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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11โ2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as โSilicon Valleyโs newest obsession,โ TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN.
Speaker 2:Today's Friday, May 29. We are live from TBPN Ultraland, the temple of technology, the fortunes of finance
Speaker 1:The capital of capital.
Speaker 2:Let's go. Hey, Brad.
Speaker 1:It feels great. Folks, we missed you Wednesday.
Speaker 2:We missed you Thursday, but we're back. It's Friday. We have a great show. We have a banger line up. John Gruber from Daring Fireball is coming.
Speaker 1:The Grubernator. We have a
Speaker 2:lightning round with a bunch of exciting fundraisers. Then Kyle Kuzma, the NBA champion and entrepreneur is coming on. And Brad Gerstner from Altimeter, the Gersonator, coming on the show. Very excited for that. Bunch of stories.
Speaker 2:We're gonna go through mostly the stories that have just broken in the last twenty four hours. The first is this insane video from Blue Origin. Very, very disappointing to see. Blue Origin's New Glenn rocket just blew up at LC landing LC 36 while attempting to static fire ahead of NG four. We can watch this video because it is absolutely insane.
Speaker 1:Looks like a Nuclear bomb went off.
Speaker 2:It looks like a like like the scene from Oppenheimer. It looks like Christopher Nolan movie. This is absolutely remarkable. Everyday Astronaut says, oh my god, that was a very big one. I hate to see setbacks in progress.
Speaker 2:This is not good. That has to be extremely, extremely frustrating. Brent and Gruber broke down a little bit of the back and forth on this particular rocket initiative. Jeff Bezos' rocket company suffered a catastrophic failure last night when his New Glenn rocket, a reusable heavy lift orbital spacecraft, designed to compete with SpaceX's Falcon Heavy. And we were talking about this in the backdrop of the the SpaceX IPO and I heard Brad Gerstner talking about this on CNBC.
Speaker 2:Think someone was playing a Gerstner interview in the studio today. And he was saying, the launch business is fantastic, but it's not enough without Starlink, which is a fantastic business. But that's not enough without the AI business, which is a fantastic business and growing. Yeah. And so to just have a launch business and then have a setback like this has got to be extremely frustrating if you're competing with a company that's going to raise $80,000,000,000 I forget how much SpaceX is actually gonna raise, but they're gonna raise a lot of money.
Speaker 2:They're gonna have a lot of capital to deploy in their march towards ever more frequent and and, you know, ever
Speaker 1:more frequent. Especially painful. Know, blue origin started before SpaceX. Yeah. We talked about this before.
Speaker 2:That's been hard.
Speaker 1:And, yeah, unclear unclear how much Yeah. This will set them back.
Speaker 3:But certainly
Speaker 1:disappointing.
Speaker 2:So the good news is that no one was hurt, which is incredible because you see the rocket. It looks like it's surrounded by a city. It looks like there's buildings around. And to see that much destruction with no one injured at all is a miracle and I'm so happy to hear that. Jeff Bezos tweeted, Very rough day.
Speaker 2:We'll rebuild whatever needs rebuilding and get back to flying. It's worth it. And Elon chimed in with some words of encouragement. Space is hard. A lot of folks were sending their encouragement because I think even if you're a SpaceX Maxi, it's it is very exciting for America to have multiple heavy launch capability providers in the market.
Speaker 2:It's good. It was very exciting when New Glenn got to orbit, came back. That was the second time that that sort of rocket technology had been demoed. And it was demoed in America, sort of even our second best rocket provider is better than everyone else around the globe. What else do have, Tyler?
Speaker 4:Yeah. Just some added context. This was the fourth test.
Speaker 1:Nice, Tyler.
Speaker 4:Or this was prepping for the fourth test. Yeah. In the third test, if you remember, this is when the rocket kind of correctly went up but then deployed an AST s
Speaker 2:satellite in the wrong orbit.
Speaker 1:But was New Glenn?
Speaker 4:That was yeah. That was the third test.
Speaker 2:That was pretty recent. So they're on a pretty good cadence here. Yeah. But this is still a huge setback.
Speaker 1:Yeah. And the AST is down 16% today.
Speaker 2:Because of this, most likely. Interesting. Interesting. So Elon Musk lent his support tweeting, most unfortunate rockets are hard. That's an understatement.
Speaker 2:A lot of people were saying like, if you think software engineering is hard, you could have been a rocket scientist. It is, after all, rocket science. The explosion caused extreme structural damage to its only functional launch pad, while Blue Origin has successfully reached base a number of times with other vehicles. New Glenn has had just one successful flight out of three attempted tries. From 2006 to 2008, Elon Musk had three consecutive failures with Falcon one before successfully launching it.
Speaker 2:And so failure is a natural state of these pursuits, but never fun to watch it happen. There were some people that were syncing up the different angles. We can look at Sawyer Merits. Oh, did he delete that one? There there were some different angles on this that were absolutely crazy to see.
Speaker 2:Yeah.
Speaker 1:This one from Truthful.
Speaker 2:Truthful. This is the one that you wanna see. Let's pull this up.
Speaker 4:Yeah.
Speaker 2:Is the Amazing footage from a local. This literally looks like a nuke went off. So scary. Yeah. Vertical footage.
Speaker 2:Absolutely crazy. Amazing footage from a local.
Speaker 1:I wonder what the reaction is from the people.
Speaker 2:Wow. That's really far away.
Speaker 1:It's far away, but it's also a pretty big mushroom cloud. Yeah. I imagine maybe they walk to their cars.
Speaker 2:Yeah. Saw some people say saying like, I don't wanna hear about my carbon footprint ever again because this seems like an immensely disastrous explosion.
Speaker 1:Other people were saying Bezos did Roman's rocket launch from Succession IRL. If you remember this scene, we can pull it up. Yeah. You haven't seen Succession.
Speaker 2:I've seen the Her season. I haven't seen the full thing.
Speaker 1:But he has a pet project.
Speaker 2:He does.
Speaker 1:Yeah. Okay. And it blows up.
Speaker 2:It blows up. That's certainly dramatic. I feel like that makes for good good TV.
Speaker 1:Yeah. We were Right before the show started, were talking the about the nominative determinism of Blue Origin. John said it blew up. Ba bum. But Or or, you know, blue as in sort of sad.
Speaker 1:Feeling blue. Sad.
Speaker 2:Yeah.
Speaker 1:Sad start. But They will be back. They will be back.
Speaker 2:So OSINT Defender says daylight reveals the extent of damage caused to Launch Complex 36 in the surrounding area of Cape Canaveral's Space Force Station in Florida following last night's massive explosion at Blue Origin, New Glenn during a static fire test. And there was a static fire test that went poorly at Starbase and they had a similar explosion. And people were regarding that as like a major setback. And maybe it was, but at the same time, we saw a very successful launch of Starship just a week or two ago. Yeah.
Speaker 2:And so This looks
Speaker 1:way better than I would have thought.
Speaker 2:Yeah. I agree. It looked like total destruction. Was expecting a crater in the ground.
Speaker 1:Yeah. So you can see here clearly
Speaker 2:Yeah.
Speaker 5:A lot
Speaker 1:of damage
Speaker 2:Not good.
Speaker 1:Right around the pad, but there's plenty of other infrastructure
Speaker 2:That seems to be still standing and so you you should in theory be able to rebuild. But I mean with anything rocket related, have to imagine that every nut and bolt on that tower, even though it is standing, needs to be reinspected, reexamined, make sure that it's not corroded. There's got to be so much work for the team. But they I have their full they have my full faith that they will get it done. Well, shifting over to the token maxing debate.
Speaker 2:People are spending more and more on tokens. There's been a complete fast takeoff in enterprise AI adoption, but people are raising questions about what is the ROI on these. There's a whole bunch of companies that are grappling with this. Some good news and a lot of questions for where this goes next. We'll take you through it.
Speaker 2:So the big news is that Anthropic recently passed 47,000,000,000 in ARR and raised a massive Series H 65,000,000,000 at $965,000,000,000 post money valuation. They're almost at $9.09 $9.09 $9.09 9. Last November, Clogcode was going viral among a lot of early adopters for and small vibe coding apps were launching daily, but Q2 twenty twenty six was clearly a massive moment for Fortune 500 wide scale rollouts. And so this has become a double edged sword for some organizations. Token maxing dashboards have been reportedly led to potentially ROI negative AI use at name brand companies like Meta.
Speaker 2:There was the talk of a token maxing dashboard, people leaving things running overnight that weren't necessarily productive just because they want to rank up on the dashboard. That's obviously very expensive. Uber went back and forth on, well, we blew through our budget. But a lot of people were saying, well, if they set a budget in 2025 for their token spend in 2026, like, the capabilities have gotten so much better, the models have gotten so much more expensive
Speaker 6:Yeah. That
Speaker 1:So theoretically, you should find more budget.
Speaker 2:Their budget might have been very small. But they did say they blew through it, and then the chief operating officer said I I think it was the chief operating officer said something like, oh, we're we're we're struggling to understand the financial impact and like the ROI on this stuff. But but his actual his actual comments, as you unpack them, were much more reasonable, and he wasn't completely, you know, dooming on the ROI of the spend. He was just saying that, like, the next the next iteration will be understanding the impact to the bottom line of this spending. And then AWS was also reported and Axios is having spent something like $05,000,000,000 in a single month.
Speaker 2:And so whenever the numbers get big, there's going to be questions about ROI. The bull case is that the cost per task completed by AI will decrease very quickly. So even if you're spending $05,000,000,000 per month on AI or tokens today, the same output will be available next year maybe for a tenth of the cost. Maybe next year, it's half the cost. Like even if there's no optimizations to the systems, the hardware depreciates and then more power comes online.
Speaker 2:Like the market solves these things pretty quickly.
Speaker 1:Yes. It's naturally deflationary.
Speaker 2:Yeah. Yeah. And I think we've seen that where capabilities have gone open source, they've gone cheaper, they've been distilled and you get 90% of the value. Maybe you don't get the exact same
Speaker 1:flavor Yeah. Somewhere there was an example really of into your you know, people are using LLMs to get the weather report.
Speaker 2:That was a funny one.
Speaker 1:Can be I'll admit, I've done that before.
Speaker 2:Yeah.
Speaker 1:It can be very convenient.
Speaker 2:Typically, you'd go to like a free chat app for that, though, not
Speaker 1:Well, then you could go to the weather app. Coding model. Yeah. But sometimes it's nice to just ask chat.
Speaker 2:Yeah. I've been running into this lot with people.
Speaker 1:I I ran into somebody yesterday who was telling
Speaker 2:me that they have a they have a an agent that looks through their their iOS contact book and sees if they added any new contacts. And I remember being at a conference and, you know, you're changing you're exchanging numbers with people and it's hard to tell if you add someone to your contacts, who'd you add? Because you can't Yeah. It's a very weird Apple feature that they don't have sort your contacts by recently added. That's just like a UI feature that Apple should add.
Speaker 2:They haven't. But there's like a $2 app that does that basically. It just looks at your contacts. But you can also do it in the agentic way and have it email you or synthesize everything and go way further. And there's a, you know, a debate about what's the value there and and people are making that those trade offs in their personal life.
Speaker 2:They're also making it in the enterprise. But of course, the stakes are a lot higher in the enterprise because everything has five extra zeros behind it, if not nine extra zeros behind it. And so there's debate about over whether AI tooling is being pointed at the most high leverage problems in these organizations. Like are you just picking up things that are deep in the backlog and they were deprioritized probably for a good reason because they were never really going to move the needle. But now you can just say, hey, go churn on the all these backlog items.
Speaker 2:That's maybe not ROI positive at current token prices. Might be in the future. Yeah. But maybe the cutting room floor should remain the floor and not be not everything should be shipped necessarily. And then outside of stories like workers checking the weather with AI agents or running endless loops trying random different make work projects, there's definitely a worry that truly needle moving features aren't being pulled forward like people would expect.
Speaker 1:Trey says, just vibe code your own weather app each time you wanna know the weather.
Speaker 2:Yes. Yes. I think you have a post about that in the timeline.
Speaker 1:Yeah. Who is
Speaker 2:Fear not the man who has vibe coded 50 apps. I fear the man who has vibe coded the same app 50 times. That was a good post. Anyway Here it there's definitely a worry that like truly new needle moving features aren't being pulled forward. I mean we we've all had this feeling of like is the United flight booking app getting better?
Speaker 2:Are you are you feeling acceleration in the apps that you use? Is the software getting more resilient? We're seeing GitHub uptime going down. You'd think the first thing you would point the agents at is like, make sure we have seven nines uptime, right? Like that should be the first thing.
Speaker 2:But there are, of course, more complex issues there as you're scaling a system. Some of it is just hardware constraints that an AI agent might be able to produce a report. Hey, GitHub team, you've to rack some more CPUs because we're shipping a lot of stuff and the service is growing. At the same time, I think people are still running into like cookie pop ups and weird UI bugs and just odd things, not just in Vibe coded sites but in programs and apps that they use every day where you would expect acceleration in software engineering to actually bear fruit. People are sort of waiting for that.
Speaker 2:At the end of the day, company management is going to have to demonstrate ROI from token spend at these levels. The next round of earnings reports should show material changes in OpEx and downward movement in net income.
Speaker 1:That said, if these same companies are invested, they should see a material increase.
Speaker 2:Not in OpEx. No.
Speaker 1:No. No. I'm just saying you have a potential offset.
Speaker 2:Yes. If they're marking their investments to market and one of the companies that they've invested in has a big up round, they can book that as increased income. But the tough questions from analysts will tease that out and and ask the question of like, did revenue move? Did true revenue move at least by what you're spending incrementally? Or if you did a layoff and then you substituted that immediately with AI spend, there's no movement in your cost structure.
Speaker 2:Well, is there any movement in your profit structure or anything else? At the same time, if you believe, as all trends indicate, that AI is a new and useful tool that will decrease cost over time, some lumpy ROI in the short term to reorient your organization around a new motion at work is completely justifiable. I don't think that boards will be completely up in arms with management teams if they're saying, look, yes, we did go a little bit over the top with the token maxing. But the good news is that basically all of our workforce is AI native. They're all using the tools and they know now that they do have limits.
Speaker 2:They know not to check the weather, not to do the useless project. They're much more focused but they're all familiar with the tools and they've used them for ever from everything from really critical features and security bug finding to checking the weather and they know where these models are great and where they're bad. And so our workforce is very capable to move forward judiciously in the AI era. And so you probably don't want a literal token maxing dashboard. I think everyone has tested with it.
Speaker 1:Metas tried it. Anthropic has it.
Speaker 2:Had it. I think they I think they took it down or something. But Meta, same thing. It's easy to get obsessed. And I and the token backing dashboards pop up not just in the not just in the literal, like, who is on the leaderboard.
Speaker 2:But also, if you give someone a budget, they can kind of see it as like, okay, well, my boss gave me a $1,000 token budget or a $10,000 token budget or a $100,000 token budget. If I am not using it, if I'm not putting it to use, then I don't look like I'm deploying the capital that I was given. Like, if you give a marketer
Speaker 3:Yep.
Speaker 2:A, you know, a brand budget of a million dollars and they come back to you and they say, like, sorry, boss, like, I only spent a $100,000. You'd be like, well, like, who'd you talk to? Like, why didn't you find good use of that funding? Like, it's very rare. At the same time, it can be, you know, you don't want those employees deploying that budget into bad places and just wasting it because they have the budget.
Speaker 2:So these are these are common problems across all aspects of the enterprise. And so I think the future looks a little bit like Jevan's Paradox. Of course, when something becomes more efficient to use, people often end up using more of it, not less. And then also Goodhart's Law. When a measure becomes a target, it ceases to be a good measure.
Speaker 2:And so we we live in a world defined by Jevan's Paradox and Goodhart's Law. And you put those together
Speaker 1:The combination of those, many people will call that Kugen's Law.
Speaker 2:Kugen's Paradox. Both Jevan's Paradox and Goodhurt's Law are true. And synthesis of these two things is in fact what's important if you're trying to run an efficient organization.
Speaker 1:Madison Mills over at Axios had some good reporting on it. I was we were we were on a flight Mhmm. When I found out when I saw that that reporting that someone had spent half $1,000,000,000 a month kind of accidentally and and And we heard just imagining the conversation of of the the the the first person to kind of like find the number and then Yeah. You know, hey, maybe maybe we should talk to the CTO about this. Okay.
Speaker 1:Yeah. Probably time to bring the CFO in. Yeah. Hey hey, boss. We accidentally spent half $1,000,000,000 in the last thirty days.
Speaker 1:It's a lot of money. What did we what did we make? Yeah. What did we do? What did we spend?
Speaker 2:What did we get done? It's tough. But we
Speaker 1:get some
Speaker 2:samples And of
Speaker 1:there was there was there was a lot of like there was some conspiratorial posts people saying, oh, how
Speaker 2:Circuit of deal.
Speaker 1:Yeah. How how convenient for Amazon who obviously owns a lot of, you know, the big labs Yeah. To spend all this money Yeah. On Anthropic right when they're raising a round and they got this revenue multiple blah blah blah. I that's not really how it works.
Speaker 1:Like, it wasn't like this round what this round wasn't like they were just, okay, we're gonna give you x x revenue.
Speaker 2:And there were plenty of hyperscalers that don't have active positions that were doing the same
Speaker 7:thing.
Speaker 2:Yeah. Like, this was a broader trend. But, yeah, it it is it is a crazy skyrocketing cost. But, I mean, we see this I
Speaker 1:think it's healthy how quickly things corrected. Mhmm. It's not like this was I mean, and of course, some companies won't correct. But it is a healthy dynamic that companies were, hey, we got a little bit ahead of our skis for Yeah. A couple months.
Speaker 2:Yeah.
