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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN. Today is Thursday, 07/30/2026. We are live from the TBPN Ultra on the Temple Of Technology, the Fortress Of Finance, the capital of capital. Let me tell you about ramp.com. Time is Monday, same boat.
Speaker 1:Easy to use corporate cards, bill pay, accounting, and a whole lot more. All in one place. Absolute chaos on the timeline. Last night, this morning, around Leopold Aschenbrenner's hedge fund situational awareness, they have been forced to unwind their public stock portfolio after steep losses on AI infrastructure bets. CNBC reported this on Thursday, today.
Speaker 1:Prime brokers reportedly rushed to raise cash to meet margin requirements while Ken Griffin's Citadel, my former employer, reached a deal to purchase the fund's publicly traded assets.
Speaker 2:Did Ken ever do anything to you? No. Like this?
Speaker 1:No. What? No.
Speaker 2:You were just an intern.
Speaker 1:I was an intern. I would I I would have loved to be getting him
Speaker 2:intentionally send the markets into turmoil just to test you?
Speaker 1:No. But I I mean, honestly, the story of of of Citadel is is crazy. I mean, the the housing crisis, the fund was down 50% and it was a very very dark time. There were
Speaker 2:Good thing for Ken though at that time, Ken Griffin
Speaker 1:Yeah.
Speaker 2:What he would become didn't exist. And otherwise, he probably would have eaten the young Ken Griffin alive.
Speaker 1:Yeah. Maybe. Maybe.
Speaker 2:Much like it seems that
Speaker 1:Yeah.
Speaker 2:Ken has done to Leopold.
Speaker 1:Yeah. Maybe. Maybe. The the other the other frustrating thing is that they went down 50%. I think the next year they went up 50% and they're, you know, this is the classic, you know, explaining fund math to people.
Speaker 1:Oh, you're back up 50. Great. You're back to where you were? Nope. You need to go back up a 100% if you're down 50%, of course.
Speaker 1:Anyway, so the news. The fund had built concentrated positions in AI infrastructure companies including Nebius, SanDisk, Micron and CoreWeave while also betting against software companies such as Adobe. Those trades have as unraveled as AI infrastructure stocks plunged in recent weeks before rebounding sharply today. Now, how much of the plunge is around shaken faith in AI's ability to deliver value, open source or just oil, inflation, Fed's actions. We'll get into all of this because there's a lot of moving different moving pieces that led us to where we are today.
Speaker 1:Let me continue giving the news, then we'll go through the timeline and discuss a little bit more in-depth. So also relevant here is from the TBPN newsletter. Can go sign up at tbpn dot com. And what a bunch of people are pointing out at X is the fact that on Tuesday it was reported that Citadel expected a surprise rate hike from the Fed meeting that took place yesterday, which did coincide with more sell off in the market. So the market has been selling off based on what might happen at the Fed.
Speaker 1:We reported on the the Fed news. There were three Fed governors that said we should raise rates, but the rate held steady. But mortgage rates are high are over a one year high at 6.66% today, very odd number. But yesterday, the Fed left the rate unchanged and today many of the stocks in Leopold's portfolio are up double digits and we'll sort of go through them. They're up today based on the news that King Griffin is buying the portfolio, but they are still down over the last month, for example, in many cases.
Speaker 1:Aschenbrenner, a former OpenAI researcher rose to prominence after publishing his twenty twenty four essay series Situational Awareness, the billion dollar PDF as Will Minitis put it, I believe, which argued that rapid AI progress would require an enormous build out of chips, memory, power and compute infrastructure. That thesis became the foundation of his investment strategy. After launching the fund, he also engaged he's also engaged to Anthropic CEO Dario Amade's chief of staff. The news is coming in hot and fast on the story. Here's a timeline of the most important headlines so far.
Speaker 1:So Bloomberg, 09:25PM yesterday. Remember I think you texted me this as I was going to sleep. And remember like, woah. This is big deal. I wonder how how crazy this will get over the next few days.
Speaker 1:It got very crazy very quickly. So Bloomberg reported Leopold Aschenbrenner's situational awareness seeks to raise capital after AI route. There was an article in the Financial Times as well last night just saying that, hey, there's some rumors that are leaking out from LPs that they got a letter saying like, hey, the market's down. Now is a good buying opportunity. The thesis is as strong as ever.
Speaker 1:If there was ever a time to put more money into this fund, now is the time. That can be good. You want to be buying when things buy low, sell high. Right? But at the same time, if it's to cover margin calls, if it's because the fund's getting beat up, it's a little bit rougher of a pitch.
Speaker 1:Then at 06:05 a. M, CNBC announces that AI investor Leopold Aschenbrenner has been forced to unwind all public stock positions after steep losses, according to CNBC sources. And then The Wall Street Journal reports at 08:39 a. M. That Citadel has stepped in to buy situational awareness's stock portfolio after big losses in AI.
Speaker 1:And so
Speaker 2:After living through FTX and SVB and now this Nothing this on the timeline.
Speaker 1:You're just grizzled.
Speaker 2:No. The the my key the key takeaway is like when when leverage is involved
Speaker 1:Mhmm.
Speaker 2:Things just move so so so fast. Yeah. Right? You remember with FTX? Yep.
Speaker 2:There's kind of some rumblings Yep. A couple a couple posts from SPF saying Yep. Like, we're fine. It's all good. Yep.
Speaker 2:And then it was over. And it is And then the same thing with SVB Yep. Like couple rumblings Mhmm. Maybe like a a couple weeks, a week beforehand, few posts here and there, and then it just moves so so fast. Right?
Speaker 2:Yep. And yeah. Quite a bit different than traditional venture world where when a company is dying Oh, it's it dies over two, three years Yeah. Often. Sometimes more.
Speaker 1:Yeah. Yeah. Yeah. Yeah. I'm thinking of like I mean, we had some of these companies on from the private markets where they've gone through big booms and busts like Bird and then they built back and they've turned around.
Speaker 1:So much Bird more
Speaker 2:turned around. Talking about Lime.
Speaker 1:Lime turned around but but but it it took like an extra five years for Bird to actually wind down and it's because there's no leverage in the system. There's just a bunch of dollars that sit there as equity and those get burned down. But every every month, if the business is deteriorating, you're cutting costs, shrinking the business, tightening things up, making that twelve to eighteen months last twenty four months and then you wind and then you wind up twenty four months in and you're like, we're not going be able to raise again. Let's stretch this again and and right size the business again. And all of a sudden, so it takes like years and years for these things to unwind.
Speaker 1:Although they are correlated in the venture world, they can be decorrelated in the unwinding process and then there can be other things that are outweighing the portfolio. So every VC that had Bird on their books probably also had some SpaceX on their books or something. And so there's this balancing effect and it takes years for these things to balance out and they can be unwound at different periods in the market as opposed to everything needing to happen all at once. So, speaking of public markets, let me tell you about public.com investing for those who take it seriously. They got stocks, options, bonds, crypto, treasuries, and more with great customer service.
Speaker 1:I like this post from Richard Craib, one of my favorite investors. He runs the quant hedge fund numerai. And he says, I think it's cool that funds like situational awareness can exist in America and that there's a market for them, but the outcome was never about being right or wrong on AI at 150% vol. Variance drag alone is 113% a year and risk of ruin is roughly a coin flip over the fund's life. A child can do the math on a napkin.
Speaker 1:Claude did it for him. He says AI says ruin wasn't unlikely. It was roughly even money. So there's a fiftyfifty percent chance, 50% chance that the fund sees so many losses that they to do this liquidation process. And that's basically what happened.
Speaker 1:And it's it must be so frustrating because the this is not it really does not feel like, oh, Leopold was wrong about AI and the AI build out. It's like, well, there's oil and a war and interest rates and all these other things going on that are creating some jitters. Then also, once the AI trade and the infrastructure trade got so big, you wind up with like this retail froth on top that makes things even crazier. And then That he
Speaker 2:was benefiting from.
Speaker 1:Benefiting from. But also, it's much harder to do sort of a first principles analysis on what the psychology of a frothy market will do as opposed to just retreating to, okay, well, there's this model progress is progressing like this and token pricing is is is, you know, counting the oooms stops sort of working when it's like, well, will this particular stock become a meme stock. Right?
Speaker 2:Pull up this picture. There was a lot of this going on this morning.
Speaker 1:The memes are flying. This is truly
Speaker 2:like This was my this my the the first meme that popped into my head if we can pull this up.
Speaker 1:The chat is asking for a non sponsored sleep score to see how we slept
Speaker 2:I slept.
Speaker 1:In the midst of financial crisis. I've been doing pretty well. I got an 87 last night, 92. There's a
Speaker 3:lot of this on
Speaker 2:the timeline this Yeah. People saying, oh, I don't know why the guy's head's cut off. You guys okay?
Speaker 1:This was you.
Speaker 2:No. This was this was just a lot of people on the timeline being like, I knew he would
Speaker 1:blow up.
Speaker 2:Yeah. Yeah. Yeah. Yeah. It's like
Speaker 1:The armchair experts are out in full force today and in many ways we are among them.
Speaker 2:So I like to think about it like at least some of the more high profile LPs Yeah. That in situational awareness. Yeah. A lot of them are like, you know, great founders. Yeah.
Speaker 2:You know, maybe they have big big positions in in the labs and all these different things. And it's quite possible that situational awareness, at least when they invested, was like 5% of their portfolio. And they're just thinking like, go giga long. Like, go Yeah. Yeah.
Speaker 1:For some of these people, it might be like
Speaker 2:One One less than 1%. Right? Whatever it is. And so it's it's actually somewhat pragmatic for them to just be like, yeah, go crazy.
Speaker 1:Go crazy. Do whatever. Yeah. That's the product.
Speaker 2:That's the product. Yeah. That's what I wanna buy. Yeah. The rest of my portfolio is fine.
Speaker 2:Yeah. You're gonna have a lot of AI exposure whether you like it or not. Yeah. But but yeah, it it's it it is actually crazy that it didn't even take a three month drawdown. Right?
Speaker 1:Yeah.
Speaker 2:It was, you know, what was it? June June 1, they were at 45,000,000,000 of AUM, something like that was was the NAV. I think end of June. End of June. End of June.
Speaker 2:So beginning of July. And then how quickly how quickly things can change. And, you know, poor poor Leopold already went through this with FTX. I believe he he and the rest of the the future FTX future fund
Speaker 1:Yeah.
Speaker 2:Team, I believe resigned like right when
Speaker 1:Oh, FTX go up? What's interesting is people are people are framing this as like they got pennies on the dollar or or Ken Griffin bought the portfolio for pennies on the dollar. And when I think pennies on the dollar, think like 5 pennies per dollar, so like 5% recovery. But it might be closer to like 50% of book value. It might be 80% of book value.
Speaker 1:I don't know. Fortunately, we have Martin Shkreli joining in just a minute. He's here in the waiting room.
Speaker 2:It's crazy because when when Martin Martin was the first account that I saw to post anything like this. He posted it before any mainstream media had picked up on it at And there was a bunch of comments on his post saying, I have good sources that say this isn't true. Mhmm. And, of course, Shkreli was right. Yep.
Speaker 2:There was trouble, and we'll bring him in now.
Speaker 1:Let's bring in Martin Shkreli to break it down for us. I believe he's here. How are doing, Martin? Good to see you again.
Speaker 4:Hey, guys. I'm doing How
Speaker 2:are you?
Speaker 1:Oh, Perfect. Perfect.
Speaker 2:Alright. How's your last
Speaker 1:Take us through it.
Speaker 2:Twenty four hours.
Speaker 1:What's last twenty four hours been like for you?
Speaker 3:It's it's been interesting. I do invest myself. So it's been a it's been a probably one of the craziest months in Wall Street history. I was talking to some friends last night about long term capital management, Amaranth, other famous liquidity driven blowups.
Speaker 1:Mhmm.
Speaker 3:And this is up there. And, it's just a really crazy thing. We had heard rumors sort of mid last week, and then they really started crystallizing last night. And this morning, obviously, sort of a fait accompli. And I actually think they did a wonderful job of of keeping it relatively quiet.
Speaker 3:I think some players were already positioning, say, early in the week, Monday, Tuesday, looking to do what my old boss, Kramer, used to call, you know, shooting against a fund. So if you know know somebody has to liquidate, the best thing for you to do, unfortunately, sadly, Darwinian, is to go sell all the positions you have in common, then go start shorting everything they have. Yeah. And it accelerates the the sort of downfall as quickly as you can. And this is a very common practice when these things, you know, happen.
Speaker 3:Certainly not something I I had overlap positions with them, so certainly not something I would do, but no wide number of funds that were shorting all of these stocks hoping to cause a panic and a crash.
Speaker 1:How do you trace back the start of this correction? Is it the war? Is it oil? Is it jitters around open source or just hyperscaler CapEx? There's so many different narratives around why the AI infrastructure trade, the bottleneck trade might be weakening.
Speaker 1:At the same time, it feels like there's some really solid progress and the models are progressing along like pretty like as expected.
Speaker 2:Yeah. Yeah. You have the labs having some of the best months in business history of any companies ever. Yeah. But then all the infrastructure correcting.
Speaker 3:Yeah. None of that stuff matters. You know? The only thing that matters is is the propensity of the buyer and seller to buy or sell.
Speaker 1:Mhmm.
Speaker 3:And what you had happened was the smart guys get in early, start buying
Speaker 1:Mhmm.
Speaker 3:See the prices go up, buy some more. And then less smart guys take take note and say, wanna do that. I wanna be up 400% this year too. Mhmm. Guys like me started buying right near the top.
Speaker 3:It's just like, hey. This is great. I love memory. I love bottom mite. And and then but but the weakest hands are buying at the top.
Speaker 3:So they're also the first to
Speaker 1:sell. Sure.
Speaker 3:First to panic.
Speaker 1:Yeah.
Speaker 3:And it just creates this like, know, every bubble sort of the same. You have this euphoria, this peak and then, you know, everyone sort of panics at once. You know, the fundamentals basically don't make a difference. Know, I think they, you know, they sort of drive the marginal buyer and seller, but, you know, the 80 or 90% of the assets, shareholders don't change hands. It's that 5% of the margin that's deciding the price.
Speaker 3:If that 5% is in the state where they're they're levered up three x there are four x as we heard South is was a four x levered fund, is that's a lot of leverage. You know, a 25% drawdown takes you out of business.
Speaker 1:Interestingly,
Speaker 3:we heard that three firms were bidding on the assets. So Jane Street, Millennium, and Citadel were sort of brought in in a closed closed circle sort of late Friday to to bid on the remains of of the the firm. And we got offered a look at a $100,000,000 of anthropic stock, which we were puzzled puzzled by. You know, sometimes you see these SPVs sort of interest comes across, you know, here and there, and we thought that was interesting. Sort of raised my eyebrows, like, that Leopold?
Speaker 3:It's because, you know, sometimes when you wanna sell $4,000,000,000 or something, you don't come out and say you wanna sell $4,000,000,000. Yeah. You come out and you say, I wanna you wanna sell a $100,000,000 of it. And usually, a guy who wants to buy a 100 is enough to buy 500 or more.
Speaker 1:Yeah.
Speaker 3:And you sort of fill them out and say, here's a 100. Okay. Do you want 5 by any chance? And then, you know, your eyebrow starts to raise a little bit that, you know, maybe he's got even more. Now, of course, this is a really odd situation.
Speaker 3:So I I we we heard Millennium did put in a bid. Citadel's bid was better.
Speaker 1:Mhmm.
Speaker 3:You know, think Ken wants to be the guy that everyone goes to when they're in trouble. Mhmm. And that's the you know, Buffett is getting older. Mhmm. This is not the kind of stuff Buffett wants to do anyway.
Speaker 2:Mhmm.
Speaker 3:But, you know, Citadel did this in the Amaranth deal. You know, when Amaranth blew up natural gas futures, I think Citadel took that portfolio and virtually every blow up in finance
Speaker 2:Well, have Enron Enron where they just raided all the talent.
Speaker 3:Yeah. They wanted to do an Enron as well. I I think, yeah, they just sort of Ken is a very smart guy. He sort of shows up and says, you know, how can I, you know, how can I, you know, be a partner to the Goldman's and the Bank of America's when they need to get out, you know, of a really risky position? They basically take an take over the book.
Speaker 3:Right? So if you I'll give you sort of an example when you're asking the question. So let's say, you know, you're at 45,000,000,000, you know, sort of try to trace this back, and you're you're, you know, 10,000,000,000 of that is in anthropic from what we understood. So you have $30,000,000,000 of of cash in your bank account. And running forex levered means you have a 120,000,000,000 gross market value.
Speaker 3:Oh. So if your GMV drops, I don't know, 25%, that doesn't sound so bad at a 120,000,000,000. Maybe that's Yeah. You know, I don't know, 30,000,000,000. So you're down to 90,000,000,000, but that's not your equity.
Speaker 3:So your equity drops from 35,000,000,000 to 5,000,000,000.
Speaker 1:Yeah.
Speaker 3:And no no prime broker is gonna let you keep 90,000,000,000 of gross market value because once you dip your equity below zero, it's their loss, not yours. And they're not gonna lose a penny after our CAGOS and after these other kind of blowups. That's not their job. And they kinda have the right to take over your portfolio Mhmm. Which is is sort of, you know, something I hope nobody ever asked to experience, but they basically call you in and say, listen.
Speaker 3:You know, these are our our assets now. Yeah. And, you know, we're we're gonna decide what their what their disposition's gonna be. And the rumor is over the weekend, he contacted about 10 parties to place Anthropic in an effort to shore up liquidity, selling the Anthropic stake for for allegedly, the offer was at 1,100,000,000,000, equivalent market cap, which, you know, is, I think, roughly where it's trading.
Speaker 2:Yeah.
Speaker 3:And, you know, it's unclear whether that was sold or half of it was sold is what we reported Mhmm. That that half of it was sold. Still a little unclear who bought that, what's happening exactly, but that's that's the best we've got. And then, you know, when it came to the public, you know, book, it does sound like, you know, the the the buyer of that book basically got a, from what we were told, a three to four billion dollar insta markup. So, yeah, they basically now have to work them they have to work out of of 3 to 4,000,000,000.
Speaker 3:Yeah. Than 3 to 4,000,000,000. Quite a lot more. But in essence, if they work out of these positions without disrupting the market, they they'll print at 3 to 4,000,000,000 on the trade
Speaker 1:Mhmm.
Speaker 3:Which, know, you is unusual and interesting trade, but, you know, really exciting. One of the parties reached out to me last night, one of these three parties, interestingly, after my reporting, and they said that, in essence, at sum and substance, yes, Leopold flew flew a little too close to the sun, and your numbers are are a little off. And I asked what direction, and they wouldn't they wouldn't confirm or deny. I I received a lot of pushback on the reporting to your point, privately and publicly that that it's not so bad and that, you know, it's only down 30%. 30% you can kinda live with.
Speaker 3:But, also, if the anthropic hasn't changed its mark, that means you were down 60 in the public book. And if you're forex levered, you know, that means you're sort of down 15 on the public book Sure. Which sounds too good to be true. If you're trading these stocks, they were down, like, 15% a day.
Speaker 1:Yeah.
Speaker 3:So we've also heard the other other AI funds are are hurting, maybe not as as much as in trouble, but but certainly hurting as well.
Speaker 1:Where does the fund go from?
Speaker 2:He gives some good he gives some good cover to all the funds that were effectively copy trading him. Oh, sure. Maybe even being more risk on and later to these positions because they were they're naturally just late if you're trying to copy trade someone and you're you're
Speaker 3:Gotta catch up. You know. Yeah. You're
Speaker 2:trying to catch up. Yeah. Leverage. You're you're you're coming into these trades way later. Do you do you recall, like, how did you process Ryan Jacob in in around the year 2000?
