Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 12 - 3 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TBPN. It is Tuesday, 03/25/2025. I got it right this time. We are live from the Temple Of Technology, the fortress Of Finance, the capital of capital. The show starts now.
Speaker 1:We got a great show for you today, folks. We got a bunch of call ins. We got some, breaking news in the financing world. Companies are doing deals. We got
Speaker 2:Deals are getting done.
Speaker 1:We got we we we got media announcements. We got VR announcements. We got news about China coming on. We got a bunch of people calling in, but we also got some news. I see you're enjoying some, Lucy cinnamon.
Speaker 2:It's hot today here in Los Angeles. It's feeling like spring John.
Speaker 1:It's great. Well, what's your take on Signal? Because, the Trump administration apparently, I've heard all these, defense tech founders complain, oh, I gotta use Microsoft Teams because my work is so important and, like, I'm saving the country, but it's such a bummer. I wish I could use Slack. Turns out they could just use Signal.
Speaker 2:I mean, they all use Signal.
Speaker 1:I guess.
Speaker 2:That's very common for
Speaker 1:my Maybe should just run the entire organization on Signal. Seems like you should just
Speaker 2:do it. The US government on Signal and Ramp.
Speaker 1:It seems like it already is running on Signal. That's, of course, the news of the day.
Speaker 2:It broke yesterday. That it that I try not to follow any political news. Yes. Try to keep my head in the sand on that kind of stuff. Yes.
Speaker 2:But I did see their emoji usage,
Speaker 1:the link. Oh, really? I didn't actually look at the the story or anything. I saw this as a tech story and that's the way we're treating it. Trump administration was was found using Signal.
Speaker 1:Atlantic's top editor said he was added to a text group in which top US Officials discussed detailed plans to bomb Houthi targets in Yemen and with other US Officials, an extraordinary breach of security from administration
Speaker 2:These were the
Speaker 1:vowed to clamp down on leaks. Oh, that's why that's going viral.
Speaker 2:Yes.
Speaker 1:The it's the fist emoji followed by the American flag emoji followed by the fire emoji. Very American.
Speaker 2:Very American. Not not super tasteful.
Speaker 1:Atlantic situation. Editor in chief Jeffrey Goldberg recounted in a 3,500 word story published Monday how he got a connection request on the signal messaging app from someone identified as Michael Waltz. He initially believed the request was fake, but later realized the account belonging to The US National Security Adviser was genuine after the group discussed detailed plans for an attack on the Houthis, a militant group that has carried out numerous attacks on commercial vessels in the Red Sea. Goldberg didn't publish the actual plans in the article, but he said defense tech defense secretary Pete Hegseth at one point shared a post that featured operational details of forthcoming strikes in Yemen, including information about targets, weapons. The US would be deploying an attack sequencing.
Speaker 1:Hours later, the attack went ahead. So it's kind of, I mean, there's a bunch of, like, bad takes about this. One is like, oh, signal got hacked. That's not what happened. They literally just accidentally added the wrong person to the group.
Speaker 1:Signal was not compromised. The the this the the encryption still works. The other kind of mediocre take or bad take was like, the Atlantic shouldn't have posted this. It seems
Speaker 2:possible marketing ever for Signal because it's very quick, easy to understand. Okay. This wasn't a this wasn't a hack.
Speaker 1:Yeah. A fat finger.
Speaker 2:Yeah. It's a
Speaker 1:fat finger.
Speaker 2:Yep. Yet validating the fact that some of the most important people in the world are having the most important conversations on Signal.
Speaker 1:Yeah. So shout out mox Moxie Marlinspike, founder of Signal, creator of a great NFT as you sell. Very fun. And and a great writer as well. Moxie is a great technologist.
Speaker 1:Anyway, Ben Thompson took the opportunity to write about this Trump administration group chat through the lens of technology, and I found his analysis hilarious and both, and insightful. It was great because, of course, he you know, there's so many ways you could dive into this as a political story. And I was like, there's no way Ben Thompson is is gonna write about this. It's just like it's so out of his his wheelhouse. There's no way.
Speaker 1:But, you know, here he says, I think this is a fascinating story with a very clear tech angle. So up front, let me get the obvious caveats out of the way. Yes. This is very stupid and probably illegal. This goes back to the the the way information is handled, the government, the Hillary email situation.
Speaker 1:Although the potential illegality itself is an interesting tech story. He says, start with Signal. Given that Signal is a consumer app, I saw a lot of commentary decrying the obvious lack of security. In fact, I think the opposite is the case. Signal is actually the most secure messaging app.
Speaker 1:I summarized the differences between encrypted messaging apps in this update. And he goes on to drop a very, very detailed analysis of how encryption works in the different apps, and it's fascinating. So I'm gonna I'm gonna take you through it because I I really
Speaker 3:like And
Speaker 1:so, basically, there are three kind of patterns for encryption, and and he kinda breaks them down here. So iMessage is encrypted. Apple and presumably an adversary cannot access your messages. But the way it does this is by limiting the maximum group size to just 32 people. So every message in a group chat is actually sent directly between the sender and every person in the group chat.
Speaker 1:In other words, when you send a message to a 32 person group chat, you're actually sending 32 separate messages and potentially more if some users are using iMessage on multiple devices. Of course, messages are very small. The Internet is a very big pipe, and so it doesn't really matter, but it's a fascinating idea. And this is the concept of of fan out. This is also the most secure implementation.
Speaker 1:There is both forward secrecy, meaning breaking one message. Like, if you if you hack the encryption on a single message, it does not give you access to past messages. And there's also something called self healing in in encryption. This means that breaking one message gives you access to future messages until you are offline for a single message, at which point you have lost the chain. So SIGNAL uses what is called client side fan out.
Speaker 1:After an initial back and forth exchange with everyone in the group, including the exchange of send keys, which are the keys that unlock the encrypted messages, for everyone in the group, you send one message that is individually encrypted for everyone in the group. This provides forward secrecy but sacrifices self healing. However, because the send keys are themselves encrypted, there is plausible deniability in that you don't know for sure who who sent a particular message. Signal does maintain the structure of the group in encrypted form on its servers to maintain a consistent state for all users over time. WhatsApp is the most reliant on a central server.
Speaker 1:This is the third type encryption architecture that's popular these days, and they use what's called server side fan out. So encrypted messages are sent to a central server with send keys for everyone in the group, and then they are distributed by the server to everyone. Part of this process entails maintaining the structure of the group centrally. And while there is a degree of plausible deniability, it does not go as far as Signal does. And so what that means is that is that even though Meta cannot read your messages on WhatsApp, they can basically map the network of who's in what groups, and that potentially could be could kind of give you a way.
Speaker 1:If you broke one of these messages, you'd say, okay. Well, this person's in this chat and this chat and this chat. Okay. We know who this person is, and we broke this single message We're we're in, basically.
Speaker 2:And I would just say it's pretty amazing how well Signal obfuscates the complexity of what's kind of happening behind the scenes to deliver this
Speaker 1:Oh, yeah. Very
Speaker 2:very easy to use chat interface. Yeah.
Speaker 1:It's remarkable. It just it feels like every other app. I can't you can't tell the difference between WhatsApp, iMessage, and Signal even though they're using pretty different architectures from an encryption perspective. And so Ben writes, while iMessage design is the most secure and thus the least scalable, you can't go more than 32 participants in a single chat, which is something oddly I've never actually run into. But I guess whenever there is a big group chat, it's always on signal or
Speaker 3:what's I run into this.
Speaker 2:I run into this with my neighbor. You do? There's a neighborhood group On
Speaker 1:iMessage?
Speaker 2:And not everybody can be in it.
Speaker 1:Really?
Speaker 2:Because there's only 30
Speaker 1:Kind of a Lord of the Fly situation.
Speaker 2:Yeah. It's very competitive. Sharp elbows.
Speaker 1:Yep.
Speaker 2:HOA. You know, it's getting getting heated.
Speaker 4:It's great. But
Speaker 1:But the problem with with iMessage, of course, is that it's closed source. Signals, apps, and protocol, on the other hand, are open source, and there's no server component that needs to be verified. In other words, we have an Andy Warhol Coke scenario here.
Speaker 2:Of course.
Speaker 1:Of course. What's great about the country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca Cola, and you know that the president drinks Coca Cola or in the or our case, diet Coca Cola. Liz Taylor drinks Coca Cola, and just think, you can drink Coca Cola too. A Coke is a Coke no matter the amount of money.
Speaker 1:You can't get a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it. The president knows it. The bum knows it, and you know it too.
Speaker 1:I do love that philosophy. I always thought about, like, I've probably seen Jeff Bezos' favorite movie, And I think that's just like really cool. That's beautiful. It's beautiful. Although
Speaker 2:Jeff Bezos is listening. He's like, John has not seen my favorite movie. Yeah. I have movies
Speaker 1:I know. Nobody has seen. I bought I bought them.
Speaker 2:I have hundreds of movies.
Speaker 1:He actually does because he owns Amazon Studios.
Speaker 2:It's like even individual actors don't haven't seen the movies. Right? Yeah. They he they were it was filmed in pieces Yeah. Assembled the
Speaker 5:You have
Speaker 1:to take out the editors
Speaker 2:He really relishes that he has his own Netflix that
Speaker 1:just own movies. He's like, oh, yeah. End to end. Inception two. You ever see it, John?
Speaker 1:Yeah. Because I made it. I spent a billion dollars on it. It's better than the first.
Speaker 2:He has his own awards.
Speaker 1:Yeah. You know? Godfather four. It was amazing. It brought me to tears.
Speaker 2:It's a classic.
Speaker 1:It's a classic.
Speaker 2:It's like I rewatch it Constantly. Twice a year.
Speaker 1:Twice a year. And, John, you're never getting a hold on it. Anyway, Jeff, if you have a secret movie
Speaker 2:movie tank.
Speaker 1:Or whatever. Yeah. Exactly. The the Scrella album. Okay.
Speaker 1:Anyway, Ben Thompson goes on to say, so it is with encryption. There isn't really a more secure messaging protocol than signal even if it were designed by the NSA. What is interesting is that the last bullet point in my excerpt, one way in which WhatsApp in particular could be compromised is if the server, which orchestrates the chat, were to insert a silent participant in the chat when it was established. This silent user, which could be obfuscated in the user interface remember, WhatsApp is not open source. So the WhatsApp code could say, if Mark Zuckerberg joins the chat, just don't just don't show that to anyone
Speaker 6:Yeah.
Speaker 1:In theory. I'm not there's no there's no allegation this is happening, but it's possible.
Speaker 2:So possible,
Speaker 3:it is. But
Speaker 1:you see that Rogan clip of Antonio Garcia Martinez where Rogan's like, the phones are listening to us. Right? And Antonio has to be like, no. Like, I worked at Meta. Like, trust me.
Speaker 1:Like, if we were listening to your phones, like, the ad targeting would be better. And Rugby's like, but they're definitely listening. Right? It feels like they're listening.
Speaker 2:But Antonio Garcia
Speaker 1:Paid by paid off
Speaker 2:by Meta. Great founder, know, just recently exit exit
Speaker 1:all the tinfoil out for Yeah.
Speaker 2:Is he the guy that goes on JRE and and is meant to say the phones aren't listening? It's somewhat believable.
Speaker 1:Yeah. Somewhat believable. We'll see. We'll have to put the screws to
Speaker 2:him one gonna go I'm not gonna take it this far. Everybody will
Speaker 1:You don't get eclipse.
Speaker 2:Save that for later in the show.
Speaker 1:Anyway, the reason I bring this up is because that's kind of what happened here. Goldberg was added to the chat, although albeit not silently. There was certainly a notification about his addition, and he would have been publicly listed as a chat participant. However, if you read the story, Goldberg was added at the same time as a bunch of other participants were added, and it seems like no one noticed. That means he effectively operated as a silent participant and thus saw all the messages until the time he exited the chat.
Speaker 1:So fascinating. Anyway, what was your I
Speaker 2:mean, my takeaway is this would this kind of fat finger move would be ruinous for most Most boys group chats. Most friend groups
Speaker 1:The most friend groups.
Speaker 2:In the entire world.
Speaker 1:Yeah. I guess the message to the listener is take a take a scroll through your signal group chats. Make you don't have any silent participants you accidentally fat finger into the chat. He goes on to talk about transparency versus security. What is perhaps the most surprising detail about this episode, however, is that the violation was not about security but rather transparency.
Speaker 1:In fact, the official policy of the DOD is that officials use less secure means of communication from a Pentagon memo about the use of text messaging effective immediately when conducting government business on of DOD users of government owned mobile devices and nongovernment owned devices. You have to use Microsoft Teams chat for text messaging as the fully designated managed DOD mobile enterprise system. You for use on government owned mobile devices, Microsoft Teams chat will be available as a managed application, blah blah blah. So, basically, they want you to use Microsoft Teams. Shout out Satya Nadella for getting that deal
Speaker 2:of those things.
Speaker 1:But it's not end to end to end to end encrypted. The DOD's primary concern is not message security, but record retention. They want to have all the records. They don't want it encrypted. Anyway.
Speaker 2:Yeah. This is one of those things, the challenge anytime you're trying to roll out roll out new software to a team or get a team to adopt software is the the the the sort of like people by default will flow to the like the the platform with the least friction which is like what they're already using. Yep. So we see this. We have Slack.
Speaker 2:We don't use it for the show. Yeah. Right? We just iMessage is just Yep. Still the default.
Speaker 2:And I'm sure at some point, we'll move some more.
Speaker 1:I mean, need to get more secure with all the other podcasts that are attacking us
Speaker 2:and That's right.
Speaker 1:And trying to hack us. Yeah. Security cybersecurity, I mean, we've been talking about trying to build our own version of Wiz Yeah. Hiring some Israeli guys to build that for us. This could be this could be
Speaker 2:a good move.
Speaker 1:Yeah. Top. Yeah. We need we need the top guys for sure. The top guys.
Speaker 1:For sure.
Speaker 2:To secure the stream. Security.
Speaker 1:Secure the stream at all at all costs. Anyway, he closes by saying, there are security considerations. Executive branch officials perhaps overstated their case when they wanted official records locked up forever, but are we really sure that we want ongoing conversations to be happening on services that are any less secure than signal? Again, none of this is to dismiss the stupidity of this particular case, but that's why I find the story so interesting. There are a lot of there are a lot more ramifications beyond one military operation that raise legitimate systemic questions about how the government should operate in the digital age.
Speaker 1:And it's interesting. Yeah. This relates to that other post we talked about, which was that that in, I believe, The UK, there was a member of parliament whose chat GPT records or AI queries were maybe like subpoenaed or Free information. Yeah. Yeah.
Speaker 1:FOIA. And there's this question of like of like, what is the value of our leaders being able to have private conversations?
Speaker 2:Yeah.
Speaker 1:Historically, it's been very easy. You know, Abraham Lincoln walks outside with his top guy and just goes for a stroll and like no one else is listening and they can weigh all the possible options on how they wanna win the civil war or
Speaker 7:whatever.
Speaker 2:Well, we don't know at what point they develop robot birds Yeah. Concern Yeah. Yeah. To fly above political leaders
Speaker 1:for more conversation. Mean, Nixon tapes was basically the start of all that. Right? Yeah. And he was getting wild in the boys group chat in the White House, basically.
Speaker 1:Saying a lot of crazy stuff.
Speaker 2:Well, so this is interesting too. Further down in the article Yeah. They talk about how there was an incident called the salt typhoon hack
Speaker 1:Yeah. Salt typhoon.
Speaker 2:In which China had the ability to read pretty much every SMS message in America, which is why the US government advised citizens to use end to end encrypted apps like Signal.
Speaker 1:And that's why if you're on SMS, specifically if you're not on iMessage, like you need to be sharing American propaganda that is convincing to Chinese nationals and the CCP. So when they hack you and they get it, they're like, wow. Capitalism is sick.
Speaker 2:Yeah. China's equivalent of the CIA Yeah. Is reading your messages and you gotta turn them.
Speaker 1:You gotta turn them. Exactly. You gotta be like because they're listening. So you gotta turn them. You gotta post Hey,
Speaker 2:like, it's a beautiful day today. I'm gonna pick up my kids, you know, take them to football practice and barbecue. Yep. What are you doing? Yeah.
Speaker 2:And it's just like multiple times a day. Exactly. Yeah. Barbecuing and barbecuing. It's a beautiful day.
Speaker 1:What was your quote about Mark's failed to consider how making money with your absolute boys is fantastic? Something like that. You send a couple SMSs across the cell typhoon hack and
Speaker 2:Yeah.
Speaker 1:It's going to be peace all over the world.
Speaker 2:Yeah. For sure. We should actually turn off iMessage on our phones and just text each other. Yeah. SMS.
Speaker 1:It is ridiculous that they were just spamming out these government secrets. It's almost like I mean, they they should have just put it on a billboard, like, at this point. They should have just taken all of the instructions, everything. They should have just communicated through a network of billboards. They should have just gone to adquick.com That's right.
Speaker 1:Because they have out of home advertising made easy and measurable.
Speaker 2:Yep.
Speaker 1:They could say goodbye to the headaches of out of home advertising only on AdQuick, which combines technology, out of home expertise, and data to enable efficiency And AdQuick is
Speaker 2:very privacy oriented. People are not gonna be finding out about your end campaign until you want them to.
Speaker 1:It actually hits the billboard. Exactly.
Speaker 2:So Yeah. Yeah. Just just something Yeah. Something to keep in mind. We'll head over to Washington.
Speaker 2:We'll let them know
Speaker 1:Yeah.
Speaker 2:If you wanna, you know, if you wanna
Speaker 1:If you wanna if you wanna get your DMs to the mainstream media
Speaker 2:Message them to right people at the right
Speaker 1:time. Put them on a billboard.
Speaker 2:Yeah. You could also if you wanted to talk with with Goldberg directly Yeah. You could just buy all the billboards
Speaker 1:Oh, around his house. Home. Yeah. Exactly.
Speaker 2:I'm sure I'm sure it's possible to figure out. We're not gonna dox him. But there's more efficient
Speaker 1:They should already know.
Speaker 2:You don't need to add Goldberg to your secret chat
Speaker 1:You don't need to.
Speaker 2:Just to send a message. Exactly. You can just You
Speaker 1:can just use a billboard for that.
Speaker 2:You know, etcetera. That's great.
Speaker 1:Anyway, should we move on to 11 x?
Speaker 2:Let's do it.
Speaker 1:Talk about 10 x engineers, ten x spies. Now we're talking about 11 x. A little bit more.
Speaker 2:11. Crazy name. They took I mean, well, it's the the meme, you know, take it to 11.
Speaker 1:Right? Okay. Is that what it What
Speaker 2:what's that? This one goes to eleven.
Speaker 1:It's an AI SDR company that's embroiled in controversy after allegations from TechCrunch that they claim that they had customers that they don't have. And there are definitely two sides to the story, so it'll be fun to dig in. Not dead to rights yet. Some Andreessen folks came out in support. There's some haters on the timeline.
Speaker 1:Interestingly, the the scoop comes from TechCrunch.
Speaker 2:I'm wondering eleven, you know, this one goes to eleven. Do you remember the movie Spinal Tap?
Speaker 1:Yeah. I remember that.
Speaker 2:That's that's a rep potentially a a deep Spinal Tap reference.
Speaker 1:I always thought that this was just like affiliated with that club in Miami Eleven.
Speaker 2:That that could be That's
Speaker 1:probably like a spinner. Because they were they were getting into cryptocurrency
Speaker 2:If could get crypto technology Yep. And we could spend all day at Eleven. Yep. And we would never have to work.
Speaker 1:Well, no. I mean, it makes sense that eleven, the club, would incubate something like this because they need to text their high paying clients, hey, do you want a bottle service tonight? Yeah. What's going on?
Speaker 2:They have a pretty sophisticated app.
Speaker 1:Do that.
Speaker 2:It makes Outbound engine Exactly. CRM. Yeah.
Speaker 1:You know? Really increasing. Mean, that's high margin stuff if they get them coming in. I mean, they're not paying $2.50 a bottle for DOM at eleven.
Speaker 2:Talk about
Speaker 1:It's gonna be 5 k.
Speaker 2:At least.
Speaker 1:Yeah. And so you gotta start using the AI sales reps to just be hitting everyone
Speaker 2:that comes Pounding the digital pavement.
Speaker 1:Exactly. Pounding the digital pavement. Anyway, let's go to TechCrunch. Last year, AI powered sales automation startup eleven x appeared to be on an explosive growth trajectory. However, nearly two dozen sources, including investors and current and former employees, told TechCrunch that the company has experienced financial struggles largely of its own making.
Speaker 1:So their own investors are talking to TechCrunch. Wow. Numerous people in The US and UK told TechCrunch that the situation has become so tenuous that 11x's lead series b investor, Andreessen Horowitz, may even be considering legal action. However, a spokesperson for Andreessen emphatically denied such rumblings telling TechCrunch that a 16 z, they ain't suing.
Speaker 2:Yeah. This story, it's interesting. TechCrunch got the scoop but they didn't have a lot of meat here. Mhmm. Right?
Speaker 2:It's just sort of like a lot of he he said, she said, former employee says. Yep.
Speaker 1:I think let's read through the meat that is here and then let's dig into the response from the founder, some of the support from Andreessen. And then I wanna talk about kind of the meta level of where
Speaker 2:is it, you know, how is this sort of like
Speaker 1:How much did you fake it till you make it, basically?
