Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVPN. It's Monday, 03/31/2025, and we are live from the Temple Of Technology.
Speaker 2:The fortress Of Finance. The capital of capital.
Speaker 1:This show starts now. We got a great show for you to folks. Jordy, how was your weekend?
Speaker 2:It was fantastic. I I was having an intense podcasting withdrawals.
Speaker 1:It's rough. Right?
Speaker 2:Pretty much until last night Yeah. When I could kind of see, you know, sort of the end of the downtime on the horizon. Yeah. And
Speaker 1:We also got extremely rug pulled on the show because Elon clearly knows that we're live from eleven to two Pacific.
Speaker 2:So as soon
Speaker 1:As soon as we logged off, he announces that X and XAI are merging. Very rude of him,
Speaker 2:but we'll And we were both
Speaker 1:we'll talk about it.
Speaker 2:We were both in the car heading to meetings. Yes. And the urge to just turn around
Speaker 1:Yep.
Speaker 2:You know, sort of donut U-turn Yep. Turn around, go back to the studio was strong.
Speaker 1:Yeah. It was rough.
Speaker 2:But we're back.
Speaker 1:Yeah. We need to figure out what our, like, breaking breaking news product is. A lot of people were saying, hey. We should hop on a a a a Spaces, which I've actually never really done. Kind of harkens back to the clubhouse era.
Speaker 1:I think it would be cool. I actually had, like, back to back to back, not just meetings, but also phone calls. And I was, like, touring studios while on phone calls. Yeah. It was like, I couldn't break away from it.
Speaker 1:But, you know, we were able to take the full weekend to digest the news and bring you a breakdown of, this very interesting deal between X and XAI. And there's a bunch of precedent around this that I don't think people have really been talking about enough, which is that this isn't the first time Elon's done something like this. He, of course, bought SolarCity while at Tesla. And so I wanna take us through, first, The Wall Street Journal reaction to or just, like, the facts of the deal. X and x AI x and x AI are now one company, so I wanna break down that.
Speaker 1:Then I wanna talk about some
Speaker 2:of the reaction, what people are
Speaker 1:saying on X, what how people think this will create value, or whether it's a good or bad idea. And then I wanna go through some of the XAI, the the history here.
Speaker 2:And we're gonna have the Take Smith former early Facebook employee Sam Lesson. Oh, I'm excited to this. To break down the merger.
Speaker 1:Yep. I'm sure he's gonna have
Speaker 2:a good He's gonna have he's gonna have more takes than we can fit into fifteen minutes. But it's gonna be a great time.
Speaker 1:Yeah. And we have a bunch of other great guests on the show, but that's in ninety minutes.
Speaker 2:Yeah. Other guests, we got David, who is the co founder of Poseidon.
Speaker 1:Oh, so glad you can come on.
Speaker 2:They launched a new plane today.
Speaker 1:Yeah. That's great.
Speaker 2:Who else we got? We got Aaron Levy From Fox. Fox, who I'm very interested
Speaker 3:in hearing
Speaker 2:he has gotta ask the story of how he amassed two and a half million followers. And it's probably just like being like early and worried about a platform.
Speaker 1:Oh,
Speaker 2:yeah. But still fantastic. We got Cristobal, co founder and CEO of Runway coming on.
Speaker 1:Yeah. They launched
Speaker 2:Then we have Alexis Ohanian and a new port co founder of his RJ who's creating a new sort of like Twitch for watching sports live in a in a very entertaining way. And then I think there's one more. It's actually getting nope. That's it. That's it.
Speaker 1:It's hard to see.
Speaker 2:So that's it for today. Very excited. And, yeah. Should we get into it?
Speaker 1:Yeah. So from The Wall Street Journal, Musk merges his AI company with x, claiming a combined value of a hundred and $13,000,000,000. That's 80,000,000,000 for XAI and and 33,000,000,000 for X. X, of course, was bought for something like 46,000,000,000 but had about $10,000,000,000 in debt. Artificial intelligence startup XAI has acquired X, the social media platform he owns, an all stock transaction that fuses two of the billionaire's biggest technology bets and assigns the new enterprise a lofty valuation.
Speaker 1:The deal combines the two Musk controlled companies racing to create powerful new tools that could transform the economy with social media platform that holds a fire hose of chatter from around the globe. X can serve as a powerful distribution for XAI's products, including its AI chatbot, Grok, and provide a valuable feed of real time data to power the startup's models. Executives of the companies which share personnel believe and it's funny because they've already had a deal in place. Clearly, Grok is
Speaker 4:Yep.
Speaker 1:Very deeply integrated in Axe. It says that they're already sharing personnel. And so Yeah. There's very clearly, like, blurry lines from day one. And I think that putting the companies together actually makes a lot of sense, but I'm interested to hear your take.
Speaker 2:I generally had a mixed reaction to this. I think it makes sense for Elon. Mhmm. Sort of got a lot of balls in the air. He's juggling.
Speaker 2:The teams were already sort of overlapping pretty substantially. Yep. My concern is just around focus. It's like, okay, the combined entity, both of them are still very much startups in some way, right? Yeah.
Speaker 2:Like X has been in this sort
Speaker 5:of like
Speaker 1:They put it back in founder mode.
Speaker 2:Back in founder. Yeah, not even founder mode but
Speaker 1:just startup Oh yeah, super lean.
Speaker 2:Running lean on budgets, right? You know, really focusing on, you know, just growing revenue and and and all these things that just historically weren't super important at Twitter for for one reason or another. So now seeing them together, I'm just, I have some, I understand how it makes sense from a team standpoint, from a fundraising standpoint. But ultimately, it's just sort of unclear to me that, like I understand that that x can be a powerful distribution tool. Yep.
Speaker 2:I don't know I don't know what it's it's unclear it's unclear to me that that it's working as a distribution tool other than people use Grock Yeah. Within x. Sure. But that doesn't necessarily need to be Grock.
Speaker 5:It's almost
Speaker 1:Yeah. I mean, it is a powerful distribution tool. But when you think about it, it's like, if you want to get a hundred million people to use your LLM and you have a 43 or $33,000,000,000 budget
Speaker 4:Yeah.
Speaker 1:To do that, like, could you acquire a hundred million people a different way?
Speaker 4:Yep.
Speaker 1:And that's like buying the entire inventory of every Super Bowl ad for the next decade. Right? Yeah. Exactly. Like like, we're talking tens of billions of dollars.
Speaker 1:It's a lot money. You could put up billboards in every single Yeah. In every single metro with AdQuick. You could, like, you could do a lot. Right?
Speaker 2:Yeah. So so my point of view is if any other entrepreneur in the world was doing this, I would just be, like, blanket bearish.
Speaker 4:Yep.
Speaker 2:But it's Elon, so we're gonna give him the benefit of the doubt.
Speaker 1:Yeah. I'm actually taking the other side of this. I'm, like, super bullish on this. I think it makes a ton of sense. I don't know about the exact valuations, but in terms of just putting the two together, I think it makes sense for both.
Speaker 1:First, you look at how quickly Zuck was able to catch up on LLM distribution with llama by stuffing it in Instagram and WhatsApp and how natural that distribution point makes sense. ChatGPT was able to break through because it's
Speaker 2:the first.
Speaker 1:And now the app's installed. It's on my home row. But Anthropic has not been able to get to, like, the normie
Speaker 2:average person. Think it's it's one of those things. What is the prize? Is the prize being a an answer engine, a sort of alternative to Google search where people go there
Speaker 1:Yes.
Speaker 2:To, you know, multiple times a day for information? If that's the prize, then the merger, I'm not really sure that it works. Because to date, I've continued to use ChatGPT for a lot of stuff.
Speaker 1:I think more and more people are moving over. And they'll use the one that's just one fingertip away as opposed to swiping up and picking a different app. And so I wouldn't be surprised. I mean, the the interesting question is, like, how much traffic to Grok is driven by
Speaker 2:Yeah.
Speaker 1:In x app usage versus just people going to grok.com? Aside from, like, the market entry of, you know, obviously, Grok is going to get a lot of attention just because it's an Elon project, and it's going to, like, essentially go viral. Any product can go viral. You know, Anthropic Claude 3.5 went viral on X even though it's not an Elon project. The question is is how much enduring value is
Speaker 2:there distribution? Wanna see a deeper analysis from somebody internally at XAI
Speaker 1:Yep.
Speaker 2:That the distribution edge and the data edge are legitimately real and working and making people more likely to want to use Grok.
Speaker 5:Yep.
Speaker 2:And actually helping Grok go mainstream, which is the final prize. Right? I don't
Speaker 1:Yeah. I mean, I think I think on the distribution side, it we learned this lesson from Facebook when Facebook was trying to launch new apps to challenge up and comers. So Yeah. When Instagram launched at one point, Facebook launched a separate app called in Facebook Camera, I think it was called. And it was an Instagram clone, just a complete clone.
Speaker 1:Yeah. And they were like, well, we have, you know, 500,000,000 DAUs. Like, we'll just send a push notification for all of them, and, of course, they'll move over. And that didn't happen at all. Yeah.
Speaker 1:And so they added feature, like, camera functionality and photo functionality to the Facebook app, then they bought Instagram. And then what happened with Snapchat? Well, they actually launched another clone
Speaker 6:Yes.
Speaker 1:At a certain point. They and I think Reels was even, like, a separate app for a while. And again and again, they've learned this they've learned that people go to a single app and they do stuff within that app and you can kind of push them around that app. But it's very, very hard to durably move someone to a new app. Yeah.
Speaker 1:And so Yeah. I just feel like if you're
Speaker 2:if you're taking I'm not using Grok as a search engine within X.
Speaker 1:Yes.
Speaker 2:And I'm not yet using it as a search engine outside or an answer engine outside of X. Yes. So this I and I don't see what they can do to to change that other than sort of marketing Grok more as a consumer product and and sort of
Speaker 1:I somewhat disagree with that. I mean, to be clear, I'm not you like, Grok has not become my number one LLM. It's still chattypity. But but I do think that there's something about seeing a post from someone who's on the edge of your understanding, someone talking about, you know, like, if I see a Joe Weisenthal post and he's going really deep on, like, jobs and labor and and Yeah. Interest rates and all these different economic things that I'm not really fully tapped in on, being able to just click a button and just get great definitions, being able to say, hey.
Speaker 1:Go give me the historical context here. Chart it out for me. Pull all the data right there. I'm going to do that, and I'm already doing that in some ways. I forget exactly the last Grok query I went, but I I I posted, but it was something like that where someone was making a reference to something, and I didn't fully understand the the historical context that they were referencing.
Speaker 1:And so clicked the button and got a pretty good answer. And I think that could grow as because so many times when I kick off a Google search, it's like, oh, you know, Saquon Barkley won the the Super Bowl. And I'm like, like, who won the Super Bowl the last ten years? And I always just go over to Google. But if I can just click Grock right there and just say, okay.
Speaker 1:I just saw that on my timeline, there's, you know, an update about the Philadelphia Eagles Super Bowl championship run. I want more context. I can just click that button. I think that that could be a a durable source of of, like, LLM entry points. And it just feels like we're we all agree that that the that the foundation model layer is commoditizing Yeah.
Speaker 1:And that the application layer is where the value will accrue. And so either you have to break through in such a massive way like ChatGPT that you get an app that's installed on everyone's phone, and then you iterate on that app so fast that you keep creating viral moments like Studio Ghibli stuff. And then you build out all these different functionalities like the deep research tool, and you make it an app that people want to keep opening. And ChatGPT has been able to do that. So they kind of catapulted their way to all of a sudden becoming not just a foundation lab, but a consumer tech company.
Speaker 1:And it's been very hard, but they've gotten there. And then all of their competitors are typically partnered with a social network, I feel And so I I don't know. That makes a ton of sense to me. Yeah. There is the other side.
Speaker 1:Yeah.
Speaker 2:To be honest, when you look at when you look at x AI and x as a sort of combined 13 entity
Speaker 1:Yep.
Speaker 2:It is a I'm not sort of like bearish on the overall investment at that price because you're basically getting one of the few social networks that matters in the world Yep. That also is a professional network Yep. That I think has massive growth potential by itself as a platform. And you're getting a call option on sort of like Elon's AI bet. And like, I think that if X continues to operate like it has been for the next five, ten years, it by itself is at least a hundred billion
Speaker 1:dollar company
Speaker 5:Yeah. Every time.
Speaker 2:And and and all you have to do is just sort of like, you know, do a, you know, you don't have to do a technical analysis or or like full deep dive on on meta. It's just sort of like if there's only a handful of social networks that matter Yep. And x can get to billions of users, which I which I believe it can, it should have this sort of intrinsic value at at close to where it's marked at right now. Yeah. That being said, just feels like it's like it's it's a very like complicated strategy complicated
Speaker 1:Elon Musk, brother.
Speaker 2:Yeah. And he he's run these before. So again, I'm
Speaker 1:No. Agree with you.
Speaker 2:I'm I understand why it's happening.
Speaker 1:Yep.
Speaker 2:I'm long term bullish on the combined assets. Yep. I just don't think it makes as much sense as it makes sense from, again, that sort of financial standpoint, the team standpoint, all these kind of things, one talent org, you know, trying to just sort of become this sort of like vortex for a type of person that thinks a certain way and wants to work on, you know, Elon's AI plus social bet. Yep. But I don't think it it it like, my takeaway from it is everybody that's like, oh, slam dunk.
Speaker 2:Like, this makes so much sense. I agree with you. Now now it's gonna be easy. Like, there are some people on the timeline that are Resting on their laurels. Well, yeah, there's some people that are fairly well respected in the industry that are coming out and just saying, yeah, this is a no brainer, etcetera, etcetera.
Speaker 2:And I don't necessarily think it's a no brainer. I think Elon will make it work, but not a slam dunk.
Speaker 1:I think this I mean, it all goes back to Zerp. And, like, if Elon had bought Twitter after the Zerp crash, I mean, Twitter would have been trading at, like, 8,000,000,000. If it had brought gotten brought back down to earth after, you know Yeah. Every stock was inflated and they all went down 80%. Yeah.
Speaker 1:I mean, Meta, fantastic business, drew down, like, 50 plus percent. And it's like, he could have bought it half off. And then at that point, we I think I think your point might be a little bit less less real. These numbers do feel high, but, of course, it's Elon. Makes sense.
Speaker 1:The other interesting thing about this deal, I think, is, does what is the value of the data? So X has become very, very good at, creating this walled garden. Right? Like, you can no longer just view tweets or embed tweets. The API is locked down.
Speaker 1:You can't really just view them in an incognito browser. Like, if you're not logged in, you'll see people's top tweets, but it's harder and harder to scrape this stuff out. And more and more people are bringing things onto the timeline from everywhere. So and a lot of times that takes the form of somebody screenshots a book, somebody screenshots a Wall Street Journal article, somebody screenshots something that happens on Instagram, but they bring it back to x. Yeah.
Speaker 1:And I think that's hard right now to categorize. Like, the search function right now is not amazing because so many people are posting images, and the text in the images isn't indexed. But, obviously, image models are getting way better as we saw with the Studio Ghibli thing. And I think that there's a world where every image as it gets uploaded to x gets and every video gets really well tagged with with information even if it's in some sort of, like, latent space that isn't human interpretable. But at the very least, like
Speaker 2:Yeah.
Speaker 1:Transcribe all of the subtitles and transcribe even if the captions are baked in, let's transcribe those and put those in a database that can be searched, and then let's bake that into the next LLM training run. I think that's really I I think that could be valuable information. I think the more valuable information is probably just the real time nature of this of these things. Like, news still breaks on Twitter immediately, and acts really is still a place where information goes out the same minute as everywhere else. And even if you look at a feed, if there's really, really huge news, it's possible that one of the mainstream media publications is the first one to report on it, but it'll hit x within two minutes.
Speaker 1:And then the other the other, like, you know, the Financial Times will have to write about it, but it'll take them a day or it'll take them a couple hours to get something out. So if you want your LLM to be up up to date, which I think people do, and we saw that with the first version of ChatGPT where they had the knowledge cut off. Do you remember this? And it was like, oh, like, I can't get it to answer anything from the last three Like, that's unacceptable as an answer engine, right?
Speaker 2:So and to be honest, I do believe that news breaks almost as quickly on Reddit. Like Sure. For example
Speaker 1:Yeah.
Speaker 2:Reddit has a very active MMA community. Yep. The split second that somebody wins a fight, it's It's know, all the information is there. So And doesn't Reddit permission the way Yeah, so if OpenAI wants that sort of like breaking user generated sort of like news, they can go to Reddit and say, we're going to give you
Speaker 1:Totally.
Speaker 2:$100,000,000 a year for just like direct access. Yep. And so, again, I think that this data is, like, more accessible
Speaker 1:Than 33,000,000,000. Yeah. Got
Speaker 2:it. Yeah.
Speaker 1:But but it's still important. And I and I think I think one thing we actually should be tracking is, like, what how does it feels like the application layer is a problem that you need to solve if you're a foundation model company, unless you're SSI and you're just going straight to superintelligence and you have no desire to play in the application space at all. But if you're anthropic, I feel like you need to figure out how are you going to solve the consumer angle at some point. Yep. And they're partnered with a number of big tech companies.
Speaker 1:Yep. Could there be a partnership with Snapchat or Pinterest or something? Are there any other assets out there that they could buddy up with? Because
Speaker 2:It's interesting to think about how broadly and Grock will approach enterprise going forward Yep. Just because of how tumultuous X's relationship with large corporates has been. Yep. Just now it's like, okay, now we're all combined and you should plug our LLM into your
Speaker 1:Well, seems like Grok has not been super aggressive on the enterprise side. And Tropic has been much more aggressive on the Yeah, that's what
Speaker 2:I'm saying. But are they going to say, don't care about enterprise. We are a consumer application company. Yep.
Speaker 1:And Anthropic seems to be more focused on the coding and driving the cursors and the manuscript I'm
Speaker 2:very disappointed I didn't get the deck on this one of the combined entity. Maybe there wasn't a deck ever. It's very possible that Elon was just like, this is happening now. But it makes sense to me if it's, you know, x AI is gonna be the everything app. Yep.
Speaker 2:It's gonna be social. It's gonna be video. It's going to be search. Like, if Elon is making, you know, is simultaneously thinking, I wanna make, I wanna actually compete with with Google. Right?
Speaker 2:He's like, it could be identity. It could be email. There's just so much. Yep. And so if he's 100% oriented around the sort of everything app angle
Speaker 4:Mhmm.
Speaker 1:Then that's great. Obviously.
Speaker 2:But it should I almost think you drop the, like, x AI and just have it be x. Right?
Speaker 1:Yeah. It is it is odd. All shares of x and x AI will be exchanged for shares in a new holding company named x AI Holdings Corp. And so he's he's he's he's it feels like he's waiting this as, like, this is more of an AI effort, and we bolted on a social network as opposed to this is a social network
Speaker 2:we bolted on. On a long enough time horizon, this just becomes, you're in x and it's there's no humans. It's just bots in all of your comments, every It's terrible. We're about 20% of the way there.
Speaker 1:Not a fan of that. We'll see though. Musk has combined two of his companies before he used Tesla stock in 2016 to buy his solar energy company, SolarCity. Musk's other closely held businesses include SpaceX, a rocket startup, which I don't think he's ever bought anything for, maybe some small I think he did some vertical integration stuff. Neuralink, the brain implant chip firm.
Speaker 1:I could see that rolling into an AI company at some point. And Boring Company, the tunnel maker, which Boring and SpaceX were much more closely linked because if you remember when the, Hyperloop, when the Hyperloop pitch dropped, Elon dropped a blog post saying we should have these tunnels where they vacuum out all the air, and then there's no wind resistance, and you could travel, you train on train very, very fast. He actually posted it both on SpaceX and Tesla's website, both of them. And and it was like, okay. Which company is doing this?
Speaker 1:And Yeah. He was kind of like, I don't know. Like, we'll figure it out. And then there was another company called Hyperloop that just was unaffiliated with Elon that started that company. I don't think that one went very well.
Speaker 1:Yeah. Then he started Boring Company, and that one's just been grinding along for a while. No pun intended. Yeah. But it it it I mean, you could see Boring Company.
Speaker 1:It's like, well, they make the road the Tesla drives on, so maybe merge those together. Or, hey. It's like this super hard tech, like these mega machines. Maybe the SpaceX team should be involved in that, and so bring that in.
Speaker 2:Yeah.
Speaker 1:But we'll see where it goes. His role as an adviser to president Trump has added to his influence and appeal for some investors. At the time, Musk has been has seen the polarizing effects of his politics hit Tesla's value. Earlier this month, X raised roughly 900,000,000 from new and existing value, investors at a valuation just above its 44,000,000,000 takeover price in 2022. And, we covered this a little bit, how X became profitable and on an EBITDA basis, but there were bunch of add backs, so was kind of unclear.
Speaker 1:It seems like the business has has been hit on the ad side, but then, of course, is making money from the XAI deal because XAI is paying for data, which is fair, but it's like a related party transaction. So it's hard to kind of exactly price and handicap that value. But at the same time, if Elon can consistently get money for x AI and grow that, then that pool of capital kind of continues. Yeah. And now they're all one, so it doesn't even really matter.
Speaker 1:I think you just needed to to justify, like, hey. This is like, this makes sense together, and everyone's kind of in the same ballpark on this. Yeah. And all the shareholders are cool. I mean, it is a private company after all, so it doesn't really matter as much.
Speaker 2:Yeah. At the end of the day, much easier to raise for this, like, collective, you know, just sort of, hey, you wanna invest in Elon's AI bet. Yep. You know, there's basically you should kind of pay any price. Yep.
Speaker 2:And we'll we'll slap on x. Yeah. As almost a freebie.
Speaker 1:Yep. It is interesting how much this has all moved away from AI safety discussions and into just, look, LLMs are valuable. He talks more about the truth engine and in control of information and free speech. I
Speaker 2:think what this can lead to is more, you can imagine Elon doing keynotes for the combined entity and getting into actually sort of more illustrating what is this vehicle? What is the long term purpose of this vehicle? Because I think you got to an interesting point with Grok being like the sort of truth seeking AI, and that made sense. But now what does that mean? Are we back to just sort of the collective everything app AI is everything?
