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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVBN. Today is Tuesday, 05/06/2025. We are live from the the Temple Of Technology, the Fortress Of Finance, the capital of capital. I love those cards. What would you say you're doing, Jordy?
Speaker 2:I'm keeping my cards close to my chest, John, because if I don't, our public information will be
Speaker 1:There are actually it's kind of a rush roulette scenario.
Speaker 2:Yeah. One of these cards
Speaker 1:is actually our card. And we are live. So rest. We can't edit it out or blur it after the fact. But that's a great opportunity to tell you about Ramp.
Speaker 1:Time is money. Save up. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Let's go. Anyway, the cover of The Wall Street Journal.
Speaker 1:We have some breaking news from the cover of the Wall Street Journal. OpenAI has abandoned the planned for profit conversion. We are AGI,
Speaker 2:the real story here, AGI lost the top spot to the Met Gala.
Speaker 1:The Met Gala did It's really really important $300,000,000,000 story. A couple people dressed up and had a party.
Speaker 2:In costume.
Speaker 1:Which one's more important?
Speaker 2:Yeah.
Speaker 1:Which one's more important? I don't know. The Met Gala is important. I believe it's I believe it's very high margin event. I saw that was $75,000 to go to the Met Gala.
Speaker 1:I love that because I think all that money goes to subsidize my opera tickets. Yeah. And I think that otherwise the Met would not be they're not profitable just on the opera tickets, but that's key. That's obviously like the most important
Speaker 3:thing that they do.
Speaker 1:So the gala raises a bunch of money for opera and yeah, let us know if you'd like to join us at the opera. I'm considering putting together a TVPN meetup, maybe at the Met, maybe at the LA opera, maybe at the San Francisco opera. We'll have to get everyone together, it'd be great. Anyway, I'm super frustrated by
Speaker 2:this situation. Bradman looked fantastic in
Speaker 1:tux last He was at the Met Gala, his company can't convert to for profit. He's hanging out with maybe, I think the Met is
Speaker 2:a nonprofit founder hanging out with another nonprofit organization. Makes sense.
Speaker 1:Yeah. Maybe he's getting some tips. I mean, I we've been very pro for profit conversion. I would like to see the Met convert to for profit. I wanna see PETA convert to for profit.
Speaker 1:I've said this before,
Speaker 2:but Red Cross. PETA is such
Speaker 1:an interesting business case because they obviously know where all the most delicious animals live. They know what cuts are the best of those animals. They know the cooking temperatures and the cooking times.
Speaker 2:Yep.
Speaker 1:And so if you were to do a for profit conversion PETA, you could unlock billions in shareholder value. And obviously, a similar story is unfolding at OpenAI. But looks like they're taking one step back before maybe they take two steps forward. Who knows? Anyway, the news we we will read through, OpenAI abandons its plan to convert into a for profit.
Speaker 1:And this was always kind of difficult to wrap your head around because they were never going to get rid of the nonprofit. Yeah. It was never a full conversion. The nonprofit would cease to exist and it would become a for profit. One, It was more like the nonprofit continues to exist and fulfill its mission and just has the most banger asset on its balance sheet of all time, which is a ton of equity a high growth, multi billion dollar consumer tech company, which is the best thing you could possibly And
Speaker 2:another big question was always that the investors in the for profit unit were capped at 100x. Yes. Which is still kind of a big unanswered because there has to be certain investors that are already at 100x.
Speaker 1:Yeah. Yeah, were joking about like, do you sell your shares and then it re triggers another 100x or is the individual share like 100x maxed out? Like, how does that work? Because yeah, if I buy from an employee, many employees are probably already a hundred x.
Speaker 3:Yeah.
Speaker 1:Although I don't even think they're subject to that. I think they might be
Speaker 2:on its own I think
Speaker 1:the only It's fascinating.
Speaker 2:Entity that figure out what's actually going on fully understand it, O3. O3. Maybe not ASI, but I think O3 could do it. Yeah. If you just really dumped in all of the every single
Speaker 1:And yet it seems like O3 is not is not up to the task because Oven AI has abandoned the for profit conversion.
Speaker 2:Yeah.
Speaker 1:And so you would think they would have put, ASI or AGI on the task, but they came up short. And I do wonder what this means. I wonder how temporary this is. This feels like a bump in the road and we are eventually It just feels unfathomable that, you know, a billion people are going to be daily driving the ChatGPT app, subscribing for $20 They're going to have ads in that thing. It's going to be like this, like, you know, generating billions and billions of dollars of like profit and revenue and cash flow, and it's still going to be in this wonky scenario.
Speaker 1:Like at some point it's just going to become a normal tech company, would have to imagine. Like that just has to happen. It's going be a long also says
Speaker 2:this may be less eventful than people were expecting. And I would imagine it's less eventful for Sam considering he was trying to turn it into a for profit.
Speaker 1:Which would be an eventful thing. Which would
Speaker 2:be an
Speaker 1:eventful So yes. Yes. The event not happening is less so
Speaker 2:overall, I mean it's a, it's an interesting situation because it seems like all of the main actual OpenAI stakeholders Mhmm. Are on board
Speaker 1:Yeah.
Speaker 2:With the conversion. Yeah. And it's
Speaker 1:various Well, gonna go into that. There's an article on Microsoft and their position.
Speaker 2:Yeah, guess Microsoft is saying that Yeah,
Speaker 1:I mean, is a question as like, you know, the non profit's goal is they have a fiduciary duty to humanity. Their goal is not profit maximization. And so is the nonprofit board able to make an argument that this spinout
Speaker 2:is For humanity.
Speaker 1:Yeah. I would argue that, yes, it is obviously. I think that I think that for profit companies have like fantastic benefits to humanity. And I think capitalism is the greatest system and benefit to humanity in the world. And so I think every nonprofit you can find to for profit if they wanna benefit humanity.
Speaker 1:But, who knows? You know, the internal politics of OpenAI, the nonprofit, the for profit, all extremely con Yeah. Complex. So let's go through a little bit of this. The move could complicate the company's future fundraising efforts, although they've been able to raise a ton in this weird scenario already, but I think eventually investors will potentially get tired of it.
Speaker 2:Softbank's, the terms of Softbank's original Yep. Deal Yep. $30,000,000,000 round was contingent on the for profit conversion.
Speaker 1:On the conversion.
Speaker 2:Now I believe what we're seeing is that the investment will still go forward somehow.
Speaker 1:Yep, yep, yep.
Speaker 2:Even though the conversion isn't happening. But Yeah. Certainly, it's in the interest, OpenAI just has so much momentum and traction. I saw Will share, Will DePue shared that ChatGPT is the fifth largest site on the internet. They can basically effectively raise on any terms that they want, given how much momentum the business But as an investor, if you're putting in billions, ideally you have a pretty clean structure, right?
Speaker 2:Yep. Especially at
Speaker 1:this scale. Once you
Speaker 2:get into that scale, yeah, it's hard to, this is not, no longer becomes a flyer. It's like Maslow's the entire SoftBank balance sheet to make this investment. Yeah, it's
Speaker 1:very different than, oh, there's He's
Speaker 2:betting the company on it.
Speaker 1:In a way Some young kid's going to test something out. We have a handshake deal. Yeah, wired in the money. We have a safe. Is the safe, like, really the most ironclad contract?
Speaker 1:Probably not, but it's fine cause it's like, you know, one on 10. But this is one on 10,000,000,000,000 at this point or a point five on, it's 5,000,000,000 on 500, something like that. Anyway, so OpenAI started to work on a change to its business structure after CEO Sam Altman's surprise firing and reinstatement in 2023. Its big investors, including Microsoft, watched its temporary ouster from the sidelines, unable to wield official power over the outcome. Conversion Do
Speaker 2:remember that? That was so wild because it seemed obvious that Satya had no real hand and in hindsight, I think we know he wasn't involved Yeah. With that process. And so, and at that point, what he had just invested I think $10,000,000,000
Speaker 1:Yep.
Speaker 2:Or something like that. Yep. And so to make that sizable investment and then watch the CEO get booted without your involvement
Speaker 1:We should do a historical timeline review because you can search your ex timeline from those dates and just see like, what was your timeline? All the people you follow, what were they posting? Because it was a crazy time. And it really like the consensus was like, oh, it's a zero. Given the chaos, like this is clearly not a functional company.
Speaker 1:And like everything will break, everything will fall apart. But
Speaker 4:craziest I think it's
Speaker 1:best They got to a place where it was like, it was even, it was a going concern. It was a company.
Speaker 2:The best content I think retrospective on that period is a podcast that Jessica Livingston did
Speaker 1:with Sam.
Speaker 2:Yeah. Just about that kind of three, four day stretch. And his reaction to it was
Speaker 1:fascinating. There's two books coming out about it too. Yeah. And I think Sam participated in both of them. We read one of the excerpts that was in the and I really didn't like some of it in the sense that it just didn't go deep enough and it was just, it really like, it just was like, oh, yeah.
Speaker 1:Like the nonprofit board, like, they asked these questions. And it never went anywhere further to ask like, okay, were those questions reasonable at all? Because the whole framing was, oh, Sam wasn't doing enough about safety. And like he let chat GPT out into the wild and it just wreaked havoc. It's like, okay, like what has it done?
Speaker 1:Other than just like generate a bunch of revenue and help people do their homework and prep for business I don't know. Just like, I have not seen the damage. Still have not seen the damage.
Speaker 2:It's interesting.
Speaker 1:Maybe it's Corpus on
Speaker 2:the AI doomers. Ellen Toner, has she commented at all on the sycophancy crisis?
Speaker 1:Yeah. Yeah. Yeah. Like like that would be a good angle if she's if she if she really has stuck with it. But who knows?
Speaker 1:She might have had a complete change of heart. Like, we we we don't know. Like, the original position was was ridiculous. Like, it it it truly was ridiculous. Anyway, the conversion would have changed OpenAI's business to a public benefit corporation, which is interesting.
Speaker 1:Not just like a vanilla c corpse. There's like b corpse and good corpse and it's some some rigmarole
Speaker 2:I might be totally off here but to to my knowledge of public benefit corporation is mostly branding. Yeah. It just says it's legally required to consider the public good in its decisions alongside its profit making goals.
Speaker 1:Is so weird because you just naturally being a public company, you should need to consider the public good because
Speaker 2:They have
Speaker 1:to legally If you don't, you're gonna get bad PR, that's gonna destroy
Speaker 2:shareholder So they all, so it's basically, they're profit focused. Yeah. But they also have to have a legally defined public benefit purpose. So this is not even the same as the sort of 1% for humanity type programs where you're sort of legally So it's like a bunch of You're basically getting certified that you're gonna give, you know, a certain percentage of your profits.
Speaker 1:How about this? You legally have to have something that benefits the public. How about a stock that anyone in the public could buy? It goes up
Speaker 2:Benefit their portfolios.
Speaker 1:It's not that complicated. Yeah. What about a website that you can go to to get intelligence too cheap to meter? Like, what about that? Is that Yeah.
Speaker 2:Well, these were originally very popular with the whole sort of sustainability.
Speaker 1:Yeah, know. I get it. I get it. It just seems like it's like a complete like end run around just like actually thinking through the how a for profit
Speaker 2:corporation Like Benadry's is a public benefit corporation. Sure. So they're benefiting humanity with tasty ice cream.
Speaker 1:Yes. Yeah. I don't understand it. It doesn't, it does not make a lot of sense to me.
Speaker 2:Patagonia is the most high profile one.
Speaker 1:Aren't they even more complex than that? I thought that they were like actually co Well
Speaker 2:yeah, like could they give a meaningful
Speaker 1:amount Like the members, or that's REI. I think REI, if you're an REI member, like you're entitled to like votes and dividends just as like a customer, which is kind of interesting. I don't know. I mean, that's the beauty of American capitalism. Like you can do anything.
Speaker 1:You can go and start a co op and you can say, you know, we're not going to have a traditional cap table. Like we're going to dividend. Like the employees are going own 100% of the business. Like you can do that. That's great.
Speaker 1:Yeah. You usually get smoked, but you can try it. And so all the communists and stuff can just be like, yeah, can go do communism over in that corner of the world. Like, that's fine. Like you're good.
Speaker 2:Yeah. The Shields shared yesterday, the OpenAI apparently updated their structure section of their website because there's so many different SPVs and stuff at this point going into OpenAI. They they create this huge disclaimer on the site. Investing in OpenAI Global LLC is a high risk investment. Investors could lose their capital contribution and not see any return.
Speaker 2:It would be wise to view any investment in OpenAI Global in the spirit of a donation with the understanding that it may be difficult to know what role money will play in a post AGI world, which is hilarious marketing, combining sort of brand marketing with, you know, with your legal disclaimer. The company exists to advance OpenAI's mission of ensuring the safe artificial ensuring that safe artificial general intelligence is developed and benefits all of humanity. The company's duty to this mission and the principles advanced in the OpenAI Inc. Charter take precedent over the any obligation to generate a profit. The company may never make a profit.
Speaker 2:That's just other legalese, but Yeah.
Speaker 1:Mean, the way I think this plays out is the consumer tech company spins out, becomes a for profit. The nonprofit remains extremely well capitalized, probably the best capitalized nonprofit in history because it will have something like 30% of a $300,000,000,000 company. And that will produce cash flow and dividends and secondary sales and all these different things. So basically this nonprofit can do whatever they want. They can hire all of the best researchers to go do AI safety research.
Speaker 1:And then I think at some point they're going to discover something new and they're just spin out another for profit. Not even kidding about that because when I think about like what, like I'm not very doom pilled, but I do think that there's a huge value in AI safety research for sure.
Speaker 4:Yeah.
Speaker 1:Just like there is a huge benefit to cybersecurity research. Let's not let cyber attacks happen. Same thing with defense technology. Let's not let anyone use planes to hurt humans. Let's not let them use guns to use humans.
Speaker 1:Let's not let them use AI to hurt humans. I'm these these are all in the same layer of abstraction. And so what happens when OpenAI nonprofit becomes really, really good at preventing AI from attacking humans. Sell it to the government. Yeah.
Speaker 1:Become defense contractor. Yeah. It's almost more
Speaker 2:to cap the nonprofits, you know, basically royalty or whatever, however the sort of transfer of value happens and just say, hey, you have a billion dollars a year to do AI safety research forever. Yeah. And you can spin out for profit entities, but this is your sort
Speaker 1:of, you cap I still just don't understand why we need to do safety research in the context of a nonprofit. It's like, I'm an American citizen. I'm a taxpayer, and I don't wanna be turned into a paper clip. Therefore, take my tax money and and and bid out a contract to a bunch of different tech companies to prevent paper clipping. Just like you prevent terrorism.
Speaker 1:You prevent Yeah. War. You try and prevent all these things. These are these are massive problems, they need to be centralized through a big government project, but they can still be bid out as programs record from the DOD. Like, I think that's the future.
Speaker 1:Anyway,
Speaker 2:I don't You could be onto something, John.
Speaker 1:Who knows? OpenAI said it scrapped the Boulder plan after discussions with civic leaders and the attorneys general of California and Delaware who would be required to sign off on it. The company will trans instead transform its for profit subsidiary into a public benefit corporation that is controlled by the nonprofit parent, the the company said Monday. And so I wonder what control actually means in this context because, obviously, there are there's the nonprofit, there's Microsoft, there's investors, and there's employees. And so, typically, if you just think about the nonprofit, the for profit stakeholders, you would think there'd be some sort of mix of those, but it seems like the nonprofit will have increased control.
Speaker 1:And then, of course, there's the discussion over who's on the nonprofit board, who has control, and the nonprofit board has been changing around. I'm not I'm not actually sure. You might want to look up who who's on the nonprofit side
Speaker 2:So I'm pulling up a graphic right now from OpenAI's website. Michael has it. Over giving an overview of the entire kind of corporate structure Yeah. Which I think is just helpful to revisit. But let us know when it's up, Michael.
Speaker 1:So the change is a win for Musk and other OpenAI critics who believe that the company has strayed too far from its founding altruistic mission. OpenAI's ChattyPT has become a lead contender in the global AI race amassing hundreds of millions of users. Okay. Here you go. Is it wait.
Speaker 1:This is the this is the most recent
Speaker 2:update. OpenAI's website on
Speaker 1:structure.directors.
Speaker 2:So you can see it on your on your screen as well. You have the board of directors at the top that controls OpenAI Inc, which is a public charity, the OpenAI nonprofit.
Speaker 1:That's nonprofit.
Speaker 2:And then that charity owns a holding company for OpenAI nonprofit plus OpenAI employees and investors.
Speaker 1:You know what this this this this reads like the nonprofit owns the employees. Like, that's technically what this chart says. It says it owns a holding company for OpenAI nonprofit. It owns the employees and it also owns the investors. Which is Basically true.
Speaker 1:Maybe it's not literal ownage, but it's like in the gaming context, they completely own the investors. Like the investors got owned.
Speaker 2:Get owned.
Speaker 1:Get get get pwned.
Speaker 2:Yeah. Get pwned. And then the employees and investors are coming in
Speaker 1:then they are the majority majority owner of the OpenAI Global LLC, which is a cap
Speaker 2:profit OpenAI GP LLC, I somehow is controlling the holding company for the OpenAI nonprofit. And then the holding company is the majority owner of OpenAI Global LLC, which is
Speaker 1:This is what people mean when they say they're too smart to make money in crypto, too dumb to make money in AI. Because like, I I don't understand this. I I I could not make money in this market because of how
Speaker 2:We're mid
Speaker 1:curving it right now. I I I'm I'm literally too stupid
Speaker 2:to understand this. No. I mean, I I feel like you could write the you could you could write a book on OpenAI. Yes. Those are happening.
Speaker 1:They're happening.
Speaker 2:Just writing a legal case study on OpenAI and all the thousands of different decision making decisions that got us to this point, which is fantastic. Yeah. And it's kind of funny because you just have Microsoft just on the left, you know, off the org chart basically, just being like, yeah, we're just gonna come into the one thing. Satya's like, yeah, I just kind of want to own
Speaker 1:OpenAI Global LLC.
Speaker 4:Yeah, just
Speaker 2:want to own the products.
Speaker 1:Don't care about that anymore. Stand for in this context?
Speaker 2:Is that the general I think that's the fund.
Speaker 1:OpenAI GP LLC? Wow. We really did our research on this.
Speaker 2:No. I mean, it's
Speaker 1:it's it's just so much. And then there's ownership and control. So so so OpenAI, the the so the nonprofit owns wholly owns the the LLC, which controls the non profit. This is so incomplicated. How do they come up with this?
Speaker 1:It's really It's amazing.
Speaker 2:It's it's honestly art. Musk's Elon, the journal says the move is a win for Musk who runs a rival AI company has sued OpenAI over various issues for more than a year. Musk, as everyone knows, has not been in favor of the for profit conversion. I think specifically takes issue with Altman getting a, you know, meaningful stake in the for profit. But Mark Tobiroff, Musk's lead counsel in the lawsuit against OpenAI says this changes nothing.
Speaker 2:The move is a quote unquote cosmetic restructuring that converts charitable assets into private billions. The founding mission remains betrayed. So I don't this, I don't think this is gonna sort of solve the legal battle between Musk and but it's certainly, I think the result here is that it allows, it will allow new investment to kind of move forward, which feels like, you know, the kind of thing that you wouldn't want to get bottlenecked for too many months.
Speaker 1:Yeah. I mean, the public benefit thing seems like a reasonable end state for this. Compromise. Right? It's like you can build a normal business.
Speaker 1:You can have investors. You can have dividends and stock options and stuff. It is The dynamic of Musk is a little interesting. Like I feel like Elon should either just make his ask very clear, like, Hey, I donated millions of dollars, I think like hundreds of millions to the nonprofit. I don't own a single share in the new for profit.
Speaker 1:Why? Like, get me on the cap table, get me equity. Like that seems fair. I think a lot of people would be like, Oh yeah, like then you're not just like going around suing, like kludging up like something that's working. You're just like, yeah, like I was early here.
Speaker 1:I mean early, I'm like, you know, the Eduardo Saverin of this thing. Like I was like around, like give me, know, comp me, like pay me,
Speaker 2:you know?
Speaker 1:It's totally reasonable to ask on that front. And the other side is like, Elon hasn't started another nonprofit because if he's really worried, if he really does believe that like the stated preference is, hey, there needs to be an AI nonprofit, like this is essential and my problem is that the nonprofit is becoming for profit and that's against what my beliefs are and how the world works and how we're going to prevent AI doom. It's like, you're the richest man in the world, go start a nonprofit, right? And so instead with the XAI, I totally think it's fair to start XAI and compete in the for profit race and just go do that. That's great.
Speaker 1:And there's tons of benefits to X and to Tesla and tons of stuff we've talked about. But where's the next nonprofit? We should be competing on both sides. Right? Yeah.
Speaker 1:Wait. What are you reading now?
Speaker 2:I put the chart into o three. Okay. And I said, can you explain this like I'm five? They took it very literally because it's funny. So the board of directors is the quote unquote, the grown ups in charge.
Speaker 1:Okay.
