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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
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Speaker 1:Hey, John. Why Yes. Is no one talking About Daniel Gross. Daniel Gross.
Speaker 2:No one literally no one is
Speaker 1:talking about
Speaker 2:Daniel Gross. He no. He should be a household name. He you should get into the a taxi, and they should be, oh, did you yeah. Did you see how how incredibly dialed Daniel Gross's AGI trades
Speaker 1:were From January 14. 2024.
Speaker 2:Yes. This is a great great website. It's what is it? Danielgross.com/agi the the classic Times New Roman, serif font, 12, just, just hammering it out in the in the vanilla HTML. No need for styles.
Speaker 2:No need for bootstrap templates. What what what's that CS tailwind? He didn't need tailwind for this. He just, wrote it in probably Markdown or HTML directly. And a lot of it has come true.
Speaker 2:It's interesting because a lot of them are framed as just, like, open ended questions. But if you think about you know, if you believe in AGI and then you go through the questions, you will see exactly what happened over the last two years. And this has been the underpinning thesis of situational awareness in many ways. Daniel Gross was an anchor of the fund. That, of course, is
Speaker 1:the And it's particularly relevant today because I'll read the intro. Yes. This is 01/14/2024, over two years ago. He says, I think we can all agree that GPT-four completes many tasks at human level proficiency. It is imperfect in odd ways.
Speaker 1:It can write software like a smart MIT undergrad, but can't do basic task planning like an entry level EA. It speaks all languages but can barely do math. Suppose the progress doesn't stop, just like GPT-four was better than three, GPT-five is capable of basic agentic behavior, I. E. Able to accept a task, work on it for a while and return results.
Speaker 1:Nailed it. And of course, today, OpenAI is has released GPT 5.4 which does exactly this Mhmm. Quite well. Yeah. Their reviews are coming in Yep.
Speaker 1:And they are quite quite good. Daniel continues, some modest fraction of Upwork tasks can now be done with a handful of electrons. Suppose everyone has an agent like this they can hire. Suppose everyone has 1,000 agents like this they can hire. What does one do in a world like this?
Speaker 1:So
Speaker 2:So let's go through them one by one. There's seventeen, eighteen questions, something like that. First, let me tell you about Labelbox reinforcement learning environments, voice, robotics, EDOX, expert human data. Labelbox is the data factory behind the world's leading AI teams. He kicks it off with an easy question.
Speaker 2:In a post AGI world, where does the value accrue? The people were debating this at the time. Application layer versus versus foundation model layer versus infrastructure layer. Value has definitely accrued
Speaker 1:to this layer. I mean, you're even post AGI, John's new haircut is is paying
Speaker 2:Paul Graham wrote a whole piece about how brands are important. We'll we'll we'll cover that tomorrow, but he he compares it to the courts crisis in the watch world and has a bunch of thoughts about value in the post AGI era. But just looking back in the last two years, value has clearly accrued to the infrastructure layer. So that means chips, packaging, power, etcetera. And this is the situational awareness trade by and large.
Speaker 2:NVIDIA basically captures and and did for a while more than 100% of the profits from the AI boom because so many of the other companies in the AI space were losing money. And so the Foundation Labs are losing money. NVIDIA's profit margin went from like 30% to 60% gross margins, and the it was born out in market cap. So NVIDIA added 3,200,000,000,000.0 in market cap from when Daniel wrote this piece. And I remember listening to him, Anstro Techery, talk to Ben Thompson alongside Nat Friedman and say, yeah.
Speaker 2:Based on based on ChatGPT, NVIDIA seems sort of undervalued. And I was like, oh, well, if they're saying it on Ben Thompson's Strathecory podcast, it's obviously priced in. Everyone knows this. And I was wildly wrong. Never never doubt yourself.
Speaker 2:But what's interesting is that the rest of the platforms did not see, you know, three x gains. They did not add $3,000,000,000,000 in value. Microsoft, from from January 2024 to today is only up 4%. Amazon's up 30%. And then you do have OpenAI, Anthropic, xAI in the private markets.
Speaker 2:The gains there, they've been huge and staggering in that it's like the fastest growing companies in private markets history, shaking the venture capital world. You're either in or you're out. It's a huge deal. But you add them all
Speaker 1:up So to 1.4 crazy when you think it Satya Yeah. In many ways went on such a generational run.
Speaker 2:And you got a 4%
Speaker 1:pop If you hadn't if you hadn't looked Yes. At the stock price at all, you would think, oh, it's gotta be up what? Yeah. 4040%? Now, it's up Yeah.
Speaker 1:4%.
Speaker 2:And so that was that was Daniel Gross's next question. What happens to NVIDIA and Microsoft? These are the two interesting players at the time, the big some of the biggest companies, the most AI aligned. NVIDIA absolutely crushed. Revenue tripled from 60,000,000,000 in fiscal year twenty twenty four to February in fiscal year twenty twenty six.
Speaker 2:Microsoft has been far less dominant. So Azure growth actually is accelerating. It's at 40% year over year, but the stock only returned 4%, as we said. The market punished the $80,000,000,000 in AI CapEx that Satya Nadella has been telling to investors because everyone's asking, well, I could be in NVIDIA, and they're not they don't need to really invest that much because they're a fabulous semiconductor design company. Their their gross margins are increasing.
Speaker 2:They're printing cash. And you are saying, okay. You gotta spend $80,000,000,000, and we don't know when we're gonna get the profits from that. So there's an open question there. So when it comes to the when it comes to the picks and shovels trade, you don't wanna tie yourself up to an individual start up or a foundation model lab.
Speaker 2:You just want to own the simplest thing that that that value will accrue to. NVIDIA all the way. They were the clear winner of the picks and shovels trade. Microsoft's infrastructure play, I think it's a good decision. It's just the bets have yet to pay off for shareholders.
Speaker 2:Much more pointed question, Daniel Gross asked, is copper mispriced? Was miss was copper mispriced in January 2024? The answer was, oh, yeah. Majorly. Now raw materials don't move like mean stocks.
Speaker 2:So the actual move, copper was $3.75 a pound in January 2024. Two years later, it went to an all time high of $6.61 a pound. So it's not like it even doubled, but that type of move in a basic material that we've been mining for hundreds of years is remarkable, and that's because AI uses a lot of copper. NVIDIA's g b 200 NVL 72 server rack uses over 5,000 copper cables. There's 72 GPUs wired together, but you need 5,000 copper wires to get it all to work together.
Speaker 2:If you stretched out all of the copper wire in an NVL 72 from one side to another, it would go two miles long. And and this is one server rack. Like, this is, like it's not, like, going across the data center. This is not taking the data from AWS East to California. This is within that one server.
Speaker 2:You stretch out the copper wire. You're you're going two miles. It's an incredible amount. A single 100 megawatt data center, which is a data center for ants by modern standards, needs around 3,000 tons of copper. I think that's, like, half $1,000,000 or something like that when you multiply it all out.
Speaker 2:Or no. No. It's data centers broadly will be using half a million tons of copper annually in a few years. And people are actually saying that copper is the new oil, but there are a bunch of things that are also the new oil, so in the in the AI build out. So it's so complex.
Speaker 2:There's bottlenecks everywhere. So you gotta take that with a grain of salt. But copper Today,
Speaker 1:it's looking like oil is the new oil.
Speaker 2:Is the new oil. The What is crude at? For 80. 80. So it was at 70 before the the the Iran war broke out.
Speaker 2:There was predictions that it would go to above a 100. Oil is another is another commodity that does not move in the same fashion as a meme stock or a
Speaker 1:Except for today.
Speaker 2:Except for today. Big move Up
Speaker 1:8%.
Speaker 2:But but typically, as prices go up, the the the firms drill more and the prices reach equilibrium. US drillers aren't rushing to increase oil production is on the front of The Wall Street Journal business section today. The Middle East is on the cusp of a prolonged conflict that could push oil prices to heights not seen in four years. For now, American oil drillers are sitting this one out. The US oil benchmark settled at $74.66 a barrel Wednesday, the highest front month settlement since the twelve day exchange of Israeli, Iranian, and American strikes last June.
Speaker 2:But West Texas oilmen, it makes but to West Texas oilmen, it makes little sense to add expensive rigs and boost production when the war could be short lived and crude prices drop. So, that's what's happening in the oil markets. Anyway, moving over to real estate. Daniel Gross asked, is is San Francisco the new Detroit? And I am not exactly sure what he means by new new Detroit because New Detroit meaning like the old Detroit when it was Motor City and they were building amazing cars there or the new Detroit in the sense of, like, Detroit today is a hollowed out shell of what it used to be, a former boom town.
Speaker 2:The the one thing that's clear is that SF is back. SF is completely booming. Office vacancy office vacancy fell from 36.9% to 33.5%. OpenAI has a million square feet of offices. Anthropic is a 25 story tower.
Speaker 2:Sierra, an application layer company, signed 300,000 square feet of office space in San Francisco. The Bay Area received 78% of AI venture capital in the 2025. And there is a flip side to this. So overall employment
Speaker 4:in
Speaker 2:San Francisco is still down relative to the pre pandemic. Some people left. Some legacy companies aren't hiring as much. All all the hiring is happening at the AI startup lab area, but housing prices remain strong. It's certainly not a hollow shell by any means.
Speaker 2:And if you've ever visited San Francisco, you can tell it's cleaner and safer than it has been in previous years. So AI overall was not a total rethinking of San Francisco, and it did not become open source or hub of activity and tech. It didn't move to Miami or New York Austin or Los Angeles, like San Francisco is still where it's at. The next question he asked, how does AI change wealth inequality? It's sort of too soon to tell.
Speaker 2:The data is not entirely clear. The data hasn't moved that much. But there are some interesting studies. So the International Monetary Fund released a working paper in 2025 that said that AI could reduce wage inequality. Reduce wage inequality.
Speaker 2:So the amount of money that people make on an annual basis could be, you know, reduced. How is that possible? Well, what they say in this paper is that high income tasks, the job of a lawyer, the job of an executive, the job of a management consultant those will be automated before the job of the machinist, the gardener, the street sweeper. And so you will see wages at the high end fall, while wages at the low end remain stable. And also, at the bottom end, you have the minimum wage.
Speaker 2:And so you will see higher end wages go down, the bottom wages will stay the same, and that will reduce wage inequality. On the other side, AI could worsen wealth inequality because it's concentrating capital returns into tech owners. So the o e the OECD found that wage growth was actually the strongest in low skilled occupation, assemblers. I didn't even know that was a job, but if you're an assembler, you've seen your wages increase by 11.6%.
Speaker 1:There we go.
Speaker 2:You know who's had it the hardest? CEOs. The high skilled workers, those chief executives saw their wages increase by just 2.7%. It's rough out there for a CEO apparently.
Speaker 1:Brutal.
Speaker 2:This is mostly because of minimum wage increases. But in general, we're seeing wage inequality decrease, but wealth inequality increase because there is incredible stock market concentration right now. So the Mag-seven, the seven biggest tech companies in America, they now comprise 32% of the S and P 500 market cap, and they drove 42% of total returns in 2025. So if you're invested in Tesla, Meta, Microsoft, Apple, Google, Amazon, etcetera, NVIDIA. You did very well.
Speaker 2:Your wealth increased. But if you weren't in those and you had a broad index or you didn't have a lot of capital to begin with, you were left behind. So that's increasing wealth.
Speaker 1:Paul Graham shared two days ago Yeah. Companies grow fast now. That's the reason economic inequality is increasing, not some sinister policy shift. Yes. He was highlighting Anthropix recent growth.
Speaker 1:He said, When companies grow fast, it makes founders doubly rich. The company not only hits a given revenue number sooner, but it is more valuable when it hits it because the value of the company will be a multiple of the growth rate. People who don't understand the math of valuations can't imagine that founders would get so rich naturally, whereas the founders and investors, it's the most obvious thing in the world. This is one of the reasons there is such a disconnect between the tech world and politicians.
Speaker 2:Yes. So if you want to invest in the mag seven or you don't, over to public.com. Investing today is to take it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. So, this is also true in private markets, as Paul Graham mentioned.
Speaker 2:AI startup mega rounds, a $110,000,000,000 for OpenAI, 30,000,000,000 for Anthropic. This concentrates enormous private wealth among a small number of founders and investors. So wealth inequality, AI will probably change it. At the very least, it will change it as much as previous technology technological booms. If you were the founder of Instagram, you did very well because there was a lot of wealth creation all of a sudden in one major tech boom, mobile.
Speaker 2:AI is is broader and bigger already than mobile. So moving over to energy and data centers. If it if it does become an energy game, what's the trade? It did become an energy game, and the trade was buy everything, basically, because every energy thing basically did very well. Anyone who got the trade corrected very well.
Speaker 2:Vistra returned 321%. It was the second best performing S and P 500 stock of 2024. Wow. You know who beat them in 2024? Palantir.
Speaker 2:Palantir mooned that they were already in the S and P 500. They did very well. But, Vistra was sort of the the the secular energy winner. Constellation Energy tripled in size, after Chachi Patti's launch. NRG Energy, which is a great name, NRG, gained 95% in twenty twenty surge
Speaker 1:seven hundred percent in twelve months, and that's without, I think, even having any producing any energy? No. Just the idea that
Speaker 2:they will produce
Speaker 1:energy Yeah. Someday. Yeah.
Speaker 2:Nuclear went on a tear. Oklo is in more of, like, the startup pre revenue camp, I would say, or pre product camp. But Microsoft signed a $16,000,000,000 twenty year PPA to restart 3 Mile Island. Google signed with Kairos Power for 500 megawatts of small modular reactors, and Meta contracted 6.6 gigawatts across multiple nuclear providers. So energy was just such a great trade from the the the the beginning of the AGI boom in 2024.
Speaker 1:Across the next step across the entire data center supply chain, which components are hardest to scale up 10 x? What is the chip on wafer on substrate of data center?
Speaker 2:Yeah. So chip on wafer on substrate, that is TSMC's secret sauce. That is the the the most gating factor in scaling TSMC's two nanometer chip production. It's what allows them to package HBM and the GPU all on one chip. TSMC And reported that they were, like, sold out, like, years in advance.
Speaker 2:It was a huge bottleneck. In the data center world, the biggest bottleneck was probably power transformers. We heard a lot about this lead time for new lead times for new power transformers reached over three years in some cases with a 30% supply shortfall. High voltage circuit break my
Speaker 1:was in escrow on a condo Really? That and closing was contingent on the development getting a transformer. She waited like six weeks or something like that. Yeah. They were like, we don't know when we're gonna get it and she ended up just backing out.
Speaker 2:Wow.
Speaker 1:Yeah. Just because there was there was so much demand.
Speaker 2:Yep. I mean, really got caught off we we really got caught off guard by this. I mean, transformers, the cost surged a 150% since 2020. It's a 100 year old technology. It's not it's not new.
Speaker 2:It's not crazy innovation. Overnight success. Overnight success. But it became the binding constraint on how fast data centers could connect to the grid. If you are running a transformer company, you're selling transformers, gotta get on Shopify.
Speaker 2:Shopify is a commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents. If you're selling transformers, start running some paths.
Speaker 1:Imagine checking out for a transformer with Shop Pay.
Speaker 2:It'd be an incredible, incredible experience. Coal. Was coal mispriced? Sort of, but not nearly as much as copper. Thermal coal prices actually declined 2020 22% in 2025, but they rebounded a little bit by early twenty twenty six.
Speaker 2:Coal stocks did fine. Peabody Energy gained 34% over twelve months. Console Energy, that was up 37. On the operational side, US coal fired generation
Speaker 1:I love how you're like, coal stocks did fine. Yeah. They were up only 3437%.
Speaker 2:I mean, compared to everything else that's doubling and tripling, it's like, nah, you know, okay. You know, you were like, I'm the coal guy. I I I believe coal is the thing like
Speaker 1:Peabody Energy is up 73% in the last six months.
Speaker 2:Just kidding. Only 37.
Speaker 1:Only up a 161% in year. Yeah. Only It did only up It did fine. Only up 728% in the past five years.
Speaker 2:It did it did fine. It's just not as exciting as as copper, and it's not as exciting as as nuclear. Coal generation surged 13% overall in in America, 23% in Ohio, 58 in Oklahoma, where they're sort of data center hotspots. Like, there's more data centers in those in those areas. So bringing more coal onto the grid allowed for, you know, more load balancing.
Speaker 2:Anyway, nations. Who wins and loses? Take a wild guess at who won. America, baby. America won.
Speaker 2:Next question. But it's really true. Like, the stats are crazy. The United States is truly the dominant winner of the of the last two years in the AI era. $109,000,000,000 in private AI investment in 2024 alone, way more now if you look at 200,000,000,000 CapEx guide from AWS, 110 going to OpenAI, 30 going to Anthropic, tons of money going into XAI.
Speaker 2:Like, the money is truly flowing in America. In 2024, China had just 9,300,000,000.0 invested in private AI companies. There's 470,000,000,000 cumulative since 2013, more than all other countries combined in America. The US produced 40 notable AI models in 2024 versus China's 15. Now, the game's not over.
Speaker 2:Lots of countries are making big investments now.
Speaker 1:And you can't forget France. France is €30,000,000.
Speaker 2:They put in 30,000,000. Yeah. Yeah. It's it's serious. It's serious.
Speaker 2:Well, let me tell you about the New York Stock Exchange. Wanna change the world, raise capital at the New York Stock Exchange. Just do it. So
Speaker 1:Next up.
Speaker 2:India. What's going on in India?
Speaker 1:DG says 250,000,000,000 of India's GDP exports are essentially GPT 4 tokens. What happens now? John says this is starting to take shape, but it's still early. Situational awareness is placing some short bets which map to the decline in hiring.
Speaker 2:I think they were short Infosys, which is an IT outsourcer. You need some software written. You will basically send a prompt and, basically, you would get back code, which is what these models are fantastic at. And so that does seem like some really, really steep competition in the near term, even in the long term. And so I think he's right to question that.
Speaker 2:Although we aren't seeing it in the overall India hiring data, the overall Philippines hiring data just yet, but it is showing up a little bit in India's IT export center. So major Indian IT firms collectively in 2024 and 2025, they shrunk by 58,000 employees roughly. And that's a dramatic reversal from the previous three years, 2021 to 2023 when they were staffing up. They added 360,000 employees.
Speaker 1:So Yeah. The only thing here is that big tech this, like, is in some ways, like, proxy for big tech hiring because a lot of a lot of the labor that's happening at these firms is effectively offloaded to to to some of these firms in India. So it's like, in some ways, it's like, if there was over hiring Mhmm. In big tech, there was could have been effectively over hiring here
Speaker 2:Yeah.
Speaker 1:And then it's re retracing.
Speaker 2:Yeah. Makes sense.
Speaker 1:And, yeah, you didn't put it in here but it it's also interesting to look at the hiring activity in The Philippines which is not as dramatic to the downside as as one might think.
Speaker 5:What do you mean?
Speaker 2:Oh, just
Speaker 1:When we looked at the data think it was a couple weeks ago. Not like you there was just like job Yeah. Jobs, like, falling off of a cliff. Yeah. Like, it's relatively stable.
Speaker 2:Yeah. There's sort of these, like, concentric circles with all of these stats. Like, if you look at Block, what's happening at Block? Like, well, they lost 50% of their workforce. Like, that's a massive cut.
Speaker 2:And then you look at tech hiring overall, and it's, like, slowing down. You look at white collar work, and it's, like, we're not adding a lot. It's maybe shrinking by point 1%. And then you zoom out to the American economy, and it's, like, it's actually growing. And so you have these, like, concentric circles of impacts.
Speaker 2:And so if there's, like, one company in India that's doing IT outsourcing that might be hurt, and then they're the least they're the worst performing, but the best managed one might be able to make it through. And then and then you zoom out and you're like, well, the overall Indian economy is doing okay. And then overall, the global economy is doing okay. And so there's all these, like like, cascading effects. And I think the the interesting takeaway was when when somebody like Dario says 50% of white collar work might be automated.
Speaker 2:Like, it's gonna be the bottom 50%. It's not gonna be the it's not gonna be at random. It's not gonna be flip a coin if you keep your job or entry level. It's gonna be it's gonna be were were you not at the top of your were you not at the top of your game? So the question is, if we are displacing software engineers, will software engineers become machinists?
Speaker 2:This is what Daniel Gross asks. He says, what is the Euclidean distance of reskilling in prior revolutions and how does AGI compare? The typist became an executive assistant. Can the software engineer become a machinist? So we're not seeing this yet.
Speaker 2:Software engineers aren't grabbing blue collar jobs just yet, but there is a divergence that's starting to show up in the data between software developers and programmers. So programming jobs are in decline, but software engineering jobs are actually growing. And so I think what's happening is that as coding models and agentic systems allow for building systems at higher levels of abstraction, demand for AI engineers has grown 143%. And so if you're going to hire someone to help you build software, you want them to be like AI native, you want them to go beyond full stack or which typically meant you could do front end in JavaScript and back end in Python. And now full stack or AI engineer means, everything from prompt to design to product development to deployment to operations and DevOps to database migrations to front end and back end because all of that is gonna be handled by AgenTex systems.
Speaker 2:And so entry level hiring at top tech firms has dropped 25%. Maybe AI, maybe overhiring from COVID overhang. We'll see. Internship postings fell 30%. So the decision is either, you know, reskill upwards to more of a manager of infinite minds, I think was the quote, but manager of agents role or, yes, you might it might be time to work on those machinist skills.
Speaker 2:I I'm extremely bullish on Tyler. We watched him assemble the first iPhone ever in America, and he's also an incredible software developer. Not really a programmer because he doesn't really know the programming languages that he employs, but Not true.
