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, 03/18/2025. We are live from the Temple Of Technology, the Fortress Of Finance, the capital of capital. This show starts now. We got a great show for you guys today, folks.
Speaker 1:And we're kicking off How are feeling today, John? Q and a. I'm feeling pretty bad. I was on a flight for six out of the last twenty or eight 12 out of the last twenty four hours
Speaker 2:back. Were bummed because you didn't get any paparazzi shots. No. Right? No.
Speaker 2:There was nobody
Speaker 1:There was no one taking pictures of me. Yeah. I saw
Speaker 2:Well, that you know of.
Speaker 1:Yeah. That I know of. I I I saw some some paparazzi shots hit the timeline.
Speaker 2:I wanna see I wanna see a video leak from a from a Delta, you know, coast to coast flight where you're arguing about how could you not have Dom Perion on a flight?
Speaker 1:Just berating
Speaker 2:the stewardess. Yeah. Then you get
Speaker 1:This is unacceptable.
Speaker 2:And you get exposed for not flying private.
Speaker 1:Oh, yeah. Yeah. It just it just destroys my entire career. Yeah. I just get laughed out of the podcasting world.
Speaker 1:Hopefully, it never happens. Well, we we we actually got some questions from viewers. One of them was, what was John doing in Washington DC yesterday? And I just want to address, you know, people have been saying like, oh, maybe John's like a political power player or like a kingmaker.
Speaker 2:Many people have been
Speaker 1:saying that. He's like pulling the strings behind the scenes. And I just want to categorically deny those accusations. There's no evidence
Speaker 2:to that and it's not The accusations have been very widespread. Yes. And seem to have a bunch of independent sources Totally. All been sort of saying the same thing in different ways.
Speaker 1:Yeah. Teddy Schleffer at the New York Times has been sniffing around. Julia Black has been sniffing around at the information. But it's not true. I wasn't in DC pulling strings, although I was doing some lobbying specifically.
Speaker 1:I mean, we've been podcasting for a couple months now.
Speaker 2:It's
Speaker 1:been going really well. Recently I've been getting very, very worried and very scared about the situation with podcasting, mainly about you know, what happens if the power that accrues to podcasters just keeps accruing exponentially. Could we be in some sort of like podcasting doom scenario?
Speaker 2:Yep.
Speaker 1:And I think we need the government to step in and regulate and create kind of a government sanctioned monopoly for podcasters. Yeah. That's right. Know, normally, like, normally, I'm
Speaker 3:a free You're
Speaker 2:normally against regulatory capture. Totally. Specifically in AI. A lot of AI
Speaker 1:safety was kinda over I don't believe in any of that. Overblown. But podcasting is different. I mean Yeah. It's it's right access to your brain's neurons.
Speaker 1:Yep. It's so important. And so I I I was there on Capitol Hill calling for action, saying regulate us. Make sure that, you know, you need you need a government sanctioned license to have an
Speaker 2:RSS feed. Cost yeah. It should probably cost $5,000,000 a year to have an RSS feed and, you know, really bring in.
Speaker 1:Yeah. And you should have a stamp, an approval from a government organization like the FDA. They should look at your content and say, this is not slopped. This passes the bar.
Speaker 4:This is
Speaker 1:good for America and humanity. Yeah. Also That
Speaker 2:would stop a lot of people from, you know, doing these sort of part time podcasts.
Speaker 1:Exactly. Would get rid of all that, which would be great. And then also, I've been very, very worried about, you know, just losing our domestic edge in podcasting in America. So I was also calling for a 10000% tariff on international Exactly. It's not made in America,
Speaker 2:just doesn't make sense. We're non ironically seeing this in the App Store right now. A lot of the top entertainment apps are sort of slopped content from overseas. And we need to put 10000% tariffs on those.
Speaker 1:I agree.
Speaker 2:As well as all foreign podcasts. I agree. Simultaneously need to protect the American podcast industry. 100%. Yet also protect consumers from the long term, you know, potential damage
Speaker 1:Yes.
Speaker 2:Of, you know, certain podcasters with unsavory content you know, getting out of control.
Speaker 1:Yeah. Yeah. It might have some short term pain, but I think in the long term America will be better off with a with a with a with a podcast policy that's focused on America. Putting America First.
Speaker 2:Who would be and it's possible that David Sacks could also expand into being the podcast czar.
Speaker 1:That'd be great.
Speaker 2:The only challenge is he's historically been against monetization. True. Which True. Could handicap the industry.
Speaker 1:Oh, well. Well, if you're planning a trip to DC, it is beautiful right now, you should book a place on Wander. Find your Your happy place. Find your happy place. Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, twenty four seven concierge service.
Speaker 1:It's a vacation home, but better, folks. And yeah. I mean, DC's it's a beautiful city. And you one of my favorite memories as a kid was going with my family and seeing all the different museums. It's a fantastic place.
Speaker 1:It's overlooked, I think, because people say, oh, I gotta go to France. I gotta go to Spain. I gotta go to Japan. We got it all right here. Got it all right here, folks.
Speaker 1:Stay in America. Go to DC. Mall. Visit the Smithsonian. And potentially, we might be The air selling off some of these Smithsonian assets.
Speaker 1:Yeah. It was part of dope.
Speaker 2:Smithsonian is great. Take private.
Speaker 1:Yeah. The take private of Smithsonian is gonna be great.
Speaker 2:Know? So the take private of the national, you know, other countries are nationalizing their energy industries and and sort of computing
Speaker 1:We need to nationalize our relics. Yeah. Or denationalize. Privatize them.
Speaker 2:Yeah. Yeah. There's gonna be a huge much like in Soviet Russia Yes. Know, as all these sort of state owned assets Exactly. Privatized, you know, it's gonna be a huge wealth creation event for the American oligarchs that can sort of take these treasured assets private.
Speaker 2:Exactly. Those are the future LPs of, you know, many venture capital funds. Yeah.
Speaker 1:Moon rocks, dinosaur bones, all of these things are up for sale in a more efficient run Truly,
Speaker 2:the Smithsonian is the National Air and Space Museum is like a core memory for me as a child because I just loved planes so much and was an avid flight simulator, you And so to be able to go around and walk around and sit in the sit in the cockpit Yeah. Or the cabin.
Speaker 1:And now you'd potentially be able to own a piece of that if you bought part of the private equity firm
Speaker 2:Fractionalize it.
Speaker 1:That took it private.
Speaker 2:Yeah. Or say, we're gonna fractionalize each asset.
Speaker 1:I love that. Love where you're going with public. This is good.
Speaker 2:Add some leverage into the mix.
Speaker 1:This is perfect. Yeah. This is more American than stuffing it all away in a dusty Smithsonian museum. Yeah. Let's lever these
Speaker 4:assets
Speaker 2:up. A Smithsonian economy. Yeah. You need a market map.
Speaker 1:Exactly. Exactly. Anyway Somewhere out
Speaker 2:there somewhere out there, there's there's somebody listening to the show for the first time.
Speaker 4:Yeah. You're just like, what is going on?
Speaker 1:What are they talking about? Well We
Speaker 2:lost that we lost them, but
Speaker 1:for the
Speaker 2:rest of you.
Speaker 1:We'll move on to something a little bit more practical. We got a call from a listener a question from a listener. They say they they currently work at one of the most profitable podcasts in the world. They're commuting in, and they need a car. And so they were deciding between a Tesla Model three or a Toyota Camry.
Speaker 2:Yeah.
Speaker 1:And we were talking about this off mic. We were kinda recommending, like I mean, both of those are great cars. Model three is great self driving, which we're gonna get into later with the Mark Rober scandal. Toyota Camry, also very reliable, very affordable. Not gonna lose a lot of money on that.
Speaker 1:But there is another way. Yeah. We were looking for deep value, looking for something where you could stand out, really impress your potentially two bosses at this podcast that you work at. And our recommendation was go and get a Dodge Hellcat.
Speaker 4:Yeah. And you know where you should get it?
Speaker 2:You know, some of the people are always saying, okay, what marketplaces can you get, you know, sort of the best bang for your buck with cars. Right? Because if you look on
Speaker 1:Like cars and bids or bring a trailer.
Speaker 2:Yeah. You look on like DuPont registry, prices are typically high. They're more collector Yep. Cars often. But if you go on Facebook marketplace and you just search for the term IYKYK
Speaker 1:If you know you know.
Speaker 2:If you know you know, you can find cars that usually aren't photographed super well. They look like they're kind of like hidden away in some type
Speaker 1:of Yeah.
Speaker 2:You know, parking garage or something
Speaker 1:like It's a little bit of like a Thielian secret, like contrarian thing is that a lot of people say, oh, you need the title. Yeah. But really to drive a car, you just need the keys.
Speaker 2:Yeah. They're usually priced 80% lower than market. Yeah. Yeah. And the one downside is that they don't typically come with a title.
Speaker 2:Yeah. And but for the the potential savings
Speaker 1:But if you have a Dodge Hellcat, do you even need a title? I always say when you're commuting to work, your tire should be breaking at least like three times.
Speaker 2:Yeah. But anyways, I think people are, you know, you could go out and get a model, a model Y long range 50 on from the Tesla dealership.
Speaker 1:Yep.
Speaker 2:You could go and get a McLaren. Yep. For 50. You might have to pay cash and and bring it in a duffel bag and you might not get title. Yep.
Speaker 1:But Who needs a title anyway?
Speaker 2:As long as the wheels aren't falling off Exactly. You're gonna be in a pretty good spot. And so, yeah, the the just go on Facebook marketplace search if you know, you know. Find an exotic and worry about the title later.
Speaker 1:I I would say stick with your Dodge Charger. You wanna search for blacked out. Yes. You want you want illegal tint on the front window on
Speaker 2:the Yep.
Speaker 1:On the front windshield for sure. For sure. Because you wanna make a statement. If you're if you're new in an organization, you're coming in and you're trying to let people know where you stand in the organization.
Speaker 2:Yeah, there's actually
Speaker 5:There's a
Speaker 1:screaming engine of that health
Speaker 2:care There's actually an entire Facebook marketplace apparently called NoTitle Cards. If you know, you know, it has 44,000 members and I don't know they're talking about.
Speaker 1:Yeah.
Speaker 2:But as long as the cars are in good condition. Yeah. And, you know, it seems like some potential opportunity there. Let us know in the comments if we're missing anything on this. Yeah.
Speaker 2:But seems like some great value.
Speaker 1:For sure. Anyway, if you We're gonna be having
Speaker 2:car dealership guy On the show later You
Speaker 1:can ask him.
Speaker 2:And we'll ask him what this is all about.
Speaker 1:Yeah.
Speaker 2:But he's gonna be breaking down, you know, kind of what's happening
Speaker 1:Okay.
Speaker 2:Today in the automotive industry.
Speaker 4:Fantastic.
Speaker 2:You know, and broadly how they're applying, you know, everything from AI to fintech and a lot more. Cool. So
Speaker 1:Well, if you are looking for something that is authenticated and does come with proper paperwork, maybe you should get a luxury watch from Bezel. They have over 23,500 luxury watches fully authenticated in house by Bezel's team of experts. Go to getBezel.com and check something out. There's a bunch of fantastic options. And you know who's gotta get out of Bezel soon?
Speaker 1:The Wiz founders because they just cashed out to the tune of $32,000,000,000. Yep. 64 x annualized, 32 x projected 2025 revenue.
Speaker 2:Sold to Google.
Speaker 4:What was the purchase price in Daytona's?
Speaker 1:Because probably
Speaker 2:I'm gonna run the numbers really quick.
Speaker 1:Hundreds of thousands of Daytonas? Something like that? It's a lot. I'm gonna run the numbers. Wiz was founded in '20 It's
Speaker 2:roughly one point
Speaker 1:It's a young company.
Speaker 2:1,500,000 Daytonas.
Speaker 1:Okay. 1,500,000 Daytonas.
Speaker 2:It'd be hard to imagine Yep. You know, the entire you know, maybe there's some stock considerations too, but definitely in the millions of Daytonas.
Speaker 1:That's great. That's a great outcome for them. So Google acquired Wiz, and, Wiz was founded in 2020 and markets itself as a seamless cloud cloud security platform. Is this a smart move? Says Wasteland Capital.
Speaker 1:Google is a distant number three in cloud with 12% share. I don't know exactly how distant that is from AWS and Azure. I'm sure it's, like, far, but not that bad. Google Cloud's pretty good. And in fact, they were they were supply constrained.
Speaker 1:Right? This this last year when we looked into their CapEx.
Speaker 2:Everybody loves to say, oh, we're supply. Yeah.
Speaker 1:And it needs to differentiate itself. Yeah.
Speaker 2:Just for some context. So Google is the clear number three. AWS, this is as of q four twenty twenty four, '30 percent market share for AWS, one percent for Azure, 12% for Google Cloud. Yep. And then That sounds like a power law distribution.
Speaker 2:Salesforce has 2%.
Speaker 1:Okay.
Speaker 2:Oracle has 3%. Yeah. Alibaba is up there at number Okay.
Speaker 1:In that context, this is a strategically very solid move. It gets a new standalone product that it can sell to anyone and also probably offer faster, cheaper, and better plug and play integration for its own cloud customers. Security is of preeminent importance and hard to manage, but the PR on the deal leaves a lot to be desired. It's not clear from the deal description on Google's site how this is gonna impact their growth margin or revenue profile. They gave us a lot of stupid platform buzzwords, nothing tangible.
Speaker 1:How did they value this at such a high multiple? Plus with $50,000,000,000 in annual r and d, one wonders why Google is unable to boost cloud security on its own. They are they not able to release products effectively? No. It doesn't look like it.
Speaker 1:Why can't they hire good people for all that cash? And was Google Cloud Security really bad before this? I don't know. They really need to work on this. I'd fire the PR team.
Speaker 1:The poor communication will cost shareholders a lot of money today. Also, considering the recent crash in Google share price, could this cash have been better spent on a buyback? Let's face it. 32,000,000,000 is only 1.6% of Google's market cap. Despite sounding like a lot of money.
Speaker 1:It's Google's largest deal ever for a strategic move, if that's what this is. It's not much as such, but some buyback support would have been nice. You need it now. Shareholders are bleeding. You have the lowest multiple among the mag seven and still choose to spend on m and a instead.
Speaker 1:And consider the struggles of their artificial intelligence. Let's face it. Gemini sucks versus the competition. It feels like many investors would have rather seen capital allocated to a better product in the AI space, like buying Perplexity, for example. But instead of buybacks in AI, public shareholders and Google product users get whiz.
Speaker 1:Okay. Now give us accelerated cloud growth targets. Give us the give the public something. Now for sure, this is an incredible exit for the VCs here, and I saw Andreessen did 1,000,000,000 on 12,000,000,000, like, a year or two ago. And so they just made $2,000,000,000.
Speaker 2:And I think Thrive was in that round as well. And
Speaker 1:There's literally a
Speaker 2:small list of
Speaker 1:The cap table's a litter literally a Silicon Valley who's who. So, yeah, we gotta ring the size gong for
Speaker 2:Yes. So The they initially had a deal in 2024. Wizz runs a secondary sale at 16
Speaker 1:Mhmm.
Speaker 2:Which was double their previous valuation. And and initially, the the initial deal was somewhere in the $20,000,000,000 range. And, anyway, so they put in, basically, all the investors into the new, collectively Sequoia, Cyber Starts, Index, Salesforce, Thrive Capital, Green Oaks, and two dozen others got Yeah. Basically, whoever invested at sixteen got a clean 2x in less almost less than a year, I think.
Speaker 1:What a cool what a cool company story too. I mean, incredibly quick, five years, I guess, from 2020 to now. Founded by Asif Rappaport. The the cofounders and the founder, Asif, stand to make more than $3,000,000,000 each from the sale. It's the biggest exit for private for a private venture backed company on record, displacing Meta's nineteen billion dollar acquisition of WhatsApp in 2014.
Speaker 1:So we had a real dry spell there for a decade.
Speaker 2:We are so back.
Speaker 1:But we are so back.
Speaker 2:Yeah, and the market, it's hard to say the market didn't, I mean, it's actually not very hard to say. The market did not love this. They wanted to buy this. Basically in the last five days wiped out roughly
Speaker 1:But it's hard to say because
Speaker 2:this deal Yeah, there's other factors
Speaker 1:but there But was the whole market's kind what I'm saying.
Speaker 2:Pretty meaningful drop in share price at the open today. And they wiped off like $5,060,000,000,000 dollars in the last five days. Great. So good point from Wasteland basically saying that if there was better messaging around this entire deal, it would be potentially bullish. Mhmm.
Speaker 2:People might like it. Mhmm.
Speaker 1:Right? So we got some other news here from the history of the company. All of the cofounders are alumni of Unit eighty two hundred, part of the Israel Defense Forces known for its cybersecurity savvy and intensity. Former Unit eighty two hundred members or 8,200, I'm not sure exactly how to say that, members have been able to attract clients and investment money from Silicon Valley in spades, and the Wizz team is now among the ranks of unit veterans that have founded highly valued cybersecurity companies such as Palo Alto Networks and Fireblocks. Raport, a 41 year old Tel Aviv native, often dons a hoodie with Wizz's logo on it in keeping with the tech aesthetic or a white t shirt, joggers, sneakers.
Speaker 1:And you'll love this part. His shoes from the from the luxury Italian brand Golden Goose typically cost more than $500. Fantastic. We love to see We love we love to see some some some fine Italian goods.
Speaker 2:With the simple hoodie and jeans Yeah. Joggers.
Speaker 1:Yeah. Can still throw us Amazon
Speaker 2:base sneakers.
Speaker 1:You can still class it up a little Let people know, hey, I'm running a $30,000,000,000
Speaker 2:The of Golden Goose too is is most of their shoes, at least the really popular ones with men are intensely worn in, know, the red and white sneakers they wear.
Speaker 1:No, those are Golden Goose?
Speaker 3:Yeah.
Speaker 4:Oh, there we go.
Speaker 2:And they look to the untrained eye 10 year old pair
Speaker 1:of sneakers. Okay.
Speaker 2:Got it. Dirty, scuffed up. And so he's, you know, he's very whoever wrote this article, the journal really put him on blast here because he was flying out of the radar prior to that.
Speaker 1:They let him know.
Speaker 2:Yeah.
Speaker 1:They did their research. They clocked those from a mile away probably. He often brought his border collie, Mika, dubbed Wiz's chief dog officer to work at the company's offices in New York and Tel Aviv and encouraged other employees to bring their dogs as well. Mika, who died late last year, had her own LinkedIn page. That's terrible.
Speaker 1:I'm so sorry.
Speaker 2:It's unfortunate.
Speaker 1:Rapaport wrote when the dog
Speaker 2:Did your dog ever have a LinkedIn page?
Speaker 1:No. He had an Instagram though. It was popping.
Speaker 2:Yeah. But why what
Speaker 1:I should have gone on LinkedIn, really.
Speaker 2:You you didn't want him to link and build Yes. And create value?
Speaker 1:Seriously, do some thought leadership
Speaker 2:Nothing happening on Instagram for dogs. Right? They get enough attention in the real world.
Speaker 1:Yep.
Speaker 2:Get them on LinkedIn.
Speaker 1:I made the wrong platform choice for sure. Sure. Rob Port wrote when
Speaker 2:the dog died that they
Speaker 1:were a power couple and called the dog the love of his life. Oh.
Speaker 2:Oh, that's sweet.
Speaker 1:He's a man's friend.
Speaker 2:He can now take his billions and spend the rest of his life
Speaker 1:Cloning the dog.
Speaker 2:You know, cloning the He needs to acquire. Don't know if he'd quite have the money to acquire. What's the woolly mammoth one? Oh, yeah. Why am I blanking on that?
Speaker 2:I forget. Something.
Speaker 1:It's not mammoth Mammoth. Or something. Colossal.
Speaker 2:Yeah. And just say, hey, look. Tech. I it seems We're
Speaker 1:this is a pure play. Dog
Speaker 2:reincarnation We're reincarnating
Speaker 3:me My dog.
Speaker 2:My dog.
Speaker 1:Love it.
Speaker 2:And we're gonna use the dog to do another $30,000,000,000 exit in five years and just sort of rinse and repeat.
Speaker 1:It's fantastic. So talks between Google and Wiz fizzled last summer. Wiz started talking to bankers again in the fall about a fresh deal. A paucity of IPOs this year prompted Rapaport and cofounders, Ami Lutwak, Ynon Kostika, and Roy Resnick to explore deal conversations with several other parties according to people familiar with the matter. None was willing to pay up as much as Google.
Speaker 1:The companies were ultimately able to improve the terms of the deal again and gain confidence that the Google transaction could overcome regulatory hurdles. Google also views the Wizz deal as something that isn't in the best interest of America's national security. The increased role of AI and adoption of cloud services have dramatically changed the security landscape for customers. The acquisition is likely to test the Trump administration's antitrust appetite, But if it clears, Wizz's security features could help Google attract more cloud customers. And we're having Joe Wiesenthal on the show in about an hour or forty five minutes, and it was very interesting.
Speaker 1:I was listening to the latest episode of Odd Lots, and he had the new the Lena Khan replacement. I don't remember his name. FTC chief Andrew Ferguson on the Trump vision for antitrust. And Yeah. It was fascinating listening to this guy.
Speaker 1:He was incredibly eloquent and could just take you on these like really long like journeys in the history of antitrust. Like clearly had really understood the foundational texts and research. It was a very interesting conversation, but maybe we'll get Joe to chime in on where he thinks this goes.
Speaker 2:Overall, win for the Israeli tech ecosystem. Sean Maguire called this out They went by the Wizards, which is a
Speaker 1:good name.
Speaker 2:Really? That's good. Oftentimes startup I like sort team nicknames can be a little bit
Speaker 1:Little bit rough.
Speaker 2:Little bit rough, but this one works. And just good for venture broadly to get this type of outcome. Totally. We need our big asset managers to get some quick wins
Speaker 1:Yep.
Speaker 2:Every now and then to just, you know, keep keep the fire hose of capital coming
Speaker 1:our Beautiful industry. Just like an IPO historic run with the Trump pump and everyone was getting ready and the market was up. Every all risk assets were way up. Everyone was like, well, everything's going public now. The the the door's open.
Speaker 1:And everyone's like, okay. Like, I don't wanna be the first one through, but, like, let's do it. And then Yeah. The market crashed, and now everyone's like, let's stay private for another decade.
Speaker 2:When you look at, you know, I'm sure that Wiz was pitched on going public by a bunch of different investment banks and I'm sure it was an option for them. That being said, you know, selling to Google and, know, is probably much better lifestyle post than post IPO. Yeah. So it makes sense and still a great way to return capital back ultimately into the ecosystem. I don't know, I'd be curious to know some of those later stage rounds where they sort of made out of some of these funds, where they special purpose vehicles, if they were in funds with that kind of timeline, they would you know, likely be recycled, you know, directly Yeah.
Speaker 2:Back in. But but
Speaker 3:who knows?
Speaker 1:Yeah. We have redeployed. We'll have to ask one of the one of the backers, see what they think. Well, I'm sure all the founders at Wiz are sleeping well, but they could be sleeping a lot better if they got an Eight Sleep. Go to 8Sleep.com.
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Speaker 1:I got a 67.
