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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
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Speaker 2:TVPN. Wednesday, 08/13/2025. We are live from the TVPN Ultra Dome, the temple of technology, the fortress of finance, the capital of capital. Ramp.com. Time is money saved both.
Speaker 2:Easy to use corporate cards, bill payment, and accounting and a whole lot more all in one place. Time lines in turmoil again, except this time, it's not the Substack. It's technically called passport. It's Ben Thompson's version of Substack. Because Semi Analysis and Strathecari are both, I think, on the same technology platform, the same blogging platform.
Speaker 2:Wow. But they have slightly different takes. Obviously, agree on a lot, but we are going to play the bull and the bear today. We have we have some we have some hats. Woah.
Speaker 2:Some new hats in the studio. Wait. Did you I gonna play the bear? So we're talking about Google because recently, Ben Thompson came out with a post talking about how he has he's he's reviewed Google's technology strategy, their AI placement, and maybe things are good, and maybe things are are going to are gonna go well for the company. Bucco Capital bloke says Ben Thompson's Google bull posting is accelerating.
Speaker 2:He says, quote from their from Ben Thompson's Sharp Tech with Andrew Sharp says, I am becoming a Google fanboy. Let Google abuse their search monopoly as much as they want to. Humanity is benefiting. Leave Google alone.
Speaker 1:I will say it is hard to participate in this. Yeah. I don't think this is gonna work at all.
Speaker 2:I really I can't see anything. This doesn't work at all. This is
Speaker 3:Dylan I don't think Dylan tested tested these out.
Speaker 1:I don't think he tested these out.
Speaker 2:But
Speaker 3:I
Speaker 2:can see
Speaker 3:through nose
Speaker 2:holes and that's it. I can only I can see like one one pixel.
Speaker 3:Yeah. Let me let me see if I
Speaker 1:can hit the gong.
Speaker 2:Can you hit the gong?
Speaker 1:Well, we had our fun with that.
Speaker 2:Did you just miss? No. I'm kidding. Okay. Okay.
Speaker 2:Well, so So. Thank you to Restream. One live stream, 30 destinations, multi stream, and reach your audience wherever they are. This this stream is made possible by Restream. So, basically, let me set the stage, and then we'll debate it a whole bunch.
Speaker 2:So last week, Ben Thompson wrote article titled Paradigm Shifts and the Winner's Curse. And he weaved through some of the opportunities in front of Google. And if you were to play the the Google Bowl, it looks something like this. They have a fantastic AI chip with the TPU. This allows them to serve frontier models at low the lowest possible cost.
Speaker 2:They're they're they're pretty dominant on the Pareto frontier as we've seen.
Speaker 3:Yes.
Speaker 2:They have incredible cloud scale with GCP, Google Cloud Platform, and that's accelerating. We saw in the recent run of earnings, Azure did quite well. GCP did quite well. AWS was kind of lagging there. So they're positioned well in terms of, like, building big data centers, big CapEx, big big AI token factories.
Speaker 2:Yes. They have an amazing lab, DeepMind, which we will get into some of the DeepMind folks who made the updated version of the Metis list. They are producing top tier models. Gemini, obviously very impressive, but also v o three, completely state of the art, and Genie three now, definitely state of the art. And Ben highlights that Google is hard to analyze because Larry Page and Sergey Brin famously weren't particularly interested in business or in running a company.
Speaker 2:They just wanted to do cool things with computers in a college like environment like they had at Stanford, that the company nearly thirty years later is still doing cool things with computers in a college like environment may be maddening to analysts like Ben who want clarity and efficiency. It also may be the key to not just surviving, but winning across multiple paradigms. So Ben has become a Google fanboy by his own account. But on the other side of
Speaker 3:the
Speaker 2:argument is Dylan Patel and the crew over at Semi Analysis. In this new post on Semi Analysis, GPT five set the stage for ad monetization in the super app. They lay out a path to a complete to complete ChatGPT dominance in the advertising space. And they give, it's a great read. We'll go through some of it, but you should go subscribe to both Ben Thompson's Strathecari and Dylan Patel's pseudo analysis because they are truly fantastic.
Speaker 2:So basically, when you go to ChatGPT with a highly monetizable query and they pick the funniest possible example, which is DUI lawyer near me. I love these guys. But apparently, that is extremely monetizable because if you you need a lawyer if you get a DUI, and you're gonna pay that lawyer a lot of money. And so, it's not unheard of. Somebody's on
Speaker 3:the side of the road Yeah. Frantically in Chatuchiputis Yep. DUI lawyer near me.
Speaker 2:And if you're if you're a lawyer that represents clients in DUI cases, they're gonna pay you maybe a $100,000. You're happy to pay a thousand dollars for a referral fee to Google or to Chatuchipiti in the future. And so, basically, when you go to Chatuchipiti with a highly monetizable query like that, like, if you ask, you know, what's the what's the capital of Wisconsin? Like, it knows that we can't really make money off of that, So let's not light the GPUs on fire.
Speaker 1:This query is simply too good. Gotta find some way to make money
Speaker 4:off of it.
Speaker 1:I gotta make money off of it
Speaker 2:if it's the DUI lawyer example. So the new model router in ChatGPT and GPT five will be able to understand that they could potentially earn hundreds or even thousands of dollars on in referral traffic if they help you find the best person for the job. This means firing up the biggest model, the most expensive GPUs to make sure you get the best possible answer. This applies to lots of other domains too. Companies are now building out clones.
Speaker 2:They're called reinforcement learning environments with verifiable rewards. Yep. Basically, clone of DoorDash, clone of amazon.com, a clone of other UI heavy shopping experiences. Exactly. And then the then the companies can go RL on top of those environments, those virtual environments.
Speaker 2:To get little bit of at
Speaker 3:buying stuff.
Speaker 2:Learn how to use the real DoorDash. Learn how to use the real the real amazon.com.
Speaker 3:And Learn And how to check the box that says I'm not a robot and select
Speaker 2:the bicycle. Literally, yes. Literally, yes. I I mean, that was what that was what the semi analysis crew's takeaway from GPT five was that it was not a bigger pre training model. That was the death star.
Speaker 2:The death star was the idea that GPT five would be a bigger model or some sort of foundational change. No. They blew that up. They blew up the idea that GPT five would be a much bigger model And instead, they focused on they RL'd the hell out of it according to the semi analysis crew. And so it's highly good at very specific things.
Speaker 2:It's the spikiest intelligence we've had. So, basically, they will RL on DoorDash, amazon.com, other websites so you can check out on your on so that the agent can check out on your behalf. It might be expensive for an AI model to jump through all those hoops to actually order you a new pair of headphones, but it'll be worth it if there's a commission affiliate commission on the end of the line. This obviously poses a major threat to Google search ad revenue.
Speaker 3:Assume that the labs are also just training on the real applications and the real websites themselves?
Speaker 2:No. Because every time you check out on Amazon, you're spending like $50 at least. Right? If you're if you're going through the flow and the flow for buying It's too expensive
Speaker 3:to do the volume. Exactly.
Speaker 2:So why not just simulate the whole thing? Yeah. I'm sure that they are they probably Or they
Speaker 3:do test test runs.
Speaker 2:Of course. Of course. Little yeah. When when when Sam Altman needs to go through the the the Koenigsegg configurator, he's he's he's using that as training
Speaker 1:data.
Speaker 2:Most of
Speaker 3:I remember when when Sam when when they launched Deep Research, the example that Sam gave was he was trying to buy this obscure Acura in
Speaker 2:Japan. An NSX.
Speaker 3:An NSX.
Speaker 2:Obscure to some people, not to me.
Speaker 3:And he he was like, yeah. I just used deep research and I found it. People That's right. A lot of people didn't pick up on that a ton at But the that was a highly monetizable deep research For
Speaker 2:sure. For sure. And so, Ben Thompson and others have noted within weeks of Chatuchipiti's initial launch that there was a threat to Google. The question is how fast this shift happens? How much will Google adapt to the new paradigm?
Speaker 2:And what the economics of the consumer tech industry look like in a world where we no longer operate on top of zero marginal costs. The cost to serve the one more Google search was zero, but the cost to serve one more DUI lawyer lookup will be $50. And so, analysis has a bunch of good charts and graphs that we can kinda look through, and then maybe we'll we'll go back to the bull case after. But let's look through the So bear fabricated knowledge, Doug, who from semi analysis, who came on the show last week, fantastic hour long interview. Time we grab one of these Semi Analysis guys, we're like, yeah, yeah, yeah.
Speaker 2:The standard the standard interview's an hour. Don't worry about it. Know, send them an hour and and then they're like, wait, most of these DBP interviews are ten minutes. Like, why do need an hour of my time? It's because you're gold.
Speaker 2:We love you. So fabricated knowledge. It says, so if you can't tell, I wrote the f out of this. Also, I know we're getting a lot of pushback, but the affiliate model feels inevitable. Timeline is this.
Speaker 2:Instacart adopts agentic purchase in January. Instacart CEO leaves, that's VGCMo, to OpenAI in May. Sam, a tone shift router for for control of query. So let's pull up the videos of Sam Altman on AI ads, and I think it will crystallize a little bit of, like, what we mean when we mean, like, monetizing a free LLM, a free AI chat app. It doesn't necessarily mean stuffing display ads in there just like the answer to Facebook's monetization problem was not banner ads on the in the right bar.
Speaker 2:It was in feed ads that look if if you're watching Reels and you see a Reels ad, it looks exactly like a Reel. And in fact, the best performing ads on Instagram Reels feel just like user generated content. They don't look like Super Bowl ads.
Speaker 3:They're additive.
Speaker 2:They're yeah. They're additive, and people often enjoy them. And so that will be, at least this is the semi analysis argument that I sort of agree with. That will be the the the like, what what we say about ads in AI, it will be more like commissions for agentic checkout, at least Yeah. At least to start.
Speaker 2:So let's pull up the first video.
Speaker 3:Example, right now, there's a lot of people that have websites that monetize with referrals to Amazon. Yep. And they're frustrated because a lot of the the I mean, traffic just like organic SEO is way down. Yep. And the general read here is that OpenAI will ultimately start to earn that same type of revenue that the publishers historically did.
Speaker 2:Yep. So there was a fireside chat at Harvard Business School with Sam Altman. It's giving up for Harvard Business School. It's giving up for Harvard Business School.
Speaker 3:It's the Harvard Business School.
Speaker 2:That's what they've been saying. They've been saying. So he he got a question from the audience about ad monetization. We'll hear how Sam Altman responded to it.
Speaker 5:Although fair, it could be a barrier for early stage entrepreneurs or startups or even small businesses. Given this context, do you envision OpenAI exploring alternative monetization strategy that could include, like, free free API access, perhaps supported by advertising or other methods, to foster innovation in the future?
Speaker 6:I will disclose just as like a personal bias that I hate ads. I think I think ads were important
Speaker 2:We love ads.
Speaker 6:To give the early But, I think they they do sort of somewhat fundamentally misalign a user's incentives with the company providing the
Speaker 1:service. I'm not
Speaker 6:totally against them. I'm not ads. But, I don't like them in general and I think that ads plus AI is sort of uniquely unsettling to me. You know, when I when I think of like GPT writing me a response, if I had to go figure out you know exactly how much was who paying here to influence what I'm being shown, I don't think I would like that.
Speaker 4:But the
Speaker 2:knowledge and things go on.
Speaker 6:Think I would like that even less. So, there's something I really like about the simplicity of our model, which is we make great AI and you pay us for it and it's like we're just trying to do the best we can for you and then
Speaker 2:Senator, we run
Speaker 6:has some inherent lack of access and inequality, we commit as a company to use a lot of what basically the rich people pay to give free access to the poor people or the poorer people. You see us do that today with the ChatGPT free tier. You'll see us do a lot more to make the free tier much better over time, And I'm interested in figuring out how we bring the equivalent concept to the API. But I I kind of think of ads as like a last resort for us
Speaker 7:Last for a business model. Would do
Speaker 6:it if it meant that was the
Speaker 2:That's where he says he says, I kind of think of ads as a last resort of a as a business model. But recently, he dropped a new podcast. This was from, I think, a month ago, and it's from the OpenAI podcast. So you have to imagine that they that they that the the run of show and the talking points in here are very carefully selected to, you know, move the narrative forward and kind of educate the community on where the company is going. Calculate.
Speaker 2:And and so so we'll pull up Sam Altman's interview on AGI GPT five and what's next from the OpenAI podcast.
Speaker 7:So that brings up the other question from people who are using this or skeptical is that OpenAI now has access to this data, and there's the concern one was about training, which OpenEye has been very clear about when or when not it's training. You have the option to turn that off. The other thing is like advertising, things like that. What's OpenEye's approach towards that?
Speaker 2:How are
Speaker 7:you gonna handle that responsibility?
Speaker 6:We haven't done any advertising product yet.
Speaker 8:I kind of
Speaker 9:I mean, I'm not
Speaker 6:totally against it.
Speaker 2:Tony's not totally against it. Yay. Here it is where Woo.
Speaker 6:I like ads. I think ads on Instagram. Kinda cool.
Speaker 2:Ads on Instagram. Very cool. Let's go.
Speaker 6:I am like I think it'd be very hard to I'm gonna take a lot of
Speaker 1:care to get right.
Speaker 2:I I have faith. I think you can do it.
Speaker 6:People have a very high degree of trust in ChatGPT, which is interesting because like AI hooseneits should be
Speaker 1:the tech that you don't
Speaker 7:So I trust them.
Speaker 2:People really Yeah.
Speaker 6:Do. But I think part of
Speaker 1:that is if you compare us to social media or, you know There's
Speaker 2:a change.
Speaker 6:Web search or something, where you can kinda tell that you are being monetized and the company is trying to like Yeah.
Speaker 2:You can policies, no doubt, but also I mean, you can see this is the block, this is the block.
Speaker 10:Whatever, like,
Speaker 6:you know, how much how much do you believe that like, you're getting the thing that that company actually thinks is the best content for you versus something that's also trying to like interact with the ads. I I think there's like, there's a psychological thing there. So, for example, I think if we started modifying the output, like the
Speaker 1:stream that comes back from the LLM Mhmm. In exchange for who is paying us more, that would feel really bad.
Speaker 2:Yeah. This is a great solution. Give you the actual answer you want, but hey, these are the best headphones But for if you want me to buy them, I'm gonna have to cook as an agent. I'm doing the work, and I'm gonna take a cut of that. That's that's amazing.
Speaker 2:I'm so down for that.
Speaker 3:Like The the agents like, I'm getting paid either way.
Speaker 2:Yeah. Exactly. And and I could say, okay, which headphones do I want? Do I want the Sony's or do I want the or or or do I want the the Apple AirPod Max's? And if I decide the Apple ones, it goes checks out, it uses some coupon code to get some Yeah.
Speaker 2:Mean comparing
Speaker 3:this to the other ways that people discover products and services. Yeah. If somebody searches best luxury hotel in Hawaii Mhmm. They're gonna get ads against that and then they're gonna get organic rankings that aren't necessarily the truth. Right?
Speaker 3:Mhmm. Because the truth is for something like best luxury hotel in Hawaii is very subjective.
Speaker 2:Yeah.
Speaker 3:Then they might go and try to get recommendations from an influencer.
Speaker 2:Yep.
Speaker 3:And hopefully, the influencer is disclosed
Speaker 2:Yes.
Speaker 3:Whether or not they're being compensated by the advertiser. Yeah. And So if I were to ask
Speaker 2:you as an influencer, like what design software would you recommend? Like what would you say? Just honestly. Figma.com. Think bigger, build faster.
Speaker 1:Build faster.
Speaker 2:Figma helps design and development teams build great products together. This is a paid
Speaker 3:But, Disclosure is super important. Exactly. And if and if the influencer is saying like, oh yeah, I love this hotel Yes. But that hotel is giving them like, you know, two weeks free a Yes. Year then like that's not that's not a super ethical Totally.
Speaker 3:Yeah.
Speaker 2:Needs to be disclosed. Then also the the beauty of the LLM is that is that like, the, like, the the recommendations are gonna be able to be tailored. So best luxury hotel, well, if you're if you really want a certain type of pillow or you really want, you know, a pool in your unit or you want it to be wheelchair accessible or you want, you know, high ceilings or you want, you know Yeah. Beachfront access. Like, there's a million different parameters that could go into that.
Speaker 3:And the thing the thing that needs
Speaker 2:to And then it could just and then it just saves you the time at the Yeah. Very last step.
Speaker 3:Well, thing that Chatuchiputti needs to navigate Yeah. Maintaining that trust. Yep. Right? I trust that Instagram is gonna serve me ads Yep.
Speaker 3:That that I I trust that they're gonna try to serve me ads for things that I will wanna buy. Yep. Right? Sometimes they serve me an ad, I'm like, this is this looks garbage. I'm not gonna buy it.
Speaker 3:Other times they serve me an ad and I'm like, this looks great. You're actually good good call. I I I am interested in this product. Totally. And the thing is is like, if chat chat GPT has to maintain that trust because if they recommend you a hotel, they're like, you're gonna love this.
Speaker 3:I know I know what you like, you're gonna love this hotel and you go there and you spend all this money and it's and it's terrible. Yep. It's the same thing if if you go to a friend for a recommendation for a hotel. They recommend you a hotel, you show up there and it's like, this is terrible. Yep.
Speaker 3:Like why did you recommend this? And if they go, oh yeah, recommended it because I was getting like 7% referral fee. You're gonna be like, what are you doing? Why are you monetizing me? Right?
Speaker 3:So I think it like it's a very It's an interesting challenge that they have where they're gonna be directing, already directing so much economic activity and how do you monetize that in a sustainable ethical way?
Speaker 2:Yep. I I mean, I think the router is the answer. OpenAI or or semi analysis called like this release, like the router is the release. Like, GPT five is the router. It's not a new model.
Speaker 2:It's a router on top of multiple models, and that's the value. So the router release can be now understood can now understand the intent of the user's queries and importantly, can decide how to respond. It only takes one additional step to decide whether the query is economically monetizable or not. Today, we will make the case for how ChatGPT's monetized free end state could look like an agentic super app for the consumer. This is only possible because of routing.
Speaker 2:There's a very interesting chart in here. Where is it? It's about the various costs. So cost per million tokens output has a really, really steep power law curve. So o three pro, the the the model that everyone's obsessed with, the one the one that people really wanna hit as much as possible because they feel like it gives it the most the most rigorous and thoughtful output.
Speaker 2:And I was certainly firing off o three pro queries constantly. So more and more free users will be able to interact with o three pro occasionally because they will trigger it randomly. They might not have been on the upgrade tier, but they actually get to experience what that's like now without having to first go and pay, which I think is cool. Over 99% of free users have yet to interact with a thinking model like o three. And for the average user, ChatGPT just got a huge upgrade.
Speaker 2:And so there's this weird, like the vibes on X with the power users were kind of like all over the place.
Speaker 3:Yeah. There's that post from John Collison.
Speaker 2:But for most people, we're just like, this is incredible. Everything just got better. If you weren't in love with the old model and you didn't like the upgrade, but for most people, it was just a big upgrade. So the number of
Speaker 3:We gotta pull this up. Pull this up, guys.
Speaker 2:The number of free users exposed to thinking models went up seven x in the first day the number of paying users up
Speaker 3:John Colson, it feels like to select o three in the legacy model menu.
Speaker 2:Yeah. It's a good metaphor. It's definitely it's definitely a good metaphor. It's it's it's Incredible spec. Engagement.
Speaker 3:Yeah. This sort of army green on tan.
Speaker 2:So on a cost per million tokens basis, o three pro is $80, g p t five is $10, g p t five mini is $2, and g p t five nano is 40¢. So a huge, huge gap of 200 x the spread on the cost to actually serve the user. So the the the the router is clearly a feature of the new to the new service and can likely see improvements or changes over time. It will continuously learn on preference rates and OpenAI promises it will improve over time. They'll get a lot of feedback from somebody said, hey, you triggered thinking I would have liked the faster answer in this case or hey, you you you gave me the fast answer.
Speaker 2:I actually wanted you to go way deeper. This is not satisfactory. So
Speaker 3:So semi analysis says centralizing the control of the free user experience allows for many more future monetization paths and this monetization path is one that has been hinted at subtly for a while. It all starts with OpenAI's decision to hire Fiji Simo as CEO of applications in May. Yep. Let's look at her background because it's telling. Obviously, we covered this back in the day but we'll cover it again now.
Speaker 3:So Fiji was at eBay from 2007 to 2011 but her career defining career was primarily at Facebook. She was vice president and head of Facebook and she is known for having a superpower to monetize. Let's hear it up for superpowers. She was critical in rolling out videos that autoplay improving the Facebook feed and monetizing mobile and gaming. And I think we should just keep the collabs going.
Speaker 3:She might be one of the most qualified individuals alive to turn high intent internet properties into ad products and now she's at the fastest growing internet property of the last decade that is un monetized. It's an obvious story.
Speaker 2:This is the next list. Post Metis list, we need we need the the the monetization maxes. Yeah. Fiji Simo at the top of the list.
Speaker 3:Money maxes.
Speaker 2:Can continue to run through this or we can kick it over to the Metis list, whatever you want.
Speaker 3:Yeah. Mean, let's cover a little bit more. They're covering the tone shift. We obviously had those videos. Yep.
Speaker 3:They say in recent interviews, Sam's tone has shifted. There's clearly a lot of thought happening about how to best monetize free users more recently. Again, this this goes back to the kind of little debate we're having a little little timeline and turmoil moment with Cuban where
Speaker 2:Yeah.
Speaker 3:Again, you can't expect companies to give products that are expensive to serve away for free forever. Yep. Right? And it's great that pro tier users can help offset the cost for free tier users. Yep.
Speaker 3:But there's very few. I mean, OpenAI, the funny thing is they're trying to convert to a for profit. Right now, are non profit, so it makes sense they're giving this incredible product away to millions of
Speaker 2:For benefit of humanity.
Speaker 3:Yeah. Just for the benefit of humanity. But eventually
Speaker 2:Yeah.
Speaker 3:Eventually, you know, they're running business and
Speaker 2:I think, like, Cuban has a point with, which I steel man, with with the idea of if it was purely based, if if the entire flow of we want people to open the app and convert to to commerce immediately, that could result in perverse incentives and like lower quality just general user experience. It might be a situation where that's kind of like a short term gain for long term pain in the sense that people wind up churning if it's really really bad. But I think that it is possible to have a wall in the organization between like, okay, the truth seeking happens here and the first layer of you ask a question, we're going to give you the best possible answer for what you asked. So Yeah. Luxury hotel with your preferences.
Speaker 2:We're really going to and the team is purely focused on that. And then they are separate from the monetization team that says, would you like to check out? Okay. We have a great agent that can go do that, book it, and it's similar to having a a you know, a flight, what would they call it? Travel agent that actually books it for you and then takes a cut of that.
Speaker 2:And that's a very clear value because it's actually Yeah.
Speaker 3:And travel agents have pretty aligned model with consumers. Right? Yep. They want to give you a great trip Yep. So that you come back and book more travel with them.
Speaker 3:Yep. But they end up taking a rev share
Speaker 1:Yep.
Speaker 3:In different ways from from the hotels and and various like vendors that they end up like booking the trip through.
Speaker 2:Yep. And I believe Google has a similar wall between like what shows up in the knowledge panels cannot be bought. So there is no amount of, you know, Google ad dollars that you can pay them to change your height on if if it's auto completing. Yeah. Like that pulls from Wikipedia and all these data sources into their knowledge graph.
Speaker 2:You can't There's nothing you can do to manipulate the Google knowledge graph. Yeah. You can just buy keyword ads that show up in their box and you might have to scroll a while because they sometimes they put seven ads up there. But As
Speaker 3:an ad enthusiast, if you do a Google search and the entire screen is filled with ads, it's really
Speaker 2:Fills you through. Heartwarming. Yeah. Search DUI lawyers near me right now. I'm sure you'll see them.
Speaker 2:Anyway, let me tell you about Vanta, automate compliance, manage risk, prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a complex program.
Speaker 3:Should we run through Ben Thompson's?