Speaker 2:They're like teachers who make the playground rules so everyone plays nicely.
Speaker 1:Okay.
Speaker 2:The OpenAI nonprofit is the caring parent club. This is a special club that cares more about doing good than making money. The teachers tell this club what to
Speaker 1:do. Okay.
Speaker 2:Okay? The big toy box is the holding company.
Speaker 1:Caring the caring
Speaker 2:metaphor. The caring club owns a big toy box. Inside it keeps everyone's toys and lets workers, employees, and friends put their toys in too so they could they all share. The helper grown up. OpenAI GP.
Speaker 2:This is a small helper that the Caring Club owns. The Caring Club owns. Its job is to help look after the toy box in the money making shop. Next item. The money making shop with a lid.
Speaker 1:This is so complicated. Is already more complicated than you.
Speaker 2:The shop can earn money but it has a lid that stops it from getting too greedy. Oh, Its profits are capped. The big toy box is the shop's main owner, most of the shop's pennies still
Speaker 1:serve it. Box owns the shop?
Speaker 2:So most
Speaker 1:of That doesn't make any sense.
Speaker 2:So most of the shop's pennies still serve the Caring Club's mission.
Speaker 1:Okay.
Speaker 2:Microsoft's tiny slice slice. Microsoft is like a friendly neighbor who gets a small slice of the shop's penny
Speaker 1:Okay.
Speaker 2:But it doesn't run the shop. Okay. Anyways That's pretty straightforward. Still confused?
Speaker 1:Still a little confused, but
Speaker 2:I can imagine a five year old would be even more confused.
Speaker 1:Thanks for the metaphor.
Speaker 2:It's great. Good effort though. Good effort.
Speaker 1:When it became clear that it was going to need more money than its founders thought, OpenAI created a limited liability company subsidiary that would allow it to take investment from big tech companies such as Microsoft. Those investors' returns would be capped at a hundred times what they put in and could fall to zero if the nonprofit board deemed it was necessary to support its mission. High risk, high reward. Yeah. I always found it, like, kind of beautiful that AGI, like the fate of AI is like, if you want to unleash the, you know, ASI future, like you must be hyper capitalist.
Speaker 1:You must raise a hundred billion. You can't just be the Techno capitalist revolution. Yep, it really is like the march of techno capital is what gets you to AGI, it's fascinating.
Speaker 2:Hyper commercial.
Speaker 1:Yeah, exactly. A lot of people were thinking like, no, maybe it's just some brilliant algorithm thought in like the independent, know, some one person thinks of it. E equals m c squared could come up with it and like it unleashes this AI revolution. But no, you actually need to coordinate Make
Speaker 2:things at the
Speaker 1:of of the community, you need to make money. Yeah. It has to be profit. It has to be profit driven. Fascinating.
Speaker 1:In the new structure proposed Monday, the capped profit LLC would be replaced by a public benefit corporation. I like to hear that. We're moving from LLC to corporation. When would serve which would serve both a public mission and investors in a note to employees Monday. Altman said
Speaker 2:Hopefully, that eliminates the weirdness around the capped the whole capped profit dynamic. I never like that. I don't know how capping profits.
Speaker 1:Not a fan.
Speaker 2:It makes it much more difficult to underwrite if you can only get a hundred x. Yeah. Right? Hundred x's don't get Masa
Speaker 1:out of bed
Speaker 2:in the morning.
Speaker 1:Has anyone done like some sort of synthetic levered SPV that's like a hundred x long OpenAI.
Speaker 2:Something there. Especially if you put it on can
Speaker 1:10,000 X return.
Speaker 4:Yeah.
Speaker 1:If you're a hundred X long OpenAI.
Speaker 2:The more complicated the structure, more complicated the financial products you can build on
Speaker 1:top of. I like Wall Street and the hedge fund guys really aren't aware of the opportunity here. Got to bring to San Francisco. Yeah. We got to save San Francisco.
Speaker 4:Save it.
Speaker 1:Anyway, Altman said public benefit corporations have become typical for AI companies such as its rivals Anthropic and Musk's xAI. Oh, interesting. I didn't know xAI was a public benefit corporation. That's cool. OpenAI board chairman Brett Taylor said during Monday's press conference that the new structure would be simpler and allow employees, investors, and the nonprofit to own parts of the public benefit corporation.
Speaker 1:That's all the different stakeholders that are already looking for a slice. He declined to say how large of a stake the nonprofit would have in the public benefit corporation. The potential size is being studied by independent independent financial advisers. Altman says he expects the moves to result in the nonprofit being one of the largest and best capitalized charities in the world. Very cool.
Speaker 1:And it means we can start deploying capital from the nonprofit very soon, which we're thrilled to do. We've got a long list of things that we think will be very impactful. And I do think that's like an undertold story right now, just what the nonprofit will wind up doing. There's a ton of interesting things that they can do in AI research. I still actually think that they're gonna discover something and then wanna commercialize it again because Yeah.
Speaker 1:That's just the nature of putting a bunch of, mean I mean, question there Researchers being like go do whatever. Course they're gonna discover valuable things.
Speaker 2:Question there is
Speaker 1:Yeah.
Speaker 2:Just wouldn't AI, OpenAI just, the the public benefit corporation just have kind of effectively a rofer on novel IP and product No,
Speaker 1:I don't think the
Speaker 2:stretchers can be like that at I'm saying legally. Yeah yeah. But
Speaker 1:would they So I think this is like the weird dynamic where the, now there are two open AIs that you can go work for if you're an AI. If you want to work for the product company, the high growth, you know, studying churn and product, and how do you actually commercialize this? How do you make this an amazing company? The next Facebook, the next Google, you go to work for the public benefit corporation. You're working on ChatGPT, agents, operator, deep research.
Speaker 1:You're having a great time. You're, you know, the next early Facebook employee basically. But if you really don't care about that and you wanna work at the nonprofit, you wanna work on AI safety, you wanna work on foundational research, you head over to the nonprofit. And all of a sudden, your job on a day to day basis is much less pressure driven. You don't have the same KPIs.
Speaker 1:You're just doing research. But what happens when you put a bunch of insanely intelligent people together and give them no constraints to just do whatever they want? They're gonna come up with something creative like they did before.
Speaker 2:Okay. But I just don't know a single person that works at the nonprofit technically.
Speaker 1:What? Really? Do you know? No. But once they're capitalized, like they will start scaling that staff with but their mission won't be like, the mandate for those folks
Speaker 2:won't be It won't be focused on
Speaker 1:productizing Go build products, go implement, you know, GPT four or five and some tool. Let's figure out coding. Let's figure out agents. Let's figure out booking. It's gonna be something much more abstract and foundational.
Speaker 1:But you put those people with a ton of resources and you let them turn them loose, like, they're going to discover cool things that will probably be commercializable. Anyway, we'll see how it unfolds. Maybe that's not what happens, but I don't know.
Speaker 2:Anyway. Yeah. Did you already share this? But Altman says it means we can we can start deploying capital.
Speaker 1:More capital. What does that mean? Yeah. Deploying capital into research that the nonprofit spits out. Will that
Speaker 4:look like?
Speaker 1:Thinking studies. Exactly. Like, yeah, there's going to be stuff that's just like policy papers. Maybe those aren't commercializable. There's going to be stuff that's just like a critique of how LLMs are being implemented across the world, right?
Speaker 1:There's going to be stuff that's not commercializable, but if they start touching research, like they're going to create value.
Speaker 2:It's just an I would still expect Altman to be looking over and be like, hey, know, we could get that to a billion of ARR in twelve months if you and we'll give you a cut. Know? Like I just feel
Speaker 1:like think it's going be complex. Like, let's say in the nonprofit they're like, hey, we actually found a new algorithm, it's like amazing in booking flights. It like never makes
Speaker 2:We did the meme, we did the meme. No,
Speaker 1:this was supposed to be at the for profit. Why did this happen to nonprofit? And there's just some brilliant researcher over in the nonprofit being like, yeah I was just looking for the most elegant algorithm possible and then I scaled it up and now it just does everything.
Speaker 2:He's like, wait, I'm
Speaker 5:goated. Goated?
Speaker 1:Anyways. You know, we're all rooting for open AI. We love for profit corporations. And if you're looking to invest in for profit co corporations, head over to public.com, investing for those who take it seriously. They got multi asset investing, industry leading yields, trusted by millions.
Speaker 1:Go to public.com. I was hoping they you know, they say they have multi asset investing. I'd love to be able to buy a slice of a nonprofit. Multi asset investing. Invest in a nonprofit so that when the for profit conversion happens, you cash in.
Speaker 1:Because that's what nonprofits to me are really about, cashing in.
Speaker 2:Well, Microsoft owns part of OpenAI.
Speaker 1:That's a way to get exposure
Speaker 5:legitimately. They
Speaker 1:They own like a significant chunk. For a while I was thinking about like another lens You
Speaker 2:got to buy some of teams though too.
Speaker 1:Yeah, no, no, there is an interesting investment thesis for the Mag seven, which is basically like, if you want exposure to self driving cars, virtual reality, artificial intelligence, autonomous delivery, like what should you buy? You could go around and buy slices of startups that may or may not work, or you could buy Google, which owns Waymo, Facebook, which owns Reality Labs and Oculus. You could own Microsoft, which owns OpenAI. You could own Amazon, which is probably going
Speaker 2:figure out Tesla
Speaker 1:humanoids. Tesla humanoids, right? Like the Mag seven have pretty good exposure to the next trends as you list them out. Of course, they're not pure plays and they're not going to And it's hard for them to do a thousand X, but it's not a crazy idea to just go and buy mag seven if you're looking to index on the next wave of like twenty year tech trends. Who knows?
Speaker 1:Some of those might be disruptive though. Some of them might be get get rocked, but so far looking pretty good. Anyway, the information dove deeper. They say Elon Musk might have won the battle over OpenAI's future, but who's to say Sam Altman isn't gonna win the war? Today's announcement by the chat GPT creator that it was abandoning plans to move its for profit arm out from under control of nonprofit conceding to Musk's legal legal efforts to stop the restructuring could end up cementing Altman's power at OpenAI.
Speaker 1:After all, OpenAI will remain a company whose controlling shareholder is the nonprofit. So whoever controls the nonprofit controls OpenAI. The information rights, OpenAI's existing board will decide who sits on the nonprofit's board in the future. Is this like a one hand washes the other scenario? What's going on here?
Speaker 2:Well, the key thing to note here is that it's, in this article shares, it's reasonable to assume that Altman has a lot of sway with the existing board, which is very different from the one that fired him in second twenty twenty three. So they already did the work to effectively turn it over and align it with the fork or or the public benefit
Speaker 1:There's 10 members including Altman on the current board, which will appoint the nonprofit board. So oh, makes my head spin. It's hard to imagine that OpenAI that as OpenAI gradually added new members to the board, Altman let anyone antipathetic to his ambitions join. The only potential wrink wrinkle in Altman's effective control of OpenAI going forward is whether state regulators get a say in nonprofits in nonprofits administration barring that.
Speaker 2:He And remember, this was why they this was the real reason that it seems they halted the conversion is because Delaware and California were not, seemingly not too excited about what was happening.
Speaker 1:Who is the current board? Adam. Is Adam on there? Okay. Yeah.
Speaker 1:So, Brett Taylor, who's the chair, Adam DeAngelo, Sue Desmond Hellmand. I haven't heard of her. Need to dig in there. Zico Coulter, retired US army general Paul Nakasone, Adebayo Unglesi, Nicole Sigelman, Fiji Simo, who's from Instacart, Larry Summers, as well as our CEO, Sam Altman. Well, it seems like a pretty good crew.
Speaker 1:It's fun. Stacked. OpenAI is governed by the board of the OpenAI nonprofit currently comprised So it seems like there's some switch here. This is all very confusing. Anyway, let's get some venture capitalists on that board.
Speaker 2:Yeah. Jeff avoid
Speaker 1:of that. Jeff Lewis would be great. I want Thrive Capital on there, Masa on there.
Speaker 6:All of them.
Speaker 1:Good people. You know, SoftBank actually, fantastic board governance. You know, people talk a lot of trash about SoftBank for a variety of reasons. When they come into a company, they run it like a public company. It's like compensation committee, conflicts committee, like the board meetings are full day events, like very well organized because they take that stuff
Speaker 2:from Professionals. Professionals. High risk, risk on professionals.
Speaker 1:Extremely risky, but professionals, which we we we respect here. At least one OpenAI investor seemed satisfied with the with the outcome and told us that it's the best outcome given the parameters that exist right now, especially because of the scrutiny and pressure that came with Elon Musk's lawsuit opposing the restructuring, the investor added that even as they awaited the potential IPO in OpenAI's future, large secondaries, which OpenAI has already done, could be another way for stakeholders to cash out. Keeping control in the hands of the nonprofit board is significant. The restructuring endeavor began because the nonprofit's nonprofit board's goal to make AI for the benefit of humanity may or may not conflict one day with shareholders' desire for hundreds of billions of dollars in profit. You might remember that when OpenAI announced the restructuring four months ago, the board, which oversees OpenAI's nonprofit, said they couldn't adequately consider the interest of investors who were pumping tens of billions of dollars into the for profits subsidiary that runs ChatGPT.
Speaker 2:Imagine you're an LP in one of the funds that has deployed billions Yep. And you send, you know, a little Saturday afternoon email being like, hey, by the way, what do we actually own of OpenAI? And then you as an investor have to try to, you know Yeah. Untangle this this web They had a name
Speaker 4:for it.
Speaker 1:It wasn't for a while it wasn't it was like credits or something or like fun coupons. It it wasn't shares. It wasn't stock. It was units.
Speaker 2:Units. Units.
Speaker 1:That's what they were calling it.
Speaker 2:Absolute That's an l you know, terminology standard with LLCs.
Speaker 1:Absolute units?
Speaker 2:Absolute units. Absolute dogs.
Speaker 1:Yeah. No. No. No. It makes sense.
Speaker 1:Yeah. Anyway, I'm sure they have to plan all these secondaries, plan all of these share sales. What are they using to
Speaker 2:plan? Well, I don't know if they're I doubt they're using linear for corporate governance, but I bet you they're using linear for purpose built planning
Speaker 1:For sure.
Speaker 2:And product building. Linear is a system for modern software development, streamlined issues prod projects and product road maps. You guys know already that we use Linear for running the show, and we are very grateful to have them as a sponsor. We are also gonna be, live in person tomorrow in SF with Kari from Linear and a bunch of other So very excited for that.
Speaker 1:Well, there is more news. We'll we'll stay on OpenAI for a little bit. We have so many stories around this. So Microsoft, we'll go to the Microsoft angle. Sharon Gaffer Gaffare says Microsoft has not yet agreed to OpenAI's restructuring plans and is a key holdout negotiations needed to get the restructured deal done along with approval from state AG offices, still being decided how much equity Microsoft gets.
Speaker 1:So Such a wild dynamic. This is Let's see. Microsoft has invested $13,750,000,000 in the startup, and they remain the biggest holdout among investors as the Chachapiti maker tries to restructure according to several people familiar with the matter. Now that 13,750,000,000.00, was that cash that ever transferred and was wired, or were those credits? Or did they transfer and then go right back to Azure?
Speaker 1:Like, I'm very interested in the anatomy of that deal. I hope that someone digs into this more and actually asks for the structure because Yeah. Mean, I think it was
Speaker 2:I know it was both. The question is what is the actual ratio?
Speaker 1:Yeah. And and and how does I guess, does Microsoft feel about how much they invested? Do they feel like, hey, we're owed
Speaker 2:Well, a
Speaker 1:this valuation, at the last valuation, a new valuation, post dilution valuation? Or are they like, yeah, it was really only like 5,000,000,000 in total cost because we gave you credits at like a two to one ratio.
Speaker 2:Right? Yeah. Mean, the the the thing here that that's apparent is it's nonstandard for a $3,200,000,000,000 company Mhmm. To invest $13,000,000,000 in another company that then is restructuring, and it's unclear how much the $3,200,000,000,000 company is even going to own of the underlying investment. Haven't seen this at least in my lifetime.
Speaker 2:Yeah.
Speaker 1:For sure. There there really has never been a tech company.
Speaker 2:Like it's funny they
Speaker 1:kind of
Speaker 2:have to just like get around the table and decide, okay, how much is Satya gonna You know, how much does Sam get? Right? Because a part of this I think Sam needs to get some personal exposure because, you know, if you check back to the Senate hearings Yeah. He, at that point in time Had nothing. Had nothing.
Speaker 2:Then he
Speaker 1:got a bunch. Yeah. It does seem like they're gonna make a movie out of this, but it might be more complicated than The Big Short or
Speaker 2:Might be like a four hour documentary
Speaker 1:just for hours. Margot Robbie in the bathtub for six hours explaining how all these different entities interact because it's more complicated than mortgage backed securities and credit default swaps combined. It's going to make the 'eight financial crisis look like two plus two. It's like by comparison. This is so much more complex.
Speaker 1:Anyway, Microsoft is still actively negotiating details. Microsoft not commenting. They said in a statement, OpenAI said, we continue to work closely with Microsoft and look forward to finalizing the details of this recapitalization in the near future. I mean, the good news is like Microsoft and OpenAI are pretty well aligned on like what they do best. Like OpenAI clearly is fantastic at consumer product development, breaking through the Ghibli moment with deep research, like all this.
Speaker 1:And then in terms of the API, it's great to vend that through to Azure And that's the relationship, and it seems like it's a really fruitful one. And it's okay for them not to dominate on the Azure side or take some sort of, like, not really build that out. It doesn't seem like they're no one would say, oh, they're just gonna be a consumer tech company. They'll only be worth 3,000,000,000,000. You know?
Speaker 1:Like, it's fine if they just become just Google or just Facebook. Right? Like, that's a pretty good outcome.
Speaker 2:Or just eat some percentage of search volume.
Speaker 1:Yeah. Seriously. Microsoft isn't the only party that OpenAI needs buy in from. They're fighting with the attorneys general of California and Delaware. OpenAI needs to do a fair market valuation on the nonprofit stake in the future for profit entity and is asking state AGs for input.
Speaker 1:Say, how much are we worth? So this is kind of like a four zero nine a situation or like a, yeah, 83 b. Like, let's let's figure out what the what the base valuation here is, but that can be so wild. I mean, imagine you're an attorneys general Trying
Speaker 2:to value OpenAI. They're like It's like on one hand, you may have created a machine god. That's worth infinity. That's worth infinity. On the other hand, you're burning Yeah.
Speaker 2:$510,000,000,000 a year.
Speaker 1:And the world's richest man is actively trying to same old fundraising.
Speaker 2:Running to the ground.
Speaker 1:Yeah. So it's either infinity or zero. One of the two.
Speaker 2:Anyway Funny, I'm using o three Yeah. And I asked how much cash has Microsoft invested in OpenAI? And it's basically stuck in a doom loop of searching the web and then trying to understand it and then just looping back to searching the web. Been going, it's been going for about five minutes now. Wow.
Speaker 2:So we'll see. Just o three?
Speaker 1:Not even deep research? Yeah. Just o three. It's just five minutes into this figuring this out.
Speaker 2:Well, just want Wow. A pretty specific answer.
Speaker 1:This is, this is the old, this is the, this is humanity's last exam.
Speaker 2:Yeah. How much money
Speaker 1:Makes makes sense of OpenAI. Yeah. If you can do that, you've passed the real Turing test.
Speaker 5:Yeah.
Speaker 1:AGI is here. So Microsoft's approval will be key only open open only OpenAI insiders. Microsoft and other early investors currently have a direct say in approving the restructure according to two people. As a result, only that group gets to weigh in on the restructuring plan, the people said. But among investors, OpenAI is currently only negotiating with Microsoft.
Speaker 1:Microsoft has a unique relationship compared with other investors because of its licensing and revenue sharing. And they also had that AGI clause for a while, but I don't know where that went. Anyway, I'm sure Microsoft, OpenAI, they all got to manage risk. They gotta automate compliance. They gotta get on Vanta.
Speaker 1:And they gotta prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation. Whether you're pursuing your first framework or managing a complex program, I can't imagine anything more complex than doing compliance at OpenAI. And, yeah, if you're working
Speaker 2:at Pretty much any company, it's very painful. Start to finish support 35 different compliance frameworks, SOC two, HIPAA, you name it. Head over to Vanta.
Speaker 1:Head over there.
Speaker 2:Tell them the technology brother sent you.
Speaker 1:Fantastic. Anyway, founder of Windsurf posted big announcement tomorrow.
Speaker 3:I love this.
Speaker 2:As if the biggest announcement wasn't going and doing a podcast with a double, you know, double collar on.
Speaker 1:Yeah. And so, the, oh, the OpenAI agreement to buy startup Windsurf for 3,000,000,000 is finalized. It's been reported in Bloomberg. We need a massive SeizGong. Katie Roof has the story over at Bloomberg.