Speaker 2:Because you were at Kramer's firm, I believe you joined maybe right before the Ryan Internet Fund started collapsing?
Speaker 3:Yeah. There's also the Ameren Fund. There was a fund in the sixties called the Manhattan Fund that Warren Buffett criticized for being the go go kind of fund. It was run run by a guy named Gerald Tsai. And so, like, every generation, you you've seen the memes about Kathy.
Speaker 3:You know, every generation has it. You know, the the guy that believes in that cycle and it goes balls to the walls on on that cycle. And look. I have a lot of respect for for somebody who's who's willing to do that. I I used to tell a friend who who kind of did the same thing.
Speaker 3:He followed this trade, he was very early. So he had sort of Leopold like numbers, and he sort of did hedge at at at what sounds like close to the top. So sort of a miracle trader, best trader I know. And I joked with him. I said, you know, if Leopold sells at the top and turns short, like, I will absolutely adulate him as the greatest of all time.
Speaker 3:It's just that, you know, usually when you're so spellbound by that narrative of whatever happening, in this case AGI, know, there are people out there that say, look, AGI's here comping. When it comes, the entirety of finance is not relevant anymore.
Speaker 1:Yeah.
Speaker 3:We might as well just run it up and and kind of see the end of days this way. And, of course, to some guy sitting on a trading desk at Goldman Sachs, you're like, these people are fucking nuts. You know? It's just the stock market. You know?
Speaker 2:Did you given given that Leopold had had been at FTX right up until the the the the fall, did you think that maybe as as risk on as he was, like, maybe he was like, you know what? I just I can't go through that again. He wasn't necessarily he wasn't necessarily directly tied to any of this sort of nefarious activity at FTX, but he did have to viscerally experience it and and I believe resigned the day of the collapse and
Speaker 3:Yeah.
Speaker 2:I would I just would have expected Yeah. To it back like so quickly. You would you would expect even like, you know Yeah. Go and do it have a normal, you know, great career for a decade whatever, then maybe come back to leverage and be like, I'm ready to dance again. But
Speaker 3:There's a lot of questions. Like one question is what's his carry? You know, when a lot of firms in the hedge fund industry, believe it or not, they have clawback provisions carry.
Speaker 1:Like high high watermark provisions. Right? So you have to clear something?
Speaker 3:Sure. Has a high watermark, but what's increasingly happened is a is a is a carry provision where you have to return the 2 and 20 you earned if you have a severe drawdown Yeah. Which, you know, could actually end up being a tough situation. Now as you guys know, the fellow is getting getting married this weekend as well Yeah. Which is, you know, a little bit of tragedy with a a little bit of triumph mixed in.
Speaker 3:But obviously, you know, when this
Speaker 2:But does every how common are those clawback clauses? Because you have to imagine in this fundraiser you had like massive massive leverage, you know.
Speaker 1:Like demand was very high.
Speaker 2:Demand was very high. That feels like a turn The numbers
Speaker 1:were so good.
Speaker 3:Yeah. It's a more institutional thing and I and it you know, speaking of which, you know, obviously, the guy basically had no no experience. And, again, you know, in times like this, nobody wants to to grape dance, and I'm not doing that. But I had some institutional friends, one of the biggest fund of funds in New York, for example, who passed on Leopold, basically laughed at him and said, you know, there's no way I could invest in this. And of course, you know, he goes on this tear Mhmm.
Speaker 3:You know, makes like 20 x or whatever it was since inception
Speaker 1:Yeah.
Speaker 3:And does fantastic and he feels sort of sheepish, but ultimately, you know, somewhat vindicated after all of this. So you did have a manager that had no experience, kind of a long only or extremely long biased, starts to do privates, which for many hedge funds is kind of the death knell. You you know, you know, when when hedge funds put on their VC cap and try try to do what what those guys do, it it it often doesn't end well. And that that goes back, like, you know, fifty years, basically, of hedge fund history, and very few people have been able to do both. And the other thing I'd point out is we're gonna see July numbers very soon here from from quite a lot of hedge funds that I think were in the same trade.
Speaker 1:Sure.
Speaker 3:And so this this is not just Leopold's 100,000,000,000 gross. It's like that times maybe five or 10.
Speaker 1:Sure.
Speaker 3:And the mark while the market's liquid, but that's a lot of downward pressure in a few weeks. And, you know, it's amazing to see this all compressed in a month, whereas, like, the .com bubble took three or four years to, like, patiently go up and patiently go down. You know, seeing that compress instantly is interesting. What's gonna happen next is really gonna be fascinating. There's some theory out there that, you know, that we see all time highs again now that all this liquidity is out.
Speaker 3:And there's other theories there that we actually were just having this nice big downtrend and that this liquidity pop will fade and will be back down further and further. You know, nobody knows what'll happen, but it's certainly while you're right that, you know, the Anthropix and OpenAI's are are having record business results, so is Microsoft and Google and Meta for that matter. There's still, I think, some more discerning questions about is are is this CapEx investment worth it?
Speaker 1:Sure.
Speaker 3:You know, they've rewarded met Microsoft for being prudent. They they punished Meta and Google for not being prudent.
Speaker 1:Mhmm.
Speaker 3:So one wonders what what the future will bring there. But, yeah, I not as crazy as things have gotten on Wall Street in in many years, probably at least since FTX. And certainly crazier than the the the sort of Tiger Softbank venture boom of '21. And then, you know, really since then, the away insanity. So it's it's, it's quite a, effectical.
Speaker 3:And I think, you know, no matter how much people wanna learn the lesson of leverage over and over and over again, we all team seem to repeat it. And, you know, it is what it is. But I think that the Jane the Jane Citadel Millennium kind of like entire hedge fund complex sort of becoming this, like, shadow bank is quite interesting.
Speaker 1:That's
Speaker 3:interesting. Like, these guys are are sort of there to normally, the banks would sort of take this on the chin, but now that there's other folks who are like, you know, Jane was an LP, for example, and and reportedly was not interested in bidding, which is fascinating. May have taken the anthropic, however. Really unclear. We're gonna learn more, obviously, as some days go on here, but it's it's an unprecedented time and, you know, really an insane story that may just get more insane as we learn more.
Speaker 1:Is there a world where the fund continues? Because I'm just hearing the numbers and it's like, you know, up at 45,000,000,000. The actual money into the fund was maybe 5,000,000,000 or something if you sell the positions.
Speaker 4:Right. Right.
Speaker 1:Right. There's a world where you wind up with like 10,000,000,000 in a bank account and the LPs are like, well, we gave you 5. Keep going. Yeah. Get back in the game.
Speaker 1:You know?
Speaker 3:I hope I hope that's the case for the LPs who are awesome, for the Yeah. Fund manager who obviously got quite a lot of whiplash. Mhmm. But, know, at the end of the day, you know, there's there's this concept on the street as as you guys know. Like, once there's blood in the water, like, these positions would go to zero.
Speaker 3:Like, we'll send Micron to $5, you know, just to liquidate this guy at three. Right? Like, that's the, you know, the craziest thing is, like, that's that's the nature of of Wall Street when this happens and there's a guy that has to sell a 100,000,000,000, you'll have a trillion dollars in front of him just like, you know, let's let's see this guy cry uncle. And it's the saddest kinda most Machiavellian thing, but like he had he sorta had to blow up. You know?
Speaker 3:There's no other ending sadly. Yeah. Because of the leverage level, it's just like one slight you know, I remember my old my old boss was a Tiger Tiger portfolio manager, reminded me of the 2000 era where there's this very slight change in tone from one, optical component supplier, and that's like him and his partner from Soros just decided to go, like, as as short as they could. This because they knew, ultimately, these vulnerable hands were sort of sitting there after the easy part of the bubble was over. You have this, like, okay.
Speaker 3:What's what's next? Things have to get a lot crazier. You saw Tworkash's tweet.
Speaker 2:Yeah.
Speaker 3:Things like that would have to sort of happen for there to be enough second derivative for somebody to just be surprised. Yeah. You know, everyone knows AI is in this boom. Everyone knows chips are in
Speaker 2:this boom.
Speaker 3:Yeah. What could possibly shock you to the upside? Not much. So if you hear any little, like, you know, we're not gonna spend as much, the whole shit hits the fan and every it's just too heavy. So I I I actually wonder if we're we're, you know, if we're not in for a longer, more protracted decline.
Speaker 3:Things feel great today. You know, we have this huge boom, this relief rally, and a lot of the froth is out of the system. But Mhmm. You know, what next? You know, I I I don't know that, you know, a patient and calm market is gonna emerge because you had these hyperscalers and the big companies, they FOMO too.
Speaker 3:They FOMO just as hard as Leopold did. Right? If not harder. Yeah. So this isn't just him.
Speaker 3:It's the whole world collectively saying, fuck. I gotta I gotta go all in in AI. And it's it's and who who had the guts, you know, other than one man, Tim Cook, in the back saying,
Speaker 2:not me. Do nothing.
Speaker 3:You know what mean?
Speaker 1:Yeah. Yeah. No. Really, was Tim Cook.
Speaker 2:Yeah. The the funny thing, you know, we we had been joking. We were joking in like q four when, you know, they're prior to like coding agents really starting to rip, know, OpenAI revenue growth had like slowed a little bit and like there's some jitters and and a lot of this stuff wasn't, you know, public at the time, but you you could tell some of the kind of crossover types were like getting a little nervous, right? They kind of expected
Speaker 3:And maybe the DAU numbers
Speaker 2:Yeah. Yeah.
Speaker 3:You know Yeah. Really plateaued.
Speaker 2:And and and then we and then there was a correction. Like there was like briefly, you know, a period. It was probably like eight weeks. Was like, okay, like And then it started ripping again and we were taking like a sort of a bit of a joking like victory lapping like cool like AI corrected, you know Bubble pops.
Speaker 1:Bubble Now we're able to build back sustainably. We're good from here on out. It's smooth sailing. No. I I completely agree.
Speaker 3:I think the most unexpected thing is it would be if we saw brand new all time highs for the entire thing. I think almost everyone on Wall Street is skeptical this will happen, which means is it has a chance of Yeah.
Speaker 1:To pick up the bullet. You're saying there's a chance. I love it. Can you can you give me a little bit more insider baseball on what it takes to unwind a big position as a shareholder? Because a lot of people who are not inside the hedge fund world are sort of maybe confused around, okay, yeah, you own $50,000,000 of a $1,000,000,000 chip stock.
Speaker 1:Can't you just dump that on retail? Can't you just like sell market sell that on E*TRADE or Robinhood? And in fact, it's much more complicated when you're at this level. Even though it's public markets, there's not just a big button. Can you walk us through what it actually takes to, like Yeah.
Speaker 1:Sell a big position when you're at that level?
Speaker 3:Yeah. There's there's a lot that goes into it interestingly. So the first is you have this advertisement system. So if you sell into the into the market, you can try that. And those that's called selling into the screens.
Speaker 3:The screens are the numbers on your screen. Anybody could buy and sell, Robinhood, whatever. Mhmm. So you don't normally do that if you if you can help it. Selling on screens is at least somewhat quiet.
Speaker 3:You can just sort of trickle out. There's always this conspiracy that as I'm selling on the screens, there's some guy who's can see my screen. And he's like, this guy's got a VWAP market order to sell 10,000,000 shares. That's like, you know, I'm gonna tell somebody. And that knowledge should be very, very powerful.
Speaker 3:And there's even some even crazier conspiracies out there that quants could actually use different all kinds of insane, know, ideas around what they can do to sort of sniff out that this is happening. So there's people that are scared of that. Then you can pick up the phone and this is the way you'd normally do it. And you you call Goldman and you say, listen, I need to sell 5, you know, 5,000,000 shares of of Microsoft or something like that. And they say, you know, should we take it or do we find a guy that wants to take it?
Speaker 3:Mhmm. And they'll sort of try to decide. Now Microsoft is easy. If you're trying to sell share in AI, a neo cloud in Australia that nobody wants, that's a tough one. Yeah.
Speaker 3:And you own, like, ten days of volume. So if you try to hit the screens, you have ten days of volume. You you have to be the entire volume for ten days before you'd be out. You'd probably take the stock down 50% or more, and you don't wanna do that. So you try to, you know, do this advertisement process, you know, and you basically can post in the stock market that you are a seller of a stock, and you can post that your your four digit, what's called market maker ID.
Speaker 3:And and so Goldman's is GSCO. So GSCO would be a seller of, say, you know, Nevious, which was one of its positions. And so you'd call up. You'd say, okay, Goldman. I'm a client too of Goldman.
Speaker 3:You What do got on Nebious? And the guy would say, listen, we got a pretty big seller here. And say, how big? 500,000 shares? And he's like, a lot bigger.
Speaker 3:And so you'd say, okay. Because they have to advertise that, you know, they're working your order. So they have to sort of tell people that there's a seller. They're they they kinda are trying to be coy about how big, but they're not gonna waste somebody's time either. So the guy who's heard that there's a big seller, well, he might turn around.
Speaker 3:He's not supposed to do this. He sort of might turn around and say, you know, there's a huge seller of nebious out there, and I'm just a little baby fish. Maybe I could short 50,000 shares and get in front of this guy. If you're an actual interested buyer, you might also still be nervous because you'd say, well, if he's really got a ton of size, I might have to be judicious about about how I step in. And so if you combine that with the sort of, like, pressure in the market and you add it all up and then usually what you do is you'd have to say, oh, I know a guy that works there, and let's see if he's returning calls.
Speaker 3:And, you know, when you hit up the guy and he's not on Bloomberg, he's hard to reach, it's kinda like, well, it sounds like it could be them selling. So it's not too many people that own that many shares of that security. So you look at the holders list, and you're sorta like, who could it be selling 10,000,000 shares? So you call Fidelity, and they say, no. We're not selling.
Speaker 3:You call the next guy. No. We're not selling. Next guy is an ETF. Next guy is a index fund.
Speaker 3:Mhmm. You know, it's gotta be him. You know? And so if it's them and they're there's they're and then you start noticing all their positions are down, it gets really hard. So ultimately, the bank decides because you might say, you know, I don't wanna sell.
Speaker 3:The bank says, don't care what you We're we're selling regardless. And Goldman Sachs is not in the business of holding AI stocks. You know, we're gonna sell at any price we can because our board would rather know for sure that we're down a billion and just take the rip the Band Aid off than to wonder if we could lose 50. And so it's Goldman's position that we're just gonna just cut cut this cut the arm off right now before it metastasizes. And so they'll do a fire sale.
Speaker 3:Of course, Goldman's smarts are gonna reach out to a guy like Citadel or somebody else to place it carefully, but selling the whole portfolio in one shot was a very smart move. Now, again, we've heard the discount could have been as as big as, you know, 20 to 50%, which is, you know, mouthwatering discount to buy, you know, some quality companies at.
Speaker 1:Yeah.
Speaker 3:But to end it and have finality, what was really to answer the question finally, what you really needed to do is the buyer of these stocks has to have the liquidity to hold them for five years and do nothing. Because the market, guys like me and to a very small extent, and guys too much bigger will sit there and say, I don't think you can hold this. And they'll start shorting it and shorting it and shorting it and trying to make you cry uncle. Kyusha in Japan, one of Leopold's holdings, also one of mine, is trading at three times earnings. You know, they basically force you.
Speaker 3:You're forcing the guy to to really, you know Yeah. To sell. And if you're gonna hold the stock, you have to make sure that you can hold it until it's two times earnings or one times earnings. And the only player big enough and more powerful enough to to sort of hold a $100,000,000,000 and not blink is somebody like a Citadel. And even still, some keep the rumors out there.
Speaker 3:They're the people who are gonna try to crush your Citadel, which I wouldn't advise, you know, but something like that where, you know, maybe they'll have now have to suffer the same contagion. So it's a very crazy time in the markets, and and I don't think we've seen everything yet because I do think there are some large tech funds that have had the same trade on. I do think liquidation is over, thankfully. Mhmm. But I do think that there are some funds that are about to be found out to be down 30% or down 40% or so.
Speaker 1:Take me through the mind of Ken Griffin like a couple weeks ago. There's this rumor that he was sort of like pushing or signaling that there might be a rate hike. But what I'm interested in is if you suspect that there's going to be a fire sale on x y and z companies, is there a world where you build the hedges before you acquire those assets? Or is that two four d chess? Because that if they if they wind up acquiring these for 50%, 20% off, but they already have offsets, then they sort of come in market neutral.
Speaker 1:Is that possible?
Speaker 3:I don't think so. So I'm familiar with the Citadel's performance for this month Mhmm. Which is surprisingly up. Mhmm. So I I think they're probably one of the only hedge funds in the
Speaker 5:world that's up this month.
Speaker 3:Yeah. It's up.
Speaker 2:So they were
Speaker 3:actually very small.
Speaker 2:They were actually hedged is what you're saying.
Speaker 3:Yes. They have a diverse platform of different businesses, a guy trading weather, a guy trading rates, a guy trading stocks, you know, about a thousand guys trading stocks. And they have a computer fund, you know, called Citadel Securities that that is a market maker that trades a good chunk of the volume of every instrument in the world. And, ultimately, I think that the the prime brokers, the Goldman's, Bank of America's, they do so much business with Citadel, and they've done this before where they know who to go to just the same way the US government went to Warren Buffett when they wanted to shore up Goldman. Yeah.
Speaker 3:They know that the right person to call is Ken, and he is really going out of his way to make himself the guy to call. Yeah. And I think that is a great brand because you may not need to be that guy more than once every decade, but look, once a decade to make a free 5,000,000,000 or 10,000,000,000 is a great great guy to be. And, you know, it's it's sort of like he becomes a dependable trusted partner to these banks. And if he wants something from the banks, he's helped them.
Speaker 3:Mhmm. Because without him, they might have had to sell that at a negative number. In fact, some people think I don't think this is what happened, but some people actually think the equity in Leopold's prime brokerage accounts went negative
Speaker 1:Okay.
Speaker 3:Which I think is, you know, something that, again, gold the Goldman's and Bank of America's try to stop you before you get there.
Speaker 1:Sure.
Speaker 3:But, you know, they also don't wanna sell, like I said, share an AI, which is an illiquid tough to sell security.
Speaker 1:Sure.
Speaker 3:You know, they'll sell out your Micron very fast or you'll sell it out before then. But if you're left holding this bag of, like, a liquid crap Mhmm. That you'd have sixty days of volume to get out of, it's pretty tough to to sit there and and tell your prime broker, don't worry. Which is why, again, I think he needed cash. Probably somebody on Monday or Tuesday tapped them on the shoulder and said, your margin's looking a little thin.
Speaker 3:You know, can can you add, you know, a couple billion here or more? And things happened so quickly that there was just no time. And yeah, it's I think Citadel learned about this at the eleventh hour as you're supposed to. You know, the firm didn't leak out that they were hurting. They didn't have to my knowledge daily performance.
Speaker 3:In fact, from what I'm told, situational awareness as a young hedge fund was not so great with communication, not surprising, especially with what monthly and quarterly letters could have been more timely on some of those. So it's small group of a couple of guys. So I don't think that this was the same
Speaker 2:rewind what was it? Only a month ago that the or Thirteen f was late. Thirteen f was, like, late and everyone was
Speaker 1:Right.
Speaker 2:Like, okay. Sold everything. Did some he work kind of deal Yeah. To get it, you know, to confidential? But it it sounded like you just like didn't get around to it.
