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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVPN. We started 11AM sharp with this show. No technical difficulties. No one can stop us from streaming. No one can stop us from podcasting.
Speaker 2:Bad day. They didn't want us to podcast.
Speaker 1:Yeah. You they they they said we couldn't do it. They said we couldn't We're still not sure
Speaker 2:exactly difficulties.
Speaker 1:But we did. And we're live, baby.
Speaker 3:We're not sure
Speaker 2:exactly the cause. Could have been a sophisticated state actor.
Speaker 1:Could have been super intelligence.
Speaker 2:Super intelligence.
Speaker 1:Gone rogue.
Speaker 2:They know that we're the last thing standing between humanity.
Speaker 1:People say this. The last jobs will be live streamer, AI thumbnail artist
Speaker 2:Thumbnail artist.
Speaker 1:And and Those are actually
Speaker 2:the only two things. Eventually, the the AI research will just be automated
Speaker 1:as well.
Speaker 2:Yeah. Exactly. Anyways, it's Speaking good
Speaker 1:of AI research, we have a ton of stories in the AI in the AI trade deal world. The biggest one is that Zuckerberg continues to be on a tear. Meta snatches Apple's AI chief. They went and poached from OpenAI. Now's Mark is poaching from Apple.
Speaker 1:10,000,000 plus pay packages, the rumor, as super intelligence hires mount. Rumeng, Rumeng Pang, who led Apple's 100 person foundation models team, is leaving for Meta's superintelligence group amid growing internal turmoil at Apple over its AI strategy. We've talked about this a bunch. Pong or Pang, I'm not exactly sure how to pronounce that, joins a wave of top tier hires from Mark Zuckerberg, including Alexander Wang, Nat Friedman, exanthropic and OpenAI researchers lured by multimillion dollar compensation and personal recruiting pitches from Zuckerberg himself.
Speaker 2:Phone calls.
Speaker 1:We Zuck. And we talked about this with with Dorakesh yesterday. He's still he's still, like, they're underpaying them. Like, it's so valuable. And so, yeah, the the numbers are staggering.
Speaker 1:But if you're a multi trillion dollar company, how are you how is the board, how are the shareholders not okay with you? Or, like, okay with you not offering, like, top dollar to actually Yeah. Get the best talent? Maybe we should pull up the chart of the Mag seven, see how the different companies are doing, the big
Speaker 2:tech Yeah. Companies The other thing
Speaker 1:here remember second to last, and Zuck is in founder mode. He's he's acting like he's on top of that chart. He's acting like he wants to be on the top of that chart.
Speaker 2:That's
Speaker 1:right. So I think that's what he's doing.
Speaker 2:And if you remember Apple's MLX team, a group of people left, only
Speaker 1:That's right.
Speaker 2:A little bit ago and Apple had to to renegotiate their contract.
Speaker 1:I remember that. Yeah.
Speaker 2:Yeah. Yeah. Weren't able to retain Pang, Pong.
Speaker 3:Yeah.
Speaker 2:But
Speaker 1:And, yeah, this team was once central to Apple Intelligence, now faces a major reorg under Zifeng Chen as more engineers eye the exits. They gotta figure out the comp structure at Apple. I bet that they're thinking about this now. Well, Mark Gurman has a post here. We're back to printing posts, folks.
Speaker 1:He says this is one of the most significant AI job changes since the beginning of the generative AI era. Started a few years ago. Ru Ming is Apple's most respected AI researcher and engineer, and his departure amid Apple's AI terminal turmoil could have a reverberating impact, breaking Apple's top executive and distinguishing engineer. And, of course, there was a jokey post from Gabe who says Apple's top executive in charge of AI is leaving for Meta's group, And Gabe says bearish for both companies. Very rude.
Speaker 3:This is this is obviously Rude.
Speaker 1:A very talented individual. Well, really quickly, let me tell you about ramp.com. Time is money. Save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 1:Go to ramp.com. And then speaking of OpenAI, DD DOS, friend of the show, has a post. OpenAI paid an average of $733,000 per year across 6,000 employees in stock, nearly three times every single other public company.
Speaker 2:Not bad for a non profit. Stock compensation Yes. Was at a 119% of revenue.
Speaker 1:Yes. So this is non cash compensation. So it's not putting them in, you know, you know, disastrous financial condition, but there is a lot of dilution there. And I'm sure investors are thinking about that. And what's interesting is that the information is an article that comps how the stock based compensation at OpenAI tracks with other major companies.
Speaker 1:So at at OpenAI, they're making they spent $4,400,000,000 on stock based compensation. That's a 119% of total revenue. At Google, before the IPO, Google was spending 16% of revenue on stock based compensation. Facebook was only spending 6% of revenue. So the the delta between how much more r and d they have to do, how much more salary do they have to pay before their revenue catches up.
Speaker 1:It's crazy.
Speaker 2:It's not just stock based comp too. It's it's all everything going into training.
Speaker 1:It's very expensive. Yeah. Yeah. I mean, everyone posts that, like, here are the Google financials. Every VC Ev Randall's posted this before from Kleiner saying like, oh, I just want just one Google in my portfolio because the company was incredibly financially stable even pre IPO.
Speaker 1:Like, within the first few years, it was like, everything looked great. Like, amazing revenue growth. All the costs were under control. Cash flow, like, everything The was
Speaker 2:meme was that they were spending on crazy food and
Speaker 1:perks Yeah.
Speaker 2:Yep. Massages because they wanted to be Yeah. Were like, hey, we don't want people to think we're too much of a monopoly. Right? The the thing the thing here that does make sense is, you know, OpenAI is the first real credible threat Mhmm.
Speaker 2:To Google search monopoly. And it makes sense that in order to compete with a multi trillion dollar company
Speaker 3:Yeah.
Speaker 2:You're gonna have to not necessarily act like a five year old company. You're gonna have to spend in a bunch of these different, you know, categories. It's interesting. Well beyond what a what a traditional
Speaker 1:style. Yeah. I completely agree. It's like, it's a new category, like LLM, chat interface, but every big mag seven company is threatened by you. And so they're all like, I'm going to pay so much to fight.
Speaker 1:And even if that's even if the, like, the aggregation theory and the default app of OpenAI and ChatGPT on the home row, even if that's not really that much at risk, it's just distorting the hiring market and you gotta hire people. Yeah.
Speaker 2:And and some people were calling out too that that OpenAI, it well, it it serves as a functional tool for a lot of people. Yep. It's also serving as this social product as well. Yeah. And people are spending many hours in the app Yep.
Speaker 2:On a daily basis. That becomes a threat to Meta. Yep. So purely from, you know, Meta wanting to they're competing for consumer attention. Yep.
Speaker 2:Right? And so
Speaker 1:Yeah. And I mean, the same dynamic plays out in the GPU market. If there's a massive capital war for GPUs, NVIDIA's supply constraint, the price goes up, and that's what's driving the cost of all these GPUs way up. OpenAI is forecasted to spend 6,000,000,000 this year with compute costs, and talent retention has become expensive as Inference itself, investors now face mounting dilution risks plus the wildcard of potential Elon Musk settlement. So there's a lot going on over there.
Speaker 1:Anyway, let me tell you about figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. Get started for free at figma.com. If you're
Speaker 2:not on Figma already, what are you doing?
Speaker 4:What are
Speaker 1:you doing? What are you doing? Well, you're probably not working at Jane Street. Jane Street is $4,300,000,000 India options trade triggers market ban and crackdown.
Speaker 2:About this? Was like, you know what? We need another PR crisis.
Speaker 1:We got the apology form here. We got the apology form to Jane Street Capital. Why why why were you hating on Jane Street? I thought Indian regulators were, good. I never actually looked at the Indian options market.
Speaker 1:Look. That South Sudan thing kinda shook me, and I had a moment of weakness. I have a poor understanding of what counts as arbitrage. Wait. What are options again?
Speaker 1:I just like dunking on prop trading firms. And then at the end, you sign, I hereby respect James Street Capital and will not talk down on the future first ballot hall of famer.
Speaker 2:And Great post from Alice at Just Plan.
Speaker 1:Yes. Fantastic. And so
Speaker 2:Yeah. There's been a lot of pushback here. Down here. Matt Levine broke it down Yep. But also was getting tremendous pushback on his post.
Speaker 2:People were accusing him of being in the pocket of big Jane
Speaker 1:Street. High frequency trading. Big high frequency trading. Well, here here's the here's the high level on the story. So a secretive arbitrage strategy that netted Jane Street $4,300,000,000 in India's booming options market has now led to a trading ban and a 5 and a $570,000,000 seizure order by India's security regulator, SEBI.
Speaker 1:The firm allegedly manipulated the nifty bank index by moving thinly traded underlying stocks to profit off of a far larger options positions, trading up up to more up to 7.3 times more in derivatives than cash, while SEB frames it as extending marking the close. Jane Street calls it textbook arbitrage, exploiting a massive price gap between overhyped options and underpriced stocks. SEBI launched the probe after Jane Street's lawsuit with Millennium exposed the strategy's existence. The Indian's market's imbalance where options trading volume can exceed underlying stocks, cash stocks, three hundred and fifty three to one left retail traders vulnerable and regulators on edge.
Speaker 2:I had no idea that options were so popular in India.
Speaker 1:I had no idea. Yeah. So James Street did not want anyone to know about this. Basically, happened was there was a few traders at James Street that discovered this strategy. Yep.
Speaker 1:They were studying the Indian market. They realized that there was this massive, massive options market relative to the underlying stocks. And so the there's an opportunity to arbitrage by buying certain buying the derivatives and selling the stocks or vice versa. And so Getting
Speaker 2:tricky at the close.
Speaker 3:Yeah. So so so they were
Speaker 2:And what happened, the the the at least some of that initial group that discovered this trade and were executing it went to Millennium. Yep. Then Jane Street sued Millennium for trade secrets Yep. And through the lawsuit, everybody was being very vague about No. No.
Speaker 2:Not
Speaker 1:everyone. Just just Jane Street Jane Street was like, we were operating a unique strategy, which we won't tell you about in redacted market. They didn't even wanna say India. Then Millennium gets in the courtroom and is like, oh, our India strategy where we do exactly this and and Millennium lawyers are like, we this is exactly what we did. And then the Indian regulators are like, wait Wait.
Speaker 1:But both of these firms are trying to do this over here? Get out
Speaker 2:of It is interesting that the the regulators had to discover this through the courts.
Speaker 1:Yeah. Mean In America.
Speaker 3:Yeah. Out of their own.
Speaker 1:You wouldn't really notice it because it's just like, oh, okay. The the the the these two assets are, you know, pushing closer to alignment Change trees. Value.
Speaker 2:Basically saying, your honor, it's called finesse.
Speaker 1:It's called finesse. Well, speaking of finesse, nothing has more finesse than Vanta. Automate compliance, manage risk, prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a complex program.
Speaker 2:It's time to SOC two.
Speaker 1:It's time to SOC two. In other news, Sean Maguire, friend of the show, multiple time guest is in hot water with I don't know, the left I guess. He is being attacked for attacking Mamdani, the Democrat nominee for mayor of New York City. Pavel Asperuhov, also a friend of the show has been has has a case study here.
Speaker 2:Let's pull up the Polymarket by the way.
Speaker 1:Oh, yeah. Yeah. I wanna see. So people are calling for Sean Maguire to either be disciplined or step down or leave Sequoia. But the Polymarket has its 17%.
Speaker 1:It seems unlikely.
Speaker 3:And there
Speaker 2:is a website. Yep. That is that people are signing.
Speaker 1:It's like seanwired. X y z or something like that.
Speaker 2:And, yeah. Anyways, if you wanna kinda
Speaker 1:So Pavel says, this is an interesting case study in media being clearly disconnected from the cultural pendulum. This is obviously not going to result in any sort of action from Sequoia. And if you had any pulse on things, would know that. And so Sean Maguire rides on and is continuing
Speaker 2:to I fight the don't see anything happening here.
Speaker 1:He's not a few times.
Speaker 2:He probably regrets the way in which he phrased the initial post. Yeah. Yet
Speaker 4:But he clarified it
Speaker 2:He made a thirty minute video explaining explaining it. I'm sure way more people saw the original post than saw the video. Yep. But yeah, hoping hoping everybody can resolve their differences. And, yeah, I don't see him I don't see him going anywhere.
Speaker 2:I think he
Speaker 1:There was a similar call to to push him out of Sequoia during the Trump stuff. Because he was like the first major Sequoia partner to really be vocal about supporting Trump and there was some backlash to that. There's some questions about whether or not Sequoia would have his back there and they did. And so we'll see how it goes. But seems like he's he's he's I I think he's enjoying the fight online.
Speaker 1:He likes a good he likes a good fight online. He enjoys it.
Speaker 2:Wrestling. Wrestling in the mud.
Speaker 1:He's wrestling in the mud for sure. Anyway, let me tell you about Linear. Linear is a purpose built tool for planning and building products meet the system for modern software development, streamline issues, projects and product road maps. In other news, Replit and Microsoft are bringing vibe coding to Azure. This is an exciting deal
Speaker 2:Bringing it to
Speaker 1:the enterprise
Speaker 2:Low code platform replete will integrate directly with Azure container apps and Neon serverless postgres letting enterprise employees build tests and ship software by simply describing it in natural language. Microsoft customers can soon buy seats through the Azure marketplace and deploy and deploy it to manage Azure infrastructure marrying replete agentic code generator with Microsoft's compliance and governance stack. Replete already counts 500,000 business owners and says the deal makes anyone in the org a developer. Yep. So, Amjad has been on an absolute tear, tons of bottoms up adoption from business owners.
Speaker 2:Yes. And I'm excited
Speaker 1:to see He's also been really good at working with the hyperscalers. Like he had an early Google deal. Now, he's got a Microsoft deal. Somehow he's made both of those deals work, which is interesting because typically, you know, they're like, if you we go with you, we want you to stick with us only. But Microsoft's taken this very agnostic approach to they serve everything from OpenAI to to, you know, Grok, and then they'll also serve Lama, and they'll also serve DeepSeek.
Speaker 1:Microsoft really wants to provide every possible model, every possible endpoint for AI so that you stay on Azure and you can use everything you want. So very excited for Amjad to, be teaming up
Speaker 2:with Microsoft. Very exciting stuff. Meanwhile, Jack Dorsey back in the mix.
Speaker 1:Is
Speaker 2:watching Unfailed a new BitChat, a Bluetooth only WhatsApp rival. Block CEO and Twitter co founder Jack Dorsey spent the holiday weekend coding BitChat in an open source messenger that passes end to end encrypted text over Bluetooth or local WiFi. No SIM card data plan or account required. The test flight beta and white paper promise off grid comms at concerts, protests or disaster zones and sites Apple's airdrop bands as motivation. Although early, the peer to peer architecture taps the same Nostril protocol Dorsey champions in his decentralized social vision.
Speaker 2:So good to see one of the one of the all time greats back coding on a weekend shipping. People are also you can I'm sure you would guess this but leveraging bit chats, bitcoin support sending bitcoin back to forth. So makes a lot of sense.
Speaker 1:Yeah. Excited to have him back in the game. Well, if you're selling stuff on the Internet, you gotta head over numeralhq.com. Sales got us on autopilot. Spend less than five minutes per month on sales tax compliance.
Speaker 1:In other news, TSA has begun letting travelers keep their shoes on. You had a good take on this, Jordy?
Speaker 2:Yeah. What is the ROI on pre check now?
Speaker 3:I think
Speaker 1:it's very
Speaker 2:It was the shoes line. Yeah. And then there was the shoe line.
Speaker 1:Well, it was
Speaker 2:And then there was the note
Speaker 1:that It was you didn't have to take off your shoes, but you waited for a longer line like 80% of the time. Because so many people had pre checked that the line would often
Speaker 2:be That's only I felt I felt like that's only been in the last like year and
Speaker 1:a half Sure.
Speaker 2:Two years.
Speaker 1:But now, it's like you pay, you wait in a longer line, you still take off your you still leave your shoes on just like every other line. So But it's crazy. It's been eighteen years. I remember when they rolled this out. It was not because of nine eleven actually.
Speaker 1:Was because post nine eleven there was a shoe bomber who tried guy who puts explosives in his shoes and tried to light it on a plane and then everyone But got freaked out about it was like this freak thing. It didn't actually result He wasn't successful. But it was still very visceral and scary and crazy. It was like, oh, if there could be a bomb in your shoe, have to check the shoes. But throwing the shoes through the X-ray doesn't really detect, I think, like the bomb material.
Speaker 1:I think that's why they swipe now. Mhmm. So the the the residue is actually more important. But they're replacing this with a bunch of CT scanners, AI threat detection software. There's a whole bunch of stuff that can screen foot well with with footwear without unclasping it.
Speaker 1:So it's a phased policy. It's already live at airports from LAX to Baltimore. Should reach all standard lines nationwide nationwide by late July.
Speaker 2:I'm excited to see TSAs go to market on this. I wanna see their efficiency. It's great to see they're already in testing in some markets.