Speaker 2:The contracted ARR. Yep. That
Speaker 1:and and then also the logo stuff. There's been a classic example of like, oh, a guy from Google signed up for my service. Therefore, can I just say Google uses my service? You know, always been questionable. So Eleven x offers a bot for outbound cold sales duties, including identifying prospects, crafting custom messages, and scheduling sales calls.
Speaker 1:All stuff that's, like, very doable within the current regime of AI tools and foundation models. It's one of a number of AI startups in the hot area known as AI sales development representatives or AI SDRs. It was founded in 2022 by Hassan Sukar. Eleven x said it approached $10,000,000 in ARR just two years after launch and moved from London to Silicon Valley Last July and announced a $24,000,000 series a led by Benchmark in September and then very quickly followed up later that month with a $50,000,000 series b from Andreas and Horowitz. Three current and former 11x workers told TechCrunch that most of its early customers took advantage of break clauses in their sales contracts to discontinue using the product.
Speaker 1:Customers faced issues such as the email product not working as expected or hallucinations according to sources. Very standard.
Speaker 2:Yeah. So I'd to get a sense. I don't think we're gonna get it from this article, but a sense of was this contracted ARR like, hey. We're gonna you're gonna sign up for, you know, a year or two, but you have a three month sort of like non paid trial that like converts in? Or were these customers actually paid?
Speaker 1:I think they probably paid. I mean, I think I think it's basically what I I mean, I think what with the ARR calculation is, like, the gold standard of ARR is that if it's if you're counting it as ARR, it by contract legally has to come in every single month for at least twelve months. Yep. And so it's okay to multiply that number by 12. If you if if you can break out of it at any moment in time, it's annualized revenue
Speaker 2:Yep.
Speaker 1:And it's not necessarily recurring This is big big you'd like it to be recurring. This is the case with my with Lucy. Like, we have people on subscription. They're not locked in for twelve Yeah. Twelve months.
Speaker 2:Yeah. Same with Roar.
Speaker 1:But it's helpful to Yeah. To kind of look at the subscription revenue, multiply it by 12, and be like, yeah. I can probably count on 10,000,000 coming in over the next year.
Speaker 2:We have subscribers that are roughly worth, you know Exactly. This amount with a sum of discount
Speaker 1:Yep. Return. But it's very different from, okay, you have a Yeah. Ironclad contract that would be very difficult Yeah.
Speaker 2:The big thing here is companies like 11x and there's been a lot of them. Yep. They make these sort of really big promises and I believe the potential is there. Yep. But the issues that, you know, 11x customers says they're facing issues like the email product not working as expected or the product just hallucinating.
Speaker 2:And there's a company in my portfolio that that builds sort of similar agentic products for another vertical. And they were able to like get a v one that was like magical Mhmm. Like 60% of the time Mhmm. Which is not enough. Yep.
Speaker 2:And so they then had to spend like almost a year kind of rebuilding the product and now it's working really well. Yep. But the issue is like you go and you sell like an air table or a zoom info on something like this. And if you have an outbound sales agent that's magical 60% of the time, but 40% of the time it hallucinates Yep. That is not a magical product.
Speaker 2:Like, you're gonna piss off customers and it's like the fastest thing that somebody's gonna turn off because they're, you know, gonna
Speaker 1:It's just it's so rough because, I mean, obviously, I think everyone's a believer in the agent paradigm, but we're clearly in the Centaur era where do you we we've talked about the Centaur chess, how for a long time, a human plus a chess engine would defeat both the best chess AI and the best human. And I would just imagine that, you know, like what Devin and Cursor are doing for programmers where they're not fully replacing the programmer. They're more just like an extension of the programmer. And even the way most people use ChatGPT, it's very interactive. Yeah.
Speaker 1:I I I I send it some bullet points. It turns into a paragraph. I edit that. I change that. I could imagine a product in the AI SDR world being super helpful even if it wasn't agentic because 60% of the time, it writes me a great email, and I can just click send.
Speaker 1:But I'm still reviewing it in the loop.
Speaker 2:The reason we've seen so much traction on the engineering developer tooling side is that developers can see the agentic product make a mistake. Yep. They can help correct it. Yep. And nobody's impacted other than the developer.
Speaker 1:Devin sends in a GitHub pull request, and then a human reviews that most of the time. I mean, I'm sure you can just say merge. But most people probably review the code at least a little bit or run a test suite against it. And if you don't have a test suite or a code review process for the emails that are being sent, it can get very spammy.
Speaker 2:Anyway This is a funny this is a funny line. So there was some internal drama too. Employees described an arduous stressful work environment even for those who embrace hustle culture. So even if you love working hard, it's gonna be a stressful work environment. So anyways Anyway.
Speaker 2:I gotta gotta call that out.
Speaker 1:They're also in hot water for maybe bake in customer endorsements is what's left No, think Using logos a
Speaker 2:little too seems like what happened is they had some big companies sign up. Yep. Do these sort of whatever the deals actually look like. Yep. Churn.
Speaker 2:Yep. And then they kept putting them on the site. Yeah. I think where where this got, I'm sure annoying for ZoomInfo is that ZoomInfo I think also has like
Speaker 1:a
Speaker 2:competitor
Speaker 1:a competitor product. Yes. Product. And so ZoomInfo must have signed up at some point or someone from ZoomInfo signed up, and, eleven x used the ZoomInfo logo along with other multiple companies on their website to to show, hey. We're a real business.
Speaker 1:We have a lot of great customers. And ZoomInfo said, we did not give them permission to use our logo in any manner, and we are not a customer. So rough there. And this happens in Yeah.
Speaker 2:It's been pretty pretty aggressive.
Speaker 1:Like Ridge. There's been a lot of I I don't know if it happened to Ridge, but there's a lot of agencies that will do, like, one campaign, and they'll be like, well, we're responsible for all Ridge's growth. Yeah. We scaled this company. We scaled that company.
Speaker 1:And and then the CEO will get on and be like, hey. Look. Like, we we're fine working with you, but, like, give our team some credit here, we worked really, really hard.
Speaker 2:I have that happen all the time. Still people, I'll have somebody reach out to me and they'll say, hey, so and so says they did Somebody a party round brand. Party round branding. I'm like, I don't know their name. I don't actually know who That's aggressive.
Speaker 2:I I was like a part of Yeah. Every Yeah. Process. But yeah, so it sounds like they've been not just putting the logo on the site, they've been claiming it in sales calls Mhmm. And now on its own, like, AI dialer.
Speaker 1:Well, were those sales calls hallucinated? Because it's possible that this is all just one everything is just one hallucination. And they're like, well, yeah. Like, we just told our AI to make a landing page. It threw some logos on there.
Speaker 2:The website feels like what? Like it was entirely AI generated. Yeah. Like if you've you've seen it.
Speaker 1:No. Love it.
Speaker 2:It's like all AI. Like, look at this.
Speaker 1:Okay.
Speaker 2:Like like Wow. It does feel like the again, I don't I don't wanna dunk I don't wanna dunk on them. We are digital workers. So anyways, if you don't have anything nice to say, don't say
Speaker 1:Oh, they really like focus on like, it's a person. Okay.
Speaker 3:Yeah.
Speaker 1:Alice, Julian, Giga Chat.
Speaker 2:Yeah. It sounds like this this blew up in their face partly because ZoomInfo had been asking them for months to take down their logo
Speaker 1:That's rough.
Speaker 2:To stop using them in marketing materials.
Speaker 1:Yeah.
Speaker 2:And it sounds like they didn't listen. And I
Speaker 1:mean, Roe Roe is still on here. You should you should hit them up and ask if they're actually a client. Yeah. Do some journalism here. Anyway, what I really want from them is an SDR that's just an IFBB pro.
Speaker 1:Because Julian looks great, Alex looks great, but I want an absolute mass monster in a tank top who can really sell some supplements for me. That's the goal.
Speaker 2:Apparently, the CEO doesn't believe in people taking holidays.
Speaker 1:Okay.
Speaker 2:Which we can't comment on
Speaker 1:that. Ben,
Speaker 2:when when did you request time off? Anyways, I thought this this line was good. And then honestly, let's move on. Yeah. There's a lot more under the hood a current employee said, wow, a current employee.
Speaker 2:You should probably leave.
Speaker 1:Yeah.
Speaker 2:Get on with your life. One day there will be a documentary about this guy. I do believe that's how scandalous he is. So obviously, Sukar pushed back. Sort of went through a bunch of different bullet points outlining how.
Speaker 2:But yeah, overall, you don't see benchmark in many companies that that have this kind of story. No, totally. But this, you know, the the sort of critique of venture in the last year and a half, two years has been companies are growing so quickly, raising so much capital that they are overestimating their traction. Yep. Basically, the the idea of ARR is now when everybody's saying, oh, we got to 10,000,000 ARR in in in six months.
Speaker 1:Yeah.
Speaker 2:Then the pressure starts building up where founders feel like, oh, well, this my competitor is counting contracted ARR to raise more And so that pressure just builds up and these rounds are getting done like really quickly. And the faster the faster a round gets done, less time there there is to do Totally. You know, real hardcore diligence. And and in many ways, I'm sure I'm sure all their investors knew that there were issues with the product, but it was a bet, you know, broadly on the category and the team.
Speaker 1:I mean, lot of this comes down to the material threshold during due diligence. I remember I was using the same lawyer as Zenefits during the whole Zenefits arc. That's rough. And we were doing a $20,000,000 series a with Andreessen, and Zenefits was doing a $500,000,000 series c or something like that. And my deal was taking forever in terms of due diligence.
Speaker 1:It was like such a beast. I was like the lead on it. And and I was like, oh, man. I can't imagine what it's like to do a $500,000,000 round. Like, that must be brutal.
Speaker 1:Like, ours has taken, like, months. It's been so much work. Yeah. Like, so so many, like, checks on, like, this this employment contract, this deal, this this thing. Get the FDA people.
Speaker 1:It was a lot. And and, like, from a legal perspective, it's actually easier to do due diligence than a $500,000,000 round because you set the material threshold at, like, 1% of the funding that's coming in. And so you might say, hey. We're doing a $20,000,000 raise. Let's look at every contract that's over 200 k.
Speaker 1:Because, look. Yeah. If there's some employment contract out there that's a hundred k liability and we get it wrong, like, we'll just write it off. It's not a big deal. But when you're doing a $500,000,000 round, all of a sudden, it's like, oh, yeah.
Speaker 1:If there's a $4,000,000 liability on the balance sheet we don't know about, like, who cares? I don't know. That that's those might not be the actual numbers. But, when you're a small company and they raised a in 2023, they raised a $2,000,000 pre seed, then a $24,000,000, round in 2024, and then immediately a $50,000,000 round. Like, it's probably still a pretty small company.
Speaker 1:And so if there's a contract out there that's, like, pretty small, you might just be like, well, like, it doesn't really matter. Like, we're not gonna dig into it that much. It just doesn't make sense based on the scale of the company.
Speaker 2:But I I do I do like how Andreessen and Benchmark have both come out Yeah. Support of Hassan. I'm sure Hassan, like every founder has Yeah. Has, you know, made mistakes. But hopefully, I'm sure he'll learn and the team will learn from this crisis.
Speaker 2:But Joe had a good point. What they've built is remarkable. The team product and metrics are world class and they're attacking a market opportunity that rivals any I've ever seen. And then Sarah Tavill came out and said, one of 11x's incredible strengths that I believe will compound for many years to come is the break net pace at which Hassan and the team move. That kind of speed brings both opportunity and challenge especially early on.
Speaker 1:Yeah. This is a cool, like, going direct, addressing the news. Like, clearly, people are gonna be talking about it. He puts out all this information. Also funny to dig into.
Speaker 1:They've raised 76,000,000, and he says, like, we barely touched our investment capital and have nearly 70,000,000 on the balance sheet. And, I mean, I guess it's only been a couple months, like, less than a year, so they're not burning a lot. But it is interesting that, like yeah. Wait. Like, even even if the ARR is a little off or something or there's some churn, like, they could totally figure this out.
Speaker 1:Like, wait. They they could wait, like, what, based on their burn probably, like, a decade for, like, agents to get better and, like, LLMs to improve. Like, as long as they can keep the energy in the team and, like, get through it, like, it's it's probably fine.
Speaker 2:The timing of this is fascinating in that TechCrunch just changed hands.
Speaker 1:Yep.
Speaker 2:And they decide, yep. We're gonna just like immediately do a do like an aggressive hit piece Yep. Which is the exact opposite of what people have liked about TechCrunch. TechCrunch, Adam Adam Ryan talked about this on the show. You know, they they talked about how he he said that the TechCrunch was the make your mom proud engine.
Speaker 1:It was
Speaker 2:a place to launch companies And it's a weird position to be in to try to do like investigative journalism Yep. And be a launch platform.
Speaker 1:Yep. Oh, totally.
Speaker 2:And so again, yeah, I'm I'm sure this drives a lot of clicks. Yeah. But but yeah. It's it's kind of yeah. It's just again, it's an awkward awkward place to be in.
Speaker 1:Yeah. I mean, he does admit some amount of fault here saying, like, we regret not having a better process to remove logos from our website more promptly after customers churn, but he's he says they've never put a customer on there who didn't pay.
Speaker 2:Yeah. This is
Speaker 1:a great clarification, and that makes sense.
Speaker 6:Like Yeah.
Speaker 1:You know, updating front end, it should be easy with AI, but sometimes stuff gets slipped and you forget that, oh, yeah. They churned. Like, we should probably remove them. And then also he says, our investors are not suing us. They categorically denied this to TechCrunch, yet this rumor was included in the article.
Speaker 1:And so a wag of the finger to TechCrunch on that one. They should have been firmer on that. Yeah. But good luck to them. Good luck to everyone building AI SDRs.
Speaker 1:And let us know if you're building AI I
Speaker 2:almost said his real name, we're gonna have somebody named Carrie No Interest on the show later today
Speaker 1:Mhmm.
Speaker 2:To just talk about the AI sales automation market generally. He's been somewhat a critic of SaaS, but he also is actively buying and transforming existing SaaS companies and is building some stuff in the space himself. So excited to have him on Yeah. In a couple hours.
Speaker 1:Yeah. And for and for Hassan and the 11x team, I think, you know, they have 70,000,000 on the balance sheet still, something like that. They are clearly going through, like, a tumultuous tumultuous time with this negative article. They gotta rebuild. They gotta redouble their efforts.
Speaker 1:And I think, like, the number one thing that they could do to really get through this hard time and accelerate is just keep costs low, get on ramp.com. Time is money, save both, easy to use corporate cards, bill payments, accounting, a whole lot more. In one place. Go to ramp.com and sign up.
Speaker 2:Yeah. I mean, the the strongest signal that 11x could send to the market right now is getting Saquon to to come
Speaker 1:in That would be fantastic. Basically I thought you were gonna say the strongest signal they could send to the market is just putting out a press release saying like, hey, we're on ramp now. Yeah. Just, hey, we're taking everything seriously. This is a serious company and we are in a serious financial platform.
Speaker 1:Yeah. We don't mess around.
Speaker 2:We don't mess around. But an even stronger signal would be getting Saquon. Saquon's, to our knowledge, has invested in two companies
Speaker 1:Yes.
Speaker 2:Ramp and Anderol Yes. To
Speaker 1:The third company The the trilogy?
Speaker 2:The third
Speaker 1:yeah. The trilogy of Saquon investments. If you're a founder in Silicon Valley, like, you have to be calling Saquon right now to be number three.
Speaker 2:Yeah. Him Give
Speaker 1:him Every other VC firm that invested in Andrewll or
Speaker 2:or Get Saquon to invest in your company, go into debt
Speaker 1:if you have to. Yes. Every other every other Silicon Valley firm that's invested in Ramp and Anderol has a ton of corpses and bad investments. Saquon appears to be just
Speaker 2:The guy doesn't miss.
Speaker 1:Doesn't miss. It's great. Anyway, speaking of Ramp Investor, Thrive Capital, and AI. Thrive Capital is leading a new deal in Wall Street AI startup, Rogo. Is Wall Street ready to work with artificial intelligence, writes Natasha Mascarinas over at the information?
Speaker 1:Two of OpenAI's biggest investors think so. Thrive Capital is set to lead a $40,000,000 financing into Rogo AI, an artificial intelligence startup selling AI software for investment bankers and Wall Street Analysts at a valuation of up to $350,000,000. You know what investment bankers need? They need that what was Optifye. That would be the big opportunity in Wall Street.
Speaker 1:If you wanna sell into Wall Street banks, go to the Optifye guys and say, hey. We're gonna put cameras in every cubicle in your investment bank. Make sure these guys are really working eighty hours a week. You they always talk such a big game. Oh, investment bankers work a hundred hours a week.
Speaker 2:Oh, you
Speaker 1:can't all data. Yeah. Show me the data. Yeah. I I don't know if I buy it.
Speaker 1:It could all just be a LARP. I wanna see it. That's right. Anyway, Khoesla's already in. Thrive is a big OpenAI investor.
Speaker 1:They're participating in the new round, styling itself as Wall Street's First AI Analyst. Rogo aims to shorten the time that investment corporate bankers spend on the grunt work of research and preparing client materials. Love that. Three year old
Speaker 3:startup Yeah.
Speaker 2:This feels like a a better attack vector for the big slide deck problem. Right?
Speaker 1:Yep.
Speaker 2:A lot of a lot of white collar work is making slide decks. Yep. A lot of time and energy goes into it, but the challenge of making decks is not generating pretty pages. Yep. It's what is the content that goes into it.
Speaker 2:Yep. You're going through all this data, you're creating models, you're creating graphs, etcetera.
Speaker 1:And it seems so obvious in the context of Harvey. I'm surprised that we haven't seen anyone do this before because with Harvey, obviously, it's a generative AI startup, customizes AI models using legal data such as case histories to save lawyers' prep time. Harvey's ARR topped 50,000,000 in December. We've heard that it's a pretty expensive product, but they're selling to law firms and saves them a lot of times. It's probably worth it.
Speaker 1:And Harvey is now at a $2,700,000,000 valuation, and it makes so much sense that there would be a Harvey for investment banking. And one of the big things is is if you're an investment banker or a lawyer, you you're going to use ChatGPT Deep Research if you could, but oftentimes, you cannot put client materials into OpenAI's models that they'll train on Feeding beast. All of a sudden, you have some secret information that's meant to be very private, and they get trained on it. And then in the next version, OpenAI GPT 4.8 comes out, and you ask it, like, how much does this person make at this company? And it's just like, here we go.
Speaker 1:Or, like, you know, what's the what's the intellectual property behind x, y, and z? It's like, oh, yeah. Like, the lawyer who was working on that intellectual property, they uploaded it all and we trained on it by accident. It wouldn't even be OpenAI trying to do that. They just wouldn't they would just be, oh, it's in the it's in the feed.
Speaker 1:We got the data. Let's just train on it. And so makes a ton
Speaker 5:of sense that you would
Speaker 2:run it.
Speaker 1:What their It's, I guess, sequestered LLM that could that could be adapted to all the data that the bank has, but then also not not leak data from one client to another.
Speaker 2:Yeah.
Speaker 1:What were gonna say?
Speaker 2:I'm curious to know what their actual policy is around that they obviously wanna use the data that they ingest to improve the product. Yep. But are they using it to inform outputs to other users? Like actual factual outputs?
Speaker 6:Yeah. I don't know.
Speaker 2:I mean, I think I don't know. I don't know if
Speaker 1:I think Harvey is not doing any of that. Risk. That's the risk.
Speaker 2:That's the risk. But we don't know if OpenAI is Yeah. Actually doing that.
Speaker 1:I mean, in in the in the long term, you could imagine a kind of data sanitization and anonymization strategy that takes in private data and and still allows it to improve the model. But it's probably very, very tricky because if any of that data leaks in and you ask it like, it's it's very easy to to to figure out what's happening with these models. Like, for a long time, if you went to OpenAI's Whisper and you just had it record some audio and then you didn't say anything and then you clicked, okay, like transcribe that, it would say, thanks for watching. Please subscribe. And it's like, okay.
Speaker 1:That's clearly YouTube data. And so you could imagine this data leaking out. And already, I mean, I'm sure OpenAI is trying really, really hard not to let personal information leak into the training data because I noticed that OpenAI has a series of personalization features where it tries to learn about you, but I will often lie to it.
Speaker 2:You if, like, how bad it would be for an investment bank if if you are able to query, like, about Ask OpenAI about something and and it just pulls up, you know, oh, yeah. This company, like, tried to sell itself, like, three or four different times. Yeah. Ran all these different processes.
Speaker 1:The Goldman was lead left in the deal. They They bailed. All this. Yeah. They couldn't Here's the name of the banker that was looking at it.
Speaker 1:Internally, they said it wasn't that good, but they tried to shell it on somebody. Yeah. It'd be a disaster. So, obviously, like, a a clear need, and a lot of people are swarming in here, such as Hebia, which we talked to George Savolka, ModelML, Prosites going after the task typically handled by overworked analysts and junior bankers, and several banks such as Citigroup and Bank of America say they're also developing AI tools internally for similar purposes. For Thrive Capital, which made big headlines for bets on OpenAI and Stripe at relatively high valuations, the Rogo deal shows the firm also wants to make investments in younger AI companies.