Speaker 2:You know, it's it's sort of unclear. But I'm excited to see it play out.
Speaker 1:Imagine he buys PayPal, rolls that back in. I mean, anything is possible with this guy. He's just like
Speaker 2:I think he wants to kill PayPal.
Speaker 1:Probably. It is it is funny to think about, like, if the PayPal mafia never sold and, like, kept running that business. Because it's
Speaker 4:a Yeah.
Speaker 1:PayPal is a big company.
Speaker 2:It's a multitrillion dollar business.
Speaker 1:If if they suck with it. They probably have done Stripe internally. They've done Plaid internally. They've done Square internally. Right?
Speaker 1:Like, all the all the different companies that they created externally could have just been all part of that. So there I mean, the reason that this deal is happening so quickly, I think, is because, X and XAI share many of the same investors. Sequoia Capital, VY Capital, Valor Equity Partners, X already owned a roughly 10% stake in XAI before the acquisition. Prior to the acquisition, they also shared some resources. And in XAI's early days, its employees worked out of X's San Francisco office.
Speaker 1:XAI has also leased GPUs from X, and so everything's kinda flowing back and forth. Morgan Stanley advised on the deal. I think that's Michael Grimes. I went to my high school. Shout out Michael Grimes.
Speaker 1:Advised on the deal along with lawyers at Sullivan and Cromwell according to people familiar with the matter. The social media site is expected to see ad revenue growth for the first time since the takeover this year. And, Morgan Stanley has close ties to Musk having advised on his $44,000,000,000 acquisition of Twitter, and that was a very controversial deal to to to Yep. Work on because, of course, there's a whole bunch of debt that I think Morgan Stanley wound up holding on their balance sheet. And there was a question about, like, is this just a disaster?
Speaker 1:Because Yeah. Obviously, the the market tanked and then this advertisers pulled out, but Elon is relentless and, doesn't seem to like down rounds and or let them happen ever in his entire career. I think he's never done down He's always gotten creative and figured out a way to just look towards what the future is like and then build towards that long enough, then he makes it happen. So it's cool.
Speaker 2:Yeah. So Tom Howard had solid analysis. He says, hold up. He's quoting the original post from Elon announcing the deal. He says, buy distribution channel with crap monetization and non optimal financing.
Speaker 2:So again, Elon had to really lever up to buy Twitter. Yep. He bought it at at what many people would say was was well beyond what it what it should have been priced at. Separately, launches x AI, which is basically a research project at least initially. Yep.
Speaker 2:Now using X to sort of distribute this sort of LLM Yep. To a large user base. And that in turn can sort of help, you know, increase the valuation of x AI. And anyways, I I think it makes sense again. They were already sharing employees, resources, etcetera.
Speaker 2:They're basically one company.
Speaker 1:Yeah. Do you want to go to the to the counterpoint from compound two?
Speaker 2:So compound two for eight, it's hard to know what to make of XAI buying X. My gut is it smacks of desperation on the surface. The deal values acts flat to Twitter's twenty twenty two takeout takeover value despite massive underperformance on financial metrics. I would argue I mean, wasn't Twitter Twitter wasn't profitable at the time of
Speaker 1:taking credit. Right? So it's complicated. Like, Twitter in its history had only had one profitable quarter ever. Yeah.
Speaker 1:And so it was this weird company where where they still were trading at a relatively high multiple. They were never really they never really got the business working.
Speaker 2:They were trading on cultural relevancy over Yeah.
Speaker 1:And and there seems to be this like zombieland for these public tech companies sometimes where the ones that really get it working and are cash flowing and are get huge like Zuck and Meta. Yeah. But Twitter was never really like a cash machine. They had a couple good quarters where there were these, like, weird anomalies in their financials where some some, like, you know, lately get some, like, tax credit, and they'd be like, oh, yeah. We generated, like, 600,000,000 in EBITDA or something that quarter, but it was, like, kind of iffy.
Speaker 1:The the question I think you're getting to is, like, hasn't the financial performance improved? Because Elon famously laid off, like, 75% of the staff. They cut so many costs. Like, the cost basis has to be way lower. And I think that's true.
Speaker 1:The problem is that we, as the public, don't have audited public financials because it's not a public company. And so we've heard rumors and we've seen that, you know, the business might be doing better. It might be producing a billion dollars in EBITDA and Yeah. And and, you know, applying like a 40 x profit PE multiple to this thing given all the opportunity. Like, not that crazy, but we don't actually know how real is that profit or what's the shape of it or how new is it, how durable, what's the It's
Speaker 2:have transactions of this size that are trading based on narrative and almost pure play sort of like founder Totally. And that's what's kind of eye popping about this. So compound moves It's an all stock Yeah, so it's a stock deal. Ex owners will now own 29% of the combined entity shifting from a near pure play social media bet in a highly strategic asset to an AI bet that's very much
Speaker 1:On the come
Speaker 2:up. On the come up plus you get a diluted ownership in Yes, XAI is a powerful model but not unusually so. XAI has de minimis revenue, is hemorrhaging cash. And we don't necessarily
Speaker 1:got to stop here because he's saying like shifting from a near pure play social media bet and a highly strategic asset. Like, I think we've played the highly strategic asset game for Twitter out a decade, and we've seen that Disney doesn't wanna buy it. Microsoft doesn't wanna buy it. Like, this idea that there was gonna be some, like, white knight, dark course, bitter that, oh, yes. It makes so much sense for Oracle to have this, so they'll come in and pay some high price
Speaker 2:It's a strategic asset for Elon.
Speaker 1:Yeah. I yeah. I I guess. But, like like, the reason that the the reason that the valuation was always high with Twitter back in the day was like, it was like, if you wanna compete with Meta and Facebook and Instagram, like, buying Twitter would be a way to get in the the game in a serious way.
Speaker 2:Yeah.
Speaker 1:And I think we played that out. I don't know how strategic it is, if that's the sense of what you're saying. But I agree with you. I agree with your interpretation of what strategic asset means. Anyway, we can go on to
Speaker 2:the XAI. XAI has de minimis revenue, is hemorrhaging cash, and its perspective business opportunity seems very difficult given the relevant competition. A has a head start. B is murderers And C has existing business and GTM strategies to build on. Yep.
Speaker 2:So obviously, primarily referencing OpenAI, ChatGPT here. And the big thing, and this is part of the reason why this transaction at a high level makes sense is like, hey, we're going to have to lever XAI up a bunch anyway.
Speaker 1:Yeah, cool.
Speaker 2:X by itself is super levered. $12,000,000,000 of very high cost debt. I don't actually know what what they're paying on that but I would have guessed it's like got to be close to like Like 10%. Ten %. Yeah.
Speaker 2:Which is over a billion dollars a year just carrying cost on on the debt Yeah. Without actually paying it down. Yep. And so that's very painful. And so, anyways
Speaker 1:it will be in perpetual cash raising mode until that changes, which leaves its risk to the whims of the fundraising environment and the temperature of macro animal spirits, except Elon seems to be fine with fundraising. So I don't know how big of a deal that is. And then I think he goes on to say, wouldn't bet against Elon. A few bonus thoughts prompted by questions. One, creditors.
Speaker 1:This is clearly a better structure for creditors. They retain their claim on Twitter and pick up optionality on XAI, which you mentioned earlier. Two, cleanup. I suspect this deal is actually clean up for XAI to raise a new a huge new equity round. And so, yeah, it's interesting.
Speaker 1:I I think the I think it makes a ton of sense to put the two together. Yep. I think it's interesting to see as we play this out, how does when this when this machine really gets humming, how big can this get? Because I'm feeling like, number one, ChatGPT is, as we saw last week, still able to be stay on the frontier for Yeah. For nine months out of the year.
Speaker 1:And then they get beat towards the end of the year, basically. And then they come out with something new, and then they're still the number one. And so as long as they continually drop the frontier and get all these people to install, they can kinda ride it out. Because I bet you in in, you know, six months, people are saying, oh, well, like, there's actually, like, better Ghiblis if you really care about Ghiblification in this app, but only the hardcore folks move over. And that's the same thing with, like, Claude.
Speaker 1:Like, Sonnet was, like, better.
Speaker 2:So
Speaker 1:But people didn't really care enough to switch for if you're, like, a normie.
Speaker 2:The interesting thing is I do believe if if this combined entity were to go public right now, it would trade well beyond the sort of private mark. Like, it probably would pop to, like, a trillion.
Speaker 1:Yeah. I wouldn't I wouldn't.
Speaker 2:But the given how much sort of political pressure is on the company right now, like, it would be very chaotic. Totally. And maybe it wasn't the right move. But if the play is to basically take it out and Bill Gurley would be watching this one like, he'd be like, do not Yeah. Leave.
Speaker 2:But you could easily see this getting priced. You know, you could see this getting priced at a like, even sort of stabilizing at a couple hundred billion dollars
Speaker 1:just just purely based is so crazy. It's hard to price. But, I mean, we actually saw evidence of, like, the market wants something that's pure play indexed to AI that's not NVIDIA. NVIDIA has already, like, run up so much. There was not much left on that Apple or whatever.
Speaker 1:And we saw CoreWeave go out, and what happened? CoreWeave priced right at 40. Bill Gurley, very happy. Yeah. It didn't pop.
Speaker 1:But the but I think the the the counterpoint to the to the CoreWeave thing is that it showed that there was not this insatiable demand for, oh, we need we need a AI pure play company. We we want it so badly. Like, we'll pay any price. It's gonna pop huge. Like, that didn't happen.
Speaker 1:CoreWeave was not able to to become like this, like, meme, at least not yet.
Speaker 5:Yeah.
Speaker 1:But, obviously, x x AI is, like, way crazier because, like, Elon, like, has so many fans and, like, huge allies all over Wall Street and stuff.
Speaker 2:Yeah, CoreSeave also being a data center business that's not coming out Exactly. Less we're going to achieve AGI. Yeah. It's more like you guys do a lot of revenue.
Speaker 1:Yep.
Speaker 2:You have a lot of leverage. Yep. And you have sort of medium term contracts.
Speaker 1:Yep.
Speaker 2:Right? That could go up in smoke. But who knows? Yeah. Either way
Speaker 1:Who knows?
Speaker 2:Wild times. The most entertaining outcome is the most likely.
Speaker 1:Let's go through the the the Tesla SolarCity merger. I just have some some key bullet points that are kinda interesting to go down memory lane. SolarCity founded in 02/2006 by Elon Musk's cousins became number one in US residential solar, installation by 2013. So he kind of delivered on the initial pitch, and I heard this crazy story that, like, he thought about it at he thought of the idea of Burning Man or something like that. Have you heard this one?
Speaker 1:It's like a crazy, like like, he was hanging out with a bunch of people and was like, maybe we should do solar panels on people's houses. And then they just, like, went for it.
Speaker 2:It's so funny because my entire life, as long as I've been truly conscious, solar panels on homes are just so normal
Speaker 1:Yeah, totally.
Speaker 2:That it's funny to think it was maybe one or a handful of companies that actually normalized it. Yeah. That's usually how things work.
Speaker 1:So at the time, Elon was, like, famous, but really he was only known by for PayPal and SpaceX. And 02/2006, like, these weren't like, PayPal was a big deal. SpaceX was still very early. Elon provided the initial $10,000,000 in the start up, and, Linden and Peter Reeve, his cousins, ran the company. He also served as SolarCity's chairman and was the largest individual shareholder leveraging his vision of a sustainable energy future across his ventures.
Speaker 1:SolarCity's business model focused on solar panel solar panel leasing and what are called PPAs, which are power purchase agreements. The customer pays no upfront cost for rooftop solar installation, but then signs a long term agreement to buy the power produced. So it's basically like a no money down solar leasing model. Yep. And it was wildly prop popular.
Speaker 1:And so there was a little bit of, like, hard tech here, but most of the panels, like, I don't think that they were manufacturing them at, you know, gigafactory scale. Yeah. I think it was mostly, hey. Let's buy a commoditized product and then innovate on the financial side. Yeah.
Speaker 1:And so this fuels rapid growth, but it was very capital intensive and debt fueled, of course, because you're giving someone a you know? I I don't know. I don't exactly know how much these cost, but let let's say, like, you're giving someone $10,000 or a hundred thousand dollars in value, like the solar panels and then the installation cost. And then you're you're paying that, and you're amortizing it over twenty years, but you're not getting the those payments from the customers for ten, twenty years. It takes a long time.
Speaker 1:And so every time you install new solar panels, you're accumulating debt on your balance sheet. Yep. And you're also accumulating, like, a revenue stream, which is great. But Yeah. But you have a major, major financing mismatch there.
Speaker 1:And so by 2015, warning signs emerged. SolarCity's stock price, which had peaked around $88 a share in 2014, began began a steep decline. In October of twenty twenty five, the company lost a quarter of its market value in one day, falling below the coveted unicorn, $1,000,000,000 valuation. The drop followed CEO Linden Rive's announcement that SolarCity would slow its expansion and cut costs as years of 80 to 90% growth had led to huge investments that were not yielding cash flow yet. We talked about that.
Speaker 1:Internally, executives knew the company faced a looming liquidity crisis by late twenty fifteen. SolarCity's aggressive growth had left it with large operating losses and over $3,000,000,000 in debt by 2016. In fact, SolarCity was nearly insolvent prior to the Tesla merger. Court found filings later revealed that weeks after the acquisition, auditors warned that SolarCity lacked sufficient cash to meet its obligations on a stand alone basis. And so there's always this question about, like, you know, kinda got a bailout.
Speaker 1:Should he just let the company go bankrupt, buy out of bankruptcy, do a proper bidding process? Like, this was always, a hot button debated issue. But, so to sustain growth, SolarCity diversified within the solar value chain. In 2014, it acquired Solavo, a solar panel manufacturing startup, and embarked embarked on a on construction of a massive one gigawatt solar panel factory in Buffalo, New York with substantial subsidies from the state. The Buffalo Gigafactory two was part of a plan to produce advanced solar modules domestically and reduce costs.
Speaker 1:And we talked to Casey Hanmer about this a little bit where, you know, he thinks that the the the Chinese manufacturers of solar panels are subsidizing them really, really heavily.
Speaker 4:Yep.
Speaker 1:And his his argument was like, hey. When somebody's subsidizing something below their cost, you shouldn't tariff it. You should buy as much as possible to hurt them, which is kind of funny. Got a hot take. But there has been incredible international pressure with these commoditized products.
Speaker 2:We could have maybe pushed him a bit more on that and and said, well, do you want to you know, usually, if somebody's selling something for less than what it actually costs, they have sort of some time some sort of long term Yep. Strategy that that maybe isn't in your best interests.
Speaker 1:Yep. It's the learning curve pricing issue. So, yes, they are losing money on each solar panel right now. But if we if we all of a sudden provide to them 10x demand, they might be able to justify investments in 10x larger gigafactories, and they might actually be able to lower the price to the point where they are profitable at a price that we can never compete with because we just are not scaled up enough. And that's certainly what's happened with TSMC where TSMC has seen so much demand from Google and NVIDIA and Apple and everyone else that that they're getting to a place where no one else can compete.
Speaker 1:And they really have, like, essentially a monopoly on on the three nanometer node.
Speaker 2:And they're running this with, cars right now.
Speaker 1:Yeah. Cars and phones and a lot of different stuff. It's it's it's all happening. So the cash squeeze got really severe. The company was holding emergency weekly cash management meetings, and its executives privately informed Musk that it needed an infusion of a hundred and 80 to $300,000,000 to avoid default.
Speaker 1:I feel like Elon nowadays could, like, raise that with one phone call for, like He'd text literally anything. He could text Mark Andreessen and
Speaker 2:say Allison.
Speaker 1:Yeah. Allison. Hey. I need 300 mil. Don't ask what it's for.
Speaker 1:It's just for something cool. And he'd be like, yeah. Of course, dude. I I got you. Attempts to raise equity or find outside investors during in early twenty sixteen fell through, which is unfathomable, forcing desperate measures.
Speaker 1:The other Musk's other company, SpaceX, loaned SolarCity money to prevent its cash balance from triggering a bond default. SolarCity had covenants requiring cash above a hundred and 69,000,000. Hilarious number. Even his debt covenants include the number 69. Classic Elon.
Speaker 1:Like, even in the debt world, he's, like, memeing. I don't know. It's probably just a coincidence, but you never know. In February 2016, as SolarCity's board grappled with how to avert bankruptcy, Musk met with Linden Rive to to explore a bold situation. Tesla Inc.
Speaker 1:Would acquire SolarCity, uniting Musk's electric vehicle and solar energy ventures. And I wanna go through a couple bullet points on how the deal came together. So so by 2016, SolarCity was in trouble. They had they were nearly insolvent, and they had $3,250,000,000 in debt. And, again, like, this is the company that was trading in the billions, and then the market cap goes down to less than 1,000,000,000.
Speaker 1:So the equity value to debt to equity ratio is, like, really, really out of out of whack. And so in June of twenty sixteen, Elon proposes that Tesla acquire SolarCity to form a vertically integrated clean energy company. And it makes a ton of sense that a Tesla owner again, it's like it's crazy because it's one of these Elon deals where it's like him one hand washing the other, him talking to himself, and, like, he's on the board, and he owns all this and stuff. But at the same time, if you think about it, it's like Tesla customers love clean energy. They have the Tesla battery pack on the wall.
Speaker 1:They Tesla charger. And, of course, they want solar panels. So you imagine that it makes a ton of sense for to just sell all of this to one person. There's tons of, like, sales channel stuff. And then also just in terms of manufacturing,
Speaker 4:like Yep.
Speaker 1:The the the the the gigafactory that produces the batteries and the cars can also produce the solar panels. Like, it's not that crazy to me, but the deal is kinda crazy. And so there's an all stock deal that happens. SolarCity is valued at 2,600,000,000.0, and they and Tesla assumes 3,000,000,000 in debt. Shareholders got point one one Tesla shares per SolarCity share.
Speaker 1:And then Tesla went on, like, a generational run, and every SolarCity shareholder, if they held, is very happy about this. Yeah. Of course, there was this conflict of interest because Elon was the chairman of SolarCity and the CEO of Tesla, and he owned 22% of both. And his brother brother and cousins were board members and executives. Despite the controversy, 85% of unaffiliated shareholders approved the merger in in November 2016.
Speaker 1:And that makes sense. Like, if I'm if I'm an unaffiliated shareholder and I just hear about this and I've never even met Elon, I'm gonna be like, yeah. Of course. Like, this deal makes sense even though it's a little wonky. Put these companies together.
Speaker 1:I'm happy to be a shareholder in the combined entity. And so, of course, there's a legal battle still because 85% approved, but some of them are upset. And so there's a shareholder lawsuit. They sued Tesla's board of board of directors for breach of fiduciary duty, which is what you sue for whenever you're unhappy about something. All directors except Musk settled for 60,000,000 in 2020 via insurance.
Speaker 1:And so they some key man insurance there or some Yeah. I forget what it's called. It's the executive director D and O, directors and officers insurance. Musk alone went to trial in 2021 accused of pushing the deal to bail out his failing investment and family. Plaintiff soft sought 13,000,000,000 in damages, which is crazy because that's, like, way more than the debt and more than the equity.
Speaker 1:It's, like, more than everything combined, but Musk won. So in April 2022, a Delaware judge ruled in Musk's favor stating that Tesla paired a paid a fair price. Of course, they did. If anything, they overpaid. And so as a SolarCity shareholder, you've you've gotten a bunch of Tesla shares that basically, like, 10x.
Speaker 1:You got a really high price at the time of the deal. Like, you have nothing to complain about. Why are
Speaker 2:you doing It was a full zero, like, literally three weeks later.
Speaker 1:Exactly. They were running out of cash. And so the Delaware judge you know, Elon's been very rough on the Delaware judges. But in this case, they say, you know, we got Musk's back. He's right.
Speaker 1:Yeah. And the deal this deal ultimately benefited shareholders, which I think we agree with. Yeah. And then there was a post merger decline too. So Yeah.
Speaker 1:Even even as they combined and they had all the resources and they took care of the cash management problem, Tesla's solar installs fell 60% from 870 megawatts to 326 megawatts, in just three years from 2015 to 2018, and Tesla lost its number one solar market position to Sunrun, which is another solar
Speaker 2:installer that's different.
Speaker 1:Crushing it. They've been crushing it. And so, today, Tesla has actually has actually shifted for away from highly commoditized solar panel installation to, to battery storage. So they sell those Powerwalls. We looked at one.
Speaker 1:It was a hundred and $92,000,000 installation. Right? Wasn't that? That you just go and you could just go on their configurator and say, yeah. I actually need, like, a gigawatt of power.
Speaker 1:Can you send me it? And they'll be like, sure. But but listen to this. In 2024, Tesla Energy hit 10,000,000,000 in annual revenue powered by Powerwalls and Megapacks. And so Yeah.
Speaker 1:Like, I think of the Powerwall as like, oh, it's like this cute, like, little side project. It's like the AirPods of the Tesla world. Like, that's a lot of money, 10,000,000,000 in revenue. And so even though, like, the solar angle didn't really pan out, like, Musk was right over the very long term that, like, vertically integrated clean tech energy would be a good strategy, good company. And so just an interesting thing that, like, you know, to think about with the x a x and x AI thing, like, it's hard to predict where this goes in the next five, ten years.
Speaker 1:Is it a good deal right now? Will there be a lawsuit? Like, all of that kind of steps to the side of really trying to concretely visualize Yeah. What does the social networking and AI slash LLM consumer productization of AI look like in five years, ten years? And can he figure out something that is good in that space in that time?
Speaker 2:Yep.
Speaker 1:And I don't know. He has a lot of money and a lot of time and a
Speaker 2:lot of effort. Time for Ben Thompson to be on vacation.
Speaker 1:I know. He did one he did one one unscripted podcast about it, and he was pretty bullish on it. He said it he said he thinks it makes a lot of sense. But we'll have to wait to get Ben's full take. Anyway, such a funny such a funny deal.
Speaker 1:Never a dull moment in tech. My number one advice for Elon is you're combining these two companies. It's more important to control costs more than ever. So go to ramp.com, Elon. Time is money.
Speaker 1:Say both.
Speaker 2:Say both.