Speaker 1:Here is the here is the value prop for PreCheck. PreCheck is now pushing a more like Clear experience where it's touchless and you don't need your ID or your boarding pass. You just like scan your biometrics either your fingerprint or your eyes. Something like that.
Speaker 2:Sounds interesting.
Speaker 1:I'm sure the schizophrenics will love that.
Speaker 2:Yeah. The CEO of Clear
Speaker 1:Oh, yeah.
Speaker 2:Is on Invest Like The Best as of I think this morning. Yeah. And cool story. I guess she bought it out of bankruptcy for like $6,000,000. I was I haven't had a chance to listen to the full episode yet and turned it into a monster.
Speaker 1:That's very cool. Well, let me tell you about Adio. Customer relationship magic. Adio is the AI native CRM that builds scales and grows your company to the next level. You can get started for free.
Speaker 1:In other news, Unilever partnered with NVIDIA to generate a ton of AI AI ads and it actually worked pretty well. They got 3,500,000,000 social impressions and they did some sort of collab with crumble cookies and then they generated a ton of Is images
Speaker 2:it crumble Yeah. You know Flavored soap?
Speaker 1:I don't know. It's scented.
Speaker 2:Yikes.
Speaker 1:But basically, were able to send every influencer that they work with a ton of different variations. Just say like, here's here's a thousand assets and a thousand taglines. Pick whatever you want. None of these overlap with anyone else. Interesting.
Speaker 1:That's cool. And so for someone like Unilever that's just like trying to just like blanket TikTok
Speaker 2:with stuff. It like works really really well. I had a funny incident with a portfolio company once where I was I've said they they were doing a launch or a fundraise announcement. I was like, try drafting some text for your investors so they know how to position the product and things like that. Yep.
Speaker 2:Right? Because oftentimes, one of the the things that will just hold an investor back from sharing is not knowing just like the the work to draft the post that makes sense.
Speaker 3:Totally.
Speaker 2:All they they they made like 20 or 30 different lines Yep. But they gave them to everybody.
Speaker 1:So everyone used the same line so bad. Rookie mistake. Yeah. Rookie mistake. Don't do it.
Speaker 1:And in other news, Swick says story here that the new version of Chrome, Google Chrome one they're on version a 138. You gotta ring the gong for the Chrome team. They are now shipping Gemini Nano for every user. So you'll have a local LLM in the web browser that that in theory web apps will be able to interact with. You'll able to go to web app and if they're in Chrome, they will assume that there's an LLM available.
Speaker 1:Is Have you noticed AI
Speaker 3:mode on Google?
Speaker 1:That's rolling out. Yeah. Okay. Haven't used it in The US but it's going to be the default in India. Interesting.
Speaker 1:So Sundar announced that today. Basically Huge. I I think that's because the the the ARPU in India is lower and so that they can
Speaker 3:Less risk.
Speaker 1:Risk. Yeah. They can risk losing a little bit of AdSense revenue while they adjust and figure out how they monetize the AI search.
Speaker 2:How to put some ads in that bad boy?
Speaker 1:They're gonna put a lot they already are, but I'm sure that the I'm sure that the monetization rate is lower in AI search mode, in AI mode. And so they need to roll it out to a really big audience. India has a billion people. Right? Tons of them use Google.
Speaker 2:It's an interesting ad unit. I don't I don't think this will be something that's permanent but you can imagine in a free LLM, it takes a little bit longer to inference Yep. The the query. And you could imagine that's an ad. Just put an ad basically Oh, waiting.
Speaker 3:That's a good idea.
Speaker 2:Yeah. And then it's like, hey, if you want it if you want it faster or instantly, you can you can pay effectively. But Well,
Speaker 1:speaking of AI, fin dot ai is the number one AI agent for customer service. That's Number one in performance benchmarks. Number one in competitive bake offs. Number one ranking on g two. You can start a
Speaker 2:free Fin dot ai. We'll say it again. Don't get don't even try to get in a bake off Don't do it. It's a disaster for you.
Speaker 1:Well, our first guest is here. We've been keeping him waiting because of our technical difficulties. But we have Alex Roy, someone that I'm very excited to talk to. Welcome to the stream. How are you doing?
Speaker 3:What's going on? Welcome.
Speaker 5:Thanks for having me. Huge fan of the show.
Speaker 1:I really appreciate You
Speaker 5:brought me howls of delight when you had booked Sohan last week. And I think twenty four hours after
Speaker 1:the story broke, I'm like, you guys
Speaker 5:are next gen media. It's fantastic.
Speaker 1:That's amazing. That's amazing. For those who don't know you, can you introduce yourself, little bit of your history, but also I I wanna talk about what you're up to now, and then I'm sure we'll have a bunch of questions
Speaker 2:I think on I'm excited for this intro too because we had another a friend of the show last week who said, I had a nontraditional background for venture venture, and then he goes on to say that he was like a product product
Speaker 1:Product manager of
Speaker 3:Big Tech. Which
Speaker 2:is fairly traditional Yeah. Certainly more traditional.
Speaker 1:But I feel like you did have a non
Speaker 3:traditional background. So so take us through it.
Speaker 5:Twenty Twenty years ago, was really into street racing and I was obsessed with the history of the Cannonball Run, this illegal race cross country in the seventies. And and so but as a startup guy, I decided to if I was gonna break the record, I had to approach like a startup. So I wrote like a business plan as if it was a startup. The competitive landscape was 18,700 law enforcement agencies and the terrain and the, you know, road conditions.
Speaker 2:SWAT analysis.
Speaker 3:Yeah. But you're actually worried about SWAT. And
Speaker 5:so, ended up using everything off the shelf one could use in o five for mapping. So, know, Google maps didn't exist. Google Earth had just gone public. So I was using Google Earth and its back end tools to figure out, you know, how to plan the drive. Drove cross country a couple times at a practice, had a thermal camera.
Speaker 5:I I salvaged from from a old Cadillac. And, you know, laser jammers, radar detectors, everything one could have. And then created a map of the police locations, dropped it into a Garmin, and then inserted into Google Earth to plan the drive. Mhmm. Because the Google Earth is always daytime, but in practice run, it's two thirds at night.
Speaker 5:And so plotted latitude longitude of every potential police trap. And spotter plane, triple redundant communications, whole thing broke the record. Wrote a book about it. And turns out, and I didn't know this, the DARPA challenges were happening at that time. And so I got when as soon as Wired magazine did a story about our cannonball drive, I got outreach from all these DARPA teams.
Speaker 5:And it was all the same thing. And so, Roy, you're using radar, lidar jamming, mapping, everything we use. You're just selfish and only not trying to help anyone but yourself. And we're trying to make roads safer. And so I became out of that an angel investor in like autonomy and mapping.
Speaker 5:And then Very cool.
Speaker 2:Watched a
Speaker 5:podcast about AVs and EVs because that's that's the future. And eventually, I got recruited to join Argo AI, was Ford and VW's self driving car unit where I was an executive for four years. And so little did I know that everything I was doing to try to drive cross country as fast as possible was directly relevant to investing in
Speaker 1:the future of road
Speaker 5:safety makes no sense.
Speaker 2:Yeah. That's amazing.
Speaker 1:Yeah. For for those who might not be super familiar with the Cannonball Run, can you explain Red Ball Garage, Portofino, the history, and kind of where it went now and kind of the current status of the I mean, it's still illegal, but people are doing it. There's these there there's these, like, delays. I see VinWiki videos like, oh, yeah. A year ago, I did this run.
Speaker 1:Like, what what's the current culture and and and, and, like, status of the cannonball?
Speaker 5:So, you know, the unknown forgotten history of the cannonball is that a hundred years ago, car companies didn't have a market, you know, internal combustion cars. So they hired this guy named Erwin Baker, who was a motorcycle racer, to drive from New York to California as fast as possible. No gas stations. No highways. And every few months, a car would come out with a slightly larger gas tank or slightly better fuel economy, and he would go again.
Speaker 5:And so he went from the record his first record, I think, was, weeks, and eventually cut it down to, you know, some I don't even remember it. This he did a 141 records cross country. But that's how you marketed internal combustion back then to prove that it was more efficient than trains and cleaner than horses. And as the interstate highway system was built out and, you know, speed limits arrived, the Campbell culture just evaporated. But what is largely unknown is that it was Coca Cola that underwrote the creation of local and eventually regional gas stations and Really?
Speaker 5:Which unlocked iterations in in better speeds for Baker. And so if you go forward a hundred years, you could kinda look at electric cars today. As more Tesla Superchargers were built, it became it unlocked electric cannonball records, and in the future, we'll have other records. Today, there are maybe, I don't know, a 100 or so people in a in a Facebook group, the Cannonballers group. Myself, Ed Bollian from VinWiki who broke my record, Arne Thoman who set it during COVID.
Speaker 5:And, you know, people go on solo runs and occasionally there's a multi car run. But the modern history is almost entirely based on the legacy of Brock Yates. He was a very libertarian editor for Car and Driver. And from '71 to '79, he went he operated a full on illegal multi car race. Mhmm.
Speaker 5:Yeah. And when it got covered in Time Magazine in '75 or '76, it got a lot of lot of attention in the last one in '79 that led to the movie. And that was the end of cannonballing in an organized fashion. It lives on today in that that the cannonballers group.
Speaker 1:Yeah. What what is the what do you think is next for cannonball? Do you think people are gonna try and, get creative with the EV challenges? Because that feels like almost an entirely new dynamic. But then also, if you could explain kind of the the idea of, like, a COVID run and how that might make it kind of impossible to ever reset the record.
Speaker 1:I don't know what your take is on that, but just giving a little bit of that history because it is fascinating.
Speaker 5:So, you know, the traditionalist group is, you know, multiple cars, internal combustion as fast as you can.
Speaker 1:Yeah.
Speaker 5:And, you know, I did it in thirty one hours in in 02/2006. And then I was the our team was the first team to break it like twenty five years.
Speaker 1:Yeah.
Speaker 5:And then eight years later, Ed Boldian did it in 2850. And then Arne Tillman arrived during COVID with his team and did it in like twenty five thirty ish.
Speaker 1:Yeah.
Speaker 5:So, you know, it is since the COVID record
Speaker 2:What what what were they driving?
Speaker 5:Arnie was in an Audi RS six disguised as a Ford Taurus police car. Ed Bohlen was in a Mercedes c l 55, I think. I was in a BMW m five disguised as a storm chaser tornado research vehicle.
Speaker 3:Yeah. It's a lot of s 60 threes, e 60 threes, that type of car.
Speaker 5:I mean, there aren't many American cars that could do it. Today, be like a Cadillac, you know, CT five Blackwing.
Speaker 2:Oh. That's what John drives.
Speaker 1:I have a great
Speaker 6:great car.
Speaker 3:Fantastic. Perfect. If they could
Speaker 5:just lift the speed restriction on
Speaker 1:the street Are you in New York right now?
Speaker 5:I'm in Scotts. I'm in Scotts now.
Speaker 1:Oh, okay. Okay. Well, I'll see you in like two hours then.
Speaker 5:Okay. You're good. So the so, you know, I looked when I looked at the history of Cannonball, as an investor, I was studying the history of the Cannonball because understanding how gas station networks were financed and built and and monetized and eventually made profitable. I was, like, looking at EV charging network business. I'm like, well, how does that have you learned anything from a hundred years ago?
Speaker 5:And the answer is no. They didn't. And so, you know, the the the lack of infrastructure and the lack of reliable infrastructure with, you know, uptime was a huge Achilles' heel for the EV industry. Yeah. And only Tesla figured this out early.
Speaker 5:And so I looking at Cannonball Baker, like, well, why couldn't I be the Cannonball Baker of EVs? Like and AVs eventually. So in '20, 1415, started doing electric records. Tesla was the only vehicle at the time capable of setting these records because of the charging network. And, recently, I began looking at, you know, Lucids and Porsche Taycans, and those are the only vehicles that could break the Tesla record.
Speaker 5:And recently, a Porsche Taycan second generation became the first car to break the Tesla electric record in '39
Speaker 1:Yeah.
Speaker 5:Something. '39
Speaker 1:And what and and what goes into a great EV for breaking a cannonball record? Is it just total capacity of the battery or ability to sustain high speeds for a long time? Mean The battery swapping. Battery swapping seems like logical but none of the cars have that stock. So I don't know how you do that.
Speaker 1:A fuel cell is common in in a a gas car, is there an equivalent in Yeah.
Speaker 2:I'm also curious what other tech would you would you use today? Would you use a network of drones? I can imagine Oh,
Speaker 1:yeah. That's interesting.
Speaker 2:Know, potentially have thousands of drones spread out.
Speaker 5:Well, this is where cannonball history and record breaking overlaps with investing in defense. Because if you if you understand the history of, like, radar detection and laser, speed measurement and laser jamming, it's all analogous, and they are literally parallel tech in defense. And so the electric records up until recently, because the power density of the batteries is less than, you know, a fuel tank full of gas Yeah. Your speeds were basically limited to the optimal cruising speed of an EV, which is in the seventies. And, and then you have the issue of the charging networks.
Speaker 5:So there's nothing you can really do to a pure EV today. There's not much you can do to increase their efficiency, and you certainly can't increase their speed without eating into the into your battery state of charge. But everything comes down to the charging networks. So when Tesla you know, when their network was a 150 kilowatt across the board, your maximum your minimum time cross country was x. When they went to two fifty, you shut you cut a little time off that.
Speaker 5:Mhmm. What's so fascinating about the recent Porsche Taycan record is the Taycan's EPA battery e EPA range is less than a Model s long range, which is what I drive. However, the Electrovaya America network, which was a terrible charging network for years, went through upgrades recently. And if you buy the cheapest Porsche Taycan with a big battery option in its lightest weight configuration, rear wheel drive only, and you can charge at Electrify America at speeds that are faster than any Tesla, the cliff in the Porsche battery will let you go, I think, at max charge rate all all slightly beyond 50%. Whereas a Tesla, their first cliff is at 20%.
Speaker 5:So that's how the Taycan did it. Less battery range, faster charging deeper into the battery. That's the trick. Elusa today, it has is the longest range EV you can buy, but it does not its battery chemistry is not designed for what the Porsche is. And so for the time being, Porsche will hold the record.
Speaker 5:I think the next generation Tesla or Lucid could take it.
Speaker 2:Talk about EV the state of EV charging networks today, coverage, you know, are networks holding back EVs at all? We live in California. Seems to be plenty of of EV chargers around. Doesn't seem to be any type bottleneck, but I'm curious nationally.
Speaker 5:Well, I think that the non Tesla charging network, regardless of its ubiquity, has a lot of issues with handshaking and seamless payments and just hook up to your car. Tesla figured this out, you know, out of the gate. Like, it has to be frictionless or people are not gonna wanna do it. And so the American EV charging industry still has a lot of work to do. Mhmm.
Speaker 5:And and even if they do, the non Tussas on the road I mean, we have Rivian, Lucid and the Porsche Taycan. Those are all great great models. But other than that, there aren't there isn't, like, an amazing EVE product from any other American OEM. I mean, some of the Honda some of the Hyundai's are good. And so you need both half of the equation.
Speaker 5:This is where the Chinese is so strong because the vehicle hardware and software and infrastructure is all very good. Dangerously good.
Speaker 1:Can you talk about it it's it's kind of surprising to meet someone who's taken, you know, traditional combustion engine cars so seriously to the limit and then be interested in EVs. I feel like a lot of the traditional car guys are like I I would never. The purest. So what excites you about EVs broadly and then what do you think about the current state, the change to the EV incentives that are going on right now? How does the outlook look, you know, with with Elon like the Tesla sales are kind of dropping but that's for a variety of reasons from everything from like political to exports to China to, you know, their latent Black refresh cycles.
Speaker 1:There's so many different things going on. So what excites you about EVs and where do see it going?
Speaker 5:Well, I'm, you know, I'm I think I'm very American in that. Like, I'm totally of technology. Like, what is the coolest, best, newest thing? Are we making it? Let's try it.
Speaker 5:And if someone else is making it, we should make it. Like, that's that's it. That's awesome. This country became great by x innovating and exporting. So I don't care how something works as long as it's really great product.
Speaker 1:Yeah.
Speaker 5:So, you know, the EV tax credit expiring what is it? I think it's September.
Speaker 1:Yep. September 30.
Speaker 5:It's gonna it's not it's not awesome if you're an American car company selling EVs. And it's gonna certainly slow rate of adoption because prices will go up. Mhmm. But the real question is, you know, how do we depoliticize technologies Mhmm. From our internal American discourse such that The United States long term can compete in export markets.
Speaker 5:I don't really care, like, about the political opinions of who developed a certain technology because we need to create jobs here and be exporting stuff outside The US. And the Chinese are gonna kill us long term in the EV market if we don't get on board. So the EV tax credit expiring sucks, but it's a minor piece in the holistic system that we need to be debating and executing on. And, you know, I recently met a woman, Elaine Dizinski from the, I think, the Foundation for American Democracy. She said, we need a Pentagon for industrial policy.