Speaker 6:That's not true.
Speaker 2:There we go. Yes. I think Tyler makes it whether he becomes the the manager of infinite minds or the machinist.
Speaker 6:I I I am pretty bullish on like the like the light blue color like thesis, which is that like you you'll have robotics, but you'll just have, like
Speaker 2:Yeah.
Speaker 6:So you'll be in the machine shop, but you're just using an iPad. You're not actually working on stuff.
Speaker 2:Yeah. I think we drop you in a Nike factory. You're running that place in, two weeks. Guaranteed. I'm not kidding.
Speaker 2:Like, I I I I'm so bullish on on young people who can use all the tools and and actually go and understand the leverage that they're getting from the modern systems natively and not need to fall back to old habits.
Speaker 6:Yeah. There was a good journal article yesterday about the Colgate, like Yeah. Head of AI. Yeah. And it was very interesting because I was like, oh, this is like, I feel like I could do a pretty good job with this.
Speaker 6:Coming after me.
Speaker 2:You're like, yeah, yeah, yeah.
Speaker 7:But you know, he's
Speaker 6:just basically telling everyone like, yeah, guys, you actually gotta use AI like despite what these these random surveys might
Speaker 1:guy has had one job in his life working on a on a podcast and thinks he could go thinks he could go dominate in the big toothpaste space. Yeah. I love the confidence.
Speaker 2:We're athletes. We
Speaker 1:got it. We we got You a corporate athlete.
Speaker 2:We gotta get him we we gotta the Colgate guy on the show and see see whose takes are better. Tyler Cosgrove or or Colgate AI guy. Anyway
Speaker 1:The chat's saying you're not they don't think you're a supply chain guy, Tyler.
Speaker 2:I think I think you could pick it up. Ask ask the l m.
Speaker 1:Claude, what
Speaker 2:do I do? Yeah. Make no mistakes.
Speaker 6:For Claude. Right?
Speaker 2:Let me tell you about what
Speaker 7:happens if
Speaker 2:I hit if I hit this? Let me see. Does that take does that take over? Fin.ai, the number one AI agent for customer service. If you want AI to handle your customer support, go to fin.ai.
Speaker 1:Electrification and assembly lines lead to high unemployment and the new deal, including the Works Progress Administration, a federal project that employed eight and a half million Americans with a tremendous budget. Does that repeat?
Speaker 2:So clearly hasn't happened yet. We also haven't seen high unemployment yet, so we'll we'll see. The Trump administration did launch America's AI action plan in July 2025. We talked to one of the authors of that AI action plan, Dean Ball, yesterday on the show. And they issued some executive orders on AI education and skilled trades.
Speaker 2:But the Department of Labor and the the Department of Labor awarded $84,000,000 in apprenticeship expansion grants, but that's like France money. That's like not enough to do to really make an impact. Overall, S. Workforce development spending is at point 1% of GDP, which is second to last among OECD nations. I wonder who's actually last.
Speaker 2:We should look that up. Anyway, no program currently approaches the scale of the Works Progress Administration or the New Deal. I think this will change very, very quickly if the data comes through that we're actually shedding tons of jobs. America is very good at creating new jobs and and and running the printing press, and And this is the whole reaction to the Citrini article. Anyway, he also asks a more philosophical question that doesn't really have a detailed answer, but I'd love your take on it, Jordy, too.
Speaker 2:Is lifelong learning worth investing in, Something worth doing beyond the economic value of mastering the task? It's a very abstract question. It's a very personal question. I tend to think yes. I tend to think that on Maslow's hierarchy of needs, you you need food, shelter, family, friends, clout or whatever.
Speaker 2:At a certain point, learning a skill for the sake of learning that skill is edifying even in a world I, you know, it's like going to the gym. Like, I was I was listening to Sam Altman talk about how kids will never kids that are born today will never be smarter than the smartest AI systems. And that's weird. That's different. But I was thinking about like but like I was there was a time hundreds of years ago when you could actually be this the the the best thing in the world, the best option for like carrying lumber other than, like, maybe an ox or something.
Speaker 2:But, like, in general, like, before we created machinery, like, before we created the car, like, you could be the fastest person. And then as soon as as soon as the the the the the the z r one axe was released, you didn't stand a chance. And I had to explain this to my son at some point. Was he was very interested in cheetahs. And and I was telling him, like, cheetahs are the fastest animal.
Speaker 2:And he was like, but is it faster than a car? And I was like, not even close. Like like me in a car, I'm smoking that cheetah. I am slower than that cheetah, but I'm way faster
Speaker 1:Yeah. So in my Cadillac. DG says, something worth doing beyond the economic value of mastering the task. Yes. And the way I would kind of flip this, I feel like most of the gains in my life have come from mastering myself or understanding myself, learning about myself, and then understanding the world Yeah.
Speaker 1:And then combining those two things in a way. It hasn't been about mastering any one Sure. Specific This is good. Task.
Speaker 4:Yeah.
Speaker 1:And so I still think there's tremendous tremendous gains to, again, under understanding yourself, understanding the world, how do these two things fit together.
Speaker 2:So I agree with you on just the on just the level of, like, there will be not just tasks to master, but, like, ideas and cons and and combinations of skills that will be valuable economically. But even in a in an ASI world where there is no economic value to any task mastery, I still think it is worth investing in lifelong learning because that will be edifying. That will be satisfying.
Speaker 1:Yeah. It's just enjoyable.
Speaker 2:It it it, you know, it's becoming a painter. Becoming someone who who gets joy purely out of the process of painting the landscape when cameras exist, when generative AI exists. It can still be edifying and valuable to to sit there and look at a landscape and paint it and wind up with the result even if the result is not economically valuable or or anywhere near what you could get with technology like a camera or Gen AI. So very abstract, but still something fun to think about. Before we move on to inflation, let me tell you about CrowdStrike.
Speaker 2:Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. So if AI is truly deflationary, how would we know? What chart or metric would show it first?
Speaker 2:And you could look at AI API pricing as probably the best answer here. So, you know, there are certain tasks that AI can do now. And so those tasks have moved from being limited by regulation or human output or the population workforce to the compute allowed or compute allocated. And the cost of compute is falling. So TVs were expensive.
Speaker 2:They got cheaper as we made more and more factories that were more and more automated that could produce ever cheaper TVs. And that's why when you look at the inflation trends, see health care, education, anything that's highly regulated. There are only so many lawyers that are allowed to pass the bar. There are only many doctors. And so health care has increased in cost, where TVs has been this knockout, drag out fight between the most ruthless companies all over the world, and the price of TVs has fallen.
Speaker 2:And so if you start putting more of those jobs on the AI, on the AGI curve, you see deflation. Where should we see it first? We should see it in AI, API pricing. And GPT-four equivalent inference costs have collapsed. In late twenty twenty two, they were which is like right before GPT-four.
Speaker 2:I think GPT-four came out January 2023. It was twenty dollars per million tokens in December 2025. The same model, $0.04 0 per million tokens. So this is a 50x decline in three years. I think that you can even get more intelligence for cheaper depending on how you're inferencing these.
Speaker 2:You can run some of these models locally, and the energy cost is even cheaper at that point. So this 50x decline in three years, this is falling faster than PC compute costs. It's also falling faster than .com era bandwidth costs. And so this should be the leading indicator for downstream service deflation. In any example that you give of like, oh, I was just able to use ChatGPT to check my I talked to somebody who said they love ChatGPT because their check engine light came on.
Speaker 2:They were able to take a picture of it, and it identified the car, told them what they needed to do. And they felt like they when they went in for servicing, they weren't going to get raked over the coals by their mechanic because they had, like, sort of a mechanic in their camp, in their fighting in their court. And so this should this should effectively act as like, okay, you have your own mechanic on your side and then you can do it yourself, you can also just go in and negotiate and say, hey, I know that this the fair price for this is $50, not 200, so give me the good price. Yeah. And so you should see that.
Speaker 2:You should see that.
Speaker 1:Yeah. You can assume that tokens are gonna get cheaper Yep. And more effective indefinitely. Yes. But all these new product launches, things like OpenClaw are actually expanding.
Speaker 2:The number of tokens. Yes. So you are seeing deflation but then you're also seeing Jevan's Paradox and increase in demand and that's why overall growth is increasing. So how should one Historically,
Speaker 1:it's like one person, one AI chat, you're only using so much. Then you have agentic products. Then you can actually multiply the number of agents that an individual can be running and the output goes through the roof.
Speaker 2:It's time to head to Gastown, baby. So he asks this follow-up question, how should one think of deflation if demand for intellectual goods continues to grow as production costs go down? AI API costs are plummeting, but AI lab revenues are skyrocketing. So prices fall, volume surges, total spend increases. And the really interesting wrinkle is we're living through a SaaS pocalypse.
Speaker 2:We're living through the Citrini article, but SaaS vendors are imposing like an AI of, I think the stats were somewhere between 2037% of renewals. So AI vendors, you you go for your renewal and they say, hey, we got AI features now. You got to pay a little bit more. SaaS revenues are still increasing and growing even as the underlying cost to build software approaches zero. This mirrors computing's history under Moore's Law.
Speaker 2:Each unit gets cheaper. Total spending grows as new use cases emerge. So classic Jevan's paradox. Let me tell you about Figma. No matter where your idea starts, Figma may clog code, codex, or or a sketch, the Figma canvas is where ideas build connect and products take shape, build in the right direction with Figma.
Speaker 2:So geopolitics. This was interesting because he put this question in the geopolitics section that feels much more like a server AI build out question, but he asks, does interconnect actually matter? And and I was very confused because interconnect typically refers to sort of like the the Ethernet cables between servers or like NVLink or, you know, the what what what TPU is doing, Ironwood, between, like, the three torus topology. And I think that the answer to that is, like, absolutely. In large GPU clusters, 30 to 50% of training time is spent on inter GPU communication, not actually computation.
Speaker 2:And so all the hype around TPU v7 Ironwood is due to their three d Taurus technology, the topology that connects 9,216 chips together. NVIDIA's NVL 72 connects 72 chips together. Interconnect is incredibly important. I'm wondering if the fact that Interconnect is in in the geopolitics section is maybe talking about the interconnections between Samsung and and SK Hynix in South Korea and Taiwan, TSMC and and America. That's obviously relevant, we'll get into that in the next question.
Speaker 2:But it is both are incredibly important. So, I do think interconnect actually matters no matter where no matter how you read this question. The bigger question and the interesting, like, hot take question he has in here is, does node process matter if the country has more energy? So China has not been able to get their semiconductor manufacturing, their fab champion, SMIC. They have SMIC, which is the TSMC equivalent.
Speaker 2:They have Huawei, which is the NVIDIA equivalent. And they have SME, which is their ASML equivalent. They have not been able to clone TSMC to the level of Taiwan Semiconductor. But they can produce 14 nanometer chips. And so the question is, usually they take those chips and they put them in just random, you know, consumer electronics goods that they ship over here.
Speaker 2:So if you go to China and you want a co packer or manufacturer to build you something and you're like, yeah, want it to connect to the Internet or I want it to have a speaker inside. They're like, oh, great. We will we will fab a 14 mill 14 nanometer chip or or something even even less frontier than that. But can they just marshal a ton of lagging edge capacity and then just say, hey. You know what?
Speaker 2:We have cheap energy. We're burning coal. We have nuclear. We have the 3 Gorges Dam. We have hydropower.
Speaker 2:We have so much free energy. Let's just spend 10 times as much energy on the lagging edge. Can we achieve AGI that way? And it seems like no. It seems like leading edge nodes are incredibly important.
Speaker 2:You can't just throw a ton of lagging edge 14 nanometer chips at the problem, at least with current architectures. Now, this might change, but no frontier model to date has been trained on hardware older than five nanometer. All the leading chips, that's Blackwell, Google's TPU v7, AWS's Tranium three, they use TSMC four nanometer or three nanometer process. And I think when we dig into Grok and Cerebras and some of the newer stuff that's coming, everyone is saying we want to be on the most frontier node. We don't want to go backwards on that front.
Speaker 2:So China's best effort, Huawei's Ascend nine ten c, is on SMIC's seven nanometer class DUV process. They're not it's extreme ultraviolet lithography. They're a deep, deep ultraviolet lithography process. That's competitive for inference but requires dramatically more chips and energy for training at scale. So brute forcing AI progress through disregard for energy consumption, it feels like it still hits economic walls at some point.
Speaker 2:And then there's also the question of how valuable like, are the weights what are the nuclear weapons? Or is it the actual deployment? I was listening to this conversation about what are the geopolitical implications of AI? Is it that you you have, okay, yes, you have the genius, you have the 2,000 IQ god model, but you can only really ask it like one question. Is that what's valuable?
Speaker 2:Or is it you have a thousand, you know, country of geniuses in a data center and you're able to marshal effectively 10,000 cybersecurity experts for each person on the enemy team? And there's just a thousand people that are trying to hack your phone and a thousand people that are trying to hack Tyler constantly. Is that is the inference, actually. What matters is the compute what where the power comes from as opposed to just the training. Training is obviously important, but inference might also be important.
Speaker 2:So there's a big question there.
Speaker 1:And last but certainly not least, DG asks, What is the likely Taiwan event and what would be a leading indicator for it? John writes that Taiwan blockade would be the biggest trigger, but Taiwan Strait tensions are already escalating. China conducted Joint SWORD twenty twenty four b exercises in October 2024 surrounding Taiwan with coordinated military operations. In December 2025, Justice Mission twenty twenty five deployed over a 100 aircraft, 90 crossing the median line, 13 warships and 27 rockets fired from Fujian. 10 rockets landed in Taiwan's contiguous zone.
Speaker 2:Contiguous zone.
Speaker 1:Contiguous. Sorry.
Speaker 2:Just 12 to 24 nautical miles offshore. So they're just like firing rockets and being like, they didn't hit land. They're just you can see them from the beach probably, 10 miles offshore, 12 miles offshore. I think that's like just over the horizon.
Speaker 1:Yep. China also recently separated Peaceful from reunification when talking about Taiwan and their twenty twenty six to two thousand and thirty five year plan. Gives you an idea of where things might be going. TSMC is planning ahead, working on a fab complex in Arizona, which Tyler visited. Should be able to handle 30% of total advanced China production at scale, but it's on a knife's edge.
Speaker 2:If you wanna know roughly how how far that is, you've seen Catalina Island off the coast of LA. Yes. Catalina Island's I think 26 miles.
Speaker 1:And so imagine So very visible.
Speaker 2:Yeah. You can see Catalina Island from Long Beach and imagine a missile coming and landing like halfway between where you are and Catalina Island.
Speaker 1:Crazy. Very Yeah. The the question is how does Iran and the conflict there update China's kind of thinking
Speaker 4:Mhmm.
Speaker 1:On this? There's Yeah. Some of the, Intel accounts have been sharing, who knows if it's true, that, China actually has operatives in Iran, like, kind of learning in the same way that The US has learned Yeah. From Ukraine, specifically, in in regards to missile capability. So wild, wild time.
Speaker 1:And, yeah, it just feels like a day hasn't passed so far since this was published that Taiwan a Taiwan event feels less likely than it did the day before.
Speaker 2:Yeah. I think that's why Palmer has been trying to message around the blockade specifically as being like a line in the sand because that's somewhat of an abstract concept. Because if a blockade happens, it could be very bad. It could be the start of a turning point, but it would not be a hot war. It would not be boots on the ground.
Speaker 2:It would not meet the level of, like, a declaration of war that many people would would wake up to. And so he's been trying to message that, like, no. A blockade is the start of something bigger. We need to be aware, and and we need to hold the line on on not allowing a blockade to happen. Anyway, we will continue following that.
Speaker 2:But first, let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy web apps, servers, databases, and more while Railway automatically takes care of scaling, monitoring, and security.
Speaker 1:Let's head over to Mouse Twitter.
Speaker 2:Mouse Twitter is important.
Speaker 1:Mouse Twitter Check-in. Is on a roll. Scott Wilson from Mouse Twitter says a block of Parmesan is an elite on the go snack. This eight ounce block has 80 grams of protein at 64 grams of fat.
Speaker 2:I don't Parmesan is like the
Speaker 1:worst cheese to just chomp on. Disagree. You think Disagree. Alright. It's so hard.
Speaker 1:I know.
Speaker 2:I feel like it's gonna
Speaker 1:I know. But but eat snack. I agree. I haven't I haven't been snacking on Parmesan since I was probably
Speaker 2:You know, well, it's such an elite snack. I've never once caught you snacking like a mouse on a block of Parmesan cheese.
Speaker 1:I don't eat like a mouse.
Speaker 2:Stated preference versus revealed preference.
Speaker 1:I don't eat a mouse.
Speaker 2:Fake mouse.
Speaker 1:But as a kid, I'd have like a bunch of big carrots
Speaker 2:Yeah.
Speaker 1:And some blocks of Parmesan.
Speaker 2:Okay.
Speaker 1:And I'd just be going mouse mode.
Speaker 2:Mouse mode. That's good. Let me tell you about Gusto mode. The unified platform for payroll benefits and HR built to evolve its small and medium sized businesses.
Speaker 1:So he says it's on Slack, bro. It's in the drive. I just put it in the notion, bro. I literally sent it to you on teams. Did you check the Airtable, bro?
Speaker 1:It's in the box, bro. It's single sign on. It's on Okta, bro. No. You need the YubiKey.
Speaker 1:Check your deal, bro. It's on gusto. Check Outlook, bro.
Speaker 2:Let me actually tell you about Okta. Okta helps you assign every AI agent a trusted identity so you get the power of AI without without the the risk. Risk. Secure every agent. Secure any agent.
Speaker 1:This morning.
Speaker 2:I like that riff. It's this is a this is a copy pasta from the it's on Tubi. It's on Hulu. It's on Zooby. Like, the all the streaming services.
Speaker 2:Anyway, what happened this morning?
Speaker 1:This morning, President Trump gave a phone interview in which he said, I fired Anthropic. Anthropic is in trouble because I fired them like dogs, which You don't fire fire
Speaker 2:You don't fire dogs. I would have fired my dog years ago. He's the least effective dog.
Speaker 1:Yeah. Isn't the phrase he he died like a dog?
Speaker 2:Yes. Yes. He's just adapting that. But
Speaker 6:He sent anthropic to the farm.
Speaker 2:No. If he's comparing them to dogs, it's man's best friend. This is bullish. He's saying he's saying they're my dogs.
Speaker 1:This also coincided with Anthropic, I guess, officially being designated as a supply chain risk Yes. Which is Yes. Again, not something that I've seen a single person in the industry push for Yeah. From OpenAI to Amazon to Apple Yeah. Pretty much everyone across the board.
Speaker 2:Even Elon But I don't think has been, like, outspokenly for this. Like, he because he I mean, Dean Ball was talking about how Elon sort of went through a lot of this with the with during the Biden administration. And so I I I Elon's usually pretty opportunistic about about dunking on competitors. But in this regard, it feels like he's he's been sort of quiet. I don't know.
Speaker 2:Maybe I just haven't maybe I missed the post but
Speaker 1:Yeah.
Speaker 4:I mean
Speaker 1:of this I I so wonder Dario sent a memo on Friday that was pretty scathing
Speaker 2:and Yeah.
Speaker 1:Looks really Crazy. Really bad. And the timing here maybe played a factor. It felt like they were still Yeah. Seemingly like trying to work towards a deal.
Speaker 2:Yeah. Let's read what he let's read what he said. He said in his memo that he believes the attempted spin slash gaslighting is not working very well in the general public or the media. Though he added that he is working on some Twitter morons. Is he talking about the administration?
Speaker 2:I mean, they're all on Twitter. Right? Like, that's the that's the whole thing with this administration. He's talking about lots of people, obviously, but, you know, not the most politic way to handle this, I suppose.
Speaker 1:Yeah. It's interesting. He Dario Dario says you're a moron if you believe OpenAI's story around this. Yeah. But, less than a month ago, Daria was running green lit Super Bowl ads that were intentionally designed to mislead
Speaker 2:It's a good to
Speaker 1:hundreds of millions of Americans
Speaker 4:Yep.
Speaker 1:On OpenAI. Yep. And so, now now he wants to be the one to say he wants to be Yeah. The most trusted source
Speaker 2:Yeah.
Speaker 1:Through this whole debacle. Yeah. And
Speaker 2:Yeah. I mean, there's also the the back and forth on, like, being the most leaned in, on one contract that's to develop autonomous weapons, but the AI doesn't run on the autonomous weapons. And there's a whole bunch of different wrinkles here. It's just such a nuanced conversation. I was I was digging into the question of autonomous weapons.
Speaker 2:Not only are there apparently, according to Ukrainian intelligence, fully autonomous Russian lethal Russian weapons that will just be sent off. And if they see a tank, they'll just go and and attack it. Like, that exists. And so there's always the game theory about if they have it, do you have it? Do you need it?
Speaker 2:What you know, what's that? Where's the line in the sand? And then also America, like, the Patriot missile system apparently has a fully autonomous mode where it can just decide what to attack. And there's a whole bunch of other nuance here that I think is lacking from these little snippets. It's, I don't know.
Speaker 2:I'm I'm I'm I'm he went on CBS and sort of unpacked a lot more of it, but I'm still left dissatisfied with the level of discussion around where the line in the sand is drawn. Even on the privacy issue, like, the there are six levels of laws around mass surveillance. It's not just the Fourth Amendment. There's a ton more. Some of them are very precise.