Speaker 2:They had other priorities maybe. Do you
Speaker 3:think Yeah. I mentioned the
Speaker 2:Do you think you can rebuild a career as a venture investor? Because like in venture, you're just you're just like gig along always. Like it's like, you know, of the few forms of investing where it's just so hard to get out of position.
Speaker 3:That's the thing. Mean, why become a hedge fund manager? This is the I have a friend who wants to to start I a have friend who wants to start a hedge fund. I told
Speaker 1:him this
Speaker 3:is the most painful, horrible business in the world. Why do this? And I if you start a newsletter business that makes a 100,000,000 a year, even 50,000,000 a year of revenue, you've done better than almost every hedge fund. Yeah. Like, you do not wanna do this job.
Speaker 3:And the reason, you know, the reason people do it, and I did it too, and I would never do it again, is it's the sexiest thing in the world. You think you're you know, the glory is incredible. Yeah. You're the master of the universe. And I had friends of wanting to quit really high profile jobs to to be a hedge fund.
Speaker 3:I was just like, you're you're out of your mind. You don't know what it what this job is. It's waking up at 3AM checking Korean stock prices and, you know, waking up back up at six, you know, wondering what's what's happening in the world, stuff like this. And there's actually no productive thing you're doing. You know?
Speaker 3:You're providing capital. You know? But other than that, you know, you're really playing this high stakes crazy poker game. And, you know, it's it's certainly fun and interesting, but when it's painful and and raw Yeah. You know, I hope he'll he'll do something you know, he's a brilliant person.
Speaker 3:Brilliant people like that. I mean, look, Peter Thiel had a hedge fund
Speaker 1:that Clarion.
Speaker 3:Didn't quite have this level of liquidation or anything like that, but it had a rough last few years. And, you know, TL was able to obviously not only continue his venture investing efforts, creating one of the biggest funds of all time, one of the most successful funds of all time, investing personally doing amazing. Also, getting back into macro trading with Teal Macro, which supposedly has done well. So I do think there is this, like, period of a few years that that, you know, he can reset and take the learnings, take whatever talent and skill and certainly genius that nobody denies that he's a brilliant guy and rebuild. I I don't think it's the end at all.
Speaker 3:And I hope he's keeping like that even temperament about this because, you know, I I I think a lot of people respect him quite a lot 100%. No matter how this turned out, you know Yep. He'll be back and and successful. But it is a little bit of a humiliation thing that I think most people on Twitter and other places are sort of saying, well, the market tends to humble you. And this is like an extremely humbling moment from being, you know, just two months separated from the biggest hedge fund on planet Earth and most successful to being forced to to sort of liquidate.
Speaker 3:That is quite a rapid sort of, you know, reversal.
Speaker 2:Also, just imagining what the fun looks like in two or three years if you just survive. Right? I can you know, he you know, there there was a clip that was circulating yesterday from his, you know, appearance on Dork Kesh where he's like, oh, there's obviously like a 100 x, you know, left Yeah. Before AGI. Right?
Speaker 2:So like, he was like up, you know, 20 x or whatever thinking like, I got I got so much room to run but I just couldn't stay in the game. Gotta say Yes.
Speaker 3:It's always a risk.
Speaker 2:I gotta Yeah. I gotta say it felt like a felt like a huge moment for you and your business just because everyone, the whole finance world was learning about this situation from your posts.
Speaker 1:Mhmm. I'm
Speaker 2:sure a lot of people were glued to your terminal. And it felt like a a changing of the guard because, again, you're getting pushback. You're getting some pushback, but then two hours later, was like Financial Times and Bloomberg and Wall Street Journal. They're all kind of clearly, they needed a couple hours to, like, run it down. But you got to it first and, yeah, I was I was quite impressed.
Speaker 2:Thank
Speaker 3:you. Yeah. I mean, I I think that, you know, we've talked about this in the past. I mean, there is a change of the guard. You guys helped change the guard Mhmm.
Speaker 3:In your space. And I think that, you know, the folks at the journal, the folks at Bloomberg, the folks at these other companies, they're fantastic reporters, but they're not active or former players. And, you know, we will hear we will always hear things before
Speaker 1:them Mhmm.
Speaker 3:Because especially on the street because that's just
Speaker 2:Well, the crazy the craziest thing is you you actually waited until it was, over effectively to to share. Right? Like, you had been hearing about this
Speaker 3:There's a lot that we sit on
Speaker 2:that Yeah. Yeah. We don't wanna You know, we've been in that position like hundreds of times where it's not appropriate to share anything. And sometimes you're sitting there being like, I'm really surprised that like Legacy Media hasn't picked up on this story. It feels like it's just common knowledge and there's there's a definitely a time and place to just not not say anything and and let something work its way through the system.
Speaker 3:Yeah. I mean, to give the devil their due, the information is also quite good at, you know, this type of thing. And they are particularly good at at scoops on OpenAI. Yeah. But the which I still haven't unraveled how how, but they're obviously very good reporters.
Speaker 3:But a rep a reporter at a place like that and Tri Media, they generally don't care about burning bridges and resources or contacts. So they want that news out yesterday. You know, I do care. And it also is a conflict of interest because I don't wanna hurt somebody that's giving me good information and betray their confidence because I have to keep the confidence of these folks if I wanna keep talking to them. But I also in the case of this situation, as the carnage is unfolding, you know, there's sort of a the the balancing the need for everyone to know with the need for, you know, protecting friendships and relationships, you have to make that judgment call each time.
Speaker 3:And I I hope that our customers understand that there will be things that we know before others that we can't disclose because we wanna protect folks and protect our friends. Bloomberg, Wall Street Journal, they'll never do that. They're they're they're always gonna serve their customer who is the reader. We can't necessarily do that. You probably know things about a litany, like you said, hundreds of times, different fundraisers going on, different things like that.
Speaker 3:And you have we have to all keep our lives closed because, you know, that will be the last time we hear about a fundraise. And and I think that this was a situation where it sort of merited discussion. Was gonna happen momentarily anyway.
Speaker 1:Mhmm.
Speaker 3:I in fact, to your to your point, the thing that got me to publish was my friend saying everyone is hearing this now. Mhmm. Once that happened, I said, alright. Well, you know, it's time to let I can let the cat out the bag. It's gonna about to be let out anyway.
Speaker 1:So Yeah. I have two more quick questions if you have a minute. One is just about how leverage works at a hedge fund. I think, again, from the retail perspective, from the much smaller player, you might know that you can go to a brokerage and get a little bit of leverage. But what does the process look like as you're scaling into the tens of billions of leverage?
Speaker 1:At certain point, you have to go to all of the banks, certain banks. Who's actually like, what is that process to get leverage at that scale actually look like?
Speaker 2:And also, let's let's appreciate for them for a moment that I feel like just a month ago, the West Coast broadly was taking this insane victory lap being like the West Coast is eating Bull Street. Yeah. The best and biggest head fund is no longer on the East Coast. Like, we just have everything now, finance and technology, and then just deeply humbled within the span of thirty days. And it turns out, turns out you guys over there, know a thing or two, and here we are asking you, so how would one go about getting So
Speaker 3:one of the things that I think is not well understood is the prime broker
Speaker 1:Yeah.
Speaker 3:Make a spread on I think the somewhat understood is they make they make their business to make a spread on financing. Mhmm. So if you go to prime broker and say, I'm never gonna use leverage. Never? And they say, I'm never gonna use leverage and I'm never gonna really trade a lot with with with your firm.
Speaker 3:You're just gonna sit there and say, like, we'll still take the assets because we can rehypothecate them and and blend them to the the guys that are going to take leverage. But in general, that's not a great customer. So if they're making a 1% spread, which is actually be is is relatively huge amount, and you're borrowing four x, you're actually giving them 400 basis points of free money Mhmm. Which is sort of fantastic. Mhmm.
Speaker 3:In fact, you know, their borrowing costs are probably less than so far. So, you know, they may be getting as much as 600 or 800 bps of of free money on huge amounts of capital. So leverage is the best friend to a prime broker. Now the risk guy is sitting there saying, well, wait a second. You know, I I I love lending, but I don't like lending to concentrated portfolios.
Speaker 3:I don't like lending to short sellers. You know, short sellers can can get big, big, big, you know, leaps in their portfolios like GameStop, for example. So the most that a long can lose is a 100%, but if a forex lover, the most long can lose is 25%.
Speaker 1:Yeah.
Speaker 3:So, you know, there's sort of this mix of of things you have to think about. I think the getting into the privates is usually, like, for me, a lot of really bad sign for almost every fund because it's as as tantalizing as private companies are. There is a whole group of people on the West Coast who are much better at that than than the guys in the East Coast. And, of course, there are funds now like Altimeter and Co2 and others that that are doing both and doing both Yeah.
Speaker 2:And and what made that what made it so tempting obviously for Leopold that just how close he is to like, couldn't be closer to Anthropic. And it's a company that over the last six months has had a 100 x the demand relative to the allocation. Right? So it just felt like, you know, and and I I don't know. Who who knows what the what the structure on those investments look like?
Speaker 2:But it's like, if you're gonna break your rule and do privates, like, then that's the company to do it with. But then you still get into a situation where you're like, wow, I really wish this was more liquid.
Speaker 3:Yeah. Can't press the sell button.
Speaker 2:Give us an update be before you leave on on Korea broadly because, you know, a lot of people are, commenting on on on just how similar Leopold's approach is to Korean retail. I don't know how true that is, but I can imagine like it's, there's blood in the water over there and the whole country is probably in shambles.
Speaker 3:Yeah. I think so. I I made a Cali criterion calculator and, like, a little portfolio simulator tool that, you know, basically and said this a while back, and I had a problem with this. Every single trader out there makes makes one seems to make the same mistake over and over again, which is their position size is probably two to 10 x more than it should be. And if you actually you know?
Speaker 3:So it sounds nuts. Right?
Speaker 1:Yeah.
Speaker 3:But if you actually run the simulator and we ours kelly.kelly. So Kelly was a a guy at Bell Labs. He was a member of the technical staff. He was original. Oh, oh, gee.
Speaker 3:M was yes. And and so Kelly came up with the proof called famously the Kelly criterion, which gamblers use mostly was gambler thing before a, financing, and it it proves the optimal bet size. And the optimal bet size is your edge subtracted by the reciprocal of it. So if you have 55% edge, your optimal bet size is 10%. That's still quite volatile for folks, and so people do half Kelly or quarter Kelly.
Speaker 3:Most most folks don't actually don't have an edge when they trade. But they're if if they did have an edge, they're trading as if they had a four x or five x Kelly edge, which is interestingly, like, you might sound, okay. Well, that just sounds swashbuckling and, like, guy takes a lot of risk. No. If you run the simulator, you will go to zero each time.
Speaker 3:And the simulator is a really cool tool that shows you even with a sixty forty edge on every trade you make, you'll go bust if you bet if you over bet.
Speaker 1:If you
Speaker 6:over bet.
Speaker 3:And it's it's an eye opener. We might say, who has a sixty forty edge in the stock market? Nobody has 60 But 40 you will absolutely go bust if you don't size correctly. And it's something that I've had to learn very painfully, very you know, over over the years that I'm almost always overbetting. And I think every fund is is sort of the same, and certainly every retailer is the same.
Speaker 3:And it's just sort of a weird variance math game that very few people actually map out and say, can I simulate portfolio and just to see what is the sort of the right thing to do in most cases? And in fact, I I had a after I left the Tiger Club I worked at, I worked in a briefly in a in the office of a guy who worked at at SAC Capital, now called Point seventy two for years.
Speaker 1:And he
Speaker 3:was one of the best managers. He's a quiet guy nobody's ever heard of, kind of retired. But I got to watch him before I set up my own hedge fund and did the exact opposite, way overbet on everything. I got to sit with this guy for a few few months, and I was astounded. So what I found is that, you know, he was managing, I don't know, 3 or 400,000,000 of his own, basically.
Speaker 3:He almost never used the capital. You know, 90% of the capital was just cash, and he would just make these tiny trades. And the guy had almost never had a down I think his record is he never had a down quarter Wow. In twenty twenty something years of trading. And he had, like, 30% returns, which is great.
Speaker 3:And the guy just kind of, you know, just did these little little nibbles, and he never lost money. And it was it's an incredible thing. And then, of course, the second I get the chance to get some capital, I'm eight x
Speaker 2:leverage to do it.
Speaker 3:Know? And it it's just like, you know, it's the dumbest thing in the world, you know, and and you live and you learn.
Speaker 1:Psychology. Psychology. Well, thanks so much for coming on the show and breaking guys. This is always a great time.
Speaker 2:Yeah. Looking forward to
Speaker 1:Yeah. Rest of time. Go from here. Have a great week. Have a great weekend.
Speaker 1:We'll talk to you soon, Martin.
Speaker 2:Cheers, Martin.
Speaker 1:Bye. Let me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codecs helps you move projects forward from start to finish. We have a couple guests coming in soon.
Speaker 1:But first, I want to talk about Ferrari. Don't know. Great. Dude, do you want to jump straight into a next guest?
Speaker 2:Let's talk about it.
Speaker 1:I want to debate this because There is John. News Ferrari world that the Ferrari EV, the Luce, designed by Johnny Ive, has already hit the 2026 sales target. The haters are in shambles. Everyone doubted that this would sell. And the Italian carmaker reports strong demand from China for electric model derided for its unconventional design.
Speaker 1:There's a whole bunch of interesting tidbits in here, in the Financial Times article. Ferrari has hit this year's sales target for its first electric vehicle on the back of strong demand from China despite a polarizing design that drew backlash from investors and enthusiasts. Remember, even the former CEO, former chief design officer, former executive came out and said, this is not a Ferrari. There was a lot of back and forth in the timeline. I could have designed a better one with Chatuchipi tea.
Speaker 1:A lot of people threw out different designs. But this one is selling, at least according to the Financial Times. The Italian group has not disclosed its target for the luce, but two people with knowledge of the matter said it had aimed to sell this year just under 500 units of the EV. Not a lot, but their goal for by 2,030 over the next four years is to get to 2,500 units. So 500 a year for four or five years.
Speaker 1:That's where they want to get here and they say they're on track. And so this is priced at €550,000, 650,000 USD, something like that. One of the two people said the target had been reached earlier in July, just two months after its controversial launch, when critics on social media derided its unconventional styling. And there's also an interesting line in here that Ferrari says they gave strict instructions to dealers not to force its traditional petrol loving collectors to switch to electric cars. He said if you want a luche, we'll give you a luche, but we're not going to make you buy a luche in order to get in line for an s p three, s p four, some special f 80 thing that's more limited.
Speaker 1:Just if you want it, it's here. It's a choice and a lot of people made that choice. Karan, according to these insiders. What do you think? Give me the pushback and then we'll debate it.
Speaker 1:Let me tell you about console while you think about that. Console is built AI agents that automate 70% of IT, HR and finance support giving employees instant resolution for access requests and password resets. Continue.
Speaker 2:I I was pausing because I wanted to start with something nice.
Speaker 1:Hit
Speaker 2:me. I think so the videos that I've seen of it on the road, it does look even more strange than in the images.
Speaker 1:Also Wait. What is this photo?
Speaker 2:That's not What is that?
Speaker 1:The team just accidentally put in some random car.
Speaker 2:Okay. So so the car the car is strange. I love the interior, but the car overall is strange. It's still unclear to me who it's really for, but they are finding buyers. The the the idea that that buying the luce like, Ferrari is saying we're not forcing any dealer to push this car or whatever.
Speaker 2:But the idea that it's not gonna have some whether or not you bought a luche is gonna have some weight on your future allocations to me is just insane. There's just no way that that's true because every single dealer is gonna look at their client list. They're gonna look what cars have they purchased. Like, we know we we know multiple Ferrari collectors that are buying two two separate cars that they don't even want of the same style in order to gain status within the dealership and show that they're a proper proper collector and and they're properly sort of cherishing the brand. Yeah.
Speaker 2:And so I'm not at all surprised that they've sold 500 ish units. That's about as many Mhmm. As I would have expected for 2026.
Speaker 1:Mhmm.
Speaker 2:I actually, I guess if you asked me, maybe would have thought they would have done more. Like to me, this was a car that was so different than the rest of their cars. It serves a wildly different use case. I would have expected their sales targets to be quite a bit higher Mhmm. Simply because when it comes to their really special cars, they make about 500 of them.
Speaker 2:Yep. And so I would have expected at least 500 sales guaranteed. Mhmm. And then you would hope there was a bunch of incremental buyers, people that are like, yeah, actually don't want a Ferrari sports car but I do want a daily and why not go for a Ferrari daily. Right?
Speaker 2:Yeah. So you would have thought that there would have been like 500 for the first year was like my very base case
Speaker 5:Mhmm.
Speaker 2:And I would have expected a bunch more on top of that. Mhmm. So I think they're positioning this as a win. I think people are gonna love the car if you ignore the price.
Speaker 1:Mhmm.
Speaker 2:And but I don't think it's the win that The
Speaker 1:Pope and the Lou Chang's so good. Okay. Three points in response to yours. Two. First point.
Speaker 1:The design is absolutely growing on me. Like, watching these videos here, it just looks way better than when we first saw the the first pictures. And I don't know if it's just distance and I'm becoming more familiarized with it, but it looks a lot better. Even the exterior. I've always agreed on the interior.
Speaker 1:I think everyone agrees on that. But the exterior is looking better to me somehow. I don't know if this is just like I'm getting used to it. Two, yes, there are there are the four d chest Ferrari collectors who are saying, I know I'm not getting pressured but I'm buying one anyway because I think it'll help me jump the line and I'm doing that independently of any pressure that's coming. But there's also just collectors that are like, this is going to be a piece of Ferrari history regardless of if they what if they never make another EV again?
Speaker 1:What if the what if the Luche is canceled next year and Ferrari literally for thirty years never makes an EV? This thing is it's important historically. It's an interesting thing to have in your collection. Yes. And then, there's also just people that are like, I want I'm a true collector.
Speaker 1:I want every possible Ferrari experience. Give me the SUV because I want to see what that's like. Give me the rear the mid engine. Give me the front engine. Give me the the the electric.
Speaker 1:Give me everything. Give me a vintage. Give me a new one. Give me a a road car. Give me a track car.
Speaker 1:Give me I want I want a Ferrari f one car. Like, I'm just I want all of the experiences because I just want to experience everything Ferrari because I'm that deep with the brand. So, there are and are there 500 of those buyers? Maybe. And then and then lastly, the question of, you know, what was their goal?
Speaker 1:I don't see this as their Urus. I don't see this as they were trying to make a mass market daily. I think that they were trying to make a very iconic, very iconoclastic, very contrarian car that was bold and weird and different and it happened to be daily able. And the fact that it is daily able is what is weird about it. Like, they're not known, the brand is not known for being able to be dailied and yet they made one and that makes it weirder.
Speaker 1:And I don't think that they were going after this is something that will be like a Lamborghini Urus which they can sell in mass volume and completely change the profile of their of their sales curve.
Speaker 2:My view is that they I I think those are all great points. Mhmm. My view is that I don't think they should have done a car like this Mhmm. Because I do think it hurts the brand. Mhmm.
Speaker 2:Unless it was gonna drive so many sales that it could make the rest of the cars that they make better. Right? Like what the Cayenne did for Porsche or the Urus does for Lamborghini. Right? This sort of like workhorse product that can fund a lot of the the the the other cars that are more halo cars.
Speaker 2:Sure. And and and so, yeah, just I I don't think it makes sense if they sell 2,500 units other than it solves their sort of a miss European like emissions standards issue. Right?