Speaker 1:Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. I would love to see X and XAI both on Ramp. Really understand. I mean, big thing of Ramp is, like, you're paying for two subscriptions, and it identifies that automatically. Right?
Speaker 1:Like you're merging these two companies. Savings. The SaaS savings. You know?
Speaker 2:Well actually, I imagine a lot of their contracts are primarily seat based and maybe aren't saving much money at all.
Speaker 1:Right. But you can
Speaker 2:always save money on ramp.
Speaker 1:Hates losing money.
Speaker 2:If anyone in our audience signs up for ramp and doesn't find a way to save at least a hundred dollars a month, I was gonna say like a thousand.
Speaker 1:I don't know.
Speaker 2:And then somebody would Depends
Speaker 1:on your scale.
Speaker 2:Yeah. Depends on your scale. But you sign up for RAMP. You're gonna save you're gonna save some money.
Speaker 1:And you're gonna save some time, baby.
Speaker 2:And you're gonna save some time.
Speaker 1:Well, let's stay with Musk and go on to this exclusive in The Wall Street Journal. That's right. Apple and Musk are clashing over satellite expansion plans. We talked about this a little bit. The iPhone is getting, Starlink direct to cell, so you'll be able to communicate with the Starlink satellites from your phone.
Speaker 1:Very cool. It's already live in some places. You can send, a single text message on a satellite network. But, obviously, this is a really, really tough deal in a very, in a very big, there's a lot at stake, obviously, because Yeah. Once you don't need the cell phone towers, you can use the the satellite communication everywhere.
Speaker 1:That's gonna be a big differentiator for any cell provider. So Apple here are the key points. Apple and SpaceX are competing for spectrum rights to expand their satellite based communication services. Apple's outer space ambitions have drawn the ire of SpaceX CEO, Elon Musk, who has pushed regulators to stall expansion efforts from Apple partners. Despite their despite their rivalry, Apple and SpaceX need each other to achieve their respective goals in the satellite market.
Speaker 1:And so, Apple has been investing heavily in satellite based communications that keep users connected in places where traditional wireless signals aren't available. Musk's SpaceX, meanwhile, has launched more than 550 satellites that provide cell phone connectivity via its Starlink service. To build capacity, the companies are competing for valuable spectrum rights, airways that carry the signals, which are in limited supply. It's very interesting. Like, the the wireless spectrum, when it goes when when there's a block up for sale, there's this whole auction.
Speaker 1:It's governed by the FCC. Brendan Carr, the new FCC commissioner is the guy who kinda oversees that now. But I don't know if you remember this, but back in twenty eleven, twenty twelve, TV stopped being over the air. Like, do you remember rabbit ears? Do you remember those little antenna that you put on a TV?
Speaker 1:That just stopped. We had the digital transition TV, you could still get Yep. TV, but it wouldn't be over the air. And so that block of of spectrum was then reauctioned off for other things, and that's where, like, the five g spectrum kinda comes in. And so Apple's outer space investments have drawn Musk's ire.
Speaker 1:SpaceX pushed federal regulators to stall an Apple funded satellite expansion effort. The conflict intensified in recent months after SpaceX and its partner T Mobile sought Apple's cooperation to offer star Starlink on iPhones. The company has engaged intense discussions intense discussions, and eventually reached an agreement that allows SpaceX and T Mobile satellite cell phone service, which will debut this summer. It appears to it appear, to appear seamlessly on newer iPhones. So even though SpaceX has a deal with T Mobile, they need Apple to opt in and say, yes.
Speaker 1:We're gonna allow this. We're gonna build this. This is gonna be a function. It's not enough to just say, oh, SpaceX and T Mobile agree. You gotta get it in
Speaker 2:Has Apple just ever shared about what its long term ambitions are? Because I imagine long term, you'd wanna just cut the carriers out completely and just own, you know, basically have another hundred dollar a month sort
Speaker 1:of Yeah. It's kind of a it's kind of a match made in heaven
Speaker 6:Yeah.
Speaker 1:With if if Musk and Apple can partner up and just cut out the middleman entirely, it'd be amazing. But, again, I think the satellite Internet just does not work in buildings. It just does not penetrate. And so you'll like like, we're we're not anywhere near there. So it's very much like a nice to have add on.
Speaker 2:Nothing penetrates my home because I use lead paint
Speaker 4:to You
Speaker 1:live in a Faraday gauge.
Speaker 2:Yeah. Yeah. I've developed using lead paint to create a Faraday gauge
Speaker 1:in my home. I mean, a lot of people are doing that. They're worried about microplastics, they're switching to leaded Calling it now
Speaker 7:Lead
Speaker 2:paint paint. Coming back in in a big way.
Speaker 1:Yeah. You don't want the microplastics. Let's just use the lead.
Speaker 2:Full lead.
Speaker 5:For sure.
Speaker 1:Go lead.
Speaker 2:Full lead.
Speaker 1:Offering greater connectivity in hard to reach areas could spur more iPhone sales or
Speaker 2:greater Connectivity.
Speaker 1:Connectivity. What do you
Speaker 2:call it? Connectivity.
Speaker 1:Connectivity. Connectivity. Greater adoption of Starlink's SpaceX. SpaceX is Starlink. In some ways, the companies need one another to pursue their respective strategies.
Speaker 1:So Apple's currently partnered with Globalstar, which I think is one of those satellite Internet companies that just puts up, like, a huge washing machine guy. It's like a massive knot in LEO. It's not a constellation like star Starlink.
Speaker 2:And Globalstar is a very
Speaker 1:high latency.
Speaker 2:Globalstar is a $2,600,000,000 company. So
Speaker 1:So there's a few of these companies. Astronis is one of them that puts up, like, a much larger satellite. It's locked in geosynchronous orbit. Yep. There's fewer satellites, but they're higher bandwidth.
Speaker 1:And then Elon, because SpaceX has all this residual capability, they can just throw up Starlink satellites whenever they don't have a full ship, basically. Yep. Throw it up there, create a whole constellation. It's a lot lower. They'll burn up a lot faster, but the benefit is that it's a lot it's a lot lower latency.
Speaker 1:And so, you know, famously, like, you can game on a plane. You can take a, you know, FaceTime call on on your private plane if you have Starlink. Whereas with Globalstar, if you've used Apple's satellite service, like, you could definitely not have a conversation on it. It takes forever upload even a small text message. But it's still very was using
Speaker 2:Apple's service
Speaker 1:During the fires.
Speaker 2:LA Fires Yep. Because I was trying to help. There was this, you know Yeah. It was a crazy time. But I was trying to get my buddy's solar panel turned on because he wasn't around to help his mother.
Speaker 2:I was using this sort of very, it's a very dinky service. You've to be around outside.
Speaker 1:Yep.
Speaker 2:Pointing it
Speaker 1:around. This is interesting. You said Globalstar is worth, what, 2,000,000,000?
Speaker 2:Yeah. Not a lot.
Speaker 1:So last year, Apple invested more than 1,000,000,000 in Globalstar.
Speaker 2:Yeah. And so So they must be the biggest outside shareholder.
Speaker 1:Unless they invested in a really high valuation, just got wiped right now. But, you know 20%? This okay. They own 20. Not bad.
Speaker 1:AppleSearch allows $1,000,000,000,
Speaker 2:I think, was, like, basically services revenue.
Speaker 1:Sure. Sure.
Speaker 2:Sure.
Speaker 1:Yeah. So invest it in the deal broadly. Yeah. And, of course, the service allows you to send text messages, call emergency assistance, seek roadside help, etcetera. The new spending is intended to help Globalstar develop a new global satellite fleet to improve space based iPhone usage.
Speaker 1:This technology has already helped save lives, Apple said. These satellite features are designed to complement carrier offerings, giving users even more ways to stay connected. SpaceX recently asked the FCC to dismiss a Globalstar application seeking permission to use certain spectrum, for the new network of Apple Finance satellites document show. It's called the Airwaves it uses it called the Airwaves it uses to carry Apple's users' emergency signals an underused resource. SpaceX didn't respond to comment.
Speaker 1:So SpaceX and T Mobile revealed their plan to offer always on texting in remote areas during a rollout event in Texas. Inside Apple, some staff believe SpaceX's announcement of the T Mobile agreement was designed to front run Apple's news disclosed soon after that it would provide emergency texting through satellites on some iPhones. Musk's Tesla and Apple long ago competed over talent for developer for developing driverless cars. The two sides also had spats related to X. There's that famous, like, Apple might be pulling out of advertising on X.
Speaker 1:Elon goes and meets with Tim Cook, and then they kind of, like, figure it out. Yeah. There was also the question of, like, was there a way for Apple for for Elon to make Axe a premium service that was based on subscription revenue without causing without paying the 30% to Apple, which which would be obviously very, very cumbersome for him. The social media company relies on Apple for distribution on its App Store and advertising dollars. And then there was also the question of, like, if if Musk goes too far with the free speech, will Apple kick him out of the App Store?
Speaker 1:That didn't happen. But Musk at times has considered building a smartphone himself over frustration with how Apple controls distribution of third party apps, but nothing's really, really happening there. And then he said Elon said, the idea of making a phone makes me want to die. But if I have to make a phone, I will. I love it.
Speaker 1:Cracking a market dominated by Apple and Samsung whose devices account for around 40% of the global far smartphone market would be tough according to analysts. In orbit, SpaceX through its Starlink operation has far more satellites than Apple, and industry leaders believe Globalstar alone won't be able to satisfy the iPhone maker's needs. Apple has held talks with other satellite providers over the years to secure more spectrum. People familiar with those discussions said it explored investments in the Colorado based satellite operator EchoStar to provide more satellites and spectrum to support iPhone connectivity, the people said. Apple previously worked on a satellite plan with Boeing, and everyone is trying to do deals with everyone in the great space phone race of 2025.
Speaker 2:It's fascinating because Globalstar has contracted SpaceX to launch satellites.
Speaker 1:Of course. Yeah. There's no vertically integrated satellite Internet or, yeah, satellite Internet provider. They're all laun they're all using either SpaceX's launch capacity or separately, and we'll talk about this today, their pure play on launch capacity. So Yeah.
Speaker 1:SpaceX is definitely unique in the fact that they make the satellites and then also launch them. Yeah. And so that's obviously much better for margins and all the different stuff.
Speaker 2:No. And again, part of the there's a world in the future where X is not only the everything app. It's your personal AI. It's your cell phone. It has sort of twenty four seven connectivity via satellites, and you're hopelessly dependent on it in the way that you are the iPhone.
Speaker 2:And I'm sure
Speaker 1:But can you imagine if your phone only worked on Starlink? So it's like, yeah, you gotta go outside. You gotta touch grass.
Speaker 2:That be would be
Speaker 1:That'd be bullish.
Speaker 4:Think it
Speaker 2:would be It'd
Speaker 1:be like Pokemon Go. Everyone I I saw a bunch of people playing Pokemon Go at some meetup in Pasadena, they were all on their phones out. It was very dystopian, actually. But it was cool to see them all walking around a golf course. Like, at least they were getting outside.
Speaker 2:They're just in the middle of a driving room.
Speaker 1:Oh, yeah. Just kidding. They shut down the whole golf course too for a exclusive Pokemon GO event.
Speaker 2:Imagine being the golfer that's just showing up on a Saturday just like, finally get a little time off.
Speaker 1:It is funny because they only they only shut down half the golf course. Like like, one of the one set of the 18 holes was shut down for the event. So you could actually play, and then you'd see, like, you know, a thousand Pokemon GO players, like, heads down, like, oh, I caught a Charizard. Like, I'm very excited. It's great.
Speaker 1:Anyway, if you're traveling a lot and you have a Starlink and you wanna hang out, why don't you find your happy place at Wander.com? Find your
Speaker 2:Your happy place. Find your happy place.
Speaker 1:Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge services. It's a vacation home, but better,
Speaker 2:folks. I gotta say VPN. Go go follow Kyle Tibbets.
Speaker 1:Oh, He's putting
Speaker 2:out like
Speaker 1:historical run.
Speaker 2:At kyle, k y l e t I b b I t t s. He posts some of the best wanders every single day.
Speaker 1:He's their chief market officer.
Speaker 2:Yeah. He's their CMO. He's a friend of ours. And he just posted one a bit earlier called Malibu Ridge that just looks
Speaker 1:10 out of 10.
Speaker 2:Iconic. We gotta get over there. I'm sure it's close to my house. And there we got some we got some shoots coming up. We got some shoots in the pipeline.
Speaker 2:We're gonna be leveraging some wanders.
Speaker 1:I love it.
Speaker 6:I'm very
Speaker 2:excited about that.
Speaker 1:Well, should we move on to, Isomorphic Labs? Yeah. They're $600,000,000 for AI drug development. They were backed by Google. Thank you for the size, Gong.
Speaker 1:Demis Hassabis, the CEO of Isomorphic Labs, of course, has been at Google for years. He founded DeepMind and famously beat Lee Sedol in Go with his AlphaGo product and team. Fascinating documentary if you haven't seen it all about AlphaGo. Move '37 really shook Lee Sedol to his core. One of the greatest moments in in AI history, basically.
Speaker 1:But we'll take you through it. It's very interesting. It's very early. Everyone kind of expects that AI will help in drug design, drug development, could help us live forever, like, really, really amazing applications. But we haven't seen AI really move the needle or move the biotech markets yet.
Speaker 1:So, still early, but Thrive Capital's getting in early as you should if you believe that this is the future. So they raised $600,000,000 in the first external funding round to boost artificial intelligence drug design pipeline across multiple therapeutic areas. And so they're taking an ensemble approach. They're really looking at not just one drug, which is the kind of the normal biotech strategy. Even a company like Moderna, before they got into mRNA vaccines, they were focused on, you know, one one specific biotech technology.
Speaker 1:Yeah. And a lot of companies will go public as biotech companies saying, like, we're an Alzheimer's company. We're we have a drug that's targeting Alzheimer's, Alzheimer's, not isomorphic labs. Isomorphic wants to work across multiple therapeutic areas. And so this is actually a subsidiary of Alphabet.
Speaker 1:Started four years ago. Thrive Capital led the funding round with participation from Google Ventures, they're potentially spinning it out. And we've seen this with Waymo too where Waymo's starting to take external funding and potentially spinning out as well. This company is based in London, and they'll receive follow on capital from the existing
Speaker 2:investment. That that Google allows for this sort of massive external investment Yep. In companies that are, you know, they're effectively acting as some type of like venture studio. But you'd think with how much cash they produce, they would just want to own all these. Sometimes having an external, you know, board members can can help.
Speaker 1:Yeah. I mean, I I think that there's something about maybe this is a kind of an ad like an admission by Google that says, like, hey. Like, these companies, these ideas are great, but they can't really thrive when they're a % owned by Google. Like, we just need the Yeah.
Speaker 2:It's almost that external pressure too.
Speaker 1:External pressure. Yeah. It's like, who are we talking to about this where, I think maybe Delian was was talking about this where it can be very tricky when you have, when you're a company and you have, like, a billionaire patron who's just kind of paying payroll off their own balance sheet, and they can kind of bail you out forever, but there's no pressure. And the venture model of, like, hey. You raised enough money to get to the next milestone.
Speaker 1:You have twelve to eighteen months. Maybe you stretch that to twenty four. Maybe it goes somewhere else, but, like, you have to deliver some sort of milestone and get on you're off the research track. Is not go spend twenty years anymore. And figure out if you can create a grand unified theory of the universe.
Speaker 1:This is, can you commercialize? Can you make really, really solid traction to justify the next round? And that treadmill has worked in technology development for decades. And so I think Google's maybe just admitting that. There's also the question of just if how do you incentivize someone who's at a subsidiary financially?
Speaker 1:Like, if you go into
Speaker 2:I wonder what these cap tables look like. Right? Yeah. Because it you have to imagine Google
Speaker 1:A % Google. It's at the start. Right?
Speaker 2:Yeah. But but post investment Yep. You've got, you know, the founders got to have some direct exposure, I would imagine. Yep. The team is now working on it would want exposure.
Speaker 2:Yeah. You know? Who knows?
Speaker 1:Yeah. Mean, would imagine that Google outside of GV and Google Ventures probably owns 50% of the company still or
Speaker 4:something like that.
Speaker 1:They probably gave a lot to employees and founders, but they they you know, it was definitely incubated there and built there. And so they they deserve a a large chunk of the equity, but that will probably get diluted down over time as the company does more more investment rounds. So the company will use the investment to advance its AI research and development and expand its team. Demes said this funding will help further turbocharge the development of our next generation AI drug design engine. And, of course, while at DeepMind, Demes worked on the team that's created AlphaFold, solve the folding the protein folding problem.
Speaker 1:That was an interesting development because everyone thought that protein folding was extremely resistant to computational efforts, that it was not going to be solved. They solved it very quickly. But, also, when they did solve it, it didn't really move the biotech markets in an interesting way. Like Yeah. You would expect it's like, hey.
Speaker 1:Like, the thing that's really hard just got solved. It's now trivial. Like, you would expect all of the companies to kind of get a little bump, but nothing happened in the market because it turns out that protein folding, while it is important in drug development, it is not a major cost center. Yes. You need to use this I think it's like an X-ray crystallography machine or something.
Speaker 1:You need to use some, like, really expensive equipment. But at the end of the day, you kinda just pay a PhD to do it, and they're kind of a starving student. And it's not that big of a of a barrier to drug development even though it is Yep. From a from, like, a philosophical and mathematical perspective, like, a very, very difficult problem. And it's very impressive that they solved it.
Speaker 1:It didn't really unlock it wasn't like, oh, yeah. Protein folding, AlphaFold came out, then we got a new cancer drug the next day. Like, that's the we we were not that limited on it. And so this is the interesting quote. Demis says his mission is one day solving all disease with help of AI.
Speaker 1:He's coming for it all, not just one area.
Speaker 2:And while OpenAI's GPUs burn due to the Ghibli usage. Google's TPU is Burning. It's on fire trying to further Brian Johnson's goals of living forever.
Speaker 1:They already have partnerships with, Eli Lilly and Novartis for drug design and development through AI. And, they put out a press release. They talked a little bit more about this. They're bringing together top tier investor groups with deep AI and life sciences expertise. They wanna transform the industry through an interdisciplinary approach.
Speaker 1:It feels like this press release was maybe written by Gemini two point five. Who knows? Press releases just sound, like, boring all the time. I I wish he'd just done a thread. He did he did post about it, but it was kind of like, okay.
Speaker 1:Yeah. We get it. You're bullish. There was an interesting post I saw by Zachary Spiro here. He says, this means isomorphic has raised somewhere between 12 to 40 x the average UK funding round for companies at this stage.
Speaker 2:Even at that stage? Yeah. Well, how is he describing stage?
Speaker 1:Probably growth equity or it's like series b or something like that. I don't know.
Speaker 2:Because if this is the first is this the first external round?
Speaker 1:It is the first external round.
Speaker 2:But, 40 times the average
Speaker 1:no. No.
Speaker 2:He's clearly saying it's more of a
Speaker 1:more of growth. This is the interesting this is the interesting benchmark. It's so large, it's equivalent to more than a quarter of all UK Life Science VC investment in '24 2024. So last year
Speaker 2:Yeah.
Speaker 1:All UK Life Science VC companies, VC backed companies raised just four times what they just raised. Thrive. Like, 2,000,000,000.
Speaker 2:Thrive goes to to London for one trip and they're like, we are venture capital. Yeah. In The UK now.
Speaker 1:Basically. But it makes sense. It's like like, Dennis has had, you know, an incredible impact on the industry. He's built DeepMind, became Google's, like, fantastic AI research organization. Google at one point had Google Brain and then also DeepMind, and they wound up merging them because it was too much.
Speaker 1:And they had two research orgs that were kinda going back and forth. But he's a legend in the industry, and he's and he really has again and again and again just created AI.
Speaker 2:Absolute dog, John.
Speaker 1:Absolute dog. He's an absolute dog. He really is. Like, I mean, solved Go, MuZero, another legendary, AI system. Same thing with, I mean, yeah, it's like Google's been doing an incredible amount of work on the research side.
Speaker 1:Just I think that the productization has been a little bit slow because a lot of these organizations within Google, they feel like modern interpretations of the academic lab. They're very much just, hey. You have unlimited money, unlimited time. Go work on science and research, and don't even think about how this will actually make money. And that's produced some incredible results, but at the same time, it's not it hasn't really produced incredible products or businesses or durable value.
Speaker 1:And so, I I I I'm in support of them spinning it out.
Speaker 2:Yep.
Speaker 1:But
Speaker 2:Yeah. We don't want these moonshot projects just living within Google without any sort of urgency to actually deliver commercial results.
Speaker 1:Yeah. Agree. But until Demis solves all disease, I think the best thing that you can do for your health is just get some good sleep. Go to eight sleep dot com. Nights Nights fuel
Speaker 2:your best
Speaker 1:days. And Turn any
Speaker 2:bed into a sleep called out on X that you can use your TrueMed funds
Speaker 1:Oh, yeah. That's right.
Speaker 2:Buy your Eight Sleep.
Speaker 1:Yeah. Shout out.
Speaker 2:Justin. Basically buy Brotherly. Eight Sleep pretax.
Speaker 1:Yep. So if you have a FSA, HSA account, you got some money burning a hole in your pocket, head over to 8sleep.com and check out with TrueMet. Can't recommend it enough.
Speaker 2:Just do
Speaker 1:it. And a lot of these companies, they have FSA, HSA programs. You can just start accruing it, pay it down. There you go. It's all good.
Speaker 2:How'd you do last night?
Speaker 1:I I imagined I did well. Let's check.
Speaker 2:I To be honest
Speaker 1:Fantastic numbers.
Speaker 2:How'd get was watching White Lotus.
Speaker 1:98.
Speaker 2:And I don't recommend Night Lotus as
Speaker 1:Night Lotus. Night Lotus. Night Lotus.
Speaker 2:Night Lotus.
Speaker 1:Night Night lotus only.
Speaker 2:White lotus before bed. Yep. Not a not a great combo. I only got six hours and forty two minutes of sleep last night.
Speaker 1:I got 07:24.
Speaker 2:So much of sleep is just getting, you know, really getting the time in, you know?
Speaker 1:Yeah. You gotta put in the time.
