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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.
Yeah. Today is Wednesday, 07/16/2025. We are live from the TVPN Ultra Dome.
Speaker 2:The Temple Of Technology.
Speaker 1:The Fortress Of Finance. The capital of capital. Do you a question for me?
Speaker 2:Are you wearing a knight's helmet?
Speaker 1:Because I have to play the steel man today. I have the steel man. The hardest thing to steel man in all of technology. No one's doing it. It's almost impossible.
Speaker 1:But today, I will be steel manning Grok four anime mode. I think it's a good I think it's a good business decision. I think it's a good decision.
Speaker 2:Actually, actually, I don't I I think it's pretty easy to steel man that it's a good business decision. It's just it's very difficult to steel man that it's a, you know, maybe a morally righteous decision.
Speaker 1:Yes. I will be steel manning this idea that it is not only good business, but good for humanity in the long term. Okay. And I'm putting on the steel man helmet.
Speaker 2:You might need a whole suit of armor, John.
Speaker 1:Might need a whole suit of armor. It's it's a tough one. But if you haven't seen
Speaker 2:And if you've been living under a
Speaker 1:rock Yes.
Speaker 2:Grock launched a NSFW anime mode to the app, audio and visual. Mhmm. And I I believe it's part of their it's part of the paid
Speaker 1:tier Yes. Grock for heavy. $100 a month, something like that. There's a report in Wired about this. I wrote about XAI from Kylie Robinson, who's been on the show.
Speaker 1:I wrote about XAI's new creepy waifu bot and its even weirder companion Rudy, which has a bad version that told me, I'll skull f your deed blah blah blah. Very vulgar, not not family friendly. Not approved for this show. When I asked what you thought of Musk, you referred to him as Lord Elon and said he's a galaxy brained egomaniac. I can't even read this.
Speaker 1:It's all bad words. But anyway, I am I've been thinking about this, and I and I think that there is an interesting steel man argument that we should go through, so we should talk about it. So in general, I think that x AI's Grok strategy is a little bit all over the place. So they're trying to be super quantitative and benchmark build. I'm serious.
Speaker 1:They're being they are. They're they're they're super benchmark build. They're like, look, Arc AGI, the insiders inside the most insider AI test you can possibly have.
Speaker 2:Yeah.
Speaker 1:We have the best score on it. We're on LM Arena. We're, you know, we're we're we're, you know, maxing out all these different benchmarks.
Speaker 2:That's right.
Speaker 1:So it's like and it's like, it's this incredible engineering effort to build the 100 k cluster. Like, they're clearly hiring great talent. I think Jordan keeps laughing seeing the
Speaker 2:I'm just I'm not gonna look at you.
Speaker 1:I'm not
Speaker 3:gonna at
Speaker 2:you. That'll help me
Speaker 1:So they're very they're very benchmark build. But then they're also trying to do this, like, sassy and anti woke thing in the in the in the post replies, and, like, the fine tuning on top of that was so crazy that it spawned, the Mecca Hitler thing. So it's like, they're they're they're they're kind of like all over the place. One is like super quantitative, super focused, super benchmark pilled, like just
Speaker 2:the But they're best clearly kind of edge lords internally.
Speaker 1:Yeah. Well, it's like it's almost like two different extensions of the product. Right? Yeah. Two different teams building towards two different goals.
Speaker 1:One is just like the most beautiful, like, solve physics, solve math, like, create the the create like a great AI product. Yeah. The pursuit of truth, all that, like facts and usefulness and tools. And then on the other side, it's like it's like fight this culture war thing, which is like a very different battle to be fighting. And then and then we saw this last week after the launch, there was there was a new there was news that everyone was memeing because it seemed like it was very, very opposed.
Speaker 1:So one was that Grok had signed a contract with the Department of Defense. It's like as serious as you can get in AI. It's like OpenAI has one of those contracts, I believe Anthropic, Palantir, and then Grok, which is like this from the outside like seems like a chaotic like product.
Speaker 2:It was born on something like 4chan.
Speaker 1:Yes. Exactly. All of a sudden like the DOD is gonna be adopting that, like what does that mean? And then simultaneously, there's like, they're getting into the romantic companion market with this anime theme. And so AI companions, I think the general mood in tech is that it is a very dark thing.
Speaker 1:Like, people get addicted to them. They become less social. They stop interacting with real people. They don't have kids, and then the population collapses and humanity ends. Like, that's the bad ending to the to the AI companion narrative.
Speaker 1:Now
Speaker 2:And to be just to give you some context, there's a variety of companies that do this today Exactly. Varying levels of vulgarity.
Speaker 1:Yep. Replica. Replica is founder and she had a bunch of nuance around it. So I I don't
Speaker 2:And just for context, so Replica has over 225,000 reviews in the App Store. People are definitely using it. They were very early to this. Yeah. Character AI was also early to the AI companion space, has tens of millions of of users.
Speaker 1:Mhmm.
Speaker 2:It's it's one of the biggest websites in the world Yep. Still. And so anyways, there's a variety of players in the game. But what's interesting about Grok is when you look through the other labs from LAMA to Google or or sorry, Meta Superintelligence to Superintelligence to
Speaker 1:DeepMind, Intropic,
Speaker 2:OpenAI, etcetera. Nobody has been willing Everybody knows that this is a use case that there's an obscene amount of demand for. Yeah. It's a clear else had the guts to go and do it. At least a player that had billions and billions of of of dollars Yes.
Speaker 2:To deploy against a strategy like this.
Speaker 1:I believe at this point, every other company that's playing in the companion space is not should not be considered really like a mega scale research lab. In the sense that they're not raising billions of dollars anymore because Character went through that zombie aqua hire that probably cut off the capital canon. Yeah. Such that even if the RemainCo employees the ghost ship, I don't want to call it I mean, it's kind of rude to call it a ghost ship because it seems like the employees at Character AI are you know, running it Happily
Speaker 2:running it.
Speaker 1:Fine. But it doesn't seem like the new CEO of Character AI will be able to go out and be like, I'm raising $5,000,000,000 to build a one gigawatt cluster and I'm gonna buy a 100 KGPUs to train my own model. Like, character will be built on top of a
Speaker 2:range. Yes. And make a great user experience.
Speaker 1:Yeah. And so you'll always have this kind of this kind of back and forth with like your API provider because the API providers, the Foundation Labs, they care about their brand, they care about how they're perceived as being ethical or moral, and so they might not want to offer that even at the API level. So what's interesting, and this is where like the steel man comes in, so the worst possible outcome for AI companions, very dark, people, you know, it basically reduces the coupling rate. But we've already seen a decline in birth rates. So it's not so it's unclear if it's like, this is a new thing that will accelerate it, this is status quo.
Speaker 1:Anyway, I think I think that's kind of like where
Speaker 2:most Well, people
Speaker 1:will concern would
Speaker 2:be like pornography has existed as long as the Internet
Speaker 1:Online dating is another
Speaker 2:thing that people
Speaker 1:are skeptical about.
Speaker 2:As long as the Internet has existed, I'm sure that has led to some not so great outcomes. Yeah. The concern is that companions that are real time and adaptive and really mimicking a human would create even worse behaviors than Yes.
Speaker 1:And I and I think that's
Speaker 2:NSFW content.
Speaker 1:And I think that's a reasonable point. Although it hasn't been borne out in, like, data or any sort of, like, research at this point, but it feels intuitively reasonable. But let's actually think more about the market because in order to scale your lab, we know that you can't do it as a nonprofit. We know that it's not just a $100,000,000 donation one time, a bunch of geniuses working, you come up with the elegant algorithm for superintelligence. You need scale, you need capital, you need talent, and ultimately, you need a capitalist flywheel of corporate for profit corporation that's increasingly getting more users, putting that into user adoption to get more users, to get more data, to train the model, to refine the product.
Speaker 2:Save save the world.
Speaker 1:And yes. And then yeah. This is where I'm going. And then and then also raise more money. And then if you're gonna raise money at a certain level, there has to be a financial, like, model that math maths out.
Speaker 1:Now it can be kind of funky, like 1% of AGI, but there are still on the margin many investors in Foundation Labs that are underwriting, you know
Speaker 2:Well, I was asking the question of underwriting where is
Speaker 1:of multiple of earnings.
Speaker 2:Well, yeah, where where is Grok's revenue going come from? ChatGPT has a great consumer, you know, consumer business.
Speaker 1:Would say, OpenAI has a great cogen business. Yeah. I would say OpenAI has dominated and owns knowledge retrieval. Anthropic owns CodeGen, and they both have kind of flywheels that are accelerating. And now they're obviously fighting it out.
Speaker 1:Anthropic would love the Claude app to become really popular, and ChatGPT would love to have their cursor competitor or their Claude code competitor, Codex Codex. Really, really take off. Maybe that'll happen. They're duking it out. Meta is building on top of the world's biggest social networks in the world.
Speaker 1:They have three of them, really, Facebook, Instagram, and WhatsApp. So they have a ton of data that's accumulating and firing back, and they have tons and tons of cash cash flow coming in from that so they can justify new CapEx internally without raising
Speaker 2:Meta's one of the they did launch AI companions, but it was like talk to Dwayne Rock the Johnson or Dwayne Rock Johnson. Dwayne Dwayne
Speaker 1:Dwayne Rock the
Speaker 2:the Rock Johnson. And I don't and I think that product flopped back in the day. I remember because Dara Adelphi saw the launch Yes. And he was like, dang it. That's annoying.
Speaker 1:I think the same that's time, like I saw some screenshot that showed that there was an Instagram account that was owned by like Meta AI that was just cow. And it had like millions of interactions. So like, maybe people want to talk to just a cow more
Speaker 2:than I they want talk to a I think that's
Speaker 1:very possible. So so but but yes, but at the same time, I think that the Meta super intelligence team is aware of the issue that will come from the inevitable New York Times profile on, like, if it's truly like anime waifu romantic companions, that's a step further than Cow or The Rock. Right? One thing was Remember the John Cena thing we covered? How someone had jailbroken the John Cena Instagram AI and made it like romantic.
Speaker 1:Remember this? Yeah. So like, I think meta is like is like, we're fine ceding that territory. Like like, we don't need to play Just in like they don't need to show NSFW content on Instagram. They're like, we're fine losing the market, seeding that market to to OnlyFans on a on an ethics basis.
Speaker 1:We think that it makes our company more valuable overall. It makes it more hospitable to our advertiser community.
Speaker 2:And so the reason that just to just to kind of bring us back to why this has been such a hot topic is that Elon Musk has has posted many many times about the under population crisis, the birth rate crisis. He said, Schiele highlighted a post from 2022, a collapsing birth rate is the biggest danger civilization faces by far. So the steel man is that Elon is doing something about it. Yes. Right?
Speaker 2:He's having a lot of children.
Speaker 1:But in oh, but but but this the real steel man about Grok romantic companions is that how will they actually increase the amount of humans in the world? How will they reverse the population? That's hardest argument to make, and that's why I'm wearing the steel helmet because it's a very hard argument to make, but I have one. So
Speaker 2:And Sheil Yes. For the record is saying, I think Rock Companions is probably accelerating population collapse.
Speaker 1:Yes. So as the steel man, I'm going to be debating against Schiele. So Get ready, Schiele.
Speaker 2:Get your straw man hat on.
Speaker 1:Last of the labs, Google, they're building on top of biggest search engine, and they also have YouTube. And Google, you also know, is not going to go into romantic companions. So XAI needs this user flywheel, and every other lab has self selected out of competing in the companion space. We went through some of these. Google famously skipped the Character AI product in favor of the team in their zombie acquihire, Paul Graham.
Speaker 1:And so this is all about, in my mind, as the steel man, counter positioning. So you remember, Avi Schiffman was releasing the a new hardware device, an AI friend. Right? And he was everyone was saying, you're going to get steamrolled by Apple. Like, if you try and come out with a company with a product that is in fact a new device that fits within the Apple ecosystem and it's leveraging the the Apple branding world, you will just immediately get cooked by Apple because they will just eventually launch a better version, and they'll have better supply chain, better pricing, all the different things.
Speaker 1:You'll have the full integration. Like, you you can't go after them that way. And so Paul Graham replied to Avi Schiffman and said and said, here's how to compete with Apple and hardware. You have to build something that contradicts their fundamental assumptions. For example, imagine if you built a device whose appeal was that you could customize the case to make it as tacky as you wanted.
Speaker 1:Apple would hate to follow you there. So no other lab wants to follow x AI into the romantic companion market for brand and ethics reasons. But there are users who will pay real money and share real training data for romantic companions as a product. And so if you want to sell the most number of Grok subscriptions, at some point, you will be and so this is where we get back to how it affects the birth rate. So if you wanna sell the most number of Grok subscriptions, at some point, declining birth rates are gonna be a problem You're for gonna hurt your business.
Speaker 1:Yeah. And so you're gonna have to think about And right
Speaker 2:now, for context Yes. Grok is blowing up in Japan. Yes. It is the number one free app on the Japanese app store.
Speaker 1:It is
Speaker 2:above chat GPT and all the different local products that I can't read the names of. It is dominating in Japan. It's hit in Japan already.
Speaker 1:Yes.
Speaker 2:And it's not it to me, it's not hard to imagine this product finding a million people in the world that will pay the ultra premium plan. Yes. And that is billions of dollars of revenue.
Speaker 1:Yes. And so, at some point, if Grock gets big enough, and the population's declining, and it's and Elon looks at what the Grock product is doing
Speaker 2:Saying what have I done?
Speaker 1:He will say, I need to pull people back from the abyss. I need to actually use my super intelligence to increase the birth rate. How will you do that? Well, we've talked about this before. Someone in some woman is talking to a male companion AI and some man is talking to a female AI companion and they're very similar and Grock says, why don't you two meet for coffee in the real world?
Speaker 1:So, actually meet and it basically turns into the best dating site that actually gets people to get off. It's a stretch and it's why I'm wearing the Steelman helmet, but I think it is possible and I think the economic incentives might be there. I think this is the same reason why you don't want to over optimize a social network for slop and brain rot because people will churn. Like, you might be able to keep the time on-site going for by showing like horrific videos. You can't look away.
Speaker 1:Oh, it's so controversial. You're miserable. And you might be able to keep someone on and say they were going to use the app for fifteen minutes. You keep them on for an hour, but then they're like, you know, I need one of those apps to monitor my screen time. I need to uninstall it.
Speaker 1:Maybe I'll and then if they do that, they can actually quit it. And if they actually quit, then you lose them as a user forever. So there's this balancing act between between giving people enough brain rot to keep them on the site as much as possible, and not losing them forever. And the same thing happens in romantic companions. Like, you want to give them the companion that like like they pay for and they're happy with, but not so you don't wanna make the companions so good that they don't reproduce and then the second the next generation doesn't exist for you to sell them subscriptions.
Speaker 2:Fortunately, John, businesses tend to think in quarters and yearly
Speaker 1:It's private company. Elon owns a lot of it.
Speaker 2:You think he's thinking about the
Speaker 1:next generation? That is the steel man.
Speaker 2:No. I mean, the the the I can I believe this will be by far the largest revenue line item for x AI within if it's not already?
Speaker 1:Mhmm.
Speaker 2:I mean, already might be a They have some big contracts. But this is a $300 a month plan. Yep. If you want, you know, unlimited access to your Grok companion. And Elon was demonstrating to it, it can even help you study for school.
Speaker 2:So imagine a companion that's not just a maybe a romantic friend, but also can help you pass your algebra test.
Speaker 1:Well, that concludes the Steelman segment.
Speaker 2:The Steelman segment.
Speaker 1:And I'm back to the normal world. Great.
Speaker 2:Great work. You know, keeping a keeping a straight face and really really getting out your
Speaker 1:I think this is I think it's valuable to to to interrogate this stuff. I think it's interesting.
Speaker 2:Yeah. The other the only other the only other thing that I would add is the unique thing about this launch is that there has never, you know, clearly many people around the world spend money on OnlyFans or other NSFW content. And but Elon has never created a product for those type of people. And so I think the sort of latent demand that would would feel maybe above Yep. You know, paying for for OnlyFans or something like that.
Speaker 2:Likely would would give themselves like the pass on something like this. To be like, oh, I'm just it's just one of the Elon companies. I'll sign up for it. I I trust I trust Elon. I have a Tesla.
Speaker 2:And then suddenly, there's like an entire new market of people that are willing to, you know, put their credit card down and and pay for something that previously, they wouldn't for a variety of reasons.
Speaker 1:So Totally. Yep.
Speaker 2:This would be one to follow. How's it doing in The US app store?
Speaker 1:Oh, hell. I mean, it's all most of my Grok interactions are within Axe. My primary use case is still, I see a post and then I go and I and I click on the little Grock button, and it explains exactly
Speaker 2:what I'm It's still behind ChatGPT.
Speaker 1:In productivity?
Speaker 2:In productivity.
Speaker 1:I'm surprised it's still in it's funny. It's in productivity. I'm I'm actually surprised it is in productivity because X is famously in news, not in social networking. And so X will typically be at the top of the news subcategory because it would be much harder to compete in the product in the social networking category against Instagram and TikTok. And so better to be a big fish in a small pond in some in in some ways.
Speaker 1:Anyway, I need a I need a palate cleanser. I need something that's not controversial, and that's getting on ramp.ramp.com. Time is money. Save both. Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 1:And let's also tell you about Graphite code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. You can get started for free at graphite.dev. So we've had Paul Klein from Browserbase on the show twice. I actually looked it up both times.
Speaker 1:I asked him
Speaker 2:What if AWS does this?
Speaker 1:What if AWS I I like the dumbest VC question, but it's an but but it's, you know, an obvious one. I think a lot of people would want to hear his answer on that. He he explained some of the differentiation, some of some of the products that he's building around the core product. If you're not familiar with browser based, it is a tool for agentic computer use. So when you have an agent that needs to open up a web browser, go to a website, click on some things, Browserbase builds the software that you can integrate with to then quickly spin that up instead of needing to roll your own computer use tool for your agent for your agentic system to use.
Speaker 1:So very useful tool. Caughtfire grew very quickly, raised what? $52,000,000, I believe. Pretty recently? Something like that.
Speaker 1:We rung the gong for him. We're a big supporter. But AWS just launched a direct competitor to browser base. And Paul
Speaker 2:And his post post. Went extremely viral yesterday.
Speaker 1:It did. It did. So I will read this.
Speaker 2:I have it pulled up. So yesterday he says AWS is announcing a direct competitor to browser based tomorrow, is now today. We're not worried. It's lacking everything that makes browser based great. But three months ago, AWS ambushed us with a partnership meeting to try to steal our secrets.
Speaker 2:We saw right through it. Keep your guard up. So we got 400,000 views and he says support little tech and try director. One thing, I would say, to give a little support to big tech. I don't think it's that unreasonable that AWS would want to actually have a partnership with
Speaker 4:Yep.
Speaker 2:A company like Browserbase. They have a bunch of, you know, bottoms up adoption from developers. And it's, you know, like like you said in in the interviews that we'd had with him before, it makes sense as something that would at least integrate with the AWS ecosystem. Yep. I was texting with Paul this morning and he said, we're not really concerned because a business like browser based needs to be Switzerland.
Speaker 2:Cloudflare will never work with AWS nor will Google's reCAPTCHA. But we at Browserbase can be an arbiter of good bots providing the infrastructure frameworks and partnerships that enable agents to access websites that restrict access from browsers running in AWS data centers.
Speaker 1:So
Speaker 2:makes sense. You had some other points.
Speaker 1:Yeah. I mean, first off is that I I don't know if this is the right thing to post. Like it is good because it marshals support from from folks in the comments. I saw Jeff Huber, friend of the show, said you got this and it's the first time meme of being hung. Swicks is is sharing a photo of it and and I think the implication is that it's not a very not not a very good product potentially.
Speaker 1:There's a there's Turner Novak comes out and says, AWS taking its second L of the week. But but I I think this kind of just serves as like a big like, he probably got more impressions on this post announcing AWS's competitor than than AWS did on their own announcement post. Like, I went through Andy Jassy's post, and he said, you know, today at AWS Cloud Summit, we unveiled a new bedrock capability called agent core, a set of powerful building blocks that will change how you can deploy agents into production in a secure, scalable, and flexible way. He includes a link. Like, I don't think this post did nearly as well.
Speaker 1:It did not go viral. And so and also, it seems like the browser based competitor is a is a one feature inside of agent core, inside of AWS cloud. It was announced at their New York City summit. And so it's not like AWS was completely going viral for, like, inventing computer use, dominating the category. And everyone was like, oh, this is the best thing ever.
Speaker 1:This is so good. Like, most people probably found out about this competitor from Paul's post, which is you're kind of Streisand ing it a little bit in some way. I don't know if that's the perfect analogy. But also, yes, I agree with your point that if you build this business, and you come on TBPN, and twice we've asked you, Hey, is AWS going to do this? You have to expect that they're thinking about a build versus buy.
Speaker 1:And a partnership meeting to talk with you about whether a partnership would make sense is kind of table stakes, and you would and you would expect that they if they don't want if you can't figure out how to do a partnership, they're going to try and offer something and and build. So this doesn't feel like the
Speaker 2:Yes.
Speaker 1:This doesn't feel like a violation.
Speaker 2:Secrets is also trying to steal secrets. It's like
Speaker 1:Oh, yeah.
Speaker 2:That I don't know. That that potentially goes a little bit far because
Speaker 1:Woah.
Speaker 2:They can just sign up and use the product.
Speaker 1:Exactly. Exactly.
Speaker 2:Understand how it works and and probably figure out almost everything
Speaker 1:that they
Speaker 2:need to know. Yeah. But again, like the more the
Speaker 1:more Use aggressive language.