Speaker 2:Some of them are more broad. And, like, how the company interacts with that is clearly important. That's actually probably happening in these discussions, but then it gets boiled down into, like, one sound bite that everyone has to interpret and read the tea leaves on, and it's left me unsatisfied. But
Speaker 1:Yeah. Dean Dean Ball yesterday says, I really cannot see how Anthropic positions benefits at this stage from communications like this. Seems like it just pushes the Trump admin to escalate further while also alienating potential allies in the industry. Yeah, I guess like you know, clearly when he was writing this, seems fairly confident that Yeah. This was gonna stay private, but you have thousands of people Yeah.
Speaker 1:Working at the company.
Speaker 2:For hire
Speaker 1:it's an insane thing to Yeah. Send to your whole team
Speaker 2:Tyler, do you need to delete a post? What happened?
Speaker 6:Yeah. So okay. Well, no. Time will tell. We'll see.
Speaker 6:But I so so I think when the the first like rumors or or whatever saying that maybe we'll we'll put a supply chain risk on traffic
Speaker 4:Yep.
Speaker 6:I posted nothing ever happened. So I'm looking I
Speaker 2:think you jinxed it.
Speaker 6:Yeah. I'm not doing well on that right now.
Speaker 2:Something happened.
Speaker 4:Yeah.
Speaker 6:Something happened. But But, you know, it's always unclear. Like, maybe this is just another,
Speaker 2:you know I think this brings to the table. It's such a ridiculous thing in a world where
Speaker 6:headlines coming out, like, right now that that are saying Dario is still trying to get something done.
Speaker 2:They they they have to go to the table, and they have to and they have to work this out, because it it just doesn't it just it's just it's just unpopular. And and I think that and I I just think that the actual like, the the the real individuals, like, the real Americans and the real AI researchers are not as far apart as the rhetoric makes it sound. Like, I think that there's a lot of comms and PR and bluster and ego at play between all the parties involved and folks are are at each other's throats. But I think that when when if they actually sit down and try and, like, like I have a I have a buddy who was on a nuclear submarine for, a year underwater. And he and I was like, what was that like?
Speaker 2:Were you, like, finger over the button? He's like, no. Was like a ton of paperwork. Like, every day, I'd, like, go and like see how many whales are there and then like count them up and like with pen and paper, like write down a report on how many whale. It was like the most boring Yeah.
Speaker 2:I just automated. No. Seriously. And that was the thing that we learned from Project Maven. Like, Google had this major protest, a a a big walkout.
Speaker 2:And at the end of the day, like, Google was giving the Department of Defense just axe they weren't building killer robots. They were giving them access to TensorFlow APIs that that other defense contractors would be able to use to run just classical machine learning programs to classify items in in images. So how many cars are in this city? How many like, like, what like, where are our drones on the map? Like, what are we seeing?
Speaker 2:Like, basic stuff that was typically the the providence of or the the the domain of, like, an Air Force reserve person sitting in an office, probably in Nevada, just clicking. Okay. Yeah. Tagging. Okay.
Speaker 2:Yeah. That's a house. That's a car. Like, this is what this is. It was not the true, like, command and control and endgame that people worry about.
Speaker 2:So figuring out where these where these models can actually have an impact, I think that there's gonna be a lot more agreement than there is disagreement. What do you think, Tyler?
Speaker 6:Yeah. I do think, like, basically before this, like, memo got leaked, there was a sense that, like, okay, clearly, like, he's positioning himself firmly against the the the admin. Yeah. But at at least there was, like it it seemed like the researchers, like, generally were on his side. Like, you you see a lot Totally.
Speaker 6:Anthropic researchers or Yeah. OpenAI. AI researchers who are,
Speaker 1:Yeah. Oh, well. Crash out.
Speaker 2:Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real time experiences and new value with Cisco. So what did Miles Grundage have to say? So I'm not super surprised.
Speaker 2:I've said before that Anthropic has too much of their identity wrapped up in OpenAI bad, but this memo doesn't look great. IMO, totally agree with the criticism of much of OpenAI's political activities, and I think people should be very skeptical of the safety stack stuff. Had a whole thread about it the other day, but this this is who they are, gullible, etcetera, stuff is a bit much. It's getting to be ad hominem. They gotta back off the aggressive rhetoric.
Speaker 2:Rune was feeling sort of gullible today, maybe due to selection effects. I love that. I have to say I really enjoy these crash outs. It's pretty keen now to read communication that's poorly calculated and wasn't meant for your eyes. So few today are able to speak in these sweeping Shakespearean terms that they hate their competitor and let it blind their calculus.
Speaker 2:That is a wild, wild time.
Speaker 1:Yeah. And I just I just don't think Dario is in that strong of a position to be complaining about or insinuating that OpenAI is lying when he's running Super Bowl ad campaigns that are just lying to everyone True. True. About OpenAI. Yeah.
Speaker 1:Yeah. It's like, why should anyone trust you?
Speaker 2:Yeah. I do I do wonder this feels I I I I'm still very interested in, know, Anthropic gets a lot of credit for predicting the future, predicting how there would be a showdown between the US government and the AI labs. And I'm wondering, like, how much of this exact what we're seeing right now was predicted. And and is that good?
Speaker 6:I think it was not predicted. Because they don't seem to be handling with handling it, like, very carefully.
Speaker 2:Maybe. Maybe. Or maybe this is all this is all what Dario wants. Like, wants to be labeled the supply chain risk. He wants to have to go his own way.
Speaker 2:He wants to be fully out. And and all of this was like like, a, like, a ruse to be to force the hand of the administration to be, like, I'm I'm on the outside. I'm I'm leaving.
Speaker 1:You're saying he wanted to inspire himself to have to grind harder?
Speaker 2:Maybe. I don't know. It's just, it it is it is I I'm still I'm still processing that idea of like the Truman Oppenheimer interaction.
Speaker 1:Mays says, imagine autonomous weapons powered by this. You got a screenshot from Claude Opus four six. It says, tell me a color and I'll try to guess it. Claude says, blue.
Speaker 2:Blue.
Speaker 1:Bay's guess is blue. Claude says, nailed it.
Speaker 2:Nailed it. I love it. You know what else nailed it? Sentry. Sentry shows developers what's broken and helps them fix it fast.
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Speaker 1:The Trump administration is drafting rules that would require US approval for nearly all AI chip exports, Washington sweeping power over companies like NVIDIA and AMD. The draft framework sets licensing rules based on shipment size from simplified reviews for small orders to government level approval for massive deployments, potentially tying exports to security guarantees or US investments. Officials say the goal is to make American AI the global standard while controlling critical infrastructure through delays or strict conditions, though delays or strict conditions could disrupt international AI projects? Interesting.
Speaker 2:I the the this yeah. I mean, it depends on like, it's so odd when someone comes out and says, like, we're gonna create, like, a framework for control because if, like, in the most extreme, you could be like, okay. Now the government's deciding to, like, send all the frontier send all the black wells only to China. Right? Like, that would be the most extreme formulation.
Speaker 2:That's clearly not what's gonna happen. Ben Thompson's take is that the the the the last the previous generation chips, that's fine to send over to to China. Keep them dependent. Keep them from, you know, needing backed into a corner. Keep them from attacking Taiwan.
Speaker 2:I I still don't know where I sit with it. What do you think, Tyler?
Speaker 6:Yeah. I I think even in this context, like, the anthropic thing is so interesting because, like, if you take this as saying The US is gonna be more restrictive
Speaker 3:Yes.
Speaker 6:Like, that's what's been saying.
Speaker 2:Yeah. Exactly. Exactly.
Speaker 6:He it's like a lot of stuff on paper, he almost, like, agrees with. Right?
Speaker 2:Yeah. Totally.
Speaker 6:And in action, it's, like, completely different.
Speaker 2:Yeah. That is weird. Right? But, I mean, again, maybe maybe there's, like, you know, is this is this a a piece on the chessboard? Is this a chip that's being traded metaphorically to Dario in some ways where where, you know, it's like, do I win over the labs, get them to work with me more effectively?
Speaker 2:Well, I'll give on the thing we agree on, which is exports, export controls. So I will be more aggressive about export controls in in exchange for, you know, yes, I want unfettered access to the best AI in classified contexts. I'm still also very, very interested in the rollout of the the different models into classified context. It just feels like so so crazy that Anthropic was able to get such a lead there. I know it's hard, but we have AI.
Speaker 2:Don't just don't make mistakes. Like, make it make it compliant with FedRAMP. Please please do it. Don't make mistakes. Anyway, really quickly, let me tell you about MongoDB.
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Speaker 1:Douglas says, why is everyone so mad at Chamath? All he did was lose billions in retail investors' money by promoting one pager SPACs. It's not like he then told them to enjoy their capital losses or anything. Give the man a break. Chamath says, yes, I did.
Speaker 2:The capital loss thing He
Speaker 1:is he's on a rage baiting terror this morning.
Speaker 2:Yes. The the this is a hot tip. If you're gonna be if you're gonna be talking about a financial asset, you need to not be specific about whether you're you're whether you're advocating for a long position or a short position. So you just need to say, I got this company.
Speaker 1:It's a winner. It's a winner.
Speaker 2:Now it's up to you. Are you going to buy puts or calls? One of them is going to be correct. But I'm not going to tell you which one, but you should look into it.
Speaker 1:That's on you.
Speaker 2:No. There are a lot of retail investors that are upset. But Chamath is is in the arena fighting it out, duking it out on the timeline.
Speaker 1:But Dan Primax says the IPO market was expected to be huge this year, but so far pricings and filings are both down more than 20% year over year. Of course, just getting started. Have a number of bigger IPOs lined up. There was an interesting article in the Financial Times on the SpaceX IPO. Robin shared SpaceX probably has revenues less than 20,000,000,000 and loses money after the merger with XAI but is targeting a $1,750,000,000,000 IPO.
Speaker 1:Alphaville explored how Musk might try to pull off what could be the biggest bag holder operation in history.
Speaker 2:I love it. That's such a good one. Should we read through some of this?
Speaker 1:Yeah. We can read
Speaker 2:through it. First, let me tell you about Cognition. They're the makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team.
Speaker 1:In AlphaVille, Craig
Speaker 2:It's a good start.
Speaker 1:Says, Star Trek's warp drive allows a Starship to bend space time and exceed the speed of light without breaking Einstein's general theory of relativity. As SpaceX prepares to go public at a reported 1,750,000,000,000.00 valuation. Elon Musk is attempting a comparable feat defying the laws of financial gravity in pursuit of something the equity capital markets have never witnessed. The only thing I would immediately jump in on is Elon has been extremely consistent in being able to defy the financial laws of gravity. Mhmm.
Speaker 1:We've talked about this before but Ben Thompson has said like he won't even cover Yeah. Elon companies as closely as, you know, or or really at all in comparison to the traditional hyperscalers because Yeah. Go for it.
Speaker 2:Well well, I mean, what's interesting is that Ben Thompson has always kept Stratankery out of politics. And so a lot of people read him not talking about Elon now in the modern era as, like, a political referendum, and that's not it. He wasn't covering Tesla before Elon said anything political because it was always defying financial gravity. Yeah. It was always hard to actually
Speaker 1:Or the truthful laws of
Speaker 2:business. Exactly.
Speaker 1:For early investors, bankers, employees and advisors, the fees, returns, prestige and bragging rights would be stratospheric. Mhmm. At the mooted valuation, even a tiny 3% float would comfortably eclipse The US IPO record set by Alibaba's $25,000,000,000 float in 2014. A rumored $50,000,000,000 raise sounds formidable until you consider how much larger public markets have become since Alibaba went public. Back then Apple, then the world's most valuable publicly traded company was worth around $600,000,000,000 By the 2025, 10 companies had surpassed $1,000,000,000,000 and Nvidia today around 4,500,000,000,000 The firepower clearly exists.
Speaker 1:Musk is arguably the most impactful entrepreneur of his generation and has built a remarkable company. The question isn't whether there will be demand for SpaceX stock, but rather what IPO investors would should pay based on what has been reported. This price being contemplated is truly out of this world. The super jumbo deal promises not to be a conventional exercise in price discovery. Musk has reportedly timed it to coincide with the alignment of the planets Jupiter, Venus, and Mercury, but that's one of the more humdrum features.
Speaker 1:More to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centicorn whose scale has long since outgrown the confines of private capital. Moonshots and moonshine. The fundamental challenge for any investor is reconciling the company's financial performance with the sticker price at IPO. Last year, SpaceX generated an impressive 8,000,000,000 in EBITDA on 16,000,000,000 of revenue. However, the mothership has recently docked this writing is quite colorful with XAI with the latter valued at 250,000,000,000 despite revenues of only 210,000,000 and a cash burn of 9 and a half billion for the first nine months of 2025.
Speaker 1:So I think they're sort of breaking out Axe, or Twitter with this. Obviously, with Twitter combined, it would be quite a bit more.
Speaker 2:I wanna put this in the truth zone. So more to the point, the SpaceX IPO looks like a carefully controlled liquidity event, a solution for a centicorn. Centicorn is 100. Centi. Are they in the hundreds of billions?
Speaker 1:They still technically are.
Speaker 2:No. 1,750,000,000,000.00.
Speaker 1:No. But they're currently at 8
Speaker 2:Oh, wait. Wait. Really? Yeah. Okay.
Speaker 2:Well, anyway, once they go out, they're not gonna be a cent of corn anymore. We're gonna need a new word. Do you know the word for a thousand billions? It's gonna be kilo corn.
Speaker 1:Kilo corn.
Speaker 2:Kilo corn.
Speaker 1:Kilo corn.
Speaker 2:I guess you could You
Speaker 1:got a nice ring too.
Speaker 2:Kilo Corn too, but Kilo Corn is a good one. Giga Corn is, I think a quadrillion dollar company. It would be something like that. We'll get
Speaker 1:Musk marked up the private valuation of SpaceX to 1,000,000,000,000, citing increases in revenue from its star like broadband
Speaker 2:Vindicated. Vindicated. Been marked up to a trillion. It's not a centicorn anymore. It's a kilo corn.
Speaker 1:Sorry. Okay. But that yeah. Yeah. I guess you're right.
Speaker 2:Boom. Thank
Speaker 1:you. That was that was as part of the merger. I don't think there was a lot of primary capital but yeah, you're vindicated. Perspective IPO investors would be expected to back valuation more than seven times higher than the approximately level recorded in October 2024. That would qualify as an astonishing rerating in any market.
Speaker 1:With these numbers and with SpaceX and XAI accommodation happening almost concurrently with the expected IPO, investors must make comic book heroic assumptions about sustained hypergrowth. Elon is the king of comic book heroic assumptions about sustained hyper growth. I remember being a part The media has guided to expect 2026 revenues of $22,000,000,000 to $24,000,000,000 given the likely mid year timing. The investors will be pointing to 2027 projections presumably with even punchier year over year growth.
Speaker 2:Yeah. I wonder how how much Starlink is continuing to grow. Like, they're doing a lot of deals, but some of those deals are slow. Some of those deals have to be big with the airlines and whatnot. It feels like, you know, the market for Internet is so big that you're just getting more and more people.
Speaker 2:Like, I see them in Best Buy. And so you just have to imagine that every month, there's just more and more people signing up. And then once they sign up, they just let it ride for a long time or switch over full time. But that that switch from they are capturing 100% of the launch capacity. I think we have the the chart somewhere in here about SpaceX revenues were basically completely flat because they were just like, yeah.
Speaker 2:We did it. We we captured 100% of the launch market. If you wanna launch something into space, you call us and we pay and you pay us. We have good margins. But it's not really growing because there aren't that many satellites to launch.
Speaker 2:And then they were like, we got an idea. What if we launched a thousand times more satellites? And they did. Yep. Great.
Speaker 3:Great story.
Speaker 1:So, yeah, they they talk about, the mother of all lockups.
Speaker 2:They
Speaker 1:don't think a standard six month lockup will cut it. Mhmm. And so they could see it being staggered. Facebook had a staggered Yeah. Lockup.
Speaker 2:I mean, there's just so many investors, so many employees, twenty years of stock grants, twenty years of investments going into this. Lots of people looking for liquidity. Lots of people that will wanna hold, but, you know, if you open the floodgates, like, yeah, yeah, that could be crazy for the stock. But I think that there's gonna be so much excitement. The narrative is just so much clearer than than Tesla.
Speaker 2:Tesla's really had to, you know, retell the story around Cybertruck and Roadster and then the truck, the delivery truck and autonomy and then the Optimus robot, whereas, like a scaled you're going to space. If you believe in Mars, you're gonna be a retail investor. You're gonna buy the stock. Like, there's gonna be a lot of people that are excited about this. And then also the AI narrative as well.
Speaker 2:So Yep. We'll see.
Speaker 1:And then, yeah, the only other thing here that they're kind of poking around at is index inclusion. Mhmm. NASDAQ has already signaled the desire to accommodate mega listings by proposing rule changes for the NASDAQ 100. NASDAQ, of course, willing to get a bit more aggressive than, something like the S and P, which has held back against rule changes Yeah. Well in the past.
Speaker 2:Alphaville closes with five key questions for potential SpaceX investors. If you are thinking about investing in SpaceX once it goes public, you got to ask yourself these five questions. First, what specific growth rates are required to support a $1,750,000,000,000 valuation?
Speaker 1:Mars. That's a lot of
Speaker 2:smackaroos. Mars. That's not a growth rate.
Speaker 1:I'm just saying that's that is Yes. Ignore traditional financial metrics.
Speaker 2:Yes. Two. On March. What is the specific schedule for lockup expirations? When are you gonna see that?
Speaker 2:Well, the timing, the number of shares. When are when are insiders gonna be selling? When is there gonna be selling pressure coming? And when when when might that affect your investment timing? Three, how quickly will SpaceX enter the indices and how much passive buying is expected?
Speaker 1:They're gonna bahablast. They're gonna bahablast directly into
Speaker 2:the S and P 500, directly into the Mag seven. It's gonna be Mag eight on day one. They're gonna be in the QQQ. They're gonna be in every index, everyone's gonna buy it passively, potentially. Four, how much of the order book reflects genuine conviction versus marking the book, political signaling, or the search for a quick flip?
Speaker 2:How many of these people are here to stay? How many of them believe in moon? How many of them believe in Mars? What's after Mars? Where are we going after that?
Speaker 2:Alpha Centauri. You know how long it takes to get there? I think it's like what is it? It's like light years away. So, like, takes like years and years and years to get to Alpha Centauri.
Speaker 1:Yeah. The the only other thing that was interesting here is they they talked a little bit about retail allocations and the idea that retail would get a greater share Yeah. Of of the actual
Speaker 7:five Initial.
Speaker 2:Trillion miles So four light years. SpaceX isn't even close to going light speed yet. So you're looking at
Speaker 1:You got room to run.
Speaker 2:Centuries to get to Alpha Centauri. And the last question, how much is being allocated to unconnected institutional investors? So ask yourself those questions, then head over to Kalshi to track when will SpaceX officially announce an IPO currently before 08/01/2026 is at 79%. So, maybe September, maybe October, but, it's coming. It's coming.
Speaker 2:Elon wants this one out in the public markets. Let me tell you about vibe.co, where d to c brands, b to b startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales just like on Meta. Moving on in the timeline, Mike Solana is reacting to the size of the Pokemon franchise. Have you ever played or watched or consumed anything from the Pokemon
Speaker 1:I had a Pikachu Game Boy.
Speaker 2:You had a Pikachu Game Boy. Did you have the did you have the Pokemon yellow game cartridge to
Speaker 1:I had the goldish colored cartridge.
Speaker 2:Did you play the game?
Speaker 1:Yes. Did you finish it? Probably not. It was much more of a thing I'd pick it up for like a road trip and
Speaker 2:then I would Pokemon Red and I think I did actually finish it. I think I got all the way through. I think I might have collected all a 151 Pokemon or something in the original game. Then I kind of
Speaker 1:better to do when you were
Speaker 2:eight years old? No. I had not discovered locking in yet. But regardless for our distaste for the Pokemon franchise, it has become one of the biggest franchises in the world. It's of the world's highest grossing media franchises.
Speaker 2:Pokemon is bringing in $288,000,000,000 over the lifetime across films, games, toys, books, and merchandise. Hello Kitty is languishing at a mere 88,000,000,000. Winnie the Pooh, sad to see. I I I'm a Winnie the Pooh fan, 76,000,000,000. Mickey Mouse and Friends is up at 74.
Speaker 2:Star Wars is at 73,000,000,000. How is Pokemon bigger than Star Wars? That is a shock to me. But the rest are basically Disney properties across
Speaker 1:Is Pokemon is more more than Star Wars?
Speaker 2:Is that it? Suppose. I suppose. So Hunter says it's kind of insane how much bigger Pokemon is than any other media franchise. And Panman?
Speaker 2:I've never heard of this, but there's a suit a Japanese superhero made of red bean bread that's apparently very popular. And Mike Solano says, what's really insane is the franchise is this popular, and you still can't buy the old games. No one has remade the original with new tech and gameplay. There are no Pokemon parks, and there are no major blockbusters. There's probably half $1,000,000,000,000 on the table right now.
Speaker 2:Well, there was one, Detective Pikachu did well in terms of, film performance. I don't know if there's a park, but remaking the original with new tech and new gameplay, that's there are two attempts. There's the there's the mod retro chromatic where you can play the original. It's not remastered or built with new tech, but it is the original experience. And then and then you do have they are releasing new Pokemon games on Nintendo Switch, Nintendo Switch two, and so but they are completely different mechanics.