Speaker 1:Now, let's be a little bit more
Speaker 2:Stack rank the tokens, cut all the unnecessary token spend, keep all the good token spend. I mean, we see this all the time with there'll be some vibe coded project out there that's, like, incredibly high token cost with very little value. And then on the flip side, you'll have someone that actually built something really cool with, you know, just like their default $200 a month, subscription. And they didn't actually have to token max to get the product to where they wanted it to be because they they knew what they were building. They used the tool like a scalpel, not a hammer, and they got a good outcome.
Speaker 2:So The Wall Street Journal has some more coverage of this. Corporate America is starting to ration AI as costs skyrocket. Executives are scrambling to track returns on AI investments as the bill for massive computing needs come due. We talked to Spencer Raskoff from Match Group about this. He was sort of sharing a very reasonable token spend, I think, in the single digit millions.
Speaker 2:But he was still saying that, like, one of the tasks that him and his team will be embarking upon over the next year will be understanding the ROI on that investment because you should be tracking it just like digital marketing dollars that go out the door. What was your ROI? How did it move the needle? So use of artificial intelligence by big companies is exploding and the soaring costs has some of them pumping the brakes in a way that could complicate AI's triumphal march across the economy. Are they pouring cold water on it?
Speaker 2:We'll see. Executives across the industry this year have urged employees to integrate AI tools. Wired has a whole AI for business deep dive that you can go take their survey into their work. Spending freely to encourage experimentation and seeking to send a message to Wall Street that their companies won't be left up behind in a coming wave of disruption. All that enthusiasm has resulted in skyrocketing costs for so called tokens, the basic unit measurement for AI computing.
Speaker 2:Now corporate leaders are scrambling to bring down expenses by finding ways to ration AI. Top technical executives for Uber, Meta, Microsoft, Salesforce, DoorDash and other companies have all talked about new efforts to ensure AI use contributes to productivity or have taken steps to reduce the availability of some tools for certain employees. You get nerfed if you're not putting up big numbers. Anyway, we should move on. First, we got to talk about the fossil hunt.
Speaker 2:Big spenders are pursuing Tyrannosaurus Rex skeletons. This was on the cover of the Financial Times. It's the most important story in the global economy according to the Financial Times as of Thursday. This is an old edition. But this is interesting.
Speaker 2:Sotheby's is to auction a 67,000,000 year old Tyrannosaurus rex two years after it sold a stegosaurus fossil to hedge fund owner Ken Griffin for 44,600,000. I thought Ken Griffin was was I didn't know I
Speaker 1:didn't know stegas were getting up there like I I yeah. Didn't know that the first spot. You know, I feel like T Rex is up here Yeah. In desirability and then everything else is Yeah. You know, way
Speaker 2:T Rex is the Ferrari of dinosaurs. Yeah. Stegosaurus.
Speaker 1:I was like kind of a minivan of dinosaurs.
Speaker 2:Minivan? I was gonna say Lambo. I was going say Lamborghini. They're on a rise. Know, the the true the true dino heads know that there's something there.
Speaker 2:And they're starting to they're starting to pick up momentum. But they don't have the heritage. They don't have as much of the heritage. I don't know.
Speaker 1:Yeah. I'm more of a I think I could get into an ankylosaurus.
Speaker 2:Oh, ankylosaurus. Okay.
Speaker 1:Yeah. Triceratops too.
Speaker 2:Yeah. I mean, the brontosaurus, like the big guys, that's that's special. You got to have a special special viewing area for that. Well, this t rex is named Gus after Gary Gus Licking, the rancher whose land it was found on in South Dakota. It'll be auctioned at Sotheby's with an estimate between 20,000,030, the highest for a dinosaur fossil on July 14.
Speaker 2:I was at a
Speaker 1:buddy's house Yeah. Recently and he just pointed over at this box Yeah. And it was it was a dinosaur Oh. And he hadn't taken it out of the box. He's like, I've had it for a few years now.
Speaker 2:What is it a glass box that you can see in?
Speaker 1:No. No. No. It's wooden box. It's just a crate.
Speaker 2:What's in the box?
Speaker 1:It's like Schrodinger's the breed.
Speaker 2:Maybe. The planned sale in New York highlights how the auction house is betting on the fossil market as a place where the wealthy will spend big. The pre auction estimate for Apex, which is the Citadel boss, Griffin's Stegosaurus, was 4 to 6,000,000. He wound Brachiosaurus. Up spending
Speaker 1:Brachiosaurus is the go to. Brachiosaurus has a crazy
Speaker 2:Oh, Odd Lots did a podcast about this. Amazing. We gotta listen to that. The overwhelming majority of fossil buyers still want to lend their purchases to a museum. Apex is now on display at the American Museum of Natural History.
Speaker 2:That is a fun story. If you're in the market, go pick it up. Go pick up a T Rex. You gotta do it. It's the ultimate the ultimate collector's item.
Speaker 2:It's the Pokemon card for boomers or something like that.
Speaker 1:Prepared remarks
Speaker 2:Yes.
Speaker 1:Is sharing some signals. You tell us what kind of signals they are. Kyle Kuzma, the AI Maxi. Stocks ripping 10 to 50%.
Speaker 2:He's coming on the
Speaker 1:show. On 13 of some chud. Can't be Leopold he's talking about. It's no chud. Mhmm.
Speaker 1:Dell plus 40% on earnings after being plus 150% year to date. Dell is now 222 up 222% Wow. Year to date. Not bad. Michael Dell.
Speaker 1:Not bad for somewhat of a I'm not gonna call it a dinosaur. But
Speaker 2:Well, it's been taken private, taken public.
Speaker 1:Yeah.
Speaker 2:It's fascinating history of that company.
Speaker 1:A great American technology company. $1,000,000,000,000 company is moving 20% on sell side notes. 1 and a half trillion space holdco of, he says turds. 10 to 20% intraday moves for no reason software with AI exposure plus a 100% in a month.
Speaker 2:He's black pilling. Moving on. Take him.
Speaker 1:No. So we were someone else said this morning, I also thought it was a top signal when Jensen signed Yeah. That that Yeah. That infamous No.
Speaker 2:Talking about yeah. The shirt. Or or even when he was drinking with his buddies, everyone was
Speaker 1:like No. But I I that was But, top
Speaker 2:yeah. He he looked very confident going to earnings and and he and he was confident for good reason. Take Him is highlighting a segment from Ben Thompson in Strathecari. He says, great thing about Ben Thompson is he's never afraid to tell it like it is amid all the banker and insider propaganda. And this is the quote from Ben Thompson's SpaceX IPO and data centers in space story.
Speaker 2:Ben Thompson doesn't typically cover Elon companies very closely because they're often They get five from business. The fundamentals. Yeah. And they're more of like this this ten year out story. But he says, in in all seriousness, the numbers are obviously absurd.
Speaker 2:But then again, everything about this IPO is absurd. SpaceX is seeking a $2,000,000,000,000 valuation on a mere 18,670,000,000 in revenue. You think the $6.07 is intentional there? They're like, let's get another another 10,000,000 in the bank so it can be a meme. Wouldn't be the first time in revenue with $4,900,000,000 in losses last year.
Speaker 2:The growth actually slowed from 35% to 33%. But again, that will be massively offset with the new AI computing contracts. So there will be significant reacceleration in the business, which I think is what a lot of people are underwriting SpaceX against. That slowdown happened despite the addition of xAI and thus also X, which tipped the company from a small profit to that massive loss, thanks to 5,100,000,000 in AI r and d expense. That r and d, keep in mind, went towards building a model that is in fifth place and whose founding team recently left the company.
Speaker 2:But sure, 26,500,000,000,000 AI opportunity. It will be very interesting to see if the macro hard thing mean, the whole like macro hard enterprise AI thing was it took people by surprise in the S1 because it was like all of a sudden the biggest number in the TAM figure is this AI enterprise software essentially. But Elon has been talking about macro hard and entering that category generally for I think over a year and he painted the top of the data center with MacroHard. And so it's not like Yeah. Comments are saying
Speaker 1:he left out the part where the infrastructure they built is already generating $15,000,000,000 in annualized revenue. Yeah. Small detail.
Speaker 2:And I mean, the story is only to get crazier. I mean, people are speculating about the Tesla SpaceX merger, and then you have Optimus with the foundation models and the AI compute and the data centers in space, and you have this, like, full stack, like, concentrated bet on, like, this The future. Ultimate future of artificial intelligence, robotics, self driving cars. Like, all of the it's it's the sci fi company. And Elon's been delivering for twenty years in this category, doing things that other great entrepreneurs find very, very hard to do.
Speaker 2:So it has been lots of lots of reasons to be excited.
Speaker 1:The account Russian Bot responded to Tae Kym and said, the guy is a journalist. His opinion is what you're hitching to? What? And Take Him says, hey Russian bot, you're never gonna guess what I am. That's hilarious.
Speaker 1:Of course, calling Ben Thompson a journalist.
Speaker 3:I mean,
Speaker 2:he's a journalist. He's very independent. He's an analyst. We actually have Yeah.
Speaker 1:I would say that
Speaker 2:the of Dithering in the waiting room who John Gruber has the good fortune of talking to Ben Thompson every day every week, at least once or twice. Right?
Speaker 6:How are you doing?
Speaker 2:Hopefully. Twice. Thank you so much for joining the show. Welcome to the show.
Speaker 1:Honored to have you on.
Speaker 2:Long overdue. How are you doing? How is your week going?
Speaker 6:Busy as usual. Leading up to WWDC. Always a hectic time to be writing about Apple. Yeah. Very Very nice to join the waiting room here and hear you guys talking about Ben though.
Speaker 2:Yeah. No. He's the best. I I heard I heard a little bit of your take on the Ferrari Luche. I would love for you to unpack it a little bit more because it's it's shaping up to be a contrarian take.
Speaker 2:I think a lot of people were looking for something that was more sharply designed classically Ferrari. Like what stuck out to you about the Luche launch?
Speaker 6:Well, I will say it's funny that you call that out. We endeavor on dithering to make as few mistakes as possible, and we've got numerous corrections
Speaker 2:Okay.
Speaker 6:To make regarding our take on this, including the fact that we complete But Ben and I both completely were unaware that Ferrari, a couple years ago, I forget the name of it, but has like a little crossover gas car.
Speaker 2:Oh, the f Right.
Speaker 6:And Yeah. But basically our take was, hey, everybody wanted a Ferrari looking Ferrari. Sure. That just happened to be electric. And yes, there are some sports cars that are electric, and this is not that, right?
Speaker 6:Yeah. The Luche, whatever you want to say about it. If if you took the nameplate off it and just drove by on the street and asked somebody what brand car do you think that is? Ferrari would probably be very low on the list. You'd probably have to run through Totally.
Speaker 6:Dozens of brands before you get there. And I think that really fuels the primary objection that people have. Is I'm interested to hear that. My take is I think it looks like a nice car. I do.
Speaker 6:Now does it look like a $650,000 car?
Speaker 2:Yeah. That's a good question.
Speaker 6:I I can't see that. I mean, number one, I'm not $650,000 car money. I I stuff hasn't gotten bought by OpenAI. Well,
Speaker 1:the big question is like, I don't I I I have a lot of friends who love cars. I don't have really any friends that I can think of immediately that are gonna wanna eat the depreciation on this car. Like, this car is gonna be a $300,000 car
Speaker 2:In a couple years.
Speaker 1:In a couple maybe even in less than that. Right? And and we don't even know how how the reliability. The car you mentioned earlier, the Ferrari FF Which shooting
Speaker 2:is a four door SUV. Yeah. Talking.
Speaker 1:This is
Speaker 2:a five seater. So But I If you don't have only a five, this is the only option.
Speaker 1:I used to own the original like family friendly Ferrari in the modern era, the FF. I got it because it had four seats. I wanted to be able to put, you know, my kid in the back at the time. And ironically, the the it had so many electrical issues that it was not usable as a as any type of like daily driver. Mhmm.
Speaker 1:And and so that's my concern with the Luche along with the price tag. It's just like, who's in the market to buy an ultra luxury car that is that is gonna say, want something that looks like it's not a luxury car, and then, you know, I could go and buy like multiple continental GTs from Bentley for the price of
Speaker 2:Yeah.
Speaker 1:You know, one. And so so ultimately, my my take was I thought it would have been a hit at like a $300,000 price tag. And I just can't personally imagine that when they started this project, they were aiming to build a $650,000 car that looked like this. Yeah.
Speaker 6:I wonder about that. Because there were reports, I forget the numbers, but you know, and of course, I'm going to take it back to Apple, but you can't help but wonder, you know, with Johnny Ives and Mark Newsome's involvement in this, you know, that Apple famously had the Titan project, a decade long car project that they ultimately just walked away from and said, you know what, we're not going to do this. But that got pretty far along and there were rumors unsubstantiated. I don't think anybody even reported it, but there were rumors that at some point when it got to the, hey, we need to make a decision here. We need to shit or get off the pot.
Speaker 6:Mhmm. That they specked out what the current idea for a car would be, and it was going to be like, I don't know, 200,000 or more cost of goods. Mhmm. And you know Yeah. Figure out what Apple would do with their margins in terms of that.
Speaker 6:And it's it just was not Apple branded. It was it would be like if the Apple Watch came out and the only ones they made were the solid gold ones that Yeah. Cost $20,000.
Speaker 2:Yeah. Yeah. It feels like it feels like Tesla already sort of created the iPhone of cars. It's it's like it checks a lot of the boxes. It's it it has this like sort of like polished feel integration.
Speaker 2:And so, if you don't have appliance Yes.
Speaker 1:You're happily Yeah.
Speaker 2:Yeah. The is not a luxury product. It's not like hand built in this It's a premium product and it's great, it doesn't Right. But but it occupies a very different place. I'm interested in in your like overall take on Apple's ethos.
Speaker 2:I feel like one of the things Apple does well is the Henry Ford ism of like if we ask people what they wanted, would have set a faster horse. There's a lot of almost like a paternalistic view of technology where they know better than the consumer. And I'm wondering about your intersection of that with their decisions in AI, VR, recent products. Like how true is that today that there's still an ethos at Apple of we might do the unpopular decision, but the consumer will like it because we know better than the hot takes men?
Speaker 6:I think that calling it paternalistic is the I I know what you're talking about. Yeah. But it it depends on whether you end up agreeing or disagreeing with what they come up with. I think from Apple's perspective, it's it's more of a And it really does boil back to that Steve Jobs adage that design isn't what it looks like, design is how it works.
Speaker 1:Mhmm.
Speaker 6:And that's the job of designers. You know, that it certainly in the Apple view of the word, that it's not being a stylist. A stylist is somebody who can tell you what to wear if you're a person or you know, tell you what to do with
Speaker 1:Yeah. Your Dress it up.
Speaker 6:But you're still the same person. Right? A designer is like, who do you want to be? Who are you? You know?
Speaker 6:Mhmm. And style is part of that, but it's just a part. And the hard work of design is making those decisions. And you know, famously, just you know, it is It's the greatest tech product of all time. Probably the greatest consumer product of all time, the iPhone.
Speaker 6:Yeah. And one of the core decisions at the front was no hardware keyboard. In a world where the difference between Well actually, all the phones had arrays of buttons. Right? The dumb phones had number pads and the smartphones had Blackberry style hardware keyboards.
Speaker 6:They Steve Jobs just addressed it head on in the introduction event, put pictures up of a Blackberry, a Palm, and I don't know, maybe a Samsung or I forget what the third one was, and said look at what they do. We're not doing that. We're going to make, you know, we're going to do it with software. And it was the thing that reaction from people who were already in the market for smartphones at the time were like, well, I can't do this because I spend all day typing messages and emails on my phone, and I'm not going to do it by poking at a touch screen. But it turns out now every, you know, within a handful of years, every single phone worked that way.
Speaker 6:That's a great example of it.
Speaker 1:Yeah.
Speaker 6:Where they didn't make two phones. They didn't make an iPhone that had all screen, and they didn't make a second one with a hardware keyboard that took up a third of the front of the face. Because they were convinced that that was the right way. Right? And they were right.
Speaker 6:Right? The market proved them right. It's as good an example as any to just sort of exemplify their mindset. They didn't do it to be paternalistic. They did it because they thought this is our job to figure this out, and this is a better way to take advantage of the limited space that a phone is.
Speaker 6:How does that apply to AI? We obviously haven't seen that from them yet. Mhmm. You know, I mean And so in some ways, I would say this is You know, it's like if you write about football, every single year come January, you start saying this is going to be the biggest Super Bowl of all time. This is a big WWDC though.
Speaker 6:Yeah. It really is because two years ago was the one where they announced the first crack at quote unquote Apple Intelligence that did not pan out.
Speaker 1:Yeah.
Speaker 6:And didn't pan out in a way that they had to announce in March last year. So that last year's WWE and said it's this is gonna be postponed to full year effectively. Yeah.
Speaker 1:And they're facing like false advertising
Speaker 8:Yep.
Speaker 1:You know Yep. Claims just around
Speaker 7:Right.
Speaker 1:How much they got Right. It,
Speaker 6:And when they did that, I mean, and again, you know, we're not lawyers, we're not judges, but even as a lay person, that was kind of obvious that that was false advertising. Like, so when they announced their settlement a couple weeks ago on that case, that was really one of the least surprising settlements of all time because it was like, you showed a TV commercial that it would do a thing and it's still now a year later doesn't do the thing. Isn't that false advertising? Right?
Speaker 1:Yeah. Was an the only real reason to upgrade at that point.
Speaker 6:But then last year's WWDC in hindsight is kind of weird. Two years ago they announced all of this Apple intelligence stuff. The most ambitious aspects of which still have yet to ship. Then last year they were in like interregnum between the year before where they announced it, but they'd already said all that stuff is coming next year, so they kind of got like a free pass for a very AI light WWDC that was excusable because they already got over the excruciating, hey, we're not ready to announce that stuff we announced last year. But now it's 2026, and it's time to show their cards.