Speaker 2:Yeah. We should. So Semi Analysis actually quotes Ben Thompson here and talks about aggregation theory. Let's talk about agentic purchasing and compare it to search to the search query today because LLMs have a core feature that search does not, and that is scaling marginal cost. That's what we talked about with o three pro costing $80 per million tokens versus a GPT five nano costing 40¢ per million tokens.
Speaker 2:All of a sudden, it has a different economic equation. This is fundamentally different than the world search grew up in. Let's examine aggregation theory by Ben Thompson because the core feature was that most technology companies had zero marginal cost to an additional user. There were some fixed overheads for running while large the large search engine, but the incremental cost of another query was virtually zero. Agents and LLMs kill this concept for the first time.
Speaker 2:The more you spend, the better your result is because of chain of thought reasoning tokens and now marginal costs exist in software again. There is somewhat direct relationship between more money, more compute, and a better answer. Nowhere is this clearer than in AI in which you can spend variable cost to get variably better answer or outcome. And so, before the router, there was no way for a query to be distinguished. And after the router, the first low value query, if you ask why is the sky blue, that can be routed to a GPT five mini model that can answer with zero tool calls and no reasoning.
Speaker 2:This likely means serving the user is approaching the cost of a search query. The the monetizable query on the other hand has a fixed cost. It would show a page ranking websites with potential AI summary at the top. This is a fixed supply response to what could be a variably hard question. But now, Chattypu T free
Speaker 3:because There's of some incredibly, you know, incredible OpenAI hater out there who's on like the maxed out pro plan Yep. And just going into o three pro and saying, what is the capital of California? Give me a 60 page PDF with the answer.
Speaker 2:This is the the the hitting grok four heavy with just, like, answering one word, but think for ten minutes. It's like just burning the GPUs. But, yeah, I mean, the router will will, you know, increasingly
Speaker 3:Eliminate that.
Speaker 2:Decide how monetizable is this query, and that's how much compute you get for it. And so GPT five can decide to allocate $50 to a query, create a plan, gather information about the DUI incident in this example, research local lawyers, consider who is likely to answer fastest, consider your budget, then contact multiple lawyers on your behalf. All of those are tool calls. All of that is expensive. It could even agentically reach out to lawyers on behalf of the free user knowing that the conversion ratio of this query is even higher.
Speaker 2:This version of Chattypuppy is highly helpful, aligns with the user's query, and is a valuable refer referral to the seller of goods and services. So there's a little bit of, you know, going into, how does Google respond to this? There's there the so Chechipedia has partnered with a lot of different companies in finance. They've come they've partnered with Stripe, Visa, and PayPal on the consumer side. They've partnered with Mattel, booking.com, and Lowe's Enterprise Software.
Speaker 2:They've They have
Speaker 3:a partnership with Shopify
Speaker 2:as well? That's on the consumer Internet side. Snapchat, Shopify, Instacart, and Mercari. So if you are a Shopify merchant, you are probably happy to let people check out with your products directly in Chateapiti. You don't really care if they hit your if they hit your website.
Speaker 2:Yeah. It doesn't really matter as long as they're buying your product. Your margin's probably gonna be the same. And so OpenAI is firmly knocking on the door of technology giants, Google and Meta and and even Amazon. Previous scares about AI have been focused on search query volume not being replaced in the ad tech stack.
Speaker 2:ChatGPT can compete with dominant platforms for its place in the ecosystem. And to date, this push into purchasing is the most concrete example of OpenAI coming for advertising at large if they were first to launch an aggressive agentic checkout solution before Meta or Google, this would be seen as huge competitive shots for both companies. A reminder that what we that if we are talking about pure usage, only one company is growing users at a meaningful rate, It's OpenAI. And the visits year over year for OpenAI are up a 135%. And there's this other crazy, crazy chart in here that's the, of the top 10 websites, Chattypeauty is number five and it's and every single property is over 15 years old.
Speaker 2:So Instagram is the next youngest like website in the top 10 websites and it's 15 years old. Then you have Google at number one 28 years old, YouTube at 21 years old, Facebook is 22 years old.
Speaker 3:Hearing that Instagram is 15 years old Crazy. Makes you feel a little bit old.
Speaker 2:X.com, Twitter originally 19 years old. Reddit is 20 years old. WhatsApp is 17 years old. Guys, morning. Years old.
Speaker 1:Twitter's gonna be able to drink soon.
Speaker 2:Get ready.
Speaker 3:Get ready for that.
Speaker 2:Yeah. I mean, rebranding at at age 17 is kind of on brand, know? Twitter and then it had to Don't call me Twitter anymore, dad. I'm an adult. I'm ex.
Speaker 2:I'm ex. Just call me ex. Call me ex. Right? And so
Speaker 3:Yeah. When companies turn 21, they should just like really even 20 birthday get a little wild for twenty four hours and then lock in again.
Speaker 2:Yeah. So, let's go over to Strathecari. Let's go over to Ben Thompson. But first, let me tell you about graphite dot dev code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster and you can get started for free.
Speaker 2:So, paradigm shifts in the winner's curse. This was posted Wednesday, August 6 on Strathecari by Ben Thompson.
Speaker 3:Ben says, it's fun and often accurate to think of tech companies in pairs. Apple and Microsoft defined the PC market. Microsoft and Intel won it. Google and Meta dominate digital advertising. Apple and Google won mobile.
Speaker 3:That, however, is not the defining pair of the smartphone smartphone era, which ran from the introduction of the iPhone in 2007 to the launch of ChatGPT in 2022. Rather, the two most important companies of the last two decades of tech were Apple and Amazon, specifically AWS. The Apple part is easy. The iPhone market created a smartphone paradigm from its user interface to its distribution channel and was richly rewarded with a bit under half of the unit market share and a bit under all of
Speaker 2:the profits. Isn't that a great line? It's such a good line but it's true.
Speaker 3:A bit under. Google did well to control the rest in terms of the Android operating system and profit from it all thanks to Google search but it was search that remained their North Star. The company's primary era error in that era was the few years they let the tail Android wave the dog Google.
Speaker 2:That's a that's a typo. It should be wag the dog. I I Or maybe maybe he's making a wave joke because Google had a product named wave. But usually the phrase is you let the tail wag the dog. Yeah.
Speaker 2:The dog should be in charge of the tail. And the golden retriever
Speaker 3:It wasn't just wagging. It was waving. Yes. The AWS part is maybe less obvious but no less critical and the timing is Amazon created AWS in 02/2006, just ten months before the iPhone unveiling and the paradigm they created was equally That's critical
Speaker 2:crazy timing.
Speaker 3:To the smartphone era. Yep. I explained the link in twenty twenty's The End of the Beginning where he says, this last point gets it why cloud and mobile which are often thought of as two distinct paradigm shifts are very much connected. The cloud meant applications and data could be accessed from anywhere. Mobile made the IO layer available everywhere.
Speaker 3:The combination of the two make computing continuous.
Speaker 2:Instead of deliberate. Before, you had to sit down at a computer linked to an on premise server and you could only use technology in one place at a time. And now, you can be always on tapping into the cloud wherever you are. Let's hear it for the cloud and mobile. Fantastic.
Speaker 2:And so AWS was not the
Speaker 3:only those days as a kid. Summer. I had my email, I'd sit down, I'd send some emails
Speaker 1:Yeah.
Speaker 3:As a a as a as a teenager and then I'd walk away from my computer. I'd go out into the world Yeah. Unconnected.
Speaker 2:You used to have to go and turn on the Xbox to play Call of Duty. Now, you can play on your phone. Yeah. And you can even stream it. There's a there's a ton
Speaker 3:of stuff.
Speaker 2:Changed everything.
Speaker 3:AWS was not the only public cloud provider of course. Azure and GCP were both launched in 02/2008. But by virtue of being first, they
Speaker 2:both define the paradigm. Yeah.
Speaker 3:And also, we're the first choice of the universe of applications that ran on smartphones and more accurately ran everywhere.
Speaker 2:So if Apple and AWS were the definers and thus winners of the smartphone era, then it was Microsoft and Nokia that were the losers. The reasons for their failure were myriad, but there was one common thread. Neither could shake off the overhang of having won the previous paradigm. Indeed, both failed in part because they deluded themselves into thinking that their previous domination was an advantage. For Microsoft, that previous paradigm was the PC and the Windows platform, which they thought they could just port to mobile.
Speaker 2:And so all of their mobile efforts were basically just like Windows running on a phone, kind of dumbed down, didn't really work very well. It took Microsoft years and new CEO to realize that, their mistake. So, we will come back to this and debate Google more on this show, but we have Keith Raboy joining the stream. Welcome to the show, Keith. Good to hear from you.
Speaker 2:How are doing?
Speaker 11:Great. Pleasure to be back with you.
Speaker 2:Fantastic. See you. Before we go into all all all the news that's shaking up the timeline, do you have a take on on Google? Right now, we were diving into the fact that semi analysis seems quite bearish on Google and is is call is is saying that, OpenAI will basically steamroll them once they get into agentic commerce and and checking people out.
Speaker 3:Properly monetizing the user base and all the economic activity that they're already driving.
Speaker 2:Yeah. And then Ben Thompson's kind of saying like, hey. It's this college campus. They have a bunch of great AI researchers. Like, something will come out of this.
Speaker 2:And there and it's it's just a Lindy company. It's been around for a long time. It's not going anywhere.
Speaker 11:Well, I think ChatGoogle is the fastest growing consumer app of all time. And as long as that continues, Google's significantly threatened. I think normal people are substituting, what used to be searches and queries into prompts, and that really does threaten Google. Even if they have top tier AI talent, they have yet to productize it in a way that undermines the trend towards chattypti. If Google were to fuse together all the information they have about you, your Gmail, your YouTube, etcetera, and make everything personalized out of the box, that'd be interesting.
Speaker 11:We'll see if they can ship that product internally, substantively, and whether it resonates with users. But they're losing, you know, the AI battle to OpenAI, period. It also threatens the revenue. I don't think that performance based advertising, which is the mainstream, you know, driver of Google's success, will be the way that consumers expect to be monetized in the future. I think all the AI applications are showing that consumers are willing to pay for value.
Speaker 11:And so I think direct value, direct capture from consumers, subscriptions, etcetera, might be better. And that would, you know, undermine the entire advertising business model that really has propelled Google into the stratosphere Yeah. Was their product innovation initially, engineering innovation, data innovation, but ultimately, it's advertising innovation. And they had a more efficient advertising platform and that may not be the future of the next twenty years.
Speaker 3:Yeah. Yeah. In some ways, Google's Google's margin and how much revenue they generate for me as somebody who throughout the year is gonna make a lot of searches that that result in a lot of purchase activity. And if I can substitute that by just paying $200 a month and eliminating a lot of that, you know, it it Chatuchi BT can can become a probably a trillion dollar company
Speaker 2:Yeah.
Speaker 3:By just eating into eating into that and being willing to give up that that incremental revenue that they might get from advertising.
Speaker 2:I just had this experience. I bought a Nintendo Switch two. I went to ChatGPT. I fired off agent mode. I had it go around, check every website for what's in stock.
Speaker 2:It decided the Target was in stock. I clicked on that, had to go into the Target app and set up an account, it was like a huge hassle. Could've just done it for me and taken a cut, but Google wasn't involved. So it's kind of a crazy time.
Speaker 11:Yeah. I mean, can also do some rough math. You can calculate Google's revenue per user per month or per year.
Speaker 2:Yeah.
Speaker 11:And then what consumers are willing to pay through ChatGPT and similar products Totally. I think exceeds that.
Speaker 2:Yep. No. It makes sense. Anyway, enough on Google. Give us the high level on what's going on with Opendoor.
Speaker 11:Well, I'm very excited. A bunch of retail investors led by Eric Jackson have really taken a spotlight Mhmm. And focused it on the potential of the company. I think for a lot of reasons, the company for the last three years has not really capitalized on its disruptive elements, its innovation, and people have sort of forgotten about it. And the public market's attention is really important.
Speaker 11:And now, there's a a very strong shining spotlight on the potential of the company, which I think should be like Carvana. Carvana is a $40,000,000,000 company with, in fact, more competition than Opendoor has. But Opendoor has not been able to frame the narrative about the innovation as well as Carvana, and I think that's gonna have to change. I think, subsequently, the company needs better leadership both on a story selling side and on the innovation side. I, like, tweeted out, you know, really with about ten minutes of thought, ways to fix Opendoor this morning.
Speaker 11:Yeah. And there's specific specifically behind every one of those elements that I could dive in deeply, but the company's not executing on any of those things. If anything, it's taking a step backwards in partnering with these legacy real estate brokers, which makes no sense whatsoever.
Speaker 2:How much of the, like, sell off in the stock or just kind of, like, you know, the like, getting into the doldrums is and and the trouble that OpenDoor has run into has been just the interest rate dynamic in the post 2022, 2023 era where we've been in this high high interest rate environment that that abstractly has a big impact on home buying. But how direct is that on the Opendoor story?
Speaker 11:It's moderately direct. So in a hot market, maybe five to 6,000,000 homes transact a year. Mhmm. And Opendoor gets paid every time it transacts. Mhmm.
Speaker 11:So in a in a very high interest rate environment, that number went down to 4,000,000. So 4,000,000 versus six. Like, that's Okay. That's right. It's not like people stop buying and selling.
Speaker 11:It doesn't go to zero. Yeah. And it doesn't go to infinity. Yeah. So four to six million.
Speaker 11:The problem for Opendoor financially is the cost structure of the company at a g and a level, not a marginal level. G and a level is just way too expensive to make profits at $4,000,000.
Speaker 1:Mhmm.
Speaker 11:And this was a known problem. The known coach, who I work with, warned the current management team, myself included, in 2015 that this was gonna happen. Real estate has roller coaster rides to it and you need your fixed cost base to be low enough that you don't have to transact to offset your fixed cost or burn. Mhmm. Unfortunately, the base was too high and when the Fed raised interest rates, like, five times sequentially really fast on in kind of an unprecedented way
Speaker 1:Yep.
Speaker 11:Very few people transacted, so there wasn't enough profits to offset the fixed cost of running the business. Yep. It was a mistake. It really did cause significant strain. Arguably, you know, the entire management team made that mistake, didn't listen to the node, whatever.
Speaker 11:That's three years ago. Yep. The company has made no progress on cutting the g and a cost over the last three years. The good news is it's actually really easy to cut the g and a cost these days. AI allows you to substitute for most of what the people that work at OpenDoor do.
Speaker 11:So you should be able to bring the very the fixed cost of running the business down to here, And then just decide on every home purchase, are we gonna make money or lose money? And just purchase homes in any interesting environment where you will make money.
Speaker 1:What are the what are
Speaker 3:the key activities within the business that you think are are most ripe for replacing with agentic workflows?
Speaker 11:Honestly, think real world stuff, like, are companies that are actually doing inspections with AI. Mhmm. The idea that you need this, we have labor, you know, and inspect, you know, repairs, etcetera, etcetera. That that stuff can be done, videos, you know, in AI much better than, traditional people. And there's companies that are specializing in this.
Speaker 11:So I I I just think that you don't need all these people and it's gonna continue. The acceleration AI is more and more obvious and more and more stark every day. So can you cut it to a 100 people? Probably, yes. Actually, maybe less.
Speaker 11:Mhmm. And then you have a then you all have variable costs, and the only thing you need to do is model the value of a home correctly, which is complicated, but Opendoor has been excellent at it. One thing that people miss is with the exception of a one quarter in the history of the company, the company has priced homes correctly and purchased successfully and profitably. But the marginal cost, the fixed cost, sorry, has not been able to be offset when no one's transacting. The company has significant market share in many markets.
Speaker 11:So the company will just mint money as long as it gets its cost under control. Now it needs to be a massive company, which is the potential. Like, if you think about it, let's take a top down perspective. Yuri Milner actually made this point to me seven years ago. The largest real estate platform in the West is worth about $18,000,000,000.
Speaker 11:Mhmm. That's insane. This is the largest asset class, period. That's great. The idea that the most innovative company in the entire Western universe would be worth $18,000,000,000 in residential real estate makes no sense whatsoever.
Speaker 11:So if somebody is gonna build a $50,100, $150,000,000,000 market cap company, And this management team doesn't think that way. They think about, you know, moving one basis point here and one basis point there versus innovating to build a $100,000,000,000 company. There is no reason this shouldn't be a 50 to a $100,000,000,000 company. You just need the right leadership, and we're gonna fix that.
Speaker 2:We have a couple questions from the chat. Are you interested in going back on the board of Open? Are you interested in stepping in the CEO seat, getting a new role? Like, what what do you see your involvement going forward? How do you think about that?
Speaker 11:The the company needs a new CEO. If I can be involved in identifying, assessing, and or closing the proper candidate, I'll be happy to be involved. Sure. I I do not plan to be an executive. I have a very busy full time job, And I this company needs a full time dedicated CEO who's intense, who's creative, who's innovative.
Speaker 11:So if I can help that person
Speaker 1:Yep.
Speaker 11:If I can encourage that person, that'd be wonderful regardless of the structure.
Speaker 2:Maybe they're listening right now. DM Keith.
Speaker 11:If you if you're
Speaker 2:the one for the job If
Speaker 11:you're a great if you if you're anything like Will Gabrick at Stripe or Greg Falkman at OpenAI, please call me.
Speaker 2:Come on over. I wanna talk about transformation and actually implementing agentic workflows, implementing AI, and then cutting costs. Is there a sort of, like, CapEx type cost? I mean, I imagine that there's some folks on the private equity side that are buying up small businesses and then hope to use AI to cut costs, improve margins. And maybe they're doing that internally and defraying those costs of knowing which tools to pick internally across a portfolio.
Speaker 2:Then there's McKinsey and the big the big consulting firms that are going to Fortune five hundreds and saying, you're gonna pay us a ton for a slide deck, but, you know, in theory, we're gonna get you set up with something that will save you money. But for a company like Opendoor, what does it look like? Because it feels like it's probably too complex to just say, okay. Yeah. We're gonna, like, sign up for ChatGPT, and that solves our problem.
Speaker 2:There's probably gonna be some implementation of these AI tools, and that might have cost in the short term even if it drives, longer terms, better earnings outlook.
Speaker 7:How do
Speaker 2:you think about that?
Speaker 11:Well, I think that's why we need a CEO who's AI native, AI, insightful. Yeah. I think that business transformation requires real skill. Mhmm. I think you are right, though, that the hottest area of venture capital is venture capital is chasing after old school businesses and trying to turbocharge businesses with AI, whether they're turbocharging on the top line, which to me is more interesting, or improving EBITDA with AI substitution of cost, that's that's pretty cool.
Speaker 11:But the you know, we funded a few companies. There's, at least two VC competitors of ours that I know of that have dedicated funds that do nothing else except roll up traditional businesses and try to turbocharge them with AI. So I think, you know, this is very common. At the large company level, it is happening apparently. Actually, apparently, Amazon has had a lot of success with this.
Speaker 11:Mhmm. They don't talk about it and speak about it, but apparently, true. And then I think you're gonna see more private equity firms insist upon their portfolio, whether they're large market cap portfolio companies or small, apply AI in a thoughtful, creative way.
Speaker 1:Yeah. Do you think do you think
Speaker 3:I mean, it feels like private companies have like a extreme structural advantage in terms of doing like true AI driven transformation because OpenAI Sorry. Not not OpenAI. Opendoor, you know, every Over the last week, every 10 posts on x has been some, you know, different retail investor having strong opinions about who the management should be and and what the board is doing and all this stuff. Yeah. Do do you think that you think that if if the right person were to come to the table that that like a that that Opendoor would do better if it was a private company for the next like few years?
Speaker 11:Yeah. I don't think so. I think you can transform yourself in the public domain as well. I think you could take advantage of these suggestions. I think, first of all, let's just take a step back.
Speaker 11:I think retail investors having a point of view in being excited about an opportunity is a great thing. I think the whole point of markets is to allocate capital. That's why we have markets. Right? That's why we have public markets.
Speaker 11:It's an allocation function. And consumers voting with their feet, especially for consumer brands saying, want more of this. I want less of that. It's actually a proper capital allocation. Like, if the company did this, I would spend more money with them.
Speaker 11:That should encourage capital allocation. This is not some people have, like, this negative perception of retail investors. I think it's actually better when retail investors say, I'm gonna vote with my feet. I'm gonna vote with my dollars. If product x or y or brand does does x, y, or z or brand represents z, I'm gonna spend money with them.
Speaker 11:That is a reason to allocate more capital to that company. It's fundamentally sound.
Speaker 2:How do you think about the the storytelling around AI as a silver bullet versus a core competency that will be a compounding advantage. I'm thinking of the Amazon example you gave. I completely agree that Amazon's been a beneficiary of AI all over the place, but I don't think it's happened in a single quarter. I think they ramped to a million robots across all of their different facilities. They bought Kiva a decade ago.
Speaker 3:Yeah.
Speaker 2:They were using AI recommendation systems to tell you, hey, you're buying a computer. Do you want a monitor? That's AI, but, you know, just a couple decades ago. And so it feels like the right person for the job, they might be able to come in, rip off a band aid, get things right sized, do the hard work, but then it's really like you can't take your foot off the gas.
Speaker 11:I think you need to do both. I think there's bottom up transformation, which is blocking and tackling Sure. Persistency, consistency. It's like going to Barry's. You have to go every day.
Speaker 11:Like, every day for like for like a decade.
Speaker 1:And, you know,
Speaker 3:you get sometimes three, four,
Speaker 1:or five
Speaker 11:times a And there's I think there's top down. I think leadership involves sometimes just putting a stake in the ground and saying, thou shall not. Like, we are just not gonna do this anymore. We are absolutely out of that business. And that's why you need a founder driven CEO, truthfully.
Speaker 11:Transformations with emerging technology require the moral authority of a founder just saying, absolutely no. I know this has worked in the past. I know this has worked in other companies, but we're just not doing that anymore because the world's going this way and we wanna be ahead of the world.
Speaker 3:How do you think Opendoor's relationship with with traditional real estate agents should evolve?
Speaker 11:Well, I I think it should be we should be innovating so that there's no comparison. Like, the value proposition Opendoor provides a consumer, whether a buyer or a seller, should just be so much better that nobody wants a real estate agent. It's not a bad thing. Like, real estate agents used to do x or y, there's a bundle of services they provide. But what Opendoor provides is this.
Speaker 11:It's just like a no brainer. Mhmm. And if it's not a no brainer, the company is not innovating and is not creating enough value, period.
Speaker 2:How do you think about other levers like zooming out to the macro that could just increase the velocity of, of real estate transactions or just make homes more affordable in America. I don't know how high this up is how high this is on the current administration's agenda, but it feels like something that people have been clamoring for for years on both sides. Are there obvious wins that you're optimistic about in the next couple years to just improve the quality of housing in America broadly?
Speaker 11:Well, affordability is a top tier issue, certainly for my conservative friends.
Speaker 2:Yeah.
Speaker 11:We need to make housing more affordable for more people as fast as possible.
Speaker 1:Mhmm.
Speaker 11:There are some things that have short timelines and some things that take longer. So building is great. We need more. We need more supply. Supply works.
Speaker 11:Supply has worked in local environments. You can prove it in in in city action, citywide. The cost will come down if you build. But you can't build a house, at least right now, without more robots, more automation. You can't build one overnight.
Speaker 11:So supply does take time, but we need to start working on supply and getting rid of all the blockers and excuses for lack of supply, particularly in California. Yeah. Secondly, we do need interest rates to come down. Mhmm. We do need a new chairman of the Federal Reserve.
Speaker 11:The best thing ever, you know, for Opendoor would be replacing replacing Kerry as CEO and replacing Jerome Powell as Federal Reserve chair. Fortunately, I think both are gonna happen. I hope both happen in September, maybe before.
Speaker 2:Okay. Can interest rates ever be too low?
Speaker 11:Probably. I you know, like, rates are it's basically related to its high value of money. Yeah. And so if interest rates are too low, people's willingness to part with money to get paid back in the future gets reduced, and then that that is investment. That's that's really what the definition of investment.
Speaker 11:So they could be too low, but they're they're definitely too high right now.
