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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TVBN. Today is Thursday, 05/08/2025. We are live back in the Temple Of Technology. The fortress of finance.
Speaker 2:The capital of capital.
Speaker 1:We have an amazing lineup today. Absolutely stacked roster. We have our
Speaker 3:The diversity.
Speaker 1:Yeah. We have, the secretary of the army, the chief staff of the army coming on. We're doing, a postgame on Andoril's acquisition in the private markets, and then we're doing a postgame on Shopify's earnings in the public markets. And then we got venture capitalists coming on from Founders Fund, Alt Capital, Andreessen Horowitz. We got Gary Vaynerchuk coming on from Gary VaynerMedia.
Speaker 3:Vaynerchuk Super excited about that. Had a conversation we had a conversation with Gary off stream a little while back and excited to make that one happen.
Speaker 1:Yeah. Very excited for it. But we do have to take you through the news. And, of course, we have to take you through some ads. So switch your business to ramp.com.
Speaker 4:Switch your business to
Speaker 1:ramp.com. Save both. Easy use corporate cards, bill payments, accounting, and a whole lot more. All in one place. I love that sound effect.
Speaker 1:It's it's really it's really I turned on the sound effect
Speaker 3:and John turned up his
Speaker 1:Oh, yeah. I turned it up because I wanna hear it more. I'm so locked in with it.
Speaker 3:Anyway We didn't have the sound
Speaker 1:effectsto.com. Switch your business. Thank you to ramp. The big news shaking up the tech industry today is, of course, the CEO of Instacart Fijisimo is going to join OpenAI Huge bet. As the CEO of applications.
Speaker 1:So now they have
Speaker 3:Maxed out contracts.
Speaker 1:Separate CEOs within as if it couldn't get more complicated over at OpenAI.
Speaker 3:They heard us talk Tuesday. They said we've got we've got people confused. Let's make them even more confused.
Speaker 1:Yeah. Let's keep it guessing. Keep it guessing.
Speaker 3:Yeah. Mean, there's so many it's funny. There's a lot of different entities. You could have
Speaker 1:Yep.
Speaker 3:CEOs at at at different entities. Yep. That's certainly it's it's very clear they're not calling it a co CEO role.
Speaker 1:No. But she is a she's an absolute legend. She was one of the top executives at Facebook. She founded the Midodora Institute Health Clinic. She's been she's on the board of directors of Shopify, who, of course, we're talking to today.
Speaker 1:And she's also she's also been on the board of OpenAI for a while, but now she's stepping into an executive role. She worked at eBay as well as Facebook and Instacart. Glad to. If you pull up this, her post, it's very interesting because May 6, she was posting about working at Instacart saying, this is Fizz, our new group ordering app for drinks and snacks launching today. Very cute.
Speaker 3:Yeah. Which was a great
Speaker 1:a great product, but doesn't quite have the weight as we're building machine god and intelligence is too cheap to meter. You know? Well, she's
Speaker 3:going be focused on products. Right?
Speaker 1:Yeah. Maybe
Speaker 3:this I saw the Fizz launch and I was like, this is a cool, fun consumer product built on
Speaker 1:Totally on Instacart. Interesting. And it also has a powerful integration, so everyone can kind of say what they want as they're planning their party. And then things got real. She moved over to OpenAI, which I just feel like it you know, obviously, it's a fun company.
Speaker 1:I I was noodling on OpenAI ChatGPT all yesterday, making charts and last night making images and stuff. Have a it's a fun app.
Speaker 3:You spent
Speaker 1:But it has weight.
Speaker 3:You were sleep deprived and spent, like, forty five minutes working on one
Speaker 1:chart It was so fun.
Speaker 3:Vibe vibe creating Yeah. Basically.
Speaker 1:A chart. Yeah. It was great. Anyway, Dan Primak has a a big question. When is the last time the CEO of a very successful company quit to join another company in a non CEO role?
Speaker 1:Well. I can't name one. I bet OpenAI is I bet o three can if you search that.
Speaker 3:Unusual on so many dimensions. Yep. And this is an unusual move.
Speaker 1:Yeah. And, yeah, it's interesting because the narrative with OpenAI for a long time has been the the old OpenAI was this insane lineup. Right? Because you had Ilya, you had Andre Carpathi, You had Greg, obviously, who's still there, but then you also had Dario. And and everyone who's gone on to found a foundation model company at one point seemed to have worked at OpenAI.
Speaker 1:And there was this question of, like, brain drain almost. Like, is it just Sam now? But he's put together a new team of founders and executives that are kind of in the same realm as the previous team. And so when you think about bringing over Kevin Wheel to work on product, like, he is a founder CEO that took a company public. Like, he's a very accomplished business person.
Speaker 1:And so, yeah, it's been interesting to see how this works, but I mean, makes sense. Like, is like what the most exciting technology since fire or electricity or something like that. Like, it's a big deal. It's a lot of fun, and you're at the center of something very important. And I'm sure there's a lot of amazing work to be done.
Speaker 1:And so OpenAI CEO Sam Altman said he would continue in his role overseeing verticals like research, computes, and applications. CMO will report directly to Altman, which is very interesting because you would think you would just do, like, chief applications officer. But CEO of applications is a new term that we haven't seen before.
Speaker 3:Yeah. It's interesting. As Matt Turk shared earlier, if OpenAI is mostly staying out of the application layer, a promise made to AI application developers as long as they don't compete on what core models can do natively, why do they need a CEO of applications? Interesting question.
Speaker 1:I don't know.
Speaker 3:But but, you know, OpenAI already has applications. Right?
Speaker 5:Of course.
Speaker 3:And they're buying
Speaker 1:They have several. I mean, like, yes, they try and centralize everything in ChatGPT, but they also have, what's what's the video model? Sora? Sora is its own application. Like, it's a web app, but it is its own application.
Speaker 1:And now Windsurf will be its own application, and you could imagine many of those also. The real interesting thing is, is there some four d chess tinfoil hat conspiracy that Instacart rolls into OpenAI at some point? You know?
Speaker 3:That's very interesting.
Speaker 1:I don't know. I mean, I I I think that's a crazy idea, but it is it is kind of interesting to
Speaker 3:get I think it's a very fascinating idea, John.
Speaker 1:Yes. Yes. It's all planned for Sam to control delivery.
Speaker 3:Well But I don't know.
Speaker 4:I mean
Speaker 1:I mean, you you you could imagine some world where, you know, you want you want to instantiate something in the real world and you need a human to do that until there's humanoid robots and Instacart has a huge workforce of humans that can do And so you're on operator and you say, I need somebody to go do something for
Speaker 3:me. Then use
Speaker 1:the Instacart workforce, I don't know.
Speaker 3:AI, you know, the the sort of consumer agent, the AI assistant that can do everything has has been, you know, one of the most exciting promises. Yeah. And yet there's still a lot of things that, you know, o three is amazing at some Hey, put together a reporter and an an analysis on, you know, this new law. Great. It can do that well.
Speaker 3:If you wanted to pick up your laundry or something like that, not so good.
Speaker 1:I think more more likely she's just an amazing operator and they're scaling And that that conspiracy theory is just what I said it is. But she has years of experience in product management and monetization. Little a on a bit of a generational run. She spent more than a decade at Meta leading the launch of ads on the news feed, heading monetization for the Facebook app, overseeing product development for Facebook Monetization is That was huge. And then helping build its advertising business, of course, like all the foundational
Speaker 3:stuff that they do. That to me feels like it's not getting enough attention.
Speaker 1:Yeah. Yeah.
Speaker 3:Yeah. And and And then she took
Speaker 1:Instacart public too. Right. It's amazing. So Yeah. So she's gonna stay on as chair of the Instacart board.
Speaker 1:In a letter to Instacart employees, she said a current member of the company's management would replace her as CEO, and an announcement would be made soon. And so congratulations to OpenAI and to, you know, everyone involved in this deal. I'm sure, it's maxed out contract, Jordy. What do you think?
Speaker 3:Maxed out. Probably. Probably, know, four year vest, one year cliff, you know, don't want to speculate too much.
Speaker 1:Don't want
Speaker 6:to speculate too But
Speaker 3:I would go out on a limb and, you know, make that guess.
Speaker 1:Yeah. We got another, I mean, other story that's basically in the news is the death of the Google search. Google traded down and showing that there are a decline in actual search volume. This has been predicted for probably like two years now. I remember using the very first GPT-three playground and thinking like, oh, this is a search engine.
Speaker 1:Because that was the thing that it could do kind of well. You had to kind of massage it and write the query in a particular way because it wasn't RLH def in the way to be like a friendly helpful thing. Would just kind of continue. But what you could do is you could say, you know, let's say you're searching for headphones or something. You could say list of best headphones.
Speaker 1:One, Apple AirPods, two, Bose, three, space. And then it would continue writing and it would just guess and fill it in. So you had to do a little bit to like set it up to be thinking in that way. Was a lot of prompt engineering. But but I could see even from that very early stage that that search was going to be a thing, these trends take a long time and and
Speaker 3:I mean, the the the fall in the share price yesterday was extremely dramatic. It was kicked off by Mhmm. Apple's VP of services who came out and said that for the first time, it was specifically in Safari. Right? So it's important to note that that doesn't necessarily count what's happening over on, you know, people using the Chrome browser on iPhone, which is obviously quite a lot of people.
Speaker 3:Yep. Think the Safari browser's always been, you know, relatively underwhelming, even though it's the default. And and it's interesting, I mean, the the the brutal irony in the in the of the of the situation that Google's in, in that they have leading AI models, yet those, that technology set, and it's a technology that that they have played a massive role in, you know, creating is the same technology that is, you know, just gonna slaughter their golden goose. Yeah. And, you know, it's like, yes, of course, LLMs can drive a massive amount of revenue across the Google ecosystem over time, but they have a, you know, $200,000,000,000 cash cow Yeah.
Speaker 3:In search. And, you know, there's gonna be a wide gap between the the question is how quickly, how fast does that revenue shrink versus how fast does sort of generative AI revenue grow. Yep. And there could be a very rocky middle period. I think it's it's hard not to be bullish on big tech broadly.
Speaker 3:Right? They have so many advantages with new venture transformer after all. New sort
Speaker 1:of tech trend but But yeah, it might mean a slight change for the for their strategy overall. I have a take, but first let me tell you about public.com investing for those who take it seriously. They got multi asset investing, industry leading yields. They're trusted by millions. Hit that.
Speaker 1:Sound board, Jordy.
Speaker 3:John never knows what to Yeah. Was expecting national. Expect the unexpected. Anyway. Thank you to public for supporting
Speaker 1:the Yeah, I wonder how real this dynamic is, but I feel like there's a little bit of Google where you start using Google for research and to find answers and you use it as this answer engine. And then when you go to buy insurance, you wind up Googling that too out of habit. Whereas right now what's going on is that a lot of those knowledge queries, those non shopping queries that are probably less valuable to Google because I it would normally just land on a Wikipedia page or some sort of blog post explaining the concept that I'm asking about. Instead of Yeah. Instead of taking that to Google, I wind up on Chattypeauty.
Speaker 1:And then I'm still doing my shopping queries. Like, I bet my my ARPU at Google is still similar because I'm still clicking the ads when I do go and buy something. But the fear is that once JajiPT launches shopping and I have that more, it's more the default behavior, then they really do lose me as a customer. And so maybe like user monetization is a lagging indicator for Google, which would
Speaker 3:be Yeah. Yeah. Was interesting. Some I mean, it it are sort of different business models. Yeah.
Speaker 3:The thing that's assorted around LLMs right now is people are paying for them. Right? Yep. People are paying $200 a year to use perplexity. They can get the same information from Google.
Speaker 3:Yep. They can get a lot of the same information from free LLMs. The question becomes, are, you know, ChatGPT and ChatGPT like products going to monetize as well as search? I don't know. Right?
Speaker 1:They'll monetize better.
Speaker 3:You think they'll you think they'll monetize better? Almost certainly. The question is it will have to get to a blend of SaaS and ads, I imagine, right?
Speaker 1:Totally. For you to hundred percent. The Google search
Speaker 3:right now, I was talking to Daniel.
Speaker 1:But not even just that, essentially like affiliate fees. Yeah. Because you could imagine that if they cut out an affiliate and you just go to Chatty Paty and you say, order me the best shoes possible, and it just does it. Yeah. Like, you've cut out seven different steps.
Speaker 1:And so they're gonna be able to advertise. There's a whole bunch of ways that that they could capture value. I just think it's gonna take a while, but I don't see a reason why more data, more knowledge on the on the interaction. Like, even the chat GPT memory thing, I was working on, like, an image poster, and I had said the name of the title of, like, the movie poster. I was like, take the pulp fiction poster and replace it with a different name.
Speaker 1:And then I was like, I was not really getting what I wanted, so I started an entirely new chat. And then randomly it was like, hey, do you want to use a different name? Because it remembered from the other chat that I was working on the same thing and it was like, okay, yeah, you opened a new chat, but you didn't really open like a new instance of me. And so like you could imagine so many different ways to have just way, way more context aware search. Totally.
Speaker 1:Will monetize in terms of ads and everything else. First, let me tell you about Linear. Linear is a purpose built tool for planning and building products, meet the system for modern software development, streamline issues, projects, and product road maps. Linear. App.
Speaker 3:It is the tool that we use to run TBPN, and you should use it too. Thank you to Linear. And I believe we have our first
Speaker 1:guest is here. Welcome to the stream. Hello. Welcome. Can you hear me okay?
Speaker 4:Can you hear me?
Speaker 1:Yes. Yes. We can hear you.
Speaker 3:Welcome to the show.
Speaker 1:Thanks so much for taking the time. I'd love to start with kind of an introduction and an overview of, what modernization is, what this project is, and what you've been, just talking about in the media most recently.
Speaker 4:I haven't used. So, the United States Army is two hundred and fifty years old. It's older than our country. We're celebrating our birthday this upcoming June. And, for the last thirty or forty years, one of the problems is that the Pentagon has contorted decision making in on itself, and it's optimized for all sorts of crazy things that have nothing to do with soldiers and war fighting.
Speaker 4:It's optimized for parochial interests around the country, lobbyist led, donor driven, non war fighting outcomes have driven what we've done for a couple of decades. And so what we tried to do in the last kind of seventy five days is work with army leadership under the leadership of president Trump and secretary Hegseth and put together a plan that is just rational. And so the plan essentially does four things. The first one is cut and a lot of these will seem so preposterous to you that this is even a big thing, but it is. And so the first bucket was just to cut obsolete systems that we don't even want anymore and soldiers haven't wanted, and this is the part that would should kill your soul for decades sometimes.
Speaker 4:I mean, we we have been buying these things because they just lack political will to stop. So mechanistically, what would occur is we just the the the army would say, hey. We want this, and then congress would come in on top of it and say, you have to keep buying these things for these other reasons. So to cut that, it's to then take the dollars that have been saved and fund the things that we actually do want. So if you thought about what modern warfare will look like, you need drones, need autonomous systems, you need a data layer.
Speaker 4:We have to pay for that with something, so we're gonna use the dollars to do that. There's a third bucket of actions, which was basically, we, the army, have been a terrible customer to ourselves oftentimes, and so we've given away the right to repair our own equipment. So as general George, the four star in charge of the army and I with 12 bases, you'd see this exquisite these exquisite platforms sitting on the sidelines for nine or twelve months at a time where we we could three d print a 2 to $20 part, and we weren't able to do that for ourselves. And so we banned that. And then the fourth thing is, essentially, we've just allowed this this preposterous amount of leadership to grow in our own formations.
Speaker 4:And so soldiers join the army because they wanna wear a helmet, they wanna get out there, and they wanna fight. And we put them in headquarters passing around paper, and so we said we gotta start with ourselves. We're gonna push a thousand people back out. We're gonna get rid of the jobs, and then we're gonna repeat these four sets of exercises again and again and again till we get closer to the right.
Speaker 1:What have you learned from history and kind of the root causes of these problems? Is it just the end of the Cold War? Is there something about technology and the digital transition? Like, what should we take from the past to inform the future as we look to you know, it's not enough to modernize now. We wanna stay modern.
Speaker 1:Right?
Speaker 4:I think one of the things, we, the army, have have not gotten right historically, at least in the last couple of decades, is looking to the private sector Mhmm. What Silicon Valley does in our venture backed startups and just our small and medium businesses around the country. What they do incredibly well is they go find product market fit. They have an innovative feedback loop where they take their minimum viable product. They get in the hand of customers.
Speaker 4:And it's small and medium businesses in the mid the heartlands, might not call it this, but they practically do it. And then they learn from it, and they iterate, and they change. What the army has historically done the last couple of decades is we lay out these big grand schemes. We put a wish list together of all the things we could possibly want, and then we'd go out to the market and we say, hey, build us this and we may buy it. The problem with that model, as you might guess, is only a couple of incredibly well funded companies can do it, which we call the primes.
Speaker 1:Yeah.
Speaker 4:And then they end up doing it terribly, and they've done it terribly for a long time. But we held ourselves hostage with our bad processes. And so I think one of the lessons we're learning is the army does best when it is synced with American enterprise and when it's synced with American ingenuity, and we are trying to return to those roots.
Speaker 1:Can you talk a little bit about the breakdown of modernization, strategies across the hardware, software, people? There's so many different I mean, it's a massive organization. How are you thinking about decomposing the problem, and and where can Silicon Valley fit in?
Speaker 4:So optimistically, a lot of the things we need are very basic tools that
Speaker 1:Mhmm.
Speaker 4:Already exist in medium and large sized businesses in the country. I think Silicon Valley, the chief of staff and I did it. One of the first things we did is we went to the West Coast, and we hit Microsoft in Seattle. And we went to Silicon Valley and did OpenAI and Meta and Google. And then we went down to Los Angeles and did Palantir and Andoril and some other autonomous software companies.
Speaker 5:And Mhmm.
Speaker 4:It's incredible what they've built. And so when we are trying to build something to compete on a hardware side, especially, it's generally gonna be a bad outcome for us. But I think what we are trying to do is we're defining our current short term goal for modernization. The number one thing we have to do is create a data layer. So we need our people to be able to sync with each other over the horizon and then sync with our things and our sensors.
Speaker 4:And all of this has to happen in near real time, and it has to be able to be updated constantly with new software as we've received inbound attacks. But what that what that data layer will do is it will allow us to start to do things like apply generative AI to our targeting. It will allow us to start to think of our vehicles and these exquisite tools that we build as really just the the manifestation of software in the world through this hardware. But that's how wars are going to be fought going forward. I mean, it's hard to understate or, excuse me, overstate war and the way humans have fought for the last couple millennia has changed in the last three years.
Speaker 4:This is an inflection point. And if we don't move quickly, we're gonna be left behind.
Speaker 3:Yeah. I Jordan. Can you can you talk about the force itself? I was talking with Catherine Boyle over at Andreessen, friend of the show, and and she was saying that the force today is just so much more technical. Right?
Speaker 3:This is a a generation that has grown up, you know, online, you know, very sort of Internet native. How do you look at, you know you know, kind of upskilling within the force today and taking somebody from good to great or, you know, technical to, you know, truly an expert?
Speaker 4:This is gonna sound sycophantic, and so I commit to you that when I hear people say these kinds of comments, I always think they're full of shit. I actually believe what I'm about to say, which is the most remarkable part of these last seventy five days of returning back to to the army and getting to spend time with soldiers is in the intervening fifteen years when I since I've been gone, I went to an Ivy League law school. I've worked in VC backed companies and a Fed fund. I've worked in PE backed companies. I've seen big amazing law firms and consultants, and, I I would put the average American soldier against any of those people as far as their intellectual curiosity, their ability to problem solve, their ability to to get to an end state of success.
Speaker 4:Like, the American soldier is incredible, and especially what you're pointing at our younger ones. When we hand them this technology, when we hand them these new drones, when we empower them with tools, I mean, figure it out in two or three days. It's it's mind blowing. They don't need a manual. They just get it.
Speaker 4:They put it in their hands. They put it up in the air, and they they they've started to innovate on it. And what we're trying to do is, like, if we look at basic training, was at Fort Jackson last week, which is one of the bases we put through a lot of our new soldiers. These soldiers were civilians five weeks ago, and we're running them through drills where we're putting up drones. They're learning how to think about top cover.
Speaker 4:And then when they finish this exercise, they go and review the drone footage to see what could a drone see. And, I mean, it has been amazing the kind of lessons and what what we're taking away from somebody who has five weeks of experience, much less the other 1,000,000 soldiers that we have. It is a it is a group of people that are just ready for the challenges ahead.
Speaker 3:How how are things changing on the recruiting side? The army has obviously, you know, struggled over the, you know, past, call it, I don't know, five, ten years around recruiting. And I can imagine, you know, showing how you guys are modernizing is a great first step to be like, there's changes happening, we're innovating, this is a place to come and be part of an organization with real positive momentum that's adopting technology. I mean, it's such a such a massive change. Is that an an intentional part of revitalizing, you know, and and strengthening the recruiting process?
Speaker 4:Absolutely. And so, there's a couple of ways I would I would talk about recruiting, and we and we talk about retention too. So how many soldiers decide to stay in? So the first thing I would say, and again, very sincerely, the leadership of president Trump and secretary Hagsef has created a culture that is a return to excellence and a return to lethality that was kind of the vast majority of the army's experience or existence, and people wanna be part of that. They want it to be harder.
Speaker 4:Like, it's not about the stuff that they get for joining the army. It's about what the army can make them. But then, quant so that's qualitative remark. Quantitatively, what we've seen is kind of on the front end demand to join. We are killing it.
Speaker 4:We were up in nearly every category and nearly every geography across the country. Male and female were up this year, and so we're really excited. And we think a lot of that, to your point, is the storytelling, but our retention is incredibly helpful for us to look at too because to us, that's the trailing indicator of how we're doing.
Speaker 3:And it
Speaker 4:it is the the soldiers that actually see us and are part of this and are reading what we're doing and are living this life. How are we doing there? And we're excited to announce that we hit our twelve month goals six months into this year, and so all of that makes us pretty optimistic.
Speaker 1:On the topic of kind of the actual fighting force, are is progress in technology or artificial intelligence playing into how you think about the scale and size of the actual humans in the army over the next few, I don't know, years or decades. Because in Silicon Valley, we're hearing stuff about job displacement or, you know, a single company run by one person because they're they're so augmented by artificial intelligence. I imagine that a lot of folks in the army are just excited to use these tools to be able to do more faster, but what has the response been on the ground?
Speaker 4:So I I think about the army. We think about it, general George and I and the rest of leadership team, is two two kind of fundamentally different things.
Speaker 1:Mhmm.
Speaker 4:One is a large enterprise system. It's a large enterprise business. The other is a a war fighting killing machine. Mhmm. On the on the large business side, one of the things we've been able to do is, like, our recruiting command.
Speaker 4:This may seem very basic to you, but it's hard to overstate how important this is for us. Instead of building proprietary software, hiring some developers, creating a a a new tool for how we, the army, existed in the past, and then having to maintain that in the future with a bunch of other silo tools. What our recruiting command did is they moved on to Salesforce, and then they changed how we recruit people to match what Salesforce already had in its out of box solution. And so and then we tweaked it a bit.
Speaker 1:Yeah. Of course.
Speaker 4:But we're seeing just these incredible leaps forward as how we manage the army as a business. And then to to your question about, like, the war fighting function, I think what ends up happening a lot of times is people are trying to be, intellectually weak, let's say, in answering that type of question. And so what they focus on is things like, end strength. And then so they'll say, we're gonna go to battle for the number of soldiers that you have, and the army will say we need more, and congress may say we need less, and the navy might say we need more. And that's not actually the way right way to think about it.
Speaker 4:The right way to think about it is, how many soldiers do we have with helmets on that can go be the the fighting force that we as a nation need? And so one of the things we focus on a lot is what what can we outsource to technology once we create this data layer? What can be done by generative AI? And then what can we do with those soldiers to push them forward? And then how many of those soldiers do we actually need that can squeeze triggers or push buttons and kill on our behalf?
Speaker 4:And so the the long winded answer is, I think what general George would echo too is, we don't know what the exact number is. We think we're at about the right number. We probably wouldn't cut a lot, but our goal is to push more people from doing kind of like the the useless shit in the office and push them back out to the field.
Speaker 1:Makes sense. How would you grade just you know, a lot of our listeners are in the technology and venture capital community, Silicon Valley broadly. How are we doing as an organization, as a as a community? Are we stepping up enough? Obviously, there has been this massive vibe shift, Andoril, part of that, pan Palantir, part of that, American Dynamism and Andreessen Horowitz, part of that.
Speaker 1:But, are you seeing what you wanna see from, the technologists in Silicon Valley? Is there more that we could be doing? If so, what?
Speaker 4:I I think what what you should see is by, General George and I coming on your show, we want you and need you. We we we are inviting you in. We are inviting that community to come help us. One of the things that we've seen with Doge, aside from just the cuts and the headlines and everything, that kind of people wanna write about more often, what's actually really valuable about having Elon and his team here is they push us to think, is that a first principle problem? Is that a problem of gravity?
Speaker 4:Or is that a human created problem? And taking that lens to a lot of these, what you realize is, I, the secretary of the army, my pen stroke can fix a lot of things. Secretary of defense, hex says pen stroke can fix a lot of things. Mhmm. We need the right mind mindset, and it it and general George and his leadership team have been waiting for us to come in and give them the top cover to do what they know is right.
Speaker 4:And so I guess to grade Silicon Valley, right now, I would say, we can't give a score. I think a lot of the talentiers and the annual roles had to take a a beating over a number of years just to get in. We are trying to open the door up to get more in. And what what I would say is what we need from Silicon Valley and the VC world and private equity if it's already starting to scale, we need you to look at what we need in our future wars, and we need you to help us build it. And it's gotta be cheap, and it's gotta be scalable, and it's gotta be not exquisite in nearly every instance.
Speaker 4:And despite our tendency, what we're gonna need is we're gonna be pushed back every time we put another requirement in. We need that community to say, well, wait a second. Why are you doing this? Like, it we created this RCV, so it's a robotic combat vehicle. It's awesome.
Speaker 4:The thing is cool as can be, but it's $3,000,000 per copy and an $800 drone can take it out. We're one of the wealthiest nations in the history of the world. The the math doesn't work.
Speaker 3:Yeah. Yeah. How how much do you feel like, you know, the the West Coast and, you know, in general, the defense tech community broadly takes feedback well? A lot of people get fixated on a single solution or an idea to a problem, And, you know, maybe they'll go they'll they'll head over to Washington, start talking about it, and get pushed back. And and sometimes founders can get so much conviction in an idea, and they think they they think exact exactly what they're doing is right.
Speaker 3:Have you found have you found the the the defense tech community to be, as receptive to kind of feedback as they should be, or are some of us a little too hard headed still?
Speaker 4:I I think if you take the most hard headed founder you've ever met and the person who's most entrenched in their belief set, and then you compare that person to the defense industrial complex and the prime, your vision of entrenchment wouldn't even get you into the game with how these primes have thought and acted in the systems that they've created. One of the things I say very often now is I will measure it as success if in the next two years, one of the primes is no longer in business and the rest of them have all gotten stronger. Mhmm. We we desperately need the thinking from Middle America, small and medium businesses, innovators in garages, venture backed businesses and not to come into the Pentagon with us and push us on everything because that's where American ingenuity thrives the best. And so, again, the reason we're here is we are welcoming you in.