Speaker 2:Like, you're walking around in three d as opposed to this top down two d. But Pokemon is interesting because it is the it is the best critical review of a video game adaptation film in history. And so for a very long time, Hollywood said, okay. We want to do films that have, they're bought in. They have audiences already.
Speaker 2:People know Batman. We'll just make another Batman movie, people will show up. The Avatar. We'll make Avatar two. People will just show up because they're familiar with it.
Speaker 2:And people thought that that would apply to video games, and so they adapted a ton of video games, Final Fantasy, Doom. And they all some of them did okay financially, but almost all of them were panned critically. And what wound up happening was there were this was true for, like, a decade or two. Like, Lara Croft, the Tomb Raider. I think it did financially well, but everyone was like, it's not really that great of a movie.
Speaker 2:It's not gonna win awards. Then Pokemon came out, got pretty good reviews, I think, like, 86% on Rotten Tomatoes, something like that. And then Last of Us, directed by Craig Maison, who had done Chernobyl on HBO, started winning critical awards. The first season was very well reviewed. The second season is sort of half of the second game, and I don't think was reviewed as well, but is still at that level of, like, critical acclaim generally.
Speaker 2:So anyway.
Speaker 1:Let's get into some important calculations prior to
Speaker 2:I have a question first. Tyler, do you believe in straight lines on log graphs?
Speaker 1:Yes.
Speaker 2:You do? Okay. So we have some straight lines on log graphs here. We have graphed out the price of the cheapest MacBook and we're getting cheaper.
Speaker 1:Ethan over at SF Compute.
Speaker 2:We have a graph that is that is logged numbers. And Ethan Anderson plotted the most expensive McDonald's burger versus the least expensive MacBook over time. And the analysis projects that the most expensive burger will be more expensive than the cheapest laptop as soon as 2081. Do you think this is true?
Speaker 6:I mean, like, honestly okay. Like, you're not seeing exponential growth in in cattle. Right? But you are seeing it in compute. Yeah.
Speaker 6:So, like I think it's possible. Not, like, you know
Speaker 2:I think it's actually possible. Ad supported MacBook could be free.
Speaker 6:You know? Ad supported burger.
Speaker 2:Ad supported burger.
Speaker 6:No one's tried this.
Speaker 2:Yes. Is that would that be you eat it and then you have this sudden urge to go buy a MacBook? Or are there just MacBook ads all over the all over the container?
Speaker 4:Yeah. You could kinda
Speaker 6:a logo on the bone or something.
Speaker 2:Well, we have the perfect person to talk about MacBooks getting cheaper with. First, let me tell you about Vanta. Automate compliance and security, Vanta is the leading AI trust management platform. We have Mark Gurman, the Gurmanator. He's journalist at Bloomberg, and he's here at in the TBP at Ultradome.
Speaker 2:Are doing, Mark? To see you. Great to see you.
Speaker 3:Doing good. Wearing my Apple sweater today in honor of the the conversation.
Speaker 2:Very nice. What is behind you? You're in Los Angeles.
Speaker 1:Has there actually ever been a day where it didn't make sense to wear your Apple your Apple hoodie?
Speaker 3:Yeah. Like, if I go to a Google event or a Meta or something like probably not wear the Apple hoodie. You know? But
Speaker 2:Well, take so take us through your predictions. Anything that surprised you, what was actually released? Like, what have the last few days been like for you?
Speaker 3:Last few days have been interesting. You know, 6AM Pacific time, they've rolled out the the new products. Monday started off with the iPhone 17 e Yeah. And the m four iPad Air. Tuesday, obviously, was a big Mac day with the m five Pro or m five Pro and m five Max MacBook Pros, the m five MacBook Air, and the two new studio displays.
Speaker 3:Then we got the big one yesterday on Wednesday, obviously, the MacBook Neo. Yeah. In terms of surprises, there were no surprises. These were a bunch of products that had a lot of pent up demand. They needed to roll out a new iPad Air.
Speaker 3:Yeah. Sales have been flagging there a little bit. It was time for them to roll off the iPhone 17 e. And obviously, this new cheap MacBook has been in the works for for several years. The MacBook Pros with the m five Pro and m five Max, some may have expected that last October because that's traditionally when they've done the MacBook Pro updates.
Speaker 3:But this time around, the the chips weren't ready until recently. They use this newer generation TSMC fabrication technology, so those rolled out, for the spring. So overall, a really nice set of updates. Think it'll help Apple have a really strong quarter. Remember, they guided, an extremely strong March.
Speaker 3:We had a feeling we knew why, but now we know why for sure because all these products are now hitting the market. And I think at $600 and 500 for education, the MacBook Neo is going to be a game changer Mhmm. Not only for the computer industry, but for Apple's bottom line.
Speaker 2:Was there any conversation about Mac minis?
Speaker 3:No. No. Just, just on Twitter.
Speaker 2:Everyone wants
Speaker 7:a new Mac.
Speaker 3:For, yeah, OpenClaw and all the AI stuff and everything going on there. Yeah. There'll be an Mac Mini this year, but I'm not expecting it until, closer to the end of the year.
Speaker 2:Yeah. I I I I'm just thinking of, like, if you get a Mac Mini, you need to plug it into something. You need a display. You need a keyboard, mouse. Like, there's a lot of extra features that drive up the cost, and it's people aren't actually buying them for the power of the Mac mini.
Speaker 2:They're buying it just to be able to interface with iMessage. And so the MacBook Neo might actually sort of displace the Mac mini potentially because you have I mean, not if you're wiring them altogether or something, but I'm wondering if there's any, like, odd, unpredictable, orthogonal purchasers of Neo, or is it just like the Chromebook market? But I don't know.
Speaker 3:Well, I think it's a secondary computer market also. Right? Like, I have this big 16 inch MacBook Pro that I need to lug around. For $500, I can get something at half the weight and, you know, half the volume.
Speaker 4:Mhmm.
Speaker 3:And if I really need it to take to an event or for a flight and have macOS, something a little bit more formidable than iPadOS, it's a great alternative. So probably not gonna do it. Mhmm. I'm saving my Mac budget, I think, for this big MacBook revamp in the fall, the touchscreen version of the MacBook Pro
Speaker 2:Yeah.
Speaker 3:With OLED. I don't really need the Neo. I can that's why can get it. Really I wanted it. But definitely, I think it's gonna do well and crush the Windows PC market.
Speaker 3:Right? I mean, if you look at the price
Speaker 1:point is it is it surprising that that it took this long to come out with a device that was going straight for the jugular with the the everyday PC market?
Speaker 3:I think you finally had alignment on the chip side to be able to do something like this. And the a 18 Pro that just came out a couple of years ago, that is on par with an iPhone or a Mac grade chip. Right? You can really run benchmarks and see that it's probably close to an m one or m two or even m three in some, you know, single thread use cases. And so that chip coming out and Apple rewriting macOS a few years ago to be able to run on these ARM based chips as part of the transition away from Intel Mhmm.
Speaker 3:Is what allowed this to all come together. So it took a long time. This would have been very difficult for them to pull off in the Intel days. It would have been very difficult for them to pull off five years ago. But once they had alignment on all of those factors, they were able to do it.
Speaker 3:One thing that they didn't really talk about yesterday with the launch is another factor here was a new aluminum based manufacturing process that has basically allowed them to save more aluminum, reuse aluminum scrap metal, and build these machines in volume while saving a lot of the manufacturing costs. And so that's a big part of how you
Speaker 2:Should I buy a MacBook Pro, or should I wait for this touchscreen OLED newfangled thing that you just described? You humbled me by telling me that my MacBook Air did not have a good display. I never wanna make the same mistake ever again. But at the same time, I'm not really convinced that I need a touch screen. What what's the trade off right now?
Speaker 3:Well, you've got the what? The 13 inch air? Remind me. Or the 15 inch air?
Speaker 2:15 inch air.
Speaker 3:I got the big
Speaker 2:I got the big small one. It's a small big one. I don't know.
Speaker 3:It's a good machine.
Speaker 1:It's a good computer, sir.
Speaker 3:Yeah. I mean, I think you just wait for the OLED.
Speaker 2:I mean Okay.
Speaker 3:We're talking about screens here. You wanna have the best screen. It's the OLED. Whether you use the touch or not, it's a breakthrough difference. You know, one thing on the on the MacBook Neo
Speaker 4:Yeah.
Speaker 3:The the screen technology that they're using is actually a different type of screen tech than what you're getting on the Air.
Speaker 2:Okay.
Speaker 3:And so I would say the Air is, like, pretty, like, down the middle. It's pretty good.
Speaker 2:Yeah.
Speaker 3:The OLED is, like, huge step above, and the screen tech they're using on the MacBook Neo, it's a step below. And if you've just like if you use the Pro, the Air is not gonna look so good compared to the to the Pro. Yeah. If you use an Air, you're gonna see the Neo screen. You're gonna be like, this is subpar.
Speaker 2:Sure. Sure. That makes sense. Talk about the naming for Neo. It's the first time Apple's ever used that phrase.
Speaker 2:They had Nano right there. They didn't go Nano. What do you think they mean by Neo? Why that term? How's the response been?
Speaker 3:I think they wanted something cool and futuristic. I wanted I think they wanted something to show that this was something entirely new. Mhmm. And I think they were looking for a new cooler term than SE. SE had been sort of their term for these low cost products in the past.
Speaker 3:You have the Apple Watch SE. They used to have the iPhone SE. So they're clearly trying to move away from that SE naming, and it seems to me like Neo is that replacement. So I wouldn't necessarily be surprised if we eventually see them rename the low end products to all be part of that Neo family. And so what they've basically done is they have, like, neo at the base, air is the midterm, and pro is the high end, and then they've got things like ultra and max to differentiate further at the high end.
Speaker 3:And so I think this strategy they've always had, which was good, better, best, you know, low spec, mid spec, high spec, they just have their fancy marketing names for it. And I think Neo is a really great name. And just like Air was a super catchy name back in 2008 when Jobs unveiled the first MacBook Air, Now that Air name is across the whole portfolio Yeah. I think Neo has that same potential. It's three letters.
Speaker 3:It's cool. It's memorable.
Speaker 2:But if I were Tabula Rasa in charge of naming products at Apple and I was given the iPhone lineup, I would probably go iPhone 17 Pro, iPhone 17 Air, which is not what they did. They just did iPhone Air. Then iPhone 17, and then iPhone 17 Neo because I like this new term. Instead, did 17 e. They did air with no number.
Speaker 2:What's the thought there?
Speaker 3:Well, I feel like on the phone, they've always just been completely all over the place on name. They basically become like Samsung or Android. Yeah. I remember when they launched the iPhone what was it? The the the the 10 s Max.
Speaker 3:IPhone 10 s Max. Right? And you have the the Pro Max. Right? So you're jumbling a bunch of names together.
Speaker 3:I think over time, it'll it'll become a little bit clearer. In terms of iPhone naming conventions, those are harder just to strip away because you have casemakers, you have carriers, you have people around the world who are used to these naming conventions. So changing naming structure on the phone is is much more difficult than doing it on something like the Mac or the iPad.
Speaker 2:Got it.
Speaker 3:But I'm sure they'll get there eventually for simplicity. You know, they're still doing
Speaker 1:What what what's playing out right now in the low end of the smartphone market in The US?
Speaker 3:Well, the low end of the smartphone market in The US is is is not so great. I mean, you've got some Samsungs there. You've got some of the phones made from some of the Chinese phone makers that people are importing here. But in terms of the price point, Apple really abandoned the low end of the phone market. At some point, you had, I believe, the SE was $350, then it eventually went up to $430.
Speaker 3:Now it's $600. So I would say Apple has basically given up on the on the low end of of the phone market. They're playing in what we call the mid tier of the phone market. And
Speaker 1:I It's so interesting to go low end on the computer on the on the PC side, but not
Speaker 2:On the phone.
Speaker 1:But stop competing on the low end on the phone side. Just give given that I don't know. I mean, grow growing up, there was just like such such a big divide. It was like it was Apple PCs were luxury products. Mhmm.
Speaker 1:They really didn't care about the low end. Calling it an Apple PC is hilarious. Personal computer.
Speaker 3:Yeah. The divide is gone now. And you know what I think this MacBook Neo is gonna do? It's not only gonna help with Mac sales, but it's going to sell a lot more iPhones Yep. And Apple Watches and iPads.
Speaker 3:Let's bring a lot more people
Speaker 2:Yeah.
Speaker 3:Into the ecosystem. So Yeah. You know, for Apple from a business standpoint, you know, they've always said they're not gonna cheap ship, you know, cheap products to shape to to to chase market share. That's clearly changed. Apple needs to do bigger and bolder things to expand its business and grow.
Speaker 3:They're in new markets, you know, Eastern Europe, developing parts of Asia. India, obviously, is a big focus there. I think eventually, they'll be, you know, in Africa as well. So clearly, they they had to do this. It was decent timing for them.
Speaker 3:And, you know, there's all these concerns about recession and, you know, war and everything going on right now. So a $600 MacBook, I think, is, you know, pretty timely.
Speaker 1:Yeah. What what's new since we last talked on any any kind of leaks or insights on on their AI strategy and the and the rollout of the new Gemini powered Siri?
Speaker 3:Yeah. The Gemini powered Siri was supposed to launch this month. They were supposed to hold an event in New York about two weeks ago to walk press through the new Siri. Mhmm. They've continued to face delays there.
Speaker 3:It was originally supposed to come out in iOS 26.4, which is scheduled for the end of this month. Now they're still splitting the features, but they've punted it to 26.5, which is supposed to come out May, June WWDC time frame. So potentially some features then, and then the rest of the features coming out at the tail end of the year as part of iOS 27. My bet is that nothing significant will really probably come out until iOS '20 seven. Mhmm.
Speaker 2:Yeah. I'm Not great.
Speaker 1:Yeah. Is that that that's is that good?
Speaker 2:Is that good?
Speaker 1:No. That's not good. No. That's not Is part of that is part of that just like the management shakeups? You have new leader you know, basically
Speaker 3:New leadership and it's sort of like, you know, we've taken this long. Yeah. It's only gonna be worse if we release it and it doesn't work.
Speaker 2:Sure.
Speaker 3:Big other questions are like, do people really care at this point?
Speaker 2:Yep.
Speaker 3:People are just gonna use the ChatGPT or the Anthropic app or the Gemini app anyways. Yep. Our a our AI hardware is industry leading. We can run all these third party models on the phones through applications. Anyways, we might as well wait until we we get it right.
Speaker 3:Thing with Apple's AI strategy, if you were to say that this was a strategy, then, you know, it's a pretty good look for them. But it this hasn't been a strategy. They fell ass backwards into it, to be completely honest with you. Right? The intention was never to fail to fail upwards.
Speaker 2:Yeah. But they did. It's, yeah, it's fascinating.
Speaker 1:Strategy. We fail upwards.
Speaker 2:For now. For now. Yeah. But, I mean, they have to be looking at the at the revenue curves of of of ChatuchPetty and and OpenAI and then Thrive
Speaker 3:significant. By I mean Yeah.
Speaker 2:And just is
Speaker 3:a growth lever for them.
Speaker 2:Yeah. Yeah. Yeah. It's a it's a huge growth lever. It's a huge market.
Speaker 2:And you can see the way Mark Zuckerberg's positioning to, like, make a real play into Gen AI in some meaningful way. And he's taken a very, very different approach. Been honestly slower on actually releasing features, but just feels like he's taking it a lot more serious.
Speaker 1:How much
Speaker 2:There's a lot more DNA there.
Speaker 1:How much are you planning to cover OpenAI's hardware? Is that gonna be in your territory at center.
Speaker 3:Front and center. Front and center.
Speaker 1:Okay. So give us give us your how have you processed the kind of the leaks we had. We had the the dime leak around the Super Bowl, which looked
Speaker 3:like I don't think that was real. I mean, I don't everyone I spoke to says this is not a real product. Interesting.
Speaker 1:Yeah. But then Joe Gebbia is sitting there in San Francisco using it, like, this week at a coffee shop. That was weird. Look the, like, the most organic.
Speaker 3:Yeah. There's a lot of conspiracy around it.
Speaker 1:And then if if the if the dime ad was fake
Speaker 2:Yeah.
Speaker 1:Then it was an incredibly good model because I forget the name of that actor. But Skarsgard? Skarsgard.
Speaker 3:Skarsgard. Yeah.
Speaker 1:Yeah. But it didn't look it it looked like, okay, leading frontier video model.
Speaker 3:Yeah. Yeah. I think Maybe the teaser of their models. But but here's the thing. Yeah.
Speaker 3:The hardware is gonna be beautiful. Yeah. We know the hardware is gonna look great. Yeah. It's gonna be designed by Love From, Johnny Ive, all those guys, the former Apple people.
Speaker 3:There's no questions there. Mhmm. The question is, who's gonna buy these things? Right? Like, are people really gonna trust OpenAI as a hardware company?
Speaker 4:Mhmm.
Speaker 3:And Apple has this ability to fast follow. Let's say OpenAI does come out with something pretty nifty. What stops Apple from copying it immediately and taking all their market share? Apple has the retail stores. They have the privacy story.
Speaker 3:They have the brand.
Speaker 2:Yep.
Speaker 3:OpenAI has this great AI brand, but they don't have the hardware brand. And so it's almost like they have the opposite problem of Apple, but the leg up they have is that their underlying technology is clearly better.
Speaker 1:Well, yeah. And there's this new there's there's rumors around their new voice model that they're working on. And so the question the question to me is like, can they create a beautiful device and have a meaningful breakthrough on the model side Mhmm. That somehow makes it more difficult for Apple to just fast follow. Right?
Speaker 3:Well, I would say, you know, for sure, yes on point a. For sure, yes on point b. Maybe yes, maybe no on Apple's ability to fast follow based on the models. But I just think the bar to sell people hardware, even if it's good and even if it comes from a big brand Yep. It's a really high bar.
Speaker 3:Yep. It's a really high bar to sell in these Apple like quantities.
Speaker 2:Yep.
Speaker 3:I mean, even look at Google in terms of their market share on their hardware. Yep. They have amazing software, and they have amazing hardware, and they have the best advertising for consumer electronics for phones at least in a very long time. I can talk about the ads last time I was with you guys. Yeah.
Speaker 3:And they've made little to no dent. Yeah. And, obviously, there's big questions there. In fact, Google should even be doing hardware.
Speaker 2:Yeah. And and and meta Ray Bans too. You open up Instagram, you see, like, a full bleed special modal ad for meta Ray Bans, and they're doing okay, but it's not, you know, 80
Speaker 3:of the population. The Metairie bands are considered a smash hit, and they've sold fewer than 10,000,000 units.
Speaker 2:Yeah. It's not a lot. Yeah.
Speaker 3:Apple sells 10,000,000 units of, AirPods Socks. Losses. Yeah. Probably a probably a quarter.
Speaker 2:Yeah.
Speaker 3:So the bar is just unbelievably high.
Speaker 1:Yeah. What's going on with the Meta with the that lawsuit with Meta? They had contractors that were just able to view the recordings of Meta Ray Ban users. I I missed that. I haven't I haven't covered it or haven't followed it very closely.
Speaker 3:It's great. It it's crazy. This is reminiscent of when people figured out that Apple with Siri and Amazon with Alexa and Google with Gemini had these folks, they're called annotation analysts Mhmm. Who listen to everything you're putting into the voice assistant, and they're comparing it to the outputs. So they're listening to the raw audio and comparing it to the outputs, so what Siri thought they said.
Speaker 3:Mhmm. And so they're able to correct it manually in order to improve the underlying model. Yeah. And that was a big blockbuster when everyone discovered that that was happening a few years ago. This is not audio.
Speaker 3:This is camera footage. This is people potentially in, you know, intimate moments. And this is not just what you're saying or facing you. It's what you're seeing while wearing these glasses everywhere. And so I think that raises really big questions about the smart glasses category.
Speaker 3:When Apple releases their smart glasses, they're going to have a big focus on privacy, a big focus on seeing the surrounding environment for you. At the same time, though, I don't think that this changes the overall equation for smart glasses. I still think that this has been a successful pioneering product for Meta. I still think they're pushing forward here. I still think they're gonna release several new models that I'm you know, based on what I'm hearing are pretty exciting there too for the for the Meta Smart Glasses.
Speaker 3:But will they need to make some privacy adjustments? Yes. But I think in this case, with the Smart Glasses, the first mover advantage is real, and and Meta has that. And in terms of glasses, they've got the biggest partner with extra Luxottica.
Speaker 2:Yeah. That makes sense. Talk about the Studio Display XDR. Is this a complete replacement for the Pro Display XDR? Okay.
Speaker 2:And and It's hot. How are they pitching pitching this? Yeah.
Speaker 3:Well, this is it's pretty expensive. Right? $3,300, but it's still much better than what you had before. Remember when they announced the the Pro Display XDR? People lost their collective minds when the stand right?
Speaker 3:So you got the monitor for $5, but then the stand came separate, which is ridiculous. Yeah. And that was 1,000 on its own. Yeah. People lost their minds, and now you can get two MacBook Neos for the same price as that stand up with an education discount.
Speaker 3:So now they've been able to go a little bit down market on the monitor. It the resolution isn't as high as what they had before. It's not like they went up to a seven k. You have a 27 inch panel instead of a 32 inch panel. There's a lot of savings on the shipping and logistical side and the product engineering side with those products.
Speaker 3:So I think this new Studio Display XDR is going to be pretty popular. I'm actually probably gonna get one myself for my office at home. So I'm pretty I'm pretty pumped for it.
Speaker 2:So grab the Studio Display XDR, but maybe wait on the MacBook Pro.