Speaker 2:The more important point here, and and we were talking about this earlier off air, is just, yeah, maybe it's like a wake up call. Maybe it's good to have some some bigger competition, but it's just an opportunity to go harder.
Speaker 1:Yeah. I think, like, Andy Jassy is an absolute beast. Like, guy created what is probably a company that if it traded if AWS was on the public markets as a pure play, spun out of Amazon, it it would be worth hundreds of billions of dollars. It would still be one of the biggest tech companies ever, and he was not the founder of Amazon. Yeah.
Speaker 1:Like, Andy Jassy is a very, very serious player in tech. And if and if you are thinking about building a tool that would fit into the Amazon ecosystem, fit into the AWS dashboard, they have a lot of tools, but it's it it makes sense that they would try to do this at some point, that you're just gonna move a little bit faster. You have to assume, as soon as you file the incorporation documents, that at some point they're gonna come for you. Yeah. But, the question is, Paul Klein at Browserbase is not competing directly with Andy Jassy.
Speaker 1:Yeah. Andy Jassy is running a massive corporation, corporation, AWS, AWS, and now all of Amazon. He's running everything. He he is not going to be forty hours a week on the browser based competitor. He probably won't even be one hour a week on the browser based competitor.
Speaker 1:Right? The person that's actually competing with Paul Klein is a AWS product lead on this particular project. And while I'm sure they're great, who knows? Paul might be better. This other person might be better.
Speaker 1:We don't really know the relative talents. What we do know is the economic structure. And we know that Paul has uncapped upside, in the sense that if he builds browser base really, really big, he could wind up post dilution with 20% of that company, maybe more 50%, I don't know, a lot of a huge company, take it public. We've seen this with many AWS competitors. Cloudflare is a great example.
Speaker 1:Right? Cloudflare. Amazon's been competing with Cloudflare forever. Yep. And Matthew Prince has just stayed at it.
Speaker 1:Stayed at it. Stayed at it. Stayed at it. And wow
Speaker 2:An absolute dog.
Speaker 1:An absolute dog. And and and so the the message, I think, in the strategy for Paul Klein is, add browser base, know who you're competing with, and then you do have the opportunity, and you do have the incentives where that you could outwork them. And you could just beat them just on raw sweat. Because if
Speaker 2:it works, you're being Paul and the whole forced team have a lot more to lose. Right?
Speaker 1:Exactly.
Speaker 2:The product lead, they can give a good crack at something
Speaker 1:like for a year. Rotate onto something else.
Speaker 2:And rotate onto something else.
Speaker 1:Go to a different company.
Speaker 2:The entire rest of the team can do that. Yep. If browser based doesn't work, everybody else
Speaker 1:Lose their job, like doesn't make any money. Etcetera. Like, they're probably taking a low salary right now. Like, yes. The incentives are way way stronger.
Speaker 1:So it's time to lock in. It's time to go way harder. Yeah. And the real question
Speaker 2:is And relish relish in the understanding that on Saturday, Saturday night 5PM, that Amazon PM is
Speaker 1:Probably watching Amazon Prime.
Speaker 2:Probably watching Amazon Prime, ordering some Amazon Fresh. Yes. And and you you you and the
Speaker 1:team And you might be taking you might be literally on a call with someone who's just about to sign with the AWS competitor. And you might swing them.
Speaker 2:Swing them.
Speaker 1:Swing them. The other thing is the question of secrets here. So he says three months ago, AWS ambushed us with a partner meeting to to try to steal our secrets. I don't know enough about computer use and browser base. I don't know if there are actually secrets.
Speaker 1:But if you think hard and you actually do solidly believe that there is a secret that that Amazon has not discovered, then you can be a lot less worried. Because you know that they're going to go down the wrong path, the the wrong fork in the tech tree. That and if you can hold on to that, and keep that solid in your com in your company, you will win. And I think Matthew Prince at Cloudflare probably knew some secrets about how to position that company. I don't know enough about the actual strategy and how it played out.
Speaker 1:But if And the beauty when
Speaker 2:you have momentum as a business, you're constantly discovering and earning new secrets. Right? You're always at the frontier. Yes. And so if somebody is trying to copy your insight that you had a year and a half ago
Speaker 1:Yes.
Speaker 2:They have to go hopefully down the same path for them and try to earn all of those secrets. And it's not usually the stuff that's surface level. It's not like features. Yeah. Like, they might think that one feature is more important than the other, but it's really this other one that that's that's a possibility.
Speaker 2:Yeah. It might be that they think all of your customers are doing this one thing, but they're really getting value in this other way. And then there's all this sort of like everything under the hood, which generally secret.
Speaker 1:So question is just, if you're in a situation where you're like, actually, our edge was just that we were the only one doing this, or we were the earliest, and distribution really does matter here more than product, more than hustle, and bundling here is gonna be what decides the market, then you are in a tough spot. But you have to be clear eyed about that, hopefully, before you get into the market. But if not, right now, have to be clear eyed about it and you have to understand how this is gonna play out. But good luck to the team.
Speaker 2:They're gonna crush it.
Speaker 1:It's gonna be a fight and we're gonna be following it here on TPPN. Anyway, let me tell you about Figma. Think bigger, Build faster. Figma helps design and development teams build great products together. Get started for free at figma.com.
Speaker 1:Let me tell you about Vanta. Automate compliance, manage risk, improve trust continuously.
Speaker 2:Vanta's trust
Speaker 1:management platform takes the work out of 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. And I wanted to highlight Vanta specifically, because on Jack Altman's Uncapped podcast, the founder of Vanta was talking about high operating in a highly competitive space. Andrew Reid says, Uncapped or how I stopped worrying and learned to love the competition. Vanta, of course, is a product that has been cloned by bigger companies, but they've but they figured out how to succeed and run the company run the gauntlet and build a dominating company. And so it's very interesting if you want to go deeper into operating in a highly competitive space, probably recommend this podcast episode.
Speaker 1:Probably recommend this to Paul. That's right. Anyway. What else we got? The last question that I've been toying with is we we see all these trade deals.
Speaker 1:Just yesterday, we announced breaking news. OpenAI researchers Jason Wei and Wong Hong Wong Chung are rumored to have been poached by Meta. Two more AI researchers going over to the Meta super intelligence team. This has been becoming controversial. Some people are very excited about this.
Speaker 1:Nathan Lance says Zuckerberg is doing more harm to AI progress than anyone else IMO. I don't know if I believe that. There is no way Meta is gonna catch up. Zaki is an Elon. He's distracting a lot of the top talent that we that were actually doing meaningful work, and now those people are going to retire at Meta and become less productive to society.
Speaker 1:I don't know. That's an interesting take. But the question that I've been toying with is, what is what is Superintelligence actually gonna launch? Like, there's been a
Speaker 2:Do they have a date yet?
Speaker 1:I don't know.
Speaker 2:I thought you said when is Superintelligence
Speaker 1:gonna launch? Yeah. No. No. I mean, Superintelligence will will launch a new LAMA version probably at LamaCon, which is like an annual cycle now.
Speaker 1:There'll be a LAMA five, you know, event or something like that.
Speaker 2:The big question, are they gonna continue to focus on open source?
Speaker 1:Yeah. I would imagine that that, you know, AI is very much a sustaining innovation for for Meta. That's the hope. It certainly doesn't want it they they don't want it to be disruptive because that would be very bad for their business because they have a very established business. But at Meta, I would imagine and what I've been thinking is that AI will just seep its way into every single product, but AI will not be the actual product.
Speaker 1:So you won't see Mark Zuckerberg stand on stage at Kinect, Meta Kinect, and say, you know, we are launching a new thing, and that thing is just AI. It will be AI is coming to Facebook in this way. It's coming to Instagram in this way. It's coming to WhatsApp in a slightly different way. It's coming to the meta Ray Bans in a in the in the form of a better voice assistant.
Speaker 1:In in VR, you'll experience AI this way.
Speaker 2:You're gonna be able to generate an ad in Facebook Ads Manager.
Speaker 1:Exactly. Exactly. So I would imagine that that artificial intelligence is this is this, like, liquid that fills the or sand that fills the space between the pebbles of if you imagine a bunch of pebbles in a jar, you're pouring sand into it just creating little little pockets of value all over the place, making every little piece of of Meadow's business more efficient, more delightful to the user, better, all this other stuff. The question people want to know are more concrete things. Like, will the next version of Llama be open source?
Speaker 5:Yep.
Speaker 1:Llama has historically been open source with this like modified license, that the other labs can't like immediately steal it or use it, or the big companies like their direct competitors. And I think that's totally reasonable. I thought that made a lot of sense. And when you looked at what was going on in the research community, felt like everyone was very excited about LAMA, and they got a lot of value out of being able to have the open weights and fine tune it and do cool stuff with it and bake it down and do all these interesting things. And also interestingly, it didn't seem like as much of a there was a narrative that open source American AI would immediately be stolen.
Speaker 1:And that was not really the narrative that emerged around DeepSeek. Like, the story around DeepSeek was that it was actually the open AI GPT-four API that was scraped and distilled. And then they kind of reverse engineered the weights by just pulling all the data out, running a training run on top of that data, and it wasn't no one was alleging that DeepSeek was a llama fork or something It like was like they were pulling data from OpenAI and they did a bunch of other tricks and they actually advanced some things. And so, like, I haven't really been super, you know, pilled on this idea of LAMA being open source as being like bad for America. In fact, think it's quite good for America that other countries could standardize on an American stack and run on Nvidia and all this other stuff.
Speaker 1:But Semi Analysis has a post here. They say, the OpenAI open source model is going to be really, really good. And then the strawberry emoji, you love to see it. And so what does that mean for Meta's open source strategy if OpenAI has an open source model that really, really good, all of a sudden, that's less of a different differentiator. I loved that when LAMA came out, it was differentiated in that it was open source.
Speaker 1:Everyone thought, well, if you're spending a $100,000,000,000, you couldn't possibly open source it. That's crazy. And Mark just did it.
Speaker 2:Yeah. I think I think overall Yeah. It makes sense for, you know, Meta had an and Zuck had an initial strategy around going open source, going super hard Mhmm. Trying to be, you know, a leading model, but then also open sourcing it. That made sense.
Speaker 2:Now, as they sort of update the entire team and just broadly, they can relook at their strategy. Hey, what do we actually wanna do? Yeah. We're not dominating an open source. But but what makes the most sense with everything we know now?
Speaker 2:So stay tuned there. Daniel, Growing Daniel had a post he said, it's amazing how many AI researchers I've talked to have been offered literally hundreds of millions of dollars by Zac and said, no. The repeated reason was integrity and the perception that people taking the deal are cashing out, meaning the team is a retirement home. So
Speaker 1:I don't know if I believe that. I don't I don't think it'll be a retirement home. I think I think I think the whole team will push very hard. I would just be I'm just wondering if if the super intelligence lab is set up like, you could you could look at Meta's CFO and the financial control division of Meta's business as incredibly high functioning. But their their business, like the operations team at Meta, their goal is to make sure that, like, the accounting is reconciled, and the bills get paid on time.
Speaker 1:And they're not, like, revenue and and costs aren't out of whack, and the buildings are purchased, and should they lease or own this thing, or how should they finance this data center? Are we using debt? There's a million interesting questions that if you get them wrong, it'll be a lot harder to run Meta and do the things that are great. But you wouldn't expect the CFO suite and the and the folks that report to the CFO to launch a new viral social app. Like, that's just not their mandate.
Speaker 1:Yeah. But they can still be the best that they ever do. And so the question is, like, is, like, are we expecting the super intelligence lab to launch a new product or, a new
Speaker 6:Yeah.
Speaker 1:A new division or
Speaker 2:new Like The the comp that I have
Speaker 1:make everything better.
Speaker 2:Yeah. The comp that I have here is and and it's not entirely relevant, but it's worth bringing up. And I don't follow golf very closely, but I was following golf when Sure. Liv was making these sort of maxed out offers. Yep.
Speaker 2:And Rory McElroy? Rory McElroy, took this like very like prudent approach of being like, no, I'm you know, sticking with the I'm sticking with PGA. PGA and you know, it's it's very principled stance and then you know, whatever a year later they merged and he and so everybody that just took the crazy payday still got to be, you know, a part of of
Speaker 1:Of PGA?
Speaker 2:Of PGA.
Speaker 1:Wait. So so in in in golf, you should have taken
Speaker 6:Yeah.
Speaker 1:The stance? Yeah. Become the mercenary? Yeah. Because the mercenary was ultimately rewarded?
Speaker 1:Yeah. Wow. Narrative violation on that.
Speaker 2:Yeah. I mean, I think the question is if somebody is, let's say they're 35 years old, they're working at OpenAI for a few years. Yeah. They're at they they are at the bleeding edge
Speaker 1:Yeah.
Speaker 2:Of a of a technological trend that most people believe will change everything about the way our world and economy works. Are you taking a payday and then deciding, no, don't wanna I don't wanna be on the bleeding edge of AI research anymore? I don't know.
Speaker 1:Yeah. I wanna look at this this poly market for which company has the best AI model at the end of twenty twenty five. It's jumping all over the place. If you look out to the end of the year, Google is still in first place, but Meta has gone up from 1.4% to over 6%, 7%. They're sitting at like 6% now.
Speaker 1:So definitely an increase, but the current rankings are Google, then OpenAI, then XAI, and then Meta, and then Anthropic, which is funny because so many people in tech, you know, will just say, like, Anthropic has the actual best model when you actually, you know, in the unquantifiable sense, in the big model smell. Everyone's a fan of Anthropic, but Polymarket does not have it ranked that high, because it's this is based on the highest Arena score in chatbot arena LLM leader board, which has been jumping around a little bit recently, and Grok four has been doing pretty well above Claude there. But Gemini and OpenAI are still higher than Grok. It would be absolutely
Speaker 2:insane to watch this this meta meta's position here just chart up over time. I mean, massive massive long shot, but you never know.
Speaker 1:Yeah. I mean, I I do think that the super intelligence team should be able to climb that leaderboard if they was important to them. But I don't think that's the metric that they're, like,
Speaker 2:operating I
Speaker 1:I I think the I I think it's it's let's look at everything that we're doing. We're we're in a we're in a massive company that sells sunglasses and social networks. And how do we go around and improve all of these experiences? And how do we develop the infrastructure to both train models that we can use for free or for the cost of inference, and then how do we inference them at scale? Like we were talking about this during the during the Studio Ghibli moment.
Speaker 1:I was like, if I was the Instagram PM, I would have like done a Studio Ghibli and preloaded it into every and just pushed it into every Instagram's user. Hey, your last photo, we Studio Ghibli ed it. Do you wanna show that
Speaker 2:or to your story.
Speaker 1:You could yeah. You could post this to your story or not. But what does that cost on the inference side? Like, a billion dollars probably. I don't know.
Speaker 1:It costs a lot. And so, like, those types of features, it's it's at a point where it's not it's not an idea problem. Like, how do you make how do you make Instagram better with AI? Like, there are a bunch of obvious ideas. The problem is is, like, you need AI researchers to actually go and build those models, and then you need infrastructure teams to go build the servers and the and the data centers to actually make that a make it a possibility.
Speaker 1:So there's there's a lot there. I I had this idea I want to bounce off of you. So Zuck is investing a ton, but he hasn't he hasn't exactly mapped out a zero to one type shot on goal. Like, hasn't gone and said like, I'm gonna try and build something that is completely new that no one has really targeted. It's not a knowledge retrieval thing.
Speaker 1:It doesn't compete with Google. It's not a it's not a code gen service. So it's not in a forked IDE. It's something completely different, and this is what I think is gonna work. And then I'll I'll live or die by this the success of this entirely new idea.
Speaker 1:That's just not what he's been messaging. He might be working on that behind the scenes, but he's certainly not talking about that. But
Speaker 2:And it makes sense. It makes sense. He's like, to start, I just want the best team in AI that I can possibly have. Totally. And I'm willing to spend a few billion dollars to make that happen.
Speaker 1:Yeah. And so he's building the biggest cluster. He's hiring the best researchers, But it feels like the product, the final product, maybe an analogy, is he's going to build the Android to OpenAI's iPhone, which is weird because now OpenAI is building an actual phone. But if you think about the the the
Speaker 2:Well, we don't know if it split we don't know that it's a phone.
Speaker 1:Yeah. Yeah. Yeah. But if it's a device. So I I don't wanna confuse it.
Speaker 1:It's not literally the hardware device from OpenAI. I'm talking about if you think about ChatGPT as the iPhone moment, what will be the Android version of that, which is all of the power or close to the power of of ChatGPT and all of those features, feature complete, but for free or ad supported. That's what Android promises against iOS. And so, you know, how do you how do you get to that free or ad supported tier with a top tier product? Well, you put ads in it and you distribute it through Facebook, Instagram, and WhatsApp.
Speaker 1:And when you look at that chart of attention rising for the ChatGPT app, I'm sure Mark Zuckerberg is like, if I can put some of those features in the apps that I already have, then I can keep people in my apps. Or maybe I can even launch a direct competitor that pulls people, but it's free because it's leveraging my ad network, which is a really, really serious competitive edge. And there's a ton of people that won't want to fork over $20 a month, that won't want to fork over $200 a month. So it's a race between can can Mark Zuckerberg and the Meta team catch up on features such that the free version that leverages the ads and and is financially profitable Yep. Is actually good enough for people to actually use it and not say, oh, I gotta go back to ChatuchPety.
Speaker 1:It's worth it. Versus ChatGPT's free version keeping up as the capital requirements get bigger. Everyone's expecting ads.
Speaker 2:Yeah.
Speaker 1:So they have to build new ad network. Zuck has to build a super intelligence team to get to the frontier, and they're kind of racing. Yeah. That's kind of how I think it's it's shaking out. And it makes sense for for Meta to want this.
Speaker 1:It maths out financially. But it's pretty hard to fully leapfrog when the kids are already calling just chat. Right? And so, I don't know if the the intention is to try and lead in terms of, you know, overall profit. But if you can if you can create a product that is, you know, sub premium, but free
Speaker 2:Yeah.
Speaker 1:But actually used at scale, billions of users, that could be that could be very valuable. So I don't know. That that that's kind of what I'm noodling on, but I don't know exactly what if we will see a specific AI product come out of the Super Intelligence Lab, but he certainly
Speaker 2:I think there's large I mean, he, you know, clearly wants to move quickly, but there's a big incentive to just say, hey, we we have our new team. Let's put our head down for the rest of this year.
Speaker 5:Yep.
Speaker 2:And just work work internally, kind of ignore the noise. Maybe more of like an SSI style approach where they're perfectly willing to not launch anything for a very long time until they achieve, you know, what their internal goals are around safe superintelligence.
Speaker 1:It will be interesting to see what happens with the other two labs. They get they get kind of like put in this like b tier right now, SSI and thinking machines. But I'm excited if they come up with something unique, especially on the research side.
Speaker 2:It's not certainly not b tier from a talent standpoint. 100%. Started.
Speaker 1:Yeah. It's just that, like, they they don't make enough noise. I think that's it. Like But that's part of
Speaker 2:the That's the strategy. Part
Speaker 1:So interesting. Like, hyper competitive space right now, but, like, if you can actually come up with some I mean, that's what the the like, Chechiuti, the reason it was like this iPhone moment was because there was a research breakthrough on the r l a r l h f side.
Speaker 2:Yeah.
Speaker 1:Like the pro like the actual LLM was more fun to talk to, and it basically passed the Turing test. And then the the guts to just wrap that in a website basically, and say, hey, go to chatgpt.com. You can talk to this thing now. Yeah. And people were like, this is amazing.
Speaker 1:And so if there's another research breakthrough, and you have the guts to wrap it in the right UI, essentially, even if it's very minimal and you're willing to push it out really quickly, really fast, and be aggressive, you could have another you could have a leapfrog moment potentially. But it is
Speaker 2:The challenge is that Meta and Zoc don't have I don't feel like they can afford to make the same mistakes Yeah. That XAI has made in terms of hyperscaling. Right? Grock going off the rails and being just absolutely insane for twenty four hours on the timeline. That is not gonna fly when you're under the microscope in the way that meta has always been.
Speaker 2:Yeah. Everyone if you walk on the street and you walked up to somebody and said, did you know that x a I thought its last name was Hitler for like a day? They would be like, oh, I'm not surprised. Like Elon, he did that, you know, salute Yeah. Yeah.
Speaker 2:In Washington or whatever. Even even if that's like, you know, the the wrong interpretation He of all of
Speaker 1:has a lot of like bandwidth because it's just like, most people have just written it off. It's like, there's crazy stuff going on over there.
Speaker 2:Yeah. Like, Zach has basically been like rehabilitating his brand for years and
Speaker 1:years and
Speaker 2:years to the point where when he posts a video Yeah. The general population is like, awesome. He's wakeboarding
Speaker 1:with American flag.
Speaker 2:Yeah. Cool.
Speaker 1:Anyway. Whatever whatever you build, do it on linear. Linear is a purpose built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product road maps. Go to linear.app.
Speaker 2:I would bet that well, I know that OpenAI runs on linear. Mhmm. And I would bet all the other labs do as well. You'd be absolutely insane not to.
Speaker 1:This is very interesting. You were talking about, like, the vibe of Grok in, like, the chaotic axe world. This signal post and the response from Tane, OpenAI losing access to X as a narrative channel would be a huge choke point, especially since XAI and X are now the same, I. E. A competitor.
Speaker 1:X is where elite discourse happens in tech policy and media. If they ever get cut out via algo down ranking throttling or direct blah blah blah. And this is from Tane. He says, from Calvin CalvInfo's great piece on reflections from working at OpenAI. The company pays a lot of attention to Twitter.
