely, that's been a really tough slog.
Speaker 7:Like, it hasn't really worked out. I wish those guys the best.
Speaker 1:Yeah.
Speaker 7:You know, you know, to be frank here, I wish them the best. But Of course. It's hard. The software moat around NVIDIA, the the adoption, the models are designed to fit on NVIDIA GPUs.
Speaker 4:Yeah.
Speaker 7:Like, that that is the moat. Like, everything is architected for NVIDIA. And so good luck bringing in something else. So the new pitch, the new, like, pitch for these guys is everyone did this wrong. I know what they did wrong.
Speaker 7:If you just do this, it's gonna be fine. But my fundamental issue with it is you're all using TSMC in the exact same node with the same packaging technology. You can't tell me you're gonna have some breakthrough. It's the exact same tech.
Speaker 1:That's fascinating. Well, good time to be in the compliments to NVIDIA, not in the Indique. Not in the substitutes business. I like your strategy. This was a fantastic conversation.
Speaker 1:I honestly, I didn't know about the business last week, but I'm super excited we got to talk to you, and we'd love to have you back. This was fantastic. Thank you so much.
Speaker 7:Awesome. Yeah. Happy to be on and and thank you guys.
Speaker 4:Yeah. Congrats
Speaker 1:on all the And and congratulations and we'll talk to
Speaker 2:you soon. Cheers.
Speaker 7:See you.
Speaker 2:Gears. Eight overnight success.
Speaker 1:An eight year overnight success. An absolute dog. We gotta we gotta hit the size gong again for all the big numbers we heard from that. Didn't understand most of them, but, liked his attitude in that. Size I love the size gong.
Speaker 1:Well, we got Roam Mortgage coming in the temple of technology in just a few minutes. Fascinating business. Heard about this, and the pitch made so much sense. You're locked in to a 2%, a 3% mortgage fixed. You wanna move.
Speaker 1:You feel chained to that specific house forever. That shouldn't be the way it is, you can move and and and and kinda keep your rate or sell your sell your mortgage. But I wanna hear it from the founder, so let's bring him in. How are doing?
Speaker 5:Hey, John and Jordy. Great to meet you guys.
Speaker 2:Great to meet you.
Speaker 5:By the way, if you're wondering, say my name like Ronnik. It's like ironic without the I.
Speaker 1:Ronk. Ronk. Okay. Great. Well, thanks so much.
Speaker 1:Would you mind I tried to give the pitch. I probably botched it. Would you mind giving me the pitch, for Rome just from the horse's mouth?
Speaker 5:Yeah. It's basically you can buy a home with a 2% rate. You know, the basic problem we're solving is that today, there's millions of sellers who are locked up at home because they have this two or 3% rate. They don't feel like there is a value or ability to be able to move. And 75,000,000 families in The US cannot afford a purchase because of how high rates are.
Speaker 5:So we help buyers wind back the clock and purchase the home with the seller's mortgage included.
Speaker 1:That's amazing. Is this a, a regulatory innovation or a technological innovation? Why didn't this exist a decade ago, or is it just a function of we didn't need it when rates were low?
Speaker 5:Yeah. So, actually, you know, these were very popular in nineteen eighty, eighty one when mortgage rates went from 2% to 15 to 17%. Mhmm. And at that time, all mortgages were assumable, actually. And since, you know, for other reasons, because the savings and loan crisis, we ended up regulating it such that all the other homes had to have their loan paid off
Speaker 1:Sure.
Speaker 5:When the home was sold so we could avoid, you know, everyone just purchasing a home with seller's mortgage. But what remained were these FHA and VA loans, so the government backed loans. And there were 1,500,000,000,000.0 of them, basically, if you think back to low rate years of '9 2020 and 2021 when everybody was getting a two or 3% mortgage that remained assumable. But the problem was nobody knew how to find them because no seller knows what type of loan they have. And if they know what type of loan they have, they don't think there's a marketing advantage to it.