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Speaker 2:They should update their website copy to that.
Speaker 1:Early to bed, early to rise makes a man
Speaker 2:healthy, wealthy, and wise. Wealthy, and wise.
Speaker 1:Well, let's stay
Speaker 4:on the topic of
Speaker 1:acquisitions and go over to Keva Dickinson who says, what's this $300,000,000 tax benefit getting talked about? Okay. PepsiCo Poppy acquisition. You wanna break down break down this?
Speaker 2:Yeah. Just real quick.
Speaker 1:We can do the Wall Street
Speaker 2:article first. Yeah. Let's let's go through it. So PepsiCo announced yesterday they're acquiring prebiotic soda brand Poppy for 1,950,000,000.00. The soda make the Pepsi, the snacks and soda maker said the deal includes 300,000,000 of anticipated cash tax benefits and really eye popping number makes sense that sort of the big CPG brands would pay quite a lot to ultimately buy the products that are displacing them on the shelves, I think Poppy and Olipop, these companies have very, you know, very quickly made a product that was, I would argue close to as good, seemingly more healthy and consumers love them.
Speaker 2:They killed it on, you know, the merchandising side just delivering a bunch of different flavors iterating quickly. I saw somebody joking, know, the backstory here is that, Ollipop started, Poppy actually started before Olipop.
Speaker 1:That's
Speaker 2:right. But was called something else. I think it was called Mother something. Oh yeah, rebranded it. And they were an apple cider vinegar sort of tonic.
Speaker 2:Yeah. Olipop comes out and I guess Poppy allegedly was like, that's a good idea and just immediately rebranded. And I remember at the time, I was living in Venice at the time which Venice is the hub of in many ways, I feel like the hub of consumer packaged goods outside of Brooklyn maybe. Yeah. And I remember there were this was drama in that moment because Poppy had come out and basically like almost one to one copied the Olipop brand.
Speaker 2:I I'm sure there I I don't know the whole sort of like legal backstory, but I'm sure Yeah.
Speaker 1:Letters were getting and Yeah.
Speaker 2:It was like similar fonts.
Speaker 1:You know,
Speaker 2:similar fonts.
Speaker 1:Yep. And and very similar products. Like, I think the I think the main thing with at least Poppy is that they didn't go like, soda might be over a hundred calories a can. Obviously, Diet Coke is calorie free, zero calories. Poppy and Olipop always played in this, like, 25 calories per can.
Speaker 1:Some calories, but low calorie, kind of just a different positioning. And it's interesting that PepsiCo is feeling the heat from the prebiotic soda more than they did from the seltzer Because, do you remember Spindrift was really putting pressure on them? And I saw a lot of people switching to just chugging seltzers with because they have zero. I mean, you look at the ingredients on Spindrift and it's just like lemon juice and water and seltzer.
Speaker 2:There's like nothing But the sales velocity for these prebiotic soda brands just ended up being orders of magnitude Totally. More than the Seltzer market. People realize, okay, Spindrift was hot, LaCroix was hot. Poppy and Olipod came and just flooded the market. And one thing that's, I won't say one way or another if Poppy was a direct copy of Ollipop.
Speaker 2:I just don't I don't know enough of the backstory. I just know the sort of rumors.
Speaker 1:Doesn't matter now.
Speaker 2:But really fantastic example of it's rare that you see a company sort of get called out for copying someone else. Especially in CPG where the product is one thing but it's really about the delivery and the branding, the packaging and all that stuff. But it's rare to see a copycat product do you know, scale to a $2,000,000,000 outcome in, you know, in such a short amount of time.
Speaker 1:So let's talk about why Pepsi did this deal, and then let's talk about those cash tax benefits. First, soda is under more attack than it's ever been. I mean, everyone knows that the, you know, big gulp at seven Eleven is, like, a thousand calories and very bad for you. RFK junior, the new health and human secretary health and human services secretary has called soda poison. And sales of of traditional soda has have gone flat.
Speaker 1:A little bit of a pun there. Yep. PepsiCo and Coca Cola have jumped into the market dominated by Poppy and competitor, Olipop, with their own creations. Coke in February said it would launch a soda promoting digestive help called SimplyPop, while Pepsi is formulating a version it aims to sell in the spring. They'll probably cancel that because they have poppy in the portfolio now.
Speaker 1:Unlike probiotic drinks such as kombucha and kefir, which introduced is that how you pronounce it?
Speaker 2:Technically.
Speaker 1:Why? I I
Speaker 2:I've always said kefir, but maybe that's the
Speaker 1:Kefir? I I don't know. Kombucha and the other hippie one, which introduced new microbes to the gut. Prebiotic sodas contain dietary fibers that feed the bacteria already living in our systems. Olipop and Poppy use inulin fiber often naturally derived from agave or chicory roots.
Speaker 1:So that is why they're putting pressure on it. I'm not We can go back to the previous
Speaker 2:post Kiva, pretty prominent CPG investor says, what's this 300,000,000 of tax benefit getting talked about in the PepsiCo Poppy acquisition? Is the deal being done at 1.65 or 1,900,000,000.0. Yep. When you acquire an LLC, you get to step up the basis of the target company's assets to account for the difference between what you pay for the company and the balance sheet assets Mhmm. Aka the book value.
Speaker 2:In situations like Poppy where a lot of what PepsiCo is buying is brand. The step up can can be quite large.
Speaker 4:That makes sense.
Speaker 2:Often a majority of the value of the company. Yep. Pepsi here is saying, hey, people love this product. Yep. They're they're the sort of in these retail stores with our distribution network.
Speaker 2:We can get them in many more. We can get them global. Yep. We're really buying a product that people already love that has velocity. Yep.
Speaker 2:That's competing directly with one of our core products, which is their Pepsi Cola and I'm sure like Pepsi Zero or whatever they call it. So Kiva says the acquirer can then amortize the value of the step up over time in the same way they depreciate a capital asset they invest in. That amortization reduces their earnings before tax thereby reducing their tax bill for years. These future tax savings can then be discounted to reflect a present value. Presumably then Pepsi is saying they would have paid 1,650,000,000.00 if Poppy was a C Corp, but instead they were willing to pay an extra 300,000,000 for the tax savings that they won't realize over time.
Speaker 1:Interesting.
Speaker 4:As he
Speaker 2:has no in inside information, but that's what he assumes is happening. So interesting.
Speaker 3:Good for that.
Speaker 2:Either way, really big numbers. Good for the CPG ecosystem broadly. This doesn't mean it's a good time to start a prebiotic soda company even though it's a very impressive The trap with CPG has always been that, you know, it's sort of these simple tangible ideas, right? Sort of, oh, I can make a beverage, I can put it in a can, I could get it in a store? And what you don't realize is that it takes just a monumental effort.
Speaker 2:It takes a, you know, really ridiculous execution over a long period of time. Poppy also, Poppy had like pretty much a pretty ridiculous, they'd done sort of series of party rounds over the years that I think they pretty well leveraged if you look at their, yeah, if you look at their investor list, it's kind of a very
Speaker 1:Yeah, it's tough because of CPG, it's extremely difficult to build distribution into the product. There are very few network effects or flywheels that you can build. Everyone does like a refer a friend program, but it just doesn't work the same way as something that's like Dropbox that has
Speaker 4:a refer a friend program where
Speaker 1:you get something like tangible, that's free, high margin. So it just comes down to just grit and sales and distribution and advertising and out of home advertising made easy and measurable. You have to go on Adquick.com. You have to say goodbye to the headaches of out of home advertising only. Adquick combines technology, out of home expertise, data to enable efficient, seamless ad buying across the globe.
Speaker 1:That's really what it takes to succeed. And so that's what I would recommend to the Poppy team and and the folks at Pepsi. You know, they're gonna have a lot more money on their, in their marketing budgets. And, you know, I'm sure you're listening Pepsi CMO, like go to Adquick right now and just full set. Just send it all on
Speaker 2:Well, know, have a flavor called Pepsi Max. And so they could lead and, you know, literally buy every single billboard on Adquick for Pepsi Max. And sort of max out that Just max it out. Platform.
Speaker 1:Max it out.
Speaker 2:Max it out.
Speaker 1:And if you're a founder that's working on a consumer good, go buy a billboard, go viral, have some fun with it. Talk to the iQuick team. They will get you set up. They will.
Speaker 2:I I have a buddy who really noticed that out of home demand Mhmm. In LA dropped dramatically after the fires.
Speaker 4:Oh, So
Speaker 2:he just bought up pretty much he has a, you know, a 9 figure revenue CPG company. Love it. He bought up basically every Yeah. Grade a billboard in all of The Jeremy Defon of billboard buying. Yeah, special situations guy.
Speaker 2:Yeah, I'm into it. And the amount of just like attention he received off of it was insane. I mean, single day there was, you know, tons of people taking pictures.
Speaker 1:It's one of those things that's, like, really, really hard to measure because you'll get, like, text messages from people that just, your company feels more real. It's similar to PR and press where it's hard to measure, but that person who's considering joining your company, they see the billboard and they think like, okay. This is a more serious company. Yeah. Or, you know, you know, potential distributor, potential investor sees it.
Speaker 1:It just makes you feel more like you've broken out of just, oh, you exist in this hyper targeted, you know, online flywheel that might be working, but you do
Speaker 2:see what else makes it more beauty out of home versus traditional media is you don't have to talk to journalists. Can say whatever you want. Add quick. You know, just sign up and do it. Anyway, should we talk about this, Mark?
Speaker 2:Yes,
Speaker 1:we should. So Mark Rober put out a YouTube video, testing can he fool Tesla's full self driving system. And, I mean, it's a very funny idea. He built a wall that looks like the road straight out of Roadrunner and Wile E. Coyote.
Speaker 1:And, of course, the Tesla, which is using a camera, is fooled, and smashes through the wall. Completely, you know, impossible situation, not something that you should be worried about if you are purchasing a self driving car. But it was extremely controversial because
Speaker 2:I don't know if you have any enemies, like Like, wild coyote. Style.
Speaker 1:Or I guess the roadrunner is the one who puts it out. Right? So Do you have any enemies like If you're feuding with someone with Roadrunner strategies and aesthetics, then, yeah, maybe stay away from the Tesla. But if you're not, you're probably fine. But Is
Speaker 2:there another was there another what what was the other company that was?
Speaker 1:Luminar. And so that's another interesting thing. Luminar founded by Austin Russell, a Teal fellow, took the public company public during the SPAC boom. I also believe Luminar's Austin Russell at one point, he was trying to buy Forbes. And at another point, I think he bought the succession house that burned down during the fires.
Speaker 1:I think that was him.
Speaker 2:Right? Hundred hundred million dollar
Speaker 1:house or something like that.
Speaker 2:And so
Speaker 1:the stock has been it fell from its SPAC peaks. It's down at around $213,000,000 now. And I as a market cap and I think the company was at one point valued in, like, the 4,000,000,000 range like most of these SPACs. And so, Luminar sells LIDAR for self driving car companies. It was a very hot topic, very hot product during the self driving car boom.
Speaker 1:There was a question, okay. If the if Waymo really takes off and or something like it and Luminar is one of the providers, well, then Luminar is gonna be a really key component in the supply chain. They'll be a very successful company. Obviously, the stock is down. But since that Mark Rober video dropped, the stock's up 27%.
Speaker 1:And it's very interesting the way it's filmed because they actually they're using a Lexus SUV for the LIDAR car, but they but they black out the logos. So you can't see like, you can tell if you just don't
Speaker 3:want a
Speaker 2:Lexus look like Luminar has not really made progress on getting back towards its 2020.
Speaker 4:What was the peak?
Speaker 2:February twelfth of twenty twenty one, it peaked at $565 a share.
Speaker 1:Wow. You're on public.com looking at that?
Speaker 2:Yeah. Okay. It's at $0.6.70 right
Speaker 4:now.
Speaker 1:Wow. It's down 99% still.
Speaker 2:So if you loved Luminar at $565 a share, you're gonna love it at six Wow. No. But this seems like an interesting strategy to potentially get retail investors reengaged
Speaker 1:with Totally. Totally. And so let's go through kind of the story here. So Alex Finn breaks it down in what is a pretty controversial thread. I think pretty much every single one of these tweets that he posted got community noted.
Speaker 1:But he does do a good job of just kinda laying out exactly what happened. He says, you know, Mark Rober's built one of the strongest reputations on social media. Absolutely true. I've talked to Mark briefly in a clubhouse room. Very nice guy.
Speaker 1:You know, Mark's background is he worked at NASA. Just total science guru, like, you know, just science nerd. He just loves doing these little tests, has has grown this massive YouTube channel, where he kind of tests different scientific ideas. And and Alex Finn is claiming that today he obliterated it all with one eighteen minute video. It's a story of greed, deception, and cowardice.
Speaker 1:And you can tell from the writing, like, that that this is, you know, this is as clickbaity as a YouTube video, but it got 90 k likes and 22,000,000 views. So Mark is a longtime YouTuber who spent years accruing over 65,000,000 subscribers. That is a massive, massive number. He was the MrBeast before there was a MrBeast. And then he says yesterday, he let money, politics, and greed get in the way of all that.
Speaker 1:Mark put out a video called can you fool a self driving car? The concept is is simple. Drive a drive a Tesla in full self driving mode on a road where there's a wall painted like a road. There's actually six tests he he does. One is just there's a there's a mannequin with a kid in the road, then they sprayed some water, then they sprayed some fog, then they had the the kid pop out at the last second.
Speaker 1:They did a number of different tests to kind of show different scenarios. And basically, gist of the video is like LIDAR succeeded in six out of six and the Tesla succeeded in, I think, only three out of six. But the Tesla fanboys really came out in strongly against this, and there are some, you know, reasonable critiques of this. So Alex Finn says, wrong. The video was filled with deception, lies, and illegal undisclosed advertising.
Speaker 1:In the video, Tesla does not detect a wall and goes right through it. On top of that, there's a mannequin that gets absolutely nailed. It is very funny. The but there are a few things Mark doesn't tell you. First of all, he lied about full self driving.
Speaker 1:He didn't even use FSD. He used autopilot, which even Tesla admits is an older, not a strong technology. And this is where it gets really confusing because, obviously, in the context of, like, a highly edited YouTube video, Mark Rober's not giving you all of the details on, like, this is the exact hardware I'm using. This is the exact software I'm using. I've updated the software.
Speaker 1:Here's how I'm engaging it. Like, it's edited to be entertainment. And so it's pretty it's pretty hard to tell exactly what's going on. There's there's actually a ongoing debate on whether or not he deactivated it by accident or on purpose before it hit the wall as opposed to whether or not the system disengaged. And, technically, if the system disengages, you have to be ready to step on the brakes, and that's the that's the car signaling to you, hey.
Speaker 1:I need you to take over. It's time for you to press the brakes. And so if you don't press the brakes when the car tells you to press the brakes, it's kind of on you, kind of goes back and forth.
Speaker 2:Alex's writing is really funny saying he sold his soul.
Speaker 4:I know.
Speaker 2:He betrayed his country by a
Speaker 1:time He betrayed his country.
Speaker 2:By the most American made car company in the world. He deceived his entire audience all for a paycheck.
Speaker 1:So it's so sensational. I love it. But Yeah.
Speaker 2:I mean
Speaker 1:So so in the description, they do Mark Rober does mention, thanks to Luminar for allowing us to test their LIDAR equipped car. They provided the vehicle for testing purposes, but no compensation was given, and this is not a paid promotion. And so it turns out that I I think Austin Austin Russell and Luminar and Mark Rober are, like, independently connected and, like, kind of friendly. And Russell had donated to one of Mark Rober's fundraising efforts, and it seems like they're just kind of, like, buddies more or less. And I think the other, like, subtext here is that Elon has just become such a lightning rod that if you are in the business of just getting attention and getting clicks, you can get millions and millions of views on YouTube right now with any video attacking Elon because the the the audience is just so ravenous for something to push back against Elon's new kind of political arc.
Speaker 1:And so I saw a video by a a a livestreamer who's just sitting there just talking about Tesla and what the stock's done. 2,000,000 views. And he normally gets, like, 400 k views on a video, but, like, the Tesla stock crash got like 2,000,000 views showing that like there's super high demand for this type of like anti Elon content on YouTube right Everyone who's a YouTuber can see that. And even if you're not anti Elon, like for a long time, there was a whole sub niche of like, you put Elon with a clown nose on him and you say like Elon's tunnel company is stupid or that doesn't make any sense. Or like Tesla just crashed or,
Speaker 2:like Why would you wanna go underground?
Speaker 1:Yeah. And then and then there was another genre of, like, Tesla glazing videos that got millions of views that were, like, the test Elon Musk just announced nuclear reactor. It's confirmed. Like like, this changes everything. And they would just produce completely fake videos, but pro Elon because they were, like, pro Elon people that would just click on anything that was pro Elon.
Speaker 1:And so Elon's just become this, like, vortex of content nonsense. But even the big YouTubers are clearly feeling that. Johnny Harris, this video essayist, when Elon started getting political, wanted to do a deep dive on, like, how did he get here? What's his evolution? Like, you want to just address the things that are in the news, and Elon is in the news.
Speaker 1:And so very, very, very controversial. We have a post from Nick Carter here. I don't know if you wanna read that, but, he says, I'm not a big I'm not a I'm not a big Mark Rober fan and not a Tesla fanboy at all. Have never owned the stock or the car, but Tesla's but Tesla has a case if they wanna sue him for this video. It's clearly deceptive with the aim to disparage Tesla, and that was kind of the the vibe on Axe.
Speaker 1:But, overall, wild story.
Speaker 2:Yeah. It's an interesting position for Tesla to be in because suing a big creator is not gonna necessarily get you more fans.
Speaker 1:Totally.
Speaker 2:It does feel like the right way to do it is to potentially have the engineers just do like an entire breakdown. Like, if you did a two hour breakdown of the video and were pointing out, you know, here's here's why this scenario, you know Yeah. We're not building these cars for the sort of road.
Speaker 1:Exactly that. It it it it's literally just a trade off between do you want a cheap self driving car that is susceptible to Roadrunner scenarios? Or do you want an expensive car that is Roadrunner proof? And most people will say, yeah. You know what?
Speaker 1:Like, I could I could wear a five point racing harness and a helmet every time I drive. That would be safer. But, like, I can also just wear a normal seat belt and an airbag and, like, try not to crash. Drive safely. Like, the the the there there's obviously a spectrum of capabilities with every one of these vehicles.
Speaker 1:The LiDAR thing, I mean, Elon's been beating that drum for years saying anyone who's using LiDAR is doomed. Like, it has its own edge cases. I think it doesn't work in maybe the rain or something like that. The rain confuses it. And so it has its own drawbacks, but it's also very expensive.
Speaker 1:And so unless you're running a Waymo style business where it's fine if the company if the car has 500 k CapEx, it hasn't made sense. I've always heard that and been like, but can't we just make LiDAR cheaper over time? Like, it has to be possible to make that cheaper. Like, Starlink's making million or like, Starlink's making millions of satellites.
Speaker 2:Or is the right system to leverage both because you want to manage all the different edge cases and be able to work in different environments. Yeah. Who knows?
Speaker 1:George Hodz. George Hodz. Yeah, talked to him about this.
Speaker 2:He's a proponent
Speaker 1:of it. And he just said like, look, how does a human drive? Two eyes, two ears, two hands, two feet. That's all
Speaker 4:you need. Ears and stuff.
Speaker 1:Yeah. And and, no, he even said, like, it has, like like, the Kama AI self driving kit that you attach to your windshield that adds self driving functionality to your car, it has a mouth because it breathes air to cool the CPU. He sees it as, like, a human head. That's it's very fun. Very cool person.
Speaker 1:But, yeah, he he just says, like, fundamentally, like, we don't have LIDAR, and we can drive cars. Therefore, software must be able to drive cars with just two eyes and two ears and, you know, a couple other things, and that's it. So, it'll be interesting to see where this goes. It'll be interesting to see if any car companies see this demo and say, yeah. Let's roll that out.
Speaker 1:Because I think everyone wants more competition, and no one wants less safe vehicles on the road. And so, the most the my most disappointing thing was that they used this, this Lexus SUV to demo the LIDAR, and it seemed to be a good system, but you can't buy that car right now. Like, if you're if you're driving behind a Lexus, they're and they engage their autopilot. Like, they're just as likely to crash into you as anyone else because they they don't have these systems engaged yet. At least I I I don't think they have it on offer yet.
Speaker 1:There are some there are some companies that are obviously working on it.
Speaker 2:But We gotta talk to Joe about Tesla.
Speaker 1:Oh, yeah?
Speaker 2:And the stock. Okay. Where does it go from here? Okay. We had, I'm just curious to get his
Speaker 1:Yeah.
Speaker 2:Just like analysis on obviously, he's not a, you know, hedge fund manager, but it's such a stock that that trades on the future, Elon's Yeah. Elon's popularity.
Speaker 1:Yeah. You're talking about Joe Weisenthal. Right?
Speaker 2:Yes.
Speaker 1:Yeah. I mean, from what from what I know, I I've only talked to him, like, once, but it seems like he's a person that takes investing seriously and thinks about multi asset investing. He prioritizes industry leading yields. You know, he would only use a platform that's trusted by millions, and that's why, if I were talking to him, I would recommend that he set up for public.com.
Speaker 2:That's right. Fantastic choice stocks, bonds, crypto, options, T bills. You can get itallAtpublic.@public.com. And, we're we're
Speaker 1:I'm excited to talk
Speaker 2:to we've got a a video with with public in the pipeline that that I'm very excited about.
Speaker 1:Should we make that video over the top anti woke potentially, kinda do like the Solana thing.
Speaker 2:One way to get a lot of attention with with an ad in 2025 is to make it so anti So bad. People decide, oh, I'm actually woke.
Speaker 1:I'm actually not liberal now.
Speaker 2:So if you missed it yesterday, Solana put out an advertisement. What was it called by the blockchain put out a Solana blockchain. The foundation.
Speaker 4:The foundation.
Speaker 1:Put out an ad, and Sam Lesson broke it out here. He was a early Solana investor, and he says the Solana ad completely comically misunderstood the 2025 media assignment reauthenticity. I love Solana, and I actually agree with a lot and not all of the points See
Speaker 2:the investor in Solana.
Speaker 1:Yeah. Wow. But let's be honest. It's a terrible ad. Hilariously terrible.
Speaker 1:The tone is completely wrong. They were right to take it down even if the Internet and, of course, the blockchain in particular never forget. Lowell irony. The reason it doesn't work is isn't the content. It's that they used actors in a polished scripted scene.
Speaker 1:That is completely wrong in 2025. Interesting take. I don't know how much I agree with that, but I'm getting there. What people care about, what works in media's authenticity, warts and all, is real people in raw form speaking their truth. I'm not suggesting it, but if the Solana leadership had made the exact same points in a speech on the street, like them or dislike them, the content would have worked.
Speaker 1:When other tech leaders make these points in their own voice, it works. But this these points packaged in pristine background with scripted actors, it honestly just shows whoever made this completely misunderstands the moment in how media and comms works in 2025. It's the opposite of going direct.
Speaker 2:Your take on it was that they just seemingly planned the ad, Like, when Trump was elected, it took a while.