Speaker 1:Yeah. I do think a lot of people buy a Urus because they want a Lamborghini, but they need a daily. And so they go with that because it says a lot. It's a very bold choice. And I don't think that's the calculus here because you're paying so much more.
Speaker 1:Whereas, I believe the Urus is cheaper than most of the Lamborghini sports cars, whereas this is substantially more than just going and getting a
Speaker 2:Yeah. And Ferrari has a an SUV
Speaker 1:Yeah. That Is cheaper than this.
Speaker 2:Is significantly cheaper Yeah. And it and it is much more desirable to the Ferrari clientele because it has a naturally aspirated v 12.
Speaker 1:Yes. But at the same time, the Purosangue, the SUV that you're referring to, had a lot of pushback when it came out. So did the SF90 and they all look really great now. And so the anti halo halo car theory also holds. But I think it looks good and I think it's going to turn heads in a weird weird way that very few cars as we are collapsing and we're getting to everything is white, everything is gray, everything is black, everything is the same rounded, the can you tell the difference between a McLaren or a two nine six or a Lamborghini.
Speaker 1:They're all sort of starting to look the same like supercars and then there's the whole hypercars, the Batista and the
Speaker 2:Yeah. I'll give you this. I think certain specs of the luche are gonna look they're gonna look funky, but they're gonna look cool. They're gonna stay And they're gonna be a joy to drive.
Speaker 1:I just like that Johnny Ive in the Financial Times, they sent this photo of him looking over. We gotta pull up the go to the go to the Financial Times article, Scroll down to the picture of former Apple designer Johnny Ive who designed the Luche. And he's just like
Speaker 2:He's like, what did I tell
Speaker 1:you? Doubted me? You You doubted doubted we we couldn't sell 500 of these. We did. It's a true it's a true victory lap photo and I love it.
Speaker 2:Yeah. Great photo. Anyway. And I and I can't wait to see one in person. Me?
Speaker 2:I'm excited. Two. Let's not keep
Speaker 1:Tell you about Figma first and then we'll bring in our next guest. Agents, the canvas. Your AI agents can now create and modify your Figma files with design system context. And we have Guillaume Verdon from Extropic. Long overdue, but very excited to have him on the show.
Speaker 1:Guillaume, how are you doing? Welcome to
Speaker 4:the show. Doing great. Doing great. Long time fan, first time caller.
Speaker 1:So So excited to be on here.
Speaker 2:Congratulations. During a massive moment. Massive moment.
Speaker 4:Thank you. You. Good time coming.
Speaker 1:Give us the state of the union on the company and then the news and the deal that's going on, the letter of intent.
Speaker 4:Yeah. I mean, so, you know, at Extropic, we've been pioneering this new form of computing from the ground up called thermodynamic computing.
Speaker 3:Know, our
Speaker 4:whole thesis is that right now everyone is focused on scaling things up, buying more GPUs, bigger data centers. We want to scale things down. We think there's going be a race to densification of intelligence. So we started that about four years ago, which was very early to worry about energy. It sounded crazy to say we're going to run out of energy four years ago, but here we are.
Speaker 4:And so we've reinvented how to leverage a transistor for the era of generative AI. So generative AI, for those not familiar, is a probabilistic algorithm. Right? You're from these distributions of like, okay, if I give you if I type in the word cat, what sort of image do I get out? It's it's kind of random at the output.
Speaker 4:And so that is a probabilistic workload. It turns out you could run electronics probabilistically and at at much lower power, and we pay a huge price to maintain our electronics in a deterministic state. So it doesn't make sense to run probabilistic workloads on deterministic electronics if we're going to pay a huge tax to know the state of our computer at all times. So our insight is if you use very little power, essentially, your computer can operate probabilistically and you can train it directly just like a neural network. And you can map your algorithm that is a generative AI algorithm like a diffusion model directly onto the physics of the hardware.
Speaker 4:And so that's kind of the vision, and it's been it's been a journey, essentially.
Speaker 1:Yeah.
Speaker 4:You know, a year, year and a half ago, we had our our first prototype in in silicon. Yeah. You go. X0. And this one we taped out with with TSMC.
Speaker 4:We've also now done global foundries and that that demonstrated that actually because when you operate electronics probabilistically, you can use far less transistors for these these algorithms. You don't actually need the smallest transistors.
Speaker 1:Mhmm.
Speaker 4:And right now, the reason people have to go offshore is because the best cutting edge fabs are all offshore and they have the smallest transistors. And so what we demonstrate is that in principle, we can manufacture these chips in The US. And that was very interesting to all sorts of folks higher up. And, you know, we we had some conversations and, you know, there's a there's a very strong history of, you know, the government supporting the silicon industry. I mean, Silicon Valley was
Speaker 1:was DARPA. They created the Internet. Right?
Speaker 4:Exactly. Right? And and and now, know, we're we're we're trying to
Speaker 3:go with or I guess, they're going we're going
Speaker 4:with a modern twist where, you know, if the if the the taxpayers are gonna support r and d, you might as well get some upside as well and and get some equity. And so this is what this this announcement is about. It's with the chips r and d office and and, you know, we'll get into it. But Yeah.
Speaker 1:Yeah. In terms of where you want the first applications to be, it feels like different models are maybe sometimes designed around certain architectures. You see certain like GPT OSS runs really well on Cerebras, and then you'll have another model that runs on an NVL 72. It's like rack scale. And then there's other models that can sort of run locally or run on the Mac Mini or Apple Silicon.
Speaker 1:And there's all these different pieces of the puzzle. And increasingly, we're starting to see where, like, voice models might be really good for those to run locally, but some crazy long running AI agent might be fine to send off the server. Do you have an idea yet of where you think if things go perfectly, the first application might be? Like, where's the sweet spot?
Speaker 4:Yeah. We've been exploring a lot of applications. Obviously, the model itself, transformer is a big one. What we found is that and we have a blog post coming soon, I guess it's a scoop here, but we have a blog post coming on on a sparsity scaling loss. If you sparsify your model because our our chips have a sort of sparse structure, so that means sparse is just, you know, for GPUs, they have big matrices, which are these grids, and and basically every entry in the grid is is busy.
Speaker 4:Right? Like, there's there's something going on. Sparse means there's a lot of zero. There's a lot of stuff not going that's not activated. Yeah.
Speaker 4:So our chips are really good at sparse operations. That's not originally what we're designed for, but if you really want to shove a transformer on our chips, you can do it. Mhmm. And if it's sparse, as long as it has the same number of parameters, you could reach the same sort of performance, which is interesting because for us, the flops are much cheaper per watt.
Speaker 1:Sure.
Speaker 4:So even though you use more flops, you get more intelligence per watt. So we have something coming out soon on that and teasing it here a little But overall, we're really interested in diffusion models, you know, models for predictive control, for defense, physical intelligence
Speaker 1:Yeah.
Speaker 4:Signal processing, you know, stuff you would use an FPGA for, you wanna use one of these chips. So, you know, we have RTX as investors for that for that reason and
Speaker 1:similar
Speaker 4:defense primes. Cool. Very interested. Yeah.
Speaker 1:How are you feeling about the retrospective on effective accelerationism? Because it feels like my interpretation of it is that you were 100% right at the time and that class of models didn't really pose any real risk. There was clear need for a build out and diffusion of this technology. But now we're in this like new the last few months, there's been a new discussion over literally slowing down, literally decelerating. It's coming from inside the leading labs, not just like doomers who are outside.
Speaker 1:How have you reflected on what Yak was, its role now, just AI optimism versus pessimism, risk? How are you thinking about all that now?
Speaker 4:Yeah. I mean, originally, I wanted to just bring balance to the force. Was kind of modern culture in Silicon Valley. It was just just the doomer camp. Yeah.
Speaker 4:You know, I was seeing the writing on the wall. If we just had the doomers, then that would eventually affect policy. And and to me, it was a very biased view of the world. And so I think we kind of stretched the Overton window. It was okay to Yeah.
Speaker 4:Say no to do doomers and say that's a ridiculous model of the future, you know, gray goo, foo, and all that stuff.
Speaker 3:Yeah.
Speaker 4:But now, yeah, we've reached a point where, the models are very capable and the EAG view to me is just like viewing the whole world as a complex self adaptive system. And ever since the dawn of time, it's basically been PVP. Every form of life is becoming more complex and harder to predict, and then its adversary has to step up, get smarter in order to predict it, in order to compete. And if you do that slowly, then basically you can have a whole ecosystem and everything's good. But if one one thing becomes much smarter and much more complex than others, then it can kind of control others and that's bad.
Speaker 4:And so I think I think pace stopping makes absolutely no sense. Pacing can make sense, but really it it has to come with a a really strong investment in, for example, cyber security and hardening things because you can't pause things forever. Essentially, just want to be adversarially robust and and I'm all for that, personally.
Speaker 1:Yeah. It is very interesting reflecting on the doom arguments. How they were, like to your point about Grey Goo and Foam, it was not as precise as cybersecurity risk, which some people were calling out, but the conversation was definitely distracted from the more practical, like, difficulties about around slop and, you know, over investing and bubbles and all these different things that that are much more short term that, you know, America will need to grapple with to actually deliver a positive outcome here. How are you is your development process being accelerated by AI?
Speaker 4:Oh, absolutely. Yeah. Yeah. No. Absolutely.
Speaker 4:I mean, we we use all the big big model providers
Speaker 1:Sure.
Speaker 4:In house and we try them all. We have agents constantly running. You know, for us, it's like we have to speed run deep learning. It's like you you teleport back to twenty eleven Yeah. You know, and there's no AlexNet paper, and you have to speed run ten years, fifteen years of deep learning progress as fast as possible.
Speaker 4:Sure. Right? But now you it's like new game plus in a video game. You have all the power ups. You have you have the AI, and so we're speed running progress Yeah.
Speaker 4:Very quickly, and and, you know, we have online learning agents. We're training our own models as well, or post training rather, sorry, as as the cutting edge companies do. And so that that's very exciting to me that, you know, current AI can help bootstrap and and kick start the next paradigm, the next substrate. Mhmm. And going back to the your your comment about the cycle, you know, my my thesis was that, you know, GPUs are not the end game.
Speaker 4:And so, you know, we want to invest in the current cycle, but we should we should hedge our bets. You know, as we saw today with Leopold, RIP, you know, you got to hedge your bets. And I think for all in on GPUs, and we don't invest in the next generation, the next paradigm of computing and have a couple bets there, then when that pops up, you're gonna get wiped out, and we don't want that. And so to me, we're starting the next s curve. We're starting the next cycle.
Speaker 4:I know people are not over the current cycle, but everything is cyclical. But, you know, it's my responsibility to make sure, you know, we can we can have build outs in the future that are that are really power efficient and, you know, it gets you better return on investment on your capital whether it's on Earth or in space. Yeah. Or, you know, at the edge.
Speaker 2:Yeah. It feels like the one of the you know, you've been one of the loudest, biggest voices on on X for the entire time that we've been running the show. We've had a bunch of your posts on the show over the years and it feels like you picked a you picked a product category that just by the nature of it was gonna take time to Yep. Evolve. And I think like, when I think back, it's like the challenge of showing progress.
Speaker 2:I mean, this moment is massive. Right? It's a it's a it's a vote of confidence and and it's very exciting. But everything that it took to get here, meanwhile, you're getting, like, hundreds of millions of views from some of the, like Billion. Billions of of views.
Speaker 2:And I'm curious, like, yeah, reflecting on the last two years, do you feel like you've found the right balance between like you you want to be getting attention and you want to maintain your voice, but you also want to be moving the business forward. And at any point, you know, x and teapot specifically, if they feel like those two things are not balanced, they're gonna, like, pounce and and Yep. You know, take shots and all that stuff. And I know you've gone through that, which is why I'm excited for for this moment to to to but, yeah, how have you processed it all?
Speaker 4:Yeah. No. It it it's been a it's been a journey. It's been a lot. It was despite, you know, allegations, it was never planned to get doxxed and, you know, I knew Oh.
Speaker 4:I was going after a very much a deep tech moonshot that was going to take some time to cook. But, you know, exponentials are slow at first and then they compound over time. Could I have had, you know, a product that, you know, would have had a shorter time to market and and use the heat to make it grow? Probably. But, you know, I I was just dedicated to this this one mission.
Speaker 4:I I I think it's the most important thing I could be working on, and I've been all in since the beginning. But, yeah, there's certainly a tension like building in deep tech where you're supposed to be in stealth, you know, you have Yeah. Nation states trying to reverse engineer technology and you're you're trying to just reveal the the minimum because that's your secrets is are your edge. But at the same time, you want to get buy in, you want to shape people's beliefs like, hey, actually, this technology is here. It's coming.
Speaker 4:Here's a hint. Here's a prototype. Here's a nature paper. Here's this. Here's that.
Speaker 4:Here's some signal. We're going to have a lot more coming up next week, a big announcement Yeah. For z one and and all those products around it, including our stacks.
Speaker 1:I love that framing of new game plus. It feels like there's so many founders from the previous era who grew big like SaaS companies and they're now sort of on new game plus moving a lot faster. It's a great formulation, great philosophy, and thank you so much for coming on the show and breaking it down. Yeah.
Speaker 2:Congrats on
Speaker 3:all the Thanks for
Speaker 1:having Yeah. Great to to you soon. Have a good one. Goodbye. Cheers.
Speaker 1:Let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy web app servers, databases, and more while Railway automatically takes care of scaling, monitoring, and security. Did you see that California startup Satiris unveiled a two meter tall centaur robot designed to enter disaster zones too dangerous for humans.
Speaker 2:There's no way this is a real picture. Sorry.
Speaker 1:Go to the website. Though I mean, Satyres, Satyres, s a t y r e s s
Speaker 2:dot demon robot to go into disaster. Imagine you're in a disaster zone, John, and through the fire and flames,
Speaker 1:you see. Just kill me.
Speaker 2:Yeah. Okay. Okay. I actually am in Hades.
Speaker 1:I'm in Hades of this thing. It says no job is worth your limbs. That doesn't mean a job isn't worth doing. Do you think this is a prank? Do you think this is a joke?
Speaker 1:Or do you think this is a real company?
Speaker 2:I think if it's not a joke Then
Speaker 1:why that
Speaker 2:they gotta go back to the design minds and do something else.
Speaker 1:Human like torso and arms allow for
Speaker 2:On natural pull the website it says this robot is more dangerous than it looks. Like, no, it looks dangerous. It looks very dangerous. I think this was, vibe coded and I don't think it's a real company.
Speaker 1:Well, it's burning up the timeline. People are having a lot of fun with it. Anyway, we have Lulu Meservey from Rostra in the waiting room.
Speaker 2:Let's ask Lulu if she thinks this is a real company.
Speaker 1:Yeah. And the value of rage bait. The value of like fake fake launches.
Speaker 2:Alright. Lulu, please look at this product, this new robot company and tell us. Give us your read. Is it real? Team, can we pull it up?
Speaker 1:Show her the the the Centaur robot that is absolutely
Speaker 7:saw I saw a glimpse of it. This is like the stuff from nightmares. Like imagine that you're It's very and this thing comes to you through like the smoke and the flames. I think you would probably die of heart attack if we could save you.
Speaker 2:Don't worry human. I will protect you. Yeah. Really fascinating. I think I think if they change the head, you know, maybe you could get it a little bit better.
Speaker 3:But still gonna be rough.
Speaker 7:Demon head. Like, this Yeah. Looks like the canonical Satan head when he appears in in form on earth.
Speaker 1:How did this originally hit the timeline? Like, where did this this just came out as if
Speaker 2:Well, the whole world gets their news from prediction markets or media accounts now. So
Speaker 1:I guess. But, yeah, it it it did go out on like a PR newswire. I guess satras robots like pants to answer the question
Speaker 2:No. I'm I'm curious. I wanna have them on now.
Speaker 1:They say the horns are necessary because they place cameras there so they can see the position of all limbs and tools. It gives a layer of redundancy in case there's issues with encoders and on the actuators.
Speaker 3:That's what
Speaker 1:will
Speaker 7:make people like AI more actually. It's that the horns don't have enough cameras. But once the horns are for surveillance
Speaker 2:Yeah.
Speaker 7:Then people
Speaker 1:I will saw come an open letter
Speaker 2:about Yeah. Gave the demon robot a chainsaw and they say the horns are completely necessary.
Speaker 1:Yeah. Yeah. Yeah. What do you yeah. What what what do you make of of the the current startup launch playbook?
Speaker 1:Because there there is a world like, there's all this speculation that Nathan Fielder's working on a new season of the audition with that boy band called Boythrob. Have you heard this, Jordy?
Speaker 7:No. Boythrob?
Speaker 1:Boythrob. So it's this it's a real band, boy band that has been like like detained and they have a whole, but they've been making news but people have been suggesting that like Nathan Fielder is sort of puppeteering the behind the scenes. And I'm wondering how far off we are from a startup just launching something that's like intentionally rage bait or viral and then sort of like pulling off the mask and saying, oh, well, we're at we actually are doing a quadruped. It doesn't look as crazy as this. This was just to, you know, draw a bunch of attention.
Speaker 1:Here's the final design. It feels like that would probably be a rough go because you've signed it. You've sort of violated the trust of the of the audience on day one. But do you think the right founder could pull it off?
Speaker 7:I think it's a really bad idea to just optimize for going viral.
Speaker 1:Okay. Why?
Speaker 7:Because viral comes and goes. What's that?
Speaker 1:Yeah. Yeah. Why? Why? It feels like it's such
Speaker 3:a bad So viral
Speaker 7:comes and goes. Like, it's you're viral for like twenty four hours, thirty six hours, good or bad. You know, I think for Leopold, maybe we could get to that. Like, by next week, people could be saying he's the GOAT again. People are just very fickle and everyone is intensity all the time.
Speaker 7:Five x.
Speaker 2:No. I I do think I do think people under people have this idea of like, if I can just go viral once, then I'll have a big business. And I think back with just building our show. Mhmm. Like, had so many we had some big, you know, moments, you know, you can think of like the the Soham Pariks and there were big guests and there were things like that.
Speaker 2:But the amount of times that we needed to go like moderately viral on X to build our audience was like 20 times more than I would have thought Yeah. That you needed to to build a media business. And so
Speaker 7:Yeah.
Speaker 2:Just trying to go doing something that will get you viral once and sort of a in a shortcut kind of like a almost cheating, which rage bait is like wouldn't call it cheating, but but it's like, you know, it's kind of
Speaker 1:It's edge.
Speaker 2:It's it's kind of Yeah. Close to there. It's just short term and it doesn't actually get you the thing that you want, which is like, they're sustained attention.
Speaker 7:Yeah. Agree with you. But it's also not just about viral versus not viral, it's actually about consistency. So if you are consistent over the course of a year, there'll be times when you go more viral, less viral, there'll be times when there's like some Tuesday afternoon thing that you do that catches the attention of 50 people, but it happens to be that one of the exact right people is among them. You just have to keep doing the same thing kind of forever.
Speaker 7:It's like getting fit. You don't get fit by eating nothing for two days and and and then lifting for two days straight. It's like you just have to go to the gym kind of every day for the rest of your life in order to be fit. And the same thing is true of relevance. Consistency in just keep doing it, it's not a one time thing, but also consistency in like, what are you going viral for?
Speaker 7:It's like Ilya said, what are we scaling? What are you going viral for? Because if it's not going viral for the thing that you actually consider your true identity to be, now you've actually just gone in the wrong direction. Now you have to like over correct back. And so if you are consistent with the story and then with doing it over and over, that's a lot better than trying to put everything into one moment.
Speaker 2:Well said.