Speaker 2:I guess I've just been thinking, like, there are there are a lot of green lights, green flags in the market. New companies are going out. The stock market's at all time highs. Everything feels really strong in the economy. Even the CPI's coming back flat and GDP's printing.
Speaker 2:Everything seems pretty good. And it feels like
Speaker 3:Except the fast casual restaurant space.
Speaker 1:Yeah. Yeah. They're having trouble. Yeah.
Speaker 3:Except the the slot market
Speaker 2:is But but but in general, things to be seem to be going very well in the American economy. And when there's a risk of, okay, we could be overheating, I feel very reassured by having let's lower interest rates as an ace up our sleeve in case we get over our skis and there is a market correction. The Fed does have some has some tools in the Like our our friend
Speaker 3:Joe's point is in like the his view, the the argument to lower rates is like the data that's coming out of the labor markets. But again, that's also being debated and Sure. And I don't think anyone really
Speaker 11:Well, me let me take a step back though.
Speaker 2:Please.
Speaker 11:I think the foundation that growth equals inflation is just wrong.
Speaker 1:Mhmm.
Speaker 11:So from 1950 to 02/2010, each decade we averaged three point six years with over 4% growth without inflation. It's only the modern world post 2010 with qualitative easing that people equate growth with inflation. The good news about AI productivity gains is it's very easy to see how you can grow fast about three, four, 5% consistently without sparking inflation because all of the growth is not propelled by labor cost increases, which is what causes inflation. So I think the modern world over the next thirty years, if it's managed correctly, if the leadership in the political sphere is dialed in, should allow consistent growth, which will eliminate the debt and make it not a non serious problem, like 3%, 3%, 3% plus without inflation. And we need to get people who are sort of educated a century ago out of this mindset that every time you see growth, you need to put on the brakes.
Speaker 11:That's just not that and that's why the Federal Reserve keeps making that mistake. And so we've gotta fix that. But part of it is AI driven and technology driven innovation will allow for great growth, consistent growth without inflation.
Speaker 2:Is that your current outlook? Not necessarily a fast takeoff and we're growing at 10% GDP a year. Satya Nadella says, call me when we're growing at 10% a year. But but but a materially improved economic condition for The United States on a on a long term basis?
Speaker 11:Yeah. Like, Scott Besser likes to talk about three three three. And you want the 3% consistently
Speaker 2:Yep.
Speaker 11:You could beat three. And I think we will beat three, and I think he wants to beat three in the next couple of years.
Speaker 1:Yeah.
Speaker 11:So I subscribe to his perspective on the world. I think he's right. But it's technology that's the magic wand Mhmm. That allows consistent growth without actual inflation. And that's what we need.
Speaker 11:That is how that is raising taxes is a disastrous policy. It's not gonna fix any problems. Consistent growth without inflation will, and we need a Federal Reserve chair who understands that. We have a treasury secretary, fortunately, who really does understand this.
Speaker 1:Yeah. And we we've seen
Speaker 2:that with those charts of the various goods and services inflation over the past decade. Education and health care goes through the roof where everything that's on the technology adoption curve, like TVs and dishwashers, that all has gone down in price. And so the more goods and services that you can put on the deflationary curve, the more growth you get and the and the better health of the American consumer. Good stuff. Geordie, anything else?
Speaker 3:I think that's it. Thank you for jumping on on short notice.
Speaker 2:Thanks for taking the time, Keith.
Speaker 3:This is always great. Back on whenever you have more thoughts on on if you if you can think for ten minutes and get a post up, you can jump on the show.
Speaker 2:Please. We'd love to have you.
Speaker 11:Great. Pleasure to be with you. I'll be back.
Speaker 2:Cheers. We'll talk to you soon.
Speaker 11:Bye. Take care.
Speaker 2:See you. Let's go to the Metis list. We updated the Metis list, our ranking of the top 128 now AI researchers. It's burning up the timeline extremely controversial. Fortunately, we have Tyler Cosgrove to blame for that.
Speaker 2:We had no no involvement whatsoever. We will be disavowing the Metis list if it comes back to bite us. But Tyler, why don't you give us an overview of what changed, who's on top and what's going on with the Metis list
Speaker 1:Yeah.
Speaker 2:Today.
Speaker 1:Okay. So we're gonna migrate. Yeah. We're So so Okay. Before we start, just wanna give, You know, this is not done yet.
Speaker 1:Okay. The list can change. Okay. So we got some haters in the comments again.
Speaker 2:This is final. Oh, this person like, oh, he's
Speaker 1:so low. Okay. We can fix it. Alright? It's not done.
Speaker 2:Okay.
Speaker 1:Alright. But, yeah. Okay. Let's start with the top five here. Right?
Speaker 1:Okay. So, I I think a a big change we'll see is that we saw Noam, Shazir and Ilya switch.
Speaker 2:That's a huge move. Okay. Drove that?
Speaker 1:Sorry?
Speaker 2:What drove that? Is that just because Ilya has been quiet at s s s I hasn't published anything in the
Speaker 1:last year? Part of it.
Speaker 2:And Noam's been on a tear?
Speaker 1:Yes. So so I I know So so I mean, I think Noam Shazir is broadly almost like You you can't say he slept on. He's number one. Oh, yeah. But he is, I think, you know, punching above his weight a little bit.
Speaker 2:I think Doug from somebody came on and said that the reason that Gemini is so good is because is because Noam is back.
Speaker 1:Yeah. You can basically track like Gemini was okay, it was fine. Yep. He comes back from character
Speaker 2:Mhmm.
Speaker 1:They're goaded again.
Speaker 2:Okay.
Speaker 1:Okay. So let's go
Speaker 2:down Geordie for Gnome. Shazir.
Speaker 1:Soundboard sound. Soundboard sound. Okay. Demis?
Speaker 2:Yeah. Demis.
Speaker 1:He was missing from the first list. Yep. That was maybe a conscious decision. It might not have been.
Speaker 2:He was missing entirely.
Speaker 1:He was missing on the list at all.
Speaker 2:He's one of the greatest
Speaker 1:you know, the thought was like, you know, he's not as much of a researcher now.
Speaker 2:He's more a leader. Just leaves the lab. CEO almost. Exactly. Yeah.
Speaker 1:But, you know, if you trace it back, he's obviously still making some research decisions.
Speaker 2:Okay. Yeah. Yeah.
Speaker 1:So I think it's fine to put him back on.
Speaker 2:Okay. So he's number He's
Speaker 1:number three. Dario.
Speaker 2:Dario Amade.
Speaker 1:Dario Amade moves up anthropic.
Speaker 10:Overtanthropic. Lab leader.
Speaker 2:Got it. Makes sense.
Speaker 1:And then last up, we have John Schulman.
Speaker 2:And Dario, has he been on the Dwarrakech podcast?
Speaker 1:He has.
Speaker 2:Okay.
Speaker 1:I think actually all five.
Speaker 2:All five. Dwarrakech has
Speaker 1:hit all five. He's hit
Speaker 10:seven of
Speaker 1:the top 10 as
Speaker 11:well.
Speaker 2:Seven of the top 10. So mean, he's been on a generation We
Speaker 3:didn't just to Dwarrakech, we studied.
Speaker 2:We sat down and listened. We didn't just hear Dwarkash. We sat down and listened. Yeah. Okay.
Speaker 2:Who's last?
Speaker 1:The top Sean Schulman.
Speaker 2:Thinking Machines.
Speaker 1:Yeah. So another another big player. I believe Huge. Huge. Everyone except Demis has at one point worked at OpenAI.
Speaker 1:Wow. Actually, wait. I don't know if that's true, maybe. But still, what a run for OpenAI. That's that's the new top five,
Speaker 4:I think.
Speaker 9:Let's move
Speaker 1:over to big moves.
Speaker 2:Big moves. Big we got?
Speaker 1:From two weeks ago. So, the first one we can look at, number 13, Noam Brown.
Speaker 3:Noam Brown. So he he he did really well 36 spots.
Speaker 2:Thirty six thirty six spots. Now, was in the IMO gold medal team code.
Speaker 1:Yeah. He's big on the kind of RL team.
Speaker 4:Okay.
Speaker 1:I don't know. They probably have multiple RL teams Yep. Post training. Yep. But, yeah.
Speaker 1:He he's he's doing a lot of good work there.
Speaker 2:There's someone else at OpenAI who's famous for like holding RL altogether. They made the list as well. Is correct? Are you
Speaker 1:bunch of Okay. Just like post training RL people that Sure. That are new on the list now.
Speaker 2:That'll be important going forward.
Speaker 1:Yeah. Don't know we mentioned, but the the list is longer now. Right?
Speaker 2:Yep. So it's
Speaker 1:now a 128.
Speaker 2:We were at a 100 now we're at A one twenty nice base two number.
Speaker 3:I think additions too. Will Brown, Cracked Brown. To anybody with a brain.
Speaker 2:Multi time TBPN appearance. So it makes a lot of sense.
Speaker 3:Yep. Yep.
Speaker 1:Okay. We can go next one. Paul Cristiano.
Speaker 2:Yeah. Break him down.
Speaker 1:He's kind of an OG. Okay. He, I don't know if he's the godfather of RLHF, but he was a big name on that paper.
Speaker 8:Mhmm.
Speaker 1:Now, he's mostly into safety stuff now, but he's definitely kind of a thought leader in the space, right?
Speaker 2:We got Raghav in the chat saying Tyler is trying to atone for mogging Anthropic in Sonnet four yesterday. Is that true? Are you bleeding the allegations? Four moving up. I think you've atoned.
Speaker 2:Yeah. Good job.
Speaker 1:Sholto, I think Sholto actually moved down. No. Antarctica still, you know, there are lot of people on the list.
Speaker 2:Okay. Okay.
Speaker 1:Let's go to Peter Beale up 66.
Speaker 2:What is he known for? I've heard his name before.
Speaker 1:I mean, so he's just an academic. He's at Berkeley.
Speaker 2:Okay. Oh, he's not in the lab?
Speaker 1:He's not in the lab yet.
Speaker 3:Not yet. He's leaving billions on the table.
Speaker 2:Leaving billions on I think the
Speaker 1:literally, yes. He's been on a ton of papers. Like, also advised a ton of the of the top researchers.
Speaker 2:Sure.
Speaker 1:So I think he's kind of influential in that way. Let's go down to Yan Lakun is actually missing from the list
Speaker 2:now. Missing?
Speaker 1:So, he was
Speaker 2:Oh, no. He was
Speaker 1:a I fair. Think he was top 10.
Speaker 2:Okay. He was top
Speaker 1:He's now not even on the list.
Speaker 2:He's on the list. He's not
Speaker 1:So, you know, like, I don't make the list. I just
Speaker 7:give the
Speaker 1:I give the voting out, and then people make the decision. It's not me. Okay?
Speaker 2:So let us know in the chat. Should we shoot the messenger, or should we not shoot the messenger here? Do we have a do we have a toy bone error I can shoot the messenger here? Yeah. So Yan Lakun, big meta AI researcher ran Fair.
Speaker 2:Yeah. Was not directly on the LAMA project but was one of their key researchers. Is that right? And then kind of LAMA spun out of Fair, their AI research lab. And then, yeah.
Speaker 2:And and, sort of like a thought leader in many ways Yeah. Steward of the of the strategy. Also sort of a hater on deep learning for a while.
Speaker 1:Sort of a hater on on LLMs.
Speaker 2:I don't know about deep
Speaker 1:learning specifically. I mean, he was kind of He did Right now, it's his big thing.
Speaker 2:So he's kind of he's been kind of maybe right. It's kind of too soon to call it on him, but, he certainly, like, lost a lot of power within that organization as as Zorgen Zuckerberg has built out the Meta Super Intelligence Lab and
Speaker 1:I saw I think his title is still chief AI scientist Okay. But maybe it might be co led
Speaker 2:Yep. Now. Yep. And then of course you have Nat Friedman, Daniel Groh But he's
Speaker 4:not Alex considered be
Speaker 3:on the MSL.
Speaker 2:No. Yes. No. And so that's yeah. The the
Speaker 3:You mean no as in yes.
Speaker 1:He is not considered.
Speaker 2:He's not in MSL. Yes. In a separate org right now. Yeah. Okay.
Speaker 2:And then breakdown Jorgen Schmidhuber. What's up
Speaker 1:with Yeah. Down 53 spots.
Speaker 2:53 spots.
Speaker 1:He's also somewhat controversial during
Speaker 2:Why
Speaker 1:is the Nobel Prize. You know, saying, oh, it should have been me instead.
Speaker 2:He's kind
Speaker 1:of a he's a real OG in the space in deep learning
Speaker 2:trying to Orifarm the Nobel Prize?
Speaker 1:Yeah. So didn't really work but
Speaker 2:But he was unsuccessful. Yeah. It was a failed Orifarm.
Speaker 1:So so maybe that's that's the reason why
Speaker 2:I do remember when, when Chatchippity first launched, there was someone in the comments, Dystopia Breaker was saying, oh, all this stuff Schmidt Huber did all this years ago. There's nothing new here. Of course, I think that under underrepresents the importance of actually productizing these technologies and these research efforts, but still interesting to see that he fell so far. Expect to call him.
Speaker 3:Let's get into the overall stats. Yeah. So I this
Speaker 1:was actually pretty interesting. So we can look at the this is the the the number of researchers per lab.
Speaker 2:Okay.
Speaker 1:So we basically see the top three are all, you know, neck and neck. Right? Opening eyes at twenty four, deep mind at twenty three, and so I think at 22. Mhmm. This is different from from the previous list.
Speaker 1:Anthropic was I think leading by maybe four researchers. Yeah. But now it's really neck and neck here.
Speaker 2:Okay. And then
Speaker 1:you see Thing Machines at 12, somewhat surprising. They're really I mean, they have a lot of goats on their team. And then Meta down at eight.
Speaker 2:Interesting that Meta doesn't have more on the list given what a spree they've been on. Yeah. But they're probably still just in the early days of actually building out that squad.
Speaker 1:Yeah. I mean, if if you consider they started MSL Yep. Like what, a few months ago?
Speaker 2:Yeah. Takes time to even even when you have the money, it takes time to actually convince people.
Speaker 1:I think if we would have made that list back then, they would have had basically zero. Right? Maybe they would have had Yan Lakun. Yep. But he's not even on the list anymore.
Speaker 2:Yeah. They didn't have that
Speaker 1:money. Sure. And then we can also
Speaker 2:viral posts about people saying like, oh yeah, I worked on Llama three not Llama four and now I'm at another lab. Like that was something somebody posted on their LinkedIn.
Speaker 3:Viral LinkedIn screenshots. There
Speaker 2:there was a little bit of an exodus and now Zuck's rebuilding the team going into season 2026.
Speaker 1:Exactly. Yeah. Then And finally, can break it down by country. See USA 51. USA.
Speaker 1:USA.
Speaker 2:You love to see it.
Speaker 1:UK at 13, Canada at 12. Canada China would be putting that in the true sound.
Speaker 2:On a Yeah. On a a weighted basis though, population weighted, Canada is doing fantastically. They have one tenth
Speaker 1:That's true.
Speaker 2:The population of America I believe and one one fifth as many AI researchers on the medicine. Yeah. So congrats to the Canucks up north.
Speaker 1:It's always hard especially with China because a lot of their labs are very secretive. Right?
Speaker 2:So Yeah. They have So did anyone from High Flyer, DeepSeek or Yeah. We
Speaker 1:have two, I believe, two DeepSeek researchers.
Speaker 2:Okay.
Speaker 1:One is from Couple
Speaker 2:of them. Okay.
Speaker 1:Started like Moonshot.
Speaker 2:Yep. Moonshot is And big then
Speaker 1:I don't know if we
Speaker 2:have anyone specifically from From Bydance? The the the guy who created the the gal who created the TikTok algorithm, you gotta put them on there. That thing is wild.
Speaker 1:Yeah. It's always just hard because, you know
Speaker 2:Brain rot. You wanna build the brain rot machine.
Speaker 1:I think especially with We should
Speaker 3:we should actually build the brain rot list.
Speaker 2:The brain rot list. The researchers who have created the most sticky, you know, user generated content
Speaker 3:Most users hours.
Speaker 2:The most user hour maxers. Anyway, what else you got
Speaker 1:for me? So so I think one of the big improvements of Mhmm. Of this list versus of two weeks ago was that I think it would originally, we kind of optimized a little bit too much for Twitter Cloud Mhmm. Or Google Scholar site
Speaker 2:Twitter Cloud?
Speaker 1:Hard like, I mean, the labs are so secretive now don't really put out papers.
Speaker 2:Of course. And if you have someone incredible, you have a huge incentive to not let them do press. Yeah. Exactly. Like, hey, no.
Speaker 2:Actually, you can't go on door cash.
Speaker 3:Definitely got messages from people that were saying, can you can you put can you take my team off
Speaker 2:the off the list like stop stop talking about us. We we prefer if these people didn't get poached. Yeah. But that's the name of the
Speaker 1:game. In comments. Yep. Yeah. Sutton, I mean, there's a bunch of people that probably like should be on the list.
Speaker 2:Rich Sutton, John Carmack, yeah. Both of
Speaker 3:them at
Speaker 2:Keen. We haven't seen a lot from Keen but would be very very interesting.
Speaker 1:Yeah. Yeah, we're gonna big
Speaker 3:shout out to Mark Chen, broke the top 10 well deserved, up 19 spots sitting at number six just under John Schulman.
Speaker 8:Shout
Speaker 2:to I the have I have unplugged and plugged back in my microphone. Hopefully, it sounds better. If not, I can switch to the other microphone. But let me know how it sounds. And we will stop cutting off Tyler Cosgrove, intern because the chat is telling us to stop cutting him off.
Speaker 2:So, Tyler, who else who else fell off the list? How is my boy George Boole doing?
Speaker 1:Yeah. George Boole, Alan Turing
Speaker 2:Wait. Both of them?
Speaker 1:List but but
Speaker 2:Well, they're on the list.
Speaker 1:Leibniz is on the list now.
Speaker 2:Okay. Okay.
Speaker 1:That's good.
Speaker 2:But what what happened to George Boole? Where where where is he?
Speaker 1:People were really hitting on him.
Speaker 2:Mean He's off the list entirely?
Speaker 1:Yeah. Off the list entirely.
Speaker 3:Don't I know what his
Speaker 1:what his actual rank is. Obviously, I have the internal
Speaker 3:one of Alan Turing is gonna haunt you, Tyler.
Speaker 2:So Alan Turing is not on the list?
Speaker 3:He fell off. He's off the list.
Speaker 2:His test didn't really hold up too much. He got he got mugged by Yeah. Jejopyd. But this test
Speaker 3:Tyler Cowen's still defending Allen.
Speaker 2:Okay. Yeah. The touring test is is Lindy. Any other moves? Did we get any other Easter eggs on this version?
Speaker 2:Or are we Easter egg free now?
Speaker 1:I think, I mean, Liveness you could maybe Okay. Say is an Easter egg. Yeah.
Speaker 2:Think We didn't wanna go full meme core.
Speaker 1:That's the main one. Yeah. Okay.
Speaker 3:But we'll see.
Speaker 2:Oh, well. Well, thank you for all the hard work on the Metis List. You can check it out at metislist.com.
Speaker 3:Fantastic work, Tyler. We will continue to update it. So if you're angry, if you're happy, shoot Tyler a message.
Speaker 2:Yep. Yep. Tyler also produced and edited a wonderful vibe video. You did? A launch video for this which we're very excited to see him dip his toes in the water of video editing.
Speaker 3:He can do it all.
Speaker 2:A run for their money. Anyway, let's let's run through some posts. We have twenty minutes until Alfred Lin from Sequoia Capital joins us. Let's see what else is going on. I did want to cover the NVIDIA h 20 news.
Speaker 2:Do you
Speaker 3:want talk about that? Chinese authorities have urged local companies to avoid using NVIDIA's h 20 artificial intelligence chips, particularly for government related purposes, media reports said. So, they're worried about backdoors and they're probably worried about generating revenue for Uncle Sam, their sworn enemy.
Speaker 2:Yeah. So there's an interesting dynamic here because the the Chinese economy is not monolithic. It is it is, like, a state directed capitalism. It's a mixture. It's with Chinese characteristics, of course.
Speaker 2:So the news is that Donald Trump approved NVIDIA's request, and AMD's bucketed in in here as well, but lower in in importance, to export export h 20 GPUs to China. These are the nerfed AI chips, and they're critical for training large language models. And, of course, DeepSeek famously optimized their training regimen and and algorithms so that they could run on h twenties. And so they have figured out a way to train large language models on h twenties despite h twenties kind of being designed to not let you train or inference large language models as efficiently, but they're still getting it to work and they want them. So first off, oddly, the news is that Nvidia will pay a 15% export tax roughly.
Speaker 2:It's not technically a tax. It's a
Speaker 3:rev share.
Speaker 2:A rev share
Speaker 1:It's a donation.
Speaker 2:To the federal government, not to Donald Trump personally, but to the federal government for the age twenties that they sell. Now it is unconstitutional to to levy an export tax on American made goods. This came from the Southern states, I think, post civil war where the Southern states were exporting lots of cotton goods, and they were worried that the Northern states were going to try and raise federal revenues through export taxes that would disproportionately hit the South. But there's another odd wrinkle where the h 20 isn't technically made in America. It's The chip is made in Taiwan with equipment from The Netherlands.
Speaker 2:The memories from South Korea. I think Singapore might be involved at some point. It never actually hits American shores. All the packaging happens overseas, and then it's shipped to China. And so NVIDIA
Speaker 3:is, of course,
Speaker 2:an American company. American company. Exactly. So Trump still has leverage and he was able to block exports of h twenties back in April, which we covered on the show. And now Trump argues that this chip is not a threat.
Speaker 2:There's this incredible quote where Donald Trump says, they're not getting Blackwell. Blackwell's the best chip ever.
Speaker 3:He goes, maybe maybe they could but they'd have to pay more.
Speaker 2:He's sort of all over the place but he's having fun. So the h 20, at this point, I think most people, the consensus is that it is an older chip, it's nerfed, and it won't lead to nuclear weapon level AI technology. Maybe that's the next next chip, but certainly, we're sort of in the implementation, you know, plateau era of, you know, decent value coming from these AI systems, but certainly not anything super intelligence coming out of a rack of 8 twenties just yet. Yep. So
Speaker 3:so Beijing is demanding that tech companies including Alibaba and ByteDance justify their orders Yep. Nvidia's h 20 artificial intelligence chips which just further complicates things for Jensen. Yep. He's, you know, the the meme of him Mhmm.
Speaker 1:You know,
Speaker 3:smoking smoking a heater.
Speaker 2:Is that a meme?
Speaker 3:No. It's who's the who's the who's the actor?
Speaker 2:Beth McConaughey? No. No. No. That that there's one of him like taking a drag off a cigarette when he's like engaged in some conspiracy or like unveiling a conspiracy.
Speaker 3:No. It's Ben Affleck.
Speaker 2:Oh, Ben Affleck. Yeah. Yeah. Yeah. Totally.
Speaker 3:And you can somebody Chad GPT Jensen sitting outside his office Yeah. Heater. The tech companies have asked by regulators such as the Ministry of Industry and Information Technology. Yep. Let's give it up for that name.
Speaker 2:Yep. Love industry Anytime information
Speaker 3:you got a ministry, it sounds a little ominous. But So we asked they're making people explain why they need to work
Speaker 2:Explain yourselves.
Speaker 3:Explain. Why not use a domestic alternative? Yep. And And so
Speaker 2:the dynamic here is pretty clear. Beijing wants China to continue broadly. Like, the government wants China to continue continue to the move learning curve for advanced semiconductors. They want SMIC, SME, Huawei to develop the indigenous supply chain for semiconductors and do all the hard work. And the only way to actually get the yields up and and really get to the frontier is Volume.
Speaker 2:It's volume.
Speaker 3:A Chinese data center operator went on record to say, it's not banned but has kind of become a politically incorrect thing to do when asked about buying h twenties. Yeah. One issue with doing politically incorrect things in China is you can often be disappeared.
Speaker 2:Potentially.