Speaker 6:Yeah. And honestly, it seems like they've done a pretty good job keeping it under wraps, what they have, right? They've they've announced the deal with Google, very unusual to have like a white label version of Gemini that won't be called Gemini. It's just going to be used for Apple's foundation models that are built in. And there's some rumors from Mark Gurman, of course, at Bloomberg, saying that they're going to have a sort of app store for AI agents, but I think it's probably just going to be Chachi BT and Claude and Gemini Yeah.
Speaker 6:To be the sort of smarter layer on top of Siri. Other than
Speaker 1:that that mean you could have a potential situation where you have like a Siri based LM, or sorry, a Gemini based LM as Siri, but then you could also call Gemini separately to get more features. Right. Which feels crazier.
Speaker 6:Well, I think that effectively they don't want to talk about the fact that it's Gemini technology that's going to be Siri. Yeah. Right? And and they're not going to call that Gemini. They're not going to, you know, they've gotten that announcement out of the way
Speaker 3:Mhmm.
Speaker 6:And that's that's Apple's foundation models. And if you don't have a Google account or don't use a Google account and don't want to use Gemini, you'll never encounter the word Gemini. Right? It's just that it's Google's underlying AI technology that that's powering it. Yeah.
Speaker 6:I think the biggest question and is how good can that be, right? How much how how good can an AI system be if you're not the company that controls and made the underlying models? Nobody I We don't really have a good example of that yet.
Speaker 1:Well, Well, I would say that we do, and there's a bunch of vertical SaaS companies that don't make their own models. I think good examples are, you know, coding agents Harvey. Like Cursor, Legal Yeah. Like Harvey. Yeah.
Speaker 1:You can make good products. I guess like I'm more interested in
Speaker 6:Cursor is probably the best example.
Speaker 1:Yeah. I'm I'm actually more interested in what Apple allows third party agents to do within iOS. Right? Like will Right. Chat gbt allow will will will I be able to prompt in Siri chat gbt to do things in native iOS apps or other apps in the App Store?
Speaker 1:Like, will it be able to use my phone for me or will it still be like question and answer?
Speaker 2:This is like, will it break the wall
Speaker 1:cord? Yeah. Like, will it be will it be an agent or will it be a chatbot?
Speaker 2:Yeah. That's tricky. How how do you how do you think about what what Ben always has this interesting take where he says people always want to entrepreneurs often want to build productivity tools for consumers, but consumers don't want to be productive. They want to be entertained. And I see Apple as something that feels very productive.
Speaker 2:The iPhone and and all the Mac apps are very well organized. You can be very productive in them. But I see the phone as primarily a consumer device. And if I believe Ben Thompson's formulation of it, I believe that then more entertainment focused product is maybe the end goal. And so maybe this is my way of saying like we're just early on Memoji or or or Genmoji or something.
Speaker 2:I I I don't know where that all goes but
Speaker 1:just like a different
Speaker 2:set of it's a different set of of goals for a consumer company.
Speaker 1:Used to joke that Apple Intelligence was the first AI product to really crack humor because the summaries would
Speaker 2:always They were very funny.
Speaker 1:So funny.
Speaker 2:They were very funny.
Speaker 1:And no other LLM could reliably make you laugh Yeah. Like Apple Intelligence.
Speaker 6:Yeah. And and Image Playgrounds is by far and away the funniest image generation tool because it's so bad. It's so hard
Speaker 2:to use. The UI, it just doesn't give you feedback on like when is it always asking for like another It's like do you want to add something else in? And I'm like, I'm kind of done. I
Speaker 6:don't know. It takes an enormous amount of work. Yeah. An enormous amount of prompting to make an image whose quality is embarrassingly bad
Speaker 2:Yeah.
Speaker 6:Compared to any other tool on the market that lets you do it. So why did they do it? Yeah. I think that's a good framing and I think sometimes Apple hopefully, you know, something is new it takes them some time to find their footing. And I feel like the whole thing two years ago, put aside the actual legal implications of false advertising, it's just I feel like they got caught up in the hype and the rush Yeah.
Speaker 6:And we need to have something big to announce in June 2024
Speaker 2:Yep.
Speaker 6:Ready or not. And it clearly was or not. Whereas the Apple way is and they've emphasized this. Tim Cook has emphasized it many times. I don't know, maybe Steve Jobs didn't because I don't think he'd wanted to make an admission like that.
Speaker 6:But Cook has admitted many times that they do not aspire to be first, they aspire to be best. Yeah. And if that means not being first, so be it. Right? I mean that was the not again, going back to the iPhone.
Speaker 6:Yep. There was a whole smartphone market. Blackberry and research and motion was a big company and and Microsoft was all in on Windows Mobile and it was like, hey, Apple's late to the game. Nobody remembers that entire era.
Speaker 2:Yeah. Think about how long how long were they they were so slow on Bluetooth headsets. Like Bluetooth headsets were a category for twenty years and then now AirPods is bigger than the GDP of Vietnam probably or something. It's a business. And and same thing with a folding phone.
Speaker 2:Like it hasn't come out yet, but I'm extremely optimistic about that product. I think that they're they waited until the final second until the technology was good enough. And I think when in that releases, it's going to actually be good enough and we're going to see folding phones everywhere all of a sudden. But it feels like Apple is at their best when either they're waiting what feels like almost too long, but then it's the perfect time for that particular technology to be diffused. Or they're more on like an Apple TV production cadence where it's not tied to an annual release cadence.
Speaker 2:And I almost wish for some of the AI features, they were treating it like films and shows that go into Apple TV. Like there's no annual release cadence. It's just like when we finish something, we'll have new seasons every month. We do a little bit here and there. And when it's polished, it goes out.
Speaker 2:But that's a very different motion for them. So I don't know, there's a tension there.
Speaker 6:So to go back to the earlier question Yeah. I I there's the the underlying stuff that really only Apple can do is provide the frameworks for the the built in system apps, Apple Zone, Apple Notes, and Safari, and Mail, and third party apps to to offer functionality effectively like an MCP, you know, for AgenTix AI. And they talked about that two years ago. That was the whole thing that they were talking about where you could just ask your phone, what was the woman's example, when's my mom's flight arriving, and it just knows to look in email and look for any knows who your mom is and knows to look in email and knows that she sent you this. Will third parties be able to use those APIs to do it?
Speaker 6:Yeah. And then number two, obviously that's going to work with Siri, Apple's built in AI. Yeah. But will the third party stuff, and right now all we have is ChatGPT is that optional layer on top of that.
Speaker 7:Yeah.
Speaker 6:But will, and according to Gurman, and it, you know, Apple said at the time, you know, and if you even look now, if you look on your iPhone today, that's called an extension. You know, the chat chat GPT. There's only one extension, chat GPT. There are no other ones. Presumably, there will be others.
Speaker 6:At least two others. Would presume Claude and Gemini. I don't see them working with XAI and I don't know who else is even a maybe on that list. I also don't see them working with Meta. Right?
Speaker 6:So those are the only companies I could even think of who have a product of this scope and caliber. But will those be willing be able to do access the same things? So that if I choose as a user to use Google Gemini as a layer on top of Siri, will Gemini have access to everything in my Apple notes? So that I can ask questions about it.
Speaker 2:And vice versa. And And Will you be able to go to Siri and ask to pull up the latest email in Gmail or will Google say, hey, for that we want you to come over to our world garden. Apple's done a fantastic job with the Shortcuts API. It feels like they've built out basically like mobile MCP servers for every app. You've been able to call an Uber with Siri for like a decade.
Speaker 2:No one does it because it's a little bit fuzzy. But it feels like in the AI era we're getting less fuzzy. We should be on this turning point. But who knows where the business dealings will wind up.
Speaker 6:Right. And it's a blessing and a curse. It's, you know, there's positives and negatives, but Disney or Apple has a Disney like brand where they are overly family friendly.
Speaker 1:Yeah.
Speaker 6:I I one of my favorite examples of that is I've my son's now just graduated college actually, but when he was younger we used to go on the Disney
Speaker 9:cruise ships. Yeah. There you go. Thank you.
Speaker 2:Disney cruise ships.
Speaker 6:The Disney cruises are super kid friendly.
Speaker 2:Sure.
Speaker 6:But they're the only major cruise line in the world that does not have a casino on the ship. So no good for daddy. You know, and they find the middle ground. They do serve alcohol, you know, but there's no casino on a Disney cruise ship because it's off brand for them.
Speaker 8:Yeah.
Speaker 6:And who knows how that'll change, you know, ESPN is a Disney property and is certainly all in on sports.
Speaker 8:Oh, sure.
Speaker 6:But Apple has a similar problem and especially it comes to a head like they With the phone and with the mobile revolution, they navigated this spectacularly well with the app store. Mhmm. Where there's all sorts of third party apps that provide and do things that Apple itself would not want to be a part of, but they can sell through the store and take 30 or 15% from.
Speaker 8:Mhmm.
Speaker 6:There are Apple does not make games. People spend an enormous amount of time playing games on their phone. And there's an enormous amount of money to be made by selling in app purchases in mobile games. Apple is one of the most profitable gaming companies in the world. Maybe the most, I don't know if you did the math.
Speaker 6:I'm not quite sure how you would figure that out. And they don't break down services revenue by gaming. But they're certainly one of the most dominant and profitable game companies in the world by making no games at all. They just have the app store. And with AI, I think they're trying to carve out this middle ground where their own branded Apple intelligence is never going to be as adept as the leading edge models because the leading edge models are going to answer questions that Apple would consider inappropriate to be answered.
Speaker 6:And they are going to help you do things that Apple would consider inappropriate for an Apple branded product to help you do. Right? Like, there are lines far short of deep fake porno imagery. There's lines far short of that that Apple is not going to want their own thing to cross. And that's the role of these extensions for ChatGPT and Gemini and Claude, where if you choose, right, if you want to stick with the Apple branded stuff, you're going to have a more limited AI experience.
Speaker 6:And if you want more, there's an extension system, and they can wash their hands of it because that's not Apple's Siri, that's ChatGPT, or that's Gemini, or that's Claude who's giving you that. But I really do think the whole thing is not going to get off the ground if those third parties, with the user's permission, don't have access to all that stuff on your phone, in your mail, in your notes, all of that stuff. Because if they don't, then they're going And I think this is where it's an Apple's benefit not just to get their 30% of the subscription revenue that you would pay by subscribing through your phone, through these extensions to get a plus or pro plan from one of those makers. And trust me, Apple wants that 30 or 15% from that subscription revenue. But the other benefit to Apple for this is it will keep those companies integrating with having your digital life in the Apple ecosystem.
Speaker 6:Your your information, your personal information in Apple notes, your email in Apple mail.
Speaker 1:Yeah.
Speaker 6:Safari is your browser. Whereas, if they don't let third parties have access to that, it's going to push people to say, hey, I want ChatGPT running all of this for me. I'm just going to use what ChatGPT tells me to say. Or I'm going to go the Google route and put everything in Google Calendar, Google Keep, all the Google products, not the Apple products.
Speaker 2:Or or like the I keep comping it to like the Napster analogy of like, if you're running Open Claw on a Mac Mini and it's literally just opening the iMessage app, taking a screenshot and sucking that out against Apple's will and like it's open source Apple's fighting it constantly, but it doesn't really they can't really beat it. Like but that feels very hacker. That feels very prosumer. That doesn't feel like where we're going in terms of broad adoption.
Speaker 6:Right. It's because it's going to start looking clunky compared to other platforms that have a more native this is the way it's And meant to the other thing about that too is it's all the Mac. Right? Because the Mac is the Apple's open platform Yep. Where something like that can happen, where Open Claw is possible.
Speaker 6:Yep. And as convoluted as it is, that Open Claw is driving iMessage by taking screenshots and then analyzing it as an image to figure out what to do. As clever as that is, that's only possible on the Mac, and at least I would guess 85, 90%, probably around 90% of Apple users don't have a Mac. Right? They just have an iPhone and or an iPhone and an iPad.
Speaker 6:And so if, you know, for for it really to to for the for the Apple, overall Apple user base to move forward as this world becomes the normal world of computing and not the cutting edge world of computing, it's gotta work on the iPhone. Yeah. And there's no way to do that without Apple's help.
Speaker 1:Yeah. A 100%. What is the latest on how Apple is approaching mobile vibe coding apps? You covered, you know, a while ago some of them, you know, not getting removed from the app Yeah. But not allowing them to ship updates.
Speaker 1:It feels like Yeah. It I I can understand exactly why both parties there are have the views that they have. Apple's like, hey, you're just kind of like building software on the fly. This is like a, you know, one a threat to the to the Yep. App Business.
Speaker 1:It's also, you know, gonna allow people to generate applications that we don't want on the iPhone and then the other side, hey, you're stifling innovation, users really want this. Yes. It's harmless, let it happen.
Speaker 6:We don't know. And that is way up that's a great question because I would put it easily top three or four on my list of things that I'm most interested in for the WWDC keynote is what is the, you know, what is their answer to this? Including is it, you know, is this one of those things where ninety minutes or two hours after it starts and it's over and people are talking about the stuff that was announced and we're all gonna be like, hey, wait a second. They didn't even talk about the whole vibe coding thing. They didn't even mention it.
Speaker 6:Know, like, and to me that would be a red flag because yes, it's disruptive to the way that the software distribution and development has worked on the platform for twenty years now.
Speaker 1:Yeah. Yeah. And it's like very clearly the future it's very clearly the future that any iPhone user in ten years will be generating some of their own software. They're still gonna want a lot of stuff that's purpose built but I would bet that in a decade Yeah. Everyone that is buying an iPhone at some point or another will make their own piece of software on the fly just like they would
Speaker 2:And you sort of can with the shortcuts feature. Like you can build something that looks like I know it's super limited but
Speaker 6:Right.
Speaker 2:Like if I was truly giving them the most credit in the walk crawl run, I would say that the next version of iOS 27 Siri, yeah, it's not going to have a text box that you can talk to and it will generate you an iOS app natively. But you should, in theory, be able to describe a workflow that then becomes like a shortcut that is created instead of using all the drop down menus and going around finding all the apps and linking everything. It should be able to instantiate that for you because it's probably just marked down under the hood or something. Well, they But I don't know.
Speaker 6:They they just need to have an answer because it's like part of part of what makes disruption theory so satisfying as a business theory Yeah. Is that the disrupted doesn't get to choose. Yeah. Like, but that's what happens. The entrenched monopoly or part of a duopoly or just entrenched way of doing things faces the disruptive technology.
Speaker 6:They dismiss it at first, then when it becomes bigger and kind of can't be ignored, they just sort of say, well I choose not to be disrupted. And it's like you can say that, but it never works.
Speaker 2:Never works, no. No, it's a powerful force.
Speaker 6:And it's it is in in my opinion just nerding out. Yeah. You know, going back my my undergraduate degree was in computer science. It is in some ways offensive to me that IOS is a nearly 20 year old platform. It is a computer.
Speaker 6:Yeah. And it's the It's a 20 year old computer on which you cannot make software for the computer itself. Yeah. And I totally understand why that wasn't the case for the first few years when it was more limited hardware, and even a few years after that when the whole idea of the app store was new. But at this point, I mean, an iPad Pro costs like $2,000.
Speaker 2:Yeah. Has a keyboard and a huge It's as powerful as
Speaker 6:the MacBook. Can't use it to make apps. Yeah. It's kind of is kind
Speaker 1:of Don't they'll don't you think they'll find a way to allow this and make money from it? Because I would imagine Yeah. I I I know people want this. Yeah. But the main reason to not allow it is like one just like safety and integrity of software Yeah.
Speaker 1:Mhmm. On the iPhone and security stuff, but then also, hey, we gotta figure out how to make money on this the Apple way.
Speaker 6:Yeah. And and there's obviously some technology that's already a way of doing things. The whole test flight ecosystem which is what Apple's beta distribution is for IOS. And it was a startup, you know, I forget probably more than ten years ago when it was an independent startup. But Apple saw the wisdom of it.
Speaker 6:Right? This is a thing that Apple didn't invent. They should have invented it, but then they saw how clever it was and they're like, oh, we'll we'll acquihire these guys and build it into our platform. And so there are ways to distribute software now outside the the app store It's just by limiting the number of people who can do it. I think the test flight limit is like 10,000 or something like that.
Speaker 6:They could do something with AI where that limit is much lower. Like even if it was just like 10 people, right? Like a consumer level of test flight distribution where you can make apps for your friends and family or yourself Yeah. And distribute it on up to 10 devices and it doesn't go through Apple, doesn't need approval, you just make it and distribute it and it's only limited to 10 people. You know, something like that.
Speaker 6:But there needs to be a story like that though and I think, again, only Apple can really make it a really good rich system where you can make apps that really feel like real apps.
Speaker 1:Yeah.
Speaker 6:But the technology to make the apps, it's obviously there. We're all talking about it this last six months. It's obviously there and you could do it on the phone itself. And the it's super frustrating that some of the the third parties that were doing it like BitRig and I forget some of the other ones. But BitRig was the one I'm most familiar with.
Speaker 6:Where they kind of, you know, they're not kicked out of the app store, but they stop taking
Speaker 1:Updates.
Speaker 6:Updates to it. Yeah. It's like super frustrating because it's not theoretical. It is an actual thing that was actually working and they took it away. Mhmm.
Speaker 6:Right? And it was super cool. And yes, it's disruptive to Apple's business, but in a way that the disruption is inevitable anyway. So why not go with what's cool and do the coolest thing possible that makes new possibilities available to your users and the developers on your platform.
Speaker 2:Okay. Last question. Give us a recommendation of a recent favorite episode of the Acquired FM podcast.
Speaker 6:I don't have any recent ones. I'm I'm I'm going through the
Speaker 2:You're going through the archive, right?