Speaker 1:SeizGong. OpenAI has agreed to buy Windsurf, an artificial intelligence coding tool formerly known as Codium, for about 3,000,000,000 according to people familiar with the matter, marking the Chachi PT makers' largest acquisition to date. The deal has not yet closed, said the people who spoke on condition of anonymity. Both companies declined to comment, although the founders out there tweeting and wearing two polos. The acquisition could could help OpenAI take on rising competition in the market for AI driven coding assistance, Systems capable of tasks like writing code based on natural language prompting.
Speaker 1:Bloomberg News previously reported that the two companies were were in discussions. Windsurf, formerly called ExaFunction Inc, has recently been in talks with investors, including Kleiner Perkins, General Catalyst to raise a $3,000,000,000 valuation. Last year, they were valued at 1.25 by General Catalyst, and OpenAI came over and scooped them up. So I have a little bit of a history deep dive if you want to go through this for to break down Windsurf, how they wound up there. So 2021, ages ago in the AI race, but, you know, a real over the true overnight success here in Gokul starting a company in 2020 Yeah.
Speaker 1:They could have gone into crypto. They decided to go into m I they decided to go into AI. So their MIT friends, Varun Mohan, ex neuro autonomy infrastructure lead, and Douglas Chen, who had worked at Meta and Oculus as an engineer, incorporated ExaFunction Inc. In California to abstract the the away the challenges of managing accelerated hardware like GPUs. Like a GPU they're basically a GPU wrapper.
Speaker 1:It's funny, like, wrapper is in their DNA.
Speaker 2:Yeah, so basically what they were doing, I actually have a post up from Bruno from X, and at the time, Exifunction customers connect to the company's managed service or deploy Exifunction software a Kubernetes cluster. The technology dynamically allocated resources, moving computation onto cost effective hardware, such as spot instances when available. And so anyways, pretty wild to see.
Speaker 1:Yeah, so you can get cooked if you're on AWS and you're just using the reserve instances. And so sometimes if there's specifically cloud hardware that's underutilized, the price falls in the spot market. And so you want to dynamically move over there. So they're using this like server side virtualization to do that, but it really is a GPU wrapper. Yeah.
Speaker 1:But it's funny because Kubernetes is also supposed to do that.
Speaker 2:Don't stop wrapping.
Speaker 1:Yeah. But they wrapped, they wrapped the So they raised a $3,000,000 seed from Green Oaks to build this
Speaker 2:server Which was that, I have another post up from Shai who highlighted, Shai Goldman. He highlighted that the round was 3,000,000 on 23,000,000 pre.
Speaker 1:Wow. Pretty good on the dilution front.
Speaker 2:Yeah. Not not bad.
Speaker 1:Watch out These founders are gonna be bidding against a lot of you folks.
Speaker 2:Yeah. VC is creating their own competition at Sotheby's. Seriously.
Speaker 1:Yeah. This is dangerous.
Speaker 2:Of course, they went on to do it many more Yeah. Rounds including, you know, some that we'll get to.
Speaker 1:Yeah. So a year later, 04/28/2022, series a, ex the function emerged from stealth with a $25,000,000 series a. Is this Green Oaks and Founders Fund? Is this really the FF company? Never knew that if that's the case, but I know Lee Marie was in, and so maybe that got kind of confused.
Speaker 3:Don't know.
Speaker 2:Hallucination.
Speaker 1:Who knows? It's a bold claim to and they had a bold claim to be the reference infrastructure for service serverless deep learning. And so they're going deeper into AI specifically. Promising customers faster inference and lower bills by multiplexing workloads across thousands of GPUs. So there's a lot of idle GPUs out there, and they're going to bind and allocate your inference workloads to the lowest ones.
Speaker 1:This is a famous story from mid journey, which was, like, getting started around this time. Mid journey, obviously, very inference in very inference heavy in the sense that you you generate an image and it generates four of these images, and they diffuse very slowly and you're getting these little streaming updates while the images kind of depixelate. But famously, mid journey because it's not it doesn't matter that it's low latency because it takes a minute. And so it doesn't matter if it's if it takes a full second to stream you the final image. They would render those images on servers across the world.
Speaker 1:Because they're like, no one's watching Netflix in 3AM in Taipei or whatever. They would have a
Speaker 2:server Well, John, I'm sure a few people are.
Speaker 1:Yeah, that's for sure. But you get the idea. Like the American servers were used for the international audience and vice versa. And so this idea of like load balancing is a tale as old as time, but clearly, there was a market here. And so they raised their $25,000,000 series a.
Speaker 1:Early pilot customers in autonomous vehicle and vision startups reported 10 five to 10 x hardware utilization gains, but Mohan worried the business world would become the business would become a commodity once every model looks the same. Interesting. So they make a decision to pivot in mid twenty twenty two. Watching GitHub Copilot's debut, the founders concluded that their application layer AI, not infrastructure, would capture real world value. They chose to pivot, betting that their low latency serving engine could run an AI code assistant cheaper than anyone else.
Speaker 1:Fascinating. So, like, in the this time, like, the meme was don't build a wrapper. The value accrues to like the hardware layer, like go deeper. And instead they're saying, Hey, we're actually set up really well to serve a fantastic AI code assistant and cost competition is going to be very important. Even though we've been in this era of like freeze VC money and people are paying a ton of money for everything, but having that margin and that optimization really makes sense.
Speaker 1:And it seems like that's increasingly the way you break through is like the, you know, DeepSeek, it's like the optimization on the inference, optimization on the hardware, like the economic gravity of these projects really does matter. So in February '6 December sixth of twenty twenty two, Codium launches. On Hacker News, Neil on Hacker News, Mohan announced, we just released Codium to open up access of generative AI to all developers for free. Try it in the browser. The extension shipped for Versus Code, JetBrains, VIM, and more trained only on permissively licensed public code and promising to stay free forever for individuals.
Speaker 1:Very cool. So speed wins fans in early twenty twenty three. They're getting up and running. Kleiner Perkins leads a $65,000,000 series b at a $500,000,000 valuation, and the and the and the response on Hacker News is very good. Folks are saying that it's noticeably faster than Copilot and Edge credited to ExaFunctions GPU scheduler.
Speaker 1:And so there I mean, this was the time when everything was scaling up and, like, I I mean, even ChatGPT at the time would be like, well, I'm cooked. Yeah. GPUs are melting.
Speaker 2:I'm cooked.
Speaker 1:I mean, I'm sure you saw this at the Studio Ghibli moment. Would be tons of times when it would just be
Speaker 2:like failed, broke Or just come up with an excuse not to do the work.
Speaker 1:Get lazy. Lazy. And so by mid year, Codium had grown organically to tens of thousands of daily users without a dollar of marketing spend super viral, especially in tech Twitter and X. Kleiner Perkins leads that series B, joined by Green Oaks and General Catalyst. Kleiner Perkins partner, Lee Marie Braswell, called Codium a secure personalized productivity multiplier deployable on prem or in the cloud.
Speaker 1:We gotta have LM on. She's great. I worked with her for a couple months at Founders Fund. Yeah. And then she got poached over to KP.
Speaker 1:Very dramatic. Poach alert. Yeah. So they hit 300,000 developers in just fifteen months. VentureBeat reports that Codium already wrote 44% of new commits for over 300,000 developers and dozens of Fortune 500 teams.
Speaker 2:So the CEO at this time gave a quote to TechCrunch saying, even though we've barely made a dent in the B money, this lets us ramp R and D and make larger strategic bets.
Speaker 1:You love it.
Speaker 2:Just scaling.
Speaker 1:So they add self hosted and air gap deployments, which is pretty cool SOC two, type two compliance, post generation license filtering features that won cautious customers like Andoril, Zillow, and Dell. And so, yeah, if you need to be in a in a I I think there we've been talking about this with, some of the llama instances going into the DOD. Like, at a certain point, like like, you can't just be, like, calling out to some random server all the time. Like, it has to run locally. And so having that optimization background makes a ton of sense.
Speaker 1:They become a unicorn in 2024, just, what, six months ago, August 20 August '20 ninth '20 '20 '4. They do their series c. TechRench breaks the news. 50,000,000 series c led by General Catalyst, valuing them at 1,250,000,000.00. Total funding hit 243,000,000.
Speaker 1:GC's Quentin Clark praised the customer follow ethos and multi IDE coverage. They're at 700,000 users then, a thousand enterprises. Scales wild. Crazy. And they were the leading independent rival to GitHub Copilot this time.
Speaker 1:To signal a bigger vision, the company rebrands the product and domain as Windsurf, which is interesting. Yeah, this happened in November of twenty twenty four and that's where like, so it felt like Windsurf kind of came out of nowhere, but we're now like three rebrands into this. Like it goes from Exa function, which you might've heard of in Codium, which I think I'd heard of a little bit. And now Windsurf came out and then it was like the the the big launch, and everyone's talking about Windsurf being so great. A new AI AI native IDE bundled inline completions, whole repo search, and cascade, an autonomous agent that plans multistep fixes and starts working before you ask aimed at keeping devs
Speaker 2:ten steps Windsurf is beautiful name.
Speaker 1:It
Speaker 2:is. Windsurfing kind of fell off. Used to be a It's
Speaker 1:moved on to what's the new one?
Speaker 2:Kiteboarding. Kiteboarding. Kiteboarding. Kiteboarding.
Speaker 1:Next AI company. Yeah. Editor, unlimited superpowers, marketing touted Windsurf tab, a command palette that surfaces context aware snippets, tests, docs, and deployment as from a single keynote, keystroke, heralding the IDE wars of twenty twenty five. We will never forget those. They hit $40,000,000.
Speaker 2:Midst we're still in the midst of them. I mean, obviously, the the other news out of the last twenty four hours is that Cursor's raising 900 on 9,000,000,000. 9 billion. That was initially rumored to be closer to 10. Yeah.
Speaker 2:But has a bunch of big names in it too. So the IDE wars will continue. Yeah. The show will go on. Yeah.
Speaker 2:And yeah, I don't think Windsurf is not gonna back down in terms of their ambitions. I am interested to see if they just sort of continue the Windsurf brand or it's just rolled into ChatGPT Yeah. Completely. But
Speaker 1:Also interesting that they have this freemium funnel converting to $12 to $60 per seat enterprise contracts. Like even doing per seat here instead of consumption is very interesting because that doesn't necessarily like you have, at least in the short term, like real variable costs. Like you could sell in a bunch of seats and if you have some power user who's just sitting there hitting tab every two seconds, like they could burn through a lot of inference costs. Yeah. But I guess that they're just really comfortable dealing with their infrastructure scaling.
Speaker 2:Yeah, to be clear, I don't think any of their investors at any point over the last two years was really saying, hey, you could focus, you should really focus on margins. Yeah, yeah. Because it was clear that inference costs were dropping off a cliff Yeah. During that, you know, entire period.
Speaker 1:Yeah. Yeah. I mean, we've certainly seen that with the new with the new o three models. And and it's it's it's seems like something that's very, very solvable in the in the mid mid term as you bake the models down, distill them, optimize them, all those things. So certainly something you don't need to worry about.
Speaker 1:It's just interesting that like that they're betting on this per seat model. I wonder if that will stay because you could imagine that the margins could be the same and you could still do it on a consumption basis. Like, you know, AWS is mostly consumption based, not seat based.
Speaker 2:Yeah, one of those things at some point if companies are hiring less engineers but doing significantly more engineering work, you would want to effectively
Speaker 1:Exactly.
Speaker 2:Be an index on engineering labor. Yep. You know, AI led.
Speaker 1:It's like number of lines of code changed is what you want to be comped or just raw inference costs, right? Yeah. Just pay me 10x what it costs to inference this thing. I don't know. So there's some funding rumors.
Speaker 1:We talked about this. Kleiner Perkins is thinking about doing another deal, but they get this acquisition agreement for 3,000,000,000. Observers called it a distribution grab, owning Windsurf Hands OpenAI direct channel to millions of programmers and keeps a prime asset away from Anthropic, Microsoft's GitHub and Cursor. Before the sale, Windsurf and Cursor were neck and neck in the agentic IDE space. One analyst quipped, begun the IDE wars have, as Cursor sought a $900,000,000 round to stay independent.
Speaker 1:Mohan credits weekly five hour walk and talks with his cofounder for intellectual honesty, the habit that enabled a radical pivot from infra to app for Well
Speaker 2:meant method.
Speaker 1:Yeah. Yeah. Totally. Probably putting up 30,000 steps a day at that pace.
Speaker 2:It's great.
Speaker 1:So they still own their proprietary LLMs on GPU virtualization layer. It owns end to end, allowing sub to a hundred millisecond suggestions and cost structure cheap enough to keep the individual tier free. Company filters out GPL and other restrictive licenses, blah blah blah blah. Anyway, pretty fun. Pretty fun.
Speaker 1:Really good outcome for everyone involved. Just a couple of years, billions of dollars created in value.
Speaker 2:Yeah. Mean, it's interesting. It's it for again, this comes back to this kind of question for all these platform investors around needing a lot of Windsurfs in a single fund to return a fund. Yep. Even potentially a one x, right?
Speaker 2:Yep. So
Speaker 1:Yeah. I do wonder if the, if, Windsurf will get rolled into OpenAI and ChatGPT in any meaningful way because, like, just from a product perspective, OpenAI has been kind of bifurcating the apps a little bit. So the latest Studio Ghibli moment happened via images in ChatGPT. The previous images project they worked on Dolly and Dolly two, those were separate URLs. So separate separate apps.
Speaker 1:They eventually brought some of that into ChatGPT, but Sora is still its own domain, its own editor basically, because you want to be able to adjust the timing on certain cuts and add music and kind of a nonlinear editor just makes more sense for video editing. Certainly, don't want to be writing code just in the Chattypeauty app. But, you know, they have a bajillion users. Right?
Speaker 2:Yeah.
Speaker 1:Probably makes sense to bring to leverage that distribution one way or another.
Speaker 2:My bet as of right now is Windsurf by OpenAI, not OpenAI code whatever.
Speaker 1:Not like, oh, new button where I could click deep research or I could click Windsurf. And if I click Windsurf, it just builds me an app. I don't know. I think that might be cool. It's already writing code pretty frequently.
Speaker 1:When you ask it to crunch some numbers, it'll go and crunch the numbers down. And tool use seems to be really important. So I could imagine some of the stuff getting ported back. But it does seem like Windsurf just by itself is its own great product.
Speaker 2:Yep.
Speaker 1:You know, it's popular, and so they will continue to do that. Anyway, we we were tracking this on Polymarket, sponsor of the show, and Polymarket had Will OpenAI acquire Windsurf before August? Shot to ninety nine percent. It was at like 60% yesterday. Right?
Speaker 2:Yeah. I think the big question was just trying to understand how, yeah, if this actually was a rumor. It was at 80% a week ago. Yeah. And then somebody bet big no and cratered and then it just steadily ticked back up until yesterday.
Speaker 1:Yeah. So so yesterday when we talked about it on the show, that was May 5 and it was like noon. It was at 67% and we said that the double polo told the story. Yeah. And the double polo was evidence that the deal was going through, that you wouldn't throw on the double polo if the deal with Sam Olin was going south.
Speaker 1:Yeah. And we were correct. There were a couple posts about this later in the show. We'll we'll maybe dig through them. But anyway, cool to see that Polymarket, you know, predicted it and was edge positive right up until the the final confirmation.
Speaker 1:I still think it's interesting because, like, yes, they have an agreement, but there's so many things that could fall through post. So 99% maybe feels even a little bit too high now. I don't know. But Yeah.
Speaker 2:Who knows? It's interesting.
Speaker 6:Go and
Speaker 1:go and express your own view on on Polymarket. Check it out.
Speaker 2:Oh, it's so funny. What? Varun is hilarious. So thirty four minutes ago after we started the show Yeah. Last night he posted big announcement tomorrow and everybody's just saying like, congrats, like this is amazing.
Speaker 2:And the big announcement is Windsurf Wave eight. It's so big. We're doing it over three days. Today, we have a bunch of updates that make Windsurf Windsurf the best product for teams. Windsurf can now automatically review your code, use internal knowledge sources, share conversation, and deploy apps internally and more.
Speaker 2:So anyways, I
Speaker 1:guess there I think this is great. I think if you are getting acquired, that's the the the it is weighty and it is But no, no, no. Focus on the focus on the company, focus on the product, focus on the customers. Like, job's not finished. Like, yes, you have new shareholders.
Speaker 1:And you're and you're aligned with the new team. You have more resources. But continue to grow that. Continue to
Speaker 2:grow Yeah. It's so interesting because now Bloomberg Yeah. And a bunch of other media outlets have said OpenAI reaches agreement to buy startup Windsurf, but we haven't seen anything from the Windsurf team
Speaker 1:or You would think that they would put out an official Or anything. Yeah. So, so Dakesh Gupta said, so the windsurf guy wore a double polo on the YC podcast, which was last worn by the OpenAI guy when he was working on his first startup in the early two thousands signaling that the rumors of acquisition are in fact true. And it's like the guy yelling in the girl's, ear. And Spore says, so this was correct, Lowell.
Speaker 1:Like, it actually did happen. Anyway, should we go through Apple's iPhone woes? The prices are going up. They're getting hit by tariffs. Apple won't be able to avoid price hikes for long.
Speaker 1:The iPhone maker is absorbing $900,000,000 in tariff costs this quarter, but the hit to profit margins could still get worse. So Apple's latest earning report shows the company is choosing to eat the additional costs and not raise the prices. But Raymond James, analyst, says, looking ahead, our base case for Apple is to raise prices, which should help offset the tariff impact to an extent. Now Apple hasn't raised prices in a while even in the head of inflation, even in the face of COVID stuff. So I think they have some room to raise the prices, but they are getting expensive.
Speaker 1:Once you break the thousand dollar point price point, people, psychologically, it's different. It feels more like a laptop. At the same time, spend more time on your phone than your laptop. Right?
Speaker 3:So Yeah.
Speaker 1:I mean, I'd rather I'd rather have a $4,000 phone than a $900 laptop, honestly. Yeah. True. Laptop can just kind of do whatever. I went to the Apple store to
Speaker 2:buy this laptop. Was like, I'm Yeah. Always thought it's it is amazing that a device that you can be so dependent on still costs less than a thousand dollars.
Speaker 1:Use it more than your car. Like, if it was $30,000, I think people would still buy us. Yeah. Like, know, of course, there's, like, pricing dynamics of, like, you know, will the iPhone stay competitive? Because it can't be 10x than an Android, people will switch.
Speaker 1:Bluebubble's probably not worth that much, in terms of like the value that's created in your life by your phone, like it's up there. Yeah. It's up there with the best of them. Yeah. The tariff impact so far is actually pretty slight in Apple's earnings call.
Speaker 1:Tim Cook said the company expects 900,000,000 in additional costs. That would add less than 2% to what Wall Street was projecting for Apple's cost of sales. And so, yeah, the cost of sales is in the, what, 50,000,000,000 range to make all those iPhones. If it goes up by 900,000,000, not that big of a deal. Yeah.
Speaker 1:But if you believe Apple's terrible We're
Speaker 2:going eat it for now. In the next quarter, we're gonna raise prices. Yeah. And hopefully people forget.
Speaker 1:Yeah. Given the prospect of tariffs of of Trump's sectoral tariffs, we think it is prudent to at least double the 900,000,000 hit to COGS for a few quarters beyond June, says one of, the researchers covering Apple. Concern about Apple's margins come in coming periods helped drive the stock down nearly 4% following its earnings report. The stock lost a fur further 3% on Monday after the information reported that the new ultra thin Apple iPhone iPhone Apple is planning to launch later this year will include compromises such as shorter battery life. Interesting.
Speaker 1:I didn't realize they they were going thinner. That's kind of a cool story. I might do that. I don't know.
Speaker 2:I never run out of battery. I would I would I'm not gonna go as far as to I'm not gonna go as far as to say I would stand in line for an ultra thin iPhone, but I would hurry to get one.
Speaker 1:So you would be okay with shorter battery life? Yes. I think so too.
Speaker 2:Well, the battery's always good, batteries always good in the first six months.
Speaker 1:Yeah. But can you imagine? So it's gonna be a thinner phone, but the camera bump will probably be like three times longer.
Speaker 2:It's a telescope.
Speaker 1:It's a telescope.
Speaker 2:Imagine a little telescope.
Speaker 1:People are like, yeah, the camera lenses keep breaking off because they protrude so much. Ridiculous. Something Anyway, there's a chart here about the iPhone prices. They went up almost to a thousand and they've been down for the last couple of years, hovering around 900. Can't really go too far.
Speaker 1:Anyway, Apple shed more than 350,000,000,000 in market cap since president Trump's announcement of new tariffs on April 2. Most other mega cap stocks have since recovered from their post tariff losses. Company has been making moves to offset the hit from tariffs. Cook said Thursday that most of the devices shipping to The US will come from India and Vietnam. They're getting out, especially as it looks to enhance the iPhone with new cutting edge designs such as a thinner body or bendable screen that pose more complicated manufacturing challenges.
Speaker 1:Yeah. They gotta they gotta spice it up. They gotta do something different. I feel like there's you know, people have the the the Mac, the iPad, the phone, throw something else in the watch, you know, just give me something in between. I was thinking about trying Yeah.
