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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
Welcome to Technology Brothers, the most profitable podcast in the world. Today, we are breaking down Ross Ulbricht. He was released from prison because he was pardoned by Donald Trump. We will give you the full deep dive on his life and career and the drug in it marketplace he built called the Silk Road.
Speaker 2:Sharing economy startup. Yeah. Another way you could put it that way.
Speaker 1:Yeah. Exactly. Tons to learn from him. Tons to, you know, avoid. Mainly mainly all the crimes.
Speaker 2:Mistakes were made.
Speaker 1:Mistakes were made, but that should be a fun one. We're gonna take you through Ross Ulbricht, get you up to speed on that because he's he's on the wild now.
Speaker 2:Yeah.
Speaker 1:He could be he he could do anything.
Speaker 2:Yeah. I think the part means There was, we weren't involved with the rumor. Yeah. But there
Speaker 1:Had no nothing to do with it.
Speaker 2:May have been there may have been a rumor or some misinformation shared about him, you know, potentially out raising, but it's just a rumor.
Speaker 1:Yeah. You know? And so rumor. Also in, in economy news or fed world, the fed
Speaker 2:We love
Speaker 1:the economy here. The economy. We love business. The Fed had a meeting today. People were hoping for
Speaker 2:A rate cut.
Speaker 1:Rate cut. Ideally, to see how
Speaker 2:So we had the dom ready.
Speaker 1:We had the dom ready.
Speaker 2:We picked it up this morning in preparation for a celebratory moment.
Speaker 1:Yep.
Speaker 2:And we I I feel a little bit rugged by Powell, to be honest.
Speaker 1:Yeah. I mean, I don't think the market was pricing in a a a cut.
Speaker 2:I know.
Speaker 1:But it didn't happen. But there were also rumors. There were rumors
Speaker 2:that Trump was saying smart optimists, you know, get paid.
Speaker 1:Rich. Yeah. Well, maybe next time, but I'm sure there will be a reason to break out the Dom Perignon soon. So
Speaker 2:enjoy. Leave it on the table. It might be this episode. Maybe. You know, you never know.
Speaker 1:Yeah. Surprise.
Speaker 2:Trump Trump might Trump might send override it, send out a post. Hey. Talk to Powell. We fixed the issue. We're going down to to 2%.
Speaker 1:I love that.
Speaker 2:That would, that would help us recover from Monday's, you know
Speaker 1:Monday's bloodbath. Bloodbath. It's terrible. Well, let's go to, SpaceX news. Starlink is coming to iPhones.
Speaker 1:They're teaming up with Apple and T Mobile. There's an article in Bloomberg from Mark Gurman, guy who covers Apple better than anybody in the game. And he says, Apple has been secretly working with SpaceX and T Mobile to add support for the Starlink network and its latest iPhone software, providing an alternative to the company's in house satellite communication service, which I don't know if you've used it. It's simultaneously amazing and absolutely terrible.
Speaker 2:T Mobile?
Speaker 1:No. The the the satellite Internet on your phone. Oh, yeah. If you get caught with no
Speaker 2:Yeah. It uses it during the fires.
Speaker 1:During the fires. Yeah.
Speaker 2:So you have to go outside and
Speaker 1:get It's amazing. It still works, but it's so slow, and
Speaker 2:you can only
Speaker 1:send a few texts.
Speaker 2:Like text based messages.
Speaker 1:It's like being back
Speaker 2:in a plane.
Speaker 1:I don't know. Like, 19.90.
Speaker 2:Being on the the phone, the phone like, planes now, they
Speaker 1:offer the free messaging product, and then they have, like, the
Speaker 2:paid version. And they all come messaging. And it's, like, okay. Well, you can't receive images, but you can send text back and forth.
Speaker 1:And so they've been testing iPhones with Starlink service, in an under rate under the radar move. The smartphone's latest software update released Monday now supports the technology. The tie up comes as a surprise. T Mobile had
Speaker 2:So that's interesting. I didn't realize they fully had the tech it was just their
Speaker 1:The hardware side. Yeah. Just the software.
Speaker 2:Yeah.
Speaker 1:T Mobile has previously only specified Starlink as an option for Samsung phones, such as the z fold and s 24 models. Don't wanna get caught using that one.
Speaker 2:Do we have any listener?
Speaker 1:Yes. We do. We have 1.
Speaker 2:Wait. 1. Lone Ranger. The Lone Ranger. I'm pretty sure.
Speaker 2:I'm
Speaker 1:pretty sure. He he Yeah. He said that. The
Speaker 2:Lone Ranger.
Speaker 1:In a post on x responding to the news, Musk said images, music, and podcasts should be supported by current Starlink technology, and future upgrades will add video support as well. So it does seem like Full
Speaker 2:market for
Speaker 1:the
Speaker 2:daily podcast.
Speaker 1:Yes. Fantastic. You'll be able to listen to this anywhere. I mean, there are some, like, restrictions because you have to be able to see the sky. You can't really use the the satellite Yeah.
Speaker 1:You know, receiver inside. Side. And then also, if you just look at the size of the Starlink dish that I have, I have the mini, and that gets pretty good speeds, but they make a bigger one. As you scale that down, it does seem like you're scaling down the bandwidth and there's some sort of, you know, like, kind of Yeah. Like like power law function there.
Speaker 1:An Apple an Apple spokesperson declined to comment while T Mobile said the test Yeah.
Speaker 2:Mark is really just throwing this news out there without,
Speaker 1:clear so many moles and and sources inside Apple.
Speaker 2:Clearly, they weren't exactly ready to announce all of this, but He
Speaker 1:knows it.
Speaker 2:But it was just a stranger
Speaker 1:to it.
Speaker 2:He just reacts.
Speaker 1:Yeah. Yeah. Yes. Text messages are already going out from T Mobile saying, you're in the T Mobile Starlink beta. You can now stay connected with texting via satellite from virtually anywhere.
Speaker 1:So I think,
Speaker 2:Apple too because because I never followed this closely, but I always imagine that Starlink would eventually come out with their own phone plan and actually threaten the telecom providers. Yep. But maybe telecom companies just find a way, you know, to really
Speaker 1:I mean, I think I think it really comes down to tied
Speaker 2:to service still.
Speaker 1:Yeah. And I think it comes down to, like Reliability. Yeah. Yeah. And using it in buildings.
Speaker 1:Like, you'd be like, why would you pay for that plan if it doesn't work in a building? That'd be weird. And then I guess they could team up and kind of, like, white label, like, you know, like Mint Mobile that, Ryan Reynolds company. Yeah. Yeah.
Speaker 1:Like, that is they don't have their own towers. They piggyback on the they roam on the other towers, and so I'm sure there's some way to build something. But, Apple was originally working with Globalstar to offer satellite features in 2022. There's been speculation over whether it might support competing networks. The day after Apple's 2022 announcement, Musk posted on x that his company had some promising conversations with Apple about Starlink connectivity.
Speaker 1:It's so funny how he just, like, rips, like, these private conversations on x. He's just like, oh, yeah. I just walked out of Apple. Like, we're definitely getting a deal done. Like, yeah.
Speaker 2:Like, it's
Speaker 1:in the bag.
Speaker 2:Do not do that if you're not Elon Musk.
Speaker 1:Yeah. Yeah. Exactly. So when a, when a t mobile phone is in an area without cellular connectivity, devices that are part of the Starlink program will first try to pair with Starlink satellites. Users will also be able to activate texting via the satellite menu for the Globalstar service or or contact emergency services through Apple.
Speaker 1:The initial version of Starlink is exclusively for testing, but Starlink and, with SpaceX and T Mobile have said that they plan to expand into data connections and voice calls in the future. The program is also only available in the US for now, and that contrast with Apple's Globalstar service which works in several countries.
Speaker 2:So when I am getting the opportunity to use satellite on my iPhone, it's still Globalstar. Yes. Exactly. And so Globalstar shares fell because people are thinking, okay. Yep.
Speaker 2:They clearly aren't on the level of Starlink, and Elon's gonna make a bunch of deals happen that directly threaten their business.
Speaker 1:Yeah. And so the, like, the the history of, like, satellite communications for cell phone and Internet, that's been going on for, I mean, 30, 40 years.
Speaker 2:It's also crazy. Think of the cost structure for Starlink Yeah. Because they own the rockets versus Globalstar who presumably has to use Yeah. SpaceX to get their satellites
Speaker 1:Yep.
Speaker 2:Up. That's a great that's not a great competitive dynamic for Global Stars.
Speaker 1:Yeah. A lot of this started with, you know the guy who built the, he owns Madison Square Garden. He built the Sphere in Las Vegas, James Dolan. So James Dolan, at one point, was working with Madison Square Garden on, like, all their sports and entertainment thing. And he had an an, a satellite TV startup that didn't that he was, like, obsessed with.
Speaker 1:He was beefing with his dad about it. It was this crazy story. They wind up selling it, I think, to Dish Networks. And Dish is, the traditional, like, satellite TV provider. So you put the satellite dish on your, on your roof, and then you're getting a constant stream of TV.
Speaker 1:So it's not two way communication. It's not bespoke. So that satellite, all it has to do is just say, okay, there's a 100 channels of data. I just gotta send those out to everyone all the time. Yeah.
Speaker 1:Whereas Starlink's much more complicated because it has to send you your, you know, Instagram your specific Instagram images. What I'm using
Speaker 2:deep sea.
Speaker 1:Yeah. Yeah. It has to send, like, your specific data. Right? Internet's, like, more complicated.
Speaker 1:And so then there were sat sat phones, satellite phones, Yeah. And then Viasat was a company that was, like, really promising for a while putting up big, like, huge, satellites.
Speaker 2:Still does a lot of stuff with the, airlines. Right?
Speaker 1:Yep. Yep. Yeah. Exactly. And so and then, Astronis is also doing geostationary, satellite Internet.
Speaker 1:So they will put one up over Alaska, and then that will just control just Alaska, but it's just one. Starlink has this mesh strategy, so they put up, like, 1,000 and thousands of them. Yeah. And that's, of course, like, driven by the fact that they have, you know, all these rockets that are going up all the time, so they can afford to just put up tons. And then and then they're also in, low earth orbit as opposed to geostationary orbit.
Speaker 1:So they're Yeah. I think, like, it's, like, 3,000 miles instead of 30,000 miles or something like that. So, much closer to the Earth, and that enables lower latency. So instead of like, you could you could sometimes with satellite Internet or satellite TV, you could download, like, a big file, but there would be latency. So you can never do, like, a Zoom call Yeah.
Speaker 1:Or play live games. And that's the advantage of, yeah, of Starlink. And so, currently, if you're using an iPhone with Globalstar, you, you have to point your phone at the sky to find the satellite. Whereas with Starlink, it's designed to work automatically even when the phone is in a customer's pocket, which so maybe it'll work inside to some degree. I'm not exactly sure.
Speaker 1:But both the Starlink and Apple satellites featured our features are designed to work in off the grid areas, such as hiking trails that don't have cellular service. The capabilities can't be used in places where mobile phone where mobile phone network is within reach. So it will just say, okay, we're not even bothering with the satellites if you're connecting to a cell phone tower. And the, and the support for the Apple feature is available on most current iPhone models, and the company plans to bring it to its Ultra smartwatch later this year. That's cool.
Speaker 1:So, like, if you go hiking, you just bring your watch, you don't even need the phone. If something happens, you see a bear, you can still send a text message saying, come rescue me.
Speaker 2:The clock's coming out.
Speaker 1:Yeah. Yeah. Maybe maybe you don't need the StarLink connected Apple Watch. You just need the clock. T Mobile updated its website this week.
Speaker 1:SpaceX requested authority to begin beta testing the service starting Monday. The FCC commission granted SpaceX conditional approval for its satellites to supplement T Mobile cellular network in November. So very exciting to see more Starlink news, more Starlink rolling out. You know, just kinda Turns
Speaker 2:out owning the heavens as SpaceX does is quite valuable.
Speaker 1:It's free real estate.
Speaker 2:Do a lot of stuff with it.
Speaker 1:Yeah. There's a lot of alpha in that. I mean, that's the whole that's the whole, like, mega bull thesis on the The Boring Company. It's just, like, there's only so much land under the earth and, like, if you can justify a way to, like, own it, like, that's extremely valuable. Yeah.
Speaker 1:I love that.
Speaker 2:Yeah. And we've talked before about land yachts and and and and Bean Air's, you know, Bean Air's looking to develop Yeah. Large drills
Speaker 1:Yeah.
Speaker 2:Attached to vehicles that allow them to burrow Yeah. Deep beneath the earth and pop up in Saint Tropez, or Chevelle, Aspen
Speaker 1:Yeah.
Speaker 2:Or Basel.
Speaker 1:You know,
Speaker 2:like, being able to just pop up
Speaker 1:Pop up. Yeah.
Speaker 2:Is is a great feature and something that, is in high demand.
Speaker 1:Fantastic. Well,
Speaker 2:should we talk a little bit about AI? Yeah. We love talking about, organic intelligence and artificial intelligence. Today, we we have an article here. I wanted to cover some news on OpenAI.
Speaker 2:For those that don't know, this is an American company that competes with, a Chinese company called DeepSeek. Do you wanna Yeah.
Speaker 1:People call it, like, the American deep sea,
Speaker 2:basically. It's the American deep sea.
Speaker 1:It's the American.
Speaker 2:Yeah. Very similar to to chat g p t, except it struggles to talk about Tiananmen Square.
Speaker 1:Yeah.
Speaker 2:So
Speaker 1:but, of course, if you've been listening to the show, you've seen you know, you've heard many deep dives. We've probably spent 3 hours talking about deep seek at this point. But Ben Thompson, dropped a new update on Strategery, and we're gonna go through it. So to review his conclusion on OpenAI, he has he has he has some criticism of the company Yeah. Specifically around speed of innovation Yeah.
Speaker 1:Which is which is interesting. And his thesis is basically, like, all the crazy nonprofit effective altruism, all the fear mongering around AI doomerism, that really held us back, and this is what we get for that. Yeah. Meanwhile, like, no one is causing an AI panic over deep sea. People are like, oh, cool.
Speaker 1:They use floating point 8 instead of FP 32. Like, it's like, oh, it's so much more efficient. Like, it's it's gonna be able to, you know
Speaker 2:Yeah.
Speaker 1:Like, review my, you know, homework faster. Yeah. And that's it. It's not the like, everyone's saying it's a incredible jump. No one's saying it's more dangerous now.
Speaker 2:Yeah. And and
Speaker 1:that's just a complete vibe shift from 2 years ago when everything was, I was reading my son, the boy who cried wolf, and Yeah. Nothing like, the AI doomers really need to read that story because they've been like, GPT 1, this is gonna kill us all.
Speaker 2:They prefer
Speaker 1:to die. 2, we're done in 4. GPT 3, it is completely over. It's never been more over. And now we're getting a new a AI model every couple months.
Speaker 1:It's like, yeah. It couldn't tell me, but I'm not gonna listen to people.
Speaker 2:Widely agree that we have AGI. Yeah. And it's ASI that we need. Yeah. Artificial superintelligence.
Speaker 2:Yeah. Which so the goalposts keep moving.
Speaker 1:And so let's read from Ben's, let's read from Ben's, previous day conclusion. He says that leaves America in a choice we have to make. We could, for very logical reasons, double down on defensive measures, like massively expanding the chip ban and imposing a permission based regulatory regime on chips and semiconductor equipment that mirrors the u the EU's approach to tech. Alternatively, we could realize that we have real competition and actually give ourselves permission to compete. Stop wringing our hands.
Speaker 1:Stop campaigning for regulations. Indeed, go the other way and cut out all the cruft in our companies that has nothing to do with winning. If we choose to compete, we can still win. And if we do, we will have a Chinese company to thank. And I like that because he's just so focused on just the, like, go go go, like, competition, and just just actually win there.
Speaker 1:So some folks read this as being simply about government regulations, and I did specifically mention the president Biden executive order on AI, which Trump has already repealed, but that misses the deeper point I was diving at. One of these intense frustrations of the last few years of the AI debate has been the motte and bailey aspect of the safety question. And this is funny because I there's a there's this AI doomer guy on axe who always uses the motte and bailey, like, meme whenever someone's mar arguing with him. He's like, no. That's the motte and bailey, and now Ben Thompson's kinda, like, flipping it around.
Speaker 1:And so, we'll break down, like, what that is because it's actually kind of odd. But, I understand and grant the very real concerns about AI safety, which I think everyone does. There is some safety concerns, but but that's the mott in the safety argument. But the way that AI safety has too often manifested has been through the imposition of various cultural mores that roughly align with San Francisco politics. Ouch.
Speaker 1:That's the Bailey. Indeed, if you look again at the excerpt from OpenAI's GPT 2 announcement that I linked to yesterday, it's right there in the first sentence. Due can due due to concerns about large language models being used to generate deceptive, biased, or abusive language at scale, we are only releasing a much smaller version of GPT 2 along with sampling code. We are not releasing the dataset training code or GPT 2 model weights. So this is this is the moment that OpenAI decided to stop open sourcing everything.
Speaker 1:Yeah. And the reason was, we we believe that our release strategy limits the initial set of organizations who may choose to do this and gives the AI community more time to have a discussion about the implications. So they're they they were worried about generating deceptive, biased, or abusive language. So and then and then Ben says, first off, deceptive, biased, or abusive language is not a human extinction level danger. So you've said, hey.
Speaker 1:We gotta lock this down because it's gonna paperclip us.
Speaker 2:And then we've we've dealt with bots trying to influence public opinion at scale.
Speaker 1:Yeah.
Speaker 2:Yeah. They're not. Are we good, Ben? Yep. Cool.
Speaker 2:Cut for a second. Historically, it hasn't been this intelligent bot who's having a conversation. It's more of these bots that are spamming comments being like Yeah. I think America's bad.
Speaker 1:Yeah. Yeah. Yeah. Yeah. It's literally just copy
Speaker 2:pasting active and biased. Totally. You know, doing the same things. I think one one thing that OpenAI has always balanced is clearly they want to win. Yeah.
Speaker 2:Sam enjoys the competition, but loves winning. He said he he even said on on television, I think about a year ago at this point, nobody could ever compete with us. Like, he's on
Speaker 1:the
Speaker 2:record being, you know, saying I don't know who that is. I I saw it was it was shown on, like, entertainment tonight, like, some random television, but it was from from some event he was at. So he said nobody can compete with us. That's obviously not true. They also have used this pending looming doom.
Speaker 2:We're creating this all power intelligence as a marketing and capital raising strategy to to basically create this aura around the company of we are creating
Speaker 1:super intelligence.
Speaker 2:We're creating this powerful being that's more powerful than humanity, and and, you have to trust us to control it. So, historically, I think some of this stuff due to concerns about, you know, large language models playing into that Yep. That that, narrative, but then also saying, well, we have the power. Yep.
Speaker 1:I do I do wonder, like, there are so many different people around the table. Like, a lot of this language was clearly driven by the previous OpenAI administration, essentially, like the nonprofit board. Like, some of those people were really, really crazy. And and, and it it and for a while, it felt like even though Eleazar Yudakowski wasn't tied to OpenAI, it felt like he was almost like an informal
Speaker 2:Puppet master.
Speaker 1:He felt like he was like an informal spokesperson for a while. And now it's like he's completely out of the picture. But he was like, oh, if if Eliezer says something, like, OpenAI is gonna have to respond because, like, it's it's really critical that we, like, take him seriously. And now it's been kind of, you know, move we've moved past that. And so second, who decides what is deceptive, biased, or abusive?
Speaker 1:And 3rd, whatever your position on these questions, I think we can all agree that a tremendous amount of time and effort has been devoted to arguing about these cultural war issues and implementing one side or the other of them. By the, and by definition, the time has that time has an opportunity cost. More broadly, I think it is completely valid to argue that a lot of time and energy in tech has been devoted to many things other than actual tech. And that's the justification for that lack of focus has been really
Speaker 2:be interested how many tens of 1,000,000 or potentially 100 of 1,000,000 of dollars are spent on their safety team annually. Like, it could easily be somewhere in the range of 50 to a $100,000,000 that's just being spent on people that are a part of the safety apparatus, which Ben is basically putting in the Yeah. Culture war bucket. Yeah. Like, almost classifying them as d like, making them like a DEI or
Speaker 1:Yeah. What's interesting is, like so he goes on to talk about the o one chain of thought and how they when they launched o one in in comparison to r one, r one tells you everything it's thinking and just dumps it out, and it's open source. So even if it didn't, you could still see every single token that it's thinking about, and that's turned out to be a great UI pattern. We've talked about this. It's like Yeah.
Speaker 1:It's just really reassuring to the user. But, when OpenAI launched o one, they said they believe that a hidden chain of thought presents a unique opportunity for monitoring model models. Assuming it's faithful and legible, the hidden chain of thought allows us to read the mind of the model and understand its thought process for and and this was the thing where I went to o one, asked it to summarize a book, and one of the hidden chain of thoughts sections was copyright infringement. So it it thought internally about, like, is it okay for me to share the contents of this book? Cool.
Speaker 1:And it decided, yes. And and so there's
Speaker 2:little bit of a bad boy. Like,
Speaker 1:There's that. Ross. Yeah. And then there's also the fact that, so they they were also thinking about, hiding the chain of thoughts so that people couldn't steal it and use it to train their model, basically. And and if they have some interesting thing in there, they can kinda tuck that behind the scenes and just give you a better answer.
Speaker 1:But this exposed chain of thought, from r one is it has clearly won out on the day, and I think we'll see another level of shit. Yeah. Users like it.
Speaker 2:That was the the the only UI change Yep. That people cared about and talked about with the deep seek long Yep. Launch was that exposed chain of thought.
Speaker 1:Everything was either a copy, like, even even just the fact that you have, like, the chats on the side, like, where the buttons are laid out is a verbatim copy of chat gpt. Yeah. Many of the features are Yeah.
Speaker 2:The way the API works.
Speaker 1:Many of them are are actually degraded features, like, you can't you can't click a button just to talk to it. There's no voice mode at all. It doesn't
Speaker 2:Yeah.
Speaker 1:Have a lot of features yet. But exposed chain of thought is, like, the fundamental UI pattern breakthrough. And so exposed chain of thought teaches users how to do better prompting because they can see exactly where the I AI gets confused. It increases trust in the model because you gain an understanding of how it's arriving at the answer, and it's just cool and endearing. One one thing that was interesting with the normie discovery of r one is how delightful they found the in the experience.
Speaker 1:And so, Ben understands OpenAI's competitive concerns, but the existence of r one has shown that locking down chain of thought perhaps didn't matter so much. More generally, the consideration of competitive concerns gets back to my overall critique that the US approach to competition is too rooted in stopping and blocking would be competitors instead of out innovating them.
Speaker 2:Yeah.
Speaker 1:And this was the thing where, like, remember when we went back to that Ilya working on a star, and Yeah. The framing around that was absolute panic. I remember there were fake news articles about, OpenAI. This was almost 2 years ago, we said. Right?
Speaker 1:It was a year year and a half ago or maybe a year and 3 months ago. And they said, a star is so good. It it solved every foundational, like, math problem, and it also broke encryption.
Speaker 2:Yeah.