Speaker 2:And once you're getting the time in, sleep on your pod. Yeah. Not in the pod.
Speaker 1:You need a good morning routine. You gotta need a good nighttime routine. You gotta go to bed. You gotta start your bedtime routine at 05:30PM.
Speaker 2:I need a keg of Saratoga water to just do a quick keg stand.
Speaker 1:You go.
Speaker 2:Keg stand in the evening Yeah. Saratoga water.
Speaker 1:Yeah. You're good. Sparkling. What you could do with the Aurora? The Aurora is a keg.
Speaker 1:You should flip that bad boy over.
Speaker 2:We should You're a huge keg stand guy.
Speaker 1:I'm a huge keg stand.
Speaker 2:You're bringing keg stands back.
Speaker 1:Yeah. Yeah. We need to take back Tech Bro.
Speaker 3:That was a great
Speaker 1:Take back Meathead.
Speaker 2:That was a great post earlier. It was fine. Maybe it was last night?
Speaker 1:I think it last night.
Speaker 2:But then just missed it. John said, if you're trying to avoid microplastics, don't drink beer out of those red plastic solo cups. Stick to keg stands.
Speaker 1:Stick to keg stands.
Speaker 2:And that only got about 25% of the likes of your other post, which was the heat death of the universe is unacceptable. We need to address entropy in a meaningful way within the next ten to a hundred years at Gary Tan. So hopefully
Speaker 1:Is that all doing well?
Speaker 2:It's it's over 400. Okay. We're we're we're going with
Speaker 1:that one. Yeah. The at Gary Tan one went viral.
Speaker 2:Any any problems that you have right now
Speaker 1:Yeah. Just Gary Tan.
Speaker 2:Tag tag GT.
Speaker 1:This, of course, comes from, like, a pretty serious post, Deep Prasad, who I've actually met years ago. Nice guy. He said last night around 03:30 to 4AM. Okay. That's your first mistake, Deep.
Speaker 1:You should have been sleeping. Yep. But this is crazy. He said he was shot at twice near his hotel in San Francisco. Very scary.
Speaker 1:So they chased me to my hotel and shot the second time when I ran inside and got one of the staff to come out. We both heard a glock, and he saw the gun while I saw the bullet impacts. I'm still shaking. Very sorry to hear that. I hope you're okay.
Speaker 1:That is very rough, and it was no laughing matter until we found out that you were safe. And then at the end of your post, you just added Gary Tan, like, hey. Help me. And, so people had a lot of fun with this. It turned into a meme.
Speaker 1:Glad that you're safe, but we're gonna meme. Okay? And
Speaker 2:She's safe. New meme format.
Speaker 1:Says, I'm sorry. That happened. But what is Gary going to do? And there is a little bit of, like, Gary Tan has just become, like, Batman of San Francisco. You just, like, put up the bat signal anytime anything bad happens.
Speaker 1:So we had a lot of fun with this. Jordy put up a a similar post in the format talking about the difference between East Coast and West Coast time and how the East Coast has a three hour advantage on us and Gary Tan should fix it for us.
Speaker 2:It's absolutely brutal. Perpetual three hour head start on the day forever. We should we should flip it.
Speaker 1:We should flip it.
Speaker 2:Every six months it should flip.
Speaker 1:Yeah. That wouldn't cause chaos at all.
Speaker 2:In in sports, you know, you don't let one, you know, team just sort of, like, pick their side.
Speaker 1:China, One time zone.
Speaker 2:Yeah. Base.
Speaker 1:Russia, Thirteen time zones. 13? Yeah. So long. And and and it's funny because it's, like, they're both, like, pretty big countries, but it's clear that, like, Russia was just like, let's have as many times out as possible.
Speaker 1:And China was like, let's have as few as possible. And so, yeah, I think if you're on, like, the I think if you're in the Western side of China, like, the sun sets, like, really early. Yeah. Something something odd happens. But you gotta deal with it because they're not putting up an East West rivalry.
Speaker 1:It's one team.
Speaker 2:Well, I got I got some breaking news.
Speaker 1:Okay. Hit me.
Speaker 2:We have a new partner.
Speaker 1:Oh,
Speaker 2:yeah. If you look in the ticker right now, you'll see a lovely for Numeral. So shout out to Nate, Sam, and Matt over at Numeral.
Speaker 1:Break it down.
Speaker 2:What is You're about to know Numeral put sales tax on autopilot for leading e commerce and SaaS businesses. It is the platform for sales tax compliance, John. You already know that. They already work with a thousand plus different e commerce and SaaS businesses. They power Ridge Wallet.
Speaker 2:Yep. Our friends Sean and Connor.
Speaker 1:Very cool.
Speaker 2:They also power Graza, is a company that is absolutely crushing.
Speaker 1:It's in the Hayes portfolio.
Speaker 2:It's in the Hayes family portfolio. I think it's like a clean But they got their own ticker, So they're ticked up.
Speaker 1:They're ticked up.
Speaker 2:We love to see it.
Speaker 1:You got to scroll down so that
Speaker 2:Fantastic. Already ticker doesn't
Speaker 1:block their ticker. Let's look at their
Speaker 2:Benchmark series
Speaker 1:They got great teams. Very cool. And I mean, two things. Like like, sales tax is such a hassle because it's there's just so many sales tax jurisdictions. It's like the perfect thing for automation and software.
Speaker 2:I I was like
Speaker 1:But Yeah.
Speaker 2:Definitely afraid because I just yelled out benchmark series a. And I was like, oh, wait. Did did that not get announced yet? It did get announced. Got It
Speaker 1:was leaking at
Speaker 2:my It got it got announced. Last Congrats, team. So We love a
Speaker 1:bachelor series,
Speaker 2:Zach. Fantastic. And I'm very excited to be Sam, the CEO. Yeah. Splits is is spends time in LA.
Speaker 2:Cool. Yeah. We'll have lunch with him as soon as he's back on.
Speaker 1:Do you remember the golden age of e commerce when you just didn't have to pay sales tax? And Amazon was just like, yeah. If you're not in Seattle, we're a Seattle company. We don't have Nexus in California. Yeah.
Speaker 1:Crazy And it was this crazy arbitrage because you could buy things, and you just wouldn't pay tax if you bought it online. And then eventually, Amazon was like, okay. Yeah. We actually have Nexus everywhere. We gotta pay tax everywhere, and it got a lot less fun.
Speaker 1:But now that it is a lot less fun, the fund's coming back because of sales tax automation. So what's the call to action?
Speaker 2:Go to numeralhq.com.
Speaker 1:Numeral h q Yeah.
Speaker 2:Just check them out. I'm pumped to have him on the show. It's great. We are eventually gonna sell some merch. Yeah.
Speaker 2:And we will be running on numeral.
Speaker 1:That's great. Guillermo, friend of the show, former guest of the show, has a post here. There's no better investment in the world than America. It's people. It's culture.
Speaker 1:It's land. It's companies. It's freedom. Leaders in AI, there's no second place. I'd buy every stock in every square foot.
Speaker 1:It's only been in the blink of an eye since 1776, and the best is yet to come. Let's hear it
Speaker 7:for America.
Speaker 1:Let's hear it for America, folks. Thank you, Keanu.
Speaker 2:What happened to the American flag that we used to have on the set? Did you take it for your bedroom?
Speaker 1:I don't know. I was thinking we need a massive American flag somewhere on the set. Yeah. Well, we're working on a new studio, folks. I'm sure we'll maybe we should just paint the whole wall American flag.
Speaker 1:I'm also seriously looking at a Cybertruck that's wrapped with the American flag and throwing a sticker on there. I bought this before Elon went crazy and see if people fall for it. Just the most aggressive screaming eagle and be like, yeah. Yeah. I bought it before Elon went crazy.
Speaker 1:Yeah. Yeah. Or or maybe you throw the, I bought this after Elon went crazy.
Speaker 2:I kinda wanna do a copy pasta of this Guillermo post that says there's no better investment in the world than Vercel. It's people's culture. It's land. It's companies. It's freedom.
Speaker 2:Leaders in AI. There's no second place I'd buy every stock and every square foot. It's only been a blink of an eye
Speaker 1:since 02/2014 when they incorporated when Guillermo launched Next. Js. Yeah. Isn't that the one he he launched? Very funny.
Speaker 1:Anyway, if you're looking to get it on America, on the action in America, buying every stock in America, go to public.com.
Speaker 2:To invest in America.
Speaker 1:Investing for those who take it seriously, multi asset investing, industry leading yields, and they're trusted by millions, folks. Anyway, let's move on to Tom Bloomfield over at Y Combinator. He says software engineers are highly paid farmers tending their crops by hand. We just invented the combine harvest harvester. The world is gonna have a lot more food and a lot fewer farmers in very short order.
Speaker 1:I think this is true of doctors and lawyers too, but maybe a year or two later, we're going to have abundance of an abundance of incredibly high quality knowledge work at very low prices. Instead of living off gruel, everyone is going to have bananas and kiwi fruit for pennies. The farmer but the farmers will need something, to to find something else to do with their time.
Speaker 2:It's actually so wild that you can take a you can you can take any type of media Yep. Whether it's text, screenshot, PDF Mhmm. Image, etcetera. Put it into any of these models and get and say pretend to be this and give me an analysis
Speaker 1:of this content. Totally.
Speaker 2:And then it just spits out a really robust analysis from the lens and you're effectively getting to hire a lawyer and intelligence operative, a doctor, etcetera, to do this sort of pretty in-depth analysis Yep. For effectively $0.
Speaker 1:This is a very And
Speaker 2:that is still just dramatically underhyped.
Speaker 1:This is a very potentially a very stupid take, but I haven't seen it. And I wonder if there's something good here. Like, we talked about Jevan's paradox where deep sea drops the cost of inference, and paradoxically, the overall demand goes up. Right? That's Jevan's paradox.
Speaker 1:Now I've always wondered, like, is Jevan's paradox just price elasticity? Because if a product is very price elastic like, a price inelastic good is is cigarettes. Like, the price goes up. People buy the same amount. But with a price inelastic good
Speaker 2:inspire myself To grind higher,
Speaker 1:of course. But yeah. Well well, that's a Veblen good. And recently, I I said we should put a % tariffs on Veblen goods because Veblen goods are goods that the demand increases when the price goes up. So that's something like a Patek Philippe is a Veblen good because you you're like, oh, it's a $200,000 work.
Speaker 1:I I wanna buy it more.
Speaker 2:I was joking about the auto tariffs being Yep. Yeah. Good for the economy because, okay. If if, you know, if whatever. If a Daytona SP three costs 25% more
Speaker 1:I'm gonna work harder.
Speaker 2:I'm simply gonna grind harder.
Speaker 1:And you're joking, but that's actually the economic analysis of what a Veblen good is. That's exactly how an economist would describe how a Veblen good works, which is why I think that post is funny. Yeah. But what's interesting is, like, if you have if you have price inelast if you have price inelasticity for, AI inference, as the price goes down, if it's truly very price inelastic or price elastic, what will happen is your your demand increases disproportionately to the price, and so you're actually selling more at the lower price. And so your overall revenue goes up, and that's what Jevons paradox predicts about GPUs and new technologies.
Speaker 1:But is there a Jevan's paradox for software? And I think that's what we're hearing from a lot of folks in the industry who say, hey. Yeah. It's gonna be much easier to write code, but there's a lot more code to write. And so what's interesting is, like, it's possible that the software engineering industry actually grows even though the price of software engineering declines, and you have a sort of Jevan's paradox, but we'll have to figure it out.
Speaker 1:We certainly see that with with Studio Ghibli's. Like, someone was chirping at Mike Tyson for posting a Studio Ghibli photo of him with a with a pigeon. And somebody was like, you're you're a millionaire. Like, why aren't you paying an artist to do this?
Speaker 2:Oh, I saw this.
Speaker 1:And and and the and the thing was like, look, like, he was never going to pay an artist to do that because, like
Speaker 4:Did you see somebody
Speaker 1:to hire and he's not thinking about that. That's not something he was doing.
Speaker 2:Somebody quoted that and said something to the effect of, hey. I'm looking for an artist to make me a picture of Mike Tyson, you know, with a pigeon, and my budget is $0. Like, let me know if anybody
Speaker 1:wants to. Let me know if anybody's interested. Exactly. And so and so you have this weird this weird paradox where where it's possible that, like, demand for for art and demand for engineering, it all increases. And it's kind of unclear what that does to jobs.
Speaker 1:Like, you would imagine there's fewer software engineers like what Tom Bloomfield here is saying, But we could see a lot more code, a lot more doctoring and lawyering. And we certainly can imagine that with with legal where all of a sudden, like, everyone's suing each other constantly because it's all AI powered, and it's going to get very weird.
Speaker 2:Yeah, but yeah, it's one of those things. Think, I do think more legal work will happen when you have these sort of ChatGPT like, I mean people are already using chat GPT to generate legal docs. Think it's more dump in legal docs. Yep. And usually those types of people are never gonna hire a traditional lawyer.
Speaker 2:Yeah. But then there's some intersection of people that would have hired a lawyer but now we'll just pay. Yeah. You know, or or they're like, I pay $200 a month for
Speaker 1:Hey chatty PT. Draft a restraining order for a podcaster who stole my idea. Let's get
Speaker 2:Aaron that 50 times a day.
Speaker 1:Aaron, the CEO of Box, is coming on the show in just a few minutes. I wanna read his post
Speaker 2:because Nope. He's actually coming on at 12:45. We got Yes.
Speaker 1:At fifteen.
Speaker 2:Oh, sorry.
Speaker 1:In fifteen minutes.
Speaker 2:Sorry. Yeah.
Speaker 1:But I wanna give some context about what I'm excited to talk to him about because he has been very rigorous in his, evals. And, I'm sure Avi Shiffman from, from Friend.com is just kicking himself reading this post because, Aaron's saying that Gemini 2.5 Pro is a big step towards AI being useful in the enterprise. So Box has an AI enterprise eval, an evaluation, and Gemini 2.5 Pro scored three points better overall than Gemini two point o Pro for accurate single shot data extraction from enterprise docs. This entails asking the model to pull out many fields at once from the doc, and the jump is actually bigger specifically in areas where it must work through a complicate through complicated logic in a doc. Obviously, this is extremely helpful for Box.
Speaker 1:You have a ton of documents in your enterprise Yeah. Kinda, you know, document storage warehouse, and all of a sudden, you can just query across everything. Note, doesn't matter if it's PDF or Excel sheet. It's gonna pull it all out, which is awesome. It performs much better when tasks require more time thinking and not just jumping to the first answer it assumes is right, such as deducing dates in a contract when you have to reason through multiple sections in the content to come up with the correct answer.
Speaker 1:Accuracy and data extraction is obviously insanely critical for enterprise AI use cases. You can't get data wrong when working with enterprise information for a mission critical use case. This is the difference between being able to deploy AI or not in financial services, health care, life sciences, and many other places. It's amazing to see the continued performance and capability breakthroughs happening in AI, but it only seems to be accelerating. So what I'm interested in is, like, Gemini two point o five Pro.
Speaker 1:Like, it's a Google product. Google has Google Drive. Box obviously competes with Google Drive. He's going to be probably offering this as a product. How does that deal get done?
Speaker 1:What are the risks to partnering versus building your own foundation model? Is is AI and data extraction a sustaining innovation or a disruptive innovation. Box is unique in that they're still a founder mode company. Aaron's still the CEO. He founded the company.
Speaker 1:And so you would imagine that he'd be able to move faster on product, and that could be a pretty big differentiator in the short term. So I'm excited to hear what he has to say about all that. And, you know, if he gets it really working, he should run some more ads on AdQuick. Out of home advertising.
Speaker 2:Maybe he's measurable.
Speaker 1:Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient seamless ad buying across the globe. We have someone
Speaker 2:who is technology. The cap table of AdQuick. Who? Alexis Orhanian.
Speaker 1:Let's go.
Speaker 2:The man himself.
Speaker 1:And he's coming into Temple RJ.
Speaker 2:Right now. From, see if he's here.
Speaker 1:Let's go.
Speaker 2:And this is maybe our second time having two guests.
Speaker 1:We're still figuring it out. We might do a four up. We might just see one person. We'll we'll scroll back and forth depending on who's talking. But we always love having Alexis on the show.
Speaker 1:He's got so much to talk about, so much history.
Speaker 2:And he's always cooking.
Speaker 1:He's always cooking. He's a chef. And hey. How are
Speaker 2:doing? RJ.
Speaker 7:Hey, guys. I wasn't sure if you could see me or not. Knock on.
Speaker 1:It was We can see you now. Confusing. How are doing today?
Speaker 7:I'm good, guys. How are you?
Speaker 1:We're good. Can you start with just, like, a little bit intro yourself, your company, what you're working on?
Speaker 7:Yeah. Yeah. Really quickly. I'm RJ. I'm the CEO and and cofounder of Playback.
Speaker 7:I can go more detail on
Speaker 3:my background, which is really
Speaker 7:high level. I actually have a little bit of a nontraditional background for a startup founder. I was a hedge fund analyst and an activist hedge fund based here in San Francisco called ValueAct Capital. So kind of investing in large pack public companies. In terms of playback, look.
Speaker 7:The idea is pretty simple. We're trying to create a better way to watch sports by integrating creators and communities directly into the content itself. In practice, what that looks like is it looks like a little bit of a combination of, like, a traditional NBA or MLB broadcast with a Twitch creator stream overlaid on top of it. Mhmm. So creators can basically add their own voice, own commentary, and most importantly, they can actually interact with an audience while they watch these games.
Speaker 7:And what we found is that that's just, like, a way better way to watch sports. And then I'm sure we can get into more detail on this stuff, but we had a couple big announcements last week in terms of, obviously, adding Alexis and seven seven six to the team and and a new partnership with MLB. But, yeah, that's the high level.
Speaker 2:Dude, I loved it right away for a few reasons. One, we basically are doing for technology and business news what you're doing for sports in a where we don't do any journalism. We're basically sort of providing sort of this like commentary
Speaker 1:Reactions.
Speaker 2:Reactions to news. And I think what you tapped into is basically, you know, just an existing behavior, which is so many people are sort of consuming sports content in this sort of bifurcated way where they're getting their commentary from YouTube or Twitch and then they're getting their, the broadcast, you know, through these sort of legacy providers and like sort of putting that in the same place just makes a lot of sense. Because I, I don't, I don't watch, I don't watch a ton of, I don't watch a ton of sports, but if I want to like get a recap on F1, I'm going to YouTube. I'm not turning on the sort of like post race
Speaker 1:reaction. Yeah. I I watch a lot of those, like, f one reactions, and they can barely even use photos. They have to go to get images, license them. They can never use the real footage.
Speaker 1:And I'm just like, as a viewer, I want I want everyone to be able to use the footage in the right ways, and it just requires figuring out all the licensing and stuff. I remember seeing on Twitch, someone was watching a boxing match that was clearly pay per view. You've probably seen this. And they're playing the controller. Controller?
Speaker 1:And they're like, I'm playing don't worry. It's just a photo real video game I'm playing. I'm just playing the photo real video game.
Speaker 7:Badging and diving too as
Speaker 5:if they're Yeah.
Speaker 1:Yeah. Exactly. They're getting really into it. And it's like, clearly, they're just they're just, like, pirating the pay per view stream for their viewers, and the viewers are just, like, ignoring that guy and just watching the the pay per view stream.
Speaker 2:Talk about how Yeah. I wanna know how you guys do that. The licensing and the rights work for all this stuff.
Speaker 7:So just just first off, totally agree with everything you guys are saying. Like Yeah.
Speaker 2:It's one
Speaker 7:of those things where, to me, like, one of the internal maxims we use is, like, you know, can the next Stephen a Smith just be an independent creator on playback? Like, they don't need to go work for ESPN. They don't need to go work for Fox or one of the big traditional media companies. And I think the only thing that's held back, like, independent sports creators, is the lack of content and lack of rights. Like, it's just been too hard to do it.
Speaker 7:So one of our goals was to kinda mesh those two things together. The way we've done it is actually pretty interesting. So, essentially, both this is true, and I I think you guys know this, but we have partnerships now with NBA and NBA League Pass and MLB and MLB TV. And the way those partnerships actually work is MLB TV and NBA League Pass are just apps on playback. So we kind of created this, like, bifurcated system where there's, like, an app layer where these, like, you know, content companies and streaming services can put their content, still deliver it the exact same way in a lot of ways, still get all that user data, still have the same subscriber relationship, but then we can overlay on top of it this creator experience because sort of everyone agrees that this is a good idea.
Speaker 7:It's just really hard to actually fit it into the existing rights ecosystem. And the way we've been able to do this with this app layer just makes it a lot easier. It was still a lot of work to get the partnerships over the line. Like, you know, MLB partnership went live on Thursday. We first agreed to that partnership in February, and then actually been negotiating it and talking about it for, like, nine months prior to that.
Speaker 7:So it's still a long process, but I think the, like, sort of structure we've set up here is pretty scalable, and it can hopefully work with anyone, basically.
Speaker 2:That's awesome. Amazing. Well, natural fit to partner with Alexis given that he not only is a sports fan, but he's creating new leagues. Obviously, I wanted to give you an opportunity to talk about Athlos. But maybe before we get into that, I'd love I'd love to kinda get your take on it, Alexis, and and what kinda got you over the line to partner up in a big way?
Speaker 8:Dude, I had a tweet from six years ago ranting about it only being a matter of time for someone to build the product because there is a lot of product that gets done, so the syncing and everything works well and the partnerships. And it took a minute, but thankfully, RJ and the team did it. And and the only reason this one was an easy one to spot even six years ago is is I think for anyone who spent time in gaming, we watched the ascent of Twitch, you know, shout out to Justin and Emmett, who who found that one of the most popular things people would want to watch people watch was video games, esports, whether it was competitive or not. And what are games other than, you know whether it's sporting events or League of Legends, it's it's abstracted away. It's the same damn thing.
Speaker 8:But what gets you in the way is the rights deal. And that was obviously not gonna be solved easily, but I first got into sports. It was actually one of my first investments after leaving Reddit in 2020 and splitting Initialized up was launching Angel City FC, now the most valuable women's soccer team in the world or sorry, women's professional team in the world. But what I found getting into sports was here was this world, especially in the emerging side, where folks didn't really have any of the media dollars at stake so they could move a lot faster with innovation because, you know, you weren't looking at billion dollar rights deals. You could just assess from first principles.