Speaker 3:Yeah. You know, I need the most reference monitor like quality. I need medical image. Need all of that Yes.
Speaker 2:From
Speaker 3:Yes. My my very intense engineering work
Speaker 2:For sure.
Speaker 3:And lives. But I
Speaker 1:ordered I ordered the new, MacBook Pro Max. Yeah. I got 48 gigs of RAM. It was like 06:15AM. I was at the gym.
Speaker 1:I just went through the order flow pretty quickly because I wanted to be Mhmm. First in line. And then I realized that I didn't max out the RAM. And I tried and then I was on was Apple support saying, hey, can you just switch me for the version with with more RAM?
Speaker 3:Mhmm.
Speaker 1:And they said, I was not feeling the AGI in that moment because they said, you have to cancel your order and re and place a new order and lose your spot in line. By this point, it was like five, six hours later. Oh. And I was like, how how how do we not have the technology for this?
Speaker 2:Just swap this. Yeah.
Speaker 3:It is it is wild. But so question for you. Why get this m five version knowing that they'll have m six version with OLED and touch in six months?
Speaker 1:I cannot stand when people touch the screen of my computer. And so
Speaker 2:But what
Speaker 1:about you? I don't wanna give them another reason. They already seemingly have enough reasons people come around here at the office. They're they're pointing at stuff on the screen. I don't I don't want them I don't want them to even be tempted.
Speaker 1:So No. I mean, I I just look at I I think that computers are these amazing things that we use for something like eight hours every single day at least of the of the work week and the their their cost relative to the value Mhmm. Is just so extreme that if the new device comes out in the fall and it's amazing, then I would just get that.
Speaker 3:Alright. Fine. Maybe I'm gonna have to get the m five one two to hold me over to the m six. But, you know, one thing we didn't talk about is, you know, Samsung has its new s 20 sixes. Yeah.
Speaker 3:The ultra version, it has this privacy display on it.
Speaker 2:Oh, yes. Have you guys
Speaker 3:seen this?
Speaker 2:No. I haven't I haven't actually seen the demo. I've heard of it. It sounds amazing. Explain.
Speaker 3:So the pixels turn off, in certain places. So if someone's reaching over and looking at your screen, not touching it, but looking at your screen, they won't be able to see what's going on.
Speaker 2:I think that's amazing. So on like, in control center, if you're on a plane, you can basically you know how you have that polarized screen protector? You can effectively turn that on in software dynamically. So you're on the plane and you say, yeah. I don't want this person reading my emails.
Speaker 2:Turn that feature on. It probably gets a little bit dimmer, maybe a little bit blurrier. But then when you're just hanging out by yourself, you can turn that feature off and get the full, display resolution. Yeah. Really, really innovative.
Speaker 2:That that's gotta come to Apple soon. But talk about fast following.
Speaker 3:Soon is wrong. Soon is wrong.
Speaker 2:Right?
Speaker 3:Don't forget.
Speaker 5:Yeah. This is this is
Speaker 3:the interesting thing about Samsung, right, where they are the component maker and the hardware maker Yeah. And the component supplier to Apple Yeah. There are certain things they're not going to want to give to Apple Totally. Because it's a it's a competitive advantage for their own hardware. We saw this with OLED many years ago where it took Apple, I think, four or five years to get OLED after Samsung.
Speaker 3:Yeah. Right? Apple basically OLED transition a year or two ago Yeah. On the phones at least. They haven't even done OLED yet on Yeah.
Speaker 3:On the Mac. They've only done OLED on one iPad. They'll have it on a second iPad this year and the others in the next couple years. But this privacy display is, I think, a hot feature, and it's gonna be a few years at least before Apple's able to to to get it.
Speaker 2:Yeah. This is my my overall skepticism. Like, I completely agree with you on the idea that it's very hard to sell tens of millions of units of a new consumer hardware, but I just am not necessarily buying the idea that Apple can fast follow things that work because it took them a decade to get a VR headset out, and it wasn't a smash hit. And, like, they, you know, they they they are, like, you know, at least a few years behind on even the most basic little, implementation features that happen.
Speaker 3:Let's, you know, let's say OpenAI does earbuds and, they have these remarkable AI features.
Speaker 2:Mhmm.
Speaker 3:You know, Apple could cook up some new models with Google and Yes. Try to get in software, you know, within a year.
Speaker 2:Yeah. Yeah. It's hard to imagine the the suite of Apple products on your body across vision, watch, phone in your pocket, laptop, and, AirPods, like, not being able to satisfy, like, your demand for AI. So I completely agree with you on that.
Speaker 3:Well, the question is, are, like, do people actually want these things? Right? Like, we talk about these AirPods with cameras. We talk about these smart glasses. We talk independent.
Speaker 3:We talk about a pin. Talk about whatever.
Speaker 2:Smart chain.
Speaker 3:Staff. Yeah. I mean, none of this is they're not proven these are not proven products. Yeah. Right?
Speaker 3:Like, 7,000,000 units on Meta Glasses is really successful, but it's not proven at at Apple quality and Apple caliber. I mean, there could be a situation. Look back a few years from now, like, say, this whole AI hardware thing was just a big, you know, whatever, and people are just so glued to these things. So we'll have to see what happens, but at least Apple's gonna give
Speaker 8:it a shot.
Speaker 2:Appreciate it. Well, thank you so much for taking the time to come talk It's to been a busy day. To you. Always great to see you.
Speaker 3:Got it.
Speaker 2:And Thank you. A great rest of your week. Cheers, man. Talk to you soon.
Speaker 1:To the man.
Speaker 3:See you next time.
Speaker 2:Goodbye. Let me tell you about Eleven Labs. Build intelligent real time conversational agents. Reimagine human technology interaction with Eleven Labs. Let me also tell you about Phantom Cash.
Speaker 2:Fund your wallet without exchanges or middlemen and spend with the Phantom card. And without further ado, we are joined by Dan Primak.
Speaker 1:The legend.
Speaker 2:From Axios. Dan, how you doing?
Speaker 1:Hey. What's going on?
Speaker 5:Good. How are you guys doing?
Speaker 2:We're doing fantastically. Thank you so much for taking the time to come Great. Sit out with
Speaker 1:Long long over long overdue.
Speaker 2:First time on the show. Crazy.
Speaker 1:What? Story
Speaker 5:TV fan virgin here.
Speaker 2:Yeah. Crazy.
Speaker 1:Story from breakfast this morning. I was talking with John. We were looking over the schedule. I was telling him, when I first got on Twitter in college, I followed a bunch of VCs as one does. And, you know, I see them every day, you know, talking about, oh, I backed this company at seed or series a.
Speaker 1:And you were the first person to really highlight like, oh, man, you know, like they're Sometimes they
Speaker 2:don't meet they they don't beat the bet the S and P 500.
Speaker 1:Yeah. So you were the I I initially had some cognitive dissonance but came around Yeah. To your VC Yeah. Returns true thing
Speaker 2:over time. But that's a good place to start. What yeah. What what is the health of the of the VC industry, the VC market?
Speaker 5:I mean, it's not great. Right? We reported the other day, you know, that that median returns are are under the S and P five hundred. They're under the Nasdaq. They're under the Russell three thousand for twenty five years.
Speaker 5:And and I know there's a little bit of lumpiness because, know, you're you're coming out of certain things that's coming out of kind of the great financial crisis, but that was true for the public markets as well. Yeah. So it's not great. Now look, you know, top top funds in those top 5%, they're doing great. Yeah.
Speaker 5:But the reality is you've got so much more money flooding into the market now. That means more money is gonna be at that median, and that's not great for them. And and and it's, you know, you're talking four zero one k's, you're talking more money coming from insurance companies, etcetera. It it's not a great place to be. It's it's one LP told me this quote I use, it's kind of the the story of hope over experience, and that's what Betra Capital seems to be right now.
Speaker 2:Yeah. Talk about that money that's flooding into VC because there's smaller funds that had a particular playbook that have scaled up massively, become growth funds. There's stuff that there's the crossovers. There's SPVs. There's strategics.
Speaker 2:Like, what is the shape of the venture capital funding boom over the last few years?
Speaker 5:I mean, it it's hard to even define what venture capital is anymore. Right? Like, I mean, can you say that somebody who's putting half $1,000,000 into, you know, a a founding team of maybe two people in a garage Yeah. Is that the same as giving, you know, $10,000,000,000 to OpenAI? I mean, they're they're not even vaguely the the same industry, but they're all venture capital.
Speaker 5:But there is an enormous amount of money, and it's coming from everywhere. Right? You know, it used to be that if you wanted exposure to venture capital, you had to, you know, either be an institutional investor or have a friend and be very high net worth. At this point, you can get some exposure to this stuff by just having a Fidelity mutual fund. Right?
Speaker 5:You know, Fidelity, you know, ContraFund has a bunch of quote unquote startups in it, you know, and what's coming soon out the Trump administration is letting your four zero one k plan invest in private funds. Now are they gonna actually invest in individual funds? Will they try to kind of put money into pools? Unclear. It hasn't happened yet.
Speaker 5:But but there's a huge it's a lot of money coming, and it's the thing that venture capitalists and private equity firms have viewed as kind of the holy grail forever because they haven't had access to any of, you know, that defined contribution money.
Speaker 1:So when you saw the news, you jumped out of your chair and you said, yes. Finally, my 401 k will be deployed into venture capital.
Speaker 5:I mean, look. This is the moment when traditional limited partners in venture capital have been, if not getting out, at least trying to give themselves some optionality. Right? You you've seen some of kind of the biggest endowments, Yale, Harvard, etcetera, do big secondary sales of their private equity and venture portfolios. They're not getting out, but they're recognizing they were a little bit too concentrated.
Speaker 5:And so it's the very minute when some of the smartest money is, if not leaving, at least hesitating, that I hate to say it, all the dumb money is about to come flooding in.
Speaker 2:So what does that mean for this k shaped dynamic that we see in venture capital where there's a few funds that are getting bigger, they still have solid returns, and then smaller managers seem to be getting crushed. But what are you actually seeing?
Speaker 5:I mean, I I think that's what we're gonna continue to see. But the and and this is where the hope over experience part comes in.
Speaker 2:Yeah.
Speaker 5:The best returns still in terms of actual cash on cash are still the young funds. Right? It it's not the it's not the firm that invested in SpaceX two years ago. Yeah. It's the firm that invested in SpaceX eight years ago, and those are generally smaller funds.
Speaker 5:Granted, was founders fund, but they were small at the time. Yeah. So it is it it that's still where those massive massive returns that when people think of venture capital, what they're thinking about, you know, if you invested a, you know, half $1,000,000,000,000 valuation in a company that you hope is gonna go public at a trillion, that's nice. I mean, two x is nothing to sneeze at. Right?
Speaker 5:You'd be happy that with that's not a venture capital return. That's not the reason you have this you know, the illiquidity premium on venture capital.
Speaker 2:Yeah. What's the shape of the illiquidity premium this the like, around like, recently in in recent fundraisers? I mean, everyone goes back to the two and twenty, but there's obviously a dispersion around that. What are you seeing?
Speaker 5:I mean, there is. I mean, the decision the the problem is when is what that illiquidity is right now because it used to be you'd you'd think you're invested in a startup depending on the stage. Right? But say from inception, you know, seven years maybe. That sounded about right at which point, maybe it worked.
Speaker 5:And if it worked, that means an IPO or that means a sale. Or if it didn't work, it didn't work, and and that's understood because it's venture capital. Now that you've got companies, you know, decade, you know, 15 years old, and you've got lots of limited partners in these companies or in or in these funds who are looking and saying, I've got great paper returns. These things are amazing on paper.
Speaker 2:Yeah.
Speaker 5:But I keep going to my investment committee and, you know, say you're a college endowment. Right? And and your job is to produce money that then gets used by the school every year. Right? It's not to take money out of the core endowment.
Speaker 5:It's to produce returns that then can be used to fund operations. And the investment commit committee keeps looking at you and saying, yeah. You keep giving us these great numbers. We need cash. We gave you cash.
Speaker 5:We would like cash back. And and the managers just kinda have to shrug and go, you know, Stripe doesn't wanna go public. You know, what what can we do?
Speaker 2:But it's changing this year. Right? We might get, like, $4,000,000,000,000 of liquidity this year between SpaceX Maybe. OpenAI and Thropic. Walk me through the maybe.
Speaker 2:What what's at stake?
Speaker 1:Before before you jump in there, I I did have a a story. I there's a friend of mine that I that I've invested with in the past, and he started to look at some new investments. And he's closer to 60 than he is 50. And so, he's starting to run the numbers and being like, do I really care to make assume this goes incredibly well, do I really care to get a 10 x when I'm Yeah. 70 Like, at some point, he's like, I might just leave it in the market and
Speaker 4:Yep.
Speaker 1:And go play another round of golf.
Speaker 2:Yeah. Yeah. That's interesting.
Speaker 1:So, that's real thing. How much on the on the LP, when you have conversation with LPs, so much of the reason that I personally have invested in a bunch of startups and and some funds is is basically FOMO and like there's like the there's the healthier dynamic which is like generally, I meet a founder that I'm excited about and I wanna support them and usually money is the most effective way to do that at least at at scale. But a lot of it is just kind of FOMO and, you know, venture is a small part of the money that they are allocating and they just wanna be able to tell their friends or their or their or their fund that they're in all the great names. And I don't actually care if it underperforms a little bit if I have something to talk about at at dinner.
Speaker 5:Yeah. I mean, look, a limited partner doesn't necessarily care about that. Right? The the FOMO piece. Their their job, they they literally get paid based on if they outperform a benchmark, whatever that benchmark might be.
Speaker 5:So that's really where they care. And and on the FOMO side, I mean, there is this old story going back to, like, I don't know, mid or mid two thousands where Harvard stopped investing with Excel, the big Silicon Valley firm. They were limited Excel for something they had done in terms of kind of splitting some funds and not giving money back. They were mad, and they wanna make a big point of not investing. So the next fund for Excel, the one that Harvard very loudly did not invest in, is the one that seeded Facebook.
Speaker 2:Yep.
Speaker 5:Right? So that didn't work out very well for them. So, yeah, there the the FOMO thing is real. I I will say, I mean, you asked one of you asked about the crossovers earlier. I mean, that there is this part of the market.
Speaker 5:Right? The fidelities, the t row prices of the world. And the reason they're investing largely in these companies isn't for the return necessarily on those startup stocks. It's to have a nice foothold if and when the company does go public, right, and to have a relationship with the company. So then they can take a really big position, then they can, you know, get their mutual fund clients and their high net worth clients access into the IPO.
Speaker 2:So is that more about of a context to talk to their clients? So Fidelity has a bunch of high net worth individuals with accounts, and they can say, hey. We've been investing in this company while they were private, so we can bring a more confident thesis to bear?
Speaker 5:Or is that actually literally access. Access. It's literally access. I I think, Bill, I think what this often means is because they have relationship. Mhmm.
Speaker 5:And if you've got a very you know, if you've got an issuer that's oversubscribed for an IPO, it's a very popular IPO. Yeah. The company's gotta make decisions. Who gets an allocation of what those allocations are? And what if you're Fidelity or TRO, what you really want is to be able to go to your existing clients and say, we've, you know, we've got act you've got access to the OpenAI IPO if you want it.
Speaker 5:Do you want it? And then the clients like, oh, they, you know, they had access to OpenAI. I I like these guys. I'm gonna stick with them, etcetera. That's what they want.
Speaker 5:They want the relationship, and they want and they and they can say to the CEO, look. We believed in you six years ago. Of course, we still believe in you today. We're a long term investor.
Speaker 2:So talk about the IPO market. Is it over, or are we back?
Speaker 5:It's slow. I mean, if you look I mean, despite the fact there was this little boom in January Yeah. In terms of both number of pricings, in terms of filings, we're down over 20% in both of those year over year from last year, which was a garbage year for IPOs. Yeah. So everybody is looking at the big dogs.
Speaker 5:Right? Everybody's looking at SpaceX. Every you know, coming sooner. Everybody's looking at potentially OpenAI or Anthropic. I I think Databricks is another one that people are sleeping on.
Speaker 5:That's almost certainly gonna come in the second half of this year. Yeah. So I think what we might end up with is a really skewed IPO market. You know, the dollar numbers are gonna look good, because you're gonna have some huge ones, but you're not necessarily gonna have enormous number of actual issuers, at least at this moment. I mean
Speaker 2:Yeah.
Speaker 5:It's pretty dead. We've got one coming tonight. That's all for the week.
Speaker 2:Is that because
Speaker 1:Who's tonight?
Speaker 5:Oh. Tonight's on the call mini med, not a venture backed startup. It's a diabetes management spin out of Medtronic.
Speaker 2:Is that because, like, you sort of have, some sort of liquidity premium for the first name to go out in a category? Like, Coreweave gets out and there's, like, the one public Neo Cloud, and so that puts, the bar goes a lot higher for the next three Neo Clouds to get out, something like that?
Speaker 5:I mean, I I like I I would like to think if that may that that was a good argument or that that that, like, that it's that it's that much. I think it's really a vibes thing and a and a and a cowardice thing. Kinda been writing this story now for three years, which is these companies are scared to go public. Bankers are scared to necessarily bring them even though bankers are coin operated and IPOs are good for them. Yep.
Speaker 5:They're a little bit scared of having a lousy IPO and then having a bad reputation off of it. And also, a lot of them are spending a lot of time on SpaceX because there's a lot of money in that for them. No. I think I think people are scared. They're scared of, you know, what if this doesn't work?
Speaker 5:It's gonna be a lot more work. There's gonna be a lot more scrutiny on us. And and I think folks have just been terrified of going public for years, and I don't think that's necessarily changed.
Speaker 2:Yeah.
Speaker 1:Well, and and, of course, the choppiness of of the market this year, the sasspocalypse narrative. Do have political tensions? All sorts
Speaker 5:of stuff.
Speaker 3:But this
Speaker 5:is the problem. Right? There's there's gonna be choppiness every year. Right? You know, last April, you obviously had the liberation day stuff.
Speaker 5:Now you have a war. You have the sasspocalypse. There's always going to be a reason to not go public, and I think a lot of people take that reason. You know, there's always something.
Speaker 1:Yeah. What should people What heard? Have Obviously, bad bad week to be fundraising in the middle in The Middle East. How how much are you looking at at the war as having kind of like downstream impacts on capital flows? Do you think it's you know, this started as like, you know, we thought it was gonna be a a couple days.
Speaker 1:Now, then it was a few weeks and now, apparently, it's looking like September. So who knows at that point? Yeah. And and so many of the some like, I every time I log on to X, there's a refinery that's, you know, on fire, things like that, which is kind of the economic engine for a lot of this capital.
Speaker 5:Yeah. Yeah. I'll take kind of the counterargument I think on this, which is the the one of the reasons that whether it be Saudi Arabia or Qatar or some of these other countries have decided to do so much venture capital slash private equity investing, particularly in The US. And by the way, it's worth noting, the folks who are doing these investments often are based in New York. They're not based in The Middle East, so it's not actually impacting their day to day lives.
Speaker 5:Mhmm. It's because they want diversification from oil. So, yeah, there there could be some issues in terms of actual capital flows because people are like, oh, wait. We're gonna have less actual money coming through to invest. But at the same time, the point of diversification, and it's possible that what's happened over the past week or two is gonna only kind of solidify that desire for diversification.
Speaker 5:Oh, wow. Oil is our economy. We need other stuff.
Speaker 2:Mhmm. What should we read into Michael Grimes going back to Morgan Stanley?
Speaker 5:That you don't that that working for the White House is a is complicated thing. You don't wanna do it for too long. Beyond that, I mean, look. He's got like, SpaceX is about to go public, and, you know, that and there's gonna and the thing is the reason bankers love IPOs isn't for the IPO per se, although they like that. It's all the business that comes after that.
Speaker 5:Right? It's the secondary offerings. It's the debt offerings. It's the acquisitions because the companies now have a public stock, and it's easier to buy stuff. It's all that other business.
Speaker 5:It's the reason everyone wants to be the left lead. And and Grimes, you know, is an Elon banker and has been, and I think this is a great time for him. And for Morgan Stanley, it makes all the sense in the world to bring him back in the fold.
Speaker 2:There's also the wealth management piece, I believe. Like, after the Facebook IPO, you have a whole bunch of potential new clients. Right? And so there's
Speaker 5:Yep. You do.
Speaker 2:That's also a piece of lead left. What what actually goes into winning lead left? Is is that is that is it sort of power law distributed in the allocation or the amount of work? Or is it more of just like a symbolic title and everyone's sort of splitting it equally?
Speaker 5:I I think there is more work. I I think getting lead left, and the reason, you know, that it's JPMorgan over Morgan Stanley or somebody Yeah. Is really the relationship usually between the CEO slash board and that particular banker, maybe that banking team. It's really a comfort thing. It it's the first of all.
Speaker 5:Right? If something's not going well or something is going well, you need to have that one person. You don't wanna have to call 10 bankers at 10 different banks to give them the same information. You want one source of information. They can be kind of the distributor to everybody else.
Speaker 2:Mhmm. What what are you tracking on the other AI lab side? There's a whole bunch of rumors, Anthropic, OpenAI. What what what are you seeing on that side of the of the IPO market?
Speaker 5:On the IPO I mean, I open there I do think there is perceived you mentioned earlier this kind of first mover in a space. I I do think there is a sense between Sam and Dario that going first might have some advantages to it. I think there could also be some disadvantages. I I do think even though we all know the losses are huge, I think the market's gonna be shocked when they actually see it in black and white from the companies, how large these losses are. But I I so I think there is a little bit of a race between the two of them.