Speaker 1:And so they were like, they have an AI model that can break encryption. So they're just gonna, like, you know, Bitcoin should go to 0 because they broke the encryption. And it was, like, obviously not true, but people were just so insane about it. And and internally, it seemed like a lot of people were maybe just using it for internal politics and, like, you know, oh, is this dangerous? Like, why are we moving so fast?
Speaker 1:The nonprofit folks having a big problem with it. And then o one just throws or or r one just comes out and throws it out there, and it's, like, yeah. It's basically fine. Yeah. Very funny.
Speaker 2:Yeah. It's kinda it's kinda the, the most savage founders that I know will when they're fundraising, they'll take a PDF export of their deck, and they'll share it with anybody that's, like, remotely Yep. Interested in what they're doing or relevant in some way. And then the the the founders that are sort of afraid of competition, you know, kind of lock their decks down. They put emails, you know, authentication and passwords on their deck, and then they usually end up just, like, not being the actual, like, winner in the category.
Speaker 2:Yep. And so it's the same thing here where we should just be really focused on
Speaker 1:Innovation.
Speaker 2:Winning, innovation
Speaker 1:Yep.
Speaker 2:Being at the edge. Yep. Understanding that people are gonna reverse engineer Yeah. Everything good that gets done in the world. That's been the case for every technology.
Speaker 2:Yeah. And things will get copied, one way or another.
Speaker 1:And this was kind of the the weird critique that I saw once the Sam Altman, like, haters got really emboldened. They would make the claim that Sam Altman is, like, nontechnical and has never done anything good and is not responsible for any innovation in AI. Like, the transformer was invented at Google. He didn't invent the transformer. He just, like, popularized it.
Speaker 1:But then simultaneously, they'll argue that him, the the quote, the OpenAI board that criticized Sam for launching chat gpt too quickly without informing the board. Do you remember this whole thing? It was like it was like as evidence of Sam, like, moving recklessly with regard to AI safety, he just put out he just tweeted out chat gpt one day. And it's like, well, which is it? Like, he can't be both.
Speaker 1:He can't both have no impact and also create the most dominant product and drive it forward and actually get it out in
Speaker 2:the If you're thinking about OpenAI as a business Yeah. Him tweeting it out and getting to a 100,000,000 users in in Haver was weeks.
Speaker 1:Fantastic.
Speaker 2:It's it's, you know, clearly was the right decision to just go. Yeah. If you're thinking about it from a nonprofit safety org lens Yep.
Speaker 1:You should have
Speaker 2:waited a year. You should have tested more. Yeah. Should have put more guardrails up. Yep.
Speaker 2:Should have rolled it out slowly. Yeah. There's a number of things that
Speaker 1:Yeah. And so I kind of see it as as, like, there is a world where Sam was fighting, like, an internal like, the the nonprofit structure culture war, like, a longhouse type environment that was saying, like, no. Don't release products. Don't move fast. Don't innovate.
Speaker 1:Don't do anything that could be risky because they're so terrified of what they're building. Yeah. And and he's looking at it, and he's like, actually, this is fine. It's chatbot. Let's just get it out there and see what what happens.
Speaker 1:And and that was the right decision, but there's still, like, there's still that that that impulse internally to say, hey. Maybe we should lock this down a little bit more. And so, there's an interesting, discussion right now. Is this a Sputnik moment or a Google moment? And so, Ishan Wang, who is, I think, the CEO of Reddit, says Sputnik showed that the Soviets could do something the US couldn't, a new fearsome power.
Speaker 1:They didn't subsequently publish all the technical details and half the blueprints. It they only showed that it could be done. With deep seek, if I recall correctly, a lab in Berkeley read their paper and duplicated the claimed results on a small scale within a day. That's why I say this is like the Google moment in 2004. Google filed its s one in 2004 and revealed to the world that they had built the largest supercomputer cluster by using distributed algorithms to network together commodity computers at the best performance per dollar on the cost curve.
Speaker 1:And famously, Google's, was massively profitable when they went when they went public. And and every VC is, like, why can't we have more Googles? Because the financials were so fantastic. This was in contrast to every other tech company of the day during the dotcomboom, who at that point just bought what were essentially larger and larger mainframes, always at the most expensive leading edge of the cost curve. And so Ben says it's hard to overstate what a favor deep seek did to basically everyone by outsource by open sourcing their model and explaining exactly how they accomplished what they did.
Speaker 1:They could have, and from a geopolitical perspective, arguably should have kept all their progress a secret even as China built drastically more efficient AI infrastructure.
Speaker 2:You know the narrative that they are a hedge fund. This was a side project. Yeah. And so they just released it short opened a massive short against
Speaker 1:That's a fun one. Yeah.
Speaker 2:And then made you know, they could have made how many tens of 1,000,000,000 of dollars off of that short. Right?
Speaker 1:There's so many theories here.
Speaker 2:Like, it is a fun theory.
Speaker 1:Yeah.
Speaker 2:And there is a world where that was exactly the strategy. Do they were building models internally
Speaker 1:Yeah.
Speaker 2:To run their investing. And then they realized, hey, we can train a model Yeah. And we can throw up a a clone of chat gpt. Yep. And if we pay to get it number 1 in the app store
Speaker 1:Yep.
Speaker 2:We can tank the markets on Monday and, like, get you know, make, like, an entire career's worth of,
Speaker 1:It's definitely a tinfoil hat theory, but I I but I'm interested. I'm listening.
Speaker 2:Yeah. Yeah.
Speaker 1:I'm listening. Yeah. Yeah. I'm not saying it.
Speaker 2:I'm not saying it.
Speaker 1:I mean, Palmer Palmer just cited that in the post that we'll go through later, and, and it's not as crazy as it sounds. There were some people pushing back, and he had some very good responses to those things. Yeah. So, then he moves to a tweet from Rune who says, this is not the right lesson. There is an opportunity cost to research your time and there.
Speaker 1:And if they're spending it micro optimizing PTX to make best the best of limited comms, like the memory communication bandwidth, that's something else they weren't doing. Nerfing some aspect of the hardware is never a benefit. The most danger and then Ben says, the most dangerous lure about thinking in terms of compare comparative advantage is how time and learning curves lead you to consequences that you never considered when you made the decision. I wrote about this exactly last year in A Chance to Build. I started the post by describing how US semiconductor companies kicked off outsourcing to Asia and tied that to the fact that Apple can't make an iPhone in the US.
Speaker 1:And so Steve Jobs famously said, you know, it's not a it's not even a matter of price. It's just there are not 30,000 manufacturing engineers in the United States. There are not 30,000 manufacturing engineering jobs to be filled. This is because the structure of the world economy, choices made starting with Bretton Woods in particular and cemented by the removal of tariffs over time made them non viable. And so, connect us to Google.
Speaker 1:What if Google had taken Rune's advice and not wasted time, what not wasted the time of valuable researchers in transforming how data centers are built? Perhaps they could have waited until Alibaba did it a decade later and rented capacity. And in the meantime, they would have been as far smaller and less significant company specifically, and the entire US tech industry would have been similarly stunted generally. To be fair to Roone, he does seem to be talking narrowly about the specific optimizations that DeepSeq made to overcome the h eight hundred's nerfed memory bandwidth, but I think the critique holds more generally. US tech companies, including OpenAI, have clearly in retrospect been NVIDIA's willing suckers happy to pay for more capacity instead of wringing out their own.
Speaker 1:How many years would it have taken them to discover business break this?
Speaker 2:This is a classic if you're trying to scale anything really quickly, do anything really fast, you just end up paying more for it. So you hire somebody and you just say, yeah. We'll pay you, you know, $20,000 a year more than we budgeted for the role because we need the role, or you're trying to buy billboards quickly and you and you say, yeah. We're gonna pay 30% premium, but we wanna launch this now because there's this competitive pressure. So what these US firms have been doing is not exactly out of the ordinary.
Speaker 2:It's just the nature of trying to do things fast as you focused on you just focus on speed versus efficiency and cost.
Speaker 1:Yep. Yep. And so he closes talking about aggregation theory. Says, on the flip side, non reasoning LLMs are still great at producing content, and they also get smaller by distilling the output of reasoning models. One of the big r one takeaways is that you can infuse reasoning into normal LLMs.
Speaker 1:More than that though, you can also use them to generate massive amounts of synthetic data that simply teach the normal LLMs the answer to an effectively infinite number of questions. And of course, reasoning could end up simply being effectively free. One announcement that I should have added to yesterday's post was Google's announcement of Gemini 2 point o Flash Thinking. That it appears to be competitive with r one. The China is crushing US rhetoric today, forgets about Gemini 2 point o flash thinking, likely cheaper, longer context, and better on reasoning.
Speaker 1:We're still early in the AI race. So this is, like, completely missed. Yeah. But, we don't know the prices yet.
Speaker 2:Believe that Google owns search and YouTube, and they basically have every mainstream media company by the by the ball. By the balls? Yeah. And they can't even get news out? No.
Speaker 1:It it is it is crazy. Their product sense is just so bad, and they have this whole problem
Speaker 2:with marketing
Speaker 1:sense now. Now. It's like, is it Gemini or is it Bard or they've been renaming models left and right? And it's clearly they're shipping their org chart because they had they had Google Brain and then DeepMind, and they finally merged them. But they're still just like like, I know what Google is.
Speaker 1:Google is a search engine. I don't know what I know what ChatGPT is. ChatGPT is a text is a chatbot. Like, Google Gemini 2 point o Flash thinking, like, what how do I even access that? I tried to get Gemini set up.
Speaker 1:I finally figured it out.
Speaker 2:Sounds like an internal project.
Speaker 1:I went to Gemini, and then I had upgrade to Gemini advanced, and then I got access to the 1.5 model. But I was even asking the model, like, what are your capabilities? And it didn't know. Like, it was, like, not telling me, like, how to do it.
Speaker 2:That should be one of the a new benchmark for models. You should be all day.
Speaker 1:What's your context window? How like, what version do I have? How do I upgrade?
Speaker 2:You're you're interviewing for a role and somebody asks, so so what are you good at? What do you do? You don't have a good answer for it? That's kind of a tough sell.
Speaker 1:Yeah. And so Google is a company that actually cares about and has invested in infrastructure and perhaps doesn't need this doesn't see the need for software type of margins, OpenAI and Anthropic have allegedly been earning on their API. So I wouldn't be surprised if they are very competitive. Of course, they're not open source. But again, r one is I can get all the thinking I want locally for free.
Speaker 1:This isn't necessarily dispositive in terms of the long term prospects for aggregation theory, but given that the entire history of technology has been defined by processing speed simultaneously increasing even as it decreases in price, the burden of proof is probably on those who say that zero marginal costs are an aberration. And so he's saying that, like, in the long term, all of these models will be optimized to the point where there's 0 marginal cost.
Speaker 2:Yeah.
Speaker 1:And at that point, being the entry point and being able to tax that is
Speaker 2:Yeah.
Speaker 1:Really valuable. And so there's a couple posts that we'll go into during the timeline that say, oh, this is massively bullish for Apple. Yeah. Because, you know, all of a sudden the inference gets super cheap, gets much better, can be done on the edge, baked down. They don't need to mess around with any of the, the the the actual training or inference themselves.
Speaker 1:They can just throw it on the phone, and it's there, and it's great. Yeah. And, and and same with Google and and Facebook. They're saying it's really good for Facebook because they can just chuck this in, and they don't need to worry about, you know, playing the model race. Yeah.
Speaker 1:But fascinating story. Continues to evolve.
Speaker 2:Ben Thompson staying competitive. Goated. Goated.
Speaker 1:Goated. Let's move on to Ross Ulbricht and the story of the Silk Road.
Speaker 2:We we've had a lot of laughs.
Speaker 1:Oh, yeah.
Speaker 2:Obviously, it's a dark story in many ways. Yep. There's sort of this bright spot now with him being pardoned. We're not we'll wait till the end to to talk about whether or not we agree with that decision. Not that it's on our, you know, not that we'd like to comment on politics.
Speaker 2:But, but, yeah, there's there's so many just insane aspects of of this story.
Speaker 1:Yeah.
Speaker 2:And I think that as we looked into it, we realized that so many people had talked about the history and the sort of crime story around Silk Road because it's so fascinating. It's this Internet narco trafficker meets hacker meets Anon Yep. Who, you know, was an Eagle Scout. Right? So it's just, like, wild story
Speaker 1:Yeah. We should
Speaker 2:an amazing marketer
Speaker 1:Oh, yeah.
Speaker 2:Even even after getting caught.
Speaker 1:Even after, he still has a ton of fans. I don't know if, Ben, you can pull this, this photo up, but he was an Eagle scout. I was an Eagle scout. Do you know that?
Speaker 2:I didn't know that. My my dad
Speaker 1:was an Eagle scout. And I remember when I was in, the Boy Scouts, they would tell everyone, no Eagle scout has ever been convicted of a felony or something like that. It was, like, clearly wrong,
Speaker 2:but it was
Speaker 1:just to, like, put you in the mindset of, like, well, I don't wanna be the first one, so I can't be a criminal. Yeah. And it was very effective.
Speaker 2:The boy scouts and the girl scouts fell off massively.
Speaker 1:There are tons of, like, culture war issues there.
Speaker 2:Yeah. Yeah. And and real, you know, issues around Criminal stuff. Sex crimes and stuff like that. But, anyway, so
Speaker 1:But he has a lot of fans and and dripped out Technology Brothers, like, really, really likes him and has posted him multiple times. There's another photo of him. Yeah. We'll put that up on the screen, of him. And
Speaker 2:Without a doubt, he's he's benefited massively from his, you know Aesthetics. Aesthetics. Yeah. The physiognies strong. Why it's underpriced to get diced.
Speaker 1:I don't know that he's diced. I don't know that he's actually lifting.
Speaker 2:But a lot of people say he looks healthier than Brian Johnson after 11 years in prison eating prison slop.
Speaker 1:Yeah. What's the secret?
Speaker 2:What's the secret?
Speaker 1:Yeah.
Speaker 2:We'll have to ask him.
Speaker 1:He does look young, and he certainly played into that, and we'll go into kind of the timeline here. Because a lot of
Speaker 2:people think,
Speaker 1:oh, yeah. He was 17 when he did this. He Wrong.
Speaker 2:He yeah. The other aspect that we'll talk about throughout the story is is how good of a marketer he was. And he and his family post incarceration on his Carceral journey. Yeah. They were able to spin the story like he was, like, some 18 year old kid, you know, high schooler almost.
Speaker 2:What you'll find out is that he was, you know, 11 years ago, he was when he was, put into prison, he was 29 years old. Yeah. So he wasn't, you know, he wasn't a kid. No.
Speaker 1:Not at all. He was born in 1984.
Speaker 2:And he was very aware of his actions. So just to get into kind of, like, the high level founder mode elements of the story, and then we'll get into the timeline. He's a self taught developer, first time CEO, completely bootstrapped the company, went from 0 to 1,200,000,000 in sales in less than 3 years, personally netted over 80,000,000 in fees off the marketplace with a very low take rate, which we'll also get into, operating a fully remote global and basically anonymous team where he was the only one that knew the real identity of his employees. He would require them to to show ID, leverage novel payment rails using Bitcoin and maintain this sort of missionary sort of mode to building the company that was basically almost like a religious pursuit for him because of his libertarian beliefs, which we also get into. So
Speaker 1:And so the backbone of our research was mostly Nick Bilton's American Kingpin, which is a great book. I highly recommend it. It reads like you know, it's a page turner. It's like a total thriller. And so, Bilton kicks it off by taking you back to the beginning of Ross Ulbrich's story, born in Austin, Texas, March 27, 1984.
Speaker 1:Supportive middle class house household. Nothing crazy going on. Eagle Scout, as we mentioned. Friends and family described him as polite, gentile, and unassuming. Ulbricht developed an interest in science, tinkering with computers.
Speaker 1:He goes to University of Texas at Dallas on scholarship, initially studying physics, then he pursues a master's degree in material science at Penn State. And he basically gets obsessed with libertarian economic theory, especially Yeah. Well Mon Mises Mon Mises, Murray Rothbard, Milton Friedman.
Speaker 2:Yeah. And so while he's there so so one thing to note, he's not studying computer science. He's not a programmer No. At all at this point. He's interested in technology, but he's spending his time going and debating Yep.
Speaker 2:Libertarian beliefs, arguing for things like the legalization of drugs. His big his big point, you know, the the high level sort of his high level view is that government should not have any decision making power over individuals, and individuals should be able to do whatever they want. And he goes on to do Yep. Whatever he wants Yeah. For the you know, basically
Speaker 1:Have you seen that post that you go on banger archive, but it's like, women will say they want a man who reads, but every man who reads ascribes to some hoe scaring Extremest. Extremist political belief. And it's like, yeah, he got into reading and started reading, like, mezis and Rothbard and, like, these, like, kinda crazy philosophers. And he really
Speaker 2:Speaking of lu Ludwig von Mises, there's, this this UFC fighter Money Moicano. Yeah. Oh, yeah. Done this, post fight speech where
Speaker 1:he just
Speaker 2:is, like, hammering against the government. Yeah. Like,
Speaker 1:And, I mean, obviously, like, there's a lot of good good ideas in libertarianism, but it clearly like, Ross took it to such an extreme that he was using it to justify anything. Yeah. And and clearly bending his like, libertarians love to they, you know, they have a hammer and everything looks like a nail. And so they wind up not seeing any externalities, just viewing every little minor interaction as, like, oh, well, this fits with my libertarian ideology. So therefore, it's justified.
Speaker 1:Yeah. And and he really, really twisted the ideology in, in, like, a much more negative way than many libertarians who are just arguing for, like, slightly smaller government or, like, you know, slightly, you know, lower taxes or something or more efficiency in the government. Like, you could look at Doge as, like, a libertarian project in some ways, but it's much different than yeah. We should legalize guns and drugs and all this crazy stuff, which is, like, where he wound up. And so
Speaker 2:Yeah. Not just legalizing it, but brokering transactions at scale for a number of Yeah. Illicit goods.
Speaker 1:He dabbled in entrepreneurial ventures in after graduate school. 1 of these involved day trading. Another was an ebook enterprise. None proved lucrative or fulfilling.
Speaker 2:So so so to be clear, he was trying to do day trading, realized it wasn't very profitable. He also, he he was a part of this someone else's sort of nonprofit called Good Wagon Books, which
Speaker 1:Oh, yeah.
Speaker 2:They would go around to houses, collect sort of old books. If people didn't want, they would sell the ones online that they could, and they would donate to prisons the ones that they couldn't sell.
Speaker 1:Wow.
Speaker 2:And so he was probably Foreshadowing. Foreshadowing donating books to himself in his later years.
Speaker 1:Setting himself up.
Speaker 2:And, yeah. One one other thing about this time that I thought was interesting, while at Penn State, little, like, odd jobs he was working, he saved up enough to buy a rental house, and he later, shared that that he found it so frustrating having college students as as, you know, degenerate college students as tenants that he that he sold it. Yeah. And he actually used that money to kind of get self care off
Speaker 1:the ground
Speaker 2:because he didn't have an income for some amount of time.
Speaker 1:Yeah. So he becomes fascinated with Tor, the onion router, which is the the portal to the dark web.
Speaker 2:The timing here is so key. Right? Because, like, if he had had all these ideas 5 years before Impossible. To do it then, wouldn't have had Bitcoin.
Speaker 1:Yep.
Speaker 2:I don't know where Tor was in the development, but it wasn't. All this stuff was, like, this perfect convergence.
Speaker 1:Totally. And Bitcoin, obviously, coming up at this time. Few people outside of cryptography circles were paying attention to Bitcoin, but Ross saw it as a tool for circumventing government oversight. He once famously stated, I want to use economic theory as a me as a means to abolish the use of coercion. This quote illustrates Ross's self styled mission of empowering voluntary exchanges.
Speaker 1:And, he Yeah. It's also very funny throughout this because he's not, like, super technical. There's a lot of times when clearly you can tell that he's he's bought, you know, like, oh, nothing can go wrong. It's decentralized. Like, oh, Bitcoin.
Speaker 1:It's anonymous. And it's like, it's not it's actually not anonymous, like, in many ways. And there's always ways around this stuff to
Speaker 2:do stuff. To,
Speaker 1:but see
Speaker 2:What's the word for it? You don't have to KYC. Yeah. But but it's it's a public ledger.
Speaker 1:Exactly. Exactly. So it's very, very traceable. And, and we'll go into this later. But, the they're, like, tracking the Bitcoin movements actually got a lot more people caught because it was all trackable.
Speaker 1:And so
Speaker 2:And there's still companies today, like Chainalysis, that leverage public blockchains to track down criminals at scale.
Speaker 1:Yeah. And so, combining Tor with Bitcoin and his ideological calling, he sets up the first version of the Silk Road. By early 2011, Silk Road was online, though still small, and his site allowed buyers and sellers to communicate post product listing and leave reviews. Is basically an eBay account.
Speaker 2:And so and so just going back a little bit, taking one quick break. So he to to anytime you're starting a marketplace. So the fact that he took this marketplace from 0 to 1,200,000,000 in volume Yep. In 3 years, Bootstrap is insane. Yep.
Speaker 2:Very, very, very few companies do that. Yep. He in order to get this started, marketplaces have this chicken and egg problem where what what comes first, the supply, you know, you need supply in order to have demand on the marketplace. And so he actually, starts growing mushrooms in order to create the supply Yep. To have supply on on on the marketplace.
Speaker 2:So he's growing mushrooms. He's building the site. Yep. And then once he's at a point where he's ready and he has a girlfriend at this time who's, like, sounds like a very sweet girl, and they're very, like, in love at the time. Yep.
Speaker 2:And he, at one point, like, takes his girlfriend, like, blindfolded out to, like, see the mushrooms and, like Yeah. Is, like, all proud of it, like, takes her out to this, like, damp kind of field or whatever, and there's just and so he's he's, he's this is, like, the very beginning of him actually. So he had the intention to commit crimes. Yeah. And he's very aware that it's what he's doing is illegal, and he specifically chose psilocybin mushrooms because he felt, like, the the penalty for that would be less severe than than starting by selling harder drugs or even something like marijuana.
Speaker 1:Yeah. But I thought the amount that he was growing was it was it wasn't like he was growing, like, oh, he's got, like, one little plant. It was, like, a whole roomful, and the punishment for that if he had gotten caught would have been years years in prison just for
Speaker 2:that. Yeah. Yeah.
Speaker 1:Which is, like, still kinda crazy.
Speaker 2:And one thing is in order to kind of kick start the first initial sales, he, he went on a site that would talk a for a public forum Yep. That would talk about mushrooms. Yep. He made a post and he was very sort of this was smart at the time if you weren't committing crimes, but he he he posted something under this username. I forget what the username was called.
Speaker 1:Was it Altoid?
Speaker 2:It was Altoid. Yeah. And he was like, hey, has anybody tried this site?
Speaker 1:Yeah. It looks pretty cool.
Speaker 2:Looks cool. Yep. And he used that to sort of catalyze some traction because he knew he was holding supplies Yep. That he was ready to sell.
Speaker 1:Yep. And yeah.
Speaker 2:And so and we'll get to this later, but that would ended up being part of his downfall because he had used his real email to create the altoid account.
Speaker 1:Yep.