Speaker 8:And I think that's why we've had the success we've had in emerging sports. And then what it was gonna take was really seeing the uptick of this new generation of sports fan. That's the reason Angel City has been so successful. We're talking to a very different sports fan than the traditional one. It's a fan that lives here, right, that watches on their terms.
Speaker 8:It's a younger fan. And so now, thanks to the success of emerging leagues, the big four can look and say, okay. Like, maybe we need to reach out to fans here and technology is the way to do it. And it just took time, but the market's ready now and RJ delivered.
Speaker 2:Yeah. And talk about kind of with with playback, you have an opportunity to truly sort of productize sports culture in a way that I feel like Twitch early on, which is very much like video game culture. Like the entire thing was built around that. How how are you approaching kind of, like, bringing sports culture into the kind of the product layer?
Speaker 7:Yeah. It's a good it's a good question. Honestly, the easiest way we've kinda done this is I think a hallmark of sports culture is that people like to get their takes off. Like, they're very interactive and active in their fandom. And it's honestly, like, the biggest dividing line between what a 24 year old fan looks like versus a 48 year old fan is, like, you know, 48 year old fan leans back, turns on the TV, and just, like, relaxes and probably still yells at the TV.
Speaker 7:But a 24 year old fan actually wants to yell and be heard while they're yelling. And so one of the first tweaks we made to the product is we actually built it originally in sort of the the Twitch style of, like, a One to Mini. Like, it's just a creator basically talking. And what we did is we we switched that from a, like, a One to Mini to actually a stage concept. So creators can actually bring people from the audience up on stage to chat with them, debate with them, do whatever.
Speaker 7:And, like, our best users are, like, very frequent stage requesters or even joiners. Like, they're always trying to kinda get their takes off. And I think that's kind of a microcosm for how we think about why we're focused on sports is, like, if we can continue to tailor it to this user and this use case, like, we're gonna have a much better chance of, like, carving out our niche and kind of winning the use case. But, yeah, there's lots of other little things. But, hopefully, that gives you a good at least early signal.
Speaker 2:Yeah. Do you see it you know, maybe it's happening today already, but do you see former pro athletes sort of, like, retiring in the same way they do now saying, I'm gonna start a podcast, you know, once once they're out of the league. You know, I'm gonna get on playback, I'm gonna just start being basically a super fan providing that commentary. Yeah.
Speaker 1:Is that
Speaker 2:is that part of the vision?
Speaker 7:Our our biggest creator is Gilbert Arenas, so very classic example of that. And I've also been very successful as, like, an independent content creator. He has a show called Gills Arena. It's very similar on to what you guys are doing live on YouTube four times a week. Been super successful in that venue and has transitioned into a playback creator too.
Speaker 7:He's live, you know, four times a week with us at night
Speaker 1:Mhmm.
Speaker 7:And we'll be pacing seven times a week for the playoffs on. And he's been super successful because I think he has, like, the right blend of like, he has a content creator mindset. Like, he can actually think, like, what's gonna go viral, what's interesting to people, what do people wanna talk about, like, what's just basically fun. But he's also an ex player, so people sort of naturally wanna hear what he has to say. But, yeah, he's been super successful.
Speaker 7:I can even I can send you guys a clip. He had a really fun clip that went very, very viral this past week when when Giddy hit the game winner, basically, for for Lakers versus Bulls. That was really fun. Reason. But, yeah, I can follow-up with that.
Speaker 1:Can you talk a little bit about monetization on your end? Obviously, I'm paying the MLB through their app. You're sitting on top of that. It makes a lot of sense that if I'm, following a creator and I'm tipping them, that money just flows through. You take a cut of that.
Speaker 1:But on Twitch, they're actually running ads as well. I imagine that the MLB would be pretty upset if you just start running ads on top of their ads and kinda disintermediate them there. Is there some sort of partnership? Like, you obviously, as a digital platform, have even more information. You could target better.
Speaker 1:There's a lot of different things. How are you thinking about monetization over the long term?
Speaker 7:Yeah. So short term, it's just focused on the creator monetization that you referenced. Like Sure. I think we have a long runway, and we have great investors to kinda build to the long term. But, yeah, near term, it's all about basically these independent sports creators.
Speaker 7:Can we actually help them build a business?
Speaker 1:So Yep.
Speaker 7:Obviously, tipping is one category, but even just room subscriptions is what we call them. Like, the ability to offer an actual subscription to their audience for either, like, limited interactive interactivity or even, like, premium streams. That's the primary focus right now. Long term, though, I think there's sort of two options. One is, like, there is already a proven model around, like, advertising sponsorships in partnership with the leagues.
Speaker 7:Right? So the leagues do have these partnerships with Amazon and YouTube and other, like, obviously, fully scaled platforms to deliver ads for them, and then a healthy cut goes to the partner, basically. So that's one category. The other category is, like, I kinda think once we're big enough, there's gonna be a really big opportunity for what we call, like, platform revenue, which is basically, like, some percent of our of the subscribers we drive, obviously, to these partners. We should earn a percent of that.
Speaker 7:But, also, there's gonna be new services that we can kind of offer. So the two obvious ones that come to mind are ecommerce and and sports betting. Right? Like, being able to bet from within this experience, being able to buy a ticket from within this experience. Like, all of these are gonna be sort of, like, high quality opportunities, and we expect to both enable that and make money from that, if that makes sense.
Speaker 2:Yeah. For me, it's kind of silly right now that you have a creator who's providing reactions and commentary to sports on one platform and saying, use my code and go to PrizePicks or go to, you know Mhmm. Underdog or, Joey and and Jake's, you know, platform. Like Better. Better.
Speaker 2:Like, it's very silly that these are just happening in one place where a sports fan wants to, like, post up. They're just, like, fully immersed in the game, the commentary, and whatever sort of activity they're doing on top of that.
Speaker 1:So I mean, merging a social network in an LLM, foundation model company as well. Yeah. Just merge Yeah.
Speaker 2:Yeah. LBO, a big
Speaker 1:Quarter trillion. I I I see a quarter trillion
Speaker 8:dollar valuation here.
Speaker 1:Yeah. Let's throw it all together.
Speaker 2:Got last question? We got a a minute left. Alexis, tell us I I wanted the the update on Athlos. Oh, like there was some stuff going on over the weekend.
Speaker 8:Yeah. The greatest show in track. We started this women's track league last year. 3,000,000 people tuned in for it. It was the biggest person in the history of the sport, fastest ladies in the world, and it was a blast.
Speaker 8:We're doing it again October 10 in New York. And, of course, we're gonna be streaming it on playback.
Speaker 2:Yeah. Was gonna say, are you gonna have a are you gonna be Yes. Providing commentary?
Speaker 8:You don't wanna hear my commentary. But there is to your point, though, right, this is why I love the idea of building in a new in this case, building a brand new league, but even in emerging sports, is is you can reunderwrite everything from first principles. Right? We can say because we don't have a billion dollar streaming deal media deal yet, we can say, okay. What's the best thing for fans?
Speaker 8:And what's wild is there is a long, long, long tail of creators who love this sport or even just mildly curious about the sport who are gonna be able to bring their audience to watch it.
Speaker 5:Yeah.
Speaker 8:And I really believe if you haven't watched Jamboi like, I'm not an MLB guy. I'm not a baseball guy, but I fell in love with this sport through this random creator, happens to be a Nick, not a Nick's fan, a Yankees fan. Nobody's perfect. But he's a big Yankees fan and does these voiceovers of baseball that delight even a non fan. Like, it's just so engaging.
Speaker 8:And to me, that that is the future of sports, and it just seems kinda silly that we've had all this talent emerge from streamers talking about video games, but we've never seen the new John Madden or the next Pat McAfee. And it's it's gonna happen here imminently in these next years.
Speaker 2:Love it, guys. Thank you for jumping on. Very excited. I'm gonna hit the size gong for you. And we look forward to tuning in to some playbacks in the near future.
Speaker 2:And hope you guys crush the rest of your Monday.
Speaker 1:Yeah. Good luck.
Speaker 7:Talk to soon. Guys.
Speaker 8:Thanks a lot.
Speaker 2:Very cool. It's crazy that that do people bet on running a lot yet? Horse betting's huge. Why is betting on, you know, people like these personalities Yeah. Track stars?
Speaker 2:Why is
Speaker 4:this not
Speaker 1:You should be able to do a whole track day. Just Yeah. You head to the track, get some get some mint chiseles.
Speaker 2:I mean, I respect horses. We love horses.
Speaker 1:I went to the Kentucky Derby. Why can't I just go to, you know, the human derby?
Speaker 2:The derb.
Speaker 1:The derb.
Speaker 2:The derb. Hang on.
Speaker 1:How we doing? Do we have our next guest? Not yet. Hopefully coming in soon. I think that's very cool.
Speaker 1:It's interesting. I mean, you have to wonder if Twitch is thinking about that. They're so big. Amazon has the rights to a bunch of stuff. It seems so logical, but, man, I mean, it's been a decade, they haven't done it.
Speaker 1:So
Speaker 2:I mean, part of it is it's great business if your competitor is owned by Amazon.
Speaker 1:Yeah, exactly. Not that they
Speaker 2:can't innovate at all,
Speaker 1:but but I mean, a long time, Emmett Sheer was the CEO of Twitch and was running essentially an independent organization from Amazon. But, of course, he stepped down, and now Twitch has been much more absorbed in the Amazon ecosystem. It is a fascinating model. Have you have you seen on Twitch how the Twitch Prime model, how if you have Amazon Prime, you get one free sub subscription to a creator. And so most people who use Twitch, they really have one favorite person that they tune into every time.
Speaker 1:It's not really like YouTube where you're bouncing around watching 25 different creators. And so you you go in and you get a free one. And so they would give $5 a month. And then the Twitch Prime, I think, delivered maybe $2. Only like the margin went through.
Speaker 2:Right.
Speaker 1:But still, you would have these these creators with, like, huge organizations. What are you looking for? Water?
Speaker 2:I was looking for a year, but I thought you had two. Oh, no. Just We got Aaron in the chat here.
Speaker 1:Bring him in. There we go. How you doing, Aaron?
Speaker 3:Hey. Hey, guys. How's it going?
Speaker 2:Welcome. We're doing great. We're doing great.
Speaker 7:How can
Speaker 2:we finally have you? You should have been on like, you know, we've had like 50 plus guests at this You should have been on the first Why
Speaker 3:wasn't I a launch partner for this thing?
Speaker 1:I know. Seriously. Yeah. Oh, well, we're making up for today.
Speaker 3:Okay. Great. Another podcast. Awesome. Good
Speaker 1:work. Yes.
Speaker 2:Yeah. Yeah. Okay. And that was the genesis, right? The world didn't need another
Speaker 1:We said technology needed a podcast.
Speaker 2:Yeah.
Speaker 1:That was the idea for sure. I want to talk about the Enterprise AI eval and how the different LLMs are inter are interacting at Box. Is this a sustaining innovation? Is this a disruptive innovation? Is Google a rival?
Speaker 1:You're gassing them up. What's going on?
Speaker 3:There were, like, nine questions in there. Where do you want me to where do you me to start?
Speaker 1:Wherever you want.
Speaker 3:Yeah. I mean, we're we're pretty pumped about AI as, as you can imagine. So we we've been building this platform to help enterprises store their their their data for Yeah. You know, a couple decades now. And, we have hundreds of billions of files within Box.
Speaker 3:And what the you know, the one challenge with with content, you know, financial documents and resumes and marketing assets and contracts is you create it, you share it, and then you kinda never look at it again. Yep. And so what happens is you see this this sort of, you know, curve of, you know, people you know, content remains hot for a day or two, and then and then it kinda goes into an archive state. Yep. And AI is the first thing that lets you actually tap into all of the value of all of your data, you know, no matter how old it is and when it was created and who it was shared with and where it is.
Speaker 3:So for us, it's this massive breakthrough, which is you can turn all of this unstructured data into, you know, effectively usable knowledge for an organization. And so we we've we're kinda betting the whole company on this idea of in the future when you work with your content, you're gonna have AI agents that go out and and read your documents for you, you know, create analysis, you know, go through all your contracts, find exactly the data you're looking for, automate workflows across any business process. So that that's effectively why we're all in. And, and so we're, you know, trying to think through what are the implications in the future of enterprise software. Yep.
Speaker 3:You know, I I'm I'm very much on the side right now that it's a TAM expansion of software as as opposed to kind of a TAM compression.
Speaker 7:Mhmm.
Speaker 3:I think this lets enterprise software you know, startups or incumbents go after much bigger markets because you're now tapping into the you know, just a completely different budget pool organization. But but, yeah, lot lots happening at the moment.
Speaker 1:What what about training a foundation model? Did you consider it? It seems like can you talk a little bit about value accrual versus foundation model layer versus application layer?
Speaker 3:We thought about it for, like, six and a half minutes. Okay.
Speaker 2:And That's a long time in 2025.
Speaker 3:Yeah. Exactly. Exactly. So in in in back in you know, the moment we saw ChatGPT, like, there was, like, one brainstorm of, oh, do we need to, like, fine tune our own models and or even train our own models on on, you know, certain datasets? And, and we basically quickly concluded, like, no.
Speaker 3:That doesn't make any sense. And the math is really clear. It's like if you have Google and XAI, we didn't, you know, didn't have XAI at that point, but but you had, you know, OpenAI, Anthropic, Google, Meta at a minimum. Just don't wanna be you don't wanna be fighting that war Mhmm. From a capital standpoint or even just a deep research talent, standpoint.
Speaker 3:So, you know, you always wanna be as a, you know, a startup or any size company. You kinda wanna be on the side of the tailwinds of of the market. And the tailwinds in this case are that there's, like, now five or six at scale companies that are deploying hundreds of billions of dollars, you know, on computers and and and training data and talent. So you wanna be riding that wave as much as possible. And and so we've built an architecture that lets us tap into any of the AI models, you know, whoever makes them.
Speaker 3:Great. Dory?
Speaker 2:You had quoted somebody, I think it was a couple days ago, that that basically delivered a pretty good prompt about a paragraph of text describing a website that they wanted, and it just sort of pops out this beautiful, you know, landing page. And the designer said, we are so cooked. That was a reaction for a lot of people last week. Maybe that was reaction if you're a studio in Kipley. Yeah.
Speaker 2:I'm kidding. But but you said here's how this plays out. AI makes producing amazing designs more affordable and faster. Designers get to offload the long tail work, iterate faster, and serve more clients or projects. Customers get better results faster or cheaper, inducing more demand for great design.
Speaker 2:Basically calling Jevan's paradox on design. Yeah. You is there any, like, context that that you feel like is worth adding there? Because I I think they're they're generally, you see these sort of big, you know, exciting releases or updates to models, and there's, a lot of sort of doom. But if I was if I was in high school and I've like enjoyed design, I would be calling up every single SMB and I wouldn't even what I wouldn't do is say, hey, will you pay for this website?
Speaker 2:I was I would say, I designed this website for you already. Uh-huh. And you can have it for whatever, a hundred bucks. And you could just be printing in like seconds. Right?
Speaker 2:So I had a positive takeaway. I think you did too, but I was curious if you had anything else. Yeah.
Speaker 3:I mean, that that that I I took took it way way further than the initial thought on on, you know, how you how you kinda growth hack that, which is which is, I think, a great idea. The I think we we you know, everybody got really excited about Jevan's paradox because of of, you know, the the efficiency of AI models, the theory that as they get more efficient, consumption goes up. But there's an equal amount of of Jevan's paradox of all of the applied use cases of AI. And and so that's that gets you closer to to then the the human labor side, which is which is if you just think about, like, most markets on the planet, I would argue, are are sort of smaller than they should be. If the cost of delivering the service was was cheaper, you would have Jevan's paradox for almost every domain in the world.
Speaker 3:Like and let let's take a very easy one. If health care was cheaper, we'd probably consume it more. Like, my biggest hurdle to seeing a doctor is is just it's a nightmare to to just, like, even get, you know, you know, a date on the calendar to to see anybody. And so so just just think about all of the things if you could increase the productivity of that particular category, which is an which is an inverse or a corollary to lowering the cost of delivering that thing or making it more available or making it more accessible with the consumption of that category go up. And I think there's not a lot of markets that are kind of at this perfect saturation level of of what the potential demand is.
Speaker 3:And we saw this in the very you know, the I think in modern tech, saw this, let's say, in Uber as an example. There was this really funny article that that some economists wrote, like, fifteen years ago about Uber. That was like, the case scenario is this takes, like, half the taxi revenue, and it's, a $5,000,000,000 business or something. And and, like, what the guy, like, obviously, totally missed the forest from the trees is if you if you just make Uber, you know, and low liquidity of of of a taxi service a hundred times more efficient, you know, the market actually goes up by it, let's say, you know, a hundred x. And and he couldn't kinda quite process that.
Speaker 3:But we we're doing the same thing over and over again in AI where we're sort of thinking like, oh, wow. You know, we made this thing way more efficient. That means it's gonna compress the size of that market. When actually what what it will mean is is that is to your exact point, all of the people on the planet that have really bad design right now, they'll have some some entrepreneurial, some, you know, high ingenuity person going and saying, okay, now I can actually do better design for the first time ever, because it's affordable to do great design for this small bakery that that would never have hired a designer, they never would have, you know, thought even to make their their website look good. But now it's actually affordable to do so.
Speaker 3:And so I think that's actually gonna play out, you know, many, many times over, in AI. There'll be some categories where where this where we we are at sort of equilibrium of of of sort of supply and demand, But I'd argue most categories are are this is not the case. You know, even as an example, taking, like, another knowledge workspace, let let's say, you know, there's a lot of AI startups doing legal legal work, you know, AI for lawyers. And, you know, one theory is, okay, wow, is it a really bad time to be a lawyer? On the other hand, if you make it much more accessible to now ask a a question that's a legal question, I'm still gonna follow-up and say, okay.
Speaker 3:Can you paper this now as a contract? Or or can you just give me a little bit extra advice? But the we've lowered the barrier to now getting access to even thinking about what is the legal implication for a particular thing that then grows the demand of that space. And and, you know, even in the category of, let's say, internal legal work at a company, if I could make it so we could review contracts faster with customers that we're going back and forth on, I'm not gonna have fewer lawyers in the company. We're gonna actually just have higher throughput of our deal review process.
Speaker 3:So there's a lot of these areas where where where, you know, you're just gonna actually see an increase in demand of the overall category, as AI comes and drives productivity in these, these spaces.
Speaker 2:Talk about just hiring and and headcount expansion generally. You've have thousands of employees already at Box. When when you're talking with the team about doing head count planning, are you pushing people to say, do we actually need this person? Or if you just figured out how to use sort of these tools better, could we get away with without sort of adding that that incremental person? There's been a lot of, know, the Klarna CEO came out and was basically like, we're not we're never hiring anyone again.
Speaker 2:And like, obviously, that's really good marketing. But like, what what's the reality? And and how are you approaching it?
Speaker 3:Yeah. So so we we are we are a % committed to being an AI first company just across the entire business. So we want every employee using AI to be as productive as possible, you know, with all the right asterisks of of you know, if you're doing production code, you're still responsible for what the AI produces. It's not the AI agent. So so all all the all the normal, you know, kinda t's and c's on that.
Speaker 3:But for the most part, we look at it through the lens of if we can cause efficiency in in a particular area of the business, we wanna reinvest those gains back into a another area in the business, might be even the same category or same function, but we wanna use those dollars that we're freeing up to actually reinvest into the areas that were previously constrained. And this is sort of, you know, even in the case of things like customer success where you're getting kind of, like, the first line of defense, you know, hey. I need to reset a password, those types of things that that we can now begin to automate with AI. The dollars, at least in our case, that we that we save on on that kind of of, you know you know, kinda human labor, that that will actually go back into the same exact organization. But now for more proactive customer success managers that we're always constrained by, we can't we can't hire enough people to go out and do a proactive outreach to our customers and help them strategically because we have to have people that that are responding to to tickets.
Speaker 3:And what's interesting in this case, and it's think it's an optimistic, you know, sort of story about AI. In most cases, it will be the same person that that sort of moves from one type of work to the other. You know, our our classic kind of customer success manager type roles oftentimes started in support at either our company or some other one. So so what really, what it lets you do is is recalibrate your talent to increasingly more strategic ways of of using it. You know?
Speaker 3:The the sort of, you know, go in and, translate this marketing asset into 10 languages is a much less strategic use of time than help go work on the next marketing campaign that we wanna go deliver. So it's it really just lets you readjust into more and more strategic things, and that that I think is a is an analog for what we can expect for most AI impact in the in an enterprise context.
Speaker 1:Can you talk about going public? Is it as bad as people say? You went public young. You're a young guy. Your hair is gray.
Speaker 4:Is it
Speaker 1:irresponsible of the is it because of the SEC?
Speaker 3:It's it's actually not because of the SEC. It's because of the hedge
Speaker 1:Okay.
Speaker 3:So so the the I I my my you know, I there's always this conversation of, you know, if we if we magically change the listing requirements or something of a company, you know, would that be better? I I actually don't think I think that's a red herring. I I think that the the scrutiny that the SEC requires, the governance that you have to have, I actually think is all net positive Mhmm. On companies. I think that that, like, just lets you run a more stable, mature, you know, thoughtful business.
Speaker 3:And and, you know, any reduction in that probably, if anything, just causes adverse selection for the kind of companies that eventually go public. I think I think the the the and this, you know, Brad Gerstner kinda kicked this conversation off a couple days ago or yesterday online of of, like, you know, about the supply of IPOs. I think this is firmly actually in Brad's hands. This is a private this is a private capital market dynamic, which is as long as you have, you know, him and the Kotus and the, you know, Sequoias and everybody else doing very large late stage deals, it's you know, as long as you have capital in the private market to stay private longer, that is the the real thing that will reduce IPOs. And I don't necessarily know that there's any any kind of grand economic loss for that, but this is this is now this SEC has nothing to do with this.
Speaker 3:This is firmly
Speaker 2:Yeah.
Speaker 3:You know, in the private private sector. We could we could decide do we want more IPOs or not.