Speaker 1:Do you think we are at peak I forget what the word was. I got asked this recently. It was like, are we at peak like transparency in terms of CEO communications? Because we're certainly at peak volume in terms of
Speaker 7:Yeah.
Speaker 1:If I go back and I'm like, oh, I'd love to just like listen to twenty hours of podcasts from Jeff Bezos while he was in the middle of building Amazon. That's not really an option. There might be like a ten minute hit on Charlie Rose and then a four minute hit on Letterman or
Speaker 2:Imagine Steve Jobs on Joe Rogan. Yeah. That would
Speaker 1:be imagine like like Steve Jobs on Lex Friedman for the third time and you're like, yeah, that one I didn't actually get through because it's like now Yeah. We're in hour nine. But I but do you think we're at like peak like maximum amount of just founder content and founder like interviews in terms of just the volume?
Speaker 7:It feels like this should be the peak, but Mhmm. I don't think it is.
Speaker 1:Yeah.
Speaker 7:I think people consider it to be an arms race where now the peak is the new bench line benchmark and bench line. I did I for a fun fact, I learned English from a book called English. So sometimes I still do stumble into like
Speaker 2:on English.
Speaker 7:Did. There's a book. It's called English. I read it, and then I knew English. Like like Neo in the Matrix.
Speaker 7:So forgive. Benchmark is the the the new peak is the current benchmark, where it's like everybody is loud all the time. So if I'm launching and talking, I have to talk more and louder. But to your point, it's very different from actually learning new things.
Speaker 1:Mhmm.
Speaker 7:So I've seen the same CEO maybe go on 10 different podcasts Mhmm. And I still don't know what they're doing.
Speaker 1:Sure.
Speaker 7:Or, like is the sixth podcast marginally useful compared to the fifth? There was one week when, Demis went on like a whole podcast tour
Speaker 1:That's right.
Speaker 7:And this is no shade to Sir Demis, this is like planned around he released a book or whatever,
Speaker 3:but Yeah.
Speaker 7:It still was like, am I gonna get anything new from the six podcasts that I didn't get from the fourth podcast that I already listened to. And each one of these is like two hours. I'm really
Speaker 2:criticism there is like that podcast tour and the book launch and everything coincides with them like completely falling behind the frontier. So now in hindsight, it's like maybe you should have been
Speaker 1:I thought you were saying he there was no Rogan or Theo involved. Because that was the real Yeah.
Speaker 2:Should have done Theo Vaughan.
Speaker 7:He's more Theo.
Speaker 1:Yeah. No. I I would do but do do do you agree that if you're advising a founder and the choice is between 10 tech podcasts that are going to ask roughly the same questions or 10 varied podcasts where one might be cultural, one might be more political, one might be business, one might be finance focused, one might be technology focused, that having more of a breadth. Because I there was a moment where the CEO started going on Rogan and Theo and I was like, oh, this is so fresh and different. It's just a very different conversation for them to have.
Speaker 1:It's not the same as a door cash or like a serious interview, but it just shows Yeah. Me a different side and I like to see how they interact. Not every CEO is set up for it, but how would you solve that problem? Yeah.
Speaker 7:So I I would approach it from the obverse, like almost the opposite of what you said, which is if you have five podcast opportunities in front of you, or five whatever publicity opportunities, and they're all different. Think about who do you actually need to reach? Like what is the best use of your time? Mhmm. And if you don't need to reach the general population, if you don't need to show some fun side of your personality, then it's less about finding a way to show your range and it's more about focusing on what do you actually need.
Speaker 7:Instead of doing five podcasts that are all different, just cut the other three.
Speaker 1:Mhmm.
Speaker 7:The three that are either duplicative or are reaching people that you don't need to, literally just don't do them. I I think, CEOs need to be thinking about what is like minimum viable effort where I can get my vision and persona and build trust with the people that I need to Yeah. Without actually going on a press tour. Because at a certain point, the same way that it wastes my time to listen to the fifth podcast, it wastes you, the CEO's time to do the fifth podcast. Because the marginal value of one hour of your time, there is like $30,000 or more.
Speaker 7:I mean, what's an hour of a CEO's time worth? Right?
Speaker 2:Push that I back is I think the reason that you see some CEOs once they just get on this podcast treadmill and then it's like every week new episode Yeah. Is when you actually think of if if it's a virtual recording and they're using one hour of their time and even if all that happens, let's say the podcast is like decent size, right? Yeah. Like top 25 tech podcasts in the world. Mhmm.
Speaker 2:If you have a 100 customers or potential customers that listen to that, I would argue and they'll listen to the whole episode, I would argue that it is like well worth the time to go on Yeah. Even if that's the only That's why that's why you end up and it's like it's it's unless you're in a period where it's like you actually don't wanna share anything, then I think every incremental progress is like is it a better use of is it a better use of time for the CEO to talk to like a warm lead, you know, that's just coming in, talk to your customers? Or talk to a 100 customers and they listen to you talk for an hour in this sort of like passing sales, or passive sort of like sales motion. Right?
Speaker 7:Yeah. See, that's very true. And I agree with you there. And the difference is we're making the assumption that it is one of the top podcasts that your customers are listening to and you're saying something that is gonna be worthwhile to them. That is an amazing use of time.
Speaker 7:Because you use one hour or maybe on TBPN, you use like twenty minutes if you're a busy CEO and then you get clips and clips and clips out of it and you just were able to amplify the equivalent of having a thousand meetings into this setting where someone is able to to pull better responses from you than you might have been able to give on the spot. That's true. Mhmm. But what a lot of CEOs also do, and and founders in general, is just try to maximize her volume at any cost. Mhmm.
Speaker 7:And that leads to going on a podcast that nobody listens to.
Speaker 1:Sure.
Speaker 7:Going on a show that is actively detrimental to your vibes.
Speaker 3:Mhmm.
Speaker 7:There are shows where it's net negative. It's not just a waste of time, but you literally leave with a worse reputation than if you hadn't gone on there. Or, just being boring, wasting people's time, or you're making people angry, and you're building a brand that you actually don't want, and now you have to put in extra effort to unwind the brand and walk it back, versus if you had just been more focused in the first place. Mhmm. So I think that optimizing for volume and sheer quantity leads you down the road to all of these perils.
Speaker 7:Whereas if you're just focused from the beginning and say, here are the things that matter to me. Here are the podcasts and shows and venues that I actually respect and people listen to. I'm gonna focus on those. That's a better use of your time than just to go like hungry hungry hippos with it.
Speaker 1:Yeah. It's also sometimes cool when the CEOs are sort of like, I don't know, like almost king making a little bit where they jump onto a show that hasn't hit that inflection point before it's obvious and they take the risk of going on some small show and then that show blows up and you're like, wow, that that CEO went on that show that early. That's crazy. They took a real risk.
Speaker 7:Yeah.
Speaker 1:I think Elon did this with Lex very early and there were there there's a whole bunch of other examples. But You
Speaker 7:know who loves doing that? Brian Armstrong loves doing that.
Speaker 1:That's right.
Speaker 7:And he he went on p TBPN when you guys had already blood like this wasn't
Speaker 1:company CEO, first Fortune 900 CEO. He was very very early. Anyway, it's huge.
Speaker 2:It was we it was probably not in the first like 100 or 200 guests. Yeah. But definitely, I I think you're right that it was the first
Speaker 7:for other public company CEOs to be going on there. A lot of public CEOs are so risk averse that they're like me. If Satya and Jensen have done it, I'll don't even bring it to me. Yep. Brian just never asked these questions.
Speaker 7:He just asked, do I like this thing? And so TBPN wasn't that early, still a nice milestone. But he went on this one podcast called Pod of Jake.
Speaker 1:Oh, Pod of Jake. By a
Speaker 7:guy called Jake. Yeah.
Speaker 1:Yeah. It's a great show.
Speaker 3:Great name.
Speaker 7:50 listeners and he just liked it.
Speaker 1:Yeah. No. No. No. No.
Speaker 1:That's so cool. And Toby Luecky did that too with like some Starcraft podcast, which was like crazy. I was like, this is selection. This is taste. I know that like, you know, he was involved in this.
Speaker 1:This wasn't something that came through a committee, which is just so refreshing. Did The opposite of volume and and the spray and pray do every podcast is is like just being mysterious and having aura. Do we need to move to I think of Jeff Bezos does it very well. Jack Dorsey does it very well. Ilya Sotskyver does it very well.
Speaker 1:Do we need to move from a world for certain CEOs where instead of media training we're doing mystery training where we are coaching them to be mysterious and have high or is that possible or is it innate with those people?
Speaker 7:It's innate because people who are too thirsty for attention cannot help themselves. Like, you can tell them, I have coached founders to do less and there are some people who cannot be held back because they get excited and that's okay. You can be a very respected, excited, public facing archetype.
Speaker 1:Yeah.
Speaker 7:But like what Ilya has cannot be taught and in fact, if you tried to coach him to be the opposite, that wouldn't
Speaker 1:Yeah.
Speaker 7:And Leopold is in the category too, where there are people who just are a certain way and then that reputation gets out and it benefits them. Mhmm. But this is why it's such a mistake for CEOs to try to copy another. Because if you just say, I wanna copy Ilya and I wanna be able to have a five word tweet that gets 10,000 likes and everyone has ahs and whatever. Well, you can't because you're not him.
Speaker 7:You have to make this new thing that suits you.
Speaker 1:Yeah. Yeah. Yeah. It's always funny when when his tweets get completely taken out of taken out of context and people will be like, wow, like this is about ASI. It's like actually Yeah.
Speaker 1:He's just happy about his family or something like that. I'm sort of
Speaker 2:I'm sort of inclined to try to workshop some some ideas. Let's do it. If if we were doing comms for situational awareness Okay. What's the next move? It's interesting situation
Speaker 7:Yes.
Speaker 2:Because he was very very quiet. Right? He basically had like a couple podcasts
Speaker 1:a Literally billion dollar just one.
Speaker 2:A billion dollar PDF and then went on the most insane run, all of his predictions coming true, you know, vindicated and then total annihilation
Speaker 1:Mhmm.
Speaker 2:In a very short period of time. I think that one, I think he's gotta start kinda shitposting a little bit. Like
Speaker 1:You're gonna advocate for the SPF, like what? Parenthesis.
Speaker 2:Think it worked for I think it worked. Well, one, SPF was different in that
Speaker 1:Yeah. Yeah. Yeah.
Speaker 2:In that he was very he was always talking a lot. Yeah. This is like wildly different because he's been effectively silent.
Speaker 3:Mhmm.
Speaker 2:And to come back, you know, maybe after the wedding and say, what did I miss? You
Speaker 1:know? No.
Speaker 2:No. I just I I think that he's clearly brilliant. Yeah. He I think is from everything I've seen, will probably be an incredible venture investor. Yeah.
Speaker 2:He'll probably Well, minus
Speaker 1:leverage, he's just correct. Like, minus leverage, his his whole thesis is correct, so. Like Yeah. Everything went up. It was just the leverage thing.
Speaker 2:Yeah. And when
Speaker 7:he should not do that now is start doing things differently. Sure. Because when people change how they operate, it shows that they're in a crisis. And obviously, it wasn't a good day.
Speaker 1:Yep.
Speaker 7:But there's a difference between market movement, portfolio management Mhmm. Versus repudiating your underlying world view and your underlying long term thesis. Mhmm. And so, couple couple thoughts on my end is like, one, going direct doesn't mean you just have to tweet into the void or to the public. Going direct can mean picking up the phone and calling your LPs.
Speaker 1:Mhmm.
Speaker 7:And the people that matter to him most today and always are the LPs. So if he can call the LPs or if he already has
Speaker 1:Yeah.
Speaker 7:And make sure they understand two things. One, that day to day market movement and portfolio management, even in pretty extraordinary circumstances, don't change the underlying thesis and worldview. And that his vision for what happens in AI still stands.
Speaker 1:Yeah.
Speaker 7:That's one. And two, is that he has this kinda hidden jewel of his portfolio in private companies. This is an unusual thing that he does that he has access to, and that what is happening in the public market is actually the peripheral padding around this really interesting core of his private investments. Now people know about Anthropic, but he has all these other private investments True. Yeah.
Speaker 7:That are super interesting that haven't even really hit their peak at all. And so if his if his employees and LPs know these two things, then I think it's like weather Twitter for a little bit
Speaker 1:Mhmm.
Speaker 7:And then come back and two weeks later, some other thing will happen and people will be like, he's the GOAT again.
Speaker 2:Yeah. And I also think that I I don't know about institutional LPs. I don't know about that whole world. But I think knowing a lot of the a lot of the, like, you know, founder types that are just allocating a very small amount of their portfolio to situational awareness. I think they give them another roll.
Speaker 2:Roll the dice Yeah. Personally. I think after that run I think after that run a lot of them would be like, yeah, I'll I'll just whatever I got out I'll I'll I'll let it I'll let let it it ride kind of Just because again, it's not like the underlying thesis has ever been wrong. It's a timing thing. And if you're just thinking of it as like, yeah, basically like, you know, high stakes gambling
Speaker 1:Yeah.
Speaker 2:Then why not keep rolling the dice?
Speaker 1:You've been through this, I think loosely. I mean, you've certainly seen Scott Wu, Cognition come in as sort of the savior in a messy situation. And we were talking to Martin Screli about this where Ken Griffin is starting to play this non bank role of of backstop lender of last resort. This was a situation where the liquidity crisis could have bled into the big banks, Goldman Sachs, Morgan Stanley, JPMorgan. It did not.
Speaker 1:It stayed within the the shadow banking system of of Citadel. And it's interesting because it feels like what Martin was saying was Ken Griffin is is beginning to position himself as like the next Warren Buffet. In a crisis, he can be the lender that brings stability to the market. The market is up. And I'm wondering about your advice for founders who are fortunate enough to be in the situation where they are rescuing another founder, another business, a market even in this case.
Speaker 1:What is the right communication strategy where you are reassuring the world with Scott? It was the, you know, the the social contract in Silicon Valley Yeah. Tim Griffins.
Speaker 7:One year ago.
Speaker 1:One year ago. Right? But at the same time, don't want to take too much of a victory lap and and and rub it in everyone's face and you don't want everyone to believe, oh, well, like, you know, maybe I can actually go and, you know, screw over all sorts of founders because Scott Wu is always going be around to save the day. So how would you balance that?
Speaker 7:So the the highest aura move is always to just chill and not make a big deal out of it. You know, like when you when you see someone dance a little too much after getting a touch it's like,
Speaker 3:this is
Speaker 7:someone who's not used to getting touchdowns. This is a big deal for them. Is this their first ever touchdown? Yeah. But for the people who kinda like do a little something and move on, then you realize that they're just this is just part of their day.
Speaker 3:Yeah.
Speaker 7:And so, I think one, just not getting over excited as if this is the best thing to ever happen to you by sheer luck.
Speaker 2:Mhmm.
Speaker 7:Two is, I think a classy way to approach this is to stand up for principle or to stand up for the other party. Mhmm. So in the case of Cognition Windsurf, Scott's instinct was to protect and stand up for Windsurf employees as opposed to, some big treatise about here's why I did this and I I I. Yep. It was all about here what windsurf employees deserve and by the way, you're not appreciating how talented this group is.
Speaker 7:Was all about defending them and about the social contract. I think for for Ken Griffin or anybody, the best move here is like defend the principle, defend the people that you're trying to help and then just don't make a huge deal out of it and be chill.
Speaker 1:Yeah. Well said. And I and I loved that when when Scott put that announcement video together, he was there alongside with the team. It was not all about him. Of course, that's his nature.
Speaker 1:He's a very humble person. But Yeah. The the the the it would have been very easy to just say like, oh yeah, like we can only schedule Scott for this video and that's not what happened and it was intentional very clearly which was great.
Speaker 7:One thing I'll say, there's one thing that I've learned from Yeah. Sheryl Sandberg. Mhmm. I've I don't know or I've never met her. Yeah.
Speaker 7:I didn't read wait. Okay. Here's here's what it is. When I think that I'm gonna super duper hate a book, sometimes I'll read it so that I can hate on it with more credibility. Yeah.
Speaker 7:So like I thought I would really dislike white fragility and Between the World and Me, so I made sure to read them so that when I hate on them, nobody can rebut because nobody's read those books. Yeah. And so I thought I would super hate Lean In, so I read it.
Speaker 3:Mhmm.
Speaker 7:And it was okay, but there was one part of it that was actually really useful. And she was saying this in the context of women have to do this, but actually it's just anybody. Mhmm. And what she said was, if you are advocating for yourself and defending yourself, that gets totally discounted because it's just self interest. But if you are able to do that on behalf of someone else that represents what you want, represents what you believe in, or principles that represent how you want the world to work, just that small shift allows you to go really hard on being full throated about them in a way that doesn't get discounted for self interest.
Speaker 7:So same for like any founder who's standing up for another person or for an ID or anything else.
Speaker 1:Yeah. That makes a lot of sense. Well, Jordan, anything else?
Speaker 2:There was a interesting comms crisis and resolution that happened effectively in the last twenty four hours. I don't know if you guys saw it. The founder shared out a picture of someone getting a tattoo. A tattoo. We told everyone that would get a tattoo of our logo.
Speaker 2:We got a company. I'm not a big fan of logo tattoos
Speaker 1:Yes.
Speaker 2:In general. There's a few that I might consider myself, but I certainly wouldn't, you know, encourage other people You have to Roman Coca Cola across the back.
Speaker 1:Thought you were gonna do a whole sleeve of the Bottega Veneta Roman weave on your arm.
Speaker 2:Yeah. Exactly.
Speaker 1:A sort of black
Speaker 3:or something
Speaker 2:like that. But that's less of a logo. Yeah. Roman weaves
Speaker 1:It's like if you know, you know Teneventy. Yeah.
Speaker 2:Quiet luxury. Roman no. I I I just saw this and I was like absolutely shocked that someone said this out loud. Basically, founder was telling anybody that got their, again, I think sub seed stage startup tattooed on them, got guaranteed an interview, which just felt like so so wrong. They posted it.
Speaker 2:Everyone was like, wow, did you say this out loud? And then I saw the I think it got deleted, but I saw the correction of like, we're now paying for tattoo removal
Speaker 1:Don't do for anyone that
Speaker 7:No. Wait. No. There's another one. I didn't see the paying for tattoo removal, but he posted this mea culpa tweet that was fully written by Claude.
Speaker 7:Did you see that?
Speaker 1:No. I didn't see that. But I mean the steel man here, I'm not going give you the steel man helmet but the steel man is that there are people that just love tattoos and if you offer certain people free tattoos, they will say yes because they just want as many tattoos as possible. Yeah.
Speaker 2:We don't know. Maybe it was at a tattoo convention.
Speaker 1:I was I I I've seen I've seen free tattoos given out before and people lining up it's don't it doesn't math for me. I'm not in the market but there are certainly people who are just like, yes, I want more ink. I want more tattoos. If there's a tattoo artist here that I don't
Speaker 3:have to pay, sign me up even if they
Speaker 1:get something silly. But, yeah. What what That's true.
Speaker 7:There's like Cyan with her androil tattoo.
Speaker 3:But the but the she's
Speaker 1:a shareholder.
Speaker 2:Anderil didn't say, like, we're not giving you the allocation unless
Speaker 7:give you allocation if you get the tattoo. That was the thing. It's like, you're you're are you maybe exploiting desperate job seekers? And also
Speaker 1:Yep.
Speaker 7:Do you not have a different and better bar for whom you want in the company as opposed to the people who make the most rash poor decisions in the moment? You're like optimizing for people who can't decision make to advance in your interview round.
Speaker 1:Yeah.