Speaker 5:And even if Yeah. You know, by the grace of god, you could find one of these loans, it was impossible to transact on them because the banks made less money on it. So we thought we could build a platform that basically vertically integrated all the problems within that, you know, purchase process and give it to consumers as a simple tagline, buy a home with a 2% rate, come to Rome, and, you know, you can find all of the homes that are relevant.
Speaker 2:Yep. Yeah. So break down, I guess, what what like, the the obvious thing is just like for Rome to be, you know, truly, you know, widely just incredible. Right? You just need scale.
Speaker 2:Right? You need options. Right? When people go and they're looking at a specific some people wanna go down and, you know, I I have friends that wanna move to to where I live and like, they're trying to buy one of like a 60 homes and, like, 90% of them aren't on the market. Maybe some are for rent and some are for sale.
Speaker 2:So how do you think about just getting getting it it feels like it's a supply problem in terms of just getting the supply on. And then once you have the supply, then the demand is just obviously obviously there.
Speaker 5:Yeah. So we actually did something pretty scrappy. You know, I think had we waited for every seller to come on board, it's like any other marketplace issue. If you wait for all of the supply to come on board and opt in, then try to aggregate all the demand, it's gonna take, like, five years. You know?
Speaker 5:And by that point, consumers have lost interest. So what we did is we actually, in a pretty novel way, found every home in America and then every mortgage record in America and cross pollinated it. So we just loaded up all the supply on the site.
Speaker 1:We do amazing.
Speaker 5:I love it. I'm on board. So you solve the supply side because you can uniquely show all of those homes, and then you just hammer demand. And you're basically like, hey. Do you feel priced out?
Speaker 5:There's nothing wrong with that. All of us feel like we can't afford to purchase a home today. And there's a better way you can actually afford to do it, and it's credible and legitimate and trustworthy. And in cases where, you know, for instance, like, the banks wanted to drag their feet on closing some of these transactions, so, you know, we're like, let's just pay for it. Like, let's say that if it takes longer than forty five days to close, we'll pay for the seller's mortgage until it closes.
Speaker 5:So it's kind of a combination of using technology to find all of the homes that are relevant, taking advantage of some of the partnership stuff, and getting some of the mortgage lenders to come on board and see that there's value in this. Mhmm. And then also just, like, really pushing on the experience. You know? Like, I tell the team every day, like, if somebody doesn't wanna close one of these, I will personally call, and we will make sure that this gets cold closed.
Speaker 5:You know? It's like, we'll just razzle it.
Speaker 2:Do people ever realize that that they have an an assumable mortgage and then try to sell their house for more because they're like, look, your carrying your carrying cost is gonna be a lot lower. You should be able to
Speaker 1:It's the bond market.
Speaker 2:Pay more. Right? I know John has a very low low mortgage rate, and I was like he was like, know, if he ever moves, he could be like, well Pay me more. Yeah. Pay me more because with your carrying cost,
Speaker 1:it's gonna
Speaker 2:be lower.
Speaker 1:Be lower. Yeah. Yeah.
Speaker 4:Where does
Speaker 1:the value actually transfer or accrue?
Speaker 5:So, basically, an independent group of economists recently studied Rome, and it's always fun, you know, when you, like, start a company, You're like, okay. We have, like, these set of ideas on, like, what the sellers are gonna get, what the buyers are gonna get, and what's gonna happen. Mhmm. But, like, independently, a group of people who'd never even spoken to me studied Rome, and what they found was sellers get 5% more for their home sale when they sell their home with their low rate mortgage included. Buyers, $700 a month.
Speaker 5:And that if this option was widespread, it would remediate basically the lock in effect you see today.
Speaker 3:That's
Speaker 5:awesome. One of the reasons I got really excited about starting Roam was that I was at Opendoor before this, which is how I had a chance to work with Eric and Keith. And I just pulled 50,000 homeowners and asked them what's the interest rate on your mortgage, and what's your preference share for selling Opendoor? And, like, 90% of people who had a 7% mortgage were willing to do it. But if you had a 2% mortgage, you would only do it, like, 5% of the time.