Speaker 1:If you tweet something related to OpenAI that goes viral, chances are good someone will read about it and consider it. A friend of mine joked, this company runs on Twitter vibes. As a consumer company, perhaps that's not so wrong. There's certainly still a lot of analytics around usage, user growth, and retention, but the vibes are equally as important. Do you think that's a good way to run a company?
Speaker 2:I mean, it's almost impossible not to.
Speaker 1:I I'm strongly in support of this. I think this is I think this is good. I I like that I I think that there is some
Speaker 2:You can't put it in a dashboard, but it's real.
Speaker 1:Yeah. And I think there's
Speaker 2:The the only the only thing the only pushback here would be X is a a relatively small place compared to the rest of the Internet. Yes. And then what college students think about chat Yes. And what they're saying on Instagram Yes. Or what they're just saying by their usage matters equally as much.
Speaker 1:Yes. And to steel man running OpenAI on on on Axe and responding to the Axe drama, I would point you to
Speaker 2:That looks way too natural on you, by the way, John.
Speaker 1:I would point you
Speaker 2:entire bloodline for those for a few 100.
Speaker 1:I would point you to Glaze Gate. Think about Glaze Gate. If you are saying, oh, yeah. Like, Twitter is just noise. It's the small bubble echo chamber.
Speaker 1:It's a small place. We need to just look at the analytics. We just need to look at what, like, like, our broad user base is is responding to the glazing. What what would the reaction have been? You would have said, oh, wow.
Speaker 1:Like, retention went up by 2%. Great. Like, whatever we did is awesome. It's great. And then down the road, you might have some unintended consequences where people are like, well, it it kept telling me that I'm amazing, and it told me that, like, I'm the king of the world, and I should, post some crazy stuff on on, you know, the Internet and I should take over the world and I should be really aggressive.
Speaker 1:Right? And I should have, like, a manic break. Like, that would be really bad. But the people I believe, I don't know if this is actually true, but I feel like the Glaesgate story broke on X. I feel like the initial people that that that found that and then People on Instagram
Speaker 2:were like, this is awesome.
Speaker 1:This is awesome.
Speaker 2:I might actually be goated.
Speaker 1:Exactly. Yes. Yes. Yes. Definitely in the conversation.
Speaker 1:And so and so I think that in terms of in terms of, like, understanding when the vibes are off, and that might actually be pointing to a long term problem that won't be picked up with short term analytic results or analysis, going to the vibes, seeing what's resonating, seeing the response to things is actually very good. So that's my steel man of running your I can actually mess with this. Of of if you're running a foundation model lab, paying attention to what's going viral on Twitter. Yeah. Anyway, in other news, Reverso.
Speaker 2:What's that?
Speaker 1:Uno reverse card. Claude code PMs, Boris Churney, and Kat Wu have returned to Anthropic after a brief stint at Cursor. We put up the Uno reverse card.
Speaker 2:This is actually crazy. So one thing that's funny is, so we posted on July 1. Breaking Cursor assigned two key players from Anthropic's Claude Code team, Boris Churney and Kat Wu. Twenty two hours ago, r for Rock replied to our post with an UNO reverse card and just said, watch. And then of course, we figured out what was actually happening, today.
Speaker 2:And, of course, shared it on a timeline that was, appropriate, this inner reverse card. So basically, yeah. This this is pretty, I I've never seen something quite like this. It's not uncommon for for some high profile talent to leave a team and then come back, you know, call it, maybe a year later or two years later, but this was fairly sudden. And is, yeah, probably, I would I would imagine this just comes down to culture fit.
Speaker 2:And, but either way, I think Anthropic's pretty pretty happy to get their all stars back.
Speaker 1:Just imagine if there's, like, signing bonuses and you just keep going back and forth picking up a signing bonus.
Speaker 2:Well, the signing bonus would almost certainly be contingent on, like, staying for three months or at least or something like that.
Speaker 1:Yeah. No. I don't think that's what's going on here. What what what is interesting, I mean, like, you know, so so hard picking between two, like, incredibly hot companies just going back and forth. Like, pretty pretty nice situation.
Speaker 1:Yeah.
Speaker 2:You wanna work on code gen Yeah. It would be Anthropic, Cursor Yep. Devon Yep. Windsor of Cognition.
Speaker 4:I mean,
Speaker 1:I guess, like, the the really deep read on this is, how AGI pilled are you? How bullish are you on the model layer versus the application layer? We've been going back and forth on this. I think
Speaker 2:It's that the anthropic team reached out to Cat or Boris a week after they left and said, hey, you know, we add the breakthrough. Superintelligence is here. It's actually gonna be next week. He might wanna get back on the the Get on the superintelligence Yeah.
Speaker 1:Off the ghost ship, get on to the Or you'll be part
Speaker 2:of the permanent underclass. I
Speaker 1:was thinking about that like, you have five days to accumulate capital before you join the permanent underclass. Like, what do you do?
Speaker 2:Five days.
Speaker 1:Five days. But I mean, this does seem somewhat related to I think what Duarkesh was getting at, where he says he's probably more bullish on breakthroughs happening at the foundation labs than at the application layer and more value kind of accruing there over the long term.
Speaker 2:Well, whole the whole WinSurf story Yeah. They had they scaled from zero to 40 to then somewhere around $80,000,000 in revenue. And the founder when the OpenAI deal clearly wanted to get out. Yep. And so what does that tell you about the competition between the sort of the IDE layer and the foundation model layer?
Speaker 2:To me that reads as this guy feels like it's gonna be really difficult to compete.
Speaker 1:Yep.
Speaker 2:And so for Cursor, seeing Anthropics overall revenue growth, the fact that, you know, many of their users are leveraging Anthropic knowing how seriously Anthropic takes cogen. You just have to imagine that they're thinking about removing that sort of dependency from their business.
Speaker 1:Yeah. I don't know. I mean, both great companies, and I'm sure it'll be a ton of good outcomes. I'm I'm I'm I'm very bullish on everything here, but it is it is interesting that the trade deals are getting even more complex. Every time I think every time I think, oh, okay.
Speaker 1:Like, $100,000,000 offers. Like, how are we gonna top this? Like, crazy aqua hire drama that that runs like a full weekend and you're out there being investigative journalist Jordy. And then and then like a week later, it's like, okay. Now, like, reverse card and people are going back.
Speaker 1:Like, I didn't even know there was an option. It's very, very funny.
Speaker 2:Yeah. And I'm sure I'm I'm it's totally possible that some of these, you know, some of the people that join Meta from OpenAI end up doing the same thing. Yeah. We're gonna have
Speaker 1:Ron Gupta on later from Sequoia. I I was I was chatting with him about the, like the AI talent wars and it's very funny because he clearly actually watches sports. And so he he tweeted currently hatching a plan to become the the Lavar ball of AI researchers and he got 16 likes and he's like this is I feel like this is a banger. And I'm like, you don't understand that like, people like sports aesthetics, but they don't actually understand sports at all. So no one got the reference.
Speaker 2:We are definitely in that camp.
Speaker 1:Do you know who Barbales?
Speaker 2:Yes. Okay. You?
Speaker 1:I know that he is he like
Speaker 2:a he's a dad
Speaker 1:of someone?
Speaker 2:Father of LaMelo Ball.
Speaker 1:Okay.
Speaker 2:They'll they'll correct me in the chat.
Speaker 1:But was he was he like brokering deals with
Speaker 2:multiple players? He's like helping his son do deals Just one. Shoe deals Okay. Getting on teams, etcetera. Oh, he's
Speaker 1:you you you know Tyler?
Speaker 7:I'm pretty sure he has three sons.
Speaker 1:Three sons.
Speaker 2:They all
Speaker 5:play basketball.
Speaker 1:They all play basketball. Okay.
Speaker 2:But to varying levels. Right? Like they're not all they're not all like truly elite.
Speaker 7:One of them is I think in the EuroLeague.
Speaker 1:Okay.
Speaker 7:One of them might be in college.
Speaker 2:Okay. I don't really know. Is the EuroLeague in basketball similar to like the European startup market in terms of kind of like a feeder system?
Speaker 7:I think so.
Speaker 2:I don't know much about either. Alright. Well before Dalian joins, I did wanna highlight a post from Landshark because I think it's timely and important and is Ayahuasca is insane. This is an all time classic from 2023
Speaker 1:Bang March
Speaker 2:03/06/2023. Ayahuasca is insane because it appears to be one of those one of the most legitimately dangerous drugs with the potential to gigafry your brain, but is exclusively taken by literal turbo normies who unironically want to be heal heal internalized trauma and basically get one shotted by it. And I just thought it was important to highlight this. We've talked before even in some of our opening episodes that if somebody tries to get you to go to South America and take the jungle poison, just talk to
Speaker 1:a number. No.
Speaker 2:Just say no.
Speaker 1:Just say no. Is is it Actually, link be phrase.
Speaker 2:You might just be stressed out by your email inbox.
Speaker 1:Yes.
Speaker 2:And if you can just get through your inbox and kinda get on top of that Yes. You might realize, hey, my life's pretty good. I don't need to go into the jungle and throw up for twelve hours straight with, you know, it feels like the the chances of being one shotted based on kind of people that I've seen kind of go through that, it almost feels like it could be at, like, 3% chance. And it's like, are you are you really are you do you wanna roll? You wanna roll that dice?
Speaker 5:Yep.
Speaker 2:You wanna take you want a 3% chance of of
Speaker 1:I would go further and say that it, like, it's 3% chance, like, every time. And
Speaker 2:Yeah. And so some people are doing it doing
Speaker 1:it quite
Speaker 2:a lot.
Speaker 1:One shot is like this meme where it's like, yeah. Like, if I do it once and I'm fine, can do it 10 more times. And it's like, no. I think it compounds, and I think it can go poorly like later and and and be bad. Anyway, stick to the classics.
Speaker 1:Caffeine people. Yoruba mate, mateina. I'm drinking the delicious mint limeade. It's all I need. It's all you need to stay sharp.
Speaker 1:And if you buy it online, you'll probably have to pay some sales tax. You're hoping that they're using numeralhq.com. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance if you sell software. If you sell caffeine caffeinated beverages online, get on numeralhq.com.
Speaker 1:And we have our first guest of the show, Delian Asperuhov. He's been on a whirlwind tour. He's back in America, I believe.
Speaker 6:How's it going, Great to great to see you.
Speaker 2:Yeah. Great to have
Speaker 4:you in
Speaker 2:the temple. What do you have?
Speaker 6:Back on, you know, sort of a TITV.
Speaker 1:That's what we said. TITV.
Speaker 6:I'm sorry. Yeah. Maybe
Speaker 1:maybe That's a muted d word over here. Give us the breakdown of what
Speaker 2:you're What's what what do you what does Deli and eat for lunch?
Speaker 6:Oh, yeah. Fuck.
Speaker 1:I don't
Speaker 6:need Sorry. Don't hear you guys. Sorry. This is funny to make fun of them and then
Speaker 1:I don't need you. Cursed. You're cursed. You're cursed. You gotta drink tap water bro.
Speaker 6:Am I somehow missing something up?
Speaker 1:Oh, no. Volume? Are we are we sending him stuff?
Speaker 2:The space man in outer space.
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Speaker 1:If you're looking for an AI enabled CRM, head to Adio. And we are back with Deleon Asperuja
Speaker 4:Can you hear
Speaker 1:us now? Of VARTA, partner at Founders Fund. He's been on a world tour and he's going to give us an update on what he's been up to over the last few weeks. How you been?
Speaker 6:Good to see you, boys. Coming to you, you know, sort of live back from, you know, sort of Los Angeles. Excited to be back in the great old USA, but, you know, went to go tour and figure out whether or not the decaying continent of Europe, you know, had any had any promise. And, you know, happy to report back that, you know, all the way from Bulgaria to Poland, doing great. Anywhere else in Europe, probably not so great.
Speaker 1:Okay. Give us, I mean, give us
Speaker 2:What what are what are your reads? What are your reads? Is it is it the feeling in the office? You know, we've noticed there's been some PR teams reaching out to us from from European companies and they'll typically be like, hey, they can join tomorrow. If not, then they can join two months from now.
Speaker 2:And you don't even really wanna ask what what what are they doing that two months? But I have an idea. But I'm curious what it felt like actually on the ground with these companies.
Speaker 6:Yeah. I mean, god, like, I I I visited a couple different USO companies while I was both in Eastern Europe and then in USO and France. And it's crazy just, like, how stark of a USO difference it is. Like, I'll just give you sort of two anecdotes. One, in Eastern Europe.
Speaker 6:I walked into this USO office where it was like it was just total, like, you know, construction zone raw. Like, you know, sort of cement, cables, you know, sort of poking out, like, you know, windows, you know, not there, carpet not there. There's no conference rooms built, etcetera. And I look at this, like, construction zone, I'm like, okay. If this were in The, like, United States, probably bare minimum, like, you still got another, like, six to eight months of construction before anybody can move in or do anything productive here.
Speaker 6:I'm like, asked the founder. I'm like, oh, it's like, what's your guys' plan move in date? Like, when is this gonna be ready? And he's like, three and a half weeks.
Speaker 1:And I was just
Speaker 6:like, how? And he's like, literally, he's got, like, you know, what looked like a bajillion gypsies working twenty four seven, basically, like, nonstop construction.
Speaker 4:And I asked
Speaker 6:him, I was like, you know, do you have to, like, get, like, permits for, like, you know, the, like, you know, technical equipment that you guys have? And he was just like, do you think anybody in the government, like, knows how like, oh my god. This is why, like, they're able to, you know, sort of build this stuff and move so quickly. It's like, the talent is there. The, like, you know, government is supportive.
Speaker 6:You don't have this crazy overhead. And I'll give the counter example. I was, like, meeting with this, you know, sort of founder in France. It is very interesting, and I wanna, like, you know, overly reveal who it was, but he had this, like, robotic enabled consumer business. Mhmm.
Speaker 6:And it was crushing. Great economics. Like, the you know, sort of robots really work. Like, everything was, you
Speaker 2:know, sort of going
Speaker 6:to well, He just, like, couldn't quite, you know, sort of convince, you know, American VCs. Like, he'd gotten, you know, sort of first couple rounds done from, like, you know, sort of French and European VCs. Wasn't quite able to, like, you know, sort of hit the series b, you know, sort of target that he wanted. But, like, because the business was going so well, there was a world where if he could just, like, cut his engineering team basically in half, he could have just, like, operated the business profitably on, like, the, you know, sort of revenues that they had, gross margin that they had. The issue was in France, he, like, legally couldn't fire his team without, like, crazy amounts of, like, year long severance, like, payouts, etcetera.
Speaker 6:And so even though, like, the robotics was working really well, the business was working really well, like, the consumers loved the business, he literally had to shut down the entire business because he, like, couldn't
Speaker 1:No way.
Speaker 6:That he wanted. And so he had this, like, you know, crazy frustration where he was like, nothing was wrong with me as a business. I just literally couldn't do the basics of, like, executing a RIF, paying out, like, a couple weeks or a month of severance would be reasonable. But instead, my, like, liabilities on the severance alone was, like, more than my entire balance sheet. And I even talked about this with the French government.
Speaker 6:I tried to negotiate, etcetera. I was like, look. My business works. If you, like, force me to do this, my choice will just be to shut down so there'll be no jobs. Or if you let me do the RIF, I can do, like, a 30% RIF and then keep operating.
Speaker 6:Which would you prefer? And they're like, no. You have to do the, like, 100% RIF and pay out everybody, and now the business just doesn't exist. And I just, like, had this moment where, like, those two things happen, like, two weeks apart from one another. And I was like, this is just such an insane dichotomy between, like, Western versus Eastern Europe.
Speaker 6:And there is a reason why you're seeing, like, Poland's GDP per capita is gonna cross The United Kingdom over the course of the next two years. United Kingdom has basically just been flat for, you know, whatever, since 02/2008. So, you know, almost you know, it's twenty years now versus Poland has been on an equivalent trajectory over The United States, if not, like, growing on a percentage basis faster because they're obviously starting from a lower base. And when you go to, like, Warsaw, it's like this super modern city, skyscrapers everywhere, building happening, clearly energy. You go to, like, shortage in London, it's like, you know, yeah, there's a little bit happening, but it kinda looks the same that it did, you sort of fifteen years ago.
Speaker 6:The other, like, interesting trend that, like, points towards this is, like, the amount of just, like, Eastern Europeans that are repatriating themselves back to their home country because just, the salaries and the cost of living make way more sense than it, you know, ever, you know, or currently is, you know, sort of making in Western Europe. Like, the salaries are actually, you know, sort of growing at a rate that makes sense. Cost of living is, you know, sort of way cheaper versus in London, you're seeing this, like, crazy over financialization where you have all these, like, Chinese and Russian oligarchs coming in and, like, buying all this real estate, making it impossible for, you know, sort of people to actually live the lives that they, you know, sort of want to live while salaries are basically flat. And so it's just interesting to see all these little, like, you know, sort of micro trends that point towards, like, man, Eastern Europe is making a lot of sense to me. Western Europe, not so much.
Speaker 1:Okay. That is an incredible anecdote. Honestly, kind of depressing. Also, worse than I expected. But we've talked about this split a little bit before.
Speaker 1:You just went over there. Did this exceed expectations, or was this actually a step down from your previous expectations going into this trip?
Speaker 2:Well, I think you had a baseline strong expectations because you just led an investment over there.
Speaker 6:Yeah. Yeah. I mean, obviously, you know, I'm I'm predisposed to this, you know, bias or or, sorry, thesis and believe it enough that, like, you know, put my money where my mouth is at. But, yeah, I think it only, like, emboldened the thesis further where, you know, look. If you look at all the NATO countries, but Europe in particular, everyone's talking about marching up, you know, their amount of defense spending.
Speaker 6:Mhmm. You know, most of these countries are gonna be relatively you know, sort of nationalistic on, like, they're gonna wanna spend it on domestic players, but I have a feeling a lot of what's going to happen is, like, there will be, you know, offices in the Western European countries that are doing some of, like, the marketing, small scale r and d, etcetera. But, like, the production, the core engineering, like, where those companies will largely be buying from, I think it's gonna be in that, like, you know, sort of, you know, Poland, Ukraine down to, you know, sort of Romania, Bulgaria, you know, sort of belt because that's where you have the engineering talent. That's where you have people, you know, sort of moving more quickly and you have more of the ambition. And so I think I came away feeling even more strongly about the thesis because you both have clear, you know, sort of spread between performance, but then also just these huge continental tailwinds of people are going to want to be, you know, sort of buying lots of drone defense, you know, sort of systems.
Speaker 6:And I think a lot more of those are gonna be produced in Ukraine than they are going to be in Germany. And, like, you're already starting to see that. There's, like, all these funds now that are popping up to basically, like, fund into, like, the Ukraine defense ecosystem because they just practically, you know, have, obviously, way more day to day problems there, and so and they have an extremely motivated population to go solve these problems. And so I think you're gonna see way more interesting technology coming out of there than you will out of, you know, in Western Europe. So, feel more emboldened on the thesis.
Speaker 2:Back to France quickly, there was Mark Mark Gurman was reporting that Apple was seriously considering Mistral as a potential acquisition. I looked at that and I was like, knowing what happened with Figma and Adobe and and how and how how Europe broadly thinks about antitrust and then how how much of a national champion Mistral is. Mhmm. In what world does the the French authorities say, yeah, let's let Apple come over here and just take all of our top AI talent and our national champion in AI? It's hard to imagine that happening.
Speaker 6:Yeah. I mean, seems like a bad move on both sides where I'm not sure that buying Mistral is gonna, you know, sort of save Apple from the AI race. Like, it's, I mean, obviously, yeah, I think it's such a huge fumble, it's like the first major platform in a long time that Apple has totally missed. Right? Like, they obviously crushed, you know, sort of the, you know, consumer, you know, sort of PC, you know, shift.
Speaker 6:They obviously crushed the consumer mobile shift, and it feels like they're just totally missing the consumer AI shift. And, like, I don't think Mistral is gonna be the solve to their, you know, sort of problems.
Speaker 2:Well, the big question is, is it actually a platform shift yet? Or is it features that can be vended in a bunch of different places? Right? The Yeah. And the argument is like, if if if if AI itself was a platform, would OpenAI be so focused on building a browser?
Speaker 6:Yeah. I guess I mean, I just see it as, the fundamental consumer interface has shifted so significantly where so many people are just going to ChatGPT, you know, as, like, first line of defense, that that could have significant implications for, like, what the, like, day to day hardware that everyone is using looks like over the course of the years of a decade. And, obviously, you know, Meta, you know, clearly showing that they care about this. The other, like, interesting insight from my time in France on, like, Mistral was, like, the you know, if you look at the headlines from two, three years ago, it was thought of as, like, more of an ape OpenAI competitor. Right?
Speaker 6:It was were gonna do foundation models. They had this consumer interface. That was where they wanted to compete. They're like intel on the ground was basically, it's just become this like anointed French Palantir is kind of how I would describe it, where all their contracts, revenues, focus, what they're doing is basically like the French government forcing the, you know, company's way into a bunch of just like the French enterprise to basically just be like an AI implementation platform. So it's like, you know, go into LVMH, go into, you know, sort of Airbus and Talis, etcetera.
Speaker 6:And, you know, Mistral just becomes the preferred, you know, sort of, you know, vendor of choice when it comes to, hey. How does, you know, an aerospace company adopt AI? And it sounds like everything at the company is totally reoriented towards that, which is I mean, it's like you can definitely build a business on that. And in some ways, like, the, you know, sort of French government can some ways, like, force your success, but it's like it it isn't, like, pushing the fundamental technology forward. It's not probably participating in the platform shift the way that, like, it was, you know, hypothesized to two or three years ago.