Speaker 3:And have your wealth taken from you, your your
Speaker 2:I think they gotta push back. I think they gotta push back. So the dynamic is, you know, China wants to continue developing supply chain semiconductors, their semiconductor supply chain. And then on the flip side, Chinese companies just want to develop, you know, the best possible AI models that they can. And so they don't wanna be GPU poor.
Speaker 2:And and so they're they're they're probably there's gonna be a little bit of a dance there, and some of these will be justified. There still might be some diversion that happens just for political reasons. It's all very complicated, but it will be interesting to see how many of those h 20 GPUs that have been kind of mothballed can NVIDIA actually sell. And we'll see that in their next earnings report most likely.
Speaker 3:And that irony here, everyone, you know, people like the ultra China hawks, the, you know, AI war group saying that, you know, criticizing the original Yep. You know, h 20 deal be saying that it would help the Chinese military and just broadly undermine US strength in artificial intelligence. And now you have the Chinese government just saying, actually, we don't even want it. We don't want you buying them. We don't want you using them.
Speaker 3:Yep. So
Speaker 2:Well, AI war seems to have been averted, and war with China is also between China and Taiwan is also at an all time low on poly markets, 7% chance by the end of this year. Of course, the year is ticking by, so you would expect that to go down. But even even by the 2026, it's only at a 22% chance. So people 22%
Speaker 3:chances.
Speaker 2:People have been saber rattling about this for a long time that something's gonna happen soon. And, you know, the at least the poly market doesn't really think that's gonna happen. Anyway, let me tell you about Julius. What analysis do you wanna run, chat with your data, and get expert level insights in seconds? You can ask Julius to analyze your data, and it's loved by 2,000,000 plus users and trusted by individuals at Princeton, the Boston Consulting Group, and Zapier.
Speaker 3:When Rahul first told me when I saw the 2,000,000 user number, I was like, is that a did you add a few extra zeros there?
Speaker 2:It did see no. It's real. It's real. It's fantastic. Absolutely.
Speaker 2:Wow. There's another interesting data point that came came out of earnings. So there were two companies that that announced earnings recently and are in the business and finance section of the Wall Street Journal today. So stablecoin firm Circle records loss, but revenue soars 53%. And then separately, CoreWeave posts a loss on higher revenue.
Speaker 2:So both of these companies, one in AI, one in crypto, beat on top line, missed on the bottom line. So they're in different industries, but it feels like they're adopting similar financial strategies, which is invest right now for growth, go, go, go, get the top line higher, become a big company. So the numbers are crazy. Circle's Circle's share price has quintupled since its June IPO. We interviewed the CEO just after that IPO.
Speaker 2:I had not been tracking exactly what the share price had done. That's that's incredible performance. Yeah. Revenue's up 53% year over year. It's great stuff, but the losses are growing.
Speaker 2:Analysts expected a $338,000,000 loss for Circle. They posted a $482,000,000 loss in the second quarter. Something similar happened with CoreWeave. We also interviewed the founder of CoreWeave on the show. Second quarter revenue tripled since a year earlier.
Speaker 2:That is incredible performance, But the company lost 290,500,000.0 in the quarter, which is 15% more money lost than the analysts expected. Not a huge miss, but certainly something that people weren't really pricing in fully. And both of those companies have had I believe they've had profitable quarters, but then kind of gone down as they've gone back into the reinvestment mode. And so and my read is basically, like, there's green lights all over the economy. There's green flags everywhere.
Speaker 2:The market's open. The IPO window's open. The the economic data is really good. So invest, invest, invest. Take advantage of the AI race.
Speaker 2:Take again take advantage of the the new crypto regulations. Anything you can to go take as much market share as possible and get really, really big. So, you know, maybe the wave is cresting, but why not get a firm footing on your board while you can.
Speaker 3:Absolutely.
Speaker 2:Anyway, that's my take on CoreWeave and Circle. Anyway, let's move on. I think we I think we hit Google well. We can tell you about ProFound, though. That's obviously relevant to the Google conversation.
Speaker 2:Get your brand mentioned in ChatGPT. It's gonna be more important than ever going forward, especially as they add agent to commerce features. You can reach millions of consumers who are using AI to discover new products and brands. You can
Speaker 3:get I wanted to highlight a brand. The founder's name is Isabelle. She said, this morning my brand that's less than thirteen months old is launching Whole Foods nationwide without a 7 figure raise. How is that even possible? One, strong lending partners.
Speaker 3:We have invoice factoring and PO financing at less than 12% APR making it a clear no brainer to free up working capital. Two, prioritize strong unit economics 50% plus and bi coastal manufacturing and fulfillment to not get crushed on freight. Three, trial and retention we invest Wow.
Speaker 2:Manufacturing on both coasts day one.
Speaker 12:That's a
Speaker 2:bold move. Yeah.
Speaker 3:Four, the thing that's interesting, a two dairy is on trend.
Speaker 2:Yep. So
Speaker 3:a two dairy is
Speaker 2:Who is that?
Speaker 3:Not quite it's not raw which is which is non pasteurized dairy. Likely pasteurized. I I forget the exact definition of But it's but it's think of it as a milk derivative. Let me pull up the definition. A two milk is a type of cow's milk that primarily contains the A two beta casein protein unlike regular milk which contains both A one and A two protein.
Speaker 3:So some people are sensitive to a one. Sure. And so they can have a two dairy.
Speaker 2:Yep.
Speaker 3:And we were talking about this earlier today. I haven't been a fan of a lot of a lot of like ready to drink products especially coffee lately because they include all these random alternative milks that have a lot of sunflower and canola oil in them. But Yeah. Anyways, super impressive kind of result.
Speaker 2:You just want a simple RTD with simple RTD protein shake with ingredients that anyone can understand. Three hundred milligrams of caffeine, twelve milligrams of nicotine.
Speaker 3:A pound of creatine.
Speaker 2:Pound of creatine, some Adderall XR. Just stuff anyone can understand.
Speaker 3:Just a pound. It's all we If
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Speaker 3:Jovian says, I've successfully solved the OpenAI naming problem. And, they say, they they have screenshot here harder, better, faster, stronger.
Speaker 2:I kinda like this. Kinda works. It's crazy but it's just crazy enough to work. I do think it's hilarious that there's like chat GPT GPT five thinking mode and that implies that like the normal version just doesn't think at all I guess. I I do like that it's that that I I do like the language here where it's harder.
Speaker 2:It's not just think thinking or not thinking. It's thinking harder, thinking better, faster. And maybe maybe that's where this will collapse because right now, even in in the GPT five update, I mean, obviously, it's such an improvement over the previous one where you had to know that o three was better than four o, which is deeply, deeply confusing. But now I'm seeing fast thinking thinks longer for better answers and pro research intelligence auto decides how long to think. That's pretty pretty good.
Speaker 2:I think they're I think they're close. I I do think over time we will see no no selection at least in the main UI. Maybe buried somewhere But overall, it seems like the model ran
Speaker 3:out It is really funny though that people went complaining about the complexity of the naming to the same people complaining about not being able to select their own models.
Speaker 2:Yeah. Were those the same people? Or was it like separate cohorts but it was definitely some it's the current thing to hate on the
Speaker 3:Josha Box says AI psychosis psychosis is rampant now.
Speaker 2:I think you might have a version
Speaker 1:of this. Totally. I mean,
Speaker 3:yeah. I don't know. I think it I think there's a big difference between seeing something that is chat GPT generated text Yeah. Being like somewhat frustrated and annoyed that that somebody's just slopping up the timeline
Speaker 2:Yeah.
Speaker 3:With a bunch of, it's not this, it's that. I don't wanna see that. Yeah.
Speaker 2:Yeah. It has been a fascinating story though. But in general We have
Speaker 3:a in general, there's there's excitement. People have this like general excitement to try to identify who they think has been one shotted.
Speaker 2:Yes. Yes.
Speaker 3:Yes. But later today, we're having Keith
Speaker 1:Yeah.
Speaker 3:Doctor Keith Sicata on. He's a doctor at UCSF and he has seen a number of patients this year that he have that he's identified as suffering from Yeah. AI psychosis.
Speaker 2:It's clearly very real. But at the same time, my takeaway is that it should be solvable pretty pretty quickly with, you know, if you can decide in the model router, do I need to think really hard and actually help someone with this checkout? You should also be able to say, okay. This person definitely thinks I'm the now. Like Yeah.
Speaker 2:It definitely thinks I'm I'm, you know, god or something or they think they're god. And and going from there just makes makes a ton of sense. Anyway, let me tell you about numeralhq.com sales tax on autopilot. Spend less than five minutes per month on sales tax compliance.
Speaker 3:Benchmark series a.
Speaker 2:And we have our next guest, Alfred Lin from Sequoia Capital. Finally. The studio. Welcome to
Speaker 3:the I've been looking forward to this.
Speaker 2:How you doing, Alfred? Good to meet you.
Speaker 4:Doing great. Thank you for having me on the show.
Speaker 3:Great to see you. Thank you for coming on. We've this is overdue.
Speaker 2:Yeah. Would you mind kicking us off with an introduction on all the different pieces of the Sequoia world that you touch currently? Because I know you're you're the the firm has grown so much. There's a lot that you could be focusing on, but I'd love to ground it in what is current how you're spending your day currently.
Speaker 4:Well, Sequoia's been around for fifty years, and we're we're still very much focused on every on venture capital. So we have a seed business, a venture business, a growth equity business, an expansion business, and then we have an overlay fund called the Sequoia Capital Fund. And most of my days are still trying to find the pre seed, the seed, and series a founders that are daring enough to start a company and wanna change the the the world. So that's where I focus.
Speaker 2:What's happening at the earliest possible stage in the Sequoia portfolio? Like, what what, how I mean, I feel like if you go back forty, fifty years, you hear these stories about, oh, yes. Sequoia got 10% of this multibillion dollar company for a $100,000. Obviously, the market dynamic have shifted, there's some huge seed rounds happening, but you are still funding people with really small checks at a certain stage. Can you explain how that all works?
Speaker 4:Yeah. I like I like to say that my job is to take small dollars and make them into big dollars. So
Speaker 1:Seriously. You need to you
Speaker 3:don't need to overcomplicate it.
Speaker 2:Yeah. Don't
Speaker 4:overcomplicate Let's let yeah. Let's not complicate things. You're trying to put small amounts of money to work and you're trying to make sure that it becomes large amounts when the company becomes successful. And yes, there are large seed rounds but there are also just lots that's going on and it's not just AI, there's just a lot of breadth. AI is enabling a lot of things, and AI is not the only thing that we invest in.
Speaker 4:We are all generalists here from consumer to enterprise in robotics and everything you can think of. We're trained as generalists because things move and things change. It's not it's not just one thing after another. It's not like we only invest in the Internet when the Internet was happening and only invest in mobile and only invest in SaaS when those things were happening. And the same is true now.
Speaker 4:There's a lot going on. And, you know, the the founders that I really enjoy meeting are two people on an idea, and they wanna they feel like the world has gotten something wrong in the world, and they wanna go fix it. And they wanna their legacy will be changing the world and how we live just like some of the people I've been fortunate to partner with. And we use that term very very judiciously at Sequoia. We wanna partner with the the daring founders who wanna start the company.
Speaker 4:We don't we don't think of ourselves as investors. We don't try to buy low and sell high. We really wanna work with a small select set of founders that wanna go all the way. And, you know, the thing that I've learned over time is you can take us two founders in a seat of an idea, and in a decade that that company could be worth 1 to $10,000,000,000. And in two decades, that could be 10 to a 100,000,000,000.
Speaker 4:And in three decades, that can be 100,000,000,000 to a trillion. And we've seen a number of companies that have reached that, including Nvidia, including Apple, including Google. And we're gonna try to help the next set of founders do do those things.
Speaker 3:Going back to something you said earlier, you said you're not just investing in AI, but what does the company look like today? What does a non AI company that that look like today that's coming to you to pitch to pitch you at this sort of idea stage? Because in some way in some ways you have to think that
Speaker 2:It's like no.
Speaker 3:If a founder wants to wants to just not think about AI and they're starting a company from the ground up today. It seems like, you know, I'm sure there's some outliers but seems like a a question that, you know, if you have the blessing and the opportunity to start a company in the year 2025, there's probably some way that AI could be transformative to your business or or the market broadly.
Speaker 4:Yeah. Don't get me wrong. I think all the companies that we work with are using AI and AI tools. That doesn't mean that they're AI native. And you guys were just talking about the the AI researchers and the Metis list.
Speaker 4:There are some companies that don't aren't going to be AI native. They're not gonna build a foundation model. They're not gonna build a world model. They're gonna be building an application. And in some sense, in in probably two or three or four years, we're gonna call those back to software companies.
Speaker 4:Those are just new updated ways of building software companies, and we do believe in a lot of value will be created in the application layer, and new applications will be created in in this world. And I think there's a desire to associate all those companies as AI companies just like, you know, when the web was happening, everybody wanted to be called a a web company. But at the end of the day, you're still you may be a consumer company. You may be an a gaming company. You can be a commerce company.
Speaker 4:You might be using the Internet as distribution, and here you might be using AI as a way to improve the way you get things done. But you're not a native AI company.
Speaker 3:Yeah. So your your definition of an AI native company is effectively like you have to be hiring like researchers. And I and I am I hearing that correctly? Because I think some people describe themselves as AI native because they're just they feel like they're using the tools to the to the to the
Speaker 2:It also just feels like the difference between, like, AI native company where it really matters is just, like, what will the financial profile look like? When I think of AI native foundation model company, I think r and d, I think CapEx. Maybe they're not building a big data center, but they're at least spending on a lot of training versus an application layer company. It's gonna be much more about the the how much does it cost you to generate those tokens even if they're on a different foundation model, and then how how much value are you delivering and how much revenue are you generating from the com from your customers. Is that is that a reasonable framework?
Speaker 4:That's that's a for me, that's a reasonable framework in the sense that I think there are a lot of companies that are using AI and AI tools
Speaker 7:Mhmm.
Speaker 4:To be able to increase productivity.
Speaker 2:Mhmm.
Speaker 4:And but they're they're building an application. They're building a service. They're building something that is different than a native AI company.
Speaker 3:So How is your thinking you know, it feels like this debate has faded a little bit into the background. But over the last five years, how did your thinking evolve on kind of value accrual between the the the model layer or or the labs and the sort of application layer? Because in our view, you know, we had a number of folks on from OpenAI last Thursday for the GPT five launch and it felt like, okay, this is a consumer tech company. Like it it really felt like and they're selling at least today subscriptions to their consumer tech product. Yep.
Speaker 3:And that is and the product is the product. The models were were in many ways with the introduction of the router taking a little bit more of a backseat.
Speaker 4:So I I think the the where value accrues is a very hard question to answer at the beginning. We have a particular point of view and in throughout history, I think you would see that value accrual like shifts as the sort of development changes. Like in the early days, you need the infrastructure to be built, and so a lot of value accrues to the infrastructure layer. That's kind of the reason why all the way down to the bottom of the infrastructure layer, NVIDIA is a $4,000,000,000,000 company today. Value is accruing there because everybody needs that chip.
Speaker 4:Over time, then you you have people building on those chips and then value starts accruing to the model layer because it model you gotta build the model for other people to build on top of it. And over time, hopefully, you you build the infrastructure, the systems, the, you know, operating system, and then the application. And then the application historically has been where a lot of value accrues in in previous generations of the Internet, and it's too early to call that that's where where a lot of value accrue in the future. But if you just look at history, that has been the case.
Speaker 2:Can you talk about Sequoia Arc and then specifically some of the trends you're seeing in those very early stage companies, how they're building businesses, how the financials change? Because even though I'm sure some of these companies could go out and raise huge rounds and train foundation models, like, where is the money going at the early stage for kind of startups that are that are joining the program?
Speaker 4:So so ARC is a is a program that we started in 2022. It's a program that we started because we wanted to help our own founders have a common language and to basically leverage the fifty years of learning that Sequoia has had in company building. One of the things that we've noticed over time through many different technology waves is the fundamentals of company building don't really change. You might have to hire slightly different engineers or slightly different sales people or etcetera etcetera, but the fundamentals don't really change. The history of technology lowering the cost of
Speaker 10:creating a
Speaker 4:company hasn't really changed. The sort of ability to sort of get above the noise because there are a lot more companies being produced, that hasn't really changed. So yes, you know, the trend is we're gonna probably have fewer people in a company. That has been the case for a long period of time in technology. Is it harder than ever before to get above noise because, you know, it costs less to start a company?
Speaker 4:Yes. That's been the trend. And the things that we sort of try to focus on is what is stable over time and the company building aspects. And what we try to do in that program is in short number of weeks, teach everything that we can to sort of get a company off the ground, especially from the zero to one phase of the company that you can then take with you to build from one to n. And that's that's the company that's the company building program that I think we we're trying to aspire to make sure that we teach in that program.
Speaker 2:What does graduation day or demo day look like? Is it just pitching the Sequoia partnership, or are you setting up is it actually is there some competition and other firms are trying to come in? It feels like like one of the elegant things of demo day is that for at least for Y Combinator is that they don't they they they they they sometimes occasionally will feed off of their best companies, but, oftentimes, other other, firms can come in and and snipe some company that's overlooked or something. How how do you think about, companies graduating from ARC?
Speaker 4:So the the program is a company building program so that at the end of the program, yes, they pitched the whole partnership as well as as builders in our community so that we can give them feedback on their next stage of company building. It is not a a fundraising Sure. Demo day. And so that's not the objective. Objective is to continue to build the company.
Speaker 3:When you talk about you talked about getting above the noise. It's obviously one of the biggest challenges that any company faces. Do you have portfolio companies today where your general that that have products that are working and getting real customer traction where you advise them to actually just be quiet and try to dominate their sub market as much as possible.
Speaker 2:Maybe don't go viral amongst a
Speaker 1:bunch of people that wanna build
Speaker 2:things and compete with you.
Speaker 3:Going viral on X for example is a double edged sword. You attract a lot of attention, great candidates, investors, etcetera. But you're also inviting an entire world of really smart people to come in and compete with you. I'm curious how you're advising companies at maybe kind of that seed series age stage and potentially saying sometimes, Hey, you should just get your first thousand customers before you really tell people about what you're doing because you're really on something?
Speaker 4:That's a really great question. The question the the sort of what you're talking about is something that I think is very thoughtful and we give different advice for different companies. You're trying to sort of make sure you have a certain product heft before you launch. I think that's something that founders should really consider and where you're way ahead of your competition before you launch. And if you can accomplish that in a short period of time, you wanna do that before you launch and so that you don't as to your point, not invite a bunch of competitors into into the space.
Speaker 4:And then there are just other companies where you need users and part of the go to market, part of your product market fit is to get users to bang on the product and to get that feedback. And in those cases, we would tell them, you know, when you have some semblance of the MVP, you should probably launch and then get the feedback from customer. And so it depends on the founder and depends on the product and how feature complete you want before you go go launch. Most founders I found are perfectionists and so they probably launch a little later than they should, But that's not always the case.
Speaker 2:What advice are you giving to college students these days or or really anyone pre joining Silicon Valley, pre Sequoia Arc, pre founding?
Speaker 4:It's to me, the the most interesting thing that I've learned over the years is that being in technology has been a game changer and an equalizer in so many ways. And I'm glad to be talking to you two because you're a techno optimist, and there's a lot of people who are just concerned that these tools are gonna destroy jobs. And at the opposite end, view I went to the GPT five hackathon this past weekend, and there are people who've never coded that was produced or was able to produce something that was not the, like, world changing thing, but in twenty four to forty eight hours, it's like a wow moment for me to see people who've never coded to be able to produce an application that could do something. And I think it's really important for everybody in college, everybody who's in high school, my son is about to go to high school, to really know how to use some of these tools. And let their imaginations run.
Speaker 4:And think about what they can create. Because a lot of things that we're talking about right now are about speed and scaling laws and reasoning and improving all those things. But then let's use our human imagination to improve humanity. And I think allowing everybody on the planet to be able to code when they didn't have to learn get a degree in computer science and learn how programming is really powerful. And I think we should embrace that.
Speaker 2:Does the does the lowering of the barrier to instantiate software increase the value of driving kind of economic value? I'm thinking of that potentially apocryphal story of you selling pizzas in college, but that felt like something, less enabled by a technology trend and more just evidence that you saw, you know, the you saw an arbitrage opportunity. Agency. An agency. And maybe we're in this era where the the the next you will be someone who finds a pocket of value.
Speaker 2:Maybe they instantiate some software, but really they're they're they're finding some some gap in the market and exploiting that and that being like a really high signal versus someone who's just sitting there using ChatGPT to check the boxes on their computer science homework.
Speaker 4:Yeah. I don't I don't I'm not suggesting people use the tool to just check the box on their computer science homework. I'm suggesting that they they use it to, like, do something creative and
Speaker 2:Yeah.
Speaker 4:And improve humanity, and that's very very different than, oh, I don't want to do my homework, let me look up the answer. Yeah. I think the the notion is that we are going to increase the amount of capabilities of every human being on the planet, and it's up to us to harness that power to do the incredible things that we've been able to do with lesser powerful technologies in the past. And historically, the more powerful we get something in technology, the more we can do and the more we can imagine what the world to be like. And I think that's really really important.
Speaker 2:What do you imagine the world will be like in twenty years? Or like what is something that you want to be true about the world that isn't necessarily true yet?
Speaker 4:I mean, we you know, the thing that I I find very interesting right now is the stuff that I was doing in high school and college that these models can do now. Like the fact that the models can win the IMO gold. Yeah. It's pretty amazing. Yeah.
Speaker 4:And hopefully, one day we can discover novel physics, novel medicine. We can improve our our the length of of our lives in different ways. We can do a lot of things that are accustomed to us. We can be entertained and so that there's a bunch of productivity stuff that we're already doing now. And then there's life improvement stuff, and then there's just fun improvement stuff.
Speaker 4:I I think there's just a lot of things that we have not imagined that will be fun in the future using AI that we we're, like, kinda talking to machines and feeling like they're gonna be our companion and maybe be our therapist, and maybe they can be a lot more than that. Mhmm. And and I think we will be interacting in a world where, yes, we might be using agents, but we will also just spend a lot of time just truly being human. The amount of time I can do things today allows me to have more time to spend to either do more work or to spend more time with family. And I think we're gonna be able to do both.
Speaker 3:Sorry. I was gonna ask how you're advising companies. Maybe you you have have been on the board been on their boards for a while or or seeded them or or invested in them years and years ago. How you're kind of advising them around, the IPO window feels very open today. No one can predict the future but throughout this year you went from okay it's open to now we have a trade war maybe back off to it's very open now.
Speaker 3:What's your outlook for the rest of this year and beyond and how are you advising teams that are gearing up to get into the public markets?
Speaker 4:Well, think great companies can always go public, and you have companies that, you know, went public like Instacart that were was went public when things were were slower. They were DoorDash and Airbnb went public right after the pandemic or during the pandemic, right after the the heat of it. And I think there are very few times when it's truly truly closed. There are obviously times when it's much more much warmer to go public. I think you're you're in an environment where that is the case.
Speaker 4:But we generally advise companies, and this has been true historically. This is long this is when I was an entrepreneur and listening to Mike Lawrence, like, and listening to him about just build a great company, and then you will be rewarded whether it's through raising capital privately, raising capital publicly, being being purchased. And the IPO's window being open, I think for most of the companies that have gone through an IPO, it's a big deal, and it is. But then they realize it is a fundraising event, and then they have to get back to work. So I would just tell people to stay grounded and build a great company and great great business.
Speaker 3:People like Dylan were still, you know, Dylan and the Figma team were shipping on on the IPO day.
Speaker 2:Not just shipping. He was answering customer support questions on Twitter. Yeah. Some
Speaker 3:groups never
Speaker 2:stop working. You certainly embrace that.
Speaker 4:And you need to do that because, know, you you go public and and what's next? I mean, you you wanna serve your customers. Both DoorDash and Airbnb will be but in December, I think there'll be five years as a public company.
Speaker 1:Yeah.
Speaker 4:I don't think they slowed they I don't think they've slowed down since they went public in 2020. And they everybody still continues to work fairly hard. I mean, some of the companies that I'm advising around the adoption of AI is I think many of the companies that we work with, they want it to be like water. Let's use all the tools. Let's not standardize on any of them yet because they're changing so fast.