Speaker 5:Do remember when
Speaker 1:the Jaguar rebrand happened and everyone was like, oh, they expected Kamala to win?
Speaker 2:Yeah.
Speaker 1:And it felt like a very Kamala coded ad. Yeah. This is kind of the same thing where it's like, oh, they they greenlit this as the day Trump won. Yeah. And they didn't realize that there would be, like, kind of a reevaluation of things post and, like, there'd be a settling in period.
Speaker 1:But, yeah, I mean, these these ads, like, if you go can find it because it's been somewhat taken down, but it's still up there.
Speaker 4:Yeah. It's
Speaker 2:Yeah. Everybody was saying you you Solana deleted it, but they're like, we will not let you forget this ad.
Speaker 4:I never forget. I
Speaker 2:wish I'd I'd wanna have the actor on the show. Yeah. That'd be fun.
Speaker 1:But, yeah, mean, the the the an ad like that, it's like clearly shot on cinema cameras, professional lighting, makeup, hair, script, all this stuff. Like, it takes months to get something like that made. They didn't they didn't use just some some film school kid to whip it up, which they probably should have. It took a long time. And so by the time it got through all the reviews and all the post processing and editing, color grading, and sound mixing, it was it had missed the mark.
Speaker 1:Like, might have been edgy. I mean, really, got to go back to, like, Coinbase in twenty twenty twenty one saying, like, hey. We're mission oriented. And even that was different because the the the Coinbase, the Brian Armstrong piece about Coinbase was they were not saying we are anti woke. They're saying we're just mission oriented.
Speaker 1:We're apolitical. Yeah. We're not it's not they weren't saying, hey, we're right wing now. Yeah. It was like, we're not left wing.
Speaker 1:We're not right wing. We're just crypto apolitical, like, and we're gonna donate where we need to just on crypto stuff. We're gonna stay focused. And, like, I liked that, and I think that was good. And I think that And
Speaker 2:they were dealing with internal sort of mutiny Yep. You know, people similar to what happened to and a lot of big companies were experiencing that.
Speaker 1:So they had to kind do something. And I and I looked at Crusoe Energy launched a video yesterday, kind of reintroducing themselves as a producer of energy and data center capacity for
Speaker 2:Brother Justin Mair's first angel in
Speaker 1:the studio. Oh yeah, that's right. That's right. Chase Lochmiller, the CEO over there. And on one hand, like you watch this Crusoe energy video and it's like, it has like a very corporate vibe.
Speaker 1:It's somewhat stock footage but it's just very clear what they do and what they
Speaker 2:care It's authentic.
Speaker 1:It's authentic. And I'm like, this is amazing. This is actually what business is about. They just care about their business. And you know what?
Speaker 1:I don't know what the political statement is here because it doesn't need to be a political statement. They're just saying, look. We wanna build data centers. Yeah. That's the business that we're in.
Speaker 1:We're gonna do it. And Yeah. We're excited about what people will do on top of those data centers training AI, and they have some pictures of people in health care settings that could benefit from AI and financial settings that could benefit from AI and, you know, all these different things that could benefit from data centers. But at the of the day, they just say, we're Crusoe, and we're and we're building the next generation of data centers. And I'm like, I'm so here for this.
Speaker 1:This is so refreshing.
Speaker 2:And if you love big data, you're gonna get excited
Speaker 1:about Yeah. And I actually do.
Speaker 2:You love energy.
Speaker 1:I love energy and I love big data. I was very happy with that.
Speaker 2:If you love leverage.
Speaker 1:Yes. And let's go to Dylan.
Speaker 2:Yeah. I can bring this down. So Dylan says, this should have been the Accelerate America ad. Solana is about builders, like, a 22 year old, dev born to Sri Lankan immigrants putting real world assets on chain. Still one of the projects I'm most proud of.
Speaker 2:So, and this is referencing a video. You can go watch it. It's capital.xyz/founders. We made this video in 2022 highlight highlighting Mary Gunaratte. And Mary has a very very cool crypto company.
Speaker 2:She's been building on Solana from day one. She has this amazing story. Yep. And and this ad sort of breaks it all down. And not an actor.
Speaker 2:And this was very You
Speaker 1:just talk to a building. You are building.
Speaker 2:Yeah, very real story. Mary is not, you know, doesn't bring politics onto the blockchain, you know. It's like
Speaker 1:Let's keep politics out of meme points,
Speaker 2:delivering value. And I'm proud to have be an angel in our company.
Speaker 1:Let's keep politics out of the pump and dumps and out of the rug pulling and out of the meme coins and out of the pumped out funds. Let's just keep it clean.
Speaker 2:Except except politics definitely got to the onto the chain. Trump coin. Through Trump coin, Melania coin. You remember Joe Biden and all these other things.
Speaker 1:Just keep politics out of it. Keep politics out of everything. I'm over Anyways,
Speaker 2:I'm sure Solana is already working on their next ad. Yep. The comeback ad. Yep. Cool.
Speaker 2:High opportunity.
Speaker 1:What it's worth, like, I I've I've done a whole deep dive on the founders. And although their marketing seems to be missing the mark, like, I think that they're really, really talented engineers. And their whole story of of working on wireless networking and high performance computing, like, I I don't even know how much we could say about, like, is it not decentralized enough? Like, maybe that's a good argument for or against Solana. But I think, like, the founders are just interesting people, but they they have so much attention on them because it's such it's like, it's not just a huge pool of capital, but
Speaker 3:it's also like where people
Speaker 1:make the huge wins and huge losses.
Speaker 2:Here's the play. If you wanna make a statement around innovation in the future, take the Smithsonian National Air and Space Museum private, put it on Put all those planes on chain. Planes on chain.
Speaker 1:We need planes. Mean, call Mary. She's putting real world assets on chain. Right?
Speaker 3:Yeah. This is Fantastic.
Speaker 2:Mary takes over the CEO role at Foundation.
Speaker 1:Takes It becomes a it becomes a private equity
Speaker 2:firm. And
Speaker 1:Yeah. Kind of rip out all, like, the decentralized And I'm
Speaker 2:sure it would trade at, like, 400 x book value
Speaker 1:Fantastic.
Speaker 2:Of the underlying planes. And that is a real financial innovation there.
Speaker 1:Well, we'll we'll close the last comment on the, on the Solana thing. Joe Wiesenthal, who's coming on the show in fifteen minutes, he says, he's he's sharing a post from 2020. I wonder how many Silicon Valley people are inspired by that Marc Andreessen post on now is the time to build to get working even harder on their next generation decentralized stablecoin protocol. And Joe Eisenthal said this is painful, but also exactly what I joked about five years ago, especially if you make it to the final forty five seconds. Well, Solana could be in trouble.
Speaker 1:They need to control their costs, and so, you know, we recommend that they get on ramp if they're not already on ramp. Time is money. Save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Next time you see a bill coming through on a credit card charge for, anti woke, over the top marketing campaign, you can just be like, hey, that's out of policy.
Speaker 4:It's out of policy.
Speaker 2:Yeah. Not approved.
Speaker 1:We we we wanna do mission driven content here.
Speaker 2:That's right.
Speaker 1:We wanna stick to the basics.
Speaker 2:Well John, do you have a battery real quick? Do got some extra batteries?
Speaker 1:I think we got Soren joining the team.
Speaker 2:He has crazy nominative determinism there. He's Soren over the skies.
Speaker 1:You. Can you bring him in?
Speaker 2:Let's bring him in.
Speaker 1:Let's bring him in. Soren, can you hear me?
Speaker 2:One sec. I have no problem.
Speaker 1:We got Soren from Niros. We have his post here. I'm thrilled to announce that Niros has raised a $35,000,000 series a led by v y Capital or VY Capital US with Sequoia, Interlagos, d three, and Keller. This funding is going straight into mass manufacturing capacity that America desperately needs. My cofounder broke the news today in front of 800 DOD stakeholders and industry leaders at Manifest Demo Day in Washington DC.
Speaker 1:We're gonna try and bring him in in just a second. He should be here any minute. He's here.
Speaker 4:We're having an audio issue. Just second.
Speaker 1:Okay. We're having an audio issue. We're working through it. Have you actually had a chance to meet Soren before? Or will he be the first I've not.
Speaker 2:What's his co founder's name? I met
Speaker 4:his Olaf. Olaf. I met Olaf. I don't know if I'm pronouncing that right.
Speaker 2:And I just want to say they I mean, we're going get into some of this stuff. They only announced both their pre seed and their seed less than a year ago, back on May twentieth of twenty twenty four. And so they've been, know, absolutely crushing. I got got a breakdown on Niros Yeah. Probably six or so months ago from one of the partners over at Long Journey,
Speaker 1:which
Speaker 2:are also having the show on tomorrow. But but crazy, crazy lineup of, you know, investors and the traction that they've seen is pretty crazy. I believe they're already deploying some of their
Speaker 4:early tech companies I
Speaker 1:went and toured his first office maybe. Small pretty small office in in El Segundo. And I'd heard that he was a fantastic kind of like maybe the number one in the world or like world world renowned drone pilot. And I was like, look, I've flown a DJI camera drone. Like, how hard can this be?
Speaker 1:Like, what am I really gonna see here? And we we we go out. We're kinda walking, talking, and we get to this park, and he puts on the puts on little the the FPV goggles and takes off and is the most aggressive drone pilot I've ever seen. And, like, there's this tree and he's circling it, like, 50 times a second. And it's just the craziest, like, swoop swoop swoop swoop swoop swoop.
Speaker 1:It it was really, really insane. Yeah. He's a fantastic drum pilot. And and what a great demo. Like as
Speaker 2:It's a high stakes video game.
Speaker 4:Like an or or a journalist or anything like that. It's it's really, really fun.
Speaker 2:Yeah. Few founders have the advantage of being able to go and give a technical demo that can display that level of capability.
Speaker 1:Right?
Speaker 2:Both in the operator and in, you know, the tech. Right? Yeah. So. Okay.
Speaker 2:Ben, how are we doing?
Speaker 4:Okay. Can hear him. He can't see you, but we're just
Speaker 2:gonna run it.
Speaker 1:Okay. So you can hear us, Sauron?
Speaker 6:I got you guys.
Speaker 1:Fantastic. K. Sorry for the lack of video. We're we're building the plane as we're flying it. You're building the drone as you're flying it.
Speaker 1:Giving us give us the update. How you doing? How was, Manifest Demo Day?
Speaker 6:Well, yeah. My cofounder Olaf was out there. He he crushed it. I mean, we we had a big announcement, so we just closed our series a funding round, $35,000,000, going straight into more American drone manufacturing. So really excited about that stuff.
Speaker 6:We also, a few weeks ago, announced our 6,000 drone production contract. So we are now officially making over a thousand drones a month, which I believe is the highest rate of any drone company in The United States. So our vision of MaaS is coming together, but there's still a long way to go.
Speaker 1:What's the main use case for these drones?
Speaker 6:Yeah. I mean, primarily, we're we're building drones that are gonna be putting warheads on foreheads. It's, you know, FPV precision strike is kind of all the all the rage right now. And, you know, our we have kind of two systems, Archer and Archer Strike. Archer Strike is the one where we're actually the warhead integrator.
Speaker 6:It's basically a modular warhead system. And then we have Archer, which is just the the plain FPV drone, and you can basically mount whatever you want on there.
Speaker 2:How do you think about scale long term? I think that's probably the the the number one question on, you know, people's mind that are following the industry. You see this sort of footage coming out of China of of, you know, not even drone specific manufacturing capacity, but when you just think of, you know, China's scale and that being, you know, one of our most obvious adversaries, you know, that's what you're up against. You're clearly not afraid, otherwise, you probably wouldn't be doing this. How do we how do we sort of reach and exceed China's manufacturing capacity over the next ten years given that they have a, you know, decades long head start?
Speaker 6:I think the question we need to be asking ourselves is what would happen if the Chinese supply chain was completely cut off, and we had to build, say, a million of these systems in a year? What would we do? What would that look like? And right now, the answer is, you know, the entire American industrial base, I think, would be would be a disaster. And even the defense industrial base would be scrambling to to make that happen.
Speaker 6:And we really need to do whatever we can to make manufacturing cool again and get people excited about working on this problem. I mean, we've been sanctioned multiple times by China. It seems like we're we're getting attention because we're doing something that is that is relevant, but there's a long way to go.
Speaker 2:You guys are literally
Speaker 6:eighteen months into this very, very long journey.
Speaker 2:So you're saying Neuros has already been sanctioned by China?
Speaker 6:We have. Yeah. We were sanctioned a few months ago for the first time, and then recently, they they reupped it. I think we're in the list with General Dynamics and a few others.
Speaker 1:It's more prestigious than being on the Forbes thirty under the 30.
Speaker 2:Yeah.
Speaker 1:I I see that as a huge bull's case. What about can can you give us a little idea a little overview of, like, what's actually happening at various orders of magnitude of scale? You said you're doing a thousand a month, I think. When I when I first met you and toured the facility, it seemed like you were putting everything together by hand. The founders were welding or soldering or doing everything.
Speaker 1:Now it seems like you probably have some machinery in there, but what is the path to, like, the lights out factory look like? There was some debate on the timeline last week about, you know, you don't wanna do too much automation too early, but, obviously, we wanna get to high production value, numbers. So walk
Speaker 4:me through that.
Speaker 6:Yeah. Automation is definitely the last step in the process, and the the first step is designing the product around this, you know, this high rate manufacturing. I think that's one of the big problems that a lot of the existing drone companies in The US run into is because they're basing off of, one, these pretty exquisite components that are, you know, tough to to source in high volumes, and they're really expensive. And then two, they just didn't actually design the airframe around, you know, these really scalable manufacturing techniques or having low human labor to be able to put it together. So that was kind of the, you know, first thing we looked at when actually designing Archer.
Speaker 6:It was how can we reduce the amount of human labor that goes into this thing. So even if we're not automating yet because things are still in flux and we're not at crazy high volumes, we're, you know, still spending, say, like, less than an hour of human time per drone that goes together. So that's really, really critical. I mean, we've been in our current factory for about a year. And in that time, it's mainly been about optimizing the the main assembly line.
Speaker 6:And it's still it's still a very manual assembly line, but there's a lot of, tooling in place to make everything really repeatable and easy. And then just the design of the drone itself is very intentional.
Speaker 1:Yeah. It it's one of those things that, you know, people might say, oh, like, they're putting these together by hand, but that could actually be the right decision given where you are. Can you tell me a little bit about, supply chain? I've heard it's basically impossible to find an American made drone motor. Is that still the case?
Speaker 1:Is there a change there? And are you leveraging any of the cool companies that we've talked to, like the Hadrians, the Rangeviews, the the three d printing companies? Like, what what do you see as, like, really beneficial to you?
Speaker 6:Motors are still a big challenge in The US. I got asked on on on X the other day, like, oh, are you guys winding your own motors? And the answer is no. We're not doing that yet. We definitely want to be part of solving that problem.
Speaker 6:And, you know, there there are some things in the works, but motors have been historically really tough. A lot of US companies are still using Chinese motors because it's not mandated by the government to to avoid them. And same thing with cameras, especially low cost sensors. We've seen there's just they're they're primarily dominated by China. And in our world, in the FPV world, really everything is kind of built on top of architectures that use Chinese chips.
Speaker 3:So Yep.
Speaker 6:Our, you know, long time challenge until we we kind of finished the work and got onto the blue UAS list was rebuilding all of all of these components from the kind of chip level, because you'll you'll look at these open source projects that a lot of, like, drone racing technology is built off of. And, oh, look at that. It's it's off of a Chinese microcontroller. Or, like, every video receiver for analog FPV in the world uses this Chinese radio module. So you have to get rid of all that, do all the engineering up from a a clean sheet, which has been a big challenge.
Speaker 6:But, you know, we're we're getting there, and it's great to see these companies that are working on the kind of like fundamental manufacturing challenges. Like, that's what I would put, you know, RangeView into the the bucket of, like, America needs investment castings, where we're we're sort of one level up, where we're we have to be really smart on our component design, but we're not actually, you know, making the chips.
Speaker 2:Sure. Do you think a lot of these suppliers over time can and should localize to a specific area? You know, China has a massive advantage, you know, with Shenzhen and, you know, a lot of DGI being a lot of being able to source a lot of, you know, components locally. Do we need that? Or is is it not necessary?
Speaker 2:What's your vision of of how these things, you know, how we get to producing, you know, millions of drones per year?
Speaker 6:That's what else Segundo should be, baby. Let's make the American Shenzhen.
Speaker 4:Let's go.
Speaker 2:Let's do it. Do you feel like, you know, you've been very successful at, you know, raising a significant amount of capital, you know, very quickly. How much, know, is there enough private investment into drones broadly? Or do we need to, you know, do do a multiple more? I I posted probably a couple months ago at this point that we it felt like we needed a sort of project stargate for domestic drone manufacturing?
Speaker 2:Like, seems like such a critical national security issue that potentially there needs to be an order of magnitude more investment in the category? Or do you feel like there's an adequate amount of investment yet?
Speaker 6:I'll say that, you know, the the capital is available to, you know, to companies, but it has to be directed really well. Because, both on the, you know, private capital side and the government side, like, my main ask to the the DOD is not to spend more money. It's to spend money in a different way. It's to mandate higher volumes of systems that are lower cost. So it's not just about throwing money at the problem.
Speaker 6:I think we have to set the expectations. And those expectations might be an order of magnitude greater than, you know, like, billion dollars goes towards buying a thousand loitering munitions. That should probably be a hundred thousand, you know, two orders of magnitude difference. So it's not necessarily about spending more money. I do think there is private capital that is ready to go, that's excited to get into this industry.
Speaker 6:On the government side, I think there are really positive shifts happening in the direction I'm describing, but that's where a lot of this will be driven from.
Speaker 2:How's the transition gone from drone pilot to CEO? I know you were running a a sort of drone oriented company in high school, so you had a a little bit of experience. Experience but does it feel like you're playing a video game when you're in Slack and you're just sort of manning the ship? Has it been pretty seamless?
Speaker 1:Yeah. Do you use Slack in the FPV goggles?
Speaker 6:That would be really locked in.
Speaker 1:It's Slack. It's iTarget plan. He's on Teams. But, Teams guy.
Speaker 6:We we we we're actually we do use Slack, but
Speaker 1:Oh, they're good.
Speaker 6:Not in the goggles. I I wish. Okay. But it it's been an interesting transition. I mean, you know, sometimes I do kind of look around and I'm like, wow, I, you know, used to just be flying drones off my back portion.
Speaker 6:Now I'm now I'm doing this. But I think I've always had this, you know, really strong natural inclination to start a company, and I've been interested in startups for a really long time. So it feels very natural. Like, I understand the exact progression of why I'm doing what I'm doing, but certainly a ton of learnings. I mean, we're also just moving really quickly.
Speaker 6:And so that comes with, you know, at times a lot of pain and a lot of a lot of lessons, but it's it's been a great journey. I'm I'm super grateful for what I get to do every day.
Speaker 1:That's amazing.
Speaker 2:Last last tiny question, will we ever see a Niros consumer product? That was an nice We're we're we're I think DGI's number one haters over here. Been trying get on the sanction. We've been trying to
Speaker 1:We do a lot of cinematic things. We wanna film them with drones, but we wanna be American about it. It's tough.
Speaker 6:Yeah. I think the the market dynamic right now is is in defense, and that's where the most critical need is. But our mission is to fix the American drone industrial base so that doesn't just, you know, that doesn't just mean defense. Right? I think way in the future, there's a very good possibility that we'll be able to replace DGI on the the consumer shelves.
Speaker 6:I would love to.
Speaker 3:That'd be amazing.
Speaker 1:Well, thanks so much for stopping by. We'll have to be back next time there's a big announcement. We really appreciate you calling in. Thanks so much.
Speaker 2:Congrats on the milestone.
Speaker 6:Thanks, guys.
Speaker 2:See you.
Speaker 3:See We'll
Speaker 1:talk to soon. I wanna go to Andrew Huberman for a bit. I mean, unless you have something to debrief on that.
Speaker 2:No. No.
Speaker 1:Let's get
Speaker 4:into it.
Speaker 1:Because you got a shout out. Rora.
Speaker 2:So out of nowhere
Speaker 1:Out of nowhere.
Speaker 2:On it was Saturday, woke up. I guess, yeah, it was around noon. He says, I find it weird that most of all the countertop reverse osmosis water filters are made of plastic. The same industry that is built on keep contaminants out of what you ingest. Ethos puts cleancleaned water into plastic, glaring contradiction.
Speaker 2:I'm excited that Rora water is metal. So, he's of course referencing to, this product here. I don't know if you can see it on the camera now, it's in the it's on the set here with us. Yeah. We developed this product extremely intentionally to eliminate as much plastic as possible from the system because we saw that the vast majority of filters that were supposedly filtering out microplastics had, you know, huge amounts of plastic used in the process.
Speaker 2:So unfortunate. Appreciate the shout out, Andrew. And yeah, we we saw a massive pop in sales from this post alone as you can imagine. And it was very cool to
Speaker 4:see. That's fantastic. Well, there's other
Speaker 1:big news from Dan Primak. He says, VCs always tell me they can't talk about active fundraising on advice of lawyers, but that may be about to change. The SEC has issued new general solicitation guidance that makes the process much less onerous for private equity and venture capital. We may not see Times Square billboards advertising new funds, but we should. But at least it's theoretically possible, they say.
Speaker 1:Firms would also be able to discuss fundraising efforts with reporters. That's huge. So next time you're doing your big fundraise, call in to TVPN live, announce that you're raising a $10,000,000,000 micro fund to rip checks into a hundred million companies.
Speaker 2:Yeah. This has always been sort of done indirectly, you know, the Yeah. Somebody will leave a fund and there'll be an announcement,
Speaker 3:you know,
Speaker 2:oh, they're coming out. But, we wanna see one zero one billboards of all the big asset managers.
Speaker 1:Percent. I mean, we talked about scout funds. You you know, you're you're a scout at a venture capital firm. You find a company, take some of their money, put it in there. I wanna see scouts on the LP side.
Speaker 1:I get comped when I when I go and solicit a bunch of the rich friends to write LP checks to you. That's what I'm interested in. Anyway, we got the perfect person to talk about this. We got Joe Wiesenthal from Bloomberg calling in. Hi.
Speaker 1:Hey, Joe. How you doing?
Speaker 2:It's our financial brother.
Speaker 3:I'm thrilled to be here with my with my technology brothers. Thank you for having me.
Speaker 1:I'm so glad to have you on the show. This is this professional professional. Know.
Speaker 3:I'm not used to this. You know what? The the last time I did any sort of, like, video call in show, my producer, Kale, who's in the room with me, he scolded me because he's like, you look like garbage in that video that you did. Because I just went down to, like, the basement here at Bloomberg, and I, like, propped up my phone, and it was weird angle. So he said, next time you do anything, just let me know.
Speaker 3:And so he got me set up. Shout out to Kale, in this really nice, this really nice studio here.
Speaker 1:I have, like,
Speaker 3:a proper ring light and everything in front of me.
Speaker 1:So You're fantastic. Can we give the viewers a little background on you? As I understand, your your passion is for finance podcasting, but you have to make ends meet by playing in some sort of band. Is that right?