Speaker 1:The New York investment firm is also in talks to invest in the newest financing for popular coding assistant, Cursor. We heard about this earlier at, I think, a 10,000,000,000 valuation. And so, Kushner's all over the place. He's going down to the $40,000,000 round. He'll do a $1,000,000,000 round.
Speaker 2:He's an absolute dog. Size lord,
Speaker 1:but let's ring the size gong for Kushner
Speaker 2:and Well, if he wants to invest in companies that Kushner invested in ten years ago, why not check out public.Public.com,
Speaker 1:baby. Investing for those who take it seriously. Got multi knack
Speaker 2:for investing in stuff before it ends up IPO ing. Yep. Which is a pretty good business.
Speaker 1:Yeah. Pretty good business. I I think he described it as like buy low, sell high. I think that's the strategy Exactly. Over there.
Speaker 2:Or just hold forever. Yeah. Hold to hold to three t's.
Speaker 1:Yeah. Let's do let's do it. Well, they got multi asset investing, industry leading yields that are trusted by millions. Head over to public.com to get started.
Speaker 2:Thank you to Public for supporting the show. We love you guys.
Speaker 1:Thank you to Public. Anyway, speaking of mag seven, big tech stocks, big market movers, Apple, Meta, Google, they're buying remote controlled robotic arms. We talked about this briefly on a previous show, The Arm Farm at Google. I love this one.
Speaker 2:By the way, I didn't realize this article is written by someone at the information named Rocket.
Speaker 1:Cool. Like that name.
Speaker 2:Rocket called Rocket.
Speaker 4:That's a great name.
Speaker 2:And then writing about deep tech is just
Speaker 1:Amazing. Great nominative determinism.
Speaker 2:Perfect.
Speaker 1:Your future is bright for Rocket Drew over at the information. They write, during NVIDIA's conference for developers last week, Jensen Huang showed off a software that creates computer simulations of robots. Those simulations aim to teach robots how to perform tasks from washing dishes to picking up household objects. But some robot makers I spoke to say it's better to train robots to do such tasks by having a person control them remotely, also known as teleoperation. And this has been, like, the most popular topic, but also controversial.
Speaker 1:Oh, Elon did the, the Optimus event, and they were teleoperated. Is this like, maybe teleoperation is actually the path to robotic AGI. And so it's good to be on that path. But then everyone else kind of is like, wait. What?
Speaker 1:It's teleoperation? Mean, doesn't count.
Speaker 2:We could put each of us put an optimist in each other's houses and instantly teleport into it. I could come over. You're sleeping. I go, hey.
Speaker 1:Get up. We gotta do the show.
Speaker 2:We got breaking news.
Speaker 1:We got we got breaking news. That'd be great.
Speaker 2:Hey. Hey. Not too distant future.
Speaker 1:I hope so. In a sign of growing interest in teleoperations, Scale AI is considered jumping into that market according to people who have spoken to the company's staff. I was talking to Alex Wang about this, a couple years ago, actually. He had a great interview on Invest Like The Best, and he talked about the data wall in robotics. The fact that, yes, there's a trillion tokens of words on Reddit and the Internet broadly that are very easy to crawl, and that's why the LLMs have advanced so quickly.
Speaker 1:Yeah. That dataset does not exist anywhere for human motion data.
Speaker 2:Well, I'll go out and say, have content of me kick flipping Nice. Surfing, snowboarding, bunch of cool
Speaker 1:But were you wearing a mocap suit? Because we gotta know where the joints were going. The video is not enough. Now, they can do translation from video.
Speaker 2:Put me in a suit. I I would like to train Tesla optimists
Speaker 1:on I think that actually might be the future, that might be what scale's do going to do. Scale might have an army of we talked about this with Mercor too.
Speaker 2:You could get paid to serve. Yeah. Right now right now, knowledge workers globally can just train models Yeah. By writing code, answering Yeah. Yeah.
Speaker 2:Questions.
Speaker 1:I mean, that's the Mercor thing. It's like you hire people to answer math questions.
Speaker 2:The greatest opportunity of the next five years is to wear the suit and just do awesome Just
Speaker 1:do sick extreme sports in a mocha suit.
Speaker 2:Can imagine?
Speaker 6:Why not?
Speaker 2:Can you imagine if you're like out snowboarding in this suit and you just just have like terrible like you like are like flailing on some jump. You're like, alright, we gotta like cut that out. That. Yeah. Yeah.
Speaker 2:Yeah.
Speaker 1:I'm sorry. Pull that from the training
Speaker 2:It's real.
Speaker 7:Like it should be
Speaker 2:the data but like at the same time, I don't wanna, you know
Speaker 1:Yep.
Speaker 2:I don't wanna set set set poor example.
Speaker 1:Exactly. You gotta cull all those data points.
Speaker 2:Remember, remember I talked about too, I wanna have, you know, I think that the real benchmark that matters for all humanoids is the ability to do extreme activities.
Speaker 1:I agree.
Speaker 2:Cliff jumping Yep. You know, a robot should be able to
Speaker 3:900.
Speaker 1:Yeah. Backflip. Barrel roll. Deadlift All
Speaker 2:the tricks.
Speaker 1:The thousand pounds.
Speaker 2:Yeah. When a robot can just be in the thousand pound
Speaker 1:Clean and
Speaker 5:jerk for sure.
Speaker 1:Yeah. These are important evals. Scale has an army of human contractors who create data to train AI and evaluate the performance of AI models in difficult tasks. The company has discussed using that workforce to handle teleoperation for training robots. And I think we were talking to a company that was doing teleoperation for those small delivery robots, which have been, getting more and more popular.
Speaker 1:And I've long said I mean, George Hotz had a had a take that, Google Waymo was overly teleoperated in the sense that there was a human in the loop too much, basically, a human in the loop overseeing, you know, one or four or eight or 16 Waymos at a time. And, basically, there's always a human behind the scenes in Waymo that's ready to, like, hop in if there's a problem. I don't really have a problem with that. Like, they let's see how the economics pay, like, pencil out. If if there needs to be a human in the loop for most of these robotic things and that's helped and that helps us develop the training data to get to really, really autonomous systems over time, I'm fine with it.
Speaker 1:I I I'm not a I'm not an I'm not like an AI purist in that regard. And so large firms such as Tesla, OpenAI, Meta, and Google and Apple are trying to develop hardware or software for humanoid or home robots. There's also a bunch of startups doing this stuff. Sensei is another rival. Says it wants to be Scale AI for robotics training data and aims to distribute cheap teleoperated devices to a network of human data collectors.
Speaker 1:This is your idea. Who will perform tasks such as folding laundry on behalf of robot developers.
Speaker 2:Still virtualized.
Speaker 1:Yeah. We need Sensei for extreme sports. We need
Speaker 2:Scale AI for kick flips.
Speaker 1:Yep. I like it. Scale AI is up to 14,000,000,000 The
Speaker 2:kick flip is the final male benchmark.
Speaker 1:I think it is.
Speaker 2:You can be in the thousand pound club
Speaker 1:But you can't kickflip,
Speaker 2:what are you doing, dude?
Speaker 1:Well, dunking. I would say you you handle the kickflips, I'll handle the dunking.
Speaker 2:Okay. Yeah. Together, we make a good team.
Speaker 1:But until I see an optimist or a figure robotic robot dunking, I still got a job. Let's see.
Speaker 2:Yeah. Figure trained their new they trained their robots on
Speaker 1:Biden's Yeah. On Joe Biden. Saw.
Speaker 2:And they were saying today this is the last time
Speaker 1:This is the last
Speaker 2:time it
Speaker 1:will look like Joe Biden. Because they're gonna train on someone athletic next? Yeah. That's interesting. Cool.
Speaker 1:Anyway, in the relative world in the relatively small world of robotics, teleoperation equipment is hot. Trosen Robotics, a longtime seller of robot parts in recent years, began selling Aloha, a teleoperated device with four arms that allows a human operator to use two arms to control the other two. Interesting. The device's sensors collect information while the arms move, and the robot is trained to repeat the motions. There are multiple versions of Aloha, including stationary and mobile, the latter of which was designed at Stanford.
Speaker 1:Troson is based in Downers Grove, Illinois. Last year sold more than 100 stationary and mobile Aloha devices together, which have a sticker price of more than 3,300,000.0, from only a handful of sales. And so they're doing well. There's also robotics some roboticists are collecting teleop data using more rudimentary gear, including some game controllers. Dexterity, which develops robots that pick and pack pick and stack packages and trucks and other areas, bought Xbox controllers and connected them to robots.
Speaker 1:Very cool. Human staff use the controllers to direct its machines to stack boxes. And so maybe in the future, you'll just be downloading the latest Xbox game from Scale AI and just tele operating for, you know, points in the game, basically.
Speaker 2:The golden age is going to involve people moving to very inexpensive countries just getting paid to do fun stuff all
Speaker 1:the time. There was a performance artist named Ryder Ripps who, when VR was getting hot, built a VR simulation of what it was like to be in a pick and pack facility in like an Amazon workplace. It was very bizarre. And so you would have to like pick up the box. It was the only, the game was just work.
Speaker 1:It was just work. That was it. It was very interesting. Was very like
Speaker 8:The how
Speaker 2:do many DAUs did he have?
Speaker 1:I mean it was like something that was shown at like fine art museums basically. He's like a, he's an artist essentially. But it's it's it's like thought provoking work. I I'm he's he's he's a wild guy, but he's he's a character. Anyway, you know what I think the final eval will be for these humanoid robotics, these robotic arms?
Speaker 2:I know. I I know what you're thinking.
Speaker 1:I think you'd be flexing with a nice watch on the robotic arm on the robotic arm's wrist. Of course. Yeah. It's We gotta get robotic.
Speaker 2:Know these robots aren't approaching true AGI
Speaker 1:or Until they're rocking an aqua. Yeah. Exactly. Yeah. I mean, honestly, like, if you're spending what is this $3,000,000 on a robotic arm, like, a patek on there.
Speaker 1:Yeah. Like, why not?
Speaker 2:It's an easy way
Speaker 1:to At at least put a Daytona on the thing.
Speaker 2:It's an easy way to signal the buyers Yeah. Hey. Shared value.
Speaker 1:Exactly. Hey. Yeah. Yeah. You know, this robot, it's some class.
Speaker 1:Yeah. It's not just like automating, not just stealing jobs. It's also, you know, like raising the aesthetic floor in in your office. I love it. That's right.
Speaker 1:So where should they go to buy watches for their robotic arms, Jordy?
Speaker 2:They should go to getbezel.com. Download the Bezel app. They should download Build your
Speaker 1:Bezel should integrate scale I and so you can just, you're doing the training data and then you're
Speaker 2:immediately cashing your I volunteer. I to provide the training data for buying watches on Bezel.
Speaker 1:And yeah, training, training, okay. How do you properly check the time on your watch? I don't know if if a if a robotic arm could do that effectively.
Speaker 2:That's right.
Speaker 1:And so we need training data for that. And of course, we're gonna head over to getbezel.com. Shop over 23,500 luxury watches fully authenticated in house by Bezel's team of experts. Fantastic. Anyway, we got five minutes.
Speaker 2:We got some breaking news. Taylor Lorenz just commented on Alex Conrad's post
Speaker 1:Okay.
Speaker 2:Announcing the news coming on TVPN saying powerful collab and she hit it with a repost. So shout out to tech adjacent journalist, Taylor Lorenz, the one and only. Separately, Shkreli is saying that Coreweave is five x oversubscribed and will IPO.
Speaker 1:He was going back and forth. So we're we're so we're having Tane on the show from Wing. He does a lot of a lot of deep dives on s ones, and I asked him to prepare something for for CoreWeave, which I think will be very interesting. But it sounds like we have Christian Garrett in the temple of technology. Welcome to the show, Christian.
Speaker 2:There he is. How you doing?
Speaker 9:Good, you guys. I'm good. I'm good. How's it going, John?
Speaker 1:It's great. Good. I'm happy.
Speaker 2:It's a beautiful day. Where are you calling in from?
Speaker 9:I'm in San Francisco. So I am I'm holding it down and depending who you ask, this is the future or this is Detroit. So I'm enjoying finding out what's gonna happen.
Speaker 1:Have you checked your signal group chats for mainstream media reporters yet?
Speaker 9:Yeah. No. I man, I really need to step my signal group chat game up. I could tell you that Yeah.
Speaker 1:Yeah. Just take a pass at the member list. If you see Taylor Lorenz in there, maybe create a new chat. You know? You you don't need to kick her out, but, like, you know, start a new one.
Speaker 3:At least
Speaker 1:move the important conversations elsewhere. Well, thank you for joining. Can you give a little bit of an overview of who you are, what you do just for the just for the folks on the show who might not be familiar? And then we'll go into through to some questions.
Speaker 9:Yeah. So I'm a partner at one three seven Ventures. We're a growth stage venture capital firm, and we wanna invest in what we believe are generational category defining companies that can be long compounders and have defensible, sustainable competitive advantages. Like every firm, we have a differentiated strategy. You know, a lot of what we focus on is as a liquidity partner to companies.
Speaker 9:Mhmm. We do do growth capital. We do invest in primary rounds. But, you know, we saw, you know, a long time ago, really, the heels of Facebook and after spinning out of Founders Fund, we saw the opportunity to partner with companies on the liquidity side as a way to invest in them and build positions in them. And that's what we've been doing for a while now, and that was a contrarian bet.
Speaker 9:The companies are gonna stay private longer and there would be growing demand for liquidity. Now it's, you know, somewhat consensus and and and popular and understood.
Speaker 1:Yeah. I think Peter was basically banging the table saying, never go public. And now you have Elon kind of saying the same thing. Hey. Tesla's kind of rough go.
Speaker 1:Obviously, did very well, but got kind of, you know, beat up in the courts and whatnot. And so it's great to see that it's at least an option for those founder led companies to stay private longer. We thank you for your service to the capital markets. It's fantastic. You got a question, Jordan?
Speaker 2:Yeah. I'm curious. There's been a meme for a very long time that, oh, yeah. I'm an early investor in SpaceX, but like maybe there's like a bunch of SPDs separating you and like the actual like actual, you know, certificate. Right?
Speaker 2:They certainly don't have the certificate. How do you think the average investor has done over the that's like investing into these sort of like which is not what you guys are doing, but when when when these sort of power law companies end up just crushing and growing tremendously, does it matter that you're stacked in layers and layers of fees? Yeah. Do you get smoked? Can you come out alive?
Speaker 2:You know, what's been
Speaker 9:Yeah. Well, let let let me I'll take a step back to and kinda make a broader point. I will say it's funny you picked SpaceX. I do have a rocket engine right beside me.
Speaker 4:Nice. There you go.
Speaker 1:That's great.
Speaker 7:No. Yes. We we do have a
Speaker 9:SpaceX rocket engine here in the office.
Speaker 4:That's fantastic. Amazing.
Speaker 9:So well, like I said, let's take a step back. I'd say, you know, for the last two decades, companies have trended towards staying private longer and longer like we talked about. And in order to do that, companies need growth capital and they also need liquidity capital. And the secondary market is just a tool for private tech companies that works just like the public markets in that it just provides liquidity to existing shareholders. There are two distinct segments of that market, which is what you're hitting at.
Speaker 9:One segment's done in partnership with companies, which is where we at One D Seven Ventures focus on, and another segment operates outside of that. You don't wanna operate outside of that. You know, we've been longtime ENDRAL investors and they have tweeted a ton about fake allocations in their primary rounds being marketed to investors. Right? And so, yeah, I will say what you're hitting on is is mainly just the really just a proxy for demand.
Speaker 9:And so, you know, investors wanna invest in great companies regardless of how. And as demand grows, investors look for supply, and there's only so much supply for primary, which I can talk a little bit about why that is. And secondary is another way to access a company's equity, and so people will do things, to your point, on investing in various SPVs or whatever it is as a way to access, and I think some of that is good and blessed by the company. It's just another vehicle avenue to put capital in these businesses. And then a lot of that operates outside of that and is kind of a black hole and, maybe not the best place to be in because you, one, don't collaborate with the company, and then, two, you don't have access to information.
Speaker 9:Right? And so, and the third is potentially, like Andrew was tweeting about, is there could be fraud as well.
Speaker 1:Sure. Can you talk a little bit about why like, how companies think about doing these tender offers, when they do them, when's the right time, and how how do they go over, like, culturally, obviously, there's some incentive and employee, like, just, like, reward the employees, but what other considerations go into a successful tender?
Speaker 9:Yeah. So, you know, the the tenders and just the broader market we're talking about has grown dramatically, over the years. And, you know, one of the interesting things is, like, a lot of these companies have made the transition to being cash flow positive in the private markets, which means that more shares are actually bought in secondary than primary through things like tenders, right, over the life cycle of the business. You know, Databricks just did that massive that massive round, right, to convert and pay the tax bill for a lot of the RSUs. SpaceX has raised $10,000,000,000 in primary over its, you know, twenty three years of being around as a company.
Speaker 9:They've been running, you know, two tenders annually that, you know, total, like, more than a billion and a half dollars a year for a long And so, you know, I think a lot of companies are falling in the in in SpaceX's footsteps particularly and building liquidity programs like theirs. Stripe, I mentioned Databricks, Applied Intuition, OpenAI, Andoril, a lot of them. What hasn't changed is that it matters who your investors are. So great investors, like, may not make your business but terrible investors will definitely ruin it. This is why the best companies want to control their cap table as always and, you know, work with investors like us, on implementing the liquidity strategy as they scale.
Speaker 9:And more companies, as they stay private longer, as they've scaled, even as they hit cash flow positive, tenders have been a way for them to offer liquidity and kind of postpone going public. And and it's a way to align incentives. It's a way for recruiting and retention. Like you mentioned, right, if you're recruiting against publicly traded companies, if you're recruiting, you know, software engineers against, you know, Google and Meta or you're recruit you know, recruiting researchers from NVIDIA or Google, you wanna be able to offer not just a compelling package and upside, but being able to offer liquidity also helps bake bake into folks kind of comp decisions. You have people that have, you know, structurally have to run these tenders based on their RSUs.
Speaker 9:Like, you know, it's on the single trigger RSUs, and so they structurally have to run them for their employees' tax bills. There's a bunch of reasons. You know, what some people also use it to mark the business up. Right? If you're not raising primary because you're cash flow positive for years, then liquidity checks a bunch of other boxes but also allows you to continually show progress in the stock of the business.
Speaker 9:So I just think, you know, as the as the capital markets have grown, as these companies have grown, the secondary market has obviously grown with it and and I think a lot of the best companies have had the privilege of working with their investors, working with folks like us, people they want on their cap table and to grow on their cap table to run these programs and control and manage liquidity in a way that's beneficial for the company.
Speaker 2:Have you guys looked at any businesses that are basically building like actual like basically software to manage these liquidity programs? And did you guys ever think about incubating something there? Or is every company unique enough that it should just be done by the investors and the company's counsel and it's just all bespoke?
Speaker 9:Yeah. I mean, there's like two versions of that. There's the software to run these programs which exist. Right? Carta Carta has great software, right, for running this and so I I think, you know, that's just back to, like, broader cap table software management trend, which is awesome.
Speaker 9:Yeah. But that's, like, more of the execution side. The the other side is more of creating a market, right, and then using software to facilitate more liquidity and grow liquidity. And that is basically another version of the same thing we talked about earlier, right, which is, like, the best companies wanna control their cap table. The best companies have unlimited demand.
Speaker 9:Right? And so in that in that essence, you don't need a broader market to have random buyers and sellers to do price discovery. Right? And so I think the best companies generally like to run their own processes and work with, you know, their major shareholders and a lot of times, you know, which includes us and a lot of these and a of these companies as well on kind of running these processes. Very similar to how the primary process would run, just a different type of transaction and goal.
Speaker 2:Yeah. To me, it feels like you guys are in the financial services business in many ways when you're creating these sort of programs and you're an investor as well and there's been there's constantly people that see the opportunity, they see how big it is, they try to attack it with sort of software and marketplaces and then time and time again, I feel like we see them sort of flop and you saw this with Carta basically kind of apparently giving up on their entire secondary brokerage business at some point. But but again, people in venture always see a problem and an opportunity and and wanna like throw software at it. And sometimes it's basically, you know, companies like Andrew all saying, yeah, we wanna work with one three seven Ventures because they've done an exceptional job, you know, with with their relationship with SpaceX and, you know, we we want that kind of partner as well. And that just looks more like traditional financial services Yeah.
Speaker 2:Versus, you know, a venture business. Do you give any attention to every once a month, these sort of lists pops up around heat around different companies? And sometimes I see this list
Speaker 1:Well, they're doing your job for you because you see a list on Twitter. You can just go hit the company up. Right? Like, you know, you can just,
Speaker 8:you know, you don't have
Speaker 1:to work that
Speaker 2:out. Usually, you see 10 companies and you're like, all those make sense. One of
Speaker 1:them Except for that one.
Speaker 2:Except for that one. So do you you give any weight these lists or
Speaker 1:Where do they actually come from? Because it doesn't seem like it's put out by one hundred thirty seven Ventures, which I would trust.
Speaker 2:To me, to me, it could be a single broker who's just basically pumping their own back.
Speaker 1:Pumping their own
Speaker 9:Yeah. I mean, guys you guys nailed it. Yeah. I mean, it's I mean, look, depends where these lists come from. A lot of them are noise, they're not signal, you know, transactions and a lot of those transactions are uninformed buyers and uninformed sellers.