Speaker 1:Yeah. That's fantastic. That's fantastic. I mean, I have I have one last question, then we'll switch over. Are are you seeing enough from the parts of the financial market outside of Silicon Valley for a long time?
Speaker 1:Certain large pension funds couldn't invest in defense technology. Obviously, we are very excited about the venture backed, defense tech ecosystem, but there are transformations that should happen maybe in the public markets. Maybe, the even though I'm rooting for the the the startups here, let's make our primes great also. Are you seeing movement there? Is there the same type of energy in the public markets with the really big companies that maybe you're seeing in Silicon Valley?
Speaker 4:I I would say that, they they will be slower followers is my guess. Mhmm. I think that they have typically been able to, withstand these little bursts of energy that happened at the transition of an administration.
Speaker 1:Sure.
Speaker 4:Their incentive structure, I think, has been in these moments when you have general George on.
Speaker 1:Yes.
Speaker 4:We we just testified yesterday at the house, and we get yelled at by whomever the the congress man or woman is about whatever the parochial interest is, I think that that the primes have had the tendency to double down on lobbyists. They've had the tendency to pull down the hatches and basically say, we're gonna weather the storm. And so what I think they're misunderstanding about this moment in time is president Trump's and secretary Hegg's tolerance for pain to do the right thing on behalf of the American soldier, I I truly believe is different and unique. And my best guess is that they will start to realize in the coming days, weeks, and months that they are going to have to adapt and change or die, and we are not going to come bail them out again as a nation. And we we want them to succeed.
Speaker 4:The the those remaining ones that can sell to the army in a couple of years, they're gonna be incredible because we won't buy it unless they are. Yeah. And so I think what it is going to take to change them is the realization that the the the ways that they have delivered value to their shareholders for the last couple of decades are no longer gonna work in the new security environment with the leadership of the president.
Speaker 1:Well, secretary Dyssegreau, thank you so much for joining. This was a fantastic conversation. Learned a ton. Really appreciate you helping fantastic.
Speaker 3:Come back on.
Speaker 1:Whenever you have more news, we'd love to have you.
Speaker 3:Love to have you.
Speaker 4:I appreciate it. Hey. Thank you for having us.
Speaker 7:And thank
Speaker 1:you for And General George should be joining in just a second. I'm excited to go deeper on this topic and then hopefully carry these conversations into some of the other folks we have on the show. Michael, I don't know if you wanna pull up the guest list as well while we're bringing in general George, but we can give you the rundown of the show. We have general George coming in now, and then we're gonna jump over to Adam Porter Price, Anvil
Speaker 3:Perfect segue.
Speaker 1:And then Delian at Varda can also give some, some context on what's happening in defense tech on the smaller side of things. But, the the I I I still think the the the proof is in the speed of execution to go from a tweet that I posted that was, you know, almost half joking. Hey, TBPN. Hey, army, do you wanna come on TBPN? To actually making it happen in two days.
Speaker 1:They're going It's just speed of execution and you can tell that, I mean, are some startups that can't get a CEO on our show in two days. Yeah. Because they're like, oh, we got to talk about what they're going to talk about.
Speaker 3:Or a solo GP that needs to schedule a month out. Yeah. Like how many, are you going on four vacations in a row? Yeah. It's crazy.
Speaker 3:No. But but just the the mindset, the focus, the sort of urgency, the commitment is amazing to see.
Speaker 1:Yeah. Totally. Anyway, let's take a second to tell you about numeral sales tax on autopilot. Spend less five minutes per month on sales tax compliance. It it is AGI for your sales tax.
Speaker 1:Sales tax on autopilot.
Speaker 3:Numeralhq.com. Go check it out.
Speaker 1:We we we should also build some series. We should also build some poly markets around army transformation. I wonder if there's a market for for recruitment goals. Yeah. Well, anyway, we have our next guest.
Speaker 1:Thank you so much for hopping on. General George, welcome to
Speaker 3:the the show.
Speaker 4:Thank you.
Speaker 1:Great.
Speaker 5:Thanks for having me.
Speaker 1:So we were just talking about modernization. I'd love to hear a little bit more about what that means for you, what your goals are, and, how would you, describe the overall process to our our audience, which is mostly folks in Silicon Valley, venture capital, and technology companies?
Speaker 7:Yeah. I think, you know, we're seeing we're watching what's changing around the world on the modern battlefield. I think a lot of people are seeing it and reading about it. And, you know, what you get with a lot of this dual use technology is changing drones, for example, autonomous systems. What we have been doing over the last year or so is actually transforming our units.
Speaker 7:We're gonna have to change how we train and operate. The big thing, and I think our secretary was just talking about that, talk about how we buy things, how we get products that we know are gonna work into our soldiers' hands and doing it quickly. I think the biggest change that we're trying to do is actually getting, you know, the engineers that that you guys are familiar with out inside of our formations, talking seeing the problems that we're trying to solve, and help us solve those problems directly. So we're trying to get rid of all the middlemen that we have normally have had, in our process.
Speaker 1:I was reading Mike Gallagher's, Wall Street Journal op ed, bring warriors back to the US military. He advocated for something he called shifting tail to tooth, talking about urging the Pentagon to redirect money and manpower from headquarters bureaucracy to actual combat units. Is that an important, shift, and and what does that actually look like empowering the warfighter to make a a decision to buy something that that that that seems like antithetical to the way we've been operating?
Speaker 7:Yeah. Well, you know, we I we always put things in terms of, you know, we have a budget. It's our job to get the biggest value out of that.
Speaker 4:Yep.
Speaker 7:Head headquarters aren't going to win. You know, it's our soldiers that are out there, you know, fighting and we need to put every resource that we can into those. So we're cutting higher headquarters. We're cutting geo positions. We're, you know, closing some of that down so that we can really focus.
Speaker 7:And I know our secretary and I talk a lot about getting helmets back out inside of our formations, and that's what we're really focused on. So we're cutting our headquarters here in DC, you know, whatever we can do to thicken our formations, make sure that we're growing the capability that we know we need.
Speaker 3:Can you talk about how you're thinking around planning and urgency as you guys have a sort of monumental task to modernize the force, and you guys are making great progress against that. But at the same time, you know, this is a multi multi year project. How how do you think around kind of pacing and and pushing pushing your your leadership as well as, you know, the force to to move as quickly as possible?
Speaker 7:Yeah. Well, the biggest you know, our soldiers have no problem moving at speed. We've shown that. You get that out there. You know, they can adopt this technology.
Speaker 7:They can do it quick quickly. You know, the problem we have is the closer you get to DC, that's where the challenge is. And so, I think cutting some of that out, you know, the secretary talked about, I'm sure, about being data centric and what we're doing, you know, to understand, you know, what's happening inside of our formations, automating our business systems. There's just a lot of things we can do. We can go fast, and there's a lot of things that we can do to adopt commercial tech out there.
Speaker 7:We're buying things that are modular, open system architecture that work with us. We have bought drones for the most recent brigade that were updated from the very first unit that we fielded some of the drones. So I think we have to buy things differently, and I think we can go faster, and that's our focus.
Speaker 1:Can you talk a little bit more about that digital backbone? I'm sure there's incredibly advanced things that you can do with artificial intelligence once data's in one kind of centralized location. But are there still systems that we're moving off of paper? And and, just like can you talk about the balance of working on the the latest and greatest while still, you know, tackling the the nuts and bolts of just a version one of a digital transformation.
Speaker 7:So one of one of the things, for us is we're calling it next, next generation command and control. Mhmm. And you can envision we have a bunch of these disparate systems. Each of them have a vehicle. There are several different radios.
Speaker 7:And we're collapsing all of that to your you're basically, you know, leaders are going to be out there with a tablet and apps. So you've got an application that does airspace management. You've got an application that can help you with lethal targeting, and that's where we're moving towards. That's on the tactical side. We're doing the same thing on our business side, and really, we need to collapse all that together.
Speaker 7:I mean, I don't ask for, you know, the days I think of asking for information papers and asking for information are over. I mean, I have a smart board in my office. I have every you
Speaker 6:know, I I just don't
Speaker 7:do that anymore. I can go click on anything that I need to know inside the army and have that, you know, have that data at my fingertips. And we just gotta train all of our leaders. Like I said, that has to be business from top to bottom. Our soldiers have no issue.
Speaker 7:That's, you know, that's how they've grown up, and they are very comfortable in that space. And we gotta make sure the whole process from top to bottom is operating like that.
Speaker 1:Is this modernization effort I imagine that it will have knock on effects in recruitment, but what what are the other messages that you're sending going forward around recruitment, specifically?
Speaker 7:Well, we we are doing great. I think we're, we're closing in on, like, 95 of our recruiting mission. We have some of our biggest months that are coming up. What I've I enlisted in the Army right out of high school. When people come into the Army, they want to come in and do their jobs.
Speaker 7:And again, that gets to cutting out the excess and folks at headquarters and doing those things. And so we're trying to eliminate anything that doesn't allow them to completely focus on their jobs. The other thing that I consistently hear from soldiers when I'm out there is that they know we need to transform. They wanna transform faster, and so I think we owe them that, and that will make a difference too. They wanna come in to a modern transformed army, and and we can do that quickly.
Speaker 7:I'm confident of that.
Speaker 3:What what kind of, you know, his historically, people, you know, on the West Coast in in San Francisco or working in the tech industry generally think about, you know, serving the country by maybe joining a defense tech company. And if if they're an engineer, particularly, they they wanna oftentimes work on, you know, technology in in the private markets. What kind of opportunities do you guys have in the force that you're really excited about recruiting for that maybe people within the tech community aren't aren't thinking about as opportunities today?
Speaker 7:So we are reaching out, and I hope here next month we got a bunch of of folks that we wanna bring in. You know, there's so much talent out there, you know, that they have an opportunity to serve. We have some of them that on the army birthday, we're gonna swear them in. There are engineers, technologists that can serve in the army reserve. They can help us and still be a part of their companies.
Speaker 7:On the others on the other side, you know, we wanna be very open. I mentioned the transforming and contact. We're having engineers that are coming out with our units, seeing how our you know, seeing the problems that our soldiers are trying to solve in the conditions they're trying to solve it, whether that's, you know, the heat out in the Indo Pacific. You know, we had engineers with us over in Europe. And I just think we need to be more open and inviting in getting those folks in because we got a lot of innovation out there, and we need to just make sure that we're tapping into all of it.
Speaker 1:Last question, and we'll let you go. A lot of early stage, defense tech companies, they don't always have the opportunity to go run a large scale pilot with the defend Department of Defense or the US Army on day one. Some of them are getting, experience in Ukraine, for example. Has that been is that an effective path to pull some data from, a Ukraine experience as a start up and then, use that as a case study to make the case that the US Army should at least demo, what they're building?
Speaker 7:Yeah. I mean, that has we've we've taken a lot of that. We're collecting a lot of that. And, we we are creating our own environments. You go to any of our combat training centers
Speaker 1:Sure.
Speaker 7:We have that out there where we have jamming, you know, they're going to have to face the electromagnetic environment that we can replicate to do that. So we're doing that at our combat training centers. We're doing that at home station training. So again, just getting these companies and that's what we want to do. We want to invite them in and we're doing that.
Speaker 7:Next week, I'll be down at our joint readiness training center and we got a whole bunch of new companies that are coming in there showing us the systems that we have. And again, this gets back to being agile in our funding. And the secretary and I talk a lot about we want these small companies that are very innovative involved in what we're doing and and building products for our soldiers.
Speaker 1:That's fantastic. Fantastic. Neil, Stuartie?
Speaker 3:No, this was great.
Speaker 1:Thank you so much for taking the We really appreciate it.
Speaker 3:And thank you for all that you do. You do.
Speaker 7:Yep. Thanks for having us on.
Speaker 1:Appreciate it. Cheers.
Speaker 3:Bye. Talk soon. Super helpful perspective.
Speaker 1:Yeah. Very interesting.
Speaker 3:And honestly, it's makes, I mean, it's always a bull signal to me when people in any type of leadership position are willing to go out be on the media, you know, the front lines of the media telling their story. You know, we've seen, you know, possible cross.
Speaker 1:Go ask every drone company we've talked to, like, hey, have you actually taken the army up on their offer? They have electronic warfare test sites. Are you there? Are there? Are you just are you just building CGI renders?
Speaker 1:What's going on? Are you actually out there on the test sites getting shot down by the US army? Because I imagine you build something, you raise some money, and the VCs are like, yeah. This sounds great. And then you take it out there and the army just destroys you.
Speaker 1:It was like, this is 1% of the
Speaker 3:way they're People are nervous to do
Speaker 1:the Sequoia partner Yeah.
Speaker 3:No, no, no. People are nervous to go, you know, do a demo for VCs, but For SaaS? Doing it for the one customer that you need to make your business a reality.
Speaker 1:Yeah. Well, we have we have Adam Porter Price from Andrew joining next, I'm sure we can ask him about these demos because they've been on an absolute tear launching different missions, different programmers record. They just made an acquisition that we'll ask them about. So welcome to the stream, Adam. Thanks, guys.
Speaker 1:Great to have you here.
Speaker 3:Great to have you.
Speaker 5:I'm excited to be here.
Speaker 1:Thanks so much. Can you introduce yourself and then give us the breakdown of the news from this week?
Speaker 8:Yeah. So I'm Adam Porter Price. I'm the head of M and A at Anderle. I also look after some of our strategic partnerships as well. And this week, we announced that we acquired CLASS, which is a ruggedized computer company.
Speaker 8:They're based all over the world. They got locations in, in The US as well as Ireland, and they've been making sales, you know, to to US and allied governments.
Speaker 1:So what's important about ruggedized, ruggedized computing in the modern warfare context?
Speaker 8:So every robot, every Enderal robot has a computer in it. Mhmm. And it turns out that, like, actually making a computer that can go into places that is hot, dirty, it's gonna get dropped a lot, things like that, is actually kind of hard. And we have tested we have tested other people's computers. Like, we have we have taken computers out into the desert and, like, tried to make them work on the back of a JLTV and run program run Lattice, our operating system.
Speaker 8:And, like, basically nothing works, right? It it is a difficult and very demanding environment. And the only computer that we've seen consistently work when you're out in that environment where a warfighter has to be able to do something when they're out in the field is the class is the class computer.
Speaker 9:So Amazing.
Speaker 8:Amazing. We we use a lot of their computers today, but we have visions for what we wanna do with them in the future. And, like, the number one thing that is extremely likely to happen is that there are gonna be more computers out in the world, and they they need to make decisions. Like, our our our AI needs to be able to do stuff without being able to phone home, and ask for permission. Like, there's decisions that have to be made, and literally can't happen fast enough over the Internet or over whatever networks.
Speaker 8:Right? The speed of light is not fast enough. Yep. And so, like, you actually have to make these decisions on the device.
Speaker 1:Yeah. I imagine, like, the device gets hot. You want a fan to blow it up. Now water flows in. Like, there's just like a constant trade offs.
Speaker 1:Right?
Speaker 3:I was I was thinking, you know, maybe another bidder in the process would have been Sonos because I can't even get I can't even get my Sonos speakers to work in my Don't
Speaker 1:get Jordy started on Sonos.
Speaker 8:I I with you guys. I I I love my Sonos and then they messed up the app like, nothing
Speaker 1:works at all. It's it's so, so bad. Anyway, quickly, can you benchmark, what one of these computers feels like relative to, you know, a a phone, a laptop, a desktop versus, like, a server rack of h one hundreds? Like, how powerful does the system roughly need to be if that's not classified?
Speaker 8:So the reason why we we we acquired this company is because the team can actually make lots of different types of computers.
Speaker 9:Like, when
Speaker 8:we buy a company, we're we're really they they often have a product that we like a lot. But really, what we're doing is we're getting an amazing team.
Speaker 1:Sure.
Speaker 8:And what we love about this company is that already they were sprinting with us on building a new product that we did, I think we announced this week, Menace T. Right?
Speaker 1:Yep.
Speaker 8:But like we have we have a lot of grand designs for different types of computers that we think need to exist in the world.
Speaker 1:Yep.
Speaker 8:And so they have they they have a very popular computer called Voyager. And and it's like it's about this big. Like, it's it's probably the the size of a really thick hard hard cover book. Sure. But the the team is extremely capable of building lots of different types of computers.
Speaker 8:And then the other thing that they do, which is for for some people, like a little bit boring, but actually extremely valuable, is that they will build the chassis that that's ruggedized. Like you can drop it off of a c one thirty and like it's gonna hit the ground and like it's gonna be fine. Still gonna work. Right? It has all of the cooling in it that you need.
Speaker 8:It can carry a lot of different radios. Right? So you can plug in a Silvis and a persistent systems and a whatever radio into it. And so, like, you actually can go do the stuff you need to do out in the field. You can run Lattice.
Speaker 8:You can talk to lots of different people that are using lots of different radios. And this is just, like, an absolutely invaluable capability that we have to have.
Speaker 1:Okay. Talk to me about the anatomy of the deal. Is there, like, an investment banker involved? When did you guys meet? I've heard this story, like, oh, if you're gonna get acquired, you'll meet your acquirer a decade before the deal You don't just cold call and say, hey.
Speaker 1:I'm ready to get out and take my stock off me.
Speaker 8:I mean, if you're if you're a good if you're a good acquirer, you are out in the market and you are talking to two to 300 companies a year Mhmm. And you just, like, you know everybody. Right? Like, there's not that many companies in the world, and there's not that many good companies. And so the chances are pretty good that and in fact, like every single company that we've bought, we've known them for a while.
Speaker 8:Right? We've watched them. We've talked to them for years in advance. And like we've been buying class computers for for years. We knew that they were really, really talented.
Speaker 8:And we we realized last year that not only is our demand for computers just insatiable, but the things that we would like to do if we had this team working for us, we could go build products that as two separate companies we would never be able to do. Right? It would just be too hard to make the incentives work. And we like, we never buy a company that's for sale. Like, we always make them for sale.
Speaker 8:We go find them and we ask them, like, will you? We we think that there's there's two paths, right? There's a path where we are separate companies and we do things arm's length, or there's a path where we are one company and we are able to move much faster together. And and and in every company we've bought, that's that's the route that they've chosen. Right?
Speaker 8:And so we've been working on this for since last July or August. Mhmm. And, yeah, this this is how long it takes. It takes nine to twelve months to buy a company like this.
Speaker 3:The the line that that stood out is that we don't buy companies that are for sale. And I wanted to highlight that because I Really? I believe there's a sentiment in the defense tech community that's, you know, it's all I've kind of butchered.
Speaker 1:Who cares if I raise $200,000,000
Speaker 3:annual will buy me? Like, yeah, shoot to be a new prime. And even if I miss Someone
Speaker 1:will buy me.
Speaker 3:I'll just run a process and I'm so talented or,
Speaker 6:you know.
Speaker 1:Yeah, so I wanna know, yeah, what is the state of, of like the market, the M and A
Speaker 3:market Yeah, and the thing I wanted to specifically highlight was, a lot of teams look talented on paper. Mhmm. But if you've been, if you've raised and been working on products, even if you don't care that much about the products they built in the past, you're still gonna be hypercritical because your, the real resume is like, well, what have you built with $10,000,000? What have you built with $50,000,000? What have you done?
Speaker 3:And and because that that says a lot more than who your investors were. Mhmm. Or, know, anything else.
Speaker 8:We we often, it's really hard to buy a company that has raised venture capital, because the pref stack is I mean, you guys know this, right? The pref stack is really, really high. So and our expectations when we buy a company is that we can, like, five to 10 x revenue in three to four years. Right? So you really have to have conviction that when you're paying when you're paying what we would pay for a company, and we pay in market multiples, like we we can lean in on some things.
Speaker 8:We can we can we can be flexible in a way that I wasn't able to do when I was doing this in in in more traditional companies. But like we still we're not crazy. Right? We pay like what you would what what a fair value is for a good company. And so, we we can lean in a bit, but if somebody goes out and raises a couple hundred million dollars, like, the the outcome that they have to have in order for their investors to be happy and for the common to have a good outcome is really, really high.
Speaker 8:And I actually think that the ceiling on like a YOLO, like let's just do this and be legends acquisition, it's like 3 or $400,000,000. Like when when Boeing acquired Liquid Robotics a couple years ago, that was a company that they had invested in. They were a little bit bailing out the venture capital arm because the VC arm had had invested in it. And so like Big Boeing was like, alright, well we're gonna yeah, we wanna own this. And I'm I'm certain that they I think they paid about $300,000,000 for it.
Speaker 8:I'm certain that that was 10 x forward revenue. I I don't believe that they ever hit that 10x forward revenue number. But like I actually think that that is basically the ceiling that a traditional buyer can be like, yeah, let's just rip it, right? Above that the board gets involved. There's actual valuation math.
Speaker 8:Like people start to look pretty critical at it. And so for like a traditional buyer, I actually think that that's the ceiling. And like we're not stupid, right? We don't make dumb decisions about acquisitions. We don't just like rip it because it's it would be cool.
Speaker 8:And we're helping somebody out, right? Like we are we're we're pretty careful with how we value companies.
Speaker 1:Yeah. So so so you've talked to, you know, two or 300 companies in the defense tech space. I'm sure some of those have raised venture capital. Every How are these companies being built without venture capital? That seems very, counter to the narrative.
Speaker 1:Everyone says, oh, I need to raise so much money because everything's so expensive. We gotta hire all the engineers and pay for all the drones I'm gonna blow up. But yet companies are doing it, so something must be, you know, unspoken.
Speaker 8:Takes them it takes them longer time. Right? And and and but what you'll find is though that they just make decisions that you make when you are when when you you have to be cheap and cheerful. Right? You have to, like, hustle, and you have to figure out a way to do it.
Speaker 8:And so, like, a lot of times when we find companies, they've just found a really clever way of doing something that allows them to get their product out. And like all of these guys are hustlers too. All these men and women who run these companies, like they move. They're hustlers. They they they are they are good at at running their companies.
Speaker 8:And and like that's why we wanna own them.
Speaker 1:That's awesome.
Speaker 3:Do you expect more competition from primes on the M and A side in, call it, two, three years? Like, it seems like right now they're they're asleep at the wheel. And and to be honest, I don't think a lot of talent would be like, oh, I wanna be the talented team to go join the non talented team. And then, you know, you you you, it's not that fun, you know, to be like the best team at a company, right? And you know, many ways.
Speaker 3:Yeah, wanna be on group of all A players.
Speaker 8:In some ways, that's what the money is for, right? Like, if if if you pay enough, right? That that that's what the money is for. But yeah, I I'm with you.
Speaker 3:Well, yeah.
Speaker 10:And so that's
Speaker 3:what I'm that's what I'm kinda getting at. Do you expect you guys come in three years from now and say, this is a, you know, we believe this is a fair price. And then, you know, some other prime comes over the top and it's like, we're gonna pay double just because we're we're getting killed over here. And that happens
Speaker 8:at
Speaker 3:I
Speaker 8:think ever pay double. I don't think they'll ever do that. I I often am in deals, and, like, there are other people in this ecosystem that are smart. Like, other more traditional, but not super traditional, but other other acquirers. And the problem is that, like, they are just you have to do, like, a hundred things right to buy a company like this Yeah.
Speaker 8:And and to and to win. Right? And if you do some of those things wrong, and, like, a traditional incumbent is just is just they they have so many impediments in their way of keeping them from doing this. It's not just like finding a good company. It's not just showing up and saying like, we wanna pay a lot for you.
Speaker 8:There's so many other things that you have to do right in terms of taking care of the team, committing to investing in additional products in the future. And so like, I I think it's actually pretty hard for them to do. I used to work in a more traditional acquisition environment, like M and A environment. I know what this is like. It's really hard for them to do.
Speaker 1:Yeah. Well, this is awesome. I I know you have to get out of here. It's 11:29. We will talk to you soon.
Speaker 1:I'd love to have you back. We could go way deeper. I'm sure there's tons of people that would learn a lot from what you have to say. So thank you so
Speaker 10:much for joining.
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Speaker 1:Delta v with Delian. He's not here yet, so let's do an ad for one of his companies in his portfolio, Eight Sleep. What's new in Pod four Ultra? Pod four Ultra has all the signature features you love about the pod plus new groundbreaking upgrades. How'd you sleep last night, Jordy?
Speaker 3:I put up an 89, only six hours fifty eight minutes.
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Speaker 3:your new milestone, John, How did I
Speaker 1:get so little sleep?
Speaker 3:No, two nights ago, three nights ago.
Speaker 1:We thought we were gonna have a real like battle back and forth and Jordy just ran away with it in the first quarter.
Speaker 3:I take it seriously. Anyway. I take it seriously. Oh and we're having Matteo from Eight Sleep on.
Speaker 1:Fantastic. Next week.
Speaker 3:We're gonna get a bunch
Speaker 1:of sleep people. Brian John's performing as well. We should have the WHOOP CEO back as
Speaker 3:well. Yeah.
Speaker 1:Talk about that. Jump back on. Anyway, until Delian gets here, he's almost here, I'll tell you about AdQuick. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising.
Speaker 1:Only AdQuick combines technology, out of home expertise, and data to enable efficient ad seamless ad buying across the globe. And I'm excited to bring Delian into the studio. We have a yellow light, which I think means, like, he's kind of here. I don't actually know what that means. He's green.
Speaker 1:He's here. Welcome. Welcome to the stream, Delian. How are you doing?
Speaker 6:Yo. What's up? You guys are getting real commercial. I like it.
Speaker 1:Yeah. Yeah. Yeah. The ads never stop. The ads never stop.
Speaker 1:Thank you to the sponsors. You see it you see the ticker down there.
Speaker 3:The best companies
Speaker 1:We do hybrid commercial. We just didn't need sleep read. I know. So you're welcome.
Speaker 6:You should have, by the way, like, you know, come up on stage when I was, you know, interviewing senators last week at Hill and Valley Forum, you should have said, Senator, we sell ads.
Speaker 1:Yeah. We sell ads.
Speaker 3:Because remember we ran it, we ran it, we did a talk at Heretic on Oh, yeah. Ran a ramp ad during
Speaker 4:the
Speaker 1:We
Speaker 4:ran a
Speaker 1:ramp ad during the talk. Wow. Yeah. I think they paid us a couple hundred bucks, which was the highest CPM ever paid for any ad ever, I think, because there were, like, 50 people in the room. But, you know, it's like a $2,000, 10 thousand dollar CPM, but it's a lot of fun.
Speaker 1:Anyway, let's talk about modernization, army modernization. What are you reading into? What's being put out from the army, from the DOD, from the government? And, are there any companies that are taking advantage of this? It seems like they're very much welcoming Silicon Valley in it.
Speaker 1:I mean, they're on the stream two days after we tweeted. It's crazy. But, what's your take?
Speaker 6:Yeah. I mean, huge cultural shift. If you look at the, you know, sort of various branches and how they're known for, you know, sort of adopting next generation technologies, at, like, the tippiest, tippiest of the spear is basically, like, the Space Force, know, sort of subpart of the air force.