Speaker 3:That's right. You know, yeah. You can't really live on finance podcasting Yeah. Alone. And so I'm in a country music band called Light Sweet Crude.
Speaker 4:Yep.
Speaker 3:And, yeah, we pass a bucket of tips around after each show. Yep. And I think the last show, I probably after netting it out with the opening act and the other members, I think I got about $10.
Speaker 4:Fantastic. Amazing. Was the key. At the size of Gong, Gong. Boom.
Speaker 1:Boom. Boom. There we go.
Speaker 3:Yeah. There you go.
Speaker 4:Gong. It's fantastic. Well, yeah. I mean, yeah. Thanks for joining.
Speaker 1:Did Odd Lots a couple months ago. It was a great show. We had a bunch of stuff we wanted to talk about today. I mean, did you see this SEC news that VCs will be about to that they should be able to advertise their active fundraisings? This is in Axios today.
Speaker 3:Oh, did did they I I I missed that today, but I'm sure I'm sure this will be wonderful. Many retail investors convinced that they're getting on getting in on the next big thing. This could only mean good things. I'm sure that the more wired checks to you guys.
Speaker 2:Think I think the idea is that if you can put a hundred thousand dollars into a fund or if you can put a million dollars into a fund, it sort of implies that you're accredited. Right?
Speaker 4:I mean,
Speaker 1:it could be less risky than some SPACs, I guess. Like, you know, you get into some diversified fund that's professionally managed. Doesn't seem that crazy.
Speaker 3:I love that. Well, there are riskier things that are configurable, so therefore yeah. No. I I get it. Hey.
Speaker 3:Yeah. Look. You can advertise literally anything else. Right? Okay.
Speaker 3:So So
Speaker 1:so I I I I I wanna know. You gotta break the news here. You posted yesterday. I have a good idea for something I wanna write in the newsletter tomorrow. I'm so tempted to just waste it as a pithy tweet right now.
Speaker 1:You put it in your newsletter.
Speaker 2:Yeah.
Speaker 1:We're gonna encourage people to go subscribe, but can you break us down? What was that
Speaker 3:good idea? I hated that Solana ad. And I
Speaker 4:Oh, yeah. I know everyone hated it, and I hate just like
Speaker 3:you if someone follows me on Twitter, I don't usually, like, jump on the thing that everyone's jumping on. I'm not really, like, my style, but I hated that ad. It had nothing to do with it being, like, anti woke or whatever. It was just like I hated the premise
Speaker 4:Yep.
Speaker 3:That, like, investing in crypto, that, like, investing in meme coins, which is the primary use of Solana, is somewhere along the land
Speaker 1:Space travel.
Speaker 3:In the same conversations. Like, we built the railroads. We landed on the moon, and we trade coins on Solana. It's like, no. I'm sorry.
Speaker 3:I don't accept that premise. It's not part of it. Yeah. And I was gonna make you know, like, there's this I the joke when I was gonna I could have just done it in a tweet Sure. Which is the real sad, which is, you know, it's like, what would your job be on the, you know, the Soviet commune and everyone imagines that they're the poets?
Speaker 3:Like, what would your job be on the, you know, the Martian landscape? And probably your job's gonna be miserable because it's miserable up on Mars. And it's cold and there's no climate. You're probably doing something with, like, trying to mine ice or something like that. Yeah.
Speaker 3:But everyone imagines that they're the guy who's gonna be like, oh, I'm gonna, like, set up the decentralized payment platform to, like, finance.
Speaker 2:Like, meme coin.
Speaker 3:That's what they're
Speaker 2:The Martian meme coin artist.
Speaker 3:Yeah. It's like, I'm gonna be the guy posting dank memes to, like, motivate the workers who are out on the out on the Martian landscape. I hated that ad. I hate the whole premise. It could have been a tweet.
Speaker 3:Yep. But because I am employed, because I need to make ends meet here at Bloomberg, I was like, you know what? I'm gonna write it up in slightly longer than 280 characters for my newsletter today.
Speaker 1:Yeah. I mean, you know, the the steel man, the salon on Mars Yeah. We're gonna need to fractionalize that ice, get it on chain
Speaker 3:That's right.
Speaker 1:Trade it. Like, this is gonna be important, I think.
Speaker 3:Yeah. No. I like, who has the one token? You gotta tokenize the ice. I get that.
Speaker 1:Exactly. So
Speaker 3:maybe Alright. Well, then I'm slightly open minded to it.
Speaker 4:We've got a we've got a
Speaker 2:working theory. Yeah. We want Doge to let us privatize the Smith Smith in the Tesla video yesterday. Do you have do you have any sort of comments on that? It felt weirdly sort of conflicted in the sense that, you know, Luminar was I
Speaker 3:don't know what the I'm sorry. I'm so online and I'm embarrassed. I miss who who is Mark?
Speaker 1:Mark Rober.
Speaker 3:I totally missed it.
Speaker 4:Yeah. Yeah. Anyway, yeah,
Speaker 1:Mark Rober put out a video testing the Tesla self driving, which is camera based against the LiDAR system from a from a rival company.
Speaker 2:We're gonna we're gonna switch this interview. We're gonna we're gonna pretend like we're interviewing a country music superstar.
Speaker 3:Yeah. She asked me about country music. You asked me about, like, Tesla. I don't know anything about that stuff.
Speaker 1:Well, well, what about, your your recent interview with Andrew Ferguson, on Oh, yeah. On the, FTC antitrust thing? I I like that. I thought I mean, my takeaway from it was that he is very eloquent and a great storyteller. He did a really good job of kind of going back multiple decades talking about Trump won and Leon Khan and stuff and, like, kind of just taking me on a tour of what's going on.
Speaker 1:But, and, also, it's very interesting that he kept coming back to, like, worker harm as well. That was kind of an interesting talking point. But first, like, what was your what was your read coming out of that in terms of, like, how things might change?
Speaker 3:Sure. You know, it's so interesting because, obviously, everybody remembers there was the huge market rally immediately after Trump won. And one of the narratives was that, you know, the FTC under Lina Khan had taken this really strict line on mergers, and mergers weren't getting done. And so it's like, okay. We're gonna finally get this green light on merger wave.
Speaker 3:I think there's two things here. So one is, like, when markets are down and risk is off, obviously, that's it's that's a main driving force for declining mergers. Right? When people are uncertain, etcetera. So that's one factor why we haven't seen this big merger wave happen.
Speaker 3:It's just because, actually, market volatility came fairly quickly as soon as the new, administration hit for various tariffs and reasons, and we could talk about that or maybe the general economy even prior to tariffs. But, you know, I think that, like, this expectation that the new administration was gonna be sort of this, like, at least on the regulatory side or at least on the deal side, this sort of, like, libertarian green light everything has not really panned out. And so it's interesting. We did a live show down in DC just last week, and it was a lot of fun. And we had the new FTC chair, Andrew Ferguson.
Speaker 3:And it's interesting because he's keeping Lina Khan's merger guidelines in place. Mhmm. He does have philosophical disagreements as he puts it. And, you know, he did this, like, fantastic history of, like, what the consumer welfare standard was. It's actually funny because so early in the interview, he actually there was a point I forget exactly what the question was, but something about Trump and the rule of law, etcetera, and the whole audience, like, started laughing.
Speaker 3:You can hear it. It's in the audio.
Speaker 4:Well, you don't know what was
Speaker 3:like, I heard
Speaker 1:Your producer, like, turned down the volume on that. Oh, yeah. So I just heard, like, a gap, and I was I they might be booing him, he's like, I get it. It's a DC audience. Laughing.
Speaker 3:Was a hostile. It was a lit it got a little hostile.
Speaker 1:It was kinda crazy.
Speaker 3:Yeah. It was like I was like, oh, boy. Like, this is gonna go off the rails. It didn't go off the rails. And then to your point Yeah.
Speaker 3:In the next question, he sort of walked through the history of the consumer welfare stun as it's been understood by, like, theorists and conservative jurisprudence over the years. And he did a very good job at that. And, actually, the same crowd that had laughed at him before gave him a round of applause for that part. So they did the the sort of, like, history of some of this stuff is really interesting. But to your question itself, like, I think his point was there is more to consumer welfare than just lower prices.
Speaker 3:Mhmm. We don't need to expand the you don't have to expand beyond consumer welfare. We just have to sort of have an expansive definition of the term. And so as he puts it, if there are issues that are gonna slow down innovation because something is anticompetitive regardless of the price, that could be a harm to consumer welfare. He did talk about the idea of harming workers as a harm to consumer welfare.
Speaker 3:So I think, like, I don't know yet. Like, it's really hard to say because the next if we get a sustained market rally at some point, we might see a bunch of deals get announced. Until there's a bunch of deals announced and they actually have to go through and green light or red light them, I don't think we really know how tough this new cop on the beat is, but, you know, he's made this point and now public and private, he's like, we're not we take this idea of corporate power as a harm very seriously. And if you think this is gonna be sort of like a Bush era FTC, you're mistaken, which I think is really interesting and probably relevant for investors both in private and public markets.
Speaker 1:Yeah. It's interesting. In terms of consumer harm, we're I it it almost feels like people are they're not saying consumer harm, but people are frustrated with the pace of AI innovation at Apple and just the fact that Apple can kinda just sit there and Siri is free. They're not raising the price, but it feels like it's underperforming relative to if it was true. But what
Speaker 3:do you think I'm actually curious your take on it. Like, why do you think that is? Because Apple must feel some angst about that, or maybe they don't because no one is gonna switch to the green
Speaker 1:I think they feel angst after John Gruber's article last week Yeah. Because they got really taken to task. But
Speaker 3:But anyone it seemed but this is what I don't get. Like, I get the impression it's not that hard to build a pretty high quality LLM because everyone seems to be able to do it. So what it is it just about, like, turning it into a Siri quality product?
Speaker 2:You just need $7,000,000.
Speaker 1:So I I think it comes down to, you know, Apple wants every they have this insane standard for every interaction has to be perfect. Right. You look at what's going on in Apple TV and Yeah. And and they're having trouble getting through the, like, awkward stage of what Netflix did where there was a lot of just, like, background, laundry TV on Netflix, just reruns of, you know, sitcoms and stuff. And Apple, everything needs to be polished almost like award level.
Speaker 1:And so they, you know, they've gotten close, but they're they're they're kind of trying to play HBO's game. And I think But it with the with the AI summaries, yeah, they could easily just vend in an LLM, then they're gonna get hallucinations. Those screenshots are gonna go out on x, and people are gonna say, look at what Apple did. It's crazy.
Speaker 3:But this is why, to me, it makes me wonder whether like, I so much of this conversation has centered around the Apple question. Why can't Apple get this right?
Speaker 4:Yep.
Speaker 3:And I keep wondering. It's like maybe this is an AI thing, which is that, like, all of us who and I use LLMs every day for sometimes work, but sometimes just out of curiosity. I'm simultaneously every day blown away. And I'm also every day like, oh, this is the dumbest thing I've ever seen. Exactly.
Speaker 3:And the idea that this is approaching human intelligence is a joke. Yep. And so the fact that, like, it can't be productized to, like, a real,
Speaker 2:Well, it's
Speaker 3:a a company that really is, like, takes the consumer experience very seriously as Apple does. Like, I wonder if that's, like, a oh, this is
Speaker 2:very simple. Here's here's an angle. Yeah. It seems like Yeah. LLMs are good at delivering sort of human intelligence, which is not always reliable.
Speaker 2:Right? Sometimes you're working with somebody that's smart and they give you some work and you're like, this sucks. Do it again. And so people are used to that dynamic. Whereas with a machine, if you click on, you know, Chrome and it opens Spotify, you're like, what are you doing?
Speaker 2:You know? And so like that's Yeah. That that kind
Speaker 1:of Yeah. Expect our systems to be deterministic.
Speaker 2:Possible. Yeah. It's possible to be blown away by an LLM when you're using it as a copilot to write stuff. But then
Speaker 1:Yeah.
Speaker 2:If you're using it to order an Uber, it just does, you know, it's not gonna do Totally. Right?
Speaker 1:Yeah. I mean I had a
Speaker 3:great hallucination the other day. Was using per perplexity to prepare for an interview. Was like and I, you know, I I find them useful. Anyway, we were interviewing some of the founders of Dimensional Funds, and I said, what are some interesting aspects of Dimensional lore that would be just sort of interesting to bring up? And he said, oh, ask them about their famous low volatility coffee that they serve at their headquarters where they claim to have, like, developed the perfect mix of caffeine and taste.
Speaker 1:Okay.
Speaker 3:Complete does not exist.
Speaker 1:It doesn't exist.
Speaker 3:Complete. I was and so I'm thinking, like,
Speaker 2:I'm not, you know,
Speaker 3:responsible journalist. I'm not gonna just, like, ask a question that an LLM. But somewhere or someday, some reporter you're gonna see on TV asks is going to ask an insane question with an insane premise, and it's because someone along the lines, I gave them a list of questions generated from AI. Yeah. And I'm just waiting for that moment because, god, if I had just, like, asked that question, what's the deal with your low volatility coffee?
Speaker 1:And they're just like, what
Speaker 3:do you You've been, professional humiliation. Yeah.
Speaker 1:Yeah. I mean, I It's
Speaker 2:like a offhand joke that the CEO made Yeah.
Speaker 3:Right. Right.
Speaker 2:At one point.
Speaker 4:No. I said
Speaker 3:my zero also, the clue was they say it said they serve it at their Santa Monica headquarters. They're headquartered in Austin. So I knew there was something off about it from the beginning. But anyway
Speaker 2:So going back a little bit to m and a Yeah. We're purely technology focused. We were covering the Wizz acquisition today, which is obviously good for the private markets. It's good for everyone from the big asset managers that, you know, got a nice two x in in less than a year. It's good for, you know, broadly, you know, SaaS broadly.
Speaker 2:You're less focused on that type of M and A and more focused on stuff like the the sort of Capital One
Speaker 3:Yes. And
Speaker 2:Discover. Like, is that the M and A market that really you know, if Capital One and Discover can happen, does that mean that M and A is really back on the menu? It's a really
Speaker 3:good it's a that's a really good question. And actually, one of the things I regret, we we we only had so much time with Ferguson is we actually so much of it was talked about tech and tech power and concentration of tech power because, like, you know, everyone on the right and the left is in some degree anxious about that. In retrospect, have we had more time? I wish we had actually spent more time on nontech things because that matters too. It just doesn't get as much attention or people don't think about power to the same degree in some of these areas.
Speaker 3:But I do think that is interesting. And it's if you look at that spread, my colleagues, I think, flagged it yesterday. If you look at that spread on that deal, that's been a complete round trip since the election. So if you wanna see, like, one chart that sort of encapsulates the sort of changing moods since the euphoria in mid November, mid December, etcetera, and then the sort of turnaround, essentially, when Trump took office, which is basically the turn. You know, I think, like, the crypto high was literally the day he had that ball.
Speaker 4:That makes sense. Yeah. Yeah. Trump meme coin. The
Speaker 1:Trump top followed by the Trump dunk.
Speaker 3:Top, Luigi's perfect. I mean, it's so perfect because, of course, it was.
Speaker 2:You wanna start if you
Speaker 3:look at that that spread chart for Capital One and Discover, you kinda just see the whole, like, oh, wait. The rethinking of, you know, how sort of markets friendly this administration's gonna be.
Speaker 1:On on economic data Yeah. I I love following you on days that are, like, the, you know, the jobs numbers and stuff.
Speaker 2:Jobs day.
Speaker 1:But I I I wanna get kind of, like, a high level for someone who's maybe in tech and not as embedded in finance. Like, what is the Super Bowl of finance? Like, what are the important days to watch for? Because I know that there's data dripping out. There's, oh, preliminary CPI data.
Speaker 1:Then there's Funds. Funds. Funds data and stuff. Like, what what is the one day that, like, you can't miss or, like, what what and and what's kind of noise that you can kinda write off?
Speaker 3:Yeah. Well, I'll say, like, the Super Bowl is always gonna be jobs day because it's a really good, high quality Mhmm. Survey. If you wanna understand, like, are businesses in a mood to invest?
Speaker 1:Yep.
Speaker 3:And are they feeling good? I mean, there's no better measure than are they actually willing to, like, hire someone and take on new payrolls. So I think, like, just sort of, like, on if you wanna, like, understand the business climate, that is gotta be the gold standard, and there's so much to chew on, and there's so many ways to slice it. There's so many ways to analyze it. Yep.
Speaker 3:There's a lot there. You know, it's what is it? I guess the first Friday of every month typically. That's good. You know, the other things that I think are really worth watching right now, several of the regional feds have a monthly survey of the manufacturers in their in their district.
Speaker 1:Mhmm.
Speaker 3:And I think you right now, you really be wanna be watching specific questions about are you how are you feeling about investment right now? Capital expansion plans Sure. Capital expenditure plans. To me, that is, like, the sort of billion dollar question right here, which is there's this hope, right, that we're gonna have this reindustrialization or further industrialization or you know, that's kinda what the administration is banking on. Yep.
Speaker 3:The sentiment right now is that there's too much chaos to, like, make any big choices, and no one really knows what the final tariff arrangements are gonna be, etcetera. But I would say in terms of, like, the sort of second tier data beyond the jobs report, I'm really interested in those sort of, like, business surveys that sort of ask a bunch of different questions about are you, you know, what's happening with your, your costs? What's happening with your, you know, various various business planning as they see it out the next six months.
Speaker 1:Are you looking at any, kind of, like, alternative data sources? Like, we were talking to somebody who was looking at Truflation data instead of kind of CPI, or are you, like, a purist? You gotta go straight to the source. Like
Speaker 3:No. I love all all of I love all of it. There's no the truth of the matter is is that the government data is very good quality by and large. There are a bunch of other surveys. You know?
Speaker 3:It's like I remember, like, during COVID, you know, looking at, like, those, like, measures of, like, die dining out, etcetera, and when is that coming back or airplane sales, which were actually that's another sort of, like, yellow flag or red flag for the market. Mhmm. Some of the airlines, I think, Delta last week or two weeks ago, they said they're already starting to see ticket sales tail off. It could be because there were a lot of
Speaker 1:Crashes.
Speaker 3:Travel incidents in the news. Yeah. So it's not totally clear. I look. There's no data I won't look at.
Speaker 3:I'm really but I think right now, the question is, like, is the sentiment data, the business sentiment data, the consumer sentiment data gonna translate into hard numbers? And I don't know if the answer is yes or no, to be honest, because we had pretty terrible sentiment data the last several years. You think back to 2022 when inflation peaked. Terrible sentiment numbers. Consumers kept shopping and dining out.
Speaker 3:So for all they told survey surveyors that things were so bad Yeah. They were still active as consumers.
Speaker 1:The Kyla Scanlon vibe session.
Speaker 3:Yeah. The I mean, it really, like, it really did seem to be a disconnect between how awful everyone is saying things were and what they were doing, which was going on cruises with record numbers and all kinds of things like that.
Speaker 2:Yeah. Question for you. People have joked about, you know, there there used to be we had bull markets and bear markets, and now it seems like we have kangaroo markets. I I grad which is just like, you know, going going up and down like this is just sort of a fun fun analogy.
Speaker 3:I hadn't heard
Speaker 2:that before. That's too graduated I graduated college in 2018. You know, very we had Yeah. You know, very quickly it was COVID and then the COVID crash and then ZERP and then
Speaker 1:Interest rate hikes.
Speaker 2:The interest rate hikes and then, you know, every everything's it's been this sort of kangaroo dynamic. Yeah. It or or is the is a kangaroo market just a obvious byproduct of the Internet where just information is just traveling so quickly where, you know, sentiment can change Yeah. So quickly and trade on, you know you know, I joked historically like now we have group chats where like Yeah. Friends are just, you know, from all over the world sometimes are just like talking about what's happening and trading against that information and trading against the sentiment in the group chat.
Speaker 2:Right? Yeah. And historically, would be like, oh, yeah, you go to your college reunion and you're hanging out with your buddies that, you know, maybe you got some got, you know, and everybody's like, oh, yeah. It's actually, we should be really bearish
Speaker 1:and then we sort
Speaker 2:of make these sort of long term decisions.
Speaker 3:Yeah. You know, it's funny, like, because I am a journalist in financial markets, people think I know something. You know? They're like, oh, is now a good time to refinance my house? I was like, I have no idea.
Speaker 3:If I if I knew which way mortgage rates were going, I'd be maybe in a different business. But I do, you know, typically get a few texts after a when the market's down. And people are like, hey, Joe. How have been? It's been a long time.
Speaker 3:What do think about the market? And that's often like, okay. Maybe we're getting close to a bottom here. So just for what it's worth, I haven't gotten any. I've no old friends have reached out in the last several weeks.
Speaker 3:Okay. So if you wanna use that as an indicator of something, maybe that means we have more to go down. But I think, look, like, markets are volatile because the world is volatile. I mean, there's a war going on. There are multiple wars that
Speaker 4:The US is in some way connected to.
Speaker 2:Yeah. But is the argument that we directly ex we feel like we're experiencing that volatility Yeah. Because we're seeing it live. Yes. We're seeing the war in Ukraine.
Speaker 2:We're seeing something happen in, you know, Syria or Libya or or you you you can sort
Speaker 1:of like I mean, the war
Speaker 2:on terror,
Speaker 1:like, was pretty smooth sailing until, like, a massive crash that lasted years and then a massive buildup for years, and now it does feel more volatile. I mean,
Speaker 3:it looks It's
Speaker 1:a bull market in
Speaker 3:the biz. I think that's real. I mean, I I think that, like, in terms of, like, the emotional vandalism that everyone experiences every day because they're just spooling. How can it not be having an effect on things?
Speaker 1:Totally.
Speaker 2:Do you do you see a world in the you know, are are SPACs doomed because they have such a bad reputation right now, could they be great? Could SPACs
Speaker 3:be great? You know what? SPACs have come and gone multiple times in their history. That's true. So I would I would never bet against the return of the SPAC.
Speaker 3:It might take a while. I think, you know, it's like maybe even, like, every fifteen or twenty years or whatever, but I am confident that in my lifetime, there will be another SPAC boom. I I will I will I will make that prediction, whether it's in a year or five years or ten years. But, like, you know, yeah, I believe that this idea of, like, you're gonna put money into a box and something magical is gonna happen, that will never stop being tantalizing to investors. I think we will the SPACs are not dead.
Speaker 1:Capital finds a way like sand through pebbles. It just needs to find its way. I wanna talk to you about, your like, you post on X, but you also post on Blue Sky. And I see some posts do really well on X. Some of them do on Blue Sky.
Speaker 1:Are are you using other platforms?
Speaker 3:I mostly use X. Yeah. You know, when, like, the market's down, I post on Blue Sky because the crowd is, like, sickos for bad news under the Trump administration.
Speaker 1:So,
Speaker 3:So, like, I'm gonna throw I'll throw them some chum about, like, how the Nasdaq is down 2%. I, you know, I love Twitter.
Speaker 4:I'm so addicted to it. I'll stay on
Speaker 3:you know, it's like Donald Trump and Diet Coke. Like, I'll, like, keep, like
Speaker 1:But are you using any of the other platforms? Are you on threads? No.