Speaker 5:So I
Speaker 7:I it it obviously wasn't great, but I think the real crime was the cover up which was in this case
Speaker 1:Yeah. It's Slot. A sloppy.
Speaker 7:Sloppy. Don't know if if that's still up there but it was a sloppology.
Speaker 1:Rough. Well, good luck to them. Hopefully, they live and learn and hopefully those folks who didn't want the tattoo can get it removed smoothly. And thank you so much for coming on the show. Always
Speaker 2:great to talk
Speaker 7:you. Thanks guys.
Speaker 2:Always great to you here. Talk soon.
Speaker 1:Have a
Speaker 3:great week. Cheers. We'll talk to you soon.
Speaker 1:Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Up next, we have Michael Kim from Sundana Capital.
Speaker 1:He's the founder, and I'm very excited to dive into your story. Welcome to the show. Michael, how are you doing? Thank you. Great to be here.
Speaker 1:Thank you so much. Great have you. You mind taking us through a little bit of an introduction of yourself, your background, and then what you're doing today to sort of set up the conversation?
Speaker 8:Yeah. So I set I started Sendana in 2010. It was specifically to focus on seed and pre seed stage funds. Mhmm. The thesis was that these new, you know, suit these super angels were starting to institutionalize and bring outside capital in, guys like Mike Maples
Speaker 2:Yeah.
Speaker 8:Steve Anderson, Michael Dearing, Jeff Clavier. And so we were very early in identifying seed stage investing as becoming de facto early stage investing. And so, you know, it took me eighteen months to raise the first fund in 2012. You know, today, we have almost 3,000,000,000 under management. Our LP base is largely US endowments and foundations.
Speaker 1:Yeah.
Speaker 8:So, you know, we feel like we've we are now, you know, solid LP focused on very early stage venture. And, you know, a a lot's changed, and we can get into that. But, you know, overall, we are convinced that early stage investing is still the way to go in this world Yeah. Of AI.
Speaker 2:Do you think that if you look back, you you weren't even thinking big enough about how much the category would emerge? Because like clearly the initial thesis was right. But in some ways, it feels like early stage venture has gotten bigger than anyone really could have predicted.
Speaker 8:Yeah. I mean, back then, there weren't opportunity funds. People weren't standing up SPVs. You know, I spent time with Josh Kushner when he was raising his first fund. He was talking about, you know, ultimately running billion dollar funds.
Speaker 8:We were a little bit too disciplined perhaps where we didn't. We really wanted to have people play in the sandbox of seed, and so did not invest with Josh, did not invest, you know, in Ribbit, Mickey Malko's fund, you know, that's like a 50 x fund. So, you know, I I think perhaps I was a little bit limited in how I was thinking about it. So exactly, you know, should have thought bigger. But, you know, the market's grown obviously, and there are probably 2,000 seed funds now.
Speaker 8:And Yeah. You know, we're investing out of relatively large vehicles.
Speaker 1:So, I mean, 2,000 seed funds is is so so so much smaller of a pool than the broader startup the broader startup ecosystem. And I'm wondering about what the day to day looks like if you're familiar with the venture capital fund that might be having a founder stop by the office every hour, on the hour, every day of the week and then partner meetings and they might be taking thousands of meetings over the course of a year. What is your firm's day to day? What does the heartbeat of the firm look like?
Speaker 8:Yeah. Well, you know, just to give everyone a sense of how we invest, we want to be the lead investor. So we're the largest LP in over 80% of our funds. So we work very closely with our fund managers. We're always on WhatsApp.
Speaker 8:We're talking to them. We do monthly calls.
Speaker 1:Mhmm.
Speaker 8:I would say also one way to think about this is, you know, it's similar in in early stage versus late stage investing. Late stage investing, there's a a finite set of companies that, you know, investors want to be in. At the earliest stages, there's an infinite number. Right? Because new companies are being started every day.
Speaker 8:Yeah. So that actually transfers as well or translates to what we do. There are always new funds being created, Whereas, like, if you look at the Sequoias and Excels and Index and Founder Funds of the world, that's a finite number that LPs try to get into. Mhmm. Whereas, we're actually discovering new fund managers.
Speaker 2:Sure. Sure. How many great new seed funds are born every year? Is it like two? When when you think about when you think about like venture investing, when you look back throughout history, there's like very small number of companies every single year that really matter and you you gotta get in those companies.
Speaker 2:And then if you look at all the venture investors that actually break out and build big platforms or just deliver really great results year over year or fund over fund, a lot of them got into those 10 companies. And sometimes all it takes is really getting into one in a significant way, and that's what allows their career to blossom. But I'm wondering when I when I you know, we have six companies a day on to announce fundraisers, probably on average, sometimes sometimes a little less, sometimes more. And venture feels so competitive, but when I really narrow in and look at the seed market, like true seed practitioners, it actually in some ways doesn't feel that competitive because I can kind of clock these sort of rising stars and I just know like I have a good intuition like this person is Yeah. I don't know if they're gonna back, like, two out of the 10 next breakout companies, but I know they're gonna back at least one, and they're gonna break out.
Speaker 2:But I'm curious how how you view the market.
Speaker 8:Yeah. I mean, with the fund, obviously, you get 20 to 30 shots on goal, and the idea is that we're indexing on fund managers that have access to amazing founders. And, you know, one good example of that is Neo. You know, Ali Partovi. You know, he was the first check-in the cursor.
Speaker 8:Yeah. First check-in the Kalshi. Yeah. He has Cognition. He has Deal.
Speaker 8:He has Ramp. You know, amazing track record, but he had a sourcing engine. You know, he was created he created this Neo Scholars program, so he was going to Harvard, MIT, Stanford, CMU, all these different places to identify the top CS students.
Speaker 1:Mhmm.
Speaker 8:And, you know, I think right now, we've been investing along this thesis that there's an arms race for younger founders, and part of that is AI native companies, small teams can actually generate substantial revenues, so the next round is actually a growth round.
Speaker 3:Mhmm.
Speaker 8:And so, you know, that actually translates to our some of our fund managers that really focus on finding young founders. So, like, a good example would be Carlo and Coco at a fund called Nova, and they spend you know, they're they're 25 and 23 years old. Their third partner, Henry, is 19. You know, they spend a lot of time with kids in in college. We have Corey Levy at Z
Speaker 5:Fellows who's,
Speaker 8:you know, all over the college campuses. And, you know, Josh Browder.
Speaker 2:He's Yeah. Yeah.
Speaker 8:A Thiel Fellow, and he, you know, he he's on the selection committee, so he gets access to this. So you're absolutely right. It it's always venture is a power log game.
Speaker 1:Mhmm.
Speaker 8:I think with fund investing, they have more shots on goal. Mhmm. And the other element that dynamically is that, you know, one fund may be good, but the next fund actually might be better. Mhmm. And so, multiple layers.
Speaker 8:And so, what we have to do is track who are they investing in, how these companies are performing, and then decide whether we continue on with with them or not. And, you know, Neo is an is a very good example of one that we have continued to invest in since fund one.
Speaker 1:You want to be the anchor LP in a new fund, you're excited. What does it actually take to win that allocation? Is it different than winning a seed stage venture round for a startup? Are you identifying value add or or strategic advice? Like what are the what is your pitch to new fund managers?
Speaker 2:I imagine it's like Signaling. Yeah. There's way less scarcity and there's way less urgency. Right?
Speaker 8:That's absolutely correct. Yeah. I mean, funds are raised over a period of time. They're not raised over in a in a week, so there's not competitive term sheets, etcetera.
Speaker 1:Yeah.
Speaker 8:You know, I think one of the things that we benefit from is that we know what we want. We know what to look for. We have good pattern recognition. So, like, with Kirsten Green, her first fund, 40,000,000. You know, we committed we were the first to commit.
Speaker 8:We did 10,000,000, and, you know, and she was off to the races. And I would say that, you know, because, you know, of the sixteen years of pattern recognition, we we kind of know what we want in a fund manager. And, you know, again, it's indexing on people who have amazing access to tremendous founders. Obviously, we want to see some picking ability or proven picking ability, so we've never invested in a first time investor, but we've invested in plenty of first time funds. And then I think, you know, we we think that networks and shelf and domain expertise have a shelf life.
Speaker 8:So you could have been like the VP of whatever at Google, ten years ago. That's not as relevant today. And unless someone has hustle, and they're building on those networks, and they're and they have the intellectual curiosity, you know, I think that's what we also look for. It's sort of like the it factor.
Speaker 2:Yeah. Are you are you so maybe to try to repeat it back to you, is like volume of deal flow and access your preference over like just raw picking ability? Because when you think of like z Fellows and Neo, sure they clearly can pick great companies, but it's also they just have like insane They have insane access. Right? They've built these sort of like pipelines of of Right.
Speaker 2:Talent. And that feels almost easier to bet on, but then you have other investors who just clearly know how to pick winners. We have a buddy who like, I think the first two companies the Ever Angel invested in like both became unicorns and so he has like, clearly has access and picking ability.
Speaker 1:Yeah.
Speaker 2:And a little and a little luck, but you definitely need that as a as a VC.
Speaker 8:Yeah. I mean, luck is definitely part of it, but you got to be in the right rooms. So we're investing in this one guy. He worked with Matt Freeman and Daniel Gross. He's a very smart person.
Speaker 8:I can't mention who he is because he's still fundraising, but, you know, he's someone who has the intellectual curiosity. He's seen what great could look like. He's learned from really good investors, and he's in the right rooms. Now, do we know if he's going be an amazing fund manager? No.
Speaker 8:But, you know, he's got the the ingredients there. You know, and to your point, you know, because there are so many companies being formed, you've got to be able to have some sort of competitive advantage, some sort of discernible edge in finding these and accessing these founders. You know? And and so Carlo and Coco, for example, have that. They have the hustle.
Speaker 8:They're in the right rooms. They have the right access. Not only just at the founder level, but also, you know, like with Sequoia and the downstream capital.
Speaker 9:Mhmm. Jordan?
Speaker 2:Do you how much do you value if someone's a former founder? Because a lot of people like to talk and say, oh, yeah Yeah. Former founders make make such good investors. But but when I think about it, some of my favorite investors across stages have never started a company. They've never had a job other than, you know, just just just looking at, like, deals and trying to pick good ones.
Speaker 2:Yeah.
Speaker 6:And Yeah. That's
Speaker 8:For sure. Like, Mike Moretz, right, legend, was a journalist.
Speaker 1:Yeah.
Speaker 8:Right? And Bill Gurley, he was an equity research analyst. But I I will say at the earliest stages, a lot of our fund managers are actually ex startup people or operators. And that's because, you know, if you're a founder, you want someone who can actually help you. I know it's a total v VC meme that, hey, how can I help you?
Speaker 8:What kind of value can I add? But I think at the earliest stages, they do founders do want that help, even the best ones, although they probably don't need as much. But if you look at late stage investing, there are typically ex investment bankers, consultants, and lawyers. So there is some sorting, and I do see we we do see a lot of ex founders. We actually have current operators.
Speaker 8:Like, we're invested in a mods fund, know, CEO, founder of Mercury. And that perch gives him really great perspective, and he's a founder magnet. People want to work with him.
Speaker 1:Yeah. Can you give me a little bit of history on how venture capital alternative investments became attractive to LPs, endowments, universities? We often talk briefly about the Yale model. How real is that as a story that gets told? What were the other key turning points in endowment sort of waking up and starting to allocate towards venture capital?
Speaker 8:Yeah. I mean, David Swenson, Yale legend, you know, he obviously pioneered the endowment model of having significant exposure to private markets. I think 60% of their endowment is private markets, including private equity, but
Speaker 1:Yeah.
Speaker 8:I think 25% alone is to venture. And, you know, you mentioned a word that I think describes venture. It's it's about stories. Right? I mean, if you think about asset allocation and, like, oh, you know, small cap value investing or, you know, these public funds, the standard deviation of returns is pretty tight.
Speaker 8:In venture, because of what we just talked about, you know, power law, you know, a handful of companies can do generate most of the returns. And so, you know, I think a lot of endowment and institutional LP types get attracted to those anecdotes. You know? I think, you know, for for for kids, you know, the Facebook movie actually inspired a lot of people not to just go down the Goldman Sachs, McKinsey path, but try to try to do something new. And so, you know, it is it is narrative based.
Speaker 8:It's anecdote based, but when it hits, it really hits. You know? I mean, I I don't think Neil will be upset for me saying this, but, you know, they had 4,000,000 in Takashi. It's worth a billion 5.
Speaker 1:Wow. Seriously. Yeah. That's incredible. Yeah.
Speaker 1:Wow. That's wild. He's goated.
Speaker 2:Going to the Midas list. The another question for you. How much time how much time do you spend looking through a fund's portfolio and trying to apply or understand what your like a real, fair value to different assets? Because as as an angel investor, I've I've done like 70 some odd companies and there are companies out there that I'm up like, you know, ten fifteen x and I believe the company is probably a zero. Right?
Speaker 2:And and knowing the way that the venture game is played, there's a lot of you know, I'm not in the venture business.
Speaker 1:Right?
Speaker 2:Yeah. Yeah. So I don't have to report to anyone. I'm just like, I do it for fun and and I enjoy I enjoy learning from the process. But I know there's venture investors who are out there with in the same exact situation and they're not exactly probably like raising a hand and being like, you know, Michael, like I know I'm up 15 x here but it's I'm probably getting wiped out.
Speaker 8:Yeah. I mean, there's a couple things around that, you know, like all the SaaS companies and vertical SaaS companies in in the 2016 to 2022 before ChatGPT came out, you know, we call those the messy middle. Those are companies that, you know, raise probably at 50 times revenue, you know, maybe at a billion or more. And today, they might have a 100,000,000 of revenue growing 10%. You know, you look at the SaaSpocalypse, you look at the rerating of software multiples to, like, three and a half times.
Speaker 8:You know, those companies are probably, at best, worth 3 to 400,000,000. So the question then becomes, are our have our fund manage and everybody has those companies in their portfolio. You know? But, you know, have the fund managers been proactive in marking things down? We've had fund managers, for the most part, be proactive and mark things down.
Speaker 8:We've had other fund managers that haven't, and we know that those are, you know, unrealistic marks. The other thing that we do, just to give you a sense of this, is when we diligence a fund manager, you know, for the first time, we we are very founder centric. So we'll call, you know, all of the founders that they've ever invested in and really get a good sense of, like, you know, can this person help you, or how do they help you? But also importantly,
Speaker 1:and
Speaker 8:this this gets into some of the the inside football, you know, a fund manager has to come to us with a plan. Right? Portfolio construction. We're to invest in 20 companies. We're going invest a million dollars in each.
Speaker 8:What we do is we assess the credibility of that. So if you're an angel and you're getting 25 k into a bunch of companies, that's one thing. But if you're, you know, running an institutional fund and you're saying to your LPs, I'm going to get a million bucks into each company, that's what we want to hear from the founders. So we we run a very founder centric diligence process.
Speaker 2:Yeah. I my my best ever investment is roughly at a 150 x to 200 x right now. And I would love to think about a world where I could have I put 25 k in. I would love to think about a world where I could have put
Speaker 1:A million.
Speaker 2:A million in.
Speaker 8:But Yeah. Like,
Speaker 2:honestly at that time, this was a few years ago, 25 k was the like I was begging for 25 k.
Speaker 1:Right.
Speaker 2:Yeah. I could never go out and be like, yeah, like because there
Speaker 1:was someone else. They wanted to give
Speaker 2:me a million, I turned it down. It was like I was getting the last slug Yep. And I'm very grateful for that. Yep. But but yeah, that that that's
Speaker 1:You got to fight for that allocation.
Speaker 2:It's so interesting to think about think about the paths into into building regrets
Speaker 1:too. Mhmm.
Speaker 8:Like, I I I've I've invested in two of the three best venture returning funds ever. We're not in lowercase one, but I I we're, you know, we're involved with lower carbon now, and I've known Chris Saka for probably twelve years. But the other two funds are Founders Fund two, which I'm in and personally, and also Blockchain Capital two, which is Brandenbart Stevens. So
Speaker 1:That f f
Speaker 8:two is same. Yeah. FF is probably going to be a 300 x fund. I think blockchain capital right now is a 157 x fund and it's on its way to being 250. And Chris Saka, of course, was 204.
Speaker 2:Know, I didn't realize NFF two was that good. SpaceX. It's It's amazing.
Speaker 1:No. It was a lot of fun. Yeah.
Speaker 8:Not having more in those.
Speaker 1:Wow. But yeah, thank you for coming on. Thank you so much for talking about the anti portfolio, the wins, the losses. This is like what makes a great interview. So thank you so much.
Speaker 1:It's been a lot of fun. Yeah. I appreciate it. We'd love to have you back on and talk more about venture, the different landscape, how rounds are changing, how funds Yeah.
Speaker 2:Next time what what I think what we would appreciate because you have a bunch of interesting data is like a regular interview where you're talking about the current actual market dynamics from an standpoint because like Super interesting. Getting that kind of read, all the venture stuff and the venture deployment is you know, a lagging indicator Mhmm. Typically of, you know, LP Yeah. Activity for you know, historical LP activity. So this was great.
Speaker 2:I appreciate it.
Speaker 8:Yeah. Thanks for having me on.
Speaker 1:Yeah. Have a great rest of Have your a great rest of your week. Alright. And we'll talk to you soon, Thank you so much. Let me tell you about Cisco.
Speaker 1:Critical infrastructure for the AI era unlocks seamless real time experiences and new value with Cisco. And our next guest is Joon Sung Park from Similee. He's back. Co founder and CEO with a huge fundraise. June, how are you doing?
Speaker 1:Welcome back to the show.
Speaker 6:Hi, everyone. Great to
Speaker 2:Great to see you.
Speaker 1:It's been
Speaker 2:Dude, you've been cooking. You've been cooking. It must be about a year since I you're
Speaker 1:don't know. It's blown it's blown by, but congratulations. Why don't you give us the news first because it's the first Gong hit of the show. I gotta warm up the Gong and then you gotta tell me what happened. How much did you raise?
Speaker 6:We raised $200,000,000 at $2,000,000,000.
Speaker 1:Thank you. So where is the company today? Take me through the foot print. How big is the company? What really unlocked this new round?
Speaker 6:So the last time I was at TBPN, I believe it was about five months ago. Since then, the company, literally the team itself, has quadrupled. Wow. And one of the amazing things that we're seeing here is the pure market demand. Meservey is a company it's an applied AI lab that is creating foundational model of human behavior where we create models that can predict human behaviors across different market segments in the future in the multi agent simulations.
Speaker 6:And this particular area of study and model is seeing an extreme amount of demand across retail. So we've been working together very closely with CVS, but other Fortune 10, Fortune 50 retailers, but also in finance, in some of the largest financial banks that are out there today, and also in CPG companies and more. So the market demand has been incredible.
Speaker 2:Demand for AI products is insane everywhere, and clearly no different here. How are you grading yourself? Because it sounds like this this feels like the product the kind of product where, like, the value prop, if the product works, is, like, almost too good to be true. Right? Try to understand people's future actions so that you can better serve them as customers and all that kind of thing.
Speaker 2:And I feel like humans wanna believe that, you know, they have free will and like, you know, you couldn't possibly predict my next move, June. I'm too unpredictable. I'm sure you disagree. But like how good how good is the product today and how much better can it get? Like from a from an accuracy standpoint and and and on that, like what what gets a a CVS or one of these big logos confident in your product where they're, like, actually changing their road map based around your data?