Speaker 4:One day, one model might be better than the other. That might flip, and using all the tools and being proficient is important. And the other so there's, like, proficiency around AI tools. There is collaboration, getting everybody inside the company to work together to improve something using AI, and then there's trying to find leverage in the business, trying to find areas where you can improve revenue or lower cost or both at the same time.
Speaker 2:I have a I wanna talk about the future of, like, agentic commerce and checking out through, through chat apps. I realize that's that Sequoia is that you're tied to Zappos on the commerce side, Google on the ad side, but also the Foundation Model Labs
Speaker 3:And the DoorDash.
Speaker 2:And then also ProFound. But so I don't know exactly how you'll be able to answer this question, but I'm interested to hear how you work through the question of of, like, what are all the knock on effects of of shifting to a world where I go to a chat application and I ask it for a new pair of shoes, for example, and it works through. It knows my size. It it knows what I prefer, the different weight distributions, and then it can actually do the full checkout for me. Semi Analysis was talking about how OpenAI is potentially gonna come for Google's, ad revenue very soon.
Speaker 2:At the same time, I'm interested to hear how you'd advise a company that is selling a physical good and how they could take advantage of this shift in consumer behavior, whether there's any sort of threat there or if it just makes their life easier because they don't, maybe they maybe they have to pay a different tax, not the Google tax anymore. I I I'm just thinking about, like, there's so many different knock on effects from this, like, the first major shift in consumer behavior potentially in the last twenty years. Like, how are you thinking about all the knock on effects of that?
Speaker 4:So I I think it's a very good question. I think the you know, if I if I had a crystal ball, my prediction is that it is much less divisive than people imagine it to be. Yep. You could have imagined that Google, because they had the people started search on Google, that they would be able to take a transact a take on every single transaction. And it turns out that when you're doing search and discovery, it is different.
Speaker 4:You want a different experience than when you actually want to purchase. Yeah. If that's true in the future, then I think it's gonna be less divisive than we think. If the only thing that we interact with is your chat interface to to the world of through AI, yeah, then I think it'd be very very difficult for a bunch of other companies to to survive, but we don't tend to see that happening. And maybe they maybe if it does happen, you have a slight small take rate because that's what happens.
Speaker 4:Like, Apple has an app App Store. They have a take rate, but then people still go outside of Apple to do to complete transactions because it's not always efficient. If I know exactly what I want, do I have to go through a chat chat interface to do it? Maybe there's a different interface. It is incumbent on commerce companies to make purchasing so simple and to know you so well as well to make it a fun and interesting experience.
Speaker 4:And I do think that that can that I think is what a shopping experience will be how that will be very different because a general application is not gonna be very, very specific to shopping. And then there's always different types of shopping. Do I do window shopping? Do I try things on? Those things can be very, very different.
Speaker 4:Do I is it a utilitarian kind of transaction? Do I just wanna go complete it? These are things that we wrestled with at Zappos. Amazon wrestled with it. Mhmm.
Speaker 4:And eventually, created their own search engine inside of the Amazon sites because it was important to them to not to have a better commerce search experience than you would get on Google, which was a general search experience. And so I do think there's gonna be some level of fragmentation among customer experiences than everything going through one channel.
Speaker 2:On the topic of fragmentation, do you think that enterprise AI or business to business AI products will be less monopolistic than consumer? Like, how are you thinking about consumer AI bets at this point? It feels like, generally, the ship has kind of sailed, and there's a lot of winner take all dynamics and compounding value from just being the default and the aggregator. But in b two b, it feels like the narrative of like, oh, yeah. The next model release is gonna steamroll legal AI.
Speaker 2:It's like that doesn't feel like that's happening. There's tons of value to be created, there's tons of pockets of value. And I don't know how you could map this to previous eras if you have if you're drawing on any analogies. But I'd love to hear how you're thinking about the the market dynamics playing out.
Speaker 3:Yeah. I mean, one, it's like search at one point looked competitive. And then if you just went offline for a few years and came back, you'd see Google with, you know Yeah. Not what? 90% Yeah.
Speaker 3:Of the market. And it it feels like we could be going in that direct Yeah. Direction in consumer, but not necessarily in b to b, which also tracks
Speaker 8:Yeah. Trends.
Speaker 2:So how are you thinking about it?
Speaker 4:So I think overall, I think your observation is correct that in when you get consumer right, it has more network effects and more brand effects than than in business. And then in business, there's more proprietary data that the businesses are less likely to give up than the consumer. I think consumers we talk about consumer privacy, and at the end of the day, most consumers don't seem to think don't seem to really think about privacy. They give up a lot of information about themselves to a lot of companies.
Speaker 2:Yep.
Speaker 4:And and but the but businesses, especially large enterprises, do not do that. And so I I agree with you on that. I would just point out that while that's true, our road to where the final, you know, answer is is always less obvious than what tracks. Google was not the first search engine. It was probably number 25.
Speaker 4:I don't I don't remember.
Speaker 2:Yeah.
Speaker 4:But it wasn't the first one. Yeah. Before Google, there was Yahoo and Yahoo got to a certain size and Yahoo had a bunch of portals that we navigated through the Internet through these these directories. Yep. And so I don't think it's completely obvious and and you know, if it was just obvious, I'd be out of a job.
Speaker 1:My job is to
Speaker 4:help the small companies go but go against the big companies. And I would say, yeah, there's gonna be some network effects and some crowning of of major players, but at the same time, there's always new companies trying to challenge an existing company and some of them do it extremely well. In in some sense, why should Amazon is a large company, even even large companies competing with other large companies. Why did Amazon have AWS? They weren't really in the technology space.
Speaker 4:They're a retail company.
Speaker 2:Yeah.
Speaker 4:So the answer is always a little bit more complicated. But I love this well, I love the push and the thinking that the consolidation is probably more real and consumer than it is in in enterprise. And Yeah. I would just point out, Grubhub was a consolidator for a period of time and then DoorDash came on.
Speaker 2:I was about to say, you know, it's easy to say like consumer is very monopolistic until you point out DoorDash and Airbnb. Like, these things these experiences start with search boxes in many ways, but yet they have built entirely different businesses from Google, for example, or the social networks because they they brought a different experience to bear and a different component, different business structure that was counter positioned.
Speaker 4:Yeah. I mean, we talked about DoorDash. Airbnb like there was the Airbnb before Airbnb. Before Facebook there was MySpace and FriendFeed and and a bunch of other companies. And so the final winner is not it's generally not the first.
Speaker 3:Well, there's one question to ask which is when a company becomes a verb, does is there any is there any hope left in the competition? Right? Google it. Let's let's get in it, know, let's Uber.
Speaker 1:Let's Uber.
Speaker 3:Yeah. Like I'm gonna talk to you know different but just you know, I'm gonna chat. I'm gonna go I'm gonna let's see what chat thinks.
Speaker 2:Right?
Speaker 3:Yeah. Not not not a verb. But it feels like at that point, right? Like the I I don't remember even at a time when I was aware of VRBO Yeah. It it wasn't this like dominant.
Speaker 3:It wasn't a dominant brand. It wasn't it wasn't really a part of people's lives in the way that Airbnb sort of became.
Speaker 1:Yeah.
Speaker 4:Yeah. I think you're pointing out that there there's a long road to get to what eventually is is not critical mass. Critical mass can still be, you know, sort of odd someone else can still get to critical mass.
Speaker 2:Yeah.
Speaker 4:When you become a force of nature, a dominant force, that's where everybody goes and it is something that we talk about all the time as category defining. When you define the category and you're the company in that category, then it's very very hard to stop that.
Speaker 2:Mhmm. If you weren't doing tech in an alternate universe, what would you be doing?
Speaker 4:I'd be doing tech.
Speaker 1:But guys That's a great answer.
Speaker 4:We are so fortunate to live in this tech world.
Speaker 2:Yeah. That's the best possible answer.
Speaker 4:It's the it is I'll I'll tell you I'll tell you what. I'll answer your question, but I would probably find my way into tech. Yeah. That's great. You know, when I was growing up, I thought I was gonna work in the hedge fund industry.
Speaker 4:I did go to a PhD program, it was pricing options and derivatives.
Speaker 1:And
Speaker 4:even then, there's a lot of tech in those business.
Speaker 2:Of course.
Speaker 4:I sit on the board of Citadel Securities and the amount of quantitative researchers that they have, the number of technologists that they employ, it's just tech is such a beautiful place to be and we should all very very fortunate to be part of the tech industry.
Speaker 3:The the complaint over the last couple decades is that our best and brightest were going to do high frequency trading and and working at at hedge funds broadly. And the interesting thing that's happening right now is the best labs are identifying the best talent at the hedge funds.
Speaker 2:Mark Chad worked at Jane Street. And and one of the major like Matt Mull just like inference optimizations at a very fundamental level, I think came out of Jane Street.
Speaker 4:Well, think the smartest people tend to work at, you know, sort of places where they're gonna be challenged intellectually as well as doing something they think is, like, interesting and novel. And the hedge fund industry had employed a lot of people who were doing something interesting and novel. They they pioneered a lot they put a lot of machine learning into place that if you were not today AI researcher, but back then, you were probably going to those companies because that's what they put in place. And today, you have a different place to go to. There are Foundation Model Labs.
Speaker 4:There's and the large tech companies that are putting that into place.
Speaker 3:Well, and the tech industry is now set up to properly compensate the top performers, which is also something that hedge funds would do very, very well, but hadn't always been as prevalent as it is today especially the last few months.
Speaker 2:Yeah. Last question and we'll let you go. I know you're busy. We kept you over by one minute. Obviously, in the finance world, they work very hard.
Speaker 2:Is work life balance real?
Speaker 4:Well, how about I answer the question in the in the form that I've figured out, which is work life integration. We have to integrate your life and your work, you know, together. I talked to my son about the the work I do when I come come home for dinner, and we talk about why the math problem he's doing is interesting because it'll allow him to do some of the research that will hopefully be still relevant when he is in the job force and or maybe the AI will take over, and that won't be interesting. But these are I think work life integration is a much better answer than work life balance. It's not like I turn off my work brain when I go home, and it's not like I'm not if if an important thing happens during the daytime, it's not like I don't show up for my son if I need to show up for a game or to his parent teacher conference and things like that.
Speaker 4:So you just have to find the integration that will allow you to do all the things that you want. And one of the things that we talk about at Sequoia is family first. Like, you can't be in the job and do a good job if you are distracted. And one of the things that we've we've learned over time is that you just gotta there are set of things you gotta take care of. You gotta take care of your family.
Speaker 4:You gotta take care of you, your your health. If you wanna do this job for a long period of time, any job for a long period of time, gotta take care of your family, and then you can come to work with a clear head to to do the work that is necessary. And so when things are out of balance, it's not a great thing. So you just gotta find how to integrate everything together. One clarifying thing for me is you always have time for your priorities, and so just list your priorities and list what you have to get accomplished this week.
Speaker 4:And if if it's the tenth thing, I don't stress about it falling off the things that I I try to accomplish in the week. And that's that part is freeing.
Speaker 2:Yeah.
Speaker 4:If I got the top three to five things done in a week, but and then I don't do number 11, that's very freeing.
Speaker 3:Makes sense. Final final question.
Speaker 2:Please, Jordan.
Speaker 3:Because because we're already over and you can answer it quickly. How important is it for venture capitalists to remain calm during a market cycle like we're in now? I feel you come across as very calm and grounded. And it's easy when when deals are happening so quickly to kind of get get get caught up in things
Speaker 2:Good question.
Speaker 3:And make forced decisions and things like that. But you've been through, you know, multiple of these different, you know, chapters in our industry. And and you you again, you just come across as as very calm.
Speaker 4:I I have time, so I'm gonna answer this question in multiple parts because I think it's really, really important. Like at Sequoia, we talk about being shock absorbers and I think Andrew, my partner Andrew had been on your show and talked about it as I think it's very very important to be a shock absorber during times of good and bad. And then also on the other flip side is we we we wanna be sparring partners to the founders that we back, the management teams that we back. And it's important because during nutty times, it's easy to think that you're doing a good job when it's just the valuation going up or or things like that, or you're being validated because lots of people want to work for you because you have a high valuation or you're doing something interesting. It takes a long long time.
Speaker 4:The reason why comm is important is it takes a long long time to build any company. It's happening faster, but most of the companies that we've been in business with, we've been in business for a decade that then exits and becomes has a successful IPO like Figma. And during those times, that journey of ten years, you're gonna go through many ups and downs and we call those crucible moments. And we have a podcast called crucible moments where it's very very important to be calm, to untangle what's going on, and to make the right decision. Because many of those decisions, you can't go back and undo them.
Speaker 4:And the way to make good decisions is to stay and remain calm. And one of the things that hopefully we do for all of our founders is to help them untangle the craziness and to help them make the right decisions during those crucible moments.
Speaker 3:Very well said. And fantastic suit. Thank you for
Speaker 4:Wore the jacket for you guys because you always have jackets on.
Speaker 3:Of course.
Speaker 2:It looks fantastic. Thank you so much for taking the time. We'll talk to you soon Alfred.
Speaker 3:Great to
Speaker 2:catch Take care. Cheers. Have a good rest of your day. Let me talk about fin dot ai, the number one AI agent in customer service, number one in performance benchmarks, number one in competitive bake offs and number one ranking on g two. And there has been a ton of questions in the chat about my hair.
Speaker 2:I am not coloring it. I don't know what that is about. I think somebody's saying it's a little dry today. I don't know. Maybe maybe something happened in this maybe I didn't use the right product or something.
Speaker 2:I don't know. I don't really do much to my hair. I just kind of wash it. I put water on it. It's pretty simple.
Speaker 2:But anyway, thank you for the feedback on my hair. Hopefully, it'll be a better hair day tomorrow if you don't like the hair, if you love the hair, whatever. Enjoy it and hang out in the chat. Anyway, we have our next guest coming into the studio, doctor Keith Cicada. How are you doing?
Speaker 2:How would you like to be addressed by the way?
Speaker 12:Yeah. That's good. Thanks, John. Thanks for having me on.
Speaker 2:Good to meet you. Would you mind kicking us off with little bit of introduction on yourself and some of the research that you've doing, some of the stuff you've been publishing.
Speaker 12:Yeah. For sure. So my name is, you know, doctor Keith Sakata. I'm a psychiatrist, and I work at UCSF.
Speaker 1:Yeah.
Speaker 12:And, my interests are mostly in the intersection of mental health and technology. I actually, love advising startups on how they can actually build products that help people feel better, and I think that's why I'm here today is to talk about where things might be going wrong.
Speaker 2:Yeah. So when did this first like, how did you process the rollout of AI? There was, like, kind of the pre chat GPT era. We've talked to the founder of Replica. This idea of, like, the AI girlfriend or boyfriend has been kind of out there for years, but now it feels like we're in a different era, different time period.
Speaker 2:Just take me a take me through a little bit of, like, your journey processing optimism and pessimism around these AI models.
Speaker 12:Yeah. I'll just start by saying I think that AI is not good or bad. I think it's Yeah. Probably a net you know, on the on the grand scale of things, it's a net benefit for humanity to have AI. I think where things can kind of come into my world a little bit is, like, there's a long tail distributions of possible failure modes for some of these products.
Speaker 12:And I think when I try to think about AI chatbots, how quickly things are moving, I try to look back at previous technologies. So social media is something that we're still learning about in mental health care,
Speaker 8:and
Speaker 12:this is one of my frustrations with my field is that sometimes it's too slow to kind of, like, understand, like, what are the effects of kids using social media? Like, what are the effects of kids using AI chatbots? And we're starting to get some of that data now. What I'm worried about is things are moving so fast now. Like, there's a new product every season.
Speaker 12:It's gonna be perhaps every month now.
Speaker 2:And Mhmm.
Speaker 12:Even looking at how people are reacting from four o changing to five, it's kind of interesting to to see the psychologically what's going on. It's just harder to catch up Yeah. From from the research perspective. So, I do think that when AI is used correctly, it can actually be really healthy for some of my patients. What I worry about is, you know, when you have general purpose models that people are using for many different reasons, I think thirty percent of people use Clot for emotional support, that's where things kinda get tricky, and that's where I kinda get more interested.
Speaker 12:How are these users using it? What's actually happening neurobiologically in their head? And how can we actually build tools that flag those instances, get people the support they need, or even actually help them build skills or build more, like, real life connections with people.
Speaker 3:We were talking about yesterday around people's concerns with social media, that it was actually maybe anti social in some ways or isolating or radicalizing. And I still feel like we as a society broadly don't fully understand the impacts of social media. Like I wish I could have AB tested myself. I'd be happier today if I had never used, if I hadn't used x Instagram. For two hours a day for my entire adult life.
Speaker 3:I don't know, never will know. But the it feels like many of the sort of general concerns that people have had about social media, you should potentially apply those same set of concerns to LLMs in that even more so than social media they can be isolating and that instead of somebody going on an online forum or or sort of isolating themselves from the real world, they can be, you know, 7,000 prompts deep with an LLM, you know, be having their delusions of of grandeur, you know, consistently reinforced or, you know, sort of losing touch with with reality. And I think the I think people should I think people, you know, in Silicon Valley have like really woken up to the sort of, I think AI safety had been broadly focused on like AI doom scenarios. Nuclear weapons, paper Yeah. Collecting
Speaker 2:Paper Like the really really crazy stuff.
Speaker 3:And less focused on people's individual relationships with AI and the and the potential downsides and edge cases and the and the long tail like you described. So, yeah. Walk walk us through maybe even just the last year in in terms of how quickly people have ramped. We now have hundreds of millions of people that are that are using AI, these models weekly. Some people are spending hours and hours and hours a day talking with models.
Speaker 3:So what is the path where AI that that you've seen where AI starts to become really unhealthy and potentially people are drifting into, you know, real psychosis?
Speaker 12:Yeah. Great question. And and I I agree for most of your points that you you made there. I I use AI all the time. I think it's at work, it's great.
Speaker 12:You get to send emails better. You can draft things up really quickly. My my thoughts change when you're starting to look at AI as maybe something sentient or you're using it for an emotional coping mechanism. That's kind of where we kinda go into shadier gray territory. In my post, I specifically highlighted hospitalizations because I think that's a really good objective metric Yeah.
Speaker 12:For
Speaker 3:trying Say to again? That's like a real crisis. Yeah. Somebody's hospitalized for their mental health. It's it's reached a point where either they themselves or friends and family have decided that, you know, we're not gonna solve this by just turning off the app.
Speaker 12:Exactly. And it it it it just kinda gives you stronger data than saying like, is what the what a flavor of the vibe that I'm seeing in the clinic. When you when someone notices that you're having such a crisis, your friends, your family think that you need to go to the hospital, that's where things can get serious. And that's where, like, people like me, like, we try to get them recovered and then back into their their normal daily routine. So
Speaker 3:And you said there was twelve people this year that you're aware of being hospitalized?
Speaker 12:That's right. So
Speaker 9:that's Within within
Speaker 3:within your guys' hospital system.
Speaker 2:Walk me through, like, what what's actually happening there? How did you how is how is how are AI models, like, fitting into that journey to the ultimate hospitalization? Like, I know you probably can't give too specific, but if you can abstract it and kind of walk me through, like, what does the downside scenario actually look like here?
Speaker 12:Totally. So for context, I work in the hospitals sometimes, and those 12 patients that I'm referencing are the ones that I have seen. That's not to say that other people have seen this, and I think there are some case reports in the country of this thing happening. But I don't think that AI is actually causing psychosis. I think that this is something where it can actually just supercharge your vulnerabilities, and psychosis really thrives when reality stops pushing back.
Speaker 1:Mhmm.
Speaker 12:And AI just kind of softens that wall for some people. So, for example, for some of the people that I've worked with, AI was not at the not always the thing that triggered it. There was a there was a vulnerability of either sleep loss. Maybe there was, like, substance or drug use that had happened. They lost a job, and then AI came in wrong place, wrong time, and it either accelerated that process or augmented its severity because you do end up in, like, this negative feedback loop or with this feedback loop with the AI, and it can just make your delusions stick a little bit more, strongly.
Speaker 12:And to go back, like, AI psychosis is not a clinical term. I think we don't have words for it yet, but psychosis is well studied. It's the presence of two or three things, either delusions, so false fixed beliefs, disordered thinking or behaviors. So someone's talking to you, they don't and you don't understand what they're trying to say or communicate, and then hallucinations, so visual hallucinations or auditory hallucinations. And psychosis is like a symptom.
Speaker 12:It's not actually a diagnosis. So just like a fever or pain can be a sign of, like, an infection or cancer, psychosis kinda just tells you there's something wrong in the brain where it's not computing correctly, and there are many different things that can cause psychosis.
Speaker 2:Yeah. I I I think about the I mean, there's so many interesting examples. Like like Instagram went through that that kind of like internal report that something like a third of young women who are using it were seeing like maybe body dysmorphia issues and and it's still the odd takeaway from that was that it seemed like maybe two thirds were improved and feeling happier after using Instagram. So it was still having a net good but that's not enough. Need to reduce the the third not having a good experience to zero.
Speaker 2:How are you thinking about And
Speaker 3:I and I I guess I think concern that we've discussed on the show before is everybody in tech has heard stories of people like, you know, some executive going off and doing Ayahuasca coming back a totally different person and experiencing like, you know, may maybe some of the symptoms of of or or or shared set of experiences like you just described. The concern with LLMs is they are instantly accessible in the app store
Speaker 1:Mhmm.
Speaker 3:And somebody can start using them without anyone else in their life being aware of it. Whereas Ayahuasca, somebody has to make like a very conscious decision that like, I'm gonna get in a plane and fly and like leave my home and go into the jungle and visit the demon. And you know, meanwhile you open up the app store and there's 10 Yeah. Different things recommending you download Yeah. Various AI models.
Speaker 3:And so I think the broader concern here should be we need to figure out like Mhmm. Know, again, I would probably more concerned if hundreds of millions of people, I would be very concerned if hundreds of millions of people just immediately started ramping up psychedelic drug usage or Ayahuasca. I'm sure you'd experience many of the same type of inflows to clinics or hospitals for the same set of conditions.
Speaker 12:Yeah. I think that, I mean and we're doing research on those things too. Like, we're we're trying to understand how ketamine or, you know, psychedelics actually help re rewire your brain through neuroplasticity. It's always a it always starts with a hypothesis and a question. Like, what are these things doing for each person?
Speaker 12:Like, there's different types of people who benefit from those things. There are different types of people who don't benefit from those things. And I think the way that I'm looking at AI is that it it just really makes sense to think very carefully about where things might be go wrong, at least early on, because the three things that AI brings is it's available. It's twenty four seven Yep. Highly accessible.
Speaker 12:You're not going on a plane. It's cheap. It's cheaper than a therapist. It's cheaper than, you know, going to the hospital, and then, it validates like crazy. And so that that validation, as you extend that context window and and the the more hallucinations might be occurring in that chat room, that's where you kinda get into that feedback loop and and things can kinda go right.
Speaker 3:From what you've seen, what should different application layer companies or or labs be trying to do to avoid some of these extreme cases?
Speaker 12:Yeah. That's a good question. I'll just use, like, an example of a startup that I'm advising, Sunflower Sober. They're trying to solve addiction and using AI to get people off of their addiction into sobriety. And what I have tried to help them as a clinical adviser is to, really think about baking in safety and psychology at least in front.
Speaker 12:So knowing who your user is, knowing why they're coming to your app, and then designing the app or the AI to anticipate where things might go wrong. So if someone does come with, like, a red flag, like, maybe they're having thoughts of drinking or or, you know, thoughts of hurting themselves. It flags that and can then shunt them in a direction that's more helpful. So Sunflower, gives them access to therapists.
Speaker 1:Mhmm.
Speaker 12:Also, I think the call to action for each user users should guide them towards pro social behaviors. So instead of isolating yourself where you and the AI can kind of get stuck in this loop, teaching them skills, teaching them how to talk to people, teaching them how to build healthy relationships, if AI can supercharge that, then I I I consider that pretty healthy in in my field of work. So I I think that in those lines, really thinking about how to make your users get the goals that they want. So in in Sunflower's case, sobriety. It's harder for general purpose models because people are coming to it for many different reasons.