Speaker 3:Well, I
Speaker 1:I went on Blue Sky, and you're the only person that I follow.
Speaker 3:Use TikTok. Okay. I don't use threads. I don't use TikTok. My Instagram is private.
Speaker 1:Yeah.
Speaker 3:Yeah. But we have a Discord. And the Oddwatch Discord, 10,000 members.
Speaker 4:Wow.
Speaker 3:It's like a really so I'm in there a lot.
Speaker 1:That's really cool.
Speaker 3:People are, like, posting book recommendations.
Speaker 1:Sure. Sure.
Speaker 3:Stuff like that.
Speaker 1:Like, much higher signal, I imagine.
Speaker 3:That's less noise. Yeah. And, like, you know yeah. So it's mostly x. A little
Speaker 4:bit of Cool.
Speaker 3:And then my Discord and Yeah.
Speaker 1:That's great.
Speaker 3:It's
Speaker 1:fun. That's awesome. What about prediction markets?
Speaker 3:Oh, yeah.
Speaker 1:Yeah. Can you just give me, like, how you're experiencing them? Sure. What Sure. Pros and cons I love values.
Speaker 3:This is like my cohost and I, Tracy, we have different perspectives on this, which is good. But look, the way I see prediction markets is like threefold, which is, like, I think it's good to have a price on the news in many cases because people make a prediction. They'll be like, oh, you know, I think AI is going to eliminate all white collar labor within two years. I would like to see some, like, price on that. I would like to see people put their money where their mouth is rather than just that big said with big tweets.
Speaker 4:I think one p it's a good way
Speaker 3:of knowing what people are interested in at any given moment. And the other thing I'll say, and I've said this before, which is that the US treasury market is literally a prediction market because US treasuries, at any point in the curve, are the ensemble prediction of what the Fed is expected to do over the course of any given time. So a five year treasury is what the next five years of of Fed short term rates are gonna be. You could decompose it. And the Fed makes its decision on, like, you know, whatever whatever it is, 12 voting members.
Speaker 3:And so the treasury market is literally a prediction market on what 12 people at the Fed are going to do eight times a year over any given term. So the idea, like, that it's not like a prediction market. It is a prediction market. Yeah. And so they're clearly validated as one of the core pillars of the, financial system.
Speaker 3:So, hopefully, I don't know. I'd be into it if they have more liquidity and people can have more specialized bets on things. I think it'd be a cool thing.
Speaker 1:Yeah. It does seem like they need to figure out how to do longer dated prediction markets.
Speaker 3:Yeah. Right. Because you don't wanna tie your money up forever on some twenty thirty two contracts.
Speaker 1:Exactly. I was talking about, like, I the the the the last election was so exciting. Was like, I'm ready
Speaker 2:to start betting on this It's like,
Speaker 3:don't wanna, like, make a bet that it's like you're Exactly.
Speaker 1:And and they're just like, yeah. That that's not a product that anyone wants. It's yeah. Yeah. It it it's very funny.
Speaker 1:But
Speaker 3:Sorry to I gotta run, fellas. Yeah. I gotta run to a, recording. But, I'd love to come back Yeah.
Speaker 1:Yeah. You gotta come back
Speaker 3:with the technology brothers this time. Thank you so much
Speaker 4:for him.
Speaker 2:Go get on the Ted Cruz podcast.
Speaker 1:I I
Speaker 2:know you were
Speaker 4:And I would love
Speaker 3:to go on the Ted Cruz podcast one day too. It's between you guy it's between you guys and him.
Speaker 4:Fantastic. Well, thanks for stopping by.
Speaker 3:Thanks for having me. Take care.
Speaker 2:Thanks for coming on. Have a good one.
Speaker 1:We'll talk to you soon. That's great. Okay. Up next, coming in two minutes.
Speaker 2:Joe's voice, by the way, makes me very nostalgic.
Speaker 4:Oh, yeah?
Speaker 2:Yeah. He just it's it's it sounds sounds like he could could could easily have been recording about, you know, the Great Depression. Yeah. You could hear him chattering over the radio.
Speaker 1:No. He's a great podcaster. I love Odd Lots. That was like one of the first podcasts I listened to. I think he'd been doing it for almost like ten years.
Speaker 1:It's fantastic.
Speaker 2:And he's held the line on not going independent. I'm sure people have tackled a million dollar pre seed over his head. Hey, why don't you come over here and you know, but he he reps Bloomberg.
Speaker 1:Yeah. Reps Bloomberg.
Speaker 2:Loyal.
Speaker 1:That's great. Well, got Scott Wu from Cognition coming on the show in a couple minutes. So many questions for him. Obviously, highly
Speaker 2:We gotta start with AI. What is AI? What is What is this whole thing? People have been talking about it. We wanna know about it.
Speaker 1:I mean, when everyone was saying like the AI, like massive job displacement stuff, the the bet I would try and formulate with people was over under 10% US unemployment by 02/1930. And even that, it sounds like not that crazy. Like, we've had unemployment higher than 10% in the past, but a lot of people who were who I would talk to, they say, oh, yeah. AI is gonna, like, take all the jobs. When I tried to get them to concretize it in 10% higher or lower than 10% unemployment in The United States in 2030.
Speaker 1:It's, like, not that far out. It's not that high. We've had higher than 10% before. A lot of people would say, oh, like, I don't know. Maybe we'll still maybe it won't roll out that fast.
Speaker 1:And so, like, that's the prediction market that I want.
Speaker 2:You know, there was always that headline of, you know, humans will be having more sex with robots, you know, by 2020 Do you remember that one?
Speaker 1:No. Oh, yes. Yes. I see that go viral all the And then
Speaker 2:Tesla optimist just did a campaign with Kardashian. Kardashian. Right. Being very silly.
Speaker 1:Very scintillating.
Speaker 2:Very, very silly. Yep. And it seems that that feels like a big campaign by Tesla
Speaker 4:Totally.
Speaker 2:To go and work with the Kardashian Totally.
Speaker 1:That's sort
Speaker 2:of the final boss of influencer marketing.
Speaker 1:It is. Right?
Speaker 2:And so I saw people speculating on that but It'll
Speaker 1:be interesting to see where it goes. Well, we got Scott Blue in the temple of technology. Welcome to the show, Scott.
Speaker 2:There he is.
Speaker 4:Not bad. Good to see you guys. How are you?
Speaker 1:We're great. How are you?
Speaker 4:Good. Good. Good. Busy couple days for us.
Speaker 1:But Oh, yeah? What's keeping you busy?
Speaker 4:Oh, there's always I mean, there's always so much stuff going on. I feel like there's there's there's there's new products that come out every week. There's new models that comes out every week. And then, you know, we obviously have a lot going on with with Devon. So
Speaker 1:Well, we appreciate you taking the time. Could you
Speaker 4:give us kind of just an overview
Speaker 2:real quick? Scott and I talked on the phone. I think it was maybe 05:30 or six Friday night. And he was like, yeah, everybody will be here until probably, you know, what what did you say? What what's your normal you guys have a pretty intense
Speaker 4:We're usually we're usually still around past midnight.
Speaker 1:Yeah. Yeah.
Speaker 4:So busy schedules for us.
Speaker 1:Hopefully, it's fun. You clearly haven't put yourself out of a job yet. But can you give us the update on kind of like where is Cognition now? Obviously, like massive launch, huge, like, going direct moment, great launch video. And then, you know, you kinda went into build mode, we kind of haven't heard that much from the company.
Speaker 1:So can you give me an overview of where the products are, where the company is, and kinda set some some ground rules for for where you are?
Speaker 4:Yeah. Yeah. Yeah. Absolutely. So we had our initial announcement about a year ago, actually, at this point.
Speaker 4:And and from then, a lot of it was was basically just going through all the all the frictions of software engineering. You know, the the truth is engineering is just so messy in the real world if you think about, you know, what has to get done. Obviously, there's some pretty hard logical problem solving type work that has to be done, but there's also a lot of practical stuff. And so, you know, figuring out how to to to to have a clean experience that slots in, figuring out how to work with all these enterprise customer code bases, figuring out the the the capabilities and working with logging and documentation and tooling and things like that. And so, you know, for for a decent chunk of time, our main work actually was with larger enterprises.
Speaker 4:Mhmm. And so we would work with a lot of these these different groups, you know, bigger tech companies, you know, financial services, or or things like that, and and work with them on on a lot of these bigger projects and more repetitive projects and have Devin basically come in and and and speed up the job for a lot of this stuff. And then in December, we we rolled out our our general availability. And, you know, it's a self serve plan where you can just put put put down a credit card and get started and plug in your code base and have Devon. And we were super, super excited about that, obviously, because it's, you know, really the the chance for for everyone to just get to try it out and see how it is.
Speaker 4:And it's it's been a fun last few months for us. It's been a a lot of iteration and a lot of growth and so on. We've had users talking about how how Devon's now quickly become become the number one committer in their code base and so on. And so it's it's it's very cool to see. Yeah.
Speaker 1:Can can you talk to me a little bit about the decisions you made early on on where to kind of put your AI efforts? Like, as I understand it, you didn't train a foundation model. You didn't do one of the massive runs. You you work with different model providers. But what considerations were made in the early stage, and are you still sticking with those, or have those evolved over time?
Speaker 4:Yeah. Yeah. Yeah. Absolutely. So so we had, you know, I I would say two two major bets that we really started the company with, and I would say the first one was, you know, that that reasoning and and this whole RL paradigm was gonna work.
Speaker 4:Mhmm. And this is, you know, this is a it it was a pretty controversial thing, I think, around the end of twenty twenty three because most of what, you know, the first generation of AI was or or, you know, the first generation of of of language models was was more like imitation learning. Right? It was basically, like, read all of the Internet, you know, read every Reddit post, and and talk like somebody on the Internet. Right?
Speaker 4:And and, obviously, I mean, it's pretty incredible. You know, we passed the Turing test. ChatGPT was a massive you know? And and for a while, all of the work that was being done and all of the products that happened in particular verticals were much more in that style, which was basically, you know, I'll call it text completion, basically. Right?
Speaker 4:And so, you know, you had had this you had product like that in marketing. Right? You had a product like that for for customer support and similar things for code where it's kind of like, here here's the code so far and just predict for me what line comes next. Right? I I think we had a strong view that, yeah, that that this reasoning was really gonna work and was gonna enable a lot of new use cases.
Speaker 4:And then the other thing that we felt really strongly about was that the product experience was going to shift from this kind of more q and a, text completion style products to basically an agent. You know? Yeah. And and practically, I think what that means is honestly, I think a lot of folks today still think of AI as kind of, you know, a better Google, call it. Like, you have a question and you wanna go search it up.
Speaker 4:You know? You ask your AI, and your AI has a better answer, which is big, obviously. I mean, Google is not a small company. Right?
Speaker 2:Yeah.
Speaker 4:But but but I think the I think the actual vision that we're going towards with AI is is actually even bigger than that, which is basically, you know, your your buddy that does your chores for you. Right? And and the the the obvious difference between those two is the ability to actually interact with the real world and do real tasks and so on. Right? And so, you know, there's there's a big difference between having a a legal q and a, for example, versus having a lawyer that can actually go submit things for you that can go and, you know, interact with all these different surfaces.
Speaker 4:And the same is is obviously the case in code, right, where it's you know, this is how we build software. Right? It's it's you you you you write code. You run the code. You see if it worked or not.
Speaker 4:You run run the tests. You look at the documentation. You know, you click around on the product yourself. And this is how we this is how we iterate and build. Right?
Speaker 4:And so the the ability to do that is is is a big step function difference.
Speaker 2:Yeah. How do you think of getting Devin to go from sort of this reactive experience where you talk to Devin like you wouldn't, you know, a teammate or employee and say like, hey, can you help me sort of execute on this specific thing? It goes and does it, you know, maybe it comes back to get, you know, feedback at different points too. I imagine long term, you you want the sort of proactive, sort of like high high agency agent and Yeah. How you know, I'm sure you guys are already experimenting with that kind of thing internally.
Speaker 2:But, you know, what are your plans along sort of that route?
Speaker 4:Yeah. Yeah. For sure. And so, you know, the the way that we kinda think about it is turning all the brick layers into architects is almost, you know, is how I would describe it. And, you know, I I think the the really beautiful part of software engineering, I would say, is getting to do this core, you know, problems of solving and decision making around what do you wanna build.
Speaker 4:Right? It's it's like, you know, let me understand the problem. Let me understand what's exactly what exactly is going on, and then let me figure out here's exactly the solution that I wanna build for this. Right? The is you only spend about 10% of your time doing that.
Speaker 4:You know? As a software engineer in practice, you probably spend about 90% of your time, you know, dealing with your Kubernetes and fixing your unit tests and upgrading your your thing to the new version and all of this other stuff, you know, fixing these bugs that come up. And so a lot of it is the way I would kind of describe it is is working with Devin as as the implementer that allows you to be a really great architect. Right? And so there's there's a lot of detail with that because, naturally, you have to be in, you know, all all the same flows that that humans use for software engineering if you wanna do that.
Speaker 4:Right? And so you have your logs on Datadog. So, like, you know, Devin's gotta go look at those logs. Right? You're you're talking about issues on Slack, so Devin's gotta be in Slack.
Speaker 4:Right? And Mhmm. A lot of it is is really kind of figuring out the workflow where where it's it's very natural and very easy that as you're talking about this idea that you have or this new feature that you're trying to build or this bug that you're trying to fix or whatever, you're able to just tag Devin and just say, hey, Devin. Can you take a look at this and make this fix or do this thing? Yeah.
Speaker 2:Talk about specifically, I can imagine that Devon, because it's so embedded in these different workflows, every single day we see conversation on the timeline from somebody that says, I'm switching from this code editor to that code editor or that code editor back to this code editor. How do you think about long term moats and lock in as you're building Devon for yourself, but then you're also trying to build it. You're already a billion dollar company. Eventually, I'm sure you have much, much bigger ambitions. But how do you think about sort of long term moats and around the sort of, like, software engineering agents?
Speaker 4:Sure. Yeah. You know, I I I think in the the short and medium term, it's there there's a lot of different experiences in code, and and, you know, I think a lot of folks building kind of different different project experience for for for different verticals or use cases within code. I I think in the short and medium term, it's you know, things are just changing so quickly that the natural thing is just whatever is able to help folks the most is is what they're really excited to use. Use.
Speaker 4:Right? And I and I think there's there's just you know, when when the the pace of development and also the pace of progress in AI is as high as it is, I think that's gonna be to continue to be the case for a while. You know, I think with that said in the long term, I think these things naturally do kind of converge to a point. And there are a few particular pieces I would say that that really kind of cause that, and one of the big ones that I'll just point out is, you know, there really is a lot of I guess, in most spaces, you know, we would call this personalization or something of that sort, but but there's a lot of it in in code. Right?
Speaker 4:I mean, if you imagine you hire, you know, the smartest software engineer in the world and and, you know, you get them to work on your code base day one, it's they're not gonna know a lot of these little details about here's why we chose to do this architecture. Here's what this function does and that function does. Here's how you do this database migration or whatever it is. Right? So, you know, they have to learn all these things from the ground up as opposed to somebody who's, you know, just as smart but has been at the company for, you know, ten years and built half the code by themselves and, you know, they they wrote all of these files themselves and so on, right, then, you know, you get to a point where you really just understand the code base.
Speaker 4:You're you're making the same decisions and trade offs, and you're working with it very tightly. It's the kind of thing where and and we see this already where it's you know, as as folks start using Devin more and more, one of the really cool things is, you know, you can have one of your engineers ask Devin a question, and Devin is drawing on the knowledge that it has from all of the previous sessions it has with everyone on your team. Right. Right? And it's able to learn all these things.
Speaker 4:And, you know, if someone says, hey. You know, we gotta we have we have to go do this this version upgrade. And Devin might say, oh, yeah. I remember this. I actually just did one that's just like this, like, last week for this other part of you guys' code base.
Speaker 4:And so let's let's figure out this one, and let's do this. And so I think there's a lot of that's kind of the shape, I think, of of of what we're gonna see a lot in AI actually over the next couple years where, you know, this is this is a bit of a hot take, but I would say a lot of the problem solving is actually good enough already. You know? A lot of the reasoning and the problem solving I mean, AI is has has been shown to be capable of solving some pretty hard stuff. I I think actually what we have left to do is a lot more so just understanding the detail and the complexity of the real world.
Speaker 4:Right? And you think about all these tasks that we spend our time on, you know, they they they there's some amount of problem solving, but there's also a lot of just pulling in the relevant context and, you know, understanding what is the common sense what are the common sense considerations you're working with, and and that's a lot of what we spend our time working on with Devon's capabilities.
Speaker 1:Can you talk a little bit about I I, like, I have this take that we're almost in an AI winter for consumers even though AI feels like it's moving so quickly. The ChatGPT moment was so big because we passed the Turing test that for most average people, it's just Google search, as you mentioned. But over the last year, obviously, if you're following this stuff, there's been incredible breakthroughs. Inference cost has gone way down. Models have gotten bigger.
Speaker 1:Context windows have gotten way bigger. Has have there been particular milestones in in just AI research and development that have been more transformative to your business than others, over the last year?
Speaker 4:Sure. Sure. Yeah. You know, I I I think the, at a high level, you know, I think all the the continued progress that we're seeing everywhere in AI actually is is primarily due to essentially, like, reinforcement learning, RL, that's that's really working. And it is a very different paradigm, right, where we're saying how the past, it was all just imitation learning, and it's get as much of the Internet as you could possibly scrape up and just train on all of it, you know, and hopefully, you get something that that knows a lot of stuff.
Speaker 4:Right? Whereas this is kind of you know, this whole reinforcement learning paradigm is, you know, if you have a clear problem space where you can do the problem a hundred times and you know this was right, this was wrong, this was right, this was wrong. You know, it's it's a little bit more like AlphaGo. You know, this this self play learning, but in a language model. Right?
Speaker 4:And and I think that's the the biggest paradigm and, you know, folks like OpenAI, Anthropic, and and and and lots of, you know, Google X and so on have have have have shown a lot of real progress through this whole RO paradigm. To your point on consumer, you know, I actually think that I think that we'll probably see a resurgence actually in consumer over the next the the next few months or so. And I think one of the big things I think that will actually flip that switch is is like a really great consumer agent experience. Know? It's there's We talked about this.
Speaker 2:Haven't had the we haven't had the moment of of just chatting with with this sort of generalized agent that can just book you a flight in a hotel Yeah. And it's like super seamless. Like that that's like what I feel like we've all been waiting We've
Speaker 1:had that preview since Siri one point o back in a decade ago, and it still isn't here, we're still waiting for it. But it feels like now it's actually just a couple months away.
Speaker 4:Yeah. Yeah. Yeah. Exactly. It's like, I I wanna buy this pair of shoes and just go and look on all those websites and find which one delivers and which one is the best price for that and just go buy it for me.
Speaker 4:Right? Like, things like that where it's I I I think that'll be that'll be a pretty big moment for folks because you'll really feel, I think, the difference of
Speaker 1:how process the deep seek moment? Obviously, that that took over the timeline earlier this year. It was it was very controversial in a bunch of ways, but what was your what was your deep sea takeaway from that development?
Speaker 4:Yeah. Yeah. No. I mean, I I I think at a high level, it's it's it's a competitive world out there. You know?
Speaker 4:I I think there are a lot of a lot of really smart folks going after this problem, and it's it's it's the kind of thing where it's you know, if you think about, like, what what what people even not not just what was possible a year ago, but what even people even imagined could even work one year ago or two years ago or three years ago. I mean, every year, it's basically totally it's it's totally flipped. Right? And and now it's kind of like everyone in the space is talking about agents and the future of agents. You know, when we were doing this, like, here, no one really even believed that agents were, a thing.
Speaker 4:You know? And and I think that yeah. No. I mean, it's it's it's the case, I think, everywhere in the stack, and, you know, we'll see you know, I mean, there's the there's there's the GPU layer. There's the hardware layer.
Speaker 4:You know, there's the the foundation models and and so on. But but I I think I think all throughout the space, you know, you have these these really, really smart folks and really smart teams that are going after the problems and and and basically pushing things forward. You know? I think we're in a very high velocity period where it it really does feel like every every month in AI is is like a year, you know, in in in a lot of these tech industries in the past. And so so yeah.
Speaker 2:How is how is AI adoption what what's been your takeaway from AI adoption within the Fortune 500? Right? You see all these companies are spending billions of dollars on like Gen AI consulting contracts with Accenture. It feels like the consulting companies are probably doing more revenue from generative AI than, like, all of the software companies combined. Maybe ignore, you know, OpenAI.
Speaker 2:Is it happening sort of bottoms up? Like, an engineer of comes to their team and they're like, you know, it's they're they're in, you know, not not on not in San Francisco or New York and they're saying, hey, I got this like guy named Devin. He's $500 a month and like, I think he could do, know, what what, you know, our next 10 junior engineers can do? Or is it happening more so top down where execs are super, you know, kind of clued in and following this stuff or or or both?
Speaker 1:Like, we need an AI strategy.
Speaker 4:Yeah. Yeah. Yeah. I mean, I I think the interesting thing with the these times is there's a lot of both. You know?
Speaker 4:And and executives, obviously, and boards, for example, I mean, everyone is thinking about how do we get AI native and how do we make sure we're on top of this wave and how do we make sure we're ready to to just accelerate as fast as possible and and that we're ahead of the curve on this rather than being too late on it. Right? Because, obviously, these things are moving so quickly. And then at the same time, you know, it's like you have individual developers and and folks like that who who are are just really excited to use these things. I mean, it's you know, a lot of these painful tasks I mean, if you're if you're doing a full code base migration and your your your code base is, you know, 50,000 files and you gotta do the same migration on every single one, I mean, it's it's not a fun task, you know, and and and figuring out how to how how to go quicker on those things so you could spend more time on on the problems that you really care about and on, you know, figuring out what to build is is really exciting for folks as well.
Speaker 4:But, yeah, I mean, I I think it's an interesting time for us where it's, you know, it's it's bluntly I mean, it's I think most of our waves of tech, you know, there's always been kind of a hype phase, I'll call it, and also, you know, a a phase where basically, you know, this adoption really comes in. And you saw the same thing with cloud. You saw the same thing with mobile. I mean, you saw the same with the Internet itself. Right?
Speaker 4:And and, yeah, I mean, I I think it's an exciting one for us because I think with AI, I mean, I I think the I think if anything, you know, I I think the capabilities and I think what will be possible in AI are are are are just getting exponentially better and better every year. But I I I think what I would say is, you know, I think there's a lot of different there's a there's a lot of different areas, you know, of generative AI where it seems very clear that it's like, you know, this is getting better by the month. This is, you know, this is this is clearly gonna work soon, and we wanna be, you know, ahead of our time with this and get get ready for this. And, you know, there are a few spaces, would say, and and code is one of those where it's you know, this is actively working right now. I mean, if your team is not using any AI code tool, you are just heavily behind.
Speaker 4:Right? And so it's it's kind of interesting. I think we'll see each of these kind of come online at at different points in time. And I think there are few reasons why code is one of the first to really get there. But but but yeah.
Speaker 4:Yeah. It's gonna be an exciting few months for us.