Speaker 3:Mhmm.
Speaker 6:Then next year, traditionally, you know, sort of thought of as the air force, then navy. And then typically, army is more of a, you know, thought of, I guess, as, like, a, you know, sort of laggard in terms of, you know you know, really, you know, sort of pushing the fold on tack. And so, you know, sort of clearly, they're starting to, you know, sort of shift that culture from within. And, like, I I do think it's, like, a very bullish signal that SecArmy goes from, you know you know, seeing that, you know, you guys, you know, are relevant to the tech ecosystem and the Catherine Boyle thing, and, obviously, the comms team there being like, Sir, like, you have to you just go get on this. And like, to do that in forty eight hours is like very not trivial.
Speaker 6:Like,
Speaker 1:I don't even know how they got my email. Like, I tweeted US Army come on TVPN, they just emailed me five minutes later. Was crazy.
Speaker 8:No way.
Speaker 1:Yeah. Was wild. They emailed me directly. It was amazing. Yeah.
Speaker 6:Yeah. I mean, look, I think there's, you know, sort of a lot of, you know, sort of changes and chaos from the new admin and, you know, know, like, I've been seeing this at a very tactical level with, like, sort of portfolio companies where it's like, know, they're going from, you know, we we talked about this plenty of times, but, like, continuing resolution, reduced budgets to, okay. There's now this reconciliation bill that's, you know, sort of coming in, but then, like, congress has to go, blah blah blah. And then there's already talk of, like, well, maybe they're not gonna be super pleased with that reconciliation package in congress and pass it all, and they're maybe already talking about a fiscal year twenty six continuing resolution. So they extend extend the, you know, sort of current budgetary environment.
Speaker 6:And so you're seeing that, you know, sort of volatility, you know, just show up within individual program offices where there is a little bit of, like, you know, sort of retreat to safety of the, you know, sort of preexisting, you know, sort of programs, preexisting, you know, sort of contractors, etcetera. And so to have, you know, sort of US army talking about, hey. You know, even in this budgetary environment, even with all this volatility that we're, you know, sort of leaning in, you know, sort of on, you know, sort of net new, you know, sort of players and net new technologies. I think it's a real, you know, sort of bull signal for the cultural shift that's happening, you know, sort of within the army. You're seeing that, you know, sort of some amount within other, you know, sort of branches, but, like, there's sometimes pushback too.
Speaker 6:I'll give an example that I thought was really interesting. Yesterday, I'm forgetting the, exact official. I think he was, like, a major general, I wanna say, within the, you know, sort of space force. I'd have to, you know, sort of look up the headline. But he basically, you know, sort of went on stage at a space conference, not space symposium, but another one.
Speaker 6:Anyways, this is, like, two days ago. And, basically, he was like, look. I have a lot of people that keep pitching me on, like, orbital refueling. We've even funded some orbital refueling companies. I don't think that this gives gives us any significant advantage anytime soon.
Speaker 6:The, you know, time where this will be relevant to the warfighter is when there's probably a significantly larger number of, you know, sort of, Space Force satellites up in orbit to justify this, but that's not gonna be anytime soon, and it's probably a decade away. And so, you know, it's kinda interesting, you know, to see these, like you know, so in some ways, like, counter to what you'd expect. You think Space Force is, like, bleeding edge, adopting the you know, some new technologies, and you have, like, a major general saying, like, we don't think refueling technologies are particular, you know, sort of relevant. And so indicating, hey. Maybe the tech ecosystem is, like, pushing too hard on next generation capabilities before it's relevant.
Speaker 6:And then you have the army, which is thought of as being a little southerly being like, we want next generation capabilities. People aren't pitching us enough on, you know, sort of this type of stuff. Yeah. So, yeah, those are two. I feel like, you know, sort of, you know, people are reversing seats.
Speaker 1:Yeah. I mean, at the same time, I feel like the the the story with the army was interesting because it wasn't just, like, IVAS, which is obviously this, like, debacle that took thirty years, never really got anywhere. Now it's in the hand of Andoril. You could you can imagine that when Andoril shows up and is like, hey. We're ready for you to buy this.
Speaker 1:It's gonna be pretty good because it's in Palmer Lucky's DNA, and I think he's just like, you know, the ego of messing that up would not allow he would never ship something that doesn't work. Right? But but then we also heard that he was like, oh, yeah. One of the tech companies that we visited was just Microsoft because, of course, we need databases. We need email.
Speaker 1:We need Excel sheets probably, all these things. And I'm wondering if there will be a next, like, a next generation. OpenAI was one that that that he called out, as, hey. We get all this data. We can drop LLMs on top of it.
Speaker 1:And I wonder if there will be kind of a second wave of defense tech where enterprise SaaS companies, as much as we like to joke about, like, let's put the government on ramp, like, it really might happen. And there's all the there's gonna be all Yeah.
Speaker 3:I wanted to ask.
Speaker 1:For recruiting.
Speaker 3:Yeah. That was something I wanted to ask, but we didn't get a chance because we only we we only had it, like, ten minutes or so with each. But Yeah. Is there is there not enough founders in defense tech doing non kinetic, non sci fi Yeah. Sort of boring, you know, just like effectively Yeah.
Speaker 3:You know, the modern CRM for x y z,
Speaker 1:you know? Yeah. We we had
Speaker 3:on that was doing supply chain, logistics, management? Rune? Rune. Rune?
Speaker 1:Yeah. That's why. Yeah. So, Deleon, what what are you seeing in terms of nondefense tech startups start exploring working with the government in one way or another? I imagine that it's very it's easy to, like, slap that on.
Speaker 1:It's like, oh, yeah. We're cool. We have an American flag on the wall. At the same time, there is a real need, and it does seem like there's been some neglect here.
Speaker 6:I'm gonna do the classic media thing where you asked me a question, and I'm gonna answer what I wanna answer.
Speaker 1:Please. Which is Just do whatever.
Speaker 6:All blend together. It's a pro.
Speaker 1:It's also a bit
Speaker 6:of a ramp ad. Cool. Today, Stripe and Ramp announced that they're gonna be partnering together to issue stablecoin backed in Latin America.
Speaker 1:Yeah.
Speaker 6:Now it's interesting to think about, okay. So why LatAm? Why aren't they launching this, you know, necessarily, you know, US, Europe, etcetera? You can make the arguments on, like, hey. We have more currency stability here, so it's not as relevant.
Speaker 6:There, the value proposition is a lot stronger. But I think it's always interesting to study. If you look at, you know, let's say, next generation sort of payment systems, how much is done via, like, mobile QR codes, tap to pay, etcetera, you actually see that some of the more modern infrastructure is actually in more of the laggard countries because they don't have this sort of preexisting, let's say, ACH wire systems, etcetera, that have been built up over the course of a century, so it makes it harder to fully adopt and switch over. Whereas, like, in Africa, if you look at, like, mobile payments, you know, QR codes, etcetera, the, like, speed of transaction, it's actually, like, faster and better and lower fee there, but it's because there was no sort of preexisting, you know, sort of infrastructure or innovation there. They sort of leapfrogged us.
Speaker 6:You know, you can kinda make
Speaker 1:this Greenfield.
Speaker 6:You know, sort of China too is, like, it was
Speaker 4:more of
Speaker 7:a greenfield. It's mobile.
Speaker 6:Have the, like, super apps like WeChat. It's because, like, they didn't have all of these individual apps that existed before, and so one can come onto the scene with a super app. And so to tie this, you know, sort of into DOD, is you need to think about perhaps the places that are going to in general gov, let's say, not DOD alone. Perhaps the places that are gonna be able to, you know, sort of leapfrog are going to be some of the places that have been the least innovative over the past twenty or thirty years because they don't have any preexisting infrastructure or concepts for how do we adopt next generation technologies. Right?
Speaker 6:Within the air force, there is the, like, air force research laboratory, AFWERX, which is meant to basically, you know, sort of be one of their early funding mechanisms for these next generation technologies. In the army, you kind of have, like, army futures command, but it's much less built out of an infrastructure of, like, how do we adopt next generation use of technologies? There isn't, like, a preexisting pattern, and so maybe it can be a bit of a leapfrog in a use of greenfield. And then the equivalent on the, like, OMB smart card, etcetera, side of things, like no. I don't think there's been, like, an RFI for, you know, next generation payment systems for, like, the Fed and, like, the corporate card system in The United States in, like, thirty years.
Speaker 6:And so in some ways, they don't have any, like, preexisting biases infrastructure etcetera. They can be like, yeah. We're just gonna, like, completely radically rethink, you know, the entire way that we do it, and adopt the stuff from scratch. On, like, the VC side, am I seeing tons of people working on this? I don't think so.
Speaker 6:Like, it still feels like it's a little bit of an underexplored trend. I think the biggest thing is more, like, some of these incumbent companies realizing that there is a real, you know, sort of gov opportunity. So I don't think that you're gonna see, like, next gen corporate card companies start that are focused on the Gov. I think where you're is, like, ramping, like, oh, I didn't even think about the idea Totally. That the government could be an adopter of my technology.
Speaker 1:Because the whole point of commercial off the shelf is that it's commercial off the shelf. Like, if you build it just for the government, yeah, you have one buyer, and that's a problem. But, also, it's not gonna be as good of a solution as if, like, yeah, also every Fortune 500 company uses it, and you're under immense pressure to deliver the best possible product.
Speaker 6:Anyway Totally. Like, yeah, they they you know, the reason that RAMP most relevant for them is because it also has all these commercial customers where you can adopt the, like, best in class, basically, like, know, sort of patterns and, like, you know, I think they talked about yeah. I I forget if we talked about this when I went on TBPN during, you know, AHVF. I think it was before this panel. Mhmm.
Speaker 6:But just like the, you know, senator Ernst and, you know, you know, Eric panel was phenomenal. Just from the perspective of Eric talking about the, like, cost savings and efficiencies, they were able able to improve with an annual. It's like
Speaker 1:Yeah.
Speaker 6:ATB, you know, it just was on the show, O'Brien Schiff, etcetera, all super, super brilliant people. These are, like, the best technologists that have, like, tackled this field. And even for them, Ramp was able to, you know, sort of create significant efficiencies. Imagine what that happens when you get, you know, get it adopted into the government.
Speaker 1:Yeah. Well, speaking of, Adam Porter Price, he just came on the show. He was breaking down their acquisition of Class. Gave us some interesting anecdotes about how, the m and a markets work in defense tech. He's not buying a lot of companies that are for sale.
Speaker 1:He's also not buying a lot of venture backed companies. What do you think? What are you reading into Andruil's m and a strategy, as far as a venture capitalist perspective?
Speaker 6:Yeah. I mean, look. I think, you know, ABB is a very intelligent acquirer. Right? When, you know, I was listening into the last, you know, sort of five, ten minutes of his, you know, sort of talk, and it's like, look.
Speaker 6:He goes out and buys things where, like, there's a clear ability to, like, go five, ten x their revenues. There's a one plus one equals three in that, like, they can build products together within that the two companies weren't able to apart. And it's somebody that he's, like, known for years, not something that, like, when there's a fire sale because the VCs are starting to run out of money, like, you know, then he finally starts to take them seriously. And so yeah. No.
Speaker 6:No. I I I I do think there's a subset of investors that are investing into these defense tech outcomes that think that there is a potential, you know, sort of acquisition m and a option at the end of it. And I don't think there is the equivalent of, like I I you know, there's definitely these, like, massive mergers that happen, you know, within, you know, sort of the primes, but you don't see the equivalent of the, like, I don't know, like, Figma offer, the Google, you know, sort of Wix, you know, offer. Like, there's not the equivalent
Speaker 1:of What's that? Yeah. All of these. Yeah.
Speaker 4:Where we Yeah.
Speaker 3:No. Like, looking at it, there was there was, like, roughly 3,000,000,000 of defense tech funding in 2024. Like, there has to be a bunch of other exit paths. Not like Andrew Earl's gonna be like, oh, yeah. You know, we know your funds coming to a close in '10 We're gonna we're gonna acquire $9,000,000,000 worth of venture companies that
Speaker 1:are at the end of it.
Speaker 3:Just so we want you guys to get a nice three x.
Speaker 1:Yeah. Yeah. And, I mean, the the other thing is that, like, I think that it's easy to look at a headline number on some sort of acquisition that happened and think, like, oh, well, like, they were acquired for three x revenue. So, you know, we could probably that is probably our base case. But when he actually dug into it, was like, oh, there was this deal, but it was because, like, Boeing Ventures had invested in this company, and then Boeing bought it.
Speaker 1:And so there was, like, total, like, cyclicality of the deal and, like, all these special things going on. And it wasn't necessarily just, like, an open, fair price, all financial investors really setting a price in the market. And so there seems to be a lot of distortions in the M and A markets.
Speaker 6:Yeah. I mean, I'll give an example that was just announced today in the, like, aerospace field that sort of matches the negative pattern that APB was suggesting. So this company used to Capelle Space. It was one of the leaders in the synthetic aperture radar satellite. Think of this as basically like a different spectrum than, like, Planet Labs that, you know, largely focuses on, like, visual spectrum.
Speaker 6:This is more like radar based, you can see through clouds
Speaker 1:and clouds. Yeah.
Speaker 6:They raised, like, you know, $320,000,000 total. So right in that, you know, ballpark where APB was saying, once you've raised hundreds of millions, it's really hard to, you know, sort of, you know, go to an M and A outcome. The company was around for, like, twelve, you know, sort of thirteen years. In 2022 or '23, suffered a handful of setbacks, both like they had, propulsion issues that made some of their satellites end up deorbiting a little more quickly. They, unfortunately, on a Rocket Lab rocket that ended up having a launch failure, and so that basically satellite went down.
Speaker 6:Founding CEO ends up having to, you know, sort of resign. And company just sold for what looks like, you know, sort of 320,000,000 even though they're basically, you know, sort of preferred stack was 315. And it sold to this, like I forget the name of it, but it's, like, quantum fund or quant it was, like, some quantum related hedge fund that is gonna start using their data for, you know, sort of hedge fund trading and then try and develop some solutions on it. And so it's like
Speaker 3:Interesting.
Speaker 6:Looked at it. Basically, it turns into effectively, like, a, you know, sort of one x outcome for all the investors if you're selling for your, you know, sort of prep stack. And that's sort of, like, truly the best best case outcome that you can, you know, sort of get when you're, you know, call you have seven years in, probably, I assume flatlining in revenue, still significant, you know, sort of burn. There aren't any obvious, like, large DOD programs that they were, you know, sort of scaling into. Of into.
Speaker 6:Mhmm. And then you have this, like, counterexample that one of their competitors in the, you know, Los Angeles area, Umbra, that, has, you know, sort of raised less, but I think has taken this much more, yeah, don't know deeply the company's numbers, etcetera, but my just sense is, like, they've just been way more, you know, sort of capital efficient, and they're taking, you know, a longer time to, you know, sort of build up. But they're doing it in a way that, know, sort of gives them an outcome on the other side where I do think if, you know, need be, they could get acquired. And if not, I think they can probably run it for a pretty long period of time just just on use of revenues and cash flows. And so I look at, like, the defense tech ecosystem.
Speaker 6:I'm like, man, people are raising large amounts of money, and they think, like, oh, if I take the Silicon Valley approach of, like, burn fast, grow fast, etcetera, there will be, like, a whiz like outcome on the other side potentially. And it's like, no. Like, the you know, sort of m and a space here is, like, way, way, way, way more constrained because unlike Google or, like, let's say, like, you know, Facebook acquiring Instagram back in the day, there's much less of this, like, competitive threat by next generation players that grow really, really fast. There's just, like, not that equivalent dynamic where, like, you're going to get, you know, sort of bought out even with, like, relatively limited progress. You're only gonna get bought by, like, these very, very, you know, irrational buyers.
Speaker 6:Not to say that, like, Facebook's Facebook's, you know, sort of acquisition of Instagram was irrational in the long term, but in that moment, it looked very irrational. Right? Like, it was a deeply, deeply irrational purchase according to, like, traditional purchasing use of frameworks. I don't think, like APB said, there's going to be that in, like, the defense, you know, sort of tech ecosystem. They're only gonna be very rational purchasers.
Speaker 1:Yeah. Staying on, I don't know, cameras in space, I was talking to Kevin Weil from OpenAI, formerly Planet Labs, about, observation in v LEO, and he was saying one of the challenges is that orbital refueling and maybe the fact that it's farther away than we think. What is your take? I mean, obviously, you're one of the new LEO, you know, beneficiaries. What's your take on timelines for doing interesting stuff in very low Earth orbit?
Speaker 6:Yeah. I do think there's a, you know, sort of real challenge of, you know, if your business case is predicated on a certain mission timeline of, like, how long you're up there to take photos and generate, you know, sort of revenue. You know, there's definitely some interesting folks that, you know, Albedo Space is trying to build these very, like, dense and somewhat aerodynamic, you know, sort of satellites where they're trying to, you know, sort of close this gap between, hey. If we're lower, we, like, have slightly better, you know, sort of imaging quality. And if we make this thing somewhat aerodynamic, then we don't either have as bad out of, a, you know, sort of deorbit timeline.
Speaker 6:It just feels like it's you know, there's so many technical risks and hurdles where you're trying to, like, you know you know, the way that I feel like Trace sometimes talks about it is, like, companies typically should only really rely on, like, one miracle One miracle company. Success. These, like, multi miracle companies are somewhat difficult. Now, I I'm saying that like also, know, maybe Varda is also a multi miracle company. It's not trivial.
Speaker 6:But, you know, maybe maybe you're allowed to take a, you know, sort of multi miracle stab if you're
Speaker 3:also Oh, we have an American Pope now.
Speaker 6:So Yeah. Exactly. Exactly. You're gonna, you know, bless all of us.
Speaker 1:Switch switching gears, can you give us the update on India Pakistan? I feel like there's these geopolitical conflicts that boil up every once in a while. Sometimes they're just like random rubblings. Sometimes they turn into really huge things. Are you in the nothing ever happens camp, or or is it so over?
Speaker 6:You know, I think we're just gonna continue to vacillate back and forth between you. I just, like, I love this conflict, though. Well, not know. Like, people love conflict. Sorry.
Speaker 6:I find this conflict particularly, you know, sort of humorous even though it's very tragic Yeah. You know, sort of for a variety of reasons. Mhmm. The first is if you go to, you know, sort of Columbia University and go interview all of the, like, you know, sort of, you know, Hamas affiliated protesters that are starting in the library and ask them, you know, sort of which side of the conflict are they on, who are they rooting for, and who's the aggressor versus who's the, know, sort of persecuted. Mhmm.
Speaker 6:They have no idea what to say. They're so confused. Both sides are brown. Like, both sides are, you know, kinda, you know, crazy and poor. It's, like, not very obvious who's the terrorist and who's the terrorized.
Speaker 6:And so I love that it just, like, you know, sort of confuses the, like, know, sort of moral compass of these people that typically have, like, an, you know, sort of immediate answer. The second thing that I love is just, like, there's all these just, you know, sort of meme videos. There's this, you know, you know, sort of favorite of mine where, you know, anytime that you see, you know, sort of Indian and Pakistani people, you know, sort of yelling at each other, especially in English when they're arguing, it's always like, you motherfucker. You you you know, you motherfucker. No.
Speaker 6:You motherfucker. You know, you the motherfucker. And so I've enjoyed some of those, you know, sort of, you know, meme videos. And then the third is, you know, I do think I can guarantee you Russia, China, The United States are all studying this, you know, you know, conflict very closely because you're seeing a testing of, you know, sort of real bleeding edge systems in a way that, like, you know, Russia, Ukraine for sure showed. But the, like, current sorties that are happening, you know, sort of over India and Pakistan, it's like, one, remember that these are both, you know, sort of, you know, nuclear powers.
Speaker 6:Mhmm. Two, they both have access to, like, you know, not current, you know, sort of generation, you know, f 40 sevens that, you know, you know, the current administration is building, but, like, a generation or two prior, absolutely. And there was a recent sorority that supposedly had on the order of, like, a hundred fighter jets that were firing at one another. Now technically, no sides fighter jets, you know, sort of, you know, crossed into, you know, sort of enemy territory, but they were definitely firing missiles at
Speaker 3:each What's the latest read on actual kills on the on the fighter side? It seemed like each each side was claiming different things. We're also seeing a different dynamic play out with the Houthis where they've taken down seemingly a large amount of Reapers that some of which we've confirmed, others we haven't. What what's actually what's best practices for as a country? Because on one hand, you should be honest with your, you know, nation and your your fighting forces and say, look, we lost this, you know, asset and hopefully the the individual pilot was okay.
Speaker 3:But on the other hand, it's like you wanna be, you know, show a sort of, you know, maybe you don't wanna admit at at at an in a conflict like that that you're actually taking losses, and so there's kind of like a game theory to it.
Speaker 6:Yeah. I mean, think OSINT is starting to change this a bit. Right? So, you know, India was trying to claim that there were no, you know, sort of fighter jet losses that they had on their side. The Pakistani side, there were photos that are, you know, sort of clearly components that are in, you know, Pakistani mountain ranges that are of only Indian fighter jets.
Speaker 6:And so it's like, can't, you know, sort of fight against that. I mean, again, maybe people are deep faking these, you know, sort of photos, but it's clear that there, you know, should have been some losses. There was also this example. I think this was only, like, three or four days ago now. I'm pretty sure it was an f 14 that was basically trying to land on the Truman and overshot its landing, but a part of why it overshot the landing was because the Truman was taking evasive maneuvers because of Houthi, you know, sort of activity.
Speaker 6:And so I I you know, there are people that are more informed than myself on this, but, you know, my probably, you know, rough estimate would be I'd bet that there are, you know, sort of more fighter jet losses in the past three months between United States, India, and Pakistan than there had been amongst those three countries in the prior, like, two decades combined or something like that. Mhmm. And so it definitely means that these things are, you know, getting trialed out for the first time ever. It's also probably pretty good for the defense primes that build those jets because I'm sure that they're getting bigger hoarders. You know, Palmer was talking about this, you know, sort of recently on this interview that he did, like, two or three days ago about how, you know, in order for them to win an f 35 scale program, they have to go public.
Speaker 6:And so that's probably true where it's like, Andoril, you know, at some point, will probably be a beneficiary of some of these things as their fury start to get into production, and people will keep demanding more and more. But if they wanna win that size of, you know, sort of human rated platform and program, they probably need to be public. And it's probably pretty good to be Lockheed and Raytheon right now and getting some big orders.
Speaker 3:What's your thesis around Fury is super exciting. You can imagine they scale it up to be bigger, carry bigger payloads, faster, more competitive with something like an f 35 or an f 47. But does Andoril advance so quickly from an autonomy standpoint that they're that they never have to do a sort of human rated, human enabled platform. Is that is that is that, you know, just from your personal standpoint, does that feel like a possibility?
Speaker 1:They just make them for Tom Cruise and the next Top Gun. That's it. They make exactly one plane. Has the IMAX cameras already baked into it.
Speaker 6:Feels like there's just a such a strong religion within, you know, sort of the air force around, you know, sort of human pilots. And yes, you know, CCA was like a, you know, sort of significant step towards getting them comfortable with, like, autonomous wingman, but, like, fully, fully, you know, sort of decoupling for some of these, like, larger, more capable, more expensive platforms from having, like, a human operator that, again, I think what happens is, like, the ratio of autonomous jets to human jets just significantly, you know, sort of, increases, I guess, over time where it's you know, right now, they talk about it as, like, three to four to one, and then over time, I think that gets to, like, a hundred to one. But I think they're still gonna want this, like, human orchestrator that literally just probably has, like, literal ball of Furies that are, like, you know, operating around the, like, you know, sort of fighter, you know, jet pilot. But I would probably bet on, you know, sort of five to one odds that it's more likely than not you know? And, again, it's hard to, you know, sort of gauge whether or not they win it.
Speaker 6:You know? I I think, you know, Trey and others have talked about, you know, how recently some of feedback that they get from the department is, like, they're winning too much. And so, you know, maybe they're not able to win because they're such big winners.
Speaker 11:But, you
Speaker 6:know, I put, like, five to one odds that they definitely, like, either sort of bid or, you know, architect some human rated, you know, sort of fighter jet system Mhmm. You know, in the next, you know, call it five years.
Speaker 3:Yeah. Yeah.
Speaker 6:Is that a personal perspective? This is not, you
Speaker 1:know, any your
Speaker 6:internal information
Speaker 1:Of course.
Speaker 6:Or speaking on behalf of founders.
Speaker 1:Well, while while we're on FF Portfolio Companies in the news today, Fiji CMO going to join OpenAI from Instacart, CEO of applications. The c now they have two CEOs and and running different divisions. Do you do you have a take about that? Not co CEOs. Not co CEOs.
Speaker 1:Are you worried that Will Brewery is gonna be poached at some point since Sam just seems to steal the CEOs from all over the market?
Speaker 3:Head of head of space. Head of space.
Speaker 1:We was thinking
Speaker 6:about CEO planet, now CPO there.
Speaker 1:Yeah. Exactly. Yeah. I mean, underrated, right, that, like, the old OpenAI team was was incredible, they all kinda scattered to the wind and started 25 different foundation model companies. But now he's putting together the Avengers again.
Speaker 1:It's great.
Speaker 6:You know, I you know, not to be rude as the prior, you know, v one Avengers, but I think the v two Avengers are a little more sane, commercially appropriate, and a little more stable. You know, I think the the v one was probably right for, like, the research lab days
Speaker 1:Totally.
Speaker 6:Be a little crazy. Now that, you know, it's a commercial company, probably a little different. I don't know. I mean, you know, there's so much news that I feel like has come out of OpenAI over the past week that I do I do think fundamentally changes how you should, like, underwrite the company over the next, you know, sort of five years where, you know, it seems like, you know, they're sort of abandoning the full for profit conversion. It seems like Microsoft is not necessarily fully willing to give up their, like, rev share and percent of, you know you know, the the revenue they get at these, like, larger scales that they originally promised.
Speaker 6:And so that negotiation is clearly not done. And then in Sama's announcement, you know, sort of tweet, he was like, by the way, I am staying on as CEO of OpenAI even though this person is CEO of applications. It's like, well, nobody was asking that question, but, like, given that you're clarifying, maybe we should be asking that, you know, sort of question.
Speaker 3:Well, made me think is it I mean, we we had o three explain ChatGPT's entity structure the other Opening eyes. Yeah. Opening eyes. And and it and it could not it was like explaining it five and it was it was extremely botched. You came away even more confused.
Speaker 3:So we don't we don't have
Speaker 1:We haven't passed that to a test.
Speaker 3:Real AGI
Speaker 1:is when he's gonna explain the structure of
Speaker 3:Being able to explain your own corporate structure. Yeah. But but I just read into that as like, maybe Sam is CEO of one entity in the stack and then, you know, OpenAI Global LLC is has a you know? Yeah. Yeah.
Speaker 3:Because they're not like co CEOs.
Speaker 1:Sure.
Speaker 3:Sure. Sure. Point to say that. So
Speaker 1:Yeah. I mean, you've been you've been a little bit negative on on wrappers, on companies building on top of, on foundation models. And yet, another FF portfolio company, Windsurf, acquired by OpenAI, three billion dollar outcome. It seems like it it I don't
Speaker 6:think WinServ is a portfolio company, by the way. Maybe it is.