Speaker 5:That doesn't need to be, you know, verticalized monolithic, you know, command economy, but it needs to be a little less chaotic and more focused than we've been. And I think that's really essential. Really, really essential.
Speaker 2:How do we solve the depreciation problem with EVs? I think it's for for the consumer frustration of like, let's say you buy a model y, drive it for nine months, and suddenly it's worth half of what you paid.
Speaker 5:I well, I don't know if there is a solution to that. You know, I I I don't I probably the best solution is we need to be investing in EVs and supply chain such that we can bring cost down, such that there isn't such a huge delta between the new cost and the depreciation. And it's I mean, all cars appreciate some extent. EVs more so. I mean, the great news for a lot of Americans is that used EVs are really cheap, and a lot of them are great.
Speaker 5:I mean, used Teslas are fantastic.
Speaker 2:I
Speaker 5:mean, assuming you well, don't but don't buy an old Model s, but everything else is fantastic. Fantastic.
Speaker 1:Yeah. Where are you seeing opportunities to invest in or alongside the EV trend? There's so many different parts in the supply chain. There's so many different adjacent products that an EV buyer if you're not going and funding like the next Rivian or the next Lucid, where do you see opportunities for founders?
Speaker 5:Well, you know, I you know, automotive is a very small part of my fund, new industry venture capital. I mean, a lot of the the biggest bets mostly had been taken. Yeah. And they're very expensive. You know, the I think most of the opportunities are in in manufacturing and in energy.
Speaker 5:However, there is I mean, we only do deep tech. But outside deep tech, there are a lot of opportunities adjacent to transportation and EVs and especially AVs. When people talk about job loss, you know, due to driverless vehicles, I think they are missing the big long term picture. The there is a universe of startups that don't exist yet. Not even barely in conversation over dinner for providing services for passengers in autonomous vehicles.
Speaker 5:You know, my mother, you know, she's older and and she has some issues with shopping. She would love to have an attendant or someone just to go with her on trips to go shopping. Like, where where is the Uber for elder elder care? Mhmm. That would it's a startup that's adjacent to Uber and Waymo that figures out how to connect them and has a supply of people who can do that.
Speaker 5:Most people who are driving Ubers probably shouldn't be, just from a safety standpoint. But they'd probably be very good at helping people. And there's a much better long term opportunity, an employment opportunity for that role than there was for driving cars.
Speaker 1:Yeah.
Speaker 5:Now, I'd also add that the the the fear and concern and the politicization of driverless tech is doesn't track with the history of automation in other other verticals. You know, we used to have a 100% penetration of elevator operators in this country.
Speaker 7:Yeah.
Speaker 5:And we went from a 100% in 1946 to 1% in, like, about 1970. But the total number of people employed by the elevator industry is bigger today than it was ever.
Speaker 1:Interesting.
Speaker 5:Because elevators will always be a business, but there's other roles around the elevator industry. And that's true of transportation. So I just don't buy any of the the panic and doom that that companies new tech at all.
Speaker 2:What about what about go to markets, the race between Waymo and and Tesla? Obviously, very different Mhmm. You know, approaches in terms of, know, fleet development. But I'm curious how you're seeing that race.
Speaker 5:So the race there I mean, I used to like to say, there isn't a race in AV because there'll be multiple winners. I mean, there's no one can name an elevator company other than Otis, but there are the big five elevator companies on earth. They're all big. So in AV, Waymo and Tesla are both gonna have products. And the people who claim one will win and those destroyed, it's absurd.
Speaker 5:But the real race is, you know, can Waymo develop a business model outside of robotaxis before, Tesla can generate a business at scale in robotaxis? Because Waymo's not in the personal ownership business, and and Tesla is barely in robotaxi at all. So Waymo needs to get into the licensing business and probably miniaturize their hardware such that it can conform to and become invisible on passenger cars. If Ford or anyone else had Waymo tech inside, if they could do that now, I mean, Tesla's in a in a tight spot. But Tesla's got the opposite problem.
Speaker 5:They've got to deploy a, I would say, perceptibly safe system, because no one knows what safety means, and get into the robotaxi business at scale with all the friction unique to their business model before, Waymo can invade their space. But, ultimately, you're gonna have three, four, five companies competing in AV tech. You know, we're we we're just seeing growing pains in both companies executing on different business models, and that's gonna play out. They'll both have their place.
Speaker 1:Last question, for me at least. I'm interested in, you you compared the cannonball run to building a start up business plan. What do you think about the actual activity of racing in a Cannonball? That idea of, of risk taking of, the stress on your body and founding a company. Have you found any analogies between the two?
Speaker 5:Well, you know, the can when you actually years of planning going to a cannonball drive and then it's over in, you know, sub thirty hours. Mhmm. I don't know of anything in except maybe like an emergency product deployment. Right. Like, that would that's stressful physically stressful.
Speaker 5:But every other component of it is similar. And in that way, the cannonball is more similar to, say, a deployment of a prototype in a defense scenario for the first time, and you have you gotta deploy it. It may not be ready. You don't know. You spend years developing it.
Speaker 5:It's it's go time. That's the closest analog. And I I I spent a lot of time with, you know, law enforcement and defense folks today, and I'm constantly amazed that they find what I did so interesting because to me, it's nowhere near as interesting as as what they do. But then when you start talking about laser jamming and communications and mapping and spoofing, you know, aircraft transponders to mask your location. And then I'm like, yes.
Speaker 5:Conceptually, it is all the same thing. I I would also remark that there's something profoundly American about the cannonball, which I think points to like the spirit of innovation. It is unique to United States, but that drives American dynamism, which is that whatever the rules are, how far beyond them can we go successfully without hurting anyone? Let's go let's find out. And that is the opposite mindset of a lot of founders from other countries and sadly, Europe.
Speaker 1:Yep. No. That makes a lot
Speaker 2:of sense. Makes sense. Last question from me. The CEO of Ford was recently making some comments. One, basically talking about white collar work broadly, felt more like he was just parroting, you know, maybe Dario or or something like that.
Speaker 2:But on the other side, he's been very outspoken about how innovative, you know, Chinese EV manufacturers have been, at multiple different kind of touch points. Do you think that American car manufacturers outside of Tesla have the will to start to innovate at the level of of some of these Chinese EVs?
Speaker 5:Well, I know Farley and I and, you know, to his credit, after I set my last electric cannonball record in a Tesla, he he he invited me to dinner. He sat next to me and grilled me on everything about Tesla Model three. So he's
Speaker 2:he's He's on it.
Speaker 5:He's on it. And the Mach E reflects some of those those lessons.
Speaker 2:Yeah. The Mach E the I I my buddy my neighbor has a has a Mach E rally and it's Good. Great wild car.
Speaker 5:Good. Look, you know, the Chinese car market has been there for anyone to see who wants to go over there and do competitive intelligence for years. And the same thing's happening now as happened in the seventies when the Japanese arrived in The United States. People weren't paying attention because, oh, they can't you know, these foreign they can't innovate. They don't know what they're doing, x y and z.
Speaker 5:Well, guess what? They did. And the cars are great. And friends of mine, Kevin Williamson's a journalist who went to China and has driven everything. He's like, the cars are better than anything sold here, even Tesla, because they're built better than Teslas.
Speaker 5:So we've got a problem. The only companies that are really have an opportunity in in the near to midterm are, you know, Lucid and Rivian and Tesla from The United States. Mhmm. The other the legacy OEMs have individual models that are okay, Mach E, you know, okay. I don't know what's coming what GM's got, but the real question is what could be exported to any other country to compete with a Chinese car in that market?
Speaker 5:And the answer right now is, other than Tesla, basically nothing. Lucid stands alone because it's a luxury model and it's really good. And Rivian's are very cool because the the products are great. But we are in a tight spot. And, you know, we need to whatever your politics are, The United States needs to have national champions that are exporting.
Speaker 5:We shouldn't be talking about Tesla versus Waymo. We should be talking about Tesla and Waymo and exporting the hell of anything we can that employs Americans here, that are great products, that then support the American soft power narrative for the rest of the century.
Speaker 1:Yeah. That's great. Great answer. I completely agree.
Speaker 2:Thank you so much again soon.
Speaker 1:Yeah. Gotta do this again soon. This is super fun.
Speaker 5:Anytime, guys. Love you.
Speaker 1:Thanks so much for hopping on.
Speaker 2:Cheers, Alex.
Speaker 1:Well, if you have an opinion about a public car company, get on public.com. Investing for those who take it seriously. Got multi asset investing, industry leading yields and
Speaker 2:a trust the day when Figure was allegedly getting valued north of Ford Ford Motors.
Speaker 1:Well, yeah. If you wanna rotate into Ford, you can do it on public. If you wanna rotate out of Ford, can also do that on public. This isn't financial advice here on the show. Just Never.
Speaker 1:Give you the facts. And, the next fact is that Ryan Peterson from Flexport is joining the stream in any minute. Now Ryan, how are you doing? Sorry.
Speaker 3:You just threw me in here. I'm eating food. I didn't know what was going on. Yeah.
Speaker 1:It's okay.
Speaker 2:Surprise. Surprise. What are you having for lunch?
Speaker 1:We've been under attack today so the stream's been late. What you got?
Speaker 3:It looks like Chinese food but it's a fancy salad.
Speaker 1:Oh.
Speaker 2:Nice.
Speaker 1:How is that Blue Barn? Yes. Blue Barn's fantastic. Great spot. Anyway, what is new in your world?
Speaker 1:Can you give us the update? We we we live through the tariffs. We checked in with you a few times. Give us the temperature check on where we are with tariffs, global trade broadly, and your business.
Speaker 2:There's no strategy with the tariffs. They're purely to torture Ryan Peterson.
Speaker 3:Also, all caps, we're learning how to read and write in all caps all over again. Someone said the the art of letter writing was dead, and then Trump just proved us all wrong. You know? He's writing letters to national, to countries Yeah. With really amazing capitalization standards.
Speaker 1:But he's dictating just call you mister Flexport. Is that
Speaker 3:The best part is that he's dictating because he doesn't type himself. So he's telling them, no. Like, capitalize tariff and capitalize country Yeah. And all caps for trade.
Speaker 1:Certainly has a certain aesthetic to it.
Speaker 3:It's it's a yeah. Whether there's a strategy to it or not is a really good open question because we got new tariffs that are at above like, on our allies, Japan and
Speaker 1:Mid Japan.
Speaker 3:And 25% tariff. I don't know. I couldn't tell you what what the plan is there, but it's everyday new things, basically.
Speaker 1:Yeah. What about what about just the general mood of customers, the flow of shipments? I mean, initially, it was like, you know, the the the boats are sitting at the port not moving because people are just terrified. We heard about, you know, iPhones going in the bellies of $7.40 sevens on rush flights to get out of the airport like minutes before the tariffs went into effect. Has there been any more clarity?
Speaker 1:Are we in some sort of return to normalcy where at least CEOs can feel like they can plan ahead for what's coming or is it just as much uncertainty?
Speaker 3:It's, you know, today's the day. So the terrorists are the the ninety day reciprocal terrorists came out and they were paused for ninety days
Speaker 1:Mhmm.
Speaker 3:Ninety days ago today. Mhmm. So they are going unless something is announced, which he announced, like, six or eight countries yesterday with their new tariff rate, but everybody else, that's happening today. They'll go back to the ninety day to the original rates from April 2 that freaked everybody out tonight at midnight. Mhmm.
Speaker 3:Now then I believe he tweeted earlier today or True Social that it'll be on August 1 that those new duties are due. So there probably will be a bit of a race here for the next three weeks to try to get stuff in at the 10% rate instead of the higher rates Sure. That's coming back. The thing that freaked everybody out, ninety days ago was more the China rate, which is a 145%.
Speaker 1:Yeah.
Speaker 3:And that's come back down to 30, and people are kinda, like, okay with it. I don't know. We'll we'll take the temperature here, and we'll see what happens with with freight bookings. But seem things seem kinda normal with the customer base, but we haven't got enough data yet. I mean, it's brand new information, the new rates that came out yesterday that are going to go into effect in the next
Speaker 1:couple of weeks. Just as a little extra data. Right now, the S and P and NASDAQ are basically flat. But copper prices have hit all time high on this planned 50% tariff. Am interested in China.
Speaker 1:I remember when you were explaining the nature of the tariff, there were a few different elements. You were talking about the energy prices into China basically being passed through. I believe that was a tariff on oil that then was getting passed through to the cost of goods in some way. How are you thinking about the you said 35%. Is that all in or is that just a piece of the overall tariff picture if you're considering doing business in China going forward?
Speaker 3:It'll depend on your product. Tariffs are driven by three things. One is the the country of origin Yeah. And that is a something that actually Trump is changing the rules around in real time, with this idea of transshipment that he said Break that down. Are transship through Vietnam will pay a higher duty.
Speaker 3:But, like, that very odd. I mean, those of us in the industry think of transshipments has no effect on duty rate whatsoever because it's still the original country. If you you ship from goods from China to Vietnam and then from Vietnam to The US, unless you did what's called substantial transformation, you change them into a product of Vietnam, they still pay the Chinese duty rate.
Speaker 1:Yeah.
Speaker 3:Whereas he's kind of changing those rules in real time and have not yet published something in the code of federal regulations that we can actually understand what he means. So Mhmm. Remind everybody that true social is not how laws get and regulations get published. It's Yeah.
Speaker 4:Yeah. We're waiting to see what
Speaker 3:really comes out. Yeah. So okay. So you have the country of origin. You have the classification Mhmm.
Speaker 3:Which is, okay, what type of goods are they that that drives do they have the components of steel and aluminum that sets a different duty rate? Or what is the thing actually classified as? And then the third one is valuation. How are they valued? And those are the three kind of key drivers of what your duty rate is.
Speaker 3:And right now on the there's just a lot of uncertainty that we're waiting to see what this transshipment thing means. The world will find ways to minimize their duty rate. Hopefully, in legal ways. Don't don't don't make sure you work with an attorney and don't just go do this. But it'll be very interesting to see, like, can you actually save duty by shipping from China to Vietnam somehow in this world?
Speaker 3:Like, I don't know. I don't know what the definition of transshipment's gonna be. The interesting the other interesting thing here is that from a trade perspective, logistics and customs companies are kinda happy about this stuff because it adds complexity. You need leader you need partnership from experts more, and you're doubling the amount of trade because there's gonna be if there's incentive now to move goods from one country to another, transform them, and ship them onward, that's two shipments. One from China to Vietnam and one from Vietnam to The US.
Speaker 3:Or, like, you know, one of the sad ones that came about here is we have a customer longtime customer that makes bicycles in The United States. Mhmm. And they import components and assemble them in The US and sell them. Mhmm. Well, bicycles got an exemption.
Speaker 3:They're duty free, but the components did not.
Speaker 1:Oh, interesting.
Speaker 3:So these guys are actually better off shipping their manufacturing offshore now, and that's what this gonna happen.
Speaker 1:That's very odd. Have there been yeah. You feel like it feels like there's a little bit of this, like, game theoretic dynamic where Trump puts these blanket tariffs all over the place, but there's potentially an incentive for some country to just jump head first and say, hey. We're playing ball. Give us the lowest rate possible because we wanna grab as much manufacturing capacity over here and be as friendly as possible.
Speaker 1:Have there been any, like I mean, I know that the the the situation with Japan has been more difficult than expected. Have there been any countries that have popped out as, like, new favorite trading partners of American companies in your feeling?
Speaker 3:Well, the company wise is different from the government probably.
Speaker 1:Sure. Yeah. Yeah.
Speaker 3:Maybe both. The government, it looks like The UK so far. And but The UK's got a 10 duty rate and Mhmm. Some nice exemptions that they got on auto, which I guess is like Land Rovers and Bentleys Ass Martin. Yeah.
Speaker 3:Those are nice. They don't make a lot of those, but
Speaker 1:Jaguar, is that is that how they Yeah.
Speaker 2:I is that don't think they've been making many cars.
Speaker 1:No. No. Jaguar Jaguar actually took a year off. They skipped a year producing cars.
Speaker 2:They were They're taking a year off business.
Speaker 1:We're we're just gonna sell down our inventory.
Speaker 3:Oh, okay. So it wasn't just because the commercials were that bad?
Speaker 1:No. No. Then they launched the rebrand after they had announced that, hey. We're we're not producing any new cars, which was like, your job is
Speaker 2:car companies make cars.
Speaker 3:Belong in a Jaguar commercial. Look at
Speaker 1:you too.
Speaker 3:Belong in the North Of England. I actually I I didn't understand that. In the convertible.
Speaker 2:I didn't understand the hate on actual silhouette of the new Jaguar. It was beautiful. Thought it was cool.
Speaker 1:It was very cool. I mean, it was one of those prototype cars that didn't have, like, mirrors or anything. So they clearly needed a lot to do to make it a real one. Yeah. But, yeah, I mean, a lot of
Speaker 3:But so coming back to your question. Yeah. The UK is interesting because they actually have a trade we have a trade surplus with The UK, and they still got a 10% duty rate. So that's what everyone know. The best you could possibly do is 10%.