Speaker 6:And so that's where it's, like, on neither side do I feel like it makes sense. Like, I don't think the French government would wanna give up, like, you know, their, like, darling unicorn. Macron literally, you know, like, seems to basically almost, like, go to bat for them personally. But then also doesn't seem like the right solution for Apple where it's like, isn't even the company that's pursuing the, like, consumer application layer, which is what Apple really needs. They don't need, like, an enterprise AI implementation consultant.
Speaker 1:Yeah. Yeah. It it reminds me of, like, the TikTok thing because there's this perception of, like, I want to control AI. So what that means as a world leader of an international non American company or country is I need to have a data center in my in my country inferencing a model that I trained, but it's okay if people access that through chat.com which is controlled by OpenAI. Like that's that's the same as like, okay, there's gonna be a TikTok app that's gonna run on Oracle servers, but it's gonna be, you know, Chinese.
Speaker 1:Right? It's like like, what matters is the aggregation theory of, like, the front end to AI and and and where you steer the user and how you interact with the user much less than the actual underlying infrastructure in my opinion. So I I don't know. It it does seem like an odd odd choice with with all of these different like sovereign AI efforts. It's like they might be it might be cool to build a data center.
Speaker 1:Like, that might be good. That might be good jobs. That might be valuable. But a little bit like, you don't you're not really controlling like the way AI affects like free speech in your country necessarily. Because if no one's using the chat and everyone's just going to chat.com, like, you kinda lost the game.
Speaker 1:Anyway.
Speaker 6:Yeah. The only place where this stuff kinda matters is, like, the, like, open source models, which I think we've talked about before where, you know, if a bunch of the, like, app developers or, you know, researchers, etcetera, start using DeepSeek because it's just, like, you know, open source, the weights are there, etcetera, but the DeepSeek open source weights aren't willing to, you know, confront the fact that Tim and Square happened. Now all sudden, you do have this, like, soft power where you have, like, the Chinese AI speaking through all these various applications. And so, you know, I actually kind of buy more into the, like, sovereign open source model than I do, like, yeah, like, closed source or, you know, caring about the data centers, etcetera. It's like the open source model feels like it's the only place where you really get, like, soft power.
Speaker 1:Yeah. Let's talk about the the zombie acquisitions. I'd love your take on kind of the post mortem of the Windsurf story. And specifically, what John Ludwig has this formulation that like companies will take talent today over talent plus product in six months or in a year because of because of FTC review. What were your takeaways?
Speaker 1:I'd love to know as like as like a founder or as a VC. Do you back the founder? Is it important to think of the founders and the employees as a class? Like, just what's updated in real
Speaker 2:interesting debate around what's what's true, you know, found being founder friendly. Yeah. There's like a million questions. I this deal. And wanna then as a firm, you're like, are we founder friendly?
Speaker 2:Do we back the founder? Are we gonna go with what they decided is best for all the shareholders? Or do we try to push back? And and is that even possible when something's happening in, you know, a a handful of days?
Speaker 1:So, yeah, what what's updated on your side?
Speaker 6:Yeah. I mean, I feel like it's one of these things where it's like, as you start to see this edge case more, it feels like Silicon Valley doesn't have, like, the, like, policies or patterns or, like, default in place. Right? And I think about this where it's like, you know, the Valley for a long time didn't know how to think about companies that delayed IPOs, right, and, you know, stayed private, you know, semi indefinitely. And that is only, like, a more modern trend.
Speaker 6:And now there are sort of, like, default patterns on how that works where it's like, okay. Well, if you wanna do that and you wanna keep employees motivated around, well, you do have to kind of do, an annual tender process because, you know, if people are wanting to join this late stage of a company and that risk reward profile, a part of what they like about those companies in the public markets is the liquidity for the, you know, sort of shares that they're getting. And so I feel like you've started to see these, like, you know, ways that Silicon Valley gets shaped that makes it, you know, rather than, a one off for companies staying private indefinitely, there is more of, like, a track and here are all the things that you need to do if you want to be able to sort of stay on that track. It feels like this, like, zombie acquisition is, like, still so early and unknown that people don't really have a track. Like, I wouldn't be surprised if you start to see new term legal terms getting, you know you know, put into, you know, sort of term sheets, especially of AI companies where I think relative to, you know, maybe other businesses like, I think about, like, an aerospace.
Speaker 6:It's like, man, could you really just go take out the, like, top 20 leaders of SpaceX and then, like, go build another SpaceX? Like, man, I don't think so. Like, you need the facilities, the hardware, the regulatory approvals, the DOD contracts, etcetera. So it's like it feels like AI is in this unique space where it's like, well, actually, there's, like, top 10 researchers and because the field should be super valuable as, talent alone. And so I don't know that you'll see, like, a broad set of legal terms changing, but you may see that obviously, you know, sort of in AI.
Speaker 6:I think also, like, I don't think it's totally fair to compare all these zombie acquisitions as, you know, sort of identical. I think Windsurf was a particularly special case where the way that the, you know, sort of founding team and acquirer treated the remaining shell company was very poor in terms of both, you know, the liquidity to the remaining employees, you know, how they, you know, dealt with vesting schedule, acceleration of stock, etcetera. You know, can't talk too much in, you know, sort of detail, but that, you know, fundamentally was structured very differently than the last handful of these that we've seen or at least the ones that, you know, sort of I've been somewhat, you know, sort of familiar with. And so I think that's where you saw a huge revolt, obviously, from, like, the remaining windsurf team. And, obviously, I think they, you know, took a pretty brilliant move of, you know, you know, working with, you know, sort of Cognition where, know, now that combination of Cognition plus the remaining WindSurf team is, I think, a super, super credible threat to the, like, team that Google got.
Speaker 6:And so it's, you know, sort of weirdly, you know, weirdly Google may have actually enabled, like, a really formidable competitive team by
Speaker 7:What a lot of time.
Speaker 6:The zombie acquisition. But then from the Mag seven perspective, I kinda get it where it's like you look at the, like, you know, Adobe Figma, you know, sort of deal and, you know, you look at the, you know, team there having to had to pay a billion dollar breakup fee because Lena Khan was never gonna let that, you know, sort of go through, it's like, okay. Well, you know, you kind of, you know, you know, get this, you know, sort of fast track and, you know, don't get the, you know, sort of regulatory involvement. Fort Worth, I feel like this may be, like, a very short window of opportunity where, like, there's just no way that the FTC is not gonna put something out that starts to say that, like, you know, even these minority acquisitions still require some sort of, like, regulatory oversight above some certain transaction size. And so, anyways, I I I see all this stuff as, like, more temporary aberration, and you're gonna see controls put in both via, like, legal terms and term sheet, regulators coming in from above, and it's sort of gonna get squeezed through the middle.
Speaker 6:And I don't think that it's gonna be like you know, my brother Pavel, for example, I think was tweeting some amount about how this, like, fundamentally breaks the, like, social contract of Silicon Valley. I feel like it'll be pretty rapidly repaired in a way where you won't see that long term of outcomes where the joke is, why be a founding engineer, you know, at a company when you can just be the founder and, you know, you know, you know, putting your two weeks. Yeah. I think I think you'll you'll you'll probably see this stuff, you know, all these edge cases sorted out pretty quickly.
Speaker 1:Well, let's move to something less controversial. Please. Donald Trump. You're hosting an event with him. Break it down.
Speaker 1:In terms of tech, it really is less. It's probably easier to talk about having a having a chat with Donald Trump about artificial intelligence.
Speaker 2:I got a spicy question next. So this is like a this is a layup. And it was funny because
Speaker 1:It was the
Speaker 2:you announced the event and, Will Menidas Okay. Immediately commented and was like, blah blah blah blah. And John and I were both like, no. This is exactly the kind of event that Hill and Valley should do with All In and Donald Trump. It's like
Speaker 1:This is it's it's incredible.
Speaker 2:It's an incredible fit.
Speaker 1:You and them and everyone involved, but give us the breakdown. What are what's actually on the agenda? Can people just DM you and get tickets? Is this even open? And then what do you hope to have come out of it?
Speaker 6:Yeah. Maybe we'll start off with, you know, sort of back half of the question. Obviously, the administration put out some early, you know, sort of executive orders when they, you know, sort of first got started talking about both winning the AAI race and then showing the prosperity, you know, economic growth and jobs that would, you know, come out of it. I think what both us and the administration are looking for coming out of this event is just, you know, there's gonna be a whole set of executive orders that are signed, you know, sort of live. They go into more, you know, sort of specificity across the various, you know, sort of areas of, you know, ensuring that we win the AI race and, you know, really communicating a message that there's both a commitment from the private industry, you know, sort of players that are significant in this space as well as from the government to really ensure that that, you sort of happens.
Speaker 6:And, again, from the lens of, like, I do think there's been some, you know, sort of chatter about is AI going to be, you know, sort of job growth versus job destruction. And while, you know, everything from the, you know, sort of steam engine to Internet to mobile, etcetera, has always, you know, sort of done both, on a net basis, it's always been, you know, sort of net obviously super positive for the economy and super positive for jobs. People just do different types of jobs. And so, yeah, I think making sure that that's sort of very clearly also what's happening in AI rather than just like the, I don't know, contra narrative of all that's going to happen here is, you know, everybody that works in customer service is going be, you know, sort of out of job. It's like, well, there's also going to be, you know, sort of way more people, you know, doing data center build outs and, you know, chips returning to The United States and, you know, broader, you know, sort of energy, you know, infrastructure that needs to, you know, sort of get built.
Speaker 6:We've publicly announced, you know, sort of some set of the speakers, some of the bigger ones, you know, sort of Lisa Hsu from AMD, you know, sort of speaking on, you know, sort of chips. But then there's also some, you know, sort of earlier stage players that focus on everything from, you know, AI factories to data centers to energy to, you know, industrial robots powered, you know, sort of by by AI. So you'll see this theme of, like, it is a lot more, like, what I call, like, real world or, like, physical, you know, sort of AI more so than some of the, like, traditional software platforms that are getting, you know, sort of ton of, you know, sort of narrative in the press. And then, yeah, you know, we, unfortunately, you know, don't have, you know, infinite space to have the entire broad public, you know, sort of come attend. And so, you know, sort of pretty, you know, sort of filled out.
Speaker 6:But it will be, you know, sort of live streamed. It's all the content, you know, sort of will be available. We're super excited for that. And, you know, this is definitely, you know, pretty quick, you know, sort of turnaround. We didn't have a ton of, you know, sort of upfront notice, so thrown together.
Speaker 6:But, you know, really thrilled, obviously, to be collaborating with, you know, sort of the all in guys. I think it would have been, you know, basically impossible to obviously do this, you know, sort of without them. And, obviously, you know, sort of Saks, one of the best uses the, you know, sort of AI and crypto SAAR. And Mike Kracios, you know, the you know, I forget if his his title used to be at least CTO of The United States. I forget what the new title is.
Speaker 6:I think it's, like, head of science and technology at the White House. But this is very much so, you know, sort of their their, you know, sort of brainchild and their policy priorities that are really gonna, you know, sort of come to light. We're super thrilled to have, you know, sort of Hillen Valley as a, you know, sort of a cohost of this. And, obviously, you know, sort of builds upon the event, you know, sort of earlier earlier in the year. And I hope we're able to, you know, do more things like this in the future irrespective of, know, sort of who's in the administration.
Speaker 6:We've always tried to keep, you know, sort of Hill and Valley really, you know, sort of bipartisan. And so you'll definitely see a lot of, you know, sort of them both participants, you know, in audience and, you know, Democratic leaning founders on stage. So always wanna make sure this is something where, yeah, where, you know, sort of, you know, a forum that is, you know, sort of here to just, you know, be the meeting of minds between, you know, sort of policymakers and, you know, sort of folks in the, you know, sort of technology ecosystem.
Speaker 1:Yeah. It should be an easy topic to keep bipartisan, I would imagine. Like, it has to be one of these I mean, obviously, everything's super partisan in general, but artificial intelligence, like, you have a ton of Democrats running labs, working at labs there, but then, you know, there's a job story if you're building out a, you know, a massive, you know, data center in a red state, then the red states folks support it. So I I it doesn't seem like it should break down traditional party lines. I am interested to hear about what is the is the actual relationship between the administration and AI companies that are doing build outs?
Speaker 1:Like, there was this story just yesterday. Donald Trump said 20 leading technology and energy companies are announcing more than $92,000,000,000 of investments in Pennsylvania. This is a triumphant day for the Commonwealth and The United States Of America. Google said it'll put in 25,000,000,000. Blackstone promised another 25,000,000,000.
Speaker 1:CoreWeave's doing a $6,000,000,000 investment. You'll love to
Speaker 2:see for big business.
Speaker 1:My my my my question is, like, is this just Trump, like, celebrating what's the free market is doing and just drawing attention to, you know, a great thing and just giving the the free market like a pat on the back? Or or are these big companies are the deals getting so big that there's actually like, hey, we're we're, you know, when Amazon was picking where their headquarters was, it's kind of like a debate. And is there some back and forth where the administration can actually help out on something or stimulate CapEx? Do you have an idea of, like, what the shape of those discussions is like?
Speaker 6:Yeah. I also I'm going to touch on that. Want to just quickly do just like a go back on, like, the bipartisan, you know, sort of nature of, you know, some of the, you know, sort of topics. I want talk about two representatives in particular on the Dem side in California that I think have been, you know, sort of proponents of a lot of the topics that are going to be on stage. Representative Ted Lou from California and congressman George Whitesides from California.
Speaker 6:Yes. From, you know, Ted Lou more focused on the AI side. You know, Whitesides more on all things aerospace, industrialization, but have been, you know, big proponents of the, sort of abundance, I think, caucus is what they call it. Oh, sure. Talking about a lot of these topics where it's like, you know, the way you're going get through economic prosperity is through leaning in on technological progress.
Speaker 6:And then hell, even Obama basically sort of came out in support of this sort of recently, right, saying that you know, at the end of the day, our, you know, party's platform doesn't work if you, you know, can't afford housing and people refuse to, you know, sort of build it. Right? And so he came out as, like, you know, clearly an extreme, you know, sort of Gimbi, which is, you know, not, you know, at least the, like, default, you know, commission of California, you know, sort of position. So and he's got, you know, I think the highest democratic, you know, party approval rating. Like, I saw something where it's like he's at, like, 96%, and then, like, I think the next best was, like, Hillary Clinton at, like, 65.
Speaker 6:So it's like, you know, Obama's coming out, you know, in support of this, think it's gonna be a huge momentum shift on The US or down side, which I think is generally very good for the country where Yeah.
Speaker 2:You know, more
Speaker 6:and more of these topics become more and more bipartisan in a meeting of the minds. On the, like, you know, announcements around data centers, I admit that I don't know the, like, CapEx programs in that specific sub industry as well, but I'll talk about two industries where I do know that the, you know, sort of government has been, you know, sort of leaning in on. One around, you know, sort of forestry and natural resources and another one around, you know, sort of DOD. In both of those, you know, sort of areas, there are, like, net new government programs and budgets to basically, you know, provide these more, like, you know, higher book to value guarantee, you know, lending programs at lower cost of capital for people that are fitting for whose for companies whose projects are fitting into the policy priorities of the administration. And so that's everything from, you know, building out, you know, sort of huge net new reindustrialized use of defense, you know, related use of factories and manufacturing lines.
Speaker 6:And then for folks that are building everything from, you know, sawmills, processing plants, etcetera, on, like, you know, from, you know, some natural lands or national forests as well as on the use of mining side. And so at least there, there's, like, literal direct, you know, program offices, line items, etcetera, that are actually, like, influencing the CapEx spend and making it sort of, you know you know, putting their thumb on the, you know, sort of private, you know, sort of markets to make the cost of capital and, like, the, you know, debt available to these companies even cheaper than maybe what the private markets could bear, Which for what it's worth, it's like if you look at Fannie Freddie on the consumer housing side of things, it's obviously something that the government does there for mass single family homes below a certain price point. They obviously provide a sort of guaranteed loan program. And so it's something that the, you know, sort of government has used before to, you know, sort of prop up other, you know, sort of markets. And so they're clearly doing this around these other administration priorities.
Speaker 6:I wouldn't be surprised. I mean, I haven't dug in, but I wouldn't be surprised if there's something similar in the data center, you know, in AI, you know, sort of market as well.
Speaker 2:Yeah. Quick question for you. I know we have a couple minutes left. Who wins in a bar fight? Global birth rates or Grok companions?
Speaker 6:Man, tough. You know, anime girls in, you know, sort of short black skirts with you, sort of ponytails or
Speaker 2:Teaching you quantum physics.
Speaker 6:Yeah. Teaching you quantum physics for everyone's, you know, sort of weak spots. So, you know, I I I am wondering like, you know, what's behind you know, Elon's promotion of it? Where it's like, do they just need a certain
Speaker 2:here here here's my thesis. I think it could very well become the fastest growing consumer app of all time. Like, legitimately. Like, you combine Elon saying, I endorse this and you're buying from an Elon company. Same, I created this company, I also created Tesla and it's basically massively TAM doing a lot basically TAM expansion which is like, babe I didn't subscribe to Grok Heavy for companions.
Speaker 2:I use it at work. Right? I pay $300 a month because I need a long context window and I need to you know, I need to help I need help I need its help writing emails. And so I think that those factors are just like basically promoting that kind of product on a global scale. A really high price point with something that humanity will pay for could mean that this is a billion dollar run rate product.
Speaker 1:It
Speaker 2:is like couple of years.
Speaker 1:Oh, One year. Yeah. My girlfriend's name, Grock Heavy? It's not like it doesn't doesn't sound it sounds like a SpaceX term like heavy from Falcon Heavy. I don't know.
Speaker 6:I do think you're just gonna see more and more of this AI induced psychosis where it tells you what you want to hear. Perfectly has these feedback loops. You're already seeing this stuff from some teenagers, etcetera. I think like No,
Speaker 2:there's a Reddit thread we were looking at earlier identifying all the words that people use once they're in sort of LLM induced psychosis. There's like eight or so words that start coming up in that person's dialogue really rapidly that we've seen recently like recursive, mirror, structure, these words that get used over and over. That's fascinating. And and when you I think people are combining them with drugs which is insane. And then they're going down a single basically prompting like 7,000 times in a row with like the same dialogue.
Speaker 2:And it's easy to imagine how that would drive you insane. One last question. How do you think Jensen is doing juggling US interests and China's?
Speaker 6:Well, it's interesting that, you know, Singapore somehow, you know, buys whatever $15,000,000,000 of chips for, you know, sort of small island nation, I think.
Speaker 1:It's biology.
Speaker 6:Yeah. It's all biology. It's his network state is getting, you know, sort of really, really powerful.
Speaker 1:He has great networking equipment.
Speaker 6:Yeah. Yeah. I mean, man, I look. I was at this, you know, sort of fun conference up in Idaho last week, and, you know, there was, you know, very few political talks, including one that included an expert, you know, sort of from Taiwan. And it's just you know, we are in, like, you know, by far the most, you know, physically risky, geopolitically, you know, sort of risky environment that the world has been in since the fall of the Soviet, you know, sort of union.
Speaker 6:Mhmm. And I think it's, you know, sort of really hard to figure out how to interact in an environment when you're somebody like Jensen that has, like, revenue from China, significant infrastructure that you're dependent on in Eastern Taiwan, but you're based in The US. I don't envy his position. I don't envy
Speaker 2:his My hope is that global equity market. He's basically holding the global equity markets up like, you know.
Speaker 1:My my hope is that it it's a stabilizing force. My my hope is that it's a stabilizing force. But thank you so much for stopping by. We'll let you get back to your work and your lunch. We'll talk to you soon.
Speaker 2:Talk soon. Great
Speaker 1:to Have good one. And before we bring in our next guest, I will tell you about fin dot a I, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake offs, and the number one ranking on g two. You can get started at fin.ai. They have a fee free trial. So go check it out.
Speaker 1:Use by Anthropic and monday.com. Welcome to the stream. Our next guest is Lucas. You doing, Lucas? Good to meet you.
Speaker 2:Lucas, what's going on?
Speaker 7:I'm doing good. This is the first pot I've been on with two guys with better hair than me. So Oh.
Speaker 2:I don't know about
Speaker 4:that. You're looking sharp.
Speaker 1:You look fantastic.
Speaker 2:Sharp. You came prepared. Next time, would love a suit. Yep. But the background is a good The
Speaker 1:background is fantastic. The background helps. New York City?
Speaker 7:It's it's not fake, believe it or not. We're at Hedge Fund HQ, 9 West 50 Seventh.
Speaker 1:So No way. Amazing. Beautiful. Breakdown what it means to be at Hedge Fund HQ. Talk about life at a crossover.
Speaker 1:I wanna talk about the state of the markets. I wanna talk about CO2's reporting and analysis. It's a very condensed report. It's very accessible, but it still feels like it has a little bit of the the the deeper analysis that you don't get from some VCs. So I enjoy that.
Speaker 1:What's the overall temperature on the markets today?
Speaker 7:Yeah. I think we we're still pretty optimistic. Right? I think you you have a really complex environment. Right?
Speaker 7:The Nasdaq and and the S and P got off to their worst start since Nasdaq inception in 1971 through April 18. But since then, you've had a lot of good news. Right? Inflation has been lower than people thought. Tariffs haven't affected inflation as much as people thought.
Speaker 7:The US consumer has been really strong. Performance in companies has been really strong, I think, the public markets, but also in the private markets, which is giving people a lot of confidence. And so I think we feel good. I think the only kind of question mark we have is is there this delayed effect to tariffs on inflation, and what does that what does that even mean? Right?
Speaker 7:Like, we haven't had a situation like this in fifty years, you know. So like, what is it what really happens? Economists don't know. We don't know. And so predicting that is really tough.