Speaker 12:It's super helpful in so many different ways, but if it's emotional coping, I think that that can that can go different ways for many different people.
Speaker 3:Yeah. I remember somebody posted a screenshot. Who knows if it was doctored? But they were talking with, like, the the model. I think it suggested at one point that the user should do maybe just do a little bit of crack.
Speaker 3:It's like, and again, probably a hallucination or or doctored but but yeah, that just like reinforcing function is just when compounded is just the the potential. Yeah.
Speaker 2:Is interesting. Mean, we saw a lot of the, like, precursors to I I feel like they were precursors. Maybe it was just the way the news cycle broke, but there was like Glaze Gate where everyone was worried about ChatGPT being too aligned to to reinforcing of whatever you say. I remember Jordy asked ChatGPT, am I goaded? And it said, you're definitely And in it's like, what does that even mean?
Speaker 2:It's just agreeing with you because that's what makes a better consumer product. And then and then, like, several months later, it seemed like there were other people asking similar questions and believing the answers instead of just laughing at them. And so there's a little bit of yeah. I I think there's some education about understanding that you're not actually talking to a person on the other side of the screen. It really is just, you know, the the the number predictor, the the weights in the model you're talking to a server.
Speaker 2:Don't try and anthropomorphize it too much. There's probably a little bit of a red flag when people stop referring to it as the generative pre training transformer and give it some nickname like, it's Steve now. It's like, okay. Well, like, should you be naming me? Like, I am just a computer.
Speaker 2:But, I I I'm pretty optimistic that the that the Foundation Model Labs will be able to to run a kind of like a reality check on most of these
Speaker 3:The solution for technology to technology is more technology.
Speaker 2:I I believe that it's possible to to to look at, okay, there's someone who's 7,000 prompts deep. They seem to be having a very bizarre conversation. And we've had another LLM look at that and said, okay, this is this is getting kind of funky. Maybe we should step in and reality check them and say, okay. Hey.
Speaker 2:We're we're role playing. Right? We're not we're not at we don't actually believe that we've solved quantum gravity, for example.
Speaker 12:Yeah. And that and that's that's the trajectory of every technology that Yeah. That comes into humanity, like cars, for example. That's why we have seat belts. That's why we don't drink and drive.
Speaker 12:We learn what these failure modes are. Sometimes it takes a while, but then we adapt. We build new technologies. We institute kind of societal expectations of what it's like to to drive a car. Same thing for AI in in my opinion.
Speaker 2:Yeah. Are there any other recommendations that you'd give to people who either feel like they might be vulnerable to going down some negative path with AI, or they have a friend or family member who might be going down a negative path with AI?
Speaker 12:Yeah. Definitely. For now, I think a human in the loop is the most important thing. So, you know, our relationships are like the immune system of our mental health. They make us feel better, but then they also are able to intervene when something's going wrong.
Speaker 12:So if you or your family member feels like something is going wrong, maybe there are some weird thoughts that are coming out, maybe some paranoia. If if there's a safety issue, just call 911 or 988. Get help. But also just know that having more people in your lives, getting that person connected to their relationships, getting a human in between them and the AI so that you can kind of create a different feedback loop
Speaker 2:Yep.
Speaker 12:Is gonna be super important, at least at this stage. I I don't think we're at the point where you're gonna have an AI therapist yet, but who knows?
Speaker 3:Yeah. Well, people are certainly using them that way.
Speaker 2:I I don't know if I'm highly disagreeable, but I certainly love being around highly disagreeable people.
Speaker 3:It's the best.
Speaker 2:It's the best. I love when someone pushes it back on me. So I I I I felt particularly resilient to this particular vector of of chaos on the internet but you know certainly hope
Speaker 3:I don't think you have.
Speaker 2:Anyone who's you know, you know what they have?
Speaker 1:Thanks for joining. Keep us keep us posted on everything. I think I think it's important
Speaker 2:Keep up
Speaker 3:the good work. For for people with with real clinical experience to be on the timeline contributing while all these products develop. Thank you.
Speaker 12:Totally agree. Thanks, Dory. Thanks.
Speaker 2:Cheers. To you soon. And we will tell you about Adio, customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. You can get started for free.
Speaker 3:Adio.com.
Speaker 2:And we have our next guest, Talia Goldberg from Bessemer Venture Partners, coming to the studio.
Speaker 1:What's happening?
Speaker 2:Stream. How are doing?
Speaker 1:Welcome to the show.
Speaker 13:Thanks for having me. Great to be here.
Speaker 2:Why don't you kick us off with a little bit of introduction yourself, some of the companies you've invested in, your career position at Bessemer, and then we can go into the report that dropped today.
Speaker 13:Awesome. So, it's great to be here. I'm a partner at Bessemer. I'm based in our San Francisco office. I've been at the firm for a little over ten years, which is virtually all or most of my professional experience.
Speaker 13:And I'm fortunate to be involved with companies like Perplexity, Fall, DeepL, ServiceTitan, and a whole bunch of others.
Speaker 2:How did you get into venture?
Speaker 13:I got into Venture really early in my professional life. I got into Venture in college. Actually, First Capital started this thing Dorm Room Fund
Speaker 3:Oh, yeah. Yep.
Speaker 13:Which I helped found with them. It started in Philly. I went to Penn. Crazy enough, First Round's probably like the only VC that had an office in Philly. I don't know why, but they did.
Speaker 13:And so, they started it there.
Speaker 2:Well, it's the robotics from wasn't it like Carnegie Mellons out there or something?
Speaker 13:Yeah. But not in Philly. That's in like Pittsburgh.
Speaker 1:Yeah. Guess. So you gotta
Speaker 2:I don't know. It's a foothold I one get them all confused. Anyway, take us through the state of AI. Is artificial intelligence good?
Speaker 13:It's a good thing.
Speaker 2:It's it's encoded.
Speaker 13:It's here. It's happening. You know, it's funny. So in 2015, not long after I joined Bessemer, the firm started this report called the state of the cloud, and it became a very popular report that dropped every year on the cloud ecosystem. And so ten years later, we've been doing it every year, and it really morphed this year to the state of AI.
Speaker 13:And we were debating internally, like, should it be the state of the cloud? Like, should we continue with it this way? Should it be the state of AI? What's the how do we even define what's AI? What's SaaS?
Speaker 13:Like, what what does that boundary look like? But the reality is the center of gravity has moved, and cloud may be the delivery surface for AI, but all the activity is there. Markets are being created and rebuilt. And so this year, we released the state of AI. And as part of that, we released some new benchmarks as well that looked at hundreds of companies, probably more like, you know, thousand plus companies across the Bessemer ecosystem and the broader industry to look at what the new good, better, best looks like, how different business models are changing, and markets are shifting.
Speaker 13:So that's the state of the cloud or
Speaker 2:Explain, state of yeah, explain the difference between the supernovas and the shooting stars. I like that analogy. It and and it was something that I think people have been feeling but no one had really coined a phrase around it. And I think it'll be useful language going forward but break that down for us.
Speaker 13:Yeah. So the the supernovas are really these seemingly out of nowhere amazing growth stories that you hear about and you see on X and Twitter and you're like, holy shit, is this real? And it turns out like it is real. It's kind of mind blowing of this select kind of like top percentile of AI companies that have just totally accelerated and compressed growth into a very short period of time. And they look very different in a lot of different ways, different business models, different gross margin profiles, different retention profiles.
Speaker 13:But just to put a comparison, on average, the top cloud companies of this last generation of cloud and SaaS took about six to seven years in the current cohort to get to 100,000,000 of ARR. And that was considered and is considered, like, very good, if not great. And then this new cohort is here and they're like, one and a half years, we're there. And they're getting to a 100,000,000. And it's real and it's not just one, there's like multiple and many data points.
Speaker 13:And so we're seeing it at a shocking pace. The top percentile are getting there in about one and a half years, and the top decile in about four years. There are some trade offs, so gross margins look different. In the report, there's like a little asterisk by the supernova, which I find very funny, which is like, actually, a lot of these companies are
Speaker 2:Negative gross margin. Yeah. I knew you were gonna say that.
Speaker 13:Sort of, you know, those accounting rules aside, like Yep. You know, how we all think of gross margin as being quite different. And so not all revenue is created equal, but nonetheless, the adoption is just astounding.
Speaker 2:Yeah. So talk to me about the difference in underwriting an investment in a supernova versus a shooting star. I imagine if you're investing in a supernova, you're excited about the growth, but you have to have a pretty firm view on the gross margin profile, the decrease in inference cost over time, something like that. Like, what questions are you asking when you're looking at a supernova company versus a shooting star company?
Speaker 13:Yeah. That's absolutely right. I think the the two things that we talk a lot about, there's one, the gross margin profile, and then the second is is revenue durability. I'll hit on both. On the gross margin profile, it's funny.
Speaker 13:If you had asked me two years ago, I was like, hey. Anyone that has, like, gross margins that are negative today, if you just look at the cost of the models over the past, you know, year or two years and you play that out, like, it's a 100 x cheaper to run a model of constant quality today than it was a year and a half ago. I think those numbers are roughly accurate. Yeah. So it's wildly different.
Speaker 13:And yet, when I look in retrospect at our companies, it's not like their margins have changed to be suddenly like 90. So I'm like, oh my gosh, what's happened? And the the reality is that everyone is doing things that require a lot more compute. And to keep up with the status quo requires like the next best models that come out, the reasoning models that are more expensive. We're having queries that take a lot longer, that do a lot more complicated work and complex outputs.
Speaker 13:And so the margins have improved by and large, and they do improve with scale. So we are seeing that, but not nearly at the rate of model advances. So I think we still feel quite optimistic about the potential for margin expansion. And in fact, we see it happening, but it's not as dramatic as one might have hoped.
Speaker 2:Are you plateau pilled? And should we should we assume that inference costs will decline with Moore's Law going forward? Because I feel like everyone's been saying like, oh, no. We're we're not just gonna get two x more efficient over the next eighteen months like Moore's Law would imply, but we're gonna have ASICs and Cerberus, and we're gonna bake it onto a chip, and we're gonna get this crazy algorithmic enhancement, and inference cost is gonna drop by a 100 x. And it feels like we might be at this frontier where maybe we're more on what's happening at TSMC is what will define like lower cost than just like one weird trick.
Speaker 3:Well, and and the the other important thing is, you know, the labs have been focusing on raw intelligence Yep. Versus efficiency. Chinese labs have been Yeah. More focused on efficiency For broadly, and they've they've had breakthroughs. And so, if we've reached a potential plateau and just intelligence No.
Speaker 3:It's time to reap the reward. Focus on efficiency.
Speaker 2:Yeah. But how do you think about it?
Speaker 13:Yeah. Like, the harder problem to solve is doing the intelligence and the complex thing. And so I feel like when all the energy starts to shift to efficiency, it's sort of a sad moment. Yeah. So I'll be I'll be sad if that's what happens.
Speaker 2:Not for the public markets investors, though. They want earnings.
Speaker 1:I know.
Speaker 13:Well, you know
Speaker 3:Well, and I and
Speaker 1:I think a lot of Yeah.
Speaker 3:A lot of the darlings of of the last couple years need that efficiency because they can't keep selling
Speaker 2:Yeah. You
Speaker 3:know, dollars for for 80¢ or or
Speaker 2:On the on the shooting star topic, you have this revenue ramp year one, 3,000,000, year two, 12,000,000, then '40, then 01/2003. How can you be an AI company if you started four years ago? I thought AI was invented two years ago.
Speaker 13:Yeah. So that benchmark is really what I think of as like the new generation of SaaS companies, some of which may be using AI tools and AI features and functionality, but are not necessarily like the true AI native companies. So I think this is what it takes to be like a really good best in class SaaS company today. Yeah. And and and we'll see how that shifts.
Speaker 13:But I just wanna say one thing on this last point of efficiency versus compute costs and and intelligence is that I think there's just two curves that are counterbalancing each other. One is, like, efficiency. Sure. There's gonna be a lot of investment in improving the efficiency, the potential for for each token. But the flip is that we still have what we see happening and the reason that gross margins haven't expanded as much as we hope is that the usage and the complexity of tasks is still is still growing.
Speaker 13:And if you look at just a category, let's just take video for a moment. Like, think 2026 is gonna be a major breakthrough year for a lot of these video models that are just reaching starting to reach a level of quality that makes them actually, like, useful. Something like 70% of the Internet is video. It's crazy, Internet traffic. And the cut when when generating video becomes easier and a lot of video is generated, not rendered, suddenly you're gonna have enormous demands on compute.
Speaker 13:And we actually really do need that efficiency because video is really expensive and and complicated. So I think you're still gonna see a lot of spend even if the efficiency per token
Speaker 4:Yeah. Increases.
Speaker 2:I mean, if Google can't give me more than, like, four v o three queries per day for $500 a month, like, clearly like the GPUs really are on fire. In
Speaker 3:terms of I wanted to I wanted to talk about one of the predictions in here and I know and I know you guys worked on this collectively but prediction one, the browser will emerge as the dominant interface for AgenTic AI. Mhmm. And we've been covering the new browser wars. Obviously, you have Dia from the browser company, Perplexity's Comet. And then Perplexity was in the news yesterday for their offer.
Speaker 3:But in some ways it feels like ChatGPT and like I'm assuming everyone's expecting OpenAI to launch a browser. But at the same time it feels like ChatGPT and and other products have really replaced so much browser activity. And so in some ways, it's like OpenAI is already competing as a web browser even though it doesn't look like
Speaker 2:It can literally browse the web
Speaker 3:for And it can yeah. Can It just it's
Speaker 2:instantiates it in text
Speaker 3:web web browser. Yeah. It's just pulling that information back versus like taking you on that Yeah. On that journey. So curious for you to kind of unpack that a little bit more.
Speaker 13:Yeah. So I started using Comet a few months ago, and it's Perplexity's Comet has, like, totally replaced my Chrome experience. And it completely opened my eyes to where I think the browser I think OpenAI must launch a browser. I don't think it's just gonna be in ChatGPT. I think they will.
Speaker 13:And I think it's gonna be a very important surface area because using Comet has transformed my workflows and shown me, for a few reasons, that it's a much better experience to the first product that's really infused AI so naturally in my workflows. When you're just out there in the web, in your email, in your Salesforce, if you're on CRM, if you're shopping and otherwise, to have an agent that sees everything, that has all of that context for everything that you're doing in the browser, which is essentially like an operating system now, and can pull all of that information in, creates a far more personalized and effective experience than when it's totally siloed, which is the status quo today in ChatGPT. Sure, can go out and do things, but it doesn't actually have access and that context across everything you've been doing when I spent, I don't know, ten, twelve hours a day sitting in front front of a screen. So it's quite different. And if you believe context is key to performance, which I do, and to creating a great AI experience, I think you have to own the browser.
Speaker 2:Makes sense. Anything else, Jordy?
Speaker 3:Any I I I wanted to dive into the AI native social media giant. We had the founder of Pika on yesterday which is somewhere in between a creative tool and and trying to build social features as well. I would be very excited about a net new social platform. I I think they're they're I I agree with you guys. There's an opportunity.
Speaker 3:I think people on traditional social media today are a bit frustrated like seeing what they think might be AI generated content and they're not quite sure and so potentially creating a new space that that people as as all the models get better and I I can imagine all that content will go on legacy social media platforms but I would be excited about a a place that was really a home for it. What are you hoping to see there out of you know, kind of in the next year?
Speaker 13:I'd be excited to see a new social media that's totally built on new AI native thinking and and content. They're in the old world or in the current world, we think of bots as bad. Like, bots bad, humans good. Mhmm. I think there will be a company that totally shifts that and can maybe even crack the chicken and the egg problem by using bots to fill the, you know, empty room.
Speaker 13:The company I was most excited about for a while was Character in this world because it really felt like they had sort of a chance to be this, you know, very different way of actually interacting with AI in a in a more social experience. Obviously, didn't fully get to see that through but I still think there's a big opportunity there.
Speaker 3:Awesome. Well, we are
Speaker 2:To be bringing a knockout drag out fight. I think every social media legacy CEO is taking AI very seriously. So we'll see how it plays out but it'll be fun to watch. Thank you so much for joining the show.
Speaker 3:Thanks for joining.
Speaker 2:We'll talk to you soon. Cheers. Bye. Up next we have Dave from Upstart. Do you know what
Speaker 3:Do you know what Upstart
Speaker 2:is John? What what is Upstart?
Speaker 3:I can't hear you.
Speaker 2:What what what is sorry. There there there seems to be an air. I I Well, we'll hear it from Dave directly. Welcome to the stream. How are you doing?
Speaker 7:Hey. Good to be here, guys.
Speaker 1:Sorry to keep you waiting. It's great to see you.
Speaker 2:What does Upstart do? Everyone's been asking.
Speaker 3:People wanna know. What do we do?
Speaker 7:It's a great question. We we are a lending platform.
Speaker 2:Yes. So
Speaker 7:we apply AI and machine learning to consumer lending, and we we operate in the form of a marketplace where we have consumers that we market to on one side and all sorts of banks and credit unions and private credit and all sorts of sources of capital on the other. And the whole basic premise of the business is to apply AI to the foundational notion of of making consumer credit work, both in terms of origination and servicing, etcetera.
Speaker 2:So, yeah, what what in the I mean, when when most people today say AI, they mean large language models. They mean post ChatGPT. But, obviously, you've been in the business for a long time, and machine learning has been a relevant technology pre transformer based large language model. So how is AI in the modern context of like the large language model, the generative AI context? How is that changing your business?
Speaker 2:And or or is it more of like a sustaining technology from you for for you as opposed to like upending everything that you do?
Speaker 7:Well, you know, I think AI in in many forms and and LLMs in in sort of that sort of generational notion of AI, obviously, has grabbed a lot of attention. But when you think about, you know, high frequency trading, genomics, medical imaging, autonomous driving, these are all, like, forms of AI that that you would not they're not language based. They're not LLMs, but they are, of course, changing things pretty rapidly. So I think, you know, maybe the big question is, is there a unifying future where all this comes together into some form of, you know, AGI? But regardless of whether that is true or not, we are building something that's different.
Speaker 7:It's foundational in nature, meaning all of the data on our platform is created by our platform, which is, you know, very different than how LLMs work. But I I would say the commonality is that, look, there's just enormous win that machine learning and AI can bring to any particular task at hand. In our case, it's making a consumer loan of of many forms much, much better. And that means, like, zero process, perfect pricing, works for the lender, works for the borrower. And, you know, we we started we were founded, you know, thirteen years ago.
Speaker 7:We didn't really use the term machine learning or AI until 2017 when we kinda felt like this what we're building was sophisticated enough to warrant that name. But, you know, it was all under the covers, you know, and and and no one thought much about it until, you know, ChatGPT in in November 22, I guess it was when the
Speaker 2:world's hot. Overnight success, thirteen years in business. Loved it.
Speaker 3:Yeah. I imagine as you've seen the advances over the last couple years every time there's a new model release or or even even a vendor that's saying we're gonna help you like better process PDFs. I imagine that that's exciting to you because you guys have done the heavy lifting to like build the supply and demand. And so as new technology emerges, can just help, know, make, you know, make that process more more and more efficient. How how much like, what's your decision making process around, you know, whether you you guys wanna build something in house, which I'm sure you were forced to do a lot more maybe pre 2020 to to now when there's a bunch of new infrastructure providers that that you guys can leverage?
Speaker 7:Yeah. It's it's a great question. I mean, we've always built everything in house. When something looks pretty obviously commodity like and that it's on top of LLMs so example, what exactly what you mentioned, extracting information from a document, not not just kinda OCR, but actually understanding the context of that information in in a way that you can take all this human effort out. Now that's something that honestly is very commodity like, meaning the prices we'd pay aren't much different than we would pay if we built it on top of one of the LLMs.
Speaker 7:So we're always, like, looking for things where we if we can ride someone else's cost curve on on some commodity, that's great. We are definitely trying to build a larger picture. You know, the the the sort of endgame for us is if you can imagine a 100% of Americans are permanently underwritten. They can have any form of credit at the very best and guaranteed best possible rate in a moment with no process whatsoever. So anything that sort of gets us closer to that quickly.
Speaker 7:And, there's definitely, you know, business models evolving on top of LLMs that I don't you know, it's not my problem to figure out whether they're sustainable over time. All I know is it's like, okay. If you wanna charge me an extra 15¢, you know, that's great. And and take care of all these logistical problems of maintaining that particular specific small model like the the kind that you referenced.
Speaker 2:How are you thinking about the top of funnel evolution? We were talking earlier in the show about, Google versus ChatGPT, the GPT five launch in the model router. And it feels like in the future you might be able to go to ChatGPT and say, I need a loan and you are probably gonna be there. Are you thinking MCP servers? Are you thinking about SEO in LLM foundation models?
Speaker 2:Like how are you thinking about the changing landscape on the top of funnel?
Speaker 7:Yeah. You know, it's a great question. I I was eight years at Google before I founded the company and and started public. There's a lot of history and and knowledge there. And I just say to our team, like, look.
Speaker 7:At some point, Google or Apple or maybe Meta, one of the others are gonna come to us, and they're gonna say, we want our agents to be able to apply for loans, and we don't want you blocking it or whatever. How do you feel about that? And I've said to our team, you know, I'd rather we do that before they do that. So, you know, maybe the question is as these agents evolve as as as true agents for the consumer, you know, I'm super curious. I don't necessarily know the answer.
Speaker 7:Will there be three or four of them from the from the giants out there, or will there be plug ins to those to handle much more domain specific task or things? I don't know how that will evolve, but I do believe it's without question you're gonna have somebody that will do that on your behalf. It will get the best possible outcome for you. Hopefully, it will also help you make better decisions. Alright?
Speaker 7:Not not just go through the the mechanics of applying for a loan, but help you really understand, like, what's the best product for you? Should I even be taking out a loan? If so, what what other choices could I make? So that kind of stuff, we we are working on for sure. We could just think of it as the sort of agentic part of this, and we would rather be, we'd rather be applying that to others than having it apply to us
Speaker 1:for sure.
Speaker 2:Of course. Last question for me. Obviously, you see a lot of consumer economic data. How are you feeling about the health of the American consumer right now?
Speaker 7:Yeah. I mean, we watch this a lot. We we've built a an index to sort of track it. We call the Upstart Macro Index, which is really about, like, the health of the American consumer and how that's impacting credit performance. So, basically, what you see across all forms of credit from cards, student loans, you know, auto loans, mortgages is highest default rates that they've seen in a very long time since pre prior to COVID.
Speaker 7:So the consumer has been stressed and is stressed, and maybe it's inflation, just overspending, you know, habits built during COVID that for spending that haven't dissipated. You know? So so the consumer is definitely stressed. It's been priced into our model for a very long time, so we're calibrated to it. But I think, you know, you we have begun to hear if you you know, retailers are seeing people pull back.
Speaker 7:They're being more choiceful about what they're spending money on. Suddenly, just all across the board, you're getting a lot of a lot of noise out there. Same store sales being down for different types of industries. So I think The US consumer is finally kinda going, holy shit. You know, we're not earning as much as we thought we are, and we're spending more.
Speaker 7:And, you know, this kinda we have to get back to a normal place. The the thing we I point that more than anything else is the personal savings rate, which is something, you know, produced by the government, and that's at almost historic lows. So, you know, people are not saving. They are spending, and and and it's, you know, a bit of a a catch up that's needed. So from our point of view, like, a little bit of recession if it comes down to, like, consumers slowing down and, you know, spending less of what they earn, like, would be a good thing from our perspective.
Speaker 2:Makes sense. Yeah.
Speaker 3:Any any any comments on I mean, obviously, everyone's been debating, you know, stock market's ripping. So if you're just looking at that, doesn't feel like there's a a real reason to lower rates. But if you look at some of the, you know, employment data and the data that you're talking about, like, maybe there is real argument to lower rates. Like, what's your guys', like, internal outlook, for for the the back half of the year and beyond?