Speaker 5:Wow. So I intuited there was, like, a large chasm, both emotional and functional, that they wouldn't be willing to cross, but somebody could give that optionality to them.
Speaker 1:That's cool. Can you take us through the news today? What are you announcing? How to come together? Give us the story.
Speaker 5:Yeah. So today, we announced that Keith and Kosla led an $11,500,000 round into Rome with Founders Fund. We actually had two investors, and the whole process happened in, a week, so it was really fast. But we're thrilled to continue working with Founderspawn and Cosla. You know, Founderspawn led the pre seed and the seed round, and it's been great to have a chance to work with Keith in all three investments that we've done.
Speaker 5:So pre seed, seed, and series a. Keith led all three rounds, and then he joined the board alongside Eric, who is the founder of Open Door in series a.
Speaker 1:And in terms of the use of those funds, I imagine it's almost entirely r and d. You're not putting up any capital for these mortgages or buying things. There's no it's a very asset light business. Right?
Speaker 5:Exactly. So we're not taking any capital risk. You know, still hold all my Opendoor shares RIP and, you know, saw some of the dynamics there. But basically, we help people without putting balance sheet risk on. We're like connecting all of the layers through the stack.
Speaker 5:So, yeah, no balance sheet risk in the business.
Speaker 1:That's great. What do do oh, sorry. Yep. Go.
Speaker 2:Do you just get frustrated that, you know, there's millions of people that are, you know, looking at Zillow all day long, and you're just like like I feel like the big problem in terms of scaling Rome is just like making people aware of it now. Like do you walk down the street and yell at people and just say like,
Speaker 1:by the way,
Speaker 2:have you heard about Rome? Like you can get a 3% mortgage. Like if I were you, I'd just be screaming it like on the street like a crazy person because it would probably be pretty effective marketing. But I but I'm curious like what are the next two years look like? This almost feels like, you know you know, with the series a, it would be not super practical to spend it entirely on a Super Bowl ad, but this almost feels like the kind of business that you could be doing this just sort of like mass, you know, at scale marketing and and and find results with that.
Speaker 5:Yeah. Exactly. I mean, I, you know, I like walking to a bar, the first thing I ask people is, like, do you wanna own a home? And then do you feel like you can afford a home? And, like, nine of 10 people wanna be able to own a home, but, like, one of 10 people feel like they can.
Speaker 5:So that's immediately, like, the opportunity to tell everyone about is, like, we can close that gap. And then we think about getting distribution in three ways, basically. So we tell sellers and listing agents who, like, actually have that inventory with an assumable loan that instead of advertising like everyone else, you got a cozy two bed, two bath garage in Decatur, Georgia. You need to leave with the fact that your home is differentiated compared to everyone else because it comes with a 2% rate. That's why somebody's gonna buy it.
Speaker 5:You know? It's because it's not a rate that they can afford. And for buyers, it's, as you mentioned, more mass market, just getting the word out there through media as well as through some now we're trying a few paid channels, but telling people that they can actually afford a home with the 2% rate. And then we're actually getting, like, some other partners, you know, like mortgage servicers and agents to distribute the product for us to their clients because I see there's value in it now too. So so a lot of the distribution, you know, we had found signs up early on, but now we're diversifying that and bringing out really what's gonna be super repeatable as we look to get to, like, you know, massive scale.
Speaker 1:Sorry. I'm not distracted. I'm just shopping on Rome right now. There's some absolutely banger mortgages available here. I'm seeing some potential future.
Speaker 1:Yeah. Yeah. Yeah. I'm like No. It's amazing.
Speaker 2:It's amazing. Honestly, I think people what you need to tap into is people's addictive behavior around Zillow.
Speaker 1:Oh, yeah. Totally.