Speaker 2:Probably market has will Apple release a new product line in 2025 at 24% and will Apple release a foldable iPhone in 2025 at 7%, but a bendable iPhone is not on the list Even
Speaker 1:if it's
Speaker 2:worse A bendable device
Speaker 1:is so I just want something fresh. I'm bored. I don't care.
Speaker 2:Give me something.
Speaker 1:Just give me something. Yeah. Exactly. Anyway A
Speaker 2:bendable iPhone is really funny because you can imagine people just putting it in their back pocket and then it's just sort of folding.
Speaker 1:Bending, yeah. I mean, I think bendable means foldable in this context, but
Speaker 2:Okay,
Speaker 3:I don't
Speaker 2:know. I was thinking more like bendable, like, you know, a stick. You try to actually fold a stick,
Speaker 1:you're to break I'm bored, I want something new. Was hoping they'd do a TV. I still like the Apple Vision Pro. I'm excited for the next one.
Speaker 2:How about a backpack Yep. That that, you know, operates as a, you know, desktop, you know, top, you know, computer in a very, you know, an extra large mobile phone.
Speaker 1:You know what I was talking about? Yeah.
Speaker 2:If you could get like, make just the largest mobile phone on earth. All this tech this boom because you can put it on
Speaker 1:There's all this boom about humanoid robots. I I was posting about this on May, my birthday, Star Wars Day. May the fourth be with you. May, I was saying we should make We make R2D2.
Speaker 2:Birthday on the show. Everybody's gonna be like, what the heck? You didn't
Speaker 1:Yeah, you didn't. Before
Speaker 2:your birthday.
Speaker 1:We did, we did. We talked about it on Friday and Thursday.
Speaker 2:Right, right, right.
Speaker 1:We talked
Speaker 2:about Not the exact date, so people were kind of left
Speaker 1:stinging. But making R2 D2 seems trivial at this point, right? Yeah. It's like a bunch of car batteries, the battery technology is definitely there. The LLMs are there.
Speaker 1:You throw a Starlink on that thing. Yeah. Or a bunch of cell signals, like a bunch of cell phones in there. You're going to have great connectivity. Going be able to follow you around.
Speaker 1:The wheels exist. Like all the tech is there to build RTD two. That would be a great product for Apple. Just $10,000 and it just follows you around and tells you the weather. Sure.
Speaker 1:And it was like, oh, you want me play you I still don't have a good AI, but I don't know. Something like that would be fun and different. I'd be into
Speaker 2:it. R2D2.
Speaker 1:R2D 2. Put it on the roadmap. Anyway, I hope that Next time we can
Speaker 2:get, you know, press passes to an to an Apple event, we'll We'll stay to wander. Pull Tim aside and we'll and we'll say, hey, look, R2D2. Make it happen.
Speaker 1:Yeah. For sure.
Speaker 2:We've got the fortress balance.
Speaker 1:If we go to the BDC, we'll be staying in Cupertino and we'll be in a wander.
Speaker 2:That's right.
Speaker 1:We'll be finding our happy place.
Speaker 2:Find your happy place. Find your happy place. Book a wander
Speaker 4:which is
Speaker 2:on a tear. It's actually insane. It is. Every single day.
Speaker 1:They're in the conversation.
Speaker 2:They're greatest of all time, you mean? Yes. Of conversation.
Speaker 5:Right. Book a wander with
Speaker 1:inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home, but better. Anyway, you were telling me about this, the the the bringing Hollywood back to America, this whole thing. John Voigt has a plan, which is isn't John Voigt, Angelina Jolie's dad? That's
Speaker 2:right. Really? Yep. I have no idea because I've never seen any movies.
Speaker 1:You haven't. So actor John Voigt presented his plan to boost US jobs in the entertainment industry to president Donald Trump over the weekend, laying out a proposal that included federal incentives for US Theater Owners to upgrade their facilities. Let's go. Universal basic
Speaker 2:Is that gonna fix the I mean, judging by the commentary that I hear from people in Hollywood Yeah. The issues are around how much regulation there is. Yeah. And the costs associated with said regulation Yeah. In making movies in Southern California.
Speaker 2:Yeah. And revitalizing theaters and
Speaker 1:making And the lack of technology podcasts in Hollywood.
Speaker 2:Okay. It's no way That's another that's another story.
Speaker 1:That's why it's falling apart.
Speaker 2:No. But but the idea that I'll I'll I'll give him a chance to kinda get into this. But the idea that just fixing the bathrooms in old theaters is not necessarily going to revitalize, you know, the domestic entertainment industry.
Speaker 1:Yeah. It's tough model when you have
Speaker 2:But nice bath I like nice bathrooms.
Speaker 1:I mean, you think about the you think about when Hollywood was in its heyday and like you didn't have all, like you couldn't watch anything in HD. You had a TV with three channels on it and it was 12 inches and it was crackly. If you wanted to see something actually big and beautiful with good sound like you had to go to the theater. Now you can just buy a home theater with a projector for $2. And you can also just scroll YouTube and TikTok and streaming and your phone all day and there's unlimited content.
Speaker 1:It's impossible to keep up with it. And so the excuses to go to the movie theater are getting less and less. You really gotta have a federal incentive for taking your boys out to the movies. Guys movie night really will be the thing that brings Hollywood back for sure. Yeah.
Speaker 2:You've been leading the charge here.
Speaker 1:I have, I have. Highly recommend it. Just text everyone who's in your town. Get 20 tickets on Fandango that you can always refund the ones if people don't show up. Send out the text message to everyone.
Speaker 1:Hey, we're going to this Jason Statham movie next Friday. Are you in? Are you out?
Speaker 2:Be there.
Speaker 1:Be there. And then just Venmo everyone at the end and you're all good. Have a fun time. But other than that, if it's not like an event, it's really hard to justify going. Totally.
Speaker 1:Anyway, this is John Voigt was was appointed a special ambassador to Hollywood by Trump in January. Showbiz. I feel like these special ambassadorships are just like up for grabs. Like Yeah. Could we become special ambassadors to Technology podcasting.
Speaker 1:Podcast. We really should. Be like
Speaker 2:Yeah. We can make it happen. So, Voigt was appointed in January and he's detailed the plan along with his manager, Steven Paul and Scott Carroll, the president of Paul the president of Paul's company to Trump at Mar A Lago. The proposals include changes to the tax code to encourage investment in US films and job training initiatives according to Carroll. The incentives for cinemas, if approved, could help buoy theater chains such as AMC Entertainment Holdings, Cinemark Holdings, and Marcus Corp that have struggled since the pandemic with films being released online sooner than in the past.
Speaker 2:They're basically saying, we're gonna bail out the theaters Mhmm. Which have been struggling because of something that we're not addressing. It Which what? Oh, which is
Speaker 1:is like competition Films
Speaker 2:are being released online sooner. People wanted, are happy to just watch them at home. Yep. Everybody has a massive HD TV. Yep.
Speaker 2:And there's just, and I would argue that films are just not, you know, often, you know, for the last few years films have been good enough to warrant going to a theater when you could just
Speaker 1:You wanna bring back film to America? Here's an idea. Give Jason Carmen three hundred million dollars to remake the Terminator starring Sam Soulek.
Speaker 2:Today. Today.
Speaker 1:If you if you do it will generate $5,000,000,000 in ticket sales.
Speaker 2:I think that's very possible.
Speaker 1:It's entirely possible.
Speaker 2:So anyways, filmmakers who coproduce pictures with foreign companies would be allowed to obtain credits for their US spending for quote unquote bad actors who take all of their production overseas. There would be a tariff that equated with the incentives they were getting from the foreign countries, Carroll said in an interview.
Speaker 1:Here's another idea.
Speaker 2:Trade war in Hollywood. The president loves the entertainment business and this country and he will make help us make Hollywood great again.
Speaker 1:Yes. Boyd said in this interview. I recently watched Almost Famous. I'm trying to learn about journalism. Almost Famous is a story about a young boy who goes on the road to write a profile about an up and coming rock band for Rolling Stone.
Speaker 1:And it's a Bill Dunserman. It's a coming of age tale. Yeah. So he learns and he grows and he experiences all the vicissitudes of life on the road with this rock band, learns the good and the bad and writes this fantastic profile. Eventually gets them on the cover, spoiler alert.
Speaker 1:I think we need a almost famous style movie about Ashley Vance going on the road to write the first big profile of Elon Musk becoming a man, becoming, you know, a real real tale of his journey
Speaker 2:on A real, a true,
Speaker 1:an elite Yeah, a Bill Dungemerman. Yeah. A coming of age tale about Ashley Vance doing technology journalism. This is the next thing after we've made some Time's about begging for it. We haven't made enough movies about technology journalism.
Speaker 1:Yep. This could be big. This could be very, very big. Movie Executed by
Speaker 2:Julia Black.
Speaker 1:Yes, get her in. But mainly it needs to be the story of Ashley Vance. Yeah. Telling the story of Elon Musk. Elon Musk is by
Speaker 2:Ashley Vance. Exactly. Yeah. Exactly. Trump posted on social media Sunday evening that he would impose a % tariffs on all films produced overseas.
Speaker 2:The comments sent shares of US entertainment companies tumbling on Monday as investors tried to discern what types of films. Because the issue is it's The US entertainment companies that have been paying to produce films overseas as investors tried to discern what types of films would be subject to tariffs and how the Levy's would affect the profitability of producers. In a press briefing on Monday, Trump said he planned to meet with entertainment industry executives to discuss his plan. I want to make sure they're happy with it because we're all about jobs, the president said. California senator Ben Allen said he would he was given a heads up about Voigt's plan last week.
Speaker 2:He said he would support a tariff, but that should be crafted to encourage US productions, not harm foreign films. I understand why the president was moved to want to take some drastic action, Allen said. We have been facing so much damage as a result of other jurisdictions throwing all sorts of incentives at productions to pull movie production that really ought to be happening here in The United States and that ought to be happening in LA. And again, you know, what I hear is just the the dynamic, the the logistical complexity of producing a film in LA. Why are you laughing?
Speaker 1:Because I have another idea to save Hollywood. Michael Bay directing the ramp movie. The ramp movie. The ramp movie. So it's a like the evil Switch your
Speaker 2:business to ramp.
Speaker 1:Yes. The evil receipt personified like transformers.
Speaker 2:Yeah. The
Speaker 1:corporate receipt malaise has has fallen upon the American economy, and only Eric Glyman played by Vin Diesel can revive the American economy Yes. By bringing by streamlining their corporate cards.
Speaker 2:Godzilla sized receipt
Speaker 1:Yes.
Speaker 2:Stamped Maybe
Speaker 1:maybe we go Chris Hemsworth for Eric and Vin Diesel can play Kareem.
Speaker 2:Yeah.
Speaker 1:I think that's a good pairing.
Speaker 2:That's right.
Speaker 1:We need some AI generated movies to like kind of really sell this to Hollywood, but we'll get Michael Bay in there. Be high stakes. It'll make the
Speaker 2:It's time to tap in, Bay.
Speaker 1:Yeah. It'll, yeah, it'll make it'll make the social network look like a snooze fest.
Speaker 4:Yeah. It's gonna be great.
Speaker 2:Okay, you're onto something, Anyways, we should have somebody on that actively has tried to make movies in LA. Yeah. Over the last
Speaker 1:few We got Michael Bay on. Heard he's making a really cool movie. Don't know if it's public yet, but it seems sounds awesome.
Speaker 2:Well, he's been making movies for a while, so I'm sure you're not leaking anything too Yeah. Significant. But, yeah, we should have him on. I'm very interested to hear the actual updated details on why if you're an American film producer, you decide we're gonna go to Portugal Portugal or we're going to go to London or wherever to actually make this just because the cost to do it locally are so high. So I think that the local politicians, you know, county level need to take some responsibility as well because I don't think you can just say, oh federal government, you know, it's time to step in and make local feels like the local a part of the trade war.
Speaker 1:Yeah, it's like It was almost more important. We saw that with like LA versus Atlanta. It's like kind of a domestic issue almost. Mean Toronto's in there, but Toronto is not, this is not like some massive global A
Speaker 2:of the people I know in entertainment have been spending a ton of time in Atlanta, like for years now.
Speaker 1:Really? Yeah. Just generally, right?
Speaker 2:Yeah, I'm not joking.
Speaker 1:That's not
Speaker 3:what you're joking.
Speaker 2:I'm joking. Like, if you're actually working to
Speaker 1:Yeah, see it at the end of movies, it's like the peach and it's like made in Atlanta because the folks in Atlanta were just like, let's build that business here. And so they gave a bunch of incentives. Baby Driver was filmed there. There's a bunch of movies. Yeah.
Speaker 1:Mean, it it it's economic war on like the state level, which is interesting. Which is like totally fine. That's the way the states are supposed to work. It's just like Hollywood was mismanaged and just like played the game wrong basically. And it was like, oh, we're so cool and powerful and Lindy, like, we'll never lose this.
Speaker 1:We don't need to play the game of tax incentives. When in fact like, no, no, they did. People would just leave. Like they didn't really have the loyalty that clearly the Hollywood Policymakers and lawmakers like thought that they would. Yeah.
Speaker 1:Very rough. And yeah, rough for, you know, I think it was Rob Lowe who was talking about it, how he's always he always says to go to, like, Toronto and he doesn't like it because he's away from
Speaker 2:his Yeah. Toronto's the other one.
Speaker 1:Probably away from his bed, probably away from his Eight Sleep. Go to 8Sleep.com. What's new in Pod four Ultra? Well, Pod four ultra has all the signature features you love about the pod plus new groundbreaking updates. They got a five year warranty, thirty night risk free trial, free returns, and free shipping.
Speaker 2:We Let's go. Incredibly back.
Speaker 1:Oh, yeah. I wonder how I did. I feel like I slept a ton last night. I'm feeling good. Finally back in it from the previous weekend and travel and whatnot.
Speaker 1:Let's see. Tuesday, I got a 93. How'd you do?
Speaker 2:Eighty seven.
Speaker 1:Eighty seven. Smoked you. Is that two nights in a row? You said it was impossible. You said it couldn't be done.
Speaker 2:To be clear, a little asterisk for the sleep Superbug, sick. I did have food poisoning
Speaker 1:on Oh, issue.
Speaker 2:And What
Speaker 1:happened? I yeah. I'm good. I'm I'm I'm moving through this. I'm gonna be I'm gonna be rock solid this week except going to SF tomorrow.
Speaker 1:But I think I'll be I'll be on my eight sleep every night which is
Speaker 2:good. Cool. Awesome. I don't I don't know if we have time for this next story.
Speaker 1:We do have time for an Adquick ad. Of course. Out of home advertising made easy and measurable.
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Speaker 2:One of our best yet.
Speaker 1:It is the best. We definitely gotta talk about Adquick
Speaker 2:is coming out with an AI product. Yeah. And we were in a cameo in the video. Can't wait. They're launching Adquick Copilot Yeah.
Speaker 2:Very cool. To help you more efficiently buy ads out of home.
Speaker 1:Yeah. I mean, was a lot of stuff with Adquick, like, if you actually go through the process, like, they will they will pull up the map, they'll pull up all their tools, they'll provide, like, kind of an idea and report and there's no reason why that shouldn't be a little bit more self serve. Even if you do wind up, you know, working with an AdQuick representative directly, there's no reason why you shouldn't be able to just like investigate their whole database via an LLM, it's very obvious. Anyway, let's do one or two posts and then we'll bring in our first guest. We have a great one.
Speaker 1:Evan McCann says, with so many people going no alcohol, there is a lot of alpha in drinking again. You love it.
Speaker 2:I thought this was hilarious. Saw it earlier and I laughed. Contrarian. Contrarian. Yeah, it seems like alcohol fell off but at the same time it's just so Lindy.
Speaker 1:It is.
Speaker 2:There's an opportunity to bond with other people that love alcohol.
Speaker 1:Yeah.
Speaker 2:So, it's just, it used to be so common to drink alcohol that you wouldn't have a meeting and somebody else says, you wanna have a drink? And you say yes and it's like, oh, we now have some common ground.
Speaker 1:We gotta send this
Speaker 2:to Andrew Now you find
Speaker 1:He's gonna be
Speaker 2:Can find some common ground. Furious about that. No, it's funny, I've just gotten to a point where stopped enjoying alcohol. You know, I went from drinking maybe, you know, having a drink one day a week on average to realize, going down to probably
Speaker 1:once dom every time you double.
Speaker 2:That's right. That that most of the drinks I've had endure were were on the show.
Speaker 1:Yeah. It needs to be tied to celebrations because then you just start grinding harder and harder and harder for everyone.
Speaker 2:Yeah. I think the alcohol decision, like, shouldn't let the timeline decide whether or not you like drinking because some people can have a few drinks and their body can process it and handle it well. For me, I It's not for me.
Speaker 1:That's That's okay. Yeah. They're drinking.
Speaker 2:Yeah. The Balmer Peak.
Speaker 1:I've been, yeah, I've been very pro alcohol as a performance enhancing drug for sales reps.
Speaker 2:Yeah. The power lunch
Speaker 1:methodology. Yeah. Power lunch. You gotta get loose and Yeah. Have a couple of martinis with a client.
Speaker 2:Yep. Ink a deal. Ink a deal.
Speaker 1:This is how business used to be done. It's coming back. Yep. Coming back. It's coming back.
Speaker 1:Anyway, Levy was over at Y Combinator. Game respects game. Very, very funny picture. He, of course, runs Z Fellows, direct competitor to Y Combinator in many ways. Corey's running around the valley signing deals before companies get to YC sometimes.
Speaker 2:Yeah. But I'm sure Corey's generally excited when companies he backs
Speaker 1:Totally.
Speaker 2:End up joining YC.
Speaker 1:Yeah. This is one of those things where, you know, they are like they are competitors, but the nature of competition is that sometimes, like when you see two competitors take a picture together and do some sort of collab, it's like they either hate each other or they love each other, you know? Yeah. I feel like a lot of people experience this where like, you could be like competitors, but if understand your business at a deeper level than everyone else on the outside, you can wind up having like a beautiful partnership and friendship with someone who is ostensibly a rival because you actually see the world in a more nuanced way than someone just on the outside being like, oh, you guys are just capital and you guys just invest. Like, actually probably view their businesses very, very differently and as Yeah.
Speaker 1:And very complementary.
Speaker 2:Totally. Yeah. Think Z Fellows had an interesting wedge. Yeah. And it's just consistently found great founders.
Speaker 2:Oftentimes, I think even before they have an idea Yeah. Which is not the same model as YC. Even though YC will, will in small instances.
Speaker 1:Yeah. Even though they are somewhat like in the same The way
Speaker 2:I'd it is the z fellows of z fellows is z fellows, and the y c of y c is y c.
Speaker 1:Yes. Yes.
Speaker 2:And those things can, you know, overlap.
Speaker 1:Totally. With an x. Yeah. X y z.
Speaker 2:X y z. Cool. Well, we have our guests ready in the waiting room.
Speaker 1:Let's bring them in.
Speaker 2:They're both in the waiting room. So do you think it's
Speaker 1:I wanted to bring in Kelvin first. I will text Santi and tell him to give us fifteen minutes, we'll go back to back. Think that's probably what's best. Let me text them, and let's bring Kelvin in. And, oh, FYI, Kelvin is with FAI.
Speaker 1:We are going to do Kelvin first, then then Santi Santi at 12:45. Cool. We are good for that. Let's bring in Kelvin whenever he gets a chance, and let's update his lower third. The Chiron is ever evolving, all part of our mission to bring media to Hollywood.
Speaker 1:I like that stinger. That's very Michael Bay. It's not Yeah. There's something about the Ashton Hall one that just hits so much harder. Yeah.
Speaker 1:It's just so much better. So much better. It's much night and day. It's night and day. Anyway.
Speaker 2:If you have any sound effects you want us to add to the soundboard, reach out to Ben. Yes. He's a soundboard maestro.
Speaker 1:Yeah. We really got to get on, you know, TikTok, Instagram, whatever, wherever these sound effects are coming from. We need to bring them into the show because the soundboard has been a delightful upgrade. And we have our first guest of the show. Welcome to the stream, Kelvin.
Speaker 1:How you doing?
Speaker 2:Boom.
Speaker 7:Gentlemen, good to see you guys.
Speaker 2:What's going on? Intro. Great to have you. Music.
Speaker 1:Yeah. Oh, yeah. We're we're we're big fans of the soundboard. Expect the unexpected during this interview. It'd probably be the the loudest, most interruption riddled podcast you ever do.
Speaker 1:Yeah. But it's fun. Can you anyway, can you give us a little bit of a backstory on you and specifically the announcement today, some of the of the work you've published and kind of just give us the high level overview?
Speaker 7:%. Some Kelvin, kind of prototypical Silicon Valley tech bro. Nice. Got dropped out of Princeton. Moved out to the Bay Area.