Speaker 3:Mhmm. Even if you have a trade even if we maintain a trade surplus. Vietnam is probably the best example of someone that tried to play ball, and they said, hey. We're gonna do everything duty free on American products being imported, and they ended up with, what was it? 25 20% and then this weird transshipment thing that I already got to that we don't understand yet.
Speaker 3:So that's probably the thing that Trump would like to get is that transshipment. What he would like to have is that these countries put duties on China. And Chinese goods coming into Vietnam, they want them to get hit with high duties so that you're not effectively laundering, washing Chinese goods through that country Yep. Doing some minimal transformation and then shipping them to The US. They wanna make it so, like, it's a you know, like, create this coalition of the willing against China.
Speaker 3:That's my that's my read on it.
Speaker 1:Yeah. Yeah.
Speaker 3:It's kinda hard for them to Yeah.
Speaker 1:There's kinda two narratives. One's like Trump likes tariffs. He wants to throw tariffs all over the place, make us a high tariff country. On the flip side, there's like this is about a trade war with a rising near peer competitor and the entire narrative is really just US versus China and everything else is in service of that. Mhmm.
Speaker 1:Is is that a reasonable narrative that you people should
Speaker 3:It's one of those two probably. Yeah. Yeah. Maybe some balance and I'm not sure they know and there might be different factions within the US government that want different They're ones of those and it's it's it's pretty hard to get a read on it. Mhmm.
Speaker 3:But from a company perspective, they're just looking for whoever makes the cheapest stuff that's high quality that they could sell. I mean, I don't think these countries there's not that many companies. They might, on the surface, like, claim to be patriotic or have some views or something, but that's not that's not what companies are meant to do. They're meant to make money. And so they're gonna they're gonna route you know, their way to the rules get set and then they're gonna water flows downstream.
Speaker 3:They're gonna downhill, they're gonna go figure out where the best place to make stuff is.
Speaker 1:Yeah. We saw this with Nvidia where there were chip bands and Nvidia it is, hey the speed limit's 65, I'm going 64 miles an hour. And so I'm gonna make a specific chip that is as good as possible while not breaking that regulation.
Speaker 3:And it's like, that's not the spirit of the law. And it's like Yeah.
Speaker 1:Yeah. I'm a $3,000,000,000,000 company. My job is not to adhere to the spirit of the law. I gotta adhere to the letter of the law. I gotta make as much money as possible.
Speaker 1:And so
Speaker 3:that's That what is what companies are Wide out. Do. So Yeah. Government needs to set the rules and then we all figure out how to make money by giving those rules. The problem right now is that the rules change, so you can't make any decisions in the I I I advise people wait.
Speaker 3:Yeah. At least tomorrow. I mean, we'll see what what new trade deals drop tonight, but I think every few weeks. No. No.
Speaker 3:If if any
Speaker 2:if if if history is a guide, as soon as you leave this Zoom Yep. There will be news.
Speaker 3:Yep. Then Someone checked Twitter right now. What what what's what's the
Speaker 2:up how how cooked are are Timu and Sheen right now? There have been some reporting last week around you know, people based, you know, US shoppers ditching them because of the loophole. I didn't know how Mhmm. How real that was.
Speaker 3:I haven't seen the latest data. I think they're both back live. You can buy stuff on their apps again. So I think they're they're set up in a way that lets them transact and just pay the customs duties. Yeah.
Speaker 3:And I I think they're I I don't know how the consumer's responding to it all. It's already cheap. They have stop selling for a couple weeks, so that probably hurts you pretty significantly.
Speaker 2:But if it's a $30 couch and then you're paying $90 or or whatever, it's like
Speaker 3:Well, it's only 30% on their on their wholesale price, not on the price that you pay.
Speaker 2:Oh, right. Right. Right. So
Speaker 3:I think they may be fine. It's all but I have heard that apparel companies who is who most directly competes with Sheen at least, actually, sales are up quite a bit despite the tariffs and having to raise prices, and that's probably in part because Sheen's volumes have come down and the consumer is shifting their spend onto other brands. So we've seen that a little bit in our customer data and our fulfillment business where customers are exceeding their forecasts. So the world is not all doom and gloom from a ecom perspective, which is a big departure from ninety days ago where I was screaming everyone's gonna go bankrupt and companies were screaming that to me. I think that relaxing the Chinese tariffs, made a big difference.
Speaker 3:But, we're gonna figure out what happens next twenty four hours of with these new duties and how people respond to that over the next few weeks.
Speaker 1:It's gonna be exciting. What about some of the smaller players in the market, like just the the the broad, like, drop shipping economy? Jordi and I were talking about this this morning, how it feels like and Sean Frank from Ridge was talking about how like the default road to entrepreneurship a few years ago was like spin up a Shopify store, like white label some stuff, like you know get get a business up and running and then it shifted to like courses and influencer stuff and AI and Info products. Info products. And and now it's it's WAP and Cluely and these other things that they're kind of talking about like the modern, you know, first time entrepreneur track.
Speaker 1:Is are these like, you know, lean, drop shipping operations still going, do you think? Do you do you ever run into any of these people? Do you ever see them kind of like you used to hear about like, oh someone just found this really interesting niche on on ads and they scaled this like very simple business to like tens of millions of dollars. Are you still seeing that or or do you think that's kind of like
Speaker 3:I think you mostly see it in China and Vietnam but selling into The US.
Speaker 1:Yeah. Okay. So
Speaker 3:from there, they're entrepreneurs. They're entrepreneurs who figured out how to do marketing and branding and the more that that that was something I predicted that would happen twenty years ago that it would but that it would take a generation because
Speaker 1:Yeah.
Speaker 3:That they have to speak English, they have to know enough about they have to have enough humility to go, speak English, but not that well. I should probably hire an American to do the writing. Mhmm. Instead of writing myself and have it be English, but terrible.
Speaker 2:On on Sunday, I wanted to get a new hose. Mhmm. Like what is not a not a spigot, but one of those things that you can like control the Nozzle.
Speaker 3:Nozzle or whatever. Yeah. So I go
Speaker 2:on Amazon. I I search hose nozzle and I went five pages without finding a legacy US brand Yeah. That that would sell me one. Yeah. And they're all these names that are basically some common five six letter combination of English letters that that doesn't even read well.
Speaker 3:Yeah. Amazon's a real problem in that regard. And I I I would I would
Speaker 2:happily like, I wanna check a box Yep. That's just only buy from brands that have been around for fifty years. And I would I would just happily like, those are the products that I wanna buy Yeah.
Speaker 3:Because I don't wanna
Speaker 2:buy the $6 product that's gonna break in a year and I gotta buy another one. I just wanna buy
Speaker 3:the thing that that, you know, it's not It's been trying watch on this front, those companies don't 60% of all the sellers on Amazon don't even have a US entity. They're being they're like, the goods are actually imported from abroad.
Speaker 1:Interesting.
Speaker 3:And there's a there's a bipartisan movement in DC to block this policy, to block this law, to make it so that you have to have a US entity. You can't just import as a Chinese company or whatever country country company. You can't just import stuff into The US. Like, without someone here who can be held accountable to following the customs law to whatever other child safety laws, you know, other stuff that's downstream that can happen. And I think Amazon has business exposure there that people like you are gonna at some point, I I started gravitating towards Shopify and, like, the shop app where you're like I don't know.
Speaker 3:There's something higher quality about people trying to build a brand on Shopify today anyways. And then they have political exposure. I mean, what did Trump call them? Treasonous? I forget what the
Speaker 1:surpassing through the tariffs and
Speaker 3:Yeah. He called them a treasonous
Speaker 2:check out the For me as a consumer, it's not like I want my hose nozzle. It's not like I need an American made hose nozzle. Just like this this commitment to like this this relationship that you have when you're buying a product which is I wanna trust that this company put in a real effort to design a product that is gonna be effective and durable. And I'm happy to pay four or five times what the what the the entry ticket price is.
Speaker 3:Mhmm.
Speaker 2:So Lindyism. I like it.
Speaker 1:Yeah. I mean, people are clamoring for this on Pinterest. Like, they want to search Pinterest from like image that's posted on Pinterest before 2023. Like, before the AI images came. You just search for anything and it's just a lot of like sneaky AI stuff stuck in there.
Speaker 1:If you're looking for something very specific, you're like, I don't necessarily want an AI image and there's no real good filter other than just like is it in the Pinterest database with date created before 2023. Like, that is the provenance of that image. It's kind of the same thing like on on Amazon being able to filter for did this company exist, you know, ten years ago.
Speaker 2:What was the what was the postmortem on the on the conflict in The Middle East from a trade standpoint? I remember there was one night
Speaker 1:Straight to Sudhermeuse.
Speaker 2:Well, looked like two tankers had been blown up and I and I was seeing that like open source intel on it being like, oh, like I just was feeling bad
Speaker 3:for you.
Speaker 2:I didn't I didn't send you a message or anything, but I was like, oh, this is the last last thing that that the that global trade needs right now, but it we seem to get out of it.
Speaker 3:Yeah. It's this trade war moves is incorrect. Much more important for the wider economy than just for certainly not for containerized train trade. It's pretty small. Like, only about two percent of containers go in and out of the
Speaker 1:Oh, interesting.
Speaker 3:Strait Of Bormuz. And that's basically going to Dubai, Jibbalali Port, called. It's a top 10 port in the world, but it's mostly a transshipment port, meaning cargo comes in there, gets unloaded. Think of it like a packet switcher. The cargo comes on and gets rerouted.
Speaker 3:It's not that important of a port in the wider scheme of things. The big the big thing, obviously, is oil. It's, 20 something 5% of the oil in the world flows out of there. And it it's fascinating. Look.
Speaker 3:If you look at the oil prices, look at the price of diesel. There's no sign that anything ever happened in The Middle East at all. Like, you don't even see a blip upward.
Speaker 4:Wow.
Speaker 3:And when Iran threatened to close the Strait Of Hormuz, the oil price went down 6% Mhmm. Instead of spiking.
Speaker 1:Yeah. Weird. Why?
Speaker 3:My read is, like, no one thinks that's a credible threat. Because if they close it, China gets all their oil out of there.
Speaker 1:Yeah.
Speaker 3:And China is, like, kinda necessary to keep if Iran stops you know, if Iran screws with China, like, what's left? Like, you're gonna get be against China and The US? Like, this is probably bad strategy. Yeah. I thought that would maybe if when I saw that they might do that, I like, this is kinda some four d chess by Trump if he gets Iran to shut down the Strait Of Hormuz.
Speaker 3:We don't need it in The United States. We got we produce our own oil, basically. It's an overstatement, but
Speaker 1:Yeah.
Speaker 3:When the oil price goes up, America does better now. Right? We produce we're the number one oil producer in the world. Like, that might be good for us as a country. That is a crazy story.
Speaker 1:Like, there's the idea of us yeah. I mean, I mean, I grew up with the idea of, like, energy independence and the idea of America needs oil, and we gotta go to these wars to get the oil. And oil drives everything and now, you know, we're an
Speaker 3:exporter. Yeah. Yeah. It's like
Speaker 2:There there is It's not like purely that we produce it. We can just keep it here and be self sufficient. Right? Isn't isn't it? There We're we're producing it Like, it has to
Speaker 3:different grades of oil in our refinery capacity is, like, different. Yeah. Sure. There's some of that, but, that's, nonetheless, a higher price of oil would benefit American companies. Now it's, yeah, like, normal people, you and me, you know, our our energy bills will go up and it'd be bad.
Speaker 3:But on that for this for the country, you know, probably income inequality goes up or something, but
Speaker 1:with high price of oil is good for
Speaker 3:the number one oil producer in the world.
Speaker 2:How how do you think, retails broadly are thinking about interest rates in the next twelve months? You know, there's certainly pressure on that front. On Powell, it would be, you know, retailers have had to get used to high rates and if you're financing inventory and things like that, it is meaningful cost. I've I've heard rumors of of aggregators, you know, shutting down that were heavily debt fueled, probably can't sustain in Mhmm. In this type of environment.
Speaker 2:So
Speaker 3:I assume like everybody else. I don't think that that's I don't think we're that sophisticated in our business. Like but cheaper interest rates would definitely help consumers buy more stuff and drive a
Speaker 1:lot of growth.
Speaker 3:And I think most of us would realize, like, hey. We we kinda took it for granted for too long, and we probably should have borrowed more money when it was 2% and bought more stuff and done capital investments. And the next time around, I think it'll be a massive spending splurge or investment splurge if they drop interest rates back down. People won't take it for granted.
Speaker 2:Mhmm. Totally.
Speaker 1:Europe and SF, there's been a bunch of massive trade deals in SF AI engineers going to Meta. What's been the mood on the ground? Do you have any advice for the folks picking up 9 figure checks?
Speaker 3:I just well, I love first of all, love asking people because if you didn't get an offer, what's wrong with you? No. And and if
Speaker 2:if you're not if people aren't if there's not like whispers that that people from your company are being post probably Yeah. Not at the right lab. Yeah.
Speaker 3:Or lab Oh, man. Maybe I should make some posts about this getting angry at Zac for taking my best people. Oh, yeah. That's so much why. Yeah.
Speaker 1:The psy ops need to continue.
Speaker 2:The rumor the rumors are true. He's been The personally dialing the entire engineering team.
Speaker 3:Yep. The advice would be it's you should go read the most important business book ever written.
Speaker 1:Mhmm.
Speaker 3:It's called the prince by Machiavelli. Oh, sure. And Machiavelli's rule number one Mhmm. Is never hire mercenaries. He says it over and over again.
Speaker 3:It's the whole theme of the book. Mercenaries are useless. They will run away when the time they'll they'll take your money and then run away when it comes when it actually comes to fight. Mhmm. And that is really dangerous out here in this world of AI poaching, people paying this much money.
Speaker 3:You know, I'd be I'd be very, worried if I was how do you build a culture out of that? It's gonna be challenging. They they should all go read the book and figure out what are they gonna do about that.
Speaker 1:How do you think about the sports analogy? A lot of people are kind of comparing the current trade deals to sports. No one thinks about Ohtani as a mercenary. You know?
Speaker 3:Yeah. It's interesting question. Sports, have a fixed size of your team, so you can only have so many players. So maybe there's something to be said for that of like, okay, you've got therefore, it bids up the price of the Yeah. Also, if you look at
Speaker 2:if you look at the the, you know, we we know nothing about sports but I growing up in the Bay Area watching the Warriors go on this very dominant run. Yeah. I'm sure at any point many of those players could have increased their
Speaker 1:Well, not at any point because they have contracts that
Speaker 2:are most for
Speaker 1:years and so But but It's like they're And there's
Speaker 5:a good point.
Speaker 3:You know, the ultimate is Tom Brady. Because Tom Brady, his secret was marrying a supermodel wife who made so much money that he could work below market price and they could build out a great team. So, maybe you need to hire engineers who have rich spouses.
Speaker 2:There we go. There we go.
Speaker 3:It's a good take. Yeah. Yeah.
Speaker 1:That's gonna be the next the next bull signal.
Speaker 3:Yeah. I don't I don't do it for
Speaker 1:the money. You bring
Speaker 3:to the holiday party? Okay.
Speaker 1:You're getting poached. You're going to
Speaker 3:the top team. The holiday party was was popping. Yeah. But it's a yeah. It's I I don't know.
Speaker 3:I'm fascinated by seeing how this plays out. And it is you know, at the end of day, you gotta hire the best talent and Zuck's kinda smart. He's got the war chest. Yeah. And OpenAI did this before.
Speaker 3:I mean, they hired they were hiring everybody. I love seeing them whine about it because all my friends have had their engineers poached by OpenAI who were overpaying by two x. So
Speaker 1:Yeah. Yeah. A front
Speaker 3:end engineer was making 350 k just to, you know, HTML and CSS. Yeah. And that it's it's kind of Yeah.
Speaker 2:$3.03 50 and and then you know, tens of millions of dollars and probably Stock Stock options.
Speaker 3:And hopefully not for the front end engineers. This isn't even people Hey.
Speaker 2:Hey. No slander for front end engineers.
Speaker 1:I mean, depends on when they got in. Right? If they got in
Speaker 3:Oh, fair.
Speaker 1:A couple years ago, it could have 10 x in terms Yeah. Of Yeah. You know, net value.
Speaker 3:It's, you know, it's one of those it's like trying to be the toughest fighter or something at some point, you know, you can beat up everyone on your block, you eventually run into Mike Tyson you're gonna lose.
Speaker 1:That's exactly what's happened. Yeah. I mean Yeah. It's It's it's so interesting because like the last
Speaker 5:Go on.
Speaker 1:The last like big like the I mean we've had we've had a few like big hyper scale like really fast growing super hot like ordained as like winner companies like SpaceX, Tesla, Uber and those companies were not seen as a direct threat to Google or Microsoft or Apple. And so it's not like there was ever I mean Google was kind of thinking about Waymo as a counter to Uber but it was never like our core business might disappear. So we have to spend, you know, unlimited money to protect that, you know, what we have.