Speaker 2:And you just need to convert that to because the dopamine of seeing like, I see a house that's
Speaker 1:it's it's Seeing a number that's like, oh, $2 a month or $3 a month. Yeah. It's like, oh, that's like completely the sting shot
Speaker 2:goes So seeing a house that is almost three times as expensive as my house within a half mile, but the mortgage is only like 60% more.
Speaker 1:Yeah.
Speaker 2:And it's like that is like the dopamine rush for a user to be that sort of like basically take the magic of like look home shopping and then you just make everything like, you know, whatever whatever the average is 30% cheaper from a carrying cost standpoint because that's what ultimately drives affordability for most people.
Speaker 5:That's why we have this right through visualization everything on Rome because Yeah. You know, we didn't even need to make a map if Zillow would have done this. If you go to Zillow and you search for, like, don't know, like, a city like Houston and you go in keyword search because that's how you'd have to find it, and you just look for sellers who are advertising a Sumo loan, You'll find, like, literally two results. And then if you come to Rome and search in Houston, you'll find 2,000 results. And it's because sellers don't know they have it, and Zillow is basically just feeding what the MLS gives them, which is, like, you know, an uninformed perspective into it.
Speaker 5:And, you know, when we raised the capital too, we had some investors ask, like, oh, what happens if Zillow doesn't? I'd be like, great. You know? Like, now everyone knows. Put a button on there that says buy this home with their own and cut your monthly payment in half.
Speaker 5:So it becomes, like, a firm for home buying Oh, interesting. Button on every listing card in The US to help you cut your monthly payments in half.
Speaker 1:Yeah. That's very cool. I mean, speaking of customer acquisition, like, what is working, and what do you think the next year of customer acquisition will look like?
Speaker 5:Yeah. So right now, what's really worked super well, you know, pre seed, seed, series a, like
Speaker 1:Yeah.
Speaker 5:When we did the pre seed, you know, and we're like, okay. Like, is this a real problem? Like, let's announce it. It was like the front page of The Wall Street Journal, you know, which, like, blew me away. It's amazing.
Speaker 5:That's not because of me or anything that I've done. Like, nobody even knows who I am. It's mostly about, like, the fact that it resonates with so many people that they feel like they can't afford to buy a home. And so we saw that continue for, like, the last eighteen months, basically, that there's just, you know, quarter million buyers that come to the site, and we didn't pay for any of them.
Speaker 1:Yeah.
Speaker 5:And they're just, like, looking to be able to buy a home. Now it's like, okay. How do you really deepen that penetration and get to work within each of the local markets? And so now we're finding ways to work with agents, which, like, for listing agents, hey. Let's help you win more sellers because you can actually show them why you can get them to move, kind of relating to that study I've done at Opendoor.
Speaker 5:And for buyer's agents, it's like, hey. You got, like, 10,000 contacts in your CRM that basically said, no. I'm not interested because insurance is high. Taxes are high. Prices are high.
Speaker 5:Rates are high. Go and reengage all of them. Be like, hey. If I got you in a home with a 2% rate, you might find that you don't get qualified for 325 k, but now you get qualified for 475 k. So maybe that makes you interested in buying a home now.
Speaker 5:So have
Speaker 2:you seen have you seen investors using Roam to buy homes with the intention of just leasing them out? Because like I imagine, you know, I'm just like scanning the marketplace around LA. There's rental units that I'm, you know or I'm I'm seeing like three bedrooms that are whatever for like $4. And I'm like, I know where that is. It's probably like a $7.08 k a month rental.
Speaker 2:And if you're an investor looking at this, I don't do anything in real estate. I prefer highly liquid private shares in my friend's company. But there are lot of opportunity, I imagine, just like in in kind of like, you know, potentially alpha on on Rome.
Speaker 5:Yeah. Totally. So we actually launched a page just for that. I think if you go to the homepage, there's a tab called investors. So it shows you all of the homes that have an underlying VA loan.
Speaker 5:Those don't require primary residency. And so any investor can purchase that. You can put in the cash, and you can take over that loan and, you know, go on to lease it out. So we facilitate those all the time. And most people don't even know that's possible.