Speaker 2:What what advice would you give the young Scott Wu, you know, the the younger version of you that's that's learning that's just starting to learn to code. Yeah. And and how do you sort of fast track to be kind of at the bleeding edge? Obviously, you can learn from the models themselves. They're great sort of instructors, but, you know, I think we went from this period where maybe a year ago everyone was like, oh, all the software engineers are cooked.
Speaker 2:They sort of like made their own replacement to now it's very clear that if you're a software engineer today, you have a massive
Speaker 1:More leverage than ever.
Speaker 2:Have more leverage than ever and you have this massive sort of edge because even if eventually all this work goes from, you know, code to natural language, you know, there's still this sort of, it's possible to be on the bleeding edge but how would you, somebody sort of 22 year old coming out of college today, what what would your advice to them be?
Speaker 4:Yeah. For sure. No. I I mean, I really think I I really think we're coming up on the golden age of software engineering here. And and I think the main thing, know, as we're saying, I mean, I think it's always gonna be up to us to decide what to build, obviously.
Speaker 4:Right? And and a lot of the core of computer sciences, I would just just say, is that question of understanding and deciding what to build. And so if anything, I think the theory of computer science is gonna be even more valuable. You know? Understanding the the layers of abstraction and knowing, you know, the basic model of how a computer works and how to break down problems logically and how to how to reason with these with these systems is gonna be, you know, even more valuable.
Speaker 4:The other side of it, I would just say is there's no shortage of demand for software. You know? And one of the things that I think about all the time is, like, you know, I I think today, even still, it's it feels so outlandish, but I
Speaker 7:think a couple years ago
Speaker 4:couple couple years from now, this is gonna be commonplace is single use software, actually. Right? And and, you know, you you can imagine a world where it's like, hey. You know, I gotta go look at these these these 10 LinkedIn profiles today, and I gotta click through each of these, and I'm looking for this and that and whatever. And, you know, I gotta go, like, research and get a bunch of data online and then put that into an Excel sheet and run some numbers.
Speaker 4:You know, a lot of these things are naturally code works just as well for these tasks, if not better. Right? But, obviously, it makes no sense at all to go hire some some some engineering team to go build you, you know, this this massive script that you're only gonna run one time for this use case that you have today. Right? But I think I think we will get to a point where, basically, you can just ask Devin, hey.
Speaker 4:Here's the thing that we need to do. Let's just go build this real quick. Right? And and software will do that for you, and we'll solve that problem for And I think there's just you know, there's there's there's so many more products out there to build. That's that's that's the main thing that I always index on.
Speaker 4:It's it's crazy to think about, but I think it's like, you know, you can imagine all of these products out there that are niche products for for a thousand people or a hundred people or even just for you. But but, you know, they have the the level of quality and the level of execution as, you know, the the the biggest products in the world today, you know, YouTube or Instagram or or whatever it is. So
Speaker 2:Yeah. Talk a little bit about, there's been a bunch of these sort of platforms, apps that have popped up, lovable. Dev, I think bolt. New or bolt. I forget what it is where, you know, these sort of products that allow you to just generate in apps immediately and they're and they're showing this tremendous revenue growth.
Speaker 2:You guys seem to have focused on the potentially much harder problem of sort of building durable software products. But is there a world in the future where Devon goes more downstream and is actually, you know, somebody comes on and creates their very first, you know, application ever with Devon because, you know, I see a lot of these companies pop up and and I have no idea what their long term roadmap is, but I can see why it's easy to generate a lot of revenue quickly to just generate apps or generate websites. But then, you know, maybe that's not, you know, the you know, it feels like potentially a good wedge, but not a super durable business necessarily, which is like, do I need to generate a a new app every month? Like, probably not. Maybe, you know.
Speaker 4:Yeah. Yeah. No. I mean, I I think a lot of different product experiences in the space for sure. I I I think the way that we've always thought about it is, you know, I I kinda think of self driving as the parallel where it's you know, there was first, it was all manual, and then eventually there was, you know, there's automatic shift.
Speaker 4:Right? And then there was cruise control. There's auto park. You know? And and and, basically, I guess, the kind of the thing that I would point out here is, you know, up until the point where it was true, full you know, it could do every single thing you wanted it to do, you still needed a driver's license for all of that middle era.
Speaker 4:Right? And and you know, there was a point at the end where it's kinda like, yeah, you could just sit in the back seat and and just have the car do everything for you. Right? And and so I I I think we kinda have this this similar paradigm, I'd say, in code, whereas maybe maybe not so maybe not as much of a of a kind of, like, single step function switch, but you kind of have this gradual spectrum where, you know, there are a lot of tasks, I think, where, you know yeah. Like you said, building a cool website or something like that where it's yeah.
Speaker 4:You know, you don't have to have any experience with code at all, and now you can just do this. And and then I think there are a lot of these kind of, like, larger and more complex tasks, you know, working on a big code base or figuring out things with your existing products or, you know, building, as you're saying, like, a lot of this really kind of
Speaker 1:these
Speaker 4:bigger projects where, you know, you still wanna be an engineer and you still wanna be really deeply technical, I think, to be able to to to make the most out of these AI coding tools and to to use that. But with that said, I mean, I think that every month, the capabilities change. Right? And I think there will be a time, I think, where you you you're able to it's it's just as easy as kind of looking at your product and talking in plain English about what you want, and that's it.
Speaker 1:Do you like the innovator's dilemma framework? And do you think AI is more in the sustaining sustaining innovation camp or disruptive innovation camp. There's been a lot of debate about this, people comparing it to mobile where the really large companies were actually the best positioned to take advantage of mobile. A lot of people are saying Google, even though their product road map has been a little lumpy, there's they still have amazing talent, amazing hardware, amazing software, lots of talent to kind of reap the benefits of AI over the long term.
Speaker 4:Yeah. Yeah. It's an interesting one. I mean, I think there's gonna be a lot of interesting second order effects. And, you know, one of the the the maybe the most obvious ones to call out is is basically a lot of these a lot of these switching costs, you know, that exist, especially in these b two b businesses, are just gonna go way down.
Speaker 4:You know? And you I'm sure we can all think of these these companies that, you know, they only really thrive today because it is so painful to to to to switch off and to migrate off. Right? And and I think that's gonna change a lot. I think on the other hand, I I think a lot of as we're saying, you know, this deep personalization and, you know, the ability to use data and to to really build customer experiences for for your for your users or your customers, I think that is going to only become more and more powerful.
Speaker 4:And and so I think long story short is, you know, I think that I think that a lot of the the existing great businesses are gonna do very well in the age of AI. I think there will be, you know, in the neighborhood, I would say, of kind of, like, you know, the the 10 to 20 power law businesses of the new ones that come up from AI. You know? And, I I mean, we already can see it's there's there's the Foundation Labs themselves, and then there's some of the you know, each of the big verticals of the application layer. Right?
Speaker 4:There's code. There's law. There's, you know, customer support. There's sales and so on. Right?
Speaker 4:There's there's image and video. And and and I think there'll be kind of, like, yeah, like, a a handful of businesses kind of from each of those categories. I think that that really make it to the really massive outcomes. But, yeah, I mean, as is always the case with these things, you know, a lot of it is it's it's very hard to know in advance which ones will will be the winners. I do think that yeah.
Speaker 4:I mean I mean, I I do think with the richness, I think, of the space of AI, you know, I think one of the big differences is is there's just so much difference in technical execution where it's, you know, you can in in AI, you can be doing things that other teams or other products just cannot do. Right? And I think that difference kind of means that I think really great, really talented new innovators will have a meaningful edge, and and the best ones will be able to create some some
Speaker 1:What's your take on the various walls? There's been this you know, deep learning's hitting a wall. Scale might be not all you need. Now it's everyone's pretty scale pilled. Then we got in the reinforcement learning paradigm, as you mentioned.
Speaker 1:Are you worried about a data wall or an energy wall or just some sort of wall where we hit and we kind of stagnate and Yeah. And we and we're not seeing the, like, the breakthroughs and the acceleration that I think people are kind of expecting if you're if you're following AI closely? Are you worried about any of those walls?
Speaker 4:Yeah. I actually so I actually had the opposite take, which I think is is in some ways optimistic, some ways pessimistic. But what I would say is how stagnation is actually the default. You know? It's it's by default, it's not the case that we're gonna have this, you know, the next and and I think we've kind of like we've we've felt it for so long at this point that it's like, yeah, the the next model is gonna be even better, and the next product is gonna be even better, and the next GPU is gonna be even better.
Speaker 4:But but but I I I think more of what it speaks to actually is is kind of the just yeah. How how amazing the the the the kind of the flow of innovation is. You know? It's like and just to give simple examples, I mean, it's like, you know, g p t three wasn't just more of g p t two. It was like a you know, it was a step function different, and there there were a lot of things that that had to be figured out.
Speaker 4:And g p four wasn't just more of three. It was like know? And the same is true, I think, with with reasoning. The same is true with advancements that we're making in hardware. It's the same is true with with the advancements that we're making in the application there.
Speaker 4:So in some ways, it's kinda you know I'm saying? It's like there's there's no single kind of, like, force of nature that we get to rely on where it's just like these things will get better all on their own. At the same time, it's it's it's it's it's truly remarkable I think that over the last few years, you know, we have we we we we haven't slowed down in in figuring out the new innovations and and the new categories that will get us there. So
Speaker 2:What is one thing that you learned from Eric and Kareem from your from your sort of ramp days that you feel like you you you've really focused on making sure that you guys implement at Cognition?
Speaker 4:Yeah. Yeah. You know, it's a they they they've I I I've known them a long time. I'm I'm super super tight with both of them. They've they've given me a lot of incredible advice.
Speaker 4:I'll share one which I think was hilarious. You know, we were we were just getting started, and I I called Eric. And I was like, hey. You know, we're we're we're starting this company. You know, obviously, like, Ramp is incredible.
Speaker 4:I I have so much respect for you and and what you've built, and I just wanna get your thoughts on basically, yeah, what what is the thing that I should really that I should really focus on today that I'm not thinking about right now? And Eric said, you know, take a lot of pictures. And it was it was I mean, it was it was actually great advice. It is funny because, you know, it's I would talk to these people and and all the you know, they would say, oh, you know, you can really you gotta really nail in on on hiring, and you gotta really, like, figure out these and all the all these things are also true, obviously, and and Eric has helped with all these other things. But I I I found that funny that that was the first you know, the day the company is founded, don't forget to take those pictures.
Speaker 4:And then it's like the you know, it's it's it's only been, I I don't know, fifteen months for us. Right? But but it's I I am actually really grateful that that that we have those and that we did that. And I I think there's a lot of things where it's just, you know, just just being in it and going through the experience and and knowing what you what you miss and what you don't miss, I I I think Eric and Cream understand that better than anyone, honestly.
Speaker 1:Well, thanks for joining. It's 01:30. We won't take any more of your time. Where can people sign up, and and who should who who's kind of the wheelhouse client right now?
Speaker 4:Yeah. Yeah. For sure. It's it's Devin dot a I, and anyone who's you know, I I'd say engineering teams all over the world. So so, you know, we have we have teams that range from one or two person startups all the way to to the biggest financial services firms in the world.
Speaker 4:And so, yeah, we'd love to hear folks' feedback on Devon as they're trying it out.
Speaker 1:Awesome. Amazing.
Speaker 2:Thanks for joining us. Coming on, Scott.
Speaker 3:Thank you
Speaker 4:guys so much for having me.
Speaker 2:Have a good one.
Speaker 4:Have a good one. Yeah.
Speaker 1:Very interesting. I always love talking to an AI founder. So many things you can peel into. We didn't even get into AGI timelines, p doom,
Speaker 4:all the fun things that you can
Speaker 1:go from there. You want a pen? Peter Charger. What? Oh, Charger.
Speaker 1:Here you go. And we we're in we're in we're in demand today. There are multiple guests trying to call in right now. We can only let one in at a time. Or maybe we could do a debate between
Speaker 2:Do we have two guests scheduled? That would be cool.
Speaker 1:I think we have yeah. Do we should we do a a VC and a car dealership guy at the same time? I think there might have been some confusion over scheduling. Let's try and let in well, there's two people in the waiting room right now. We're we're not sure who joined, but we wanna let in the car dealership guy because that's who is scheduled next.
Speaker 1:Hopefully, we can get him in the temple of technology and pick his brain about what's going on in the car world. Should be a fun conversation. But we gotta figure out some some Zoom details.
Speaker 2:Well, yeah. I don't how the entire entire, like, stream infrastructure right now is just melting down.
Speaker 1:Melting down. Yeah. We're pushing this to the limit, folks. We're building the plane as we're flying it, but I think we're having, I think we're having good streams back to back. It's been a lot of fun.
Speaker 1:And I I like these little conversations. Take us on a little tour, go over into finance land with Joe, drone land, defense tech with Soarin, some AI with Scott Wu. Now some car dealerships. Hopefully. Ben, how are doing with the car dealership guy?
Speaker 1:Is he ready to come on down to the temple of technology?
Speaker 2:He left. He left. He says trying to join.
Speaker 1:Why don't you send him another message and I will pull up some info on this car dealership.
Speaker 2:Oh, said he does a lot of these stuff. So he says we didn't let in his main camera.
Speaker 1:Oh, he has two cameras. Okay. Okay. Well, let's see. Nissan has a profitability problem that is determined to fix.
Speaker 1:How? A mix of product pricing and placement. Interesting. Honda is sidestepping some tariff uncertainties by reworking its battery sourcing strategy. Beginning in April, Honda will source hybrid batteries for nearly 400,000 vehicles from Toyota's fourteen billion dollar North Carolina plant.
Speaker 2:He's
Speaker 1:in. He's in.
Speaker 5:Hey. Can you guys
Speaker 1:hear Yeah.
Speaker 2:Can hear
Speaker 1:You look fantastic. You sound fantastic.
Speaker 2:Got a
Speaker 1:real professional TVP over That's
Speaker 4:the least I could do if this
Speaker 5:is what I do all day.
Speaker 1:This is fantastic. Great great to have you here. Can you can you kick us off with a little introduction? What do you do? What's your name?
Speaker 1:Who are you?
Speaker 5:Well, it's great to be on the on the fortress of finance.
Speaker 4:Thank you.
Speaker 2:No.
Speaker 5:I'm so I'm the founder of Cardiership Guy. You've probably seen me on Twitter if you're if you're listening to this right We are the leading content news and insights platform for car dealers. Cool. Didn't start that way. We were very consumer based, but it's been, you know, a couple years where I've really just shifted to focusing on the industry.
Speaker 5:And today, you know, we're pretty much, you know, offering anything for dealers to come and, you know, learn, kinda stay informed, get ahead, really just trying to make a better industry with the kinda ultimate vision that if we can if we can create a better dealership experience and educate the dealers and, you know, kind of democratize knowledge, then the consumer experience would be better and everybody wins. So that's kind of like the utopian vision.
Speaker 1:I know very little about car dealerships, so I bet my questions
Speaker 2:would be silly. Give us the crash course history, your personal history Yeah. The industry leading up to this because this is not not the kind of business that you start, you know, just because you had a good good x account. I I imagine you you experienced a lot of the, you know, the the turmoil of the industry and the good and the bad.
Speaker 5:Yeah. So it's quite the opposite, but I'll give you the the short version. So I was a dealer. I grew up in used car business. Father had a small used car dealership, so that was where I spent most of my time.
Speaker 5:In 2018, I got the bug. I said, there's no way that we're still selling cars this way. Right? Everything's done online. Why do I have to why do people have to come to my dealership?
Speaker 5:You know? Why can't I expand virtually and whatnot? And so I took this traditional dealership, and I said, we're gonna build a better way to buy a car. We're gonna do it a % online. Mhmm.
Speaker 5:At the time, Carvana had just gone public, but it was still kind of like a nascent thing, you know, selling cars online. And so I actually raised capital, and we transformed to do a venture backed online auto retailer. You know, we started building out our own website, our technology, our platform, and I spent five years doing this. So we were completely vertically integrated this entire time. So as we were building this business, you know, we were acquiring the warehouses, building up the logistics network, and actually retailing vehicles online from what was a small used car dealership.
Speaker 5:It was a crazy experience. I mean, you know, we raised lots of capital throughout the time and grew the business to close to, like, a hundred million dollars in annual sales. And in end of I wanna say it's 2021 when rates started rising. You know, we kind of things got really tough. Yeah.
Speaker 5:We spent the next eighteen months.
Speaker 1:You know,
Speaker 5:we couldn't raise more capital. Business was obviously you know, the burn was accelerating, and we kinda had this, like, existential we're facing this existential point in our life. And the next eighteen months were just brutal. We ended up shutting that business down. We tried to pivot the private equity.
Speaker 5:We we almost got acquired, but that didn't work out. And in the meantime, I sort of had this, like, you know, anonymous Twitter account where I was just tweeting, you know, just trying to stay sane, be a little creative, but really just sharing kind of my thoughts. And it blew up like crazy. Right? So I I I I don't remember when I launched a Twitter account exactly.
Speaker 5:Think it was like early twenty
Speaker 2:For anybody just on audio, he's got almost half a million followers on on X, which is the equivalent of 50,000,000,000 followers on Instagram.
Speaker 1:Pretty much.
Speaker 2:No. It's it's a big big
Speaker 1:Yeah.
Speaker 5:I mean, it was it was definitely very like, you're right. It's it's very difficult to today, it's completely much more difficult, I would say, even unless you're putting out slot. But I mean, like, high quality followers is a very tough thing to do. Right? You gotta put an insight.
Speaker 5:But that's essentially what I was doing. I was just sharing my knowledge and experiences that I've gone through. And then after we ended up we ended up closing down the business completely, this was, like, you know, like I said, eighteen, twenty one, twenty four months later, I said, I don't exactly know what's in store for my next thing, but I do know that there's a thirst for this knowledge. Mhmm. Right?
Speaker 5:When I launched this account, people didn't understand what the hell is going on with prices, and inventory was all over the place. And it wasn't just consumers.
Speaker 1:It was dealers themselves as well. Yeah.
Speaker 5:And so I said, there's something here. And so I formed a b two b media company. And and we can talk about, like, I went down the holdco route and, you know, all that stuff that Sean Pori spoke about on your podcast the other day as well. We can talk talk chat chat about that as well, but that was essentially how I fell into this business. So I went from, like, a traditional family business to a venture backed tech business.
Speaker 5:Right? Raised, like, $60,000,000 and all that hoopla, And now we're like a bootstrapped media brand. It's completely different things, but it's been a fun fun learning learning experience.
Speaker 2:Yeah. Yeah. So one of the reasons I wanted to have you on now is just to get a sense of of, you know, really on the consumer side, are how are people behaving in the market? What are what are the deal you know, you guys get a lot of data from dealers that are, you know, in your community. And I think it's a good signal of of sort of how consumers are feeling.
Speaker 2:It's obviously sort of this shaky time broadly in the market, but how are dealers doing broadly? What is consumer sentiment looking like? And then I wanna kind of get into some individual brands and potentially ask you about the EV market and some other stuff as well as later, I'd love to get your thoughts on the war between platforms like Bring a Trailer and Cars and Bids and all that stuff. But maybe start with a kind of a market update. What's happening sort of on the ground today?
Speaker 5:Yeah. So, look, the market has been, I would say, very consistently improving and just becoming more pro consumer. Right? It's we're definitely in more of a buyer's market today, although it's still very divided. Like, if you go to a Toyota dealership, they are still at, like, thirty plus day supply, which is roughly half the the level of supply they should have for, you know, current demand.
Speaker 5:And so Toyota and Lexus are sort of the anomaly here. I'd say the majority of the brands out there are oversupplied right now, which is simply a good thing for consumers. Sure. Because it means you have more negotiation leverage and means that brands will put more incentives on these vehicles so that they'll they'll sell them faster. And I would say they're roughly, like, 30% oversupply.
Speaker 5:So it's not you know, these numbers are not low. We're sort of in this phase right now where it's the incentives are only gonna keep getting better because the reality is the inventory is out there, and it needs to move. Now it is spring season, which is typically a pretty good time of year for dealers. Right? People get it most people are getting their tax refunds and whatnot, and they're going shopping.
Speaker 5:So there there has been a bump in business over the last couple of weeks. But, you know, other than that, I mean, I don't expect the spring bump to last that long and never really last that long. And, you know, it's a very temporary thing. When is the best time a Go ahead.
Speaker 1:Oh, yeah. When is the best time to buy a car if you're a consumer? And, like, are there any, like, tricks to getting a good deal?
Speaker 4:It feels like a very opaque process
Speaker 5:for us to assume. Question. Look. Yes. You'll you you might get luck out if you go, like, you know, end of month, end of quarter because there's these things called stair step programs where, you know, it's like, hey.
Speaker 5:You sell, I'm just making it up a hundred cars. Yep. You'll get an extra, you know, x amount of dollars as a dealer. Right? So if I'm trying to get that stair step, you know, if I'm trying to unlock that, you know, that that benefit from the deal from the automaker, then I'm going to maybe even sell a couple cars at a loss at the end of the month because I wanna hit my number.
Speaker 5:Now many manufacturers have moved away from those. Many dealers don't even participate in them. But, yes, I mean, in theory, you could do that. I would honestly tell you that a better way would simply would be to simply see what brand right now is most oversupplied. Now you might not like that answer because maybe you don't wanna drive a, you know, an infinity or whatever, you know, is the the most oversupplied at that current moment.
Speaker 5:But reality is, like, that's where you will have the most negotiation leverage as a consumer.
Speaker 4:Yeah. That makes sense.
Speaker 2:That makes sense. What you know, Tesla as a stock has been down tremendously over the last month even. I think it's down like 35%. You know, at the same time, we're seeing more than ever on the roads, but they're they're obviously, you know, the stock pressures in part, you there's probably a political angle. There's a, you know, broadly the sort of moat they had around EVs has been eliminated as other manufacturers have have entered.
Speaker 2:What what do you see in store for, you know, Tesla? I know they're they're verticalized, you know, there's not, like, Tesla dealer owners on your platform. But what is the future of the Tesla brand in the near term in your view? Are you see sales performance, you know, continuing to slide? Or is there you know, John has joked jokes a lot on the show, obviously, you know, completely joking that, like, they should come out with a gated manual transmission with a combustion engine.
Speaker 1:Naturally aspirated v 12 ideally in the Roadster. The Roadster's been delayed so much. Let's just put a Yeah. Carbureted v 12 in there. Let's get the Countach engine in there.
Speaker 5:Look. I think it first, if you look at EVs in general, right, this the that's fine. The pendulum swung too far over the last couple of years. So these manufacturers went you know, had all these crazy proclamations. Right?
Speaker 5:We're gonna do x amount EVs, you know, or whatever x percentage of our production will be EVs and sales. And the problem was that EV demand simply was way behind. Yep. So, you know, like, Ford was the prime example where they were kind of make producing all these vehicles, and people didn't want them. Right?
Speaker 5:Now demand has been growing very consistently and and linearly. Like, it hasn't gone exponential. Like, their demand is still growing if you look at simply, you know, how many EVs are being sold. But relative to the supply that was produced and what was out there didn't make any sense. So what happened?