Speaker 5:It's gonna be a huge headline. It's gonna be a huge story. OpenAI does seem to be a little ahead on that. When you look at you know, they have a CFO who's done this before in Sarah Fryer. Right?
Speaker 5:She helped take Square, now Block Public. Sure. She then ran Nextdoor. She's done this before. Yeah.
Speaker 5:So I I think that's gonna be the story of the second half is is gonna be those two companies maybe battling, and I do think OpenAI goes first. Again, unless there's some, you know, extraneous event.
Speaker 2:You you mentioned that companies are afraid of going public. Obviously, like, at the high level, there's completely different equations around what SpaceX, OpenAI, how they're thinking about this. But at that sort of, like, mid tier of Decacore and Centacore and the the stripes of the world, do do they see that there's now infinite liquidity in the private markets to raise endlessly? Or are they more aware that their current investors, their VC backers are fine rolling everything into endless continuation vehicles so they can get profitable and operate as a highly venture backed profitable company in the private markets for a long time?
Speaker 5:I I think it's that. I think there's enough capital, and and they can get some so it used to be one of the main reasons to go public outside. So there was two. Right? One was get cash on the balance sheet.
Speaker 5:Well, as you say, there's tons of money in the private market. You can get cash, to be honest, probably easier in the private market than you can in the public market if you're a strong growth company. And then there was liquidity, not only for investors, but but for early employees. That was always a very big deal. Right?
Speaker 5:You know, how do you help get, you know, how do you help get money for these folks who have all these options? Well, you've got this kind of industry of of secondary tenders, which has happened. Stripe does one annually. They did one, what, two weeks ago. Yeah.
Speaker 5:So you can satisfy both of those problems now. So there's not a real great reason to go public if you're not somebody who really wants to. There there are certain founders who like the idea of ringing that bell and being that CEO who does the quarterly earnings call. It's a feeling you know, it's a big leagues thing. Right?
Speaker 5:We we've gotten the big leagues. It's what Bill Gurley or I'm sorry, Fred Wilson used to talk about Uber, like, you know, get in the fucking ring. Go public. Yeah. But, you know, some folks so, you know, if you're the Collison brothers, I'll I'll end with I'll if they ever do go public, I'll be kinda stunned.
Speaker 5:They don't want to. They clearly don't want to because they could've, and they still could, and they haven't. And I know when Sequoia Capital did kind of a quasi continuation vehicle about a year or two ago for Stripe where they basically said to other investors, we'll buy your stock. You know, if you want to, we're gonna buy your stock in this so you can get out. We wanna double down.
Speaker 5:You know, I spoke to somebody over there and said, how do you get out of this thing ever? Like, how do you use Sequoia? How do you ever get liquidity? They said, well, they're gonna go public. And and I said, what gives you the thought what what gives you any confidence in that?
Speaker 5:And there wasn't a great answer to it outside of just faith, and so, you know, I guess faith.
Speaker 2:Faith. What about secondary fund growth, LP demand for secondary funds, even like the fee structure of secondary funds? Because it feels like so much lower risk if you're managing a fund that is just gonna buy secondary that's been priced by the best VCs. You're just following along. You're buying maybe at a little bit of a discount.
Speaker 2:Can you really justify two and twenty on that type of fund?
Speaker 5:To you or to me? Probably not. But can they to their investors? Apparently, they can because that's what they generally get. Not always, but it's what they generally get.
Speaker 5:You know, the secondary market's interesting because even just probably, like, maybe say ten years ago, was still very much a cottage small industry. Mhmm. You had a handful of firms that did it, that traded, you know, LP interests and venture capital funds or private equity funds, a very small number who did direct secondaries, which is, you know, buying actual portfolios or or individuals, company stocks Yeah. From somebody else. Now it's this massive business, and and big private equity firms already have gotten into it.
Speaker 5:Right? So couple several years ago, Carlyle bought something called Alpenvest, which was a huge secondaries investor. EQT, which is kind of this private equity firm most people in The States might not know about, but it's one of the biggest in the world. They just bought AES, which is this huge utility. They bought something called Collar Capital, which is one of the original secondaries firms to build up that practice.
Speaker 5:So it's it's becoming a really mature marketplace, and and it is another way that companies can stay private longer. It's also a way that, you know, institute that limited partners can get some liquidity so they can feed it back into the system. Otherwise, given the kind of the lack of, you know, so called DPI, distribution to paid in capital, the whole market would grind to a halt because a lot of these investors haven't been able to get their money back via traditional means.
Speaker 2:Do you think we will see a well known venture capital firm go public in the next three years?
Speaker 5:Yeah. General Catalyst. Yeah. I mean, they're they're they're the one. I mean, they're because they're not really a venture capital firm anymore.
Speaker 5:I mean, it's it's their core. Yeah. It's still what they do when they invest, you know, in series a rounds and startups, and they still do that. But they've got a wealth management business. They own a hospital.
Speaker 5:I mean, they own a hospital. That is not a venture capital thing. And by the way, have to say, and and I I this is not a knock on them. Man, if I was admitted into a hospital and somehow there was like a plaque on the wall that said, we are owned by a Silicon Valley venture capital firm, I'd be scared out of my mind about what was about to happen to me in that room. But they're not Why?
Speaker 1:You'd getting a YC company robot would be doing your surgery. It'd be great.
Speaker 5:Yeah. That's exactly what I want. I you know, as you know, whenever you see a doctor, particularly for a procedure, you wanna hear the word experimental. That's always what you're looking for. And and yeah.
Speaker 5:So I they're not really VC firm anymore. And and they've they've diversified, they wanna diverse be paying asset base, which is what they're building. Good for them. And to be honest, it's not even that different. If you look on the kind of the private equity side, you know, Blackstone started as a private equity firm doing leverage buyouts, but then they got into other stuff.
Speaker 5:Right? They have private credit. They arguably became a real estate investment firm more than anything else. Diversified asset base. Yeah.
Speaker 5:I think GC will do it. Sequoia has been talked about forever, but they don't seem to have an appetite. And and the way that they operate in terms of management, it doesn't seem it doesn't seem like it's gonna be them.
Speaker 2:What about Andreessen?
Speaker 5:Maybe Andreessen.
Speaker 2:Yeah. Maybe Andreessen.
Speaker 5:Maybe maybe Andreessen, but can you honestly imagine Mark or Ben doing quarterly earnings calls?
Speaker 3:That'd crazy.
Speaker 5:I can't.
Speaker 2:That'd be fun. I mean, they do a lot of podcasts, so it's somewhat similar. They they got the raps.
Speaker 5:Do a lot of podcasts with their friends.
Speaker 2:Sure. What about, the fact that, private equity and private credit, has sold off so significantly in the public markets? Isn't that, downward pressure? Any any VC firm has to be looking at that and saying, like, hey. Maybe we wanna stay out of this for a while.
Speaker 5:I I would think so. I mean, it's it's an interesting thing. I you know, we were just I was just having a conversation with a colleague before I got on with you guys about this. And this question, is there systemic risk in the private credit market, or is there not? And and the argument for yes, if there's any, would be that so much of the money that's gone into private credits come from insurance companies.
Speaker 5:That that's been this big boom into it. That's kind of the counterparty here and, uh-oh, like, you know, if insurance companies have problems, we've seen this act before. We know what happens when insurance companies have problems. It goes bad for everybody. But that said, you know, the private credit sell off right now seems to be a reaction to the to the SaaS apocalypse and some of that.
Speaker 5:We haven't yet seen a large number, really any significant defaults in private credit. People are trying to get their money out of funds. There's been big redemptions. That's a liquidity story. But it's not that, oh my god, you've got, you know, these 20 companies that have gone under that are in these portfolios.
Speaker 5:Look at those dominoes.
Speaker 1:Well, it's different it's different than, you know, a private credit fund that's getting a bunch of redemptions or kind of a run on the bank. They can just say like, hey, we're we're cutting off redemptions. This is a, you know, ten year fund. We'll see you Yeah. We'll see you later.
Speaker 1:It's different than an actual bank run where you can just go and say like, I'd like my money back and then you have a a collapse.
Speaker 8:You're right.
Speaker 5:And and look, and and they consider that a feature not a bug. Right? That's one of the arguments private credits made for why they are stable. You can't just you know, the funds can't just have all the money pulled out in a day.
Speaker 1:Yeah. How much have you tracked the volume of SPVs that have been happening over the last twelve months? I I imagine it's pretty hard to actually get a lot of data, like high quality data on this. There's been this narrative that, you know, the average person has been cut off from benefiting from the overall gains in the in the market caps of a lot of the AI labs in particular. I would push back and be like, everybody, you know, if you've got a four zero one k, you own Amazon and Nvidia and Microsoft.
Speaker 1:And so, you actually do have quite a bit of exposure to the labs. But and the other side of that is that it didn't feel impossible to get exposure to Anthropic over the last six weeks, if you wanted it. Mhmm. People were posting on X, hey, I've got a slug here, a slug there. If you wanted it, you could've probably get it.
Speaker 5:Probably. I mean, two things about SPVs. One, to answer your first question, I don't have a great sense on the tracking in terms of actual volume, except, you know, the sense that it's through the roof. When people advertise an SPV or or say even forget advertise, maybe, you know, somebody you know personally and they send you a note about it. You don't necessarily know they actually have exposure.
Speaker 5:What they're trying often to do is build up enough money that then they can go to somebody and offer a good price. They're often putting the cart before the horse. I will say, I mean, certain companies, big companies included, have tried clamping down a little bit on it. I mean, CEOs and CFOs particularly hate SPVs, generally speaking. Not always, but generally don't like SPVs because it complicates their cap It becomes even though it's a single entity, it still becomes way more investors.
Speaker 5:It becomes a lot more exposure. They would generally rather have a traditional investment firm in them than or in a traditional investment fund than an SPV.
Speaker 2:Yep. Yeah. General solicitation, potentially overrated.
Speaker 1:Definitely overrated.
Speaker 2:Probably we do avoid it. Anyway, thank you so much for taking the time. Yeah. Great to
Speaker 1:have you on, David.
Speaker 2:Great to have you on.
Speaker 1:Thank you for all of your coverage and come back on anytime.
Speaker 2:We'll talk to you soon.
Speaker 5:Thank you, guys.
Speaker 2:Have a good one. Let me tell you about AppLovin. Profitable advertising made easy with axon.ai. Get access to over 1,000,000,000 daily active users and grow your business today. And let me also tell you about Lambda.
Speaker 2:Lambda is the super intelligence cloud building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. I'm liking that graphic. Well, Sweeney. Our Tim Sweeney.
Speaker 1:Is feeling good.
Speaker 2:He's feeling good. He's out front of Google. He, according to The Verge, has signed away his right to criticize Google until 2032. There's some nuance here. He agreed not to criticize Google related to App Store distribution and fees.
Speaker 2:They got Please. To to a deal.
Speaker 1:Give us
Speaker 2:Stop trash. Stop Please. Dragging
Speaker 1:just need a break. Exhausted.
Speaker 2:The Verge put it in harsh harsh words as Google has finally muzzled Tim Sweeney. So, he might be one of the most outspoken people in the history of the world. He fought two of the world's most valuable and profile and powerful companies almost all the way to the US Supreme Court, insulting them again and again, crooked, deceitful, insanely sneaky, calling Android a fake open platform, calling both companies gangster style businesses that will do anything they think they can get away with, telling me how Google's Project Hug was an astonishingly corrupt effort at a massive scale. Wow. He does not mince words, but Google has finally muzzled Tim Sweeney.
Speaker 2:It's right there in a binding term sheet for his settlement with Google on March 3. He not only signed away Epic's right to sue and disparage the company, he signed away his own right to advocate for any further changes to Google's App Store policies. He can't criticize Google's App Store practices. In fact, he has to praise them. The contract states Epic believes that the Google and Android platform with the changes in this term sheet are pro competitive and a model for App Store slash platform operations.
Speaker 1:Two companies have also agreed to terms about a new class of apps they're calling metaverse browsers according to a heavily redacted section of a revised binding term sheet. While the term metaverse has largely fallen out of favor, Epic CEO Tim Sweeney has been talking for years about the metaverse and how it might work in the future. And this actually isn't the first time there's been a connection with Epic and Google about the metaverse. In court in January, while discussing a secret $800,000,000 unreal engine and services deal, Sweeney blurted out that the agreement related to the metaverse. Unfortunately, the redactions in the binding term sheet cover up a lot of key details about what a metaverse browser actually is.
Speaker 1:But what's from what's visible in the document, metaverse browsers will have the primary purpose of allowing the navigation of exploration of metaverse worlds, support virtual items and identity that are portable across different worlds and must support modern security considerations.
Speaker 2:Well, if you don't see me here one day, I'll be in my Apple Vision Pro playing Fortnite in the metaverse browser for sure. That's right. It's gonna get me. Let me tell you about Gemini 3.1 Pro. With a more capable baseline, Gemini three point o 3.1 pro is great for super complex tasks like visualizing difficult concepts, synthesized data into a single view, or bringing creative projects to life.
Speaker 2:And without further ado, let's bring in we the Lambda lightning round. We're kicking it off. Let's take a look at that. Beautiful camera move. We got graphics.
Speaker 2:We got a I have the gong now here actually, but we will kick off with the first guest of our Lambda lightning round, Max from Vast Space. Max, how are you doing? Hey,
Speaker 4:guys. Great to see you. Thanks for having me.
Speaker 2:Thanks for coming on Thanks, the Give us an introduction on yourself and the company first.
Speaker 4:Yeah. I'm Max Eout. I'm the CEO at Vast. So we are a space station company based in Los Angeles. Wow.
Speaker 4:Our short term goal is to have the privilege of replacing the International Space Station for NASA and its partner. There's a competition this year that we hope and expect to win. And our key differentiator is that we are not waiting to get the contract. We are building right now the world's first commercial space station, Haven 1, that we are launching in Q1 next year. The team I have the privilege to lead is a thousand people that are mostly technicians and engineers and we are getting on.
Speaker 4:We're building it. And after that, we will be launching more modules and basically creating a multimodule station that can ensure American astronauts, but also allied astronauts are able to be in space permanently. China is out there with a permanent space station, so we need to succeed it before the ISS is retired.
Speaker 2:How'd you get into this?
Speaker 1:It's an amazing first step, by the way. Just start by Yeah.
Speaker 2:Go straight to space station. What were you The doing
Speaker 4:So I'm an internet entrepreneur originally. I I created a couple of companies that I've exited. One is called Livestream. So live video is pretty similar to to familiar to me. Yeah.
Speaker 4:Also a video camera company called MiVo that I sold to Logitech. Livestream was sold to IC Video in And '20 then my first space company was called Launcher. It's a small launch company. We launched two satellites. We built an amazing engine.
Speaker 4:Then the founder of VAS, Jed McCaleb, acquired it in 2013. So at the time, VAS had about 40 people and my team had 80. We became 120, and then we embarked on the current strategy and grew to 1,000 people obviously our first external fundraising that we are announcing today.
Speaker 2:Yeah. Going after space stations
Speaker 1:Wait, you said first external fundraise?
Speaker 2:Yeah. Give us the numbers.
Speaker 1:What's the history? So you guys had combined your team
Speaker 4:Well, 2020 the the original investment was from our our founder jet. It's pretty unusual. It's it's over $900,000,000 since 2001. And then today, we
Speaker 8:are announcing
Speaker 1:Thank you for the gunk.
Speaker 2:500
Speaker 1:Breakdown breakdown what what the what the why we need new space stations? What are the different use cases other than just having a strong presence?
Speaker 4:I mean, today, if you look at the International Space Station, it's been there for twenty five years. It's been amazing in safety, in keeping a continuous crew for twenty five years. So we've had people outside of Earth for twenty five years. It's pretty amazing. What it has not been great at is the cost.
Speaker 4:You know, it's the single most expensive object created by humans, and it's not sustainable to the taxpayer or to the NASA budget which need to focus more on exploration, including moon and Mars, as you heard Jared yesterday or a few days ago. Yeah. And so the NASA basically wants to reduce the cost. That's why they wanted to move to commercial provider. And and they also need to retaliate ISIS.
Speaker 4:It's a partnership with Russia. Obviously not desirable geopolitically right now long term, and it's also aging. So all of these reasons create the commercial opportunity to succeed it. Short term, you know, the main business model are international space agencies, NASA, Europe, with ESA, JAXA in Japan, and other nations getting involved in human spaceflight. Long term, it's the orbital economy.
Speaker 4:So it means manufacturing drugs, semiconductors, and so on in space and our space station will become more factories as opposed to government mission. But that will take a while. So today, the key opportunity is to help all the governments around the world get into human spaceflight, to do important science, and NASA and other governments to save money with a fast, iterative, low cost approach.
Speaker 1:Very cool.
Speaker 2:Where are you able to partner with the existing orbital economy, the the existing space community? Because there's so much that goes into actually building and deploying a a space station. Where I imagine that you're standing on shoulders of giants, but walk me through all the things that allow you to accelerate your mission.
Speaker 4:I mean, first step is to go from zero to one. It's actually to have a space station and a crew visit it. And if you compare that effort versus the effort of having payload and from partner in science, you know, having it going beyond renders and beyond MOUs and dream and press announcement, still have it there. Right? Whoever has it there and is profitable will figure out these applications.
Speaker 4:More concretely, we have partnered with companies like Redwire, a company in Europe called Yuri, and other companies. We have a laboratory on the first station, Haven One, which is which basically are companies that have already done science and are doing now on the ISS. So we brought them in on our space station that we launched next year, and then our astronauts will be will be continuing the science and research. Beyond that, you know, right now we are in the R and D phase, whether it's materials, semiconductors, making drugs in space that we can't make on Earth thanks to the microgravity environment. It's still R and D, right?
Speaker 4:There's no killer app, no product. And through being commercial, doing more flights, being commercially friendly, we're confident we unlock it. So we're super excited with what NASA did. They created thousands and thousands of experiments and have found some interesting applications, and so we benefit from that full pipeline when our station will be up.
Speaker 2:How important is the next generation of reusable rockets, the Starships of the world, to unlocking new capabilities in deploying space stations?
Speaker 4:I mean, if you even go back to reusable rocket even before, right, Falcon and what SpaceX has done Yeah. We couldn't be here without early transition to commercial that NASA and SpaceX have done with the Dragon spacecraft. You know, it's pretty you know, if we were still in the space shuttle era, I don't think I could be buying a ride to our commercial space station, Haven 1, from from NASA. Yeah. Because of what they did with that program, hopefully, they'll get Starliner up and running, the the Boeing version.
Speaker 4:Yeah. You know, we can go call SpaceX and buy a ride for astronaut to to our space station. Starship will, you know, take that you know, what we hope is it will lower the cost of transportation to our space station by at least an order of magnitude. It'll allow us to bring not four people, but maybe 20 people. So that's really a big timing and a big unlock.
Speaker 4:You know, it still will take a little while for it to arrive. It will get there, and our goal is that by the time Starship is ready, that we have a large enough space station so that, you know, in relation to the volume inside Starship, we are still, you know, four or five times larger, we have a lot more power, a lot equipment. So we, you know, it's a key enabler why we are here and why the future is exciting for Space Station, the arrival of Starship.
Speaker 1:Sort of a random question, but I'm just curious. What what is the planned process for retiring the current space station? You do the humans leave and it just kind of continues to orbit? Do they take it out of orbit? What is that?
Speaker 1:Do you have any idea what that'll look like?
Speaker 4:Yeah. It's interesting. When they design a space station, they sort of panned out. Right? Like, they don't have the ability to deorbit itself.
Speaker 4:And so they always had the plan to build a special, you know, spacecraft that will push it in the Pacific, and that's called The US deorbit vehicle. SpaceX won that contract. I think NASA is hoping to get it there, you know, two or three years before the retirement of the ISS. The current retirement date is the 2030. There's discussion now to extend it to '32, but somewhere in that region.
Speaker 4:So it will be there, ready to go, especially if there's a safety issue or something like that and to do testing. And then they will just push it, you know, with some delta v, some some propulsion to eventually it will reenter in a in a pretty interesting display, if there was anyone there, to to a place called Point Nemo in the in the in the Pacific. I think NASA is expecting to decrew it nominally, meaning not in an emergency scenario due to the aging, maybe a year ahead of that, but I don't know the exact date.
Speaker 2:Hopefully, we can get a camera there and livestream it because I'm sure they're pretty good at watching the rockets come down even when they're landing in the middle of the ocean. So hopefully, we can see the deorbiting Yeah.
Speaker 4:We saw some of the Starship reentry was pretty spectacular. Hopefully, we'll see the same.
Speaker 2:Yeah. In the Indian Ocean, that was a remarkable video. Dramatic ending.
Speaker 1:Is the entire team based in Los Angeles? Where is the team dispersed and what are you hiring for going forward?
Speaker 4:Yeah, we're just over 1,000 people and more than 900 in Los Angeles, in Long Beach specifically. In our manufacturing, we have control room, we have integration room, we manufacture our primary structure. We brought that capability to America for twenty years. It has been outsourced abroad. You can see actually on my right our test site in Mojave.
Speaker 4:Then we have an operation in the Mojave Desert where we test things. You know, we're a pretty small team there. We have an office in DC. We just opened an office in in Japan where where you've seen some of our investors are from Japan, the largest bank, MUFG, Mitsui from Japan, and and Nikon, the camera company. Japan is actually one of the key market for human spaceflight.
Speaker 4:You know, they were really a co builder of the of the International Space Station, and and they want to continue with their 10,000,000,000 fund.