Speaker 3:So it's publicly reported.
Speaker 1:It's publicly reported. I I don't know how that would be the case. We we missed that when we saw that.
Speaker 3:I found it on '3 different
Speaker 1:platforms. Who knows? Could be fake news. But but the big thing is this, like, is it game on for application layer companies now given that you can go and raise a very traditional venture path? And the narrative of, oh, you're just gonna get steamrolled might not be there because $3,000,000,000 is $3,000,000,000.
Speaker 1:It's a pretty good outcome. Right?
Speaker 6:I mean, look. This is the, you know, perfect example of, you know, the delta between, you know, sort of defense tech companies and AI tech, you sort of companies. Like, one, there is the, like, hey. I am the big company with lots of cash. I feel slightly threatened.
Speaker 6:The, like, exponential growth of these things can sometimes be inescapable, And so or I need to buy this and have, like, a player in the race. Yep. And then on the defense side of things, there is no such thing as, like, uncontrolled exponential, you know, sort of growth. In some ways, the government explicitly, like, meters your progress where they want you to see you accomplish x y z thing on a smaller program as a lily pad to a larger program, larger program, etcetera. It's a it's like, yes.
Speaker 6:Op you know, Anderol has done super well, but if you compare them to the, like, exponential revenue growths of the, like, OpenAI's, the ramps, etcetera, of the world, I don't think it's that. It still is, like Yep. Super linear, but, you know, there is some, like, you know, natural cap on, like, you know, true, you know, sort of growth rate. And so I do think it then makes it more rational for investors to be piling into some of these AI application companies. Like, look.
Speaker 6:I still you know, I'm probably not a, you know, you know, bull on things like Harvey as an example.
Speaker 4:Sure.
Speaker 6:Not to, like, overly pick on them. But when I think about, like, you know again, not to pick overly on another company. But if I were think about, like, the irrationality of some of the, like, you know, Harvey, you know, prices versus the Ceronic prices, at least with Harvey, you can rationalize, hey. There are these, like, multibillion dollar acquisition outcomes that are, you know, almost certainly going to happen quite regularly. I don't know, like, who buys Cyronic.
Speaker 6:Right? Like, I don't think that, like, you know, Electric Boat, you know, the General Atomic subsidiary, etcetera, is buying, you know, Cyronic for their shipyards for $3,000,000,000.
Speaker 1:Like Yeah. Yeah. Yeah. Yeah. It's totally possible that the windsurf thing causes this cascade of, like, every hyperscaler needs an IDE company, and it's just like boom, boom, boom.
Speaker 1:And they all have $10,000,000,000 to spend. So, you know, oh, is 10,000,000,000 too much? Maybe 2,000,000,000 happens. But, like, multibillion dollar outcomes, we could see a whole bunch of this. Same thing with, you know, image generation, same thing with, you know, different agent models.
Speaker 1:Like, there's there's a way that, like, a lot of these could be baked into things anyway.
Speaker 3:I think the other question I'd be interested to get your point of view on. So we were at config yesterday. Figma came out with Make, Sites, Buzz, like a bunch of like very, you know, things that could be by themselves their own kind of businesses. Right? And I saw some commentary online that was basically saying that, like, every app is just, like, basically converging on the same feature set right now, it feels like Mhmm.
Speaker 3:In some ways where it's just like, make anything. You know? And and so, like, what hap like, in your point of view, obviously, you you went you very clearly took a a a you shifted away from looking at a lot of software, pure software opportunities. But how do you think VCs will change in kind of underwriting some of these opportunities where it, for some businesses that have been started in the last year, they're moving towards a place where everyone is weirdly competing over the same kind of like core use case at the end end of the day. Make an app.
Speaker 3:Make, you know, x y z, you know, thing.
Speaker 6:Yeah. I'll I'll I'll use a, like, example from more, like, back end, you know, sort of cloud infrastructure that was related to AI. There was all this hype in, like, '21 and '22 around and I I may butcher this because, again, not my field, but I believe it's, you know, the term was basically these vector, you know, sort of databases. Were a way of basically storing a lot of the, you know, sort of model weights that, you know, sort of pre training, you know, sort of data that you were, you know, sort of working with. And, you know, you're fine tuned, basically, models on top of the, you know, sort of base foundation models.
Speaker 6:There was a whole set of investors that plowed, like, hundreds of millions of dollars into these companies. They had crazy revenue growth. And then, like, within twelve months, AWS made it a feature. Google Cloud made it a feature. Azure made it a feature.
Speaker 3:Yeah.
Speaker 6:And the company basically usually dropped off to zero because it was like, yeah. This is just a natural cloud feature. Thanks so much for pointing it out. Thank you, VCs, for, like, funding hundreds of millions of dollars to, like, you know, make, you know, our customers very aware that this was necessary. But it turns out, like, people just like having things in a single platform that they already have a relationship with.
Speaker 6:And so, yeah, I think, like, you know, if I were, you know, sort of, you know, Dylan, CEO of Figma, I would just be, like, studying what all these VCs are funding and then being like, great. I don't even need to buy this. This is so easy for my internal team to build that I will just go build the best applications. And then it turns out the CFO is like, well, why would we have two design software contracts? You know, we already use Figma.
Speaker 6:It's already rolled out to everybody. Everybody knows how to do it. Let's just kill this AI thing and just, like, you know, use the AI up within Figma. And so I think that, like you know, I don't know if you guys remember this term, Sherlocking. Mhmm.
Speaker 6:It was you know, this is for the, you know, sort of viewers on the show that are, you know, below the age of 30. Back in the day, there was this app on the Mac App Store called Sherlock. That, you know, was very popular. Some VCs funded it. It was getting, like, millions of use of revenue.
Speaker 6:All that it did was if you hit command space, it'll it pulled up a little search bar, and allows you to search all your applications, etcetera, on your Mac app. And then one day at WWDC, Apple was like, hey. That's a cool idea. We're just making it like an OS feature. And so and on, it was known as getting shirtlocked when a big tech company just is your entire company as a free feature in the, like, software that they already have all the distribution on.
Speaker 6:And so Yeah.
Speaker 1:I mean,
Speaker 3:I I looked at a lot of these generate an app companies. Mhmm. And, you know, looking at their revenue ramps, it's just it's always it's all it it should be nerve racking if your revenue is ramping that quickly and there are founder mode incumbents that are in the same category because usually means you can build said thing very quickly. But Yeah.
Speaker 4:Anyways, this
Speaker 3:is fantastic.
Speaker 1:Thank you so much.
Speaker 6:Great to
Speaker 3:have you on.
Speaker 6:We'll talk
Speaker 1:to you soon. DeltaVideo, and that's the end of that. Godspeed. Next up, have Harley coming in from Shopify. We need a bunch of size gong because it's earnings day, and we're pleased to report that Shopify delivered.
Speaker 1:Did. 2025 revenue rose 27% year over year, 2,360,000,000.00 edging past the 2,330,000,000.00 consensus. They beat the analyst estimates. And we're excited to have Harley here in the studio. Welcome to the show, Harley.
Speaker 5:I'm so glad to be here. Can you guys hear me okay?
Speaker 1:Yeah. Oh, yeah. You sound
Speaker 3:Loud and clear.
Speaker 1:So run us through it. Give us the breakdown. How are you processing today? How how are things going?
Speaker 5:Things are going really well. I mean, I think q one I mean, remember, obviously, Shopify is a bit of a seasonal business, meaning q four is always, like Yeah. We're we're we're ultimately in retail, so q four is always a a big quarter for us. But q one was amazing. Revenue was up 27%, with 2,400,000,000.0.
Speaker 5:Free cash flow margin hit 15%, so about March 03/1930 and $63,000,000. And then it was our seventh consecutive quarter of GMV growth above 20%. It was about 70 almost 75,000,000,000, GMV is always important because it speaks to how well merchants are doing on the platform. So I'm I'm, you know, I'm when when Shopify does well, I'm obviously very proud. I'm I'm especially proud now because I think this is, you know, just to say the thing, this is a very unpredictable market, and I think Shopify's superpower of agility really comes into play here.
Speaker 5:I actually mentioned something on the call that didn't really get picked up, but because you guys are interesting people, I'll share with you. Please. We've been public now for almost ten years to the day.
Speaker 1:We did
Speaker 5:we we had our IPO 05/21/2015. And if you look back on the last thirty nine quarters or so 39 cohorts of merchants that have come on, 38 out of 39 cohorts of merchants on Shopify have outperformed the greater ecommerce market. So Wow.
Speaker 1:One of
Speaker 9:the things I'm
Speaker 5:I I I'm I'm very, proud of is that merchants on Shopify seem to be doing really really well. But I'm excited to be on your show. Mean this
Speaker 1:is Yeah. Thank you. Thank you for
Speaker 5:joining the online time. I mainstream media to do
Speaker 1:this because like
Speaker 3:There we go.
Speaker 1:We are the mainstream now. We are the corporate funded media. That has some connotations.
Speaker 5:I think this is better than mainstream because it's not mainstream.
Speaker 1:Yeah. Yeah. No. No. No.
Speaker 1:We love it. So, yeah, I mean, you talked about the the tumultuous market. There's a lot of headlines at the same time. Stock market went way down. Stock market's kind of back up.
Speaker 1:What should people be reading into new business formations, just broader entrepreneurship trends and the data from Shopify about the health of the American entrepreneur?
Speaker 5:Yeah. I mean, look. Let me talk about macro a little bit first. Sure. We were around in 02/2008.
Speaker 5:We were a tiny little company, but, I've spent I've spent, you know, almost a third of
Speaker 1:my
Speaker 5:this
Speaker 1:a snowboard shop originally?
Speaker 5:Well, we were a snowboard shop in 02/2004, but
Speaker 1:Okay, four.
Speaker 5:Yeah, like, started a snowboard shop and then Yeah. Actually, when I was in law school,
Speaker 11:don't know
Speaker 5:you guys know the story, but
Speaker 1:Yeah.
Speaker 5:I when I was in law school, I I was born in Canada, grew up in South Florida, ended ended in in college in Montreal at McGill, and then I went to law school in Ottawa, and I became one of the first merchants to use Shopify. Oh, cool. That's when I met Toby. Yeah. But, 02/2008 happened.
Speaker 5:And, actually, one of things we saw during the great financial crisis was that a lot of people turned to entrepreneurship either as a way to replace their job, their income, or as a way to supplement their income if they had a reduced, you know, had had reduced, hours if they were working at, you know, a restaurant or or a retail shop. During the pandemic as well, we sort of saw that during the pandemic, all these physical retailers that some of them were laggards that had not really, you know, moved online yet, began to move online at this amazing clip. So in many ways, this is sort of you know, Shopify kinda does well in these periods of of of uncertainty. But from our merchant perspective, we're not, you we're not seeing any changes in our merchants so far. Our data actually through April, so beyond just the quarter, but through April does not suggest any slowdown.
Speaker 5:It's still obviously fairly early to assess some of these impacts, but, you know, I think from a consumer perspective, one of things that also happens is in times of disruption, it does feel like consumers and retailers, they kinda lean into brands that they know and they trust. And you think about your favorite brands. You know? I don't know. For me, it's like Viore and Aloe Yoga and James Purse.
Speaker 5:Like, all those brands are all on Shopify. So things have been really good for us, and and I think that'll continue.
Speaker 3:Talk about I want you to talk about for a second the power of shop shop pay just because as a consumer, I'm I'm probably a DAU at this point. It Nice. Thank you. Truly, I mean, it's truly life changing. I I I wanna I would love to get your sense of kind of the what what is making Shopify so dominant today?
Speaker 3:I mean, we talk to a lot of entrepreneurs and obviously like the core platform. But can you talk about how kind of the the sort of like flywheel that that, you know, Shop Pay is is kind of creating in the ecosystem?
Speaker 5:Yeah. I mean, Shop Pay is really interesting for two reasons. One is, historically, we've we've really been a merchant facing product, a merchant facing brand. So people kinda knew Shopify if you were a merchant and entrepreneur. But for most people, like, we were the brand behind the brand.
Speaker 5:You didn't really know us. And both the shop app and and more specifically, to your point, Shop Pay, is really the first time that I think people are seeing the Shopify brand in the wild. And, actually, for the quarter, Shop Pay facilitated, like, $22,000,000,000 of GMV. That was up 57% year on year. If you look at the entirety, like, cumulative g m we launched Shop Pay in 02/2017, and we've done about $225,000,000,000 on Shop Pay so far.
Speaker 5:Part of it is that I think companies I mean, Amazon has done a really good job of this, actually. They sort of reset consumer expectations for how commerce is done. And I think for a lot of consumers, because of that, they want, you know, they want their products either shipped fast or they want it, you know, shipped cheap to them, or they wanna be able to do one click checkout. So this idea of, you know, we are not obviously a retailer. We're a platform.
Speaker 5:But if you were to pretend for a moment that Shopify was a single retailer, we would be the second largest online retailer in America after Amazon.
Speaker 10:Mhmm.
Speaker 4:We
Speaker 5:have millions of stores. We're about 12% market share in terms of all e com in The US. I think Amazon's somewhere in the, you know, forties or something like that. So one of the things that we're able to do is even though everyone on Shopify is an individual merchant with independent business and and and and independent brand, we're able to give them economies of scale as if they were the second largest retailer in America. And one of those, is Shop Pay.
Speaker 5:But Shop Pay has done incredibly well. And not just that, but we're also seeing that brands are now coming to Shopify specifically for Shop Pay. So we have something called Shop Pay Commerce components, which is, which is which allows merchants just to use Shop Pay. And the way we kinda think about it is that if you're a a big you know, a coach is actually a good example of this. Kate Spade as well.
Speaker 5:If you're these brands that have, you know, your own platform, maybe you're using a legacy platform or you have your own your own in home in, you know, homegrown system, you can actually use that component, and we sort of look at that as our way of starting a relationship with these very, very large brands. But Shop Pay has been been incredible. In terms of the the flywheel question, if you think, you know, historically about how Shopify started twenty years ago, really the focus for us was just ecommerce for SMBs, and then some of those SMBs got really, really big. Mean, Gymshark got big. Yeah.
Speaker 5:You know, Veory got big. Fashion Nova got big. Bombas, Allbirds. These stores that start their mom's kitchen table became billion dollar companies. And so one of the first changes was we sort of moved from just focusing only on SMBs to focusing on larger merchants as well, and and especially those that sort of grew up on us.
Speaker 5:And that that allowed, you know, established brands, Hunter Douglas, Mattel, OnRunning, that had their own systems to come and migrate entirely to Shopify. But the second thing that also happened was we began to think about, like, you know, what what is the future retail? Where is this thing going? And it became really obvious that the future retail was not just gonna be this, like, false dichotomy of online versus offline. It's gonna be retail everywhere.
Speaker 5:Mhmm. And then if you were going to be the the entrepreneurship company, the retail operating system, for the most important brands, you have to make it easy to sell on every surface area. And so we began to introduce things like point of sale and b to b and, you know, embedding our checkout into places like Instagram and, you know, x and, you know, every social media platform. Yeah. Obviously, YouTube is another one.
Speaker 5:We have a we have an integration to Roblox now. So if you have a toy company on Shopify or a company where your consumer spending time in Roblox, now you can actually transact directly in Roblox powered by Shopify. Mhmm. So the way that we kinda think about it is more of like a
Speaker 4:Oh.
Speaker 5:These different channels where commerce happens, AI shopping on, you know, AI shopping will likely be one of the, you
Speaker 1:know Yeah.
Speaker 3:So that's an area that I That's an area I wanted to to get to next is basically LLMs. I think you guys have made some early meaningful moves here. How how excited did you get about the intersection of shopping and LLMs as you started, you know, using some of these products just as a consumer? Right? I think a lot of people just early on start using it maybe as an alternative to a Google search, and it was more for information.
Speaker 3:It wasn't purchase driven. And then we've had we even had an employee from from OpenAI on the show. And he was like, oh, every time I wanna buy a product now, I just get a deep research, even if it's for something like bathroom towels or something like that. Because he's like, why wouldn't I want, you know, the equivalent of three hours of research on the the right product to buy?
Speaker 9:Yeah. It it feels a little
Speaker 5:bit like where social commerce sort of started, where it starts with discovery, doing research, finding new brands. You get to serve some like, I don't know, I I think actually it's one of my favorite stores on Shopify is Ember. You guys are
Speaker 1:asking? Oh, Yeah. I know the founder.
Speaker 5:Great company.
Speaker 1:Yeah. Good
Speaker 5:company. He's he's he's on Shopify. Please tell the founder that I'm incredibly I use it every single day. Yeah. Here here in Montreal, my office.
Speaker 5:But, you know, we start with Discover. Think I was I think I saw an ad or I saw some sort of reel for Ember a couple years ago. It like, my coffee or my tea could stay warm longer. That sounds really good. But I didn't necessarily go to complete the purchase on Instagram.
Speaker 5:I then went to, you know, em I went to probably Google, typed in Ember, found the website, went on shop Shopify store and and bought it. So I think sort of the the trajectory of these new commerce channels starts with discovery and research first Mhmm. And then eventually migrates into, like, full on checkout. So I think this idea that more people are gonna discover and shop on these AI tools, whether it's a wrapper or it's it's something like OpenAI or or Perplexity, I think that is an amazing thing. What the way that we kinda think about it is anywhere where commerce is taking place, Shopify has the great the greatest product catalog in the world because we have the best stores in the world.
Speaker 5:We wanna power those as well. So I'm not gonna, you know, front run front run, product road map, but you should expect to see Shopify merchants selling wherever their customers are. And if their customers are spending time on places, on on AI tools and and and MLM modeling models, you should expect that that will be there as well. But what's really interesting, I think, about that is that it it means that all these, like, what's a good example? Let me let me use Spotify, for example.
Speaker 1:Like Sure.
Speaker 5:Weird thing to say out loud, but, like, Shopify has an integration for Spotify. Yeah.
Speaker 11:Why do
Speaker 1:we have?
Speaker 5:Because most merchants don't have Spotify artist profiles. But if you're Beyonce and you who own Sacred, which is a great, cosmetic company on Shopify, you have a huge art artist profile. It makes so much sense for you to also have an embedded store inside your artist profile in the same way that if you're Jim, if you're mister beast, and you have a huge Shopify store with Feastables, you should also sell directly on your YouTube channel. Like Yep. Right there embedded checkout.
Speaker 5:So that's kinda how we think about the future of retail. That, like, where are these surface areas, new or old, that transactions should be taking place that they're not? And then what we do is we go to these companies and say, look. Let us help power that both discovery of great products, but also checkout, in some cases, even Shop Pay.
Speaker 1:Yep. That makes sense. I I wanna do a little bit of a deep dive on AI. It's such a big topic. I'd like to break it up and understand how is Shopify thinking about using AI tools internally as a company?
Speaker 1:And then I'd like to go through some of the different technologies, from diffusion to to text generation to agents on how the merchants can benefit from those. But maybe let's start with just culturally, what is the average Shopify employee using in their day to day now?
Speaker 5:Yeah. So I I don't know if you've seen you saw Toby's now leak email Absolutely. At the at the time, having it leaked, I wasn't sure. Was I mean, may I think now, actually, there's probably more benefits downside to it because it does it feel I I feel like it's getting referenced a lot, and I think it also I don't know. From an employee brand employer brand perspective, it's kinda nice to know that, like, that's how we think about things.
Speaker 1:Totally.
Speaker 3:But Yeah.
Speaker 5:This idea of, like I I think every technology company has AI. You know, they'll say that it's being utilized inside their company. I think there's a big difference between utilization and it being reflexive. Mhmm. And part of the reason why, you know, this email was really important was we wanna make this reflexive.
Speaker 5:We want to push the boundaries of of how our our our team thinks about it. So this idea that even a simple friction point that be before you go and ask, hey. I wanna I wanna add some headcount to my team. Okay. Well, like, substantiate why AI cannot do that.
Speaker 5:That small friction point may seem annoying, but actually what it really provides for is a much more reflexive process of, like, you're right. I actually don't need this person. I can go do it then. We also built roughly about a dozen MCP servers that make pretty much every corner of Shopify's work legible. Wow.
Speaker 5:So now any everyone can now find out about kinda everything else happening in the company. I'll give you the best example because I'm in kind of an earnings mode right now. It's our our our earnings day was today, as you guys know, which is why I'm here. I often will go to different teams and different product leaders or channel technology leaders and say, hey. I I wanna talk more about, you know, I don't know, b two b in Europe.
Speaker 5:And they'll be like, okay. Well, here's what's going on, and they'll give me, you know, they'll me the brief. Whereas I felt for this particular earnings cycle relative to previous ones, again, we've had 40 now or 39, so we have 40 coming up. I I didn't have to do the nearly as much. I was able to go into the vault, which is sort of our internal wiki, and I was able to pull far more information on my own even to the extent that I can see at what stage different projects are are at.
Speaker 5:So I think that is, making company operations legible, I think, is I don't know. To me, that's, like, the gold standard. It means that I'm not bothering anyone. I also you know, if I'm working at 06:00 in the morning and, like, I need to get this one thing on b two b, I don't need to wait till someone is at their on Slack to ask them. I can just figure it on on my own.
Speaker 5:And I think the other the other piece of it that I think is is on the developer side, which maybe is less maybe is more obvious, but we actually launched, MCP server for what we call dev assistance. So, effectively, it allows developers to, like, use cursor chat, windsurf, quad desktop in in a very in a very simple way. It's just part of their daily workflow. So that's part of it. The other part of it maybe is less sexy, but it's on the support side.
Speaker 5:We think about, like, our support organization, how they deal with these millions of merchants, how they work with our merchants. In many cases, there's two types of conversations. One conversation is really more like, like, more of a low quality conversation, things like configuration of a domain name, you know, config like, username and password, picking a theme, or how do I pick a theme? Then there's, like, high quality conversations, which almost looks like more like business coaching. And that's like, hey.
Speaker 5:I'm noticing that I'm getting traffic from Pinterest. What should I do next? Well, you should actually be the Pinterest channel. Or I'm not getting any sales at all. What should I do?
Speaker 5:Or this theme, I'm not able to configure it properly. Maybe I have the wrong theme. So one of the other things we're able to do is by giving our support organization that the a lot more of these tools, now they're able to just simply focus more on these high quality conversations versus low quality quality conversations. And and it just means that when you're speaking to, you know, if you're speaking to a human at Shopify, you you like, we're able to ensure that you're having high quality conversations
Speaker 6:Mhmm.
Speaker 5:And you're not taking up time from them because you're you know, you need a pass password reset.
Speaker 1:So what I'm hearing is like barely using AI at all. It seems like you stuck it everywhere.
Speaker 3:Yeah. It's
Speaker 1:like we're using three different coding agents. We have agents everywhere.
Speaker 3:Well, I like the I like the I like how deep you guys are going because we've seen we've seen other kind of like leaks, which is clearly just a CEO wanting to signal it's purely
Speaker 1:Yeah. Yeah.
Speaker 3:Yeah. Purely PR
Speaker 5:You should map that against again, is why it's fun to go on this show. It's something I can't talk to the CEO. Okay. You should map that against technical founder led companies. Because I bet you, you know, I bet you, you know, dinner, like, dinner somewhere Sure.
Speaker 5:That if you map that, you will see that generally technical founder led companies at scale, so there's not that many of them.
Speaker 1:Yeah. Yeah.
Speaker 5:Yeah. You won't hear these sort of, you know, superficial kind of statements. You will see actual building. What you know, I mean, Toby's our CEO, Mikhail, from Microsoft is our CTO. There's there's no room for that superficiality at Shopify.
Speaker 5:It is like like this is the way to go. And maybe there's a whole topic about this sort of era of founder led companies at scale, which I think is like the best era.
Speaker 3:The other
Speaker 1:thing Yeah.
Speaker 3:It just means very different if it's coming from a founder led technical CEO. If they're saying we need to be AI native, that means we're going to leverage AI and actually use it to develop workflows and processes and all these things. And then the other side is we're gonna be AI native means we're gonna buy a hundred million dollars of AI tool pilots Yeah. In return six months. You know, it's like very difficult.
Speaker 1:A lot of decks from McKinsey.
Speaker 5:Yeah. Yeah. Mean, you guys were at the Figma conference, right, yesterday? Yeah, yeah. So like, I mean, I've known Dylan for a while.
Speaker 5:You know, like there's a group of people like Dylan and Toby and Patrick and Zach, like, they're just operating at a different level.
Speaker 1:Totally. Yeah.
Speaker 5:And and the fact that, like, we're in an era now where these incredible people, these incredible leaders can lead over a long period of time.
Speaker 1:Yep.
Speaker 5:Because that wasn't the case. Go back twenty years ago. You didn't see that.
Speaker 1:No. It we need the gray hairs in.
Speaker 5:Yeah. That's right.
Speaker 6:That was rough.
Speaker 5:And and and and even the the fact that they called the gray hairs or adult supervision was almost pejorative.
Speaker 1:Yeah. Totally. Totally.
Speaker 5:This is a better era with better run companies, and there's no better person on the planet to run Shopify than than Toby. Yeah. Of I I just on the AI, just before we get off the AI thing, one thing I I do wanna say also on the merchant side
Speaker 11:Yeah. One thing that
Speaker 5:I think people miss is, like, yeah, like, all these great tools that all of our companies are building, you know, I I saw some the stuff that Figma rolled out yesterday around, you know, like, effectively, you know, you can fire your agency because Figma can ironically, you know, there's all these agencies in the room probably thinking, like, our our our, like, unique value proposition is now going to be somewhat disrupted by the stuff that I'm watching on on on at the keynote. But it's actually small businesses that I think actually will benefit far more from a lot %. This this tooling. Yeah. Yeah.
Speaker 5:Big business can can as well. I I this is a bit of an aside, but I'm not a sports guy. But on on weekends, I have this small podcast called Big Shot. I'm creating an archive of the greatest Jewish entrepreneurs of the last fifty years. Cool.
Speaker 5:Awesome. People like Izzy Sharp, who created the Four Seasons
Speaker 4:Mhmm.
Speaker 5:And, Linda Resnick, who created Fiji water. I just did Bobby Kotick and Michael Milken. But I interviewed this guy, Mickey Drexler, a couple weeks ago. And Mickey Drexler is about as close as you get to retail royalty. He ran the Gap.
Speaker 5:He was CEO of the Gap for twenty years on the board of Apple. He created Old Navy. He quasi created, Jake Crew, at least made Jake Crew what it is, which will they're a household brand. But he talked about in the old days of of the Gap or the heyday of the Gap in San Francisco, they have hundreds of people doing merchandising, product photography, product descriptions, you know, layouts. And as he's sort of saying this to me, didn't wanna obviously say this to him on the on the podcast, but I can say it here.
Speaker 5:I was like, Mickey, like, today, like, literally, like, the thing you get from Shopify for $39 for free with all Shopify magic can do a better job of your 300 people at the Gap. And I'm I I'm I I think, actually, like, people talk about this term, like, democratization of entrepreneurship and leveling the playing field. It's all just these, like, random, you know, platitudes. But, actually, what we're talking about here is is that very thing, that twenty years ago, a team of 300 people were able to produce merchandising results that today for $39 a month on Shopify, you get for free. Like, you you get included in your subscription.