Speaker 7:I was a founding engineer at two companies. And then, a few years ago, just started reading about industrial policy and the history of technological progress in The States and recognize that we're in the moment of, intense techno industrial decline and that this was in large part facilitated by bad policy choices. And so in a move into DC, we got to meet people like Santi, and, we released this playbook after six months of, long hard work. And it's a recognition of the fact that tech industrial decline is a policy choice and that we are, in a moment where, with the rise of China, with the stagnating industrial base, there are intense changes that need to be made to the existing system. And, these this playbook, has 27 very concrete ideas for how to change things across the industrial base, across the national security apparatus, and in the ways the government funds frontier innovation.
Speaker 1:Cool. I wanna go into the playbook, but first, give us a lay of the land. FAI, IFP, what are these organizations? What are their goals? How are they funded?
Speaker 1:They're nonprofits. Can you break all of that down, and then we'll go into the actual playbook?
Speaker 7:I resent. So there's, four institutions involved in this project, FAI, IFP, American Compass, and NIAH. A lot of, acronyms here.
Speaker 3:So,
Speaker 7:FAI is the foundation for American innovation. The center right, tech policy think tank focused on, tech policy, emerging technologies, industrial policy. IFP is a, nonpartisan think tank focused on a lot of similar topics, also particularly around metascience, and and energy as well. And then, American Compass is more of a, new right economic think tank. They do a lot of other stuff beyond just industrial policies and family policy, workforce policy, etcetera.
Speaker 7:And then Naya, is the new American Industrial Alliance, focused on a new trade group started by a bunch of, really sharp builders, focused on bringing the best of Silicon Valley, industrialists to Washington DC. So this project is kind of a merger of all these different circles of, the new right conservative folks all the way to your Silicon Valley, builders.
Speaker 1:Got it. So we've, we talked to Catherine Boyle yesterday about American Dynamism broadly. We've talked to Chris Power about Hadrian and building manufacturing in The United States, Andoroll, and some of these themes. But, what are some of the more concrete steps that you're advocating for on the road to reindustrialization, techno industrialization? What does that actually mean?
Speaker 7:Yeah. So, this was born out of a kind of growing bipartisan consensus over the past two administrations that something, like, do some things deep need to change. And the Biden administration really took a pillar approach where they looked at things like chips, energy, manufacturing, and passed really large scale subsidy programs that were have been, like, unseen in generations. And the Trump administration has recognized that there's, all these systemic barriers to industrialization beyond just subsidies, things like trade policy, non non trade barriers. And so where we wanted to, get into the conversation is the is recognizing that there is, in all these different critical industries, whether it's critical minerals or, hypersonic missiles all the way to, biotech manufacturing, there are, unique industry nuances that prevent, more things being built faster and cheaper.
Speaker 7:And so, the goal with this playbook was to really channel this newfound energy, both sides of the aisle in advancing these issues and elevate folks who could, write up very specific policy proposals Mhmm. Along these lines, to advance specific areas. So the way we categorize the playbook is we have a three section, industrial power, national security, and frontier innovation. And we have, senior domain experts right on, each individual Mhmm. Piece of this of this pie, with proposals spanning from developing hypersonics testing infrastructure to demand side support for critical minerals production to, how does the navy improve its, ship streamline its, design of ships.
Speaker 7:There's all these really wonky things that this playbook gets into in each of these specific categories.
Speaker 1:Yeah. Do you have a like, a an overarching theory around, tariff policy versus subsidization of American industrialization versus kind of the Doge stuff, which is, like, do more with less efficiency driven. These three pillars seem very different. Very they're typically advocated by, very different political groups. We're kinda seeing all three happen right now.
Speaker 1:Do you think that all three of those are equal tools in the tool chest, or, are you advocating for leaning one way or the other?
Speaker 7:Yeah. This is what we're most proudest of for this playbook is that it is a synthesis of all these ideas, and it's a recognition that for all these deeply, deeply important questions, you just need an all of the above approach. There is no one silver bullet. The things that are required to restore American shipbuilding are gonna be slightly different than things, required to, do a more broad based reindustrialization movement. But it's a recognition that, all for all these different topics, there's all these things from regulatory fixes to, state capacity fixes, to subsidies.
Speaker 7:They're all critically important.
Speaker 1:On shipbuilding, can you, like, give us a concrete example of of of what the playbook looks like? Because I feel like shipbuilding's pretty, you you can kind of wrap your heart hands around it. Like, it's a pretty, pretty simple thing to understand. We make a certain amount of ships. We wanna make more.
Speaker 1:But what are all the steps that lead to actually increasing shipbuilding capacity?
Speaker 7:Yeah. So, shipbuilding, in America is in a dire in a dire need for fix. We produce China produces 230 times more ship tonnage than The United States. This is due to a lot of different factors, everything from constantly changing requirements from the navy to a lack of workforce to a lack of automation in our 50 yards compared to other countries. And so, the particular proposal that, Brian Potter, and Austin Vernon vote for our playbook was around streamlining the way the navy actually designs its requirements, for ships and the way that navy, actually goes about planning the design of, of certain naval vessels, and it gets pretty into the weeds on those topics.
Speaker 7:And, really, this is, you know, this is not a comprehensive plan to Yeah. Restore American shipbuilding, but more of a, of a specific deep dive into one particular underrated, aspect of the problem that policymakers may not realize. And so there's a great bill out there called the SHIP's Act, which gets into a bit of more of a of a broad based plan. And so the goal with this particular proposal was how do we complement the existing discourse with things that are more a bit more of the weeds that people aren't paying attention to.
Speaker 2:Can you talk about some historical precedent where America was maybe behind in in certain areas and, managed to turn it around? Like, basically, like, obviously, you lay out a bunch of very kind of proactive solutions for a variety of these issues, but I think it'd be helpful to understand at at what points throughout history maybe we recognize that big big changes were needed from an industrial policy standpoint, and we actually effectively made those changes?
Speaker 7:Yeah. The Cold War is the best example of this. Right? You had, space race where, The US public and our intelligence agencies were shocked, when Russia launched Sputnik. It was really a it's really hard to, just fully articulate how deep this shocked the American psyche and how fast we got, our shit together.
Speaker 7:The in a in a matter of less than a decade, we directed, 400,000 people, 20,000 companies, and 4.4% of the overall federal budget towards the Apollo missions. And we went from being laggards in engine technology, missile technology, space technology to land, getting to the moon first.
Speaker 1:Is that
Speaker 2:part of the challenge though now is that we don't have sort of a stunning visual of industrial decline? It's sort of this sort of slower, insidious sort of process that's been happening that we feel in different ways, but it's it it doesn't strike, you know, fear into the hearts of Americans in a way that that Sputnik did.
Speaker 7:That's 100% a challenge. You know, there's some some people who don't believe America really gets serious until there's a Taiwan scenario. But, you know, there's, there have been instances over the there's been flash points over the past few years. Ukraine, COVID, October Seventh, where people have realized actually, like, the lack of a, of a robust defense supply chain, the lack of the ability to make basic things like medical masks are problems that affect us today. And so that's where the work you guys are doing is so important.
Speaker 7:That's where the work of these three think tanks and other folks like Catherine Boyle, in the whole American dynamism movement. The more the more we talk about these things, the more more I think people will recognize the seriousness by which we need to we need to take these issues.
Speaker 1:Did you ever explore the idea of I don't know what exactly how this would, like, get implemented, but some sort of incentive for American investors to focus on reindustrialization. We were kicking around this idea of, like, the the carried interest tax was kind of up in the air. Maybe that would hurt private equity firms and venture capital firms. But what if carried interest that that deduction didn't exist for investing outside of America? But if you invest in America, all of a sudden, you get a much more favorable tax treatment, something along those lines, or even just anything like we've seen the American dynamism movement take hold in the venture community, but we haven't heard nearly, as much on the private equity side.
Speaker 1:It seems like the private equity firms are still just kind of dollars and cents maxing. But what what, do you do you think there's any, moves that could, kind of lead to more just decentralized American capital driving reindustrialization?
Speaker 7:No. That's such a fantastic question. There are there are so many levers. It's it'll take a long time to go through all of them. But, Julius Klein of American Affairs wrote a great piece for us on, on that very question of how do you get large scale capital, institutions to invest in industrial finance.
Speaker 7:Yeah. There's also, you know, Sam Hammond wrote a piece on utilizing the SBA's authorities to incentivize, investing in small, medium sized manufacturers. Mhmm. You know, the one one of the greatest strengths of America is that we have, the world's strongest entrepreneurial base. We have folks like Jeff Bezos, Elon Musk, and we also have, a state that is capable of doing a lot of things.
Speaker 7:Right? Tesla being a great Tesla and SpaceX being the prime examples of what can happen when you combine, effective industrial policy, effective tools of of statecraft with, amazing entrepreneurs who are building the future.
Speaker 1:Yeah. Interesting. I had some sort of do you have any follow ups?
Speaker 2:I'm curious. As you guys were putting this together, what kind of announcements or policies maybe sort of shifted your priorities? Because over the last, call it six weeks, there's been a lot of announcements, you know, on Sunday, we had 100% tariffs on
Speaker 1:The three d chessboard has been flipped.
Speaker 2:We're just flipping the board constantly. But no. I'm curious, was was there anything that you were, you know, wanting to to to write about or include in here, but you felt like already had enough momentum or or kind of coverage from existing policies?
Speaker 7:Yeah. To give the Trump administration credit, like, we we had a we had a few things, written up around, defense procurement reform, energy reform, where they put out some deals, and we're like, oh, man. We gotta we'd add some more things. It's it's a it's been a very fast moving administration. But, you know, with you brought up Liberation Day.
Speaker 7:Like, the way that we view tariffs and, it like, every every each of these, four, think tank partners have their own, opinions, but, we're all in agreement that tariffs alone are not enough. Right? These are Yeah. It's a it's a stick. But if you actually wanna be serious about doing the very specific things like critical mineral production or shipbuilding or whatever, there's a whole host of unique tools you need to apply to that particular problem.
Speaker 7:So that's really what this playbook is trying to provide.
Speaker 1:Are there any lessons that you think America can learn from how China does industrial policy? We've seen, you know, what, fifty years of investing in semiconductors over in China in the midst of never really being on the leading edge there. But now
Speaker 2:Yeah. Even around planning. Right? So they plan in these sort of five year Right? You know, let's make a five year plan and another five year plan and then just sort of compound.
Speaker 1:I know I know we're adversaries, but, like, what can America learn from China on the industrial policy front?
Speaker 7:Yeah. It's a fantastic question. And I mean, to your point, there's been a lot of waste over there. Right? You have all these state backed private equity firms that, kind of are just, black holes for for capital.
Speaker 1:Mhmm.
Speaker 7:You've got I mean, they use a bunch of slave labor, which helps drive down, industrial costs. Yeah. It's a yeah. You have to do a lot of things that are really effective. Like, you know, oh, I think a lot of narratives around China is just a copycat or China is just, like, using, like like, using distilled models to to, to to produce beef seek.
Speaker 7:It's a it's a lot of cope. I mean, you know, they're leading in electric vehicles. BYD is an absolute beast. Drones Yeah. Critical minerals.
Speaker 7:Like, these are these are real advantages. And the number one thing I think is just, we should be taking things as seriously as they are. Like, Chinese leaders routinely come out, not just Xi Jinping and the top, level CCP brass, but even, like, the CIA equivalent, in China and their, like, internal think tanks. They're constantly producing essays and, and and giving speeches on how the foundation for world power is, industrial power and technological power. They view this as they view the lack of technology as the reason they suffer the century of humiliation.
Speaker 7:And so they are deeply serious, in throwing their entire state behind, developing the, the future of, all these different emerging technologies. So, yeah, the the thing that we can learn is just the degree of seriousness by which there is a political class is is taking.
Speaker 1:That's a really good answer. Yeah. Thank you. Well, yeah, we'll we'll move on and we'll let you get back to your day, but thank you so much for coming on. Is really interesting.
Speaker 2:Yeah. I'm excited to fully read the report myself and yeah, looking forward to Thank have you back on in the near future.
Speaker 1:Yeah. Yeah. We'll talk to soon.
Speaker 7:Sure. Cheers.
Speaker 1:Thanks so much. And next up, we're continuing our deep dive into the techno industrialist play policy playbook. If you haven't had a chance to go see it, it's all over X today. And it's you can find tech. Rebuilding Tech.
Speaker 1:What a good domain.
Speaker 2:Www.rebuilding.tech.
Speaker 1:Yeah. So Santi Ruiz is joining, and he can, share the techno industrial industrial policy playbook. Is The United States still the world's leading techno industrial power? The answer is no longer obvious, and that should worry us. Let's bring him in to have him break it down for us.
Speaker 1:Cindy, how are you doing?
Speaker 2:Welcome to the Dramatic entrance.
Speaker 1:Fantastic. To see you. What's going on? How are you doing?
Speaker 3:Good. I'm good, guys. Thanks for having me. Long time listener, first time caller.
Speaker 1:Yeah. Yeah. Amazing. To have you on here. Yeah.
Speaker 1:We got a little bit of an overview of how the little, what, think tank cinematic universe came together. Yeah. The Infinity Stones Avengers
Speaker 1:of together. Yeah. The Infinity Stones. The Avengers of Thinking. But so so so let's just jump into it. What what what I I I know that there's a number of policies, but which one do you think is the most relevant today? There's a lot of things in the news around tariffs. TikTok is still in the news, but it's kind of faded.
Speaker 1:If there's just one takeaway that you, wanna dive into first, what where where should we go?
Speaker 3:Totally. Let me get to that in one second. I just wanna say, Kelvin did not blog the hard copy of this thing to you Oh,
Speaker 1:we gotta get that.
Speaker 3:But it's really but it's it's really nice. Like, dude, it's really happy. I got a hold of it yesterday and I'm like, really feeling when I was on So, yeah. We'll we'll we'll put up we'll put up the the the drop shipping link soon.
Speaker 1:Yeah. We love the word. We're big fans of the Wall Street Journal. We love we love books. We love everything printed.
Speaker 2:Oh, I I
Speaker 3:made that.
Speaker 2:And the playbook should be in print. Mean, it's it's, you know, it's more deserving
Speaker 1:Just out of print. Dump it out of a c one thirty all over Washington, Capitol Hill.
Speaker 3:Just out the Right right now, you know, while while we're talking, a couple of my colleagues are doing hand deliveries to every congressional office. We're we're doing Amazing. Trying to do trying to do that.
Speaker 1:That's great. Yeah. So so let's go into, some of the top topics, in the report and what we should be focused on first and foremost.
Speaker 3:Totally. So Kelvin pushed on this project and the and the way he broke it down, which I thought was really useful, was basically you've got, like, your national security recommendations, which are what they sound like, you know, a lot of the defense acquisition stuff. A lot of, like, making it easier to do hypersonic testing, for instance, The US. So, like, really defense specific stuff. Then there's, like, a broader, you know, industrial based section called industrial power.
Speaker 3:That's, you know, critical minerals. It's, like, small business administration to make it easier for small manufacturers to get going. The chunk that we really owned, the IFP, and again, for context, I'm at the Institute for Progress. We're a nonprofit or sorry, a a nonpartisan think tank. We focus on, like, largely kind of the innovation policy side of things.
Speaker 3:So our section was, like, frontier science and technology. So we not all those submissions are by us, but a lot of it, you know, we we source most of those submissions. Okay. And a lot of that stuff is just how do we get more out of the marginal dollar that goes to r and d in The US, whether that's a federal dollar or r and d through like the NIH Mhmm. Or the NSF or the Department of Energy.
Speaker 3:In a lot of those places, we we think there's some really actionable stuff where you just want more bang for your buck. Let's say, know, whether or not, you know, agnostic of whether you should be cutting NIH funding by 30% or whatever. I happen to think you shouldn't, but, like, agnostic of that conversation. We think there's still a lot of ways that you can get more juice for the squeeze. So a lot of the stuff that we were really championing in that section was, for instance, one of my one of my favorites is my colleague, Caleb Watney, who's got a piece about XLABS for science funding.
Speaker 3:He's got a new new proposal, basically, the way the NIH and the NSF and to a certain extent DOE are set up, it's really easy for them to give money to universities and academies and really hard for them to give money to other kinds of institutions even if those other institutions might be better at the kinds of basic research or the really kinda hardware intensive high, you know, high basically, high CapEx research that you might need for certain manufacturing fields or or science and tech fields. There's Caleb gets into it pretty well, but it's basically existing authority that all these agencies can use to just start setting up another kind of grant structure. There's no no statutory text needed. No EO needed. They can go do it right now.
Speaker 3:Mhmm. And you can basically you know, whether it's the ARC Institute cool biomedical stuff that that's frontier where there's some of the best stuff is not happening Mhmm. Just at Johns Hopkins or just at these academic institutions. So that that's one example. I could go I could go all day, but, like, there's a lot of stuff that we really try to be as actionable as possible.
Speaker 3:Most of this stuff either needs small statutory tweaks or president or the executive branch can say, let's do it right now, or it's already kind of firmly in agency authority, and it's just culturally or for whatever reason, it's hard for them to get going.
Speaker 1:Yeah. We we were talking to Deleon about this last week, this weird dynamic where arguably the greatest new innovation in science and technology came from OpenAI's nonprofit arm, which is now spinning out this for profit and everyone's gonna make a ton of money off of it. Is is the OpenAI I guess, like, what lessons are the the think tanks on this project or even just what you're seeing in Washington? What lessons are they taking away from that experience? Obviously, it's very different than doing basic research the on, you know, the the human brain, for example.
Speaker 1:But at the same time, you know, they're the the government didn't really fund the transformer that happened at Google. They didn't really fund the development of the initial large language model that happened at OpenAI, and yet, like, the research did get done. And so is that coloring how policymakers are thinking about allocating funding towards research and development in kind of the modern era?
Speaker 3:I definitely think it is. And I think you got, like, a a really live debate right now in, like if you wanna talk about the meta science field. Right? People who wanna do more science on science, figure out how you get the most bang for your buck, basically. I we at IP, this is one of our, you know, our five verticals and the five areas that we work on, and you definitely get people across the spectrum, people who think, like I I've heard people say, you know, like, all federal r and d is, like, down the drain.
Speaker 3:I don't think that's true. Think there's good evidence that's not. But, like, you get people in the space who think, like, you have to overturn the apple cart completely. Mhmm. I think the things that most people agree on is increasingly you're seeing institutions that are not universities being much better at leveraging AI, and I think that's, like, a pretty pretty straightforward argument.
Speaker 3:Yep. You're seeing nonprofit set up often by, you know, folks in the West Coast who wanna be able to leverage a lot of cap they have a lot of capital. They don't have a lot of the other institutional ties, but you you can build kind of new institutions and you're not constrained by the tenure or, you know, whatever. And if you can affiliate with, say, a Stanford, then you get the grad student pipeline, and so you still get a lot of the great talent from the academic system. I think you've seen, you know, focused research organizations or FROs where the idea is, hey, we're gonna spin up for, like, five years to tackle one basic research problem.
Speaker 3:We're gonna see if we can just crack this. We're gonna be a nonprofit because it's we're not gonna commoditize ever. It's just, like, it's too fundamental, but it's either a basic research thing that we think is upstream of some like whole field that other people will be able to tackle, or it's we're gonna build tooling, we're gonna build like an open source like map of the brain at a level that hasn't been done before. And we're never gonna make any money on it, so there's no reason to do it as a for profit company. And we're gonna move at a pace that you can never do at the academy.
Speaker 3:And so
Speaker 2:we're gonna
Speaker 3:try and, like, build the institution to solve the kind of problem instead of starting at your institution and saying, how far can we take this institution? And I think that instinct that, like, you wanna just solve specific problems and build an institution that's, like, built to solve that rather than try and pick up whatever you have and squeeze it in. Yeah. And I think you're seeing a lot of that in Washington right now.
Speaker 1:Can you talk a little bit about the replication crisis? Is that front and center? What what is the replication crisis in your mind, and and is there actually a plan to solve it? Is it something we should even be trying to solve?
Speaker 3:Yeah. We've got a great recommendation in here from our good friend Stuart Buck where he basically pushes us to to get more serious at the federal level, you know, investing replication. I think it's a really plausible idea. It's funny you ask, but my my first on campus job over over the you know, I think my my freshman summer was working at a place called the Center for Practical Wisdom, which was like a psych research lab, and about halfway through that job, I kind of realized it's a great name, but I think I I kind of had to come to Jesus moment where I realized this this research isn't like, this is not gonna hold up. Like, two years from now, this is gonna be poked full of holes.
Speaker 3:Like, what am I what am I doing here?
Speaker 2:Narrator, it was not practical.
Speaker 3:It was it was, you know, I still I still think you can probably study wisdom and maybe not with, like, these small end studies about how people appreciate paintings. It was really bad. I I tend to think that the replication crisis stuff is more of an issue for the soft sciences, for the social sciences. Mhmm. I think a lot of the hard tech that you really wanna push on, you can get a yes or no, and replication's a lot easier.
Speaker 3:I also think there's a lot of, basically, regulations or, like, encouraging of gating of science that the federal government does. If you loosen that, you can make it easier for people to try and replicate stuff and to basically crush bad science quicker. What you really want is just faster turnaround cycles. Like, you're no matter what in a thriving scientific ecosystem, I think you're gonna get a lot of kind of crap. You know, the question is, like, how quickly does that stuff get flushed out of the pipeline by Yeah.