Speaker 9:Yeah. As an institutional firm, we don't pay attention to them and the best companies don't either. I you know, it would be amazing if the job was so simple as to look at a list and press a button and buy, but, unfortunately, there's a lot more to investing than that. Yeah. So but, yeah, I I I think you'll see them either, like, aggregating a bunch of transactions from a platform level but still brokerage business, or you'll kinda have brokers who are, you know, sort of, trying to create a market and advertise what they may or may not have access to.
Speaker 9:So, yeah, that that is in that segment of the market that I think the best companies don't particularly like and, and that you don't wanna be in as an investor on the secondary side that we talked about earlier.
Speaker 1:Yeah. Can can you talk a little bit about, like, how do how do secondary shares work their way into the broker system and how transfer restrictions work a little bit and how those have evolved over time?
Speaker 9:Yeah. So on the first part, I mean, it's a broad range. Right? I mean, this this is, you you have employees that may not be under transfer restrictions.
Speaker 1:Mhmm.
Speaker 9:You'll have a lot of employees that, you know, may do transactions on a forward basis. So, you know, they're actually violating transfer restrictions, but, you
Speaker 7:know, it's
Speaker 9:through a different type of construct.
Speaker 1:Sure.
Speaker 9:You have a lot of this too are just SPVs. Right? So, you know, as investors, a lot of of institutional firms, you know, will do co investment vehicles with their LPs, and then those LPs will want liquidity. And so, you know, you, in essence, have liquidity into the SPV, which then allows you access to the underlying, company. So there's just various forms of supply.
Speaker 9:As companies grow, right, there is a lot of avenues where there just is supply. And some of it is legitimate, some of it's not, but, you know, definitely is there there is a lot of legitimate supply for sure, right, from employees or SPVs, etcetera. The transfer checking side actually hits on, like, this whole dynamic. Right? And this is this actually all goes back to the Facebook days.
Speaker 9:So in the nineties and early two thousands, companies only had a right of first refusal refusal and that was sufficient to discourage random buyers. Facebook was obviously a popular consumer business and the first to go to tens of billions of dollars enterprise value in the private markets and there wasn't as much money in venture back then, so the company and the company lost control of its cap table because the volume of shares that traded was well beyond what the company or existing investors could purchase. And so you basically just had a lot of outsiders being able to buy. Right? Because there's a ton of demand.
Speaker 9:The existing investors, you know, weren't able to just, you know, just use a roofer as a way to buy it and control it. And so once other venture companies saw this, they implemented basically blanket transfer restrictions, and that has been the default ever since. And so you have to understand, like, the entire benefit of being private is that companies can choose who they give information to and allow cap table. No founder wants an activist investor. And if you pull your cap table, it's kinda no longer your choice.
Speaker 9:And so transfer restrictions have sort of been the default.
Speaker 1:Or even in the case of Facebook, like, Yahoo could have potentially, like, built a position or Google could Totally. Built a position Totally. In the secondary market and then had rights at some point, which would be potentially disastrous. Didn't happen, but, you know, that's the So if there are no transfer restrictions, does that mean, like, an early employee could just meet a random VC at the Rosewood and say, hell, yeah. I have I'm sitting on $2,000,000 of stock in this company.
Speaker 1:Like, you wanna take it off my hands and they can just do that over a handshake and some contracts, or does it eventually need to bubble up to, like, the company? How how does the company actually
Speaker 4:move to
Speaker 1:their shareholders?
Speaker 9:They're still a roper. Right?
Speaker 1:Okay.
Speaker 9:So yeah. And like I said before, with the right of first reviews, it was enough to discourage this. But then with Facebook, the demand overwhelmed the ability for the investors to actually execute that exercise that right, right, from a capital perspective. And so
Speaker 1:And the ROFR is just the ROFR is discouraging because if I'm trying to build a position in a company through the secondary markets, there's no transfer restrictions. I know that. I go to an employee. I say, hey. You have $2,000,000.
Speaker 1:I'm gonna keep running into this problem where we get a handshake deal. I'm gonna buy 2,000,000, and then the company buys it. And then I go to the next employee. Right? And it's just a waste of my time.
Speaker 1:That's the main structure of
Speaker 2:the broker or the the other investors.
Speaker 3:Get after it.
Speaker 5:Investors. Correct. Exactly.
Speaker 2:Exactly. Talk about the companies you invest in or many of them you you described as having, effectively unlimited demand for for the equity. And right now, we see venture funds that have ballooned and they have more capital than ever to deploy. It used to be these companies would get to the point where the VCUs would be like, I remain gig along your company. I just like, I'm fully tapped.
Speaker 2:So, like, I just gotta let it ride.
Speaker 1:Yeah.
Speaker 2:Now it's less the case
Speaker 1:for full like, 30 mil. Have you seen
Speaker 2:Do do elbows get sharper in some of these later rounds where I I imagine from an AUM standpoint, like you guys have ton of AUM but you're coming to the table with people that might have 10 times as much AUM and these capital bases where they can hit up a sovereign and be like, hey, we're doing an SPV into this one. Do you want do you wanna come in? 5,000,000,000. Yeah. Yeah.
Speaker 2:So what what's the the competitive dynamic in the in these sort of later stage
Speaker 5:brands?
Speaker 9:You know, I think it's a bit I I'd say, like, to your point a %, as as these companies really scale, and demand, you know, demand obviously follows suit with the performance of the fundamentals of the business, and this and and how they've executed on the story, you you do see obviously a ton of I mean, you know, SpaceX does a tender and their 10x oversubscribed. Right? That is, you know, billions and billions of dollars of demand. Right? That is that is unmet.
Speaker 9:And the investors, to your point, the venture ecosystem has grown, so there's a ton, you know, ton ton a ton more dry powder in the market as well. But, also, I think, you know, the size of these tenders and primary rounds does scale a bit, definitely on the tender side. So I do think, like, as a company grows, the its secondary market does grow and the liquidity programs grow in size, so that helps meet some of the demand. But you a hundred percent run into that. Like, look, at I think at a certain stage, it works, but there's a certain stage where, like, there's more demand for, you know, SpaceX or Andoril, than there is supply.
Speaker 9:And that just is the function of it. And, I think, you know, that's where relationships really matter. But even then, right, there's still a limit. Right? So I would say, like, I think relationships are end up being the biggest driver there for your ability to still not just obviously in allocation, but also try to continue to size up the position and invest more.
Speaker 9:And, you know, I think being around being a major shareholder, being around for a long time, and having very close relationships, which is what we focus on, gives
Speaker 2:you the It's a likability. Allocation and venture is like often comes down to likability. It's like, does the CEO and the management team like you? If so, cool. We're gonna give you preference.
Speaker 1:What's that called? It's like You know,
Speaker 2:you might get your pro rata. Otherwise, good luck.
Speaker 1:Or being an SPD promoter is more like being a club promoter than being, like, a VC or something like that.
Speaker 2:I have
Speaker 4:I have
Speaker 2:a Yeah. I have
Speaker 10:a more like
Speaker 1:Ventures Yeah.
Speaker 9:Yeah. Ventures unique venture's unique because, you know, it it's a unique asset asset class given how important access is. Mhmm. And, you know, access and that dynamic there, you know, leads to, like, you could be a a a you you could end up getting access to an incredible company and and maybe even still be a schmuck to your point. However, doing that consistently and over a long time frame Yeah.
Speaker 9:I think is a different story. Yeah.
Speaker 2:Yeah. Totally. How do you advise founders that are kind of reaching the territory where you guys are starting to invest? I'm gonna pull out a number. Let's say they're close to 9 figures of ARR.
Speaker 2:They're a real business now. It's working. They're raising a bigger round that's some mix of, you know, liquidity for the team as well as, you know, some some growth capital. Do and they're worried about kind of like signaling risk around selling secondary. Right?
Speaker 2:In the in the public markets you see this, it's like, okay, this CFO is like selling a huge amount of their position. That's obviously bad. Same thing on the founder side. If the founders are selling huge amounts of of secondary, it can be a bear signal. And we saw the worst of this in 2021 and 2022 where founders would be selling like $50,000,000 like pre product market fit and that wasn't common.
Speaker 2:But how how do you advise founders as they start to get opportunities to get liquidity and they're sort of worried around, well, I'd like to be able to like buy a house and put my kids through college but without stressing about it, but I don't wanna send the the wrong message.
Speaker 9:Yeah. I mean, I I I think you hit on, you know, the reality of, obviously, there there are the obvious extremes, right, which is, you know, if a founder selling 90% of his position while still operating the business, that's obviously, gonna gonna raise eyebrows and people are gonna protect that. And the founder, you know, sells $10 also, people probably aren't gonna bat an eye. Right? So what number in between is is the magic number depending on stage?
Speaker 9:And, you know, look, I I think, one, it's usually driven by life needs. Right? And so that de facto backs into a dollar number that makes sense. Right? And so I think in many times, the conversation is around derisking, about a life need, someone just had a kid, they're starting a family, they wanna buy a house.
Speaker 9:Right? And so I would say, like, you know, you're also investing in in in founders that you trust and are rational and reasonable, and usually, these conversations are fairly easy from that perspective. I don't think there's, like, a particular dollar amount. I think one of the things to think about, whether you're a founder or, you know, on the investor side, is, you know, more so, like, you wanna think about the the two dynamics around percentage of holdings and then total dollar size. Right?
Speaker 9:And those are interesting. Right? Like, in some sense, if you sold $5,000,000, but it's half of your holdings, right, $5,000,000 at a certain stage of business is not a lot, but, you know, selling 50% of your position while still operating, you know, may signal something. And it works both ways. Right?
Speaker 9:You may be able to sell a hundred million dollars, which is a lot, but it could be, you know, 5% of your position, right, which generally people would not view as a lot, and that's the conversation. So I think it's a bit of, like, it depends on the the the circumstances and the context. But for the most part, founders are pretty rational and reasonable. You gotta remember, most founders are the most bullish in their company, even more so than the investors. The desire to sell is generally pretty tapered and usually driven by life needs.
Speaker 1:Yeah. Makes sense. Thanks for stopping by. Great to have you on. Great conversation.
Speaker 2:Can we see the rocket again? Can we see the Yeah.
Speaker 1:Us the rocket one last time. Let's see
Speaker 6:the rocket.
Speaker 1:And then we'll get out of the next one. Here we go. Oh, that's a beautiful engine. Let's hear for
Speaker 4:the rocket Yeah.
Speaker 2:If you you end up with a spare rocket, we'll throw it
Speaker 1:on a send it over if you got an extra
Speaker 9:one laying around. I need at least three more appearances on the pod.
Speaker 1:Okay. Deal. Deal. Deal. I
Speaker 9:can talk to the rest of my partners and maybe one three seven Avengers will send you a rocket. See you.
Speaker 1:Fantastic. Heard it here first, folks.
Speaker 2:It's great having you on.
Speaker 1:Have a great rest of your day.
Speaker 2:Talk to you guys.
Speaker 1:Talk to you soon. We're going back to back, folks. We got
Speaker 4:Back to back.
Speaker 1:Seven more guests coming into the temple. I think six. We got Darshan from Beyond. He just launched the big screen too, the VR headset. We discussed this on Monday, I believe.
Speaker 1:Maybe maybe maybe Friday actually. Yeah. And it's a very cool VR headset. I think we got him in the temple of technology. Welcome to the show.
Speaker 1:How you doing?
Speaker 2:There he
Speaker 7:is. Good. Thanks for having me.
Speaker 1:And congratulations. Can you give us the breakdown? What'd you launch? How did it go?
Speaker 7:Yep. So we launched last Thursday. This is our second generation product, Big Screen Beyond two. We launched our first gen about two years ago. This one addresses a lot of the things that people really wanted out of the next gen one.
Speaker 7:So for people who probably know this old thing, this is the Apple Vision Pro.
Speaker 1:Yep. I had one for exactly two weeks.
Speaker 7:Yeah. I've got one on my desk. That's where
Speaker 1:it's So I expect that you wouldn't return yours, but
Speaker 7:It's a beautiful
Speaker 1:It's magical.
Speaker 7:It is incredible technology. Yes. And and I've got some some spicy takes. But I don't think anyone wants to wear a brick on their face. Right.
Speaker 7:It's just unless you're skiing or something, maybe? Even then, people don't wanna wear a brick on their face. So Yep. We've been working on this company for about ten years. We raised some capital from Andres and and Drew, and we set out to build the world's smallest VR headset.
Speaker 7:So we think that VR is much more like wearables, much more fashion centric, actually. So Mhmm. It needs to be super comfortable. We're chasing after enthusiasts, not mainstream mass market, I think. We're playing a thirty year game.
Speaker 7:People are, like, kinda in it for let's start a thing, build a whole thing, like, flip it in two years, blah blah blah. Like, we're actually playing a long term game here. So we built Bigstream Beyond two. It is the world's smallest VR headset. This weighs
Speaker 1:So small.
Speaker 7:Two thirds of your iPhone. Like, an iPhone is heavy compared to this. Yeah. Oh, yeah. And it looks pretty freaking cool.
Speaker 1:I think it looks great. Yeah.
Speaker 2:Congrats on the launch. Yeah. When you think about playing 30 games, how do you think about just capital efficiency? There's the meme that like hardware is really expensive and all these companies like, I imagine you you run, if you're playing this sort of long term games, you're like, well, we need to be in business for thirty years. We need to be able to have big moments where we sell a lot of products and then Maybe through dark yeah, we're going through dark times.
Speaker 2:I'm sure you've been through both already, but but how do you think about durability of the business? Given that you're selling hardware, will just end up, you're gonna have fluctuations in in demand?
Speaker 7:Couple things. I'm pretty sure, I don't know if they'd want me to say this publicly, but I'm pretty sure we're the single most capital efficient company in our in our investors portfolios.
Speaker 1:Here it for capital efficiency folks.
Speaker 10:Thank
Speaker 2:you. Hit the gong for that.
Speaker 1:We love that.
Speaker 2:It's not typical, but we
Speaker 1:love some capital efficiency on this show.
Speaker 7:We have raised 17,000,000, from Andreessen and True. And at some point, I think we had, like, ten years of runway. That's amazing. And now, you know, for a couple years, we've been cash flow positive. We could be, you know, we could be profitable any minute that we want.
Speaker 7:But we put all of our revenue into r and d Yep. And the team, and that's it. Like, dollars in acquisition of customers. It's all organic. Hardware is a lot cheaper than people think.
Speaker 7:I think Meta is wildly inefficient. They're spending, you know, tens of billions a year to try to accelerate a market. They're also playing a different game. They're trying to go they need to get a billion users. I don't care.
Speaker 7:We can make a massive awesome contribution to the world by focusing on people who really, really need what we do, and we can do it efficiently. Like, the number of people at Meta that are doing stuff, they just throw everything at the wall and at no cost. Right? It doesn't matter. And frankly Don't tell the shareholders that.
Speaker 1:It does have a cost. I think the cost is 20,000,000,000. But Yeah. Respect to Zach. I I I love a guy who's chasing his dream.
Speaker 7:Yeah. But like how many
Speaker 1:Yeah. Sorry. Let's let him continue. Go for it.
Speaker 7:Yeah. Yeah. For for us, we're playing a different game because we can stay focused on like real use cases and make a real business out of it. And like and and just on first day of of our sales, we did 10 times more than we did for our first gen. Wow.
Speaker 7:In a couple weeks, we will have done more sales than we did in 2023 or 2024.
Speaker 2:That's amazing. Congrats. That's crazy. How many how many companies that were high flying, amazing teams came out and raised more than you? Like, have like, you started in 2014.
Speaker 2:There must have been probably 20 companies that you're like, you you're a pretty viable competitor, flashy, raising a lot of money, but then they're just they spend it all in two years. Is that sort of has that happened like a bunch of times at this point?
Speaker 7:You're But there's bunch of times like waves of capital and then also hype cycles. Right? There was, like, AR wave or there's the NFT crypto wave or there's this or that. There's so many waves every year or two. We've actually just stayed extremely focused.
Speaker 7:We're focused on building an excellent VR headset for consumers, particularly like PC gamers and enthusiasts Yep. As well as in the past year, like the businesses that have reached out that are using our stuff, like NASA is one of our customers. We have a bunch of customers in aerospace and aviation Yeah. Education, retail. There's like a nuclear energy department whose website looks like they're from the nineties and they've been buying our stuff.
Speaker 7:We have no idea what they're doing with it, but you
Speaker 8:can just think
Speaker 1:Secret operations. Yeah. That we I I wanna ask about. So I I'm kind of like a VR enthusiast prosumer level maybe. I've had a number of headsets.
Speaker 1:I've built custom PCs and then video graphics cards to wire them up. Had the first Oculus and then, like, the next seven of them or something. They've always kind of wound up collecting dust. Can you walk me through what would you recommend just for the first, like, magical big screen beyond experience? What what what's, like, the basic hardware I should get?
Speaker 1:Should I get a PC? Should I you know, what's the ecosystem look like to knock it out of the park and, like, what game or what experience am I playing?
Speaker 7:It really depends on what floats your boat. So Yeah. I'd suggest, like, get like a good PC. If you're gonna build one I've built my own computers, that's all I do. Love it Yeah.
Speaker 7:Great, do that if that floats your boat. Otherwise, like, buy like a good NZXT PC Okay. Get like a RTX $40.80 or $4.90. Get whatever you can afford. Buy the Beyond two, and then really depends on what you like.
Speaker 7:Like racing sims are insane in this. Just Okay. The feeling of like going down like the Nordschleife in a car, like you could just
Speaker 1:love it.
Speaker 7:You cannot get an experience like this in real world because you will probably
Speaker 6:we're getting
Speaker 2:a new studio.
Speaker 1:Yeah. We'll consult with you.
Speaker 2:And you were gonna get the full rig.
Speaker 1:Yeah. It'll be great.
Speaker 7:LightSim is another one. Like, I've literally flown seven thirty seven out of LA at night.
Speaker 1:No. This is great. No.
Speaker 2:I think so. Here's a challenge for you. Yeah. Make a game that's basic I'm sure somebody's already made this game, but you know how every guy thinks they can land at 07:37 if they were asked to. Right?
Speaker 2:Yeah. Like, that's the challenge. It's like the big screen seven thirty seven challenge and it's like you get dropped into a plane, engine down, and you gotta land it.
Speaker 1:This is one of the craziest stories. The first time I ever went ski shooting, shot like shotgun shooting, I'd never shot a gun before in my life and we were competing and I beat everyone. And I and everyone was like, is this just beginner's luck? And I think the reason was is that I've been playing VR shooting games for, like, a year straight. I've been playing Robo Recall on the Oculus, and I was like, this is second nature to me.
Speaker 1:So I really think the VR training thing is real. One of the use cases that I I really enjoyed with the Apple Vision Pro, while I did have it, was just sitting there and watching movies in bed at night. It it it could how close are we to having just like a puck? Like, I'm almost thinking like a little Mac mini that I just link under my bed that I can just kind of plug this into because I know it's not fully standalone, but the benefit is that it's not gonna be heavy on my face. Is is there is there a way that I could kind of get that level of experience with the Big Screen Beyond
Speaker 7:Yeah. So the company's named Big Screen for a reason. This we actually started building hardware because we wanted we made software for a long time. Yeah. And we hit limitations.
Speaker 7:Our software is still there on on the Meta Quest and stuff like that. We've got, like, I don't know, six, seven million users in VR. We actually have a very sizable software platform, but the hardware just was such a big limiting factor for the past five years. We couldn't achieve the vision we wanted to under the platform that was given to us. We had to go build it ourselves.
Speaker 7:And it turns out other people wanted it too for all these other use cases in gaming or in in enterprise use cases as well. So we wanna build hardware that you can actually use for movie watching, but the problem is, like, I could go right now, turn on my TV and watch Netflix in four k HDR on OLED TV in ten seconds.
Speaker 1:It's pretty good.
Speaker 7:The art is to get to that level and I'd say we're halfway there. We're getting closer and we had to build incredible hardware for it. We're building the software for it. And at some point, our path to going mainstream is basically Meta's path has been like $300 headset. There's something like 20,000,000 of them.
Speaker 7:It's doing really great with kids.
Speaker 1:Yeah.
Speaker 7:Our path, I don't think it's actually it's not about price, it's about price to utility. So we wanna deliver you like a 2 or $3,000 incredible home movie theater system.
Speaker 1:I love it.
Speaker 7:And yeah, can play games with it, you can do all this other stuff with it too, but it's not about price. It's it's really Apple Vision Pro is $3,000, but I'm not gonna wear this for Yeah. Actually, battery life limitations, the weight, the ergonomics, it's not right. It's not the right factor.
Speaker 2:What is Apple doing with VR? Because I've I've posted a few times. I was like, Apple's like, they're sort of giving up on it. Like, you you can tell they don't have real conviction. They're just like, they're in this highly commercial phase where they're just gonna extract as much value out of the existing technology that they have and and that's, you know, can be good for business.
Speaker 2:But I posted a couple times and people get angry. They're not quitting VR. They're not. It's blah blah blah. But what are they actually doing in in your view and are you the next CEO of Apple?
Speaker 7:I think Apple I'm actually surprised that VisionPro came out. They've been doing the work for a long time, but I wouldn't have put it out not this way. I mean, it's it's setting the wrong expectations, creating weird hype cycle. This is not the next iPhone, but I think Apple is patient and is gonna play a ten, twenty year game as well. They don't need this to become an overnight success.