Speaker 5:You know? There's so much misinformation about this stuff. Because if you think about it, nobody's really incentivized for it to succeed. Most people are incentivized to originate new mortgages at seven percent, not, like, recycle the cash to purchase your friend's mortgage at 2%.
Speaker 1:Yeah. That makes a lot of sense.
Speaker 2:That makes ton of sense. It's very exciting.
Speaker 1:Well, now we know you. We know how to pronounce your name and we yeah. We really appreciate you stopping by. This was fantastic. And congratulations on the series a.
Speaker 1:Congratulations on
Speaker 2:all the Stack lineup too on
Speaker 1:the round. What size is going for you. So enjoy it.
Speaker 5:I appreciate that, guys. And then if there's anyone listening who is interested, I think of it as, like, the Manhattan project for housing affordability. Yeah. We're actively hiring. This is gonna be the most important and, I think, only solution to affordability in the next five years.
Speaker 1:Fantastic.
Speaker 5:The politicians talk about, like, oh, we'll increase permits or something like that. That's just not gonna take impact till, like, 2035.
Speaker 4:Sure. If wanna
Speaker 5:contribute to making it more affordable today, email me. I respond to every single email. I'm ronak@withroam.com, r a u n a q at with roam dot com.
Speaker 2:So Amazing.
Speaker 1:Thanks for coming on.
Speaker 2:Fantastic domain too. Hit this yeah. Yeah. Oh, with with roam. Sorry.
Speaker 2:Hopefully, you're getting roam.com soon. Soon. Soon.
Speaker 1:That's series b money. Yeah. But we will have you back as soon as the series b drops and anytime there's housing news, we'd love to chat with you about it. Have a great rest of your day. Thanks so much for stopping by.
Speaker 2:Great to meet.
Speaker 1:We'll talk to you soon.
Speaker 2:See you.
Speaker 1:Bye. Well, know, if you're looking for a new house and you're roaming around, you're trying to see if you want to live in a community, go on wander. Find your happy place. Test it out, rent a luxury home, and then get on Rome and buy a house next door. Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning in twenty four seven years.
Speaker 2:What do we say about wander?
Speaker 1:We say find your happy place. Find your happy place. And we also We're
Speaker 2:getting better every day at that.
Speaker 1:Yeah. We are. We're getting good. Well, let's go through some news and some, some timeline. This is an exciting story.
Speaker 1:So the cofounder of Robinhood has started a company called Aetherflux Aetherflux, and Chad Byers was posting about it. Baiju cofounded Robinhood and helped scale it to a $40,000,000,000 company today. He's back with a new company to help deliver energy from space. Excited to be a small angel to work on space lasers. So they're putting solar panels in space as I understand it.
Speaker 1:I I I had, I got, like, a pizza with him, like, a long time ago. I think he'd be able to come on the show in a few days. And and and I think they're putting solar panels in space and then beaming the energy down with lasers to a receptacle that that takes the energy, and it's all very sci fi and futuristic. But I'm I'm excited to hear how he built out that model because that feels like something that lives and dies by the spreadsheet of, like, what are launch costs? What do the cost of the solar panels cost?
Speaker 2:Totally.
Speaker 1:And if you play it out, there's a bunch of controversial things about, like, are we gonna black out the sun? Like, will we be able to see the sky? There's there's space trash, space junk questions. There's also a ton of hard tech engineering stuff. We've talked to Delli and a bunch about how hard it is to actually manufacture something, get in get it into orbit quickly.
Speaker 1:And so lots of challenges, but I love that he made a bunch of money in finance and then is taking it into hard tech. This is what we saw with Elon. This is what we saw with a lot of folks who had a This is what
Speaker 2:everybody says. Yeah. Say I'm gonna I'm gonna I'm gonna get the bag, and then I'm gonna change the world.
Speaker 1:And he's
Speaker 2:doing it. A few actually
Speaker 1:And he's doing it. So there. So Yeah. Happy to support, and I'm sure we're gonna see a lot more from his company in the near future.