Speaker 5:And I think when you think about, like, product descriptions and and product, that's part of it. But even things like, you know, like, we used to make it Shopify inbox or an email marketing tool. Like, the idea of automatic, automatic responses to every customer you have with highly contextualized replies. You used to have a team that would do that, and if you were a big company, you had a team. If you were a small business, you did not.
Speaker 3:Or even even downstream even downstream of that though, right? Before somebody's signing up for Shopify, you know, a lot of them need to get some type of entity, right, to like, you know, house their business. And before, now that somebody that that doesn't have any business expertise can go and even ask you a simple question like, should I set up an LLC or a C Corp, right? Which is like a classic thing. Lot of people botch it.
Speaker 3:And it is insane to, for a lot of, if somebody's getting on their entrepreneurial journey and they're going and you should get advice on it. Yeah. It's not even that complicated of advice, right? A lawyer's just gonna regurgitate, well, like, here's the benefits of this, and, like, here's the benefits of that. And, like, given where you want to take the business, maybe you should use this.
Speaker 3:And the fact that you can now get that advice, like, contextualized for free from an LLM, yeah, in many ways you shouldn't get legal advice from an LLM, it might hallucinate. But for a decision like that, it's certainly better than just guessing. Then the other stuff that I'm, the other stuff I'm excited about is, you know, specifically I can imagine a world in the future where an entrepreneur makes a product. And the product's like, you know, maybe it's a physical product, and it's slow to change something like that. Maybe you're making it overseas, you're making it here, but it's a slow process.
Speaker 3:But I can imagine a world in the future where Shopify lets you generate an entirely new kind of brand web world around that product. And you might see conversion rate go up by 15% for something like that for like a one time action. And in in that world, it's like the the incremental benefit of like a change that could happen almost instantly is insane. So I think the the implications of shopping in LLMs is exciting, but at the actual business level, the impact of Gen AI, I just think is is really underpriced right now.
Speaker 5:Yeah. I I also think one of things that is missing is a little bit like this, like, we sort of think about our AI tools as very practical, like, goal oriented, meaning, like, what like, how they operate their business. Rather than simply just rolling out random sort of features, like, what actually is this going to do? Is this particular tool going to help them pick a better theme? Well, great.
Speaker 5:But why? Like, what does that even matter? Well, a better theme may mean better navigation, maybe higher checkout rates, maybe more customers end up buying. And when you sort of think about that in contrast to and the cost of failure in entrepreneurship now is about as low as it's ever been in the history of the world, truly. I mean, you think about, like, Ben Francis creating Gymshark, and, you I think he's the youngest billionaire ever in in in UK history.
Speaker 5:The fact that he was able to create this thing from his college dorm room and and turn this into a multibillion dollar company, and he himself is now a billionaire, the the prerequisite for that type of journey years ago would have been capital. It's not anymore. The other thing is if he failed, he could have, like it didn't really matter because he wasn't leveraging his house and and taking out loans and stuff. So when you layer on all these new tech pieces of technology plus this, you know, this this idea that the cost of failure is treading so close to zero, what you end up with is more people trying their hand on entrepreneurship. And that's obviously good for Shopify, but it's also just it's it's a great I mean, look what you guys have done.
Speaker 5:Right? What you've built. You've built a modern media, you know, giant out of out of sheer will and hustle and and and incredible insights around what's wrong with traditional media. Having more of these things, I think, actually makes everything better.
Speaker 1:Yeah. 100%. Yeah. How do you think about messaging to the Shopify developer ecosystem? I can imagine LLMs could write new liquid templates.
Speaker 1:You can generate text. You can generate images. There's agentic workflows. There's so many things that could be the domain of plug ins. You wanna message that to create a really, really vibrant plug in ecosystem.
Speaker 1:But, also, there's certain things that you want to do internally because you have a unique position or advantage there. Is it just about communication? How do you think about that trade off and and keeping everyone happy while, you know, you're responsible to customers, shareholders, and the developer community?
Speaker 5:Well, look, it's the I think it's called the Bill Gates line. Like, a real platform is when you create more value for others than you capture for yourself, and that obviously is the case for us for for our our merchants, but also for for our our developers. I mean, there's currently 16,000 apps in the Shopify app store. Yep. In 2024, we paid it a billion dollars, with a b, in rev share.
Speaker 5:So
Speaker 4:Yep.
Speaker 5:Like, a huge part of Shopify success is our developer ecosystem. So that's the first thing. The second thing, though, is that that we I think communication is part of it. Frankly, I think communication is often just a proxy for trust, a lack thereof, or or, like, the trust battery. Right?
Speaker 5:When you say, like, there's there's been a lack of communication issue, it's obviously it's usually a trust issue. We've been really clear, with the developer community for the last, I don't know, fifteen years or so that, okay. Here's what you can expect. Shopify's core offering, the thing we build ourselves, will be what for most people need most of the time on the platform. And that that definition, that philosophy is dynamic, meaning it's gonna change.
Speaker 5:So years ago, 02/2012, there were apps in the App Store that would take your desktop Shopify store and make it mobile optimized. It was like, I don't know how many
Speaker 1:there were.
Speaker 5:There's probably five of them, maybe more. At some point, it was obvious that, okay. This is not like, this is something that Shopify's core offering should do because this is what, like, most merchants most of the time need and will expect that they're paying us to do. Like, how would you like, how are you even thinking about building a desktop store or or a web based browser store on a desktop that's not mobile optimized? So, eventually, we basically went to those developers and said, hey.
Speaker 5:Look. This is something we're gonna do. But here's here are sort of the bounds. Here are the limits of what we're doing. You can build everything beyond that.
Speaker 5:And you can look at companies, for example, like Klaviyo. We have Shopify email. Klaviyo has built you know, Andrew AV has built a multi a billion dollar company, on Shopify, which is now publicly traded
Speaker 3:Yeah.
Speaker 5:Doing email marketing because we are just clear about here's the bounds of what Shopify email will do. Beyond that, we're not gonna touch. Same you can you can continue to roll that across pretty much every product category. So one is, to your point, good communication, but the other point is, like, we have, you know, we have fifteen years of of reps building with this community to the extent that now if you are building an app or a piece of a product for the commerce and retail space, Shopify's app store and our APIs are probably the best go to market, you know, way to get access to millions of businesses. And and that that trust relationship, that ecosystem of reciprocity is not something that we take it's actually the first thing I did when I got to Shopify sixteen years ago, help to build that that ecosystem.
Speaker 5:And I I we cherish it. But we're we're also very clear of what's coming and what's not.
Speaker 1:Sixteen years. We love an overnight success on this show. You so much for joining this.
Speaker 3:I have so many more questions. Can talk for another hour, but We'll have to have you back.
Speaker 1:We'll be back next quarter.
Speaker 5:I'd like to come back. One day I'd like
Speaker 1:to over,
Speaker 5:and we can bring some Shopify merchants.
Speaker 1:Absolutely, let's do it.
Speaker 3:Let's do it.
Speaker 1:Let's a whole Shopify day.
Speaker 3:We'll get Jim shot Twelve hour stream back to back. Let's do it.
Speaker 9:You know what?
Speaker 5:We can do something black BFC we can do BFCM, like Black Friday, Cyber Monday. Yeah.
Speaker 8:The We we did $11,500,000,000
Speaker 5:in four days. We can actually stream and then bring different merchants on to
Speaker 1:save That'd be fantastic.
Speaker 5:Tell us what's happening.
Speaker 3:Yeah. QVC mode. Let's turn let's turn TVPN into QVC on.
Speaker 1:I'm excited for that.
Speaker 5:Yeah. You guys are already going for the affiliate model. It always happens.
Speaker 1:Yeah. That's great. Alright. Thank you so much. Talking.
Speaker 1:Alright. We'll talk you soon. Have good one. We're gonna bring in Jack Altman. But first, let me tell you about GetBezel.com.
Speaker 1:Your Bezel Concierge is available now to source you any watch on the planet. Seriously, any watch. I noticed Harley wasn't wearing a watch. We gotta send him to Bezel, get him a hitter, an absolute him one. To yeah.
Speaker 1:Just send him one to commemorate sixteen years in the game. He needs
Speaker 3:225,000,000,000 on shop pay.
Speaker 1:Yeah. I mean, should always invest 1% of your AUM or 1.1% of your GMV into your watch for sure.
Speaker 3:Exactly.
Speaker 1:Let people know. It's only right. Anyway, we we got Jack Altman coming in the studio.
Speaker 3:Welcome to the Welcome
Speaker 1:to the stream, Jack. How you doing?
Speaker 3:What's up, guys? Very happy to be here.
Speaker 1:Thanks so much for joining. Yeah. I I hope you can hear the soundboard because George has a lot of fun with it. Anyway, what's what's latest with you? Would you mind introducing yourself a little bit for the stream?
Speaker 10:Yeah. I'm Jack. I I'm a longtime listener of your show. You guys are doing amazing. Thank you.
Speaker 10:I've been waiting for somebody to do something like this, and you guys are just crushing it.
Speaker 3:Fantastic. Thank you. Your Chiron
Speaker 1:right now says rival podcaster squashes beef because yesterday you tweeted, that that you can either be collaborative or competitive. And just to be clear, we see this as direct competition. And so you're on That's
Speaker 10:how I feel.
Speaker 11:This is
Speaker 1:not a collaboration. I'm
Speaker 10:super angry every time I
Speaker 1:see you. Exactly. Every time I see you pop up with another
Speaker 10:Just getting mad.
Speaker 1:It's upsetting. Interview. I'm like, oh, that
Speaker 3:person should
Speaker 1:have my show.
Speaker 3:I I I love how how strong you've come out specifically where the average it seems like the average net worth of an all new guest is like $2,000,000,000, something like that. Absolute hitters. No. It's great it's great to have you on.
Speaker 1:Yeah. So, yeah. Mean, obviously, the the the podcast is is something that you're working on, but also you're running this fund. Tell me about the fund, how to come together, what are you excited to invest in? Do you have any bounds on it, or is it just anything that interests you on a day to
Speaker 10:day basis? I've been doing the fund for, like, fifteen months. I've been doing a lot of investing before. I was, like, a I was running Lattice, which I started in 2015 up through the beginning of last year.
Speaker 1:Yep.
Speaker 10:And I did a bunch of angel investing. I did some institutional investing. I sort of fell in love with it, realized it was what I wanted to do, and then started this fund fifteen months ago. It's like an early stage, pretty generalist fund. So it's a hundred and $50,000,000 fund.
Speaker 10:What you see in series a, we're, like, pretty concentrated. And there's no technical bounds on it, but we've mostly been doing, like, b to b, a little bit of hard tech, just kinda trying to do stuff that we either know or think can be hugely impactful to the future.
Speaker 1:Are you worried about your brother poaching your best CEOs? I mean, he hired Fiji Simo. He hired Kevin Weil from Planet Labs. He's It's incredible. Hoovering up entrepreneurial talent.
Speaker 10:It's unbelievable. That was a that was an incredible I mean, Fiji's Incredible. Right? I mean, it's amazing. Yeah.
Speaker 10:Yeah. It's really, really good. So, yeah, probably.
Speaker 3:That'd a
Speaker 10:good outcome.
Speaker 1:Amazing. Well, what else are you taking away from the current AI market? We've been talking to a lot of folks about, this, like, don't build a wrapper meme. Now Windsurf is going into OpenAI, and it seems like it might be a best time better time than ever to build in the application layer. Is it too late, or what what are you seeing that's exciting you on kind of the the AI front since most of the it seems like most of the foundation models have left the harbor, but there's still obviously a ton of opportunity.
Speaker 10:Yeah. I mean, first caveat is like, what do I know? But I've always thought that, like, the wrapper thing is, like, a bit of, like, a you know, it it's a slightly cheaper mark to me, I think. Like Yeah. Most companies are always built on the shoulders of technology that came before.
Speaker 10:Totally. There's a bunch of stuff to do with the underlying intelligence just like there was stuff to do with, like, cloud infrastructure.
Speaker 1:Mhmm.
Speaker 10:So I don't think of it that way. I think there are probably cases where you're flying close to the sun in a way where, like, what you do is just gonna be obviated by, like, the, you know, sort of big labs directly.
Speaker 6:Mhmm.
Speaker 10:But I think in a lot of these cases, like, the difference between a a thin wrapper and then something that becomes, like, a specialized workflow, I think, you know, there's there's a real gap there. And so I'm much more in the camp of, like, thousands of blooming flowers, and the underlying intelligence is going to create a bunch of specialized things that, like, OpenAI is not gonna go do everything. And so I think you have to be thoughtful about it as a founder, but I don't I've never thought the thin wrapper thing is you know, it it's it's a concept that is worth knowing, but it doesn't, like, discredit the whole idea of application software.
Speaker 3:Mhmm. Switching gears slightly, how do you think about opportunities to build companies in categories that that are established but potentially stale? And I wanna bring up an example, which is Fillout. I I we recently used Fill Out, is a portfolio company of yours. Yep.
Speaker 3:And when I used the product, I was so relieved to be using a form product that was beautiful, easy to use. And I looked back at their founding date, was in 02/2022. Right? Not not very long ago. Right?
Speaker 3:And I think that most of the time, I think a lot of VCs would would sort of look at a category like that. Maybe they get a pitch, they're just thinking like, okay, forms, like we've had these for, you know, forever now. There's Typeform and Google Forms and and all the all these different players. How did you kind of how do you underwrite opportunities where it's clearly a big, you know, market, but it feels like, you know, there's no obvious why now other than, in my view, typically, it's like a super talented team that's just committed to, like, craft and just building this exceptional
Speaker 10:Yeah. Totally. And so I guess maybe two answers to that. First is, you know, I think you can always bet on Jiro, like, Jiro dreams of sushi style approaches where really great teams are building important products that a lot of people need. Even without a why now, I always believe that you can bet on teams particularly at the early stages.
Speaker 10:And, like, that that can work out. But I actually think that there is for this particular example, and then I can share a couple others, I think there is potential for there to be a really important why now around AI, which is and they just released this new product called Zite, which is, like, still in beta. But, basically, you can take all of this user data, and then you can build things around it. And so now they have also, like, an application builder. And so you can release these forms.
Speaker 10:You can, like, get all this data in a seamless way, but then that can become, like, the baseline for a bunch of internal applications or other things that you'd wanna do with that with that user data. And so to me, I think a lot of times, particularly when you're betting behind great teams, there's a lot of adjacencies that come up over time, and great teams figure those out and, like, find the next thing. But to me, you know, it looked you know, you it's a big enough market that for me, betting on a great team always is is a is a good thing to do.
Speaker 3:You should. And has anyone else coined the the Jiro method? Because, like, super Good. Superhuman is, like, another example of, like, Jiro in many ways where it's, like, email. Everybody was like, this is a finished market.
Speaker 3:Everybody has an email product. Most of them are free. And then you just come in with sort of like craft and there's there's an entire list of
Speaker 1:Yeah.
Speaker 3:You know, really successful companies. I
Speaker 1:mean, speaking of Yeah. Ahead. Yeah. Just speaking of like talented teams, are are are you seeing new pockets of kind of young talent emerge? There used to be, like, the Stanford Industrial Complex.
Speaker 1:Now it feels like you go to Stanford, you just walk on to Sand Hill Road, you get a turn Then there was, the Waterloo. We've talked to Sequoia Partners who are pulling people from Talpio now in Israel. Where where are you seeing interesting groups of entrepreneurial talent emerge these days?
Speaker 10:I mean, there's a lot of good pockets. And also now as a bunch of these companies start to block I mean, there's obvious ones. Like, you could talk about, like, an OpenAI or something like that or, of
Speaker 1:course Stripe previously.
Speaker 10:Yeah. Stripe, of course. I mean, I think Palantir has some incredible talent. I think outside of AI, one of the most interesting to me areas is, like, hard tech, defense. There's a lot more appetite for people to fund harder problems.
Speaker 10:Like, I had Sean Maguire on, you know, our podcast, and he's talking a ton about, like, why that matters so much. And I think people who have seen those kinds of companies, someone who's been at a Palantir or an Andoroll or a SpaceX, I think those are really interesting pockets for that. So, you know, I think there's a lot of these companies now that have gotten to such scale so quickly that you have people who have seen what greatness looks like from the inside. And I think like, I always think there's, like, more ways to fail than there are to really succeed. And so people who have seen a big success, I think those create obvious pockets.
Speaker 10:So there there's a bunch. Yeah.
Speaker 1:Have you felt any of the the squeeze from the mega funds and the crossover funds kind of pushing downwards? We talked to Sam Lesson at Slow about this where you get the the hedge funds crossover into growth, and then the growth funds crossover to venture. The venture guys are like, yeah. I can do a seed check. It doesn't really matter.
Speaker 1:And then the seed guys are doing the angel stuff, and they and at each stage, they take the previous round, like, less seriously because it's, like, free money for them. And it but it puts pressure on the people where they're like, that's my business. What's your experience been?
Speaker 10:So here's my perspective. In 2021 in ZERP, Mhmm. The the the big funds at the latest stages, which I was a customer of, were the crossovers. And it was dominated at that point by all these crossover funds
Speaker 11:Yep.
Speaker 10:Coming into venture with humongous amounts of money. Yeah. But they were, like, always gonna leave. You know? Like, that group was always going to come and go.
Speaker 10:That's just weren't designed for it. Now you have really smart money doing really big funds. There are, like, brilliant managers. There's, like, Josh at Thrive. There's obviously Founders Fund is exceptional.
Speaker 10:Like, there's just, like, really good groups out there with large funds, and this group is not gonna go away. Mhmm. And they do have different incentives at the early stage, and they're, you know, extremely clever about how they're positioning themselves. And, you know, they're they're they're making very intelligent moves, and that does include, in many cases, coming down to seed. And like you said, they don't need to make the same economic decisions at a seed as a $50,000,000 seed fund because they don't have to make most of their money from the seeds.
Speaker 10:Mhmm. So the rules of the game do change, and I think it has a huge impact.
Speaker 1:Awesome. Every of that.
Speaker 3:Your well, your reaction your reaction to that, I imagine, is take much more concentrated positions Mhmm. But and use that as a lever, I imagine, with the entrepreneur to be like, I'm gonna put a meaningful amount of my fund into you, and I'm gonna, you know, this is not like, it doesn't, in a hundred and $50,000,000 fund, if you're participating in any seed or a today, it's not a flyer for you with the kind of concentration that you have. How much has that resonated with with entrepreneurs on on their side knowing that, yeah, Jack's not just kind of tossing a check-in and and maybe he'll respond to every third investor update. You're, like, going to do everything in your power to help the the company win.
Speaker 10:The way I think about this is in order to do well in any competitive environment, you basically just have to have, like, an incredible amount of self awareness and know what you are, what you're not, what things you can provide, what things you can't provide. There are a lot of shapes where I couldn't look somebody in the eye and say it makes more sense to do a deal that makes sense for me than a deal that's gonna make sense for another firm. And by the way, there's like, you think about the things that a VC can provide to a founder, not all of them require blood, sweat, and tears. Having a great brand and then not doing anything else might be a lot more valuable to a founder than having no brand and doing a lot. It just, like, depends on the situation.
Speaker 10:Yeah. And so I think I don't think that there is, like, a tweet length answer to sort of figuring out where you can play and what situations you look at. You have to look at each of these differently, and then you have to find the situations where what you can offer and what you think can be meaningful to you as a fund manager matches what's gonna be valuable to the founder and, like, good deals happen when it's an actually correct transaction for both sides. So that's how I think about it, which
Speaker 3:is That makes sense.
Speaker 10:A bit of, like, a it depends kind of answer, but I think it's the truth.
Speaker 1:Can you talk about your personal AI stack? What are you daily driving? What has been helpful in your job either with the show or with the fund? You know, deep research. There's all these different tools, and I think everyone's always interested to know, like, how people are getting the most out of the tools that are available.
Speaker 1:I feel like everyone feels like like, I'm not doing enough with AI. Like, I know it's powerful, but I just need to know that one secret prompt or something. What
Speaker 10:what do is think I could use it more, but I mean, I've moved most of my searching to chat GPT.
Speaker 1:Yeah.
Speaker 11:And I
Speaker 10:like, instead of texting, like, my group of friends, sometimes I'll just, like, say the same question to, like, ChatGPT. And so I kind of am like, this is, like, an always on friend that I can, like, ask stuff to. And I'm like, my usage just kind of goes up over time now.
Speaker 1:Yeah.
Speaker 10:I think I don't consume, like, that many software products
Speaker 4:Mhmm.
Speaker 10:For it. So that's also, you know, the nature of what I'm doing. I think, like, the companies that I'm investing in are consuming a lot of AI. Mhmm. But I think it depends on the area.
Speaker 10:Like, I will say that outside of maybe we can, you know, talk about companies specifically, but, like, outside of prompting
Speaker 1:Mhmm.
Speaker 10:There are certain specific domains where it's proven to be incredibly valuable, and there's somewhere it's not there yet. And so, like, I don't think it's working in every category yet.
Speaker 1:Yeah. Totally.
Speaker 3:You invested in, ROGO, which these recently announced pretty big up round. Have you have have you seen any products like that in applied more specifically to Venture? I mean, I'm sure you could potentially leverage what they're doing, but Venture's such a small, you know, market in comparison to potentially kind of Rogo's core market, maybe it's not
Speaker 1:And for reference, Rogo is
Speaker 3:analyst AI for finance professionals. So investment banking at a hedge fund or Yeah. Tiger Global. You know? Yeah.
Speaker 10:This to me is a I think there is a market, but it's easy to forget in San Francisco what little fish we are compared to, like, New York and, like, real finance and hedge funds and private equity and the big banks. And the numbers are, like, super different. You know, for all of the talk, which I think is accurate talk about how there's too many dollars in venture, it's, like, still kind of pales in comparison. So the total spent and, you know, you look at things like, you know, a Bloomberg or something like like, there's not an equivalently big business to Bloomberg for venture. And I don't think that's because the products aren't useful.
Speaker 10:It's because, like, the market is a lot smaller in my opinion.
Speaker 1:How do you oh, yeah. Yeah. Yeah. How how do you think about the difference between going after these, like, the mag seven companies that maybe have lost a step? We're seeing, you know, little little cracks start to show whether it's Apple Intelligence or the Copilot rollout versus taking AI into these niche markets that haven't even maybe seen the the SaaS transformation yet, and maybe AI is the one that unlocks it.
Speaker 1:Is there one area that excites you more? How do you think about each one? Is there a certain type of founder that needs to kind of fit with a specific market? How how do you think about those different areas?
Speaker 10:I think for the most part, it's a lot easier to take on the niches, which are still not so niche. You know? Like, some of these niches that we're going after, you know, in you know, what we're talking about in application companies, the the leading company in the niche is 10 or 20 or $40,000,000,000. Might not be 2,000,000,000,000, but they're they're big niches. But I think this is there's there's two reasons.
Speaker 10:One, I think it's much easier to just win a small market and expand from there. That's like you know, Peter Thiel Mhmm. Point is, like, monopolize something, expand, and that's much easier to do in small, less competitive markets than going up against Amazon or something like that. The other reason is what I've seen a lot of is companies are able to crack old industries with AI in a way that hasn't happened in the last software wave. And so you're seeing in education and health care and legal and accounting and, like, finance and all these places where they were kind of hesitant before are suddenly buying things without even knowing for sure what it is.
Speaker 10:They just know that they wanna buy AI. And that's, like, a completely new paradigm. And it's not even you know, that's professional services I just mentioned, but you could even go to restaurants or, you know, like, home services companies or
Speaker 3:Yeah.
Speaker 10:You know, mom and pop accounting. And you're, like, leapfrogging, and you show them AI, and it's much easier to use than last generation of software. And so the value that they're getting is actually much steeper relative to what stack they were on than a tech company.
Speaker 1:Yeah. That the the the examples you gave, it seems like there's obviously huge opportunity to go after the those those small markets, whether it's mom and pop accounting firms or home services, any of those markets with, essentially a SaaS product. There's also been a recent boom in, folks in venture crossing over into kind of the private equity roll up strategy. Yep. Have you looked at any of those deals?
Speaker 1:Do you have are you cautiously optimistic? There's some people that have been saying, like, every time venture steps into that, it it can't go well. But what what is your take? You're not the fund's probably not really set up for that, but you could probably participate in some way.
Speaker 10:Yeah. I I think all of that is right. Well, I I'm I'm directionally optimistic about it. And like you said, like, we're not an appropriate size for that to be the right strategy. Yeah.
Speaker 10:But I think it's a very good idea. I mean, like, the sort of, you know, one one lens on this is at some point, it is too hard to sell, you know, a great product into an industry that doesn't wanna receive it. And so just become that industry and then receive this great product. The other lens is if it's so valuable, why are you gonna give that away? I think that's a point that, like, Keith Rabowitz made before is, like, if you've got this thing that's transformative for a, you know, an accounting firm or, you know, a law firm or whatever, why should you sell them some software for 200 k that they're gonna go make a hundred million dollars off of?
Speaker 10:Yeah. Like, is that the right
Speaker 4:part of
Speaker 3:the It's good value capture. Just get a hundred times more customers.
Speaker 10:You know? Yeah. Exactly.
Speaker 1:No. That makes lot of sense. Do you think the job's finished with the founder friendly meme in venture? It was it was controversial twenty years ago, but now it feels like it's baked into most venture brands, and it seems like it's more real than ever. I I talked to founders that are set up from day one with super voting and seven board seats and stuff.
Speaker 1:Is is that still an issue in VC, or is it still a differentiator for venture brands as new managers build their firms?
Speaker 10:I think it is here to stay.
Speaker 1:Mhmm.
Speaker 10:I think it is basically, it it is table stakes in at least positioning. Mhmm. And then I think it's maybe more than table stakes in actuality, and I think people can sort of, like, go through and do the real work to see who's positioning it versus who's really doing it. Mhmm. I think in most cases, it's the right thing to do, by the way.
Speaker 10:So I think the, like, industry converged to the right place where most of the time it's the right thing. But I guess a new thought, so I'm not positive if this is right. But it feels on some level, like, over time, it is becoming a bet like, it's a better and better proposition to be a founder as, like, the decades go on. And sort of the the margin in this whole ecosystem has kind of probably moved from LPs to GPs to founders where, like, I think that is the directional flow of where, like, extra sort of leverage is moving. And so I think that's probably just going to continue rather than recede.
Speaker 1:Do you think any of that's due to the work of Y Combinator? I've often thought of YC almost as, like, a union for founders in the sense that, like, if you're a VC and you screw over one YC founder, then it goes out to the entire network and you maybe lose access to the entire community potentially. Yeah. Is that is that a reasonable net narrative or is it more like just the writing and the memes of of all the folks in in tech broadly?
Speaker 10:No. I think it is reasonable. I think there's probably a constellation of inputs, and I think that's probably a big one. And I don't underweight how important YC's footprint is. And it's so founder friendly, and it's so dominant that going against that is hugely expensive.