Speaker 7:It's fine. Who cares what the markets say? Like, they've got the cash for it. They can they can do it. And they're also doing it in a relatively cash efficient way compared to Meta.
Speaker 1:Yeah.
Speaker 7:So they're playing a long term game. I think they'll stick with it. I think it's in the hands of developers, but I think the problem is there isn't really anyone saying no, in my opinion. I don't know how Apple actually runs any of But in my opinion, no people aren't saying no enough. Like Yeah.
Speaker 7:Yeah. On that note,
Speaker 2:how do you how do you think about focus generally at big screen? Right? I'm I'm sure people are saying, hey, build this for factories, build this for Game of build it, you And I'm sure you've had to in order to be capital efficient and great create great products, you've had to say no a bunch. Do you have ambitions outside of entertainment in the long run? Or are you is that Absolutely.
Speaker 2:Extent yeah.
Speaker 7:The the nice thing about what we do is that we're laser focused on a set problems that happens to cater to the needs of a bunch of people. So the enterprises that are coming to us, they're using VR for real work for many hours a day versus the cycle they all have Apple Vision Pro and Quest and all. They can afford all the devices. They've tried But you'll use it for an hour, you achieve your thing, and you gotta go charge it for an hour.
Speaker 1:Mhmm.
Speaker 7:That doesn't work for most use cases. Think of this as Apple and Meta are trying to build the next smartphone. Meanwhile, we're trying to build the next workstation, the next
Speaker 1:TV actually can't Apple actually canceled their workstation focused VR thing. I I wanna I wanna ask one more question. On the Apple Vision Pro, can you give me, like, your pros and cons? Like, what did they get right? I feel like the the external battery and puck was really controversial, but some people say that's really great.
Speaker 1:What's your take on Apple Vision Pro?
Speaker 7:I think they established that this industry is really not going any like, it's not gonna go away. It's this is gonna be here. Spatial computing is gonna be a thing. It might take a long time, but it's gonna happen. Apple and Meta are at it.
Speaker 7:They're gonna go push it. That's the best thing that they've done here is is they've made the world really understand what is VR or spatial computing and and it's gonna happen. What they're getting wrong is comfort and ergonomics matters a lot more. People are trying to build the next iPhone but again, no one wants to wear an iPhone on their face either. There's literally a MacBook Pro inside of this thing.
Speaker 7:I don't wanna wear a MacBook Pro.
Speaker 1:Yeah. Makes sense.
Speaker 2:Yeah. That makes sense. Last question. Broad applications of spatial computing in the military. Andrew Roll was in the news with winning the IVAS program.
Speaker 2:Is the technology ready? Is it just about getting the product right? And again, I imagine that's sort of a ten, twenty year kind of vision as well, but and and it's not where where you guys are building to my knowledge, but, what's your take on that? Was it Microsoft just had a good shot but didn't have the the sort of leadership to deliver on it or was the technology just truly never ready for for what they were being asked to do?
Speaker 7:I think that came out of an older generation, the like 2016 era hype cycle where a lot of products were coming out that were telling a story that they really couldn't meet. So HoloLens, Magic Leap, etcetera. We're we're touting this vision of, like, oh, we're gonna be able to do all these things. And what really matters in a nascent emerging technology is, yeah, but what can you do with it today? Like, be honest that when you come out of the gate, what is this gonna be amazing at right now?
Speaker 7:Like, so for us, racing simulators, gaming, entertainment, like really great things that people can do right now today with this and we're honest about that. Too many companies back in that first generation hype cycle, yeah, like they were putting out a product that the military could not it didn't work at all. It's billions of dollars for that. So That's crazy. Now you're having people come out like Andrew Earl that are putting out devices, that should be able to actually deliver with, you know, the promise of current generation technology.
Speaker 7:What can you actually do with it?
Speaker 1:That's great. Well, thanks so much for coming on. We gotta have you back to talk about VR every time there's more
Speaker 2:news Yeah. You're especially included. You haven't opted in, but you're our official VR correspondent.
Speaker 1:There's so much to talk about here. It's such a fascinating technology. I think people have kind of, like, written it off from time to time, but I'm just continue to be fascinated by it. There's so many cool developments.
Speaker 2:Yeah. I'm really happy for you and the team too. Congratulations. I'm sure the last week has been massively vindicating and you guys deserve it. Eleven eleven years in, here's to the next eleven.
Speaker 2:That's good luck. Look forward to the next conversation.
Speaker 1:An overnight success, really. Yeah. Have a good one.
Speaker 7:Later. Talk
Speaker 1:to soon. Thanks. Well, coming up next, we got Alex Conrad. But we got some breaking news. Ramp has partnered with FPGeorne.
Speaker 1:Did you see this? They're having a Padel tournament in Miami and the partners are Ramp and FP Journe. You love to see it, folks. Love to see it. FP Journe, of course, maker of fine watches owned by owned by none other than Mark Zuckerberg has some F.
Speaker 1:P. Jorns. Francois Paul Jorn, one of the greatest watchmakers in history, still alive, still cooking and he's using ramp, baby. He's on.
Speaker 2:I I don't know if this was supposed to be breaking news, but it is now.
Speaker 1:Okay. It's pretty awesome.
Speaker 2:Pretty awesome. I mean,
Speaker 1:if you text us, I'm gonna talk about it. It's amazing. It's a public website.
Speaker 2:Yeah. Yeah.
Speaker 1:Okay. I think. I mean, maybe this is Maybe. I think this is a public website. Yeah.
Speaker 1:I think we I I I think it's a public website.
Speaker 2:Extremely tasteful.
Speaker 1:We will share this. I'm very excited about this. If you like Padel, we will we'll we'll we'll share the link at some point.
Speaker 2:You can go RSVP. Fantastic.
Speaker 1:Anyway, we got Alex Conrad coming into the temple of technology. Welcome to the show. Congratulations. Big day.
Speaker 2:Hit the gong for the Let
Speaker 1:us know what you're announcing.
Speaker 10:What are
Speaker 1:you doing? Break it down.
Speaker 10:Yeah. Thank you, guys. I'm so excited to announce my new startup today called Upstarts Media. Cool. Upstarts Media is a new tech media publication focused on the startup ecosystem.
Speaker 1:Fantastic. What's the angle? What are you doing differently? What are you leveraging? And will there be a list of the best and, more importantly, the worst venture capitalists dropping soon?
Speaker 10:I know I know that I have a customer in you for that for sure. Yes. The Icarus list.
Speaker 1:We need
Speaker 10:this. Yeah. I'll think about that. You know, I actually did 25 audience calls ahead of time, and I should have I should have asked that specific question. Should I launch an anti Midas list?
Speaker 10:But yeah. For for your your audience who don't know me, I spent twelve years at Forbes covering venture capital and startups. I really lived in that world, you know, wrote a bunch of cover stories about folks like Melanie Perkins at Canva, the Collison brothers at Stripe. I wrote one about a softwrap report at Wiz, which has been in the news a lot. You know, really enjoyed writing about startups and the VCs who fund them.
Speaker 10:And I felt like we were in a moment where so much traditional tech media coverage is focused on big tech politics. You know, we have tech people in the White House
Speaker 1:Mhmm.
Speaker 10:Big policy debates, not so much on sort of the startups that I really love writing about. You know, I just heard from so many people that it was just hard to kind of get those founder journeys, you know, startup storytelling out there right now. And so I'm hoping to do my small part to just tell those stories.
Speaker 1:How do you think about the the different products that are offered in the media ecosystem? I mean, most people just think, like, it's a news article, but once you dive in, you realize, like, there's investigative journalism. There's breaking news. There's profiles. There's op eds.
Speaker 1:There's editorial. There's all these different stuff. How do you think about the landscape and what interests you the most?
Speaker 10:Yeah. Well, first off, you know, these these tech bros showed up and they just completely created a seismic event for us in in media. No. But but seriously, like, jokes aside, you know, I think you guys and a lot of these new brands that have been the most interesting in tech journalism and media right now have kind of come from these adjacent spaces. They haven't been traditional journalists.
Speaker 10:Yeah. We have seen, though, some people go independent and try to kind of get more direct. You know, we we keep hearing go direct, you know, from certain founders and and PR folks, and I think that's great for certain people. But my hope is that there's still room for curated storytelling from journalists like me who can help, especially those founders who maybe don't have the platform to go direct, and also can just maybe connect the dots in ways that you wouldn't get from some of these awesome podcasts and shows like your own.
Speaker 1:Yeah. I I mean, I really do agree with you. We were talking about to Lulu about this yesterday. Just the idea of, like, yes, you should go direct and post your own news, but then you should also talk to new media like you and me and us. And then you should also talk to The Wall Street Journal if they call if they come calling.
Speaker 1:And it's really like an ensemble strategy to build this like cinematic universe around you and what you're doing if it's important.
Speaker 2:Yeah. How how do you think about, you know, funny funny timing. So we talked about this last week about TechCrunch selling. It was unclear what they were gonna do. I think TechCrunch had sort of created this.
Speaker 2:The thing they did well was like make people's parents proud, right? It was like you wanted to get into TechCrunch. It was sort of like this moment in every founder's journey. You go there to announce a round or for a product launch or whatever. And they sell to private equity which people were like, oh, great.
Speaker 2:Like private equity is just gonna come in and, you know, I I I don't know, know, nobody knew what they were gonna do. And then the first TechCrunch headline I see is this like hit p you know, drive by hit piece on 11x, which whether or not it's fair, it's like TechCrunch is in a very weird position around there, I guess, trying to do investigative journalism, but then they still wanna be the place that maybe you launch your startup. Are you trying to pick a lane and saying like, we are pro founder, we are pro tech, we know this is hard but we want to like, you know, tell your story in an authentic way that makes you like, are you looking to really like develop trust with these founders and cover them across their entire career? Is, you know, what is that like? I'm I'm trying to kind of hone in on on your specific angle because I think the temptation is, you know, somebody starts out writing tech positive and then eventually they get some crazy scoop and they're like, oh, this is gonna get so many this is gonna get so many Yeah.
Speaker 2:Just gonna publish this fund's returns, you know.
Speaker 10:I'm curious to
Speaker 2:think about it.
Speaker 10:I I have, like, three different responses for that, but I can try to keep them short. It's really important important debate, I think. You know, first, I would say our ideology is that Upstarts was founded on the belief that startups are at their best when they punch above their weight, challenge the status quo, try to improve the world in some way. And I think at that core, I believe that technology is great for the planet, great for our daily lives, and I wanna write about that. I think at the same time, you know, I am gonna be a journalist.
Speaker 10:I am gonna be independent, so I'm not a cheerleader. You know? And and just because a lot of my, you know, Midas VC, you know, pals might be subscribing today, doesn't mean I'm gonna suddenly write about their portfolio company or something like that. You know, I I wanna keep a really impartial and fair view. But that's really what I tried to build in the last fifteen years writing about startups was that sense of trust that you can expect me to be fair to to have sort of the good of the ecosystem at heart.
Speaker 10:So if I do something that doesn't feel super comfortable, I'd say that's actually a good thing because you can get that from an amazing VC podcast or you can get a beautiful marketing video. I might ask questions that push you a little bit, but I am in the ecosystem. I I do consider myself a founder of a startup here, and I have that empathy that I'm gonna be only punching up really carefully. I'm not gonna be punching down. You know?
Speaker 10:I I never wanna get out of bed and be like, what startup am I messing with today?
Speaker 1:Yeah. So no Gawker two point o, but I want to talk about, like, the instantiation of the work that you do. Obviously, you're a writer, first and foremost, right? And and most people experience your work through Forbes.com, essentially. But have you thought about where that lives?
Speaker 1:Is it are are you targeting the email inbox? Will there be a printed version? I'd love a coffee table book of the Conrad list maybe this year. I think that would sell really well. I think every single VC firm would probably pay a thousand dollars for the for the Conrad printed coffee table book, sell a lot of those.
Speaker 1:Are we gonna get videos, podcasts? What are you thinking?
Speaker 10:Yeah. So it's a little crazy because I am bootstrapping this business at first to kind of control my outcomes and test the product market fit, but I kinda wanna do everything you said. I mean, maybe not the the coffee table book just yet. That could
Speaker 7:be a a year two goal.
Speaker 10:Yeah. But I'm gonna be launching a live video series, of monthly interviews, very different from what you guys do, but just a quick fun interview with the CEO, next week. I'm doing that like my newsletter over Substack, have been a great partner.
Speaker 1:Okay.
Speaker 10:So I'm working closely with them and gonna be publishing twice a week. I also got a shout out, you know, and this this might be controversial on this show, but I am gonna be working with partners to make sure that one edition of my newsletter is free each week.
Speaker 1:Okay.
Speaker 10:I want to be proving this can be a sustainable business, but also inclusive to folks who maybe are early career students, you know, founders who are cutting their burn, they wanna get high quality news, but they don't wanna pay yet. And so I'm just trying launch partner in Brex.
Speaker 1:Oh, okay. Brex. Here we This my launch partner. Okay.
Speaker 10:But, always happy to work with others down the road. But, yeah, I mean, that's basically the way I'm thinking about this is multiple streams, a newsletter. Yep. I'd love to do a podcast eventually, but I'm gonna be building in public. I'm gonna be screwing up a lot.
Speaker 10:I think that'll be that'll be authentic with this audience. You know, you guys you guys will see that.
Speaker 1:Awesome. Yeah. That's great.
Speaker 2:What's the future of the Forbes brand? It's been in an interesting spot. I'm saying this, you're not saying or confirming this but I know they've been like on the market trying to sell themselves for a long They sold off a bunch of random assets.
Speaker 1:Austin Russell was searching Forbes.
Speaker 2:Forbes book publishing is not really tied to the parent company any, you know, it's like very unclear. Like it's, it was an iconic media property. You tried to keep it alive and you know, you
Speaker 1:And certainly more brand cachet than TechCrunch, I think. Like the Forbes brand
Speaker 10:Yeah.
Speaker 1:Still has a lot
Speaker 2:of Yeah, but it's diluted over time and part of, you know, if you had stayed and said, I'm going to recommit the next decade and sort of bring it back. I I'm sure there's a variety of factors that that didn't allow for that. But what happens with Forbes? I know you probably can Yeah. Maybe maybe you can give the your your most sort of positive perspective on it.
Speaker 10:Upstarts is acquiring Forbes in 2026.
Speaker 1:Today. Heard it here first.
Speaker 10:There we go.
Speaker 3:Scoop. Scoop. But but
Speaker 10:but to answer Jordy to answer Jordy a little more seriously, you know, I started recovering startups in 02/2010. You know, TechCrunch was a giant. VentureBeat was a giant. You know, Forbes Yeah. The website was still very siloed, so was Fortune.
Speaker 10:It's like, media has changed a ton in the past decade plus. I think, like, people forget that the Midas list was actually started in February. So way predated me died
Speaker 1:off too.
Speaker 10:It will outlive us all whether VC is like that
Speaker 1:or not, you know? Yeah. Yeah. That's great.
Speaker 2:That makes sense. How what what do you think the what what's the future of Substack? They they they went through this kind of, you know, period of massive hype and then there was a period where every media platform was attacking them and then it seems like they've come out of it and now people are deciding to to go on and build real businesses from day one on the platform. What's your take on on are they having real network effects? Like do you think they're they're sort of existing audiences there are are gonna help you accelerate your growth faster?
Speaker 2:Maybe kind of break down the decision to start there versus working Yeah. You know, ground up on on a Beehive or or one of these other products.
Speaker 10:You know, I think there it's good if there are multiple options out there and that they get better and better. And I think companies like Beehive are pushing Substack to update their their own technology. You know, from a technical component, I was really impressed with Beehive. Ultimately, Substack was where a lot of my peers, a lot of the folks I think are startup curious are today. It is, I think, an effective social network.
Speaker 10:And so when I was thinking about who I wanted to partner with, that was really important for me. You know, other journalists, other writers who are in the ecosystem who aren't journalists, I hope that we can collaborate. They can, you know, send their audiences back and forth. I think, you know, what they're doing in video notes, they're trying to kind of adapt and and have new ways to reach audiences, and that's gonna be a huge priority for me.
Speaker 1:Awesome. I I had a crazy idea I pitched to another writer I wanna get your take on. The thirty under thirty list is is, it's controversial, but I think, generally, like, there's a lot of people that wanna be on it. They're excited, and then they they get frustrated when they turn 31 or they're ineligible. My idea was, every week for the full year, you post, here are 20 cracked 20 year olds.
Speaker 1:And then the next week, it's, here are 21 really great 21 year olds. Here's the 22 year olds, and you're just chronicling all the great people in tech. It's an opportunity to get on a list every single week. It's massive viral fuel. Do you like the idea, and can we expect it from your media empire in the near future?
Speaker 10:I promise everyone I would wait at least two quarters before I ship to Crazy List. So, like, I gotta add that to the product road map.
Speaker 1:But I
Speaker 10:do wanna cover non going on. I think there are a lot of cool people in
Speaker 1:startups Totally.
Speaker 10:Who we don't ever hear from.
Speaker 1:Totally operators. Right? Yeah. Yeah. Makes a lot
Speaker 2:of sense.
Speaker 1:Well, I I mean, thanks for stopping I congratulations on the launch. We'll definitely stay tuned. We'll have to have you back when you break a big story or do a wonderful And
Speaker 10:it'll be my goal to have you guys on my show someday. Fantastic. We'll see that too.
Speaker 1:To do it. Yeah. We're down.
Speaker 10:Thanks, guys.
Speaker 2:We will also be streaming
Speaker 1:Yeah. On show at the same time.
Speaker 2:We'll we'll have dual syndication.
Speaker 1:I love it. Thanks so much for stopping by. Good luck.
Speaker 2:Congrats again.
Speaker 1:Congrats again. Talk soon. Talk to you soon.
Speaker 10:See you guys. Thank you.
Speaker 1:Fantastic. Well, coming in next, we have Willem. This is your buddy?
Speaker 2:Yes.
Speaker 1:You wanna you wanna give a little backstory on who this guy is?
Speaker 2:Yes. I mean, he should be in the waiting room any second. I will make sure.
Speaker 1:From terrain.com. Good good domain.
Speaker 2:Fantastic domain.
Speaker 1:Fantastic domain. Same word. Nice little logo. Says call your shot. Terrain is an early stage investment firm focused on software and technology.
Speaker 1:Okay. So Not giving me a lot to work on there, but we'll hear it from him. He's here to break it down for us. Willem, are you there? What is Welcome
Speaker 8:to Strauss.
Speaker 2:Hey, guys. What's going on?
Speaker 4:How are you? Love. How are you? Great.
Speaker 2:Popping in with the art. What do you got behind you?
Speaker 4:Yeah. Bring it down for us This is actually a piece that my mother made.
Speaker 2:Oh. That's nice.
Speaker 9:So I'll
Speaker 4:I'll put a plug out for her her work. It's, Catherine Vanlancker. Shout out you. She's a painter.
Speaker 3:She's been
Speaker 4:a painter my whole life.
Speaker 1:Fantastic. Can you break us down? What what is terrain? What are you working on? What are you announcing most recently?
Speaker 4:Yeah. Absolutely. And thanks for having me here, guys.
Speaker 6:It's great
Speaker 2:to have Yeah. It's great to have
Speaker 6:you on.
Speaker 1:To see you both.
Speaker 4:So Terrain is an early stage investment firm that I started last year with Eric Stromberg, and we back founders who have specific and ambitious views of the future. Mhmm. We like to say these are people who call their shot. These are folks like Zach Dell and Justin Lopez at Base Power. Yep.
Speaker 4:Alex Mather at Eternal.
Speaker 1:Oh, yeah.
Speaker 4:Zach Abrams and Sean Yu at Bridge. And increasingly, we think that this is just going to be very important to build a meaningful and lasting company, whether you're attracting capital or building an audience or building a team that being able to clearly articulate your vision of the future is just going to be the the things that separates, the good from great.
Speaker 1:Yeah. Definite optimism. I I wanna know about, like, the whole call your shot, your declare your free agency thing. It feels much earlier than, hey. Show up on Sandhill Road and raise a mango seed round in a weekend.
Speaker 1:Walk me through the different options that founders are facing these days. They can go do YC, especially if they're if they have a good track record. They can even do EIR programs at Founders Fund or that's what I did. Like, I wound up doing this.
Speaker 2:Already didn't slip.
Speaker 1:But but but at VC funds, they have EIR programs that are, like, a little bit more flexible for folks. But but where where do you see slotting in? Because it sounds like you're thinking pretty early stage.
Speaker 4:Yes. So, you know, first and foremost, we're an investment firm. We invest from that really early stage, which I'll talk about shortly, through to seed and series a. So we're very kind of flexible in kind of where we enter and, you know, work with, you know, those companies that existed or, you know, raising mango seeds or series a's, whatever you wanna call it. This most recent program we launched is called free agency.
Speaker 4:And what that is is a concentrated ninety day period before you have your idea Mhmm. To go through a focused exploration to uncover your idea. Mhmm. And this stems from the belief that it's kind of a missing thing in the market. It's something that I saw while I was at Thrive Capital where we were partnering with people who had an edge or an interest area in a certain technology or a background, but we're not yet convicted behind what that is.
Speaker 4:And, you know, the venture industrial complex tries to, you know, give you capital and, you know, quite frankly, perhaps before you're ready and make those commitments and those decisions before you're ready. And so with free agency, what we're doing is we're unbundling that from selecting your idea and taking capital. So there's no strings attached. There's no, cohorts. There's no demo day.