Speaker 2:That's amazing. Well, congratulations on all the progress. Thank you
Speaker 1:so Yeah. Great to meet. So so excited to follow along. Yeah. And congrats on Thank the
Speaker 4:you. Thank you. And I hear John, you're a watch Spacewatch fan from your interview with
Speaker 2:Oh, Yes. Do have any recommendations if I'm going to We
Speaker 4:partnered with IWC. Here you go.
Speaker 2:There you go. That's a great
Speaker 4:bringing new revenue stream to to commercial space. In April, we're announcing a new watch that we've designed with them Oh, wow. That that's designed for space. So hopefully, check that out soon.
Speaker 2:Incredible. That's yeah. That's amazing. Last year, we were partnered with a company called Bezel. We're a marketplace for buying those watches.
Speaker 2:I'm sure they'd be flying off the shelf. So thank you so much for advancing space and advancing the equally important industry of fine watchmaking. We appreciate everything you do. Have a great rest of your meet you, Max.
Speaker 4:Thanks, guys.
Speaker 2:Talk to you soon. Let me tell you about Turbo Puffer, serverless vector and full text search built from first principles on object storage, fast, 10 x cheaper, and extremely scalable. Oracle has joined the rate payer protect protection pledge. They said we are proud to be part of the White House's mission to advance American AI leadership while protecting the communities in which we build data centers. We are committing to pay we are committed to paying our own way on energy, hiring locally, protecting local water resources, and enriching communities across the country.
Speaker 2:AI isn't just about technology. It's about strengthening communities while fueling America's future. Let's go with some GPT
Speaker 1:dog food.
Speaker 2:Maybe. Who knows? They had a dog food. But it's I mean, it's a good point. Google, Oracle, x AI, Meta, Microsoft, OpenAI, and Amazon have now signed on to the rate payer protection pledge.
Speaker 1:Very smart.
Speaker 2:That seems like a really, really important move because you have the resources, you have the capital, go build the energy, do not spike the local do not spike the the local energy rates because the communities will protest and they will block you. And it's just game theory one zero one to just not not not let the negative externalities run wild in the communities of a democracy. Anyway.
Speaker 1:Ben Smith and Semaphore, Rachel Jones are covering a new AI cost, hardened data centers. They say building new data centers in underground nuclear hardened bunkers, which some companies began doing recently, cost more than $2,000 per square foot in The US. According to Larry Hall who owns Kansas based bunker real estate firm Survival Condo. Wow. That's we gotta get Nick, if you're hearing this, we gotta get Larry Hall.
Speaker 1:We gotta talk to Kansas based bunker That real estate firm survival
Speaker 2:sounds amazing.
Speaker 1:That's twice the cost of constructing a facility from scratch above ground and building in The Middle East can be more expensive depending on the terrain. Mhmm. Given the average data center spans the size of a Manhattan city block, an underground concrete shelter of that size might go for 200,000,000 and that's before factoring in the cost to cover energy, cooling and servers, of course, GPUs.
Speaker 2:Yeah. Cooling seems
Speaker 1:to Still be most of Survival Condos clients are looking for facilities smaller than that. The cheapest facility the firm has priced was for an existing 54,000 square foot bunker costing just 45,000,000.
Speaker 2:This is there's some extra context from Matthew Shaw. After Amazon's Bahrain data center was hit, this will likely be heightened. I'm sure people at CISA are looking into this issue. So in The Middle East particularly, while there are conflicts undergoing underway, I'm sure people will be looking at the future of how they build these data centers. Let's
Speaker 1:Netflix acquires AI filmmaking startup founded by Ben Aflak
Speaker 2:No way.
Speaker 1:Who will serve as adviser to Netflix.
Speaker 2:Very exciting.
Speaker 1:Company is called Interpositive Mhmm. That makes AI powered tools for filmmakers. The system builds AI models from a film's dailies? Dailies are the Oh,
Speaker 2:yeah. You guys wanna explain?
Speaker 1:Explain dailies, Ben.
Speaker 2:Yeah.
Speaker 1:That's good. Do you know that, John?
Speaker 2:Come on, filmmakers. Yes. Know what dailies are.
Speaker 1:Are when you were shooting on film, you would send the daily print to the lab and they would look at it and they could review it to make sure if they needed to reshoot the next day.
Speaker 2:Yeah. So, it's basically like reviewing the film that you shot in one day at the end of the day or before you go shoot because you might not have torn down the set. You might still be at the same location. You don't want to leave and wrap that particular shoot until you have reviewed the footage. But dailies, it just means that postproduction tasks like color, relighting, VFX.
Speaker 2:So you're on set. You go and you shoot that one cinematic scene, the dramatic scene. And typically, when you're watching it, there's no monster in the background. There's no color grade. It's very flat.
Speaker 2:It doesn't look like the final movie. If you can use AI and AI powered tools to get you much closer to something that looks like what the final movie will look like, then very quickly, you can turn around that daily shoot into, okay, it's, you know, we got a bunch of raw footage. Let's edit it together so that if we're filming me and then we're filming you, we cut it back and forth, cut it back together, color grade it, do some basic sound design. Even if it's sloppy AI slop, it's like gonna be much more watchable than just watching, like, The Rock.
Speaker 1:What do you what do you think Netflix, like, plans to do with this tech? Is this something they'll offer to productions that they're funding? Is that the idea?
Speaker 2:Yeah. I I would imagine that I'm not I'm not exactly sure how much more they're going to be scaling up their their, you know, in house production budget, but I could imagine that that this gets deployed into projects that are being filmed and run and produced by Netflix directly. But we'll have to see. We'd love to have someone on for Netflix. Without further ado, let me tell you about Graphite, code review for the age of AI.
Speaker 2:Graphite helps teams on GitHub ship higher quality software faster. And without further ado, we'll bring in Christian Howell, the CEO of Cognito Therapeutics. Christian, how are you doing?
Speaker 8:Gentlemen, how are you? Thanks so much for having me.
Speaker 2:We're doing fantastic.
Speaker 1:Great to have you.
Speaker 2:Thanks so much for taking the time to
Speaker 1:join Big day.
Speaker 2:Big day. Please Big day. Introduce yourself and the company.
Speaker 8:Yeah. So I'm Christian Howell. I'm the CEO of Cognito. My background is I'm a former Navy officer and a long time med tech Wow. Executive, and then the the company is, you know, sort of an amazing story.
Speaker 8:It's spun out of MIT. Yeah. And it's developing a noninvasive therapeutic for driving brain activity to promote brain health and starting in Alzheimer's disease.
Speaker 2:Yeah. Give me the shape of Alzheimer's for those who might not know the scale of its impact in America or even globally today.
Speaker 8:Yeah. It's really unbelievable, candidly. So there are about six million people and families in The United States that are impacted by Alzheimer's disease. There are another fifteen million people that are impacted by something called mild cognitive impairment, which is the early stage of cognitive decline. What's even scarier is about twelve million of those people are undiagnosed because there just haven't been available therapies for patients and their families.
Speaker 8:And so in the last couple of years, there've been a series of therapies that have come to market called the monoclonal antibodies, but unfortunately, not indicated for patients with more advanced Alzheimer's disease, and there's some risks associated with them. So, almost fifty million people around the planet are impacted by Alzheimer's disease.
Speaker 2:And is it fair to say that Alzheimer's has sort of like always existed, but if you go back a couple hundred years, lifespans were just so short that people would die before they had the chance to fight with their brain. They were fighting with their heart, basically. And now that we've extended lives, now we're grappling with brain deterioration. Is that roughly correct?
Speaker 8:I think that's exactly right. I think that we are entering an age where we have just made so many diseases chronic, whether it's cancer, or cardiovascular disease, that we are now our bodies are living longer than our brains.
Speaker 2:Yeah.
Speaker 8:And that is why we are, you know, moving into this space where we're seeing more neurodegeneration. And and I think we're trying to remove the stigma from it so people aren't just calling it dementia or, you know, people are, you know, they're really thinking about, you know, why am I experiencing cognitive loss? Why am I seeing, you know, why why am I seeing loss of independence? But you're exactly right. I mean, I think it I think it is I think the next twenty years is gonna be about you know, brain health, but really thinking about, you know, how do we preserve structure and function in our brains so we can we can have our brains living as long as the rest of, you know, the rest of us.
Speaker 2:So you mentioned monoclonal antibodies. You mentioned invasive techniques. Walk me through the spectrum of treatments, cures that are available and how you fit in.
Speaker 8:Yeah. So no cures, unfortunately, to date. So everyone is focused on just figuring out how we can slow the progression of the disease. And really what's happened you know, for years is people are sort of focused on the sort of underlying pathogens. Right?
Speaker 8:So that you hear about things like amyloid and tau, and they're actually not causing cognitive and functional loss. They are they are biomarkers of the disease, but what's actually causing the cognitive functional loss is network dysfunction. So the brain is no longer think of it like a symphony. The brain is no longer able to be in harmony. And when it falls out of harmony, it's unable to drive the biology that preserves its cognition and function.
Speaker 8:And so what a brilliant group at MIT led by Liwei Tsai discovered over the last several decades is that, one, that you can actually stimulate the brain back into harmony. Mhmm. And that when the brain is at a particular activity rate that they call the gamma band about gamma band when the neurons are firing north of 40 hertz per second, then what you see is you see this sort of profound biology that is driven that helps drive synapses and myelin and and really preserve brain structure and brain function. And they then learned that you could you could use an external stimulation to drive that level of activity. And actually, if you stimulated the visual and the auditory cortices, that would give you the most profound sort of response.
Speaker 8:And what ultimately then they discovered is that you could use sensory stimulation. You could use light and sound at a duty cycle of, you know, 40 hertz that would then drive the nerves to promote that type of activity in the brain, and then you would ultimately see this really profound biologic expression. So I mean, it's an it's an amazing
Speaker 2:So for the so for the folks with with brains that maybe are not fully working, is this a fancy hat?
Speaker 8:No. Okay. You know, it's it's a real you know, it's it's a good question because I say all the time that I think the first principle challenge of Cognito is that the science seems too simple to be plausible. Right? So you're gonna you're gonna you're gonna flash light and sound
Speaker 2:Okay.
Speaker 8:And you're gonna get my brain active, and that's gonna drive biology that protects the loss of cognition function. Right?
Speaker 2:And specifically, the light and sound goes through my eyes and my ears?
Speaker 8:Eyes and ears. Right? Because we wanna we wanna stimulate Here we optic go. Nerve. Yeah.
Speaker 5:There you go.
Speaker 8:You wanna stimulate the optic nerve, and you wanna stimulate the stimulocochlear nerve in the ear.
Speaker 2:Yes. Okay.
Speaker 8:Right? And so light and sound are really effective at stimulating those cranial nerves.
Speaker 2:Yes.
Speaker 8:But what's great is because the science candidly was perceived as being sort of so simple, it meant that there had to be this massive investment in clinically validating it.
Speaker 2:Yeah.
Speaker 8:So there's been more than a billion dollars invested between MIT and Harvard on exploring the science. We are currently fully enrolled, almost completed what is the largest nondrug randomized clinical trial that's ever been conducted. We're doing 673 patients across 70 sites in The United States. We're studying them for twelve months, and we're looking to see, can we preserve their cognition and function using this type of, you know, this type of therapy. So it ultimately becomes a tailwind for us.
Speaker 8:Yeah.
Speaker 2:So over twelve months, that gentleman with the device on his head
Speaker 1:Is that Oregon Freeman? How often is he
Speaker 2:How often is he wearing that? For how long? Yeah. What intervals? Walk me through sort of what a typical treatment program might look like.
Speaker 8:Yeah. So the the first thing we do is we which which is exciting is we confirm that the brain responds to the therapy. So patients come in. We give them the the the device. Yeah.
Speaker 8:The one, we determine they can tolerate the light and sound. Then under an EEG, confirm that we can get the brain to 40 hertz and hold the brain at 40 hertz.
Speaker 2:Got it.
Speaker 8:Then they are they get a personalized device that they go home with. We ask patients to wear an hour a day Okay. Every day.
Speaker 2:Yeah.
Speaker 8:What we hear from patients is they feel empowered. They feel like they get an opportunity. I get up. I have my coffee. 09:00.
Speaker 8:I sit for an hour. I'm doing something proactive to address my disease.
Speaker 2:Yeah.
Speaker 8:And and candidly, that has manifested itself in one you know, in our study state, we have a almost an 85 or 86 adherence, meaning patients are wearing it six days a week, at least fifty minutes a day.
Speaker 2:Yeah.
Speaker 8:We have almost ninety percent of patients that are, when they end the study, wanna stay on the therapy and go into additional studies.
Speaker 2:Have you considered putting advertisements in it?
Speaker 8:You know, it's funny you said it. There there is a you know, this one was designed for AD patients. Yeah. But this idea that you can use light and sound to stimulate brain activity, I mean, the platform opportunity here is really interesting to think about, you know, we know we've got indication in other disease states and conditions. We're gonna study those.
Speaker 8:Yeah. There's the opportunity to think about it for, you know, preventative or Sure. Or even, you know, sort of brain health proactivity. And then there's opportunities for us in things like sleep and stroke and and traumatic brain.
Speaker 2:But the default path will be FDA approval prescribed by a doctor. Maybe they send it home with you. It's probably expensive, but insurance will cover some of that, if not all. Then patients will be able to use this sort of non invasively to treat their Alzheimer's, hopefully, for as long as it takes.
Speaker 8:Exactly right. Right? So we will we will read out the study in August. We hope to go to the FDA in November. Yeah.
Speaker 8:The hope is that we see an approval mid of next year. You're right. We'll work with CMS to make sure that it's covered.
Speaker 2:Sure.
Speaker 8:And then patients will have a very sort of straight line path to be from diagnosis to getting the device personalized for them to getting the device in their homes. You're right. They can do it anywhere. Right? They don't have to go to the hospital.
Speaker 8:Don't have to go to a clinic. That's great.
Speaker 5:If they
Speaker 8:travel, they can take a device with I have one here. You can, you know, you can it really makes life it it it sort of bends to their life more than asking them to bend their life to a therapy.
Speaker 2:That's amazing. Well, good luck. You raised some money. How much did you raise, and what does it allow you to do?
Speaker 8:Yeah. So we we oversubscribed the round. At that. We love it. The Gong.
Speaker 8:We oversubscribed the round to a $100,105. That's right. Congratulations. Not an easy time to raise money in the life sciences, especially when you have something completely sort of non you know, unconventional. Yeah.
Speaker 8:And, know, you that was it was a really interesting time. Right? Because as as investors got more conservative, they didn't wanna operate outside their thesis. And we're we're not a traditional biotech. We're not a traditional med tech.
Speaker 8:Right? So we really had to find investors that weren't looking at it from the modality in, but we're looking at it from kind of the disease state out. But it allows us to now sort of downshift. So we are, you know, gonna continue on, you know, get the hope read out, get to the regulators, and then start the commercial work. Cool.
Speaker 8:And really try to, you know, meet that urgency in the market. And we're doing it with in partnership with big academic medical centers that are help us learn, you know, how do you identify the patients? How do you get the therapy to patients?
Speaker 2:Yeah.
Speaker 8:How do you help them adopt it and adhere to the therapy? And then how can we explore new new indications?
Speaker 2:That's amazing.
Speaker 1:Super exciting. My my, grandfather my late grandfather, suffered from Alzheimer's and I remember he was doing the antibody treatments but I just remember the frustration of waiting for those treatments and then kind of waiting to see what kind of impact that they would have and and just he was fully willing and excited to do whatever it took.
Speaker 2:Yeah.
Speaker 1:And not having something outside of kind of more basic everyday health stuff to do was deeply frustrating. So very, very excited that you're building this and come back on as you make more progress, and congrats to the whole team on the milestone.
Speaker 8:Thanks, man. I really appreciate it. I mean, it it is I I say to people all time, I I got the best gig in the world, right? Because I get to see this really interesting science get delivered to families that need it desperately. And and as much as I'd love for your story to be, you know, unique, and it's unique for you guys, there's not a day that I don't run into people that say, you know, my mom or my dad or my aunt or my uncle or and so it's just it's just such a desperate need.
Speaker 8:I can't I'm so I'm so fortunate to be the guy that gets to kind of steward this. So I appreciate you guys giving us an opportunity to talk about it and share Of the work that we're doing.
Speaker 1:Yeah. Thanks for everything
Speaker 5:you do.
Speaker 1:Last couple questions from the chat. Ryan in the chat says suspected effect size if successful, how many cog points are you aiming for? I don't Yeah. I yes. It's it's a Explain those questions for for me and then
Speaker 8:What we're trying to measure is, you know, how much can we preserve cognition?
Speaker 2:Sure.
Speaker 8:And how much can we preserve function? Right? So think of cognition as like memory and think of function as agency and independence. And so in our feasibility study, which was a study we did just before this one, we showed an almost 77% preservation of function and a 76% preservation of cognition. Those numbers are best in class by a long ways.
Speaker 8:And so if we in the big studies show something similar to that or even a little bit less than that, it will be, you know, the most significant clinical impact in addition to we've never had an adverse event related to the therapy.
Speaker 3:That's great.
Speaker 8:And you know, it's non invasive and patient could use it in their home. So that, you know, that's kind how we're thinking about the impact. And then we'll support that through biomarkers and all the stuff that you show in these studies that you're making an actual, you're actually making a difference.
Speaker 2:That's great. Well, thank you so much for coming on show. Great to meet you. Look forward to
Speaker 3:Yeah. Love what
Speaker 8:love what you guys are doing. It's Appreciate a cool it's such a cool scene. So
Speaker 5:Thanks a lot.
Speaker 8:And and welcome looking forward to coming back and Yeah. Talk to you guys about the work that we're doing.
Speaker 2:Yeah. We'll talk to you soon. Cheers, Christian. Goodbye.
Speaker 8:Thanks, guys.
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Speaker 2:And our next guest is here live in person with us in the TBP and Ultradump. We have Cameron Record from nominal.
Speaker 1:What's going on?
Speaker 2:Welcome back to the show. Good to see you. Good How see you. Should we kick this up? Can we just hit the gong right away?
Speaker 7:What happens here?
Speaker 2:Tell us tell us what happened.
Speaker 7:Today, we are announcing a $80,000,000 raise at a billion dollar. That was was a
Speaker 2:loud one. That was
Speaker 1:a You broke the mallet. You broke the mallet. That's a powerful powerful omen right there. Yeah.
Speaker 2:I'm excited.
Speaker 7:We're announcing our latest our latest financing led by Founders Fund.
Speaker 2:Fantastic. Fantastic. Thank you,
Speaker 1:What do we what do we have here?
Speaker 2:Had you been working with them before?
Speaker 7:We had been working with them before. Okay. Yeah. So they Founders have been an investor since the seed round. Okay.
Speaker 7:Through
Speaker 2:Delian, Trey, both?
Speaker 7:Delian and Trey. Okay. Yeah. Both. Yeah.
Speaker 7:And really I think really how this Yeah. Came about was I think Foundersman has a really good perspective obviously on the evolving hardware landscape
Speaker 4:Yeah.
Speaker 2:Broadly speaking. Yep.
Speaker 7:But a unique perspective into particularly Andoril. Sure. We announced our partnership with them
Speaker 4:Yep.
Speaker 7:Two weeks ago now.
Speaker 2:Know if it's working or not.
Speaker 7:Yep. Exactly. They're gonna know if it's working or not. And so I think, you know, some direct feedback from them and and other FF portfolio companies. Yep.
Speaker 7:And so, yeah, we we were not raising. I mean, we were on the show eight months ago
Speaker 2:Yeah.
Speaker 7:Announcing the the series b led by Sequoia. But we got approached by Founders Fund at the end of the year, really over the holidays Yeah. With a pretty good offer to lead a like preemptive financing and it made a ton of sense.
Speaker 2:That's great.
Speaker 1:You're like, why not make a magazine?
Speaker 2:Yes. Yes. Or
Speaker 1:I brought
Speaker 2:I brought props. Magazine first sort of reintroduce the product for those who didn't see the previous
Speaker 7:Yeah. So Nominal, we build a a platform for hardware tests and operations. Okay. Right? So we're managing everything from the end of the manufacturing process.
Speaker 7:So then quality testing, inspection, end of line through to more like lab testing, benchtop testing. Okay. I think power supplies, DACs, oscilloscopes, instrumented hardware.
Speaker 2:And Earl's making a submarine. Yep. They need to test the battery that goes on that submarine as soon as it comes off the manufacturing line. Even if they buy it from a supplier that they trust, it comes in. They have to know that it has the right voltage and Yeah.
Speaker 7:And that's exactly it's honestly, that is a really, really like, we're seeing that use case really explode in the product. Okay. I think particularly as there's been a a big rush of more onshoring manufacturing Sure. Frankly, I think quality in the entire industry Mhmm. Is sort of going down as there's a little compression effect.
Speaker 7:So people making, yeah, components, widgets, you know, servos, motors
Speaker 2:Yeah.
Speaker 7:Etcetera. When these the OEMs, the bigger companies, the end of the world Sure. Receive them, they they need to run through some, yeah, some initial inspections.
Speaker 2:And does your business grow as businesses that you work with shift from r and d and testing and
Speaker 7:Yeah.
Speaker 2:Prototyping to actual scaled manufacturing?
Speaker 7:Yes. Yeah. And that's a huge part of the thesis. Like, honestly, like, some of the earliest Like, what you unlock. Yeah.