Speaker 1:The back catalog
Speaker 2:But but what what what what's a recent favorite that you've listened to? Not recent from their catalog, recent from your listening history. What would you recommend for someone who's getting into the Acquired
Speaker 6:podcast? For people who aren't familiar, this obviously, probably everybody listening to this watching this show knows of the Acquired podcast. Me, a big dummy who does not who does a lot of reading and does not listen to I don't have a commute. This is my home office.
Speaker 2:Sure.
Speaker 6:So I don't have a lot of podcast time. I stumbled A friend of mine recommended the Mars episode. The Mars Yeah. Incorporated episode. That's the one.
Speaker 6:Yeah. And a friend said, you got to listen to this. And I'd I'd heard of Acquired, you know, but it's like, I don't know, there's If you listen to every podcast somebody says you should listen to, you would spend twenty
Speaker 1:four hours a day listening to Full time job.
Speaker 6:So I go there and it's four and a half hours and I'm like, you've got to be fucking kidding me. And I'm like, alright, I'll listen to it. And it's of course fantastic and it's amazing. But the Mars one, it just sucked me in. So that's the one I would recommend.
Speaker 6:Fantastic. It is a 100 year old candy company that the business decisions that Not the founder, but the founder's son, Forrest Mars, who's the one who took it from sort of a mom and pop thing to a big one. The decisions he made in like the nineteen twenties and thirties are exactly like the world of business today in the twenty twenties and thirties. It was like he came from today's world, time traveled a hundred years into the past, and applied today's knowledge of branding and scale to that world. And there's just these other crazy bits that I had no idea.
Speaker 6:Like the fact that Hershey, who was the bigger company at the time, supplied all the chocolate to all the companies including Mars. Yeah. And they just were like, sure, we don't care. And it was sort of like a heads they win if you buy a Hershey bar and tails
Speaker 2:They also win.
Speaker 6:They don't lose Yeah. Because you're buying a Snickers bar that was covered in Hershey's chocolate.
Speaker 3:Yeah.
Speaker 6:Until the day Forrest Mars called them up and said, yeah, we're going to cancel your our chocolate contract. And they're like, what are you crazy? And he's like, yeah, we're gonna make our own chocolate.
Speaker 2:We're just integrating.
Speaker 1:Final For anyone final question. Sir. It can be a really brief answer. Do you think that Apple's overall software quality is getting better or worse? Because when I use when I use like the FaceTime app recently, I just get enraged because it's a constant experience of, oh, wait.
Speaker 1:I'm in this group and they started a FaceTime and I didn't get a notification and I'm on a call and and now it's doing a FaceTime and I start to fit maybe maybe it's just me, maybe I'm You know? I I turned 30 and and I just can't use the device anymore. But it just feels like across the board, there's less like polish than I than I remember and and I'm wondering what you think.
Speaker 6:I love how you prefaced it with make it a short answer.
Speaker 2:Yeah. That's impossible.
Speaker 6:I think that to make it as short as possible, I think Apple over the last ten years is facing a be careful what you measure problem with software quality. Where things that you can measure are things like crashes. When an app just crashes and it says like, hey, do you want to send a crash report to Apple like if you've opted into the share crash reports with Apple thing. And their apps crash almost never, right? Like it's almost unusual when you know, you're using Apple notes and the app just crashes.
Speaker 6:It doesn't happen. And they've tackled a whole bunch of things like that because you can measure it, right? Like there's like a number that used to come in. How many times How many users today had Safari crash? Well you can measure that and they've cut that down.
Speaker 6:The things you can't measure are things like your problem with FaceTime. Like, I'm confused. How do I add somebody here? I thought that I added a third party
Speaker 1:call somebody but it doesn't ring on their side. Yeah. Point of what's the point of just just joining a call when the other person's not getting a live notification?
Speaker 2:Well, if you happen to be in that iMessage group chat at the time, you can see that notification.
Speaker 1:But I'm not this is how it works. The phone's a busy place, but I'm just saying it's like a terrible user experience every time where I'll send John a text. I'll just be like, John, we're in the FaceTime because I know he didn't get it.
Speaker 2:You can press the button, but it's an extra button.
Speaker 6:It's a perfect example because Apple's never going to get a number Yeah. That goes Because you encountered that problem. There is no number that's gonna land in front of Craig Federighi's dashboard of problems with Apple software Yeah. That says, Jordy Hayes had problems adding somebody to a FaceTime today. But you did.
Speaker 6:And that's the sort of thing it's getting away from when Steve Jobs was there and was not just the CEO of the company, but the number one user of the products. Right?
Speaker 1:Yeah.
Speaker 6:And if that happened to Steve Jobs, that would get fixed, that would start getting fixed the next day. Right? If he had problems adding somebody to a FaceTime call, all of a sudden that would be the biggest problem in the world. Right? Or iMessage
Speaker 1:iMessage search. Right? The number one app that I use Well, search is just bad everywhere. Yeah. But Apple should be able to create like the most elegant solution.
Speaker 1:It's the number one app Search that I
Speaker 2:is bad everywhere. I'm not afraid
Speaker 6:to Searching say searching in iMessage technically works, but it is sort of like the way that putting two empty soup cans and tying a piece of string and holding it taut that you can talk to somebody through the can. It does work because the audio goes through the string and goes to the can on the other side. But that's not what people think of when they think of talking on the telephone, right? And the way that you search in iMessage and the way that you get results in the sidebar is not the way people think of search. People think of, hey, I was searching for this one I was talking to somebody about this one word and it was just a month ago.
Speaker 6:Just show me the goddamn message where I was searching for that word. And I think that's the sort of just sort of opinionated from the top thinking that was there because Steve Jobs was running the company, and Tim Cook just isn't that type of person. And the company has taken on as a company more of the personality of Tim Cook. That's the nature of leadership, right? Yeah.
Speaker 6:The organization tends to take on the personality of the person leading it.
Speaker 1:And there's a lot of good things that have come from that.
Speaker 6:Absolutely. But I And that's and that's For example, I Tim Cook loves numbers. And so something like, hey, how many times a week do apps crash? Those numbers have come down. Mhmm.
Speaker 6:But that is driven by a culture that kind of comes from Tim Cook. And I think hopefully under John Turnis that they can sort of not not turn the ship around, but just make a minor course correction back towards, hey, let's focus on just some opinionated shit like, hey, this app is confusing. Like when you open this and you just want to add a collaborator to this, why why does it look like this? Shouldn't this be way more obvious? You know?
Speaker 6:And I think, you know, we can't measure it. This isn't gonna come with a number that goes up and down. It's a we know it when we see it. But this isn't up to snuff, and I think they've gotten away from that.
Speaker 2:Yeah. Well, thank you so much. Perfect. Went way over time.
Speaker 1:You fit it exactly into sixty seconds.
Speaker 2:We got to do this again because this is super fun. We could go all over the place and there's so much more to talk about. Yeah. Yeah. Thank you Have a so great weekend.
Speaker 2:Have a great rest of your day. Thank you so much for It
Speaker 6:was a pleasure to be on.
Speaker 1:We'll talk to you Have
Speaker 2:a good one. Up next, we have Ronak from Trajectory. He's the co founder and CEO. We've been keeping them waiting too long. We have a whole team.
Speaker 1:Let's bring them in. Give us the news.
Speaker 2:What happened? How much did you raise?
Speaker 1:Tell us about the company.
Speaker 2:Sorry for keeping you waiting. Please introduce yourselves.
Speaker 7:Awesome. Great to meet you guys and and thanks for having us on. Yeah.
Speaker 9:I guess, my name is Michael. Before this, I was on the foundation of research at DeepMind, build a lot of cool things in robotics and very excited about trajectory.
Speaker 2:Amazing.
Speaker 10:Amazing. What's up? My name is Arjun. Before this, was at Apple working on Vision Pro and then multimodal foundation models. Cool.
Speaker 10:It was good hearing a lot of tea right before this.
Speaker 1:Well, John John also is the number one user in the entire world of the Vision Pro.
Speaker 2:Yeah. I watch full movies regularly.
Speaker 10:All of his blog posts. It's great. He's got some great info
Speaker 1:on this. Well, was saying this John. This John. Oh, yeah. Absolutely love.
Speaker 5:This John. No. No.
Speaker 2:I'm like still a regular user of the Apple Vision Pro. Yeah. Call John on
Speaker 1:a Friday night. Yeah. It's like I gotta I'm in the Vision Pro. Give me a second.
Speaker 7:I'll watch the movie.
Speaker 10:We should chat. We should chat.
Speaker 7:Yeah. Now, everyone else in our office is using monitors and everything. Sometimes, Arjun is just like Nice.
Speaker 1:Here working.
Speaker 7:She's the Vision Pro in the office. That's great.
Speaker 2:It'd be
Speaker 7:great to meet you guys. I'm Ronak. I was at Windsurf before training And then this led to the 2,000,000,000 acquisition at DeepMind. So I went over there as you guys probably heard on the news and then left all the acquisition money on the table to start trajectory.
Speaker 2:Okay. But you raised some new money. How much did you raise?
Speaker 7:What's the Yeah. So we raised 15,000,000 from conviction.
Speaker 5:Hello. That's amazing.
Speaker 2:Fantastic.
Speaker 7:And we're building
Speaker 2:Yeah.
Speaker 7:We're building the platform for continual learning.
Speaker 8:Okay.
Speaker 7:We're working with some awesome companies of Harvey, Decagon, Clay, Rogo, Recore and basically building agents that learn online. So all of that that usage, the edits, the retries, everything they're using in an AI product, using that to make AI smarter every single day.
Speaker 2:Yeah. Amazing. So, yeah, like 15,000,000 seems like, you know, great amount of money to start a business with, but it doesn't seem like enough to jump straight to training a frontier model at the mega scale. So I imagine your approach is a little bit more capital light. How much of your approach is in the deployment phase with the companies that you're partnering with versus pure research versus something that's going to happen around fine tuning something?
Speaker 2:Like what can you tell us about how you actually deploy a model that is capable of continual learning?
Speaker 9:That's a great question. I would say the way we're we're thinking about this is every lab is focused on building this, like, smart PhD student. Mhmm. Right? And how to make this PhD student smarter and smarter.
Speaker 9:Yeah. But it's always day one of their job. Sure. And it's always that they're going to make the same exact mistake every time.
Speaker 3:Yep.
Speaker 9:What we're interested in is building, like, building an agent that is ten years of experience on the job. Mhmm. It doesn't need to be a PhD student, it doesn't need to be like frontier level math or anything like that, but it needs to know your primitives, it needs to understand your business, and it needs to really, really understand your rewards. And with that, like, just doing very, very light post training
Speaker 8:Okay.
Speaker 9:Can get us very, very far. So we have models that are 10 times smaller than the frontier models that are able to beat them. But also, that's not what we're most excited about. What we're most excited about is that not only are we beating them today, but we're improving 1% every day.
Speaker 2:Yeah.
Speaker 9:And that is continual learning. That's the most exciting part about continual learning.
Speaker 1:Very cool. Is part of this too you mentioned some of the application layer companies that are your guys' customers. Is part of this helping reduce their dependency the model providers and help change maybe the leverage equation there?
Speaker 10:Yeah. I think all of our customers have different motivations. But I think really at the the the main thing they're really attracted to is this idea that like, what they're doing and their bet is that product like craft, product expertise, domain expertise is going to win and is going to hold the taste is gonna hold for the years to come. And they wanna find ways to actually use that and work that into a product. Right now, kind of their only lever is like prompt optimization, putting prompts in, and we view ourselves as like a research lab in their like back pocket, like giving them the tools so that they can modify the models, modify the harnesses and have them modify together so that they can do what they do best and that's make beautiful products.
Speaker 2:Amazing. Well, congratulations on the progress.
Speaker 1:So great to meet you guys.
Speaker 2:Thank you so much for taking this time to come on the show.
Speaker 1:I'm sure you'll be back on this year.
Speaker 2:Yeah. Any day now.
Speaker 10:Fingers crossed. Yeah. Yeah.
Speaker 6:Have a great rest We've so many
Speaker 10:more things coming up. Yeah. Yeah. So excited to see y'all soon hopefully.
Speaker 2:Hiring was posted in
Speaker 1:San Francisco. Is that correct?
Speaker 10:Yes. Only in San Francisco for now. Okay. More to come soon. We're doing our five days of trajectory right now.
Speaker 10:Check us out and so many cool stuff to come.
Speaker 1:Amazing. Amazing. Thanks so much.
Speaker 2:Guys have a great weekend.
Speaker 1:For coming on. Congrats. Talk to you soon.
Speaker 5:Amazing. Talk to you soon.
Speaker 2:Bye. Bye. Up next, have Zane Mountcastle from Pico Grid. Good friend. Interviewed him for a video about the Gundo years ago.
Speaker 2:I'm very excited to catch up with Zane if we have him in the waiting room. We've been keeping him waiting. And so, hopefully, Zane from Pico Grid will be able to join in just a minute. We'll see. Let us know who is in the waiting room.
Speaker 2:We're waiting. We'll give him just a second.
Speaker 1:Wish we had more time with the the Grubernator.
Speaker 2:Yeah. That's so far.
Speaker 1:Yeah. We can we can go.
Speaker 2:I mean, he's a professional professional podcaster. Dithering, of course, is available in the Strathecory bundle twice a week. We also have to say a little shout out to Jackie Shapiro from The Bronx. Apparently, she's one of our newest fans. Thank you so much for being part and of the tuning in.
Speaker 1:It's an honor.
Speaker 2:An honor to have you in the audience. What else is going on? We have Jamie from Pace coming on in just a few minutes, and then
Speaker 1:Chris Kuzma. Says what we've all been thinking.
Speaker 2:Oh, what's that?
Speaker 1:Can you die from a lack of being called big dog?
Speaker 2:It's a
Speaker 1:big question. It's a big question. Where? Do you get called big dog too much?
Speaker 2:No. Not very often. I don't know. Okay. Think in the right Let's work on changing it.
Speaker 2:There's certain spaces where you might get called big dog Yeah. And you have to you have to attend. You have to open yourself to the opportunity. You have to open the door to being called big dog.
Speaker 1:Yeah.
Speaker 2:Like if everyone knows your name, they're just gonna call you your name. You have to be you have to be walking around in a certain space.
Speaker 1:Deep fates. This was the post we had earlier. Yes. I fear not the man who vibe coded 50 new apps, but the man who vibe coded one new app 50 times. It's a banger post.
Speaker 1:I think he meant to say, but the man who vibe coded the same app 50 Yeah. Times.
Speaker 2:Yeah. The same new app 50 times, something like that.
Speaker 1:This was good.
Speaker 2:What was going on?
Speaker 1:Over on Reddit r/cfa. Would it be considered insider trading if I'm on a hunting trip or safari with a CEO of a large firm and they get mauled by hyenas and I start buying put options on their firm? Let's say I go to Tanzania on a
Speaker 2:This does not sound hypothetical.
Speaker 1:With the CEO of a very prominent firm in The United States when we suddenly get overrun by a pack of a dozen hungry hyenas. However, I and my youthfulness are of course quicker than this old man and I manage to escape and hide behind a rock while the hyenas maul him. Mhmm. If instead of helping him fend them off, I open up Robinhood and start buying put options on his company, would this be insider trading? There's absolutely no way this can be priced into the stock predicted.
Speaker 1:Oh, but the material non public info blah blah blah. Okay. But what if before I buy the puts I post a video of him getting attacked on my public Instagram story of what then? Thoughts purely hypothetical. Does
Speaker 2:not sound hypothetical. Well, it all depends on what the market thinks about the CEO because it's possible that the market sees his bullish signal that the CEO is no
Speaker 1:longer He's clearly pricing in the 21% nuke salute.
Speaker 2:Yes.
Speaker 1:You know, where the market Yes. At least briefly
Speaker 2:Briefly.
Speaker 1:Sells off 21% and then hopefully pops back up. But of course people are saying it's priced in.
Speaker 2:Everything's priced in. Well, we have Zane from Pico Grid here from the New York Stock Exchange. Welcome to the show. Sorry for keeping you late for running late here. Great to see you.
Speaker 1:How are you doing? Doing well. How are you guys?
Speaker 2:Congratulations. Why don't you give us the news? Then I wanna go into the product portfolio, the traction, everything else. But what happened today?
Speaker 8:So we announced our $45,000,000 series a led by Bessemer. There we go.
Speaker 2:Fantastic. Congratulations.
Speaker 1:Big number.
Speaker 2:So take us through the product portfolio, the traction, the latest with PicoGrid.
Speaker 8:So PicoGrid, build technology to help integrate different mission critical systems. So think our sensors, drones, our robots, our weapon systems, mainly for military applications. What that means is sort of we're building the open infrastructure that is the the hardware and software tools that make these systems work together. The sort of connected the connective tissue or the glue between these different platforms. We have active contracts right now with the Pentagon, with NATO Yeah.
Speaker 8:With various allied partners around the world supporting a whole bunch of different applications.
Speaker 2:Yeah. When when we when we first met, you had an office in El Segundo Still do. Still do. It felt like, you know, a lot of r and d going on, a lot of experimentation, some really great traction with the systems that you'd built. But I imagine that a lot of this funding round is thinking about larger scale manufacturing.
Speaker 2:What does that look like? Do
Speaker 1:you
Speaker 2:need to, you know, bring on new people, buy automated equipment, set up a manufacturing line? Like, what does the next couple years of the business look like?
Speaker 8:Yeah. So the the big book around is going towards just continue continuing to build out a team. And with that, all the investments in the underlying infrastructure to build out. And, really, you know, our biggest challenge the past couple years, John, has just been keeping our head above water. Right?
Speaker 8:Keeping our head above of all the demand that's coming in and how we can best serve it without stretching ourselves too thin. Yeah. And that is in the past, I think, three or four months, just given all the traction that's that's been building up, we've actually, I think, 7x ed our production line Mhmm. And did so as successfully as you can 7x the production line in a couple months. Yeah.