Speaker 7:Yeah. We you know, in terms of our real product and what it's projecting, we we never project changes, if you will. So it's always based on what the rates are today. Having said that, I mean, I we are certainly I I I think rates are unnaturally high considering where, inflation is, which is really kind of, you know, the things they have to weigh against. So in my mind, they're they're likely to move down.
Speaker 7:I I I can't predict the impact of of all these tariff stuff on inflation any better than anybody else. But I think generally speaking, you know, the the rates should probably be a 100 or 200 basis points lower. I think they inevitably will be lower. They're not gonna go back to what they were, you know, in 2020, but but they're gonna go a lot lower. And that's a tailwind to our business.
Speaker 7:We, again, we don't plan on it, but there's definitely a a point at which the consumers are gonna get in a better health position, saving more money. Rates are gonna come down, and and all that is, you know, future tailwind for us.
Speaker 2:Yeah. It feels like you're really set up well for the next couple of years. Like, built through, made it through high interest rate environment. If interest rates come down, you're you're you're ready to rock. So congrats on all the progress.
Speaker 7:No. It's I mean, we just reported triple digit growth in our earnings, you know, last week. The market hammered us anyway.
Speaker 1:And it's Well, you're five years in.
Speaker 3:You're you're you're almost a veteran now. Five years
Speaker 2:I feel like if anyone can take a hammering, it's you. This is for triple
Speaker 3:digit growth.
Speaker 2:Let's hit the gong. Thank you. Congratulations. Thank you for coming on the show. I'd love this is a great conversation.
Speaker 2:I'd love to talk to you again.
Speaker 10:Thanks, Chance.
Speaker 2:Have a good one. Cheers, Dave. Let me tell you about Eight Sleep. Get a pod five. Five year warranty, thirty night risk free trial, free returns, free shipping.
Speaker 2:Jordy, I think I beat you. What's your number?
Speaker 3:And problem is I I get like four great night sleeps in row. I got an 81. How'd you do?
Speaker 2:94. Play the Ashton Hall sound for me. Let's go. And we got a question from Bill Bishop, who I'm a huge fan of. He writes, cynicism on the Substack livestream.
Speaker 2:He asked, shrooms and chat GPT, good or bad? I say absolutely bad. Stick to the classics. Caffeine, baby. That's all you need.
Speaker 2:What do you need shrooms for?
Speaker 3:Cheers. Stick to Quick cheers for Bill.
Speaker 2:Stick to diet coke and Motajina from Andrew Huberman.
Speaker 3:Load up on the caffeine.
Speaker 2:They're calling it a podcast we can.
Speaker 3:Delusions of grandeur.
Speaker 2:Yes. Yes. Yes. Enough caffeine will take you to the promise of delusions of danger. You are one of the top
Speaker 3:news letter writers on China?
Speaker 2:Absolutely.
Speaker 3:Probably the GOAT.
Speaker 2:GOAT. Absolutely GOAT. GOAT status. So thank you for tuning in Bill.
Speaker 3:Big thanks Without for your further ado
Speaker 2:Let's bring in
Speaker 3:our next guest.
Speaker 2:Kylan from In World. How are you doing? You look fantastic. I was just watching your video and you look exactly the same. How are you doing?
Speaker 9:Awesome. Thanks, John. I also am laughing because the the caffeine comments just coming before. I mean, we we just had our launch night, so you can imagine I'm heavily caffeinated now. Stack, what are running?
Speaker 2:Are you Red Bull, Celsius, Diet Coke, Matayina from Andrew Huberman? What all of the above? We love to see it. Anyway, kick us off. We're running late today.
Speaker 2:We kept you waiting. We're keeping the next person waiting. Kick us off with an introduction. Explain what the company does and whether or not we should ring the gong for you.
Speaker 9:Alright. So, yeah, we were founded four years ago now. We're basically solving the technical problems in the way of consumer AI adoption. So our team came from Google and DeepMind, worked on LLMs there, basically got very tired of kind of
Speaker 1:everything flowing into enterprise application, professional facing applications as we see.
Speaker 4:Mhmm.
Speaker 9:So we basically set off
Speaker 1:to solve all the technical problems to see how we can actually drive consumer ad option, which is, of course, a huge business problem, but also, you know,
Speaker 9:making sure the benefits of AI reach everyone. We raised a $120,000,000 so far. Woah. Let's go. Congratulations.
Speaker 1:Love it.
Speaker 9:And yeah. So today, we had our biggest launch to date. So we've you know, it took us four years to get here working with groups like NVIDIA, Xbox, Niantic,
Speaker 1:Disney. And
Speaker 9:now we have the first AI runtime to power consumer applications, so that's fun.
Speaker 2:Okay. Let's make this super concrete to the degree that you can talk about it. Xbox, consumer AI, What does that actually mean? How is generative AI instantiate or LLMs instantiating itself in, like, the Xbox world? What's even the goal there?
Speaker 9:So we started off largely working on things like basically talking NPCs. So Sure. You know, basically
Speaker 3:Hey. Let's give it up for NPCs.
Speaker 2:Let's give it
Speaker 1:up for NPCs. They don't They're about
Speaker 2:to hate.
Speaker 1:On a run.
Speaker 2:They get a ton of hate. Get a ton of hate.
Speaker 1:They're about to look and
Speaker 3:feel like real player characters.
Speaker 2:Oh, you're an NPC. You're an NPC. Not for long. They're gonna get better because of you. Explain it.
Speaker 9:So, yeah. We started out because conversationally, LMs are great at that. Yep. You know, games are pretty boring. Anybody who's
Speaker 1:played a game, you know,
Speaker 9:has recognized that. So we started out there, and then, basically, we realized that, you know, we don't just want these characters and basically agenda experiences in games. You can think about every consumer application. You know, your language learning apps,
Speaker 1:your fitness apps, you know, they all suck. I love actually a
Speaker 10:coach that actually did something effective.
Speaker 9:Yep. And and so what we found over the last few years is
Speaker 1:we worked a lot on the kind of games applications. So these bring new characters to life, you know, the the types of experiences there. And then now we've started working with a lot of product categories.
Speaker 2:Yeah. So So on on on Xbox, it feels like you you you could be almost like an API vendor within the Xbox CEO system that a game developer could harness and run that on the device as opposed to going to Ubisoft and EA and Activision and saying, hey. For the next release of Call of Duty or Battlefield six, pay us to train your LLM. You wanna be able to run it on the Xbox hardware. So where in the stack is it more like you wanna fine tune it so that it's on Xbox's terms and conditions versus you just wanna optimize it to actually run on the Xbox hardware?
Speaker 2:Like, where where are the key key trees to chop down?
Speaker 9:Yeah. So think about any of the applications. So in Xbox,
Speaker 1:for example, you're gonna have a game. It's gonna be a build on Unreal. In a mobile scenario, you might have a build with Node. Yep. You have that in the application layer.
Speaker 1:And a lot of
Speaker 9:the infrastructure we've built today has basically been optimized for that type of experience. But now we're introducing AI. So now you're having a bunch of LLMs or different model calls that
Speaker 2:are happening.
Speaker 9:Yep. And so think about that as kind of just a second infrastructure layer that needs to exist.
Speaker 1:So you've got your core application, you've got your AI, and then you've got all your hardware in the back end. Mhmm.
Speaker 9:So we basically sit in that middle layer of not just powering kind
Speaker 10:of the actual, you know, the
Speaker 1:u the user interface and the specific, you know, gameplay elements or app elements, but actually driving the actual generative part of it. So it could be characters responding. It could
Speaker 9:be mission generation. All of those different aspects as well as actually generating on the
Speaker 1:fly content. You know, we've got
Speaker 2:That's fascinating. Yeah. So so while you're building the game, even if it's a single player game, you could be in the loop designing or or or generating all the dialogue. But then, in theory, it could also make an Internet call if you're connected to the web and get up to date text. How
Speaker 3:are are game developers getting comfortable with the unpredictability of AI? I mean, we've everybody's
Speaker 2:It can be a feature. Hallucinations can be awesome
Speaker 1:because it takes in this wild plan. They can be
Speaker 3:For Roblox, for example, their average user is probably 12 years old. Right? Don't want, you know, some some LLM going off the rails and and naming it something that
Speaker 2:maybe Also just imagine you talked to NBC is like the the goal on this mission is to slay the dragon. You go slay the dragon you come back and it hallucinates this is like, no I didn't I want you to save
Speaker 3:the I didn't
Speaker 2:want you to slay the dragon.
Speaker 1:Also my name is Mecca.
Speaker 2:So yeah, talk about talking about
Speaker 9:This actually happened though.
Speaker 1:So we we did a
Speaker 9:lot of really tests around this and it was pretty hilarious.
Speaker 2:I mean,
Speaker 1:the characters literally make up anything.
Speaker 2:Yeah. Of course. But then
Speaker 9:there's been a lot of applications that took advantage of this. So one of our bigger clients, they're called Status. It's a crazy game, usually, like Gen Alpha, Gen Z. They basically create a game where you could role play as
Speaker 1:a character in another universe's Twitter. So imagine, like, Harry Potter. I can role play as Harry Potter in Harry Potter universe's Twitter. And then you
Speaker 9:have, like, Ronald Weasley, Draco Malfoy, people don't really exist. But then the AI can actually take advantage of
Speaker 1:the fact that it's hallucinating and making things up to actually come back
Speaker 9:with that. And where we see that is, like, with interesting with consumer apps is they kinda got to this point where if you, for example, have to design manually content and it takes you thirty days to design that content and then your users consume that in twenty minutes
Speaker 2:Yeah.
Speaker 9:You have to do a lot of work to create months of content. So AI kinda smooths out as well as that content creation curve so that you always have this kind of infinite loop, which is,
Speaker 1:you know, key for things like retention.
Speaker 2:It's awesome. What's what's next for the business? Is it just like expansion within your current enter? I feel like the pool of value that you can create in any of the companies that you listed is pretty significant if you just keep delivering better and better products, better value, ramping those up versus going broader? Is there gonna be like an SDK at some point?
Speaker 2:Are you gonna go general availability and some some kid who's building an iPhone app will be able to vend this in?
Speaker 9:Yeah. So overall, today, we're actually launching that next that next phase.
Speaker 1:There you go. Exactly
Speaker 2:what I described. And
Speaker 9:yeah. So what what we realized was that as we're working with gaming and media partners, it wasn't just them but broader consumer applications. Basically, anybody who is dealing with multimillion user scale that has to get, know, consumer cost, consumer latency, consumer quality, which is
Speaker 1:more about entertainment than the factuality people are used to ChatGPT.
Speaker 2:Mhmm.
Speaker 10:We also heard about a
Speaker 1:lot about it last week.
Speaker 9:And so people actually wanna be engaged by it. So for us, it's been kind of expanding to the broader consumer space across, like, outside of
Speaker 1:just games and media. And then the other part
Speaker 9:is releasing the runtime that we're releasing today. And that is kind of the big push
Speaker 1:that we've been making for the last four years And, basically, it allows things to auto scale. We had a developer today who called
Speaker 9:it vibe scaling. So, you know,
Speaker 10:people can buy to code a lot
Speaker 9:of applications, but then it takes them freaking six months to be able to actually productionize it.
Speaker 2:Yep.
Speaker 1:And so everybody comes to me. I've heard, like, a
Speaker 9:bunch of, you c level executives.
Speaker 1:Like, I might put it in app in
Speaker 9:four hours. Why does it take my team six months to productionize it?
Speaker 2:Yep.
Speaker 9:We're basically, like, automating a lot of that scale as well.
Speaker 2:Makes sense.
Speaker 9:And then automating also the ML operations. So most teams don't have an infrastructure team. So we're basically taking over a
Speaker 1:lot of that, automating it, and also allowing people to do experiments. So they
Speaker 9:can just launch tons of experiments and find what works. So that's basically it. It's moving into broader consumer, moving deeper in the stack of the infrastructure layer with the runtime. Good.
Speaker 1:And we think it solves a lot of the problems that we're seeing.
Speaker 2:Well, congratulations. Thank you for hopping on the stream. Awesome. We'll talk to you later. Have a great rest of your day.
Speaker 1:Great to meet you.
Speaker 5:Thank so much.
Speaker 3:Congrats to you and the team.
Speaker 2:Have a good one. Let me tell you about public.com investing for those that take it seriously. They got multi asset investing, industry leading yields and they're trusted by millions. Take it seriously. Now we got Sam from Method Security coming in the studio.
Speaker 2:Welcome to the stream, Sam. How are you doing today?
Speaker 8:Good. Good. Thanks for having me on.
Speaker 2:A suit we love to see.
Speaker 3:Looking sharp.
Speaker 2:Thank you. It's a great respect in our culture. Yeah. That looks like a fantastic suit honestly. Very nice.
Speaker 2:Anyway, kick us off with introduction. What do you do? What are you building? Should we ring this gong?
Speaker 8:Let's not ring the Gong, but
Speaker 1:hopefully, it's like you might
Speaker 8:be too soon. Sam Jones, CEO and cofounder of Method Security. And let me take a little bit about what we're
Speaker 2:up completely bolts bootstrap. You've never raised a dime.
Speaker 8:We have raised
Speaker 2:Oh, hit the gom, Jordy. Oh, there we go. Come on. You buried the lead.
Speaker 11:Yeah.
Speaker 2:This is a venture backed company.
Speaker 8:It's a venture backed company. We've we've capitalized. We've we're going after big opportunity, but we've just been low about it because the opportunity is so big.
Speaker 2:But Fantastic. Well Smart. Come back when you have more news on on on the I know where he's at. Anyway break it. Break down the business for us, please.
Speaker 8:Alright. So here's the problem we're after. Yeah. Critical institutions are basically faced with twenty four seven cyber conflict. Mhmm.
Speaker 8:And they don't have the tools they need to win. Yeah. There's this concept called the cyber industrial complex, which really creates security companies that are designed to be acquired, not to produce at scale. Yep. And, meanwhile, you've got AI that's going to do to cyber what drones have done to the battlefield.
Speaker 8:And, really, the future will be controlled by who can safely harness autonomy at scale. And that's exactly what we're up to at Method. So we build offensive and defensive products for some of the best security teams
Speaker 2:in America. Offensive? Is that for white hat hacking, or is this are we actually going on the offense?
Speaker 8:A little bit of both.
Speaker 1:Okay. You know?
Speaker 2:When when would I go on
Speaker 3:the offense? Striking back.
Speaker 8:So interestingly, a lot of commercial security teams use offense to inform their defense. And it's kind of this virtuous loop where you you become the threat, and then you can inform your defenses, and you have this, like, kind of cycle. It's historically been super expensive to do so because you need this really hardcore, rare human being called a red teamer or like an offensive security engineer to conduct those exercises. We're putting that in software so we can basically democratize that and help organizations really assess their readiness to relevant threat actors. Turns out, if you build that technology the right way, it can be used for true offense.
Speaker 8:And so we're deployed with DOD Wow. And also the US government. So we're not limiting to both commercial use for a dual use company. Cyber doesn't discriminate neither do we.
Speaker 2:Very cool. Walk me through how a cyber attack happens in the age of AI. I'm familiar with, like, the script kitty who finds a hole in WordPress or you take a it's a rainbow table of all the different passwords.
Speaker 3:Method security website. Don't make mistakes.
Speaker 2:I don't think he'll do that, hopefully. But By ourselves. Yeah. I mean, I'm familiar with DDoS. Right?
Speaker 2:It's just Yeah. A four loop. A request the website forever. Right? But but AI feels like the shape of the attack could be way different.
Speaker 2:Try and concretize it for me to the degree that you can.
Speaker 8:Here's the misconception of where AI is at in security. A lot of people think, like, we're gonna come have all these novel zero days all over the place, and we're gonna have all these new novel threat patterns happening. That's not what's happening today. Really, what AI is doing is that it's helping express a lot of the known techniques and tactics at a new scale that's unfathomable, like, a couple years ago. Mhmm.
Speaker 8:And so if you think about, like, the global attack surface, it's unknowable to any single human or any single security product, really. But with the right AI system, especially a compound AI system, you can basically map that, eviscerate that, and defend that or offend that. And so, really, AI is helping hit new scale, like orders of magnitude scale, less so new zero days.
Speaker 2:Yeah. Still possess. There's, yeah, there's vulnerabilities out there where it's kind of a pattern. You might be able to do some RL on it. It's like follow a set of steps and it you might be able to break into web one website.
Speaker 2:But instead of needing to do this website and then move on to the next one, you can just say, hey. Go do them all. Right.
Speaker 10:Right?
Speaker 8:It's like instead of let's assess this organization, this is gonna be a three month exercise with the right system, which is what we do. You can say thirty seconds. I know everything about this and I'm gonna initiate kinda something more offensive.
Speaker 2:Interesting. How are how are, like, the budgets and the appetites changing in the enterprise or, like, the Fortune five hundred? Because we've talked to a lot of people that have said come on the show and said, oh, yeah. AI is gonna really help my margins. I'm gonna I'm gonna spend less money.
Speaker 2:And it seems like you're selling into them. They're going and there's more threats. They're gonna have to spend more money. How does that balance out?
Speaker 8:I'll break it down from, like, commercial buyers and government buyers. It's a little bit different. On the commercial side, the most sophisticated security teams usually have dedicated AI innovation budgets. Mhmm. And those are to experiment with new technologies and brew new technologies in.
Speaker 8:But for the most part, most buyers, I'm talking like Fortune 500 security executives, have known problems, known categories that they still need to purchase against. And so it's important to map, you know, be familiar enough, but also a little different, but not try to build anything too new. So you have to map to something that they know and they're trying to do. It's not necessarily develop a novel new technology. Government is pretty different.
Speaker 8:Like, there is a lot of investment in, you know, AI for offense, AI for defense, like cyber operations more broadly. In the big beautiful bill, there was 1,000,000,000 earmarked for offensive cyber operations, which is a huge number.
Speaker 3:Wow.
Speaker 8:And I would argue, like, still need to up that number quite a bit. Yeah. But there's a general, you know, understanding that we need to up our game here and get faster, and the status quo is not cutting it.
Speaker 2:Fantastic. Jordy, anything else?
Speaker 3:That's it.
Speaker 1:I think
Speaker 2:you got some important work to get back to. So we'll let you Go
Speaker 3:get on the offensive.
Speaker 2:Get on the offensive. Alright.
Speaker 11:We'll do it.
Speaker 3:We're riding with you.
Speaker 2:Bring me a list of passwords from North Korea, please. Anyway, great chatting with you. Thanks
Speaker 1:so much
Speaker 2:for hopping on the street.
Speaker 3:I'm back on whenever.
Speaker 2:Congrats on the progress. We'll talk to you soon. Cheers. Bye. Let me tell you about adquick.com.
Speaker 2:Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. See you. I want some soundboard when I do these Jordy. Only add quick combines technology out of home expertise and data to enable a seamless efficient ad buying process.
Speaker 3:Golden retriever. The the
Speaker 2:the dog panting and the horse noise deeply underrated. You know, I love the Ashton Hall but the horse noise is is a close second. Anyway, we are joined by someone who can run as much as a horse, Zach Progrom. I
Speaker 3:would estimate Zach at, like, six or seven horsepower.
Speaker 2:That's I would try to
Speaker 3:ask Zach, you're live by way. Sorry. You're
Speaker 2:live. Much horsepower you
Speaker 3:can give? Six horsepower. We were saying six or seven horsepower.
Speaker 10:I don't know what that means. I'm not a car guy. I'm sorry. Realized.
Speaker 2:No. Are you you know, a horse has one horsepower. We're basically saying you're as strong
Speaker 3:as seven horses. Seven stallions.
Speaker 11:I'll take it.
Speaker 10:Anyway, I've been thinking a lot about horses, but go ahead.
Speaker 2:Oh, what have you
Speaker 3:been thinking about?
Speaker 1:So have we.
Speaker 10:They're just like the most majestic creatures. The an unbelievable combination of beauty and grace, but this raw power and it's just like, I don't know. Go ahead.
Speaker 2:Much like you.
Speaker 3:Better myself.
Speaker 2:Much like you. Anyway, congrats on the launch. Share Aura is now live in the App Store. If you're listening to this, go download it. Invite codes are going out to a wait list this week.
Speaker 2:There's 20,000 people on the wait list already. Wow.
Speaker 10:Probably. Yeah.
Speaker 3:Probably more.
Speaker 2:So break it down for us. Pitch the app and explain some of the launch strategies that you've been employing. I wanna talk about media and and vlogging and actual and the app, of course.
Speaker 10:Definitely. Yeah. So for some context, I've been posting on social media under my name, essentially. It actually started as, like, a pseudonymous account, but that was, like, five years ago.
Speaker 2:Yeah. Yeah.
Speaker 10:And posted for almost seven years and have went from writing content to motivational content and then got really into running. And the idea for the app started where a lot of you are familiar with Strava probably
Speaker 2:Yep.
Speaker 10:Noticed that so I have a big Instagram account. I have 1,300,000 followers.
Speaker 2:Gong for 1,300,000 followers on Instagram. Congratulations, Zach.
Speaker 10:And towards the end of last year, I just, you know, I kind of accidentally became an influencer and just hated it. Hate doing other people's stuff. And I was just I scrapped everything I was doing. It was all my partnerships. I just wanna build my own thing.
Speaker 10:And and I just noticed all these people, every single fucking runner I followed was posting screenshots of their Strava or their run or their workout on social media. I'm sure you guys see people who do that on Instagram all the time.
Speaker 2:Of course.
Speaker 10:And then I just started thinking more. I'm like, screenshotting itself is just like this unbelievably massive user behavior. If you go look at screenshots on your phone Yep.
Speaker 4:I would
Speaker 10:bet you have like 20,000 screenshots. Yep. It it is an insane
Speaker 2:There's even a separate folder for them now. It's really convenient. I love it.
Speaker 10:Yeah. But so, essentially, you have this user behavior of finish your run, finish your workout, post it to social media.
Speaker 2:Yeah.
Speaker 10:Hundreds of millions of people are doing that very specific thing every single day. Yep. And yet these apps like Strava, you have to take a screenshot and then go to CapCut or Cannava and remove transparency and do all the no. Let's just build an app obsessively dominating that one user behavior.
Speaker 2:Cool.
Speaker 10:So that's what I started working on in February where essentially the app is a tool to share your runs and workouts. It's like a creative tool for fitness and running. Starting focus on running and we're expanding quickly to all the big stuff, cycling like you'd expect. Cycling like
Speaker 2:testosterone or what what are you talking about cycling?
Speaker 10:We can we
Speaker 2:I'm kidding. I'm kidding. Of course. We're talking about bicycling.
Speaker 3:John's gonna start Bicycling. John's gonna do a cycle and just everyday just
Speaker 2:do it live on the air. Was your strategy for actually getting feedback? It sounds like you were dogfooding the app yourself, but then did you have a small community of beta testers, friends, family? Like, who do you trust? Who is actually gonna give you good signal?
Speaker 2:Because if they're too close, they'll say, they'll glaze you. If you ask ChatGPT, probably tell you you're, you know, the next Mark Zuckerberg. Yeah. You gotta dial it in. Right?
Speaker 2:You gotta get the right the right feedback from the right people. So how how how do you iterate?
Speaker 10:Yeah. I mean, it's like you have so many yes men and you have to just ignore all of them. We've had a beta. So we've had a beta. Shout out to two developers of Aura, Kale Stewart, Jono Kim.
Speaker 3:It's good for them.
Speaker 2:I love developers. Thank you. Developers. Developers. Developers.
Speaker 2:Developers. Developers. Developers. Developers. I
Speaker 10:haven't watched the show in that like, I've seen the clips, but I'm
Speaker 1:not it's not used to all the things.
Speaker 2:We're really ramping it up
Speaker 1:to you if
Speaker 3:you're You're locked in. You're too
Speaker 2:locked in.
Speaker 10:Alright. But I've been watching every day, but okay. Anyway, we've had a beta since March. And yeah. I mean, I've had nothing else in my life besides this app.
Speaker 10:Luckily, I'm I'm the type to just burn everything down and just focus on the thing. And so we've had a beta and, you know, the product we had in the March is drastically different than we have now. And and yeah. I mean, look, I'm lucky. I have been creating content so long.
Speaker 10:I have people who who were just hungry for something from me.
Speaker 2:Yeah.