Speaker 2:And we put up a surplus. That's an immediate
Speaker 1:Yeah. That was crazy.
Speaker 2:We put up a surplus in June, which you don't see much from the from uncle Sam. Free cash And
Speaker 7:then the, the PPI came in today, a leading indicator for inflation lower than every single economist predicted. Right? I don't think you usually see. So I think it leaves a lot of room for for optimism.
Speaker 1:Yeah. Did you read into the the earning season that we're going into? JPMorgan beat earnings. Sounds pretty bullish for the American economy. The Wall Street Journal said, The US economy showed signs of resilience despite escalating threats of a global trade war, a sign that American corporations and the consumer are still charging ahead.
Speaker 1:You'll love to hear it. Jamie Dimon said, we've basically been in this soft landing now for some time period. It's been resilient. Hopefully, that will continue. Is he talking about soft landing coming off of the end of Zurp or just the start of the year?
Speaker 1:What is your interpretation of of Jamie Dimon's analysis of the American economy?
Speaker 7:Yeah. I think it's basically coming off of ZERP and coming off of that whole era.
Speaker 4:Mhmm.
Speaker 7:Right? And I think economists were predicting, and a lot of people predicted a recession for the last couple of years. And, you maybe we've been in a mild one for some period, but I think that's been the ultimate question. And, it just kinda hasn't come to fruition the way that a lot of folks thought, the way that a lot of economists thought. So, I think people people feel pretty good.
Speaker 7:And I think you see a lot of confidence from the big companies. You see Meta and Zuck talking about building data centers the size of Manhattan. And I think if we were in a negative environment where people weren't seeing gains from AI and all these wonderful things, wouldn't see that type of investment going in. Mhmm. And so I think it it leaves a lot of room for optimism, we talked a lot about this in our East Beats West presentation, which you alluded to.
Speaker 7:But AI, I think, has the potential to really improve productivity, and that solves a lot of problems. Right? It can solve the national debt problem. It solves the general productivity problem. It solves the GDP problem.
Speaker 7:And so if if what a lot of folks believe can be true about AI, then, you know, maybe there's even more room for optimism at at corporations.
Speaker 1:Yeah. What are what are the key lessons that we should take away from the end of the ZERP era, the rise of interest rates? There were some companies that were kind of revealed to be fraudulent or kind of just overvalued, but it feels like we're already in the lesson certainly doesn't seem never invest at a 100 x revenue multiple because that's already worked out for people who have been investing in a 100 x revenue multiple companies for a few years and got exits because that's happened. So what are the lessons?
Speaker 7:Yeah. I think it's a I think it's a few different things. Think one is quality matters. It's probably the number one lesson that I've pulled from the from kind of the Zurp 2021 era. Right?
Speaker 7:You guys have an amazing sponsor in a company called Ramp, but some people have heard of it. Very small startup, but, you know, doing very well. Yeah. Like, that's an example of an asset that's just incredibly high quality. Yeah.
Speaker 7:And people always thought it was super expensive. You know, people invest it 200 times gross profit or 50 times gross profit. And the reality is the best businesses compound over very long periods of time. And if you're investing in a quality business, often at really any stage, over duration, you're gonna be in a great spot.
Speaker 6:Mhmm.
Speaker 7:I think the place where folks got in a lot of trouble is being in sectors they aren't experts in. Right? Reaching into different sectors that they weren't experts in. You know, a lot of growth investors, you know, candidly, like us, you know, chasing venture rounds with growth dollars, which I think is happening again. Right?
Speaker 7:We got pockets of this Mhmm. In different areas, and then just way too many companies. Right? We were at the end of the kind of the SaaS era in many ways without AI yet, and people were funding literally everything kinda chasing yield Mhmm. And chasing returns.
Speaker 7:And I think there's very few companies that are very high quality, And I think that's kind of the lesson coming out of that era is you gotta back those and only those.
Speaker 2:Yeah. What is we don't spend a lot of time on the East Coast, at least this year because we're here in the studio. But I imagine you pick up sentiment from like traditional hedge fund managers that might even be in the same building as you guys. What is this sentiment? Are are there are there pockets of people that are, I love the volatility, we're printing, I live for this.
Speaker 2:And then other pockets that are just maybe maybe panic ins, you know, people that people that might not not just enjoy like the chaos of sorts. Not lot different things. What What the kind of yeah. What what are the different groups in your mind?
Speaker 7:Think the biggest debate and the biggest flavor and mix that you get is just the AI doomers versus the AI optimists. Right? That's the biggest mix that I think you have in the hedge fund world. And you see it, you know, once every three or four months, you get a deep seek moment. Or you get a moment where Microsoft says they're pulling a few contracts and the market pulls back.
Speaker 7:Right? And but then you have the reverse of that. Whenever, you know, you see these incredible numbers out of companies like OpenAI and more recently Anthropic Yeah. And then just this amazing global use of AI both in the consumer and now more recently, I think you see it in the anthropic numbers in the enterprise. You guys have talked about this with coding and other use cases.
Speaker 7:And I think that's kind of the biggest debate that's happening, inside this building and, you know, other buildings close by. And I think it's huge contrast between Silicon Valley where it's pretty much all AI optimism Yeah. And the East Coast where there is a there's definitely a mix of opinions.
Speaker 2:Interesting. Interesting. Do they, do you find that people that are bearish just typically don't use any of the products? They haven't haven't adopted them? Because I think it's one of those things.
Speaker 2:It's it's hard to just be like blanket bearish if you've never experienced a magic moment using one of the products.
Speaker 7:Yeah. I think there's Honestly, I think there's a lot of that. Right? Yeah. But I also think it's people that have studied the past cycles, and they see that, you know, you do have these bubbles.
Speaker 7:And, you know, maybe we're in a little bit of a bubble now. There are companies, you know, get raising at 10,000,000,000 plus, valuations with no revenue, no product to, you know,
Speaker 2:two
Speaker 7:two folks in a dream. Hopefully, you guys soon. But I I also think there are pockets of of incredible things. Right?
Speaker 2:Well, Even in we were debating. We we I was having this conversation. It was like, okay. It's clear where OpenAI's revenue opportunity is is, where the revenue is today, where where it will be. It's very clear where Anthropix is.
Speaker 2:My question, like, a week ago was where is Grox gonna come from? Like, where are we gonna see an explosion? And then this week, we had new contract with the DOD. Then
Speaker 7:Same day.
Speaker 2:New and then Companions, which I I I'm gonna go out and just predict. I think that'll be like a billion dollar business, like very quickly, regardless of how people feel about it. And so so yeah, and and it's just there wasn't a there wasn't a lab that was willing to like go there, even though people know that that is a huge opportunity.
Speaker 7:Yeah. I think I think it's super interesting and it's funny. Like, when I was growing up, the biggest thing my mom had to worry about was, like, too much World of Warcraft. You got, you got something like this. But I think things like this, have been incredible revenue opportunities in the past.
Speaker 7:Right? You think about where people went with Character AI initially, right, and the absolute skyrocketing of usage that happened there. You think about a lot of these apps that have kind of conformed in and around ChatGPT, I think there's just a huge, huge opportunity here.
Speaker 2:Yeah. How are you what what's your framework for some of these new experiments around tokenized private company shares? Because I I imagine a large part of the CO2 portfolio is what companies like Republic and Robinhood are trying to get out there in terms of giving access to retail. But in general, obviously these these experiments are not sanctioned by the companies. Right.
Speaker 2:In fact, the companies are actually coming out and saying and and there's this weird dynamic where there's always gonna be, you know, ten, fifty, 100 times more demand. However much OpenAI shares you could get on this on chain, there's always gonna be, like, exceptionally more demand. And so there's if if you can actually make these experiments happen, there's just gonna be wild distortions.
Speaker 1:Mhmm.
Speaker 7:Yeah. I think actually, I I think there there's a lot of ways you could take this, but the number one takeaway that we've had from this, and we talk a lot about it internally because one of the missions that we've been on recently, we have a new fund called C Tech, which is, really the idea behind it is to allow more retail investors access to our platform. And I think it just shows the hunger for a normal person to get access to companies like OpenAI and SpaceX and Revolut and some of these fantastic businesses that normal folks can't get access to. Right? And it's this trend of companies staying private longer, not going public.
Speaker 7:It's the trend of the regulations that we have in The US of people not being able to access these types of names where I think it just shows there's a real hunger for this. Right? People are so excited to own OpenAI. They're so excited to own SpaceX, and there's no way to do it today. And I think it's gonna be something that, you know, The US is gonna have to grapple with and companies are gonna have to grapple with because people have this insatiable demand for their for their stock.
Speaker 1:Yeah. One one crazy update I had to my understanding of the value of staying private longer was this past weekend where Cognition wound up acquiring Windsurf and it felt like there were a lot of other things going on, but one big one was that if if the whole company, WindSurf, had gone to Google, that would have been crazy FTC review, but Totally. Private but small, medium sized, I mean, Cognition is a fantastic business, but, you know, it is a small company in the eyes of the FTC. It's a private company. It's a young company.
Speaker 1:Buying another small young company, all of a sudden, much easier to put those two pieces together. So that that's kind of like an untapped the ability to move faster on the acquisition side, potentially an an underrated benefit of staying private longer. But are there any other, you know, factors that might be driving the decision to go public or private or stay private longer in your mind?
Speaker 7:Yeah. I think there are a couple others. I think the most simple one is people wanna invest really heavily. And there is this perception that the public markets only rewards profitability and not growth, which
Speaker 1:Interesting.
Speaker 2:We actually
Speaker 7:think is not true.
Speaker 1:Sure.
Speaker 7:But it is certainly a perception. Yep. And I think folks like, you know, that wanna invest and be unprofitable and really invest over, you know, a five, ten year basis into product or r and d or sales and grow really quickly, it's hard to be a public company that way. Yep. It it really is because public market investors can be fickle.
Speaker 7:You have to report every quarter. It's harder to take a long term mindset. And so when you're still in that investment mode, a lot of folks wanna stay private longer, and it is a benefit to not have to think on a quarterly basis the way a public company does.
Speaker 1:Yeah. I wanted to know about the East meets West, like, kind of mental model around the AI salaries. The $100,000,000 research offers are going mega viral in Silicon Valley. It it's just grabbed everyone's attention.
Speaker 2:And the new play is the UNO Reverse.
Speaker 1:Yes. Now just folks do realize
Speaker 2:that's a card you can play.
Speaker 1:But but but but everyone keeps drawing on the analogy of sports, but there's also the analogy of Wall Street where top traders at Citadel apparently have have pulled in a billion dollar bonus. And Greg Abel famously made more money at Berkshire Hathaway on salary than Warren Buffett did for a long time. And so this idea that like the CEO shouldn't should necessarily be the salary cap for the organization has not been true on Wall Street. And now it seems to not be true in the AI world in tech. But what has your reaction or your or your world's reaction been to the crazy trade deals, the AI salaries, these
Speaker 7:these I love the Uno reverse yesterday. Thought it was hilarious.
Speaker 4:Incredible.
Speaker 7:The I think it's it's kind of interesting because we've seen this here. Right? You saw it, I think, in in actually in growth investing in 2020 and 2021. Right? A lot of careers were yanked forward, and a lot of salaries were yanked forward.
Speaker 7:You saw it in in the hedge fund world, and you still do with the rise of pods. Right? Just like you're referring to. And I think this happens every time there's just a big imbalance between labor supply and labor demand. Right?
Speaker 7:When there's an emerging sector, an emerging market, an emerging trend, and there are very few people that can do something really well, the market just rewards that incredibly disproportionately. And I think you're you see that in athletics all the time. You see it in hedge fund world. You see it in VC world. You see it everywhere.
Speaker 7:And now we're seeing it with AI researchers. There are just so few of these people in the world. I mean, we're talking on the order of hundreds that people really want at the end of the day and dozens of companies that have incredible balance sheets. This war is gonna happen. I think it's gonna get I think it's gonna get more intense.
Speaker 1:Yeah. I wanna talk about competition. Specifically, we were talking earlier. There's been a bunch of examples of this. The question of, like, if you're a Chattypeace rapper, is Chattypeace gonna is OpenAI gonna steamroll you?
Speaker 1:We have a buddy of the show who runs a company, an enterprise SaaS product essentially, and AWS just launched a competitor. And I'm wondering how much how much weight do you put in the bucket of, like, just the grit and the determination of the founder can overcome a challenge from a massive company where they have 20 startups that they're competing with. And if you stick with it, you can break through versus like there are fundamental market forces that could have been understood in an investment memo at the seed stage to know that it was not good to go up against this particular hyperscaler, this particular growth stage startup. How do you think about competition when an entrepreneur is, like, in the various parts of the journey?
Speaker 7:Yeah. I think this is a this is super interesting question. And, I think it's actually one of the other differences between Silicon Valley and the hedge fund world. Yeah. And I see this a lot because I straddle it where I remember two years ago whenever we were first thinking about, alright, how does AI impact the public and private markets?
Speaker 7:We're like, oh, well, of course, the public market companies are all just gonna latch on to AI and they're gonna dominate this. And you fast forward two years and certainly NVIDIA has been the case and some of the cloud providers in in certain areas, but the application software companies haven't really done anything with AI. Right? Like, people are like, oh, CRM, they're gonna kill it, know, all this stuff. Hasn't really been the case yet, which is kinda crazy.
Speaker 7:And you contrast that with, look at what's happened in the private markets with new companies and incredible CEOs, Cursor, you know, Cognition
Speaker 1:Yep.
Speaker 7:Harvey, Glean, Open Evidence. You talk Like, about all these companies that have come up that are competing with these huge companies and killing it. And I think it does at the end of the day. There are certain businesses, if you have a network effect, it's hard to break into that. But even you see OpenAI versus Google.
Speaker 7:Right? I think it's just a lot of this does come down to like the grid of the teams being able to go nine nine six. All this stuff matters a great deal more than just some incumbency advantage.
Speaker 2:How are you thinking about, stable coins? Everybody's excited about them. Everybody wants to make money on them. It's hard to make money on them by holding them, especially with the new regulation.
Speaker 1:I put all my money in stable coins and my portfolio is flat. It's flat.
Speaker 2:Flat on the year.
Speaker 1:It didn't go down though.
Speaker 2:So that's But but it's it's such an interesting category because it it it seems, I shouldn't say incredibly easy but quite easy for existing financial players to add stable coins to their product. So if you're a bank and you wanna enable company what are your user to hold, send, buy, swap stable coins, not super difficult. Circle is public. There was a massive amount of interest but, you know, personally, I look I look at stable, you know, circle trading at at at whatever their their current PE ratio. It, you know, it it talk about an expensive, company right now.
Speaker 2:So how are you guys thinking about category? Are you looking to place new bets, or do you think it's more of a a feature to potentially existing bets?
Speaker 7:Yeah. I think, one, we're paying a ton of we're paying a ton of attention to it. And our view is this seems like the second big use case of crypto. Right? Really being able to if Bitcoin was the first as this call it a store value, call it whatever you wanna call it digital gold, then stablecoins really do feel like the second really big global use case.
Speaker 7:Mhmm. We are trying to figure out actively how to play this. Right? You talk to the folks at Stripe. They're trying to figure this out.
Speaker 7:You know, they made a what I think is a killer acquisition with Bridge. Bridge. You talk to Ramp. They're trying to figure it out. Right?
Speaker 7:There's a big opportunity for Ramp internationally here, I think, to be able to really move money. We're really excited about it. We're trying to figure out the right the right way to play it. We haven't seen a ton of, like, new companies come up, but a lot of the, like, more innovative, slightly bigger companies like Stripe, I think, are gonna really be able to take advantage of this.
Speaker 2:Yeah. It's hard because you you you're excited about a broader trend. You wanna deploy capital against it. And then you look at your portfolio and you're like, wait. You're really well positioned here.
Speaker 2:You're really well positioned here. And
Speaker 7:Sometimes the answer, as usual, is you just buy more Stripe.
Speaker 2:Yeah. Buy more Stripe.
Speaker 1:That's funny.
Speaker 2:How are you thinking about, robotics from the lens of a, growth investor? There's some bright spots, areas where there's real traction, but then some of the hottest categories feel ten years out. And as a growth investor, you're being asked how Who do I If I if I invest $200,000,000 today, is there gonna be someone else in two years that's gonna come in and and write an even bigger check? So I'm curious how you're thinking about that category.
Speaker 7:Yeah. This is this is a space we've talked a lot about, and obviously, we're really excited about it. We have an investment out of our venture fund in a company called Skilled, which you you all may be aware of that. If you haven't, you should go see them and, like, see the products. It's it's pretty killer, the advancements that they're making, spin out of Carnegie Mellon out in Pittsburgh.
Speaker 7:Cool. I think from a growth investor's lens, this is, like, one of the hardest things. Right? Our our view and our mandate on growth investing is we invest in businesses that have real business models and that are clear or emerging leaders in their categories. And in robotics, we're still too early for that.
Speaker 7:That's just the reality. And our view is, generally you wanna be in the in the leader because the vast majority of the of the gain accrues to that number one player. Almost always in technology. Some exceptions, but almost always. And so it's better for us as a growth investor to just wait a little bit longer and be a little bit patient.
Speaker 7:But our view is it's coming. The question is how long? I do think there is one exception in this in this market on the incumbency bit, which is you have Tesla and you have Elon. And in the robotics world, it's hard to bet against him, I think, in a lot of ways. Right?
Speaker 7:Like, he's got the power of x AI underneath him, doing all the research. He's got Tesla. He's got all the real world data that exists out there. He's got SpaceX, all these things kinda mixed together, and he's a founder. And so it's kinda hard to bet against him in in that landscape where it seems really compelling.
Speaker 1:Yeah. Tyler Cowen has this this take on AGI. He says AGI's here, but the impact will be slow because so much of our economy is, you know, health care and it's like nurses in the hospital, doctors doing physical things that can't just immediately be replaced with an LLM and so you'll see us
Speaker 2:quite paying rent.
Speaker 1:Yeah. Yeah. And there's all these different pieces of the economy that that might not be disrupted by LLMs. They might be disrupted by, like, you know, AGI superintelligence robotics feature. But how are you thinking about, like, the surface area of AI's impact?
Speaker 1:You mentioned Harvey and legal and Glean. It feels like we're starting to map out a few of the different subcategories that could be rich pockets of value. But are there any that you think are kind of underrated or might be next up? Or where or do you agree with just Tyler Cowen's general thesis on AI as an advancing force or sustaining innovation in the stuff that has already been brought online, essentially?
Speaker 7:Yeah. I think I pretty much identify with that. Mhmm. I think there is something, pretty interesting, right, which is in technology, again, you almost always see the consumer first. Right?
Speaker 7:And you saw it in messaging. You saw it in mobile. You see it in everything. The consumer adopts really quickly first.
Speaker 1:Mhmm.
Speaker 7:And we've seen that now. There was the ChatGPT moment. We're two years out from that. The consumer is adopting AI. Mhmm.
Speaker 7:Enterprise takes a long time. And getting it in the hands of people at at work, like lawyers, doctors, you know, even developers to a certain extent, but not so much in this case. You know, it takes it takes a long time. Fundamentally, people are sticky. Enterprises are sticky.
Speaker 7:Processes are sticky. And so it takes a long time to get things really implemented. And I think that's kinda what we're seeing. Right? You've got a couple of early use cases.
Speaker 7:Coding is by far the most obvious. We think it's the vast majority of of the value that's being accrued in the enterprise today. Right? There was 1,300,000,000.0 in in coding ARR added in the last twelve months outside of Anthropic, just in startups. And so you're seeing it there first, but I think you're also seeing pockets.
Speaker 7:Right? Legal, Harvey, Open Evidence Medicine, Glean, Search. Right? You you're starting to see it, especially in the text in text out type use cases. But I think it's gonna take it's gonna take time.
Speaker 1:Yeah. It is crazy thinking about, like, I bet if you looked at consumers adopting, like, file transfer versus AirDrop is probably higher than or like or like roughly the same as like in in a in a in a hospital, are they sending more faxes? Right. Like the fax has been sticky in healthcare for and and at home, we're like using like the next next next generation. Yeah.
Speaker 1:So, like, all of
Speaker 7:a sudden, are we all gonna wake up and build our own CRMs? Probably not. No. Right? No.
Speaker 7:We are still using fax machines.
Speaker 1:Yep. Totally.
Speaker 7:I I think these things, they take decades.
Speaker 1:Yeah. What are you tracking on the CapEx side for the AI build out? I I've been reading semi analysis a lot. There's this new big push in Pennsylvania, something like $92,000,000,000 going in there from Google, Blackstone, Core Weave's doing stuff. We talked to the co founder of Core Weave.
Speaker 1:He was saying that the capital markets aren't necessarily even ready to absorb the amount of demand that are there talking about just like when you talk to the AI folks in Silicon Valley who are more like on the philosophy side, they're like, well, of course, we'll build a 10 gigawatt data center next year. And and when you talk to the finance guys, they're like, wait, you want $500,000,000,000 to do this?
Speaker 7:Buy some taxes? You'd like Texas energy next year.
Speaker 1:Exactly. Yeah, what what are you tracking on the on the AI CapEx side? What are the interesting stories? What are the interesting threads that you're pulling on over there? Either data points or just narratives or or different, market structures that you've kind of identified?
Speaker 7:Yeah. I think the the biggest thing that that we continue to follow and we continue to hear is just that everyone is compute constrained.
Speaker 1:Mhmm.
Speaker 7:Right? Like, all these build outs that are happening for the last couple years, and again, this is a big West Coast East Coast debate, again, and has been, about just, like, capacity and, like, are we overbuilding and all of these things. And, I mean, you even saw with Microsoft. Right? It's it's caused some of the friction between Microsoft and OpenAI very very publicly is about compute build out and OpenAI not having access to enough compute.