Speaker 3:Good replication or by incentives that make it easier. You know? If if if there's a got a bunch of great scientists out there, you're still gonna get random stuff that doesn't replicate, but you just wanna kill it early and and have, like, strong incentives for that killing to happen.
Speaker 1:That makes sense. How do
Speaker 2:you think about timelines for all of these issues at at, you know, one of the potential disadvantages of our democratic system is, you know, potential turnover every four years, or two years in in leadership. And, we we were talking with Kevin about sort of China China's ability to do a bunch of consecutive five year plans that are kind of building on each other's. So across the board, how how do you make sure that, these kind of policy recommendations can, really outside of getting a meet you know, immediate changes implemented, have sort of longevity because in in many of these, you know, we're not gonna fix shipbuilding in the next three We're not gonna, you know, set up, you know, it's gonna be hard to set up a meaningful amount of special compute zones in a a few years. Right? So maybe talk to the strategy around on for you guys in terms of making sure there's like really these become kind of organic movements in Washington.
Speaker 3:Totally. There's a few different pieces. I think one is going a lot of technology podcasts.
Speaker 1:You know, that's really
Speaker 3:simple here. There we No. I I would say, like, at the top level, like, you just have to sell this to the democratic to the democratic public. And, you know, what Kelvin mentioned about, like, you don't have the Sputnik case, you know, short of a a Taiwan invasion. There's not one single thing that's gonna, you know, wake up the American people to this where they weren't on before.
Speaker 3:I think you're just gonna have to sell. You just have to, you know, keep keep making this argument. I tend to be pretty bullish on, you know, the American people's, you know, perceptiveness about this stuff, but you just do have to go sell.
Speaker 1:Yeah.
Speaker 3:A lot of the recommendations in here are around shortening timelines for stuff. There's a lot of things I think you can do to just make that kind of change administration democratic accountability problem easier by just saying, like, for any given thing that you work on, can you make it last, you know, two administrations instead of three? Like and what are the kind of technocratic things that are standing in the way of that? Like, what are the actual regulatory things that make you take four and a half years to get, you know, your initial need to permit for a for for infrastructure? And I think that's like a that's like a real issue here.
Speaker 3:Right? On a long enough timeline, anything is going to get vetoed. If you have vetoed points throughout the process, like, the longer the timeline is, it doesn't matter what it is, someone's gonna kill it. Yeah. And so I think you have to have, like, an affirmative democratic case for, like, look, people voted for this.
Speaker 3:We're gonna do it, and it's gonna be done, and we're not gonna let somebody fifteen years from now kill And then there's a lot of stuff in here that I think is bipartisan, where it's wonky, it's technocratic, you know, there's not, like, huge risks on critical mineral production. You know, it's not huge risks on, like, the small business administration should be really effective, but you need to exercise political will to do it. And so some of it is just like really fine grained technocratic stuff that we think, like, you have agreement, but you just need to push and you need a really clear action plan for how to do it. It's not enough to just say like, hey, shipbuilding should be better. You need to be able to lay out, like, here are two things you could do tomorrow to improve and TV.
Speaker 1:Yeah. I mean, staying on shipbuilding, what does the vibe feel like around, advanced manufacturing, automation, humanoid robots, let's not worry about the workforce at all versus let's go into reskilling, upskilling. Let's bring let's bring back the idea that you can have a beautiful American dream career in an industry like shipbuilding.
Speaker 3:Yeah. Thanks to our our friends at American Compass. You know, I'm an IFP. Kelvin's a FAI. American Compass is kind the third part of this, but they spend a lot of time thinking about workforce skilling and redevelopment.
Speaker 3:So there's a lot of stuff in the industrial power section here about, like, what do you actually do? What's worked? Because there's, you know, easy to say, okay, workforce retraining, but, like, it's it's not an easy problem. There's lots of failures there. So what do you actually what do we actually know about how to do that?
Speaker 3:I think everybody on this on on this team, like the Venn diagram is there's not gonna be as many manufacturing jobs five years from now as there were at a, know, at a peak of American manufacturing Mhmm. Even if we improve output. And I think, you know, your listeners will know this, that you're gonna have to lean on automation pretty heavily to kinda get close to competing with China. At the same time, I think there's absolutely room to say, like, if you if you reindustrialize and automate, that's gonna there's be a lot of jobs there. So I think the question is just, like, on what scale is that?
Speaker 3:Is that, you know, a World War two level mobilization? I don't think anybody here is pushing for that, you know, that that more than half of, you know, all able-bodied men should be working in the factory. But I think there's absolutely room to to push to push that even without even without looking at those kinds of orders of magnitude.
Speaker 1:There should be a warehouse in El Segundo, honestly. Maybe not. Everybody.
Speaker 2:Yeah. Everybody. What
Speaker 3:away voice.
Speaker 2:What topic in the playbook do you think is gonna get the least attention this year that will get the most attention, let's say, in in in five years? Is there a specific area? Because right now it feels like, you know, a big a big part of this is around, you know, is is all encompassing around kind of industrial policy. But, know, we were in Washington last week and there was, you know, it was very bipartisan event around re industrialization. So it it seems like everybody is is not not everybody, but it feels like there's a general alignment there and a lot of attention there.
Speaker 2:But of these kind of subtopics, where do you think it is being kind of, like, underrated or under discussed?
Speaker 3:Yeah. I think probably in the discourse, there's a couple I would point to. One is just nobody wants to talk or think about pandemics anymore. You know? It is just, like, no energy to, like, relitigate COVID or to kinda think ahead of plan.
Speaker 3:Think this is one of these weird lessons of COVID. It's, like, operation warp speed is a massive success in a lot of ways. We learn a lot about, like, what should we do to prevent future pandemics or to minimize them, And then just nobody has any energy left to talk about that. So I think there's
Speaker 2:some Yeah.
Speaker 3:Really good ideas here on, like, pathogen sequencing. And there I think there is real movement in DC on, like, all purpose, like, viral vaccines. And a couple of colleagues put together some really good work here. But it's just, like, nobody wants to talk about that right now. I think that's, like you know?
Speaker 3:And and I get it, to be honest. And then the other one is, you know, the high school immigration fight is gonna keep happening, you know, throughout. You know, over the course of this admin. I think you've got different parts of the coalition, you know, in the admin that have very different views on this, obviously, even among the orgs that put this together. We, you we we don't all agree on everything on immigration, but there's a proposal in here that I really like that's basically DOD could be much better tracking, like, who are the top scientists, maybe the top thousand scientists out there who we would like to have stateside and just, like, keep it keep it tight.
Speaker 3:You know, this it doesn't have to be lumped in with the o one or the other just kinda general, like, high level talent. But if you have, like, a specific list of here are the people we would love to poach from China, and then just, like, make it extremely easy for that specific list of a thousand or 2,000 people to if they ever wanna come over here, you know, either got the the kind of golden ticket path. And I think there's you know, if you think that science is, like, long tail, that the the really the rock star scientists, the best founders, the best r and d people are just like, a few orders of magnitude better than some pretty good people, this is not a kind of crazy idea. Think, like, let's, you know, poaching the highest highest value people would have an outside impact.
Speaker 1:Awesome. Makes a ton of sense. We're we're we're staying on shipbuilding. But thank you so much for
Speaker 2:hopping the stream. Is great. Great to have you. Yeah. Of Yeah.
Speaker 1:We'll have to talk more soon.
Speaker 2:And, yeah, congrats on the launch.
Speaker 3:Thanks a lot.
Speaker 1:See you. Cheers. Bye. And we got Bill from Durack coming in the studio. I want sound effect for Phil.
Speaker 2:Phil. The man I once called
Speaker 1:a child.
Speaker 2:I didn't call him a child.
Speaker 1:You called him a baby? No. You referred to him as a five year old. You said he was a toddler? No.
Speaker 1:It was very rude.
Speaker 2:You're going too far. You're going too far.
Speaker 1:We've all had
Speaker 2:mistakes in I made a big mistake. Things make mistakes. I've also mispronounced Oh, tons of And now we're boys.
Speaker 1:But now he's here.
Speaker 2:In Washington last
Speaker 1:For the third time joining the stream.
Speaker 2:There he is.
Speaker 5:Yes, gentlemen. How is it going?
Speaker 2:Let's Welcome to the
Speaker 1:stream, Mel.
Speaker 2:Oh, that's great It's
Speaker 1:been ages. I haven't talked to you on stream in three days. It's terrible.
Speaker 5:Yeah. I'm so glad to be back.
Speaker 1:I'm just
Speaker 5:surprised dearly. Yes. I'm in New York in the capital of the empire, you know, in the Empire State Building.
Speaker 2:Capital of the empire.
Speaker 1:Capital of the empire. I love it. Okay. Quick intro. Explain, like, five, what the company does, and then the announcement today.
Speaker 5:Absolutely. So we're Dirac. We have some software that automatically generates assembly instructions for manufacturers. We like to say it's all about context aware production planning. That's not the, you know, five year old wouldn't really get that part.
Speaker 1:LEGO instructions for ships.
Speaker 5:Yeah. Imagine IKEA assembly instructions for planes, cars, engines, and now boats. That's what
Speaker 4:we're gonna talk
Speaker 1:about today. Okay. So what else? Break it down.
Speaker 2:So we're talking about yachts, right? Potentially transitioning Alcatraz to Yep, pleasure yachts. Yacht Harbor.
Speaker 1:Super yachts.
Speaker 2:Tax Haven, yacht harbor.
Speaker 1:Yeah.
Speaker 2:No, sorry, go on, go on.
Speaker 5:All about yachts, specifically yachts that can launch projectiles.
Speaker 7:There we go.
Speaker 2:Got it.
Speaker 1:Okay. Best
Speaker 3:So unfortunately,
Speaker 5:shipbuilding for a while in The US has been slowly slipping. We at Dirac have decided to partner with a company called Fairlead.
Speaker 1:Mhmm.
Speaker 5:Who is a captain of maritime production in The United States. They're based out of Norfolk, Virginia. They're sort of the Norfolk Shipyards. They run the place. They work with all sorts of different clients.
Speaker 5:They're a massive shipbuilder. We're talking submarines. We're talking destroyers. We're talking carriers. Fairlead has selected Direct to basically modernize a lot of their production planning and infrastructure.
Speaker 2:So Amazing.
Speaker 5:Really, really excited to work with them. They are super tech forward. Funny enough, they actually launched their own venture fund
Speaker 2:earlier today. Wow.
Speaker 5:So great timing for them. And, you know, we're excited to announce this partnership. This looks like us basically getting into the forward deployed engineer game. We're gonna we're gonna have a guy deploy down there, modernize a lot their infrastructure, and deploy, the latest and greatest rack technologies to their production plan. So if we, I yeah.
Speaker 1:Yeah. So break down the, you know, the massive onion that is the layers of building an actual ship on Fairlead.com. I see they have an aircraft carrier, but it seems like they build systems that go into the aircraft carrier. So are they, like, a are they under a prime contractor? Do they work for Lockheed and Northrop or someone else?
Speaker 1:Or So Huntington Gold. Is that right?
Speaker 5:Yes. So I got you know, in the in the interest of preserving Fairleads confidentiality, I, I won't I won't say exactly which primes, but they have many, many, many prime contracts that they
Speaker 3:Sure.
Speaker 5:Systems directly onto. Got I can tell you that the biggest shipbuilders and maritime producers that are primes are Huntington Ingalls, Bollinger, General Dynamics Electric Boat. Yep. These are potentially the types of companies that hypothetically fairly Sure. Be working with.
Speaker 5:And so, yes, they
Speaker 1:support And then what are they actually building on the ship? I see some systems, variable speed drive switchboards control systems. Like, can you concretize this and, like, break it down in more simple to understand? Like, is it the steering wheel that they're building? What are they doing?
Speaker 5:So basically, when you get a boat, right, you're you're you're saying it's time to ship. Right? We're we're gonna make a boat. It it's which is a, you know Right. You you a shipbuilder makes a hull.
Speaker 5:Right? They make they make this, you know, they make the they start to make the hull. They start to make various, systems within that ship, but, really, they're making like a ship. Yeah. What then happens is a integrator needs to come in and actually soup it up with the latest and greatest technologies.
Speaker 5:Mhmm. You know, they need to integrate software. They need to build in the control panels.
Speaker 1:Mhmm.
Speaker 5:They need to build in all the infrastructure and weapons platforms that then go on that boat.
Speaker 1:Got it.
Speaker 5:So it's different as an industry in the way that you produce than automotive, than aerospace and defense, a variety of other industries. But when you look down at like the types of things they make, these are subassemblies that you can see on any type of platform out So that's shipbuilding as an industry, if we were talking about it relative to other industries. They build, obviously, the largest systems on the planet because those are basically boats. If you look at automotive as an industry, automotive is fairly modern. You have automated facilities.
Speaker 5:Automotive is fairly modern. Aerospace and defense as an industry is probably like around twenty years behind automotive. And then shipbuilding is probably thirty or forty years behind. So, you know, CAD as an example of like a metric or the CAD adoption, like three d modeling adoption as a metric for, you know, advanced the industry is. You know, we're talking, you know, automotive, everything is cadded up.
Speaker 5:Aerospace and defense, the majority of things at this point the past fifteen, twenty years have been Mhmm. Catered up in, you know, digital representation.
Speaker 1:Yep.
Speaker 5:In shipbuilding, you know, these these guys are largely on paper processes. And they make these, you know, some of the most advanced pieces of technology that come out of an engineering department, But they're still looking at two d drawings. They're still, you know, basically drafting pieces of paper. And that is what we're getting Maritime off of. Dirac is leading the charge, captaining that ship.
Speaker 2:What does that design kind of work and production workflow look like from a, you know, prime to a fair lead to the actual, you know, manufacturing engineers that are making, you know, individual parts? And I imagine oftentimes the the the initial designs or the specs, you know, you're actually, I'm sure that Fairlead and Fairlead's engineers realize at different points like, this worked, in, you know, a CAD file, but it doesn't actually work in practice. We need to reengineer it. What what does that kind of collaboration process, look like on a on a general level without going into detail on on on Fairleads specific process?
Speaker 5:It looks a lot like a lot of plane tickets bought to Virginia. You know, a lot of folks flying from DC to you know, from, Norfolk to DC, from Boston all over the place to California. It is very difficult for these folks to communicate technical designs digitally right now and it is because it is all on paper. And so it looks like a very angry phone call down to the docs and say, hey, we got that system that you guys shipped. This thing don't fit.
Speaker 5:What's going on? So unfortunately a very frequent occurrence. If you look at the average delivery date for a submarine, on average submarines are three years late. It is really, really bad because the barrel that everyone in maritime is staring down at is the year 2027. It's a big year that the Navy, that the Army, that everybody in the US military is focused on because that is the year that we think, you know, some crazy stuff's gonna happen with China.
Speaker 5:And so, you know, they're thinking, okay, it's 2025. We need submarines yesterday. Yeah. You know, the annual production rate for submarines in The United States is one and a half submarines a year. China makes more than 10 a month.
Speaker 5:And so, you know, that is a terrifying number because the as you were kind of asking about,
Speaker 1:it just
Speaker 2:Red alert. I mean, that that is Yeah. Yeah. Staggeringly bad. That's terrible.
Speaker 1:Yes. Can you give me a little overview of the executive order restoring America's maritime dominance? Dominance. What's in there? What does it mean for shipbuilders, you, America broadly?
Speaker 1:Yep. And yeah. And and and, does it make you more optimistic about that problem?
Speaker 5:Yeah. I would say it makes me more optimistic. The administration current administration is taking it extraordinarily seriously that we need to the modern American shipbuilder. Mhmm. These are things that are named like that statistic that I mentioned.
Speaker 5:Statistics like this are named specifically the executive order. And they're basically calling out the shipbuilding industry saying, if you are, you know, 15%, I forgot I forgot the explicit number. But if you are late by a certain percentage on your contract, you will be fine. You are subject to losing your prime contract. Like, is not okay to ship late anymore.
Speaker 5:You know, unfortunately, not too many Jira tickets flying around shipbuilding, but they ought to use something like that at least. Yeah. When it It is staggering problem that at least the EO is taken seriously.
Speaker 1:Yeah. Yeah. That makes a ton of sense. Well, thank you so much for hopping on. Do you have anything else, Jordy?
Speaker 2:No.
Speaker 1:This is We are going to hop over to talk to Fairlead, the other side of this deal, get Jim's take over at Fairlead. Put the screws to
Speaker 2:him. We're going to pitch Fairlead on leading on 1,000,000,000 posts into direct. So wish us luck. Good luck.
Speaker 5:Well, thank you guys. I will catch you later.
Speaker 1:We'll talk to later.
Speaker 2:Great to see
Speaker 1:you. Bye. Cheers. And let's bring in Jim here on the other side of We don't talk, I mean, Fairlead's not a company that a lot of people know about private. It's been in business since the eighties.
Speaker 1:But fascinating to hear from a true industry insider, who actually works on building these ships. I you know, we've seen in Silicon Valley a lot of companies kind of nibbling around the edges. There's some, you know, bunch of shipbuilding companies that are building smaller systems or more swarm based systems, not really focused on the exquisite systems. Well, Fairlead is the company that actually works on the big ships, which we need to keep making, even as the landscape of the battlefield changes. They do ship repair, maritime manufacturing, privately held, veteran owned, controlled by its founder.
Speaker 1:They're still in founder mode. You'd love to hear it. Jerry Miller.
Speaker 2:And they have a new venture fund.
Speaker 1:Sounds good.
Speaker 2:I'll have to ask about that.
Speaker 1:It was founded by a former US Navy surface warfare officer and longtime Hamptons Road Ship Repair Entrepreneur, owns the company through closely held Miller Group. In 2014, he rebranded his previous Miller IMG field operations as Fairlead Integrated and has remained chief executive officer and majority shareholder ever since. In 2019, former, General Motors CEO Dan Ackerson bought a small equity stake and serves as a minority owner strategic adviser, but no outside corporation holds a controlling interest. Anyway, is Jim available? Let's bring him into the studio.
Speaker 1:Welcome to the show, Jim. Nice to meet you.
Speaker 6:Thanks so That was fantastic. Yeah. We appreciate, and privilege.
Speaker 1:Yeah. We're really excited to have you here. Would you mind introducing yourself and a little bit about the company? I gave a little bit of an overview, but I'd love to hear it from you.
Speaker 6:Certainly. James Blum. I run corporate development on behalf of Jerry Miller and Fred Pasquind, the president. Who's running, Fairlead. And we've rebranded into, we've now turned it into Fairlead.
Speaker 6:And we have Fairlead Ventures, which we announced earlier today, and very privileged to also partner with Tirac. And that announcement is, coming out any moment as I as I understand from Phil and the team. Yeah. And at Fairleaf, we're very privileged systems engineering, shipbuilding, ship repair. Mhmm.
Speaker 6:And then we work on many different advanced energy challenges that the Navy has experienced and wants to integrate and adapt and and apply. And we're very fortunate to do what is known as commercial off the shelf integrations and then harden those integrations from the world's leading industrial manufacturers and integrate them into navy platforms. I'm very fortunate to support the navy and work on a number of different key initiatives across the maritime industrial base. We're part of the submarine industrial base, and we're we're fortunate to work on some very important problems around Colombia and the Virginia class. And then we do a lot of modular shipbuilding, around aircraft carriers and all the the latest designs that are coming out and applying a lot of different autonomous capability, to our aircraft carrier, fleet.
Speaker 6:And then we're working very closely to destroy our class as a platform and working on, applying a lot of next generation energy capabilities so that they can be integrated for lasers and hypersonics. And then lastly, we worked very closely across the USB space, really applying very, very hardened military, industrial systems engineering, and and critical engineering capabilities where you're you're really classifying a new set of software defined infrastructure that's being, cascaded and fused across all the different platforms so they're more intelligent, more capable, and and can move faster and and address a different lethality capability that we faced in the past. And now we're we're upgrading and and ready for maritime dominance under the executive order that our president just announced. And and then, obviously, with the opposite shipbuilding coming in.
Speaker 1:Yeah.
Speaker 6:Shipbuilding and ship repair maritime dominance is something that privileged to support the community around. And so we're really augmenting and accelerating what I would call that next generation of hardening and that capability of engineering that is critical from a quality control and speed perspective. And so that's what we're doing at Fairlead, and that's why we created a venture arm, and we actually launched it and announced it today. And we're we're backing emerging managers who are leading in autonomy and AI and applying autonomy and AI and machine learning, some of the most important weapon systems, for for our country and as well as to afford us that capability and deterrence and and all the key theaters that our are responsible for addressing.
Speaker 1:That's very cool.
Speaker 6:Are you Very
Speaker 1:nice to be here on the Yeah. Thanks.
Speaker 2:Yeah. So is it is the new fund folk is it would you call it a fund of funds? Are you, you're investing in in managers or in in direct investments? Or or what's the focus?