Speaker 2:Last question. Did how how did you react to the x AI x merger? You have more followers on this platform than probably anyone I follow but Elon himself. Yeah. I I I'm curious what your take is.
Speaker 2:You've been you've been here since day one.
Speaker 3:I I I I, you know, was was early on the the the the Twitter wave. Yeah. I know I mean I mean, I I the the, Elon clearly likes to keep buying x, so it's, he will find another way. I mean, the
Speaker 1:twice now.
Speaker 3:Yeah. I have, I I don't have a particularly strong opinion other than, you know, I want I do wonder if, like, Tesla is the ultimate acquirer of x AI. But but I, you know, I don't know how how he's gonna kind of, you know, make make all these worlds come together. But, you know, we'll be interesting to see and and but no no impact on my life.
Speaker 2:So Yeah. Yeah. As long as we can post.
Speaker 1:As long as we can post, we're good. Just don't turn off the posting.
Speaker 6:Don't turn
Speaker 3:off the posting. And and and what I don't want is I don't really want, like, a write this tweet button. I I hope that's the one thing that they won't do. I think I think that, like, a lot of these platforms, like LinkedIn has this, you know, like, AI write your post. Mhmm.
Speaker 3:And, like, I just think you get slop. Like, it would be nice if if this could be, like, a slop free environment.
Speaker 1:Slop on x? Do you no way. Unfathomable.
Speaker 2:No. We want a handcrafted artisanal
Speaker 7:So slop.
Speaker 2:Organic farm to table Yes.
Speaker 1:Exactly.
Speaker 3:We need artisanal content.
Speaker 1:We need artisanal content. I agree with that. Well, thanks
Speaker 2:for It's great to have you. We'd love to have you back
Speaker 1:in back
Speaker 2:when you have Box News.
Speaker 1:We'll talk to soon.
Speaker 5:See you. Bye. Bye. Who
Speaker 1:got coming in next?
Speaker 2:We got Sam
Speaker 1:Lesson in the waiting Oh oh, we can keep it on on x and x AI. Let's bring him in. Get a hot take. Get him out of here.
Speaker 2:The take Smith himself.
Speaker 1:I wanna hear it. I wanna hear it. You know it's gonna be good. Is that a yes or a no?
Speaker 2:He's here. No. He's here. There he is.
Speaker 1:Welcome to TBPN.
Speaker 5:You need get me in here and get me out of here? I want some hot takes, spicy
Speaker 1:I yeah. I mean, you know what we're talking about. X, x AI, what's the take, sustaining
Speaker 2:No. We got and so we we technically dealer. We technically have, like, twelve minutes, so we should probably just let you go on a giga rant.
Speaker 1:Just rant.
Speaker 2:But first, I wanna say you're the only person I know that's been getting more tan throughout winter. And I it's because of all the tennis. But you also were Looking were you skiing recently?
Speaker 5:It's because of the skiing and I'm not Okay.
Speaker 2:I'm done. He's not done.
Speaker 1:He's putting down sixty days on the epic pass or whatever.
Speaker 5:Epic pass. What do you think
Speaker 7:I am?
Speaker 5:A basic bitch?
Speaker 1:I don't
Speaker 2:know. Where there's no passive
Speaker 1:There's an app that you track your days in. I forget what it's called, but it's people people track it.
Speaker 5:Garmin. Maybe it's Okay. Garmin. Yeah. Garmin.
Speaker 5:No there's no Epic where I go.
Speaker 1:Okay. Yeah. There's no chairlifts. It's all helicopters and cats. Right?
Speaker 1:No. It is.
Speaker 5:Listen. I'm just trying to live the VC dream.
Speaker 4:You know? You're doing it.
Speaker 1:You're doing it. Keep it up.
Speaker 2:Yep.
Speaker 1:Well, speaking of VC dream, opine on something.
Speaker 2:Yeah. You were probably, you know, midway down some peak when the news broke. But talk to us. What was your reaction? We we had sort of a a, you know, sort of I remain sort of long term bullish, Elon having a sort of an AI bet.
Speaker 2:And
Speaker 5:How could he not?
Speaker 2:Yeah, yeah, yeah. And on, you know, this platform that we've built our, you know
Speaker 1:Show on.
Speaker 2:Our show on. But to me, it's like, you know, it's generally like complicated. There's a lot of ways to kind of like, you know, maybe poke some holes in it. But I was curious to get your initial reaction as somebody who's been, you know, bearish bearish on just a lot of stuff in AI.
Speaker 1:On everything except meta
Speaker 2:Because the reaction was like like Big tech. People were really
Speaker 1:Big tech.
Speaker 2:Yeah. People were just like immediately like, yeah. This makes total sense, you know, etcetera. But, you know, there's
Speaker 5:So look. I I actually think to Elon's credit, it makes total sense of Elon. Right? Like, Elon is the king of cheap money. Right?
Speaker 5:No one played Zerp in history better than Elon. Right? You basically come up with a long term vision that can require infinite capital. You're the world's greatest marketer. You sell the shit out of it.
Speaker 5:You raise infinite free money and you build stuff. Right? He did that great. Now it turns out the ZERP free money is over. But you know where there's free money?
Speaker 5:AI narratives. Right? AI narratives is where the free money is. So obviously, Elon's got to have an AI narrative because he's the king of free money. And so I think when you look at the Twitter X thing, I mean, it seemed I mean, he literally named them they're they're like, how could they not end up combining?
Speaker 5:Like, literally, one was distributing the other. They're layered on top of each other. They basically have the same name. And to Elon's credit in terms of pulling this off, I mean, what is this really? This is AOL Time Warner if Time Warner had like a ton of debt.
Speaker 5:Right? Like and so and so you use an inflated, you use the zero cost capital inflated valuation thing, which is the AI thing, to buy the thing you also happen to own that's an actual asset. Twitter's great. I love Twitter. Right?
Speaker 5:Yeah. But it also has a what is it? Tens of billions of dollar debt noose around it. Right?
Speaker 1:It's 12. It's not tens. It's 12 exactly.
Speaker 5:Oh, twelves. Sorry. A 12 of debt around it. And, like, what's not to like about it? Right?
Speaker 5:If you're Elon, it's a great deal all around is what I would say. But what does it actually add up to? I mean, like, look. The entire question is what are these I call the mid market AI players actually worth, right? And that's the I mean I again, as you know, I've been very consistent on this for years.
Speaker 5:If you're the biggest in the world and your cost of capital is zero, sure, like build out a huge AI infrastructure. Ideally one where it's non cannibalistic, like Meta. Ideally one where you know how to make money off of it, like Meta. If you're a tiny baby player, take all the leverage. Fire your customer service team.
Speaker 5:Like, be more efficient. Hooray. But I think these mid market players, I don't understand the numbers.
Speaker 1:I mean, you said it makes sense for Elon, but I feel like when we were looking through the deal, it's like the SolarCity Tesla acquisition.
Speaker 5:%.
Speaker 1:And it looks and it and it looks good for the Tesla shareholders too because they they effectively get out at the same price they got in and out. They're in this new thing. If you're a Tesla shareholder, are you happy or not?
Speaker 5:Wait. Which one's Tesla now? Are we saying that sorry. That XAI is Tesla? Because
Speaker 1:they're No. No. So so so if you went in on the Twitter deal and you're sitting at x and it and the valuation probably went down and then it Yeah. Goes back up and it get and and you get out at, like, 44. It's about where you got in.
Speaker 1:But now you're in this combined entity.
Speaker 5:Well, let's let's put it this way. I think the question the question is, there's probably and I don't know this. You guys probably do. There's gotta be some market for x AI shares floating around on and and markets, you know, things that are worth what people are willing to pay for them. So if you bought into Twitter at 44 and it's not worth 44, despite the fact I love it, despite the fact you guys love it, just not.
Speaker 5:Right? All of a sudden, there's a market for x AI plus Twitter at whatever the number is, and you can get out and you want out. Well, who cares? Right?
Speaker 1:This seems like a win win. It's not just Elon. The original Twitter slash x shareholders But guess should also happen.
Speaker 2:But I guess so But
Speaker 5:if you're a I don't know. If you're an x dot ai shareholder, it's just kind of I mean, this kind of fits in the world of you know, we we live in a world of spheres of influence right now. This is not my line, by way. It's a smarter hedge fund friends of mine line, which
Speaker 4:is we've gone from kind
Speaker 5:of a legalistic globally open market to a world a multipolar worlds of spheres of influence. You know, if you bought into x dot ai, you bought into Elon's fear. If you bought into Twitter, bought into Elon's fear. What are things actually worth? Meh.
Speaker 5:You know, like who knows? But like you're kind of just betting on Elon holistically. And this is a nice consolidation, which by the way gets him out of a very large debt bill, right, that he was personally liable for in some way, shape,
Speaker 1:or form. But I mean, it it just feels like Tesla Solar City all over again. But if you play Tesla Solar City, that deal worked out for everyone.
Speaker 5:Well, but listen. Well, everyone made money. Well, it it's not clear it actually worked out for Tesla shareholders. It's fine because it's a rounding error.
Speaker 1:Right? 10,000,000,000 now. They're making Tesla Energy on batteries and stuff. Yeah. They pivoted away from that.
Speaker 5:Did they need Solar City for that? I don't know.
Speaker 4:I mean
Speaker 1:Maybe not.
Speaker 5:Like, if you think about it, the Solar City story when it was pretty weak when it was acquired. It was we're gonna stick solar panels on the roofs of Teslas, and that's why we should buy this thing. Like, it it didn't really make any sense. Right? And, like,
Speaker 1:so in the house of the Tesla owner. Right? I mean Like, you're already there to install the install the battery pack, install the charger,
Speaker 5:install the We all I get it. I'm saying we all know, you look back on the history of that deal, that was a this thing is about to die, bailout. I'll come up with a one page letter that makes that justifies it because we're gonna put some solar panels on the roofs or some shit. Right? Was, like, completely made up.
Speaker 5:Now when number go up, all sins are forgiven. Right? And so what I'd say is number go up so everyone's fine and no one's
Speaker 1:of number go up.
Speaker 5:He's the master of number go up.
Speaker 1:Right? So everyone should be happy.
Speaker 5:So is I guess I guess that's the kind of story in general. I think there's a real Elon narrative Yeah. Which is master of zero cost money in, master of narrative number go up. Right? And the reality is it's kind of like very Roman.
Speaker 5:It's like as long as everyone's getting paid, everyone's on your side. Even Doge. Right? Like the whole thing with the Dogecoin is brilliant. Like, the best way to build more followers is to get them paid.
Speaker 5:Right? And Elon has been the king of that. Now the question is it works in both directions and we'll see how that plays out now. But, you know
Speaker 2:I think what I'm what I'm interested in is like, I want to hear Elon speak for an hour about the combined entity and what that really means versus data and distribution. Right? Like the two narratives have been like, you know, x AI gets distribution, x and and sort of data. So so it makes sense. But for me, it was it was more easy to visualize how x was worth $44,000,000,000 when it's sort of an Elon pure play sort of social media bet in a strategic influential asset.
Speaker 2:And if he is able to continue to grow earnings and grow the importance of the platform, it's easy to see how that's like, maybe it's a hundred billion dollar company someday. Now you have x AI, and it's you're you're sort of looking at this collective entity being like, it's a founder. It's a pure play founder bet at this price.
Speaker 5:I mean, I in the end of the day, the problem with all its AI stuff is it's either worth infinity or zero. And no rational person can do a discounted cash flow on an infinity or zero. Right? And and I think that's kind of where everyone's stuck, is why it's so narrative dominate. Personally I have to say, I actually quite like Grok.
Speaker 5:I use it. Like I have on my home screen Grok and OpenAI and all of them next to each other. And when my finger goes which button do I press? I press Grok. You know why?
Speaker 5:Because it's kind of marginally faster and fun, whatever. I don't know what that's worth. Right? But we'll see. Right?
Speaker 2:And the the and the the bull case for that behavior is that Grock could replace Google
Speaker 1:for less Exactly. I say Google's a multi trillion dollar company. You slice it up, and all of a sudden, you're getting a couple hundred billion dollar bets.
Speaker 5:Maybe. Maybe. This is one this is a mistake. Maybe. This is a mistake that people make, I think, consistently when thinking about AI, which is the story of will you use LLMs to look things up.
Speaker 5:Yeah. Of course. Yeah. You're definitely gonna use them. Like, you know but the idea it's kind like the same stories when people say, hey, I pay accountant hundred twenty thousand dollars a year, AI accountant ten dollars a year, therefore AI accountant worth 20 times per that's not how it works.
Speaker 5:It's just it's worth 10. And like the mar it's all about the marginal advantage. And so it's not clear to me. I mean, it is very clear to me that a lot of search volume that currently goes through Google and gets resolved by shitty web pages people have set up to farm those searches goes that behavior goes away. Where commerce go?
Speaker 5:Where the ads dollars actually go? And whether just search is like it's just not the same market configuration anymore and who gets that money. That's all, like, really TBD is my view. And it's really unclear. I mean, again, it's a very binary game.
Speaker 5:So that's the one that's why I think it's very hard to value right now. But I think the big picture is, like, so long as private investors are willing to foot the Hail Marys, the binary outcomes, and believe that, you know, again, Elon is the king of cheap money.
Speaker 1:How do you feel about market concentration? Google has, like, 99% of the search market. Meta has 99% of the social networking market. It feels like LLMs could be a little bit more oligopolistic on the consumer side. But if history is any guide, like, these monopolies kinda run away with it at some point, what are you feeling?
Speaker 5:You know what, actually, I think the question is if you think really what I'd say with Google and Meta are is they're not technologies, they're economies. Right? And this is the really, I think, the mistake people make is if you think that Google's a technology company and Google searches technology purely, then and you're like, wow, technology tends to compound and run away. Then you're like, yeah, like this would end up that way. Same thing with social networking.
Speaker 5:There's no actual techno I mean, yes, there was like some stuff Facebook invented on a way to scale, but like it's not fundamentally a technology company, it's an economy. Yeah. And I think that the problem with LLMs is people are equating them to an economy but they're not. They're just a technical level. Now, if someone actually nailed the everyone's pouring every single thought they have into it and all the knowledge of the world into the LLM and then that single element aside is like the smartest fucking thing in the world.
Speaker 1:But that's
Speaker 4:what they're
Speaker 1:doing with this deal.
Speaker 7:But
Speaker 8:they're
Speaker 1:not
Speaker 8:Like,
Speaker 1:you go on x and you get paid a creator payout for bringing information to x, and then that gets siphoned into x AI and
Speaker 5:Grogg gets
Speaker 1:better answers.
Speaker 5:Agree. But here's the thing that you have to understand, and this is really important, is one of the big economic failures of the Internet is that the economy of the Internet, both social and search, is actually driven around entertainment, right, and engagement, not around information or truth. Right? And so the reality is what you're basically at best that's what the economy's worth. That's why we're so screwed on so many things is because there's actually no economy of truth.
Speaker 5:There's an economy of entertainment. And I think that's getting to get quashed in a bunch of ways because, again, if nothing else, and LLMs do generate infinite free personalized entertainment. Right? And, like, that's gonna, like, crush that economy. It's not clear to me.
Speaker 5:I mean, I can tell you the vision where, yes, for some reason, x becomes this machine that pumps all of the world's knowledge and then somehow Grok has some fundamental advantage on knowledge. I can tell you the story, but I don't see any indication of that actually being what's played out. And I would argue that, again, that was the same story Google had. It didn't play out that way. It ended up being a commerce engine, you know, and a bunch of, like, you know, dead Internet theory stuff.
Speaker 5:Unfortunately, it's not the way that social played out either because social is just like a dopamine feed, unfortunately. It's not an information machine. So that's really the question of how you get there. And I I we'll see. I I I am very skeptical that the mid market players who are saying LLMs are a compounding economy actually have anything right now.
Speaker 5:I think they have technology that's pretty fun, and it's all pretty undifferentiated. But we'll see.
Speaker 2:Where do you think x AI would trade if it were to IPO tomorrow?
Speaker 5:Well, this is a really interesting question. Right? Because basically you have two dynamics at play. Either it's traded as a meme coin. Right?
Speaker 5:If it's traded as a meme coin, it might be huge. Right? It's the same thing with like, you know, MrBeast wants to go public. We talked about him the last time I was on. It's like if MrBeast's, you know, public company trades like a meme coin, it trades like GME, then it might be a very, very large number.
Speaker 5:If it trades on a discounted cash flow basis or as like a traditional accepted business, way like not very well, right? And so I think that's really just the question, you know, as the retail versus, you know, enterprise versus like effectively real serious business world compete. How these things trade is all about the marginal buyer. Right? And what that marginal buyer's belief system is as much as anything else.
Speaker 2:Yep. Got
Speaker 1:it. Well we gotta move on to the next interview.
Speaker 2:Bye friends.
Speaker 1:Was that?
Speaker 2:Talk to you soon. He said bye, friends. Bye. Great to have you, Sam. Thanks for coming on.
Speaker 6:That was great.
Speaker 2:We got Chris. A is it Chris?
Speaker 1:Oh, wait. No.
Speaker 2:Oh, we got David. Is he in the waiting room?
Speaker 1:That's right. From Poseidon. Let's do it. I'm gonna let you take
Speaker 2:the shot. I'm gonna let Poseidon himself. Can you grab me a yerba mate? Of course. Thank you.
Speaker 2:David, what's going on? Big day for you and a big flag.
Speaker 6:Thank you. Yeah. No. It's a it's been a great day here. We finally launched in public.
Speaker 6:We've been in cell for a bit over a year now, so it's really exciting to show the world what we've been working on.
Speaker 2:It's amazing. And if I remember correctly, some of the very first posts we featured on the show at the beginning of last year, weren't they yours? I feel like you came back.
Speaker 6:Yeah. I think there was one. Yeah. Way back.
Speaker 2:So thank you for contributing to us getting this off the ground. But talk about talk about the Poseidon Seagull, kind of the the genesis of the company. Would love to hear kind of, like, you know, your backstory and then and then the first, you know, has it been a year and a half of the business? How long have you even been in market?
Speaker 6:Yeah. So we I can go way back to the beginning. We started right around, like, December 23, January of '20 '4, raised our initial pre seed. And the way that the company got together was it's me and two of my cofounders, Isaac, Zeke Duff, and Parker. And so we were, I think, ideating about, like, logistics and aerospace.
Speaker 6:And I think, like, logistics, especially, has been a market that's been largely unchanged for the past hundred years. The types of planes that we're flying are, like, largely the same same seven thirty seven, same like Cessna's. And on the the ship cargo side, it's been pretty much, like, containerized cargo with very much, like, spoken hub model. And so we were going through a bunch of ideas of, like, what we could build to disrupt this, thought about airships for a while, and those are very interesting, but have their own set of problems. Couple other things.
Speaker 6:But then I think one night, a random party in San Francisco, a girl walked up to Isaac and was like, hey. You should look at into, like, a chronoplons. And we're like, oh, like, what are chronoplons? So we spent the next night just, like, binging YouTube videos and, like, documentary series. So chronoplanes were these, like, types of vehicles that were built in The Soviet Union in the sixties and seventies.
Speaker 6:And at the time, they were, like, the highest cargo capacity, like, planes ever built. Like, they're, like, flying ships, essentially. And so they're constrained to fly in ground effect, which is a regime when you're flying extremely close to the surface of the ground, in this case, water because water is extremely flat, where you have an aerodynamic boost. It does two things. It, a, largely reduces your drag, and it increases your lift.
Speaker 6:So you can carry a lot more and spend a lot less fuel. So it's, like, increase of your lift drag ratio by 30 to 50%. It's a huge deal.
Speaker 2:Yep.
Speaker 6:And so we started looking at those, and the really crazy thing about ground effect vehicles, Spartan age is, like, a lot of the problems at the Soviet side are solved for the most part, so it's it's really done a a controls issue and a material science problem, and composites are incredible material science. So, like, carbon fiber and controls is, like, much like, I think we we've solved those firms pretty well now. And so but the the really cool thing is, like, the ground pick bugles are not regulated by the FAA. Yeah. They're regulated by the Coast Guard.
Speaker 2:Yep.
Speaker 6:And so Coast Guard certification is significantly easier than FA. And so you have, like, really great companies that have built cool, like, EV tool stuff and, like, they've IPO ed or SPAC or whatever for billions of dollars, but they've never actually had a commercial flight because the FA regulatory process is so long. So it's, like, a decade plus to get it certified. But if you're going through the coast guard, and so it's if you're flying sub 50 meters and it's the same thing internationally. Europe under the IMO, you get certified as, like, what is technically a boat.
Speaker 6:And so what we're building are flying boats.
Speaker 1:Yeah. We talked to Billy Thalimer at Regent. He's doing
Speaker 4:Yes.
Speaker 1:Personnel carriers, but that that regulatory arbitrage is just, like, amazing.
Speaker 2:Josh, even off air after we had Billy on, you were just awesome.
Speaker 1:So excited about this. I love that.
Speaker 2:A good Ragarb just gets
Speaker 1:you wrong. Ragarb. It's previously the domain of crypto stuff, but now in hard tech, we're taking advantage
Speaker 2:of Ragarb.
Speaker 1:So we
Speaker 2:have the video. I want to pull up the video, and I want you to just kind of like talk over it. Ben, can you pull it up
Speaker 1:And while we're waiting for that, I'd love to know a little bit more. Oh, here we go.
Speaker 2:You can mute it, Ben.
Speaker 6:I don't see it.
Speaker 2:Okay. Maybe try to watch I mean
Speaker 1:We'll we'll just Seagull.
Speaker 4:Okay. Pretty cool.
Speaker 6:So this is a I'm just put Starlink on it? My heart. So this is taking off
Speaker 1:Yeah.
Speaker 6:Like flying at about eight to 10 feet is peak. And so the
Speaker 1:How fast is this?
Speaker 6:It cruises 65 miles an hour. We hit a 15 miles an hour,
Speaker 1:and it's good. 15. Let's go.
Speaker 6:Yeah. So the prop changes, think we'll hit a 60 on our next set of tests.
Speaker 1:You gotta get better in sports car numbers. I wanna see 200. Bugatti Veyron goes, what, two fifty?