Speaker 4:There's no kind of deal that you have to take. It is really this period of open exploration. And our hope is that it results in more thoughtful and, deeply convicted ideas from the founders we get to work with. And on the other side of that, if it makes sense to partner with Terrain, fantastic. We will be there and waiting.
Speaker 4:But we believe that that is just something that is really needed and we're on the last day of applications today and, quite frankly, been really surprised, and elated by how many people this seems to resonate with.
Speaker 2:Do you think most people can figure out if an idea is good or bad without spending money? Because the typical accelerators like come in, we're gonna give you 200 to $500, maybe a little bit more and then you're just gonna start spending money to like figure out if you, if the sort of high level idea that you had is good. Now, I think a lot of really brilliant entrepreneurs do all the work to sort of like make that idea concrete sometimes for years prior without ever spending sort of explicit dollars, But venture dollars are so available. So as part of this program to basically say like, all you need to do is invest time and energy into exploring your idea. You actually don't need money, but when the time comes to actually hit go, we'll, you know, we'll we'll be there, you know, other other funds in your network will be.
Speaker 2:So maybe maybe talk about that because like you at Thrive Capital leading incubations, you guys incubated a lot of companies. I'm sure you also explored potentially thousands of ideas, right? And so maybe talk about kind of your process and I imagine a lot of free agency is like built built out of and and your sort of process internally is like how do you evaluate ideas? How do you kind of build conviction without having to spend a lot of money?
Speaker 4:Yeah. So one good feature of today's ecosystem is that we actually have access to a lot of resources that maybe didn't exist, you know, in decades prior. Every person that participates in free agency gets access to over $350 in compute resources and service resources, that sort of thing. So there is some capital to deploy, you know, via technology. That is not, you know, dilutive or or anything in that regard.
Speaker 4:You know, the the process and I I'll kinda go back to to kind of, you know, zooming out for for for a second. Each of these products, EIR, accelerator, incubator, free agency, they're products for founders. Right? And so you have to meet the founder kind of with what they need in that moment. Free agency is not going to be for every single type of founder, and it doesn't need to be.
Speaker 4:You know, if you're a young person and you're looking to get access to network and, you know, enter Entre into Silicon Valley, accelerators are phenomenal for you. But what we found with the people that we're engaging with is that we don't they don't wanna be put onto that track. They don't want to be kind of put onto that timeline and make those decisions kind of too far upfront. Instead, what they want is close partnership to dissect an idea, to dissect a market with the perspective of investors and with the perspective of someone who can be that thought partner through the journey. And, you know, you guys have both started companies.
Speaker 4:Like, you know that feeling of being close to something but not quite there. Like, it is not the myth that is often told on stage where, you know, you're struck by lightning one day or, like, the, you know, almighty comes down and just drops the idea into your head. It is the process of iteration, of staring into the abyss at times. And we just think that there can be some structure placed on that and some shortcuts to, you know, strengthen the business model or strengthen their travel through the idea is what we saw time and time again at at Thrive. And the reason to not attach capital to it is one, both for that point of commitment and restriction, but the other is I think it makes you make decisions differently.
Speaker 4:I think that you either if you have that stipend and you're hanging out in the offices and you're drinking the spa water in the VC office every day, I think you have a different mentality about the burning platform and the company that you need to go and build. And so we think that, you know, actually creating a little bit of a pressure cooker during that time is really, really important.
Speaker 2:Yeah. I completely agree. Is talking now? Is
Speaker 4:I love spa water too. I
Speaker 1:mean Yeah. But of great spa of the best benefits of y c is just like the competition of like seeing everyone around you, the pressure and having a deadline. It's great. I I I wanted to ask about like archetypes that you're seeing. Like, there's so many different people that I could imagine going into this from the the repeat founder who really wants to make sure that they call their next shot and they take a big swing in it and they're ready to set up with a lot of capital when they're going versus the employee early stage employee at a growth stage company that wants to move on to something new, leverage something but wants to fully transition out of the previous company versus like the high school college dropout.
Speaker 1:Yeah. Is is is there a pattern, or are you just widely open to everything?
Speaker 3:It's been
Speaker 4:it's been really open. So we we've had hundreds of applicants already. Mhmm. You know, these have been engineers and designers of companies like OpenAI and Databricks, SpaceX Yep. Ramp, you know, like, you name it.
Speaker 4:We have a Gen z creator who has millions of followers and more research focused people, like, you know, from DeepMind, and then some successful repeat founders both in our network and kind of entering, you know, from from the application. And I think what it illustrates is that there isn't something really like this. And I and I feel, you know, kind of, you know, you're supposed to keep these things secret for a while, but it really feels like we've hit on something to to meet people in this moment at this stage. I think with this first batch, we're gonna experiment and try to take on a real diversity of of people while keeping it focused. But I imagine over time, we'll start to see a kind of a consistency form.
Speaker 4:But, you know, more than anything, I think these are people who are not starting something because someone else told them to. They're starting something because they believe that this is the almost the last resort. Right? It's like, can't join a great company or I'm at a great company, and I have this thing kind of burning in me to go build a company.
Speaker 2:Is talk when you're when you're calling your shot, you have a big sort of vision for the world, is talking to customers overrated? Like the YC approach is like have a loose idea, iterate quickly, talk to a lot of customers and that clearly works. But at the same time, we've seen some other like sort of major power law businesses where they clearly just had like a vision for how they imagine the world. And yeah, you got to talk to customers along the way because you have to sell to them. Yeah.
Speaker 2:But but, you know
Speaker 1:It's the Henry Ford thing.
Speaker 2:Like, if
Speaker 1:I ask people, they would have said a faster horse. The ultimate like, I didn't talk to customers, guys, Henry Ford.
Speaker 4:Yeah. Look, I think, you know, Henry Ford certainly talked to customers along the way.
Speaker 8:Yeah. But I
Speaker 4:think that had the vision of what he wanted to create. And that's the case that we see with, you know, with people like, you know, Zach Dell at at base. It's like he wants this idea of, you know, energy too cheap to meet it. Right? And that's where the starting point is, and let's work backwards from that.
Speaker 4:Because if we can achieve that view, we know we can appeal to customers. Right? Or, you know, Zach a lot of Zachs here. Zach at Bridge, you know, started that company not during a time when cryptocurrencies and stablecoins were
Speaker 9:all the rage. Right?
Speaker 4:It was it was built on internal conviction over many, many years. And I think that in the environment today where software has eaten the world and you should assume that if you're onto something interesting, there are two or three other competent, well funded, you know, good people going after as well. It has to be, you know, from that kind of internal conviction, not from, you know, I I pulled 500 people and they told me that, you know, dogs want this type of, you know, x. Right? I Do you There was an era where that I think that worked and I think we're out of that era.
Speaker 2:Do you think founders get way too much validation of their ideas from investors? Because I've fallen into this trap before where people will invest in your company, you know, if really smart people will invest in your company, sometimes you can think, well, must, this must be a good idea, you know, because people were willing to bet on it. When usually from the investors point of view, there's tons of scenarios where investors are like, yeah, I'm sort of so so on the idea, but this guy is just so great. So is that some kind of like, you know, I'm I'm curious if like, you know, one of the like, you should basically get validation in your idea by spending enough time with it, spending time talking with other intelligent people that aren't just incentivized to deploy capital but actually wanna help you find that, you know, help you get to the point where you can actually call your shot.
Speaker 4:Totally. Look, I I think that maybe fifteen or twenty years ago when CVC and an early stage venture was more scarce, you could rely on that. Like, you know, you could say, well, you know, there's someone who's willing to stake capital on this and thus I've passed through some barrier. Now that didn't mean that it was, you know, the next Google or Facebook, but there was some barrier that you pass through. I don't think that's the case, and I think that, honestly, the best founders are not solving for capital at the beginning.
Speaker 4:They're you know, there's a there's more options available for them than ever. There's bootstrapping. There's, you know, coming in with past success. There's friends you have around the table. And so what I think that means is that the moment you put up that flag and say, I wanna start something and you're, you know, a talented individual with great experience, those offers start rolling in.
Speaker 4:And you have to have the internal fortitude and disposition to say, you know, I'm gonna I I need to make sure this is the right thing because that investor or that angel investor is going to place who knows how many bets. And you're gonna place one during this period of time. You are an investor of your time, and that is one thing that you can do during this period. And you have to take that really seriously. So I think that it's it's much more about finding that for yourself because you can't outsource conviction, and you can't outsource that type of diligence, especially when the incentives aren't necessarily fully aligned.
Speaker 1:I have a question.
Speaker 2:Go for it.
Speaker 1:You used LeBron James in your launch video. Where do you stand on the GOAT debate? Is he a better basketball player than Michael Jordan?
Speaker 4:As a kid of the nineties, I think it's gotta go to it's gotta go to MJ. Okay. That that video, it pained me as a Celtics fan to, to show him in a Lakers jersey winning, winning championships. But look, he's someone that I think, you know, had doubters throughout his career, even does today, and now Bronnie, you know, after him. So I
Speaker 10:and
Speaker 4:you got to tune it out, you you know, and I think that if you're doing something right then people will throw shade at you and I think it's a great thing.
Speaker 1:It's still a great metaphor. Do you have a last question? Then we'll
Speaker 2:Yeah, last question. I'm sure you get hit up by people all the time that are starting venture studios, incubators, etcetera. You, like, ran incubations at Thrive. Now you're running a traditional venture fund. I'm sure you could do an incubation, but do you think that that model is best done opportunistically versus, you know, systematically?
Speaker 2:What what's your takeaway from, you know, doing a bunch of these?
Speaker 4:Totally. The you know, going back to that kind of idea of products from a product person, like, you you have to be building a product for a a great audience. And I think that you need to be honest with yourself about what value you provide to a founder. And, you know, incubation is a really appealing tool. Right?
Speaker 4:And I I think it's like, hey. We can get more ownership and we can kind of you know, I have all these great ideas and I can create it. But I see a lot of VCs piling into it, I think, for the wrong reasons and and are gonna make some mistakes. I think there's a real alchemy that it takes to get it right. And you have to know just like as a founder, I think you have to know where your edge is.
Speaker 4:And when I was at Thrive, you know, my focus was on incubations and I was working really closely with founders right from the beginning. But there was always a humility in the fact that the founders are gonna build this company, that we need to, you know, put the right environment together to help them, you know, find it. And also, there's a lane of where we can incubate and where we can't. These are areas that at Thrive, it was, you know, heavily regulated industries. There are really large markets that perhaps would take deep capital availability to succeed within, and it wasn't everything.
Speaker 4:And that, I think, was the beauty of being able to do both things of of do early stage investing and incubate allows you to have that flexibility, and it's something that, you know, I believe will do really well at Terrain too.
Speaker 1:Awesome. Well, congratulations and good luck.
Speaker 2:Yeah. No. You it's open for until the end of today. Maybe maybe can apply right now?
Speaker 4:Maybe tonight? Yeah. People can apply. It's been open for the last few months or
Speaker 1:last domain too. Terrain.com. Terrain com. Terrain
Speaker 4:Com / free agency. We love
Speaker 1:a good domain.
Speaker 4:Short application. Hope to see some people that cite TVPN as the the source that they got it from.
Speaker 1:Thank you. Your next Powerwall winner is coming from our audience.
Speaker 4:There we go. We go. Thanks, guys.
Speaker 1:Thanks for being on.
Speaker 2:Talk soon.
Speaker 4:We'll see you.
Speaker 1:Thanks so much. We got, we got Jordan Schneider from, China Talk coming on next. I'll let him give the pitch, but this is a fantastic podcast. China. It's China.
Speaker 1:One of those podcasts that's completely a portal to another world where on most shows or it shows up in your RSS feed, you probably haven't heard of the guest, but you he's doing he's doing not only the great work of putting together the show, but also curating the guests, bringing you information that you would just never find otherwise. And it's he's been a really fascinating host. So I think he's here. Let's bring him on down. Jordan, how you doing?
Speaker 5:I'm doing amazing. It is a rare occasion where I get to get actually dressed up for something. So this is a real tweet treat for me as my camera totally fucks up. It's okay. And we switch to the shittier one.
Speaker 1:Oftentimes an audio show, but that looks good too. That's great.
Speaker 2:There we go. Lovely jacket. Lovely jacket.
Speaker 1:Great to have you on the show. Can you give us a little bit of my wedding?
Speaker 5:It's my only look.
Speaker 1:Nice. Nice. Can you give us a little high level on China talk, what you're building, just introduce yourself to the to to the fans.
Speaker 5:Well, yeah. Hello, everyone out there. I guess I just first wanna start off by saying, you know, I grew up listening to sports radio and to have like a call in show be revived on a vertical that I now spend way too much time in my life thinking about, I just think is great. So like I'm rooting for you guys. Think you're on to something.
Speaker 1:We appreciate it.
Speaker 5:What is China talk? It is a podcast and newsletter about US China and technology that I've been running for the past eight years now. And John did a really good introduction. I don't know. It's kind of weird.
Speaker 5:Like I'm not really trying to like break news or report on news. It is just the best tagline I've given for myself is Dwarkash for the deep state.
Speaker 1:I love it.
Speaker 5:Just like like the stuff that politicians and intelligence officials listen to on their drive to and from work where, I mean, I guess now we're bringing cell phones into skiffs and texting about targeting So maybe my window is gone.
Speaker 2:You need to get added to the chats.
Speaker 1:Yeah. Yeah. They should have added you. It would have been great.
Speaker 5:Can neither confirm nor deny that I told the missile to be
Speaker 1:Yeah. I know.
Speaker 5:500 meters to the right and be released right after the goat ended up, you know, doing its feeding
Speaker 1:or whatnot. I mean, speaking of the signal chat thing, what what is your take on that, and what has the has there been a reaction in China or or amongst your sources and friends and people you text with?
Speaker 5:It's just fucking embarrassing. It's amateur hour. It's this is the d team. And I think this is like the the best, like everyone knows that these are not all the sharpest tools in the shed. And I think there are different levels of competency that you see across the cabinet level of this administration.
Speaker 5:And the problem is is like when you look at the discourse of actually the quotes and the arguments that were they were going back and forth to each other, like honestly, I feel like my high school Model UN team might have been able to do a better job weighing the pros and cons and timing of this sort
Speaker 1:of stuff.
Speaker 5:That's really what beyond the sort of, like, obvious, like, illegality and Yeah. Of, like, texting about classified information, I was just kind of bummed that, like, you know, you grow up being like, oh, man. Maybe one day I'll be a national security adviser. And then it's like, oh, wait. Like, I I actually did a better job of this when I was 17.
Speaker 1:This is what Trace Evenings always says. There's, you know, you you you you expect that there is a queue in from the James Bond universe with secret gadgets and and an all knowing eye and a man in the chair and secret agents running around the globe, but in fact there is no queue. You have to build it yourself.
Speaker 5:Got a recommendation for
Speaker 1:you, Oh, please.
Speaker 5:So there's this there's this book called The Wizard War by R. F. Jones who was 28 years old and a PhD physicist out of Oxford when in 1939 World War '2 breaks out and he is like the only scientist in the entire British intelligence community. And basically, he was a complete bull in the China shop telling everyone they were full of shit. And ultimately, Churchill he got into a meeting with Churchill and there are some, you know, 50 year old people who are saying x and he's like, no.
Speaker 5:It is y and here are the 20 reasons why it's y. And then because he impresses, you know, the big dog, he ends up really getting to have a big impact doing all this cool stuff around, you know, radar and
Speaker 1:Yeah.
Speaker 5:Targeting systems and whatnot. And it and it goes to show that like like, yes, Trey Stevens is right and that at one level, there's no there there, but it also means that like really excellent people at a certain point in history when they get the right level of top cover can like really punch above their weight. And what is concerning, I guess, about watching the past few months of this administration is like that bench of extraordinary, like like, it's great if you have the extraordinary cabinet secretary Mhmm. Which I don't think there are any, but like one level down and two levels down, like you want at least the cabinet secretary to be able to note this sort of mid level person who's really great and give them room to run and I just I'm I'm worried that's not the timeline we're living in.
Speaker 2:Anyways, we can talk about tech too. Don't know. Let's talk about We
Speaker 1:never talk about politics on this show ever. No politics. So let's move on to tech and can. Can. Let's talk about China.
Speaker 2:You can talk about whatever you want. Yeah. Just maybe maybe I'd like to go a little bit back in time and talk about what drew you to be interested in China. In the beginning, I studied Mandarin in college. Decided instead of going to, you know, study abroad in Barcelona and just, you know, party or whatever a lot of people do in college, decided to go to Shanghai and I was working out of a of a Chinese startup accelerator that was bringing sort of western startups in which is the most flawed Which one?
Speaker 2:China accelerator in in Shanghai.
Speaker 1:Yeah. Yeah. Sure.
Speaker 2:Yeah. Yeah. It's it's like the it's a it's one of the it's like
Speaker 1:the most impressive. Has a ton of experience in China and I had a layover in China once. I was there for twelve hours in Guangzhou. So you're talking to experts and dumb it down for us. But some of the listeners might be less familiar.
Speaker 1:So why don't you take
Speaker 2:us through
Speaker 1:how you got into China? I'll give
Speaker 2:you some I had this idea as a kid, but, you know, a lot of kids wanted to be astronauts and things like that. I wanted to be an international businessman. I had this sort of extreme vision of myself with a briefcase, you know, traveling to Asia to do deals. Like, that was
Speaker 1:like founding deals guy.
Speaker 2:And then I went to China and I realized one, I was really frustrated that nobody really wanted to speak Mandarin and Shanghai because they speak Shanghainese, which is like a completely different dialect. Yeah. And so I was like, what am I even doing here? And so and then I very quickly like, I I feel like I clashed with the culture. I had, you know, friends that were, you know, local Chinese, but overall from a business culture standpoint, it just didn't work.
Speaker 2:I felt like the entire model of the accelerator that I was working out of was flawed because they were trying to bring Western companies in to build in China and we were just constantly getting blocked on everything. Was like clearly China didn't want us to thrive there and we've seen this with other big companies. So anyways, I got a sort of bad taste in my mouth, left, decided never to come back, stop studying Mandarin. But I'm still very fascinated with it. But I'm curious, you know, to hear about your kind of journey into all this.
Speaker 5:Sure. Well, what was that, what was the timeline? What were the years
Speaker 2:It was 2016. So it was like during the Trump Hillary election cycle. Yeah.
Speaker 5:Okay. So yeah. I mean my my China arc was 2017 to 2020. And I think I was living in Beijing which is a, you know, different experience on
Speaker 9:a Yeah.
Speaker 5:For a number of reasons than than Shanghai, but I also came to China wanting to work in tech. I guess like my or I came to China and then very quickly it was clear to me that like the only interest interesting jobs were ultimately going to be not in like western firms trying to enter China, but this was like the hot minute where Chinese firms were trying to expand around the world and that wasn't like quite as sensitive as it ended up turning out to be. So you know, working at places like ByteDance and you know, the company that turned out to make Timu, all were the sort of interesting jobs for foreigners because you were totally right. Like the alpha of being a foreigner, a foreigner doing business in China is like a nineteen eighties, '19 nineties, know, first half of the February story. And Yeah.
Speaker 5:Then sort of your only alpha as a foreigner in China was not even like, you know, working at Microsoft China or whatever what have you, but like helping the Chinese firms explore the rest of the world. So I moved there in 2017 for graduate school. Very quickly was like, alright, if I'm gonna stay here, it's gonna be working for a Chinese firm because like there's no other interesting jobs. I did that for, I guess like nine months I think. I was at Kuaishou, which was actually the first company to do short video and got completely blown out of the water by ByteDance.
Speaker 5:But within two months of being there, I was like, oh, this is really silly. Like they're asking me to expand into Turkey and I don't speak Turkish. And doing my podcast and newsletter when I was at work was more fun. So I kind of rode that until they realized that and fired
Speaker 1:me and then COVID happened.
Speaker 5:And I left. So anyways, I mean, no good time, don't regret it. But yeah, the the sort of the time where there was any edge in being a western business trying to expand into China, I think closed before your or I'd or or ours time.
Speaker 1:Well, I wanna go through some of the big topics that you've covered recently. Maybe we should start with just the foundation model battle that's going on. Can you give us a lay of the land over in China? What's happening on the LLM front?
Speaker 5:Alright. I got a take for you that I'm parroting from Alvin Wong who gave it to me today at breakfast. Created deep seek.
Speaker 1:Oh, woah.
Speaker 5:So there is this window in around 2017 or 2018 where the calculus of the top students in China about where they want to go to undergrad and where they want to do you know masters and PhDs changes. And part of it is a function of opportunities in China where wages are increasing, there's this big exciting startup ecosystem, but there's also a big part of it of the Trump administration and just like, you know, the vibes being bad and the the vibes being bad for Asian Americans, you know, whether that's like realized by the numbers or just amplified by Chinese propaganda. And then COVID where sort of like China was doing fine over the course of 2020 and America wasn't. So the sort of choice and it was also very difficult to go back and forth between the two countries which you know, if you're going to be deciding to like go and live halfway across the world, like you might wanna see your parents every once in a while, which was not a straightforward thing during the lockdown years. So what used to happen pre 2016, '17 is the best Chinese students would go to the tier one universities in The US, the sort of next rung down would go to the tier two universities in The US, and then the third rung down would go to the best Chinese the best universities in China, and that was kind of a clear hierarchy.