Speaker 2:I wanted to cover the Circle IPO Oh, filing. They filed their s one yesterday. We have a post from Omar who I believe is over at Dragonfly. He says nothing to love in the Circle IPO filing and no idea how it prices at 5,000,000,000.
Speaker 1:Mhmm.
Speaker 2:Gross margins getting crushed with distribution costs. For those that don't know, Circle pays Coinbase as an example a lot to effectively distribute the stable coin. Omar says core US market being deregulated and banks and financial institutions about to crash the private party, spending over 250 year in compensation, another another hundred and 40,000,000 in GNA. Core income driver, which is rates already topped and heading lower, 90% chance of two cuts this year. And it were they're pricing it at 32 times 24 earnings for a business that just lost its mini monopoly and facing several headwinds.
Speaker 2:And it's expensive when growth is structurally challenged. TLDR feels like a Hail Mary for some liquidity before the squad rolls in.
Speaker 1:Who is the squad in this case?
Speaker 2:Oh, it's just all the banks and other financial institutions that will launch their own equally stablecoin.
Speaker 1:Sure. Sure. Yeah. That makes sense. I heard a take from a crypto investor I was texting with.
Speaker 1:She said, you know, there's no real crazy take here, but it's the first, stablecoin IPO, which is just a cool way for public markets to have a clearer way to be long stablecoins generally. And so that's a product that really hasn't existed prior. You had to go in the private markets and invest in something like Bridge, which Sequoia did, or you had to go on chain and do all this more manual stuff and get some, like, leverage and do all these crazy DeFi things. And now you'll just be able to buy it on public.com.
Speaker 2:So if you are invested in Circle and waiting for the IPO and you're stressed out, what kind of bed should you sleep?
Speaker 1:I mean, sleep for sure.
Speaker 2:Absolutely. No
Speaker 1:doubt. Go to 8sleep.com.
Speaker 2:Best days. PM. How'd you do last night?
Speaker 1:I think I did poorly because I woke up so early because the rippling deal spy news. We had to get up early to talk about that story, dig in. Let me see how I did. I imagine I'm a little low on total time. I was right.
Speaker 1:I got a 79. I was asleep for six hours and thirty one minutes. What'd you do?
Speaker 2:We were we were scooping
Speaker 1:Yeah.
Speaker 2:In our defense.
Speaker 1:What'd you do?
Speaker 2:I I did a 97.
Speaker 1:90 seven. That's great.
Speaker 2:Bales in comparison to a friend of mine and listener of the show, Bailey. Bailey Barrow put up a hundred last night.
Speaker 1:Oh, congratulations. To Bailey.
Speaker 2:Congratulations to Bailey. Give him a
Speaker 1:little gong for that.
Speaker 2:A little gong moment. But go to eatsleep.com/tbpn Yeah. And get yourself a pod. You will not regret it, and your body will thank you. Who else
Speaker 1:we can talk about? Oh, big news from Patrick O'Shaughnessy. He's launching issue number two of Colossus Review. We we did a whole deep dive on the first edition of Colossus Review. It was a fantastic, interview and and, really a lot of content in that magazine.
Speaker 1:Not not light on content at all. Great layout. It will be free for everyone online that the print is magic. You gotta get the print edition.
Speaker 2:A good strategy, by the
Speaker 1:way. And I feel like one of my friends had, his parents had a subscription to natural National Geographic since, like, the eighties or something. And so he has a collection of every single magazine of National Geographic. And so when you go over to his house, he'll kinda say, oh, like, what month and year were you born in? You'll pull out the National Geographic from that year, you can kinda see what's going on in the world at that time.
Speaker 1:It's kind of a fun, like, party trick. And it's not every day that you get a chance to actually say, okay, I think this will be I think Colossus Review will be around for a long time. If I order the first one and then stay subscribed forever, I could wind up with a library full of these things and actually have a complete collection. And I'm not saying that that's gonna be like wildly valuable. It'll just a cool artifact to put in your library one day.