Speaker 2:People are people are starting to talk about how the the competitive dynamic between meta and OpenAI Yep. Being that if you're spending three hours a day talking with chat Yep. That's three hours a day that You're not scrolling. Putting comments on your friend's Instagram posts Yep. Or hitting reels or things like that.
Speaker 2:So there there's, you know, twenty four hours of the day. We're making more humans but, know.
Speaker 1:Yeah. Yeah. It's I
Speaker 3:I wanna see what ideas they have because, know, the way to compete with Google was not make a better search engine Mhmm. Like, years ago, twenty years ago. Yeah. You know, it's it it would that a lot of people tried that, you couldn't do it. So I don't know that the way to compete with OpenAI is to make a better chatbot.
Speaker 1:I completely agree.
Speaker 3:Like, they gotta come up with some new ideas here, and I don't know what they are. I don't what they have in mind. Maybe they maybe they I want a new I want a new, thing at the bottom
Speaker 2:of the Instagram app that's just dopamine and it's just a perpetual loop. Yeah. Something there.
Speaker 1:The whole app might be that eventually.
Speaker 3:Just surfacing content you wanna see would be a win.
Speaker 1:Yeah. Anyway, this has been fantastic. Ryan, thanks so much for hopping on.
Speaker 2:Send us a note when when when when new pope new truce hit the timeline. We would love your reaction.
Speaker 3:I don't think you guys can handle the the speed at which this is gonna happen. I mean, we might
Speaker 1:need you back on the show tomorrow. Who knows?
Speaker 3:Hell, yeah. Yeah. I don't I don't think you need that. Well, Alright. Take care, guys.
Speaker 1:We'll talk
Speaker 2:to See you, Ryan. Cheers.
Speaker 1:Bye. Let me tell about adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only Adquick combines technology, out of home expertise and data to enable efficient seamless ad buying across the globe.
Speaker 2:It's billboard time.
Speaker 1:And we have our next guest in the studio already. Jonathan from Air Garage talking about parking. How you doing Jonathan?
Speaker 2:It's time to talk about parking.
Speaker 4:Everybody's favorite topic parking. I'm just glad I finished my lunch before I got let in on my.
Speaker 8:So I'm a little more
Speaker 4:more prepared than he is.
Speaker 1:It's a bit of a random stream today.
Speaker 2:Great hearth.
Speaker 1:Great But
Speaker 4:Great hearth.
Speaker 3:Hearth. Is that a TV? That looks like a TV.
Speaker 4:Yeah. I wish it was a real hearth. I You know, it's San Francisco. It's June or it's July now, I guess. But it's, pretty much always cold, so we gotta try to stay warm however you can.
Speaker 1:I think the real hearth comes after the next round.
Speaker 2:That's right.
Speaker 1:Once there's some major liquidity in the business maybe, then you can upgrade. But give us the news. What's the latest from you?
Speaker 4:Yeah. Very exciting news today. We just announced that we raised our series b from and was led by headline growth and participation from some of our existing investors and customers and all that jazz. So very exciting. $23,000,000 series b and hit that gong.
Speaker 4:Let's go.
Speaker 2:Great contact. Great contact.
Speaker 4:Great contact. Sounded sounded very very full from this end.
Speaker 1:Yes. Good. It was fantastic. So give us give us an update on where the business is today. Kind of introduce the business and yourself, and then we'll kind of dig into some questions.
Speaker 4:Yeah. Definitely. So Air Garage for people that haven't heard of us before, basically, we work with real estate owners that own parking lots and parking garages, and we help them manage and monetize their their parking assets. So, you know, if you've ever parked your car in The United States or really just anywhere, you know that it's a pretty terrible experience. There's signs that are confusing.
Speaker 4:It's like a five paragraph essay on a sign. Yep. The machines are broken. They eat your credit card. They eat your ticket.
Speaker 4:All that sort of stuff. And, you know, I think a lot of people when they first experience that or if they've thought about it at all, it's kind of like one of those slut blindness problems that most people you experience it, but you just kind of ignore it when it happens in your daily life. If you've thought about it, you're kind of like thinking, okay, maybe it's like this because, you know, that's how real estate owners like it. They wanna scam me. They wanna, like, rob me blind.
Speaker 4:A lot of people, you know, they have it out for real estate owners, but, it's not that way at all. Real estate owners hate it too. And so we work with those real estate owners. We've built this basically vertically integrated operating system for parking real estate. It combines everything involved in taking it from being a piece of asphalt with stripes on it to a full fledged parking operation that generates income using technology.
Speaker 4:So it's the technology you would expect in any other industry, but it's just completely new to the parking industry. So we do payments. We do advertising enforcement. We build hardware. We build software.
Speaker 4:Basically, what we're trying to do is bring as much data and visibility to these assets as possible to generate more income for real estate owners to create a better experience for driver at the same time. And so, you know, the net result is we can increase net operating income by 20 to 50% for real estate owners. And for a real estate owner, that's huge because your asset is valued on NOI, and you wanna make as much as much as possible. So that is how we've managed to grow as much as we have. So we've grown 10 x since we raised our series a.
Speaker 4:We're
Speaker 1:actually That's good.
Speaker 4:Cash flow positive as business, which is awesome.
Speaker 1:Congratulations. You
Speaker 4:know, just trying to get as many locations across the country as possible. So now we 300 plus locations in 38 states across The United States.
Speaker 1:Fantastic. I have two Thank funny you very stories much. About parking. One, once was I I started I stopped carrying a wallet because I was like, yeah, Apple Pay is so good. I'm fine.
Speaker 1:I don't need a wallet. And I got locked in a parking garage that didn't take Apple Pay once. And I had to talk my way out of it and hit the security guard and be like, sorry. I literally have no money of any kind. I can't do anything.
Speaker 1:And then the other time, I was parking in a garage going to a restaurant and and like it's very confusing how to pay for this garage because there's no like there's no like gate. So you just go in and there's a ticket attendant and the guy comes up to me in like a jack in like a like a you know security vest or whatever and says like here, yeah you pay me. And I pay him and I go into the restaurant and the restaurant owner is like, yeah that guy doesn't work there.
Speaker 3:And it was
Speaker 1:just like an enterprising homeless man I think. And know, good on him, but not not the best user experience. So, yeah, I I have a ton of questions. I I wanna know I mean, so hardware, like, that seems actually pretty hard to solve. I mean, taking cash, credit cards, Apple Pay, like, the demands are pretty wild.
Speaker 1:Do you do you white label stuff? Do you actually develop everything? Do you have manufacturers for this stuff? Is it commoditized? Like, what is that what is the shape of that side of your business?
Speaker 4:Yeah. So the hardware that we do is is all basically cameras and sensors. So it's mostly licensed light reading cameras that sit at the entrance and exit of the garage and they track every vehicle that goes in and goes out. It gives us real time occupancy data, gives us enforcement data, but then it also can actually enable these magical experiences where I park in our down near our headquarters in Downtown San Francisco. We have a garage right near there.
Speaker 4:My account, because I'm already registered with their garage, when I drive into that garage, it automatically starts a session for me. When I drive out, it automatically ends my session. I never have to touch my phone. So to your point, you wouldn't have to carry a wallet anymore. Yeah.
Speaker 4:And it bills me for exactly the time I use. Right? And it's like that's when you think about it, that's just how parking should be. Yeah. But it's not that way.
Speaker 4:Right? It's like so old school. And that's because basically real estate owners, they hire a parking operator, which is basically a property manager to run their property. Those parking operators, they're 50 to a 100 years old. They've been doing things the same way since the nineteen eighties.
Speaker 4:They use cash and machines and attendance. And yeah, they all use basically parking machines in their locations. And it turns out the parking machines are just kind of the wrong way to run a parking facility. You have those gate arms, people more often than you would think, people drive through those gate arms. A lot of owners when they're switching to air grudge, they're telling us about, you know, 15 times a month somebody breaks their gate arm and it's like $4,000 to fix it every single time.
Speaker 4:And that's on top of you spent a $102,100,000 dollars to buy the gate arm in the first place. And then you just need an attendant to sit there and like babysit it. So one of the things we do differently at air garages, we're in entirely a gateless system, which means you remove that entire huge sort of headache and expense of maintaining and and keeping these gate arms in your facility. And so when you're a driver, that's also a better experience. You drive in, you drive out, the license for reading cameras track your car, we get real time data, you get a better experience, and you have a lot less expense and sort of, you know, maintenance issues to deal with with the gate arm because I a lot of people can relate to the experience as well of, like, especially after a big, you know, sporting event or event that you've been to, you're trying to get out of a parking garage, you're sitting there for an hour because people are taking so long to go through that gate one at a time.
Speaker 4:You get rid of those, you entirely get rid of the bottleneck and it's a way better driver experience. So our hardware, the way we build hardware, we build it all actually in house which is very unique for any parking company. Most parking companies, they don't even build their software in house. We build software and hardware in house to give us the best control and visibility. But the critical thing is you don't make the hardware a dependency.
Speaker 4:Right? If if a camera goes down for some reason, people can still drive in, still still drive out, they can still pay. We still have a functioning system through the software. So you remove that dependency and it makes it a way better experience and also you just get a better experience as a driver and as an owner.
Speaker 2:Okay. I gotta ask two VC coded questions. Yeah. I'm you got in the raise but I'm curious. So we had the CEO of Metropolis on.
Speaker 2:Yep. I'm sure you guys were competing in a maybe at at some point in a more intense way. They've taken the more roll up approach in terms of
Speaker 1:Asset heavy?
Speaker 2:At very asset heavy, they raised 1,700,000,000.0 to buy.
Speaker 4:It's not and not technically asset heavy because they're not not purchasing the assets themselves but they got it. Basically, to acquire operators. So they just took to your point, they took an inorganic growth strategy which, yeah, I certainly have lots of thoughts on but finish your question. Sorry.
Speaker 3:Yeah. No. And I'm
Speaker 2:just curious like I'm sure every you know, investor meeting leading to this b, people were like, have you thought about raising a billion and doing this strategy? And and you did not. So, I'm curious kind of the Yeah. How how you how you evaluate those two approaches.
Speaker 4:Yeah. I think that there's a lot of different ways to build a company. And, you know, basically, the thesis that they're working on is actually the same thesis that there's another company called Reef Parking. I don't know if you've heard of them, but they took the same approach. And what they did is they raised about a billion dollars from SoftBank in twenty eighteen, twenty nineteen.
Speaker 4:That was right as we were raising our seed round. So a lot of people were looking at that saying, like, oh, they beat you to it. Sorry. You're out of luck. But the thesis is basically, okay.
Speaker 4:We have this technology. We have this platform. We're gonna raise a bunch of money. We're gonna acquire this old school operator that has all of these locations and contracts already. And, of course, we're gonna you know, it's gonna look beautiful in a spreadsheet.
Speaker 4:We're going to replace all of this g and a or this overhead or this cost of goods sold of human labor. We're gonna replace it with this technology, and and our margins are gonna look great. And there's gonna be a bunch of upside. It's kinda like classic private equity playbook. You know, it's it's a very, like, investor obsessed spreadsheet driven way of building a business.
Speaker 4:And the critical ingredient that has to be true in that is, like, we have the technology. And that's what wasn't true really for reef parking, and that's why that whole thing sort of went sideways. And they're no longer really a business. I mean, they're working through restructuring. Mubadala has, like, taken over that business and is trying to sell it last I heard.
Speaker 4:And, you know, that's the question for Metropolis is, like, do they have that technology? And we're taking a very at Air Garage from day one, we started by taking over one parking lot, working from first principles, figuring out how do you run this parking lot using the technology that we have available to us. We didn't know what a parking company was. We didn't know what a parking operator was. We knew nothing.
Speaker 4:We were just completely making it up from scratch, which is a huge advantage compared to doing things the way they've always been done. And so we've built the platform as we've gone along to actually truly do what we say it does. Right? And that's the question for them is as they're going through their portfolio and trying to transition people, are those people actually going to transition to the platform? Does the platform actually work?
Speaker 4:And the thing is real estate owners have been burned so many times in the last twenty, thirty years by vaporware software and people saying like, oh, we have technology and you real estate people are so old school and you don't get it and like we're gonna change your life and make things everything great with this technology. And it hasn't played out many times. And so it's very hard to earn that trust with real estate owners. And so if you start taking over locations and you don't have that technology and it doesn't work out, then you sort of quickly fall out of favor. And so they're making that bet and that's the question is do they have it remains to be seen.
Speaker 4:I I, you know, I have an opinion on that. Of course, I won't comment directly on that. But, yeah, it's just a different vision for how to build that end state. And then, you know, do we go and do roll ups in the future as well? Potentially, because we do actually have the technology.
Speaker 2:Mhmm. Jordan, second question. Second VC coated question. We had Alex Roy on famous cannonball driver, wrote the driver. And we were talking a lot about autonomous vehicles.
Speaker 2:I'm curious how you think AVs will impact the parking industry. Interesting. People have had this sense of, oh, there's so much parking in cities and when we have AVs, we won't need them. That's never fully tracked for me because
Speaker 1:Gotta charge the AVs.
Speaker 2:Gotta charge them. You have to maintain You have to store There's way more demand during rush hour than there is, you know, during, you know, and and and I don't wanna send my my AV, you know, if I have an AV that that I personally own, I don't wanna put a bunch of miles on it driving it way out of the city to then circle back. So it's never fully tracked to me that And some
Speaker 1:people just like parking lots more than parks. Like public parks, you can't really do a lot of car spotting in them.
Speaker 2:That's right.
Speaker 1:Walk around hunting for the Lamborghini.
Speaker 4:Can't do cars and coffees in a public park. You gotta have a
Speaker 8:parking lot.
Speaker 1:No way.
Speaker 2:That would be fun though
Speaker 3:on the on the You know what's funny is is this was
Speaker 4:a question I got all the time in our series like our Seedways and that was like at the peak of the autonomous vehicle hype wave, like the classic hype wave that autonomous vehicles has followed. And this was every VC in the seat round was of course asking about this. That was actually like why we What what did you say?
Speaker 2:I'm six years behind.
Speaker 4:You're six years behind. Well, and yeah, the funny thing to me was that during this this most recent fundraise, basically nobody asked us about that. And that's while at the same time I'm in San Francisco riding in Waymo's and cruise cars constantly. And so it's like actually real now versus six years ago it wasn't actually real. You know, I think I have a lot of thoughts on this.
Speaker 4:One of the one of the reasons we chose Floodgate actually to lead our seed round at the time was because they saw without us, they independently came to the same conclusion that we did that, you know, basically parking is gonna be this really interesting asset class over the next ten to fifteen years at the time based on what they were seeing because, Anne, the partner at Floodgate, is on the board of Lyft or was on the board of Lyft at the time. And so she was seeing the changes even before autonomous vehicles with just the Uber and Lyft trend over the last ten years. And so what they saw was somebody's gonna need to basically figure out what to do with all this space in our cities. Like 26% of the median urban core by land area, median urban core over 500,000 people, 26% by land area is dedicated to parking. So that doesn't even account for garages under a building.
Speaker 4:That is dedicated surface area in the urban core of our cities, not looking at the suburbs, which is even more parking. That's a massive amount of space in our cities. There's eight parking spaces for every car in The United States. I think the stat is there's enough parking surface area in The United States, and eight is the low end. The estimate is eight to 11 parking spaces for
Speaker 3:every car.
Speaker 4:There there's I think one stat that I saw that basically there's enough parking space in The United States to cover the entire state of West Virginia with asphalt. And so regardless of how you look at it, there's gonna be some repurposing that needs to happen. And in order to do that over time, you first need to like understand how that space is being used today. And that's the thing is like that just doesn't exist. Like the parking operators that are in running these facilities right now, they're so old school.
Speaker 4:They're doing things manually with paper and like they don't have any real time visibility about like how many spaces are actually filled right now and like what's our busiest day of the week. These like basic insights that, you know, if you were a real estate owner and you called your hotel general manager and said, hey, what's our busiest day this month? And hotel general manager couldn't tell you the answer to that question, like, would fire them on the spot because that's like basic information you need to run an asset, but that's the state of the parking industry. It's like literally we took over an asset actually last week, massive garage, very large asset in in a sort of tier two market. But you know, the way they were tracking validations is literally a paper spreadsheet in a binder, you know, tracking who gets a validation for going to the retail shops on-site.
Speaker 4:That's the state of the parking industry. And so our mindset has always been, you know, if someone's gonna bring this online, we're gonna bring it online and be able to more flexibly use this space in our cities. Maybe that's autonomous vehicles in the future where they're parking in our facilities and they need to be able to pay for their parking in an API driven way. That doesn't exist right now. There is no default online way to purchase parking or no operating system or no sort of, system of record for where the space is used in our cities.