Speaker 10:I also just think that there's there's an extent to which everything about tech has become public. And, like, to a to a crazy degree, we know all the you know, we know all these stories and the ins and outs, and people have a good feel for how hard it is to be a founder. And I think even on that note, it's like, you know, all of the you know, in the store in the narrative of who do you want to win between the founder or the VC, it's, like, obvious. And so, you know, I think even that kind of thing, it's just like that's rightly the champion. And, you know, having gone through it, I'm like, it is it's real like, in order like, part of what makes this whole industry work is that there is so much respect and support for founders because it is so hard.
Speaker 10:And so I actually think part of why Silicon Valley works is because the whole industry supports people in a way that, otherwise, you don't sort of get that, and I think that is actually critical.
Speaker 3:Jordan? Where do you go to get perspective and get out of the bubble? Right? If you walk outside of your house, you see billboards companies that you've invested in or competing portfolio companies or you run into another, and then you go to Thanksgiving and Yep. You're not you're not, you know, that that doesn't work either.
Speaker 3:I'm I'm curious how you try to, you know, kind of break out of of the bubble and and get perspective on on our industry and and the work that you do.
Speaker 10:It's a problem. I'm steeped in it. And, like, all my best friends are also in tech, and so I don't have a lot. But the obvious thing I have is, like, my family. Like, I have three kids.
Speaker 10:My wife's in medicine, and so I do have that in a huge way. And I think that that's that's that's the only reprieve, but it's enough, I think.
Speaker 1:Can you talk about lessons from Lattice? How did you kind of grow as an executive? What and a founder, what skills did you pick up? And, what did you develop, like, kind of, I don't know, top, like, top tier talents in?
Speaker 10:Well, I think, you know, so on this point I was just making about how, like, it's good that the industry supports founders so much because it's so hard Yeah. Which is true. Like, the flip side of it is that I think, like, one of the things that is that you just, like, can't believe till you do it is, like, how much you get to grow as a person being a founder and just getting constantly just, like, bashed every day for years by a million things. It's like the things from the early days that stress you out. It's like the you still are equally stressed the whole way through.
Speaker 10:It's just like the two by fours that hit you have, like, gotten stronger, and so the little stuff doesn't get you as much. And so I think there's a lot of of that growth that happens. But I think, you know, peep one of the criticisms of consultants, which is the far other end of the spectrum from being a founder, is when you're a consultant, you are not actually you're not tethered to the results of your recommendations. You are you're, you know the the criticism is you're fully dissociated. You make a recommendation.
Speaker 10:You get paid. You're out. Who cares what happens five years later? You're, like, long gone. Versus as a founder, every decision you make, you're living with forever, and you're just completely connected to it.
Speaker 10:And so I do think that that experience of everything I everything I do is, like, making the bed for, you know, years to come. I think that creates a that creates, like, a sense of autonomy, personal responsibility, everything's my fault. Like, all of those kinds of characteristics, I think, are things that you build and then you never let go of. And I think this is a big part of why people, like, love hiring other founders. Like, you know, so many founders I talk to are constantly trying to recruit other founders to join their company because they have that DNA that gets built into them that just, like, doesn't go away.
Speaker 10:So I think that's that's the biggest thing that's, like, you know, an intangible.
Speaker 1:Mhmm.
Speaker 3:What do you have to say to pronatalist in tech that don't have kids? You've got three. You're you've crossed the the the replacement rate. We always we always joke
Speaker 1:Palmer lucky number. He wants everyone to have 2.1 kids at least.
Speaker 10:It's the best. I I mean, honestly, it's like, you know, with all this stuff, with so much of tech stuff, it's so easy to get lost in, like, the sauce of, you know, deals and new markets and AI is going crazy. And it's all just it's all it's all awesome, but it is so far from the most important thing. And, like, you know, the, you know, the the the most important things in life are relationships, and, like, kids are the best relationship you ever get to have. And so it's, like, a really awesome special thing.
Speaker 10:And so, yeah, I'm like, you know, there's there's trade off to everything, but it's been the best.
Speaker 1:Yeah. I I I have one last question. We'll let you go. I wanna know yeah. I mean, you mentioned that idea of, like, founders hiring other founders, and there's a bit of a debate in Silicon Valley, I think, broadly about, you know, first job out of college.
Speaker 1:Should you try and go work for a a a a really successful scale up series b product market fit company? Go work with the best founders be on that hyper growth trajectory, experience growth, feel it, and then go start your company versus, hey. You know, some people see YC now as, like, a summer internship almost. Like, oh, yeah. I'll go.
Speaker 1:Maybe I'll drop out. Maybe I'll go raise a little bit of money, try something, have one startup under my belt, and then go do the next thing. How how do you counsel kind of the next generation between not necessarily, like, there's a one size fits all answer, but
Speaker 4:Yep.
Speaker 1:How do they know which one's right for them?
Speaker 10:For me, I so I I worked at a startup before doing Lattice, and
Speaker 1:Yeah.
Speaker 10:I was there for a couple years, and it grew a ton. And that was really helpful to me because, like, when you start a company, there's, like, 30 things you have to, like, be reasonably good at, which is ridiculous. Yeah. And at least you learned, like, 14 of them by, like, working in a fast growing startup, so you only gotta learn 16. You know, it's like it's that kind of thing, and it does help a lot.
Speaker 10:But, you know, there's a lot of great examples we could name of people who just went right from college to building iconic companies. And in fact, the very most iconic companies were built by people who out of college or did it right out of college. And so it's like, you know, your mileage may vary, and I don't think that there's, like, one story, and it's easy to over rotate. I think
Speaker 1:Yeah.
Speaker 10:For most people, getting experience helps not hurts, and it's not like by the time you're 26 instead of 21, you're too old to do it. Yeah. But, you know, there's a lot of great people who have not needed it. And so Yeah.
Speaker 1:Yeah. It's kind of like the that that quote. Mozart didn't go around asking people how to write symphonies. Like, the folks who are destined to go start power law companies in their
Speaker 10:You can't stop them.
Speaker 1:In their teens, you can't stop them, right? Exactly. But if you're asking yourself the question, maybe you should go build up the skills first. This has been fantastic. Thank you so much for stopping by.
Speaker 3:Yeah. Thanks for being
Speaker 10:guys for having me.
Speaker 1:Yeah. We'll talk to you soon.
Speaker 6:Bye. Cheers, Jack.
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Speaker 3:From Hollow. Hollow. Can't we
Speaker 1:I've been meaning to invite him. I'm really glad
Speaker 4:we got on.
Speaker 3:Thirty, so the timing is good. Shout out to Catherine Boyle for suggesting that.
Speaker 1:That's fantastic. And, right now, have David Haber from Andreessen Horowitz coming into the studio. I believe he was at Goldman Sachs previously, where he was, he was the head of firm wide strategy, which I always thought was an interesting description, because it it it feels like the CEO would be the one to do the, the the firm wide strategy, but I'm excited to talk to him about his career and then what he's doing at Andreessen. So welcome to the show, David. How are you doing?
Speaker 1:Boom.
Speaker 9:Hey, guys. Great great to be here. Big big fan of the show. Thanks for having
Speaker 1:so much. Wonderful background. Look at that.
Speaker 11:Thank you.
Speaker 1:In that I was
Speaker 9:channeling the army earlier and, you know Yeah. Captain Boyle, you know, on the other day. So
Speaker 3:It's fantastic. Looks fantastic.
Speaker 1:Yeah. It's awesome. Yeah. I mean, I'd love to start with just kind of, like, your background, introduction, and kind of how you your path to Andreessen. Because I I I've been following you for, like, over a decade on Twitter, and I think this is the first time we ever met in person or on Twitter.
Speaker 3:You to be you had to be in one of my first hundred follow
Speaker 1:ups For sure.
Speaker 3:Back when I was in college. For Like, this is this guy looks like a Chad. Let's throw him a follow.
Speaker 9:Still still Chad, I guess. No. I'm
Speaker 5:serious. I
Speaker 9:It's been it's been circuitous. I let's see. I well, I studied biochemistry as an undergrad, so I actually thought I was gonna be a doctor. Worked for a super successful serial entrepreneur out of school, a guy named Rory Riggs, who had started a bunch of biotech companies, ran a railroad, and started a giant private equity firm called Royalty Pharma, which we can get into. It's a fascinating business.
Speaker 9:And then I joined Spark actually back in 2011 up in Boston. Essentially, it's like the one non GP at the firm. I was like a 23 year old, you know, analyst associate, and it was an amazing experience. We were investing at a fund three at the time. You know, the firm had already been pretty successful at that point.
Speaker 9:You know, they had seeded Tumblr and put a bunch of money into Twitter when there were 10 people. We wrote the the first check-in Oculus when I was there.
Speaker 3:Wow.
Speaker 9:So, you know, great pickers. It's kinda where I learned, I would say, like, you know, the craft adventure. You know, ended up going deep into fintech at the time and, you know, in some ways getting getting lucky. I helped, you know, source and seed Plaid back in 2013 and a bunch of other companies when I was there. I always thought of myself more as a founder than an than an investor, and so I ended up leaving and starting a fintech company in 2013 called Bond Street with a good friend of mine named Peyton Sherwood who had been running engineering at Venmo.
Speaker 9:They ended up getting acquired by Braintree and PayPal in 2013. I pulled them out to go start that business, which was in the small business lending space, which was challenging. But we built a great team, which is what I'm most proud of, and ended up selling business to Goldman. That's kind of how I ended up joining the firm. We we came in kinda through the side door.
Speaker 1:Yeah. Yeah.
Speaker 9:You know? And got merged ultimately to what became Marcus, which was their consumer business.
Speaker 1:Oh, that's right.
Speaker 9:You know, Peyton ended up inheriting he had a real job. He had, like, 70 engineers to manage. I had a more amorphous
Speaker 3:and an org Yeah.
Speaker 1:I remember when I when I when I was following you, it said firm wide strategy. And that sounds like something that would normally be, like, the CEO's job. So can you actually explain, like, that sounds extremely important firm wide strategy. Was pulling the puppet strategy. But yeah, I mean, what decisions were you making?
Speaker 1:What was the culture like at Goldman back then?
Speaker 9:It was fascinating. I thought I was going go there candidly and get like suffocated and micromanaged because that's what my friends did, you know, ten years before in banking. And fortunately that wasn't my experience, I think in part because, you know, had no I
Speaker 1:was need this DCF yesterday. Not working on Sundays. That's good.
Speaker 9:You know, yeah, I just started firing off emails when I got there, honestly, to like, you know, Marty Chavez, who was the CFO and the heads of banking and asset management, just kind of running around Cool. And trying to be helpful to people and and really just, mapping the place. Mhmm. You know, you realize that even people who had been there for for a decade or longer didn't know kind of what all the different component parts of that firm did.
Speaker 1:Yeah. And it
Speaker 9:and it was fascinating because it's not a normal kind of operating business, like, I don't know, an American Express that has a big consumer commercial business. Mhmm. It's really a confederation of a lot of little businesses who sort of fight for collective resources under these common kind of divisional umbrellas. But it's also really fascinating because if there's something interesting to do on the outside world, there's probably somewhere to put it. Mhmm.
Speaker 9:Meaning, you could be an equity investor, a debt investor, an adviser, a customer, an acquirer. So it's fascinating to kind of bridge, you know, the world that I I primarily lived in, like, tech ecosystem, you know, and then try to help, you know, Golden navigate that too. I want to be clear, I wasn't the head of firm wide strategy. I worked for a woman named Stephanie Cohen who reported to David Solomon.
Speaker 1:But Sure.
Speaker 9:But I was the weird kind of startup entrepreneur guy kind of running around and trying to help her, frankly, you know, get connected in the tech world. And she's now at Cloudflare and and doing a great job there.
Speaker 1:Yeah. It's still a really cool role. How much of, Goldman's structure is a function of either, like, legal firewalls between different teams or just the idea that if you have a specific desk, you need to be able to manage their own p and l and kind of account for their business independently and then align incentives towards how that team is doing, Or is it more just like sclerotic because it's an old company?
Speaker 9:I think it's a little bit of both. I mean, there's definitely some, you know, kind of regulatory bridge between, like, the public and private side and and what can be shared legally. But I think the more interesting history, and there's a great book called The Partnership, which I think is a great kind of business history book even if you didn't work at Goldman Sachs, it would I think for a hundred and forty years, it was one of the most entrepreneurial places in the world. Right? It was it was not it was an it was a firm that had to scrap.
Speaker 9:You know, it started, like, by Jewish immigrants, basically. It was not sort of JPMorgan or a lot of these other, you know, kind of white white shoe firms, and they they started basically in, the factoring business. And then, you know, entrepreneurial people would raise their hand. It was a partnership. They'd give them a little bit of money and they'd say, I want to go build a new business.
Speaker 9:So somebody started the merchant bank. Somebody started the wealth management division. Somebody started Europe. And it was not a business built through M and A. It was a business really built organically brick by brick by enterprising people.
Speaker 9:Mhmm. And I think it's just such a fascinating history. And so part of that is the culture. Right? It really was a partnership.
Speaker 9:And I think that confederation is is kind of the evolution of that, which was like, you know, you wanna feel like a CEO, right, of your own individual business, even that it's like a trading business within a much larger division. I think the last ten, fifteen years has been it has required an evolution from that in some ways. Right? I think the firm went public, then you had, you know, the tech bubble, the financial crisis. The financial crisis, I think, was like a terrible experience for Goldman Sachs.
Speaker 9:If you remember the Vampire Squid and, like, the blood funnel, like, that was the brand, unfortunately, for a long time.
Speaker 1:Yeah. They actually did pretty well during the financial crisis. They're, like, the the the best of the worst performers, which was, like, somehow terrible even more because then all the negative attention came on the firm.
Speaker 9:It did it did amazing. And part of that was they had really talented people. Part of that was they was actually technology. They built their own kind of unified core risk system so they understood across every division kind of what their exposure was to the housing market, and they were able to to hedge basically that exposure. And they didn't lose money, then they made a ton of money, you know, kind of coming out of that crisis, which, again, didn't hurt the brand to your point.
Speaker 1:Yeah.
Speaker 9:Yeah. Or didn't didn't help, you know, the perception of the market, unfortunately. But but I think ultimately, like more recently, you know, we can I just find their history fascinating?
Speaker 1:Yeah, is. It's so
Speaker 6:fascinating. You
Speaker 9:know, I think they've become more of a company than a partnership. Right? And I think to do that, you kind of need operating leverage. And therefore, kind of it's a bit tighter kind of at the top. And I think it's my perception is that it's made it a less entrepreneurial place over time.
Speaker 9:Right? Instead sort of giving an individual person the agency to make their own individual decisions, especially from a technology perspective, you need more centrality. You need more leverage. You need more kind of command and control. And I think you've seen that actually benefit their share price.
Speaker 1:Mhmm.
Speaker 9:Right? If you look at stock you know, Goldman's market cap even in the past few years, it's it's actually done really well. I think a lot of that is through that kind of centralization to some degree, but I think it does come at the expense to some degree of the entrepreneurial dynamism that that existed, you know, for, again, one hundred and forty years. It used to be one of the, you know, most lucrative places in the world to work in. Nobody's crying for Goldman Sachs employees, to be clear.
Speaker 9:But I think it's just it's a different culture. And it's going to look more, in my opinion, like a normal bank than it was previously, which was a broker dealer in a partnership.
Speaker 1:I mean, to shareholders of the partnership. You catch up
Speaker 3:with old peers, colleagues, etcetera, how do you feel like Goldman and and other firms of that caliber are reacting? How would you rate their kind of reaction to AI specifically? Are they just buying a lot of it so that they can kind of say, like, look, we're doing AI? Or is it, like, you know, truly organic sort of ground up movement or or some of both?
Speaker 9:I think it's changing very quickly. You know? And I think again, not to pick on them, but historically, like, there there and I I think in a lot of banks, there was this culture of, like, if it wasn't built here, we're not interested. And I think that was, like, the wrong decision for a very long period of time because the world, you know, kinda changed, you know, around them in in a lot of ways. But I I think actually Marcus, you know, despite its challenges, was actually a good cultural kinda catalyst in this point.
Speaker 9:It it they they leverage a lot of third party technology because the consumer business, you know, hadn't existed, you know, previously. And I think many the the CIOs and the CTOs at these firms are just understanding that, like, there are some things that we should build internally. If it's core to our competitive advantage, fine. We should own it ourselves. But almost everything else we should outsource to to third parties and and leverage the best of what exists.
Speaker 9:Right? And it's actually informed a lot of how I spend my time here, in part because, you know, as a founder, it was very challenging navigating these big institutions to understand, you know, who is the decision maker. And then you get inside these firms and you realize that if you're a division head running, you know, a 10,000 person, 20,000 person organization, it's not your job to know what's happening on the frontier. Right? You know, certainly not at the seed in series a stage.
Speaker 9:And and and I think one of the things we've done explicitly and and part of what what's been useful to do, you know, from New York City, know, where I sit, is be a bridge between those those ecosystems, right, and and kind of convene the CEOs and the leadership teams of every kind of major financial institution in America and then curate, you know, a group of twenty, thirty, you know, portfolio companies, nonportfolio companies that align with whatever their strategic priorities are. And, you know, it's kind of a win win win. You can accelerate, you know, the go to market for the seed stage business. You help this sort of incumbent, you know, understand what's coming. And it's helped us come to conviction, you know, on on investments and and just feel like everybody's sort of winning in that dynamic.
Speaker 9:But the rate of adoption is happening very quickly, just to answer your your question more specifically. And I think this is true in financial services. I think it's true broadly in enterprise, both because there's bottoms up adoption. Like, engineers are, you know, using whether it's GitHub Copilot or Cursor, you know, big investors, obviously. But then there's top down pressure.
Speaker 9:Right? I think any CEO, any board member can plug a prompt into any of these models and understand intuitively the impact that it's gonna have on their business. And I think financial services in particular are so human capital intensive. You know, at Goldman, they call the basically, back office the Federation. And it's largely it's kind of a star you know, Star Wars, I guess, reference.
Speaker 9:But, you know, it's it's still humans sitting in Excel, not even using enterprise software necessarily. Right? And across legal compliance, risk, vendor onboarding, And so much of that should be AI. And I think they're recognizing that and beginning to adopt it a lot more aggressively than I've ever seen, which is exciting.
Speaker 3:Do you get a sense that there's been innovation happening in some of these more traditional financial firms or even hedge funds and things like that that is potentially groundbreaking, but not being released as products. Right? Like, Jim Simmons didn't, you know, discover an algorithm that could, you know, make 60% a year forever. And then he he was like, yeah, we we shouldn't just like productize this and let anyone Yeah.
Speaker 1:James Streets had GPT six for like a decade.
Speaker 3:We should just use it. So so, yeah, how do you I'm curious if you have any kind of insight there. Because if you discover something like, you know, if you discover a machine that just makes money, you should just,
Speaker 1:you know. Well, I mean, was a rumor a while ago that that Google's just their treasury management system was so advanced. They were like, we could just become a hedge fund, but that wouldn't align with our mission.
Speaker 9:Totally. I mean, look, there are a bunch of, like, know, quant hedge funds that I'm sure have I mean, they have to have had, you know, great kind of proprietary technology that have given them an edge, whether it's Renaissance, as you mentioned, or, you know, Two Sigma or or Jane Street. It's hard to know exactly what's in there. Think they purposely keep
Speaker 1:it Yeah.
Speaker 9:So secret.
Speaker 1:Yeah.
Speaker 9:And I I was listening to your conversation with Jack earlier. I forget if it was him or you guys who had said it. Like, if you found something that is actually money printing, like, don't go sell it to a bunch of other people. Just, like, raise a giant fund and do it yourself. Yeah.
Speaker 1:Well, can you talk about the transition to Andreessen? How did that happen? You you see people cross over from Goldman into Venture every once in a while, but it does seem like you had a somewhat unconventional path. So how did that conversation start first spin up? And then what's the experience been like over the last couple of years as the fund has scaled?
Speaker 9:Yeah. It's been it's been awesome. I mean, I I've known actually Alex Rampell. So he was the one who kind of recruited me to the firm back in in 2021. But I've known him for over a decade.
Speaker 9:So I met him, I think, originally through through Plaid. You know, we we've done the seat at Spark. He'd he'd let it lay I'd pitched him Bond Street when he first joined the firm in, like, 2015, '20 '16. He passed. We stayed friends.
Speaker 1:Many such cases.
Speaker 9:And then when I was at Goldman, I, you know, ended up helping them put a bunch of money to Carta alongside Meritech and alongside Andreessen, and and he and Mark had worked on that investment. And then in PPP, like, during COVID, I was trying to figure out ways to help the firm plug our balance sheet into the economy. Right? I'd run a small business lender, and I was afraid that, you know, small businesses weren't gonna be able to get the capital they needed to actually survive, and we could pledge unlimited assets to the Fed window. And and yet tech I thought technology and and fintech in particular was the kind of the right distribution channel.
Speaker 9:So he and I were chatting a bunch in that moment as well. I actually left Goldman in October 2020. Went to go do this kind of weird thing with a hedge fund guy to buy a stake in Sotheby's we can come back to.
Speaker 1:Very cool. That's good. That's amazing. I love that.
Speaker 9:And he pinged me in March of twenty one. He's like, know, how's how's Goldman? I'm like, well, no. Haven't been there for six months. He's like, what are you talking about?
Speaker 9:Like, yeah. Never updated my LinkedIn. Here's this kind of weird thing I'm doing with Sotheby's. And he's like, can I put you in front of Mark? And I'm like, well, twist my arm.
Speaker 9:I've never met Mark Andreessen. And and that sort of precipitated a bunch of conversations. And, you know, fortunately, they wanted to open up a New York office, and it was just a I mean, I had always admired, you know, Andreessen from a distance. It really is a firm kind of run by by entrepreneurs. And, yeah, it was a unique opportunity to kind of plant the flag here in New York City.
Speaker 9:And Yeah. You know, that was almost four years ago. We're 100 people full time in New York now.
Speaker 1:Wow. Yeah. Can can you map Andreessen a little bit for us, maybe compare it to Goldman? Obviously, a lot of entrepreneurial energy, but then, you know, there's specific funds. There's specific offices.
Speaker 1:It is a unique firm in so many ways. How has it changed? How would you describe it now? Eric Thornburg was on the show and said, it's very specialized. And I think I I think a lot of people in the audience were like, what are you talking about?
Speaker 1:They do everything. And it's like, well, they're specialized within the firm and there are specialists at the firm. And so what's that been like and what's the how have you experienced the last couple of years as Andreessen has scaled?
Speaker 9:Yeah. It's it's it's fun. I mean, I I think actually, you know, before Goldman, you know, Bond Street had been the biggest business that I ever worked at, was, you know, several dozen people. Goldman was 40,000 people. So I think that scale has actually helped because Andreessen doesn't feel that big to me.
Speaker 9:Yeah. I think in venture, it's still big,
Speaker 3:but compared
Speaker 9:to Goldman, it's it's not. Yeah. Just to give you a sense for kind of how the firm is organized today. So, you know, we last year, we split the early stage venture business into three. Mhmm.
Speaker 9:We raised three separate funds. So there's an infrastructure fund, you know, my partner Martin Casada leads with with Ange, Jennifer, and Zane. Mhmm. We have American Dynamism, obviously, which David Yulovich, Catherine, and Aaron help lead.
Speaker 1:Yep.
Speaker 9:We have an AI apps fund, which Rampell, myself, and Anish help run, which is basically anything consumer, anything b to b. Fintech kind of being a horizontal across either.
Speaker 1:Sure.
Speaker 9:And then there's a separate bio and health care business, a games business, obviously a large crypto business. Yeah. And then a growth fund that kind of sits across all of it, we'll invest in, you know, things that are kind of inflecting. And then, you know, uniquely, I think, you know, the firm is 600 people. The vast majority of our headcount is a is a large operating platform, right, across a bunch of functional different, you know, kind of areas, whether it's go to market or, you know, marketing or people practices, you know, an internal kind of capital network team.
Speaker 9:And and these are resources that we, you know, help make available to our entrepreneurs and really to try to tilt the board in their favors, right, to help them build great businesses. And that was kind of the ethos of the firm from the very beginning. You know, I think Mark and Ben were sort of customers of the bench best venture firms as entrepreneurs. Yeah. And was, like, you know, five people in the checkbook, and their view was, we're gonna take no salary.
Speaker 9:We're gonna reinvest a hundred percent of our management fees back into building this operating platform. And that sort of benefited from economies of scale, you know, over time.
Speaker 1:That makes a lot of sense. Can you talk about how the kind of platform teams have evolved over the last I mean, as long as you know. I was actually in the portfolio back in, like, 2012, and they did these, like, seminars for b to b sales and marketing and PR. But now you're seeing new value add pieces of the platform, whether it's introductions on Capitol Hill now, almost like a lobbying light version. But how has that evolved, and how are you thinking about that going forward?
Speaker 9:Yeah. I think part of what has happened is kind of, yeah, it has further decentralized in some ways. So, you know, some ways, it does kind of remind me of Goldman, where each fund is almost its own unit division that can kind of allocate, you know, management fees and talent at will to some degree. And as a result, ultimately, like, we think about each fund almost as a product to serve the entrepreneur. So I suspect that as David and Catherine are thinking about the American Dynamism business, it's how do I leverage these management fees to build the right capabilities that are unique for that specific customer, right, which might be more of a presence in DC, for example.
Speaker 9:Martine might think about it differently on the infra side than on the app side. Same thing in the bio and health care business, like having a deep relationship with all the payers and the big hospital systems to help again accelerate the go to market of the bio and health care portfolio companies is super valuable. And so it has sort of further decentralized, further specialized over time. But I think the same ethos is the same. It's how do we you know, come with capital but also help, you know, help these businesses grow and scale and, you know, take what often was a first time founder and give them all the kind of superpowers and capabilities of being like a scaled CEO.
Speaker 9:Like, that was sort of the the mental model I think that that Mark and Ben started with.
Speaker 3:I wanted to switch gears for a second and ask you about something that I feel like is kind of potentially on the horizon. So I've been hearing various teams are working on putting secondaries on chain, which I think is gonna be potentially hilarious and and potentially a disaster. We'll we'll see. We'll see. I I'm I'm cautiously optimistic, but on the on the topic of secondaries in, you know, just just
Speaker 1:Just companies staying quiet longer.
Speaker 3:Liquidity in in the private markets. It feels like the this has been this, like, perpetual, like, promise. Like, the whole industry is very excited about it. And I don't feel like at any point, despite so much that this sort of broad growth of the private market over the last ten years, it doesn't feel like we've made that much sort of meaningful progress. Can Silicon Valley learn at all from you know, Wall Street is notorious for creating new financial products that can actually be, you know, successful and and scale and become big markets in the in in of themselves.
Speaker 3:Do you expect secondaries to get there at any point in venture? Do you spend time thinking about that at all? It it feels somewhat inevitable, but then at the same time, we've all seen how illiquidity can be, you know, such a feature and and not just a bug like like some people would have us believe.
Speaker 9:And and are you talking specifically about, like, kind of employee secondaries?
Speaker 3:Or Just, like, broadly, like, just bringing, like
Speaker 1:Well, there's a public fund right now. There's a public Yeah.