Speaker 2:And, he had gone back at one point and changed the email, but there was a record in the database Yep. That it had rossolbricht@gmail.com
Speaker 1:Yeah.
Speaker 2:Tied to that username. So that was one of the ways that they sort
Speaker 1:of Yeah.
Speaker 2:Ended up,
Speaker 1:Yeah. Yeah. He's one of those things where he's, oh, everything's anonymized and decentralized. It's like, you left paper trail all over the place, bro. Like, you were not that good at your OPSEC.
Speaker 1:Yeah. And so it's fascinating how fast this took off. So he's thinking about it in late 2010. In January of 2020, 2011, he launches the Silk Road code named Underground Brokers in Austin, Texas, aiming to create a free market website where users can buy anything anonymously. And by June, just 6 months later, senator Chuck Schumer denounces Silk Road in Washington, DC, prompting heightened media coverage that forces across
Speaker 2:the voter. They also got a big Gawker article, which I think was right around this time.
Speaker 1:Yeah. It's all happening right around the same time.
Speaker 2:Schumer. So a reporter, who is at Gawker and Gawker's no longer with us
Speaker 1:Yeah.
Speaker 2:Due to, the actions of, some powerful people in tech. But, this Gawker article hears about Silk Road, gets on it, and is browsing around, ends up writing this whole piece. Yep. Ross talks to them
Speaker 1:Yeah.
Speaker 2:And says, please don't write this piece. That usually doesn't work with journalists. They know they're onto something. They know they're They end up publishing this. And and, there was even a while that that journalist was suspected of starting Silk Road because it was such a big marketing moment Yeah.
Speaker 2:That people were like, did he just, like
Speaker 1:Start this? That's hilarious.
Speaker 2:Like, use this? And and they'd he'd written about
Speaker 1:Yeah.
Speaker 2:Some other topics.
Speaker 1:There were And that
Speaker 2:was like Yeah. Ross really felt like it was too early for it to go that public.
Speaker 1:Yeah.
Speaker 2:Like, they were starting to do sales in a meaningful way, but at the same time, he was a self taught developer. And so he struggled with, hacks and stuff like that all the time. And so he would notice every now and then he'd be like, what what the heck? Like, my my wallet's getting drained. And so he'd be freaking out.
Speaker 2:The Bitcoin at the time to be clear with who I don't we should look up on public what the actual price was, but it would be, like, I'm sure it was, like, a few dollars It
Speaker 1:was a few dollars.
Speaker 2:Yeah. Bitcoin. And so you'd be noticing, like, oh, my wallet's getting drained. It wasn't that damaging.
Speaker 1:Yep.
Speaker 2:But he kept having these sort of, small errors because he was not a super sophisticated. He was, like, a hacker type builder, but not a security engineer. And so he kept constantly getting kind of lightly scammed.
Speaker 1:Yeah.
Speaker 2:And so this launch, like, you can imagine, he's just in Austin building this thing by himself. He had a couple engineers that would help him that knew they were committing crimes too, but they were they were on board with it. Yeah. And then going 0 to 60 in 6 months, 0 to a 100, 0 to a 1000. Right?
Speaker 2:Like, he's getting a senator in Washington, DC that's denouncing you is, the pressure was on right away.
Speaker 1:Yeah. Usually, these these, like, you know, government federal level pressures take, like, years until, like, the first, like, oh, is Facebook, you know, leading to misinformation that took, like, you know, years years or even, like, the JEWEL
Speaker 2:Probably almost 10 years.
Speaker 1:Yeah. The JEWEL hearings were probably I mean, that company was started, like, 10 years before,
Speaker 2:the And they were publicly marketed the whole time. Yeah. Totally. Totally. Was was had the Gawker article and some other coverage, but it wasn't
Speaker 1:Yeah. I mean, Chuck Schumer, had the ZYN the ZYN press conference in 2024. ZYN launched in America 2014. And so Yeah. The, the the the dark web, Amazon, the Silk Road really, like, just took off so fast.
Speaker 1:6 6 months.
Speaker 2:And to be clear, the reasons why it it was in many ways a much better looking purely at the user experience.
Speaker 1:Yeah. If
Speaker 2:somebody that's buying drugs in in 2011 while this starts, they can go and find a dealer on the street or hit up some random sketchy person on Facebook. Yep. And there's all these ways to have a transaction that don't have a bunch of reviews. Right? So you're kind of trusting the dealer, which is like people sell they sell drugs.
Speaker 2:I can imagine you wouldn't wanna, like, trust them with your life. And so the experience at the time was from a purely, like, a product experience, to be able to go on a site to see vetted sellers that have a selling history Yeah. And activity on the forum and reviews. He really made the experience of buying these narcotics much better. Yeah.
Speaker 2:And pea and people were allowed to buy very small amounts. And and this ended up being what what slowly, helped get the marketplace taken down is, usually authorities so, like, Homeland Security, DEA, FBI, when they're tracking drugs, they're looking for these big shipments.
Speaker 1:Yeah.
Speaker 2:And as Silk Road started taking off, they started getting these envelopes that would be, you know, one little pill. So, like, one person who just, like, goes on there, they just order 1. Yeah. It's kinda cute.
Speaker 1:It's kinda cute.
Speaker 2:But, but, yeah, it was it was it it it it can't be understated, like, going back to the the founder story bit. He made the experience like, he really innovated on the experience.
Speaker 1:Yeah. There's a couple other things that were pretty innovative here. They had an escrow system, which used Bitcoin kind of smart contracts, but really just it would transfer the Bitcoin out of the buyers out of the buyers account into a holding account. And then once the transaction cleared, it would get paid to the the seller. Yeah.
Speaker 1:And so, like, if you got scammed, you could actually have, like, a dispute resolution process. It
Speaker 2:was like a PayPal. Exactly. Type experience.
Speaker 1:Yeah. And PayPal really unlocked me.
Speaker 2:Clear so that that it wasn't fully trustless. Right? No. No. Like, somebody
Speaker 1:Very centralized.
Speaker 2:It. It centralized.
Speaker 1:And and we saw stealing Bitcoin from the site constantly.
Speaker 2:Well, yeah. And Ross would also have to get involved with these disputes. Yeah. And there was even situations where he'd be negotiating with cartels saying, you know, somebody would would steal
Speaker 1:Yeah.
Speaker 2:And and he'd be the cartels would get mad at him and be threatening him. So so one thing to be clear at every step of the way, he was doing things that didn't scale.
Speaker 1:Yeah. And that involved
Speaker 2:and that was that involved committing committing crimes
Speaker 1:Yeah. Yeah. Yeah. Basically. Yeah.
Speaker 2:And then so looking at and just to compare this to another company like Airbnb Yeah. That got launched out of this era. Airbnb innovated on the vacation rental because there were some marketplaces, but
Speaker 1:Couchsurfing.
Speaker 2:People would book a vacation rental without seeing any reviews, and then you show up there and just, like, well, the toilets don't work Yep. And the sheets are all dirty.
Speaker 1:Yep.
Speaker 2:It's a very, very similar experience. We're just opening it up, and and creating, more trust really catalyze some some velocity.
Speaker 1:Yeah. And so as he's growing the site, he starts going by his pseudonym, the Dread Pirate Roberts, which is a,
Speaker 2:reference to the to
Speaker 1:the Princess Bride.
Speaker 2:Yeah. Yeah. Yeah.
Speaker 1:Which is, like, kind of an odd reference. I don't think of that as, like, particularly libertarian. It's just kind of, like, a funny weird thing to pick because he likes that movie. Really shows you how old he is, though, because that movie came out in, like, the eighties. Right?
Speaker 2:Yeah. Yeah. It's classic, though.
Speaker 1:Classic. And and Well, you went
Speaker 2:in, and he never went by Ross, to be clear. He went by admin. Oh, okay. And so going by Dread Pirate Roberts
Speaker 1:Yeah.
Speaker 2:Was a way to build this brand world around the site. Right? It was this pirates themed kind of,
Speaker 1:it's funny because there's another pirate themed, like, decentralized, like, the Pirate Bay. Are you familiar with this? The it's it's like a a Yeah. BitTorrent. Right?
Speaker 1:So, like, for downloading illegal Movies. Movies and stuff. Yeah. Yeah. Much less harmful, but still Yeah.
Speaker 1:Kind of similar piracy
Speaker 2:theme. Pirates of the Internet.
Speaker 1:And so people start obsessing over this guy. They revere DPR as a benevolent philosopher king who is giving the world a safer alternative to street drugs. And people really believe the narrative of, like, harm reduction that Yeah. That he, you know, reduced the amount of violent crime because anytime that there's a drug transaction on the street, there's chances it goes south and someone gets shot or stabbed or murdered or something like that, and that's not gonna happen on the Silk Road. Now the problem is is that, well, if you're if you're increasing the amount of drug dealing by a 1,000 acts, even if they're 50% safer, well, there's still a net negative impact of that.
Speaker 1:Yeah. And you need to measure that. And so, sure, it's
Speaker 2:like And and there was I'm
Speaker 1:sure I'm sure a lot of cartels were like, cool. I'll just go on I'll just go on, Silk Road, buy a bunch of stuff, and then deal it on the street. And so you just wind up with more street deals.
Speaker 2:Yeah. And and at this time, so he so the whole this brand world building that he's doing, this is why if you view him purely as a founder and ignore the heinous crimes that he committed over a long period of time, he would do things like they would have a 4/20 sale. Right? Where it was like, whoever if you bought That's okay. On if you bought on the site, you got, like, a ticket that entered you into, you know, something where you could win, like, an all expenses paid trip and stuff like that.
Speaker 2:So he was following sort of, like, traditional e commerce, like,
Speaker 1:marketing matters. Black Friday, Cyber Monday is, like, huge for him. Yeah. He's, like, let's let's pump it.
Speaker 2:And he'd be, like, no fees today on the platform. Buy as many drugs
Speaker 1:as you want.
Speaker 2:But meanwhile, the dark side of that is that people would be buying heroin Yeah. And overdosing and killing, like
Speaker 1:Yeah. Yeah. Yeah. It's bad.
Speaker 2:Like, it was very
Speaker 1:Yeah.
Speaker 2:To him, he he had these libertarian ideals. Meanwhile, you're enabling addicts to if you make it almost as easy to you to buy drugs as going on Amazon Yeah. You're enabling a lot of behavior that that isn't so great.
Speaker 1:Yeah. And, Yeah. I mean, another another factor of the growth was that Silk Road really drove early adoption of Bitcoin, and it created this crazy flywheel where you would buy a little bit of Bitcoin to go on Silk Road, buy some psilocybin mushrooms or something. And then because there was so much buying pressure, the price of Bitcoin would go up. You'd still have some left over in your wallet and be like, woah.
Speaker 1:I made money. Like, I could buy more now, and then that would drive more people into it. And so it became this, like, virtuous cycle.
Speaker 2:Yeah.
Speaker 1:And I remember reading about some journalists who had tested the site and bought, like, one, you know, drug pill or something when they were reporting on it
Speaker 2:Yeah.
Speaker 1:And then forgotten about what they left in their wallet. So they bought, like, you know, oh, I needed to buy a $100 of Bitcoin, and I spent 50 of it on the Silk Road back in 2010. And now it's, like, 500 k or something. Uh-huh. And then they have to find their keys, and some of them some of them did.
Speaker 1:Some of them lost it.
Speaker 2:Yeah. So so the crazy thing about this is so Ross in the very, very early days in 2011, had a girlfriend.
Speaker 1:Oh, yeah.
Speaker 2:She didn't agree with the plat with with what he was doing.
Speaker 1:Yeah.
Speaker 2:And she basically gave him an ultimatum at one point, like me or Silk Road. Yep. He chose Silk Road, founder mode. Yes. Absolute dog.
Speaker 2:So he goes with that. He and then and then at one point, like, later, he tells her they're, like, yep. They they get together again at some point in San Francisco, and he tells her that, you know, yeah, I gave the site away, all this stuff. His her roommate also during this time found out about it, because, like, they got in an argument, and she posted on his Facebook wall, like, I hope the authorities don't find out about Ross Ulbrich's drug website, and then, like, deleted it. Yeah.
Speaker 2:Like, he got her to delete it.
Speaker 1:Yeah.
Speaker 2:And so he had a couple loose ends here. Yeah. The other thing that's crazy about the the his experience doing this is he so anybody who's built a company before, you know that it's the kind of thing that you're you're thinking about around the clock. Right? You wake up at 3 AM.
Speaker 2:You're thinking about it. Yep. Be right as you're going to bed. You're telling your significant other about it, whatever. Yep.
Speaker 2:It it it's not something you can get off your mind, and it's a very uncomfortable thing to not be able to talk about it. You have all these ideas, like, right, like, we're in the gym. I'm like, oh, I need to talk to you about this
Speaker 1:Yeah. Yeah.
Speaker 2:Challenge, whatever. So Ross doesn't have any of that. He has his girlfriend at first, and then she's like, wow. Like, my my my boyfriend is like a narco trafficker, like, digital pirate, like, this is crazy. So that that ends.
Speaker 2:And then he starts to develop these friendships online, people that he's talking to, people that are users of the platform, people that are sellers. And so he starts developing these friendships. He's got a buddy that's in Vietnam. Yeah. I forget.
Speaker 2:I
Speaker 1:forgot. Developing, like, 2 worlds, almost like a split personality thing. Like, he actually
Speaker 2:Well, he doesn't have that much of a IRL life.
Speaker 1:Yeah. He doesn't have much of an IRL life, and then he actually splits his computer hard drive in 2 and kind of has two wings of the of the computer. 1 for his personal life, 1 for the Dread Pirate Roberts. And it's almost like there's, like, he can switch to just being a completely different person, completely different moral framework. Because even during the trial, a lot of the, like, you know, witness testament character witnesses were like, yeah.
Speaker 1:Even during this period, like, he was just total totally normal guy. And it's like, he was able to put on one face and then go online and then be chatting to people about, like, oh, yeah. Let's kill this person. Let's let's bring in a 1,000,000 mass.
Speaker 2:Send me the photo when you finish the job, you know. Yeah. So so and and this whole time so law enforcement already by this point has started to develop like, use anonymous accounts to develop relationships with him. He already has law enforcement that are buying drugs on the platform to, like, build cases, and they're trying to he has this guy, De Geggy. What's his name?
Speaker 2:Do you
Speaker 1:remember what you were saying?
Speaker 2:No. So this is a random guy in Chicago who's with Homeland Security who's painstakingly collecting thousands of Silk Road orders, which he had figured out. Historically, apparently, people would send drugs in the mail, and they'd have, like, these handwritten letters. Yep. So that was, like, one way you could potentially identify.
Speaker 1:Sure.
Speaker 2:But then people on Silk Road wanted to look like they're more professional.
Speaker 1:So they type
Speaker 2:So they would print out these sort of, like Mailing labels. Address, mailing, return labels. And so there was this, this guy, Diage. I forget his name. And what's crazy is many of these law enforcement people themselves end up committing crimes
Speaker 1:as part of the process, and then they get it.
Speaker 2:And it's, like, the most chaotic story.
Speaker 1:And, I mean, there's just so many different organizations involved in this. The DEA, the FBI, the IRS, Homeland Security, the Secret Service, and then they all have varying levels of of jurisdiction and abilities.
Speaker 2:They all want to win.
Speaker 1:They all wanna win. They all
Speaker 2:want credit for it.
Speaker 1:They all want credit for it, and so it's just chaotic. Let's go through some of the some of the posts, just to kind of break it up. I have this one from Rune here who says, okay. But where are the crypto conferences for people building illegal stuff? I'm talking next generation impenetrable silk road, evading Chinese capital controls, war bonds.
Speaker 1:Hit me up. And, this was back in 2022 when crypto was obsessed with, like, NFTs and and just kind of like
Speaker 2:pre FTX crash?
Speaker 1:Yeah. Yeah. There's I think this is pre FTX. And and so, yeah. I mean, I think that I think that we can obviously intellectually understand that, like, everything that happened here was terrible.
Speaker 1:It's a tragedy. It's, like, bad in so many ways. But it's deep down. I think if you don't recognize that, like, you know, crime stories are a little bit cool and, like, edgy. Like Yeah.
Speaker 1:Like, that's just a very natural impulse, and I think that's what drew a lot of people to this story. And then, the whole reason that we're talking about this is, this clip from autism capital that says, breaking Trump confirms that if he becomes president, he will commute the sentence of Silk Road founder, Ross Ulbricht. So this was in May of last year before. So the whole reason that we wound up in this situation is because, there was a like, there was this massive campaign that we'll get into, free Ross, that was, driven by his mother, and she'd been campaigning for him a long time. There were a
Speaker 2:lot of married
Speaker 1:Yeah.
Speaker 2:At at one point.
Speaker 1:And she was working on the project, and then there were a lot of libertarians and a lot of Bitcoin people that were, like, get him out. And so it became this, like, bargaining chip with Trump as like, oh, we will back you super hard if you give us our boy back. And so this is when, on January 21st, Ross Ulbricht has been fully pardoned, and Donald Trump says, I just called the mother of Ross William Olbright, he misspells his name, to let her know that in honor of her and the libertarian movement
Speaker 2:writing the he's signing the papers. He's like, what did this guy do again? Murder for hire?
Speaker 1:Yeah. Which supported me, and they will tell you he he didn't get convicted
Speaker 2:of that. Yeah.
Speaker 1:Yeah. It's clear
Speaker 2:to be clear.
Speaker 1:To be clear.
Speaker 2:Yeah. Yeah. Yeah.
Speaker 1:It was it was my pleasure to have signed a full and conditional full and unconditional pardon of her son, Ross. The scum that worked to convict him were some of them same lunatics that were involved in the modern day weaponization of government against me. He was given 2 life sentences plus 40 years. Ridiculous. And Sagar says, I'm no fan of the Silk Road, but the way the FBI set up Ross Ulbricht for life is still one of the most insane cases I've ever read about.
Speaker 1:And so, Sauger is, like, hugely anti drug, even anti weed, marijuana Yep. Cannabis, but still, the this is a nuanced topic.
Speaker 2:Yeah. Yeah.
Speaker 1:Yeah. Yeah. And it is possible that someone could be doing something really bad, and then the government can come in and throw the book at them
Speaker 2:even harder than they should. Yeah. And so so getting kind of into that, you had, one of one of the one of the I I forget if they were f, I don't think they were FBI, but maybe Homeland Security. At one point, one of the guys had turned like, was selling secrets to Ross about all the investigations
Speaker 1:Yep.
Speaker 2:And had made some somewhere over half a $1,000,000 Yeah. Selling information to Ross about the case even though he kinda still wanted to get him. Yep. But but it became this whole game that you could tell that
Speaker 1:Double agent.
Speaker 2:All the all the agents involved with it were so consumed in the cat and mouse game Yep. Of chasing this guy. Really, he he he he at one point, got, citizenship in the Dominican Republic, but he it wasn't really a big factor in the story. And so the the other thing is, like, you would imagine that this guy would take off and be in Eastern Europe or Asia somewhere. He went to Australia at one point, but he was just really visiting his sister.
Speaker 1:He did go to the Dominican Republic briefly. But, yeah, we just some accounts,
Speaker 2:but that was it. To invest, like, a 100 k or
Speaker 1:Yeah.
Speaker 2:Under 6 figures to actually get that.
Speaker 1:And so let's do a little bit of a tour of the of the agencies involved in this. The DEA, would sent agents to infiltrate the marketplace by posing as large scale narcotics traffickers. The FBI was focused on tracing the Silk Road server, which they eventually got. I think there was one in Iceland or something Yep. That they were able to get and decrypt.
Speaker 1:The IRS wanted to follow the money trail. Homeland Security specialized in customs and import control that recognized that packages from overseas were flooding the US postal system. One key figure was Gary Alford, an IRS investigator who approached the Silk Road puzzle by following Internet breadcrumbs. He started analyzing older forum posts discussing Silk Road's launch, focusing on handles like Altoid that might have been inadvertently that might have in inadvertently revealed a personal connection.
Speaker 2:And so this guy, this IRS agent ended up getting taken down because he was he he was profiting in different ways from the, like, from the investigation and very, very corrupt. Yeah. But he was one of the guys that traced those old forum posts Yeah. Found posts that had an account that was called altoid created by rossolbrecht@gmail Yeah. That then he changed to a fake email called frosty@frosty.
Speaker 2:Yep. But then he had used Frosty. He called the Iceland server frosty. Yeah. So they tied that together.
Speaker 1:Not not enough imagination on the username generation, bro. You gotta get a password generator.
Speaker 2:Yeah.
Speaker 1:Just go full random. Yeah. It's, the the Gary Alford guy, I read a thread about him as well about how what was interesting was that he didn't have access to, like, really crazy proprietary databases and, oh, the fingerprint database and the DNA database. It was really just like Google. It was just really good at just, like, Googling around, finding usernames here, piecing things together.
Speaker 1:And so, all of these investigations were hampered by a lack of interagency coordination rather than pooling intelligence. Each unit often withheld leads, hoping they could be the ones to crack the c that crack the case. This fragmented approach would simultaneously prolong the manhunt and create openings for suspicious behavior. Indeed, 2 law enforcement agents, Carl Force, DEA, what a great name, and Shawn Bridges, Secret Service, would later be indicted for misusing the case to enrich themselves. Wait.
Speaker 2:Wasn't the IRS guy then?
Speaker 1:I I don't think so. I'm not sure. But,
Speaker 2:I thought he got taken down as well.
Speaker 1:No. I think Gary Alford was fine. Okay. But, I mean, it was it was like, the whole thing was
Speaker 2:just so chaotic.
Speaker 1:Because it's all happening in a dark web, and there's money flowing around Bitcoin, and everyone thinks it's anonymous. It's not. But everything And they
Speaker 2:would they would have these meetings called deconfliction meetings Yep. Yep. Where they'd bring everybody together. And, like, some people would share information, and other people would be like, I'm not gonna share that. Like, this is my edge in the case.
Speaker 2:It's just very toxic dynamic where within those types of organizations, you rank up and get more titles and comp and paid leave and vacation Yep. By cracking cases. And so everybody wanted everybody was self interested in wanting to crack the case themselves and get credit for it.
Speaker 1:Yeah. It's always crazy to hear the numbers. It's like he stole, like, $50,000 and then, like, you look at the price of Bitcoin now and it's, like, oh, that would have been, like, you know, 100 of 1000000000 100 of 1000000000 if they, like, been able to hold on to it.
Speaker 2:But Yeah. The other thing about so so law enforcement is, like, starting to have this, like, very, like, multipronged chaotic.
Speaker 1:Yeah.
Speaker 2:And it it didn't take them that long to really start to get some real leads into him and and start to put the pressure on. Right? So at this time, they're creating fake identities. They're taking over. They're finding sellers.
Speaker 2:They're they're going to sellers and they're saying, we are gonna put you in prison for life for selling drugs
Speaker 1:Yep.
Speaker 2:Or we'll give you a better sentence if you give us your seller account.
Speaker 1:Yeah. Flip.
Speaker 2:So then then they would flip sellers Yep. And then they would just be in there, and they also started flipping, like, different moderators.
Speaker 1:Yep.
Speaker 2:And they also just started creating entirely new accounts where where they would come in and be like, yeah. I'm a narcotrafficker. And
Speaker 1:Yeah.