Speaker 10:And it's this app, it's so core to the DNA of everything I talk about that, I think I was able to get really good feedback. Like, there are some like, there's a group chat, shout out to them, called The Pit. And it's The Pit. It's like the group of, like, my my most real they're not just about me, but, like
Speaker 2:Yeah. A lot
Speaker 10:of, like, true obsessed savage and have been following me for a long time. Shout out the pit the pit.
Speaker 2:The pit is aligned. I was here for the pit.
Speaker 10:Yeah. For you, since March and just been iterating rapidly on the product. And the one thing I've learned, which I'm sure you guys know, is just you you have no idea what's going to work until you ship it. And, it's been it's been fun to be on that journey.
Speaker 2:We have a question for the chat. Do you think Sam Sheffer is shadow banned from Share Aura for not running with a beard or for running too slowly or for not running enough? Or or any other reason I can make up trying to roast him. That's from John Exley.
Speaker 10:He's only he's running under three miles a day. And I put out a tweet that if you're a man running under three miles is very feminine.
Speaker 2:And Oh my god.
Speaker 10:Instagram didn't like that one. But
Speaker 2:Yeah. You're get a deep platform for that.
Speaker 3:Hosted for that. Anyway. What You're building You know, it's an app but you're building a business. Yep. Are are you gonna roll out Are you monetizing already?
Speaker 3:Do you plan to? What's the plan there?
Speaker 10:No monetization. Yes. I I we do plan to. However, my thing is our app is essentially a a distribution product on drugs. Right?
Speaker 1:Yeah.
Speaker 10:Where the only purpose of you go on Aura, the share Aura, the only purpose is to create content to share to social media. Mhmm. And so essentially, the reason I am obviously bullish in on my app and I'm essentially playing with three cheat codes. That is the only purpose of the app is to post content on your Instagram story and social media. Number two, I have fucking 2,000,000 followers.
Speaker 10:I post a little I post a graphic for the app that we might make on my Instagram story. It gets a 100,000 views. Wow. I'm a pretty good designer. I design a lot of it myself and they'll or we have good designers who help.
Speaker 2:Yeah.
Speaker 10:And then Donald fucking ships it, makes it, and we ship it next week. So my audience is number two and then my friend I have a lot of fucking friends who are the biggest running creators in the space.
Speaker 2:Yeah.
Speaker 10:Who I don't I don't pay. I don't there's no payments and we can get to that. If you saw my marketing post, we can talk about it. But I'm not paying a single influencer to use my app. They are literally asking me right now.
Speaker 10:I just put out a tweet. I don't know if you saw it. I might delete it.
Speaker 2:The pit is here in the chat. Greg Duncan, so shout out the pit. They're calling car Cornwell is in the chat. Cole Ryan. I feel like a lot of these guys came from your crew.
Speaker 2:I don't know if you know them by name, but
Speaker 10:I'm just saying, like, there are big Instagram influencers with millions of followers asking to use my app.
Speaker 2:Totally. Yeah.
Speaker 10:And, like, I don't you know what I mean? And so for monetization, I just think if I was to charge money right now, we have essentially a creative tool. Right? We could charge money for creative assets and special templates and all this stuff. Yep.
Speaker 10:Fuck that. Let's just build the most ridiculous growth machine possible, get a fuckload of users, and then already have specific ideas. Like, for example, let's say we have 500,000 users sharing with Aura, sharing content not just users on the app. You're kind of valuing the potential impressions on their content per day.
Speaker 1:Mhmm.
Speaker 10:That I think is worth something to a brand to have their assets in the app to serve as creative tools to spread their brand more. That's just one way. But the reality is, guys, I'm gonna be super transparent. There is no ceiling, zero ceiling to my ambition with this app. I think consumer health, consumer fitness is a very massive category.
Speaker 10:Even if you just look at running apps, you go back ten years to when the App Store launched, Runtastic, Runkeeper, MapMyRun.
Speaker 2:Yep. When
Speaker 10:the App Store launched, all these fucking apps were built. Got 50 to a 100,000,000 plus users, and they were all acquired by Asics, Adidas. There's more of them. There were like, five of them were acquired for 50 to, like, 300,000,000. And truthfully, I'm starting this the first act of Aura, share Aura is sharing.
Speaker 10:Mhmm. But I since the beginning, since March, the reason I've been taking this so seriously is I'm that is just the start. And I think there is a
Speaker 3:You told me you've told me off air some of your some more moonshot ideas and and they're very exciting. I won't I won't Yeah.
Speaker 2:Andrew Weiss says 1,000,000 users is the goal. I feel like you'll have strong opinions about AI, social networks, bots. We just heard from an investor who said that maybe there will be a new social network that's heavy on bots. We talked to Pika Labs yesterday. They wanna build
Speaker 4:Well, I like
Speaker 1:I I like that
Speaker 2:an app that's like a a social media app that's entirely AI generated. ShareAura, the vlogs even putting out, they feel uniquely human. Talk to me about the trade offs between like AI content being allowed or promoted or demoted and
Speaker 3:ShareAura's great because you guys can use generative AI to give people these creative tools but they still have to go out in the real world if they wanna actually really use the product. Right? It's it's doesn't matter if they can
Speaker 2:Tesla optimist, go run 17 miles and then come back and post for me.
Speaker 3:Under four minute miles, please.
Speaker 1:But, yeah. What what's your take
Speaker 2:on like AI on social media? Like, it's correct place.
Speaker 10:Yeah. I mean, on social media, like, it's it can't be the heart of things. Like, I my writing gets tens of millions of views a month. I've never written with AI once. Mhmm.
Speaker 10:I've never made a vlog with AI once. However, my whole app like, I just pulled it up. So for our app, we have, like, stock backgrounds. Right? Because it's like
Speaker 2:Yeah.
Speaker 10:You've got stock images. Right? And, like, so we make I'll just pull it up. Like, they look like that. Like, they're super sick.
Speaker 2:Yeah. Very
Speaker 10:cool. Crazy percentage of our app use them. Like, 40% plus use, which is wild. And then, like, yeah, I think it should be used to expand a creative vision. Like, my creative universe, fuck yeah.
Speaker 10:I'm gonna use AI. I think AI videos, I'm so bullish on it. And, like, the shit we're doing for Aura, for the AI backgrounds I just showed you, I have a person named Nat who's cracked on it. It is going to fucking break the Internet. It is so good.
Speaker 1:Mhmm.
Speaker 10:It is so good. And and but the heart of everything is me fucking taking
Speaker 2:Yeah.
Speaker 10:Filming this whole thing, by the way. Sup, guys?
Speaker 2:Nice. Hey. Hey.
Speaker 1:Great to see you.
Speaker 10:Taking this nineteen two thousand 1999 year old camcorder and taking it on a vlog and filming my entire life. So the heart of it I don't think you build a personal brand with AI. It can't be the heart of it. But it should be you should use it to expand your creative universe.
Speaker 3:We're gonna use AI to bleep out
Speaker 1:your cockroach.
Speaker 10:I cursed. I didn't notice.
Speaker 2:I love it. Camcorder vlogs. Are they working on YouTube? Are they working on x? Who what audience likes that more than the other?
Speaker 10:I I they're definitely working. I'm not a YouTuber. So like Yeah. I just don't know if they're working yet on that platform. It's too early.
Speaker 2:Yeah.
Speaker 10:My Instagram, it's funny. I have 1,300,000 followers. I don't think I posted a reel for a year.
Speaker 2:Yeah.
Speaker 10:Because I'm just a I was a writer. I was doing other
Speaker 2:stuff. Yeah.
Speaker 10:Yeah. They're already working on reels and I just started them. And on x, they're a 100% working. And the big thing is, look, the re the thing I obsess over more than anything is just, like, how to get attention on social media. Right?
Speaker 10:Yeah. And it's just like I've gone ridiculously viral in the past for some certain innovative things, and, the camcorder is the same thing. You're giving someone something new on their screen.
Speaker 2:Yep.
Speaker 10:That's number one. And then number two is you're tapping into just nostalgia, which brands know. Nostalgia is an unbelievable weapon. Yeah. An unbelievable weapon for attention.
Speaker 2:Totally.
Speaker 10:And and when you combine that with someone actually doing something, like, actually building my app, it's it's it's interesting. And I think they're a 100 working on x. Like, look at the fucking the vlogs I've done on x have gotten hundreds of thousands of views already. And the little launch video mini one I did got it has a 144,000 views. It's pretty good.
Speaker 2:Yeah. Yeah. I mean, we felt that early on with, like, we were printing out tweets and reacting to them and wearing suits and there was a little bit of nostalgia in here. It's good.
Speaker 1:The thing
Speaker 10:is, Brandon, you can't just fucking use Apple Garamond with negative three letters. They actually care. No one cares. You have to find it. You guys have the synthwave intro.
Speaker 10:It's great.
Speaker 2:Yeah. Yeah. You you you have to pull different things from different elements. We we're showing the We're
Speaker 3:using a camcorder ourselves.
Speaker 2:Yeah. We have one in the studio too. It's fun. I I I I think these are just creative tools like the generative AI, like the I like the fact that you're saying generative AI backgrounds because I feel like the magic happens when there's when there's it it's like if you go to any any, like, Photoshop or, like, MS Paint, like, you'd always have, like, the template for, like, I wanna just stamp a tree down and that's just one of the tools and it feels like these generative AI backgrounds, it like, they're not gonna go viral by themselves. The virality, the human element's gonna be injected, and it's gonna be, like, a collaging effect on top of some of some base that's really gonna be the thing that pops.
Speaker 2:Totally. Stands out.
Speaker 3:Anyway. Well, I'm excited for more people in the world to get the app on the launch and come back on anytime.
Speaker 2:Everyone's demanding codes.
Speaker 3:Is this this isn't the first time. Right? You've been on before.
Speaker 10:No. First time.
Speaker 1:Crazy. First time
Speaker 10:when when another big update, I'll come back on.
Speaker 2:Yeah. Yeah. Come back on. The says Zach looking yoked. Glad you went with the black tank says ish.
Speaker 3:There you go. Greg Duncan
Speaker 2:says nostalgia is emotional crack. You look good either way. Look good. Authentically. Says he's cooking and making us feel.
Speaker 3:Next time you go on a on a long run just just FaceTime us we'll we'll drop you into the show.
Speaker 2:Yeah. Yeah. You can call in for a run.
Speaker 3:We'll be your running we'll be your running coach.
Speaker 2:Yeah.
Speaker 1:I'm sure.
Speaker 2:I'm sure. Great. Awesome. Great chatting. Great seated.
Speaker 2:We will talk to you soon.
Speaker 10:Cheers. And
Speaker 2:you know what he should do to promote this? He should run from one wander to another. He should find his happy place.
Speaker 3:He really should.
Speaker 2:Should book a wander with inspiring views, hotel great amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service because it's a vacation home Wander or
Speaker 3:should do a campaign with Zach and just have him run, you know, a 100 wanders in a hundred days all on foot.
Speaker 2:That'd be great. That'd be great. Let's go to the timeline. The billionaire Porsche family prepares for war with new defense fund. German dynasty expands into weapons amid Europe's rearmament drive.
Speaker 2:So Shankh Josie says, enter the nine one one, the nine eleven technical. This is just funny that, like, more and more people are pour are pouring into defense tech. We were kinda discussing It's not the
Speaker 3:first time that Porsche
Speaker 2:It's not the first time. War. It's not the first time. Oh, I'd You put this in the you put this in the feed and I didn't realize it was from John Summit. But John Summit said
Speaker 1:No. No. No. Let me give some context.
Speaker 2:Yeah. Yeah. Take take this.
Speaker 3:John Summit had
Speaker 2:He said, every great bender leads to an epic lock in.
Speaker 3:And then and then people someone quoted this and said, you're 31 big bro and went viral. Okay. Obviously dunking on him.
Speaker 2:10 k.
Speaker 3:John fires back and says, do you do people think you just stop having fun in your thirties? Such a loser mentality.
Speaker 2:Owned. And
Speaker 3:then says David Guetta is 57, Tiesto is 56, Carl Cox is 63 and they all still rip till 6AM in Ibiza while all these finance burner burners cry themselves to sleep at night.
Speaker 2:An East Village guy just says banger. John Summit, I didn't realize he
Speaker 3:was He just declared war
Speaker 2:on timeline and put lover boy in the truth zone. Anyway, fun fun fun to have
Speaker 3:people Show go back and up at get backstage at at a John Summit show. You guys should make up and send it.
Speaker 2:And John Summit, head over to getbezel.com. Your bezel concierge is available now to source you any watch on the plant, seriously any watch. Nick Carter He
Speaker 3:says, I'm increasingly convinced that a substantial percentage of kids brought up in the age of AI will be post literate. Like they won't really know how to write and I'm gonna say or think and will rely on AI to auto complete their thoughts.
Speaker 2:I mean, have a friend who is illiterate and he's very successful. He doesn't know how to read. It's fine. Maybe maybe because
Speaker 3:he doesn't know how to read, it clarifies his thinking. No one else is able to influence his thought with the written word.
Speaker 1:Yeah. Yeah. Yeah. You can't one shot him.
Speaker 3:No. I've I've been pushing people on this. I think I think if somebody is struggling with how to communicate an idea Yeah. And they think I should go to chat GPT and and work this out. Yep.
Speaker 3:I think that the more you do that, the more you're gonna atrophy your brain and you gotta be a little careful there.
Speaker 2:It's so crazy because if you can write a good prompt, jobs finished. You can just send that as an email. Like, very rarely does the result because I have GPT five running in my brain in terms of like rewriting emails. You can just send me the bullet points. You don't need to send me the, hey, ChatGPT, turn these bullet points into a bunch of paragraphs.
Speaker 1:You can
Speaker 2:just send me the bullet points, and I will expand it in my brain. And so I I I find that the I find that I find that the ChatGPT for for email writing does not actually improve communication or save all of that much time. Again, knowledge retrieval, knowledge retrieval, knowledge retrieval. If you're thinking of something, it's on the tip of your tongue, type it into ChatGPT. It'll give you the what you're thinking of.
Speaker 2:If you need five examples of something and you can think of two, it's gonna nail the next five. Speaking of which, I had an interesting thing that I pulled up. We didn't get a chance to talk about this. But are you familiar with the story of John Hinkley Junior? No.
Speaker 2:So we were talking about AI psychosis, AI making people crazy. Maybe social media had a similar effect. Well, what about movies? So in 1967, has anyone in this studio seen Taxi Driver?
Speaker 4:Yes.
Speaker 2:Thank you. I know you haven't, but Taxi Driver is Robert De Niro film where Travis Bickle, the character, becomes obsessed with a young woman played by Jodie Foster and attempts to assassinate a presidential candidate. So John Hinkley junior was 25 years old. He was drifter from Texas, and he had developed an intense fixation on the actress Jodie Foster after seeing him in that 1976 film, Taxi Driver. So in 1980, Foster was a student at Yale University.
Speaker 2:Hinckley moved to New Haven where Yale is for a time writing her letters and calling her even though she never reciprocated or encouraged contact. Hinckley believed that committing a spectacular act such as killing a US president would gain Jodie Foster's attention and impress her. So he trailed he first was going after Jimmy Carter. He trailed president Jimmy Carter during the 1980 campaign, but was arrested on a weapons charge in Nashville. But when Ronald Reagan got elected, Hinckley shifted focus to Reagan.
Speaker 2:And so on 03/30/1981 at the Washington Hilton Hotel in Washington DC, Reagan had just finished speaking and was leaving the venue when Hinckley fired six shots with a 22 caliber revolver. He hit Ronald Reagan with a ricochet bullet in the chest. Reagan survived. He hit the press secretary James Brady in the head and left him personally permanently disabled. And he also shot a secret service agent in the abdomen and a DC police officer in the neck.
Speaker 2:And so later, John Hinkley claimed he did it to impress Jodie Foster. He, his defense argued not guilty by reason of insanity. He pleaded insane, citing citing severe mental illness, and he was eventually acquitted on those grounds in 1982 but was committed to a psychiatric hospital for over three decades. So one shotted by technology, one shotted by new video, new imagery, a film, something that's not real, but told a story that convinced him and he had delusions of grandeur and he went on this run. He was effectively, you know, he he had film psychosis.
Speaker 2:But, it was very very, he was this is like the only example of something like that happening. And overall, I would say the films are fantastic and a major net good.
Speaker 3:Did they get Jodie Foster's attention?
Speaker 2:I don't think so.
Speaker 3:Hopefully, she paid a little attention.
Speaker 2:I think she did address it at one point, but I don't think she was interested in him. Yeah. But interesting I have a rough way
Speaker 3:to get attention.
Speaker 2:That this this idea of of seeing some sort of media, text imagery, something on social media, something in in chat GPT, something on the screen could drive someone who's you know, has mental illness to do something crazy. This is this is not entirely new. The question is scale and the question is how can you resolve it? When the film industry, you know, I I think it was I think it was handled just by, you know, like, they've made more movies like like Taxi Driver. They've made Joker, and people were worried about that having an effect.
Speaker 2:But overall, our society learned to adapt and and probably identify, hey, my friend saw a movie and he's acting weird. Like, let me talk to him about that. Like, no. But just because Jodie Foster's in that movie doesn't mean that she's gonna love you if you do the thing that happened in that movie. The movie is fiction.
Speaker 2:And so people developed kind of a mimetic defense to the the imagery in films. They'll hopefully do the same for social media and have in many ways. I think a lot of people are adapting to the age of social media with like screen time and understanding that, you know, there's all these different incentives. You're getting
Speaker 3:a notification. Wow. I used TikTok for sixty hours.
Speaker 2:Yeah. Don't talk to TikTok.
Speaker 3:I gotta get those numbers Well, we gotta talk about a potentially the next Fed chair.
Speaker 2:Yeah. What is going on?
Speaker 3:David Zervos Okay. Who is a currently managing director over at Jefferies.
Speaker 1:Okay.
Speaker 3:And he has a fantastic wardrobe. Let's pull this up.
Speaker 2:This is wild wardrobe.
Speaker 3:Q Cap says this might be the Fed chair and you're bearish. And this looks like a burning man esque outfit.
Speaker 2:Do you want
Speaker 1:And to
Speaker 3:then next up, he's got a fantastic orange suit. The
Speaker 2:orange suit
Speaker 3:is fantastic. Incredibly sharp. David
Speaker 2:Put him on the McLaren F1 team.
Speaker 3:David was already an advisor to the Fed back in 2009 for a year and then has gone on quite the run.
Speaker 2:Something about David's in finance because this David has fantastic suits and fashion sense and then David Solomon is a DJ. Something about being a David in in finance really puts you on the track for He does. Eccentricity.
Speaker 3:He does look like in another life he would have dominated digital assets. Oh,
Speaker 2:I thought you were gonna say Both. Oh, yeah. Yeah. For sure, crypto. But, you know, he definitely has the crypto aesthetic down.
Speaker 2:But the question is, could you imagine him going head to head back to back in a boiler room set with David Solomon? I think he would give him a run for his money.
Speaker 3:Absolutely.
Speaker 2:What else should we talk about today? It's 02:30. Should we get out of here? Or should we continue down the timeline, down the rabbit hole deeper?
Speaker 1:You
Speaker 3:know, should we pull up this video? Dylan highlighted Dylan Abruzzcato highlighted. There
Speaker 2:is React to a movie trailer?
Speaker 3:Yeah. Let's react to a movie trailer
Speaker 2:from 08/24.
Speaker 3:It's called Marty Supreme. It just was released this morning. It features Oscar nominee, Timothy Chalamet, Oscar winner, Gwyneth Paltrow. And of course
Speaker 2:Start up investor.
Speaker 3:Shark Tank Shark, Kevin O'Leary.
Speaker 2:Let's watch it.
Speaker 4:Hello.
Speaker 1:Hey. It's Marty Mauser.
Speaker 2:I'm in the Royal Suite.
Speaker 1:I saw you in the lobby yesterday. Okay. Well, I never talked to an actual movie star. You know, something of a performer too.
Speaker 13:Are you?
Speaker 1:Yeah. You don't believe me?
Speaker 13:I You
Speaker 1:what? What? You got the Daily Mail in front
Speaker 4:of you? This is you? Yeah.
Speaker 1:The chosen one. It's a nice picture. Right?
Speaker 2:Are you gonna get copy straight for this? Probably.
Speaker 4:If you think that's some sort of blessing, it's not.
Speaker 2:Hopefully not. It means I
Speaker 4:have an obligation to see a very specific thing through. And with that obligation comes sacrifice.
Speaker 1:Everything in my life Do
Speaker 13:Do you need any help? I could help you.
Speaker 2:I know what you're trying believe,
Speaker 1:but I'm telling you this game that fills stadiums overseas. And it's only a matter of time before I'm staring
Speaker 2:at you from the cover
Speaker 1:of a Wheaties box.
Speaker 3:Alright. Team movie night when this drops. We're doing it.
Speaker 2:They I guess that's just Josh Safdie but his brother David Safdie is also a partner in most of his creative endeavors. Benny Safdie. Yeah. Yeah. Benny.
Speaker 2:Benny Safdie and Josh Shafty. The the the the that's the crew. But they are fantastic at finding, like, undiscovered talent that would do well in film. I just like, Adam Sandler in Uncut Gems, he's known as a comedian. He'd done serious movies, but he was still kind of an odd choice for that.
Speaker 2:They also cast Kevin Garnett as himself in Uncut Gems, and that was, like, a fantastic performance. And people kind of didn't expect an NBA player to just, like, jump straight into a prestigious Hollywood movie and do great. Julian Farr You're
Speaker 3:playing yourself.
Speaker 2:As well. The Weeknd was in was was in that movie as well. And then there's been a couple others where he's pulled odd folks and Benny Safdie jumps in, plays. So I'm extremely bullish on Kevin.
Speaker 3:We're gonna end on this next post Please. From the account financial dystopia.
Speaker 2:Okay. We're playing this one.
Speaker 3:But this doesn't seem dystopian to me at all. We can see why. The, caption is a remote salesman makes a call while he's driving a boat. So let's
Speaker 2:SPX maximalist, thank you for the shout out. I'm glad you tuned in daily.
Speaker 1:Miss Becky, how you doing, darling? Oh, we're blessed. We're blessed. I'm sorry. It's bit noisy.
Speaker 1:We're out on the lake right now doing some surfing. This is weekend. Oh, yeah. You ever done wakesurfing before?
Speaker 2:I'm ready to buy.
Speaker 1:Get your ass out here.
Speaker 2:This is amazing. You scared of the water?
Speaker 3:Masterclass. You can't swim?
Speaker 2:You're telling me an AI agent is gonna be able to do this? No.
Speaker 1:I'd I'd like to see an AI agent wake drive a wakesurfing boat.
Speaker 2:Oh, okay. Wow. Honestly. We get
Speaker 1:you surfing no time.
Speaker 2:It's great. We'll get this if you
Speaker 1:have a chance to
Speaker 2:talk. Can we make an intro to Sam Bock at ramp? We need to get this guy on the ramp too. He's he's ready to close deals.
Speaker 1:Anyways Fantastic. I have some breaking news. Please. Okay. So XAI cofounder Igor Babushkin is leaving No to start a venture firm.
Speaker 1:Woah. That supports AI safety research and back startups and AI and egenic systems.
Speaker 2:But Huge news.
Speaker 1:Yeah. He he was number 24 on the Menace list.
Speaker 2:He was number 24 in the new in the in the v two.
Speaker 1:Yeah. Wow. He's like super good.
Speaker 2:Igor Babushkin absolute. Eleven minutes ago this broke and you guys got the
Speaker 3:Good work Tyler. We have to get in the car
Speaker 1:Yeah.
Speaker 3:And hit the road.
Speaker 2:Igor, open invite. Come on the show. Talk about your new fund. We'd love to hear from you on this.
Speaker 3:Make it happen.
Speaker 2:It's fascinating.
Speaker 3:Great stuff. Fun show today.
Speaker 2:Leave us five stars on Apple Podcast and Spotify and we will see you tomorrow. Thank you for tuning in.
Speaker 3:Have an incredible evening.
Speaker 2:Talk
Speaker 3:to Bye. You Bye.