Speaker 3:That is a great question. So there's a technical side and
Speaker 6:the market side. On the technical side, today, we may have already seen many models that are trying to be amazing reasoning models. So many of the labs are working on this. So they would go to more core skills of the the world, get expert data in coding, natural sciences, mathematics. These are trying to solve the objective problems in our lives.
Speaker 6:Similarly, it doesn't actually care about any of that. The models that we create are models that are trying to be as human as possible to actually represent the human values, preferences, taste, all the subjective half of human brain. So what we do is we get into partnership with places like Gallup of the world that are amazing at creating a representative sample of human population. And we try to understand what is the real behavior and distribution of our human population. So, really, on the technical side, the success here is can we predict the distribution?
Speaker 6:Can we predict people's behaviors? And can we represent them at the scale that we want? The vision here is to actually represent only 8,000,000,000 people along the way and we're very much going aggressively towards that momentum. And right now, we are representing tens of millions of people as we speak. Yeah.
Speaker 6:So that's the technological side.
Speaker 1:How much And
Speaker 2:Right. Yeah. Yeah. Continue. Continue.
Speaker 1:I have another question, but continue.
Speaker 6:And, of course, on the market side, this technology is now having real impact. So we've been in deployment, so we're obviously a fairly young company. However, the simulation technology has been in deployment some of the in some of the largest markets in the world. And companies are making real decisions. They are usually starting from actually replicating what they know to be ground truth.
Speaker 6:The studies they have run, the behaviors of their customer they are aware of. Now we run them in simulation. We see that they replicate with extreme accuracy. And once they replicate, we go on to test new markets to basically help them test predeployment testing on new markets, new product, message testing, and actually show ROI on those predictions.
Speaker 2:Okay. Very, very cool tool. Sounds like it's working. This feels like the there's there's one scenario here. The the sort of sad scenario is like big companies get access to the crystal ball Mhmm.
Speaker 2:That allows them to just like compound their scale and their growth and their customer bases and and they have access. You're you're building like predictive super intelligence. The biggest companies in the world have access to this. Meanwhile, the like long tail of, you know, Shopify brands and smaller companies are just stuck, you know, guessing. I'm super curious.
Speaker 2:Do you think there's a product to be built that, you know, the the long tail of companies can can leverage to get access to that same intelligence? Because I feel like a big company can afford to spend $20,000,000 launching a new product and, like, swinging and missing. So they have the advantage of scale and being able to take different shots on goal and they have this sort of like base of successful products. Whereas you have a young startup that's just trying to get off the ground and you have maybe one, two shots to make something, you know, thinking about consumer brands. If you're a consumer brand and your first or second product aren't a hit, like, you're probably not around to launch the third.
Speaker 2:So I'm curious about how many people you can get this to.
Speaker 6:No. This is a great question. I would actually look at this as the way to democratize access to people. If you look at how insights really operates today, if you're a large enough company, you have a budget, and you have access to your customers to go after those customers to better understand them, to actually talk to them, get their feedback. But especially if they're a younger company that is small, that doesn't have a big budget, that is very cost prohibitive in many ways.
Speaker 6:Simulation is the way to get access to people in a scalable way. So it is actually a way to democratize this function. You can also think about this from the people's perspective, people who are represented by simulations. There are so many decisions that are being made today where we would love to be able to listen to people and actually see and get their feedback. However, in practice, it's very difficult.
Speaker 6:You cannot actually go talk to millions of people every time you need to make a decision. But if you can create simulations of people, then that is representation at scale. So in the grandest sort of scheme of simile, what we are really trying to achieve is to bring human voices to the rooms where the most important decisions are being made for our society.
Speaker 2:And what does that actually look like in practice? Is that like people are developing a product. Again, I'll use, like, big CPG company. They're developing a product, and they can actually, like, pitch, like, effectively, like like, I'm wondering how much this is, like, text based right now versus actually conversational. Like, can you simulate talking to your customers?
Speaker 2:I'm sure, the y c folks would, would would laugh at this. Like, stop simulating talking to your customers and just talk to your actual customers. But it but it feels like very valuable. You know, there's there's every founder's had the experience of, having a big customer meeting and it either going great or not going great. And sometimes you wish you could have, like, just done a bunch of simulations of that conversation before you actually went into it.
Speaker 2:So what is this actually like, how are people interacting with the product now, and where will they and and what are the other kind of interaction formats of the future?
Speaker 6:Really? Right. So our customers come in and when what they see is an interface that allows them to filter down to a population of their interest. So they can describe the population to be whatever they want it to be. Let's say, male living in California in their thirties.
Speaker 6:And then they can literally ask any questions. That can be a behavioral environmental question.
Speaker 2:What about male male podcasters in their thirties in California?
Speaker 6:You know, you must have guessed. You know, I simulated both of you before coming on today.
Speaker 8:You did that last time.
Speaker 6:Like last time.
Speaker 2:Like, we've had this conversation Thousands. Times.
Speaker 6:Is my thousand first time I'm having this conversation with you all. Yes. Yes. But our customers can literally filter down to any population of their interest
Speaker 1:Mhmm.
Speaker 6:And they can ask questions. It can be survey form, they can also send images, if it's image asset, videos, if it's a video, like advertisement. It can even be a product demo, whether it's a Figma or real website. And our agents will actually traverse through those websites and Figma mock mocks and basically give feedback once they have seen it. Mhmm.
Speaker 6:Now that's how the product is being leveraged today. But one of the things that I also find to be quite exciting is as agent take development goes much more prevalent, the cost of production is going down every single day. Mhmm. Now, the real alpha in that case really is to understand what do people actually care about. We can generate 10,000 variations of this product.
Speaker 6:Which one actually matters to people? So in that way, SIMILI also has an opportunity now to actually inform not just human decision makers but but also agentic decision makers who have delegated power from real humans. So this is done through MCP, API. These are the kind of products that are also getting built instantly.
Speaker 1:Mhmm. Yeah. Oh, okay. Very interesting. Thank you so much for coming on the show.
Speaker 1:Congratulations on the progress. Really, really awesome.
Speaker 2:Yeah. One of the most I love how sci fi the company is but also grounded in in practical business Yeah. Objectives.
Speaker 1:That's a great way to put it. Yeah. It's like very very sci fi, but like then it's like CVS is a big customer and driving actual value, which is great.
Speaker 2:Next time you come on, I'm sure it'll be soon given given Trajectory. Given the trajectory. But I want you before the conversation to predict, you know 10 questions that you think John would ask, 10 that I would ask. And then and then let's let's compare at the end. Nice job.
Speaker 2:I have a feeling you'll be able to like get Probably. At least like 60% accuracy. Yeah. But this is great.
Speaker 1:Well, you so much for coming on the show.
Speaker 2:See you soon.
Speaker 1:Congratulations. Cheers. Talk to you soon. Let me tell you about Shopify. Shopify is the commerce platform to grocery business and lets you sell in seconds online, in store, on mobile, on social, and marketplaces, and now with AI agents.
Speaker 1:And our next guest is in the waiting room already. We have Karan Kunjur from k two space with an amazing update. How are you doing?
Speaker 2:Here he is.
Speaker 3:Good to see you again.
Speaker 2:He's back.
Speaker 1:You're back. Welcome back. Give us the news. The gongs warmed up. I wanna hit it again.
Speaker 5:Yeah. So we just announced a $500,000,000 round. Congratulations.
Speaker 2:So for anyone living under a data center here on Earth, what's going on in space? What's the latest on the space economy? Anything happening? Any big It's true. Any big deals?
Speaker 5:Not that much. It's been a it's been a quiet year. You know,
Speaker 3:a lot of, like, seed stage investments. Nothing much going on in space this year.
Speaker 5:But, no, I yeah. We we we started k two. We wanna build giant satellites. Mhmm. Since the last time we talked in December,
Speaker 3:we flew our first giant satellite. We called the mission Dramatas, if you guys remember. And it's gone well.
Speaker 5:We're a hundred twenty days in. We proved that we could do a lot of really hard things, and, yeah, this round comes on the back of that.
Speaker 1:What was the very first satellite that you thought about putting up in terms of actual use case? Like the if I go back to the very first deck or memo you put together, obviously, there was a vision for building satellites, putting them in space, but were you thinking cameras or Internet or data centers? Or, like, what was the earliest prediction?
Speaker 5:So when we started the company in June 2022, our pitch deck was all about Starship, and it was all
Speaker 3:about, like, building physically what's the largest possible satellite you could build using Starship.
Speaker 5:Yeah. And it was I mean, we
Speaker 3:were we were thinking about data centers. Were thinking about
Speaker 5:orbital fuel stations. We were thinking about giant telescopes, like
Speaker 7:and
Speaker 5:our pitch deck, to show you, like, how wrong we were. We were like,
Speaker 3:oh, yeah. In 2024, we'll
Speaker 5:be using, you know, Starship on, like, a monthly basis.
Speaker 3:Yeah. A little
Speaker 5:bit wrong on timing there,
Speaker 2:but
Speaker 5:Yeah. It's alright.
Speaker 1:And and and those delays, I mean, there there have been delays. Everything I mean, the video of Starship landing that dropped, like, a week ago is incredible. Everyone's like, you know, I can't believe this is in CGI. Are are you are you set up do do you set up your business to be insulated from those delays? Is the overall, like, space economy broad broad enough and diverse enough that at this point, slight delays, everyone sort of adjusts, all the different actors from employees to investors?
Speaker 1:No one really freaks out when there's like a slight delay there because everyone prices it in?
Speaker 5:Yeah. We got fortunate. We had a few very smart people tell us in 2022 maybe don't go full send on Starship. Okay.
Speaker 1:Yeah. Yeah.
Speaker 5:Thankfully. And and so we built we built something that's, like, compatible with Falcon nine. Our our entire business, like, we announced that we also crossed a billion dollars in signed contracts.
Speaker 3:All those contracts
Speaker 5:are tied to Falcon nine. Right?
Speaker 1:That's a big number. So I have heard, I think we've all heard the pitch of lots of small satellites, potentially data centers network together. We've all seen the how well Starlink works. It's an incredible technology and it and it's an incredible technology because it works with Falcon nine. It also works with Starship.
Speaker 1:Is there an actual use case or a world where you see basically the Starship fairing filled with just a single satellite, some huge thing that goes up, stays there, and it's massive, and there's benefits of the scale to that degree.
Speaker 5:Yeah. I think for us at least, we're going use it for proliferation, like lots of big satellites. Yeah. I think there's probably some military use cases that might get interesting where you go even bigger and maybe fewer per per Starship. But for the most part, we're going to stick to
Speaker 3:like, okay, let's put up
Speaker 5:like 50 of these in a Starship and Yeah. Think about how to max out how much power per satellite and power per launch vehicle. Sure.
Speaker 3:Maybe on the telescope side, like, as you
Speaker 5:start to get, like, giant giant telescopes Yeah.
Speaker 1:Things. But even those with the Hubble like you can usually like assemble things in space which sounds Yeah. Even more complicated than anything else but it but it has been done before like the ISS didn't go up in one big piece. It was assembled over time which is remarkable to think about. But congratulations.
Speaker 1:Walk us through the energy density or energy power output that comes from these satellites because there's this big vision that Elon's been very good about laying out. The timeline, you know, who knows, might slip or whatever. But there's this idea of like gigawatts in space. That would be meaningful to the AI inference market. But there's clearly going to be a walk, crawl, run.
Speaker 1:Starlink has a certain amount of power. We've seen that that can work. But what is the scale up and build out of just getting more energy in space before you start running into crazy heating and what the solar capacity can be?
Speaker 5:Yeah. I mean, power drives everything in space. Right? If you think about communications, power drives how much throughput you can put down on the ground. It drives the strength of the signal.
Speaker 5:If you think about compute, power drives how much compute you can host. It is like the fundamental metric that kind of ties every development to. And so, you know, I was telling people, like, four years ago, started this company called the K2 because we wanted to help make humanity a type two Kardashev civilization.
Speaker 1:Mhmm.
Speaker 2:Right?
Speaker 5:Like, one that's able to harness massive amounts of energy. Right? Our hallmark is the Dyson sphere. Yeah. At the time, I had to explain, like, what is a Kardashev?
Speaker 5:Right? Like, nobody knew what that was and now everyone Elon is like, I know exactly what that is. I know how it works. And so for us, like, the whole idea is keep pushing the bounds of power so that we can have even more compute. Mhmm.
Speaker 5:We can have even more comms. And over time, like, every single infrastructure play we're going to want to do in space is going to tie back to power. Maybe a bit of mass as well, but, like, all of those require going built you know, building bigger effectively. Effectively.
Speaker 1:Mhmm. On heat radiation in space, that's been sort of one of the sources of, like, fear, uncertainty, and doubt around the data center in space plan. There's I've seen really thoughtful takes from scientists on both sides. My question is more on where that intellectual property, that R and D will happen. Because if this were fifty years ago, we'd probably be like it will be done at DARPA and NASA, and it will be in the public domain and every company will be able to benefit from it.
Speaker 1:We're now in this world where some of that might happen at SpaceX and that might be sold or licensed. But are you going to be working on that particular technology? Do you see multiple companies creating standards around it, or is it just sort of a horse race between every company where everyone will have their own solution, maybe the best one wins? How will that play out?
Speaker 5:Yeah. I think I think the evolution is going be there's a conventional way to solve the thermal problem even at
Speaker 3:the 100 kilowatt class satellite. Right? Like, you can do it
Speaker 5:with the existing technology. Just an engineering problem more than a a physics or R and D problem. Yeah. Over time, I think we're just going to get more optimal and we're also going to be pushing up power more and more where everyone's going to try the new science. Right?
Speaker 5:And so, I do think you're right. We're going to see a massive amount of capital investment invested in managing thermal and space in a way that was never going to happen in a world where NASA was the only one pushing, you know, the r and d forward. I think it's gonna be pretty cool. I think we'll see, you know, like, how different strategies play out. For now, the next five years, I think it's gonna be relatively conventional.
Speaker 5:Like, there's not gonna be it's just engineering that's, like, solving some problems that that should be solved.
Speaker 1:Yeah. I feel like a lot of maybe it's sort of all hard tech, certainly space companies. They sort of go back and forth between the dual use opportunities. They'll do some government work for a few years while the commercial sector sort catches up, then they'll flip it and all of a sudden the revenue will be 90% commercial. Are you on that sort of roller coaster as well?
Speaker 1:Do you see the company going through phases of, well, we're doing a lot of government contracts, but we ultimately wanna have a big commercial business or vice versa. How do you see the the trade offs there playing out?
Speaker 5:Yeah. We've always seen it as like both. Right? Like, I'm gonna be about fifty fifty in our business. Like, the first big contract we announced this year was a massive commercial contract for 30 satellites that we're gonna deliver in 2028.
Speaker 5:Yeah. The second contract after that was partnering with Androle on on Golden Dome. Right? For us, like, it's the whole goal is to be able to build this, like, super performant platform that we can use for national security and commercial issues.
Speaker 1:Yeah. Yeah. That makes a lot sense.
Speaker 2:Do you think hyperscalers and big telecom companies over time will feel like they need an in house space in a more meaningful way? Like, now, feels like having a specialized partner makes a lot of sense, but then as space becomes a more important part of like, let's say cloud and on the telecom side, it's just like general communications. Like you'd imagine them thinking like, We should try to buy a company like k two because this is too important for us to just be entirely reliant on an external partner. I can see it going both ways, but I'm curious your view on it.
Speaker 5:100% is gonna be a mix.
Speaker 3:Right? If you look at, like, how
Speaker 5:comms and compute happen on the ground trustfully. Right? Like, Meta's rolling out their own deep sea fibers. Right? Yeah.
Speaker 5:You know, Google's partnering with certain neo clouds in a certain way. I think the exact same thing is gonna happen as we take those applications and put them in space.
Speaker 1:Yeah. It is funny looking at the mag seven, I guess, mag eight now, you include SpaceX. Like, if if the question is just, going up high, doing things off of Earth, like Google has the balloon project, and Facebook was doing solar powered planes for a while. Bezos obviously has Blue Origin and Amazon. Not directly linked, but there's a play there.
Speaker 1:And so the the big tech companies are certainly waking up more and more doing deals, but also having stuff in house and outside. It's a fascinating market watching it evolve.
Speaker 2:Yeah. It's interesting to compare launch to just the Frontier labs Yeah. Too. A lot of people realizing like, woah, it's kind of it's interesting not having a Frontier model and and being reliant on another partner. Then on the space side, it's like, hey, we we don't necessarily want just one highly competent launch party Yeah.
Speaker 2:Or sorry, launch, company. Yeah. So And
Speaker 1:we've seen that with Rocket Lab and a bunch of other companies in the space economy. But Yeah. Yeah.
Speaker 5:I think that's the coolest part about this. Right? Like, we're seeing, like, a purely capitalist reason to go invest tons of capital in things like launch vehicles. Yeah. Right?
Speaker 5:Like, that's something that didn't exist five or even ten years ago and, you know, outside of SpaceX. Right? So I think that that's probably, like, one of the most fun dynamics of this whole orbital compute dynamic that's happening now is everybody's like, wait. To your point, hey, launch is just like a, you know, a model and if if I if I'm the only one that has it, I'm gonna be in a lot of trouble.
Speaker 2:Mhmm. Yeah. Yeah. Well, Karan, I I can't stop thinking how you're kind of office studio mugging us right now. We have a pretty big space here.
Speaker 2:That's trust. Have you have a k two space.
Speaker 1:Yeah. It's amazing.
Speaker 3:Go bigger.
Speaker 2:Go bigger.
Speaker 1:Let's go bigger.
Speaker 2:Excited for the next one. Great great to see you, and congrats to the team on all the progress.
Speaker 1:Yeah. Thanks so much for taking the time to come chat with us. Have a great day. Cheers. We'll talk to you soon.
Speaker 1:Let me tell you about the New York Stock Exchange. Wanna change the world? Raise capital at the New York Stock Exchange. Just do it. Stop making excuses.
Speaker 1:Up next, we have Vlad Tenev from Robinhood. He's the cofounder and CEO back for the third or fourth time. Vlad, how are you doing? Welcome back to the show.
Speaker 3:What's up, guys?
Speaker 2:We got new sound effects.
Speaker 1:We got new sound effects.
Speaker 2:Great to see you.
Speaker 1:How's it going? The market's in turmoil. There's obviously crazy news with situational awareness, but how are things going in your world?
Speaker 9:Things have been strong. We announced earnings and we had a really strong quarter. Record revenues, 1,310,000,000. Total platform assets, time high, over $1,000,000,000
Speaker 2:Yes.
Speaker 9:And we had more records on trading, so records again with equities, options, prediction markets.
Speaker 1:Mhmm. And
Speaker 9:we launched Trump accounts as well as Robinhood chain and tokens. We're doing a lot of stuff. I think the thing that I'm most excited about is wrapping everything together. I don't think any company is pushing broad individual ownership as much as Robinhood is. We I think that's important not just for individuals, but also on a societal level.
Speaker 9:You know, I think I think we're in a very fragile spot right now, and plugging more people into owning real assets, giving them more of the upside, more of the benefit could lead to a more stable and prosperous society.
Speaker 1:How difficult is it to actually when you say unify everything, I imagine that there are there are regulatory considerations. There are also just UX trade offs that feel like I don't I don't know. It feels like it's more human taste than AI. It feels like it's not so much like the code that goes into the app, but real decisions about the hierarchy of different products in your app on the website, for example. How much of your time is spent thinking about the, like, the Robinhood super app?
Speaker 1:Like, how you actually design these things? How human is that versus you can sort of AB test your way there?