Speaker 2:And then they would slowly develop a friendship. And there was this weird situation where to develop trust, they would have to, they would have to give him advice that Like,
Speaker 1:real advice.
Speaker 2:Real advice. Like, you should get 3 passports. Yeah. You should get fake passports. You should be able to get to Asia.
Speaker 2:You should have a contingency plan to get here. You should split up your Bitcoin holdings so that, you know, if you get taken down here, like, you know, you'll still and then and then on the platform level, they had created this sort of PayPal style system. Right?
Speaker 1:Yep.
Speaker 2:It was very effective. Every now and then, a seller would build up so much selling history that they would it's very easy for them to be, like, anybody that sends Bitcoin to this address and sends me their address. So so people would circumnav navigate the platform. Right? This happens with all marketplaces.
Speaker 2:Right? Even on Airbnb, somebody will book an Airbnb for, like, 2 weeks, and then they'll talk to the owner, and they'll be, like, hey, like, can I just book it through you and, like, save on the Airbnb fees?
Speaker 1:Yep.
Speaker 2:And so every now and then, these sellers would you know, there was one on that happened on 4:20 where this certain seller was, like, hey, like, you know, if you just pay me directly, like and and they'd had a big selling history, so everybody trusted them. And then they they did, like, 250 k in sales in a day, and then just, like, gone. Right? Yeah. So that would happen, and then Ross would be in this position where he would have he would have all these people that were mad at him.
Speaker 2:His users are pissed at him, but he would be, like, well, you circumnavigated the platform to try to save what are not crazy. The other crazy thing so Silk Road's take rate for selling drugs during the most illegal activity is 40% lower than substack, which sells information, you know
Speaker 1:Is that true? Subtext is not 50%.
Speaker 2:No. 40% lower. They Subtext is 10%.
Speaker 1:Oh, okay. 6%.
Speaker 2:Yeah. So so Silk Road was 6.25%. I think
Speaker 1:he's way lower than OnlyFans too. I
Speaker 2:think OnlyFans 20%. Yeah. Yeah. It's like way way way. So Ross was was so mission oriented that that he he really believe you know, the part of the crypto ideals is, you know, there's these financial institutions.
Speaker 2:They have these crazy take rates. And so he's only getting double the take rate, basically, of Stripe.
Speaker 1:Stripe.
Speaker 2:Yeah. Stripe is, like, the most regulated, just like vanilla, like, we sell SaaS. Yeah. He's selling drugs at scale online.
Speaker 1:And Yeah. He could be taking, like, 30%. But he's not.
Speaker 2:Yeah. Yeah. And he's not. And when and and he still had issues because the kind of people he was dealing with, you know, people that are buying small quantities of drugs online are are probably not the most affluent crowd for the most part. So they would have issues with it, and so he keeps dealing with this stuff.
Speaker 2:And he also has I don't know. He has issues where, you know, something would happen to a seller, and then the cartels would be coming to him saying, like, hey. Like, you owe us a $1,000,000, and he'd and then he'd be, like, trying to do deals with them.
Speaker 1:Yeah.
Speaker 2:And so every every marketplace founder understands that at a certain point, you have this programmatic system that you're running. Right? Where, like, you know, let's say you have Airbnb, but early days, I'm sure that the Airbnb founders would have to be talking to, like, one of theirs, like, listing people and being like, hey. Like, we gotta work this out.
Speaker 1:Yeah.
Speaker 2:But in Ross' situation, he was dealing with cartels Yeah. Narco traffickers, drug dealers, and people buying drugs. And so it's not like they painted a picture. Like, he's just sitting there and, like, he created the software.
Speaker 1:Yeah. Yeah. He's just running. He's just writing code. That's it.
Speaker 1:But he
Speaker 2:would be he at at one point, he was wanting to test into a product. He was encouraged by someone in law enforcement who had built up this,
Speaker 1:you
Speaker 2:know, fake identity that he was friends with. Hey. You should create the masters of the Silk Road, which was a version of Silk Road specifically for global drug cartels. And so and and and so Ross worked with his team.
Speaker 1:He was
Speaker 2:like, hey. We gotta move a kilo. Right? And so he was just selling drugs.
Speaker 1:Just drug dealing fully.
Speaker 2:He was just fully drug dealing.
Speaker 1:That's wild.
Speaker 2:And, and then mass I don't think masters of the silk road really took off. He also around this time I don't know where we get to it. So he he he somebody started people would start listing weapons.
Speaker 1:Well, yes. So, I have some extra so he he he kind of finds, like, a almost pseudo cofounder, this ally variety Jones who offers some marketing tips, security advice, and even recommended that Ross consider violent tactics against potential threats. He, he starts thinking about all this violence and alleged murder for hire plots, which would become pivotal to the federal charges against him. And there's still some, debate over whether these plots were real or entrapment, but it's really insane how fast the site grows. We we we said it started in 2011.
Speaker 1:By late 2012 and into 2013, Silk Road was grossing 100 of 1,000,000 of dollars in transactions. Its user base extended across continents, and shipments were moving through postal systems at astonishing rates. Within this environment, Ross grappled with immense stress, anxious that each day could be his last as a free man. Still, he persisted, motivated by profits, ideology, and perhaps the thrill of running a digital empire unrestrained by Yeah.
Speaker 2:So at this point at this point, he's in San Francisco. Yep. He's living in a random apart like, he's not living he's not living, the lifestyle of Pablo Escobar No. And nice houses and, you know, cars. He's living in San Francisco paying cash
Speaker 1:Yep.
Speaker 2:Under a fake identity, something Terry Terry Jones or something like that. He needs he orders fake IDs off of the dark web Yep. Off of his own website. Website. So he gets a handful of fake IDs.
Speaker 2:They get caught in the mail by Homeland Security. And at one point, Homeland Security comes and knocks on his door, and he's like, oh, it's over. Like, he thought he was getting taken down. And they and they were just like, hey, like, we got these fake IDs addressed to you. Yeah.
Speaker 1:It's too small of an issue to be big for us. We just wanna
Speaker 2:know more about the dark matter. So he's like, no.
Speaker 1:Can you tell us? Can you
Speaker 2:tell us, like, we're not gonna, like, do anything right we're not gonna arrest you right now, but where did you get these? And he goes on record and says, there's a site called Silk Road. He can't help himself.
Speaker 1:He goes in pitching mode.
Speaker 2:He goes in pitching mode. He's like, well, actually, there's this site you can go on called Silk Road.
Speaker 1:It's amazing. Only 6% take rate.
Speaker 2:6 percent take rate.
Speaker 1:Use this coupon code to sign up.
Speaker 2:You can add some other stuff to your cart.
Speaker 1:Yeah. Guns, drugs. Do whatever. Yeah. So he's like
Speaker 2:And so and so he gets on the record at that moment, he gets that was the first time he was in the system for committing a crime, and they added base I don't know how it works, but they added notes to, like, his profile that he had talked about the Silk Road Sure. Which ended up coming back to bite him later.
Speaker 1:Yeah. And so, the DEA at this point is, is, posing as major buyers. The FBI is focusing on these high-tech methods. They find a server in, in it is in Iceland. And the, and there's a bunch of friction between the different agencies because no one really knows who's dealing with cybercrime.
Speaker 1:So Jared Der Yeggian
Speaker 2:That's Der Yeggian.
Speaker 1:Der Yeggian who was the
Speaker 2:This is the guy who
Speaker 1:just obsessed. Yeah.
Speaker 2:Der Yeggian had collected thousands of orders that he had personally caught. Yeah. And he had just been categorizing them and and tracing them to different seller profiles.
Speaker 1:Flipping the dealers to become important, to get become informants. He gleaned details about Silk Road's internal workings, including how vendors ship products. Other groups try to trace the site's IP addresses using advanced hacking techniques. At one point, the FBI exploited what have what might have been a misconfiguration in a Silk Road CAPTCHA or login screen, gleaning a real IP address that led them to a data center in Iceland. So the whole the whole goal of Tor is to mask the IP address and route through a bunch of different Yeah.
Speaker 1:Anyone who's running a Tor server all over. So you could if you just have spectrum or, you know, AT and T Internet, you can spin up a Tor server, and then you're routing random traffic constantly. And so that anonymizes things because traffic's just going all over the place. You can't trace it all. And so anytime it goes through some random server, comes out the others other side randomized or or disguised, and it's very, very hard to track down.
Speaker 1:But they found the actual IP address because it seems like the CAPTCHA that was being rendered wasn't going through Tor. It was going through, like you know, it wasn't being a non match server. Yeah. So they figured it out. They they they they issued a warrant.
Speaker 2:This is the the this is something that happens throughout the whole Silk Road journey is because he's a first time developer, first time founder.
Speaker 1:Rookie.
Speaker 2:He's just making all these
Speaker 1:Yeah.
Speaker 2:Mistakes and oftentimes suffering financial losses, but the site's doing so well Yep. And growing so quickly, it doesn't the losses are offset. The one thing that's kinda hard to make up for is getting caught.
Speaker 1:Yeah. Getting caught. And so they grab the server from Iceland, decrypt it, and it's, like, the database. It has all the information, and then they're combing through it for clues that Yeah. Could lead them to who this guy is or, like, how
Speaker 2:they operate it. To flip the, who who whatever company in Iceland had the server. Oh, no. No. Approached by US law enforcement.
Speaker 2:They're like, we believe people are committing crimes on your server.
Speaker 1:And they're just like, you just want us to copy it? Sure. No problem. Yeah. Whatever.
Speaker 2:And that goes in and and and to be clear, as they uncovered, they got data on all the buyers and sellers and, like, presumably all the transactions that had happened in Silk Road history. Right?
Speaker 1:Oh, yeah.
Speaker 2:It's like yeah. It was encrypted, but they were able to basically crack it.
Speaker 1:Yeah. And and every escrow transaction is logged in a database because it has to even though the even though the blockchain might be somewhat anonymized, like, it's not anonymized when it sits on the database record of the Silk Road, which they got access to.
Speaker 2:And so it's not like every person who had ever bought drugs or sold drugs on the Silk Road was suffered from that.
Speaker 1:Yeah.
Speaker 2:But if the government had wanted to, they could have gone and knocked on all the addresses.
Speaker 1:Exactly. Obviously,
Speaker 2:people would use fake addresses Yep. Fake names and, you know, things like that. But
Speaker 1:Yep. And so, by 2013, enough agencies had pros enough agencies has processed enough scraps of evidence that Ross Ulbrich's identity was starting to come into focus, though they had yet to conclusively tie him to dread pirate Roberts. Ross, for his part, was often oblivious to the scale of the manhunt, trusting in Tor and Bitcoin's layers of security while continuing to manage Silk Road from cafes and libraries around San Francisco. And so the corruption scandal continues. Karl Mark Force the 4th and Shawn Bridges of the Secret Service.
Speaker 1:What a great name. Mark Force. The DEA, in the Secret Service, is one of the most dramatic subplots here. The both men were were tasked with bringing down the Silk Road, yet they exploited their positions for personal gain. Force who operated under undercover personas like Nob on Silk Road directly interacted with DPR.
Speaker 2:So Nob Nob was basically boys with
Speaker 1:Oh, yeah. He was absolutely boys
Speaker 2:talking all day long. Yeah. You know, Nob would give him a this is not Nob is the guy who'd give him advice. He should get more passports
Speaker 1:Yeah. Yeah. Yeah.
Speaker 2:Things like that. And people were like, dude, stop giving him such good advice.
Speaker 1:And and he messed up because at at one point, he was he was he had a fake account and was chatting with Dread Pirate Roberts and and was like and he was like, it's Carl or something like that. And he was like, wait. What? And he was like, oh, Carl, Carla. Like, I go by a bunch of different names on the
Speaker 2:That was all on that was
Speaker 1:all record. Logged. Yeah.
Speaker 2:And then was it Sean Bridges at one point that later once Sean knew he was getting caught, he Sean was like, I will get you killed in prison. Yeah. Like, he was, like, threatening, like, you're gonna get caught. It's so messy. And so yeah.
Speaker 2:It was basically slop on both sides.
Speaker 1:Very sloppy. And so, from Ross's perspective, these agents' manipulative activities made the Silk Road environment feel ever more treacherous. Logs released in court showed Ross confiding to trusted confidantes that he suspected infiltration at every turn. He also struggled with evaluating demands for hush money or hits on suspected black mailer mailers. Whether Ross seriously believed in orchestrating murder for hire or if he was cornered into entertaining the idea is still debated.
Speaker 1:Nevertheless, chat logs indicate that Ross agreed to pay for violent solutions if it meant protecting Silk Road's anonymity and his own.
Speaker 2:Yeah. So this is, when I when I I posted this and a lot of people are, like, oh, you left out murder for hire. Yeah. Obviously, on this post, I was purely talking about the business, not endorsing his actions in any way. But, yeah, he he over the course of this 2013 era, got very comfortable with the idea of paying to get people killed.
Speaker 2:So these were people that he thought were, informants, people that he thought were just generally bad actors. Yep. There's records of him ordering hits and actually negotiating the price of hits Yep. Saying, you know, being kind of frustrated with with how expensive would something would be, and it and and the and the person would be like, well, it's like last minute, and, you know, it's kind of a complicated situation. And he'd be like, okay.
Speaker 2:He would be provided, photo evidence of success, what he thought were successful hits. At one point, law enforcement baked one of the hits using, like, Campbell's Soup, and they were taking and and using, like, crappy phone images to, like, take a picture of somebody's face, like, with, like, Campbell's Soup, like, as if their face had been, like
Speaker 1:Blown off.
Speaker 2:Blown off or whatever.
Speaker 1:Yeah.
Speaker 2:It's a very, very dark. Like, he he clearly at this point had was, like, living this dual life of, like, he's Ross, and then he's dread pirate Roberts. Yeah. And he's willing to do anything to protect the pirate ship.
Speaker 1:Yeah. Exactly. Silk Road. Yeah. And and I think we have a post here.
Speaker 1:It's probably a few deep, Ben, but, this is a screenshot from Reddit. It says, are there any merits to the claims that he hired a hitman to kill friendly chemist? Someone on Silk Road who said they would leak personal info on thousands of Silk Road users unless paid 500 k. I've never seen this discussed in our weekly Ross posts.
Speaker 2:Yeah. So this was, there was a user who hacked the server in some way. They were able to uncover quite a lot of data on, like, the sellers.
Speaker 1:Yep.
Speaker 2:And so Ross was worried that I mean, if people realize that if you bought something on the platform and that your personal information could be exposed Yep. Then, obviously, it was gonna really slow down sleigh sales. Yep. He's also facing competition at this time. Other sites are popping up that are doing the same thing.
Speaker 1:Yep.
Speaker 2:So he really didn't want this information to get leaked.
Speaker 1:Yep.
Speaker 2:And he you know, so you
Speaker 1:And so and so there, someone replies to this and says, Ross ordered hits on 4 to 5 people total. The evidence of this the the evidence that he did this is clear. No one here likes talking about this because it ruins the narrative. Now the sentence for ordering a hit in California, if I recall correctly, is 10 years per contract. So he definitely got a harsher sentence than this, but there were other crimes he was guilty of.
Speaker 1:Not that it'll not that it will save me from down votes, but El Chapo is significantly worse than Ross, and any system that gives Chapo less time than Ross is busted. But to ignore that Ross didn't try to have people executed for doing is doing no favors to anyone who wants to have an honest discussion about justice. And I think that's just a very interesting thing where there there there was this, like, big, narrative. And if we go back to, this debate between Mal Mart Matt Palmer and Joe Posting, Matt says, Ross Ulbrich's work was one of the largest contributions to harm reduction in narcotics distribution ever. The systems he created removed violence from the drug trade by anonymizing and physically dislocating transactions.
Speaker 1:He almost certainly saved thousands of lives. But Joe says, skeptical of this claim, the vast majority of drug trade violence is caused by production, namely South American cartels and opium warlords in the golden triangle. Silk Road made retail purchases safer, but that's small potatoes next to the back end. And it's funny because, you know, it's like, yeah, he might have removed some violence, but then he added it all back by trying to commit hits. It's like, come on.
Speaker 1:It it's just a ridiculous situation. But moving on, we're in mid 2013, and there are enough threads of investigation that they that had converged that a direct confrontation with Ross Ulbricht was inevitable. Each agency
Speaker 2:So at this time, they had figured out they had figured out a number of people. They started with profiles. Like, we think he's a smart guy. We think he's in America. We think he's
Speaker 1:Oh, one of the one of the one of the ways they figured out was hilarious was that he, he had he had posted something about how, buying drugs on the street is dangerous, and he says something about, like, those people. And so they so they use that to justify this idea that he came from, like, a white middle class upbringing and was not like a street guy. Because he wouldn't he would have said, like, when we buy stuff on the street, we get shot and killed. He instead, he was like, they get shot and killed, and so that that made it clear that he wasn't, like, from the from the from the rough and tumble streets.
Speaker 2:And so at one point, he was even he was a suspect Yeah. Just based on his profile of being, you know, interested in technology and libertarianism and all this stuff. But they still were, like they actually people didn't believe that he could have done it because he didn't fit the hacker, like, Internet hacker developer archetype, because they were, like, well, he didn't study computer science. And so they had this other suspect who had run, like, a Bitcoin forum that was, like, more of the prime suspect at the time. So so he had some non believers in law enforcement that were, like, yeah, we it could be Ross, but, like, we don't think he's got that dog in it.
Speaker 1:Yeah. And so the the main breakthrough came from Gary Alford, the IRS agent, and he was convinced that Ross Ulbrich made a slip up early on. And so he scoured Internet forums such as bitcoin talk dot org and shroomery.org. Going back to the brewery
Speaker 2:list where he he was trying hey.
Speaker 1:Anybody wanna get some shrooms? Check out this website.
Speaker 2:No. He was like, has anybody
Speaker 1:bought shrooms from from Silk Road?
Speaker 2:Yeah. And it was him selling the shrooms.
Speaker 1:And so he reasoned that whoever created the site might have posted dirt about it during its infancy before it was famous enough to attract major scrutiny. And, this is very funny. This actually happened in my high school. There was someone who put up a, like, a cyberbullying type website, and the easiest way to figure out who was behind it, it it's still like like myth in my high school, but I'm convinced I know who it was because I basically traced it back to patient 0. And the first person to say anything about it was likely the person that did it.
Speaker 1:Because, like, how else would it go viral? Like, it has to have somebody that introduces it. Because you if if a website's just up there on the Internet, like, no one's gonna find that. But the first person to say, hey, have you seen this? That person is, you
Speaker 2:know Guilty.
Speaker 1:Guilty. And I'm very convinced of this. So, Alford, this is Gary Alford. He discovered a user named Altoid posting in January of 2011, right at the start of Silk Road, mentioning Silk Road and suggesting people check it out. Further digging reveals that the same user had made a subsequent post looking to hire a tech specialist, leaving the email address rossolbricht@gmail.com.
Speaker 1:This was the smoking gun Alford had been searching for as it linked a real life individual to Silk Road's initial marketing efforts. While other investigators were pursuing the server's physical location, Alford's simpler forensic analysis of publicly available posts provided a direct link to Ross.
Speaker 2:And so Ross had gone back to that forum. He knew he had kind of messed up, and so he changed the email Yeah. On that account to a fake email.
Speaker 1:Yeah. But you can see the change.
Speaker 2:But then the you can see the change and then the name he used for the fake email ended up being the same name he used to name the server.
Speaker 1:So he
Speaker 2:had some he liked the name Frosty or something.
Speaker 1:And so at this point, they they were definitely suspicious of Ross, but they needed to catch him red handed, logged in as the Dread Pirate Roberts on his laptop if they hoped to secure a watertight, prosecution. And, and detective work in the digital age can hinge on human error. The altoid handle and the Gmail address turned out to be one of Ross's biggest mistakes, an unintentional breadcrumb left behind before the Silk Road success.
Speaker 2:One thing I'll note here, this is just speculation, but he his girlfriend at one point said that he was a big, marijuana fan. I think he admitted to it at different points as Dread Pirate Roberts. And marijuana is a performance decreasing drug. Makes people forgetful. Sure.
Speaker 2:Makes people anxious and all these things. And so imagining him as a first time developer high all the time Yeah. Trying to, you know, committing crimes at scale. Yep. And and and, again, I respect the libertarian view that that says, well, nothing he's do he's doing was wrong, but he was committing crimes by way of our legal system.
Speaker 2:Yeah. And so he imagining him just, like, hanging around San Francisco smoking pot Yeah. Being a narco trafficker, it's, like, not a you know, it it's inevitable. There's other people that would have made it, like, 7 years,
Speaker 1:8 years, 9 years,
Speaker 2:10 years. There's there's narcos they're, like, real narcos Yeah. That make it 30 years.
Speaker 1:Yeah. Right? They buy soccer teams.
Speaker 2:Yeah.
Speaker 1:Yeah. Mansions.
Speaker 2:They get presidents elected.
Speaker 1:Yeah. It's crazy.
Speaker 2:So it's actually wild to think about if he had maybe not as intensive marijuana habit or gone and went to Russia or something like that. Totally. There's a world where he would have become like a Bitcoin
Speaker 1:Yeah.
Speaker 2:You know, 100 billionaire. Like, one of the wealthiest was, like,
Speaker 1:you know,
Speaker 2:influential people in the world and could have been out of reach in many ways.
Speaker 1:Totally. Yeah. It is so funny that he you know, his whole philosophy was was based on this idea of, like, drugs aren't this gateway. Nothing bad can happen if you start doing a lot of drugs. And then he is the best case study for drugs ruining your life.
Speaker 1:Yeah. Drugs completely ruined his life. Started doing drugs, then started selling drugs, then started trying to get people killed, then got massively arrested and thrown in jail for a decade. It's like, yeah, drugs were not good for you, bro. Like, calm down.
Speaker 1:Yep. And so as the law enforcement officials homed in on Ross Ulbrich, they began careful physical, surveillance. His whole laptop was heavily encrypted, and he had a single button that if he pushed it, it would lock and encrypt the hard drive. So even if you got access to it, you couldn't access it without a password. They had no way to guess the password.
Speaker 1:It would take a computer 1000000 of years to, you know, decrypt that or 100 of years to to to force the decryption. Although maybe it's faster now. Who knows? But at the time, they were very worried, and they were like, we have to get him while his hands are on the keyboard or hands off the keyboard, but but he still logged in. And so they were excited about the idea that he kept working in public spaces because they could stage an unexpected confrontation.
Speaker 1:It's
Speaker 2:just the the the irony here of him in another reality, he would have been in y Combinator just absolutely crushing it.
Speaker 1:Oh, yeah. Totally. Like normal business. Yeah.
Speaker 2:And so he would have been in these coffee shops in San Francisco at the explosion of the sharing economy and mobile.
Speaker 1:Oh, yeah.
Speaker 2:And he would be sitting next to people that you know, it's not unlikely that some, like, very well known founders today hit like, we're in the same coffee shop.
Speaker 1:Right? Totally. Totally.
Speaker 2:The the the craziness of doing this all, like, from the epicenter of tech.
Speaker 1:I lived in San Francisco when this happened. And I and I would go to this library. I would go to the San Francisco Public Library. I actually worked out of there a few times.
Speaker 2:Crazy.