Speaker 8:And it's been a it's been a it's been a fun journey.
Speaker 2:So, I mean, if you're if you're keeping your head above water, is there a tension between wanting revenue diversification from different customers, different branches of the military, different organizations, and focusing on one delivering at scale? Is is there a tension there, or is it more of like dual use, public private? Because as you sort of, you know, lay out the product portfolio, like, there are lots of applications here. Right?
Speaker 8:There are. And if you look at the problem that we're solving, it's really inherent to every physical industry. Right? Military just happen to be happens to be a very large physical industry that has that's really leading the charge in the adoption of these autonomous systems, the sensors, your drones, your robots, all of that. And it's where the the the integration bottleneck has been most acutely felt.
Speaker 8:And it's so for the reason that we we we for that reason, we really focused on, on selling to the military. Looking forward a couple years, I think there will be a strong commercial presence as well. But, you know, one of the things with dual use tech is your sales motion to the military and your sales motion to, commercial industry are so different. Yeah. Right?
Speaker 8:You have to really, bottoms up think, about best how to sell to each of them independently. So, you know, for the for the time being, just given how much demand we've seen on the government side, especially the US military, but we're now seeing this across allied militaries as well, is really focusing on how can we best serve that application. And like you were saying, diversify across services. But even within given services, there are many, many different program offices, different customers, different, mission sets that we can and and we are serving and continue to expand out. I was just in Colorado Springs, yesterday morning, at an army event, a big army event called the Right to Integrate, with the secretary of army, Dan Driscoll.
Speaker 8:Monday morning, we'll be back in Colorado Springs with, US Spacecom, and so we're able to support a lot of different missions with the underlying technology that we have.
Speaker 2:Last question for me. Do you have any insight into the, like, the ramp around domestic manufacturing of solar equipment or solar panels? We've seen some companies. T one Energy has been on the show. It feels like there's starting to be momentum there, but what are you seeing in that piece of the supply chain?
Speaker 8:It's a great question. I think I've had that question before. I think we're seeing, like, manufacturing across a lot of different industries, especially really critical industries. I think energy being being one of those. A lot of that is being sort of redomesticated.
Speaker 8:Yeah. For us, a lot of our for the the the solar panels that we do buy for one of the products, Lander, most of those actually come out of out of Europe. Okay. We for a good reason, we we can't use Chinese panels, is where most of them are manufactured. Yeah.
Speaker 8:So we we're using European panels.
Speaker 1:Yeah.
Speaker 8:But with that, we're definitely seeing a a ramp up of of manufacturing across all sorts of energy systems and, you know, hard tech, silicon, all of that domestically. And that's ramping up really, really aggressively.
Speaker 2:Yeah. I'm I'm really hopeful. I mean, we've had Casey Hanmer on the show. I'm sure you're familiar. And Yeah.
Speaker 2:It feels like there's the there's all the ingredients on the capital side, the the AI demand that has a ton of demand for solar. Like, that that could be another big mega trend in the next couple of years that I'm excited about. Jordy, anything else?
Speaker 1:No. Great. Congratulations. Back on. Give our best to Lynn Martin.
Speaker 1:Hopefully, she's running around the floor.
Speaker 2:And have a great day at New York Stock Exchange.
Speaker 1:Have a
Speaker 2:great weekend.
Speaker 1:Great update.
Speaker 8:Thank you.
Speaker 2:Talk to you
Speaker 8:See you guys. Have a good one. Thank you. Goodbye.
Speaker 1:Has to be has to be one of the most powerful names.
Speaker 2:Yes. Mountcastle.
Speaker 1:Mountcastle. It's great. Mountcastle. Yes. Arguably the most regal name fantastic name and he's been fantastically successful.
Speaker 2:But we have Jamie from Pace here in the waiting room. Sorry for keeping you waiting. Welcome.
Speaker 11:Not at all. It's great to be back.
Speaker 2:Thank you so
Speaker 1:much for hopping on. You've been incredibly busy.
Speaker 2:Yes. Give us the news. Give us an update. What's going on?
Speaker 11:Yeah. Well, we are super excited today to be announcing our $46,000,000 series b.
Speaker 1:Co led by thriving co led
Speaker 11:with participation emergence and proven. Yeah. Super pop So
Speaker 2:has been the key unlock? I mean, insurance operations. Obviously, there's a lot of intuitive applications for AI and insurance. I think people understand how this product could be valuable. But what is the shape of the go to market motion?
Speaker 2:Is this something where you get one big insurance company and like that's 50% of the market and you're good to go? Are you working with start up insurance providers? We've talked to so many different people that are figuring out how to ensure data centers and all sorts of different new things and underwriting and But new pools of where has the been where has been the biggest growth source for you?
Speaker 11:Absolutely. So PACE is the AI operations partner for the world's leading insurers. We primarily are focused on the world's largest insurers, so large carriers, large brokers, rooms like Prudential, WVW, Convex that are our customers today. And we're really helping them to automate a lot of their back office operations and help ensure more of the world's risk.
Speaker 1:What are the biggest challenges right now? You know, we've talked with people from all different types of companies selling agents into the enterprise. There's plenty of workflows where if you're getting things right 90% of the time, it's like not even close to good enough. Right? But then there's others where like that's a good kind of, like, first pass and just makes the existing back office team more efficient.
Speaker 1:So, like, what's working? Where do you want the models to get better? How are you kind of taking that into your own hands? I don't know if you guys are doing your own, you know, post training and things like that or or, you know, leveraging open source models. But, yeah, what what is the current state of things?
Speaker 11:Yeah. Absolutely. So I think that's definitely very true in our regulated market where many of our customers have 99.9 plus accuracy SLAs, and we are hitting those day in, day out. And now you have to because that's the way that these get into production for our largest customers. You know, for us, some of things I'm really proud of as a statistic for our company is that we've had a 100% win rate from pilot to production, and a lot of that is because we you know, it's the product and then our forward deployed engineering team that are working with our largest customers to help them, you know, successfully deploy these agents into production.
Speaker 11:And so I think the the a lot of what we're seeing in terms of, you know, being able to deploy and hit those sort of accuracy levels and really see our customers getting the automation rates and the ROI they want is really a combination of the insurance expertise that we have as well as the AI expertise and kind of bringing that together. What's that what that has looked like for our customers is we have customers that are, you know, require that 99% plus accuracy. We have customers requiring hundreds of thousands of tasks to be automated every day in the background. And we're doing that fully autonomously with agents. Know, we have, for example, Palomar, one of our customers has said 90% of their tasks are being completed from intake to outcome successfully by PACE agents fully autonomously.
Speaker 11:And so, you know, we've we've been super fortunate to see that in production. In terms of what has been a massive accelerant to our business in doing that, certainly it's been the models getting better. We have very much lent into these agent operating procedures, so sort of natural language instructions that the agents use to complete these tasks long running. And as the models get better, our product has been getting even stronger. And I think one particular area we've seen that is in computer use.
Speaker 11:A lot of our customers had challenge in the past deploying products because they needed to integrate with various APIs that either were too expensive or, you know, just prohibitive to build out or didn't exist. And computer use models, they've really gone from something like 30% accuracy on our evals to, like, 95% plus, And that really allows us to get these models into production and particularly work around cases like desktop applications or legacy web apps or even, like, we've seen, like, green screen CLIs, you know, and being able to have the agents get live and do this work fully end to end. So those are a few of the unlocks for us recently.
Speaker 1:That's great. Another question. There's been some new insurance startups that have been growing very quickly recently, there's been some debate around ultra high growth when you're in a when you're when you're basically in the risk business can be risky. How do, you know, the companies that you guys work with think about growth? Are they really just trying to speed up the back offs speed up the back office, speed up just like, you know, increase efficiency so when a new customer comes in, they they get them, you know, onboarded as soon as possible.
Speaker 1:But, like, what is their general philosophy around growth given that these are companies that are at scale? I imagine they're not coming to you saying, we wanna be able to grow three times faster by doing this. It's more creating efficiency on the back end. But what do you think?
Speaker 11:Yeah. So for our customers, these are, in many cases, like 100 year old plus businesses that are thinking about what does the next decades and centuries look like as they want to serve their customers better and better. And I think that one thing that's, like, really top of mind for the business is the protection gap. So last year, 60% of the world's losses were uninsured. So that means, you know, a house after a hurricane that's flooded might be uninsured or, you know, life insurance.
Speaker 11:There being just a massive protection gap between what makes sense, you know, for a family having life insurance versus what they'd have today. And I think a lot of our customers are thinking about that's their kind of responsibility is how do we shrink that protection gap? How do we take the $9,000,000,000,000 of risk today that is uninsured, that should be insured, and enable that to happen? And for us, what I think we've been most excited to see is when you take the the the operations component with AI native operations, you can truly change the economics. Like, what we are seeing is two orders of magnitude less spend than would have been needed before with agents.
Speaker 11:And what that enables is our customers to launch new products, which they have, to be able to deliver an experience to a 10 person company that that is similar to the experience that they would have previously only been able to provide to a 10,000 person company for a claim to be paid consistently on time every time. And so that's like really what our customers are pushing towards, which is how can we close that protection gap, enable sort of the 60% of these losses that are uninsured to be insured. And that's truly, I think, what is so exciting about this opportunity is like this is the moment that we can really unlock the sort of operations that makes that possible.
Speaker 2:Very cool. Fantastic. Well, I have a bunch more questions, but we'll have to do it the next time you're on the show Which? Because we've been running late.
Speaker 1:I got a feeling we won't have We to wait have a day now. To see.
Speaker 2:How's the feeling? Thank you so much for taking the time. Have a great one. Sorry.
Speaker 11:Can't see
Speaker 6:you guys.
Speaker 1:We'll talk to you, See you soon. To the team.
Speaker 2:See See See See you soon.
Speaker 3:How are we doing, You've
Speaker 1:been tearing up the timeline.
Speaker 2:Yes. We love
Speaker 3:Thank you. Thank you guys for having me. Thank you guys for having me. I I learned a lot from you guys actually. So
Speaker 1:Thank you.
Speaker 3:You know, I have something new to this, but you guys help out a little bit, so thanks.
Speaker 2:Yeah. What what what got you into investing originally?
Speaker 3:Well, I mean, that really starts like when you first get into the NBA, and obviously you have a financial advisor and then you learn about, you know, typical stocks and bonds. And then I had a lot of great mentors. Like, Kobe Bryant was a really good mentor for me, especially, you know, he had a fund right before he passed away and he told me to get into it and I think that was my very first, you know, type of access and like get in with the whole VC and the tech space with everything and, you know, we can only play basketball for a certain amount of time Yeah. And you gotta make it count, but then you got like forty, fifty years to, you know, still live. So what else are gonna do?
Speaker 3:Because you know, that money doesn't last forever, so.
Speaker 1:Yeah. What what was Kobe's advice to you? Was it, hey, here's all the things not to do because you get into the NBA, suddenly you're making some money and you get a million opportunities thrown at you every day. So I imagine your financial advisor's primary job is like, how do we just make sure to not do all the dumb stuff, focus on the basics. But what was Kobe's, you know, main advice for you?
Speaker 3:Well, number one thing is probably just keeping the main thing the main thing, and that's like making sure you're focused on whatever your true primary thing is, and that's always basketball because there's gonna be nothing that gives me a return know, unless I'm like an early investor into SpaceX or something that is gonna, you know, propel me like basketball will. But, yeah, when you have a financial advisor, they they try to keep you very very conservative and you think about the little things that you can get, you know, God willing, 10 to 11%, you know, annual return. But, you know, for me, I want more. And I think that, you know, when you start thinking about like the private investment side, looking into space and tech and all these things that have crazy crazy multiples and are like flying off the shelves right now, you know, that's where the interest is, at least for me.
Speaker 2:Yeah. How do you think about endorsements versus equity versus investing? There's so many different ways, outside of basketball to apply your skills, make money, compound. But they are there are sometimes tensions and sometimes an investment makes more sense. How do you how do you think about these different trade offs?
Speaker 3:Well, you know, I'm I mean, I'm going into almost year 10 in the NBA. Right? And I think that athletes Overnight success. All these, you know, you have your agents, you have Yeah. Managers and they definitely want you to get, you know, the endorsements.
Speaker 3:Right? Because Yeah. They get their fee and it's it's a little bit harder for
Speaker 1:Sure.
Speaker 3:You to really justify, you know, okay, what does this equity mean for me because, you know, 90% of things fail anyways, right? So, you know, I think it's all about, you know, getting with the right people, understanding what you're getting into, and like educating yourself. You know, for me, I'm not the smartest person in the room and, you know, I think that's one of my best traits that I've had because, you know, anytime you can be inquisitive and you have curiosity, like, you have a upper edge on, you know, almost literally everybody.
Speaker 1:So
Speaker 2:Yeah. But you might have increased access, increased availability to just meet CEOs early, get into rounds. Have you ever thought about having other teammates or friends or even traditional investors sort of tag along with you? Have you do do you see this becoming a career like Kobe did with a fund that other people could invest in?
Speaker 3:Oh, yeah. A 100%. You know, I think for me, over the past couple of years, I've been, you know, that singular investor and, you know, getting onto cap tables or, you know, hopping into other people's SPVs or, you know, in the VC space that I know and I can hop in. But, you know, learning this space a little bit, you know, the money is, you know, having a fun, you know, being able to, you know, take the upside off of your access that you have. And, you know, I'm in such a unique position because, as an athlete, everybody wants to talk to you.
Speaker 3:You know, everybody wants to be around you and, you know, you can use that for multiple ways. You can use that, you know, to be cool and, you know, party and have a fun, good time and be famous, but you can also use that, as leverage to build your own platform if you're knowledgeable enough to then use that access to get into, you know, blue chip companies that, you know, can really change your life.
Speaker 2:Yeah. Yeah. Those blue chip companies, I feel like there's a tight enough circle that you can probably take those meetings during the off season or when you're not practicing or playing. But have you had to turn away meeting invites to seed Series A founders because just to see the landscape of everyone who's operating at that level would be just dozens of meetings every day? Or is there something about that that like, oh, you want to go earlier stage at some point?
Speaker 3:No. I think you definitely want to go earlier stage at some point. I think I'm at that type of inflection point now. You know, I think a lot of my investing has been typically, if it's not, you know, real estate or CPG, you know, getting into tech space, a lot of late, you know, late stage growth companies where it's more surefire, you know it's gonna hit, but, you know, those multiples when you you talk about IPO or somebody acquiring you, you know, maybe a three, four, five x which is all great, right? But to get the 100 x, the crazy universe
Speaker 5:You want,
Speaker 1:let's be honest, you want the thousand x.
Speaker 2:Yep. You're not gonna Come
Speaker 3:on, of course, of of course.
Speaker 1:Chasing it. Do you find one of the one of the challenges with privates is that you can't, you know, you can only get in for the most part at least directly in these certain moments during the season.
Speaker 2:There's a big round happening.
Speaker 1:Yeah. If there's a big round happening, do you find yourself being like, I'll keep tracking this company but I'm not gonna chase it right now or Mhmm. Just given given I imagine there's moments where Or do
Speaker 2:you have a partner who can sort of chase it Yeah. Down for
Speaker 3:Well, you know, I do a lot of research on my own but Sure. Like very very thankful to have just like a vast network of like resources and mentors and people that are like way smarter than me. Yeah. And I like I think that's like the most important thing that you know, because my main thing is playing basketball. Right?
Speaker 3:And I can only do that for so long. But you know, I think that, you know, I'm in that situation now. There's a couple of companies that like I'm looking at and they're like pre seeds or they're looking at, you know, their safe rounds and I really really like them but, you know, I'm at that point where, you know, putting, you know, $2,575,000 into like one of those companies, it really doesn't make sense when, you know, I'm focused on a lot of more like late stage broke companies, right? Yeah. So, you know, I think you want to track, you want to do this, but you know, for me, I'm just wired differently.
Speaker 3:And I think that like, I think it's part of my ADHD that I have.
Speaker 2:Mhmm.
Speaker 3:I'm able to focus on a lot of different things at once. And I think that, you know, when I'm playing basketball, if I'm during during season, you know, we're not playing basketball twenty four hours a day, so you know, you have to pick and choose, you know, your hours wisely. So, you know, if I'm playing basketball, I have to study film, if I have to work out, you know, I handle that. But then, you know, as soon as I get home from three to six, three to seven, I'm in my office. That's great.
Speaker 3:You know, and that's my like study time and my learning time and I can really focus on, you know, understanding different landscapes because, you know, every sector is different, right? You know, it calls for different thinking, so
Speaker 1:Is is AI changing basketball in any way? I imagine you guys are accessing new tools all the time, using the models to do analysis, but how how are how are things how is AI changing basketball?
Speaker 3:I think most of us kind of hate hate it a little bit,
Speaker 2:you know, just
Speaker 3:the analytics standpoint.
Speaker 2:Oh, sure.
Speaker 3:Because it's like, you know
Speaker 1:It's like being micromanaged. It's like, oh, you could
Speaker 3:have been you could have
Speaker 1:been an inch over here. Yeah.
Speaker 3:Bro, it's like it's like literally like a computer telling you, hey, you should not be taking this shot. But the computer is not the human and I'm sitting there, I'm like, yo, I'm wide open. You're telling me not to take this shot.
Speaker 1:But I hope it,
Speaker 3:and I'm a professional basketball player, I made this shot. Shut up. I don't know if you guys seen this. I think, and I'm not too super educated into it right now, but I saw Adam Silver, he talked about implementing something like Hawkeye or something Sure. For like out of bounds and replays, which Yeah.
Speaker 3:I think that's a great idea. Yeah. Because, you know, we had these coaching challenges and like Yeah. You know, stoppages during the game where, you know, five minutes of like real time may like go off and we're just sitting there. And I think that like making the game faster in that aspect would be huge for us.