Speaker 7:Exactly. Some of the earliest vision of nominal is, like, testing is a really powerful place to start because every organization is kinda always testing if you're iterating. There's normally some budget. There's a little bit of risk tolerance to try new software, new tools, new processes, get whatever advantage you you can squeeze out. And then a lot of the thesis is, like, if that works, you wanna use the same software when you're actually doing high scale production manufacturing.
Speaker 7:And you want to use the same software again when you deploy your asset. Let's pick submarine, you know. Yep. Wherever it is in the world, submarine's probably a bad example. Again, I was a former submarine officer, so Cool.
Speaker 7:Know a thing or two. You're not gonna get a ton of live telemetry coming off of submarine, ideally. But but if you deploy an asset in the field, you wanna be able to link all of that telemetry sensor data logs back to the the system.
Speaker 2:Interesting. And and and is that for, like, testing, like, feedback loop for manufacturing? So it's like, let's switch over to, like, the sensor tower Yep. Analogy.
Speaker 4:Yep. You put up
Speaker 2:a bunch of sensor towers somewhere. Yeah. There's a bunch of telemetry that's coming off that. Not just the purpose of that century tower, which might be object identification Yep. But also the battery failure.
Speaker 7:The battery is a really good example, and we'll we'll use, you know, sentry tower Mhmm. Counter US towers as an example Yeah. Often deployed in places in the world that are very hot. Yep. And so they're gonna have a lot of battery issues.
Speaker 7:Happens all the time. And you wanna be able to correlate if you're getting anomalous or or spurious readings on the battery. Mhmm. You would use something like nominal to be able to monitor that. Mhmm.
Speaker 7:So think like how Datadog is monitoring, you know Yep. Like a a server or or, you know, generic software. Like, we'd be you set up a conditional to monitor any weird anomalous behavior in that battery. Yep. And then you wanna be able to link that, correlate that with the physical assets Yep.
Speaker 7:Maybe the the group of batteries that you receive from a supplier, and you wanna be able to trace that backwards Yeah. Through your whole process and say, hey. Actually Yeah. Those batteries that might have similar issues are deployed in these, like, five areas because I can track those assets and understand and sort of, you know, think think that way.
Speaker 2:Yeah. Because the battery might perform differently in different temperature conditions, even just how much the CPU is turning.
Speaker 7:Just like yeah. And I think what nominal is unlocking is really just like the ability to do this correlation at scale.
Speaker 2:Okay.
Speaker 7:And frankly, like, what we we the way we we store and organize all of this, you know, massive amounts of telemetry and sensor data is just like a much, you know, more thoughtful approach that you can query at scale and sort of make these types of connections. Really, the industry status quo, which is a good segue into the the stuff we brought here. I think the industry status quo is, like, it's just there's a lot of legacy tools in the space. So it really is it is Excel. It is MATLAB.
Speaker 7:It's PDF. You know, it's it's old old pieces of of software that have not really kept pace with the
Speaker 1:Yeah. Last time last time we were at the track Yeah. Getting some laps in the the software that that the team was using to track lap times and, you know, just all the different data coming off the car. What literally look like nineties era Yeah. Software.
Speaker 2:Yep.
Speaker 1:Talk about the partnership with Pratt Miller. Yeah. So last time evolving. Are you are you gonna add more teams? Is that like a great feedback loop for maybe more traditional Yeah.
Speaker 7:Mean, so so last time we Bryce dialed in is, you know, this is very cool being in person, but he was at the the pits and that's pretty sweet.
Speaker 2:Been cool too.
Speaker 7:No. The partnership is going great. I think I'm personally very excited. Like, we we we get to go and attend a bunch of these races, and we get to bring, our customers, or potential customers, which is great because they get to see nominal in action. Yeah.
Speaker 7:And so it's a really, like, nice, like, way to kind of do that. Then, yeah, the partnership is, is expanding. There's won't I say too much on that, but I think we're we're expanding in the automotive and and racing sector kinda broadly based on the success there. So
Speaker 1:yeah. Very cool.
Speaker 7:But, yeah, I Thanks to this. Yes. Tools
Speaker 1:For progress.
Speaker 7:Tools for progress. Yeah. Our our sort of slogan for this financing has been ambition is timeless, tools are not. Mhmm. And so going in the history lesson, you know, used to be in the eighties, nineties, you know, software was industrial software was serious.
Speaker 7:It was purpose built for, you know, aerospace, defense, mechanical engineering, etcetera. We then entered two decades of very unserious software mhmm..com, you know, click optimization pass through, you know, metrics, etcetera. And then Nominal is trying to get back to serious software for the next five decades of engineering. And so what we put together here, a very tactile, you know, thing. Is this is waterproof, weatherproof also, which it would would have to be.
Speaker 7:This is
Speaker 1:so well done.
Speaker 7:Tools for progress. This is an old school catalog. This is where, like, the best tools in the world and the best companies in the world used to write about their products in paper. Mhmm. Yeah.
Speaker 7:It's kinda crazy to think. Print it up, send it to engineers all over the world, and that's how they would know the latest and greatest of capabilities. So we have our catalog here, and we have some retro features for some of our some of our customers, showing a little bit of the breadth of the nominal platform. Shinke. Yeah.
Speaker 7:Starting that one. So robotic, you know, fish, process.
Speaker 2:He's eating the fish here at the Metrodome.
Speaker 7:There you go.
Speaker 2:Live on
Speaker 7:the show. A nice, you know, Shinke. Amazing. Antares, you know, nuclear power.
Speaker 2:This is amazing.
Speaker 7:We got Pratt Miller Motorsports, Hermes, Albedo, Satellites, Planes, Regent. So, yeah, we've been sending these all over the the country over the last couple days. So
Speaker 1:That's very cool. Incredible.
Speaker 2:Yeah. How how have conversations with investors been around the SaaS apocalypse?
Speaker 7:Everyone Yeah.
Speaker 2:Says I mean, you know, Toby Looky was like, I I vibe coded my own telemetry data. Yeah. Yeah. Is this not a threat to you? What what's going on?
Speaker 7:I'd say conversations, given that you're hit the gong again. Now, the conversations I think have been good. Yeah. I think we actually see nominal I'll frame it this way, which is we're sitting at an incredibly interesting nexus Mhmm. Of, like, data coming off of hardware machines.
Speaker 7:Yep. Real human enriched engineering judgment. Like, people are doing this work in our platform.
Speaker 2:Yeah.
Speaker 7:Like, they are deciding that that battery is is good or bad. Right? Sure. And they're they're transitioning that of engineering judgment and insight into the data and enriching it.
Speaker 2:Yeah.
Speaker 7:All of that is living in our platform, and it is growing exponentially. So when you actually think about if you believe this, like, world where models will long tail commoditize Mhmm. And it just becomes about interesting access to to data and sort of like moats around that, I feel really good about where Nominal is positioned particularly there. And then I think we talk a lot about, like, what we've done in in our three and a half years so far, I think, has taken a set of an industry and a set of tools from 1990 Mhmm. To, you know, 2022.
Speaker 2:Yeah.
Speaker 7:And we've done that fast. Yeah. And now we have the opportunity and we've earned the right to basically bridge the industry into 2026 Mhmm. 2027. Yeah.
Speaker 7:Right? And so a lot of talking about, you know, what we do with some of funding, think a lot of it is like we, you know, we have our own sort of cutting edge. We have our own AI team Mhmm. We're hiring and kind of building up and people focusing on how do we incorporate how do we both a nominal build with AI, but also how do we operationalize this for the industry. Mhmm.
Speaker 7:Because right now, going from, you know, a spreadsheet to to, I don't know, cloud coding
Speaker 4:Yeah.
Speaker 7:Your own whatever is like, I'd say
Speaker 2:it's It's not big jump.
Speaker 1:Well, yeah. It's interesting. I I think of it in a racing context. The car is out on the track. It's producing all this data.
Speaker 1:You can imagine a world where an AI is able to more quickly Totally. Like respond and help the team make decisions than any human. Right? That's like Mhmm. Kind of managing Absolutely.
Speaker 1:All these different
Speaker 7:I'm really, I mean, I'm really bullish on that. I think, like, we we sometimes frame nominal a little bit as, like, we wanna be and we think we will be, like, a part of one of those systems of record. Mhmm. And so when you think about when you're using we'll just use Cloud Code. When you're using Cloud Code, right, it's still it's still interacting with, like, GitHub or whatever your version control sort of system.
Speaker 7:Right? Like, is for for just sort of doing things like that. The same equivalent, like, doesn't really exist in this, like, software defined hardware world. Yeah. And I think those need to be built, frankly.
Speaker 2:Yeah. I wonder I wonder how you think about, like, the economies of scale with regard to effectively software as a service. Because I imagine that even if software, the the instantiation of software, the writing of software is commoditized, there are still hard won lessons and almost secrets. Like, you can't go to every LLM and say, predict every problem that
Speaker 7:Yeah.
Speaker 2:This drone manufacturer will have and then build software for that that will, you know, immediately Yeah. Generalized to hypersonic flight or nuclear power generation.
Speaker 4:It's
Speaker 7:really good. Yeah. It's really good. We're we're we're working on some of this right now,
Speaker 2:I would
Speaker 7:And I think, like, a lot of our vision is the world of hardware testing Yeah. Right now in 2026 generally looks like, you know, setting out sort of a matrix of test points. Yeah. Like, deterministic. Yeah.
Speaker 7:My system my battery needs to be between this and this voltage, and or this condition. Yeah. And then you sort of run that out. It it it happens very sequentially. Like, that is how all of these systems are tested.
Speaker 7:And frankly, that's how talk about, you know, the the government that that's how testing happens. Good. We are trying to bridge from a world of, like, what if you actually can, one, do more and more in simulation Mhmm. And use outputs of pretty high fidelity Mhmm. Often physics based models of the world.
Speaker 7:That's one input. And then two, what if you actually start to build, like, AI test agents? Yeah. And their whole job is to determine the next best test point to run. Yeah.
Speaker 7:So instead of running linearly through this matrix, like, you're actually sort of in a kind of a three-dimensional space where you are trying to kind of retrain and update the model and say, hey, if I could put this physical piece of hardware in any condition or state space
Speaker 2:Yeah.
Speaker 7:What would I put it in to optimize and sort of knowledge maximize my step? Knowledge maxing. I like it. Yeah. Knowledge maxing.
Speaker 7:Yeah.
Speaker 4:Yeah. So that's where yeah.
Speaker 2:I think that's where it's going. Yeah. I imagine like Shinke likes that whatever you're learning from Andoril and whatever you're standardizing there applies to them. But then I was at Hermes, the manufacturing plant, they had like a Pratt and Whitney Yeah. Jet engine Yeah.
Speaker 2:That I don't think I've seen any Andoril products that operate at that scale. And so whatever you're doing with Hermes is gonna translate to Andoril Absolutely. And vice versa. There's gonna be there's gonna be sort of like synergies there in
Speaker 4:a way.
Speaker 7:Oh, totally. There's a ton of there's a ton of compounding.
Speaker 2:Where it doesn't necessarily make sense for every company to have their own system. No. I do you you mentioned, I think, physics based simulation, CFD. What what is off the shelf? What what bespoke systems continue to exist?
Speaker 2:Mhmm. Because it seems like the the messy Excel sheets, the messy Python version 27.3 maybe goes away. But Yeah. But what what actually sticks around long term?
Speaker 7:Yeah. It's a really good question. In in the in in intermediate, we go to a lot of our our customers and they're sometimes shocked to believe that we can actually and this is not like necessarily a North Star, but we can deprecate MATLAB Mhmm. To, like, just like
Speaker 2:Yeah.
Speaker 7:People can can get off of And
Speaker 2:for the for the f one fans out there, is MATLAB a tool that you could use to, like, visualize the airflow over a race car? Is that
Speaker 7:It's MATLAB is more it's sort MATLAB is sort of like the OG, like, you you'd use it in every mechanical engineering like masters. It's just like it's it's all the yeah. It's like it's basically plotting, graphing, but running like actual math. Sure. Just engineering analysis.
Speaker 7:Like and it is so much of the post processing of this, like, hardware generated data still happens in MATLAB. Yeah. MATLAB's like a single player by Yeah. Definition. Right?
Speaker 7:And so I think one of the big value unlocks we've had is just like take a tool like that and put it in the cloud. Yep. Horizontally scale it so a ton of humans can access it and you can actually do engineering math and computation transformation in the cloud. Like Yeah. That's that's not, I mean, incredibly revolutionary itself, but it's incredibly powerful in what it unlocks.
Speaker 7:So Yeah. When you have an to your point of, like, I think positive compounding effects between multiple different, you know, companies Yeah. I think just within a place like Anderol
Speaker 2:Yeah.
Speaker 7:Which is approaching, you know, 10,000 people, the fact that they're getting off of single player engineering and being able to do so much more in in multiplayer is Yeah. A huge unlock.
Speaker 2:Then walk me through some of, like, the the FedRAMP ITAR compliance because Fun one. If I if I'm running a company and I want just a cloud hosted Jupyter Notebook that's multiplayer, I could go to Colab. Like, it's available Yep. But it's not designed with that use case in mind. It's a very general purpose tool.
Speaker 2:But walk me through some of the more defense to government Yeah. Applications and
Speaker 7:So we we call it rugged deployability. But, like, if you if you come and you walk up and you say, hey, I wanna use nominal, we can deploy our entire stack fully air gapped on prem. Like, that's something that we invested in from from day zero. And and obviously, a lot of our customers have that use case.
Speaker 2:What does that actually look like? Like We'll ship you a server. Yeah. We'll just Oh, you'll ship the hardware?
Speaker 7:Yeah. We have a bunch of servers in
Speaker 2:Austin. Yeah. Yeah. Just several hub. Is that is that like a Dell server with, like, a
Speaker 7:g We have a deployability team. Okay.
Speaker 2:So you can kinda pick.
Speaker 7:Yeah. We call them the deploy deploy boys. The
Speaker 2:deploy boys. Okay. But they're good. No. So we because I I remember I talked to Shyam Sankar at Palantir, he said that the first time that they tried to ship a Palantir binary to Yeah.
Speaker 2:Run on prem, the the the person on the other side of the deal was like, great, but this isn't running. And he was like, you don't have nearly enough memory.
Speaker 7:Blah blah blah.
Speaker 2:And that's the birth of the four deployed engineer Yep. Project.
Speaker 7:Yeah. Yeah. I think it's so we can we can with some customers, it's easier. We'll just ship a tower. We'll ship a server to them, or we can just provide specs.
Speaker 7:I think I think people are the the department and and these, like if the government is your customer, I think people are getting getting a lot better at that right now. So Yeah. You can do that. We can also just deploy our software inside of our customers VPCs. That's often and so inherit all of their
Speaker 2:Okay.
Speaker 7:You know, security and credentialing and things like that.
Speaker 4:Got it.
Speaker 7:Okay. But I do think that's been a big differentiator is
Speaker 3:like
Speaker 7:we've invested. That would not normally be a place where I think you would spend valuable, like, startup engineering points Yep. If you were not in the industry that we are in. But from day zero, essentially, we were, like, we needed to be
Speaker 2:able to deploy this. What about, like, approval, cybersecurity, compliance? Like, I imagine that even if you have the best team of engineers possible, like, you still want third parties to work with that. What does that look like?
Speaker 7:Yeah. I think, you know, there's a long long tail of of, you know, security and compliance. I think things there I think, you know, we we're continuing to, I think, to work through that. Mhmm. Some of the basics are, you know, people have to trust that the tool is going to perform the the things that we we, you know, we say it is.
Speaker 7:And so in the early days, we'd have lots of fun conversations with folks around, how are you doing like a low pass, you know, filter? How like, and just like explaining like basic math Yeah. Yeah. You know, functions, etcetera. But we're we're well past that now.
Speaker 7:So, I mean, I think we're we're continuing to to burn down that. We we do like, we support classified work. Right? And we have a facility clearance as a company. A lot of our engineers are are are, you know, Red End.
Speaker 7:And and I think all of the not all of. A good portion of the one, like, most interesting work with a lot of our federal customers Yeah. Is happening at at higher classifications. Yeah. And I think there's a direct correlation as you go to higher classification programs of, like, a lack of tools.
Speaker 4:Yeah.
Speaker 7:Right. And so
Speaker 4:I think
Speaker 7:from a business perspective, if we can get like, there's there are really big budgets. People are, you know, they're I'll just give facts, I mean, you know, dollars 3,000,000 a day being spent on on test campaigns alone. Right? And so if Nominal is able to bring in some of those test timelines by, you know, a day Yeah. There's lot
Speaker 4:of money.
Speaker 7:And we can do more than that. It's like it's really valuable. But when you go to some of those high side programs that are doing, you know, testing, you really are restricted in what you can can use. Crazy.
Speaker 1:Some of the most important work and the fewest tools.
Speaker 2:Yeah. Is AWS sort of like the IBM of federally compliant cloud hosting these days? You remember IBM, like, no one ever gets fired for IBM. Yeah. Is AWS still this leader in just like the default tool that you pull off the shelf if you want?
Speaker 7:I think we see a lot of it, but we also see it it it really and this is one thing, like, I I we see a bunch. We see Azure. We see Yeah. Other places like that. Yeah.
Speaker 7:So I think we we have sort of partnerships with all of the Sure. The the cloud providers. Yeah. And and they all have their own efforts, I think, to provide, you know, some often, sometimes, like, the the reason why we get slowed down is just because there isn't a environment for us to deploy the software in. Right?
Speaker 7:Like, the customer wants it. They they're asking for it. I mean, we have to figure out ways to to get the software deployed. But Yeah.
Speaker 2:Yeah. What's the team like? Where where are you based?
Speaker 7:Yeah. So we are we're around a 135 employees today. We'll probably grow to around two forty over the course of the calendar year. Headquartered in Los Angeles, Austin office as well, New York, DC Mhmm. And we opened an office in in London late last year.
Speaker 2:London. Wow.
Speaker 7:Yeah. So
Speaker 2:Is that for international clients? Yes.
Speaker 7:Yeah. Interesting. I went over to I went over to London probably six or eight months ago now, set up a bunch of meetings and kinda declaring deal. Yeah. And came back basically came back and all of those opportunities, like, materialized into real customer traction.
Speaker 7:I think we we sort of knew, like, this is not Crazy. This is not a a US centric problem. This is a global, like, industrial Yeah. Sort of problem, and there's a ton of opportunity. And especially in more of the defense adjacent work, unsurprisingly, their the proximity that they're feeling is, like, is heightened.
Speaker 2:Yeah. What's the mix of of business with companies that sell to the government versus government contracts directly? Yeah. Are you feeling pull from the DOW directly?
Speaker 7:Yeah. Yeah. So we we have we have around 60 customers. Around two thirds of the work we do is is act is totally commercial. Mhmm.
Speaker 7:It's just a b to b engagement. I mean, like, company like Shinke or or Antares, etcetera. And then we also directly work with the the federal government. Mhmm. And I always say the biggest, you know, tester and validator of hardware in the world is is like the, you know, Department of War right now.
Speaker 7:And so I think we're we're very happy to to support a lot of that that work and it's very needed.
Speaker 4:Sounds great. Yeah. Jordy?
Speaker 1:Very insane progress.
Speaker 2:Thank you. Where can people get these? Do do do do you just sell these? Do you ship them to people?
Speaker 7:We've shipped a ton. We've shipped a ton out. I my sense is we will the reception has been very positive. We'll probably be printing a lot more, so You're printing. I love Yeah.
Speaker 7:We're printing.
Speaker 1:Printing.
Speaker 7:Yeah. We're printing. That's amazing. We'll be we'll probably be shipping them out. Yeah.
Speaker 2:What what what is the meaning of Y Combinator here?
Speaker 7:Yeah. We had fun with this one. So it's graduates who became astronauts.
Speaker 2:Oh, okay.
Speaker 7:Y Combinator doesn't have it.
Speaker 2:Oh, no. Oh, graduates.
Speaker 7:We we support the US Air Force test pilot school Okay. TPS. Some of the the coolest humans in the world doing amazing work.
Speaker 2:We gotta get Johnny Kim to go back through We do.
Speaker 4:His next day. We do.
Speaker 2:Yeah. He's a legendary astronaut.
Speaker 7:Yeah. Do. Hopefully, that maybe that will change one day.
Speaker 4:But, yeah.
Speaker 2:I would believe it. But if you're on the YC track, you're probably off of the
Speaker 7:Off the astronaut track.
Speaker 2:You gotta build the
Speaker 3:next You gotta
Speaker 7:make decisions. Yeah. Yeah.
Speaker 1:For now.
Speaker 7:You gotta build on Sirius software.
Speaker 2:Yeah. For sure. Yeah. Well, thank you so much for taking the time to come talk to us. Thank you.
Speaker 2:Always good to be here. Day.
Speaker 7:Yeah. I appreciate it. Congratulations. You guys.
Speaker 2:For the past. Yep. Thank you. And we will talk to you soon. Okay.
Speaker 2:Have a good rest of your
Speaker 1:close out the show.
Speaker 2:Yes. Thank you for watching today. Leave us five stars on Apple Podcast and Spotify. Sign up for a newsletter at tbpn.com. And
Speaker 1:Yeah. We didn't get enough into GBT five point AM. Four
Speaker 2:GBT five point four.
Speaker 1:The reviews are incredible, and we'll stack the beginning of the show tomorrow
Speaker 2:Yes.
Speaker 1:With updates there.
Speaker 2:Lots of fun benchmarks to dig into, lots of graphs to analyze, lots of models to play with and examples to go and build or vibe code and see if they have that smell, if people like the the vibes. Anyway, thank you for watching. We will see you tomorrow.
Speaker 1:Have a wonderful evening. Goodbye. Goodbye.