Speaker 1:And so on October 1, 2013, Ross Ulbricht walked into the Glen Park branch of the San Francisco Public Library, sat down, and opened his laptop. Unbeknownst to him, undercover agents sat nearby. Agents orchestrated a ruse where one undercover officer posed as a feuding couple, creating a minor commotion to divert Ross' attention as Ross turned his head. Other agents sprang from behind grabbing his laptop before he could even move to close the lid. The narrative of the takedown is cinematic.
Speaker 1:Ross is stunned, half standing, and as FBI pushes him back into his seat and secures arms.
Speaker 2:To visualize this Yeah. A a a man a male and female agent start yelling and, like, pushing each other. Yeah. He looks over.
Speaker 1:And then and then the person just reaches yeah. Yeah. Yeah. It's literally a a a woman who's an agent who just sits right across the table and just is like, pull this away.
Speaker 2:Don't touch it. It open.
Speaker 1:Has it open?
Speaker 2:So they immediately what they do is
Speaker 1:they take it.
Speaker 2:They take it, and they rush it to a van outside. Yeah. Like, imagine, like, you're, like, trying to keep your computer from going to sleep.
Speaker 1:Oh, yeah. Yeah. That's what they're doing.
Speaker 2:And so they're making sure they're moving the mouse.
Speaker 1:Move the mouse. Move the mouse.
Speaker 2:And so for the next, like, 10 hours, they just sit there, like, moving the mouse Yeah. And, like, downloading all of the data off the computer and, like, backing it. I think they backed it up, like, 9 times Yeah.
Speaker 1:Yeah. Yeah. In different ways. Yeah.
Speaker 2:And you could imagine because because when they when after we'll we'll talk about this in a bit. As they go to prosecute him, the the the, defense's main defense is that it wasn't Ross.
Speaker 1:Yeah. Yeah.
Speaker 2:Yeah. That's their main thing. They were like, some
Speaker 1:the real
Speaker 2:dread pirate Roberts framed him. They put all this evidence on his laptop. But they obviously caught him
Speaker 1:Yeah. Literally red handed. Yeah.
Speaker 2:With the with,
Speaker 1:And it's like, if there was, like, some sort of, like, screen sharing software where yeah. Okay. Maybe maybe he was just using his computer and then the real the Dread Pirate Roberts was, like, you know, putting evidence on there. There would be evidence of
Speaker 2:that software. But they tracked him so many times where they would be physically viewing him. He's typing
Speaker 1:And it'd be like, he logs on.
Speaker 2:Because they had they had moles on the Silk Road team. So they had, like, law enforcement was being paid to work for the Silk Road. And so they would see when he logged on, he'd be typing, and they would be recording all of this where they'd be watching him typing
Speaker 1:Yeah.
Speaker 2:And Dread Pirate Roberts is typing. And so it was kind of a tough, argument to make. Even though law you know, various members of law enforcement were committing their own heinous, crimes,
Speaker 1:it's sort
Speaker 2:of difficult to defend.
Speaker 1:And related to that, we have a post from Sam Parr. He did a podcast on Ross Ulbrich, the founder of Silk Road, and he says he admitted to creating the Silk Road but said he sold it to a new owner, and they're the ones who did the murder for hire. What do you think? Was Ross the owner the entire time or an order to murder for hire or no? Why?
Speaker 1:And Anthony, Jay Descenza DiCenzo says, of course, he owned and operated it the entire time. He admitted to creating the silk Road at the beginning and was caught red handed working on the administration page at the ending.
Speaker 2:And he
Speaker 1:did. Follow his Bitcoins from start to finish. And he agree with that.
Speaker 2:Tried to he told his girlfriend once that he was no longer running it, that she walked in on him after, like, they were
Speaker 1:hanging out. He's on that. It's so clear.
Speaker 2:There's no later, he even had this crisis on the platform where he he made a post where he's like, I'm gonna change the way I talk so that it's less obvious who I am. And then everybody was, like, got really mad at him because they were like, wait. Like, is this safe to use now? Like, did it did did they flip him or something like that?
Speaker 1:So in the days following his arrest, the global community of Silk Road users found themselves in disarray. Vendors, buyers, and administrators scrambled to figure out whether their personal identities had been compromised because as part of the onboarding process to work for the Silk Road, you would have to send him a photo of your real driver's license. Yeah. And it was kind of this, like, getting sworn in into the secret society. There was panic over bit Bitcoin funds held in escrow, which now seemed out of reach.
Speaker 1:People posted frantic messages on the dark web, some lamenting the loss of their livelihood. Oh, it's terrible. You know, you build a drug a a drug business, and it just goes up in smoke one day. Others questioning whether the Dread Pirate Roberts persona might somehow live on. Law enforcement officials also, it's like, if there was a real Dread Pirate Roberts who his fall guy gets busted, why wouldn't he just keep operating the site?
Speaker 2:Make a new phone.
Speaker 1:Make a new thing? Yeah. Just just But,
Speaker 2:yeah, you can think about it. So at this point
Speaker 1:Or even just move the Bitcoin to something like that.
Speaker 2:Hundreds of millions of year. Yeah. And you could imagine at any one point, there's, I don't know, an s a very rough estimate would be a $100,000,000 of of, like, drugs, like Yeah. Changing hands. And so that that was quite a lot of money that was just locked up in escrow at this time that was clearly the Silk Road team had to be the team that would approve when, you know, the the recipient would say, yes.
Speaker 2:Got it. Yep. Then they would approve, you know, the payout.
Speaker 1:Yeah. And so afterwards, after the arrest, law enforcement officials lauded the arrest as a significant victory in the war on cybercrime. Politicians who had long criticized Silk Road took credit for pushing agencies to shut it down. Mainstream media coverage exploded with, headlines labeling Ross as everything from a brilliant hacker to a modern day outlaw. The sensationalism surrounding the kingpin moniker overshadowed the complexities of Ross's motivation.
Speaker 1:He was painted as a cold blooded trafficker who profited off of addiction and despair. I think that's probably correct. His friends and family were stunned.
Speaker 2:Was cold blooded. Totally. He was able to separate
Speaker 1:Yep.
Speaker 2:The nice guy, Ross, who had a loving family from
Speaker 1:Yeah.
Speaker 2:He embodied fully embodied the the dread pirate, Roberts.
Speaker 1:So I wonder if there's anyone that gets to this level that isn't cold blooded though. It's, like, it's kind of a prerequisite.
Speaker 2:Every c every c every $1,000,000,000, every unicorn CEO that I know
Speaker 1:Cold blooded.
Speaker 2:Even the ones that are nice, you can tell.
Speaker 1:Ice in their veins.
Speaker 2:Ice in their veins. Yeah. Yeah.
Speaker 1:Meanwhile, the government's forensic teams sifted through the trove of data from Ross's computer. They discovered personal diaries, chat logs between Dread Pirate Roberts and administrators, and spreadsheets deal detailing profits. The data portrayed a person intimately involved in day to day operations from vendor disputes
Speaker 2:to strategies
Speaker 1:and strategies for a
Speaker 2:big long investment. Drug argument. It's just
Speaker 1:like how to evade the government federal, the IRS dot TXT. How to beat the Yeah.
Speaker 2:That was a big part of this. He was not living this high life because he had all this Bitcoin, but he couldn't couldn't really figure out a way to get it off chain.
Speaker 1:Yeah. It was clear that Ross faced a battery of charges, money laundering, computer hacking, drug trafficking, conspiracy to commit murder. The last charge stemmed from his suspected willingness to eliminate threats to Silk Road's anonymity. Whether or not actual violence occur occurred, federal prosecutors used the chat transcripts to argue that Ross was willing to orchestrate killings. As the immediate chaos settled, the case moved toward a long legal process that would captivate the public and set legal precedents about dark web marketplaces.
Speaker 1:And so the, the defense strategy, the legal defense strategy for Ross focused in on a few key ideas. Wrongful identification, they argued that Ross wasn't the true Dread Pirate Roberts, and that the real DPR had set him up. Reliability of evidence, they questioned whether the laptop data could have been tampered with, especially considering
Speaker 2:the corruption charges. That's a
Speaker 1:Yeah.
Speaker 2:Because of how corrupt many members not many, but at least 2.
Speaker 1:Karl Forse and Sean Bridges.
Speaker 2:Karl Forse.
Speaker 1:It's like, yeah. Maybe there was something weird going on.
Speaker 2:Yeah. And they were encouraging him to do things that work. That like, that was a whole like, I I think it was Nob who who would be, like, yeah. You should take the
Speaker 1:CIO out. Yeah.
Speaker 2:And it's
Speaker 1:Oh, yeah. They definitely
Speaker 2:And law enforcement helped the traffic. Helped. They they they helped him.
Speaker 1:Yeah.
Speaker 2:They were involved with helping fake these sort of murders as well.
Speaker 1:Yeah. And so they they wound up not, convicting him of that, but it definitely, like, set the tone of the trial and kind of get people out of this mind instead of, like, he just got to website. A young guy. And maybe he did this other stuff. We're not even gonna push him on that, but it, like, threw
Speaker 2:him out. Few things that didn't scale. Yeah. But but it it also is interesting. It would have been sort of, I imagine, untenable if he was convicted on the murder for hire stuff
Speaker 1:Yeah.
Speaker 2:To actually get pardon. So that small detail, I I think it it doesn't seem like Trump knows his actual name. Yeah. But I imagine there would have been much more pushback if he had been actually convicted of Yeah.
Speaker 1:Of So look at this digital diary. There's an excerpt in here that says, I'm doing about $2,000,000 a week in sales now. They also had logs with references to specific violent acts that Ross had allegedly considered or at least verbally agreed to pay for.
Speaker 2:Yeah. And so he
Speaker 1:has sent He says now.
Speaker 2:$750 $750,000 of money to fund hits. So he was paying for the hits. Yeah. They weren't happening.
Speaker 1:So he pleads not guilty, and, and there's a public trial. His mother, becomes a tireless advocate for his cause. They argued that the government was making an example out of him, which I think is probably true since this was, like, the first major cybercrime, deep web case.
Speaker 2:Yeah.
Speaker 1:And and and if they didn't get to him, there would just be a 1000000 more.
Speaker 2:And there was super like, there was Gawker articles.
Speaker 1:Yeah. Exactly. It's been mainstream for sure.
Speaker 2:So it's very embarrassing to law enforcement to have Yeah. A website that anybody can go to to buy. Yep. That's if law enforcement can log in and view it and regular like, a high school kid can do it and some, you know, grandma can do it.
Speaker 1:Yeah. It's just such a violation of, like, the the social contract. Yeah. In the in the in the end, the case would be resolved in the public eye with Ross heading to trial January of 2015, a date that would not only decide his fate, but set a precedent for the future of dark web marketplaces. The trial took place in New York in Manhattan federal court presided over by judge Katherine Forrest.
Speaker 1:It was a high profile case, and the courtroom was often packed with journalists, curious onlookers, and Ross supporters. The atmosphere was tense. The prosecution maintained a mountain of files, presented a mountain of files taken from Ross's laptop.
Speaker 2:This was part of the challenge for the defense is there was, like, 6 terabytes of data that they were, like, they're using against him. And so they're, like, they're, like, yeah. Like, we're gonna use all of this against you. Like, good luck. One other thing he benefited from is he had tried to set up a Silk Road armory
Speaker 1:Oh, yeah.
Speaker 2:But it totally flopped. Yeah.
Speaker 1:Yeah.
Speaker 2:You know, like, you know, sometimes you hit PMF as one thing.
Speaker 1:It's a side project.
Speaker 2:He he realized that it was, like, like, much harder to, like, send guns in the mail.
Speaker 1:Oh, yeah.
Speaker 2:Totally. But he was trying to sell I think you could
Speaker 1:buy explosives on the south road. Grenades and you can buy fully
Speaker 2:automatic weapons. Which is just, like, even even I think that gave Ross some pause around, you know, that the
Speaker 1:Yeah. This was the libertarian thing that always got got to me. It's like he he would argue that, you know, I am willing, I'm I'm willing to consent to sell drugs. You're willing to buy drugs. Therefore, the government has no say in that.
Speaker 1:But the there's always this question of, like, negative externalities. And what what got to me was, like, well, at at a certain point, you were selling, like, cyanide. And Yeah. And and also, it's like, okay. Even if that's not bad between the two parties, what about the the UPS guy that has to carry that?
Speaker 1:Like, did they opt into that?
Speaker 2:So if explosives are
Speaker 1:going into the mail Yeah. It's like, oh, I'm just a I'm just a FedEx driver, and now I have to carry grenades. Like, I didn't opt into that. Like, in your libertarian philosophy, I don't consent to that.
Speaker 2:Libertarianism seems to work if you had a private island.
Speaker 1:Yes.
Speaker 2:And and everybody there is there by
Speaker 1:their own. Joke. Yeah. I mean, like Sounds like yeah.
Speaker 2:I mean, it's basically going there.
Speaker 1:But, yeah,
Speaker 2:it's it's
Speaker 1:it's it's it's it's totally
Speaker 2:yeah. Your actions are affecting other people that are participating in a society that has agreed to have certain laws.
Speaker 1:Yeah. You never think about the next negative externality of, okay. You brought these drugs in and then the drug dealers on the street and commits violence because of this. Or you're funding a like, it's always just, let's look at just the one the one micro interaction and not consider the knock on effects. And and that's why we have, like, an actual society and societal contract.
Speaker 1:And so, the government witnesses included law enforcement agents who had participated in Silk Road investigations. Ross's defense contended that he was set up. Friends testified to his peaceful nature, pointing out how out of character it was for him to order violence or run a massive drug site. Over the course of 3 weeks, jurors were presented with a dizzying array of digital exhibits, as you mentioned, 6 terabytes or something like that, IP addresses, chat logs, and email addresses. And on February 4, 2015, after only a few hours of deliberation, the jury returned a guilty verdict on all 7 counts, including narcotics trafficking, computer hacking, money laundering, and maintaining an ongoing criminal enterprise.
Speaker 2:Yeah. And so to be clear here, this was, like, 3 weeks. It was not the kind of trial that stretches on for months months or years. It was, like, very quick, and the the deck was certainly stacked against him. Right?
Speaker 2:He had all these different agencies that were and there was so much evidence.
Speaker 1:Yeah. And when you think about other other trials, it's like, well yeah. Like, maybe they got some photos or something, or maybe they kicked down a door and they found someone with something, but it's all it it there's always this question of, like, oh, was it planted? But when you when you show someone 6 terabytes of, like, okay. We got his computer.
Speaker 1:He his hands
Speaker 2:on the keyboard. This profile.
Speaker 1:Logged in. It's a lot Typing. Harder to Yeah. To paint the, you know, the
Speaker 2:the Yeah. And even even this is why they it ends up being really hard for law enforcement to pin down traditional narcos Yep.
Speaker 1:And they
Speaker 2:get them on money laundering Yep. And things like that
Speaker 1:Yep.
Speaker 2:Or wire fraud Yeah.
Speaker 1:You know, this IRS. IRS.
Speaker 2:That's, like, unrelated
Speaker 1:to Al Capone went down for tax evasion, not
Speaker 2:for
Speaker 1:drug trafficking.
Speaker 2:And it's because it's really hard, especially the the Ross was able to build a massive enterprise quickly because of the Internet. Yep. But he also generated a massive amount of data related to that activity. And a a narco, you know, you have, like, I'm on, like, a radio, you know, talking or whatever. They're you know, there there's less of a lot of narcos, at least in Mexico, have, like, regular businesses too that they're talking about.
Speaker 2:Yeah. Yeah. And so And so Not the same amount
Speaker 1:of evidence. Sentencing happens a couple months later, May 29, 2015. Judge Catherine Forrest sentences him to 2 life sentences plus 40 years. And because it's a federal case, there's no possibility of parole, so he is truly screwed. And this was one of the sing it was significantly harsher than typical sentences for nonviolent drug offenses, especially given his age, 31 at the time.
Speaker 2:Which is like It's not bad.
Speaker 1:Young, but
Speaker 2:The whole, 30 you know?
Speaker 1:He was young. He did this in his twenties, but he wasn't a teenager who was, like
Speaker 2:His prefrontal cortex was developed. Yeah. Developed, and he had a good 5 year run with a full cortex.
Speaker 1:Full cortex.
Speaker 2:Full cortex mode.
Speaker 1:Yeah. And so But
Speaker 2:he was he was smoking pot. They should have included that.
Speaker 1:Yeah. Ross appealed the decision, and this outcome underscore the US justice system's stance on dark web mark marketplaces, an uncompromising approach that signaled to future clandestine operators that they too could face the rest of their lives in prison. And we didn't really see a replacement pop up very quickly. It was it was pretty it was pretty,
Speaker 2:I
Speaker 1:think it
Speaker 2:was effective. I well, the dark I mean, many of these transactions, like, still occur on the dark.
Speaker 1:Like, I I think I can't tell you But there's not a brand in it. 22.0. I'll just go over here.
Speaker 2:Thing. Any I think, historically, anytime a drug has become a brand name
Speaker 1:Yeah.
Speaker 2:They get taken down. Right? Sure. And so, like, that's why when you think about okay. 1,000,000,000 of dollars a year of cocaine gets consumed in the US.
Speaker 2:There's no brand that you can think of. Right? And as soon as you tie a brand to it, then there's, like, well, now we can start tracing this.
Speaker 1:Yeah. And
Speaker 2:and it so it's just
Speaker 1:like Colombian cocaine.
Speaker 2:That's why I'm saying Colombia. Yeah. Yeah. It's sort of that that one's more obvious. Yeah.
Speaker 2:But, yeah, I imagine that this way more volume happens now. It's just not these sort of brand name marketplaces. Right? Silk Road was the DoorDash
Speaker 1:It really was.
Speaker 2:Or the Uber of Yeah. It was crazy. You know, whatever you wanted.
Speaker 1:And so, Carl Forse and Shawn Bridges, after the after the Ross conviction, the scandal emerges, and they get sentenced to 6a half and 6 years, and then more when further misconduct was discovered. And so, they go to jail for, stealing a bunch of money and basically do not not doing their job at all. Yeah. Meanwhile Well,
Speaker 2:it's a weird thing. They were trying to catch him, but they were also trying to make, you know, a buck in the process. Yeah. Weird thing.
Speaker 1:And so, it goes on, but let's move. So that was let's see. 2015. In 2016 to 2017, he app Ross Ulbricht appeals his conviction to the US Court of Appeals, asserting evidence was tainted by law enforcement corruption, but the court upheld the guilty verdict. In May of 2017, the second circuit of New York reaffirms Ross's life sentence, reasoning that the massive scope of Silk Road justifies an exceptionally harsh penalty.
Speaker 1:In 2018, June 28, the US Supreme Court declines to hear Ross's final appeal, effectively exhausting his direct legal avenues for overturning the conviction. Lynn Ulbrich during this time 2015 onward, spearheads the Free Ross movement nationwide championing her son's cause.
Speaker 2:And Lynn is a cracked marketer.
Speaker 1:Cracked.
Speaker 2:Absolutely. Went to town Yep. For her son.
Speaker 1:And so in December of 2021, the Albericht family auctions Ross's writings and artwork is NFTs online, raising 1,000,000 through the decentralized organization, FreeRoss DAO, to support continued legal efforts. In 2021 to 2022, a stash of over 50,000 stolen Bitcoin from the silk road is seized by the US government, and Ross relinquishes any claim to help satisfy his $183,000,000 restitution order. And in 2024, PirateWires reported on April 2nd that the US government has moved roughly 2,000,000,000 in Bitcoin confiscated from Silk Road to what to what's reported to be a Coinbase wallet per CoinDesk.
Speaker 2:Yeah. And everybody's like, are they gonna market sell this?
Speaker 1:They're gonna sell this. It's getting bad. Everyone's worried. And so, in May of 2022, congressman Thomas Massie calls publicly in the house of representatives for Ross for Ross's commutation, viewing the life sentence as a grave injustice beyond appropriate punishment. And in 2024 yeah.
Speaker 2:To be clear, it is a bad precedent that law enforcement agencies can commit a bunch of their own crimes Yeah. In the effort to take somebody down and then still if they get
Speaker 1:Yeah.
Speaker 2:Like, it it is a terrible precedent. Right? We we wanna live in a society ideally where nobody
Speaker 1:Yeah.
Speaker 2:A Viby libertarian utopia where nobody's, you know, nobody's, like, hurting each other. But then if one person commits a crime, it doesn't justify another person to commit crimes in order to take that person down. And so many while while we both believe that men many of the things that he did were were net net negative and bad, it it is, you know, the the people on the other side of that that don't believe he did anything wrong, they also have a, you know, I don't necessarily think they have a good point there. They do have a point that that it's a bad precedent that, you know, law enforcement should be able to commit crimes and then still, you know, deliver this, like, you know, very intense, sentencing.
Speaker 1:Yeah. And so let's go through some of the more recent, facts about the how we got to the pardon. In May of 2024, Donald Trump promises that he will, pardon Ross on day 1, swaying libertarian minded voters and crypto enthusiasts. On in June of 2024, r RFK junior running for president similarly vows in a public statement to grant Ross a pardon. In November, Chase Oliver, the Libertarian party's president
Speaker 2:spotlight wanted to spotlight Silk's Silk Road's role in pioneering cryptocurrency, which is to kind of, like Hold on. Everybody's, like, really just trying to
Speaker 1:Get the crypto in
Speaker 2:the back. For sure.
Speaker 1:The Libertarian Party's presidential nominee reaffirms in Reason Magazine that a full pardon aligns with fundamental libertarian principles. I kinda debate that. And then on January 21st, 2025, President Donald Trump signs a full and unconditional pardon from the o Oval Office fulfilling his campaign pledge.
Speaker 2:And so the crazy thing about this is, like, imagine you're Ross. You're in jail for a decade.
Speaker 1:Yeah.
Speaker 2:Trump gets elected, signs a doc. 48 hours later, you just walk out of prison.
Speaker 1:Yeah. You're you're free.
Speaker 2:And that's why I I felt like this was a I wouldn't have wanted to cover this story
Speaker 1:Yeah.
Speaker 2:At all Yeah. A month ago Yeah. Because it was just purely dark. It's like, okay. He committed a bunch of crimes.
Speaker 2:Now his life Yeah. In jail. Yes. He was
Speaker 1:Now he's off to execution. Right? From a
Speaker 2:business standpoint. Yeah. Now he's now he's he's taken Now
Speaker 1:he's staying on the road trip.
Speaker 2:No. And there there's rumors that that he's still worth, you know, presumably
Speaker 1:Yep. It seems like he might have had a second or third Bitcoin wallet that was not seized. And so he might he might have come out with a lot of wealth Yeah. Which would be fascinating.
Speaker 2:And He was forced to
Speaker 1:And I don't hold it. Yeah. I I yeah. Yeah. Ultimate huddle ultimate hudd huddler.
Speaker 1:And so, Ross, now free, speaks across the US about prison reform, cybersecurity, and the lessons of Silk Road aiming to reshape his legacy in the libertarian movement. And, he he's pardoned in living under close public scrutiny, continues to champion libertarian advocacy and prison rehabilitation efforts. So it'll be interesting to see once he actually does, like, the Joe Rogan style interview or the Lex Fridman, like, the full story. I am interested to hear his side of this. I I wonder I would
Speaker 2:be surprised if he doubles down and says I wasn't DPR.