Speaker 6:Yeah. We gotta race one.
Speaker 1:You gotta you gotta race one. Yeah. Do the Nerberg run-in this thing.
Speaker 2:I love I mean, the the design looks fantastic.
Speaker 1:So when you say ground effect, does it have to fly over water? Or or I mean, this looks just like a plane. Can you just fly it over land too?
Speaker 6:Yeah. So so, like, if you're flying in ground effect, you generally want to fly over water because water is, like, extremely flat. And so, like, you'll have waves. And even in waves, you'll fly slightly higher, and it it'll average out. But you can find ground effect in, like, the, like, I don't know, like, the the salt flats or something.
Speaker 6:But ours is what's considered to be, like, a class b, class c ground effect vehicle. And so we're not restricted to ground effect. We just optimized aerodynamically to take advantage of ground effect.
Speaker 1:Got it.
Speaker 6:But we could fly out of it up to a 50 meters.
Speaker 2:You talk about Where were you used?
Speaker 1:Can you talk a little bit more about the tech tree that enables this? It sounded like there's some material science stuff, like carbon fiber's cheaper. Then there's also, like, the miniaturization of electronics. Like, you have Starlink on that thing. That's not possible a couple years ago.
Speaker 1:The question's really just, like, why now? But I want, like, more of a breakdown of, like, of, like, all the different things from the regulatory to the tech tree that's enabled this to happen now and not earlier? Because at the same time, like, this feels like something that could have happened decades ago, but why are we just why why are we just breaking through with this now?
Speaker 6:Yeah. So I think, like, starting on, like, the the material science side, think it's really interesting. Like, composites have really come into their own. It's like, ten, fifteen years. And so in terms of, like, being having, like, actually, like, very, like, good mini like, there's very good manufacturing here.
Speaker 6:So, like
Speaker 1:Sure.
Speaker 6:AP composites is where we get all of ours, and that's in labor more. It's like an hour Nice. It's it's kind of awesome.
Speaker 1:And that's both, like, the science of those composites, but also the cost, or is it just the cost that's come down?
Speaker 6:Both and, like, the amount to which they're being used. And so, like Sure. You're having your, like, large planes like your Airbuses are being built like, composite wings. Got it. And so, like, aerospace as a whole has, like, really moved into composites as opposed to just, like, aluminum.
Speaker 6:And so then, like, on the electronics side, I think, like, there's in the same way that, like, GPUs for, like, gamers, like, enabled machine learning, they're just, like, the the hobbyist grade RC stuff has gotten extremely good. Sure. And so just, like, really move forward, like, the quality of motors available, the quality of, like, electronic systems, sensors. The types of sensors that are available right now have gone small enough that we can fit them on here.
Speaker 1:Yep.
Speaker 6:And, really, the the Seagull has started as, like, a quarter scale prototype of our full scale vehicle, which is gonna be a 50 foot two ton capacity vehicle. But that's
Speaker 2:what I was gonna ask. I was gonna talk about, you know, sort of long term capacity scale and then, like, the applications of this. Because at that size, to me, it looks like something you would use for, like, potentially defense applications is a big one. But I
Speaker 1:thought you were gonna say pleasure craft and, like, going out and
Speaker 2:Just getting
Speaker 1:out with your boys.
Speaker 2:Boat with your boys.
Speaker 1:On the on the ground effect vehicle with your boys having a glass of champagne.
Speaker 2:Could be
Speaker 7:a really good time.
Speaker 2:But yeah. So is is your guys' first focus, like, logistics and and sort of, like, long sort of longer term Yeah. Who's the customer? Longer distance transport, that kind of thing?
Speaker 6:Yeah. So I think, like, as I was saying, this, like, started as just, like, poor scale, like, prototype demonstrator, figure out the air body design, validate a bunch of stuff. But as we were building it, it became aware that, like it was, like, pretty cable vehicle in and of itself, and, like, we designed it for manufacturing. So we reached out to, the DOD, specifically, like, the naval surface warfare center people in SOCOM, and they all had their own specific, like, mission profiles that they were interested in with, the Seagull. And so it's, like, pretty large payload capacity relative to size, and being able to operate in, like, marine, domains.
Speaker 6:And so doing stuff like anti submarine warfare, like, UV detection, very, like, urgent and, like, high priority logistics and goods He's on the on the defense side for the Seagull. And then we're starting operations commercially with it, for doing, like, very like, mostly, like, medical deliveries to remote islands. And then at the the full scale, carrying two tons, the idea is to be able to compete with air freight for coastal and island logistics and cargo. And through a bunch of things, we are gonna be able to get to roughly a quarter or a third of the price per kilogram per mile.
Speaker 1:It seems like ZipLine's done pretty well with the medical deliveries stuff. I was I was surprised to see how how long that company has been around and how much they've grown. So clearly, there's, like, these niche markets that are really important in logistics and trans in transportation. Yep. Jordan, you got another question?
Speaker 1:Or
Speaker 2:No. I mean, that was it. I just wanted to bring you on to say, thank you for the early I was saying you you missed it earlier.
Speaker 1:Oh, yeah.
Speaker 2:I just remember. I don't I don't remember much of what you posted, but I do remember covering remember Feature? Covering your
Speaker 1:family's history. Of military applications, it sounds like, logistics first, then maybe ISR. But is there gonna you're gonna put a bomb on this thing at some point?
Speaker 6:I'm I'm not sure what they stick in it, but there are discussions about a a wide range of different payload options.
Speaker 1:But, I I mean, just just, like, stepping away from, like, the business applications, like, isn't that something even like, we even need? Like, we hear about the hypersonic missiles being able to kind of bob and weave, and they don't fly on a traditional, like, parabolic ICBM trajectory, so they're harder to shoot down. This thing seems obviously maneuverable. Is there military value on a weapons platform for this thing, or is it just, like, too slow and too small to to really, like, matter?
Speaker 6:Yeah. The it's definitely faster than, like, torpedo per se, but the unique advantage of it is when you're flying at such a low elevation, you're flying below radar. Yeah. That's a, like, very stealthy platform.
Speaker 1:Oh, interesting.
Speaker 6:Like a ship. So you can get pretty close to the enemy lines without being spotted.
Speaker 1:That's cool. Back on the tech tree, are you are you doing any AI onboard, even, like, OpenCV to do collision detection like you'd get on, like, a DJI drone, or is everything kind of remote controlled right now, teleoperated? How are you thinking about the evolution of that tech?
Speaker 6:Yes. So the the way that we built it out is that it starts with being teleoperated because you need to, like, train the systems. And so running, it's like the on a hardware level, it's like Pixalk with ArduPilot that we've, like, modified it. And ArduPilot's like an open source platform.
Speaker 1:Cool.
Speaker 6:I know the guys at Angels use it as well. And so there's a few sensors that we have onboard. We have sonar. We have a radar, just like a visual camera sensor. So, yeah, taking stuff in terms of, like, collision detection, like elevation detection, maintaining civil flight.
Speaker 6:So, yeah, we're building some of our own models.
Speaker 1:So when you're flying it, are you doing FPV, or is it just at a computer screen? Like, what what does that actually look like for the pilot?
Speaker 6:Yeah. For for the pilot when you're, like, flying in just, like, remotely, we have the the computer screen with all the, different, like, signals on it. You get all your stats.
Speaker 1:So flight simulator.
Speaker 6:Yeah. Basically. And then then you have the camera on board so you can actually see where you're going.
Speaker 1:That makes sense. Cool. Super cool. That's amazing. Well, good luck.
Speaker 1:Really impressive
Speaker 2:what you've built in so little time with Yeah. In a very efficient way. So congrats again. Congrats to the whole team.
Speaker 6:Appreciate it.
Speaker 2:I'm looking forward to the next update.
Speaker 1:Yeah. We'll talk to you soon.
Speaker 6:Thank you, guys.
Speaker 1:Cheers. Bye. And we're going deeper on AI image generation. We got the CEO of RunwayML coming in the temple of technology, Cristobal Valenzuela from Runway. I'm a huge fan of Runway.
Speaker 1:I used it years ago. They had a fantastic feature that would allow you to basically create a green screen even if you didn't have even if you didn't record the footage on a green screen. And so you could do all these funny things. Remember Zuck, using the flag when he was, like, surfing, like, Lake Tahoe? I was able to use runway to, select just the flag, and then I could put a different flag there.
Speaker 1:And it would have been so hard to do in After Effects, which is a software I I I I kind of know pretty well, but, it takes a ton of time to do rotoscoping. And, that was the moment when I was like, oh, this company is doing really cool stuff. Now they've gotten into image generation, video generation, and a whole lot more. And today, they launched a new gen four, video model, and I wanna hear all about it. So welcome to the stream, Cristobal.
Speaker 4:Yeah. Yeah. Thank you for inviting me here.
Speaker 1:Thanks so much for joining. I I have a million questions, but let's just start with can you introduce yourself, the company, and, what you launched today?
Speaker 4:Yeah. I mean, you did kind of a pretty great job. OG, you've been using Runway since since a couple of years. Yeah. That's great.
Speaker 4:Yeah. So we just introduced Runway just a couple of hours ago. Sorry. Gen four, just a couple of hours ago. It's our latest, like, video model.
Speaker 4:It's basically a new frontier, I would say, of not only video generation, but it's storytelling. It's it's solved one of the most pressing things of AI view these days, which is consistency. So you can create really consistent worlds. And the way we wanted to, like, emphasize this idea of consistency is that it's actually releasing a model, and I think it's kind of the model part is, like, the the first stage. We put together a collection of, like, different shorts and films
Speaker 1:that if
Speaker 4:you watch them, if you guys haven't watched them, like, definitely try watching them. It's just, like, a few minutes. They're short films.
Speaker 1:It's crazy. It's such a
Speaker 2:trip because you're looking at it and you know it's AI, and it's does not
Speaker 1:We're passing the uncanny valley for sure. And faster than the VFX stuff did. I mean, we that that took twenty years, and it feels like AI video generation, it's been, like, a few years. There was an uncanny valley for a while, but we're getting the other side really fast.
Speaker 4:Yeah. I mean, we were working on Runway for almost seven years. So it's it's definitely been, like, more than, like, a couple like, two or three years. But, but, yeah, I would say the last two or three years have been, like, really fast. And Yeah.
Speaker 4:I don't think we're even close to, like, the final stage of where Totally. Media will come. Yeah. I I think there's still a long way to go, but but the point is really to point that, once you start, like, seeing how good this stuff that you can do with runway is and you layer in a really good creative mind, you can make stuff that you just, like, forget how it was that you're watching something that's completely generated.
Speaker 1:Yeah. We need a new eval. We had, the Will Smith eating spaghetti. We blew past that. That's photoreal.
Speaker 1:The next one, I think, should be, born identity style shaky cam. You know that? Because I think AI could not do that today.
Speaker 4:I think the Nivex evil should be just like how good the movie is. How well Oh, yeah. True. Like, you know, like how many awards, how many people are watching it. That's the that's evil.
Speaker 4:Like, I think that's the that's our internal goal is basically to make sure that you judge by the quality of the story more than anything else.
Speaker 2:I'm sure last Wednesday whenever the Ghibli meme started ripping, I'm sure some of your investors big and small reached out, hey, did you see this?
Speaker 1:Did you
Speaker 2:see know? I'm curious what if you had to answer that question, like, you know, what what was your immediate reaction to it? It's amazing that you guys so quickly followed it up with something that is, you know Yeah. So you come
Speaker 1:on the show. We ask you the stupid questions, and then you don't have to answer the stupid questions from your investors.
Speaker 4:Yeah. Yeah.
Speaker 1:You just have to
Speaker 2:do one time.
Speaker 1:One the clip.
Speaker 4:So so I I have to be honest. No one reached out, to be honest.
Speaker 1:Like, I
Speaker 4:don't think no like, yeah, it wasn't like a like a thing. I think it was it I think there's a separation between, like, memes and, like, more of the casual, like, fun stuff that I think it's great. You can just kind of, like, have fun. It's like a trend. Mhmm.
Speaker 4:But I think if you're making, like, good professional content, if you make a living out of making content, like, making a meme or, like, one image, it's not gonna get you far. It's like you need a suite of different tools. Yep. And and so I don't think we've I I I saw the trend, and I saw the images, and they think they're great, but I don't think they're no one really thought about us, to be honest.
Speaker 2:Yeah. The thing that the thing that I think was what what part of what made that so viral is that it didn't require sophisticated prompt engineering. You image one line Studio Ghibli. You can
Speaker 1:misspell this stuff Yeah. But like a text, replacement on my iPhone, a shortcut now. I just upload a photo it? S j s g s, and it automatically expands the Studio Ghibli style, and then it just does it.
Speaker 2:Yeah. But but so Yeah. So more importantly, as it as it comes to using runway and and video, how important do you think prompt engineering is in the context of runway long term? Is it I'm assuming it's just not gonna be a thing. You just sort of describe exactly what you're kind of feeling off the cuff and Yeah.
Speaker 2:Create something beautiful. Yeah.
Speaker 4:Exactly. No. I I so prompting is a way of, like, sampling something out of a model, like, basically getting what you need. But there's many other ways of getting what you need with much more control because language doesn't really, like, have all the nuances of, like, describing a composition or the style, the mood, or the feel of something. So the idea, for example, with Gen four is that, I know you saw, like, the demo, but you can combine images of real things.
Speaker 4:You can take a photo of something you've actually, like, have. You can take a color grade and a kind of, like, a a moody scene, and you can take a location. You can you there's no prompting. Just, like, put them in and, like, create, like, the composition that you like. And and you you you can get a much more, like, a specific detail thing rather than just, like, trying to where use the words correctly to, like, get to where you need to go.
Speaker 4:So it really depends on, like, what you need, but I think prompting, I think prompting is overrated. Like, just language is a unique interface, will not get you too far because, like, storytelling and films, particularly in video, is just so hard to just describe with words. You know?
Speaker 2:Yeah. How how how many years away do you think we are from being able to one shot a a movie that could, you know, win, you know, an award winning movie. Right? It feels like so many movies in Hollywood are derivative, hero's journey, it's set of characters Yeah. But somewhat predictable.
Speaker 2:You could imagine that from a storytelling standpoint, a lot of models could already deliver something that's pretty good from a story standpoint. And so to catch up, you need
Speaker 1:the mean, we're hearing, like the GPU cost alone, it would be like hundreds of thousands of dollars right now. Yes Sure. I mean, there's
Speaker 2:But but, you know, if you're a movie theater today, I mean, we we're so we're here in LA. We've been actually touring studio spaces. Almost every single studio space is completely empty because, like, it's just too expensive to film in LA. So I I I can see a world in the future where a big studio is just, like, run does these expensive Yeah. You know, sort of prompts that then they get No.
Speaker 2:No. Totally. They either remix it or whatever. But, you know, I'm curious what your take is.
Speaker 4:Yeah. I mean, if if you look at the the lonely little flame, the shirt I was just mentioning before, that's production value before gen four. We're talking about hundreds of thousands of dollars. That's just a very expensive thing to make. It took us, like, two to three days to make, like, the first rough sketch of that and then, like, another few days to just, get the final comp.
Speaker 4:So you can and by version of one, the whole thing would sound with one person.
Speaker 1:Wow.
Speaker 4:And so I
Speaker 1:I
Speaker 4:think you you are there. You can technically just take that same process, and it's something we're doing already and do it, like, for longer future films. It's more of, like, you're gonna sustain the attention of your viewer, not by the how fancy or how expensive the thing is, like, but just how good the story is. And just iterating on the shots takes you a lot of time. And so I think the issue with the way we've been traditionally making, like, very high end production things is that the budgets have, like, skyrocketed to the point it's unsustainable.
Speaker 4:Like, I mean, to your to your point, like, you're spending hundreds of millions of dollars trying to make something. And then if you need to make something, you're gonna bet for the thing that the safest the safest, which is, like, superheroes and and and franchises that you know will return. Which I think from a from a point, like, a filmmaking perspective has kind of, like, prevented, like, new independent stories from actually, like, being made because it's more much more risky, actually. And I think part of, part of this new wave of models is that it will kind of, like, flip that a little bit, and I know this, like, independent set of people actually don't don't use those studios. It's, use runway and, like, make the films to yourself.
Speaker 4:There's no excuses. Like, you just do it yourself, you know? Yeah.
Speaker 2:You think the big Hollywood studios are reacting quickly enough to the advancements of runway and other, you know, are are they do you feel like they're sort of properly planning around the sort of the biggest change to filmmaking in our lifetimes?
Speaker 4:Yeah. I mean, I I think so. Many are. I mean, Bohrigger said it was the most, important technology of your company, just a couple of days ago. I think many more that we work with are pretty much in that same vein.
Speaker 4:I think some are more advanced than others. I think for a long time, it wasn't clear to many what this meant. And and to be clear, I think that's fair. Because if you look at, like, video generation four years ago, no one took it seriously. Like, no one cared.
Speaker 4:It was so I mean, maybe you were, like, using runway for, like, rotoscoping and green screen, but, like, that was a small amount of people. Right? And I think now I can show you a film that makes you feel something. Yeah. And it was done, like, in two to three days, all generated, and that's when you wake up.
Speaker 4:And I think some have woken up before, but some are still, like, dormant. But I think, yeah, everyone's really paying attention to be
Speaker 1:honest. Can you talk a little bit about just, like, style transfer, animatics, and the importance of, like, generating the first image in something like images in ChatGPT? I could imagine a world where it's a lot easier and maybe even more efficient to block out a story in Minecraft or in Roblox and really direct it and be very, very solid on I kinda program the camera move. I know the shots. I know the layout, but then I just wanna take it to photo real, and that style transfer is what you guys are great at versus I'm gonna be purely prompting and really hands off.
Speaker 1:How do these things evolve? What's most important? Is there an important, like, step function where we work through one to get to the next?
Speaker 4:No. I think you're right. There there's many people who've been using Runway to do exactly what you're saying. You block the scenes by using either, like, three d software or just like props. We have a a way of rendering content using existing videos.
Speaker 4:So I don't know if you guys have seen it, but you you use our performance of yourself. It's like advanced motion tracking, and then that drives the performance of the generation that you're creating. And that's great because it allows you basically to, like you become your storyboard. You are defining the shots in the way you want it. And I think the the essence also is that, once you create it, like, a mood there there's a few for example, it's another mood another short film that we released called The Hurt.
Speaker 4:It's like the story of, like, two guys, like, hiding from each other in, like, this dark moody scene. We start with one image, and then you can use Gen four to kinda position the camera in different parts of the scene. And you kind of like it's interesting because the the the model becomes like a cinematographer. It's kind of helping you understand or provoking provoking you with ideas of how you wanna do it, which is different from how you do filmmaking traditionally because you can't afford to do that in traditional filmmaking. You have a kind of, like, a set needs of shots that you need to make, and it's very expensive to, like, not do those.
Speaker 4:Here, you can just, like, wander around and kind of, like, find your angle. And I think that's also interesting because it changes the nature of how you make things in the first place. It's a much more experimental, like, you're kind of finding ways and you're getting to stories that you never thought you could.
Speaker 2:That that to me is Yep. The most exciting thing because historically, you're a director and you're like, I'm gonna bring, you know, these, you know, superstars out to this like desert and we have one day to get this shot and then we gotta go this other location Yeah. Do this other mean storyboarding's been super You're basically like, you could have a better idea midway through the and not actually be able to do it necessarily without calling the producer and being like, hey, I need another $20,000,000 because
Speaker 4:Yep, exactly. We miss it.
Speaker 2:Like one person sort of deciding in the moment. It's that and if you think about how different startups have been historically where startups are this sort of like daily iteration and you can adapt the strategy and you can adapt the product versus filmmaking, which is like, well, you write the script and, yeah, you can change that along the way and you can change it in post, but then every decision is just so much more expensive.
Speaker 4:Exactly. Yeah. I've been I've been thinking about it as, like, you're paint you're you're playing in a in a jazz band and you're improvising. And so you're you get a shot, you see something, and then you can go anywhere you want. It's like whatever you wanna film and then, like, take it there.
Speaker 4:It's very fun. It's it's something that I haven't filmed for in a in a totally in really a while.
Speaker 1:How do you think about the the the kind of shift in or the ratio or breakdown of creative video content as it relates to fiction versus nonfiction. Like, YouTube and the iPhone has exploded the amount of creativity.
Speaker 2:Yeah.
Speaker 1:And we've gotten hours and hours of, like, nonfiction content, everything from, like, Mr. Beast videos to video essays, histories, podcasts, all this stuff that's nonfiction. Fiction stuff hasn't really taken off on YouTube in the same way. That's still kind of the domain of Hollywood. Of course, Tangerine won Academy Awards.
Speaker 1:It was shot on an iPhone. It took a number of years to get there from, you know, the iPhone being introduced, but it but it did eventually democratize filmmaking to the point where an iPhone filmmaker could win awards. Do you think runway is more of a of a benefit to people that wanna tell fiction stories, or do you think we'll see kind of the same breakdown where there'll just be a ton of nonfiction content that goes through Runway and you're seeing, like, illustrated video essays? Or I can just pull up history of, you know, Yerba Mate, and all of a sudden, I just get this beautiful story that's visually intriguing, but it's still nonfiction.
Speaker 4:I think Renwick is made for stories. That's what the ethos of the company is. And I think fictional or not fictional, like, stories are are just stories. And I think we're humans are, like, obsessed with stories and will consume anything that tells a story. And so I think I think you're right.
Speaker 4:YouTube hasn't been, like, yet good at perhaps, like, triple a content or, like, professional, like, fictional content, and it's better to do this, like, more informal, like, blog type of things because it's just cheaper. Mhmm. But I think this is particularly interesting because, like, what gen models like Gen four do is break that barrier. Now you, anyone, basically, anyone in out there who has a YouTube channel right now can create a type of content that looks like someone made it in a studio with 50, a hundred million dollars. Yeah.
Speaker 4:And I and I think that's the that's, like, the last unlock, I would say, media wise. The first one was, everyone can do, this. Everyone can just, like, tell like, create their own, like, channels and tell their own stories. But then professional grade content has been for the for the last couple of years, the last kind of, like, stage, and it's only been accessible to these very sort of companies. And now it should be everyone.