Speaker 9:We spend
Speaker 3:a lot
Speaker 9:of time thinking about that. And you can't AB test everything, Like you can't AB test the name of the product, the front door, what's on the app store pages. Yeah. So yeah, I'd say up until a couple years ago, we were very much trying to rev up the product engine, putting all the pieces in place. Now we've got so many pieces.
Speaker 9:We launched 13 new products at our previous event, the world is flat, and an increasing amount of time to spend on kind of this coordination and how many apps should we have, the main app, like what goes into it, how do we surface the right things to the right people, how do we push personalization. So yeah, I spend a lot of my time on that.
Speaker 2:How is so we've been in this AI, know, the bottleneck cycle. The age of bottleneck investing is probably not over, but symbolically maybe over with the situational awareness situation today. But something I think that there's a lot of American retail investors that for the first time were was like, oh wait, wanna own this Korean stock or I wanna own this Japanese stock Mhmm. Because this toilet company is in the bottleneck Uh-huh. Path.
Speaker 2:How is that changing? How how you're thinking at at Robinhood? Obviously, you wanna make sure that if invest if there's an asset that investors want to buy, like your job is to make sure that they can do that. But markets are complex and and, you know, all these regions are are quite different.
Speaker 1:Mhmm.
Speaker 9:Yeah. I mean, I I have many thoughts. I think that, you know, we we were hearing from customers that they wanted Korean stocks, right? And so international stocks were one of
Speaker 3:the
Speaker 9:features people wanted, but I don't know, was probably like top 15, top 20, It wasn't one of the top features. And then suddenly, maybe last quarter, every single conversation I would have, people are like, when are the Korean stocks coming? Why can't you bring them faster? And you saw some of them started getting ADRs listed, leveraged ETFs. And I think I had two minds of it.
Speaker 9:One, obviously, we intend to offer every asset. If people want to trade it, we'll offer it to them to trade. But also when you start hearing that everyone wants Korean stocks, it it should raise alarm bells that maybe something could be slightly overheated Mhmm. At least temporarily, which I think is is what ended up happening. I think it's interesting too that Ken Griffin is in the middle of this.
Speaker 9:Lot of respect for Ken Griffin. Just, you know, you can tell he has pure love of the game, loves what he does, you know, maybe maybe in the way that a Pavarotti is, you know, the the art of the opera singer and, you know, Trump Trump obviously make makes deals. Ken Griffin provides liquidity in the most challenging and uncertain of times. So, yeah, him him being in in the middle of this, buying the constitution. Yeah.
Speaker 9:Yeah. I thought
Speaker 2:I thought that was very I view him as like a a a shark, like a very large shark, like a megalodon that has an important role in the ecosystem where sometimes he, you know, is, you know, you maybe don't want to be Well, is just said on by the shark but
Speaker 1:it's like the final boss of tech stories where the constitution, Dow, all all the energy was intact. It was this thing that happens and then at the last second it's like, let me introduce you to Ken Griffin. And then the same thing with the situational awareness story. It's like purely a tech story for, you know, months and months and months and the domain of Twitter and podcasts. And there's like one or two Wall Street Journal articles about it but then all of a sudden it's Ken Griffin at the very
Speaker 3:Yeah.
Speaker 2:How how about a month or two ago there was a like this sort of narrative bubbling that like the West Coast had just like eaten the East Coast and like the East Coast is having less relevance. Right? And you could see this in the performance of all bunch of the hedge funds on the East Coast. You look at their performance relative to Leopold's and you're just sitting there like, you know, what is what's what are they doing on the East Coast? Are they just sort of asleep at the wheel?
Speaker 2:And then, you know, the events of the last twenty four, forty eight hours or at least since Friday have shown that like, yeah, maybe the East Coast like has learned a lesson or two about the way that that markets work in these cycles. And and I feel like Robinhood's been in a position where it's like very much a West Coast company to me, but at the same time, you guys have, I think now, at this point, like, probably more respect than any West Coast tech company for traditional finance and and that whole world. So I'm curious how you was was did you ever kind of, like, buy into that narrative that that tech was eating finance or or did you always see it as just wishful thinking?
Speaker 9:I mean, think certainly there's some truth in that technology which had at its epicenter Bay Area, you know, Silicon Valley has disrupted lots of industries. I never really looked at it as a coastal thing. It's not like, you know, rap music or or anything like that where you're kind of in your neighborhood, you know, offering offering the technology. Everything's fully global.
Speaker 1:Yeah.
Speaker 9:And, you know, I'm sitting here in New York. Usually, I'm in Menlo Park. We've got offices all over the world. New York's probably our second biggest. And now it's it's increasingly global thing.
Speaker 9:I think a lot of these people are a lot a lot of the hedge fund folks are working remotely and now out of California. So I I don't know if yeah. Don't know how much of it is actually Yeah. Location based.
Speaker 2:Well, think part of the interesting story for or, you know, we we were talking with Shkreli earlier and he was like kinda walking us through like, if you're a hedge fund that's getting margin called, like, what that's actually like. And it's like, for being a technology focused hedge fund, it's still the irony of it all and even an AI focused hedge fund, the irony of it all is, like, it sounds like if you're a hedge fund that's getting margin called, you're spending a lot of time on the phone with your prime brokers and you're trying to, like it's not really as much of a technology problem as, like, you're working with a lot of people and a lot of different buyers and there's all this game theory of, like, when, you know, trying to exit positions without letting other funds know that you're you know, it it just seems like this yeah. It's like a very fascinating like
Speaker 9:when the stakes are high, right, it it ends up being down to relationships. Yeah. I think yeah. I I think, you know, algorithms and automated processes are great for the typical case, you know, the 99% scenario, but I think humans still have to get involved at the extremes.
Speaker 2:Yeah. Mhmm. It feels like retail crowd, for the most part is like extremely I mean, it's all just very power law driven. So I would imagine like even though oil has been like a super interesting market this year, it wasn't quite as interesting or didn't have quite as much attention as like the bottleneck trade. And certainly like, you know, crypto has been has probably gotten less attention Yeah.
Speaker 2:This year than than many of the years prior just because it was like, well, if you can buy some stock that's trading at a $100,000,000 and it can go up to 2,000,000,000 in the span of a of a couple months, like, that's what gets people really interested. Is that is that is that is that track with with what you guys are seeing? And like how on on the commodity side, like, what are you guys doing on on that front? Is there a lot more things you can do at the product level or did you had you already sort of established like, is is trading oil on Robinhood as good as it as as it's gonna get?
Speaker 9:Yeah. I think there's there's obviously more we can do. We have great futures trading products. Mhmm. We have a great mobile experience.
Speaker 9:We have a trading ladder. I don't know if you guys have tried it, but it's like very tactile, easy to use, particularly on mobile. Futures business has been growing quickly as well. One of the things we announced this quarter is we've got 13 business lines, so lucky number 13, generating $100,000,000 in annualized revenue or more. So we added two more this quarter, Robinhood Legend, which is our pro trading platform.
Speaker 1:And
Speaker 9:that a big part of that is actually futures because futures traders love the desktop interface and it's just much easier to see the chart and and have the news and and everything all in one place. So Robinhood Legend got to north of a 100,000,000 annualized and the Robinhood Gold Card crossed into a 100,000,000 as well.
Speaker 2:So Yeah. The last number I remember was nine. At some point last year you had nine business lines doing over a 100, so added Wow. Even even more.
Speaker 9:Yeah. Added four since then. Like I I had this analogy that it was like adding cylinders to a high performance vehicle. So now that we're at 13, I'm probably close to needing another analogy. But, yeah, it's diversified.
Speaker 9:I know
Speaker 2:place got the w 16. Or no. Sorry. Sorry.
Speaker 1:It's the Bugatti. Bugatti. Yeah. Has the v 16 now.
Speaker 9:Maybe I've got three more. Yeah.
Speaker 1:Yes. Yes. Somewhat related to jury's question. It's very interesting that when you identified a new product request, Korean stocks, You were just stack ranking it based on customer demand, not really financial volume. It felt very much like when you talk to customers, that's just what they're asking and it's just maybe showing up in forms and feedback and requests.
Speaker 1:And I'm interested in other markets that might sort of pattern match to that where there's a lot of money moving around but it's maybe lower on the priority stack. And I'm interested in how you're thinking about compute futures because that feels like that could be a very big market sort of ensuring data centers and providing some sort of derivatives market on top of compute, which is a massive market. But when I think about it, I feel like some of those big numbers might just come from a hyperscaler who gets an insurance contract from their bank when they go to build a big data center complex. And it might not actually be the like the vast majority of the volume might not be driven by retail at any point in the future. And so I'm wondering how you deal with new financial markets that are going to be big but you don't you don't see a lot of demand from them.
Speaker 1:How do you think about reasoning through how you should play in that market?
Speaker 9:Yeah. I mean, think if we have strong conviction, we'll add it even before it becomes a huge asset class in terms of volume. I think we did that with crypto. You know, we added crypto in 2018, and it was many years of next to no volume until end of twenty twenty when suddenly it just really inflected. So compute futures, yeah, if there's a lot of demand and if people are trading them and if institutions are using them to hedge, of course we'll look to add that.
Speaker 9:I don't know if we're seeing much of that yet. I think the tricky part about that is it's typically a rapidly depreciating asset, So I think those tend to not make for very good markets. But you are in a unique situation where compute on a given architecture tends to be increasing in the short term. Yeah. I don't know how long that'll last, but I I think that's that's rather unique in history and we'll see if it's the same in
Speaker 1:Yeah.
Speaker 9:In the next two to three months.
Speaker 1:Can you take me through a little bit more of the story of the Robinhood Gold Card and how it's changed, how you're positioning it, how it's evolving, what's driving the growth?
Speaker 9:Yeah. So what's driving the growth is a very simple value prop, 3% cash back on all categories, which is much bigger than what you'd get with a typical credit card. Yeah. You know, it's market leading. And so when we find that the best products are easy to explain to your friends, they grow through word-of-mouth.
Speaker 9:And if someone asks you, well, why would I use this credit card? You have a very simple answer, 3% cash back on categories. And of course, the user experience is nice and you have virtual cards and family features and we make it really good around the edges, but I think the the clear reason that's easy to explain is is a big part of it. So we're now at above a million cardholders with the gold card. I mentioned earlier a 100,000,000 in in annualized revenue for the card business.
Speaker 9:And last week we started rolling out platinum. So we have
Speaker 1:There we go. Hey, guys. Yeah,
Speaker 9:platinum. Yeah, we've got like a growing card portfolio. I think the platinum card is really really good. Mhmm. We If you haven't checked out the website, really just sometimes I just scroll through the website and look at all the great things that we're offering.
Speaker 9:The Platinum card is a highlight, I think.
Speaker 1:I love it.
Speaker 2:Robinhood Social. What's the latest there? I've been seeing some screenshots. It's already providing a lot of entertainment even for people that are not using the platform yet. But how's it going?
Speaker 9:Yeah. I've I've seen those too. Yeah. Yeah. Yesterday was was a big day.
Speaker 9:Yeah. So Robinhood Social is something I'm really excited about. It's growing. We're rolling it out. It's not out to everyone yet.
Speaker 9:And the reason for that is we've just been iterating on all of the details. Building a social network from scratch is pretty complicated, right? There's a decision about what type of content you want to allow people to post. And at first we started with only trades and we came to the conclusion maybe that was a little restrictive. You want to give people a little bit more freedom to post charts and things like that, to post comments, maybe news stories, but you don't want to give too much freedom.
Speaker 9:So we've been iterating heavily. We just added politician trades as well, have been doing quite well. And, yeah, now you're starting to get to the point where you have legitimate influencers on Robinhood social with thousands of followers and we're still rolled out to a relatively small portion of the customer base. So I think we've got good signal that it'll do well and it'll be useful. And yeah, yesterday, it sort of like transitioned to people posting Robinhood social content on X, which is very interesting.
Speaker 9:I think the unique differentiator that we have that makes it compelling to people is that there's actual trades and real portfolios tied to the account. So we can combine these two things, you know, real transactions with opinions Yeah. That gives you a primitive that you can't find easily in other social Yeah.
Speaker 2:The content, you know, you see somebody post on X, x like just closed out this position like
Speaker 1:Mhmm.
Speaker 2:You know, can my I'm updating my thesis or whatever. Doesn't have the same weight if they are doing that and they either printed on it Yeah. Or you know, or took a meaningful loss. So Yeah. It's great content.
Speaker 1:I have one last question. You've been very early and very bullish on mathematical super intelligence. There's been a whole bunch of conjectures solved. It feels like a total validation of your idea that AI would be very good at mathematical problem solving. How have you processed the recent conjectures that have been solved by various models?
Speaker 1:How does this update you? Do you have like a next hurdle that you want the AI to solve? Because it feels like I mean, I know people are still throwing like the Riemann hypothesis and P versus NP at it. But aside from that, do you have like an idea or vision of where this goes?
Speaker 9:Yeah. I think that's an awesome question, John. So the next thing is in the same way that I applied my mathematical skills to computer science, you know, was a mathematician and then I became a business person, what we found is that math skills and coding actually go hand in hand. So what I'm really excited about now is applying mathematical super intelligence to software. Mhmm.
Speaker 9:So in the same way that MSI can be used to make sure that your math is correct. When you have a computer program or a piece of software, it can be used to make sure that's correct and that there's no mistakes. And I think particularly now when we have mythos finding security bugs and you see all the scary stuff like we saw last week with the hugging face breach. Rather than it being a cat and mouse game of just escalating model capabilities, finding breaches and preventing breaches from happening, verification and proof that software is immune to these types of bugs, I think, is the future. So of
Speaker 1:software systems that you use and there could almost be like a I mean, you know, you go to those websites and it's like there's a security certificate at the bottom and no one really knows if it does anything, but in the future you could actually land at a website where the entire code base has been formally verified.
Speaker 9:Yeah. Now the absence of the security certificate is a red flag. Browsers will block it. Yep. I think you're gonna see it first in domains where accuracy and correctness are critical.
Speaker 1:Sure.
Speaker 9:So you're seeing it a lot in crypto, actually. With crypto, formal verification is having a bit of a moment. You're gonna see it in semis if you're producing chip. And, the process of producing a chip is you get to tape out and beyond. If you find a mistake, it's incredibly expensive to reverse.
Speaker 9:So you'll see it in chip design, you'll see it in system software, You know, a lot of software, legacy software is written in languages like c, c plus plus. Mhmm. So, yeah, I I think you'll you'll start to see it in these systems languages, critical software, and then from there it'll just as as the price goes down, I think it'll be ubiquitous.
Speaker 1:Yeah. That's exciting. I there's a lot of there's there's a lot of fear about the cybersecurity questions, I think it's it's great that the mathematical progress can actually apply even if it takes a couple reasoning steps, and I think people will need to digest it. And then they'll actually have to see it in the proof is in the pudding if we go through a whole period where we're like, wow. Yeah.
Speaker 1:There haven't been any incidents even though everyone's been through, you know, piling zero days of every system, but we're still in a good spot. Very exciting. White pill.
Speaker 2:There you go.
Speaker 1:Thank you so much for coming on the show. Congrats to Cheers, guys. Have a great rest of your day. And we'll talk to you soon. Goodbye.
Speaker 1:Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI, own the data platform that powers it. I have one last post I want to go through.
Speaker 1:Jordy, have you seen Spider Man No Way Home?
Speaker 2:Absolutely no. Not. Absolutely not. Should I?
Speaker 1:I think I
Speaker 2:I'm pretty into movies now. But we I saw the Odyssey and I appreciate film.
Speaker 1:Movie? You're a film buff now. You're film star.
Speaker 2:Yeah. Honestly.
Speaker 1:No. There was a question on the timeline from Rob Felt rewatching. He was rewatching Spider Man No Way Home to prep for Brand New Day, the new Spider Man movie
Speaker 2:and That is actually insane. What? Right as you said that
Speaker 1:Yes.
Speaker 2:A white spider landed from the ceiling onto my microphone.
Speaker 1:You see Yeah. Yeah. I do. Wow.
Speaker 2:You said Spider Man.
Speaker 1:That's Maybe you are the next Spider
Speaker 2:Man. This landed. I'll try to show everyone.
Speaker 1:Yeah. You might need to turn down the the console. The put down your laptop. Swing it out more. Oh.
Speaker 1:It's really going around. Oh. It's on the ground now. Woah. There we go.
Speaker 1:Can you see this at all? I don't know if people can see this but there is a spider crawling on Jordy's microphone. You'll have to really oh, there. Yeah. You can see it in the
Speaker 2:I have to handle
Speaker 1:in the monitor right there.
Speaker 2:I have to handle this.
Speaker 1:That's a very good omen. I think that's a good omen. Anyway. Spiders can hear.
Speaker 2:Yeah. They can speak English.
Speaker 1:Well, let's, feel free to deal with that. I'm going to talk about this. In No Way Home, the movie, the prequel to Brand New Day, I think Homecoming is in this series, right? There's a whole series of new, the latest round of Spider Man with Tom Holland, right? Daily Bugle web show scene pops up and all I can think about now is a question.
Speaker 1:Is the TBPN aesthetic inspired by J Jonah Jameson's web show? And if you look at it, it does sort of look like our show. And so it's a good question. Did we see this film? Did Jordy who is the brand architect of the TBPN aesthetic watch Spider Man No Way Home and say, I like that color.
Speaker 1:I like that design. Let's bring that into our studio. And the answer, no. No. No.
Speaker 1:Lots of other influences but this was actually not one of them. I believe I have seen I like yeah. We like the color green. I remember Jordy one morning and we were working out and he's like, we should do green. And I'm like, okay.
Speaker 1:Yeah. That sounds good. I like green. And he's like, no one's done green. And I'm like, that's not true.
Speaker 1:Like Robinhood is green. There's plenty. He's like, no one in tech no one in tech has ever used green before.
Speaker 2:TBPN green.
Speaker 1:I'm like, it is a white space in the sense that like, yeah, I couldn't think of another podcast with the green, dark green background. And we and we did find our own space. We we we looked at Pinterest a lot for different references, some photos, some catalogs, Ralphie.
Speaker 2:I didn't look at Pinterest.
Speaker 1:What images were you pulling from? Because I know you had some references. I mean, obviously, f one, but just your brain? Just your brain. You don't let much go in there.
Speaker 1:But
Speaker 2:Certainly not movies.
Speaker 1:Certainly not movies.
Speaker 2:But I got to figure out where this spider went.
Speaker 3:This spider landed. It was on the mic.
Speaker 2:I lost it. I think it's I think that's a good place to call it.
Speaker 1:Anyway, it is a coincidence, Rob. That's where
Speaker 2:it looks like.
Speaker 1:It is?
Speaker 2:Blue they're up almost 9% after that.
Speaker 1:And the market is is is way up.
Speaker 2:Sandwich should have been.
Speaker 1:8%. Should have been in white suits. In white suits, but it's a very sad day because we love situational awareness and they're going through a really hard moment. We're wishing them the best, hoping that the, know, good things come out of this ultimately. But it was it didn't feel appropriate to wear a white suit
Speaker 2:on such a I'm in a black suit.
Speaker 1:He's in a black suit because it's a very disappointing moment. But of course everyone has a long career ahead of them and there are many ways to build back better and do more big things in the future in the world of AI and technology. So thank you for watching TBPN. Tune in tomorrow at 11AM Pacific.
Speaker 2:That's right. Thanks for hanging
Speaker 1:out Apple Podcast and Spotify. Sign up for our newsletter at tbpn.com and we will see you tomorrow. Goodbye.
Speaker 8:King in the castle. King in
Speaker 3:the castle. Seven in on Wall Street. Money never sleeps. You shouldn't
Speaker 4:either.
Speaker 2:Call me back.