Speaker 1:That would be interesting.
Speaker 2:I I just can't do
Speaker 1:that if he's important? He doesn't need to
Speaker 2:do that. Need to do that. So if he does do that, that would be and then he's able to prove, like, through some crazy thing, which I which I don't believe.
Speaker 1:Yep.
Speaker 2:The main thing my main takeaway is this guy is a goated operator.
Speaker 1:That's true.
Speaker 2:Like, clearly, like, he benefited from some luck and timing and was, like, this missionary founder, but but self taught developer, first time CEO, bootstrapped, 0 to a 1,000,000,000 in sales, very, very profitable the entire way, operating a remote team.
Speaker 1:Yep.
Speaker 2:He has clearly is very powerful.
Speaker 1:In some ways, he's playing in. Aura. Yeah.
Speaker 2:And if he uses that for good
Speaker 1:It could be very good.
Speaker 2:It could be very good.
Speaker 1:In some ways, he's, he's playing the game on hard mode in the sense that, as you mentioned, he can't talk about, people you know, he can't talk to anyone about his business. He can't, you know, get, you know, public investors or advisors or anything. But on the other side, he is selling the most addictive product that just has immense pull from the market because it's illegal. And so Yeah. I don't know how much credit you actually wanna give him.
Speaker 1:Let's go through some more posts. We got captain Nemo says Silk Road's historical importance is still underrated. I thought that was I thought that was interesting from 2022. This is well before the pardon, and there's another post from captain Nemo in here. 2022 says, the ultimate tech anon moment was when Forbes did an interview with the dread pirate Roberts, the anonymous founder of Silk Road, at the height of Silk Road's ascent when multiple federal agencies were trying and failing to track him down.
Speaker 1:It's so funny that he did an anonymous interview successfully with Forbes because it's like, now, you know, Beth Jesus can't stay undoxed. Yeah. And, like, it's he, you know, can't do an interview Yeah. Without getting doxxed. And this guy was able to to stay anonymous while appearing in Forbes.
Speaker 1:Last year.
Speaker 2:One of our one of one note, friend of the show, Lone Ranger says Donald Trump paved the way to be to the White House as a quote, unquote, convicted felon, giving Ross a clear path to a presidential run-in the future. Ross, who turned 40 in prison, is now old enough to run for president and could be the 1st libertarian president if elected. So that's a stretch to me.
Speaker 1:It's a joke, but it's one of those things where it's, like, maybe.
Speaker 2:But but the oftentimes, the most entertaining
Speaker 1:Outcome is the most likely. I agree.
Speaker 2:And I Yeah. It does feel like not totally out of like, if if Ross's goal is to create a libertarian utopia Impossible. United States is awesome. It's a it would be a great place to be a true utopia. And if that's what he believes, now he's got a few $100,000,000.
Speaker 2:He can finance a campaign. You know?
Speaker 1:I will be campaigning against him. That's all I can say. Yeah. Yeah. We need law and order.
Speaker 1:Law and order. Captain Nemo continues and says, more recently, he posted this January 21st when Ross was pardoned. Hard to overstate how impactful it was to be a young earnestly curious student when Ross Ulbricht was running Silk Road as the Dread Pirate Roberts, operating a completely illegal digital bazaar openly for years despite every effort to stop it by the most powerful nation state ever. Massive handsonian viewquake viscerally opened my eyes to technology's power to reshape existing power dynamics and so the flow of history for better or worse.
Speaker 2:Yeah. And even I
Speaker 1:think that's super interesting to think about how powerful the Internet and this new technology was that even though it was only 2 years and he did get shut down, he went on a generational run and was able to actually do this thing that no one else is able to do purely in his technology.
Speaker 2:Crypto for a long time was looking for use cases outside of Bitcoin being digital gold
Speaker 1:Yep.
Speaker 2:Meme coins being speculation, and and and other activities. And the the most obvious use case outside of digital gold that had the craziest product market fit was the Silk Road. Right?
Speaker 1:Yep.
Speaker 2:But no crypto VC could be like, oh, look. Look what's possible. Yeah. Like, this is the potential of crypto because there was just, like, a thousands of crimes being committed a day, you know, like, at scale. Yeah.
Speaker 2:But, and it's and it's funny because everybody that was if if all the people that had just been, you know, committing crimes with BTC early days of Silk Road, if they had just bought and held, they'd all be millionaires Yeah. Because they'd be using, like, 20 Bitcoin to buy, like, one pill.
Speaker 1:Yeah. You
Speaker 2:know? So that was, like, an expensive night on night on the town. You know?
Speaker 1:Yeah. The the the stories around Bitcoin have evolved so much. Like, version 1 was this, we've used math to solve the general's problem, and it's gonna be decentralized and not controlled by the government and, perfectly anonymous. And then a lot of those stories kind of eroded, and it became just this crime money, basically. And then it somehow made it through that and just became digital gold.
Speaker 1:And now and then there were new narratives around, oh, well, there'll be all these, like, games and metaverse built on top of it, and then that kind of melted away. And now it's prediction markets and and meme coins and digital gold and just kind of a store of value. But it's interesting that at every point in time, there's been so many negative narratives about this is the worst thing ever, but there's been this one enduring narrative that's stuck with it and driven value and now it's at a 100 k. It's, like, it's crazy.
Speaker 2:Well, yeah. And it's still even though what like, the I don't like, honest, analysis of crypto technology, you could never say this isn't cool.
Speaker 1:Exactly.
Speaker 2:Like, this isn't, like, this crazy, truly novel transformative technology. Yeah. It's just that the primary case study was a nefarious use case. Yep. Right?
Speaker 1:Yep.
Speaker 2:But it's still incredible that you could operate an open air
Speaker 1:Yeah.
Speaker 2:Drug bazaar online that anybody could go to and see and law enforcement could see and not do anything about. Like, that is a wild
Speaker 1:It was insane. Wild
Speaker 2:situation.
Speaker 1:So let's go to Katherine Hahn, former GP at Andreessen Crypto, now with Hahn Ventures. And she is, quoting, the I think the founder of Chainalysis, which is a company that does, research into how crypto is used nefariously. Jo, Joni Levin says, today is my proudest day at Chainalysis. We enabled US, UK, Germany, and South Korea to take down one of the largest child abuse material sites. Law enforcement in 38 countries made 330 arrests of alleged pedophiles and rescued 23 children from abuse.
Speaker 1:And Katherine Han says, great work by Chainalysis and the authorities in such an important case. As I found when working on the Silk Silk Road corrupt agent and other cases, having the digital bed breadcrumbs of crypto was a useful tool for law enforcement. And so she's actually saying that, like, the reason that she was able I didn't know this, but I guess she worked on the the Corrupt agents. On those corrupt agents in the Silk Road case. And the reason And the
Speaker 2:agents were obviously taking payment in Bitcoin.
Speaker 1:And so they were able to trace the Bitcoin where it moved out of the Silk Road account into their account and then was eventually taken off chain. And I think they were buying, like, sports cars and stuff. And so they were able to figure that out and track it down. And she was saying, like, if this was Fiat, that would not have been possible. And so that's actually the exact opposite narrative that people were telling in crypto, but it still worked out.
Speaker 1:I
Speaker 2:don't know if she's saying it wasn't possible, but normally harder. So if a corrupt agent takes a cash payment
Speaker 1:Exactly.
Speaker 2:There's not a record of that.
Speaker 1:Yeah. The classic, like, you kick down the door. You've gotten the drug kingpin, and there's a huge stack of cash, a huge stack of cocaine, and then a bunch of luxury watches. And you're just like, yeah. Throw the watches in the back.
Speaker 2:One node.
Speaker 1:Yeah. Yeah. Oh, yeah. We got a lot of cash and a lot of cocaine. I didn't see any gold bars there.
Speaker 2:Yeah.
Speaker 1:Throw it in the backpack. And, like, you see this in, like, training day and, like, those, like Yeah. Kinda cop movies. And there probably some element of truth and, you know, a lot of things.
Speaker 2:It's wild. It shows
Speaker 1:Don't do that.
Speaker 2:It shows the, you know, the fact that Katherine was working on this crazy high profile case Yeah. Still recognize the potential of of crypto Yeah. And goes on to have a $2,000,000,000 fund now. She was a GP.
Speaker 1:An injury billing at historic run.
Speaker 2:Historic run. Yeah. 2021.
Speaker 1:Coinbase and stuff. Yeah. Fascinating.
Speaker 2:So wild wild story.
Speaker 1:So let's go to a promoted post. We're we're we're we're we're done with the Ross Ulbrich story. I hope you enjoyed it. We're moving on. We're gonna go to the timeline, but first, we got a promoted post from Josh Steinman promoting my product.
Speaker 1:The one I've done with, with Jordy. He says, cofounder just texted me confirming that Excel performs as promised. And, Excel, if you don't know, is a project a little marketing stunt that Jordi and I worked on, to, deliver shareholder value. So it's a nicotine product that
Speaker 2:says right now. In many ways the genesis of of TV because we would This was the first loud opulence podcast. We would riff on what nicotine meant in the context of value creation and that that many of those early conversations sort of transformed into the show. So it's a cool physical
Speaker 1:Yeah. I mean, I think I think basically the first time we did anything that felt like this format was the the the launch video type that we did a Vibrio, and then we did an hour sit down. And we both came into it being like, oh, yeah. Like, let's just, like, riff on this and talk about what we did and embodied characters. And we just were fully in character the whole time.
Speaker 1:And Ben, our vice president, was like, is Geordie an actor? Like like like, what what was that? And and we were there's some amazing quotes in there. It's fantastic. Yeah.
Speaker 1:We still have that that's that's a lost episode. We've never uploaded the full thing. So it's, like, over an hour. We've only released, like, all the clips.
Speaker 2:I can't believe we recorded for an hour.
Speaker 1:Oh, yeah. We were just on fires. We were just locked in podcast for time. For sure. For sure.
Speaker 1:Let's move to, a very important story. Valentine's Day is coming up. I'm sure there's someone in your life that you need to get something nice. I was asking Jordy
Speaker 2:If there's not This is the alternative. Aggressive move right now to reach out to somebody maybe even thinking about it.
Speaker 1:Is here. Is here. Coughing season. And so I was asking Jordy, you know, what is the Patek Philippe of Valentine's Day gifts? He said the Birkin bag, which I think is a good answer.
Speaker 1:I I did hear that Birkins are maybe not a Valentine's Day gift, more of Christmas or birthday gift, and Valentine's Day is more jewelry and chocolates. So we need to find some good jewelry and chocolate options.
Speaker 2:Controversy.
Speaker 1:We're gonna do a whole deep dive on Valentine's Day gift guide for sure. Yep. But there's interesting story going on right now, because, Walmart has cloned the Birkin bag.
Speaker 2:Oh, I know.
Speaker 1:Have you
Speaker 2:heard about this?
Speaker 1:So Bethany Frankel says, we are witnessing a luxury goods rebellion, and we are rewriting the rules of fashion. Last night, I talked with NBC News about the viral burke Walmart Birkin bag has taken over social media. And they call it the workin' bag, and it's $80, and it's a clear knockoff.
Speaker 2:And the
Speaker 1:Birkin bag, if you're not familiar, is from, LVMH, right, or Hermes?
Speaker 2:Hermes. Hermes.
Speaker 1:Separate separate company.
Speaker 2:It's been family owned,
Speaker 1:and it's public now.
Speaker 2:But it's been
Speaker 1:cost to get in the game? It's, like, 20 k, 30 k, something like that?
Speaker 2:Yeah. I mean, the it's the same thing as Patek and then
Speaker 1:there's 3 k for alligator stuff. Yeah.
Speaker 2:You can't really just walk in off the street and
Speaker 1:buy 1. Yeah. Yeah. You have to be invited. You have to have a relationship.
Speaker 1:And so it it is it is in that, you know, Audemars Piguet, you know, Patak
Speaker 2:Holy Trinity. Home. Holy Trinity.
Speaker 1:Yeah. Where where
Speaker 2:And they started with saddles.
Speaker 1:Oh, yeah. They did.
Speaker 2:Yeah. That's right, Hermes. Yeah. So there there's an amazing acquired episode on the history of Hermes, and there's this family drama that you know, this whole dynamic. It's kind of a it's a wild wild story.
Speaker 2:So we should do the TV reaction to the acquired Yeah. Episode on Hermes.
Speaker 1:Okay. I like that.
Speaker 2:We just press play for 5 seconds.
Speaker 1:It was yeah. It it was funny because I, I I was looking up, like, Walmart, stuff, and I got a ton of posts from Bernie Sanders being like, they make too much money. And I was like, well, I hate them too, but for a different reason. Me and Bernie can agree on something. We agree on one thing.
Speaker 1:They're ripping off luxury goods. They should be charging more.
Speaker 2:Yeah. I mean but but tying this back to yesterday, we're talking about the what's happening in the automotive industry with the premium brands being knocked off. The thing here is that the way I can guarantee you, the the woman or the the households that are buying Birkin bags
Speaker 1:Yep.
Speaker 2:Are not seeing this Walmart product and saying, I'm gonna get that instead. Yeah. It's people that aren't buyers of Hermes Yeah. That are saying, I just like the way this purse looks. Maybe they like the way the fact that it looks like it, Birkin.
Speaker 1:I mean, you could always buy a knockoff Birkin bag at, like, Canal Street, right, on the street. The street vendors, very low quality knockoffs Same thing with watches or anything. Stuff.
Speaker 2:The only things that are hard to buy knock offs of are cars. Cars.
Speaker 1:They do they do make perfect replicas of cars.
Speaker 2:Yeah. Yeah. But, I mean, they still end up being, like Yeah. $200,000 because it's, like, a super bespoke.
Speaker 1:There's only so much you can do. Yeah. But, yeah. It's just funny that Walmart would do this. I feel like there'd be a legal battle on the design patent or something, but who knows?
Speaker 2:I'm sure they'll but it's also, like, the Birkin's been in market for so long. Do you can you actually defend that IP? Yeah. You can have design patents. Yeah.
Speaker 1:Maybe not. And, it just takes a lot of time.
Speaker 2:They can't copy the brand.
Speaker 1:Yeah. Walmart is not a move fast and break thing, like, small. Oh, like, maybe we'll get the letter from Hermes. Like, they clearly consider the the legal impact of this before they
Speaker 2:launch it. The main thing here too is is if you hold an actual Hermes product up to this
Speaker 1:Oh, yeah. It's not close.
Speaker 2:It's not anywhere close. And so the the some people will argue, oh, it's like it's the same exact thing. Why is Hermes charging this much? And it's like charging that because of the brand, but also the quality. Yeah.
Speaker 2:Like, they've mastered the art of making these bags, and they they have incredible margins, but it's still a fantastic product.
Speaker 1:Like, you know, $80, like, the cogs on a on a true real Hermes Birkin bag or
Speaker 2:what? Probably a thousand.
Speaker 1:Probably a thousand. So 10 times as much just in quality, and then you get the the actual brand and all the extra lift on top of that. Thought that was an interesting story. But stay tuned for our full Valentine's Day gift guide and our reaction to the the story of Hermes. I'm sure we'll cover it at some point.
Speaker 1:This is this is interesting. I I saw this going around with some friends. There's a scam going on. You know, we love to highlight scams on this show. There's a new scam I've just recently heard about says, David, The QR code scam.
Speaker 1:People are either sending you a package or they put it in your mailbox. Inside might be a small item, not of much value or no item at all. With that, there's a coupon or a piece of paper with a QR code on it for you to scan. Might say free or discounted or even a giveaway item. Once you scan the QR code, the hackers now have access to all or some of your data, including financial information.
Speaker 1:So they're basically trying to trick you to go into, like, a phishing flow. So it'll be like, scan this QR code, and it takes you to, like, amazon login.com. And then it looks and then you type in your username and password, and they basically phished you. And they've they've used, like, the analog real world to get you into a phishing flow, which where that would normally be caught by a spam filter. Filter.
Speaker 2:Yeah. Yeah.
Speaker 1:But it's not gonna be filtered by the ESPN.
Speaker 2:Real world action.
Speaker 1:Yeah. Yeah. Very interesting.
Speaker 2:I had a buddy recently that got his Instagram account taken over, and it was, like, bunch of Instagram stories of him hyping up this person and coach Maria.
Speaker 1:Sick. It
Speaker 2:was, like, helping him invest. And he's, like, you know, I don't normally like, it was written in a way. It was like, I don't normally talk about this kind of stuff.
Speaker 1:Oh, it's just, like, text over
Speaker 2:It was like an Instagram story. Oh, yeah. So it was, like, text over an image, and it was like, I don't normally talk about this stuff, but I started working with this woman named coach Maria. She helped me turn 2 grand into 50, Like, reach out to her. And and, of course, like, all me and all my other friends are, like, awesome.
Speaker 2:Like, I gotta hit up coach all the comments. No. No. No. Finally got back in.
Speaker 2:I I honestly don't
Speaker 1:think
Speaker 2:I don't think it I don't think it fooled anybody, but they're doing that at such an extreme scale that that they're bound to get
Speaker 1:So this is a promoted post for 2 factor authentication.
Speaker 2:Yeah. Yeah.
Speaker 1:Turn it on. Lock your accounts down. The hackers are desperate these days. Anything for a buck. But I'll do that.
Speaker 1:Have you heard of lumpy mail, generally?
Speaker 2:No. What's that?
Speaker 1:So lumpy mail is a, so basically, like, if you send someone, like, junk mail, they'll usually just filter it out and and, and they'll just throw it out, like, at the mailbox. When you get your mail, you'll just throw out, like, oh, this is clearly like a flyer for something. I'm just gonna throw this out. Then the, like, physical mail retail marketers figured out that if they got a machine to hand write your name and your address and make it look like it was script and like it was written by an actual person with a real stamp on it, it would be like, oh, maybe this is a Christmas card. I'll open it up.
Speaker 1:They open it, then then they see the ad, and they engage a little bit more. Lumpy mail is is, is a letter that has something in it, like a little chocolate. And so the the envelope looks like it's lumpy. And so it's more expensive to send through the mail, but it has a higher open rate. And so you can send people lumpy mail
Speaker 2:mail Conversion optimization.
Speaker 1:And it's all about conversion optimization to just getting someone to open the physical mail, see the ad, and then potentially buy the product. And, this is just the next generation of that.
Speaker 2:Yeah. The the classic is I get I mean, I would pay an almost ungodly amount of money to never receive physical mail Yeah. From I would even be willing to give up letters from loved ones and Christmas cards and fully switch to digital just to not get physical mail because it's just such a
Speaker 1:Have you ever done, like, earth class mail or any of those services? Like, PO box forwarding, and then it scans it all. You see there's
Speaker 2:a But, like, enough people have They
Speaker 1:figured it out.
Speaker 2:Yeah. You have a they just can send it to your address. Right?
Speaker 1:So Yeah.
Speaker 2:Yeah. It's rough. But, the classic now is, like, the like, they'll just write, do not throw away.
Speaker 1:Yeah. Exactly.
Speaker 2:You open it, and it's, like, okay. Time offer. Some insurance thing that I don't need.
Speaker 1:I feel like in here, there is a non scam version of a very viral marketing strategy. Like, if you like, if we were to do some sort of drop where we got a bunch of people's addresses and we sent them something that looked like a package, they open it up, there's a QR code, and it goes to a VibeReal announcing season 2 of Technology Brothers. Like like, that or it just
Speaker 2:goes to public service.
Speaker 1:Exactly. It just goes to, like, our x account and just says, like, you wanna follow it. Oh, we we get mail. Lumpy mail. So we're huge.
Speaker 2:We were out of town for a couple weeks, but I came home to this, a package from Fiorentino label. And so I can open it up here quickly. I'll read this. So if you don't know, Fiorentino label, is by a entrepreneur and friend of the show, John Fiorentino. He says, gentlemen, it is with the deepest admires admiration that I present to you this handcrafted tie from Florentino label, conceived by hand and brought to life by Fabio Caldarella, a true maestro of Italian bespoke tailoring with over a quarter of century of mastery.
Speaker 2:This piece is a testament to the timeless elegance and unparalleled craftsmanship we hold sacred. Got this wonderful letter from John himself, and then I saved it to actually open it on the show. John had, given us a little bit of, you know, a subtle critique that we don't wear ties enough. And so now we don't have an excuse. This thing is fantastic.
Speaker 2:So, expect to see us
Speaker 1:Yeah. Rocking that. I like that he just sent us one tie. Well, I think you
Speaker 2:got I think you got one.
Speaker 1:Second tie. Is there 2 other 2?
Speaker 2:No. No. I think he sent one to you too. Just, like,
Speaker 1:buried in
Speaker 2:your mail.
Speaker 1:No. No. No. It's our communal tie. We'll trade it off.
Speaker 2:Yeah. Yeah.
Speaker 1:We'll share it.
Speaker 2:Or you I can just hold one side and hold the other, and it's like the fidget type thing. Yeah.
Speaker 1:Exactly. No. No. No. It's great.
Speaker 1:I I I need to get I need to that's the next evolution. I got a bunch of new suits. I'm I'm sporting the white suit today. Got a couple more. I'll I'll be strutting on the show.
Speaker 2:You look like, colonel Sanders had a liquidity event.
Speaker 1:That's what I'm going for. That's the look. But definitely, the tie game is next. I like the open the open collar look, but, you know, it's a little too casual for what we do. For for her podcast, for technology podcast.
Speaker 1:Yeah. Oh, that's great. Well, thank you to John Feo. And if you do wind up purchasing a suit from Fiorentino label, tell him the Technology Brothers sent you.
Speaker 2:We've already had a few people
Speaker 1:go through. Had a couple conversions. What was that? In your text, there's some q and a from the chat. Okay.
Speaker 1:In the group? Yeah. You wanna read some q and a stuff? Jordy, what you got?
Speaker 2:Q and a.
Speaker 1:Let's see.
Speaker 2:Can we get an affiliate link in the description of those suits? Incredible suits today from Sky. Honestly, AJ Thank you. We really appreciate it. AJ Sharp says, honestly, a groundbreaking banana bone cream.
Speaker 2:Yes. And, John says white suits for a black market. Tyler says, VP, let's get a ticker tape on the bottom where the fits are from with codes. New ad skew. Yep.
Speaker 2:This is great. So this is great. This is crazy.
Speaker 1:So fantastic. My see you in the chat, guys.
Speaker 2:Ash Ashley says, my question is what's their plan to monetize with this podcast? Brother, we are already monetizing on a scale.
Speaker 1:Never before seen. You don't become the most profitable podcast in the world with running a lot of ads. I do think that we are very much on the side of of integrated brand partnerships, advertisements, and there's a very good reason for this. I mean, first off, we don't believe in audience capture. And if so, if we were charging the viewers, pretty soon, we'd be like, what do the viewers wanna see?
Speaker 1:And then we'd have to deliver exactly what they want. And so we are 100% corporate supported here. So if you wanna help support the company, call a company and have them sponsor the podcast. Yeah. This is the key.
Speaker 1:Yeah. But but but but, seriously, like, there's a long, long history of this debate about, should you just charge, like, 5 or $10 a month, the stratigraphy model versus an ad model? We decided early on that the ad model was much better because it allows us more flexibility. It gets more
Speaker 2:than happy with where we
Speaker 1:like supporting our cool companies, and, also, it allows you to price discriminate in a way that captures more value. So there are stratechery readers that are literally billionaires who work at big tech companies. They pay the same price as the college student who's paying $10 a month.