Speaker 4:It should be basically anyone who has great stories. It's like creative meritocracy. Whoever has the best stories will win.
Speaker 2:What happens to movie stars? Right? You can imagine, early on with some of these AI generated films, Somebody's planning to generate a film using entirely AI. They don't plan to have any on-site shoots or anything like that but they wanna go, they go to Brad Pitt and they say, we're gonna give you $10,000,000 star out this film Brad Pitt, they just completely use his likeness and his voice and whatever. But then over time people start realizing like, hey, it's actually much more valuable if I kind of create my own essentially like IP or own superstars from the ground up because I can instead of paying Brad ten million for one movie, I could invest a lot of money in this sort of yeah.
Speaker 2:I can make my own gigachad. Yeah. And I don't have to pay any of the fees and maybe there's some r and d ish to sort of generate that character. But what happens to our our our stars?
Speaker 4:Yeah. Well, I think it changes that much, to be honest. I think we we have the capacity of doing that for a long time. I mean, animation and, like, CGI and anything that's not, like, live action has we've been able to do that for quite a long time. It's more the cost of it.
Speaker 4:It's really expensive. I think you can still have a space in a world where you're gonna have both. You're gonna have characters and actors performing the way they do, and you can have this new medium. It's a new format. It's like a video game that allows you to create infinite worlds.
Speaker 4:Maybe the two might overlap. You may bring some elements of the real world into this. You may create some elements generate it into and it will swap. I I I don't see them as a replacement. I don't see them as, oh, we're gonna suddenly, like, stop hiring actors.
Speaker 4:Actually, for most of our shots, you actually require actors to do, like, act one or performances that you can transpose into the way you want. And so I think it's more of, like, a change more than, oh, we're gonna suddenly, like, stop doing everything we're doing and and and do this new thing now.
Speaker 2:That makes sense. Do you have any type of sort of, like, long term cost target for a ninety minute movie in four k? Is it something that in in a decade it's a dollar? Or is, you know, how how long
Speaker 4:do we Just compute wise or like
Speaker 2:Yeah. Ignore ignore the sort of like
Speaker 1:The prompting. Yeah. Well, we'll keep we'll keep something free sales
Speaker 2:OpEx of like
Speaker 1:Like, you used to have to pay by the foot for film Yeah. And it was very expensive to get it developed. Now anyone with a phone can record two hundred hours of footage for Yep. You know, a couple hundred dollar used phone.
Speaker 4:So so I think the maybe the ones they need to think about cost is to think also to the point so to understand how, like, the models and the optimization of this model like, progressing, you're gonna get re soon to a point where you can run these models in real time. Mhmm. And so by the time you run them in real time, you're streaming the pixels as you're watching them, interacting with them. Yeah. And so if you do so, then, like, the story, first of all, never ends.
Speaker 4:There's no sixteen, ninety minutes. It could be days that you could just, like, start generating. And it's a cost of inference. It could be just be as cheap as however NVIDIA wants to optimize their, like, GPUs to make their faster for everyone and cheaper for everyone. So I think it's just a couple of pillars if you wanna
Speaker 1:make it. Yeah. It's like a LUT file that you just, like, import and Yeah.
Speaker 4:You got it. And you're just, like, sort of wandering around. It's amazing.
Speaker 1:Well, I mean, what does the business of runway look like at that point? And how how are you thinking about the importance of, like, value accrual in the application layer? Are you thinking you go more b to b and try and get big contracts? You wanna go b to c and just get every consumer on, you know, some, you know, $1,000 a month plan? How are you thinking about pricing and customer base?
Speaker 4:So far for now, our focus is being professionals mostly, making sure that, like, those who make a living out of telling stories can just run away to accelerate, like, their work. Mhmm. I think there's still a a bit of, like, creators and individuals that will, like, start becoming professionals because of this. Like Mhmm. I mean, I've I've I now could do things that will require, like, an army of VFX artists, and there are many other people who can feel the same right now.
Speaker 4:Our plan is mostly to make sure that those who wanna tell something can actually, like, tell a story, and that's a wide spectrum of folks. So we work with, like, landscape, major production studios to, like, independent studios, indie studios, like, filmmakers themselves, just the groups of, like, two, three people making amazing stuff. And then we have a noise for an app, so consumers can also make stuff. I think, like, the the mission of the company is, look. This is the most important technology for, like, art.
Speaker 4:Like, I've I've started working on this because I had the idea that neural network supply to art would, like, eventually become a new form of art, and I wanna be part of that. And I think the consequences of that go beyond just b two b and b two c. It's like everyone out there should be making great stuff.
Speaker 1:Are you optimistic about any of the hardware developments kind of speeding up runway rendering or generation? Obviously, there's, like, new NVIDIA chips coming, but then there's also startups that are focused on transformer models baked into silicon like Etch. There's Cerberus. There's there's Grok, not the a x AI thing, but the the the chip company. And then there's, the deep sea approach, which was like, it seemed like they mostly just worked on algorithmic improvements to speed up inference.
Speaker 1:Where are you most optimistic about getting the next 10 x improvement in your models and your systems?
Speaker 4:I think those are all, like, interesting developments. We've been watching some of them really closely. I think right now, cost is mostly for us at the scale of what the business is and the, like, the research that we do, the main factor. And so if you give me, like, x performance, but it's unproven or, like, I will need to spend, like, six months trying to, like, debug into, like, much performance and whatever, or I already know, that makes it really hard to switch. And so I think it's it's it's cost mostly what cost in the sense of, like, how cheap can I get just, like, my compute and for how long can you, like, guarantee me the the price and and maybe a price better after?
Speaker 4:And then performance improvements, if they're, like, significant, will matter a lot, but I don't think we've seen something so significant yet that will make us, like, either switch or move to other, like, hardware. I do think it's important. Like, I do feel like all of the, chips are are being made to to compete with NVIDIA are are relevant. But, for us, it's still, like, very hard to to see where we can switch, to be honest.
Speaker 1:Makes sense. Last question?
Speaker 2:Or This been great.
Speaker 1:This has been awesome. We'd love to have you back. This is really informative. Of course. Thanks so much.
Speaker 1:I've I've I've I've been a fan for so long. I wanted to talk to you. I'm I'm really glad get this time.
Speaker 4:Thank you for having me.
Speaker 2:You've seen we make we make some pretty cinematic videos. We at some point, we're
Speaker 1:gonna have to want I I I really wanna do the style transfer thing on some of our older content.
Speaker 4:You can. Now you can. Now you can just
Speaker 2:create it.
Speaker 1:Now it's animated. So, yeah, we'll definitely be racking up those runway bills when we get to hitting render it all. I want every piece of b roll we've ever filmed in Studio Ghibli style. I don't care what it costs. I wanna It's worth worth worth it.
Speaker 1:Yeah. It's it's awesome. It's it's such a fun time, and there's so much that you can do with this stuff. So thanks for powering it, and thanks
Speaker 4:for stopping by the show.
Speaker 2:Yeah. And congratulations.
Speaker 1:Definitely. Congratulations on the new model. Perfectly timed. Talk to you soon.
Speaker 5:You guys. Take care.
Speaker 4:Bye. Cool.
Speaker 2:Alright. We can do some timeline. Yep. And then OpenAI dropped some news about a new open weight model with reasoning in the coming months.
Speaker 1:That's fun.
Speaker 2:And, I'm gonna use the restroom.
Speaker 1:Okay. Well, while Jordy is doing that, I wanna take a look at this video from ISAR Aerospace, which is a company I hadn't heard of before, but they had the most cinematic rocket crash I've ever seen, from NASASpaceflight.com. Drone and pad footage from ISAR spare aerospace spectrum launch. You can see it avoided the pad when it came down. Andrew McCallop, friend of the show, says, insane footage quality.
Speaker 1:Sorry about the loss, but serious credit to your media team. Top tier work. I couldn't agree more. It we'll have to pull it up because it's it's the most cinematic just footage ever from this drone. It looks like they color graded it.
Speaker 1:It looks amazing. And and Ashley Vance also chimed in and said and said this site this launch site slaps because it was great. And it's just a beautiful, beautiful website. But speaking of beautiful things, go to bezel. Get bezel.com.
Speaker 1:Shop over 23,500 luxury watches fully authenticated in house by Bezel's team of experts. Get a luxury watch, folks. Anyway, how are we doing on the footage of ISAR Aerospace's Spectrum launch? I'd love to have the founder on the show. We're we're we did defense week or defense day.
Speaker 1:We're thinking about splitting that up because we kinda did manufacturing in there and then also weapons systems. I think we need to break it up further, do space launch day specifically. Maybe we'll do space satellite day specifically. ISAR Aerospace would be would be a fantastic company to include in the, Space Day if we do it because I want to talk to these folks, and I wanna see what cameras are they using to film this stuff because it looks great. And we have a video here, So check it out, folks.
Speaker 1:Is it Isar
Speaker 2:Pandaros I think you gotta pan down more, Ben.
Speaker 1:Oh, here we go.
Speaker 2:Oh, we're good now.
Speaker 1:So look at this. This is so beautiful. I can't get enough of this. Look at this. The rocket takes off.
Speaker 1:Very sad that it didn't make it to orbit, but very cool video. And look at this. The drone just going higher and higher. This is why you gotta watch the video, folks. Sorry for everyone on the RSS feed.
Speaker 1:But the rocket's going up, up, up, and then starts flipping over and winds up crashing. I actually don't know where this was. It looks like it's in Antarctica or something, but I think it might be in Europe. I'm not sure. But beautiful glaciers.
Speaker 2:They gotta get Harry Stebbings over to the launch site, have him figure out what's going on.
Speaker 1:But this this post came look at that. Wow. Big. Like like, look at look at the teal and orange. It's just the classic Hollywood color grade.
Speaker 1:Looks like a transformer movie. Fantastic. And so if you're doing something cool, like, the the the takeaway is just, like, spend the money on the nice camera
Speaker 4:Yep.
Speaker 1:Because you're gonna get a lot of attention, and attention is all you need. Rad backwards. This one, it it was unrelated, but it felt related. And he says, caring is cool. You should care a lot and work really hard.
Speaker 1:That's the coolest stuff ever. And I saw those folks blowing up that rocket, I was like, you know what? It didn't go well, but they care. They care. And I love that.
Speaker 1:Try again. And, should we go to Gokul Rajaram? He says AI shrinks the skill premium. A year ago, Portfolio Co. Would ask me every week on tips to hire senior engineers.
Speaker 1:They found it really hard to attract seasoned builders. For the past couple months, they have stayed conspicuously silent on this topic. Today, I asked them why. Had they finally found their dream senior engineer hire? They said, we don't need senior engineers.
Speaker 1:Our junior and mid level engineers are able to use AI to solve every logic and system design problem. This is what we were talking to Patty about. ChatGPT is his colonel, and Cursor is his army or something like that. I like that model. But, really, it's like, yeah, you know, you have these tools and systems that plug in that help speed up the autocomplete autocomplete and the implementation of your ideas.
Speaker 1:But how do you how do you reality check? And and it's the rubber duck test. Can you explain what you're building, what your architecture is? And the these reasoning models are fantastic at that. So Gokul goes on and says, this will be one of the pervasive eff eff pervasive effects of AI.
Speaker 1:AI will massively erode the premium charge by senior professionals in any white collar role. You might still need the point 01% of talent to build world scale systems, but the top one to 10% are going to see massive competition from the middle 50% as AI uplevels the latter skill group. I don't know if you had to take, Jordy, but I thought it was interesting.
Speaker 2:Yeah. I mean, it's interesting. Last night, I had a question that I wanted to ask a friend of mine who is a a, very much an expert in the subject. Mhmm. And I felt like and and I I reached out to him and said, hey, can you chat about this thing?
Speaker 2:But I also asked the same question to a language model.
Speaker 1:Yeah.
Speaker 2:And like hours before my buddy responded, I got a like satisfactory or potentially even better answer than my friend would have given me. Yep. And I think that that scenario is basically similar to what what Gokul is is describing here. Yeah. Well Which is good.
Speaker 2:It's sort of, I mean, again, it's sort of leveling the playing field in many ways. The internet as a technology leveled the playing field globally where like you didn't have to be in The United States to compete with US workers for jobs. You could be a web developer in UK or India or whatever competing for work in The US. So
Speaker 1:Yeah. I wanna go to this post by Dylan Patel. He says data center CapEx is going to zero. Grok struggling deploying. Anthropic extremely low limits for paid plus cursor.
Speaker 1:Google not offering 2.5 on API. OpenAI not serving o three, struggling to serve four o image. Azure still not serving many models, including o one, o three deep research 4.5. And this is so funny because he's the most respected analyst in, in semiconductors. Dylan Patel, obviously, the the founder of semi analysis.
Speaker 1:But the first line is a joke. And if you don't have a good irony detector, you would just read this completely wrong. Yeah. And, unfortunately, Brad Gerstner chimes in and says, bizarre how the GPU doomers all somehow understand true demand better than the companies who all have massive compute shortage and are melting down their GPUs and scrambling to find supply. And so, I mean, yeah, if you look at the how long it takes to inference some of these models, it's all very slow.
Speaker 1:It does seem like demand is very high. Just anecdotally, I think we saw that everyone is using Yeah. All of these models all the time, and they are intense from a GPU demand perspective. And you can just see
Speaker 2:Gary Basin actually has a good Yep. Point here saying they're looking at two different time scales. The short term squeeze is priced in. Yep. But, like, that capacity for the short term squeeze is in many ways
Speaker 1:Yep.
Speaker 2:Being coming online or or being built out.
Speaker 1:Yeah. There's also this this interesting dynamic where some of the founder mode companies do have an incentive to overstate the the the level to which they are overstrained. You know? It's like the classic stage founders. Like, I can't sleep.
Speaker 1:I my phone's ringing constantly. I'm the most popular startup. We're growing too fast. Like, you kind of know that if you signal that to the market, you're gonna get more term sheets and stuff.
Speaker 2:Yeah.
Speaker 1:But I don't believe Google is in that mindset with, oh, yeah. Like, if we don't offer 2.5 on API, like, the market's gonna see that and and price us higher. It would be very odd if all of these dynamics were, fake. It would be it would be reasonable if it were, like, just one was, oh, that person's kind of overstating or they're a challenger. And so they say, oh, we're so popular.
Speaker 1:But when they're all struggling, clearly, there's there would be an economic incentive for one of them to break rank and say, actually, we have we have plenty of GPUs, so come over to us. We would love to have your business. When they're all struggling, it's definitely a sign that data center CapEx is not going to zero, in fact. And speaking of, four o, images and ChatGPT, there was an interesting post, by Technium saying four o image generation can do calculations during its image generation somehow. This was community noted because, the first LLM prompt so it it's a picture of a calculator, and the prompt is, make an image of a calculator app for the calculation 53 times 88.
Speaker 1:And the result of that calculation is 4,664. And this would be shocking if the LLM had just been able to or the the the the image model had just been able to do this at image generation time. But in fact, it appears that in the prompt reasoning step, before the image is generated, the, there is an internal prompt inter that runs that that basically hydrates the prompt and adds extra context. And so, someone else shared that and said that when you if you give the exact same prompt in the screenshot, you can see that they preprocess the prompt and that that prompt actually, does the math, which is still impressive that it can get it right. Let's not be wrong about that.
Speaker 1:But it is it is interesting. And this is a this is obviously just, like, a huge unlock and and obviously pairing LLMs with image generation. This is the future, and this is, I think, why Yeah. This new image generation, the Studio Ghibliification of ChatGPT, It didn't happen in Dali three or Dali four like a separate app. It just happened in ChatGPT, and it takes advantage of all the other ChatGPT features.
Speaker 1:And, eventually, you're gonna see consolidation so you can upload a PDF, have it search the Internet, do some deep research, generate an image with images in ChatGP. It's all gonna happen in the same app and same window, which is great. Yeah. But but interesting, like, kinda technical deep dive here. Is there anything else you want to run through on the timeline?
Speaker 1:Because we are past 2PM. We've been streaming for
Speaker 2:three hours. I wanted to take an opportunity to talk about another new partner, which some people have called out in the ticker, which is Polymarket.
Speaker 1:Polymarket. That's right.
Speaker 2:And we're very excited to be partnering with Shane and Matt at thank you. Over Polymarket.
Speaker 1:We've very happy to have them as partner. Thank you.
Speaker 2:And the reason that we were so excited to partner with them is that the Polymarket platform is news. Right? Yes. Like, it is a way to understand the world and understand news. So it's a natural fit to integrate into the ticker.
Speaker 2:Yep. It's like everything that's happening in tech, like, here's how to get an understanding of it. We're gonna be updating the ticker, making it
Speaker 1:Yeah, we're going be improving it
Speaker 2:iteratively the next few Basically like improving it day by day like we do. And we're also going to be creating some of our own models.
Speaker 1:Yep.
Speaker 2:And they already just have Markets. Yeah. One of my favorites that's going right now is AI wins IMO gold medal in 2025 at 61%.
Speaker 1:That's really high.
Speaker 2:Which is really high. And what that would mean is that everybody basically gets the average ramp employee
Speaker 1:Yep.
Speaker 2:Or average cognition employee
Speaker 1:Seriously.
Speaker 2:On their team.
Speaker 1:Yeah.
Speaker 2:And so, yeah, there there's a bunch of other stuff. Some of this stuff feels like I probably can't say this. So this is not an ad, but it's just commentary. Some of this stuff feels like free money just because it's like, you know, you look at the probabilities on some of this stuff. Yeah.
Speaker 2:But And I think
Speaker 1:it'll be cool because Polymarket's been known for political prediction markets, but we never talk about politics. And genuinely, this is a political show. And so I'm just excited to build markets around tech predictions. I love, you know, will the next Starship make orbit? How many Starship launches will there be in 2025?
Speaker 1:Like, these are the markets that I've always cared more about, and I'm excited to highlight on this show and kind of there are plenty of other shows that are partnered with Polymarket that can highlight the important Politics. Politics. Politic markets. I want to drive the tech markets forward for sure. So that's what I'm
Speaker 2:excited about. Yeah. There's so much other stuff. I mean, company has the best AI model by April? Google sitting at 51%, which again is not what I think the average person on X would even
Speaker 1:tell dangerous. It's forbidden knowledge to post that.
Speaker 2:It's forbidden knowledge.
Speaker 1:But look at this. I mean, Sundar Pachai posts 2.5 pro shipped today to everyone. Find it in the drop down here, gemini.google.com. Still, he puts up five k likes a million views. Built different.
Speaker 2:Built different.
Speaker 1:He does it. He's so confident. He throws the link in there. He's got the hilarious, image. I'm I'm grow Sundar's growing on me, man.
Speaker 1:I I like the I I like that he's going direct to
Speaker 2:own links. Yeah. I I am the Internet.
Speaker 1:Post this. Whatever. It's also hilarious that it's in this drop down on a subdomain. Like, you're taking it seriously, Sundar. But, like, how seriously are you taking it?
Speaker 1:Should this just be baked into the Google search box?
Speaker 2:Yeah.
Speaker 1:Right? But hopefully soon. And I'm excited. I mean, it seems like they're they they are hearing the message. We need better productization.
Speaker 1:Google, legendary team in terms of AI algorithm development. Attention is all you need. That's a Google paper. They created the transformer. Time to capitalize, guys.
Speaker 1:You got the TPUs. You got the team. You got the distribution. The polymarket
Speaker 2:has a polymarket for Google's Wizz acquisition being blocked before July sitting at a very 6% chance. But
Speaker 1:yeah, this is such one because you normally, if when a big acquisition is going on, you can actually determine you can extract that market from the stock price movement. So, like, you can see how Activision is trading and understand, okay. The market expects that Activision will be acquired. This is what happened with the Twitter acquisition. Like, it went right to 46,000,000,000 or 44,000,000,000 or whatever Elon was gonna pay.
Speaker 1:And then we it would it would drop by a little bit based on the probability that it would not go through. But Wizz is a private company, you don't have that you you don't have that real time data on how the share price is trading, which you can use to address whether or not the deal is gonna go through. Polymarket comes in there. Very cool.
Speaker 2:We got it. We're also sitting at a 25% chance that X relaunches Vine before July.
Speaker 1:Do you think they need to do that? I feel like
Speaker 2:they have the video have their
Speaker 1:Secondary apps are rough. They have stuff it all in one app. And they're they're very good at getting you to open up one video. It autoplays. Then it scrolls you to the next one.
Speaker 1:Pretty soon, it's just all slop, but you're watching it anyway.
Speaker 2:Those Yeah.
Speaker 1:Those unregretted user seconds are dropping to zero. Zero. But we'll see. I mean, I I'd I'd love a Vine comeback. The Vine team, one of the just legendary crew of entrepreneurs.
Speaker 2:Yeah. The other thing that we're going to be paying attention to as April starts is just what's happening with TikTok.
Speaker 1:Oh, yeah.
Speaker 2:Polymarket says today there's a 30% chance that the TikTok acquisition is announced before May.
Speaker 1:Wow. That's pretty high. Yeah.
Speaker 2:I mean, it's high, but that's also what everybody's been orienting around this early April sort of deadline to get a deal done.
Speaker 1:So we'll see. Where would it go? Oracle? Walmart? Ben Thompson
Speaker 2:says Don't.
Speaker 1:Says Walmart should buy them.
Speaker 2:You'll think there's only a 1% chance that MrBeast is the winning bidder. So no faith in the beast man.
Speaker 1:No faith in Jimmy. Oh, well. Well, that's a great show for you guys today. Folks, thanks for watching. Leave us five stars.
Speaker 1:Epic Podcast, Spotify. Stay tuned. Repost all of our clips. Like and fave everything. Do it.
Speaker 1:Do everything. Thanks
Speaker 2:a lot. Good to Last shout out. Yeah. Chris Amadon, we saw you got an eight sleep. We're competing with you now.
Speaker 1:Yep. I wanna see you put
Speaker 2:up some of
Speaker 1:those numbers, Chris.
Speaker 2:Those scores, Chris.
Speaker 1:Let's see it.
Speaker 2:That's it. Thank you, folks.
Speaker 1:Thank you.
Speaker 4:We will
Speaker 2:see you tomorrow. Have a fantastic rest of your day.
Speaker 1:Bye.