Speaker 4:And then the other thing that's really interesting from our perspective too is we've taken a lot of things in the parking industry that traditionally were fixed cost parts of your business and turned them into variable costs because we're a software company, we're a technology company instead of a basically a staffing company, which is what these traditional companies are. So if, like, parking revenue starts to trend downward, that actually squeezes all of our competitors in a really helpful way for us where, like, our cost of goods sold is entirely marginal instead of being this fixed cost, which then means that we can survive and thrive in an environment where parking supply continues to decrease because parking demand is decreasing. And actually parking supply being constrained is great for our business because that's the time when you actually can charge for parking.
Speaker 2:Yeah. I I can I can see how this becomes a major catalyst for you guys? If I drive into a city center in an autonomous vehicle, it drops me off and that and then I want my vehicle to park nearby. Imagine imagining the the interaction right now between the average city center parking garage and a autonomous vehicle just not gonna Yeah. Anyway, so great great
Speaker 1:again. Thank you so
Speaker 2:much Looking for stopping forward to the next 10 x.
Speaker 1:Yeah. Get on it. Get on it. We'll talk
Speaker 2:to on it.
Speaker 4:Thank you both. Awesome.
Speaker 1:Have a good one. Cheers. Bye. Next up, we have Jonathan from Grok coming
Speaker 2:We actually to are gonna reschedule that one. So we can jump into some timeline.
Speaker 1:Okay. Cool. Yeah. Oh, okay. Okay.
Speaker 1:We're pushing him to 01:55. Great. Cool. Yeah. Let's do some timeline.
Speaker 1:Well, Eliana over at Palantir received an air drop of Matti Mattiina. Our favorite energy drink that I drink four of every show basically. Delicious. Congratulations, That
Speaker 2:is four hundred and eighty milligrams of caffeine.
Speaker 1:It's an adult amount.
Speaker 2:It's an adult amount. It's a horse amount.
Speaker 1:It's great.
Speaker 2:Love to
Speaker 1:Shout see out to Rob for dropping those off at Palantir. Wonderful. And I think he's enjoying them. Let's tell you about Wander.
Speaker 2:Your happy place. Find your happy place.
Speaker 1:Book a Wander with inspiring views, hotel great amenities, dreamy beds, top tier cleaning and twenty four seven concierge service. It's a vacation home but better. You can go to wanderer.com to go check
Speaker 2:ad was AI and I think that's a great compliment to Wander. It the the property that we were at in the Wander property we were at in Malibu. It looks almost too good to be true but it's very real and you can go stay there today. Yeah. Let's see here.
Speaker 2:Ahmad had the post that I was earlier. He said, why is Meta scared of OpenAI? This graph says ChatGPT is not just a productivity app. People are spending hours on it to talk to AI, write poetry, etcetera. Meta needs attention to drive ads.
Speaker 2:If this trend line continues, AI will eat social app time. So this is Great
Speaker 1:mobile minutes per daily users per day. And ChatGPT is at twenty nine minutes. Now, the question is like we're not seeing a drop off from any of the other apps. So it might be that ChatGPT is cannibalizing something else in people's life. Maybe like talking to other people, but but it could also be books.
Speaker 1:It could be you know, time spent reading the newspaper, researching, or doing anything else. It it it's not exactly showing up in the Instagram data there. That would be really really if if you like when you see, you know, ChatGPT going up and Instagram going down, then you get really worried. But still ChatGPT is on a generational run. Pretty crazy going from five minutes, what, a year ago to twenty nine minutes today.
Speaker 1:So six x growth in a year. People people love it. I spend a lot of time on it. I'm always doing stuff. It's fun.
Speaker 1:You know? Just like super interactive. Just dictate something. Get the response. Read it out.
Speaker 1:It's just like so much more efficient way to learn for so many different things.
Speaker 2:Totally. I would love to see what what these other a like actual proper AI companion apps like Replica Yeah. What their usage per DAU looks like. Because I would expect that
Speaker 1:Probably really
Speaker 2:not. Least for paid users. It's it's significantly higher than that.
Speaker 1:Well, let's tell you about getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. Go check them out. We'd love
Speaker 2:Missed opportunity to ask Alex Roy about the right watch for the for the Cannonball.
Speaker 1:Oh, yeah.
Speaker 2:He'd probably say an Apple watch today.
Speaker 1:Yeah. He's very technology built.
Speaker 2:Very modern. Just a funny answer. We have a Trade deal? Trade deal. Summer, you.
Speaker 2:She says, today is my first day at Meta Super Intelligence Labs. I'll be focusing on alignment and safety, building on my time at Scale Research and Seal. Grateful to keep working with Alexander Wang. No one more committed, clear eyed or mission driven. Excited for what's ahead.
Speaker 2:Congratulations to Summer. I would imagine this was a maxed out contract. Yeah. Good to keep the team together.
Speaker 1:It's interesting because Alex was was you know moved over to Meta but Scale is still an independent entity. But it seems like some folks from Scale are now moving over to Meta. And Meta's probably looking through, seeing who makes sense where, and the businesses will kind of diverge. It feels like the true, like, super intelligence research and the hardcore AI research of training new models that Lama v five, I guess, is happening gonna be happening over at Meta. Mhmm.
Speaker 1:But scale obviously still has business in, in data generation. And so, if you were kind of on the research side at scale, you're probably gonna be moving over at some point, but this is probably the first of a few of announcements we'll we'll
Speaker 2:we'll see. So she was the VP of research at Scale AI. Prior to that was, in research at Google DeepMind for almost six years. So Got
Speaker 1:an absolute killer. Yep. Who do we have? We have a few people in the waiting room. Fun.
Speaker 1:Jacob. I don't know Jacob. I'll have to figure that out.
Speaker 2:People might just be joining. The link might have leaked.
Speaker 1:The link is leaked. Is the thing we use. We shouldn't
Speaker 2:We can highlight. So WAP announced Oh, yeah. They had they had an ad yesterday.
Speaker 1:Can we pull this ad up?
Speaker 2:Is that Yeah. Let's pull it up. Let's play it.
Speaker 1:The WAP ad.
Speaker 3:It's in the tab.
Speaker 2:L a m x n t says first off banger, second off this video means as soon as v o three slash insert new AI video generation model drop. WAP immediately assigned hands to diving head first into it, seeing what they can do. It's This is the biggest bold signal for new companies having human resources capital to be able to actively chase staying on the bleeding edge of new tech that Yep. And innovations the second it drops. Massive, massive, massive.
Speaker 2:You simply cannot beat a team that is hell bent on being first. So I thought this ad was very cool.
Speaker 1:Yeah. We should watch it. It's really
Speaker 2:Pulled up.
Speaker 1:Crazy because it it's they like, the heart they're really doing a great job of solving all the key problems with generative AI, which is like character consistency. It's not fully photo real. And so very clearly in the prompt, they said, make it look like Grand Theft Auto. And and then all of a sudden, it's it's like a Ghibli moment. And I feel like this is Yeah.
Speaker 1:Kind of the first video that we've seen that's really dominated like a new style that I think you'll see a lot more people be making them.
Speaker 2:Well, it's perfect too because WAP can make a GTA themed ad. Yep. Whereas like very few
Speaker 1:Brands could.
Speaker 2:Brands can do that.
Speaker 1:Yep. But yeah, mean I imagine that this will be as simple as Ghiblify this image pretty soon. Just hey, take the trailer for f one and make it GTA style and it'll look amazing and people will do that for all sorts of videos. Yeah. It'll be very slow and expensive first but then it'll be very cool.
Speaker 1:Let's play the WAP ad.
Speaker 3:Is pretty cool. Our parents told us to get real jobs, get off our phones, go to college.
Speaker 2:A completely different route. There's something different about kids who make money online. Huge influx in kids dropping out of school. Shot. Mumsy.
Speaker 2:My study, bro. Dude, we gotta grow faster. Just use WAP, bro. Yo. We're printing the super trim here in my garage.
Speaker 2:College enrollment numbers are on the decline.
Speaker 3:Wait, Lee? See that movie? Making money online.
Speaker 2:Everything Bunch of great cameos in here. And once you taste that freedom, there's no going back.
Speaker 1:Was that Blake Anderson there?
Speaker 2:Looked That's kinda like another guy but it does look like Blake.
Speaker 1:The How much of that do you think was AI?
Speaker 2:I think it felt close to a 100%.
Speaker 1:I think some of it might have been actual game footage. I'm not exactly sure but Interesting. Some of that could have been just generated in GTA five. It's possible. Yeah.
Speaker 1:It's possible just to actually go shoot some
Speaker 2:of the Yeah. The interesting thing here is it feels like WAP is, you know, 10 ago, we talked about this earlier with Ryan. Ten years ago, the like online entrepreneur meta was drop shipping.
Speaker 3:Mhmm.
Speaker 2:And Shopify had kind of a crazy flywheel of of different types of influencers online promising mostly young men that they could make millions of dollars selling products online. And that that that by the time people I think were making a bunch of courses about it, think it'd be become incredibly difficult to actually arb and and like buy product from a traditional, you know, US brand and sell it on Amazon and make any kind of money. And so that whole industry like effectively has shifted over the last over the last, I wanna call it five years into what what are now like info products. And so WAP has this effectively an economy of people selling info products and then armies of young people that that basically do like bounty style work for them. So clipping for a musician or clipping for a live streamer, things like that.
Speaker 2:It is a cool way for somebody in high school to make their first money online and I think that is like a formative moment to have real dollars hit your Stripe account. But, know, this this, you know, that kind of meta is constantly evolving. I think they have over a billion dollars in in transaction volume. So we gotta have the founder on again. He was Yeah.
Speaker 2:Had some interesting takes. Are we ready for our next guest or should we keep doing?
Speaker 1:Extremely tapped in. We have Jake who's at we're we're flipping the schedule a little bit. Let's bring in Jake then and we'll go to Craig. Nice to
Speaker 3:meet you, Jake. How are you doing? Jake, welcome.
Speaker 6:Thanks for having us on, lads.
Speaker 1:Yeah. Thanks so much. Good to have you. We're we're we're dealing with a bunch of different scheduling stuff today. Would you mind kicking us off with an introduction on yourself and your company?
Speaker 6:Sure. Yeah. So my name is Jacob Glenville. I'm the founder and CEO of Synavax. Previously at Pfizer, I also founded a company called Distributed Bio.
Speaker 6:At Synavax, we focus on universal immunity technologies. That's a universal flu shot that we recently closed a series a to be in humans in eight months. And then some of you may also have seen some of the news around our universal antivenom program that says a single antivenom that can treat all snakes.
Speaker 1:That's amazing. I hate snakes. I've I I actually am like, it's the one thing I'm terrified of.
Speaker 2:John always checks his boots for snakes.
Speaker 1:I do.
Speaker 3:It
Speaker 1:made You a joke my hero growing
Speaker 2:you raised a series a and and you you're gonna have a drug in market in eight months. Yeah. Is that how much did you have to raise prior to get to that point? Know, usually we hear about Yeah. The bio companies having to raise, pharma companies having to raise a billion dollars even have a shot at getting something in market We're
Speaker 6:gonna be in humans in eight months. That's the first human trial. There'll be more more to spend.
Speaker 5:We've
Speaker 6:raised prior to the series a, we brought in about $50,000,000. Half of that was non dilutive from like the Gates Foundation, CEPI, the Navy, the Army, the Naval Medical Research Command and RARE, and a number of other places because what we work on is a it's a biothreats problem. It's also a global collective goods problem. If you think about how much money has been spent on, know, $90,000,000,000 of productivity loss just on flu alone in this country every year. And so, in addition to that, we had, NFX and the Global Health Investment Corporation that were our backers, and then now we're raising we've just raised another 45,000,000.
Speaker 6:So nearly a 100,000,000 raised gets us into humans, which is a really big deal because we we show it's safe, but then we also show it's effective. And so we have we can establish the first universal vaccine and a platform technology that we can make more universal vaccines out of.
Speaker 2:I definitely feel the productivity loss every time every time I feel myself getting sick, I'm like this time I'm gonna power through it.
Speaker 1:I'm gonna
Speaker 2:be just as effective. I'm not gonna let it like let my email pile up because I just feel terrible and it's very difficult
Speaker 1:How different is this path from the traditional biotech path? I feel like a lot of biotech companies, they go public really early. It's just a completely different path from like what we typically see in venture. Are you taking more of like a Silicon Valley venture path or do you see yourself as the same kind of strategy as the biotech companies that we've seen, like, like the other companies that have just kinda gone through the normal, like, IPO early, then the stocks trading based on the, you know, the FDA, results and that type of stuff?
Speaker 6:I I historically have always tried to ignore the normal path and go, what's the best path for this company? So my last company, I actually never raised any venture capital. I built a series of profitable verticals, and we, exited to Charles River Laboratories without taking venture. Here, I need venture because we're gonna go through these very expensive phase trials. And even there, we have, like, accelerated approval and some other tactics that make it much less expensive than some of the ones you described.
Speaker 6:So what's gonna happen for us is human trials. After that, there are sources of potential nondilutive funding that could give us, right, really big checks once you're out in phase one that could potentially cover the phase two and phase three, or we do a series b and then maybe a series c to to get the first product out. And the whole idea is to prime the pump. Once you're profitable, then it's a rounding error to run your other programs, which is, like, so torturously expensive for the first product. Like, once you've once you've got something commercialized, then you can go build the other ones.
Speaker 6:You know, it's also possible that we get kind of some FOMO going because the current $7,000,000,000 flu market, there's four companies that are all competing over that, and all of their vaccines are, like, ten to sixty percent effective. Like, one in three people who got a flu shot last last season actually benefited from it. And so I'm I'm imagining those groups are gonna be like, I I wanna work with these guys. Otherwise, I might lose market share. And so there might be an opportunity there for an acquisition or partnership earlier.
Speaker 1:Yeah. On the nondilutive funding side, what has been your take on the NIH discussion publicly? Had We Andrew Huberman on the show and he was talking about some of the risks of cutting some of that early stage funding. The number that was being thrown around was around 40% cuts. I don't know if that affects you directly because you're kind of already running the company.
Speaker 1:But what's your take on on the NIH situation?
Speaker 6:Well, look, I'm, you know, I'm in biotech in general. I I think we've benefited and we're able to bring this technology forward because of nondilutive sources out there. So more is better. We our anti venom program has been supported by an NIH award. That said, you know, they're I'm working on a fundamentally new technology, and sometimes we've had a hard time convincing grant agencies to go in at the NIH in particular.
Speaker 6:I think some people just didn't get it because it was too different and new. Mhmm. That changes as we have more data, but also I think a little shake up sometimes is helpful to be able to have them invest and try new things rather than just reinvesting in the past because the past technologies just weren't working. I think we need new stuff. So, obviously, I think I think The United States needs to maintain its preeminence in biotechnology.
Speaker 6:It's one of the twenty first century sectors where we have dominance, and you don't wanna lose that because, you know, there's China and other organizations out there that are countries that are very happy to try to fill those shoes. And once you lose that, the brain drain goes the opposite direction. And that's part of the reason why we maintain the preeminence is that we have the the institutions that are propped up partially by government money to be able to go make all these breakthroughs and have your and and so forth. So I I think for those reasons, I think The United States should remain the the global epicenter of biotechnology because of macroeconomic reasons.
Speaker 1:Yeah. Genentech, the original VC, what, 100 bagger or something like that. Fantastic return.
Speaker 3:What what what kind what what
Speaker 2:are your kind of goals on the efficacy side? Obviously, the goal would be a 100 percent, but if this typical flu vaccine is ten to sixty percent effective, what what are you aiming for?
Speaker 6:Yeah. We're looking at like, we'd like to see somewhere between eighty and ninety five percent. It's hard to get that last five percent for any vaccine because you have people that have significant, you know, immunosuppression or or some sort of deficiency. But what we're seeing in the animals and all the work so far, I think probably eighty five, ninety percent, maybe ninety five is sort what we're aiming for. Like and that's a big deal.
Speaker 6:Right? That's Yeah. That suddenly changes the not just like you get a you get a shot in that Pavlovian thing. I mean, that's a big problem with vaccine skepticism is people like, I got the shot and I still got sick. Right?
Speaker 6:And so you can solve that. People like I took the shot, didn't get sick for two years. That's a that's a better outcome. But the more profound thing that happens is that when you start distributing a vaccine like this around the world, the pandemic era is over because you don't go, oh god. There's an h five n one.
Speaker 6:It's getting in cows. It's getting in people. There's just like, hey, guys. There's a reminder. We're seeing some h five n one in people.
Speaker 6:If you haven't had your senti flu shot in the last two years, go get a booster. And then you don't have a pandemic anymore. And so that's a crazy transition compared to how humanity's been operating since the beginning of time.
Speaker 1:What what is the key unlock for the universal antivenom?
Speaker 6:Yeah. So it's it's the same biology. It's the idea that there are these little Achilles heels on these proteins that the like, the viruses, they can change just about anywhere, but they can't mutate a couple key sites. Snake venoms, there's 650 species of venomous snakes around the world. And they all have different venom, but they share certain toxins, and those toxins have conserved sites.
Speaker 6:The origins of this antivenom was I found a guy named Tim Friedy who had for eighteen years, he'd injected himself with escalating
Speaker 3:Yeah. I was about to I was about
Speaker 2:to ask. We covered we covered that story and it was just like it's such an example of dude's rock. This guy, what what a hero.