Speaker 6:Yeah. We're the two latter. So we're really focused on backing the best emerging managers in the space and the best founders and entrepreneurs in the space, and that's what, Phil, from Dirac, is amazing example of. And we're just really, really fortunate to bring that kind of model based manufacturing, you know, into shipbuilding now. And and one of the key areas in the country, which is Norfolk and Hampton Roads and Virginia Beach and then Portsmouth.
Speaker 2:So So Yeah. How is, one of the the you know, Phil is extremely eloquent and, brought up a bunch of interesting data points on the fifteen minutes he was on before this, one of which was, The United States. What what do we make? One submarine a year at this point? Takes about makes around months, I guess.
Speaker 2:Eighteen months, he said. China makes around 10 a month. How does Fairlead think about, you know, helping close that gap over time?
Speaker 6:Well, we we believe that the key is workforce development and capacity and capacity planning. And these these systems are very exquisite, and they require extraordinary amount of testing and certification. And when you wanna apply next generation technology, you really have to have all those processes in place. So we're fairly just sought out from a strategic planning perspective. We've really, as a brand and under Jerry Miller and his leadership and Fred Pasquin, the entire company is dedicated to quality and to speed at scale.
Speaker 6:And so for us, we sought out, you know, a company that was doing exactly what Phil and Pete and, you know, Jared and Trevor were building. And BuildOS for us was the software that was gonna help us really accelerate that schedule and address that schedule risk you were just talking about. And so, yes, the Navy and all of its partners across the def defense primes, you know, across the Navy, all of them, shall I say, heritage primes and the new neo primes, everyone has to actually help, you know, General Dynamics and Electric Boat move faster as fast as they can, and they're an extraordinary company with extraordinary leadership. There's a lot of technology and complexity that has to be integrated. And then quite frankly, from a shipbuilding perspective, that production schedule is is very challenging.
Speaker 6:And so getting it getting it to a position where it can introduce effectively two to three more subs over the next five years. So instead of, deploying and introducing one new submarine or or two in a year to up to three to four, that's gonna take a very, very, very heavy lift from the ecosystem and fairly just part of that ecosystem. And we think with Dirac and and that modernization and that single source of truth that they bring will help a firm like ours cascade and accelerate that entire industrial defense supply chain base around the Columbia and Virginia class submarine manufacturing process. And we think we should be able to advance it rather rather significantly, but what we're talking about is really moving in production schedules from 2035 and 2030 into 2028 and 2027. And so that's a very hard lift, for the Navy, for its defense primes, and we're we're certainly with Iraq gonna impact that schedule.
Speaker 6:And we think we can have a a major impact, not just on the acquisition and delivery side, but also the sustainment side. It's a really important part of actually if you look at, you know, how all wars are won, they're won through sustainment in their supply chain. And we're really excited about that fairly to really, you know, reducing and mitigating a lot of that risk across the suppliers and across the defense industrial base supporting, the great submarine industrial base that we have in our country and that leadership.
Speaker 1:I'm sure a lot of founders of new defense tech companies would love to do a deal with you or sell into a company like Fairlead. Can you walk us through, what it takes for a young company to prove that they would be the right choice for a partnership with a more established company like yourself. What's the conversation like? What are the KPIs? What are the things that you need to do to derisk taking a chance on a new and growing company?
Speaker 6:Sure. It's such a great question. Succinctly, they believe in a center of excellence.
Speaker 1:Mhmm.
Speaker 6:So from our perspective, the leadership team and their engineering and, I'll just say, all across product, all across engineering, and the founders are to be committed to addressing the ecosystem. So what that means is literally actively having the forward deployed engineers be there to build up that new system of record with their own solution engineers and architects, but they literally will advance training for that workforce development, that workforce education, and then scaling that over a thirty six to forty eight month time frame. So as a result, that that means that the founders and their founding investors have to have patient capital and capital from what I would call remarkable venture firms and growth equity firms. And then they have to have a deep capital base because this is a very these are these are three to five year sprints, and and the goal is to move at scale. And then you're training and upskilling and then really attracting extraordinary engineers, the best builders in our country to actually a new space for them, which is maritime and this maritime industrial base for maritime dominance.
Speaker 6:That require requires a heavy lift on an earlier stage firm. So what I would say is almost series b and series c firms in general
Speaker 1:Mhmm.
Speaker 6:Are a better fit unless, of course, they have leadership that is extraordinary and deep like Dirac is and is a great example of significant expertise in the maritime industrial base, significant under understanding of how electric boat and general dynamics actually works as a company. And then having that knowledge and then being able to scale that knowledge, build that into a software system, which be is a platform that we can integrate all of our shipbuilding and our systems engineering and a lot of the product development that we do and then applying a lot of autonomy and AI stack into that from a work assembly perspective, from a modularity perspective, that is that's a heavy lift for most companies. Dirac had all of the above, and then they had extraordinary founding investors behind them from a seed perspective. Mhmm. And then they have a broad ecosystem support across what I would call the venture capital stack.
Speaker 6:And that capital investment partnership that they have cascading across the country, both on the East Coast and the West Coast meant for Fairlead. They had mitigated all the risk for us as well as the maturity of their software and then their commitment to build a center of excellence in Norfolk around that entire community where the Navy has a very significant amount of its fleet and manufacturing base. So those were the key requirements. And I would say that they also have the technology road map that we thought was absolutely core and critical to us. And we've been seeking that out for the last nine months under Fred Pasquen and Hal Barsh, and Hal really leads that for Fairlead.
Speaker 6:And he was extraordinarily impressed with the presentation by Jared and and and and Phil. And just to give you a sense of how fast we move, we moved from meeting them to actually executing a purchase order and agreement and a commitment to getting trained and scaling this Fairlead in under three and a half weeks. That's how fast we move at speed and scale. So for any founder out there who believes that they have the next piece of the core tech stack that will unlock capacity, scale, and autonomy and manufacturing for our country, yeah, we can we we move much faster than most industrial enterprises. And we're that's why we have a venture arm that we launched because we wanted to back that with capital in addition to being a great customer and a great partner.
Speaker 2:That's very cool. Wow. How how is Fairlead, thinking about, opportunities to support, various primes on smaller autonomous systems? It's obviously very different, you know, manufacturing process to make, you know, a thousand of something versus, you know, one or two of something, and I know it's top of mind, for you guys.
Speaker 6:Yeah. Which so well said. We began this journey back in 02/2015 really trying to back as many new founders who were really early in that smaller autonomous stack. And so we're just been very fortunate to back a number of new and traditional players in the USC space. And we really started really on the system engineering and systems integration side, and we have found now that we're really we've been very lucky that the Navy has been so supportive of us that we're now working with many of the of the brands who are out there who well well well published, doing an incredible job raising capital, an incredible job pioneering in what I would call smaller hybrid fleets and introducing new port capabilities, terminal capabilities, the full value chain.
Speaker 6:And so we're just really privileged to work with, you know, what I would say, the new entrants to the space as well as the heritage players. And what we're fortunate to say is we're working with almost all of them, and we really take it from a software and systems engineering perspective. And what we're really trying to do is harden the navigation systems, harden the the autonomous systems from cyberattacks, building out mission modules and payloads to support them. So as you know, many of these remarkable firms with remarkable capital are really building out these new vessels, which are we need and are fantastic. But actually integrating that from a payload and cargo and high value, high consequence cargo perspective, that's actually an extraordinary, shall we say, level of systems integration that's needed.
Speaker 6:We just feel like we're we're just a natural partner, and and the majority of the industry has selected Fairlead. So we we look at everybody as a partner, and we're we're really looking at their timeline to sell accelerate production so they can field and get tested and certified and introduced into theater and so that we can address that schedule risk that our president and, you know, our new secretary of the navy is very, very adamant about reaching. And so we just feel that we're just we're very lucky to be in that position to have the resources, the assets, the real estate, the capital, the leadership, the expertise. And quite frankly, we're now actually a prime ourselves. Been very,
Speaker 2:very fortunate. Congratulations.
Speaker 6:Yeah. Thank you.
Speaker 2:James, if you've ever, if you ever want us to come podcast on a submarine, let us know.
Speaker 1:We're here. Here until
Speaker 2:we're ready.
Speaker 6:Gentlemen, we'll introduce you to all the right people. Fantastic.
Speaker 2:It's great.
Speaker 3:Very honored.
Speaker 1:Well, thank
Speaker 2:you so much for the the new fund and the partnership, and it's great to chat with you guys. Thanks for all the context.
Speaker 1:Yeah. We'll talk to you soon. Have a great one. Bye.
Speaker 6:Thanks so much. Take care, guys. Cheers.
Speaker 1:And next up we have Jacob from New Limit talking about life extension. Can you live forever or are we trapped in this mortal coil? We will get to the bottom of it. But mean, you and it's a fantastic company. Brian Armstrong has been working on it for a while, brought in a fantastic team and they've been doing a bunch of stuff.
Speaker 1:So Jacob, welcome to the stream. Thank you so much for joining. Could we start with a quick introduction on yourself and the company just for those who don't know?
Speaker 4:Yeah. Absolutely. Thank you all for having us today. So my name is Jacob Kimmel, one of the cofounders and president of New Limit. So New Limit's working on a new type of medicine to try and extend human health span, by which we mean we want everyone to have more happy, healthy years in their lives than they do today.
Speaker 4:And we're doing that using a technology called epigenetic reprogramming, which we're happy to unpack if it's of interest.
Speaker 1:Absolutely. Let's unpack Let's unpack
Speaker 7:it. Okay.
Speaker 4:Let's unpack it.
Speaker 2:So I think it's an interest
Speaker 4:to your body.
Speaker 2:Our our human audience. There might be some AI agents listening that
Speaker 4:Not so much. Could also benefit if there are any who are currently tuned in. Yeah. So all the cells in your body, they've all got the same DNA code, which is both kind of trivial. You probably learned that in, like, third grade biology class.
Speaker 4:But it's also presents a wonderful question, which is then, well, how do your eyeball and your kidney and your tongue all do different things? They have the same code base. Mhmm. It turns out on top of your DNA and some of the proteins your DNA wraps around, there are these chemical modifications called epigenetic marks. I think of these kinda like the control flow in software where not every line of your code base runs every time a user hits your application service.
Speaker 4:You use some pieces of the code base sometimes and others other times. And so your genome's the same way. Some cells express some genes from your genome, others express a different set, and that's how they do different jobs. Turns out as you age, all of those epigenetic marks get, for lack of a better technical term, messed up. And so your cells stop using the right genes at the right time.
Speaker 4:They use the wrong genes at the wrong time, and then they degrade in function. And that actually precipitates a number of the diseases and pathologies that arise with age, including things that we don't even traditionally define as disease, but that you or I would certainly like to remedy about our experience if we could.
Speaker 1:Is is the plan here kind of traditional FDA biotech? I'm thinking like some research, then some mice, then dog or monkey, then human trials, then phase one, phase two, phase three, maybe you're a public company at some point, or is there some sort of Silicon Valley twist or different approach that you're taking?
Speaker 4:Yeah. So all of the downstream steps are pretty much what you just laid out. Ultimately, in order to get a medicine into humans, we have to first do no harm, demonstrate the medicine has some reasonable chance of actually helping a person, and then definitely isn't gonna harm anybody when you put it into them. So we do need to do animal trials. We then eventually need to go into the clinic.
Speaker 4:I think the Silicon Valley twist here is that the problem we're trying to solve with how to basically rewrite these epigenetic marks back to the state you had when you were young really wouldn't have been tractable even ten years ago without basically two technologies. One of those is something called single cell genomics. So we can actually take a cell out and sequence all of the different RNAs in that cell, basically telling you which parts of the genome it's using. And then the second, which I'm sure your listeners are intimately familiar with, is AI. Mhmm.
Speaker 4:There are more ways we could try and rewrite this epigenome than we'll ever be able to test in the lab. It doesn't matter how clever you are. The number here is about 10 to the 16, which is a stupidly large scientific notation number to put it put it in context. That's like 10,000 Milky Way's worth of stars. You just can't test all of those things.
Speaker 4:Yeah. And so by building AI models, we're able to actually prioritize which of those potential reprogramming medicines we even go bother to test in the lab, and that helps us get to these discoveries much faster. I really don't believe this company would have been a good idea prior to the advent of really those two key technologies. And so we're trying to paralyze as much as we can early on, so by the time we get to that traditional drug discovery process, we have a lot more conviction around the molecules we're moving forward than you might otherwise.
Speaker 2:Can you talk about the different kind of milestones that you sort of, that that have been important to you and important to your to your partners to get to this point. It's it's, you know, much different than SaaS where maybe you you get funded with an idea and a deck like every, you know, company does, and then you get to maybe 2,000,000 of ARR, you do a series a, 10,000,000 you do a series b. I imagine the milestones have been much different here, but I'm sure you guys hold yourself to a pretty extreme standard around continuously derisking the opportunity and getting more and more convicted, but I'm curious what those have been to date.
Speaker 4:Yeah. Absolutely. I love the way you laid that out. One of the challenges with our technology and biotech in particular is the milestones are not quite as legible as revenue for quite a while. You know, famously, some of the the largest companies in the space took quite a while to even get to revenue positive.
Speaker 4:And the reason these bets still make sense is that once they do have revenue, you really start printing it. There are more drugs making a billion dollars in revenue today than I believe there are software companies. So it's truly amazing to recognize, like, a single product is transformational. So all of these hard bets make sense even if there is a challenge in making them legible along the way. So for us, really, there were a few key milestones.
Speaker 4:When we started out and built the company, all of this was effectively an idea. There was an existence proof where we knew it was possible to reset the epigenome of an old cell back to a younger state, but that existence proof was something that in the field we often call a tool compound. It tells you that the biology is tractable, but it's not a medicine you can put in people. It basically works, but it's not safe. And so we had to first build all of the technology that would even let us run these experiments in the first place.
Speaker 4:Just to give you a sense of scale, before New Limit, people had really only tried 19 different ways to do this sort of epigenetic reprogramming intervention, make an old cell look young. 16 of those I had done in my old lab with my own hands. Like, really, this was just a gold mine that not many people were digging in. It's just like me there with, like, a tiny little plastic shovel. And so at New Limit now, we've tested about 14,000 of the different ways to reprogram cells.
Speaker 4:So we like to say it's six or 700 x depending on if you let me round up or not. And we had to build all the molecular tools to even let us run those experiments. That's sort of step one. Step two is we then have to demonstrate that, actually, even though I'm really proud of the fact that we can run 14,000 experiments, it's way smaller than 10 to the 16. We can build AI models that are sufficient to actually prioritize which of those experiments are worthwhile.
Speaker 4:If you imagine that there's some gold out there, but there's just way more places to dig than than we can really, exhaustively search through, we need a way to find where those spots are. So we're able to demonstrate that now. We think we have the most performant models in the field, really thanks to just the scale of data we've generated. We have hundreds x more than anyone else does to train these types of tools. And then one of the final pieces, and this was the last unlock that actually came a lot faster than we thought it would, is we demonstrated when the in the biotech community is known as a preclinical proof of concept in layman's terms.
Speaker 4:We built some molecules that are actually drug like. So you can actually hold these in your hand. You can hold a tube of a potential reprogramming medicine, put that into an animal model of a disease, and rescue the function of that diseased animal. We can do this both with human cells. In our case, we're able to take old liver cells from old people and restore them back to a youthful function so they can regenerate and repair a tissue the same way young ones do.
Speaker 4:And then likewise, we can put these molecules into animal models, and one of the diseases we're going after is alcohol related liver disease. It's some damage that accumulates from alcohol exposure over the course of your life. Not only can we make those cells regenerate better, but we can also just make them much more resilient to alcohol. It turns out that as your hepatocytes, the cells in your liver age, they become much more vulnerable to alcohol when you drink. That's an experiment that I've run-in my own life, and so I I believe the data even without having to replicate it as many times as we have.
Speaker 4:And we're able to really improve the protection they have against that type of damage in a way that we think will really benefit patients. So to our knowledge, that's the first time anyone's really made a reprogramming medicine you can hold in your hand that demonstrates efficacy, something you could imagine carrying forward to the clinic.
Speaker 1:Can you talk about the Series B, dollars 130,000,000? I'm, I wanna know about the round, but then I also wanna know about what do what's the use of funds look like? Because you're doing a lot with data. Is are you gonna spend a hundred million dollars in some sort of, like, large h 100 cluster to crunch all these numbers? Are we at that scale yet, or is it just r and d salaries for engineers, scientists?
Speaker 1:Are there legal folks putting together FDA applications? Is it a bunch of money on, like, lab mice and monkeys? Like, what is the shape of the business right now?
Speaker 4:Yeah, absolutely. So everything you noted is some expense. Thankfully our compute budget quite isn't a hundred million dollars yet. Though I hope we're generating enough data to get there soon. Jensen can donate some GPUs if he's feeling so kind.
Speaker 2:If he's
Speaker 4:serious about
Speaker 2:living Yeah. 50. Yeah.
Speaker 1:Mean, it's in his own interest. He wants to be running NVIDIA for the next forty years. Why not?
Speaker 4:It's it's Yeah. So, the breakdown is basically the main costs are R and D. So we have a couple we have three different therapeutic programs. Our most advanced program I told you a little bit about is focused on restoring function in the liver. We hope that can treat some advanced liver diseases and eventually treat everyone whose liver ages.
Speaker 4:You know, you probably have a little bit less energy than you did when you were 21. I certainly do as well. And that turns out that as we age, over half the population starts to suffer from something called metabolic syndrome. Basically, your rates of heart attack, diabetes, obesity all shoot up. We see this in our own lives with people we know.
Speaker 4:It's just we don't necessarily have a language for it normally. And we think those medicines could treat a very broad swath of patients. We also have programs in immunology, trying to restore youthful functioning your immune system, and more recently, vasculature, trying to basically fix your kidneys and other portions of your body that that degenerate when you can't really move blood around the way you did when you were younger. So that's a large fraction of the spend. And then another big fraction of use of proceeds is really to take these molecules toward the clinic.
Speaker 4:As you start to do experiments in humans, things get very expensive very quickly. It turns out even just manufacturing the molecules that you need to go take into clinical trial has to be done in a really controlled way. You're also just making very large masses of this stuff, and it's very expensive to do. And so because of that, you know, we try and really upfront derisk everything before we get to the clinic, but we still have to reserve a fair amount of the dry powder to make sure we can do right by the patients we're gonna treat, produce the drug in a sufficient quantity, run a sufficiently sophisticated trial to really gain evidence that it's working.
Speaker 2:Can you talk about the pressure of working on technology that so many people are effectively betting on and and in somewhat in some ways feel is inevitable. I feel like if you ever have a conversation with a loved one, you know, a parent, you know, you're talking with, let's say, a parent, they'll be like, you know, maybe a young person is thinking on a thirty year time horizon and the parent is thinking, well, I don't, you know, I don't know if I'll be around then. And then the the the the, you know, younger younger person says, oh, well, by that point, like, we'll have life. You know, I I just feel like this is converse something that comes up constantly that people I like, maybe maybe it's, you know, maybe it's misguided, but I I feel like there's a general sense of inevitability with these types of technologies. But when you guys are actually doing the research and and fighting these, you know, fighting to make this possible, I imagine that at times, you know, maybe in the fullness of time you feel like it's inevitable, but it's it's certainly not, you know, preprogrammed, right?
Speaker 2:It's it's something, it's it's knowledge that needs to be earned. But I'm I'm and it's it's a much different level of pressure than, you know, somebody raising a 30,000,000,000 for a SaaS company where if it fails, there'll be another note taking app that just sort of like takes the place and we'll still be able to organize, you know, words on, you know, digital documents.
Speaker 4:Yeah. Maybe for your note taking app, Jordy. My note taking app is gonna be entirely unique and irreplaceable.
Speaker 2:Yeah. Yeah. Exactly.
Speaker 1:Yeah. I I love the way
Speaker 4:you set this up. It is something we think a lot about, which is the responsibility we have as we're trying to work on these tools. You know, I think in biotech, you don't get many opportunities to take really audacious bets like this. The science we're working on is earlier stage than you typically start a biotech on. There's more inherent tech risk here than many companies are willing to underwrite.
Speaker 4:And so because we do have one of the unique opportunities to take a shot on goal at potentially a thousand x outcome, a medicine that everyone would benefit from over a certain age, we feel really a burden to make sure we're using that opportunity responsibly. And so I do think there's some amount of stress in it, but I think it's mostly positive in that Yeah. I feel like often we're presented with challenges where if we shrink the scope of the ambition a little bit, we can make our lives a lot Well, certainly, we can get to the clinic faster if we're comfortable just having a medicine that maybe doesn't apply to as many people or doesn't work quite as well. And having that burden to say, no. We've got one of the few rare opportunities in the industry, stewarding this capital, working with these generational investors to be able to try and take a shot where, really, we are optimizing for the scale of the outcome rather than just a marginal basis point on probability of success, which I think is something that biotech has maybe forgotten over the past decade or so.
Speaker 4:We've really optimized on probability of success but forgotten the other half of the EV equation. If you multiply even a high probability by a low potential value, your outcomes aren't generating as much as you'd hope for anyway. So it is something that's always front of mind for us.
Speaker 1:Makes sense.