Speaker 5:Well, all these crazy incentives started happening, and the the all the legacy automakers started to sell all their EVs. But, again, they didn't sell them because there was the demand out there was, oh, why this is such a great car. I want it. They sold it because, wow, the price is so incredible. This is all I can get, or maybe this is simply the the cheapest monthly payment in the market.
Speaker 5:I think we forget, like, how, you know, consumers are are are practical. Right? Like, I have a budget, and I need to fit into my budget. And if an EV is gonna get me within my budget, I will consider an EV. I don't care.
Speaker 5:Like, the average American doesn't care if it's an EV or a gas or it runs on freaking water. Right? They need to to be able to afford something. So I think that's kind of what happened in the big picture over the last couple of years. Now look.
Speaker 5:There's no doubt about it that Tesla has some of the most incredible technology. I don't think that the I don't think the actual interior is anything, you know, extravagant. It's actually pretty basic and and in many cases, so far. But the tech is incredible. The driving is amazing.
Speaker 5:I love driving Teslas, and and I know that, you know, many dealers that I I personally know drive Teslas themselves. Many do it just because they wanna, you know, see what it's like. Others just do it because they genuinely enjoy it. And so I I think that there's the EV market has been very volatile. It's you know, the the swings have been very just very rough up and down.
Speaker 5:I I can't say, like, I'm too concerned long term. I still think that it's gonna continue rising very slowly. I think dealers that put focus on it and and make the investments to serve more EV customers will do well. Obviously, it's market dependent. You know, if you're in the Mid Midwest, it might be ten years behind because they simply don't drive as many EVs out there.
Speaker 5:But in general, I think it's a it's still a smart investment. Tesla stock price is just it's so hard to know. Right? Because, like, what is even driving that? Is it like the Elon political, like, you know, like, overhang?
Speaker 5:I mean, there's so many factors going into that price the price of that stock. And so it's really hard to tell what's next for it. But I would I would sort of kind of, you know, quiet out the noise, and I still think that we're EVs are gonna continue rising, albeit a lot slower than anyone has predicted and expected because that's just how, you know, consumer adoption takes time.
Speaker 1:Outside of Tesla, who's on a tear and who's in trouble in terms of the big car brands right now?
Speaker 5:Well, you know, I actually just had one of Nissan's top executives on the my podcast today. His name is I forgot his last name. Shahani is the last name. I forget the first name. But long story short is Nissan is in trouble, or they've been in trouble recently.
Speaker 5:Right? They've been really losing a lot of money. Vinay Shahani. That's what it was. So they basically Nissan has sort of been the culprit here.
Speaker 5:And you have to understand, the auto business is very it's you know, it it it just it cycles, and it comes and goes. So, like, if you look at '21, it was like Ford was in the spotlight. Like, they were in the penalty box. Then the last couple of years, it's sort of been Stellantis. Right?
Speaker 5:Chrysler, Dodge, Jeep Ram. You know? Now it's sort of Nissan because they oversupplied their vehicles. Dealers are not making any money on them. There's way too many dealers for the market share that the brand has.
Speaker 5:And on top of all of that, because they're oversupplied, because they put all because they've been selling these, you know, wholesale to, like, rental car companies and whatnot, all the consumers are left with lower residual values. Right? So now you're the view the Nissan that you purchased is worth a lot less, so you're you're pissed. You don't wanna buy another Nissan. That thing loses value very quickly.
Speaker 5:So they're prob they're one of the brands that's really struggled recently and all that, you know, sort of accompanied by a sales decline. But they are you know, they have new leadership in place, and, you know, the hope is that they're gonna kind of come out of it. I I think that their leaders are very convincing and have just because I haven't spoken to Vinay on the podcast. I mean, he he sounded like he he knows what he's doing. I mean, the guy's been around the block, worked at Toyota, very, very smart and sharp.
Speaker 5:But it's it's not an easy thing to get out of. I mean, do they have the resources to really get to get claw back a significant amount of market share so that the brand is sustainable, or will they have to do some merger like they tried to do with Honda, which didn't really work out. And because of that, they actually ended up switching CEOs at Nissan corporate. So that's one of the brands that's that's struggling pretty bad. You know, Infinity is included in that as well.
Speaker 5:It's it's Infinity is under the umbrella. Mhmm. But for the most part, would say like that, they're probably the the biggest the biggest culprit right now in the market.
Speaker 2:Talk about the durability of the dealership model, you know, your audience, lot of people that are working in the industry, working at dealerships, obviously. But, you know, you you you had a a, you know, SMB dealership, then you had a venture backed, you know, online, you know, car sales platform. Something about cars, it feels like the sort of final boss of e commerce and that, you know, with a car, you're gonna spend a lot of money. It's one of the most expensive purchases outside of your home. And so it's really nice to just go to the deal you know, I like going to a dealership even if I'm not actually, you know, necessarily in market just because it's fun to look at cars and and and stuff like that.
Speaker 2:But, you know, do you see fifty years from now, are we still going to dealerships to buy cars? My personal bet is yes because I would rather even if even if an online platform says, yeah. We'll we'll send you the car. They'll put it up on a truck. You can drive it.
Speaker 2:You can buy it there if you want it. I'd still like to go and just see more inventory. Right? And experience, you know, more vehicles.
Speaker 5:So what's interesting is I mean, I learned so much selling cars online, like, strictly online. First of all, I learned that online car buyers by a large percentage are subprime car buyers. Right? Subprime consumers. They can't otherwise get approved anywhere else, and this is sort of their last resort.
Speaker 5:Carvana, CarMax have built such a great mousetrap that it's attracted customers who are also not subprime. Right? And I would bet you that if you looked at a graph from when they started till today and just how their customer mix evolved, I would guarantee that, you know, it started out a lot more subprime than it is today. But, you know, that's an example of a brand that's evolved. So look.
Speaker 5:The dealership is evolving. There's no doubt about that. And if you're a dealer that doesn't think that, your head is in the sand. People what we learned through COVID and after COVID is that people still want to interact in person with a dealer, and it's not for the purposes necessarily being with the dealer, but rather you might be making a large purchase. You know?
Speaker 5:You wanna go in. You wanna talk to someone. You maybe wanna test drive that thing. I mean, there's several things you wanna do in person. And so the dealer is simply gonna continue evolving just to meet the needs of the customer.
Speaker 5:There are certain things that the dealers are gonna do, which I think are very durable, such as service. The service department is the highest margin profit center in a dealership because, you know, for those that don't know how dealerships work, right, you have many different profit centers. You have parts. You have new car sales, used car sales, service. Service is the highest margin, you know, revenue stream in a dealership, and that is simply something that, you know, won't go away.
Speaker 5:You're always gonna need to get the vehicle service somewhere. Even if it becomes more fleets. Right? If we have all these autonomous vehicles on the road, they're gonna need to be serviced somewhere. Or, you know, if it's sort of like Turo where people are actually acquiring fleets, that will need to be serviced somewhere.
Speaker 5:So service is a very I think it has crazy kind of staying power, and it's not gonna go anywhere. And the margins are strong. I think new cars is it's tricky. Right? Because if you look at supply levels right now of new cars in the market, we're not right we're not quite at twenty nineteen levels yet, but we're we're inching up.
Speaker 5:Many dealers are already breaking even on new cars, you know, depending on the brand. Some are taking losses. And so new cars has never been like a real profit center. Right? It's a commoditized product.
Speaker 5:The the good thing about new cars for dealers is that it brings the customers back. Right? So if you lease a new vehicle, then they come back to you for service. Right? Maybe they trade into a vehicle, then you sell it as a used car.
Speaker 5:Right? You get another client. And so the dealership is gonna continue evolving. AI is completely shaking up things now, I would say, for the better, if anything, for dealers because they're simply able to offer a better experience, offer more targeted products and services for customers, waste less time. Consumers are getting a more consistent experience.
Speaker 5:So AI has definitely been doing a lot of good, but it's just moving all so quickly. And we don't really know if dealers will become, you know, kind of new car fulfillment centers eventually and just you know, then you'll also do service there and maybe buy some used cars or what that future really looks like. I don't think the dealership model is going away other than the fact that lobbying is super strong and all that. Like, let's put that aside for a second even though it's a super important one. I simply think that manufacturers sometimes underestimate what it takes to be a successful retailer.
Speaker 5:You know, they do they really wanna carry all that balance sheet risk on on or inventory risk on their balance sheet? I mean, there's many considerations, and it's been, you know, tried many times. And and, frankly, Tesla is the only one that has really done a great job at it or, sure, maybe Rivian as well. But there's been other plenty of examples on the legacy side that they simply have not been able to do it successfully with launching, a d to c or something direct to consumer or something like that.
Speaker 2:On the service side, are there exciting robotics companies that you think are going to get meaningful traction in the service departments of these dealerships? I imagine, you know, we we cover the the robotics companies, the one x's, the figures, the Tesla optimists, things like that. Do you know, I'm not convinced that humanoid robots are gonna be the ones in the search sort of service base doing the work, but maybe it's
Speaker 5:They already are. They are well, not doing the work. So I actually invest in a company called Robo Tire, which went out of business. So that wasn't a good one. But they were literally, like, replacing tires on they were replacing tires on vehicles in, like, I think Firestone or something.
Speaker 5:I guess the economics didn't work out there. But there's a company now, robotics company, and I should say now, I'm pretty sure they're public already. They're part of a bigger company called Richtek, which I had them on my podcast, and they're literally transporting they're literally transferring parts in the service center right from the parts counter to the technician. And this is live. You can literally see Richtek robotics.
Speaker 5:It's pretty incredible. But, again, saves a ton of time. Think about it. To technician, you know, these these are skilled trades. Maybe you're making, like, $50 an hour.
Speaker 5:I don't know how much you're making. Like and to go each time grab the parts, I mean, it's it's it's extremely inefficient. And so these robots now are in service centers transferring parts. I would say, you know, I I'm I'm a fan of, like, the whole, you know, vertically integrated kind of low NPS, high margin. I think I think Keith Rabbois is the one that was spoke about this, I think.
Speaker 5:But, you know, asking yourself, like, what is the you know, what part of the business has the lowest NPS and the highest margin that's ripe for disruption? And it's pretty crazy how true that is because if you look at the car business, the lowest NPS in our business, you know, in that promoter score is actually service.
Speaker 1:Mhmm.
Speaker 5:Right? So the service department. And it's used car auctions, surprisingly. Now auctions are dealer to dealer. Right?
Speaker 5:And those are also extremely both are high margin businesses. Now if you look what's happening on those two fronts, we're seeing a lot of just attempts at disrupting those two different businesses. So on the auction front, you're seeing all these kind of auction substitutes that have spawned up over the last couple of years. You actually mentioned a couple right there, Bring a Trailer, for example. Yeah.
Speaker 1:I wanted
Speaker 2:to get your
Speaker 5:kind of opinion. And and by the way, that's not new. Bring a Trailer's not they've been around for a while. No. No.
Speaker 5:I know. But they've they've they've gotten a lot bigger. Yeah. But just to kind of finish my thought there. So the point bottom line is, like, you're also seeing a lot of disruption in service now where all these AI companies are trying to create tech for dealership service departments to make them more efficient, more profitable, the better customer experience.
Speaker 5:And so I think that that's gonna kinda work itself out over the next couple of years.
Speaker 2:That makes sense. Talk about the used online used car marketplace, specifically around collectibles. I don't have a good read right now on market share between, you know, I've success on Bring a Trailer. Every every car enthusiast, you know, looks at the platform and they're like, somebody needs to disrupt this. Right?
Speaker 2:It's it's got a great community and this sort of rich data and history. But the actual experience yeah. It feels very dated. Cars and Bids has this sort of amazing YouTube driven marketing engine and Doug Demuro. What is who's winning there right now?
Speaker 2:Do you feel like Cars and Bids is gaining a real foothold? It's it's once you actually get it working, it's like the best business ever because you don't have to hold inventory and you're just clipping fees over and over and over. Yeah. But it's certainly highly competitive.
Speaker 5:You know, it's crazy that you said that. It feels like it's aging because I just spoke with a dealer maybe, like, three days ago who just discovered selling on Bring a Trailer. Right? Like, let that sink in. Not like, it's like, it's crazy how adoption in this industry with, you know, these auctions I mean, it just takes time because people are, you know, how are centered their ways.
Speaker 5:Things are working. And these auctions are, like, the original network effect. Right? If you think about the auction is all about how many people can you get. Can you get the highest concentration of the right type of dealers, right, the right buyers to purchase?
Speaker 5:Now, again, Bring a Trailer is consumer facing as well, so that's different. But you still need that really, you know, high concentration of of the right shoppers to to buy. So, look, my take is that I think I don't know the specifics behind cars and bids today because it's it's evolving and bring a trailer. I can tell you, like, anecdotally, I hear about it the most from dealers. Take it for what it's worth.
Speaker 5:It just you know, if I tell you what's the buzz, it's I I wish your dealers mentioned you bring a trailer, bring a trailer. I think that it's going to it like, it's unclear to me how the these brands not Bring the Trailer, but, like, the up and comers that came after, like, Cars and Bids. It's just unclear to me how they how how they could maintain their margin long term and avoid really losing their business to the bigger players like the Bring a Trailer in the market. Because I just don't like, you can only pump so much demand from your you know, having a having an audience is great because you're able to, you know, send over demand and and community and all that to your product, but that's not sustainable. At a at a certain point, you have to kind of you know, the business has to stand on its own feet and, you know, that might get you started.
Speaker 5:I don't know how far that takes you. So I think the real question is, you know, are they able to really solve a problem in the market in in a unique way long term? I I don't know. Like, I haven't bought on cars and bids. I've played around with the product.
Speaker 5:But I just I don't know if there's enough if there's an if there's enough demand for all of these because they're they're not the only ones. There's other ones that popped up. It's sort of like Yeah. And the real
Speaker 2:the real network effect with Bring a Trailer, for those that aren't familiar, is it has the longest standing, you know, most active community. And if you're a collector and you have a unique car, you wanna get it in front of the biggest possible audience to get the best possible price. And Bring a Trailer has so much leverage that people will sign up their car to sell, and it won't even necessarily be slated for auction for months sometimes. And so Cars and Bids has an opportunity to say, hey, we'll list your car next week. But then the challenge is if they don't have the same level of, you know, collectors on the platform, you're just not gonna get the best price.
Speaker 2:And so Yeah. They technically offer the same service, but they offer a worse service because they won't necessarily get the the best price.
Speaker 1:It's still just a fantastic go to market strategy to seed a marketplace with a huge YouTube audience. But yes, there's the question
Speaker 5:of like Yes. That's what
Speaker 1:do you grow from there? Like, you are kind of TAM constrained. He only has a few million viewers and only so many of those can actually convert onto the platform. But, I mean, he's done a great job just going full send and And look the every single video.
Speaker 5:The I would say the biggest physical auction or traditional auctions, what they've done is, you know, they've integrated other businesses. Now I'm not telling you here that they've kinda given up on margin on the sales front, but, you know, they become they become lenders. Right? So they floor your cars as a line of credit. They do other services as well, which helps you kind of, you know, build a moat around your business.
Speaker 5:But it's it's just it feels like every automotive YouTuber that gets an audience runs to, like, launch this, you know, auction marketplace.
Speaker 1:Yep.
Speaker 5:And I just don't know how many of those will really have staying power long term or if, you know, it's gonna end up being kind of like a winner takes all or winner takes most.
Speaker 4:We will see.
Speaker 2:We'll have
Speaker 1:to check-in with you in a couple months and see how it's going.
Speaker 2:Anytime anytime there's big car news, it'd be great to have you back on to break it down. And This is fantastic. Thanks so much.
Speaker 5:Now you guys you guys are doing great work, seriously. You guys are definitely cutting through the noise. And I can tell you, it gave me a lot of, like, early CDG vibes when I because, like, you put up that, like, breaking news stuff the other day, and, like, that's how I got started. People just started sending me shit. They're like, oh, by the way, this dealer is out of business, and I just started posting that.
Speaker 5:People were calling me, like, the gossip girl of automotive, which I never wanted to be. But it's a it's it's this thing where, like, all media in the future, in my opinion, or the winning media will be, like, expert led media, which is sort of what you're doing here. You know, you're in the game. You're bringing people that are in the game to talk about things that are relevant to them. So I think it's really great, and it's exciting.
Speaker 2:Well, thank so much for Thanks,
Speaker 1:for stopping by.
Speaker 2:Great to hang. Thanks, Talk soon.
Speaker 1:We'll talk to you later.
Speaker 2:What a background. Interesting. Setting the bar on backgrounds.
Speaker 4:Totally. Oh, yeah. Yeah. I mean, fantastic. Clearly, no sense.
Speaker 2:Him and Joe.
Speaker 4:Yeah. Both prepared.
Speaker 2:Sean last week.
Speaker 4:Yep. You you can tell, like,
Speaker 1:the early stage builders who aren't just on the
Speaker 4:podcast circuit constantly, you you get a little
Speaker 1:bit more plain background, but they come with a different set of insights, you know.
Speaker 2:That's true. That's true. So we got We like both of them on the show. We got a
Speaker 1:We got some
Speaker 4:breaking news.
Speaker 2:We got some breaking news, I Breaking
Speaker 1:news and news.
Speaker 2:I gotta pull this up, but we're gonna get Chad Byers.
Speaker 4:Let's go.
Speaker 2:Here he is. Yeah. So he should be in the waiting room any second.
Speaker 1:Hey. How you doing, Chad?
Speaker 7:What's up?
Speaker 1:What's up? Welcome to the show. Welcome to the Temple of Technology. How you doing?
Speaker 7:Doing fantastic.
Speaker 1:That's great. Good to see you. Good to
Speaker 2:see you guys, Joe. Chad, before before we dive into it, I gotta highlight some, facts for you. So, until the twentieth century, Chad was rarely used as a given name. It first entered the top thousand names for male children in in 1945, ranking at 997. It actually peaked in popularity, in the seventies reaching rank 25.
Speaker 2:But now because, you know, it it it comes with so much symbolism, it's now 1,600 on The US burst charts. And I was telling John earlier, you're a Chad, like, by by sort of definition. Right? You're you're slinging checks. You're very grinding on the fitness front.
Speaker 2:You're sort of skiing in exotic destinations. Yes. I feel like there's an incredible we talk about nominative determinism on
Speaker 1:the
Speaker 2:This
Speaker 1:is a great lead in.
Speaker 2:And it's and it's almost like your parents blessed you with that name. And now you're now there's not a lot of new Chads entering the market. You almost have a monopoly on I just wanted to give you a little hat tip
Speaker 7:for that. So that that was the best intro I've ever gotten to something. Let me give you let me give you a funny data point though. Please. I'm after I'm named after two people.
Speaker 7:One is my great grandmother who is Granny Chatham.
Speaker 2:Oh, wow.
Speaker 7:And the other was a gay wallpaper salesman that my mom fell in love with when, she was pregnant with me.
Speaker 2:Wow. Wow.
Speaker 7:So talk about what I was supposed to be Yeah. Named after and then my fall from grace as, you know, this you know, Chad was dragged to the mud as a derogatory name.
Speaker 1:Yes. Yeah.
Speaker 7:And, you know, then Giga Chad and, you know, all these things kind of, like, came out. So, it's not lost on me that I've unfortunately kind of, like, grown into the exact stereotype in a way.
Speaker 2:No. But but you rode the you rode the, you know, it's like the Masa, know, the Masa, famous Masa slide Yeah. Where like it's like the
Speaker 1:Trough of disillusionment.
Speaker 2:Trough of disillusionment and then you came out of it. Now you're you're just get to be a Gigachad. But great to have you on the show. You've been a long long, I feel like a long time, supporter. Thank And, you got some news today?
Speaker 2:I hear
Speaker 7:Yeah. Yeah. So so big news. I'm like, we just dropped this couple minutes ago, but, we are announcing SUSE Adventures five. This is our fifth early stage fund.
Speaker 7:I'll talk a little bit about what we do as a firm and everything, but wanted to drop it here. New media, you guys are
Speaker 2:Hit the hit the size gong.
Speaker 4:Boom. I didn't know the size there. There
Speaker 2:we go.
Speaker 1:What if he says it's a $2,000,000 fund?
Speaker 2:We gotta take it back. I I I got the scoop.
Speaker 1:Got scoop. Okay. So preemptive side.
Speaker 2:So you don't make a fund.
Speaker 7:So so really quickly Yeah. Started in 2013, and we've been an early stage venture fund based in San Francisco since then. Look. Our our general belief is that entrepreneurs are a lifeblood of progress broadly defined in the world. Like, they are the most important people in the world, and so we exist to to serve them.
Speaker 7:And we're ten years into this. And, you know, fifth fund, hundred and 75,000,000, and it's a return to what we did at the very start. So only pre seed and seed. And I think that makes us probably one of the largest of this exact focus. Mhmm.
Speaker 7:And so in a moment when venture is changing a ton, and I'm sure we'll talk about that, we are kinda going back to specialists and try to do one thing, and this comes from my core belief in the world that I think you guys are embodying too, which is, like, if you wanna be the best at anything, you just have to focus and try to do one thing super well. Yeah. And so that's that's the big move on this this new fund and excited to to talk about it with you guys.
Speaker 2:Fantastic. No. It's amazing. One, I I wish we had the data point on how many venture funds make it to fund five. It must be it must be like harder to do than getting to your fiftieth podcast episode, you know, or something like Like it's very, very challenging.
Speaker 2:So, you know, congratulations on the milestone, but yeah, maybe walk us through kind of your full journey. You know, it sounds like you went from super early stage to sort of expanding scope, and now you're you're you're sort of fully refocusing with this fund, but it'd be great for for the audience to hear the backstory.
Speaker 5:So
Speaker 7:2013 started with 25,000,000. It was kind of a past the hat type fund. No institutions, all individuals, family offices, 75 LPs. Like, horrific to manage. Wouldn't wouldn't recommend that to to literally anyone.
Speaker 7:Twenty sixteen, we did 50,000,000 fund two, and that was really on the back of the two breakout companies we become known for, which was Robin and Flexport. And I can kinda go into those stories. And and we got our first institution in fund two. So Horsley Bridge, I still am grateful for them. We're like, we'll take a risk on you.
Speaker 7:You guys are not the shape and size of fund we typically do, but we'll put in 10,000,000 of the 50 and then kind of the rest is history. LPs look for those types of signals, etcetera. In 2019, raised 90,000,000, and this is what were alluding to in terms of, like, strategy. I think there's this general thing in venture, but it's true of the whole world. Right?
Speaker 7:You get a little bit of success, start to think you're, you know, you're onto something, and then you get feature creep.
Speaker 1:Yep.
Speaker 7:And so feature creep in venture is like, oh, maybe I'll do other stages or maybe I'll do these other things. I'm gonna launch a program or I'm gonna do this thing. Yep. And everybody that's, like, the natural inclination of the world. So we started doing other stuff, and then we, in 2021, raised one twenty five seed, two fifty op fund.
Speaker 7:I looked around shortly after that, and I was like, you know, so happy. We raised all this money that felt like a badge. And then I was like, wait a minute. My day is, like, materially different than what it used to be. I used to just meet seed stage founders, which I love, the stage I love.