Speaker 2:And a way to understand
Speaker 1:Yeah.
Speaker 2:History from the lens of Patrick himself. I'm I'm just excited this be about this
Speaker 1:Because the topic.
Speaker 2:Yeah. Because the topic. Green Oaks is is one of those firms that is intentionally
Speaker 1:Goated. Under
Speaker 2:the you know, there there there are many ways under the radar. You don't see them on the timeline a lot, but then every time there's a, you know, $10,000,000,000 plus exit, it's like they're they're way in there.
Speaker 1:Snuck in.
Speaker 2:Very excited.
Speaker 1:Yeah. So they're covering Neil Mehta and Green Oaks. It's written by Jeremy Stern, and you really won't wanna miss it. So check back tomorrow to get a copy of Colossus Review.
Speaker 2:Can't wait. I mean,
Speaker 1:I think Colossus Review, I'm I'm I'm super bullish, super long. I wish you know, Patrick obviously posts about it and he talks about it on his show, but I think he should buy some billboards. And I think he should go to adquick.com and I think he should make, you
Speaker 2:know Put Neil put Neil on the one zero one.
Speaker 1:Yes. 100%.
Speaker 2:I'm sure he would love that.
Speaker 1:I'm sure. Yeah. I'm sure Greenhex would love that. I mean, Adquick would allow Patrick to tackle out of home advertising in an easy and measurable way. Yeah.
Speaker 1:You know, Patrick and Colossus, they'd be able to say goodbye to the headaches of out of home advertising because only AdQuick combines technology out of home
Speaker 2:expertise
Speaker 1:and data to enable efficient seamless ad buying across the globe. So it's it's kind a no brainer for Patrick. It's a no text him. Let him know. Should we go over to this this fun story that people were generating AI generated receipts trying to fool the expense management softwares.
Speaker 1:Ramps on the case. They solved it within within twenty four hours. Within twenty four hours. Eric Lyman posts spec to design and widely shipped to production in under twenty four hours by Will Yee and the applied AI team at Ramp. They, and he shares the Michael Jordan meme of I took that personally.
Speaker 1:ChatGPT's new image generator is really good at faking receipts. Well, you're gonna have to try harder
Speaker 2:Good luck.
Speaker 1:To sneak it by your ramp expense policy because ramp's on the case.
Speaker 2:What what's the scenario where somebody's generating a fake receipt? They didn't catch a picture of the receipt.
Speaker 1:No. No. No. I I think it would be you your your, you know, your boss says, hey. Yes.
Speaker 1:You can go and take people out, but you can't get a bunch of drinks. And so you go and you say, yeah. We were at the we we we went to this restaurant and we bought salads and we weren't buying liquor, basically. Something like
Speaker 6:that.
Speaker 2:That is wrong.
Speaker 1:You know, could change that.
Speaker 2:No power lunches.
Speaker 1:Because you're not gonna be able to change the name of the swipe on the credit card, but you could fake the the items that you purchased. So you could say Yeah. Yeah. Went to Best Buy, boss. I got a new office chair, but really you got an iPad and you, like, sold it or something like that.
Speaker 1:So, like, that type of fraud, I think, is what not not to give you any ideas, but that
Speaker 2:that's the type of fraud
Speaker 1:you wanna And that's the reason why why why Ramp, like, is all built around, like, take a picture of your of your receipt so you know actually what people are are are buying on the corporate cards. Yep. Anyway, speaking of ramp, to ramp.com.
Speaker 2:I'm to say A lot of people say, oh, Wander's where you find your happy place. But when it comes to corporate cards, expense management and bill pay, ramp is where I find my happy place.