Speaker 2:Which is cool, to be clear. It's
Speaker 1:cool. It's great, But it but it doesn't allow them it doesn't allow them to be
Speaker 2:able to access value. We would rather anybody in the entire world to be able to come and get the 12 hours of content that we put out a week totally for free. Yeah. And then if you wanna use Ramp or work with other partners, if you wanna go on bezel
Speaker 1:Yep.
Speaker 2:And buy, you know, a fantastic watch, you can do that. So it's got a couple other ads. Got a couple other questions. Ashley says, asking about s and p 500 and just, like, public market investing in the future, is it gonna be you know, will companies require the same amount of capital as they get more and more efficient with AI? My answer there is that I think we're still in the early stages of just the hyper financialization of the world.
Speaker 2:Crypto is the hyper financialization of memes. Right? And, companies, I don't think the capital markets are going any anywhere. In many ways, people predict that labor will be less valuable and capital will be potentially have be able to be more impactful because you can now you know, we we talked about this yesterday with all these roll ups. These companies are being bought because they have a 1,000 employees and people think they can bring that down to 50 employees by replacing people with AI.
Speaker 2:So When capital actually becomes Yeah. More, valuable.
Speaker 1:Also, when you just talk about the S and P 500, the S and P 500 is an index on American business. And we've and, obviously, like, America has this narrative, like, we're in turmoil. We're more divided than ever before. Things are crazy. There's stagnation, and there's so many bad things happening.
Speaker 1:But when you go around to other countries, we just did a deep dive yesterday on Germany's economy, and they are in a much worse position than us. Yeah. And and China's economy has been stagnating because of COVID lockdowns and and deflation and currency fluctuations. Tariffs. Yeah.
Speaker 1:Tariffs. And there's so many other things. So the the question of, like, S and P 500 or not, to me, feels like America or not, and I'm still very,
Speaker 2:like, relative to everything else. The markets are a reflection of the general value, the earnings potential of those businesses as well as their future future potential and the the memes that get and the narratives that get built around these companies. And so, thankfully, we're still going to be able to deploy capital with our absolute boys.
Speaker 1:Exactly.
Speaker 2:We got another, another just comment from CX productions. They say thank God the studio is back. It's been a rough few days. It's a rough few weeks, actually.
Speaker 1:They tried to stop us with those fires, but they couldn't.
Speaker 2:And then we got another one question. We thought we needed energy infrastructure to support new AI data centers. We actually needed data centers to justify the energy infrastructure. It's more of a statement potentially than a question, but,
Speaker 1:Clearly not Jevons paradox build. Yeah. Get up to speed. Yeah.
Speaker 2:I don't know. I I I think, even with all the deep seek stuff, every hyperscaler is still saying we still need to build data centers. We still need to, you know, have all this capex and the energy requirements of the way that, you know, on BG Squared, Brad Gerstner, I I was listening to their episode from last week, and they were talking about how, one, the way that OpenAI is projecting their chip demand just from NVIDIA, it would be like a third of all the chips that are sold this year by Nvidia. And Abilene, Texas where this new data center is gonna be is definitely doesn't have the energy infrastructure today to support that kind of Yeah. You know, just energy demand.
Speaker 2:So Yeah. So, yeah, we'll see. It's gonna be exciting, but but it it does seem
Speaker 1:Yeah. I I I think I think DeepSeq, just based on, you know, letting a few days breathe, it's like it changes the economics of the b to b market. It might change the economics of the consumer market to some degree, but everyone is marching forward towards gigawatt training runs and then 10 gigawatt training runs. Like, nothing's changed on that front. People want the best possible foundation model to build the other stuff on top of.
Speaker 1:And sure, if you can get those optimizations, let's see what happens if you run the super optimized model on the 1,000 times much Yeah. More hardware. And that just might speed things up. Cool. Let's go on to more timeline.
Speaker 1:Speaking of
Speaker 2:Thank you, everybody. Deeps. Before that, thank you, everybody, for submitting, questions in the chat. If you're listening to this on the RSS feed, we're now live streaming Yeah. Daily.
Speaker 2:So you can add questions live or just DM us post, and we will get to your questions ASAP.
Speaker 1:Yeah. So simp for satoshi says deep seek went viral outside of Twitter because of the Elon like and 0 hedge retweet of my regera meme. This broke containment, and I had a lot of normie friends in LA tell me they saw this post on a bunch of TikToks. Check the app store before this tweet and after. Deep seek went from 31 to first.
Speaker 1:And the post is, Sam spent more on this than deep seek did to train the model that killed OpenAI. And he posted January 24th.
Speaker 2:Okay. I don't even wanna respond to this post with a video. So, Ben, don't don't respond to this because, I I generally I I met some for Satosh. I I think he's a sharp dude, but he is the biggest hater of OpenAI, and there's a lot of Yes. There's a lot of assumptions in here.
Speaker 2:One, I think everybody sort of understands that they probably spent quite a bit more than than what you're saying. 2, you can't claim credit that you're one post when everybody had viral posts this week about Yeah. DeepSeek. I don't think you catalyzed it to go number 1 in the charts. It was very clear This is that it went number 1, like, in a very or inorganic way.
Speaker 2:Yeah. They were just buying, you know, downloads because this started happening Sunday, and it didn't really hit the mainstream until this week. So
Speaker 1:This is either humorous or humor. Humorous. Joking. I don't know.
Speaker 2:But we're putting it in the truth zone.
Speaker 1:In the truth zone.
Speaker 2:And,
Speaker 1:yeah. But I but I do love just posting all the time. And then if something goes viral or something happens, just be like, look. I'm responsible. I'm responsible.
Speaker 1:You know? I'm the one that posted. Yeah. He Oh, yeah.
Speaker 2:I I mean, he very so simp very clearly wants to be credited Yeah. For taking down OpenAI.
Speaker 1:You know, you you I think on the Monday show when NVIDIA was down 15%, you said on the show that you bought
Speaker 2:I did.
Speaker 1:And then what happened the next day?
Speaker 2:It ripped.
Speaker 1:7% pop.
Speaker 2:Yeah.
Speaker 1:You need to take you need to take full responsibility for that.
Speaker 2:I look at outside. When I when I did that market buy on Monday
Speaker 1:Exactly.
Speaker 2:People said, woah. There's some whales.
Speaker 1:It was yeah.
Speaker 2:There's some whales that that are buying. We gotta
Speaker 1:go It's not financial advice. We're turning around here.
Speaker 2:And I, not yeah. We never give financial advice. I did I did post, it was so funny because, like, Sunday night, Satya came out and he's like, Jevon's Jevon's par you know, Jevon's paradox, all this stuff, and and I posted in in a sort of joking way. Just imagine being unfamiliar with Jevons paradox on a day like today, because it does seem like wall like, part of its part of its, like, Wall Street is not always betting on their beliefs. They're betting on about the future.
Speaker 2:They're betting on what they think the market's gonna do the next day. Yep.
Speaker 1:Yep. Yep.
Speaker 2:And so even if you have very intelligent analysts in Wall Street that understand Jevons paradox, it's like energy as energy. It's cheaper. We use more of it.
Speaker 1:Yep.
Speaker 2:Things like that. They can understand that and still short the market. Totally. Because they they they expect it to go down and they're just trying to make money that that day. Right?
Speaker 1:So they're
Speaker 2:not thinking about 5 years from now, or they're not really they don't really care about long term CapEx implications.
Speaker 1:What I said about, Mark Zuckerberg in October of 22? I think I said he was he was goated, and he was gonna go on a generational run. And then look, Joe Esenthall says, Meta is up 659% since November of 2022. Look. I must be responsible for all that.
Speaker 2:Wow.
Speaker 1:Yeah. It's amazing. Yeah. But I do Yeah.
Speaker 2:So so make a make post something and then wait for things to happen
Speaker 1:and then take credit for it. Credit for sure. And then
Speaker 2:Great job.
Speaker 1:Anyone comes for you, just say I was joking around.
Speaker 2:You I'm
Speaker 1:not I would never take credit for something as big as that.
Speaker 2:Hubers, bro.
Speaker 1:You built different. But but I do think this is a crazy stat, almost a 1000% in 2 years. Like, I mean, this was the bottom. Like, everyone was super bearish on meta at this point. It was And
Speaker 2:that was because
Speaker 1:TikTok rates.
Speaker 2:TikTok was was doing well.
Speaker 1:Everyone thought they over invested in the metaverse.
Speaker 2:The metaverse was 10,000,000,000, and
Speaker 1:the AI thing hadn't happened yet. So this was pre chat gpt. Chat gpt dropped in, like, in, like, December of 22, something like that. And so And
Speaker 2:the other the other thing that can't really be understated though is that Gen z was spending more time on TikTok. Totally.
Speaker 1:Yeah. And there's no real, like, oh, ban TikTok. Anything
Speaker 2:So the risk was, like, hey.
Speaker 1:A lot of times you
Speaker 2:Yeah. You Yep. Your next generation of users prefer another app.
Speaker 1:Yep. Yep. So there were a bunch of bare theses. Ben Thompson, he gets to claim credit for this because he was writing about how it's oversold and how Meta was due for a huge comeback because the core business was just so solid and was just throwing off
Speaker 2:The greatest ad platform of all time outside of Yeah. Google, and ads are the best business model.
Speaker 1:Thing people were really worried about was app tracking transparency, the iOS update. And everyone was saying that's gonna screw Meta's ads and and their ability to track users with cookies.
Speaker 2:So That was Tim Cook trying to take down small businesses.
Speaker 1:Yes. Yeah. And and who did it wind up hurting? It wind up hurting small businesses and every other ad platform except for Meta. Because Meta has so much data that they can actually run AI across their entire
Speaker 2:data. They were impacted, but not to the same degree.
Speaker 1:And so they don't need to know that you literally clicked on this ad, clicked on this link, came back a day later, and then converted. They can just look at all your all your traffic across all their
Speaker 2:And they're listening to everything that you say.
Speaker 1:So Yeah. Yeah. Obviously. Obviously. And so and so, yeah, Ben Thompson Yep.
Speaker 2:To help prep for our Valentine's gift guide, I just wanna say, hey. I'm, John, I'm really looking to buy some new gifts for for my wife for Valentine's Day.
Speaker 1:Send me
Speaker 2:some stuff. Show after the show, I'll scroll, and I'll I'll get some good
Speaker 1:I told you good options. That my wife actually uses Instagram that way where if she's shopping for a product, she'll visit a couple of the websites, not just scroll a little bit, not really actually shop, and then just be like like a king. Like, come to me on Instagram. And then all the retargeting ads will come and be like, I'm ready to hear your pitch, but you have to pay.
Speaker 2:It didn't it didn't feel like it always was that way. Now Now they really follow
Speaker 1:you around.
Speaker 2:They well, they they follow you around, but the other thing is it it's so this is why it is such a bloodbath of competition in ecommerce right now because if you go, you know, Roar. Right? Like, we sell water filters. If you go to roar.com
Speaker 1:Yeah.
Speaker 2:Right now, rorra.com Yeah. And browse around for a second, and then you go back to Instagram. You will be start being served a bunch of ads from our competitors. Granted, we have a much better product. It's much better tested.
Speaker 2:It's more effective. Yep. So we're confident that you'll come back to us. Yeah. But still, it's wild that Meta, the company we spend more with than anyone except basically our own suppliers Yeah.
Speaker 2:Is, like, like, working against us in many ways. It's like you knew about Aurora. Now we're gonna show you all these other alternatives to it.
Speaker 1:It's a free market. Welcome to libertarianism, Jordy.
Speaker 2:Yeah. Yeah. Ross would be proud. Harder.
Speaker 1:Let's go to David Holmes.
Speaker 2:I'm not coping. We're confident.
Speaker 1:He says, I worry an unsustainable need to raise 1,000,000,000 of dollars has broken the discourse around AGI ASI timelines. There's too many incentives to say you're on the brink of a breakthrough, and too many incentives for everyone else to say they're not far behind. Interesting. We do see a lot of this where there's a lot of the AI foundation model leaders who are saying, AGI is so close. ASI is so close.
Speaker 1:Just one more training one, bro. Just one more. It's almost like, you know, the, you know, the the scientists, how they always wanna build the the the high the large hadron collider, and there's that meme of, like, the scientists being like, just one more collider, bro. Just one more. Just one more collider.
Speaker 1:I just wanna go a little
Speaker 2:bit here.
Speaker 1:Please, you trust me. And then it's like, I guess we do get cool foundational science out of it, but it's very hard to say, like, what has the large hadron collider done for me lately? Like, you know, it's like Yeah. Yeah. I guess it discovered, like, quarks and stuff, but, like, how has that really changed my life?
Speaker 1:I don't really have, like, you know, teleportation or, like, supersonic travel or, like, you know, space exploration because of the the colliders. And so, we're seeing the same thing with the with the training runs. I mean, I am very I want them to do it just because, yeah, you know, light some money on fire, MASA, and let's see. How good is GPT 5? What can GPT 6 do for me?
Speaker 1:Yep. If it's the same old and it's still messing up, okay, cut it then. But, half a trillion? Let's let it rip.
Speaker 2:Truly.
Speaker 1:Let's let's let it rip. Let's go to Alex Wang. He is doubling down on the deep seek hate. He says, what does deep seek rone/v3mean for LLM data? Contrary to some lazy takes I've seen, deep seek r one was trained on a ton of human generated data.
Speaker 1:In fact, the deep seek models are setting records for the disclosed amount of post training data for open source models. 600,000 reasoning data, 200,000 non reasoning SFT data, human preference, RLHF data set of undisclosed size, human process synthetic data for cold start data. According to Chinese AI engineers, deep seek actually values data annotation even more than other Chinese labs with the CEO personally labeling data for the model. That's kinda crazy. This reminds me of Carpathi who used to spend a quarter of his time labeling at Tesla.
Speaker 1:The deep seek v three paper has even even has a dedicated acknowledgment section for data annotation. Very interesting.
Speaker 2:Well, we don't know exactly what's going on there, but this is why I put out a a call to action in Chinese characters. I said, if anyone on the DeepSeq team wants to spill any highly confidential information to us, we'd be happy to discuss it
Speaker 1:on our podcast. So So if you work for DeepSeq, feel free
Speaker 2:to call in. DMs are open.
Speaker 1:DMs are open.
Speaker 2:Call in.
Speaker 1:Let us know.
Speaker 2:We'll get on WeChat for you. Yeah. We'll we'll talk it over.
Speaker 1:We'll talk it over. I mean, deep seag really is having a an impact even as an open source model. You can see, Arvind Srinivas from from, Perplexity has integrated deep seek r one and FactSet to do financial research on steroids. And so they've they've connected Crunchbase data and FactSet data with r one so you can ask it to reason through things. And this is really cool because a lot of times I go to chat gpt, and I'm like, okay.
Speaker 1:We're gonna talk about, you know, Coinbase today. Give me their entire funding history, and it just doesn't have access to that data. It's not reasoning through it properly. So then I have to go to coin bay or I have to go to, I have to go to Crunchbase, export all the data, copy and paste that into chat gpt, pull that. It's very cool to see, perplexity integrating those extra data sources so that you can get better results.
Speaker 1:And I think that's maybe an maybe an increasing trend. Like, you saw this with the operator launch where they had they had dedicated agreements and integrations with a bunch of different companies to get access to card to make it work even better instead of just trying to brute force everything with a model that might not quite be there, might kinda mess up more. It's like, hey. Yeah. Just give us
Speaker 2:a few apps. A lot of these apps and platforms that you'd wanna interact with have anti bot Totally.
Speaker 1:Products Yeah. You know,
Speaker 2:that are Yeah. Kind of trying to
Speaker 1:prevent that activity. And so yeah. I mean, using DeepSeq has been a little bit, like, controversial from the geopolitical angle. Obviously, Mark Andreessen's firmly on the side of, like, open source is great. Everyone should be using r one.
Speaker 1:It's a gift to humanity. I actually we discussed this briefly on the show, but I asked on x, how sci fi or tinfoil hat is it to consider the idea that there might be a Manchurian candidate buried within the weights of an LLM? So basically, you get this open source LLM out there, and it gives you normal answers to everything. But then at some point, it switches on you and starts changing the way it responds or doing something. And and is this, like, 5 years out or 10 years out?
Speaker 1:Or is this doable now? And, Trevor Blackwell, I believe it was him. He was one of the founders of YC, was like, it's possible and it's happening today. And I was like Crazy. I got, like, one response.
Speaker 1:It was like it was like, this is the smallest post for my account. But I was like, this guy's very high signal. Like, this is this is crazy. Yeah. So I don't I don't think there's any evidence that they did that.
Speaker 1:I don't think it's actually what happened here, but it is something to consider in the future.
Speaker 2:We got the hat ready.
Speaker 1:Yeah. It is it is something to consider. Shot. And I think we should do the same thing. Next version of llamas, Zuck, let's embed a Manchurian candidate that, you know, send that out into the world and convinces everyone to get into luxury watches.
Speaker 2:Brought to you by Bezel.
Speaker 1:Yes. Let's go to Nir. Nir says, why did deep seek go viral? TLDR class resentment, anger, and especially shot and fraud. Very little actual app usage in comparison to the above.
Speaker 1:And so Nir says, my mimetic model has really failed with deep seek, and my analysis of why I failed is so is so failing is also failing. Does anyone who studies this topic have any novel takes? And so, Near has categorized the the 1st week of the deep seek launch, showing the increase in queries for deep seek on x. The posts go from 35,000 to 66,000 to a 114,000, 191,000, and then explodes to almost a1000000 on, quote, unquote, Black Monday, 27. Like
Speaker 2:50,000 of those were us.
Speaker 1:And and then, the iOS rank, it went from 400 all the way to 1. And then there's mainstream viral videos, CNBC, Forbes, CBS, CNN, etcetera. And so Near really did a crazy deep dive here in a spreadsheet of kind of tracking how this model went so viral, and what happened. And it really is a very emotional issue for a lot of people. And and it spans the the gamut.
Speaker 1:Like, clearly, Taylor Lorenz was saying, like, yes. Like, go China because she just has this, like, funny bit that she's doing right now where she's, like, a full blown communist and, like, loves everything China does and hates
Speaker 2:about it. There.
Speaker 1:And then but then there are other people that just love open source, and and they don't care about the geopolitics at all. And so they're just like, I don't like that OpenAI doesn't open source things anymore. I'm an open source purist, and there's a lot of those people. So they'll amplify it for that reason.
Speaker 2:Yeah.
Speaker 1:Then there's other people who just really are Sam Altman haters, and they're like, anything that hurts Sam, I will amplify, and I'm stoked about. Then there's other people who are just like like, you know what? I just wanna use a cheap AI model to create my grocery lists and my recipes. And this is the best app, and I was on the free plan of Chat GPT. It wasn't reasoning at all.
Speaker 1:I didn't have access to o one whatsoever. This one gives me reasoning. I'm in for that. I love this. Thanks.
Speaker 1:It's a cool free app. And so there's all these different, like,
Speaker 2:other people Matters. Bat bat enthusiasts, if you ask OpenAI Yeah. Can you make me a recipe for a really delicious Terrible.
Speaker 1:And and and then also, I mean, there's there's even people who are, like, anti NVIDIA and anti hyperscaler, and they're like, I've been sick of of NVIDIA making all this money. I've been sick of the story about Microsoft, you know, and these big tech companies. I just don't like the big tech companies. And so if this hurts them, and I see their stocks down, this is awesome. And so there's all these different, effects going on that were very unexpected and not priced into Nir's model, which I think was interesting.
Speaker 2:Lorenz was not priced in.
Speaker 1:Not priced in. Let's go to Joe Weisenthal. He says, I think one thing that's fun about AI is that it's brought back tinkering. For years, it's been impossible to play with the computer, especially smartphones. Everything felt so sealed off for most users.
Speaker 1:Maybe this helps revive a new era of tech literacy. And I completely agree with this. I think this is so cool. It's not just the the the cursors and the and the, the cognitions and the devons. It's just this ability to have a new tool.
Speaker 1:I mean, I remember when I got to Silicon Valley, it was the, slow mo co or whatever. It was like social, mobile, and local with the trends. So, like Yeah. Foursquare was at the intersection of that. But there were really, really strong APIs for Google Maps for Yep.
Speaker 1:For delivering software on the iPhone via an app store. Nothing was locked down at that point. And there were also social graphs. So very quickly, you could say, okay. For my app, I wanna combine Google Maps with your social graph, and I'll plug into the Google Maps API and the Facebook API.
Speaker 1:And boom, I have something today. And and instead of needing to build these big services, now everything's locked locked down walled garden. You can't really, like, integrate these in the same way. Yep.
Speaker 2:And
Speaker 1:so it's been there was, like, that narrow window of opportunity for, like Yeah.
Speaker 2:And LLMs are so magical. Yep. Across all these different app experiences and model Yep. Foundation models that there's this broader excitement. X has always been willing to try a new social app.
Speaker 2:Right? Something pops off
Speaker 1:Yeah.
Speaker 2:And they'll be like, oh, everybody will download it Yeah. Play around with it. Usually, it dies Yeah. Fairly quickly. But right now, you have a more the general so many 100 of millions of people have tried chat gpt and been relatively impressed with it.
Speaker 1:Totally.
Speaker 2:Even if some of them are using it in relatively simple ways, like, you know, asking it questions like they would Google, that there's this broader willingness to just try new products
Speaker 1:Yeah.
Speaker 2:And experiment and
Speaker 1:And and this is why I think the whole, like, anti chat gpt rapper meme is so harmful to the next generation of entrepreneurs. Because I imagine that in a few years, like, building a somewhat viral chat gpt rapper, even if you get killed by OpenAI, even if you don't make a lot of money, is gonna be a massive bull signal for entrepreneurs. Because you're gonna have someone who, you you know yeah. They took a couple of computer science courses. They learned a little bit of Python.
Speaker 1:They installed Cursor or Devon, and they started spinning something up. And they just made a small little niche app using r one and these free, open source LLMs. They got it up. It delayed a few users, and it was an end to end product.
Speaker 2:Good project.
Speaker 1:Project. And then and then when they find that business opportunity that's maybe boring, like, rolling up HOA's or whatever, it's gonna be like, well, I know that this per I know that this founder can build. Yeah. And so I'm totally ready to
Speaker 2:put something together. The new, like, trading sneakers.
Speaker 1:Exactly. Exactly. Exactly. And so, I am I'm I'm I'm very excited about the era of, of AI and what it means for the tinkerer and just having more tools. I mean, even just in 2012, Heroku was a huge deal because Yep.
Speaker 1:It it allowed you to write basically just Python and then click you know, you would you would push your git repo to GitHub, and it would automatically deploy it on the cloud. So you didn't need to install any Linux servers, even AWS, which was huge because you didn't need to rack the servers yourself. Yeah. AWS was a huge increase in just developer productivity and, like, hacker productivity. Heroku was another step because you didn't even need to say, okay.
Speaker 1:I wanna provision a server. It would just do that automatically.
Speaker 2:Big is that business today?
Speaker 1:Heroku?