Speaker 5:But once you had these three factors of China's economic, know, earnings potential in China expanding, like bad vibes for Asians in America and COVID, a lot more of those sort of top folks who would have ended up wanting to go to you know MIT or Stanford just stayed in China. And the core of DeepSeek's engineering base are all under 30 and all from those top Chinese universities in that cohort. So we really messed up our shot to do this whole brain drain thing.
Speaker 1:But we had
Speaker 5:a great thing going for like forty years of really getting the best Chinese talent to come to America, get their education here. And by the way, like 85% of the folks who end up getting PhDs in STEM in The US like STEM. Either try to stay or end up staying. But by sort of screwing that up, we've really undercut ourselves, I think, for the for the long term.
Speaker 1:Yeah. That's a good trend.
Speaker 2:What what's your take now on the true cost of DeepSeek? Because they they came out with this like clearly a number that that was just shockingly low and it felt like it was designed to shock the market and then more truth sort of came out over time, but it's less, you know, it's less impactful when it sort of dripped out and saying, well, we had Yeah. We did have these chips and well, we didn't count our R and D costs. Was just, know, it just seems like to me it's now unclear, but clearly was more expensive. Do you have a good sort of Have you sort of tried to triangulate it?
Speaker 5:Yeah, I mean like, look, it's not dirt cheap but they also don't have as many chips as Anthropic or OpenAI or Google. So, you know, there's some sort of triangulation that you can do. I'd point you guys to Nathan Lambert who kind of did the back of the envelope math. He came up to like a like $300,000,000 a year like annual run rate for DeepSea, something like that. Right?
Speaker 6:I mean Yeah.
Speaker 5:It's a it's a very successful quantitative hedge fund. They have money to burn, but they are also not Google. Right? Yeah. But I do think this sort of interesting angle or story from this is that there is an aspect of not necessarily like constraints breeding creativity.
Speaker 5:Well, there's a part of that, but also the sort of constraints lead you down different technological trees. And which is not to say that like The US or Western labs can't like explore the more the things where you're not necessarily pushing capabilities, but pushing efficiency, which I'm sure they are as they kind of reach the limits of like, oh man, I guess we're gonna have to do a hundred billion dollar run to make our model better. But I think Deepsea kind of came to that earlier, the sort of need to really push on kind of the efficiency frontier as opposed to the capability frontier because they ran out of chips before the likes of OpenAI and Anthropic.
Speaker 2:Will, yeah, on going off of that, when you're trying to understand something related to China, how many different sort of data sources do you need to basically triangulate? Because my experience living in China, people were willing to just basically say nonsense or lies to sort of further a one one of their ambitions. And and so like I came away from that experience being like not having a it wasn't a very like high trust dynamic between me and anything coming out of sort of specifically like national security, you know, sort of like critical critical issues. State media. Media anything along those lines, you know.
Speaker 1:What's the algorithm for finding
Speaker 2:truth? What what's your truth algorithm?
Speaker 5:What's what's the algorithm for finding truth in Silicon Valley? I mean
Speaker 1:I was about to say.
Speaker 5:Watch this show. Right?
Speaker 1:Yeah. There I mean, there's a ton of hype in in Western No.
Speaker 2:And I and I and obviously obviously, every company comes out and saying, we're replacing $5,000,000,000,000 of labor with our AI agents and we're doing this and we're doing that. But but I do I do think it's
Speaker 5:Yeah. I think there are I think it's interesting in this. There are sort of different heuristics you can apply to different, you know, to different fields. Right? So for instance, Jeffrey Goldberg, you know, the equivalent of the Chinese Jeffrey Goldberg, if they were added to the, you know, war planning group, WeChat group, would not have published that.
Speaker 5:Right? So like Sure. I think, you know, the closer you get to kind of like national security adjacent questions, the more yeah, know you're dealing with an authoritarian state who has complete control of media and like there's a whole kind of ecosystem of people who try to like read through the lines of state media and you know, PLA journals to try to understand what this stuff means. I think for the sort of more commercial tech focused stuff, yeah, you know, these are mostly private sector firms trying to play games and you know Raise money. Raise their next round, right?
Speaker 5:Yeah. I think the one difference is that there is more money that flows directly from firms to journalists in China. So the sort of discount factor that you have to apply to Chinese technology coverage, specifically positive technology coverage or even negative technology coverage because sometimes that's like seeded by the enemy company or whatever, tends to higher. You know, it's fine and you you get to know the journalists and you get to know which outlets are are more or less credible. But that I think is the is the main difference here.
Speaker 1:Can you talk a little bit about humanoid robots? I keep seeing these incredible videos of unitary robots. There's a lot of skepticism around the American robotics companies being maybe behind or maybe tele operating a lot. Like what's your take right now on humanoid robotics?
Speaker 2:Yeah. Specifically, does The US need attention to unitary running this sort of DGI playbook with humanoids?
Speaker 5:I mean, I I don't know about humanoids, man. I mean like like like it is I think it is obvious. It it is pretty like, we we did two features on the Chinese humanoid robotics industry and then Chinese industrial robotics industry. And I think the sort of the big markets in the you know, three year horizon, let's say, let's say are much more on the industrial robotic side. But in general, like we don't build robots here.
Speaker 5:And so from a from a yeah. I think any sort of like large scale manufacturing thing, whether it's unitary or another or industrial robots or or cars or what have you, like China has a really remarkable advantage in scale and manufacturing scale. And The US, like, it's not just the cost of labor, it's the experience, it's the network, and it's the kind of like twenty five years of learning that all these firms have been doing to get to the place where they can, you know, manufacture a drone 15 times cheaper than The US can. So, yeah, I think it's I think it's real. I don't really know how to solve it.
Speaker 5:I mean, you're friends with all the Gundobros like ask them for the for what they need to to build a billion of these but yeah, a
Speaker 1:It's tough challenge.
Speaker 2:What's your take on the news out of Ant talking about how they they've had some training model breakthroughs through like leveraging what they're saying is entirely Chinese chips. Do you do you have a good read on on that situation yet? Is important or is it just another headline?
Speaker 5:I don't really buy it yet. I think there's a really interesting wrinkle in the sort of Chinese domestic chip manufacturing arc. So just to back up for all the viewers out there, America in October of twenty twenty or by the Biden administration in October of twenty twenty two had this big export control push where they were just like, we're gonna do everything on our power to well, we're gonna start trying to restrict the China's ability to import semiconductor manufacturing equipment so that they would not be able to to make frontier AI chips to train the next generation of models. And kinda ever since, Huawei, the the China's leading chip designer and SMIC, the kind of analog to TSMC, have been trying to push back against that, you know, fight through loopholes and make the the sort of level of chips and to the quantity of sort of the quant the quantity and quality of chips that that NVIDIA is able to do at TSMC. So, you know, it is a big open question whether or not they'll get there.
Speaker 5:I think the the jury is very much still out. I would be kind of wary of headlines because the the sort of most important there are two important facts to understand looking at this over the next three years. First, Huawei was able to manufacture an enormous amount of chips at TSMC by basically creating a shell company. Deciding to look the other way about some Chinese firm manufacturing all these AI chips and then the US government catching them and be like what the fuck you can't do this anymore. Have an amount of supply and so any sort of we train this on only Chinese AI chips is not actually like SMIC chips, it's sort of like, you know, off brand TSMC chips.
Speaker 5:So the big challenge is going to be whether SMIC can do them, can do kind of competitive chips at scale domestically. And the challenge there is they are not allowed and have not yet been able to replace electro EUV tools, which is what ASML makes. And Yeah. You can't really sneak it in. It's incredibly difficult to sort of reengineer, and that's really the final frontier for the Chinese domestication.
Speaker 5:And despite a handful of headlines, I think that over the past week, I think that is much more smoke and fire.
Speaker 1:So I mean, they do have a competitor to ASML in SME. Correct? And then they also need to rebuild SK Hynix at some point, I imagine, for the for the memory in the Flash. Right?
Speaker 5:Yeah. I mean, they were also able to stockpile an enormous
Speaker 1:amount of Okay. So
Speaker 2:that's stuff.
Speaker 5:It was so awkward because there is literally a Reuters article in like the summer of twenty twenty four, like Yeah. BIS is planning to crack down on memory. And then they did it a little bit, but like wrong in October, and then they finally didn't fix it until like the like like a week before the Trump administration came in.
Speaker 1:So So bunch just
Speaker 5:fuck ups all around. And yeah, at some point. But there's there's there's a whole lot of memory sitting sitting in warehouses in in in China that they'll be good through for at least the next two years.
Speaker 2:Okay. So I'm gonna massively generalize here and then you can try to piece it apart and and and fig figure out if if there's any meaning here. But China had, you know, decades to sort of embed embed Chinese, you know, either former or current Chinese nationals in US in The US companies, which then were able to over time bring bring back sort of important information, IP in different ways to sort of like catch up on, you know, advanced, you know, basically catch up on developing their own versions of products from everything from like the f 35 to phones and things like that. Right? Now China now we're in a position where like China is much more advanced in sort of manufacturing, robotics, some of these things that you're saying and we don't have the same benefit of being able to send a bunch of Americans over there for decades to sort of then like help us re engineer that.
Speaker 2:What's The US's like actually viable strategy to kind of like catch up again? China's caught caught up on product development. Can we then can we catch back up on advanced manufacturing and and what would be yeah. Is it is it possible, right? Yeah.
Speaker 5:So the thing that I always used to hold my hat on was America attracts the best scientists and funds the most science in the world. And that is a thing that may just stop happening because the Trump administration doesn't care about the National Science Foundation, National Institutes of Health wants to blow up universities for better or for worse from their perspective. But like, this is the thing that won us the cold war is getting the best immigrants and having them like do crazy stem stuff. And so, yeah, I am worried about this because that was kind of my ace in the hole is like, yes, you know, there will be this sort of like technology flow or sort of like human human talent flow back and forth between The US and China. I I think it's kind of like inhuman almost to cut that off, but the sort of hope and expectation is that like America is just a better place to live and folks will wanna stay here and more like America will gain more from that exchange in the long run just what I like what I was talking about in the in the sort of deep sea context.
Speaker 5:And when you look at, you know, a lot of the founders of these AI firms, a lot of found a lot of sort of the top research engineers, like an enormous amount like a I would say over 75% of them were not born in The US. So that is like our real superpower here is this being a country that is attractive to and like to a certain extent welcomes the world's best talent and kind of giving that away, it just makes it a lot more difficult because you do need to run faster on all of these different dimensions. And the way you do that, I
Speaker 1:mean
Speaker 5:I buy into this sort of Silicon Valley mindset that like like, sort of like the the the there are such things as 10 x engineers and you want to be able to like capture as much of them and the extraordinary founders or whatever and sort of losing out on that is gonna be is gonna make it a whole lot more tricky.
Speaker 1:Last question.
Speaker 2:Peter Zaihan, very popular in tech. He likes to talk about how China's, you know, population is in free fall and the Chinese state as we know it is is unsustainable. Peter Zaihan is one of those guys, the the criticism is that when you hear him talk about something you know nothing about, you're like, this guy knows everything, he's like completely brilliant and then when you hear him talk about something you actually know about, you're like, what is this guy talking about? I'm sure when you listen to Zai Han talk about China, you have some thoughts but talk about, you know, he basically is writing them off. He's saying, you know, yes, they're a force, but he's sort of like writing them off long term in many ways due to the demographic issues, you know.
Speaker 2:Do you have any comments on that?
Speaker 5:What what's that madman line? I don't think about you at all. Cool.
Speaker 1:I mean,
Speaker 5:like, I think I think in general sort of there are nuances to everything I've said here, which I've, you know, kinda tuned up for for our new generation of sports call and radio. The demo. I think there are demographic challenges. China is not 10,000 feet tall. There are definitely things that it has been really overperforming on and some of the trend lines, you know, some of the trend lines I think are very worry worrisome to Washington.
Speaker 5:Other trend lines are very worrisome if you're running China. And kind of understanding the nuances of that and and also baking in like different potential futures of, things that America could screw up, things that China could screw up, things that America could screw up, not relation indirectly to China, but relation to the way it deals with the rest of the world are all I guess I gotta make the plug now. The sorts of things that we Please search China Talk, one word, and your favorite Chinatalk.media
Speaker 1:is the website. Go subscribe, add it to your podcast player, add the Well, you
Speaker 2:are now our official eastern correspondent.
Speaker 1:We'd love to have you back on I I I have like 25 more questions. Energy, we could go through chips more. We there's so much we could do. We'd love to have you back. Thanks so much for coming on.
Speaker 1:This is fantastic.
Speaker 5:Talk soon, guys.
Speaker 1:Talk soon.
Speaker 2:Thanks for coming on. Cheers.
Speaker 1:Bye. We got some breaking news coming up. A big fundraising round. Over 20,000,000 pouring into friend of the show, Pavel, Osparu Hub's new startup. He should be joining in just a minute.
Speaker 1:We're excited to have him on the show to to break it down for us. I soon as I saw the news break on X, I texted Delian three red alert emojis saying, get in this thing. Massive. And I think Delian's hopping in as well.
Speaker 2:No way.
Speaker 3:That's great. Hey.
Speaker 1:The big brother.
Speaker 2:To bro, Moe.
Speaker 1:Pump the little bro's bags.
Speaker 8:And tell him to clean his camera up.
Speaker 6:Yeah. Clean up the camera. I got a good view. You got the both the spare hops. This is the first time we're ever making appearance on anything together.
Speaker 6:So, you
Speaker 1:know Fantastic.
Speaker 2:Not the last.
Speaker 1:Welcome to the show, guys. Break it down. What's happening? What's the company? How much you raise?
Speaker 1:What are you doing with the money?
Speaker 6:So the company basically, the root of it is health care providers in The United States spend a ton of time just dealing with the paperwork from insurance companies, and it really both distracts from patient care so clinicians are just able to serve less patients. And when something goes wrong, clerically, it can actually lead to, like, a delay in patient care. So depending on, like, some of our customers are autism therapists, and it's like that delay in care for some of those kids can really lead to adverse outcomes. So what we built is basically AI that merges basically, that moves data from point a to point b. Because, fundamentally, it's just it as much as, you know, maybe other curly haired technologists like to say, it it's it's it's not it's not as much of a systemic issue as it is a, you know, technological issue.
Speaker 6:And the we're we're just really, like, ensure set up reasonable processes and have an appropriate check and balance in this workflow where you as an employer don't wanna be paying, like, unreasonable premiums. You, as a patient, don't wanna be getting care that's not medically necessary. But the problem is is, like, there's a competitive space between all these insurers. There's, like, 10 different insurers that a individual clinician might work with, so there's 10 different processes they have to manage. So it's really about plugging these two parties, making them just, like, work together better.
Speaker 6:We sort of raised $27,000,000 across our seed in series a, 5,000,000 seed, 22,000,000 series a. And where we're taking that capital is we really just wanna double down on our core product set. It's basically, like, expanding into more specialties. And, really, we wanna go a layer deeper into the extent that we help clinical staff. Today, we really just help with, like, the clerical parts of things.
Speaker 6:But as we sort of sit between these two parties, we really start to understand insurer guidelines. Like, we understand why Optum might reject something, and we just make sure that the insurers are able to get clean, streamlined data that is past all the basic validation. So that's where we're bringing the capital in hiring engineers, sales operations, just really trying to scale the machine and expand on our core product set.
Speaker 1:So Bain Capital did the deal. Did the deal get done at Fogo de Chao? You gotta let me know.
Speaker 6:Did the deal oh, Dalian. Oh, that was Dalian question. Go ahead.
Speaker 1:No. No. That's for you. No. No.
Speaker 1:Because I saw you posting about it, like, two years ago.
Speaker 6:At Chao. No. The you know, I it it was part of the close more so than anything else.
Speaker 1:That's what put you over the over the finish line. That's great.
Speaker 6:Yeah. Right at the finish line. No. Deal we were fortunate enough where, this actually this deal didn't hit the market. We were fortunate to be able to close it from our New York office.
Speaker 6:So Fantastic. You know, fantastic.
Speaker 8:Do you have a say which, you know, sort of double, kind of covered, but I think for the broader audience, either that are maybe not super familiar with health care, the way that providers have gotten paid has just kinda fundamentally changed over the past, like, ten years, where basically ten years ago, provider provided care and then went to insurance companies and said, hey. Here's basically, you know, sort of what I did. I'd to get paid, etcetera. And sometimes the insurance companies would look and be woah. This is, like, really out of whack.
Speaker 8:Like, this is not what I wanted to pay for. And so you have these kind of, like, you know, sort of misaligned incentives. And so policyholder companies focus on this, like, new workflow on basically within a prior authorization. So it's basically like, you have to go to the insurance company first because it's sort of like net new workflow, and it slows down care. Right?
Speaker 8:Because before, you just go to the doctor, they'll give you the care, and then you you deal payments. Now the insurance company is set up in the prework, but then because that if that takes too long, now all a sudden, you're, like, slowing down the patient experience.
Speaker 6:Yeah. Which is also directionally, like, good. You don't wanna be hit it with, like, an unexpected medical bill. Right? Like, that's a lot of the times when you hear some of these, like, unexpected medical bills happening.
Speaker 6:It's because you don't want the check happening after the fact. You do want it happening up front. But, like, with our technology, you're able to do that upfront check without necessarily delaying the patient getting care.
Speaker 8:Yeah. If it takes, like, thirty days and this person needs, like, some cancer treatment, right, like, you want to be able to, like, you know, get this stuff, like, approved quickly. And so there have been, like with the rollout of this new process, there's definitely been some patient backlash being like, what the hell? Like, the doctor gave me my care plan. I would like to proceed.
Speaker 8:And I'm, like, waiting on my insurer to approve my ability to even go get, you know, care in the first place, you know, before the bill. And so it being fast is, like, super critical. The other thing that I wanna is, you know, so Pavel, cofounded with these two guys, Sagar, who was previously at True Work, but then the CEO is this guy, Jeff Morelli. Mhmm. There was actually my high school buddy that, you know, has known Pavel since he was, you know, sort of 14 years old.
Speaker 8:You know, the, you know, sort of first time they met, I think, was, like, up on the ski slopes in, you know, sort of Utah where I peer pressure Pavel smoking some weed for the first time when he was waking
Speaker 1:up smoking weed.
Speaker 6:But Allegedly. Allegedly. Allegedly. Allegedly. Allegedly.
Speaker 6:Know,
Speaker 8:officially, according to regulators, Paul has never smoked marijuana. But, know, I think that provided a good bonding moment. And then Jeff actually came and worked with me on my first company, which was not in the prior authorization space or, like, financial services, but it was actually in the health care space
Speaker 1:That's right.
Speaker 8:Software for autism therapists. And so we this preexisting understanding of, like, the field, you know, autism therapists, what their workflows were. Again, we were more focused on, like, clinical workflow software. But it all kinda ties together of, like you know, Jeff and I used to work together and, you know, had been friends with high school. He had known Pavel since he was, you know, sort of 14.
Speaker 8:Pavel cracked it at Ramp and, like, you know, being in the first twenty five employees and helping build out their, like, know, sort of bill pay product, which has been phenomenally successful for them. And so, actually, both were in, like, this, like, cofounder dating process, like, whatever it was, like, you know, sort of two years ago. And I was like, guys, like, you guys should a % consider, you know, sort of, you know, working together given the overlap of interest. And so in some ways, what they're working on today is, like, the perfect marrying of those two backgrounds of, like, you know, financial, you know, sort of services and what Pavel has done and then just background and, like, you know, sort of go to market in health care, marry the two prior offices, like, this crazy background trend. And, you know, the Aspero Hub magic can, you know, make space factories, and they can you know you know, make patients lives and clinicians lives way easier.
Speaker 8:Part two, hopefully, Selena ends up way better than Nightingale ever was.
Speaker 2:I love it. Talk about so we had Lulu on yesterday. She was talking about the golden ratio shipped to Yap. I think it was had to have been a pretty intentional decision to wait and announce the company and two separate financings at the same time. Pavel, you're a generational poster, you know, potentially poster of the year if you really get back into the game.
Speaker 2:Yeah. Maybe talk about that decision to not, you know, be posting 10 times a day about the company when there's probably an argument that maybe that would have helped in different ways, but clearly, you made an intentional decision to just keep quiet and and focus on building.
Speaker 6:Yeah. I think if it had meaningfully blocked the business anyway to not be talking about it, then we absolutely would've launched. But I was just like, you know, early hiring is predominantly in network and doctors aren't on Twitter. So it wasn't necessarily that we weren't, like, talking about what we were doing, but it was we weren't talking about it in front of, like, a tech audience.
Speaker 1:Yeah. I
Speaker 6:think also just there's a degree of focus that can come from downstream not being in the public eye. I think it's limiting in a lot of capacities. I think as we're scaling, now it's from the decision now. And I think part of it is just you know, I think we have sort of an opportunity when we close the a earlier than we anticipated to really just come out and, like you know, I'd say, like, a bunch of things get lost in the especially in, like, AI hype cycles. A lot of things get lost in the noise, but it's, even, like, health care AI.
Speaker 6:It's like, is this even real? What's going on here? But it was I think it was really compelling to us where you will out of the door and be like, hey. We operate in, like, 45 plus states. We work with hundreds of insurers.