Speaker 1:Yeah. Just enforcing the rules, but you're not trying to get you're not trying to get micromanaged by a computer.
Speaker 2:Yeah. What about what about on the training side? Is there anyone using like AI or I mean, the other mega trend in Silicon Valley right now is like peptides. I don't even know if those are legal in the NBA. But are there any like breakthrough changes in like training, performance, longevity that you're seeing like sort of have moments?
Speaker 3:I mean the whoop is like the biggest moment Yeah. I The whoop, you know. Like I don't really I wish we could wear it during games. I tried to and then like Elite made me take it off because all summer Yeah. You know, that's how I really track my daily life.
Speaker 3:Know I Yeah. Like I they should pay me for what I'm saying right now.
Speaker 2:Yeah. Wait. Are are you not an investor?
Speaker 3:No. I missed that
Speaker 2:Not yet. Okay. Well, there's still free idea. Well,
Speaker 3:no, like, it's not always about that. It's about, you know, good products and, you know, I think it's amazing because Yeah. You can track everything that you need, your sleep, your workout, your stress, your strain. Yeah. And I think that, you know you know, as we go, there's gonna be more and more things that pop up, especially in the, you know, athletics and, you know, professional sports and just, you know, just daily lifestyle, you know, because that's what you're, you know, you alluded to earlier with like, you know, I know the biohacking scene and
Speaker 1:Yeah.
Speaker 3:Like the founders in the tech space, like it's a huge thing. And rightfully so. Yeah. Yeah. We can't take peptides but
Speaker 1:Okay. You
Speaker 3:know, there's a lot of, you know, studies that suggest that it's really really good for you and Yeah. It'll probably make better. And I see you guys talk about the enhanced games. Don't know about steroids.
Speaker 1:Yeah. What was your what was your what was your reaction to the enhanced games? I don't I don't know if you were to track it but it it showed us like, you know, just absolute dedication
Speaker 2:Human spirit.
Speaker 1:Artwork and human spirit can over seemingly overcome Yeah. You know, PEDs.
Speaker 3:Well, you know, I don't know too much about the PD aspect, right? But I I kind of feel for certain athletes, right, because as an athlete, you know, we put our blood, sweat, and tears into this.
Speaker 2:Yeah.
Speaker 3:Right? If you're not really a part of like the power three, four, five sports, like, that don't create a revenue and don't really have, you know, a system where it's like unity and everything is fragmented, like, you know, like pole vaulting and sprinting and swimming. These guys are training their entire life for four years for five minutes.
Speaker 1:Yeah.
Speaker 3:And, know, going to the Olympics, they don't make any money. They might make a $102,100,000. I don't know what it is. But it just seems like so shit to me. You know what I mean?
Speaker 3:And I think that the enhanced game is very, very intriguing because these other sports, they get a chance to, one, in this, like, day and age when, you know, you think about a AI and, you know, everybody thinks, oh, you're going to lose your jobs or whatever, but sports is the only thing that's going be really bulletproof. Yeah. Because we want to see it and everybody wants to watch it and feel it and touch it. And I think that it's going to be important for these athletes to get paid. If I'm an athlete, I trained for four years and like I barely make money, like what else am I doing?
Speaker 3:Like this is a nice avenue that's interesting and it's different.
Speaker 1:Yeah. That was that was my takeaway. Was like the the silver lining here is like athletes can have extend their career. These sports maybe become more interesting to follow if there's like high level competition outside, you know, that that gets a lot of attention, that's properly marketed like Yeah. Enhanced games were.
Speaker 2:And you can imagine that a lot of the more like they're restricted drugs right now, those might be studied more and then used after someone retires to recover, remain healthy as they age. If they went really hard in professional sports, beat up on their body, they can get some of that back in their 50s and 60s and not have the toll of the physical the physicality on their body. Take us through American Dynamism, Industrials, Andoril, SpaceX, super interesting companies. How did you get interested in those? How did you get up to speed?
Speaker 2:What what was exciting to you about those companies?
Speaker 3:Well, you know, when I think about that, you know, I think that and this is just like my perspective of like investing and, you know, there's a lot of like tensions and a lot of stress going on like geopolitically.
Speaker 2:Mhmm.
Speaker 3:And I love where I'm from. I love America. Right? I'm sure we all do because it's given us all this platform to even speak to hear. Right?
Speaker 3:Yeah. I like that. And then, you know, I just believe that if you're an investor, like why are you not focused on investing into one serious things, but then two things that have, you know, America's interests best at heart. Right? And you think about space and you think about defense and where we're at in this world.
Speaker 3:You know, prime example, space is a crazy economy that's about to open up. You obviously hear about SpaceX and you know, all the other companies that are getting a lift from valuations within it. But you know, our counterparts and our other people, other countries in the world, they are focused on space, and they're focused on getting to the moon, and they're focused on all these satellites. And you know, whoever really rules space is probably going to rule the world because, you know, when we fight wars and we do certain things on earth, a lot of things is, you know, horizontal because, you know, we're fighting on this realm. But up there, it's linear.
Speaker 3:You're looking down and there's a lot of things that could, like, really go wrong if we're not focused on, you know, preserving, America.
Speaker 2:So That's a fantastic SpaceX bull case. I love it. That is extremely convincing.
Speaker 1:What did what your your you said coming up on ten years Yeah. In the league, what advice would you give to the young Kyle Kuzma on private markets with what you've learned so far? You mentioned some of them, you know, work with smart people, build the right network, but if you were to summarize it.
Speaker 3:You know, I have a really a really big friend in the space and I asked him this question. Like what would you do, or what type of advice would you give to like a young investor like me? And he told me don't be stupid and follow the money. This is the most simplest thing you can do. You know what I mean?
Speaker 3:Because like I said, there's so many people that are much smarter than me, much smarter than all of us that do all this due diligence, that understand the landscapes of every industry, every science, every biotech, every defense space company, you can name it. And I think that, you know, following those guys leads as much as you can, but also making your own like, you know, critical thinking educated guests on certain things is super, super important.
Speaker 2:Yeah. Trust your gut every once in a while. Well, thank you so much for hopping on the show.
Speaker 1:Let's do it again soon. Chat wants to know how you're thinking of who you got for the finals. Oh. I don't know if you're making predictions.
Speaker 3:I don't know, man. You know, honestly, there's a part of me that I just wanna see New York win because I literally wanna see New York go up in flames. Like Okay.
Speaker 1:Win or
Speaker 3:lose literally
Speaker 1:literally, think
Speaker 3:about this. Win or lose, the city is gonna burn. New York fans are, one, incredible. Yeah. Really incredible.
Speaker 3:And you can
Speaker 2:just see all the memes and
Speaker 3:stuff after they win. GRS films got pummeled in the streets. Like, like, I want to see more of this.
Speaker 2:Like, is this funny? Not Joker over here.
Speaker 3:Seeing New York win Chaos. Just like amazing for the NBA. But this game seven is gonna be serious. It's gonna be real, you know. And I think it's hard for anybody to win a game seven on the road, you know.
Speaker 3:And I think history and analytics kind of, you know, support that a little bit. But, you know, I want to see I want see Wendy versus the Knicks. I think it'll be sick.
Speaker 2:Yeah. That'd be sick. Thank you so much for coming on the show. Have a
Speaker 1:great day, Jack. Super fun.
Speaker 2:We'll talk to
Speaker 3:you guys soon.
Speaker 2:See you. Goodbye. Up next, have Brad Gerstner from Altimeter Capital. We've been keeping him waiting.
Speaker 1:We're Bring him in.
Speaker 2:Very happy to have him join the show again for the second time. Welcome back. How are doing?
Speaker 5:Great to be here guys. Great to be here. Fantastic. Man.
Speaker 1:Yeah. Took Back to back with Kyle.
Speaker 2:Yeah. Yeah. He he laid out one of the greatest SpaceX bull cases. We're going to throw it to you to try and one up him. He said whoever controls space controls the world.
Speaker 2:And for that reason, you gotta own SpaceX. I liked it. But take us a level deeper. What are you thinking about in the SpaceX IPO in the lead up? What are you watching for?
Speaker 2:What unanswered questions are there? What do you think is misunderstood maybe that more people should be aware of?
Speaker 5:I mean I mean, come on, guys. We didn't even have any foreplay. You know, our strategy down, you know, and the SpaceX IPO. I mean, first, I haven't seen you guys. Did you sell this thing?
Speaker 1:Did you sell it? Think we did.
Speaker 2:Think we're working for you now. Think we're working for you now.
Speaker 5:Did you guys get shares in OpenAI Yeah. When you sold this thing?
Speaker 2:Yeah. Yeah. Everybody on the team.
Speaker 5:So we're all we're all on OpenAI? Yeah. Yeah. Okay. Yeah.
Speaker 5:How much of mine did you make? A I mean, we got That's question. We gotta turn the tables a little bit. Anyway, let's talk SpaceX.
Speaker 1:Well well well, maybe before that we can rewind a little bit because I do remember the last time we were hanging out in person. It was at Katzenberg's event. Right? You were basically It was kind of this interesting moment because in some ways, we were going through a mini correction. Right?
Speaker 1:Like chatbots, you know, grew incredibly quickly. Yeah. Agents were just starting to work. And it's been interesting to see how the market did go through this Yeah. Correction in q four.
Speaker 1:But then realized, hey, woah, agents are a thing. And you had pretty much perfectly called that in the conversation that that we were having which, yeah, in some ways it's just been it's been such a wild year for so many reasons but I feel like you had a somewhat of a crystal ball back then.
Speaker 5:Yeah. Well, mean, thank you. And I recall that conversation. And and the truth of the matter is we've gone through several mini corrections over the course of the last two and a half years. Mhmm.
Speaker 5:Right? There's been a wall of worry. I mean, on my podcast with Bill, Bill Gruberly, you know, we debated this. You know, Bill was saying, will the revenue show up? Will there be gross margins?
Speaker 5:Will there be ROI? We're overbuilding. Are we you know, every supply constraint turns into a glut, and we saw all that wall of worry last year. Mean, I think for me, the turning point was when when we hit inference time reasoning and we really had this whole other vector of scaling intelligence. And I remembered having Jensen on the podcast.
Speaker 5:He said, Brad, inference isn't gonna a 100 x, not gonna a thousand x. It's gonna 1,000,000,000 x Yeah. Because agents are going to be talking to agents.
Speaker 1:Yeah.
Speaker 5:Right? And so I got very pilled. Mhmm. And then what we saw, Opus 4.6 in the beginning of December, it was clear that we had crossed a threshold of intelligence that offered a level of utility that was fundamentally different.
Speaker 2:Yeah.
Speaker 5:And if you were paying attention early in December, you could see that coming. But we started the year with the market very skeptical as to whether or not AI revenues would show up. And let me tell you Had Anthropic not delivered its revenues that it's delivered this year, I think the stock market would be down 10 or 15%. I think it's that important to the entire narrative. Because the fact of the matter is OpenAI has not blown away their numbers.
Speaker 5:Google has not blown away their numbers. Like, numbers have been good, but the fundamental driver of of of outperformance in terms of off take of AI revenues has been Anthropic Yeah. Which is the fastest growing company in the history of capitalism. So that buoyed the entire AI segment. And it was when they started posting those numbers, and then they said on top of that, we're doing it at high gross margins in a way that in q two may in fact actually lead to free catch, some positive free cash flow, the market really ascended.
Speaker 5:Or the remember, two months ago, the market was basically down on the year. Yeah. And a lot of these returns we just had two of the biggest months in the history of altimeter's public funds. That's eighteen years. I mean, we're going back a long time.
Speaker 5:But that's you know, listen. I think we picked some pretty good stocks, memory, logic, etcetera. But I also think it's just a function of the market delivered. These companies delivered. You saw Dell's I mean, listen.
Speaker 5:Michael Dell, one of my best buds, and you watch the the act, you know, that he's delivering with Dell. They just had AI server revenues up 750% year over year. Went from a $1,000,000,000 business to a $16,000,000,000 business. This stuff is real. But in order for it to stay real, we have to continue to see usage by consumers that they're willing to pay for and growth in the enterprise, small, medium, or large that they're willing to pay for and growth in the sovereign domain.
Speaker 5:I think it will occur. But oftentimes, you know, there'll be some pockets along the way here where, you know, where where revenues won't be as strong as people think. We'll have some pullbacks. We could have 10 to 20% pullbacks in the semiconductor stock as just like run of the mill consolidation.
Speaker 2:Yeah. Yeah.
Speaker 5:Right? Run of the mill consolidation. I mean, Micron has gone from a couple $100 to a thousand bucks. Dell, this time last year was, I think, 80 or $90. It's now at $400.
Speaker 5:These are seismic moves.
Speaker 2:Yeah.
Speaker 5:Right? And so, yeah. I I fortunately, we were pretty bullish when other people were skeptical. Yeah. But Yeah.
Speaker 2:It feels like it feels like there's a there's like this natural reaction anytime there's good news, someone has to dig up something that's like a little bit bearish. Right now, we're seeing incredible anthropic revenues. And then there's questions about ROI on token maxing and how How much is going on are you processing that? Are you thinking that we'll see CEOs and management teams on the next earnings cycle sort of start to dig into those numbers? Is it just the market
Speaker 1:You're on that where I'm better looks AI psychosis.
Speaker 2:Yeah. Well, that's the most extreme version. The other one is, yeah, we actually did spend $05,000,000,000 in a month. And a quarter billion was super effective. So that's what we're doubling down on in the coming quarter.
Speaker 2:But how do you think that shakes out?
Speaker 9:Well, I mean, if I if I size up
Speaker 5:the debate in Silicon Valley Yeah. Right? There are the the bears who've been bearish on AI for, let's call it, a while.
Speaker 1:And anything that comes out anything that comes out is actually just
Speaker 5:still very bearish. Right? And so now they're saying, oh, all this AI revenue is bullshit. First, they were saying it won't show up at all. Yeah.
Speaker 5:And then it showed up. And then they're saying, it's all bullshit because it's all token maxing and there's no ROI. So that's one side.
Speaker 2:Yep.
Speaker 5:On the other side of the people who are super AI pilled and they're like, oh, no. This is perfectly, you know, Pareto optimal. Everybody's spending the exact right amount of money on tokens, which we also know is not true. And the truth lies in the center. Mhmm.
Speaker 5:Okay? When you have millions of independent actors all making self rationalizing decisions like Altimeter on buying tokens
Speaker 1:Yeah.
Speaker 5:Right, I don't like I don't like to waste money.
Speaker 1:Yeah. Yeah.
Speaker 5:I'm spending money because I'm getting a return. Yeah. Now will we will we experiment with some things that don't provide a return? Of course. I actually sent you guys a slide on this.
Speaker 5:I think it's pretty fascinating. Yeah. I don't know if your team can pull up. But this is independent research that we did on this question of of token maxing. And what we did is we went to 300 enterprises.
Speaker 5:Right? And we just asked them, are you starting to optimize your spend? And if so, how much do you expect that you're gonna spend year over year over the course of the next twelve months? And if you leave that chart up, what you will see, guys, is that in the first category, these are all people who are actively optimizing, but they still expect to grow revenues at over 50% over the next twelve months. The second category are people who are planning to optimize.
Speaker 5:And even if they're planning to optimize, they say they're gonna grow revenue at 90% and so on. So here's my point on this. Right? And this is across 300 firms who use a multiple of AI solutions. This is what they expect of their AI, you know, API token usage.
Speaker 5:Yeah. So what are we what what does that tell us? It tells us that, of course, people optimize along the way, but we are so early in the adoption curve. Right? They're barely using coding today.
Speaker 5:They're just getting on the coding train, and they haven't really even started on using AI for knowledge work more generally.
Speaker 2:Yeah.
Speaker 5:So we're low in the use the penetration of coding as a use case. We're almost nowhere in in the penetration of knowledge work more generally as a use case. And then remember this. There are very few enterprises, you know, globally that are even using AI. We are really early in the curve of the people who are actually using AI.
Speaker 5:So I'm somewhere in the middle. Of course, I believe that optimization will continue.
Speaker 1:Sure.
Speaker 5:But my hunch is that Anthropic and OpenAI, these companies will continue to grow right through the optimization because the growth curve on penetration of both enterprise and use case is so steep. You know, we'll see.
Speaker 2:Yeah. Is this a is this a zero sum market where every dollar spent on tokens comes out of a SaaS company? How are you reflecting on the SaaS pocalypse? Because we all saw what happened in the market, but there's been some really good news lately. How have you processed that?
Speaker 5:Well, I I popped on CNBC for a second yesterday and was talking about Snowflake as an example, and the stock was up, what, 35% yesterday.
Speaker 7:Yeah.
Speaker 5:Now, of course, just to be fair, it's only up 10% for the year Yeah. Compared to a company like Micron up 200% for the year, a company like Arm up 200% for the year. But they did bounce back, and what what I think we're starting to see is the bifurcation. Mhmm. There are companies that are in the token flow.
Speaker 5:So all these software companies, we just lump together. Yeah. Right? We treat them as though they're all equal.
Speaker 2:Sure.
Speaker 5:But there are certain software companies, Databricks, Snowflake, and Clickhouse, all of which we're investors in, which very clear to me, they're in the token flow. As you consume more tokens, the amount of your database queries goes up. I see it at Altimeter. Right? In fact, our database queries are growing faster than our token usage, to give you a sense.
Speaker 3:Yeah.
Speaker 5:And this is, I think, how so now they've proven they're in the token flow, so they're starting to get some love from an AI multiple perspective. That's very different than a company, I think, like like Salesforce. And I love Marc Benioff and and got you know, he if anybody can, you know, get in the token flow, it'll be him. But the reality is the the front facing solutions that they offer are more competitive with the models than something like Snowflake. Snow Snowflake's the enabler of the models, whereas I think that Salesforce competes a bit more, so it's gonna be more challenging.