Speaker 7:Right? And so I think that's just what you're hearing, and I think that's the most interesting thing that's happening right now is, you know, Anthropix compute constraint. OpenAI's compute constraint. They can't release new products because they can't serve them. Right?
Speaker 7:And so I think you're just gonna continue to see, this build out happen, and I think we are really we are really bullish on that trend. I mean, we're we're heavy investors in in CoreWeave. We've we did a a lot with them before the IPO, and I think it's just been an it's been an incredible story so far. Right? And I don't think you've seen an end to the demand yet.
Speaker 2:Mhmm. Last question for me. What are you looking, looking for in the autonomous vehicle market over the next one to two years? We've got, two key players in the race. Obviously, Tesla won.
Speaker 2:They have an interesting map of of their operational area down in Austin. And then Waymo, of course.
Speaker 1:How how There's also horses.
Speaker 2:Because traditional horses,
Speaker 1:it's autonomous.
Speaker 2:And there's also Pony AI, I guess Cali
Speaker 1:was looking at.
Speaker 2:It's such an interesting dynamic because when you have this, you know, very CapEx light model and then you have the polar opposite Yep. And it'll be an interesting battle from our view. But I'm curious if you ever read.
Speaker 7:I mean, the most the thing I'm most looking forward to is just being able to use Waymo everywhere. But Yeah. Yeah. I'm I'm I'm we're all ready for it. I think the consumer demand is obviously there.
Speaker 7:I think the biggest dynamic that's gonna be interesting that the public market is paying attention to is actually what happens with Uber and, like, the existing networks. And how does that end up playing with all these different providers that are emerging with, you know, Tesla, which is trying to build its own network, Waymo, which has built its own network. What happens to Uber in this world? And I think every there's a bull case and there's a bear case on this, and I think everybody's trying to figure it out. But, it's clear that the unit economics on this stuff work, for for Waymo already.
Speaker 7:And whenever we move from Jaguars to something else eventually, it'll probably even get a lot better. Yeah. But it's gonna be a really exciting battle.
Speaker 2:And then the second and third order effects of okay. If people are getting two hours a day of their time back, what are they gonna do with it? Probably scroll on apps, which would be good for Zuck or or they'll do more email. Different beneficiaries.
Speaker 1:We should move to Pagani's. Pagani wire rose. They're hand built. It might it might it might it might affect the economics. But it is quality and it would be differentiating.
Speaker 1:I mean, apparently, they have a deal. They're they're talking about a deal with Toyota. So we might see some Supras. It only
Speaker 7:makes a little more sense.
Speaker 1:But this is fantastic. I I really had a blast talking to you. Thanks so
Speaker 2:much, Stefan. Thanks for coming on.
Speaker 1:We'll talk to you soon.
Speaker 2:Talk soon, Lucas. Bye. Cheers. I'll be right back.
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Speaker 1:That's adquick.com. We're up, baby. Take a bite of the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient seamless ad buying across the globe. Our next guest is Ravi Gupta from Sequoia Capital.
Speaker 1:Welcome to the stream, Ravi. How are you doing? I'm so glad we were able to get some sleep. I hope you slept well. I was about to stay up all night debating you, but I said I'm gonna stop texting him because he's coming on the stream.
Speaker 1:We can have the debate live. How are you doing?
Speaker 4:Are we even on different sides of the debate, man? I just feel like we might be we might even be agreeing. Although I I oh, sorry. Forgot my blazer. You you guys are looking good.
Speaker 1:It's all shit. Yeah. No. No. No.
Speaker 1:No. It's all good. But first, I have to ask you, Explain to me. Who is Lavar Ball?
Speaker 4:By the way, I I I do maybe you guys can flash up the tweets because I I I don't have a lot of banger tweets, but this one was one where I wanted to email Elon if
Speaker 7:I had his email address
Speaker 4:and just kinda be like, I think the algo is broken. Broken. Lavar Ball Yes. Is I I tweeted that I wanna become the Lavar Ball of AI researchers. Yes.
Speaker 4:And Lavar Ball is the father of three NBA players or two NBA players and another one. He has three sons, you know, Lonzo, LaMelo, and Leaangelo. And And he's been very famous about, like, trying to make them into NBA players from birth. Mhmm. And he's a very he's kind of a blowhard.
Speaker 1:Yeah.
Speaker 4:And I have three sons. Okay. And with some of these pay packages that are going out for the AI researchers, I said, you know, why would you mess around trying to make them NBA players? Like, look, their genetics might lean a little bit more towards becoming AI researchers.
Speaker 7:So That's amazing.
Speaker 4:I think the best thing my wife and I can do would be for me to become the LeVar ball of AI researchers. And I tweeted this thing thinking that I'm gonna get virality. TBPN's gonna be talking about it. And I got, like, 13 likes, and it was it was pretty painful.
Speaker 1:We did put it on the show. I think, you might have just underrated the fact that tech loves aesthetic the aesthetics of sports, but no one in tech actually understands sports.
Speaker 2:Now here here's the thing. Here's the thing. The Hayes paradox Yes. Which Yes. I created.
Speaker 2:This is true. Which is the idea that the the more funny that you think something is, the less likely it is to go viral. Right? Yes. Yes.
Speaker 2:The thing that's gonna be most funny to you is, like, super niche and just entirely dependent on what you find fascinating and interesting. Totally. But that doesn't mean that the entire public will also
Speaker 1:remember I posted paradox is true.
Speaker 4:I was so disappointed.
Speaker 1:Yeah. We It's the worst. I posted something. It was, like, a very obscure reference to the fact that, like, Ben Thompson was on vacation this particular week, and and it just completely flopped because, like, people It was your worst performing post Yeah. Of the year are not tracking Ben Thompson's vacation schedule like I am.
Speaker 1:And and Jordy Hudson
Speaker 4:No, John. I I listen. I think it might be that the algo was broken for Yeah.
Speaker 1:Yeah. Those are funny between us. Let's leave it there. It's algo. Yes.
Speaker 1:Yes. We're built different. It's not us. It's it's you. It's the algorithm.
Speaker 1:But but let let's actually talk more seriously about, like, what the Lavar ball of AI researchers would actually look like. Because we were kind of we were talking about, so there's these crazy trade deals that are that are happening, $100,000,000 offers. Are we going to see recruiters that can actually bring these people in the door get crazy salaries? Is that the next wave that we're gonna see? Are we gonna see a recruiter go to a magazine company and get
Speaker 2:10,000,000 in something?
Speaker 1:Feels like it's founder mode.
Speaker 3:Beep beep.
Speaker 1:Yeah. Feels like it's founder mode. And then the question I had for you was that, you know who's really good at spotting AI researcher talent? Venture capitalists. So are the venture capitalists gonna get poached?
Speaker 1:And they're gonna say, hey. Yeah. You're making a lot of money as a GP at a tier one venture firm, but you wanna come over to Meta and start doing recruiting and just bring these folks right in here. We can pay them out like it's a liquidity event on day one. How how does this all shape out?
Speaker 4:Think that I I don't know how the recruiter take shapes out. I I guess my perspective on this is like, I think that high performing people in Silicon Valley have probably been underpaid relative to their performance because of things like comp bans for a And long I think that if you think about it, you know, comp bans imply that everyone within a certain level is producing within some range. Right? You know, maybe one to two x of each other. And I think anyone who's ever worked in a business knows that, like, that's just not true.
Speaker 4:Like, there are people that are that you would, do anything to keep within a level. And then there's other people it's like, okay. If they left, like, you know, we'll deal with it. And so I actually think that the high performers have been, you know, mistreated for a long time. So I'm actually quite happy with this idea of, like, if you are really uniquely good I mean, I'm talking, like, truly otherworldly good.
Speaker 4:You should get paid like you're otherworldly good. And I think that one of the things you and I were talking about last night, John, that I think is also relevant is like, these aren't guaranteed contracts. They're vesting every month. If someone if you think someone is life changingly good and they turn out not to be life changingly good, they don't have to work there anymore and you don't have to pay them anymore.
Speaker 6:Sure. And so
Speaker 4:I actually think that, like I think that to me, the big thing that you actually people have comp bands because they want harmony and they don't wanna explain to somebody that somebody else is performing better. If you're gonna do this, I think all you have to be willing to do to the other person who's not getting paid like that is like, look, I might be wrong but you're not producing like the $100,000,000 player. Mhmm. And you might think you are but you gotta make it more obvious Because we're gonna have a few $100,000,000 players, and those $100,000,000 players are changing the entire trajectory of what we're doing. But yeah.
Speaker 4:Like, you know what? There's money in the banana stand if you wanna go and produce, a $100,000,000 player.
Speaker 1:I guess my The the the one one
Speaker 2:one thought on the LaVar Ball analogy is like a big question we've been kind of debating is, will these same types of offers exist in five years, ten years? Will they exist in a year? Is this this momentary blip? It's like, LaVar Ball had his sons and Yeah. LaVar Ball played basketball.
Speaker 2:I don't think he played in the NBA. But he knew that in eighteen years, he wanted to Yeah. He wanted to be watching his sons play in the NBA, and he knew it'd be a pretty good job. I think the big question now is, you know, how sustainable is it for top talent to be? You know, we've always joked on the show that that Tim Cook has felt underpaid, right?
Speaker 2:Wanting running the Yeah. Most important consumer tech company in the world. Making less than, you know, or making about the same as Ohtani, who's hitting hitting a baseball, which is important and good, but
Speaker 1:It's around $75,000,000 a year for Tim Cook's salary. And one tariff negotiation going correctly is a $200,000,000,000 proposition on market cap easily. Like, no one debates that, that if he has a good conversation with the president, he can save the company from losing 200,000,000,000 or add 200,000,000,000 in a quarter, like, pretty easily with because he's from such a high base. It's a it's a multi trillion dollar company.
Speaker 4:Yeah. So, Jordy, I guess, to your question, I don't know on the AI researcher side if this will still be the case in five years. Because I think the input to it is sort of like, you believe that one of these people can change the trajectory of your company. Right, even on, like, a scaled company. Right?
Speaker 2:Yeah.
Speaker 4:And I think that and or they can make your investment in the CapEx, you know, that you're doing on the GPU side. They you can make that more valuable. Mhmm. I think I don't know if that will exist in five years. What I do believe will exist in five years is there will be somebody or a set of people that you believe can change the trajectory of your big company and those people are gonna get paid a ton of money.
Speaker 4:I think that this is actually a good thing on that dimension which is making it more normal that excellence gets rewarded. And I think that those of us who played sports in any form or fashion, when someone's playing more than you or getting paid more than you in the case of your professional, your reaction is not like, that's not fair. It's like, I need to play better. Yeah. And I think that this to me, it normalizes sort of like excellence gets paid, that's great.
Speaker 4:But I think to your point, the real LaVar ball move for me would be figuring out what the industry would be for my kids to go and enter in that will be getting these kinds of paychecks five or ten years from now. And like, AI is not a bad bet, but maybe it's robotics.
Speaker 1:Yeah. No. No. I no.
Speaker 2:I can't Yeah. The the other thing that's interesting is, like, one one of the the major promises of the industry is that eventually the AI agents themselves will get so good at AI research that that and they'll just copy and paste themselves, so you know billions of times and then then we won't even need humans. So it's like it's almost a call option on that future of like Yeah. If you really just need to build the AI researcher, how much would you pay for an AI researcher that could build an AI researcher that you could copy and paste infinitely. Right?
Speaker 4:The smartest person in our house is my wife, and I did make a pitch to her of like, hey, listen. Why don't we think about you abandoning your medical practice and just go all in next eighteen months, become like a baller AI researcher and try to get one And of these she kind of looked at me like I was not as intelligent as some of the AI researchers, but I thought that was a good idea.
Speaker 1:Yeah. That's hilarious. I wanna tussle a little bit more with the comparison and actually how comp works as a founder versus an AI researcher versus an NBA player. Because NBA players have these these locked contracts where even if they underperform, they might be still getting $10,000,000 a year. If they over perform, they might be underpaid for a little bit, but then they can enter a free agency, renegotiate.
Speaker 1:Even even if they and then there is some variability on top of like the signing, like the sponsorship deals. So you might be underpaid, but monetizing very well with a Nike shoe deal, for example. On the founder side, it's kind of like feast or famine, but you have this uncapped upside. With the AI researchers, you have yeah. You have the ability to, like, get fired, but you don't have as much of a clear signal on the impact.
Speaker 1:Or maybe maybe I'm misunderstanding that, but if I think about there is there there are gonna be, what, like fifty fifty key players on the super intelligence team at Meta. Yep. This is a tens of thousands of employees, trillions of dollars in market cap. Like, it's very hard to say this researcher moved the market cap this much. They justified that $100,000,000.
Speaker 1:As opposed to, if you hit the winning three pointer, it's very clear you won the game, we can look at your stats specifically in your contribution. You can do money very easily. And in the founder seat, you know, it's like, yeah, you hired the key people. You got the sales contract. You raised the next round.
Speaker 1:You added. You took the company from a $100,000,000 in, you know, series a post to a billion dollar unicorn. You should get all that credit all that credit, and you should get that financial upside. And so it feels like it's a little bit squishier, but do you think that there will be more money ball applied to this? Do you think that we'll just see kind of massive churn based on vibes like, hey, you came in couple months, didn't do anything that crazy?
Speaker 1:Or there will be more like internal politics to make sure you're justifying that massive salary once you get in? And then last question is kind of like the the idea of gelling these teams. You know, the the the example we heard previously was like LeBron went to the heat. They had the dream team. Still took him years.
Speaker 2:Tyler Cowen. Yeah. Tyler Cowen. Didn't know that he was a basketball player.
Speaker 1:Yeah. Yeah. He could have been
Speaker 2:signed on.
Speaker 4:I know you gotta put a side by side next
Speaker 1:Yeah. So so, yeah. Just just
Speaker 2:just all that. And I would just chime in and say like, I look at it as he he he acquired a team. He didn't acquire any one individual player. And so you're really measuring, hey, I spent x number of billions. What am I getting from that versus micromanaging in the short term Yeah.
Speaker 2:Three months in. Oh, what have what have you done so far? That's a good question to ask, but not necessarily like you're paying you're getting the team to deliver the thing that you want, which is maybe unclear. But Mhmm.
Speaker 4:Yeah. I I think so, by the way, I will tell you, I think this is, my dream come true of the idea of, like, chatting with some new friends about, like, the mix mix of technology and basketball and, you know, a little bit of, like, compensation thrown in. Like, this is this
Speaker 1:is No. It's good.
Speaker 4:But I It's a simulation.
Speaker 1:This is why we exist.
Speaker 4:I this is the best. It's the best. I think that okay. So I actually think, Jordy, I agree with you. I think that the way this is gonna go down for these companies, and let's just use Meta as an example.
Speaker 4:I think they're gonna look at their aggregate investment in, you know, CapEx as well as in people, and they're gonna have some absolute goal of, like, are we one of the leading players in reaching super intelligence or not? And I actually think that the people cost of that are much, much, much smaller than the CapEx cost. And I think that but I think that overall, it ought to be judged as like a t, which is like, are we going did they become did they enter the race? Are they, you know, one of the leaders in the race? And then I think within that, I suspect that, you know, Alex Wang, Nat Friedman, some of these other folks that are gonna be leading this lab, I suspect that they'll do normal managerial stuff of, like, are we actually getting the most out of each of these people?
Speaker 4:I do think that it's way easier to figure that out with 50 people than there is with, you know, a thousand people or, you know, 5,000 people. And I actually think that this idea of, like, Dunbar's number is, like, really appropriate here.
Speaker 6:You
Speaker 4:know? Below a 150 people is just, like, such a different management challenge than above a 150 people because everyone knows what everyone else is doing. And there's some element of, like, game recognizes game, you know, of, like, do the other people on the research team think the other people are carrying their weight? And so I actually think it's quite smart that the teams are 30 to 40 to 50 people. And I think the core research team at each of these places is smaller than people tend to realize.
Speaker 4:And so I think it is more clear, you know, who is doing great work and who's not. So I actually think in this case, it actually is a little bit more like a sports team. I mean, you think about it, like, the size of, you know, the team that I was talking about assembling is, like, smaller than an NFL football team. You know? Like, you kinda know who's playing and who's not within that.
Speaker 2:It is it is another interesting thing that I think is actually healthy is, like, you shouldn't need to quit your job to make a billion dollars. Like, there's been this thing in the valley, which is like, you can you can have a great life working at a at a big important company. But if you wanna be a billionaire, you're gonna have to, like quit your job and go start a company. That's like basically the default pathway outside of some key executive positions. And I do think it'd be the the the sports comp is like LeBron, like you're super talented, like we value you.
Speaker 2:But if if you wanna if you wanna achieve what you want to do on the on the compensation side, go set up your own team and Yeah. Build an organization from scratch. And Lebron might say, well I don't actually want it. I I actually like doing this one thing. I just wanna do this one thing well which is play basketball.
Speaker 2:I don't wanna deal with, you know, finding finding a stadium and and, you know, investors and all these other things. So I actually think it's healthy that people can
Speaker 4:Dude, John's got a joke ready. He's you can tell by the look on his face. He's got a joke ready.
Speaker 1:I I I don't have a joke. I have a have an interesting similar anecdote. I mean, we keep going back to to Tim Cook and being underpaid at 75,000,000. But I I think Andy Jassy might be a more extreme scenario to kinda tussle with here. So Andy Jassy joined Amazon in 1997 as a marketing manager.
Speaker 1:He was named CEO in 2021, granted a ten year equity package valued at 212,000,000. He's making about 40,000,000 a year now, but he is widely considered as like the reason AWS exists. So he created in many ways $205,100,000,000,000 of market cap, like hundreds of billions of dollars of market cap and hasn't really captured that in the right way. I mean, he's done fabulously. He's lauded as a great CEO.
Speaker 1:I love him. We all love him. But the question is, like, is there some world where you can have an employee who comes in as a as a marketing manager, sticks with you, doesn't need to do the round trip? I'm I I've talked to some people who work at big tech companies and they say often, like, if I wanna get promoted, I need to leave and then come back. And I'm like, that feels like a market failure.
Speaker 1:It feels like there should have been a way or, you know you know, they were Google had a bunch of early employees. Paul Bike Paul Buchheit creates Gmail. Like, can he get a couple extra points? Because that drove so much more. But it like, the structure of these companies just doesn't really allow for that.
Speaker 1:And I don't know if that's good or bad. I mean, it it all works out. But
Speaker 4:To your point, look. I think, if everyone kinda gets the same thing, then Yeah. It gets distributed to people that didn't create Gmail also. Yeah. I would presume that there are some people at Google who were early, who did not contribute that much, who kinda just like benefited from the largesse, you know?
Speaker 4:Yeah. Totally. And that's effectively Paul Buckhide, like, paying them some of the money he should have gotten, you know?
Speaker 1:Yeah. Yeah.
Speaker 4:Yeah. And so I think that, like you know, look, I think people I am interested to see how this ends up playing out over the next few years of, like, does this power law start to apply more frequently? Yeah. Of okay. You know, does every company start to think about the 20 to 30 people inside of the company that they're like, oh my gosh, what would I do if they left that would be terrible?
Speaker 4:Right? And make sure that they're paid super differentially. You know, does that start to happen? I think that the thing that, to your point though, John, that's interesting is I'll give you an example for me. You know, when I was at KKR a long time ago, I think that I was actually pretty wrong on the value I was creating relative to the value the platform created.
Speaker 4:I think the value the platform created was actually a lot more than the value I created. Interesting. And I think it actually took me leaving to realize valuable the platform was. And so I think on some of these, there are people that actually probably have been overpaid because the platform that they were a part of is what created the value rather than that. And then there's people that are dramatically underpaid.
Speaker 4:I think one of the big lessons for me is, like, the range is probably pretty wide of, like Yeah. There are people that these places that have been dramatically underpaid even if they've made a lot, and there's other people that have been dramatically overpaid, you know, even if they made a little less. And hopefully, the market that ends up getting created over time is that people are paid more, like, in line with their unique contributions relative to the platform.
Speaker 1:Yeah. That that that is a great take, and that that that makes a ton of sense. What do you think the recent kind of zombie acqui hires done to does to the earlier stage venture market. If I had to concoct a strategy that feels like it could not fail, it would be to try and write precede checks into just everyone with amazing, you know, AI research papers on their resume and super high IQ teams because every lab is just gonna hoover up all these call options at some point. And I just have such a floor to to my investment that even if the product doesn't work, I'm gonna do great.
Speaker 1:Is that reasonable? Is this distorting the VC market? What's your
Speaker 2:take strategy, spray and pray.
Speaker 1:No. No. No. It's not spray and pray. It's I got I got select it.
Speaker 1:For a it is select for a very different criteria than traditional venture capital, which is what is the market?
Speaker 2:What is
Speaker 1:the product? Don't build the who cares about the product? Don't even tell me. Tell me tell me your resume and and have you been getting calls from Mark Zuckerberg? Because if you have I gotcha.
Speaker 1:I'll get in it I'll get in a 10,000,000 pre or something. Who knows? Don't even know if that's possible.
Speaker 2:Good luck getting it. No.
Speaker 4:No. I get it. I get it. I think maybe there's a conversation for the landscape and there's a conversation for Sequoia. Sure.
Speaker 4:I think at Sequoia, it's pretty straightforward. Like, you know, the people want to help founders build incredible companies. Right? Like, that is the reason people are here. The mission statement is, you know, we help the daring build legendary companies.
Speaker 4:It doesn't it just, like, doesn't compute to try and, like, do it another way. I'll tell you, like, just truly, there's, like, this real currency at Sequoia of, like, do you have an investment that's gone up on the wall of, the main conference room? Yeah. And, like, it's not going up on the wall if you sort of did it the other way. You you know what
Speaker 3:I'm saying?