Speaker 3:And I was trying to that company by the next.
Speaker 1:Owns a number of SPVs and look through exposure into various
Speaker 9:Yeah.
Speaker 3:The it's it's more so bringing bringing at the same time exposure, liquidity. Mhmm. I'm just I'm I'm interested to see if you have any type of thesis here. The other thing we saw recently was CO2 coming out with a new fund. Mhmm.
Speaker 3:That's a smaller fund with, a $50,000 minimum check size, and I I didn't fully understand that move outside of wanting to create a product for maybe the next generation of family offices and things like that. But I'm curious if you have kind of any type of vision on the next ten years of
Speaker 9:I don't you know, it's interesting. Like, I think there's been yeah. I I think there's a couple of big secular trends that are sort of happening. Like, one, certainly companies are staying private longer, and I think that's driven the scale of the venture business. Right?
Speaker 9:You can put more dollars into your winners over over long periods of time. So it kinda makes sense to be able to capture the economics there.
Speaker 6:Yeah.
Speaker 9:I think the other kind of secular trend has been bringing and it we're still early, I think, in that kind of way of bringing alternative investments to wealth, to to the kind of mass affluent kind of wealth wealth management channels, which, you know, historically have largely been funded by kind of institutional investors and and they're like. And I think, you know, the big private equity firms with REIT structures and credit products have done that much more aggressively. Venture is still relatively speaking of a small asset class and a small business and historically hasn't, I think, needed in large part to tap the kind of wealth ecosystem. And, you know, time will tell how, you know, how aggressively you can scale a venture business. I don't know that that's sort of the that's not the goal necessarily.
Speaker 9:Right? But I think if you're Apollo or Blackstone, you know, trying to raise hundreds of billions of dollars, you know, in a in a in a real estate funds, wrapping it in a re product and and distributing it to retail makes sense. And and to do that, you need liquidity. Right? Because an individual investor doesn't have the same sort of, like
Speaker 3:Time horizon.
Speaker 9:Time horizon. They need access to cash for for various reasons, so you need to give them outs. And so the Coju fund, I think, was a crossover kind of public and private fund with some liquidity gates. You know? More power to them.
Speaker 9:We we we haven't, you know, done done something like that.
Speaker 1:Can you talk about the application layer in artificial intelligence? There was this meme for a while. Every rapper is gonna get steamrolled by the foundation models. I imagine you've been investing throughout that process, but has your thinking evolved? And have any of the recent milestones that we've seen, you know, Windsurf going into OpenAI that feels like, okay.
Speaker 1:Maybe it opens the floodgates to every foundation model needs some dance partners here, and maybe that's an opportunity for liquidity at the early stage investing side. How are you how have you evolved your thinking on the application layer and the opportunity there, whether in B2B or consumer?
Speaker 9:Yeah. No. I mean, I think you're right. Like, you know, I don't know, eighteen months ago, I feel like the pejorative was everything's a GPT wrapper and the fear was every, you know, state of the art model company was gonna eat every workflow. Think that hasn't been the case.
Speaker 9:And I think the, you know, like, declining cost basically of, intelligence has benefited the application layer. And not not just in, like, text and reasoning, but across kind of every modality, whether it's voice or video or image. And so, you know, both, I think, your, the quality of entrepreneurs has has kind of, you know, I would say, increased dramatically even in the past year. I think people building specific products for you know, with a deep understanding of the industry and the and the specific workflow that they're targeting, you know, has has changed, you know, again, in the last, like, six months. And I think what you're seeing now is also not not the sort of bottoms up.
Speaker 9:You're also seeing top down. You're seeing companies sort of customer, own the end workflow, and then begin to build their own models. Right? Mhmm. And I think the fear was sort of the inverse for a long period of time, but it's been easier to kinda route, you know, prompts to different models and maybe capture, you know, the highest margin, you know, queries in your own model, right, or, you know, improve your own economics by by owning some of that, you know, that workflow internally.
Speaker 9:Yeah. And I guess, like, my hot take is that, you know, moats still matter, And and there a lot of them are largely the same, at least in my mind. Right? Like, I think AI is an incredible tool for differentiation. Right?
Speaker 9:The idea that a voice agent can do the workflow, you know, in in some cases, a thousand times better than the human is amazing. But the technology, I think, is an ephemeral advantage. I think it's an amazing tool for differentiation, not necessarily the source of defensibility. And I think a lot of the defensibility in my mind resides in the things that have kind of always been true, right? Owning the workflow end to end, deeply embedding yourselves within your customers, right, becoming a system of record, having a network effect, being a platform.
Speaker 9:And I think these were all the heuristics you would always kind of look for when evaluating software companies historically. I don't I don't know that this time is that different. I think the impact and the idea that the software can actually do the work is radically different. And if you can capture labor budgets more than just IT spend, the TAM is radically different, you know, much larger. But that's at least been kind of my own, you know, mental model, you know, over the past, you know, several months.
Speaker 1:How are you thinking about open source? Mark's obviously been very outspoken about open source. I've always wondered is will there be a red hat of this generation with AI? Stable Diffusion was kind of thinking about that, and you could imagine that some company crops up that's like a for profit, very successful company, but built on top of open source. Are you looking at that?
Speaker 1:Are you optimistic about that? Or is it more just like philosophically open source is a good thing for the ecosystem more broadly?
Speaker 9:Yeah. And honestly, it's a better question for Martine because, you know, they spend more more of their time on the infra side, you know, in in that community. But, you know, we are big believers and investors behind open source. I mean, big investors in Metztrall, for example. In Europe, which is one of the leading open source players.
Speaker 9:Mark's obviously on the board of Facebook, I think what they're doing with Llama is amazing. So I think there's opportunity for both. And it you know, I think in many ways, open source is a great kind of, you know, competitive force, which is also kinda drive down the cost of a lot of the, you know, intelligence, which, again, it can be great in its own business and I think is also benefiting the application layer.
Speaker 3:Jordy, last question. Last question. How much do you expect the adoption to a of of AI to mirror what we've seen in fintech? Right? It feels like fintech's, you know, been so transformative over the last decade plus, yet at the same time, every once in a while, I still need to, you you know, write a check or, you know, any use any number of different things.
Speaker 3:Is that provide any type of mental model for you on how to think about, you know, how people and companies and countries adopt AI?
Speaker 9:I haven't thought it's an interesting question. I haven't thought about kind of the through line there. I mean, I think AI this may not be shocking, but I think it's gonna it sounds cliche, but it's gonna change everything. It's gonna be everywhere. And, you know, even even the kind of intersection of fintech and AI is just, I think, incredibly interesting.
Speaker 9:Like, I think my bias for the past several years has been to invest in fintech companies that lead with software, you know, as opposed to financial products. And it's part why we built that incumbent network. It's in part because of the culture of these firms are changing. But, you know, again, the ability to do the work within these organizations is so radically different. There's just massive labor budgets to be able to capture.
Speaker 9:And so, again, I think we're gonna see the adoption of AI probably proliferate even faster than we did, you know, move into products, although that happened quickly as well.
Speaker 1:Yeah. Makes sense. Well, thank you so much for stopping by.
Speaker 9:My pleasure.
Speaker 1:It's great having you. We have to have you back and talk more We could go on forever. But we'll let you get back to your day. Sure you have lot going on.
Speaker 6:Awesome. Thanks, for See
Speaker 1:you. Fantastic. We are pretty much done with our ad reads. We did a lot of them, we still need to tell We mentioned Figma.
Speaker 3:We failed everyone. Know.
Speaker 1:I know you want more ad reads. Remember, we are 100% corporate backed here at TBPN.
Speaker 3:That's right.
Speaker 1:And we're also sponsored by Figma. Think faster. Think bigger, build faster. Figma helps design and development teams build great products together. We were at Figma Config yesterday.
Speaker 1:A new product. Experience.
Speaker 3:Ours so exciting. Yep. You can now, I mean, my favorite is Figma. Figma sites. It's a, it's, I posted about but it's a product that I've wanted since the very first day
Speaker 1:Yep.
Speaker 3:I use Figma. Real quick. So we have Alex Yes. Joining from Hollow. To talk about the new American Pope.
Speaker 3:I'm very excited
Speaker 1:about That's amazing. Time
Speaker 3:is So he's gonna give us some perspective. Catherine Boyle
Speaker 1:Also did this happen while we were live?
Speaker 3:Because it happened while we
Speaker 4:were live.
Speaker 1:Okay. Because I I you keep referring to this and I'm like, I'm still seeing, I haven't gotten the update. So this is the pope has been decided.
Speaker 3:So Hollow is based in Chicago.
Speaker 1:Okay.
Speaker 3:And the new American pope is from Chicago.
Speaker 1:Wow. New pope elected.
Speaker 3:Yeah. Credit to Catherine Frank about 20 20 five, the Catholic church
Speaker 1:announced the election of a new pope signaled by white smoke rising from the Sistine Chapel. This event, marking a significant transition in the church's leadership, was celebrated widely. The new elected pope was expected to address the public from the central window of the Saint Peter's Basilica. Many people learned about this historic event through various online posts, with some humorously noting the unconventional ways they discovered the news. A lot of people posting memes.
Speaker 1:Very fun. Well, I'm excited to invite Alex to the show. I'm so glad he could hop on the same day. That's amazing. He's not here yet.
Speaker 1:So we can go through some other posts and talk about what else is going on. I like this post for you. Oh, got a order?
Speaker 3:Yeah. I got a post for Will Brown has joined Prime Intellect.
Speaker 1:Oh. Wait. Really? Yeah. That's amazing.
Speaker 3:I know. He's really a huge pickup for
Speaker 1:Prime Minister. News for you.
Speaker 3:Some personnel.
Speaker 1:I haven't
Speaker 4:heard it.
Speaker 1:Familiar with Prime Intellect. Fascinating cute. Fascinating company. They do, I mean, it's technically a crypto company, but they do decentralized training of AI models. And, yeah, Will's a great poster and obviously very sharp in AI.
Speaker 1:So congratulations to Will. That's great news.
Speaker 3:Excellent, rollout of this announcement.
Speaker 1:Like, he just was teasing it every for days. I was sitting on the edge of my chair. Yeah. Very excited.
Speaker 3:Massive Congrats
Speaker 1:to him. And welcome to, Alex, to the stream. Good to have you here.
Speaker 12:Thanks for having me.
Speaker 1:Thanks so much. Yeah. Yeah. That was
Speaker 3:was fun how that came together.
Speaker 1:This is amazing. I'm so glad you could jump on the
Speaker 3:same day. Harley from Shopify Yeah. And coordinating, but made it happen. Busy day busy day for you, I imagine.
Speaker 12:Yeah. It's a pretty exciting day for us. I mean, it's like a one in a million chance that the Pope happened to be American and then that he happened to be from Chicago. Was crazy. That's where I am today.
Speaker 12:So, yeah, it's been a fun day for
Speaker 9:us. It's been
Speaker 12:a fun day for us.
Speaker 1:That's amazing. Would would you mind kicking us off just a brief introduction on yourself and the company just so everyone knows?
Speaker 12:Yeah, I'm Alex, the CEO and co founder of Hallo, which is a prayer and meditation app that we're Catholic, but we hope to be a resource for anybody interested in growing in Christian spirituality. We've been working on it for five or six years now. We're a series c startup, so.
Speaker 3:Oh, wow. Very cool. Talk about talk about what it was like kind of starting the company at that point in time. It it still felt like an era where people in SV didn't really talk about faith. That was kind of a Didn't feel like
Speaker 1:it was that people interfaced with very frequently so they didn't think of it as a big market It was
Speaker 3:almost like Silicon Valley had gone so far towards Atheism? Atheism effectively that it was that religion was like taboo.
Speaker 1:Yeah. For a long time, religion was seen as like anti science and technology was science and therefore you couldn't be religious and build a tech company, even though now that's been massively disproven and has been disproven forever. But, anyway, what was your experience starting the company?
Speaker 12:Yeah. I mean, for me, it was my own we started I I started for myself. I had fallen away from my faith and discovered a relationship with Jesus, a relationship with God through prayer. And, like, really learning about what it meant not just to talk to God, but to really listen to Him, to really sit in silence and to spend time in contemplation and meditation. And I had no idea that those things were, that there was a Christian spirituality tradition of those things.
Speaker 12:I thought it was just, you know, hey, ask for stuff and repeat the things you heard as a kid or memorized as a kid. So it had changed my own life. But yeah, I was in Stanford and working on this thing in Silicon Valley and pitching Jesus, a Jesus startup, and it was certainly not what people are used to hearing. Honestly, was fun for me, because I got to go to all these VCs, and you know, my story is just my own relationship with Jesus, and how He's changed my life, and how He's brought me this peace, and this love, and this joy, and I just get to go into these, you know, boardrooms and just pitch my own faith, which is fun, but it's certainly the vast majority of people thought it was a stupid idea. I mean, 99%.
Speaker 12:But that's true for any startup. But yeah, I mean, it's like, people don't pray anymore. They meditate. Prayer is a dying thing. You know, it's been dying for a while.
Speaker 12:It's going to continue to die. And it's funny because hallow is not hallow is a contrarian idea, really, only in like Silicon Valley and New York. Totally. If you go to, you know, the middle of the country, even if you come out here to Chicago, and you're like, Hey, do want a meditation app? Do you, versus do you want something to help you grow in your faith?
Speaker 12:You know, the latter is much more. It's like, no, 75% of Americans are praying every week. It's a really important part of people's lives, and it's a huge nobody's trying to do anything to help people. But so in Silicon Valley though, it's fun because it's a contrarian idea. So it was always fun to always fun to pitch.
Speaker 3:Honestly, best of both worlds. You have contrarian here, which everybody's trying to be contrarian, and then Yeah. Non contrarian in the market, which is where Amazing. You're growing.
Speaker 1:You seen a big surge of downloads around the the conclave and the I mean, like, religion is the national it's the global news story this week. Does that drive growth for the business?
Speaker 12:Yeah. We take it really seriously to try to help. You know, this is different than like a We talk about it often as like a political thing, but it's very different for Christians and for Catholics, especially than a presidential election in The U. S. And the most important part for us is and this is true also for political elections, but certainly for this the most important part is prayer.
Speaker 12:And so the thing for us is just to make sure that we're spending time praying for the Church, praying for the, you know, repose of the soul of Pope Francis after he passed, and so we tried to create some content to help people journey through that, and then also to pray for the Cardinals as they were choosing the Pope, and then now to pray for the new Pope, and to get to know him a little bit, and learn about his writings and his homilies, where he, you know, what he's trying to do for the Church. So, for us, trying to help grow deeper in prayer and use this as an opportunity to let God work in our hearts was, we thought, a big opportunity. So certainly pretty busy for us, and we got, like, today was one of our biggest bikes and downloads of all time because, you send out a little push notification that's like, white smoke, there's a new pope, so let's pray for him, you know? That's awesome. But for us, we just try to use it as an invitation to let God in a little bit more.
Speaker 1:Yeah. How do you think about design of the app? I feel like the App Store is so competitive, and there's so many dark patterns when it comes to, you know, mobile games. I'm sure you're trying to use best practices, but you probably have a moral framework that you're following, the lines that you don't cross. Have you thought about actually building the app to be, something that can grow and be a fantastic business, with while still, like, satisfying the core mission of the company?
Speaker 12:I would certainly hope we have a have a moral framework.
Speaker 4:I care a
Speaker 12:lot more about getting into heaven than our retention rates. But the retention is important actually.
Speaker 6:It's funny
Speaker 12:because retention is a great example. Like we work a lot on retention. Want to drive great retention. For us what that means is we measure retention based off of whether you're starting a prayer or whether you're praying on the And so a retention rate is just, okay, if you downloaded the app, you're looking to grow deeper in your faith, you're looking to try prayer and meditation and growing in your spirituality, how successfully did we help you to build a daily habit of prayer? And that's a really, you know, that's the core of our mission.
Speaker 12:But it also, as a subscription business, which there's a free version of Hallo and then a subscription version, but as a subscription, that's also all you care about is trying to get new subscribers in and low tax, and then try to keep retention, which for us is just adding value to people. You know, there's a lot of people who have a lot of very strong opinions on this, but like Christianity, and the church especially, has always had a very clear stance, which is like business and economics and certainly entrepreneurship can be forces for real good. They can be used for evil, and most of the time they are. And that's the same with technology. Like most of the stuff on the internet is bad.
Speaker 12:It's at least, if not bad, distracting and noise and awful for like your soul. But God can still use it. So just because we screw it up the vast majority of the time doesn't mean that God can't use it for His own good to try to bring joy and love into people's lives. And it's the same thing with, you know, startups, which is, and even Pope Francis was really clear on this. Like, startups in business can be a tremendous force for good, as long as they are you're doing them with a spirit of service aligned with, you know, the right values, treating your employees well, trying to serve your customers, not trying to do dark patterns or anything, and doing it in a way where money is a tool and never the object.
Speaker 12:If it's the object, you're always going to leave unfulfilled. It's always going to be sad. It's, you know, it's never going be the end all, be all. You're trying to make it your god. But if you use it as a tool, then it can be a great tool to help, you know, serve your brothers and sisters around you.
Speaker 3:Can you share a little bit more around the news today and around Pope Leo? We were live when the news was announced, and we've had like eight guests so far today. Certainly haven't been able to get to To you. Into it. So for our own curiosity
Speaker 1:a meta level, like, how can someone get to know the new pope? Like, what what is the correct process to even digest that information?
Speaker 12:Yeah. Well, in a self serving spirit, we have a challenge launching that is to get to know the new pope, to pray, and to try to spend some time in silence, but also to get to understand the new pope. Most of the time, it's through homilies. So these are cardinals that are chosen, who were then priests, and then bishops, and then they're cardinals. And so they've given a lot of homilies.
Speaker 12:They've given a lot of sermons. And you can tell a lot about where a person's heart is at, what they're trying to do in the world and what they think the world needs and what, you know, they've heard from folks in terms of what they need from their homilies. But, you know, at super high level for the folks who haven't been following the news, a new pope was chosen. Pope Francis passed away. This was the Monday after Easter Sunday, which is beautiful.
Speaker 12:Like, his last day was Easter Sunday, which is just such a beautiful time. But then there's a period of mourning, and then the cardinals get together in this, like, super old school in the Sistine Chapel, a beautiful place, and they vote for a new pope. And it's been it started yesterday, so it's been two days. So it's relatively quick, but they go through these rounds of voting each day, and you have to get to twothree, and then that's the new pope that's chosen. Today, the new pope was chosen, and it's Pope Leo XIV, which is the name that he choose, that you choose the name as a pope.
Speaker 12:And he is a cardinal from he was a cardinal from Chicago who lived in Peru for about twenty years, trying to serve especially the poor and act as a missionary. But then he worked in the Vatican for a while and got familiar with all the Vatican stuff and was a very good worked very closely with Pope Francis. You know, it's crazy because he's the first American pope in the history of the papacy, which is insane. It's not that crazy because the Church has been around for two thousand years, America's only been around for a couple hundred, but a few hundred, but but it's the first American pope, which is huge, from Chicago, which I live in Chicago currently with my wife and kids, and Hallo is based out of Chicago. So that's just insane.
Speaker 12:I mean, he was like, people kind of thought maybe he was in some sort of list of front runners, I guess, but like certainly not top five. Nobody would have thought he was, you know, the top three or four or five. You know, for me, it's and then he comes out and he blesses the city of Rome and then the whole world. So it's this picture where he's out on the balcony blessing everybody. And he gave this really beautiful speech of, you know, just how God loves each of us, and he just wants to enter each of our hearts, and that we shouldn't be afraid, and we should go forward with faith, and with hope, and, you know, with the protection of Mary, the angels, and all the fun Catholic stuff, but really just to let God into our hearts.
Speaker 12:And so he gave this beautiful speech. It's it'll be fun. But, you know, it's he's 69 years old, so he'll be the pope for like, you know, probably twenty years, or it'll be a long he's a relatively young pope, so it's a cool thing to get to witness.
Speaker 1:That's very cool. Are are people already reading into, like, the political implications of this? I know, the the The Wall Street Journal was a little bit critical of Pope Francis for some environmental decisions he made. What are people expecting from the Pope in terms of, like, political leadership or shifting the the the culture around the politics of the church?
Speaker 12:Yeah. You know, we always especially as Christians, we run into this all the time. And it's honestly, it's what happens in the gospel. Like, you read the gospels and you read the Bible, and what they tried to do to Jesus was they tried to bucket them into these political things. And they were like, Oh, you say you're the Messiah, aren't you supposed to overthrow Rome?
Speaker 12:That's the current operating power. And he's like, Guys, guys, guys, I'm not focused on your right, left fights. I'm not focused on your little disagreements with your politics. I am trying to build a kingdom, but it's not this kingdom where it's, you know, I'm going to, like, fight a war. It's a kingdom, like, it's your heart.
Speaker 12:I want your heart. That's what I want. I want your life. I want your soul. I want your heart.
Speaker 12:Like, I want you to live a life of love. And so what we tend to do is the same thing. We've done it for two thousand years. But what we tend to do as Christians is we like, we bucket these church leaders into these political categories. And oftentimes it's appropriate because they, you know, speak very politically.
Speaker 12:But especially as the Pope, it's such a funny role because American politics are such a small portion. I mean, you're the Pope of the world, but certainly the billion and a half Catholics, which are spread, you know, there's a small minority are in The United States. And so even just thinking, you know, for me with Hallow, we have a global population now, and thinking of politics in different countries, it's just like you can't really compute it. But you know what? He seemed, what Francis was really focused on, I think, was this, was trying to share the love and the mercy of Jesus with people, especially people who are the most marginalized, who are in the toughest places.
Speaker 12:Honestly, it's a lot of what we try to do at Hallo, and I think this is what Pope Leo will continue. Pope Leo XIV will continue to try to do it. He spoke a bunch of it, about that in his first kind of blessing. He's spoken about it before. I mean, one of his quotes that I looked up that I loved was like, We spend so much time as Christians focused on teaching and on theology, which is important.
Speaker 12:It's a beautiful part of the faith. But we forget that the first thing that we're supposed to teach is just like, Hey, there's this dude that I know that's awesome, that I love, and I want to share him with you. Now, said it much more beautifully than that. He said, you know, the first thing we have to teach is that is to know and love Jesus Christ. But it's the person.
Speaker 12:It's not like this set of facts or ideologies or politics or whatever. It's like, no, I just have this guy I want to share with you, this relationship that I want to share with you. That's all. And I think that's what he'll try to continue. Politically, actually, you know, on some of the more sensitive topics, he's been very reserved.
Speaker 12:So, like, there's not a lot that you can tell on his stances, other than the things that the Church has always stood very clear on. So he stands very clear for pro life. I mean, he's got a very pro life message, which is the same as Pope Francis, both for the unborn and for elderly. He's got a very clear stance on protecting the environment. God gave us the environment, and, you know, the Church's job and us, our job as Christians, is to inspire us to take care of what the gifts that God has given us.
Speaker 12:And so, you know, he pushes for a lot of the same things. But Leo actually is a really interesting name, because Pope Leo XIII was the one who really fought against this socialism, like this rise of socialism. Also unbridled capitalism, and he was like, look, you can't just, you know, exploit people for money. That's, you know, we shouldn't do that. But also, there is private property, and it was really fighting against this rise in communism.
Speaker 12:And so choosing the name Pope Leo does actually say a lot of really interesting things about what he's hoping for for the church. But we'll see. We've got twenty years to figure it out, so.
Speaker 3:We've got some time. Alex, thank you so much for joining.
Speaker 1:This is fantastic. It was
Speaker 3:pleasure. You're insightful.
Speaker 9:Thanks for having Thank
Speaker 3:you so much. We'll talk soon. Good luck today.
Speaker 1:That's fascinating.
Speaker 3:You're have a busy evening.
Speaker 1:For sure. For sure.
Speaker 3:We got Gary in the waiting room.
Speaker 1:Let's bring him in.
Speaker 3:We're excited to have him on board.
Speaker 1:Yeah. What a great topical update. I'm excited to dive more into the pope and kind of understand where he lands on everything. Pope's someone who's like kind of, you know, drops out of consciousness but then pops everywhere once in while
Speaker 3:and Back
Speaker 1:to the big banger homily. Because you got a
Speaker 3:New homily alert.
Speaker 1:Really shake up the tech industry Yeah. With a banger homily, hopefully. Anyway, we got Gary Vaynerchuk coming in to the studio to to the show. Excited to talk about the creator economy, what we're doing, what he's doing, how they intersect. And I want to ask him about this Walt Disney corporate chart.
Speaker 1:Have you seen this? The the famous,
Speaker 3:chart Yes.
Speaker 1:Of, like, how everything interconnects. And I have an interesting hot take I wanna get his reaction to because this chart, everyone cites this as like, oh, it's okay to, you know, build this really complex business where everything interacts with each other. Disney created this chart ten years before he died. He was 50 and had spent thirty years building the Disney empire. This was a reflection on his life and his career.
Speaker 1:We got Gary in the studio, so welcome to the stream, Gary. How you doing? Oh, welcome. In the back of the car.
Speaker 3:There we go.
Speaker 1:Where where are you? Where are you going?
Speaker 3:Wait. Wait. How is how is Bloomberg? You were over on Bloomberg TV?
Speaker 11:I was on Bloomberg TV a few minutes ago, and now I'm upgrading to the most important business show the world.
Speaker 1:Thank you.
Speaker 11:First of all, man, you you guys look very sharp.
Speaker 1:Thank you. Thank you. Yeah. We try and dress up. We take it professionally.
Speaker 1:We are the media. You
Speaker 11:guys look good. I am in New York City headed back to the office. I'm, like, in the thick of this major launch of my Bee Friends trading cards and
Speaker 1:Cool.
Speaker 11:But I'm really, really humbled to be on this show. You guys, obviously, we've we've spoken a couple times off screen, but I'm gonna give the flowers while I'm on it so other people hear it. I love what you guys are doing. I'm proud of you guys.
Speaker 1:Thank you.
Speaker 11:I cheer for you guys and I'm thrilled to be on the show.
Speaker 3:Thank you. Thank you so much for coming on. Tell us about tell us about the launch today to start. I have to imagine this has been in the works for years now. So tell us about what you're launching and the significance.
Speaker 11:Look. I, take knowing how high caliber the audience is here, let me say it this way. The the direct answer is we have a tops trading card launched nationally, globally, actually, which is if you pay very close attention to the narrow sports card world is a big The only other IPs that are on Topps Chrome are Disney. Disney itself, Star Wars, Marvel. So it's a big head nod to this tiny young intellectual property that I'm building that has the ambition of Pokemon, Marvel, Disney.
Speaker 11:But, I mean, year four and back to you know, you were just mentioning Walt Disney. He was doing that 110%. Travis from Uber and I used to invest a lot together. When he took over and was the day to day CEO of Uber, he's like, I would hit him up about random things. He's like, I can't.
Speaker 11:I'm a % focused on this. I I'm four years into be friends, and I'm in the process of getting to a place where I can focus a % on it, but I'm not there yet. But yesterday was a great day, especially for me. I grew up a baseball card kid. Tops is the apex.