Speaker 7:Our average dollar goes in after the seed. Like, we can call ourselves a seed fund all the way up, but we're not, like, just definitionally. Like, let's not lie to ourselves. And so that evolution of really just deciding, like, what do I want my day
Speaker 4:to be? Like, what is
Speaker 7:the stage I love working at? And fund five is just a testament to, like, refocusing that entire realization back on what I think we're the best at, what I think I love the most. And that's been our journey and evolution. And as I said, like, the backdrop of that personal, you know, realization was what's happening in venture broadly, and that's big. You know, I I call them buffet venture capital is my term term now.
Speaker 4:Like I like that.
Speaker 7:All you can eat. Right? You get any cuisine. There's there's three starters, unlimited breadsticks. You get, like, unique course, desserts.
Speaker 7:And, like, you can go fill up on that.
Speaker 3:At all.
Speaker 7:You can go fill up on that. It's not the best individual dish of your life. But, you know, we're trying to be like the single Michelin star. Like, we're not, you know, hovering over you, but, you know, hopefully, if you know what you want, it's a it's a good product. Right?
Speaker 1:That's great.
Speaker 2:So you had had Flexport and Robinhood in the first fund. So, you know, generalist from the start, what what was the sort of tech trend since 2013 that you were closest to going all going feeling like, you know, going all in on we we've seen a number of venture capitalists, you know, fall. So get so excited about a trend that they make themselves, you know, we're a defense tech fund or we're a crypto fund or things like that. And I feel just like the feature creep you're talking about. Oh, let's add growth investing or there's that same thing of, oh, maybe we'd have an advantage if we were just doing this one thing and and that's historically, you know, it's worked out very well for some, but makes venture, I think, a lot harder given that this is a people game.
Speaker 7:Totally. We have yet to go all in on something, but that is not to say we haven't had a risk of potentially falling into that a hundred times in the last decade. We talked about going all in on crypto. We talked about going all in on AI. We talked about going in on all sorts of things at different moments.
Speaker 7:We talked about pivoting the whole fund to a program. We talked about all this shit. And I said, like, this applies to not just venture funds, but any business. It's as much as what you say no to doing and the decisions you decide not to do is is what you do. And so we have, thankfully, I think, navigated to we don't try to opine too heavily on the thing.
Speaker 7:We are still led by people. So, like, at the end of the day, what I love about seed and what I was alluding to on my realization is partnering with people, which is seed. See, there's nothing there. There's nothing built. There's nothing to underwrite, is what I love.
Speaker 7:And I have found that other people are smarter than me, other people see the future better than I do. When I met Vlad and Bijou, I hadn't thought about that opportunity. But when they told me their vision and showed me a demo of the product in 2013, it was the most beautiful mobile app I'd ever seen in my freaking life. And right when they said the narrative of changing the way our generation, I was 25 at the time, experienced the stock market, it was like, yeah. Like, %.
Speaker 7:Like, that's gonna happen. Yep. And so it wasn't my brilliant idea. Right? It was just, you know, I've done a good job attaching myself to brilliant people.
Speaker 7:So that that's how we still operate as a firm. And it'd be very easy right now to be all on AI, but, you know, we're still, I think, honest with ourselves that we're still people first.
Speaker 1:So how do you think about pro rata and kind of maintaining a position, riding your winners, any of that? Is that kind of off the table, or do you have a specific strategy for that now?
Speaker 7:So this goes to a broader thing that I've been thinking a lot about, which I think that, venture is a pretty inefficient market. And if you let me just take a step back and I'll answer the question, which is, like, public equities are pretty pretty efficient. Right? Like, bid ask spread of a single stock is, like, really tight, and you end up having clearing price. It's weird that, in my opinion, the most important industry in the world, which is the innovation industry in the world, which is technology, has a market, which is called venture capital, that is really efficient.
Speaker 7:If you're a founder and you're raising a b, you pitch, like, 20 firms and get a price.
Speaker 1:Yep.
Speaker 7:Like, kind of crazy. Right? And so what we're trying to do at ZUSA is not force upon founders certain round constructions. Like, why is the a 20% dilutive no matter how much you raise?
Speaker 1:Yeah.
Speaker 7:It's a construct of the venture business model. But what if a startup wants to raise four at a hundred?
Speaker 1:Yep.
Speaker 4:What if
Speaker 7:they only need three? Like, we should develop more products and venture to allow every type of founder to finance their business in that way. And so the way we think about it is, like, we start the seed, but then we'll be creative. We'll partner with you however you want as you build your company.
Speaker 1:Mhmm. Do you think that the fundraising needs are changing over time? You're seeing more companies ramp to a hundred million ARR faster than ever. They're more profitable. There's just more smaller teams doing stuff.
Speaker 1:Is there are capital constraints changing?
Speaker 7:%. Like, that is for sure. The efficiency of companies is real. How much does early hype revenue, vibe revenue? I think a lot a lot
Speaker 1:of returns
Speaker 7:are so good. They're just like they're they're golden. You know, how much is this durable? I don't know. Right?
Speaker 7:Some these are gonna bloodbaths, but, like, what is empirically true is companies will be more efficient in the future than the past.
Speaker 1:Yep.
Speaker 7:So what I love about where we are positioned in the market is in a world where companies are more efficient, Early stage is really, like, the place to do this business. It'll be the last entrenched Alamo of venture.
Speaker 2:Yeah. Talk about, FOMO right now. You're you're based in The Bay. I'm sure you experience it all the time. Everybody you know, every time I see, you know, one of these sort of revenue charts where it's just like parabolic to a hundred million ARR, I get, you know, I'm happy because, you know, it's good for the ecosystem, but if I'm not in it, I'm angry.
Speaker 2:I'm a bit angry. But but but on your side, what's the general sense? Like, do you feel like a lot of investing right now? It it's so unclear because it feels like we're we're early in AI adoption and understanding the potential of AI, but the market is so uncertain right now. What what do you do you think FOMO is still sort of like is a is a dominant force in in investment, sort of venture investment decision making right now?
Speaker 2:Or is it, you know, still dominated by the the sort of beautiful potential of the technology across all these different industries?
Speaker 7:I mean, FOMO's real. Like, I have FOMO every fucking day. Like, to your point, I see these graphs. I'm like, I text my team, Warren, fuck. Why are we
Speaker 1:in that deal? Like, what the fuck?
Speaker 7:You know, it's like, it's it's so real. And at the same time, like, I don't know. I'm not 50, but I you know, like, if you were a venture in '21, you remember '21, and you remember
Speaker 1:Yeah.
Speaker 7:'22 and '23 sucked, like,
Speaker 1:at the
Speaker 4:same time.
Speaker 7:Like, that vintage is gonna be historically shitty. Yeah. So it doesn't take you don't have to be around that long ago to remember '21, and we're in, for sure, some type of bubble. Now how much of that will be enduring value or not is, like, I have no clue, but, like, this makes no sense what's going on. Like, it makes no sense.
Speaker 7:There's seat rounds at 70 with nothing and, like, four 19 year olds. Like, this is insane. And because venture's power law, that individual deal can make sense if it's the right one.
Speaker 4:Yep.
Speaker 7:But as but as an industry, it's gonna be a huge waste of capital. So the FOMO is real, and I but I I think I'm do like, we do a good job to, like, temper our FOMO and remind ourselves. Like, let's just try to stick to our, you know, our guns here.
Speaker 1:What what are you doing for sourcing these days? And, how'd you meet Ryan Peterson for FlexSport? How'd that deal come together?
Speaker 7:We met Ryan through Wesley Chan who was at Google Ventures at the time. He's now at FPV, his own firm.
Speaker 4:Yeah.
Speaker 7:And, Ryan pitched us on a call. There's no Zoom back then, really.
Speaker 1:And Post YC demo day?
Speaker 7:Other YC demo day.
Speaker 4:Okay. Right before it
Speaker 7:right before it, they allowed people to talk to investors before demo day back then. Gary really locked that down.
Speaker 4:Cramped that down.
Speaker 7:Or they're just not talking to us. It's one of the two. We committed to Ryan on the phone. It's the only time we've ever done that in SUSO history. We committed to the deal on the phone call.
Speaker 7:He's hit us for twenty four and a half minutes, and we were like, yeah. We're in whatever. Tell us where to wire. You know? Super irresponsible.
Speaker 7:It was our first one. I like, I cannot tell the LPs this. This is insane. This is, like, you know, a bad idea. But it was the most compelling pitch I'd ever heard.
Speaker 7:He's one of the best salespeople of all time, and he's become an incredible friend. Our families are friends. He and I even own, like, a business together outside of work now. Yep. You know, the the cheesy thing about venture is, like, it really is the friends we've made along
Speaker 1:the way. It's true though. He's the best. He's the best. Yeah.
Speaker 1:He is the best. He was our first guest on the show. Yeah. Yeah.
Speaker 2:He was. It was a solid culture
Speaker 1:in Texas.
Speaker 2:Out of your out of your portfolio, know, maybe some more recent investments, what what do you feel is the the most underhyped, Portco, the company that, you know, should be getting, more headlines and attention but isn't for one reason or another?
Speaker 7:I mean, one that flies relatively under the radar, but I'll tell you why it's not going to be under the radar for very long, is a company called Chapter, which is based in New York City. The founder is Kobe. Kobe worked at, Palantir back in the day. The reason it's not gonna be under the radar for very long is, up until two years ago, Kobe had a very interesting board and a very interesting cofounder. So his cofounder was Vivek.
Speaker 7:Crazy. And his board was JD and Peter Thiel.
Speaker 1:Wow.
Speaker 7:So talk about going from, like, oh, we have this great board dynamic to all of a sudden being like, my board member is the vice president of The United States. And, you know, Peter's still very involved. And this company is doing really meaningful work, and AI is gonna accelerate it. It is helping this very big problem of senior citizens in The US, like, navigate the Medicare, Medicaid health care system, pick the right plans. It is super hard to do.
Speaker 7:Mhmm. There's all these contingencies and other to understand the flows and prescriptions and what stuff are you on and what state are you in. And so they're making that process easier. It should help health care costs in the run. It should help patients.
Speaker 7:This is really important work. But just talk about up leveling your connections in the world, by the facet of who you chose to be investors. We were the led the seed there, and, it'll be a many, many billion dollar company.
Speaker 1:That's fantastic.
Speaker 2:Love it. Question on specifically around reindustrialization. Andreessen had their American Dynamism Summit today. JD was speaking there. There's sort of this broad emphasis on bringing manufacturing back to The US.
Speaker 2:I'm curious to get your take on manufacturing, even robotics led manufacturing as a category because from my sense is there's gonna be a lot of great businesses that come out of this that just aren't necessarily venture scale because they get to the point where they're maybe you're doing $20,000,000 in EBITDA and you, you know, maybe you're not, you know, hyper growth, but you're just a good business. And then, you know, people are gonna look at that and say, okay, this we know what the market price is for a manufacturing business for this kind of widget. And so how have you looked at that as a category and are you making are you making net new investments there out of the new fund?
Speaker 7:Yeah. Well, shout out to my cofounder, Sousa Leo Polovitz. He started a fund called Humble Ventures a couple years ago that's only doing, like, manufacturing American dynamism hardware stuff. So he's primarily of the original OG SUSE founder guys. His fund is really what's doing that.
Speaker 7:SUSE primarily focused on software. But, I think a couple of things you said are interesting trends in and of themselves. Like, one, I think this question of, like, what is venture backable and what is not is a good question in the next decade, which is there's gonna be this camera explosion of, like, micro SMB and mid sized company creation that AI enables that maybe shouldn't be venture backed. Or to my point earlier, there should be different products, different ways to finance a company, maybe different ways to not have it only be equity, but also have reps, you know, profit sharing or other long term. I think that's a reasonable point of whether it's hardware or really anything, like, as a big question.
Speaker 7:Two is, like, the strategic value of onshoring manufacturing is, like, obviously a very good idea, incredibly important. We're doing less there. What we're doing more on is, stuff back in our realm of, you know, we've led the seed of stored now over a billion, Flexport, others. Like, we're doing a lot in supply chain resilience and others. So, obviously, when stuff is manufactured, whether it's abroad or here, there's, like, a whole supply chain resilience of a company that has to happen, especially with tariffs and stuff going on of, like, where do we move stuff once it's already manufactured around the world?
Speaker 7:Like, that's probably what we spend a lot more time thinking about. But, like, you guys have had Chris on, I think, Power from from Adrian and others. Like, these companies are insanely important and awesome. We don't spend a ton of time in and around it.
Speaker 2:Yep. That makes sense. Have you made any investments out of the new fund? You're you're already doing deals?
Speaker 7:Yeah. Yeah. We we soft secretly started writing checks out of it in December. So we're we're actually four in, which is a little a little hot for us. We're we're different than a lot of investors.
Speaker 7:We we do relatively low volume. Each partner will only do two or three deals a year. It's kind of like nineties venture capital. And, but to your point on FOMO, we're running a little hot right now. So we we've done we've done a couple.
Speaker 7:I think we're just excited to get going. Yeah. I have, I guess none have publicly announced, but they're all over the place. To give you, you know, what you asked earlier, like, we're still founder led. So one is a stealth consumer gaming thing with I'm partnering with this US Chess Grandmaster to build.
Speaker 7:One is a AI personal kind of copilot that uses a bunch of cameras to collect first party context about you, yourself, and then has, like, a has an app on the phone for a personal AI where we think the Apples and others are gonna have a little bit of innovator's dilemma on this stuff. Mhmm. We've done one that's an AI copilot in hardware manufacturing. So, like, you know, we're all over the place. Like, we're we're just curious.
Speaker 1:Are you seeing more solo founders these days? We we were at YC demo day, and we saw a couple teams come through where it was just a guy with no team because he's building it all himself because of AI stuff. And that kinda flies in the face of YC's, like, early advice of, like, you need a cofounder. It's gonna be hard. You need someone early.
Speaker 1:But what are you seeing out there?
Speaker 4:Yeah. I mean, literally, the pitch right ahead right before you guys. I was literally seeing our comments from here. This guy walks in. He's thinking about starting companies.
Speaker 4:Like, I really wanna cofounder. We talked about it
Speaker 7:for thirty minutes. I was pushing him to just start himself.
Speaker 1:Yeah.
Speaker 7:And his actually entire product thesis, which is the the irony of how he was thinking about his own cofounder thing was he wants you know, his belief, without giving too much of idea around is, like, we are starting to abstract away parts of building software. Right? If you think about we had, like, cursors literally, like, you know, code itself. Then you have, like, the bolts of the world, and you have, you know, lovable lovable in Europe. Right?
Speaker 7:We're, like, they're abstracting away not just the code, but kinda, like, built like, prompting entire parts of the system. You know, where we're obviously going in three years is, like, prompt to, like, company or, like, prompt to entire thing. Yeah. And that's the company he's thinking about building, and his entire argument is, like, could a software company of the future not have and he's a world class CTO, sold a company to Apple, has built big companies. Could we not have a company where instead of the engineering looking like ten, twenty, 30 people, it's, like, three really good people, and they control front and back end everything through, like, a series of agents that are responding to prompts?
Speaker 7:And understanding computer science, understanding technology is still useful. So I think that is a counter to, like, the Jensen's and all the things. Like, you don't have to learn computer science anymore. But, like, that think that's where it's heading. I kind of buy that vision.
Speaker 1:Yeah. Have you had any AI tools that have particularly helped your job in venture? Even just, like, scheduling or note taking, like or Put the deck in ChatGPT. We say,
Speaker 2:what do you think?
Speaker 1:What do you think, ChatGPT? Rip it? Should I do it?
Speaker 7:I feel deeply insecure about this question.
Speaker 1:Me too.
Speaker 7:Because LPs ask me this, and I'm like, not, like, not really. Like, I should probably be doing more.
Speaker 1:Somebody asked me, like, oh, how many ChatGPT queries are you making per day? I'm doing 20. And I was like, I think I'm doing, like, five. I don't know if that's good or bad. Like, I should be using it
Speaker 2:Rookie numbers, John. Gotta get those numbers up, I guess.
Speaker 7:I I find it not that useful for what we do. I mean, what I to be honest, like, we don't do a ton of diligence. Like, what are we supposed to diligence?
Speaker 4:Yeah. It's
Speaker 7:like people and, like, themes.
Speaker 1:Yeah. So maybe, like, yeah, if you're searching, like, how big is this market? Where who are the major players? I wanna get to know the industry.
Speaker 7:Don't ever search how big a market is. That's where you're already wrong.
Speaker 1:I've never done that work.
Speaker 7:I actually think it's bad work to do at seed.
Speaker 4:Yeah. No. That makes sense at seed. Yeah. That's very funny.
Speaker 2:There's nothing better. I mean, this is this is I just it's so important to be authentic. Yeah. And I believe that that is actually the dominant approach of of most good early stage investors yet still half of people want to be able to sort of claim credit
Speaker 1:Dress it up.
Speaker 2:And dress it up and say, well look, know, had this memo and I knew exactly how the market was
Speaker 1:gonna unfold. That's just window dressing
Speaker 4:for someone else, their boss. Just window dressing for vibe.
Speaker 1:It's not
Speaker 7:like we we just had it. We tried this. Early on, I was like, I need to do the work. So I used to write memos. And then we looked back.
Speaker 7:We're like, everything we did a lot of work on that we overthought and passed on, we were idiots about. And then all the things we ape didn't do, like like Flexport worked. And we're
Speaker 1:like Yep.
Speaker 4:Yep. What's the name the call?
Speaker 2:He's he's got a ape in his in his in his logo.
Speaker 1:Yeah. Yeah. Yeah. What what what what's the origin of the ape? I'm curious.
Speaker 7:Yeah. So the we we registered the the firm in October 2013.
Speaker 1:Mhmm.
Speaker 7:And going into that, we had 10 names picked out that were all similar to, like we weren't very creative. We're like, oh, venture names are trees and mountains and shit. So we got all these trees and mountains and shit names picked out. They were all taken in Delaware, and we had to register the firm because the next day we're doing a first close. Mhmm.
Speaker 7:So we're, like, 11:30PM. We're on the phone. We're scrambling. We're trying to think of names. Sergeant's like, I don't know.
Speaker 7:We're, like, trying to get creative. We're like, just why don't we talk about trips we've all enjoyed? So someone's like, I went to Rwanda and did the trekking with the gorillas. And then the other person was like, I also did that. Another person was like, I also did that all before we knew each other independently.
Speaker 1:That's awesome.
Speaker 7:We're like, that was the best trip of all our lives. Like, it is truly a mind blowing experience. Go see the gorillas. It's insane. They're so human like.
Speaker 7:So we looked up one of the the family names of the gorillas, and it's the Sousa family. And we're like, this is this is so dumb that we're about to name our financial firm after, like, a, a family, and b with this little thought. The irony is, like, the only thing people remember about us is our logo. And so, like, it it's worked.
Speaker 1:Yeah. It's fine.
Speaker 2:Well, venture capital is just a game of trekking with gorillas.
Speaker 1:Yes. It's about appreciating
Speaker 2:the entrepreneur. Know, being the gorilla and
Speaker 1:being their presence but you really just sort of Is the
Speaker 4:LP the
Speaker 2:Yeah. Yeah.
Speaker 1:The the gorilla is the founder of the
Speaker 2:The founder's the gorilla.
Speaker 1:The founder's the gorilla.
Speaker 2:I think the founder's gorilla.
Speaker 7:Yeah. He's kind the company become the hundred pound gorilla if they're big in
Speaker 1:That makes sense. Yeah.
Speaker 2:Last question. What what's your I break down the workout routine. I think you've been going pretty hard lately.
Speaker 4:You guys have to like, people need to roast me way harder when
Speaker 7:I post this Twitter.
Speaker 2:No. We don't roast. We work out as a team together every morning, like, thirty.
Speaker 7:Currently, I had a crazy list, did the half marathon, doing the try soon, doing the Hyrox in in April. And then starting midyear, I had this crazy goal that people have now told me who actually lift real heavy weights that the goal makes literally no sense. Or trying to do the thousand club, which is, like, the bench squat.
Speaker 1:Yeah. Yeah. Yeah.
Speaker 7:But I wrote five reps, which everyone's like, you're an idiot.
Speaker 1:Like, the
Speaker 7:difference between one and five is, like, night and day.
Speaker 2:Yo. Yeah.
Speaker 7:My plan in July is to go, like, full meat, all protein, no cardio, bulk phase, and try to get as far as I can by end of year.
Speaker 2:Meathead mode. We need to make sense.
Speaker 7:I'm going I'm going lean to Meathead, and we're just gonna see what happens.
Speaker 1:It's good.
Speaker 2:Yeah. And then and then maybe John's been really wanting a venture capitalist to go for their IFBB pro card. So maybe you really fall in love with the the the sort of just the weights. Maybe you go the body building route and you really be I'd love to see you become the Sousa Gorilla.
Speaker 1:Yes. Yes.
Speaker 2:It's like Yeah. Time Make that girl that's small. Yeah. Next time we wanna see your traps just in your in your neck right here. Just full Chad.
Speaker 2:Chad Great. It's been fantastic having
Speaker 1:Congrats on the launch.
Speaker 4:Can I
Speaker 3:can I do one other quick shout out?
Speaker 1:Oh, yeah. Please. Yeah.
Speaker 2:Of course.
Speaker 3:One other quick shout out.
Speaker 7:So every great product eventually becomes a dating site.
Speaker 1:Sure.
Speaker 7:And I have a friend in SF who is definitely the most eligible bachelorette I've ever met. She's beautiful, geek, like, smart, ripping surfer, great skier, super hard worker, passionate about the environment, amazing human.
Speaker 1:Okay.
Speaker 7:So there's a guy out there that sounds like that would be of interest, DM me, I will set
Speaker 3:you up.
Speaker 2:Fantastic. It's funny you bring that up because I've I've had that thought recently. I wanna I wanna run Yeah. Yeah. Sort of anonymous basically, you know, semi anonymous ads because it's kinda it's kinda cringe to post on x and be like, yeah.
Speaker 2:Like I'm looking for the love of my life, but we can do it.
Speaker 7:Yeah, can This might be the first setup. You guys might get credit for the first setup on this. Here we go.
Speaker 2:We'll test it a little bit. We'll do this one for free and then maybe we'll get like some marriage contracts.
Speaker 1:Yeah. And if you get married, tell them the technology. But I sent you use code TBPN at the chapel and good luck to you.
Speaker 7:Love it. Thanks for having me, guys.
Speaker 1:Yeah. Thanks so
Speaker 2:much for coming on. Congrats again. It's awesome. Is very Alright.
Speaker 1:I I hope someone I hope the matchmaking works. We might have a lucrative business. Do you?
Speaker 5:Maybe this
Speaker 1:is our cars and bids. It's a matchmaking service. That's what this
Speaker 2:all I mean, if you're an SF right now Yeah. If you're single DM. DM Chad. Don't show up if
Speaker 1:you're a ripping surfer, great skier, you got your life together. Yeah. Your your traps are in your head. You're jacked already. You know, it seems like seems like he's looking for someone who's got their stuff together.
Speaker 2:Definitely.
Speaker 1:But good luck out there, folks. And we will see you tomorrow.
Speaker 2:Great episode.
Speaker 4:Thanks for tuning in. Appreciate you all and have a
Speaker 1:great rest of your Tuesday.
Speaker 2:Go crush it. Goodbye.