Speaker 2:Yeah, makes sense. How how do you think about the potential impact of, you know, improving the function of the kidney by 10% could have some, you know, additional externality in the body that could actually have a really meaningful you know? So how do you think about kind of complex systems and and the sort of unintentional impacts of certain sort of effects of of the type of drugs that that you guys will develop over time?
Speaker 4:Yeah. It's a great question. It's something like, we don't have a super rigorous framework for this because it's these questions are very difficult to answer quantitatively. I guess, in short, we like to treat those sorts of knock on benefits as pure upside. So before we launch into a program, we need to convince ourselves that just making one type of cell in your body younger is actually going to benefit you.
Speaker 4:And that might sound kind of obvious, like, sure, I definitely want younger cells. But if you then step back and realize your body's hundreds of complex cell types, they're all interacting, well, maybe one really solid link in an otherwise pretty busted rusted chain isn't actually all that useful. So we try and find examples where if we're able to demonstrate that re storing function in just that one cell type helps individuals, helps especially helps humans, then we can get conviction around starting a program. And then everything in terms of the knock on systems benefit, maybe if you had a healthier liver or a healthy kidney, we'll see benefits elsewhere in your physiology that maybe we haven't even directly measured yet. We just treat as upside potential for the long term.
Speaker 1:Yeah. I have a little lightning round. I want your reaction to three kind of biotech projects or technologies and I want to know if they're at all relevant to the work that you're doing, if you're learning anything from them, or just the overall impact on health and just general biotech community. Ozempic, CRISPR, and AlphaFold. So I'd love to start, I guess, with Ozempic.
Speaker 1:It feels like, you know, it's not necessarily life extension, but in terms of health span, could be very good. But how have you been processing the story of GLP-1s? And are there any learnings from GLP-1s that you've been able to kind of port back or update your philosophy or strategy at new limit?
Speaker 4:Absolutely. I think you're entirely right in saying these are some of the first health span medicines. I don't think we actually have a couple already. This isn't like a totally crazy idea. There's another type of medicine called statins.
Speaker 4:They're a bit older. One brand name one's called Lipitor, you've probably heard of. And between statins and GLP ones now, I think it's quite plausible if you do some napkin math, we're adding several healthy years to the median American's life, which very few other medicines can claim. You know, if you look at the rest of therapeutics development over the past decade and add up, how many years could you, I, Jordy, maybe, expect from these benefits, it's it's actually quite small. So I think one one of the things we've internalized is that, you know, the scale of the opportunity really does matter.
Speaker 4:The difference between the GLP-1s and many other drugs is that the axis of biology they're targeting actually is dysfunctional in a huge swath of the population, at least thirty percent of Americans, probably more, depending on exactly how you define that. And when you strike those really high value opportunities, I think exactly as you alluded to, you start to see knock on benefits maybe you didn't even plan for initially. You know, the GLP ones are now showing benefits in cardiovascular diseases. There's early data in neuro that I don't think anyone quite understands, but does seem to be reasonably consistent. And so trying to keep your mind up with
Speaker 1:this stuff specifically, like the addiction and gambling stuff you're referring to?
Speaker 4:No. No. So there's actually even neurodegeneration. Oh, So there's some early trials that like folks on GLP-1s are having lower, sort of slower disease progression for Alzheimer's and Parkinson's.
Speaker 7:Oh, wow.
Speaker 4:That's And as of my understanding right now, it's like basically no one knows how that works. But you're starting to see results like that pop up just because these drugs are out into such a broad swath of the population. Wow.
Speaker 3:We're kind
Speaker 4:of running these experiments without even necessarily intending to. And so I think, really, we've just tried to internalize the scope of the opportunity really matters. And then also the strategy they took to get the GLP-1s into the market is one we're trying to emulate. They didn't start by trying to dose the GLP-1s into a huge population. You start with a small patient pool that you know will benefit a huge amount.
Speaker 4:So in the case of LeBlanc, certain type of diabetics. Yeah. Eventually, expand to the obese. Eventually, you expand to other indications from there. As we're really trying to mirror that stepwise with our programs, where maybe as an example, we're starting an alcohol related liver disease for our metabolism drug, but that's the beginning.
Speaker 4:We don't intend it as the destination and we've tried to plan this in such a way that with, you know, steadily increasing quantums of capital, you can unlock larger and larger opportunities rather than just trying to shoot for the home run right off the bat.
Speaker 1:Yeah. Do you wanna stay on Ozempic before we move on to CRISPR and AlphaFold?
Speaker 2:Oh, yeah. We can
Speaker 1:do I I I wanna get your take on CRISPR. Obviously, was extremely hot technology about a decade ago. Is that at all relevant to what you're doing, or have you learned anything from the story of CRISPR and how that was ultimately commercialized and and baked into the rest of the biotech community?
Speaker 4:Yeah. Absolutely. Maybe two things. I think the impact of CRISPR is somehow both over and underhyped in different Mhmm. It's maybe overhyped a bit in terms of direct application to therapeutics.
Speaker 4:I think if if you go out and look at sort of how the panoply of different CRISPR companies are doing, there are few really stellar examples, like like Bean Therapeutics that we really admire who have managed to make compelling medicines, and others have struggled. And so maybe there's a bit of hype there, but it's really undervalued on the research side. So we've used a lot of CRISPR tools on the discovery end to be able to ask questions at the level of very basic discovery experiments. What happens when I turn this gene on or off? And maybe we're not gonna take those CRISPR tools and trying to actually put them in a person as the medicine itself, but they certainly help us accelerate the discovery of other therapies.
Speaker 4:And so I think it it may be the lesson to draw out of that is, like, when we have breakthrough technologies, often people rush to what is the most direct application therapeutically, but undervalue sort of the knock on benefits of that technology underlying and accelerating a lot of trends that are already at play.
Speaker 1:And then similarly, AlphaFold, massive breakthrough in terms of AI and bio, didn't really move the biotech markets when it when the news broke. And my interpretation of that was that maybe protein folding as a cost center for biotech development was actually not that much of a cost driver in the sense that it's mostly just farmed out to, grad students maybe. But but, I'm sure there's things where you look at that and you think this is going to this is on the path to really, really powerful AI and bio working together. But are are you using AlphaFold or anything like it? Or do are you learning anything from it?
Speaker 1:And overall, do I have a right understanding about the impact of AlphaFold on biotechnology broadly?
Speaker 4:Yeah. Yeah. I think you've hit the nail on the head with the direct impact. You know, I think solving protein folding like actually taking a sequence predicting a structure hasn't been rate limiting for drug discovery in the traditional sense. It is painful to get structures, but usually we work on few enough molecules that getting the structure is not really what slows you down for most traditional therapeutics.
Speaker 4:That said, I do think it demonstrates we're able to learn much more powerful representations of biology than others thought possible. And so maybe by analogy to CRISPR, the direct application is predicting structures itself really gonna solve therapeutic development? No. Probably not. Is learning the language of life in a way that we can actually work with tractably going to accelerate everyone in the ecosystem?
Speaker 4:Absolutely. Yes. And so to your question of, are we using something similar? We definitely do. So one of the the tools that we've built, the models we've built, they try and take in some notion of the genes we're manipulating, transcription factors, and you need learn an embedding, just like an embedding in natural language processing we're all familiar with that you can get from LLMs, and then predict what will happen to a cell's age as a result.
Speaker 4:And it turns out some of the best embeddings we found are from these protein language models that really are often deriving from that basic premise of the AlphaFold like tools. And so I don't think if you see the AlphaFold announcement, you'd ever intuit. Oh, solving protein folding is going to make it easier to find reprogramming drugs that make old liver cells act young. But it turns out that that underlying substrata of of learning these representations actually does accelerate a whole bunch of science you don't expect. And so I think often the headline is a little overhyped, but the subtext is underhyped and probably more important.
Speaker 1:That's an awesome framework. How much
Speaker 2:does the biotech industry broadly pay attention to biohacking and citizen science? I know you can't read too much into what one ex account is experimenting with on any given day, whether it be Cialis or sleeping sleeping nine hours a day. But the other one that was interesting recently was a guy, I think it was last Friday, was let he let like hundreds of snakes bite him
Speaker 1:Oh, yeah.
Speaker 2:That's over time. So I I feel like there there there is alpha in citizen science, but there's also, you know, 95% Yeah. And it's also not, you know, they're not running scales Yeah. Gotta take it with a
Speaker 1:spoonful of cobra venom. Yes. Anyway.
Speaker 4:My god's a legend. I I wish I had the opportunity to shake his hand because he's definitely underappreciated. So writ large, I think the pharma and biotech ecosystem are actually fairly receptive to, like, using the results of citizen science because it's so hard to get data in humans. That even if the data you're collecting in a human is confounded in some way, yes, this person didn't do a perfect controlled trial, etcetera, it can still be better than having no data at all. So I think the two qualifications on this and maybe the examples you gave are are good ones.
Speaker 4:One is when you've got a very small trial, like a single person, but you've got a huge effect size, like this guy who's immune to, like, basically every snake bite. That is such crazy outlier biology that I think that wakes people up to, okay. There's something to learn here. And the other is when you actually have this replicated, maybe unintentionally. So a good example I think you alluded to earlier is the GLP-1s and sort of alcohol use, where this wasn't something that the companies were exploring, Eli Lilly or Novo.
Speaker 4:It's something that started getting reported anecdotally from patients. Hey. I just, like, don't wanna drink anymore. And so the amount of drinking I've done has gone down a lot. And so that was in a way a type of citizen science, people recording, reporting on their own behavior, and now those are actually going through clinical trials in a more formal process.
Speaker 4:And so in the the industry, people call this reverse translation, and it often has a lot of fancy words dressed up on it. But the basic idea being that the place we can learn the most biology in humans is in humans, and we should try and treat every piece of data we have preciously. I think most people would appreciate. There's probably not as much active work trying to collect this sort of citizen science data as there could be, but I think there are a few strong examples where it's really changed drug discovery.
Speaker 1:Maybe I'll ask them.
Speaker 2:No. This was fantastic.
Speaker 1:This is fantastic. Really enjoyed this conversation. I I do want to let you kind of give an overview of the company. Like, I imagine you're hiring. What type of roles are you hiring for?
Speaker 1:What's, next on the agenda for New Limit?
Speaker 4:Yeah. Absolutely. So over the next few years, part of the use of proceeds here is actually to take these prototype medicines we have today and move those into the clinic, actually take them to patients for the first time. And so we're hiring across the board really for drug developers and therapeutic area leaders to help run some of our therapeutic programs for scientists who are skilled in functional genomics. And on the computational side, we have a growing ML team.
Speaker 4:And for those sorts of individuals who might be excited about AI and bio, the carrot we can offer is we have some very differentiated data. We have the largest dataset of this kind by hundreds of fold. You really need to get to this scale before you can train meaningful models. And we think Neulam is one of the few places you can go and and extend your valuable talents where the predictions of your models are actually gonna get tested in a real laboratory fairly soon. So you've got real contact with the universe.
Speaker 4:You're not too far from the metal. So we'd love to to be in touch with anyone who's interested in any of those verticals.
Speaker 1:Amazing. Well, thank you so much for taking the time.
Speaker 2:This is fantastic conversation. Doing this work.
Speaker 1:Thank you for saving my life in the future.
Speaker 2:Because we're I'm putting the cart
Speaker 1:before the horse on this work.
Speaker 2:We're making, you know, our our sons are are about, you know, under five and we're making succession plans with them in about thirty years. Be taking over the microphones. But if we could get another, you know, thirty years Be great. Out of new limit, that would be ideal. So
Speaker 4:world needs parallelized technology brothers podcast. It's required. So we'll try and do our best to make that happen. Thanks, guys. Is really great
Speaker 2:to to Jacob. Congrats to you and the team.
Speaker 1:We'll talk to you later. Thank you so much. Bye. Let's run through some posts and get out of here. Thank you to Brian Via, who went ahead and started a list for, following everyone that has ever been on TBPN.
Speaker 1:I thought this was really cool. Working through the TBPN feed slowly to add all the guests they've ever had. He said, give me a few days so you can go follow this list. We'll quote post it. But we were thinking about doing this and he's just doing it for us.
Speaker 1:Thank you. Citizen journalism there. Citizen journalism. Journalism. Journalism.
Speaker 1:Think of ourselves as corporate podcasters, but corporate media, but it's
Speaker 2:not Thank you, Brian, very cool. I'm gonna go follow the list.
Speaker 1:Also Eric Duncan says, I swear TBPN has me wearing a nice watch and buying DuPont registry at the airport. I start wearing a suit and they won, oh, it's great.
Speaker 2:He's cracking open
Speaker 1:the And he's got the wedding ring on. You know his family man. You love to see it.
Speaker 2:There we go.
Speaker 1:I can't clock what watch that but it looks fantastic.
Speaker 2:Eric's a day one fan. I see it. Great having you as a technology brother.
Speaker 1:And it's nice to have a have a watch on. It looks great. And DuPont registry, I'm a big fan. I follow them on X pretty much every day. I'm always tagging my friends in it.
Speaker 1:This is a good option for you.
Speaker 2:Yeah. Yeah.
Speaker 1:Anyway, we saw Greg Brockman at the Met Gala, which we talked about. This was a fun one. Brex had just launched a podcast with the with the CEO of Deal, and I feel like they must have recorded this before all the drama, and then they just decided to release it once things had kinda cooled down. But, anyway, I invited Alex from Deal on the show. He got back to me and said he can't come on right now.
Speaker 1:Obviously, things are a little chaotic, but, we would love to have him. There's a bunch of interesting questions. I wanna know about the business. I also wanna know about the drama. And it's a live show, so we won't edit you, Alex, if you come on the show.
Speaker 1:We can't. You can deliver whatever message you Always interested. Yeah, would be a great comeback story.
Speaker 2:Certainly a dramatic way to launch a podcast.
Speaker 1:It is a crazy episode one. Yeah. Like of all the people. Like, this is who people want to hear about. I wouldn't be surprised if this is a really, really popular episode.
Speaker 1:Yeah. Although it seems like it's more focused on the run rate, the scale, the employees, the business, but hadn't really heard much from Alex before, all the all the drama, but, interested to hear about him now. You know? Yeah. Anyway, Shweta says, never underestimate the power of one good tweet.
Speaker 1:Rourke's founders were $15,000 in credit card debt, been there, and sleeping on a friend's mattress when Matt's post went viral. Fifteen minutes later, Austin Allred wired a hundred k. By the end of the day, they closed $3.50 k. Conviction. $2,800,000 seed round led by a 16 z.
Speaker 2:Conviction is crazy.
Speaker 1:And Matt says, my jaw dropped. Rourke lets you create entire iOS apps just by describing them. Zero code required. This changes everything for app development. Roark blows Bolt out of the water.
Speaker 1:And, yes, I invested immediately after trying it. Watch this. It's crazy. What a great viral market entry. I mean, this really does seem like just part of the standard playbook of launching a seed stage company at this point is like figure out a way to go viral and just fill up that first, you know, batch of customers to test on.
Speaker 1:Yeah. Might not be a sustainable growth mechanism.
Speaker 2:It's almost getting to the point where if people people will judge you as a founder CEO if you can't nail a sales call. Yep. Right? It's extremely bearish. Totally.
Speaker 2:Even if you're not, every every founder should figure out how to sell the product. Right? Yep. Hundred Because you have to sell employees, partners, investors, you know, the list goes on. Being able to manufacture virality, just figuring out how to go viral Yep.
Speaker 2:Is is getting to the point where it's going to be required in the same way that just being able to nail a sales call is. Right? Yep.
Speaker 1:A %. Well, speaking of that watch we saw earlier, if you're looking for a new watch, you wanna join the ranks of our listeners with fantastic watches, head over to getbezel.com. Your bezel concierge is available to now to source any watch on the planet. Seriously, any watch.
Speaker 2:Head over there.
Speaker 1:Kion at Nucleus Genomics, friend of the show is over at the Ramp office, another friend of the show doing a little collab. All Ramp employees can use their wellness benefit to get the world's most advanced DNA health test. He'll be at Ramp's office for lunchtime.
Speaker 2:Love how he just sets up a little stance.
Speaker 1:Selling to Ramp employees. I love it. Pretty nicely designed little, little partnership.
Speaker 2:Little graphic there.
Speaker 1:I thought that was So congrats to him on that. Michael Dempsey says, okay. Maybe the best venture swag of all time from who we are. And it has a badge here that says, what Fascio Capital Fund LP. What do you think of this?
Speaker 1:You're the merch guy. You have put together some fantastic
Speaker 2:I like
Speaker 1:it. I think it's
Speaker 4:pretty cool.
Speaker 2:I like the pockets.
Speaker 1:I think it's a different look. Get a lot of t shirts and you know, t shirts are great, but you know, they And the fabric. Out. Is interesting Very nice. Something a little different.
Speaker 2:It's It's got some weight
Speaker 1:to Didn't Bain Capital get in trouble for doing the Carhartt and it was like a little too LARP y stored in stolen dollar. This feels like it evokes like the workmen you could you could do some work in this, but it's not trying to be, like, perfectly aligned with another, you know, cohort of individuals. And so it's just kind of its own thing. I thought it was So congrats to those. And we'll close with this post from Paula over at x AI says,
Speaker 2:Recently joined x.
Speaker 1:Yeah. Dramatic move. Congratulations, Paula Rambles. So who's building the app at the intersection of AI and astrology? I actually told Sean over at My First Million when I went on over a year ago that this was a prime area for LLMs because there's something called the Barnum effect.
Speaker 1:Yes. PT Barnum. So the Barnum effect is essentially there are a set of phrases that you can say to someone that sound hyper specific, but in fact apply to everyone. So an example would be like, you have a complicated relationship with your family. Sounds like I know you, but really everyone kind of has a complicated relationship with their family in some one way or another.
Speaker 1:Yeah. Or, you think you're meant for more. Sounds really specific, but really everyone thinks that they could do more. You know, everyone has these aspirations.
Speaker 2:What's your, what's your astrological sign, John? Mataurus. Bull. Okay, I'm asking Bull Marcus. My business is a Taurus.
Speaker 2:How should I communicate
Speaker 1:How should I backstab With
Speaker 2:him today?
Speaker 1:Yes, I think that astrology and AI go hand in hand in the sense that you can download this app and with only knowing a little bit, you can start producing really tailored responses that feel very specific to the individual, this. And even if you're just regurgitating generic life coaching advice, everyone needs to hear, you got this, you you can do it. Astrological sign says that it's fortune cookie, you know?
Speaker 2:Yeah, mean the thing here is I think there's an opportunity to build a thin, a relatively thin wrapper on top of whatever your preferred model is.
Speaker 1:Yep.
Speaker 2:I believe that many people will just use their preferred LLM for a lot of this stuff.
Speaker 1:Yep. Right? Totally.
Speaker 2:Like I just asked o three.
Speaker 1:Yeah. You might not need to go get a separate app, but at the same time, if you're if you design the app with the right aesthetics, right functionality, you do the right customer acquisition on on Facebook, and then you can get the app purchase and subscription, like
Speaker 2:I think a lot of astrology apps that have raised venture have actually done very well. So here's my dues for communication with John today. What to do? Open with appreciation. Hey, John.
Speaker 2:You know, I think you did a really great job on the podcast today. Everything from the prep to your zingers to your interview questions were fantastic. But we gotta talk after the show because, no, I'm kidding. Present, no, no, no. Present concrete tangible data.
Speaker 2:You know, John, the number of times you said hit the sound board, you know, it meant a lot to me. Oh. So thank you for that.
Speaker 1:You're welcome, Jordy.
Speaker 2:Frame ideas as WE projects. You know, John, the prep you did for the show today, I think WE did a great job. Common. It's good. And again, I think this is like the the the challenge here is this is like probably very general advice.
Speaker 1:But it can all work out. You're into, who knows, if you're into astrology, go check it out. Go let us know.
Speaker 2:It's funny, it says here no rush deadlines, but you're actually very good with deadlines.
Speaker 1:I love deadlines. Oh, we have to go live in thirty minutes and we don't have prep? Done. Done. No problem.
Speaker 2:Done. You're the kid who waits until the last thirty minutes
Speaker 1:to do your homework. Same day in the hallway before you go into the class. Anyway, thank you to Ramp, Polymarket, public, numeral, AdQuick, Eight Sleep, Wander, Bezel, Linear, Figma, and Vanta for supporting incredible partners
Speaker 2:of TBPN more than sponsors.
Speaker 1:We're going to be up in San Francisco with the Figma team tomorrow at
Speaker 2:At config. Config.
Speaker 1:Config. Config. Config. Config.
Speaker 2:Excited to be up in The Bay tomorrow if you're an SF. Yes. Pronouncement.
Speaker 3:If you're if you're at if
Speaker 1:you're at config, let us know. Seriously, hit us up. We'd love to have you on. Talk about design, talk about Figma, talk about Vibe code and Vibe designing. We're gonna do it all.
Speaker 1:Anyway it all. Thank you for watching. Fantastic show. We will see you tomorrow. Have a great rest of your day.
Speaker 2:Can't wait. Bye. See you.