Speaker 5:But I also I I've heard so much about about the SaaSpocalypse. And and listen. I did a pod with Satya, I don't know, eighteen months ago where he caused a stir by saying software is a thin user interface on top of a CRUD database. And Benny often, everybody freaked out. They're like, what are you saying?
Speaker 5:It's way more than that. Right? And then Bill and I did a pod. Is software dead? So it's not like this is new.
Speaker 5:But then Yeah. Everybody started freaking out in December. All these multiples reset. But the question is, what did they reset to? Okay?
Speaker 5:And this is what I wanna focus on here. So if you show this slide that that I prepared for you fine esteemed gentlemen. You know, what this slide shows is that the multiple correction just took software from a place where they were way more expensive than the market multiple Mhmm. And brought them into the category of the market multiple. Right?
Speaker 5:So now they're trading at about 22, 23 times real, SBC included, GAAP earnings.
Speaker 2:Yep.
Speaker 5:That's about where the market is trading.
Speaker 2:Yeah.
Speaker 5:So now just follow me on this. Software is trading mostly software names are trading at a higher multiple than Nvidia. Yeah. Right? Nvidia is trading about 13 times earning for 70% growth for the thing that is the most essential thing in AI, and they're they're they're at twice the multiple.
Speaker 5:So, like, when I hear everybody crying that, hey, these multiples aren't fair, it looks to me like the multiples reset from an above market multiple where everybody thought the the software revenues and and earnings were impenetrable. So now they're saying, well, I don't know. Some of this maybe three, four, five years out will be replaced. So we're gonna raise the discount rate. We're gonna lower the multiple.
Speaker 5:They've only lowered it to the market multiple.
Speaker 2:Yeah.
Speaker 5:Let me just suggest that there's a possibility these trade well below the market multiple.
Speaker 2:Sure.
Speaker 5:Right? I'm not I'm not wishing for that, but I'm just saying there's a distribution of potential outcomes here. If you get on the AI train, if you get in the token flow, you're gonna get a above market multiple. If you don't, if you slow down and it looks like every time that computational intelligence improves, your business gets worse, then I promise you they will trade below the market multiple, and there's and there's more room to the downside. So for us, as investors, you know, Warren Buffe has this, you know, this old metaphor, you know, there's the easy basket, there's the hard basket, you know, or the the yes basket, the no basket, and the too hard basket.
Speaker 5:For me, software today is generally in this in the too hard basket With
Speaker 1:it's notable because you've been saying that I I think for months now. Yeah. Yeah. And there's a lot of people now that there's been a stabilization that that say like, oh, I'm I'm smart enough. I can I can I I'm I can outsmart the market here?
Speaker 1:And like you're saying, even with where multiples are now, you still could be catching a falling knife. I wanted to ask you about the potential data center moratorium and how, you know, the likelihood of something like that in your view, how that would if you have less capacity coming online, that would obviously be bad for, you know, chip companies, various companies in the hardware supply chain. But it could be great for people that are actually have, you know, basically like have tokens to sell because they would potentially get more pricing power.
Speaker 3:How do
Speaker 5:you I think it's bad for everybody.
Speaker 1:Yeah.
Speaker 5:Bad for everybody. But most importantly, it would be horrific for America.
Speaker 1:Yeah.
Speaker 5:And lest we be overconfident in Silicon Valley, let's remember that activists, a small group of activists shut down supersonic technology, and a small group of activists shut down all nuclear clean energy in this country. Okay? We have a 100 fission reactors being built in China. We have one in The United States. It's a disaster that happened.
Speaker 5:And so we can't take for granted that the kooks who are calling for data center more moratoriums. Right? Which just think about this for a second. All of our GDP growth is coming from the fact that we are building data centers and driving AI and driving productivity improvements in the economy. A data center moratorium would thrust us straight into a recession and high unemployment.
Speaker 5:Wow. Secondly, it would seed the entire global game to China. Mhmm. Like, overnight, we would lose to China in the global AI race, which is not just about AI. It's about economic security.
Speaker 5:It's about jobs, and it's about national security. Yep. So it literally is insane that we would do this. I can't even believe there are people talking about it. However, what are why are they talking about it?
Speaker 5:Because people are concerned. Local communities are concerned. I just got back from celebrating my mother's ninetieth in rural Indiana, you know, over the Memorial Day weekend. What I'll tell you
Speaker 2:is birthday. Yeah.
Speaker 1:Happy birthday.
Speaker 5:She's incredible. She is so incredible. But you think about a place like Mishawaka, Indiana
Speaker 1:Yeah.
Speaker 5:Where, you know, they're building a data center. I mean, folks here, they they're worried about their jobs. They're worried about their kids having jobs. And then they're told by these crazy activists who show up in their town, they're not gonna have any water and their electricity bills are going to go up. So can we blame these people for being a little agitated about what's going on?
Speaker 5:So I'm actually working on an initiative. I'm not prepared to announce today, but with, like, everybody in the value chain, all of the cloud companies, all of the Nvidia's and AMD's and, you know, and off takers, etcetera, and the White House that would deliver a very tangible and profound dividend to the communities that we're building
Speaker 1:There we go. Would be great.
Speaker 5:I love it. I think it's
Speaker 1:I think it's the there's a very elegant solution there. You're the guy to do it. You're the hero that American capitalism deserves. You got Trump accounts done. I feel like this is a good good next act for you.
Speaker 5:Well, I'm I'm in the mix. I'm happy to do my part. There are extraordinary people around the table. But here's the thing. We have to build the sociopolitical bridge for the next three years.
Speaker 5:Right? In three years, it's gonna be obvious, I think, the abundance and the benefits that AI is driving for us as consumers. Everybody's going to have their own personal assistant in their pocket, right, for next to nothing. Think about that. Yeah.
Speaker 5:Can do your calendar, can order your food, can, you know, get you a new black t shirt, send mom a birthday present, all the things. Yeah. And every enterprise is gonna have things that uplevel us all as humans. So I am firmly just like, you know, John Maynard Keynes was at the start of the industrial revolution. I am firmly in camp optimism about technological progress.
Speaker 5:But I'm also not head in the sand about the disruption and the concern people have for the next three years. So we have to give them tangible benefits that get us over that bridge. Yeah. I think we're gonna do it. I'm feeling pretty optimistic about it.
Speaker 5:But you're right to bring it up and you're right to be concerned about it. We cannot take it for granted.
Speaker 1:Mhmm. Yeah. The I mean, this just goes back. I think it's entirely fair that individuals, you know, if you say I'm gonna put an AI factory in your backyard, okay, it's gonna create jobs briefly and then, you know, some some some maintenance. I think it's totally fair for people to not want it in their backyard because there's some they they they perceive some risk and there's no direct benefits because they can just get AI anywhere.
Speaker 1:Right? It doesn't matter we're work. But there's a solution. Yep. How are you thinking about adoption curves?
Speaker 1:It it feels like part part of the reason that we've had, you know, these kind of like rolling corrections is that, you know, technology gets adopted really quickly. People assume that it's just a straight line forever, but then there's a new capability, a new a new technology and it feels like stuff is just breaking through like instantly. Where have you like Are you adopting new frameworks internally to to try to understand how quickly new products can get to market? Obviously, enterprise is is different. But it feels like the line between consumer and enterprise at least in, you know, coding has never been more blurred.
Speaker 5:For sure. I mean, listen. I think about when I got into the game, guys, nineteen ninety nine, two thousand, and we had about 35,000,000 people connected to broadband Internet. Right? We all saw what Amazon was going to be, but where we got over our skis, right, is we thought it would come a lot faster and we forgot that there were only 35,000,000 people connected to broadband Internet.
Speaker 5:Yeah. Today, we have 4,000,000,000. Three, four billion. Like, the rate of diffusion and the the the the magnitude of diffusion is radically, radically different. Think about this.
Speaker 5:We have a natural constraint on how fast we can go because we only have so many memory wafers in the world. We only have so many logic wafers in the world. Mhmm. We only have so much powered shell in the world. That means we can only produce so many tokens.
Speaker 5:Okay? And it's almost as though in 1999, 2000, we could only lay so much fiber. I've said this a thousand times. When we were putting down the fiber in 2000, we called it dark fiber for a reason. There was nobody using it, and we knew there was nobody using it when we put it in the ground.
Speaker 5:There's not a dark GPU in the world today.
Speaker 1:Yep.
Speaker 5:Okay? There's not a dark token in the world today. So I think it's a very different thing. I think it's a healthy thing. We have this wall of worry.
Speaker 5:We can't build that much supply. And I would say, if I look at every company, what did they report on their earnings calls? Google was token constrained. They said if we had more tokens, we'd be able to generate more revenue. Same for Amazon.
Speaker 5:Same for Microsoft. Same from OpenAI. Same from Anthropic. The world demands more intelligence. Intelligence can only be produced with tokens, and we have physical limits to the amount of tokens we're gonna be able to bring online.
Speaker 5:So, yes, we will have these waves, but I think the rate, the parabolic rate at which these new models are going to produce intelligence, I think we're gonna be blown away over the course of the next nine months. You talk independently, you know, to Michael Truell and the guys at Cursor and now, you know, taking over x.ai or you talk to the guys at Anthropic or OpenAI, and they kind of look you in the eyes with that Oppenheimer look, they're like, we're here. Yeah. Right? Like, we're like like, we are going to think about this.
Speaker 5:OpenAI and Anthropic combined to start the year had three gigawatts of compute. Three combined. Mhmm. They're gonna end the year closer to 10 and end next year closer to 20.
Speaker 1:Yeah.
Speaker 5:We're making algorithmic improvements. Yep. We're making massive steps up the scaling wall because the amount of compute we're gonna have available to us. Think about, you know, macro hard and macro harder that Mhmm. Cursor is gonna now be able to train a frontier level model on.
Speaker 5:So we've got incredible competition in America. We got the right amount of compute coming along. I don't worry about the bubble as much even though I know that, you know, there there will invariably be, you know, some months that revenue doesn't grow as fast. I'm really worried about making sure that America stays foots on the accelerator competing globally and winning the AI race. Like, this is going to lead to a moment of of of abundance for our economy.
Speaker 5:And it's only through great national wealth that we can raise the floor for everybody else.
Speaker 1:Yeah. No. That makes a ton of sense. There was some reporting this week that Meta is hiring FDEs. I was sort of surprised to see them going into the enterprise because it feels like they have every advantage on consumer.
Speaker 1:They have the billions of users. They have exciting hardware. All these things. How much did you Was surprising to you at all? Do you expect more companies that weren't traditionally, you know, enterprise focused to say, hey.
Speaker 1:There's tens, maybe hundreds of billions of dollars of revenue here. We should be we should be in this market.
Speaker 5:I mean, the second you start spending a $100,000,000,000 on CapEx annually, okay, you run into the AWS problem. What's the AWS problem? Now I have all this compute, but I don't use it every day equally. Yep. Right?
Speaker 5:Jeff built AWS because he said, I have to build my capacity for Christmas day or the, you know, the week leading up to Christmas, Black Friday. But he's like, the rest of the year, half of that stuff sitting idle, it's expensive as hell. So I may as well rent it to everybody else. Right? Turned into, you know, a blockbuster business, but it made his core business better because he could he could build to Black Friday.
Speaker 5:Right? And nobody else could because they didn't have AWS. So that's why Elon has launched EWS. Right? Elon Web Services.
Speaker 1:Oh,
Speaker 5:yeah. You know, with his compute and he's, you know, signed up a big first customer with Anthropic. Listen. Nobody on Earth is better at turning electrons into tokens than Elon. Yeah.
Speaker 5:Right? So expect a lot more data centers out of Elon. Expect them on Earth and eventually in space. And I think that changed the whole tenor of the SpaceX IPO, both the cursor deal and the anthropic deal. I think that went from, you know, people being slightly concerned about it to people being quite excited about it.
Speaker 5:I'm happy to, you know, to to unpack that. So I think that for Meta, if they're going to be in the game of spending that much money listen. Susan Lee is, you know, incredible over there
Speaker 3:Yeah.
Speaker 5:As the CFO. And I'm sure they're looking at the strategic plan, and Mark is saying, I wanna build even more because that guy is never gonna give up the race. Mhmm. Right? The frontier level AI.
Speaker 5:None of these guys wanna give up that race. And so they just have to figure out ways to monetize everything that they're building. Do I worry as a shareholder at some level that it's, you know, that's hard. That's hard to take a business that's been a 120% consumer and say, okay. Now we're gonna be in the business of AWS and maybe even in the business of enterprise level agents.
Speaker 5:I think it is hard. I think they're up for the call. And remember, you suggested the merger between, you know, product led growth, these coding agents kind of feel like consumer adoption.
Speaker 1:Yeah.
Speaker 5:Yeah. So there's a lot of shared consumer DNA with what's going on in the enterprise today. So they may surprise some folks. But And
Speaker 1:Meta does have links into
Speaker 2:like hundreds of thousands of businesses Yep. Through the ads platform. So it's not like they don't have any relationship to businesses. They do. So
Speaker 1:One more that I I was curious to get your thoughts on Kirkland and Ellis is talking about investing half $1,000,000,000 into their own software to help run their firm. A lot of people pushing back on that. Historically, you take a firm that doesn't have strong software competency and they spend hundreds of millions of dollars on their own software. There's a lot of examples where that hasn't gone well. Yet at the same time, software making software today is wildly Different.
Speaker 1:Yeah. And it's very possible that that things are changing especially if you can get the right partners around. And I know they have some great partners. Do you expect more companies of that scale services businesses to wanna try to own as much of the stack as possible and not be reliant on, you know, the Harvey's or the Lagoras of the world?
Speaker 5:I mean, what else are they gonna do? I mean, it's kinda like what else are you gonna announce? Oh, just we give up? You know? So like and and like, they gotta do something.
Speaker 5:The competition is coming straight at them.
Speaker 1:Yeah.
Speaker 5:I I don't think it's a high probability bet, personally. Like, I was a partner at Kirkland and Ellis and somebody pitched me on that, I'd say, I I I'm not sure that's the highest and best outcome here. So what is an alternative outcome? Good friend, you know, Josh Kuzma, what he's doing at Thrive Holdings, right, where he's buying accounting companies. And now I have somebody who's just, like, deep in the weeds recruiting the best engineers in the world, deep partnership with OpenAI.
Speaker 5:I saw Greg Brockman retweet the great the work that they're are that they're benefiting all these accounting firms. Like, they're driving just huge productivity gains in these accounting firms. So it seems to me that that's a more likely outcome. You know? A Thrive Holdings buying a Kirkland and Ellis and saying, now we're going to, you know, take this thing and AI turbocharge it.
Speaker 5:I think you're gonna see a lot of that out of private equity firms, out of of firms like Thrive Holdings. I think you're going to see take privates where people do that on an individual company basis. But am I confident that software has gotten so easy that a law firm that gets up every day and thinks about writing legal briefs is all of a sudden gonna write killer legal software to compete with OpenAI and Anthropic. I think that's unlikely.
Speaker 1:That's hard. What is your thinking around the series a, b, c, these, you know, earlier growth rounds. Feels like a lot of investors are just kind of frozen. They you know, you were talking earlier about not necessarily frozen in terms of their activity. They're doing a lot of deals, but they maybe don't have as much confidence knowing
Speaker 2:What will get steamrolled
Speaker 1:What will get steamrolled future. You were talking about being in the token flow. Is that like where you feel comfortable deploying at this early stage where you're know, you're betting on it, you know, a ten year outcome?
Speaker 5:Yeah. I mean, listen. I I think we all have to have the humility in these moments to know that looking out ten years is almost impossible. Mhmm. Yeah.
Speaker 5:Looking out ten months is pretty damn hard. But I would say if you just looked across our portfolio and, you know, I think Altimeter is performing better than it has any time in its eighteen year history. You know, our early stage team, I think Overnight success. Awesome, you know, awesome work on the early stage side. But if you look at the type of stuff that we're investing in, it is in the token flow.
Speaker 5:Mhmm. Right? We're building to those compute shortages. Mhmm. You know, we had the Cerebras IPO, you know, last week.
Speaker 5:We have been in that for nine years. You know, investors, you know, Gruber. So we're looking at a lot of other semiconductor type businesses. We're looking at a lot of compute data center type businesses. And, you know, I I you just had, you know, your prior guests, you guys were talking about all the stuff you're doing in military modernization and the stuff that's adjacent to AI but benefiting from AI.
Speaker 5:We're doing a bunch of stuff there in modernization of the military. So I think you find places that are either in the token flow or benefiting from the token flow. Mhmm. And then I would say in growth, like, we're just not doing a lot in what I would call inflection stage growth. This is the companies at $5.10, 15,000,000,000.
Speaker 5:You know, we've really made massive bets. The biggest bets in the history of Altimeter between OpenAI and Anthropic, which, is consuming billions and billions of dollars. Mhmm. And so, we think they are the principal beneficiaries. Then on the public side, for three years now, we basically had 100% of the portfolio in AI and compute.
Speaker 5:Mhmm. And, you know, as I sit here today, even though it's come up a lot, you know, Hynix is still trading at a single digit multiple and Micron's trading at single digit multiple and NVIDIA's trading at 13, you know, times. You say, how is that even possible? NVIDIA's up 15 x, like, better than a venture market return over three years. Like, like, think about that.
Speaker 5:Like, all the venture returns have been had in the public markets, by the way, guys.
Speaker 2:Earnings have come. Yeah.
Speaker 5:And and it's not like But their multiples have come down.
Speaker 2:Yeah. Because the earnings
Speaker 5:have come have actually come down. This is the cheapest multiple NVIDIA has traded at in a decade right now.
Speaker 1:Easy.