Speaker 3:Yeah. Tell us the full story because it's
Speaker 1:like it's an incredible story.
Speaker 6:This guy just he decided he was gonna make himself immune to snake venom, but like all of them. And so he started collecting a menagerie of snakes in his basement, like all the gnarliest snakes around the world. And he started off with tiny little doses. I don't know if you guys saw princess bride, but it was like the iocaine powder of princess bride. Starts with tiny little doses and he would slowly increase the dose until he was he'd be able to tolerate a full dose.
Speaker 6:So, normally, he would kill a person easily. And then he started letting the snakes bite him. And so he had 202 bites and 654 immunizations over eighteen years of 16 of the most deadly species from around the world. And so I heard about him, and I'm working on universal flu vaccines. And I was like, if anybody has the getting through their veins right now, a a universal antivenom, it's it's gonna be this guy.
Speaker 6:And so I contacted him. We we started doing a research project together and it was phenomenally successful. So it it just speaks again to the power of universal immunity to be able to completely change the face of twenty first century medicine.
Speaker 3:What is the what is
Speaker 2:the distribution of that antivenom gonna look like? I imagine we should put it everywhere. Right? It should be like, always first aid kit. Know, growing up, I mean, growing up in California, like being in the country a lot, I it was always in the back of my mind as a kid of this like fear because I'd come across snakes all the time.
Speaker 2:You know, this fear of, you know, you you don't necessarily know what bit you. Yep. And then you don't necessarily, you know, first of all, is it is it venomous or not? Hopefully, you're not getting bit by snakes a lot. But then, know, you know, if a person's getting treatment, are they even gonna have the right, you know So I'm curious what that kind of go to market looks like.
Speaker 2:How do you get this distributed as widely as possible?
Speaker 6:So I mean the way you described it, that's that's right. And it's worse in the developing world. So there's a lot more people who die and get permanently messed up by snakes than you might think. It's a hundred and forty thousand people who die every year and another three hundred to four hundred thousand that lose a limb, which really sucks if you're in a village because then your your family's having to take care of an invalid when really they need everybody to be able-bodied. And so, yeah, right now, there's 650 venomous species of snake, and they make one antivenom for each snake or sometimes a couple snakes in one bottle.
Speaker 6:But so you get bit, and first off, they have to bring you probably multiple hours sometimes to get to a hospital that has IVs. And then they go, oh, I'm sorry, bro. Were you bit by, like, a super venomous snake? Did you happen to have the presence of mind while you're being bit to ruffle through the grass and grab the snake and bring it in doggy bags so we can take a look at it so we can check Yeah.
Speaker 2:Did did you bring the killer snake that just bit you? Did you bring it with you?
Speaker 6:So we Otherwise, we don't know if if they we stock the antif it even exists. And we don't wanna give it to you because it's made out of horse antibodies and it can cause a whole bunch of like gnarly side side effects. And so that's that's the world that we're trying to replace. What this is now is a single, but we're halfway through. We've got half the 300 species of neurotoxic snakes, and we're working on the other half.
Speaker 6:That was what the cell paper was. But the idea is to have a single product. It's fully human antibodies, so they don't have all the side effects of the horse antibodies. You can lyophilize them, freeze dry them. And so the idea is like an EpiPen for snake antivenom.
Speaker 6:You have some solution and you have some dry powder. You just you get bit. You turn a little crank, shooky shooky, and then you stab it into your leg, and you get the antivenom immediately. And that means it can in backpacks. It can be out in villages outside of refrigeration.
Speaker 6:There's no multiple hours of waiting and they don't need to know what kind of snake bit you. And that will change change a lot of people's lives.
Speaker 2:That's amazing. Very cool. I'm glad you guys found each other.
Speaker 1:Yeah. Yeah. Thank you so much for stopping by. We we have a slam schedule today, but this is fantastic. And I thank you for fighting the good fight against snakes.
Speaker 1:I there's nothing I truly hate more. So so I really appreciate it.
Speaker 2:Making the world man one man versus 600
Speaker 1:my literal only phobia. So thank you. I I have no problem with spiders. No problem with anything else. I hate snakes.
Speaker 1:So thank you so much for doing what you do.
Speaker 6:There's a part of your brain that actually is networked. So if you you're shown a bunch of pictures, you'll spot the snake picture first. So there's something deep in our brains that has taught us recognize and fear snakes from primordial times. Yeah. And so what you're experiencing is not unusual.
Speaker 6:Been built to to tell these things. And I'll I'll tell I'll pass on your thanks to Tim because he's the
Speaker 1:one who
Speaker 6:really just spread it for this.
Speaker 1:Yeah. I'm I'm also Irish. So there's probably something about the pied piper and wanting to rid the world of snakes. It's in my blood. But we'll we'll get to that, the snake eradication project second.
Speaker 1:Thank you for making the world's safer
Speaker 2:for me. Congrats on the race.
Speaker 1:And congrats on the race. Good luck. We'll talk
Speaker 2:to Cheers.
Speaker 1:Bye. Next up, have Craig Pigott from Halter. I was very excited for this company. They raised money.
Speaker 2:This is the most excited you've ever been about a startup.
Speaker 1:Well, it's an extremely bullish story, and we'll hear it from him.
Speaker 3:About running your ranch the way you've always wanted.
Speaker 1:Yes. Thank you so much for joining, Craig. How are
Speaker 3:you doing?
Speaker 7:I'm doing good. How are guys doing?
Speaker 1:You're overseas. Correct?
Speaker 7:I'm in New Zealand.
Speaker 1:Yes. Awesome. Thank you. I think it's early your time, I guess. Is that right?
Speaker 7:Oh, it's like 08:30.
Speaker 1:Not too bad. Well, thank you so much for joining. Why don't you kick us off with an introduction on yourself and the company?
Speaker 7:Cool. Yeah. Craig, founder and CEO of a company called Holter. Originally from a farm, engineer by training. I did a stint at Rocket Lab working for Peter Beck,
Speaker 5:which was kind
Speaker 7:of my intro to startups. And then, yeah, founded Holter. We're effectively our operating system for ag or for farmers and ranches. We've built a collar that goes on the cow. The collar is solar powered and runs a bunch of email on the edge to train the animal to respond to queues so we can then virtually fence and shift these animals from a phone or from the farm's phone, which means we can run more productive farms.
Speaker 7:Ag covers about half the planet's Adderall Lammas. So that's like the goal, I guess, is to lift the productivity of that of that land.
Speaker 1:Interesting. So yeah. What was the state of the art beforehand?
Speaker 3:Fences. Just cowboys? Yeah.
Speaker 1:Barbed water.
Speaker 7:Literally barbed wire. Fences for hundreds of years have lifted the productivity of land, but obviously, they're pretty expensive and hard to move and
Speaker 6:a lot
Speaker 7:of shortcomings.
Speaker 1:And so how do you actually steer
Speaker 3:animals with just a collar?
Speaker 7:They the collar has cues on it, like sound cues out of each side. If you imagine, maybe like parking your car, and as you're like back into a wall, it beeps and so it gives you like feedback on
Speaker 2:Sure.
Speaker 7:How close you are to a virtual fence. So we use sound and vibration, and then we train the animals with a low energy pulse. It's like a 100 times less than an electric fence that say most cows in New Zealand would be used to.
Speaker 3:Yeah. And yeah, the collar does all of that training and and kind of
Speaker 7:animal guidance.
Speaker 2:Jordan, what has been the story around cowboy employment in the context of adoption of tech? I imagine this is a kind of thing where I'm using cowboy sort of as a joke, but but I imagine by introducing this technology, you can free up, you know, ranch workers to do more important things. Like, for example, taking care of a sick cow or something like that. Has that been the case?
Speaker 7:Yeah. Like, there's been massive labor shortages on farms and ranches for a long, long time. It's obviously not glamorous work, and so I think a tool like Holter does automate a bunch of work, but really, it also enables you to just be more precise, kinda run a, like, a a more productive operation, and then you can any extra time you do have, you spend on the never ending kind of to do list of running a a ranch or a farm.
Speaker 1:Yeah. Can you give us the state of the business? I mean
Speaker 2:Yeah. I wanna know about scale. I imagine I mean, how how many how many cows are we tracking at
Speaker 1:this point? I think people don't understand the scale of your business, so I just wanna hear from you.
Speaker 7:Yeah. We're live in New Zealand, which is where we started, Australia and The US. I think we're across, like, 18 ish states in The US. We're on over a thousand farms, hundreds of thousands of cows, which we fence and shift and track and monitor their health every day. Mhmm.
Speaker 7:And growing over, like, two x year on year at the moment. So Amazing. It is like and these.
Speaker 3:Well, you got lot of room
Speaker 2:to run. I looked it up. There's one and a half billion cows in the world according to The market is some survey. Yeah. And I'm sure some percentage of that are just relatively wild and and not
Speaker 1:billion cows? Wait. Cows are expensive. I feel like that's like a trillion dollar market then. It must be.
Speaker 1:Yeah. Wow. I had no idea.
Speaker 7:The the the funny thing about LATAM is it's like, it's very different to most businesses. It's kind of a function of landmass, not like population. So you do end up with, like, a very distributed TAM through South America and Europe, like, everywhere. So but the market is is huge. So we're trying to remain focused on, yeah, NZ, Australia, and The US.
Speaker 1:Like Sure.
Speaker 7:Even within that, it's just a multibillion dollar opportunity for us.
Speaker 1:So That's awesome.
Speaker 3:Would you guy would you
Speaker 2:guys ever do health tracking for the animals? Is that something that you already do? I imagine farmers would would love to understand, like, metrics around stuff like heart rate, HRV, things like that, steps, etcetera.
Speaker 7:Yeah. To do the guidance well, you need to understand each cow's, like, behavior
Speaker 1:Mhmm.
Speaker 3:And how they respond to the
Speaker 7:queues and how best to train them. And so kind of a a byproducts maybe underselling it, but as a function of that, you then can also do health and fertility and things like that very well as well. So we already that's already part of the product, whether a cow is yet sick or not healthy for any reason or if they're fertile, which is important for breeding and things like that. So, yep, if you got the hardware there, you know, that is just a over there, yeah, update to a to the collar, and then we kinda turn that on as like a additional SaaS product.
Speaker 1:So, I mean
Speaker 2:How SaaS
Speaker 1:is beautiful. Is is the business model mostly, like, subscription SaaS structured or is there a hardware component and a fixed cost as well to kind of onboard?
Speaker 7:It is the hardware is bundled in the software, so
Speaker 3:it's pure.
Speaker 7:Yeah. It is, like, very SaaS. Like, there is Yeah. Tiers. You can start on core and upgrade to pro or unlimited, and there's a small kind of upfront installation fee.
Speaker 1:Yep.
Speaker 7:We have to put up towers on these farms to, like, run the network to talk to the collars. So Sure. But predominantly, it's just an ongoing subscription. You don't buy the collars or anything like that.
Speaker 1:Yeah. Take us through the raise and kind of what the plan is going forward.
Speaker 7:Yeah. So we just closed a 100 series d from led by Bond.
Speaker 3:Barry Meeker.
Speaker 2:There we go.
Speaker 1:Yeah. Love it.
Speaker 7:Awesome awesome firm.
Speaker 1:And
Speaker 7:probably two things really, like
Speaker 3:more expansion in terms of new markets and and even just pushing harder into
Speaker 7:the market that we're currently in.
Speaker 3:And then a huge amount
Speaker 7:of product and r and d work. Like, we've kind of for the first time taken a very analog operation and converted it into this, like, digital farm. Like, farmers spend two hours a day in the product, and they're doing everything from animal health to the fencing and shifting to, like, measuring the grass and and all that. So and there's just so much kind of room to run on new product and and shipping new products. So that's the other kind of half of the of the raise.
Speaker 7:It's just doing more kind of booting our product engineering teams and doing more r and d on that side.
Speaker 2:Will we see will we see cow BCIs in the next Mhmm. Twenty years?
Speaker 7:BCIs. Good good question. Don't know.
Speaker 2:Don't know. Yeah. Maybe maybe unnecessary. It's But you know, if if you can do something, you know, a call a caller is potentially more elegant solution than the Probably
Speaker 1:a costly to implant brain chip. But who knows? Anything's possible.
Speaker 2:If anybody's gonna do it, it'd be you guys.
Speaker 1:Yeah. Well, thanks for stopping by.
Speaker 7:There's definitely some benefits to being on the outside.
Speaker 1:Yeah. For sure. It's a little bit easier to change it out and clean it off if you need to. Awesome.
Speaker 2:Well congrats on the raise and yeah come back on when you have more news.
Speaker 1:Yeah. Thanks so much for stopping on.
Speaker 7:On you both.
Speaker 1:Next we have Jonathan from Grok coming into the studio talking about chips. Hopefully we can get him in. We've been juggling things. How do you sleep last night Jordy? Go to 8sleep.com.
Speaker 2:Absolutely terribly. My eight sleep couldn't save me my
Speaker 1:You can
Speaker 3:get a pod five
Speaker 1:at eightsleep.com/tvpn.
Speaker 2:One of the ish We got somebody?
Speaker 1:Yeah. We have Jonathan it here. How going? You? Welcome.
Speaker 1:Thanks so much for stopping by. Sorry about the little mix up with the scheduling. Glad you could make it though. Great to meet you.
Speaker 8:Thanks for having me.
Speaker 1:Would you mind introducing the company and the and the current state of the products that you sell just for anyone that might not be familiar?
Speaker 8:Sure. So the company is Grok, JiroQ, and we sell tokens as a service. So very much like you use OpenAI's API or Anthropix API, except we serve mostly open source models. And we've built our own AI chips that allow us to do this much faster than anyone else.
Speaker 1:Yeah. I remember the initial demos. I believe it was on an early version of LAMA and the inference rate was just so much, so much higher. What were the key decisions that you made to enable faster inference?
Speaker 8:One of the key ones was we don't use any external memory. Mhmm. Every time you read from memory, the chip just has to wait for it and it's very slow and it's like drinking a drink through a martini straw. Mhmm. And so what we've uniquely been able to do is keep the cost down while also being very fast.
Speaker 8:You can actually get speed off of a GPU, but then it just becomes completely uneconomical to use because you have one user using that at a time.
Speaker 1:So what are the trade offs of of not having off chip memory? I imagine, you know, there's a big discussion over how important are large context windows. Is that an important factor to to kind of how LLMs are scaling and and ultimately, you're somewhat beholden to the decisions that are made by AI researchers at big labs. Right?
Speaker 8:Well, interestingly, we actually support very often the largest context or the largest context that's practically offered by anyone else. Okay. And this is a little counterintuitive to most people. The trade off we have is memory capacity, but GPUs have a memory bandwidth issue. So what the researchers do to improve the memory bandwidth issues always improve the memory capacity issues for us So we can run all the same models with the same context length.
Speaker 8:The trade off is actually something else. You could think of us a little more as a nuclear reactor instead of thinking of us as a diesel generator. Whereas GPUs, you can take just eight GPUs and use them for a model. We need a lot more of our LPUs. But when we're running that model very much like a nuclear reactor, we get much better cost and it's better for the environment because we in our case, we use less energy.
Speaker 1:Interesting. What does the shifting landscape around different custom silicon look like right now? I feel like every hyperscaler is taking it more seriously. We've heard stories of Microsoft wanting to pull back from NVIDIA chips. It seems like Amazon's kind of doing the same thing with Tranium and Inferentia.
Speaker 1:What what is it are we going to be just be in a world where every hyperscaler has their own chip? Or do you think that the market will fragment in kind of a different way?
Speaker 8:My background, I'm actually the person who came up with Google's TPU chip. So I started as 20%. And
Speaker 1:No way. Wait. It actually started as a 20% project?
Speaker 8:It did. It was amazing. Yeah. So there are 30 percents. That's a real thing.
Speaker 5:Wow. But
Speaker 8:what most people don't realize is that there were actually three different AI chip efforts at Google, and that was the only one that actually survived and was competitive with GPUs. The other two ended up getting canceled. And so when you start looking at the broader and broader world of chips being built, a very small number of them are actually going to be competitive with GPUs. So most of those are going to be canceled. But I think where people get really confused is they keep talking about the chips.
Speaker 8:And so it's not about the chips. It's about the software.
Speaker 6:Mhmm.
Speaker 8:There are all these little features like prefix caching, speculative decode, and all sorts of things like that. If you didn't have one of those features, you wouldn't actually be able to be competitive with the the latest GPU no matter how good your chip was.
Speaker 1:Sure.
Speaker 8:So, the thing is you have to first catch up in software and only then do you get to compete on the chip. And so one of the things that we did that was very unusual is we spent the first six months working on a compiler which makes our software work very easily so we can actually compete on the software level with NVIDIA. We have the same models running. And only then do we get to compete on the chip.
Speaker 1:You so are you talking about a Google that was, like the the push to break out of like the CUDA ecosystem essentially?