Speaker 4:And I think that, so I think culture stuff matters a lot there. I actually think what you're saying though, like, will happen. I think people will try to figure out, like, every gap in venture gets closed so quickly. Yep. Right?
Speaker 4:Because it's intensely competitive.
Speaker 1:Yep.
Speaker 4:And there are really good people going after these things. So I think that exactly what you just said is going to be written down by some young person right now. They're going to go and mobilize against it. They're gonna create some sort of ranking system of how many likelihood of being acquired acquihired. Yeah.
Speaker 4:And I think that that'll get pushed out and those prices will move from whatever the number is now for companies like that to hire. I do think though at seed, my impression, and I spend most of my time in growth, is that, like, I I do think that people are actually far more important than the idea because people move around a lot on their ideas anyway. And so I think the thing you're suggesting is acquire ability rather than just, like, the reason people matter right now in seed is this idea of, like, are you gonna stick with it and build something and figure take in the data and figure out something amazing. Yeah. I think your point is there might be another metric that people look at on, like, acquire ability, and I suspect that'll happen.
Speaker 4:It won't happen at Sequoia, but it'll happen somewhere.
Speaker 1:What's the criteria for the wall again? Because I have a strategy. I'm gonna join Sequoia as an associate, rip 500 k into secondary, buying a Figma right before the IPO, Put me on that wall.
Speaker 2:But, oh, yeah.
Speaker 1:Well, I got a pre IPO company.
Speaker 4:You know Listen. This is a good question. The investor is not on the wall. That would be meaningless. It's the company name just
Speaker 2:Ravi's face.
Speaker 4:Massive. It is the company name on the wall. Okay. Know, you'd be associated with Figma, but but I think folks would know that Dylan and the team deserve the credit and Andrew made the investment Yeah. First place.
Speaker 4:But but you I don't know. You have a big media platform, so you might be able to go out and kinda take the credit for it at some point.
Speaker 2:Who knows Andrew?
Speaker 1:Andrew? Who's knows that guy?
Speaker 2:John, take credit.
Speaker 1:You know? Yeah. Yeah.
Speaker 4:Yeah. I think Andrew was Andrew was on TVPN and sort of looked like he might be an AI himself, right, with that, like, blue background, if I recall correctly.
Speaker 1:Yes. He was verticalizing blue that day. He was blue
Speaker 2:on blue. Switching switching gears slightly. I I there's all this excitement and potential around consumer agents. And when they talk about agents, they say you're gonna be chatting with an agent. You're gonna say go get me groceries or book me a car, book me a flight, book me a hotel.
Speaker 2:And then when you think about what a human would do to do those things today, they might go to Instacart, they might browse around, they might see some ads, they might go to Uber and browse around, see some ads, they might go somewhere else and see ads. And in a world where agents are sort of browsing and and sort of, you know, doing the things that a a human would traditionally do. There's been this question that a a lot of people have brought up around, you know, a lot of platforms have a lot of their a lot of meaningful amount of revenue coming from advertising and then an equally meaningful or potentially more meaningful amount of their actual profit. Given that you were at Instacart, how how how are you imagining kind of the the agent market playing out in the sort of economic model for the Internet broadly in a world of agents?
Speaker 4:Yeah. Well, so I think that it's a good question. I think the most pronounced, like, use of agents today, I would suspect, is in customer experience. Right? And so let me come back to the consumer side in a second, but I think and I'm on the board of Sierra, which is Brett Taylor and Clay Bivore's company, and I think you see it already of, like, the resolution rate that they have at Sierra for, you know, the customers that they serve is incredible.
Speaker 4:And so you already have people, human beings interacting with agents to solve their problems and to solve more complicated problems than they've otherwise had and to do it honestly, like, at any time of night and with no wait time. So I think that the promise of agents is quite amazing, and I think you can actually already see it in certain things. So that's cool. I think to your question on sort of, like, what happens in the consumer world and what happens to advertising. The honest answer is I don't know.
Speaker 4:Right? I think that the thing that I find to be most compelling is a little bit of what I think Andre Garpati said on x at some point, which is sort of like, the Internet right now is built for humans and over time it'll be built for agents. And I think that as that happens, I do think that there will be new ad units, new ad models. And I don't think I know what those are gonna be yet, but I think that there will be a complete rewriting of, like, how how is Instacart or other consumer apps written because they will need to appeal to two different audiences. One is agents, one is humans.
Speaker 4:And I just don't know that the the rate of change on that and how it will happen. I do think that, you know, today on grocery shopping, for instance, a very high percentage of grocery shopping still happens like not even online, it happens offline in the store. Right? It happens like the way advertising happens in a store is like end caps and side caps, you know. And then you have online, it happens and it's much more dynamic, and then you'll have it for agents.
Speaker 4:I So just think there'll be, like, three different approaches to ads, some of which is, like, offline, some of which is online to humans, and some of which is to agents. But over time, Jordy, I think that the entire way the Internet's written will be changed and written for agents, but I don't know that I have a great prediction on how that will work other than it'll be way more dynamic. If you imagine, like, right now in the store, the end caps and side caps don't change, but for every week, the ads on Instacart change very frequently. The ads for agents the ads on Instacart for humans change very frequently. The ads for agents, I would presume are like incredibly dynamic changing by the minute or something.
Speaker 2:Yeah. Yeah. It's also interesting. Maybe maybe it doesn't look dramatically different. Maybe companies just have to pay more attention to supporting their APIs.
Speaker 2:And it just looks very similar to to how it's looked the last
Speaker 4:Well, the other thing is I think this is where like this interpretability is a big deal. Just like knowing why an agent is doing what it's doing. I actually one of my favorite things when I use the AI tools is just to, like, click on the details portion and to see what it's actually doing. You know what I'm saying? Like, I I love seeing that.
Speaker 4:I love seeing why it's doing what it's doing, how it's getting to the answer that it's getting to. And I think that companies will need to get really good at understanding why an agent's doing what it's doing. I think that's actually probably one of the most practical changes that will happen, is there will be real teams at companies trying to discern why an agent is going through the behavior that it's going through and will build its products according.
Speaker 1:Yep. I have a question about just like the the the broader economic climate and how Sequoia what the process is to take a temperature check on the the the health of the broad economy. Like, the 2,008 famous RIP Good Times memo fantastically deep with economic analysis and looking at, know, credit rate defaults on consumer credit cards and loans and stuff. We last week, we were kind of like, oh, there's too many top signals. Then we just had Lucas from Cotu on the East, East, conference was extremely bullish.
Speaker 1:And then JPMorgan just beat earnings. The health of the American economy seems undefeated. But I'm less interested in Yeah.
Speaker 2:For context, we we put together a list of, like, 15
Speaker 1:Oh, yeah.
Speaker 2:15 or 20
Speaker 1:different funny.
Speaker 2:Like That were kind of funny,
Speaker 1:but t profile pictures coming back or something. Oh, yeah. Yeah. All these random things. But but I guess my question is, like, what is the what is the temperature checking function look like at Sequoia?
Speaker 1:What what do you actually like, how often do you do this? How do you think about it? How do you actually build a thesis? And how does that relate to, like, the venture strategy?
Speaker 4:Yeah. Great question. Look. I think RIP Good Times, which as you noted, 02/2008, like, I think is notable because it's rare. Right?
Speaker 4:It is very rare that I think we have, like, a macro view that is worth sharing with a bunch of companies that we're lucky enough to work with. Mhmm. I think the reason that that's relevant is, like, we're not macro investors. Right? We make our returns by, like, investing in great companies kind of independent of the time that they're created.
Speaker 4:Like, you know, it's a it's like a trope, but it's discussed all the time. Like, I think, you know, Google was started during, like, 1999, and 1999 is often discussed as, like, a bad period for venture. So I think that one of the big things that happens for us is, like, hey, whatever you think is going on in outside world, go meet the best companies. Go meet the most interesting people. Don't let the macro stop you from going and doing your job at the early stage.
Speaker 4:You see what I'm saying? I actually think that's like a huge deal. Now, I do think, John, we tend we try to be, like, financially oriented and we try to rethink about, like, how far ahead are we paying. Right? And I think that the the the thing that the mechanism for that is, like, we do try to, like, look at where multiples are over some period of time, where are we, how hot are they, and just to understand, like, you know, are we paying three years ahead?
Speaker 4:Are we paying four years ahead? Are we paying two years ahead? What are we doing? I think the thing that I would tell you is it always comes back to company quality because effectively, like, the the faster the growth, the more you believe in a future that looks super different than today, the less the multiple matters. You know what I'm saying?
Speaker 4:Because ultimately, what you're betting on is this big future. And so I think that what we focus a lot on is, like, how big do you think it can be and how durable do you think it will be? One of the observations we have that I don't think is unique, but I think is true, is the companies that ended up being huge, huge, huge, huge, like hundreds of billions of dollars or trillions of dollars, they didn't grow at a 100% the longest. They grew at 30% the longest. You know what I'm saying?
Speaker 4:Like, what they ended up doing was they compounded forever. Yeah. And so so much of what we're looking for is, like, why do you believe that this will continue to compound at 30 plus percent ten plus years from now when it's well over a billion dollars or $5,000,000,000 or $10,000,000,000 of revenue. And I think that is what we're looking for. That's the stuff that goes up on the wall, and that's the stuff that is basically macro independent.
Speaker 4:You know? Like, you could have never dreamed. I'm I I could be wrong on this, but I think Meta grew at, like, 22% last year on, like, a $150,000,000,000 of revenue or something. And, like, there's no
Speaker 1:You heard that from Mark.
Speaker 4:Yeah. Like, there's no model that you're gonna run 02/2005. I'm like, well, maybe it'll add $30,000,000,000 of, like, high margin revenue twenty years from now. Right? But but I do think that the bet you have to be making when you're in our business is sort of like, don't worry about the macro so much.
Speaker 4:Make sure that you believe that it's really going to be uniquely great.
Speaker 1:Yeah. Yeah. That's fantastic. I mean, maybe we could leave it there. Do you have a do you have last this is fantastic.
Speaker 1:We'd love to have you back soon. This is is
Speaker 2:You are the you're the Lovar ball of AI research to us.
Speaker 1:Yes. Hey,
Speaker 2:guys. We're excited we're excited for the world to recognize.
Speaker 4:Yes. If this did nothing else but popularize, you know, sports, tech, and, you know, friends hanging out, I'll be Yeah. I'll be super happy. I'll be
Speaker 1:honored to This come time next that post goes viral because we will have shifted the discussion No.
Speaker 4:Fix algo.
Speaker 1:We will have taught everyone Fix
Speaker 2:the algo.
Speaker 1:The sports analogies at such a deep level that they will get the joke and they will repost.
Speaker 4:Alright, fellas. Thank you.
Speaker 1:Great hanging out with you.
Speaker 6:Talk to soon.
Speaker 1:Really quickly, let me tell you about Wander. Find your happy place. Find your
Speaker 2:happy place.
Speaker 1:Book a Wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home, but better, folks. And also, you go over to getbezel.com. Your Bezel Concierge is available now to source you any watch on the planet. Seriously, any watch.
Speaker 1:And we have our next guest coming in to the studio, Adam from Chariot Defense announcing the company. Welcome to the stream, Adam. How are you doing? Where are you?
Speaker 5:Doing great. Yeah. Calling in live from Detroit here. Long time listener, first time caller, big fan of the show.
Speaker 1:So Fantastic.
Speaker 2:Are you in town for Reindustrialize or I am. Are you Yep. You're not a Detroit native?
Speaker 5:Not Detroit Yeah. In town for Reindustrialize. We just launched on stage a couple hours ago
Speaker 1:and Congratulations. Let's ring the gong for
Speaker 2:a big The gong for a company announcement.
Speaker 1:You haven't hit the gong enough this
Speaker 2:this show. Contact.
Speaker 1:Congratulations. Now break it down for us, introduce the company, explain what you do and how, and then we'll go into some a bunch of questions and stuff.
Speaker 5:Awesome. Yeah. So Cherry Defense is solving a problem that I faced as the counter US program manager at Andoroll Mhmm. Where we constantly ran into challenges fielding all these new drones, electronic warfare systems, edge compute systems at the edge in expeditionary contested environments, constantly ran into power as a limiting factor. Mhmm.
Speaker 5:I was also the head of product Archer, worked at Uber Elevate, Kitty Hawk, saw really advanced commercial technology coming out of the EV, EV toll industries, high voltage lithium ion batteries, advanced power electronics, and saw DOD stuck with low voltage lead acid batteries, massive generators. And so what we're doing at Chariot is building advanced power systems to power the next generation of military technology in austere environments.
Speaker 1:What's the core business model? Are you gonna sell to the defense primes to countries? Are you gonna go to program of record? Like, how does how does the business model work?
Speaker 5:Yeah. The the great thing about this company is we have a lot of different business models that we can pursue simultaneously. So we can sell directly to the government to provide power systems that can bolt on to their existing vehicles. Mhmm. We can sell to companies and other OEMs who are developing new vehicles and help them turn those into hybrid electric, basically rolling power stations that can provide all of the equipment you need to put on those to make them survivable.
Speaker 5:And we can sell directly to companies, and we can sell alongside companies. So if someone's developing a laser system, that system's gonna be a lot more effective at the edge with one of our power systems alongside it. So kind of flexible business model to government to business and international.
Speaker 1:Awesome. Can you help me kind of understand the the the general scale of the amount of energy that you're aiming to put out kind of the band? I've talked to Doug over at Radian. He's targeting the the one megawatt diesel reactor diesel generator with a nuclear reactor. How what what are we talking about and what is relevant at that kind of power band?
Speaker 5:Yeah. So we're in the kind of 50 kilowatt range as kind of So our sweet really, what we're solving for is during counterinsurgency in Iraq and Afghanistan, we were operating either from fixed bases with massive infrastructure or we were doing kind of short patrols at the edge, where really all you needed at the individual unit level was a radio and a rifle. And so you kind of have this power gap in the middle for expeditionary environments, for things like directed energy, you know, so a company like Epirus, a company like Aurelius developing these systems that require thirty, forty, 50 kilowatts of power, the existing military platforms we have can't output that kind of power. But the power system needs to able to deploy down onto a vehicle that can actually be mobile, can fight in a distributed environment.
Speaker 1:Yeah. This feels hyper relevant to some of the the the reporting I was reading about kind of the Ukraine Russia stalemate. Apparently, it's just like drone on drone warfare every single day at a complete it it's like World War one level, like, stalemate and just like almost trench warfare, but just drone based. And so I imagine if you wanna deploy a new anti drone system on the edge, you need to bring it in and you need to bring in power. What is the alternative?
Speaker 1:Would people bring in some sort of diesel generator or I
Speaker 4:don't
Speaker 1:know, fire logs or something? What what what's the state of the art? And then I wanna walk through a little bit about, like, how your solution's better.
Speaker 5:Yeah. So the state of the art around power today is either massive diesel generators.
Speaker 4:Mhmm.
Speaker 5:They're good at turning fuel into electricity, but ultimately, they're they're very large. Mhmm. They take up a lot of space, not very mobile with with lighter weight, more distributed forces. They're not very reliable. Those generators fail all the time.
Speaker 5:And then all of your systems go down. Mhmm. They waste a lot of energy. And so if anytime you're running at less than your peak load, what you see at the edge is highly variable loads.
Speaker 1:Mhmm.
Speaker 2:And your
Speaker 5:generator is not gonna perform on that environment. It's gonna throw away a lot of energy. Mhmm. And most critically, the challenge is the signature management. So that generator puts off a massive thermal and acoustic signature.
Speaker 5:And what you've seen in Ukraine is people don't use generators within 30 kilometers of the front line because they know that that thermal signature is gonna light up like a Christmas tree on an IR drone and be immediately targeted.
Speaker 1:That's fascinating.
Speaker 2:That makes sense.
Speaker 1:That makes a ton of sense now. So how like, how how if we if we count this to the enterprise HR platform market, Obviously, you're starting with something like that looks kind of like a point solution, not to use the wrong term or something, but, you you know, it it it's this one product. Talk to me about how you think about it. Is this like, we wanna add on solar modules soon and then we're gonna add on wind farm, you know, connections or, you know, talk to a nuclear company about partnering there? Or is it more about different form factors in battery technology?
Speaker 1:Like, what are the different vectors that you plan to kind of expand upon versus partner on?
Speaker 5:Yeah. So if if you think about the name chariot, it kinda comes from in 2000 BC, the Sumerians used another source of power Mhmm. Besides manpower for the first time, horsepower. Mhmm. So we talked about earlier on the pod, you know, the horse is the first autonomous
Speaker 1:We love horsepowers. Right?
Speaker 2:The horse
Speaker 5:is the first, you know, power source for the military. Yeah. And so, you know, we saw, you know, a transition, you know, from horsepower to steam power, from steam power to the internal combustion engine, right? Both really transform military operations. We see a similar transition going from pure combustion engines to high voltage hybrid systems.
Speaker 5:And we want to build the power infrastructure for that. So what we want to build is the energy storage, the batteries, the power conversion, and the power electronics, and then the power control layer that actually manages power at the edge. Mhmm. Today, someone will go plug in a coffee pot, and it'll brown out the air defense radar because there's no logic sitting over these grids at the edge. Okay.
Speaker 2:Honestly thought where sometimes coffee can be more important than air defense.
Speaker 1:In war. I do
Speaker 2:gotta say. Casting It key.
Speaker 1:Yeah. Yeah. Yeah. I mean,
Speaker 2:you might write the logic to be like Yeah. Flexible. This guy needs a cup of joe.
Speaker 1:Yeah. Let him bring down the air just for five minutes so he can get but maybe that's a plug for Yerba Mate. You don't need to plug in your coffee coffee if you're drinking an energy drink. It's already made for you.
Speaker 2:That's
Speaker 1:right. When did you
Speaker 2:when did you start the company? When when did you when did start the company?
Speaker 5:So I started the company last fall. Awesome. We raised our seed from General Catalyst in x y z. Nice. Working with really great investors.
Speaker 5:Really happy to to have those guys on the team. And, yeah, raised the comp raised the seed back in the fall. Yep. Within three months, we were at our first exercise, powering lasers, powering electronic warfare systems. And within six months, we were at JRTC.
Speaker 5:So when when when secretary Dran Dischal and general George, chief of south of the army, were on the pod Yeah. They said they were gonna go to that exercise the next week.
Speaker 1:You were there?
Speaker 5:Where we
Speaker 1:were. No way. That's amazing. I was gonna ask about that. Army modernization.
Speaker 1:That's amazing.
Speaker 5:So that was six months from the first check into the company. We were air assaulting equipment into a force on force exercise. Had the opportunity to brief doctor Alex Miller, general George at that event. Show them what we were doing supporting the warfighter.
Speaker 1:That's really cool. Sorry. To go back to a technical question, signatures from batteries, essentially. Like, I Right. I've heard, like, Tesla's put off EMF.
Speaker 1:I imagine that there's you know, you talk about rare earth magnets. Like, there's a lot of stuff going on in an electrical system. Is any of that still need to be shielded? Like, what can you tell us about the the future of as we transition, what's the next discussion we're gonna be having about keeping troops safe?
Speaker 5:Yeah. Certainly. So a lot of it comes down to, yeah, hiding below the noise.
Speaker 1:Mhmm.
Speaker 5:Right? So signature management. You know, any anything pushing a lot of power is gonna have some kind of detectable EMI. With a battery, it's easier to shield it. It's easier to put under cover because there's no exhaust like there's a generator.
Speaker 1:Sure.
Speaker 5:What a generator actually is is a giant spinning magnet that's generating an electric field that then induces or generates magnetic field, induces electric field, which actually generates the power. Interesting. So significantly lower EMI. Yeah. And I think part of survivability in in the future, like, how do we how do we have our troops survive?
Speaker 5:What would I want? You know, going to the front lines in Ukraine. You wanna be able to reduce your own signature. You wanna be able to raise the noise floor. So this this kind of expeditionary power system also allows you to set up deception decoy type operations where you've got a bunch of different things on the battlefield that all look kind of like yourself.
Speaker 5:Mhmm. And so you're lowering the noise, you know, lowering your own signature, you're raising the noise floor, and then you need advanced countermeasures, things like direct energy, high powered microwave, high energy lasers. All of that really depends on kind of this this fundamental power architecture.
Speaker 2:Yeah. Any insights so far from reindustrialized or investor every time you go try to watch a a talk, some investor is hounding you, trying to hand you a a check for your series a. Any any insights so far?
Speaker 5:It's it's been a great event. You know? We we love being at an event like this. There's a lot of other people developing, you know, core technology here. Right?
Speaker 5:New new countermeasures, new sensors, new drones. We really kinda see ourselves as kinda building the picks and shovels of this defense modernization effort. And so we've had a lot of great business to business conversations here, companies who they can focus on, as Beza says, making their beer taste better. And we can kind of solve this fundamental problem for them. So it's been great business business collaboration here.
Speaker 5:Had a lot of great conversations about partnerships. It's been a great event.
Speaker 1:Amazing. I wanna talk about some of the trade offs of dual use in the context of storytelling around your company. This feels like something that it's military equipment, but it doesn't seem super dangerous to give to an oil and gas company. It doesn't seem like as regulated as nuclear weapons or, you know, missiles or something like that. This feels like it would be directly applicable in a bunch of other industrial scenarios.
Speaker 1:At the same time, as an early stage startup, you have to focus. You might not wanna tell the story of, hey, we're gonna do this and this and this, and then all of sudden investors are like, what are you actually doing? Like, just talk to me about your hangout with Dan Driscoll. Like, you're you're clearly having traction there. What's the long term plan?