Speaker 2:Yeah.
Speaker 1:I don't know if it's been, like, fully so it was bought by Amazon for, I think, almost $1,000,000,000. Okay. It was a YC company. It was one of the first major liquidity events for for a YC, founding team. And so Nice.
Speaker 1:They were when I got to YC in 2012, people were like, oh, man. Like, Heroku. Like, that's, like, a sick outcome. Like, that's a great business. Like, they did so well.
Speaker 1:And then I'm sure it got folded into, like, a 1000000 different projects because
Speaker 2:Inspired. It got to a point where half of the YC batch would be dev tools Yeah. In many ways because that
Speaker 1:Yeah.
Speaker 2:One event
Speaker 1:And so you
Speaker 2:could really inspired.
Speaker 1:Could start on Heroku. You could even now they have even simpler products called, like, serverless architectures. Are you familiar with any of this where, like, you don't even need to write the server? It's it's not Heroku would, like, spin up a server and keep it on all the time, and it would kind of go dormant every once in a while if you're on, like, the free tier. But, generally, the server was on, and if you visited the web app, it was there.
Speaker 1:Serverless is just sitting there, and only when the query comes in, it spins up. The server immediately runs the query that you want or the the the the code that you want and then gives you the answer. So you that was, like, super, super cheap because you could throw something up. If you had no users, it was zero cost.
Speaker 2:Yeah.
Speaker 1:You only got you only got charged for the queries, whereas Yeah. Yeah. Heroku would give you, like, one free one so you could keep something small up. But Yeah. If it scaled at all, it would still be expensive because you'd be running it when you didn't have demand.
Speaker 2:There were
Speaker 1:some, like, automatic load balancing stuff. And then as you scale up your business, you go to, okay. Now I'm using all of AWS's, like, bespoke tools that I'm provisioning, like, dedicated servers, and then maybe I'm building a $500,000,000,000 data center in Texas. You know? Let's go to Palmer Luckey.
Speaker 1:We, we talked about this a little bit, but he is also beating the drum on deep seek, and the and the controversy around deep seek. He says, deep seek is legitimately impressive, but the level of hysteria is an indictment of so many. The $5,000,000 number is bogus. It is pushed by a Chinese hedge fund to slow investment in American AI startups, service their own shorts against American titans like Nvidia, and hide sanction evasion. America is a fertile bed for psyops like this because our media apparatus hates our technology companies and wants to see president Trump fail.
Speaker 1:We have so many useful idiots uncritically reporting Chinese propaganda as fact because on some level, they want it to be true. They love seeing 100 of 1,000,000,000 of dollars wiped off the market cap of our largest companies. And so there was there was a little bit of, back and forth in the replies to this. Palmer kind of clarified, a lot of people were saying, oh, well, you know, what are you talking about? Like, they didn't they didn't drive down the stock price with a short it's a multi $1,000,000,000,000 company.
Speaker 1:Like, they wouldn't have been able to do that. But what he was saying was that they might have just had, like, you know, a $1,000,000,000 short position, and boom, they just make a $150,000,000 and that's a great trade. Right? He wasn't saying that, like, all of the downturn was caused by short pressure.
Speaker 2:No. The whole I mean, look at Hindenburg Research. They're they're taking a position, releasing a report, and hoping that it goes down. They're not capturing the entire loss associated with that sell off. Right?
Speaker 2:Exactly. And I think the things that make that sort of conspiracy theory or or broader theory, somewhat believable is it was clear that the app on a random Sunday when nobody outside of x was talking about it
Speaker 1:Yeah.
Speaker 2:Just happened to go to the number one app in the entire iPhone app store Yeah. With a Chinese character developer name that just screams Yeah. Like, even TikTok doesn't use Chinese characters in their Yeah.
Speaker 1:I mean, to be fair, a lot of the app chart is very gamable, and it's and and I believe that that screenshot was in the productivity category, which is also very slow moving because there aren't that many viral apps that are gaining, and the and the chart is based on momentum. And so if you're if you're getting, you know, double the amount of downloads every day, you will be number 1. Even if Yep. A 1000 times more people downloaded chat gpt that day, the momentum is what matters more than anything else. And so no one really knows the algorithm, but it is very interesting.
Speaker 1:And, honestly, it's been weird because in the paper, they say we don't count r and d dollars in that $5,000,000 number. We don't count the servers that we had from a previous training run-in this number. Don't count. We don't count the data. Singapore.
Speaker 2:Singapore GPS.
Speaker 1:So there's a lot of things that they that they didn't count, and they admit to this, but it's been kind of uncritically reported in the US as just, oh, it's 5,000,000. The point is
Speaker 2:that so many like, going back to his Palmer's original point, there's so many people that wanna see
Speaker 1:Totally.
Speaker 2:Tech fail. Like, the traditional media hates tech still.
Speaker 1:Yep.
Speaker 2:The there's a lot of people that wanna see Trump fail. Yep. He just announced Stargate.
Speaker 1:Totally.
Speaker 2:Or they, you know, wanna peep people wanna position him as silly or dumb or whatever. Yep. Just give him an l. Yeah. And so there's a lot of people that just take everything at Pace Valley.
Speaker 1:Something very, like, memetically or, like, inherently viral about the fact that the number 5 is both in the deep seek announcement and in the Stargate announcement. So it's literally 5,000,000 versus 500,000,000,000. It's exactly a 100,000. And I think if it was, like, 4,000,000 and 6,000,000 66,000,000,000, it, like, wouldn't have clicked as much in people's heads. But just the fact that it was exactly a $100,000, exactly a 100,000 times cheaper to do something, like, impressive.
Speaker 1:And it's like, what's going on? This is such a big
Speaker 2:It's also disingenuous, though, because presumably, the Stargate level training runs will provide even the theory. The whole reason to do it is it will provide models that are much better than o one and Yeah. Much better than deep seek.
Speaker 1:And yeah. I mean, the original GPT 4 training run was 500,000,000. So a 100 x. So they were able to it seems like they were able to get a 100 x improvement in efficiency, if if the number is even close to being right. Definitely a 10 x.
Speaker 1:If even if their even if their number's off by 10 x, they're still they're still 10 x cheaper. But we don't have numbers on what o one cost to train, because that is not the same as the r one model. It's a reasoning model. It's a different thing. It's it's it's more about the algorithm than than than the training data.
Speaker 2:It's a smart marketing strategy that let everybody compete on advertising how much they're spending on training runs and then take the exact opposite approach. Yep. Totally. It's like a a fitness, you know, trainer online being, like, everybody's telling you to work out 6 days a week.
Speaker 1:Yep.
Speaker 2:I've got a product that lets you work out one day a
Speaker 1:week Yep.
Speaker 2:And get the same results. It's similar to It's similar
Speaker 1:to so contrasted that It's similar to, like, the friend.com. We spent our whole seed round on a domain. We spent $2,000,000 on this domain. That gets a story. And then also, I built a massive viral success with a $10 domain.
Speaker 1:Anyone can do it. That's also interesting and clickable. Yeah. But but just going with something in the meet in the like, that meets expectations, like, you have to break expectations if you're gonna go viral. Well, let's go to some good news.
Speaker 1:Did you see the Boom Arrow news? Yes. The supersonic plane broke the supersonic barrier, broke the speed of sound, Mach 1.1, very good news. And Nicole Whiskoff says, my husband from the other room, babe, can you believe the founder of Boom Arrow used to be a product manager at Groupon? Unbelievable.
Speaker 1:I gotta frame his LinkedIn and put it on my wall. Serious congratulations. Big fans over here. And, I love his did you read his LinkedIn? It says, at Groupon, he was there for 2 years, 2 months, and he says, there's nothing like working on Internet Internet coupons to make you yearn to build something you truly love.
Speaker 1:It is such a fascinating, story for him. It's been over a decade at Boom. Really rough go, hard down round, lots of regulation. Yeah. Tons of red tape.
Speaker 1:When I see the announcement, I like, everyone in, in the YC world was going crazy because I think they just did the new round as well, and there were a lot of people that doubled down. I think Joe Gebbia was in and a few other people. And, and and on the face of it, I was like, this isn't that impressive. It's just a plane going Mach 1.1. Like, we did this in the seventies, and, like, they had to caveat the record in saying it's, like, the first domestic it's the 1st civil plane that's domestically produced that's broken the speed of sound because
Speaker 2:Yeah.
Speaker 1:The Concorde was a French project. And so I was like, this doesn't feel as innovative as it could. It's not like an it's not like it's like Mach 10. Like, we've never done that before. But at the same time, it it is impressive when you think about just all the red tape that exists these days in these hard tech companies, and it just shows they actually broke through that.
Speaker 1:So it's almost more impressive business and regulatory story than an engineering story to
Speaker 2:me. Yeah. Yeah. I buy that. I mean, they had 50 people on the team Yeah.
Speaker 2:Which is crazy. That is crazy. Over 50 people came together
Speaker 1:and said, let's
Speaker 2:build a plane that can go that, like, spill the fastest possible plane we can build. It's crazy. It's amazing story. And it I mean, if you look back, it's like, we, as humanity, we gain the ability to build things. And then if you don't keep the pressure on You lose.
Speaker 2:You lose the ability.
Speaker 1:Totally.
Speaker 2:If we ever get to a point where we hit hour 3 on a podcast, and we and we decide, oh, I'm tired. I need to go to the bathroom.
Speaker 1:Just remember.
Speaker 2:Just remember, you gotta keep the pressure on. Push through. But but but this is, like, Elon, when starting SpaceX, he wanted to buy Russian ICBMs because he was, like, well, they this is, like, this technology that that they had that still, like, is viable, and we can use it or learn a lot from it. So I think it's great. And and it's such an amazing story to me that, many many investors would have left this company for dead at the down round, and I'm sure many did
Speaker 1:Yep.
Speaker 2:And are now kicking themselves because they didn't believe in the company when it was at its roughest point.
Speaker 1:Yep.
Speaker 2:They turn around. So it's just a fantastic story. They're gonna make documentaries on this. It's gonna be awesome.
Speaker 1:Jason Carmen already has. I'm pretty sure.
Speaker 2:But we need a new one. We need the the full hero's journey that
Speaker 1:I mean, really
Speaker 2:out the recap.
Speaker 1:Yeah. The really dramatic documentary that they're gonna make is the Hermeus versus Boom story. They're they're in different markets because one's military and one's commercial, but, there are these 2 founders. They're clearly racing against each other to build hypersonics and supersonic planes, and there there's, like, a lot of similar engineering that goes into it. And I think if you if you start telling that story as a horse race, it gets a lot more exciting
Speaker 2:Yeah.
Speaker 1:As opposed to just the story of 1 company. So Yeah.
Speaker 2:We yeah. We're going to the middle we're going to the Middle East later this month or sorry, later in February. And, I wish we could be going mock mock 1. That'd be amazing. It'd be nice.
Speaker 1:Jack Raines says the Shkreli versus meme coins has been a great Twitter side plot in q 1. And Martin Shkreli says, Fardcoin and dog with hat tokens for our words. What happened? It went down it's only down, like, 30%. That doesn't seem that bad.
Speaker 2:Still still
Speaker 1:in most still in most probably
Speaker 2:a multi billion. Percent. Yeah. That's the thing. Memes have some intrinsic value.
Speaker 1:The FDV is $793,000,000, which is far too high for something so stupid, but, people do like
Speaker 2:Hey.
Speaker 1:It could
Speaker 2:be the future of finance. Don't
Speaker 1:don't jinx it and don't jinx it. I mean, that's what I'm with Dogecoin. It's it's too bad. But it is funny that Shkreli has been been out there giving out lots of financial advice. Let's move on to, to set up the
Speaker 2:It is a it is a really good bit for him to go heavy against, just calling out things that he identifies as stupid or scammy or It's just takes 1 hour. He goes after these, like, bio he's he's had a couple bets where he'll post something Sunday night, short this company, and then and then maybe it's a butterfly effect, or maybe they just, like, people figure it out. He's drawing he has he has a huge huge audience. Yeah. So
Speaker 1:So after Satya Nadella said Jevons paradox strikes again and posted the Wikipedia Jevons paradox on a paradox on a Sunday night or something because he was worried about the stock going down. Ara Kharazian over at ramp, their economist that they just hired, says we can see this in the tri ramp data. Here's data from a small market a small sample of our base. Some thoughts though about whether the market reaction is justified or not. Companies purchase more tokens as the average price per token collapsed.
Speaker 1:And so, you can see even just over, I guess, it's just 2 months or 1 month, the token the average price per million tokens of LLMs dropped by, I guess, a factor of 3, and the number of tokens purchased increased on ramp cards because, companies are buying more, and it makes sense. There's so many places where you wanna stuff an LLM. Yep. And if it's super cheap, it makes sense on a per transaction basis. It's like, yeah, my LTV of a customer, $100.
Speaker 1:I can't afford to spend $10 on LLM inference per customer.
Speaker 2:Yeah.
Speaker 1:But if it's a dollar, sure.
Speaker 2:Yeah. Why not? Yeah. I got a I got a promoted post that's in the form of a review.
Speaker 1:Okay.
Speaker 2:Like if a podcast called All In was good and interesting. Unnecessary unnecessary jab. We like we like, it's our favorite political podcast over there. And Jeremy Sun says, if you wanna understand what startups are actually like and immediately tap into the unhinged, schizo, gundo core vibe, this is the show for you. Who do you trust?
Speaker 2:A couple dudes in the dream in the arena building or a guy who invested in Uber once and won't shut shut up about it? This review brought to you by Symbiont AI. Symbiont helped keeps your grandma from getting scammed through a free AI security app that reads, email, text, and more to identify scams in progress, stops them before they happen, and cost scammers money by wasting their time.
Speaker 1:That seems super valuable. Super cool.
Speaker 2:Jeremy, this is awesome. Sure.
Speaker 1:We we we covered a couple scams, the QR code scam.
Speaker 2:Yeah. So it's simbiant.ai, Symbiant. And, I need to get this for my family members.
Speaker 1:For sure.
Speaker 2:I would love to get a little printout at the end of the month, maybe, actually physical piece of paper. Great. If you could make a printer integration, Jeremy, that'd be awesome.
Speaker 1:Do you want me to read the next one? Yeah. Then we'll go back and forth. Lifelong Bureaucrat. Great podcast, although it has nothing to do with my line of work doing TPS reports and publish and pushing paper in the federal bureaucracy.
Speaker 1:It gives me a sense of how the other half lives in better yet the 1%. Love to listen and then drop the lingo on my g s 14 supervisors. Don't know what that means. Get a great way to seem value add and tech native since no one in my government workplace understands any of these words, banger, Patek Philippe, misspelled. It's 2 p's and then e.
Speaker 1:Size gong. They think I must be working in the IT. The net result is they leave me alone, and then I have more time to listen to the Technology Brothers podcast.
Speaker 2:Let's go.
Speaker 1:Let's go. Next one.
Speaker 2:Should leave an ad for your agency. Well, we love the we love the government.
Speaker 1:Well, it's an ad for the government.
Speaker 2:It's an ad for
Speaker 1:your taxes on time. Yep. And, don't break the laws.
Speaker 2:Yep. Technology Brothers. This is from Nick Stewart. Technology Brothers gave me the strength to quit wearing Lululemon and the courage to start using nicotine again. Thank you.
Speaker 2:This review is sponsored by AngelList. Attention, Beloved Capital Allocators. Are you still working at a large tier one venture firm and letting an investment committee stop you from backing the next Lucy? Are you sick of getting Carhartt merch?
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Speaker 2:I, one of my, you know, very close friends, Jack, recently set up a a new, I think it's like a $40,000,000 fund on AngelList. And, yeah, I'm an LP in it. It's an awesome experience. It's great. And, Yeah.
Speaker 2:AngelList is the best. I used to have to compete with them. I did not enjoy that. Now I I'm just happy to be a user. Fantastic.
Speaker 2:Thank you to Nick for the 5 star review.
Speaker 1:Let's move on to, calmeade 805 says, the missing piece into my Chad diet. Last year, I committed to overhauling my diet and becoming a true Chad. Existing nutrition apps weren't cutting it, so I took matters into my own hands. I built your body AI now available in the Apple App Store or at your body a I dot com, the fastest and easiest way to track your calories and macros. But there was a missing piece, my information diet.
Speaker 1:Fortunately, I discovered Technology Brothers. They consistently deliver the essential tech insights and entrepreneurial inspiration for my mind that my mind craves with body with both body and mind now fueled by optimal nutrient nutrients, I'm a new man. I'm down £12. I'm pushing up 2 plates on the bench. My wife and kids respect me.
Speaker 2:Let's go.
Speaker 1:I couldn't I couldn't be more excited for what 2025 will bring.
Speaker 2:Alright. Well, thank you so much. Body AI. Very cool. And, I just love how, everybody that leaves a review, like, it crushes the ad.
Speaker 2:Yep. They crush the review. They they're doing best when it's all integrated.
Speaker 1:Oh, yeah. It's fantastic.
Speaker 2:It just, it makes me we already love ads. This is how you marketing them, but you guys are you guys are brilliant. So Yeah. Great.
Speaker 1:So Keep
Speaker 2:it up.
Speaker 1:If you haven't done it already, go leave a 5 star review. And, I mean, this is untapped alpha. You can do it twice. There's Spotify and Apple.
Speaker 2:You can create new accounts. We might have to set a limit on a per company
Speaker 1:basis, but you
Speaker 2:can do
Speaker 1:do that like crazy, we will get flagged as, like, spammers, basically. They'll be like, this is the next deep sleep.
Speaker 2:I just I just wanna yeah. Yeah. If you if it's really funny to think about an Apple, like, podcast, like, moderator who just, like, stumbles upon this and and and is, like, starts removing these because, like, it's probably against the terms.
Speaker 1:Spam.
Speaker 2:But we support it a 100%.
Speaker 1:Yeah.
Speaker 2:So thank you.
Speaker 1:We're we're capping it at 2 right now. 1 on Apple Podcasts, 1 on Spotify. Mix it up. Let's go over it.
Speaker 2:You can leave an unlimited amount of ads in the YouTube comments.
Speaker 1:True. True. Yeah.
Speaker 2:And we post, like we we're now posting 5 videos a
Speaker 1:day. Yeah. Like, subscribe, ring the bell.
Speaker 2:Go on OpenAI. Make an operator bot that just spams the comment section.
Speaker 1:No. No. Just generate the text, the cheap LLM, and then copy paste. Yep. It's the it's the artisanal way of of spamming.
Speaker 1:Oren John says he's about he's about to cross a 1,000 short form videos. This is all it took to achieve financial freedom mid career and never have to work for someone else ever again. Kinda ridiculous when you think about it. So congrats to Oren on hitting a 1000 Yeah.
Speaker 2:I just thought this was cool. So he started like, I think really leaned into reels. I followed him on Instagram. I think he's also on TikTok and some of these other platforms, and he's just been dialing in not only building his business in public, but, like, helping people understand these, like, short form platforms and really, you know, built a pretty pretty awesome community around it. So I think that that's the amazing thing.
Speaker 2:It, 5 years ago, it was super hard to get attention on Instagram. You could get attention, but it was super slow. It was, like, very hard to grow on Instagram.
Speaker 1:There was You could go around and leave comments everywhere. I had a bot. Yeah.
Speaker 2:Yeah. Yeah. So it's just, like, really tough. Yeah. It was spammy, tough time, and then the short form platforms now make or is much more democratic system where they don't like, some if you're an account and you have a 100,000 followers on Instagram Yeah.
Speaker 2:And then you stop really posting or leaning into short form, you're pissed because you're like, I post Yep. And a 1000 people see it. Yep. But it makes it so it levels the playing field and you can have a 100 followers and then you post a good video. I still will be on reels sometimes, and I'll get a video that has, like, no views from, like, a new account.
Speaker 2:Yeah. I'm, like, sometimes it's super relevant. Yeah. Other times, it's total slop.
Speaker 1:Testing it out on you.
Speaker 2:It's a free way to to change your life.
Speaker 1:Well, we started with Elon and Starlink and SpaceX, bringing Internet to your phone from the stars, and we will close on Elon Musk and SpaceX. The president has asked SpaceX to bring home the 2 astronauts stranded on the space station as soon as possible. We will do so. So very good
Speaker 2:Yeah. I mean, it's absolutely wild that they've been up there for a very long time, and seemingly, Elon was very willing, excited, and able to assist in the effort, and the Biden admin had snubbed him at the, like, EV car event that they hosted and just, like, ignored Tesla, ignored that he had the most dominant, you know, private space company or space
Speaker 1:Yeah.
Speaker 2:You know, force in the in the history of mankind. But,
Speaker 1:crazy. And and the debate over whether or not they were technically stranded was, like, a big thing. Oh, well, it's just a safety thing. They could go back Or
Speaker 2:They could go back anytime.
Speaker 1:They could go back. And then it was like, oh, they actually can't go back on that Boeing pod. They gotta go back on the star SpaceX thing, but when will they go back?
Speaker 2:Do they do do the astronauts have a decent, Internet connection when they're up there? Can it so can they use, like, reels and x?
Speaker 1:I don't know. I don't know how fast they are.
Speaker 2:Can they do, like can they watch, like, Brainrot Slop, or do they have
Speaker 1:You might be able to use Star,
Speaker 2:like, in the office reruns?
Speaker 1:They're right they're right up there with the
Speaker 2:they could just It's, like, beamed. They got black market Star.
Speaker 1:I think they have I think they have pretty good Internet. I don't know. But, I mean, the steel man here is that, like, they were supposed to go out for, like, 2 days. They got to stay up there for, like, 9 months. Like, I think going to space for 9 months
Speaker 2:Maybe it's like a mutiny thing, and they're like, we don't wanna come down. Yeah. We like it up here. We like our
Speaker 1:little stars now.
Speaker 2:Yeah. Yeah. We like our little, like It
Speaker 1:is crazy. Elon's never been to space. Like, he's like the space guy, but he's never gone up.
Speaker 2:It's so crazy too that astronauts have to keep a straight face and and just like, it would be very embarrassing for NASA if they were freaking out Oh, yeah. Sending sending help messages out, like, Biden
Speaker 1:won't tweeting
Speaker 2:at tweeting at Elon saying
Speaker 1:at Boeing. Like, stop. Like, please let us out.
Speaker 2:But, like, Biden got to just leave the White House and go on vacation, and they're sitting up there being like, really? Like That was rough. We don't Yeah. Get to go home until somebody sends a spacecraft. I
Speaker 1:mean, people definitely jumped on this because it was such like a pro Elon narrative, obviously, but then it was true. Like, it was like, okay. Yeah. Boeing actually couldn't do it. U ULA actually messed up.
Speaker 1:And then it was amid all the Boeing planes and stuff. It was just such a such a mess last year. Yep. Rough year for Boeing. Anyway, that wraps up our show.
Speaker 1:Thanks for watching.
Speaker 2:Suit day.
Speaker 1:Go leave us a 5 star review. Put an ad in the comments. And
Speaker 2:thank you for watching live and leaving comments. We enjoy, we we love podcasting
Speaker 1:Yeah.
Speaker 2:And we we love live streaming. Yeah. And, we're excited to do this with your support for decades to come.
Speaker 1:And we'll see you tomorrow. Have a great day.
Speaker 2:See you.