Speaker 6:We have tens of thousands of patients. It felt like that was more powerful. And I think it's sort of like I I I think it's really important to me that, like, I work on something very tangible with, like less I I I didn't want don't wanna be a hype guy. I'll hype my stuff up, but I won't hype it off the back of something, like, very real. And I think we're coming today with very real business progress to show the world.
Speaker 1:Has your hiring criteria changed? You're on record saying that you have two hiring criteria. You need to have that dog in you, and you need to be nice with it. How has that evolved recently?
Speaker 6:It's a perfect framework. I don't know why you why why why why
Speaker 1:Can you unpack it a little bit for us? Break it down? What does it
Speaker 6:mean to have that dog you? Sort of we we we sort of sit someone down. We we we just dig through every life decision they've ever made. And then after that, we we sit all in a room, we go through the two avenues of, like, okay. Let's all start.
Speaker 6:Everyone go around. Do you think they have the dog in them? What's the what's what did we learn about them that show that they have the dog in them? Mhmm. And then, are they nice with it?
Speaker 6:That's just you know, we sit down. You know what? We hire one that they're supposed to be nice with something. We don't hire, like, a ton of, like you know, we don't have a lot of generalist strategists around. It's, very we really, like, have a specific skill set, and so just making sure the process sort of shows, like I think it goes back to, like, that tangibility is, like, get me wrong.
Speaker 6:We do have generalist work to be done, but we always hire someone, like, on the back of some specific tangible skill set that we can track for.
Speaker 2:That's great. That makes sense. Talk about the moment you were working on integrating GPT three into, like what you were working on at Ramp was like was that like like mind blowing at the time? Did you feel like you had discovered something that, you know, discovered a broader opportunity and you just said, need to dedicate my life to creating business efficiency using artificial intelligence. I guess just, like, talk about that.
Speaker 2:Yeah. Talk about that moment.
Speaker 6:I I think there's a few things. I think, like, it was Jeff, my cofounder, his just like family is on like, his mom's a nurse. His uncle's the CEO of a hospital system. So he just had this, like, really native understanding of what the problem space was. I think at the time so we were basically deploying LMs in the context of, like, pulling out vendor contract data.
Speaker 6:And I think what I found in my Ramp is, like, top tier company, best of the best. I I I think when I was sort of looking at my domain and, like, just the area of fintech, if you go if you go talk to, like, a finance person about their, like, technology stack, they're pretty happy with it. And so part of what it was, I wanted to be able to operate in a space where the technology we were delivering was truly, like, revolutionary in nature, something like 10 x better, not 10% better. So I think health care was this, like, awesome moment where it's like, hey. Health care data is fundamentally textual in nature.
Speaker 6:Like, you can't tell me what's wrong with your knee with a bunch of, like, toes. You need to just, like, verbally explain to me what's wrong with your knee. And so the sort of combination of all these things is, like, actually, LLMs are basically able to unlock that 10 x experience. And there's a funny thing that happened is that, like, the last big techno technological wave, like, web apps, which is sort of, like, web apps and, like, SaaS tools and APIs, which is what a lot of the successful startups of, like, the late twenty tens were. It didn't hit health care in the same way.
Speaker 6:Because, frankly, like, a web app isn't like for a physical therapist, a web app isn't, like, 10 x better than, like, a filing cabinet because you're already in person. There's already these physical, like, notes. And what you're finding with LLMs here is you're able to really drive, like, both technological waves in. So you're able to do like, we're delivering a ton of value with the same sort of technical skills that I learned in developing RAM. On top, we're just, like, this AI blend is really able like, you can see some of the quotes on the cellhealth.com of, like, we've just become, like, immediately this artery artery and, like, game changer for a lot of our customers, which for me is just, like, really engaging and gets me excited to get up and work on the problem every day.
Speaker 1:What what are the frameworks for looking at these startup ideas is find a industry that's highly fragmented and low NPS. Can you talk about the previous structure of the industry, prior to you launching?
Speaker 6:Yeah. Well, what I'll say is that's a great structure if you're an analytical guy, not a vibes guy. So we just like to kinda like the problem. People would talk to us for a long time about it, so that's how we land about
Speaker 1:it. Okay. But, yeah,
Speaker 6:totally, it is like a real, it is a real fragmented market where, frankly, there was not meaningful solutions on the market that could solve this in a holistic way. Mhmm. There were little tools here and there that you basically had to and this the fragmentation maybe is a little different in that the tools were all fragmented, and you would still have to basically employ someone to go through and use those tools and run the workflows. Where we operate is we're just like an end to end solution. You plug us in.
Speaker 6:There's no tangential tools. We're able to get it. So, like, patient comes in. You give us their insurance card. We tell you exactly what clinical documentation we need and tell you, like, hey.
Speaker 6:Yep. Patient cleared for care. Get them scheduled without having anyone on their end necessarily there to manage the process. So I think that's how we think about a lot of the consolidation that we're able to do.
Speaker 2:Do you have any advice for founders out there that are seeing your announcement today, all the money you've raised and and want to copy you?
Speaker 1:Photo to chow. Yeah. What does it take?
Speaker 4:More time photo
Speaker 6:to chow, post more on Twitter. Yep. Numeric advice is that, like, not generic advice. My advice, if I had to give the world is, I think Keith has said it, but I'll sort of reiterate as someone that's lived it is, like, work at a great company before starting your own. I think that has been, like, massively helpful from, like, basically, like, inception.
Speaker 6:We had, like, seed funding. It allowed us just to take a longer time horizon how we're thinking about it. It just really shifts the model. When you're talking to candidates, you'll I'm able to point like, hey. Here's the track record.
Speaker 6:And I think that's something I reflect on a lot. It's like that Keith advice, go work at a good Rio was a great company, had an opportunity to work there, and I think it's just made the first, like, year and a half of entrepreneurship a lot easier than it would have been otherwise.
Speaker 2:Well, hopefully, you provide that for the younger versions of you out there.
Speaker 6:We got we got some young men. We got new pobbles.
Speaker 1:Yeah. Fantastic.
Speaker 2:Last last question for you. Is there a certain milestone that you wanna hit before you cut your hair? Is it a hundred million ARR? Is it 500? Is it a billion?
Speaker 2:You just It might
Speaker 1:just be the look forever.
Speaker 2:Growing it down to your waist and beyond. I think it
Speaker 6:aligns, like, look, you it aligns with whenever I can start tweeting whatever I want.
Speaker 1:Okay. There we go.
Speaker 2:There we go.
Speaker 1:I wanna
Speaker 2:see the hardcore buzz cut paw ball. That's gonna be a
Speaker 6:It's it's a it's primarily, like, you want some pretty quickly when they see me. You're like, oh, that guy that guy works with computers.
Speaker 2:Yeah. Yeah. Everything's computer. Now, it's great it's great having you on. Yeah.
Speaker 2:You're our new healthcare expert.
Speaker 1:Fantastic. We'll have you
Speaker 6:back soon.
Speaker 5:Thank you
Speaker 1:for having me. Congratulations.
Speaker 2:No. It's been it's been I remember I remember I came over to Will's office. It was just you sitting there by yourself. You told me roughly what you were working on. It's fantastic to see all the progress and I'm
Speaker 6:Yeah. Thank you. Thank you, guys.
Speaker 2:As Joe as Joe Rogan would say, it's an honor to, you know, cover your fundraising announcement.
Speaker 1:Yeah. Exactly.
Speaker 6:Thanks for having me on, guys. Really
Speaker 2:appreciate Cheers.
Speaker 3:Bye.
Speaker 1:See and see you, Dalian.
Speaker 2:Later.
Speaker 1:Couldn't get into wording edge wise, but
Speaker 2:It's so funny to be like, yeah, little bro. I'm coming on your fundraising announcement. I I love it.
Speaker 1:That's the nature of the call in show. He's he's just in the text message group. Can I hop in just to hype up Pavel?
Speaker 2:Pavel There
Speaker 6:we go.
Speaker 1:To find a scene. No.
Speaker 2:I mean, I can't I can't Pavel's smart enough to know that he should leverage every single advantage that you have in life. Oh yeah. And having a big brother like Dalian who can be your hype man. Yeah. Who can help you avoid pitfalls, help you make sure you're actually focused
Speaker 1:on I mean, there's
Speaker 2:another thing Avoid bad investors, etcetera.
Speaker 1:I mean, there's another thing that that he's really good at leveraging and that's Eight Sleep. Nights that fuel your best days, turn any bed into the ultimate sleeping experience. Go to t go to eightsleep.com/tbpn.
Speaker 2:3 hundred 50 dollars off your pod.
Speaker 1:That fuels your day.
Speaker 2:Saw Andrew posted a hundred sleep score. Oh, no. Devastating.
Speaker 1:I don't think I'm anywhere near there. I woke up at like 4AM unintentionally.
Speaker 2:I actually I actually did put up a hundred last night. You did? Which crazy.
Speaker 1:Oh, you prepped this,
Speaker 3:didn't you?
Speaker 2:So 43. We have somebody joining the show. We have exactly and don't don't say any names. Yep. Is somebody named carried no interest.
Speaker 2:They are a prolific poster on X.
Speaker 1:You're going to hear their voice, you won't see their face.
Speaker 2:Quite the following. And he's going to come on and talk about the situation with all these AI, SDRs, all these companies saying they're going to automate outbound and then very exciting, he's gonna docs himself in like two weeks Let's live on the show.
Speaker 1:Live on the show.
Speaker 2:So I'm very excited for that. But let's bring
Speaker 1:him in. Space reveal. Let's bring him in. He's coming down. Well, in the meantime, we can talk about Wander.
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Speaker 5:t d
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Speaker 2:However good you think it is Could be better. It's better.
Speaker 1:Could be better. We've taken you on a whirlwind tour of the world today. We've taken
Speaker 2:you to China. We've taken you
Speaker 1:to the East Coast.
Speaker 2:We got Carrie. No better place
Speaker 1:than you're Welcome to the show, Carrie.
Speaker 2:I've arrived.
Speaker 1:It's great picture.
Speaker 5:I have arrived.
Speaker 3:How you doing, by the way? Hair is wonderful right now too.
Speaker 1:Oh,
Speaker 3:yeah? I wanna show it off so bad.
Speaker 1:But you sound mean, are you doing a Danny DeVito impression right now? You sound kinda like him.
Speaker 3:You like that? No. Just a lot smokes, boys. That's
Speaker 1:all. Okay.
Speaker 2:I've almost said your name
Speaker 1:10 times already.
Speaker 2:But anyways, for everybody, this is this
Speaker 1:is Carry no interest.
Speaker 2:He is a private equity investor skewing towards software, former head of AI at a billion dollar PE fund, and doing a bunch of interesting stuff in SaaS and looking at businesses as well that are using AI to sort of reinvent themselves. But you were chirping on the timeline earlier today about 11x. Wanted to just have you on. I don't want to pile on 11x too hard. But I do want to talk about the broader sort of like sales automation space.
Speaker 1:Yeah. What's going on with AI SDRs?
Speaker 3:So here's my hot take, right? Like some some software companies will be AI first and succeed massively. I think that the notion of the AI SDR is flawed permanently, whether it's 11x, whether it's some of the ones from Y Combinator. And there's a few different reasons. Like, the first reason to me is that cold email is functionally like an alpha game.
Speaker 3:You are constantly trying to take advantage of a bunch of different quirks about cold email so that you can send 5,000 to 10,000 a day. And when you abstract all of these quirks away, I know there's a bunch of cold email wizards that will agree with me, you actually lose some of that alpha when you just say, hey, here's this tech company. I'm gonna let you run large scale cold email. Very tricky. Right?
Speaker 3:Very hard. That's the first piece that I just don't love. The other piece is like, when you think about when you think about it, to me, there's five reasons that make it tricky. The first reason, with these AI SDRs, you're relying on someone else's cold email data. You can guess what happens to your gross margin when that occurs.
Speaker 3:Right? So if you're an AI SDR company, you have this big database of emails, you're mooching off somebody, you're gonna take a hit on gross margin just there right away. Right? The second issue is that, in my opinion, you have a high probability of potentially being embarrassed.
Speaker 2:So, like And embarrassing the end customer. Right?
Speaker 3:Both. Right? Yeah. You have this AI that is sending out emails. Who knows who it targets?
Speaker 3:You know, that's a tricky situation. Right? When you think about the AI utility relative to the magnitude of mistake, Kugen's Law, I have to find a way to coin this. I really do.
Speaker 1:Let's do it. When you
Speaker 3:think about that ratio, let's think about Cursor really quickly. Right? You get all of this instant efficiency from Cursor. You get more code written if you know anything about developer environments. If you push bad code, it should get caught in testing.
Speaker 3:The magnitude of the mistake relative to the efficiency gain of the AI is very low. You get all this output. The mistake is caught before it goes to prod. Win win for everybody, right, On the AISDR front. No such thing, right?
Speaker 1:We're doing it live. Yeah, we talked about this. It's a good point.
Speaker 3:Like, there's an opportunity for a high degree of embarrassment.
Speaker 1:Yep.
Speaker 3:And I think that that that that is actually leading to a lot of churn. Yeah. So I've seen, like, behind the scenes on a few of these businesses, the churn does not resemble, like, top enterprise software companies. It simply doesn't.
Speaker 2:Well, yeah, and one of the issues is you wouldn't wanna use an AI SDR on a very important account because let's say you're trying to close an account that could be worth $2,000,000 a year. Well, is it worth any potential embarrassment to just spam them with a bunch of emails where it's like, hey, I saw you live in New York. Have you checked out Central Park? You should see a Broadway show. Right?
Speaker 2:Like it's like Yeah. It's just not worth it. It's like, hey, this could be Yeah. You know, hugely creative. At least keep a human in the loop.
Speaker 2:Yeah.
Speaker 3:Yeah. Yeah. And I don't think it's an 11 x problem, by the way. Right? I think it's a entire notion of the idea problem.
Speaker 3:Here's another tricky part. Let's talk about and I you us three have talked about this privately, but like, you only grow to a hundred million dollars in ARR the way Cursor did by being self serve.
Speaker 2:Mhmm.
Speaker 3:Right? And some of these AI first companies are incredibly self serve, meaning your CAC is extremely low, your onboarding time is very low, you can grow really quickly. That's a double edged sword for a bunch of different reasons, right? But now let's think about the AI SDR. Not only do you have this high potential for a mistake, the onboarding is a whole thing.
Speaker 3:You need like a full customer success team. You need constant check ins. The amount of OpEx you're dedicating to maintaining an existing customer with a bad churn rate, that is not the profile of an excellent software business. Does that make sense?
Speaker 1:Yeah. Yeah. I mean, overall, I feel like the the risk to what AI is doing to these high growth startups is that we're seeing conversion rates go up, ARRs skyrocket, but churn rate also goes up, and that's the real, underlying question here because we have so few months of churn data on this new generation of companies that look very different and have different switching costs and different installation costs, and and there's a new hot model every two weeks. And so people are bouncing around a lot.
Speaker 3:And so there's like three buckets to me as like a very boring software investor. You have your very high self serve
Speaker 1:Mhmm.
Speaker 3:Very sticky, low ACV, and a low CAC.
Speaker 1:Mhmm.
Speaker 3:At his Cursor, I remember correctly, I don't know if they spent a dime on marketing. Right?
Speaker 1:ACV couple of ago, they said they'd never spent a dime on marketing. But at some point that will change, I'm sure.
Speaker 9:But Yes.
Speaker 3:Yeah. And so think about that. You're high self serve. You have no customer success. You're very sticky.
Speaker 3:Your contract sizes aren't big, but it doesn't matter because your CAC is low. Yep. That's $100,000,000 of ARR in two years. Yep. Right?
Speaker 3:Now let's think about a business like Salesforce. Non self serve, extremely high ACV, and very sticky. Also a good software business. Now, let's think about an AI SDR software company. No self serve, many touch points, worse gross margin because you have LLM calls and you're depending on somebody else's email and contact database, high CAC because, again, you don't have this amazing self serve option, and as we all know now, bad churn.
Speaker 3:Mhmm. That's
Speaker 2:a new What is what is, in your view, the future of enterprise sales broadly? Is it is it just back to basics, golf courses, car clubs? Oh, okay. Know, you're just, you know, broing down and you you know, you meet you you you just become boys with the buyer.
Speaker 1:Yeah. Le Mans, the best deals in software we've at Le Mans and f one and all these different places.
Speaker 3:I think there's no substitute for that, Jordy, for a million dollar contract. There's no substitute. What I do wanna highlight is, on the notion of the AI SDR, the idea of LLMs automatically market mapping and targeting your personas but not sending the emails is obviously high utility. Right? Like, that is a good thing.
Speaker 3:So I think that the future of, like, really high ticket software sales is probably LLM assisted market mapping and, like, persona identification. Right? And then the golf course, right?
Speaker 1:I love it.
Speaker 3:Only problem is that first step, that's not a venture backable company, gentlemen. That's just a really good feature of ZoomInfo or Apollo or any new market entrant. Right?
Speaker 1:What do you think about the cursor model for SDRs? And so it's something I remember there was a company called Streak that was a CRM that plugged into Gmail, and it was very self serve. Anyway, the idea was you're a small company. Maybe you've just been tasked with sales. You don't even have budget from your boss.
Speaker 1:You just wanna speed things up. You plug into Streak in your Gmail account, and all of a sudden, you can do some mail merge and some automation. Cursor for SDRs might look like some email generation functionality, but it's very much that Centaur model where the human's working alongside the AI. Could that be the next hundred million ARR company in the next few months?
Speaker 2:Well, yeah. And to be clear that the sort of, like, AI sales copilot probably has 50 companies coming at it. Yeah.
Speaker 1:But I'm curious. No, I think we're I think we're actually the first ones to ever think of that, Jordan.
Speaker 3:Yeah. Yes.
Speaker 1:Let's incorporate right now.
Speaker 3:You know, I like to think about I like to about I like to think about this. Coogan's law, this also needs to be coined. I don't know what to call it yet. For an AI product, how many times per day does it call an LLM and derive utility? So let's think about Cursor.
Speaker 3:You're constantly coding, maybe three hours of deep coding work a day. You're hitting an LLM API constantly, or at least once per ten minutes, let's just say. Great. AI first software, sticky. Let's go back to what you said.
Speaker 3:With the notion of an AI SDR self serve, to me, the utility is how many times are you really hitting an LLM per hour, right? I don't know, right? And so to me, I think that there is going to be a self serve AI SDR feature that is nice. Happenstance from Y Combinator did catch my eye. I don't know if you guys saw that.
Speaker 3:No. Great tweet about it. It caught my eye. Doesn't seem like a hundred million dollar ARR business to me yet, right? We'll see.
Speaker 3:Good luck to You know, I think Happenstance is very cool. I don't see it being a hundred million dollars of ARR this year or next year. Right?
Speaker 1:Gauntlet's been thrown. Lapestance, you gotta do it. You gotta hit a hundred million and come on the show to prove Yeah. Carried no interest wrong.
Speaker 2:Prove me wrong. Last question, our mutual friend, Jeremy Giffon likes to talk about the sort of iron law of the business universe which is like if you grow revenue just shockingly quickly, eventually, you know, you might fall back to earth or you you could potentially lose it just as quickly. So what's your take on, you know, generally on some of these various, the cursors, the windsurfs, etcetera? Do you think that revenue, do you think they can get to a point where they sort of have a durable moat or are they going to just be forever relegated to, you know, extreme competition?
Speaker 3:I get a lot of I I have a lot of VCs who I I talk to in my network that ask me that all the time, right? You know, here's the real question, and I think let's just cut straight to it. If Cursor hits $300 or $400,000,000 of revenue, could they IPO, and would the share price be supported, right? Let's cut all the way through it, right? And and and and I think that the answer is it could go the way of Slack.
Speaker 3:Right? It's a double edged sword. The the and and I think Jeremy's right. My love. Shout out to Jeremy.
Speaker 3:I think he's completely right. It's a double edged sword. There's no way around it. Right?
Speaker 4:Yeah.
Speaker 3:That as soon as you gain that that person as a customer, you could just as easily lose them. You know, I think that that there could be a Slack Teams situation that plays out with Cursor, right? That classic Slack is amazing. You know, Slack is is is the trailblazer, and all of a sudden everybody realizes Teams is just fine, right? Yeah.
Speaker 3:And and Microsoft just decides, you know, it's time to come for them. I think the same issue could happen with Cursor on a variety of dimensions. Yeah. I I can't say with any confidence that Cursor's gonna IPO. I do think it could get acquired for a, like, gangbusters deal.
Speaker 3:Like, Right? I don't think it's an IPO worthy company given the churn rate and the the the potential for Microsoft or any any of the big kind of like tech distribution companies to to go at them. Think that it's a double edged sword. I could eat all those words. They could IPO next year.
Speaker 3:What do I Right?
Speaker 2:We'll see. We'll see.
Speaker 9:We'll see. You gotta get on
Speaker 2:with Taipei. It's been fantastic having you. Close out the show with us. Let let the audience know to go give us five stars on iTunes and Spotify. Or not iTunes, Apple Podcasts.
Speaker 1:Apple Podcasts.
Speaker 3:Five stars. Five stars for
Speaker 2:these guys.
Speaker 1:Thank you, everyone. Said it.
Speaker 2:Thank you for joining the show. Is fantastic.
Speaker 1:We'll see
Speaker 2:you tomorrow. Everybody. Have good day.
Speaker 6:Bye.
Speaker 2:The man.