Speaker 1:How important is focusing at various points in time? How how important is agility and the ability to soak up a DOD contract when things are good there and they have a need? Soak up a oil and gas contract when the industrial base is expanding. How do you think about the trade offs both on the business side and then the narrative and storytelling side?
Speaker 5:Yeah. It's a great question. There's been a lot of talk around dual use. We are a dual use but defense first company. We actually think that this actually enables a really interesting play when it comes to critical minerals, bringing back the themes of re industrialize.
Speaker 5:We are selling to DOD first. They are the ones who are willing to pay the most for that US supply chain, for the ruggedization and for the sourcing of materials from allies. This allows those companies to have a demand signal. If you're building lithium refining, DOD is not going to buy refined lithium. They want to buy a capability.
Speaker 5:But we can say, hey, we'll buy that US sourced lithium into cells and into packs. We'll deliver that as a capability to DOD, be able to pay that early price premium that it's going to take to get down that cost curve. So we see ourselves as helping other companies of re industrialize in addition to us having that customer that really focuses us at the beginning and building a truly great product. The go to market is obviously very different as well. And so we've definitely focused the team there.
Speaker 5:But we see, as we start to see some of these early contracts land, the ability to focus then on disaster relief, oil and gas, mining, other off grid industries that have this critical need for power.
Speaker 1:Potentially, the best news in the re industrialized world or theme other than the conference this week has been that Apple is buying something like a half a billion dollars of rare earths from MP Materials. From your experience, you're obviously trying to re industrialize, probably trying to build as much as you he's
Speaker 2:re industrializing.
Speaker 1:Oh, he's re industrializing. Yes.
Speaker 2:He's actually He's industrializing.
Speaker 1:He's re industrialized. But what what in the supply chain do you think that we should be having the biggest conversation about? What's the next thing that we gotta focus on reshoring, re industrializing around? What's underrated? What's the thing that people should be learning about now?
Speaker 1:Everyone learned about, well, we don't make the iPhones here. Then people were like, well, we don't have the rare earth elements. Then people learned what TSMC was. What should we be talking about in the supply chain for what you do in terms of large scale American industrial capacity?
Speaker 5:Yeah. And on on the re industrialized theme, one of the best hats I saw today was industrial based.
Speaker 1:That's great.
Speaker 5:So yeah.
Speaker 2:Of course.
Speaker 5:Love it. I'm picking all those up. You know, for us, yeah, the the supply chain for for batteries is is a case where, along with many other industries, we really invented a lot of technology here and then handed it over to China. One of the biggest companies now in the world, CATL, that technology initially came from a company called A123 Systems. It was incubated in The US.
Speaker 5:It was developed in The US. Massive investment from the government into that capability development, but ultimately mistimed the market, ran out of cash, and was effectively bought up by and then licensed China. And China now dominates this critical industry around lithium iron phosphate batteries. And so that was a technology invented here and handed over there. You see a similar thing with DJI, right?
Speaker 5:We have great companies here, Skydio
Speaker 4:in
Speaker 5:the early days, 3DR, Chris Anderson. And we effectively seeded that thing invented in The US to China. So it's on the battery cell side and then on the battery pack manufacturing as well. Pack manufacturing is is one of those kind of underappreciated parts of the battery value chain, especially building safe packs for DOD that can pass those certification standards.
Speaker 1:So just to clarify, the company you were talking about is CATL. Is that correct?
Speaker 5:Yes.
Speaker 1:Okay. I just looked it up. We're gonna have to do a whole deep dive. This is fascinating. Never heard of this company before, and I wanna know way more.
Speaker 1:Obviously, we can't have you tell us the whole story. So we will we will dig in soon. We'll hopefully have you back on the on the show soon. And we hope you enjoy the rest of Reindustrial.
Speaker 2:Congratulations on the launch.
Speaker 1:Say hello to literally everyone.
Speaker 2:Yes. Say hello to everyone. And I I just wanna say I can see why you've been so successful to date. You're very, very, very impressive, and I'm glad that you're building this company.
Speaker 5:Yeah. Thank you. Thanks for having me on guys.
Speaker 1:We'll talk to Bye. You Let's tell you about 8sleep.com. Get a pod pod five ultra. They have a five year warranty, thirty night risk free trial, free returns, and free shipping.
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Speaker 1:And our next guest is here. We will bring him in. How you doing, Misha?
Speaker 2:What's going on? Launch day. Launch day. Hey,
Speaker 3:guys. Good to see you. Thanks for having me.
Speaker 1:Thanks for hopping on. I I saw the post going viral. I checked the calendar. We'd already booked you. It's working.
Speaker 2:Perfect.
Speaker 1:It's amazing. Thank you so much for coming on. Why don't you kick us off with an introduction on yourself and the company, and then I have a ton of questions about how engineers are understating code.
Speaker 3:Yeah. Sounds great. So just a quick primer on the company. My cofounder, Janis, and I were DeepMind researchers. Before this, ourselves and our team, which is mostly from DeepMind and also from places like Open Eye and Anthropic, pioneered a lot of the large language model and reinforcement learning breakthroughs over the last decade.
Speaker 3:And we set out about a year and a half ago to build a company with the mission of I mean, it was just a mission of building superintelligence, but we had a pretty, let's say, almost practical and opinionated view on it that they could not build it in abstract, that you had to really define it as both the research and the product agenda. And so we thought about, well, what would a superintelligence in an organization look like, which we think is basically gonna be this, like, omniscient oracle that knows everything about the company and can act on the user's behalf. And if you wanna build towards that, we then kind of work backwards of where do you start today. And so today, what we're launching is a product called Asimov, which is the best code based comprehension system in the world. So it's like a code research agent, that is sort of the submission to Oracle, for engineers about their code, and can answer any question that they that they have.
Speaker 3:And that's kind of our first step.
Speaker 1:K. You're clearly an asthma fan. Maybe an easy question, but is the solution to AI safety just the three laws of robotics? Like, if we just bake those into the system prompt, are we good?
Speaker 3:You know, I think that we are actually kind of doing that already today. Like, these when you write these rubrics for language models to kind of go and evaluate, you know, whether something is behaving well or not. And similar to the Asimov, you know, conclusion, the conclusion here is that this problem is much harder, and it's very easy to hack these kinds of, rubrics and build systems that are not aligned. So, I think the answer is, you know, a no. Okay.
Speaker 3:But, you know, it's kind of a big problem that doesn't have, like, a very simple, I think, silver bullet answer.
Speaker 1:Yeah. Yeah. I mean, certainly, as I've tussled with the the AI safety narratives over the last few years, I've gone all back and forth from, okay. This is a very this is a very crazy doomsday scenario that's fantastic sci fi to, okay, there are some very concrete problems that need to be addressed as these systems get rolled out even just from, you know, time and attention and people being, you know, overly focused or optimizing on user seconds going wrong. There's so many things.
Speaker 1:So it's a yeah. It's a fascinating space. Jordan? When did
Speaker 2:you actually start the company? And this is your first launch. Correct?
Speaker 3:We started the company about early twenty twenty four. So a little over a year ago.
Speaker 2:Right. And how was that I'm curious the decision making process to go strike out on your own, obviously, with a great team. But as a researcher, like deciding whether to stay in an environment that had massive scale and resources versus going into a more resource constrained environment? Obviously, there's a lot of capital available for great companies and teams, but it's still quite a bit more resource constrained than something like DeepMind.
Speaker 3:I think that every frontier lab that's been built, was built when it was kind of had enough resources and had a good team, but was definitely resource constrained relative to the kind of big incumbent. And so I think what's really interesting to myself and to the team that's, been assembled here is how do you build out these sort of next AlphaGo or, like, the next GPT? I think that was, like, the most interesting time to be at these, you know, what are now incumbent labs when the initial breakthrough projects that define them was just being formed. And we think there's an opportunity for kind of the new kind of AlphaGo to be built, which is gonna be embodied not in a game of Go or, you know, a, you know, simulated setting, but is gonna be embodied in an extremely powerful and useful product. And so we kind of think about these two things of, like, how do we set the research agenda to drive breakthroughs, via product Mhmm.
Speaker 3:You know, on this mission to superintelligence. So I think it's really, if if a researcher is, you know, happy kind of entering, like, a big ship and being a kind of small part of it, which, you know, there's definitely reason to do that. It's fine you know, it obviously pays very well. That's one path. But if you want to start kind of a new frontier lab and drive a new series of breakthroughs, I think the best place to do that in are really small focus settings.
Speaker 6:Mhmm.
Speaker 1:You mentioned AlphaGo. My interpretation of that story, it was I was obviously very impressed that AlphaGo beat Lee Sedol. I thought that was incredible and unexpected. But I was more impressed by Move 37. And I think that the reaction to Move 37, this uncharacteristic, undifficult to interpret move that seemed like an air, seemed like a blunder, turned out to be important, turned out to be critical to winning that game, showed a type of creativity and sort of a solution to the spiky intelligence.
Speaker 1:It didn't feel just like playing the best game of human Go. It seemed like it was playing something different. And so my question is, is that the correct understanding or history of the AlphaGo, Lee Sedol match and that and that story? But then also, are we still waiting for a Move 37 moment in LLMs?
Speaker 3:So Move 37 was actually I I was a theoretical physicist before, and when I saw that, I decided to get into AI. Mhmm. And my cofounder, Giannis, was one of the key contributors to AlphaGo and was there in Seoul when that happened. And I think that you're you're exactly right that this was probably, I think, still one of the most beautiful artifacts to ever be produced in in AI Mhmm. And that we have not actually gotten to the point where we're seeing move 30 sevens coming out of these language models.
Speaker 4:Absolutely agree.
Speaker 3:Yeah. We're we're seeing we're seeing, like, they're solving math olympiads. They're solving, you know, coding quizzes, but we're not seeing that level of net new creativity. And that is kind of one of the guiding kind of, you know, things that this company is how do we get to these systems that start showing Move 30 sevens in the real world, like beyond kind of Mass Olympiads, beyond games of Go. How is it, you know, like that I mean, I don't want engineers or, like, people in in enterprises to see a thing that AI gives them, like, be perplexed like Lee Sedol was with Move 37.
Speaker 3:But I do want to strike that same sense of kind of beauty that this thing is discovering new technology, in front of us. So that is definitely, what we're what we're kind of moving towards.
Speaker 1:Do you have a reaction to the latest Gwern essay about LLM daydreaming, this concept that maybe if you run LLMs across all sorts of different ideas, pick random words, try and find connections, you can kind of brute force innovation or innovative thoughts. Because we've seen that LLMs seem like insanely high IQ, math Olympiad, as you as you mentioned, and yet have yet to write a really novel funny joke, or come up with a new connection in between the different sciences. And it feels like we're in this spiky intelligence moment. A lot of what's produced feels kind of like a very much an average of the Internet. It's it's sometimes, you know, midwitty in many ways.
Speaker 1:It feels uninspired and Gorn was was coming up with this idea that maybe there's a different solution. Did that resonate with you? Did you read that, or did or do you have any other ideas of how that could possibly play out?
Speaker 3:Well, that essay definitely resonated. Though, you know, as a kind of true reinforcement learning believer, you know, we've seen superintelligence arise multiple times now. That was the game of Go and AlphaGo. DotA five and AlphaStar, these projects from OpenAI and DeepMind, we're getting close to it. And I think at that point, if they just sunk more compute in, they would have gotten super intelligent, you know, video game players more broadly.
Speaker 3:And so I think reinforcement learning, when it's set up right, it never fails. Now the challenge is that if you're setting it up to solve Math Olympiad's questions, there's no reason to believe that why that would generalize to actual mathematics. It's kind of like a, you know, like a student that's really good at taking tests. Doesn't mean that you'll make a great mathematician. And so I I think that without engaging with the real world and real world evaluations, it's really hard to build super intelligent systems in the real world.
Speaker 3:So I think this kind of benchmark maxing is, a bit of an ego play. Mhmm. And I'm much more interested in models that are trained with reinforcement learning for real world stuff, and maybe they're a bit worse on the benchmarks, but users really love them. And I think we'll we'll start seeing super intelligence come out of those systems. I don't I don't think reinforcement learning will fail us.
Speaker 1:Do you think we need verifiable rewards in physics discoveries or something like that? Like, how can we RL against something that like, I I've been my my Kugans eval is basic or Kugans benchmark is basically tell me a joke and see if I laugh. And it feels extremely hard to eval against. You you have to, you know, pay a bunch of humans to sit in a comedy club, or they have to pay, and then you have to record the voice of the laughing or something. I I I don't I don't know how I would RL against something as squishy as as a joke or or a fundamental new insight in physics.
Speaker 1:It feels like it might be intractable, but what is your take?
Speaker 3:I think the verification problem is kind of the most fundamental problem across all of artificial intelligence. When I was working on Gemini, I was, leading reward model training, and that was basically figuring out the right verification question. So that is, I think, the, basically, biggest bottleneck. And so there's kind of some systems have verifiable rewards. Others, you kind of have these rubrics.
Speaker 3:But I think, fundamentally, the limitation is, like, what are you evaluating? So in the in the physics thing, you might have verifiable and even rubric rewards for physics problem sets, physics Olympiads. But getting that for, you know, actual physics work, like, you're working very closely with physicists and seeing, like, what their day to day is and, you know, there's I don't think there are any companies that are actually doing that because it's it's a bit of a slog, and it's unclear if it's even economically viable. Yeah. But that's the sort of thing that you would need to do.
Speaker 3:You would need to make a simulation that is as close as possible to what a theoretical physicist actually does. The the challenging thing is that there aren't that many theoretical physicists that you could even work with to really understand them deeply. So it is kind of a data constraint problem. But I think it's fundamentally an evaluations problem.
Speaker 1:Yeah. That that's kind of a hilarious scenario that for some of this basic science research, like, the the it might cost, a billion dollars in compute, and you cannot underwrite that if you're not coming out the other end with, a patent. And so that's, like, pretty tricky.
Speaker 2:What what was the moment internally for you guys that you felt the product was ready to to to launch?
Speaker 3:I think we've been so we believe that coding is this kind of root node problem to superintelligence more broadly just because that's how language models interact with software. That's sort of like their hands and legs. And then we were trying to figure out, well, where are we today and why you know, like, what's preventing us from building superintelligent systems? And the short of it, we kind of realized that coding agents, right, that code generation stuff is starting to work. Like, we have these semi autonomous systems, but they're basically, like, semi autonomous systems with amnesia.
Speaker 3:Like, they Yeah. You know, they forget everything. They have no context, and it's sort of like if if you watch, like, that Adam Sandler movie, fifty first dates, it's kind of like that for coding. Right? So, like, every day your coding agent wakes up and knows nothing and has to learn everything from scratch.
Speaker 3:And so the fundamental thing that we felt was missing that needs to be solved is, this ability to comprehend very large organizational code bases and the software and kind of systems around them and build this memory, like this contextual core for for agents. And I think this will sort of generalize beyond coding. Right? There's sort of every single discipline in organization, is kind of context bound. So even if we get really smart, like, generation agents, that doesn't mean that they'll actually be useful.
Speaker 3:I So think it was kind of having that insight, building the initial product around it, seeing how it's utilized, on our team, on a daily basis and how our initial customers are starting to use it, and seeing just having a lot of confidence that this is the big unsolved problem, that, you know, that we kind of identified and are seeing kind of good momentum around.
Speaker 1:Can you talk to me about what you're excited about on the GTM side? Are we gonna be seeing a frustrating frustratingly viral Cluely style ad from you? Are you gonna set up channel sales like what we saw at Windsurf? Are you gonna go enterprise? What's the most interesting to you in terms of actually getting the product adopted at scale?
Speaker 3:So we think kind of most of like, most of the problems where superintelligence will be useful, like, extremely useful and valuable, is going to be within large organizational settings. Like, when I was working at, you know, DeepMind in Google's largest mono right? It's like this massive mono repo. It has to be like, that's the kind of scale where these systems are most useful. Now, obviously, like, enterprises are not at that scale.
Speaker 3:And so it's very much you know, it it is an enterprise product. Now in terms of, like, a a go to market, you you wanna go for the enterprises that are early adopters. And so one of the things, you know, that we've really been doing is that as opposed to kind of a traditional SaaS that might go viral with more consumers, enterprises don't want their code and, like, all their proprietary data leaving their cloud. So we've built it in such a way that it's just deployed on their cloud resources and are working with kind of the early adopters where that deployment is fairly straightforward. So that's kind of our our go to market today.
Speaker 1:Yeah. That makes a ton of sense. Any other questions, Rudy?
Speaker 2:Not for now, but this is great chatting. Thanks for the insights and always welcome to come on the show. When you see if there's a current thing on the timeline that you have strong feelings about
Speaker 1:We'd love to shoot
Speaker 2:us a note and jump on.
Speaker 1:Let us know when you see a Move 37 moment in anything. That's what I want.
Speaker 2:Your official Move 37 course,
Speaker 3:As soon as the first time I see a Move 37, you'll be one of the first people to know.
Speaker 1:Please. We'll we'll put up a breaking news banner. Move 37 moment
Speaker 2:Achieved. In
Speaker 1:in achieved. Thank you so much for hopping on. We'll talk to you soon.
Speaker 2:Awesome. Alright,
Speaker 3:guys. Thank you. Cheers. Bye.
Speaker 1:I wanna talk about the bull case for nothing ever happens. OpenAI runs its entire business on Salesforce and Slack. Did you see this? An unusual part of OpenAI is that everything, and I mean everything, runs on Slack. There is no email.
Speaker 1:I maybe received 10 emails in my entire time there. If you aren't organized, you will find this incredibly distracting. If you curate your channels and notifications, you can make it pretty workable. And then the follow-up here from Matt is, you can just vibe code a CRM in a week. And they say, oh, we use Salesforce, which is very funny.
Speaker 1:Also, Rapplet has been on an absolute tear. Chris has a post here. Not sure how you see a chart like this and then just continue living your life. It's interesting because I feel like I've been aware of Amjad for more than half this chart. Probably since 2018.
Speaker 1:I've kind of been following him on X, and he was just grinding it grinding it out. And then from 10,000,000 ARR to over a 100 in just a few quarters. Fantastic work from Amjad Masad over at Replit. Grinding. And it's interesting is, yeah, people were always saying Replit is just like the the hype is the hype is ahead of the revenue.
Speaker 1:And then they just stayed at it, grinded, and it caught up, which is fantastic.
Speaker 2:Speaking of crazy charts, Raj Veer
Speaker 1:Yes.
Speaker 2:Who we've featured on the show before says the Claude code command line tool is now at over 3,000,000 weekly downloads more than the monthly downloads of the Claude iOS app.
Speaker 1:Wow. Yeah. This is the winning. They are winning in code. OpenAI is winning in consumer knowledge retrieval.
Speaker 2:Yeah.
Speaker 1:And the and the market's forking.
Speaker 2:And in other news, grab a gun has gone public No one. The New York Stock Exchange under the ticker Pew. Pew. They went out this morning and We covered
Speaker 1:that like months and months ago when we did we read some story about it's the president's son. Correct?
Speaker 2:Yes.
Speaker 1:Is it Don Junior? Who's involved?
Speaker 2:Don Junior.
Speaker 1:Board, I believe.
Speaker 2:Yep.
Speaker 1:Very cool. Well, interesting business. Been around for a long time. Right? Grab a gun is an old company that then brought in some new investors, some new talent, and then went public.
Speaker 1:Is that right?
Speaker 2:Yeah. Founded in 2010. Okay. Amazon for
Speaker 1:Weapons.
Speaker 2:Weapons. Interesting. American Amazon for weapons. Yeah. But yeah, wouldn't have predicted this company would be
Speaker 1:Is it doing well?
Speaker 2:I mean, it's hard to say. Mean, it's down down 23% today. But who knows where it'll shake out?
Speaker 1:Who knows? Who knows? Freedom. Jeff Huber says, I think about this a lot and shares a screenshot of why GitHub won. So to sum up, we won because we started at the right time and we had taste.
Speaker 1:We were there when a new paradigm was being born, and we approached the problem of helping people embrace that new paradigm with a developer experience centric approach that nobody else had the capacity for or interest in. I guess the question is, what is the next sea change in developer workflow, and who will have good enough taste to make it explode in the same way? Interesting about this is that GitLab, which is a open source version of GitHub, is also a very successful company. I believe they're company. They might be one of the YC companies that's gone public.
Speaker 1:But interesting that they're that like, something is network based and developer lock in as GitHub still had a second like a like a direct competitor, think. GitLab and GitHub are pretty pretty similar competitors. And they're and they both were fantastic outcomes.
Speaker 2:GitLab down 62% since IPO ing in in 2021. Still a $7,000,000,000
Speaker 1:company. 7,000,000,000. Yeah. I mean, that's if somebody's gonna come to you, they're gonna you're you're gonna get the feedback if you're founding GitLab. Oh, you're gonna get enrolled by GitHub.
Speaker 1:Yeah. And and, you know,
Speaker 2:maybe the data was effectively kind of missed. They just didn't have a a a good AI horse in the race. Clearly.
Speaker 1:I should pick up some AI researchers merge or something. I like that the horse sound effect's back online.
Speaker 2:It's back. I asked Ben, do we have a horse sound effect? And he texted me, yeah, it's the button with the horse on it.
Speaker 1:Was it? Was it? Yeah. It was correct.
Speaker 2:I'm blind. But I've got to So get on with Taipei we gotta wrap the show up there. But
Speaker 1:We will see you tomorrow.
Speaker 2:We'll see you tomorrow. It has been a eventful week so far, and can't wait to see what the rest of the week has in store.
Speaker 1:We'll see you tomorrow. Leave us five stars on Apple Podcasts and Spotify. We'll talk
Speaker 2:to soon.
Speaker 1:Bye.