Speaker 8:Well, actually, this was at Grok. So at Google, we had these handwritten kernels which are sort of assembly routines and it's the same as with GPUs.
Speaker 1:Okay.
Speaker 8:GPU GPUs are actually more similar than what we've built here at Grok.
Speaker 1:Yeah. How how do you think about the the current AI paradigm and how long like the current algorithmic machine regime will last or or where how it will change. Because I feel like the the narrative around companies that bet on a particular you know, okay we're going really long on the transformer or something like that. Then there's always this question of like, will the transformer stick around? Well, it's been around for a long time.
Speaker 1:It seems really good. Maybe it'll be around forever. Maybe it won't. How do you think about those? Is that is that the right question to be asking?
Speaker 1:Yeah.
Speaker 8:I remember when we were at Google, we hired this really senior person right before we were done designing the TPU. And he came in and he said, you cannot build a generally programmable chip that will outcompete GPUs. It's impossible. Mhmm. Instead, we need to stop what we're doing and just create a chip for a particular model.
Speaker 3:Sure.
Speaker 8:And we had to walk him through the whiteboard and show him, but we actually ended up proving to him we made a faster chip by making it general. And the the counterintuitive part was if you're actually able to optimize some of the circuitry in the chip to be reused for many different things, but you're only designing a couple of those circuits, you can make them much better than if you have a whole bunch of different stuff that's, you know, not as optimized. And when you look at one of these models, you can't fit one of these models on a single chip anyway. Yeah. You have to use multiple chips.
Speaker 8:So are you gonna design a different chip for each part of the model? And it starts to become ridiculous and doesn't make any sense. There's actually been people recently who've been trying to revive that idea. But in the time when they started, since they started, MOEs became a thing, mixture of experts. So if they had already started designing their chip, the chip would be obsolete.
Speaker 8:And then now we're seeing other sorts of things emerge that are very interesting. And if any of those win, those chips will be obsolete. So we always focus on as general of a programmable chip as we can.
Speaker 2:Switching gears a little bit. I believe you're in Europe right now. It looks dark outside, and it looks like you're you're
Speaker 3:Thank you
Speaker 1:for staying up.
Speaker 2:Yeah. Thanks for staying up to hang with us. Talk about the decision to put the first European data center center in Helsinki and kind of everything that went into that.
Speaker 8:So we were at an event here, an AI event. And about a month ago, we decided it would probably be great if we unveiled a European data center while at this event. And literally A month ago. We now have it we now have it up and running. Wow.
Speaker 8:Actually, running models. So I think that's a record for time to decide to deploy and getting it up and running. We actually Congratulations. Well, we actually weren't expecting it to happen until the end of this week, which would have been insane in and of itself, but it's actually up and running now. So kudos to the team.
Speaker 2:The team is probably sweating because they're like, okay. This is the bar now. We actually have
Speaker 3:to be faster than this to to
Speaker 8:The previous bar was fifty one days. When we deployed about 20,000 chips in Saudi Arabia, it was fifty one days from signing before we set
Speaker 1:it up.
Speaker 3:Oh, I
Speaker 1:remember that deal. Yeah.
Speaker 8:Now it's like a month and three days or something.
Speaker 2:So what what makes that possible? Is it just the is it the energy efficiency? Is that a huge part of it?
Speaker 1:We're best friends with Morris Chang.
Speaker 8:I can't use TSMC to make our chips.
Speaker 1:Oh, okay.
Speaker 8:Yeah. In our case, we've actually simplified the architecture pretty significantly. We don't use any external switches as part of our core interconnect only to move data in and out from the system. It's pretty simple cabling. Sure.
Speaker 8:Air cooled still. We're not liquid cooled. We like to stay a generation behind on all of the technology and just compete on the architecture and the software. Okay. And so that allows us to use these highly proven technologies where everyone's already debugged them and we're not debugging them as we deploy.
Speaker 8:But also because we don't use that external memory. So that external memory tends to lead to a lot of chips that fail in field. And so as you're bringing them up, a lot of them fail. You have to fix them. And some there was a recent model that we ran that required 4,000 chips.
Speaker 8:The first time we ran that model on the 4,000 chips, it worked. And we would have never been able to do that if it was 4,000 GPUs. The first time you run something at 4,000 GPUs, you have to replace a bunch
Speaker 1:of them. Yeah. Because it's probably everywhere. There's been there's been some rumors that you've operated the, the token business, the API at a loss. That feels like a completely rational strategy in many ways.
Speaker 1:Nothing wrong with that. But can you comment on that as strategy? Is that just a misconception? Is that deliberate? How do you think about just investing for adoption broadly?
Speaker 1:Because there's like, it's really important as a business to grow and there's a whole bunch of different strategies and tools in the tool chest. What do you think is valuable? What's what's been the strategy to date and how's it evolving?
Speaker 8:Let let's get even more specific than at a loss because when you're running a service, you can claim you're not at a loss because you have an infinite amortization time on your CapEx and your chips. Sure. And that's
Speaker 4:what a
Speaker 8:lot of the neo clouds are doing.
Speaker 2:Mhmm.
Speaker 8:So we actually agree aim for a more aggressive payback period than anyone does with GPUs. And part of the way we can get away with this is, first of all, our electricity cost is about one third per token versus a GPU. So our OpEx is already lower.
Speaker 4:Okay.
Speaker 8:And that's sort of the flat you have to beat your OpEx, otherwise, you are losing money, period. There's no accounting tricks you can do. And then on top of that, the question is how quickly can you pay back? For us, everything we run is above our OpEx cost, so we're not losing money. Yeah.
Speaker 8:But different models have different payback periods. Some of them as quick as two years on our v one silicon. Some take, you know, four years.
Speaker 3:Sure.
Speaker 8:And it's a blend. Right?
Speaker 1:Okay.
Speaker 8:And that overall blend is what we're happy with.
Speaker 1:Makes sense. Yeah. Makes sense. On on that note, there's one world where, you know, the models are getting better. Everyone just wants the best model for every single task and they're just willing to pay for the latest and greatest constantly.
Speaker 1:There's this other interesting model where I feel like we get a new capability whether it's just the ability to convert you know, text CSV to JSON or something really or like raw text to JSON or data extraction or you know censoring you know bad words and a whole huge transcript. And like the problem is completely solved by the LLM and you don't need to throw a more advanced model at it in the future even if one comes down the pipe. You just need speed and and reliability and and eventually cost. And so do you see is is there an important part of your business where you can be the the like baseline provider for a current capability that will continue for decades potentially even as a newer model comes online? Or do you wanna try and shift the business towards the being constantly on the most aggressive side of the frontier?
Speaker 1:And is there actually a trade off there? Can you just do both?
Speaker 8:So a very common usage pattern we see is that people will develop their systems on the latest and greatest model.
Speaker 4:Yeah.
Speaker 8:And then they will optimize it for two things. One is they'll optimize it for speed and the other is they'll optimize it for cost.
Speaker 4:Yeah.
Speaker 8:Very often, the most successful AI startups are spending almost as much per month on token as a service as their total revenue.
Speaker 2:Mhmm.
Speaker 8:Right? And they'll they'll lose money on paying employees and things like that, but they're trying to keep those balanced.
Speaker 3:Yeah.
Speaker 8:We can bring the the cost per token down. Interestingly enough, the general inclination is that they wanna spend the same amount. They just want more tokens. Mhmm. Because those tokens can actually turn into more quality if you can iterate, if you can do more in parallel.
Speaker 8:The speed thing is super important because that's engagement. So if you think about it, every time you increase the performance of a model by about or any service by about a 100 milliseconds, your engagement rate or your conversion rate tends to improve about by 8%. That's on desktop. On mobile, it's over 30%. Yeah.
Speaker 8:And so, we have no patients on mobile whatsoever. Yep. And so, what we see is people get stuff working. They prove that it's possible in the most capable model and then they'll try and find one of the models that we run, all the open source models. And then when they're able to find one that works for them, because they have to try a couple, then they're very happy, and then they don't change things.
Speaker 5:Mhmm.
Speaker 8:And so there are a couple of models which are actually quite old, quite terrible that we would love to deprecate, but there's a bunch of users because their system works and they don't wanna touch it. Mhmm. The other thing is, and this one's interesting, so we had one of our engineers try solving a bunch of math theorems and they were using this thing called Lean which is a formal theorem prover. And and they would use different LLMs in the background to solve and then they would use Lean to test. Every single time, Claude Opus would actually solve it in the fewest iterations.
Speaker 8:However, Quen three thirty two b running on our chips, because they're so fast, always solved the theorems faster. It made more iterations, but it was able to go through them faster. And so you actually got the result faster with the less expensive model running on Grok. Interesting.
Speaker 2:It's been a crazy year so far.
Speaker 3:Yeah.
Speaker 2:We're about halfway through. What are you excited about in the next six months on the Grok side? And then what are you excited about in the broader open source ecosystem?
Speaker 8:Well, the Grok side, we're continuing to scale up. We're gonna add a bunch of new data centers and new continents. After this, I'm going somewhere else in the world. I'm not gonna tell you where where we're working on getting another data center deal done.
Speaker 3:Amazing. Congrats.
Speaker 8:Also, there are some rumors that we might have some new improved systems or chips or something coming later this year and there's
Speaker 2:Allegations. Allegations of massive advancements.
Speaker 1:Rumors, guys. Rumors are breakthrough. A major breakthrough. Yeah. I love that.
Speaker 1:Yeah. Can you give me your retrospective but also your current take on just Moore's Law broadly?
Speaker 8:Yeah. I I think Moore's Law is true, but I don't think it's the most important part, and people miss this. So Moore's Law, for those who don't know, every eighteen to twenty four months, the number of transistors on a chip doubles. That translates to the economics get better. That translates to the chips get faster and you can trade that off.
Speaker 8:What's really been happening in the last five to ten years, and I don't know what to call this law, but, like, when I left to start Grok, one of the observations was every eighteen to twenty four months, not only did the transistors double, but the number of chips doubled. The transistors doubled and the number of chips doubled. And so when we started, we actually asked ourselves the question, what would happen if we assume there were an infinite number of chips? How would you design the system differently? That's one of the reasons we decided to get rid of the memory altogether because the memory just holds bits that are doing nothing waiting for an active chip to do something with them.
Speaker 8:We're like, let's just make everything active and do everything all at once. And so that was a a very important observation for us and I think people are gonna focus more on the number of chips doubling over the next couple of years than how much each chip improved.
Speaker 1:Mhmm. Can you I know we'll we'll let you go. This is my last question unless Jordy has something. But can you tell us a little bit about broadly what international leaders in other countries generally are thinking or what's driving their motivation to spin up token factories, these AI factories, new data centers, the sovereign AI efforts. And because I'm thinking back to, you know, the development of the original cloud computing revolution and it felt like there wasn't as much of an incentive or or narrative around, well, we can't possibly just let AWS come over here and set up shop.
Speaker 1:This feels different. What are the motivations? Is it is it economic? Is it freedom of speech? Like what what what are the what are the shape of the conversations that you're having that get an international leader excited about setting up an AI factory, a token factory, a data center?
Speaker 8:So it's a little bit less about fear and control and it's actually more about they're not getting enough compute. So think of it this way. GPUs are expensive
Speaker 1:Mhmm.
Speaker 8:And there's only a finite number of them being built. Not because they wouldn't build more GPUs, but because they rely on that external memory Mhmm. Which is a real bottleneck in the supply chain.
Speaker 3:Mhmm.
Speaker 8:And so NVIDIA is going to build every single GPU that they can physically build this year. AMD is going to build every single GPU that they can physically build this year and then they're gonna sell every single one of them. If they could build more, they would sell more. That means that there's an allocation problem. Countries aren't getting all of the chips they need for what they're doing internally.
Speaker 8:So for example, when we built that data center in Saudi Arabia, there were a bunch of people who've been waiting over a year to get GPU orders filled and they had no idea when it was gonna happen. And so they switched over to us because they could immediately get access to compute. So what you're seeing is a lot of these sovereign plays are more about making sure they get the compute. It's as if we're entering the industrial age and all of a sudden everyone realizes if I plug something into an electric socket, I make all of my workers more efficient. Well, if everyone else in the world is getting that or feels like that's the case and you're not getting that, you're not getting the efficiency, you're not getting the compute to augment your workforce and make them more capable, you're at risk of falling behind.
Speaker 5:Mhmm.
Speaker 8:And so for them, it's as if all the power companies are focusing on some other really rich regions of the world and they wanna get that power as well so that they can start running their AI models.
Speaker 1:So is that more like the like the five g rollout, the idea of just bringing mobile to your country versus Google search I suppose? Is that the more accurate analogy maybe?
Speaker 8:That would be fair.
Speaker 1:That makes a lot of sense. Jordy, do have anything else?
Speaker 2:Any expectations around OpenAI's alleged new open source model?
Speaker 3:Oh,
Speaker 2:yeah. Is that something that you guys are gonna be, you know, integrating heavily with?
Speaker 8:If OpenAI open sources their model, we will immediately launch it.
Speaker 1:Amazing. Awesome. Well, that's great news. Well, thank you so much for taking the time. I appreciate you staying up late.
Speaker 1:We'll talk to soon.
Speaker 2:Thank congrats on the new data center record. Cheers.
Speaker 3:Alright.
Speaker 1:Have good Bye. Bye. And let's tell you about graphite.dev graphite. Dev code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster.
Speaker 2:The best teams in the world The graphite Including TBPN, of course, What use
Speaker 1:else?
Speaker 2:You have some timeline?
Speaker 1:We have some timeline we can go through. Gotta get out of here soon. Yoni, Yoni Rickman says he wants to get long mold. Did you see this?
Speaker 2:Yes. Threw this in here. Request for startups. Wanna get long mold. Basically, he says mold is super hot right now.
Speaker 2:It's like the protein of environmental contaminant. It's in everything with no signs of going away. It's in the air. And this stood out to me because I once rented a house that ended up having mold in it.
Speaker 3:Oh yeah.
Speaker 2:It was a huge disaster. Took a lot of time. It was making me sick. And I think a lot of people suffer from mold exposure or mold ill related illnesses Yep. And don't realize it at all.
Speaker 2:So there's a bunch of different ways that you can solve this. I don't necessarily know what they all look like. I mean, Yeah. One of the biggest
Speaker 1:Yeah. He mold test testing, eight sleep of mold, smart air purifiers and testing. That makes a lot of sense. Then he says mold insurance. I Maybe that's genius.
Speaker 1:I don't know. That that's not what I would have thought of. But yeah. And then mold resistant building materials. That's kinda cool.
Speaker 2:Yeah. So there's a bunch of different categories. So I wanted to throw this in here. If you are long mold yourself and your business, go reach out to Yoni. I would love to see more solutions here.
Speaker 1:In other news, tomorrow night, there will be a Grok four release livestream, Wednesday, 8PM Pacific. They're staying up late.
Speaker 2:I love how they always do their streams after after everyone else has left the office and gone home. They're like, we're still here. We're gonna go into our tents. Yeah. You know, come out of our tents and and and do a stream.
Speaker 2:So I'm excited for this. I mean, this is going to say a lot about about
Speaker 1:you know, the It's new like it has since been Grok three. So yeah, there there will be a big question about where this hits. Also, you know, we hit this like pre training wall feels like you know a lot of people are saying we need new algorithms, we need new ideas and and I'm sure they'll be able to The question is not like can Grok can XAI build a big data center and and and get to the frontier. The question now is like can they push past the frontier with some actual like completely unthought of innovation. So that'll be interesting to track.
Speaker 1:But either way I'm there's a ton
Speaker 2:of Yeah. To see what they're doing on the image side, video side.
Speaker 1:The video side would be very interesting. I mean Axe has a lot of video data because, you know, Axe has been uploading video, you know, certainly not as much as YouTube, but a lot of YouTube videos get uploaded to Axe in full.
Speaker 2:Yeah. Imagine imagine if you can tag Grok under like a meme and say Turns into anime.
Speaker 1:Yeah. Yeah. Turn this GTA V. Crazy.
Speaker 2:Twenty second GTA V.
Speaker 1:Probably be very expensive on the inference side, but Yeah. You know, maybe worth it. You have a lot of GPUs. Should we close this Audi ad? Beautiful.
Speaker 2:Let's do it.
Speaker 1:Advantage Audi. Beautiful ad.
Speaker 2:I couldn't tell if this was a real ad.
Speaker 1:10 out of 10. No notes.
Speaker 2:Couldn't tell if this was actually live. If it is It's four tennis balls. If it's not
Speaker 1:In the shape of the Audi logo. Fantastic. Fantastic. Well, thank you so much for tuning in today. Yeah.
Speaker 1:Was little bit
Speaker 2:little chaotic start. Forty ish minutes late. Startup and but they couldn't stop us.
Speaker 1:They couldn't stop us.
Speaker 2:They'll never stop us.
Speaker 1:So we will see you tomorrow.
Speaker 2:Have a great afternoon Wednesday. Evening. See you soon.
Speaker 3:See you soon. Cheers.
Speaker 5:Bye.