Speaker 1:Yeah. Every day. Use corporate cards, bill payments, accounting and a whole lot more all in one place. What else would be good to go to before we wrap it up? We got
Speaker 2:I liked I liked to round it out Yeah. Chris Backy's Oh, yeah. Post on Summary. Quote, he said, the plan, you're James Bond, but it's at a global payroll company and you only get €5,000 a month. And when you get caught, you'll lock yourself in the bathrooms and delete your LinkedIn account And immediately phone with an axe and immediately confess and join the It's a great summer.
Speaker 2:Join the, you know, the enemy.
Speaker 1:It's such a bizarre story. It's really entertaining. It's the truth is stranger than fiction. You can't really can't write this.
Speaker 2:It is.
Speaker 1:The new the new season of Silicon Valley. Everyone What a
Speaker 2:wild day.
Speaker 1:But yeah. And yeah. Thank you to all the sponsors. The show's been really fun. Go to public.cominvesting for those who take it seriously.
Speaker 1:And check out Polymarket, Adquick, Eight Sleep, Wander, Bezel, Numeral. All of our sponsors were
Speaker 2:Do it all.
Speaker 1:To them. Do it all in total.
Speaker 2:We gotta get a new so I was looking on Polymarket. There's a lot of stuff on who will acquire TikTok. Apparently, Applovin and Amazon emerge as TikTok bidders ahead of the deadline. So right now, Perplexity, Larry Ellison, Oracle, etcetera. I don't know if Applovin, I don't think is even listed or or people.
Speaker 2:Yeah. We're not seeing it up there. So we're gonna get this update or we're gonna get this market updated because Applovin is in the race. And last I checked, I'm gonna look on public. Apple oven actually had the market cap to potentially absorb something like this.
Speaker 2:And they have, you know, the ad Also,
Speaker 1:I mean, the last thing we should cover today because it is news today. The tariff announcement did happen. Trump gave the speech at the Rose Garden for Liberation Day, and the result is that, The US will impose 10% tariffs on all imports and even higher rates for some nations. The president opened his remarks Wednesday by saying new tariff policies would make America wealthy again. He said he would be announcing reciprocal tariffs on countries across the world.
Speaker 1:It can't get any simpler than that. You tariff us, we tariff you. Later, Trump held up a chart with a list of countries saying it was too windy to put on an easel, which is kinda funny. There's a funny image going around. He began to read off the list with tariffs of the countries imposed on The United States, and then the tariff he said The US would levy in response.
Speaker 1:He said that The US was going to be charging a discounted reciprocal tariff because The US is kind. For China, The US is levying a 34% tariff. Then for Europe, we're gonna charge them 20%. Japan, twenty four %.
Speaker 2:It is going down 1% tariff on Switzerland, meaning that the price if of your existing watches just went Oh, yeah. Up.
Speaker 1:And in general, the market seems to like it. The Dow Jones is up half a percent. The S and P five hundred is up point six, and the Nasdaq is up point 8% today. And so not a not a bloodbath in the markets. People were expecting some stuff.
Speaker 1:They got some stuff. They got some ex they met their expectations. And so things move forward. The march of capitalism marches on.
Speaker 2:We should have Joe on tomorrow. Sure. It'd be fun. I don't know if we have time.
Speaker 1:Oh
Speaker 2:yeah. Stack lineup tomorrow. It'd great. One of the top posters in the world. But wait, we gotta give away.
Speaker 2:We gotta so we're let's give away the Dom tomorrow. Sure. I realize we didn't prep and and pull all the
Speaker 1:Of course. Reviews and everything. But Yes. Do the Dom giveaway tomorrow. We are we are giving instead of instead of drinking a bottle of Dom We regifting a bottle of Dom Perignon.
Speaker 1:And so leave us Thank you to so a review on Apple Podcasts or Spotify. Send us a screenshot of your review, and you'll be entered to win this wonderful bottle of Dom Perignon. It is a, 2015 vintage if you care. But we think it all tastes pretty good.
Speaker 2:Everybody cares.
Speaker 1:Thank you, folks. Thanks for watching.
Speaker 2:Excited for tomorrow. Have a great rest of your Wednesday.
Speaker 1:Bye.