Speaker 5:Okay? And by the way, I think their growth is going to continue to sustain. They're now taking 50% of their free cash flow
Speaker 1:Yeah.
Speaker 5:And returning it by way of dividend or buying back stock. I would encourage Jensen to do 70 or 75%. I think if he does that, by the way, a prediction. You know, look who invested in Apple. The second they bought back or the second they committed to 50% 75% of free cash flow returning to investors Mhmm.
Speaker 5:Warren Buffett.
Speaker 1:Yeah.
Speaker 5:One of the greatest investment returns in history. Right? And so once you make that cross that threshold and I think this you know, they're running that business incredibly well. So the public markets, we've had, you know, basically 100% AI and compute. We're basically there today.
Speaker 5:I think it is harder. If you're a series b or series c company, think about what we used to do in software. If it's series a, you had a couple million in revenue and series b, I don't know, you had 20,000,000 in revenue. Shit. You would have a line out the door, people who wanted to do that deal.
Speaker 5:There's a you wouldn't have a single taker today. Mhmm. Not a single take.
Speaker 2:You mentioned Wow. Something I think that resonates with everyone. It's very hard to predict what's gonna happen in ten years. Obviously, your job is to, you know,
Speaker 1:look But at rules and
Speaker 2:I want to know about the Trump accounts and I want to know about investing for the next generation for children advice. Also, get me up to speed on the program. What's rolling out? What's the progress? But then what is advice to parents in an uncertain time where setting their children up for success is maybe more critical than ever?
Speaker 5:Well, the update is that after four years of working on this and, you know, getting it passed into law last July 4, the Invest America Act as part of the the big beautiful bill. Yeah. You know, it's set to launch and be funded on this July 4. It's amazing. But we launched the app, guys Yep.
Speaker 5:Yesterday. So you can download the app. Every single family you should tell every family you know who has a kid Yep. They should download the app for their kids, get their kids signed up. There are 35,000,000 kids in America under the age of 10 Mhmm.
Speaker 5:K, who get at least $250.
Speaker 2:Yeah.
Speaker 5:So if you're basically born after 01/01/2025, so think about like under two, you get a thousand bucks in the S and P 500. Yeah. If you're between two and 10, you get $250. Most of those kids will get $250 from Michael and Susan Dell. If you live in Indiana, you'll get an extra 250 from me.
Speaker 5:If you live in Connecticut, you'll get an extra $2.50 from Ray Dalio. If you live in Oklahoma, you'll get $2.50 from the state of Oklahoma. Okay? And that's just for starters. We have thousands and thousands of companies.
Speaker 3:There's a
Speaker 1:lot of billionaires in states that you didn't name after starting to
Speaker 5:get a little Oh, no. Listen. Listen.
Speaker 1:They've heard from you.
Speaker 10:I'm I'm
Speaker 1:sure if they haven't heard from you, they're going to.
Speaker 5:It's it's coming. And by the way, the generosity this is the giving pledge two point o.
Speaker 2:Yeah.
Speaker 5:We have trillions and trillions of dollars that are gonna change hands in this country. This is the single most efficient way for somebody like me fund the next generation. A 100ยข on the dollar goes to the kid. Yep. It compounds for eighteen years for their lifetime.
Speaker 5:It makes them a capitalist, an owner. We know they're more likely to graduate from high school and college, more likely to start a business, more likely to to buy a home. The societal ROI on this is off the charts. So we launched it yesterday. Get a get a rip of this, man.
Speaker 5:It is now the number three app in The United States. The number three app. You just passed Google. We're only behind catchypt and quad. It's incredible.
Speaker 5:You're up there.
Speaker 1:You're coming for your kids. I love that. On for app store chat.
Speaker 2:It's in all three of the top app store apps right now. Total It's a total victory.
Speaker 5:Well, I would say, you know, kudos to Vlad and the guys at Robinhood and BNY and Joe Gebbia at National Design Studio. And frankly, the whole team at the treasury department led by Luke Pettit and the treasury secretary. This is the way government should be done. A citizen had an idea. Yeah.
Speaker 5:He was able to go to Washington and actually get a law passed. Yeah. And then we put together a SWAT team of people who are experienced building these things to build them. And then the consumers, I e the citizens of America who pay for this shit Yeah. Said, hey.
Speaker 5:We love that thing and and and bid it up on the app store. So we have a lot of people downloading the apps. There are a lot of improvements coming. So be patient with us, but download the app. Get you get your kid on the path to compounding.
Speaker 5:On July 4, guys, the money turns on. So you'll every parent's gonna see that their kid owns a little Nvidia, Microsoft, a little Walmart. Right? Their little slice of all the top 500 companies in America. And on July 6, I hope we have a joint bell ringing of the New York Stock Exchange and the Nasdaq from the Oval Office to really signify the start of of of the trading of these accounts.
Speaker 5:Of course, parents don't have to know anything about investing. It all goes into the S and P 500.
Speaker 6:Yeah.
Speaker 5:Okay? But I'm cajoling some of our friends. You would know their names. I think it would be amazing if we had some of our friends gift a share of the most amazing companies in America. You know, the Facebooks, the SpaceXs, the OpenAI's.
Speaker 5:How about if they all gave just a share of those companies to every kid in America?
Speaker 1:Yeah. It'd be incredible.
Speaker 5:Right. We we are going to change and reorient how the 70% of people who have felt left out and left behind, they are not owners of capital. Okay? We need to get them on the compounding journey. They need to feel like they're on team America.
Speaker 5:They're in the game. This does that for every child. This is not a five twenty nine account for the top 10% of Americans who can afford to save. This is for everybody, and it's so gratifying. I was in Durham last Friday.
Speaker 5:I adopted a school. There are 700 kids, $250 to every one of the kids. Now a lot of people say, well, how'd you do that? Well, it's $250 times 700 kids. They made a Google spreadsheet.
Speaker 5:They got them all signed up. I give the principal a $150,000, and she QR codes the money into each of the accounts. Mhmm. K? Everybody in America can adopt a school.
Speaker 5:Raise a little bit of money, go to your principal, and say, wanna juice up these accounts for all the kids, get all the kids signed up. And the teachers there this was a school that's 75% black and Latino serving the rural poor in Durham. The level of excitement a mom came up to me crying. I never thought my kids would, you know, own anything. The teacher's so excited to teach the kids about what it means to to own something.
Speaker 5:You know, I grew up in rural Indiana. We had zero. And as I said to the president, when you're at zero, it's a despondent place to be. You don't know how to get to one. Yeah.
Speaker 5:The hardest move in the world is going from zero to one. One to two is easier and two to three is easier yet. We're gonna get all of these kids from zero to one on this compounding journey. If you start with a thousand bucks and you save $50 a month, it's $50,000 at age 18. There's no reason we can't put every kid in America on that journey.
Speaker 5:And to celebrate our second two hundred and fifty years, right, we're we're launching a natural you know, we're gonna launch this as a dividend for every kid in America. So I wanna make sure that they all sign up starting in 2027. The 3,700,000 kids born in 2027, it will be automatic. Yeah. Get your Social Security number.
Speaker 5:You get a Trump account. And then we just need to get every small we're giving money to the we have 80 kids, you know, to our, you know, roughly 35 employees. They're all gonna get $500 at the end of the year into their Trump accounts. I'm just gonna QR the money by my team into their accounts. You guys should do it for all the companies you're involved in.
Speaker 2:Yeah.
Speaker 5:That's great. And really spread the word. Small, medium, large business, realtors, restaurants, everybody can do this. And so we've created an open source platform of universal private ownership Yeah. Where the families have the title and they have the dignity the dignity of savings.
Speaker 5:A four zero one k for life for every single American citizen, think is a game changer for the country.
Speaker 1:Yeah. You did it. You did it. It was fantastic.
Speaker 2:No. I remember you you you talking about this and and you know, as as as much respect as I have for you, I put it in the in the it's too hard bucket, you know? I I put it in the like this is a thing that is just too hard for anyone, even even the best. And fortunately, it was not, is fantastic to see. It's the ultimate white pill.
Speaker 2:So thank you. That's amazing.
Speaker 5:It's a we're you know, it's still day one, but we're off to a good start here and Fantastic. You know, think in the fullness of time Yeah. As the president said, we estimate over fifteen years it could transfer 3 to $4,000,000,000,000 Wow. Of wealth from people who have it to the people who would otherwise have zero. Yeah.
Speaker 5:And, you know, the president said he thinks it's gonna be his biggest legacy. Yeah. To me, I think it'll be more impactful in the fullness of time than social security. Yeah. Because the difference is you actually own this.
Speaker 2:Yep.
Speaker 5:You actually own. It's not a government program.
Speaker 3:Yeah. Yeah.
Speaker 5:This This is a private account and private ownership that can compound for your life.
Speaker 2:And you and you have to imagine that, you know, if if you get to that place where, you know, there's there's a whole new generation that's, you know, becoming an adult, starting a family with fifty, a hundred, two hundred thousand dollars. That's a down payment on a house. All of a sudden, that can underwrite more building of houses because there's more buyers in the market. There's there's a whole bunch of market forces that I think will knock on from this in twenty years that could be incredibly positive. So I'm I'm extremely excited about it.
Speaker 5:In indeed. No no doubt about it. It's a you know, you're gonna you're gonna hear a lot a lot out of us over the course of the next several months. But it's you know, listen. I also should mention Yeah.
Speaker 5:I've got the best partner in the world on this, you know, Michael Dell Yeah. Joined me. He and Susan joined me on on on this journey. Really helped me over to get it over the last one inch line Yeah. With the administration.
Speaker 5:And then made the biggest philanthropic gift in history, $6,250,000,250 to 25,000,000 kids.
Speaker 2:Yeah.
Speaker 5:And, you know, frankly, I think for Michael and Susan, they're just getting started. And I think their example that they've set for everybody else you know, if you have if you you you guys look at the amount of wealth that's being created here in Silicon Valley. I mean, it it's it's it's really there is no historical precedent. Yeah. There is no historical precedent.
Speaker 5:And the fact of the matter, our charities are not prepared or equipped to take $10.20, $50,000,000,000. Like and a lot of people wanna give away this money during their lifetime or, you know, within ten years of dying
Speaker 1:And target and targeted too. Right. That's direct
Speaker 5:And a way in a way that
Speaker 1:there's no or down. It's like you can do the whole state.
Speaker 5:Exactly.
Speaker 1:You can do your county. You could do
Speaker 2:Your school. Yeah.
Speaker 5:And there's not 30% overhead on the charity where somebody's getting paid $10,000,000 and, you know, all this stuff happens after you pass away. A 100% of it goes directly to the kid.
Speaker 2:Yeah. Charity was so vague for so long. It was like, great. Okay. You gave away half your money, but you're actually not transferring until you die, and then it's gonna go into this charity that will deploy it later.
Speaker 2:It gets so abstract that I think people, all of those big donations that happened in, like, the previous era sort of fell on deaf ears, and they weren't didn't feel like they were moving the needle. And so this is just an entirely new way to do it. I love it.
Speaker 1:The chat is asking if you have any surf trips planned.
Speaker 5:Wow. I wonder who that's. I must be checking out my my Twitter picture, which by the way was at the surf ranch
Speaker 2:Okay.
Speaker 5:With Raimondo. Oh, yeah. And the picture actually is some people think it's me. It's not me. That was my then 11 year old son No way.
Speaker 5:Getting barreled at the surf ranch because Raimondo was like telling him how to get into the barrel.
Speaker 2:That's awesome.
Speaker 5:But I have to say, I'm 55 guys. I just had a birthday. I'm working birthday.
Speaker 1:There we go. I'm working I just can't imagine you being like, yeah, now's a good time to take a surf trip. I feel like maybe a trip to surf ranch but Yeah. We gotta stay locked
Speaker 2:There's a lot of work
Speaker 5:to We we ought to get we ought to get together and do that. By the way, I'm I'm I'm currently signing up somebody who's going to adopt all the kids in Los Angeles. We've got San Francisco already covered. We've got Oakland already covered. That's great.
Speaker 5:And we're gonna announce some big things here in the state of California. I'm not giving up on California. Yeah. Right? Gonna defeat we're gonna defeat the unconstitutional taking tax.
Speaker 2:Yeah.
Speaker 5:That some people call the wealth tax or the billionaire tax. Like this attack on success, you know, trying to divide wedge drive wedges between Americans. We're uniting people with the Trump accounts, with the invest America accounts. We're raising the floor and getting everybody into the game. And this whole idea that we're gonna demonize success and drive Elon out of the state, etcetera shout out, by the way, to my junior son, Lincoln Gerstner Mhmm.
Speaker 5:Who published his first paper this week. And I I show up at home Yeah. And it's it's on the economic impact of tax policy in in California. I show up at home and he said, hey, dad. I put I I I I finally, you know, posted that that paper I was writing.
Speaker 5:He's doing it with Josh Rowe, the incredible professor over at Stanford. He's and then he says to me, he's like, has Marc Andreessen ever retweeted you? And I said, no. I I was like, no. I I I don't think so.
Speaker 5:And he goes, I think he retweeted me. Yeah. I was like, no. He definitely didn't retweet you, but Marc did. So shout
Speaker 7:out to
Speaker 2:Mark. That's
Speaker 1:awesome. That's awesome.
Speaker 5:And that's, you know, I I I think that we are what people there's a lot of despondency in California. Yeah. I'm going to take a contrarian position here.
Speaker 1:Mhmm.
Speaker 5:Spencer Pratt's gonna be the new mayor of Los Angeles. Mhmm. The wealth tax will be defeated. Mhmm. We we will pass the retirement and personal asset protection act as a referendum in California, which will prohibit people from stealing your retirement money or your personal assets.
Speaker 5:That will get passed. Okay? That will send a shocking message to the rest of America. The rest of America thinks that California is as blue as it gets. Yeah.
Speaker 5:It turns out California is pretty purple.
Speaker 3:Mhmm.
Speaker 5:Right? And I think that common sense initiatives are going to, you know, reassert themselves in, you know, in the election in November. And I think it's great because we're the fourth largest economy in the world. I know some of my friends moved out and said, listen. California's got it coming to them.
Speaker 5:My own view is this. As California goes, so goes the country. We cannot seed California. It is where we're going to battle for the best ideas that are consistent with the founding of the country. Yeah.
Speaker 5:And we're going to, you know, win on those ideas. And so I think we're we're seeing a lot of progress. Shout out to Sergei and Building Better California and the incredible work that they did to to get us moving in the right direction.
Speaker 1:It's fantastic. Well Great stuff.
Speaker 2:We've kept you way
Speaker 1:too long.
Speaker 2:Thank you so much.
Speaker 1:Thank you so much. Hanging out. This is And excited for your next project. Yeah. Looking forward
Speaker 7:to
Speaker 5:your much did this you for?
Speaker 1:Let's go for a let's go for a
Speaker 2:far away from the I'm
Speaker 5:gonna turn this into a little BG two and turn the tables on you guys. I need to get some more some more the other way. Yeah. Great to see you. Have a great weekend.
Speaker 1:Great to see
Speaker 2:you, Brad.
Speaker 1:Thank you. You're the man. We'll see you. Cheers. Goodbye.
Speaker 2:What a performance. I'm I'm so excited about those accounts. I really can't
Speaker 1:I really can't being able to scale it up or down. Yeah. Just Hey, everybody at the where you went to elementary school, you know.
Speaker 2:This was how I first saved money. I had a physical safety deposit box at a bank. Every time I get paid, I'd go take out couple $100 in cash, put it in the safety deposit box. Couldn't really access it on the weekend when people were, oh, you wanna go spend money? You wanna go to the bar?
Speaker 2:Save the money. Watch it physically grow. This is kind of a similar example because you'll put money in, but you won't be able to pull it out until you're 18. So it'll just compound and compound and compound.
Speaker 1:Brad Oh. Hunt asked John about his new basketball.
Speaker 2:Can so is the car here? We have the basketball. Nick, can you go get the basketball that's in my driver's seat or in the passenger seat? Because we were at Laurel Supply yesterday, which makes Air One look like a It seven makes it makes Air One look like a seven Eleven. No.
Speaker 2:I So above. No. No.
Speaker 1:Is It's very is the new Air One in LA. Yeah.
Speaker 2:It's very nice.
Speaker 1:Not an actual Erewhon.
Speaker 2:Food was good.
Speaker 1:Everything is a one to one copy of Erewhon. It's disorienting.
Speaker 3:They did
Speaker 1:not try to differentiate a single thing. Yeah. They copied every item on the menu. They copied every Delicious food. Every every single item.
Speaker 1:In my culture, that's very offensive. Yes. Because if you're gonna go through the process of creation
Speaker 5:Yeah.
Speaker 2:You think And invest and know. Differently. Okay. But outside of Laurel Supply, I receive from I get stopped by a person who I believe is in the chat. And and he says, here's a basketball.
Speaker 2:I got this for you. Because he's raising money for a company, Punter, And it says invest in the future of sportspunter.us/invest. And he had this basketball with a QR code on here. What a unique way to draw attention to your company. What a unique way to to pitch someone.
Speaker 2:And you know you know we love a basketball in the in the
Speaker 1:We do.
Speaker 2:Studio. We playing basketball. Because there's a lot of camera gear, so we don't throw a full size basketball. We use a we use a foam one. But thank you to the punter team for making this possible.
Speaker 2:Very interesting Very very very fun way.
Speaker 1:Yeah.
Speaker 3:Excited to check
Speaker 2:that What a great what a great way to end the show. We had an NBA star on the show and we finished with the basketball.
Speaker 1:That's right.
Speaker 2:Anyway, have a great weekend. We'll see you on Monday.
Speaker 1:Have an incredible weekend.
Speaker 2:Have a great have an incredible weekend. Thanks watching. Podcast and Spotify. Sign up for our newsletter at tbpn.com. Will see you Flashback.
Speaker 2:On Monday. Goodbye.