Speaker 11:But at a higher level, it back to the audience that's here, I really think that intellectual property is going to be a very big topic of conversation over the next twenty years. I think as we go into this AI era, I think people will understand the value of IP more and more and more. And, I'm grateful that, you know, my belief of what the blockchain means, which is what I started befriends on as an NFT project, and and my understanding of storytelling and brand building around comic books and cards and cartoons and all that stuff. I'm pretty excited, man, to be honest. So, directly, yesterday was a big day, but it's a tiny, tiny little pebble in this boulder I'd like to build over the next three or four decades.
Speaker 3:Yeah. Talk about, you know, one of the you know, creating iconic IP takes time. There's no there's no way to Shortcut. You can't There's no way to shortcut. Yet at the same time, crypto is known for just being ruthless in terms of expecting things, you know, now Today.
Speaker 3:Yesterday Yep. Things like that. How have you found? And and obviously, I don't think there's very few people in the world that work harder than you. Right?
Speaker 3:So you're like working on on delivering that, you know you know, and growing the the the value of the IP day over day over day. How have you found the the the pace?
Speaker 11:Pretty easy if you're willing to deal with with pushback. Meaning, to your point, you know, if you if you go talk to hardcore NFT collectors, that small group, right, in the scheme of 8,000,000,000 people in the world, a lot of them would tell you that over the last eighteen, twenty four months, I've not been the darling of the ball because I just refused to do things that were gonna create short term economics.
Speaker 4:Yeah.
Speaker 11:And so I had to take my bumps and bruises on some of the degens, and I was empathetic. Like, when you are running a marathon, sprinters make fun of you.
Speaker 3:Yeah.
Speaker 11:So, you know, how have I dealt with it? I'm grown. Meaning, I've been running businesses for thirty years of my life, day to day. So I didn't I've also been a public figure for almost two decades. It wasn't hard for me to deal with the cynical tweets.
Speaker 11:I have a fucking vision. I'm focused on what I'm building. And over the last twenty four months, building the infrastructure of trading cards and comic books and cartoons, my Moonbug collaboration, my Topps collaboration, us becoming a leader in live social shopping on whatnot. These are the pieces that are being put in place. And when you look at the NFT values, because people are falling in love with Patient Panda and Fearless Fairy, You know, I know why people buy Spider Man comic books.
Speaker 11:I know why people buy Mickey Mantle rookie carts. I need the storytelling. While there was uncertainty in the market, especially with the prior regime's SEC, I'm just focused on building incredible community and collectability and infrastructure and building out my team. And, so to answer your question, it was quite easy and quite hard. It was easy because I am who I am as a human and an operator.
Speaker 11:It was hard because even if you're a gangster and focused and I like to be all those things, I'm a human. And, you know, when you get that pushback and people like, where, what, what's the value, what, this, that, or, like, where did Gary Vee go? Blah blah blah. You know, you you're gonna you gotta eat it. But the reality is is I've been very clear about what I've been doing from day one.
Speaker 11:You can go look at my CNBC or podcast interviews in 2021. I said I'm building a thirty, forty year IP. 99% of NFTs are gonna go to zero. I see a path to not being part of that 99%. It is gonna involve the real world, not just digital.
Speaker 11:I will stay on top of my web three understanding, my web two understanding. And, you know, I've spent six months on understanding AI creation's gonna matter for this IP, you know, because I'm required to, or the updates on new blockchain, or what Coinbase is doing with base as a layer two, or what's going on with YouTube Kids dynamics. And, I mean, I'm just in my traffic, bro. And so I'm I've handled it easily.
Speaker 1:How do you think about, value transfer for intellectual property going forward? I mean, for we we were in the dark ages for a while where you couldn't even use a song on social media without getting the thing taken down. Now it feels like most of the platforms have figured out how to funnel the ad revenue around to the correct creator. Imagine that gets better with AI. But
Speaker 11:It's gonna get it's gonna get better with AI and a lot better with AI on top of blockchain
Speaker 1:That makes sense.
Speaker 11:Where you could really, really layer it all together. So what do I think? I think
Speaker 1:Yeah.
Speaker 11:People in the intellectual property business are big winners of the next half century. And I'm grateful that between GaryVee, the personal brand Mhmm. And VeeFriends, the the intellectual property that has obnoxious ambitions, that I'm gonna be in the, in the game.
Speaker 3:What is what is the next, one to two years look like? You've been laying out, you know, your your master plan, giving us updates, but what is yeah. What is it what's the immediate future look like?
Speaker 11:Social media creative at scale. The believe it or not, this is analog, but the comic books are monstrous for me. Yeah. We just put out we're we but it's a modern twist. We're selling comic books in packs, so it has like a baseball card feel.
Speaker 11:Mhmm. So different covers, different variations, and we're selling it on on whatnot and TikTok shop.
Speaker 1:Mhmm.
Speaker 11:So we're doing commerce tainment, which is something I believe very deeply in.
Speaker 1:Mhmm. Yeah.
Speaker 11:So right now, I'm going into the chapter of here's how I look at it. I don't know if you men knows this, but Harry Potter's original book is a very sought after collectible and very valuable.
Speaker 6:Mhmm. Yeah.
Speaker 11:But Pokemon and Star Wars first books are not that sought after. Spider Man's rookie card in 1966, think an undervalued collectible, but it's not super sought at. Because when you're a comic book collector or more importantly, the first time Spider Man appeared in the world, it came in comic book form. Harry Potter came in book form. Trading you know, Pokemon came in trading card form.
Speaker 11:The form factor of the collectible, when it first appears, becomes the alpha, becomes the the real central focus. And then the IPs expand into everything from pajamas to cereal to vitamins to movies to video games. My what I'm focused on right now is getting people to fall in love with my characters. So animation, social media content, comic books, trading cards that have stories on the back. I'm very focused on that.
Speaker 11:What that's doing is it's leading people when they fall in love to get into the ecosystem, and that then that brings them back to wanting to own series one NFT because that is the original origin of the IP. So next twenty four months is keep my eye on macro technology, make sure I'm utilizing AI and everything that it brings to the table for me to expand the output of my creative both in volume and quality, pay deep attention to the new blockchains and the layer twos and the innovations that are happening in NFT land because, obviously, you know, this is an at the end of the day, a digital collectible first and everything else second. And then most of all, figure out more ways for people to fall in love with Ambitious Angel and Balanced Beetle and the very lucky black cat.
Speaker 3:Do you you said you're one of the most active sellers on whatnot. Are VC still underrating live shopping? It feels like one of those things that
Speaker 1:Took off in Asia, but there haven't been that many power lines.
Speaker 3:Taken off in certain Yeah. Subgroups Yeah. And and for certain product types here and and certain demos. But I'm curious as a seller, how how do you view it today?
Speaker 11:I view the the QVCification of social media as one of the most significant micro emerging trends in the community of venture capital, private equity business, opportunities for entrepreneurs and humans. I think it is incredibly real. Mhmm. I wouldn't call that VCs are underrating it. I think whatnot got a obnoxious valuation, but I think that's the macro infrastructure.
Speaker 11:To your point, DTE I I think entrepreneur I think small businesses and entrepreneurs and startup founders are underestimating it. If you sell something physical, if you sell something and live social shopping is not part of your daily debate strategy and then ultimately execution, you're misplaying spring of twenty twenty five. Every if you sell vitamins, if you sell underwear, if you sell racquetball, if you sell something, and this is not part of your repertoire, you're basically similar to someone who's not using social media at all in 02/1989, which means you're not gonna go out of business. It's not like you're a doofus and you're dead. It means that you're leaving an obnoxious amount of opportunity on the table.
Speaker 1:Yeah. Yeah. That makes sense.
Speaker 3:That's a good framework. Anyway, we'll get on there and we'll start selling twenty twenty six ad slots We got it. Right next to you. Yeah. I know I know we got a hard stop.
Speaker 3:Anything else you want
Speaker 11:me to for you? Like, Like, find No. I wanna say thank you, and and I wanna say commerce payment. You may not sell ad slots because that's a different form factor. Mhmm.
Speaker 11:But if you don't think that you guys could sell, and don't think this is the right move for the tone and 10 or what you're doing. However, there are general business items that this show could sell at scale even passively while people are watching with shop for a briefcase or these are the best travel shoes or fucking, I don't know, fountain pens. I don't give a shit. Like, you guys could dominate.
Speaker 1:Love it. I love domination.
Speaker 3:I wanna dominate everything we do.
Speaker 1:We'll discuss all I
Speaker 3:want standing desk floating across the screen and we're saying buy now. Now. Tread Great to see you, Gary. Fantastic. How are going?
Speaker 1:Good travels. We'll talk to you soon. Anyway, let's do some timeline. We got fifteen minutes until Will from WHOOP is coming up.
Speaker 3:Amazing thing about GV. Yeah. He's the same person always. Oh, yeah. Totally.
Speaker 3:Every interaction. Talking with him It's great. Here. He's in the car Yeah. Just doing business.
Speaker 1:Yep. I love It's great. It's great.
Speaker 3:Fully authentic. And I like the the the the clear dedication of Vee friends. I mean, he is on an absolute mission.
Speaker 1:So Yeah.
Speaker 3:I love to see it.
Speaker 1:Anyway, let's go through some timeline. First up from Harsh. He says Windsurf sold for 3,000,000,000. Cursor is now valued at 9,000,000,000. Windsurf bought by OpenAI.
Speaker 1:OpenAI is an existing investor of Cursor. Both are Versus Code forks. Versus Code is owned by Microsoft. Microsoft owns 49% of OpenAI, and it's the and it's the the Big short. The big short photo.
Speaker 1:Hey. There's a bubble. And, I mean, a little silly, but it makes sense that everyone's getting into this. The this one from Leo Gao, if we can pull it up, is one of my favorites from frog and toad. Said frog put the profits in a box.
Speaker 1:There, he said, now we will not be motivated by profits above the cap, but we can open the box, said toad. That is true, said frog. Just a timeless children's tale. Obviously, referencing the the OpenAI profit cap. Nick Carter also had an interesting post about AI, the k shaped reaction to artificial intelligence.
Speaker 1:For people who are naturally curious and love to learn, AI vastly improves their pace of information ingestion. For people who hate reading, writing, and see knowledge work as pointless busywork, AI will atrophy their cognitive functions. I couldn't agree more. If you're curious, you'll just be tinkering with ChatGPT all day long. I was trying to pull a list of the fastest companies.
Speaker 1:I mean, I'm sure everyone's seen that chart, the fastest companies to a hundred million of ARR. I wanted to see the big boy version of that, fastest to 1,000,000,000 in revenue. Obviously, Google, Facebook, all these companies have done it very, very quickly. And I was able to just do one deep research report then have you know, turn it into a scikit learn or I I forget I forget exactly what matplotlib chart all within one one ChatGPT chat interface. And I was just going back and forth for probably thirty minutes while Jordy was just watching me.
Speaker 3:Fully fully voice mode too.
Speaker 1:Yeah. It was great. Just talk to it and say, hey. Yeah. Change this title, make this bold, make it font bigger.
Speaker 1:In pocket.
Speaker 6:Is great.
Speaker 1:I'm not gonna say the name of this account, but I will say I will read the post. It says, there is a phenomenon on TikTok where businesses will exploit their young female employees to do an informal ad for their establishment. Have you heard about this? I don't. Oh, we have like a junior I don't call
Speaker 3:this exploitation. I call this
Speaker 1:Shareholder value creation.
Speaker 3:Being on a team and being willing to do things that aren't necessarily directly listed on your
Speaker 1:Yeah, but I mean if it's not within your purview and you're like, you know, forcing your employees to post about your stupid business or something. Gotten to
Speaker 3:your head. Make a TikTok at Yeah.
Speaker 1:I mean, I I don't know. It seems kind of silly. But, I mean, you you gotta negotiate that in your employment contract. Hey, this isn't part of my job if I don't wanna be doing TikTok for you. Anyway
Speaker 3:You can always say no to TikTok ads.
Speaker 1:There's this video that went out from Frothless. The money isn't real. I don't know if you saw this video, but it it has a very cool, like, retro vibe. We we I don't even know if we could play it. But Yeah.
Speaker 1:That's fun. It has this very cool, like, retro VHS vibe, and it's making all these points about, like, you know, crypto is the future. Money isn't real. Gold standard dropped. And the whole time I was watching it, I was just like, this feels like an ad for buying gold.
Speaker 1:Like, you can still just buy gold. And yet it's it's it's funny that, like, all like, 90% of this is just an ad for gold. And then at the last second, it's just like, oh, actually buy Bitcoin or some some it's actually don't even buy Bitcoin. It's like buy dollar sign crypto on Solana or something like that. It was like a very odd pitch.
Speaker 3:You're getting a meme coin ad.
Speaker 1:Yeah. It was a meme coin ad. And I was like, I I feel like a lot of the statements you're making are just, you know, gold bug talking points, basically. Anyway, Rohit says, this image is unironically worth 100,000,000,000 in annual revenues. Did you see this?
Speaker 1:Gemini advanced. You ask it. What are the best headphones in the world? It says it's a classic question with a delightfully complex answer. There's no single best pair of headphones in the world.
Speaker 1:Let's dive into it. Gives you this big long text response. And then on the other side, you go to Google and you click and you search world's best headphones, and it just immediately shows you exactly what you can buy. And what was your interpretation of this post? Like, what what do think Rohit's trying to say with this?
Speaker 3:Well, I mean, first, this just goes back to what I was saying earlier. It's like the Google dilemma is just will be a a HBS case study within probably five years
Speaker 1:Sure.
Speaker 3:Around disrupting yourself Yeah. But not in necessarily a great way. Yeah. Right? There's some businesses that like, we're gonna disrupt ourselves and they sort of launch an Yeah.
Speaker 3:Iteration of what they're doing, but don't kill their golden goose. I mean, I mean, I think this is a, you know, the the funny thing here is I think that a lot of consumers, the right side just getting shown the pretty picture.
Speaker 1:I completely agree.
Speaker 3:I completely agree.
Speaker 1:I I don't think the LLM response is better here. I don't wanna say a wall of text.
Speaker 3:Make with headphones. Headphones specifically are not necessarily the best example because it's emotional. It's like a part of your outfit. Yep. It's highly, you know, personality driven.
Speaker 3:It's not necessarily like
Speaker 1:I want a visual response. And also, I want like, the data can be presented in UI better than just a big long text block. You look at the Bose over here, and it has the price, the brand, which is important.
Speaker 3:Yeah.
Speaker 1:The star rating, that's also important.
Speaker 3:But I mean, Gemini could easily just add those sponsored you know, modules in.
Speaker 1:Yes. But but in terms of, like, big block of text, you know, 4,000 words on the best headphones, like, that's cool. Yeah. But I and I'm okay with the LLM kind of noodling on the question, but I do still think that a lot of people would prefer just to have a visual representation of, like, here are here's what we think are the best. Here's five others that are potentially in the running, in the conversation.
Speaker 1:And here's images, prices, you know, just just basically write an entire wire cutter report instead of just being so so so it just this highlighted to me just like the gap between the current UI for some of these Yeah. Some of these use cases. Then and then text. Yes. Text is the universal interface to quote Waroon, but there still is a lot of benefit that comes from just UI and imagery.
Speaker 3:Yeah. The the interesting thing here is, I mean, easy for Google to just like move the sponsored module into the LLM. Yeah. But then the bigger issue for them is, you know, ChatGPT being the preferred consumer LLM
Speaker 6:Yeah.
Speaker 3:And growing, astronomically.
Speaker 1:Yeah. And you I mean, you imagine that, I mean, Google has a decent image generation. I think they have actually a great one, especially with VIO, the new, video module. So but but there really is integration challenge in putting all of these together. Like, we've been joking about, like, PDF upload, like, when will like, all these different models that you have to choose from, everything's buried in dropdowns and menus.
Speaker 1:It really would be better, like, actually integrating all of the different AI models into one unified search box. Like, that's what Google has done over the past twenty years. Right? Like, you search for a flight, it knows, hey. Let's go to the flight UI, and it has different.
Speaker 1:It instantiates a a UI that's not developed on the fly. It's not Yeah. Coded on the fly. AI certainly has that promise of that, but there's still plenty of, plenty of, you know, business logic routing that can happen in the LLM. Like, you know, every once in a while, I'll ask it, like, generate an image or or make an image of this, and it'll just describe the prompt.
Speaker 1:And then it'll say, hey. Do want me to actually generate this? I kinda got confused. Did you want text or image? And so, clearly, within ChatGPT, there are multiple routes that it can go down.
Speaker 1:Like, do you want me to write code? And then if if you say yes, it writes some code. Do you just want text? Do you want me to go out to the web and search? Do you me to generate an image?
Speaker 1:There's kind of like four or five, like, tool usages. Yeah. Google, when you search, has, like, 10 or 50, I don't know, hundreds, because there's like the Wikipedia knowledge box. Also the flights. There's images.
Speaker 1:There's videos. There's all these different things that it can search and turn up in the UI. And the gap between that and where the LLMs are today, especially for some of the some of the less productized AI products, really is it's clearly, like, a path that that OpenAI is marching down, but it's gonna take Yeah. Anyway, speaking of AI, Sonia Wang from Sequoia is coming on the show tomorrow, but she was recapping, the third annual Sequoia AI Ascent. Absolutely banger lineup.
Speaker 1:Jensen Huang from, from NVIDIA talked about token generating AI factories as the new industrial infrastructure. We were talking to her partner, yesterday. And Andrew Reed. Andrew Reed. And and we were and and I have this big question of, like, when will we see the first data center build out for humanoid robotics?
Speaker 1:Because it seems like until that happens, we're not really on the scaling curve of that technology. We've we've seen that for LLMs. We are starting to see it with self driving cars, we are definitely you know, there's a lot of noise in humanoid robotics, but we're not actually seeing, like, the satellite images of the thousand a hundred thousand h one hundreds all go into one facility.
Speaker 3:Jim Fan from NVIDIA was actually at Ascent talking on about why simulation is key to robots passing the physical Turing test.
Speaker 1:And you would so you would think you'd be simulating on a huge scale. You'd be doing a massive data center build out, and that's something that, it can't just be a talking point for a humanoid robotics CEO. It has to actually be it has to be the domain of Dylan Patel and seminalysis. Until I see the satellite photo of your build out, I'm I'm not fully convinced that we're there. Yep.
Speaker 1:But Bret Taylor becoming c e CTO at age Facebook CTO at age 29 was there. Jeff Dean, one of the most legendary programmers of all time, is over at Google. Sam Altman was there. Chase Locke Miller from Crusoe. Really, really insanely Stacked.
Speaker 3:Well, we'll have to get more of her takeaways from that.
Speaker 1:Yeah. There's this other poster for moving to Europe. Your student debt will not follow you here. And so Andre says we can weaponize American AI against them. And Bern Hobart says sending Europe a bunch of people who have credentials indicating that they're suitable for office work, none of whom understand compound interest should be considered an act of sabotage similar to the Nord Stream attack.
Speaker 1:Just sending our most indebted college grads to Europe. Anyway, we have our next guest. Let's bring him into the studio. We're excited to talk about WHOOP, breakdown fitness trackers, and everything that's going on today. Welcome to the stream.
Speaker 1:How are
Speaker 6:you doing?
Speaker 3:What's going on?
Speaker 2:Hey. What's up, guys? How are doing?
Speaker 3:We're good. Doing great. Big day big day for you today.
Speaker 1:Yeah. Congratulations. Yeah. Yeah. Bring it down for us.
Speaker 2:No. It's great to be on with you. It's a it's an exciting day for Whoop. Obviously, we build wearable technology designed to improve health and performance. I've been building this company for thirteen years.
Speaker 10:Wow.
Speaker 2:And I think if you chart kind of the history of the company, it started really around, you know, high end athletic performance. Mhmm.
Speaker 11:And I
Speaker 2:think for the past decade, you've slowly seen the company evolve from being focused on, you know, the world's best athletes to being focused on a much more general population. And in a lot of ways, our our launch today, I think, crystallizes that. We came out with, two new hardwares, the Whoop five dot o and the Whoop MG, fourteen day battery life, a whole set of new, health sensing, a battery pack that, you know, gives the the sensor up to a month of of charge without without needing another charge. And then we we've come out with a whole suite of new features. So we came out with HealthSpan with WHOOP age, which will tell you essentially how old you are.
Speaker 2:I think it's gonna be a fairly addictive feature based on people's response to it already. We came out with a heart screener, with ECG, so you'll be able to screen your heart, with a medically cleared feature that's cleared by the FDA, so you can do ECG monitoring, see if you have A fib, which affects about one to two percent of the population. We came out with a whole new suite of women's health features, which is pretty exciting, menstrual cycle coaching, And and then, you know, of course, like, all sorts of new bands and apparel. We announced that we're gonna be doing blood testing soon. So, you know, what started as
Speaker 3:You skipped over that, but I'm I'm curious to dive deeper. That's Is that blood testing in people can visit labs or have somebody come to them? How far away from my whoop
Speaker 1:being able to Take your blood while
Speaker 3:you're wearing it? Just give me a little prick, the original
Speaker 2:Yeah. The hardware itself won't won't be giving you the prick, but we are gonna enable, you know, clinical lab blood tests, which will then be integrated into your your WHOOP data. I think a challenge that everyone feels as a consumer who cares about their health is, I've got some data over here. I've got some data at a doctor's office. I've got my WHOOP.
Speaker 2:I've got, you know, wearable data, and that none of that information is connected. And we're trying to bring more of that under the same umbrella. So, you know, we went from having strain, sleep, recovery, health monitoring, stress monitoring. We've now added things like, you know, ECG metrics. We came out with blood pressure today, which is a huge deal.
Speaker 2:Wow. And then, you know, on top of that, we're now gonna be introducing things like blood testing. So when you start putting all of this data under the same roof and you can layer in, coaching and analysis, different forms of artificial intelligence, it's pretty powerful what you're gonna be able to tell people.
Speaker 3:That's amazing. How how how competitive are you you and the team, and how much does that impact your kind of product development cycle? I mean, have to imagine, like, you know, obviously, there's a variety of of fitness and and health trackers out there, but you guys seem to be very clearly at the at the edge with this new launch. And I imagine already working on, you know, the next iteration, but what's what's the culture like internally?
Speaker 2:You know, I wouldn't say we spend a lot of time thinking about or talking about the competition, in part because the space for wearables went from actually being incredibly competitive to now having maybe the fewest players it's ever had.
Speaker 3:Yeah.
Speaker 2:If we were to talk about, competition ten years ago right? I started the company in 2012. But let's say, like, 2015, we'd be talking about Nike and Adidas and Under Armour and, you know, Fitbit and Jawbone and and, you know, Intel and Microsoft and, Samsung and Google, and here are all the other companies that are gonna enter the space, and Amazon's coming, and Facebook's coming. And so and, of course, Apple has been in the space. So, today, you know, it's it's really only, like, three or four companies, that I think are playing a big role in pushing pushing health monitoring.
Speaker 2:And I think we got this far by having our own point of view on the space. We've done things a little differently. We built a device that doesn't have a screen. You know, it really just focuses on health monitoring. It doesn't do a bunch of other things.
Speaker 2:It's not a, you know, it's not a tool that you can get emails with or or call an Uber with. It's it's really focused on health monitoring. So, you know, I think competition's real. I think you wanna be paying attention to the market, But I wouldn't say that we spend a lot of time, talking about competition. Now that doesn't exactly answer your question because you asked if we're competitive, and I would say we are competitive.
Speaker 2:You know, we like to win. When Amazon knocked us off and so Amazon met with us in, like, 02/2018 to invest in the company. Never invested. Came out with a copycat product in 2020 called the Amazon Halo. And we were so competitive then towards them that their forwards on every circuit board we manufactured, we wrote, don't bother copying us.
Speaker 2:We will win. And we literally we were that message was actually actually directed directly at Amazon because we knew
Speaker 9:they because you knew they
Speaker 3:were gonna reverse engineer it. Right?
Speaker 2:Yeah. We knew they were taking our product apart. And so there was sort of like an inside joke that, of course, they were gonna have to see that message.
Speaker 1:That's hilarious.
Speaker 3:That's so that's so demoralizing, you know, you're like
Speaker 1:And I'll be like, yeah,
Speaker 3:you're product manager of of 300 Yeah. You know, working on Halo, and you just like discover this. That's Like, guys, I have I have some bad news for being, you know, we're being sent messages. Can you talk about the the I'm particularly interested in the in the HealthSpan Mhmm. Feature.
Speaker 3:You know, I I've tried a variety of different various, you know, testing companies over the years. I'm an investor in Famously,
Speaker 1:your biological age is like what, five years old?
Speaker 3:Three years Yeah, yeah, This is our joke. Like there's this kind of like competitive dynamic if you're doing anything related to biomarkers that you would just drive it down eventually. Going to tell me I'm actually negative one. I'm still in the womb biologically. But how do you guys of work?
Speaker 3:What does that product actually look like in practice? And what was important to get right there?
Speaker 2:Yeah. It's a feature we've worked on for a few years now, and, it's called HealthSpan with WHOOP age, and it really has two key numbers. The first is your WHOOP age, which is essentially what we define as your your real biological age, which is obviously different than your your chronological age. And then it's got your pace of aging, which ranges from negative one x to three x, and, and the lower, the better for that. And those two numbers kind of play off one another.
Speaker 2:The the age itself is based on six months of data, and the pace of aging is looking at your last thirty days. So you kind of get a sense for, have my recent behaviors been positively affecting my my, you know, my overall health? And we developed this feature in partnership with the Buck Institute, which is one of the top, institutes for longevity in the world. And in particular, we worked with an expert named doctor Eric Verden. And we looked at a universe of all the different, variables that are related with all cause mortality.
Speaker 2:And, you know, we looked at a a pretty large universe of different metrics. But, ultimately, we settled on nine that most closely, correlated with all cause mortality or were leading indicators of all cause mortality. And, those include the the hours of sleep you get, your sleep consistency, exercise as measured as, like, the time you spend in heart rate zones, your your steps throughout the day, your v o two max, which is a huge one, the amount of time you spend strength training, and your resting heart rate, and so, lean body mass. So we we took, you know, we took each of these metrics. We actually show some of the research that is related to each one of them.
Speaker 2:And when you get the feature, you can go down every single of those nine metrics and see the degree to which it's adding or subtracting from your age. In a lot of ways, this is it's probably one of the first times WHOOP has been really explicit on how good you are at a specific metric relative to your age and and, you know, your gender. And so people have found it very actionable because, you know, maybe you're great at these five things, and these four things are making you older. And so now you know what you have to work on.
Speaker 3:Yeah. Very cool.
Speaker 1:I have a question about Meta Ray Bans partner with Luxottica Ray Bans. Have you ever thought about partnering? Jordy was joking that you should partner with Patek Philippe or potentially Vacheron Constantin or maybe Audemars Piguet. But have you ever explored that? Do you see it in the future?
Speaker 1:What are you thinking on the partnership side?
Speaker 2:We're we're certainly open to to different partnerships. We haven't done a lot of them today. I think there's a few different categories of partnerships. So, you know, one would be around, just like the whole universe of accessories and apparel, that Whoop has. Actually, one of the things that's quite unique to Whoop is it's the most customizable wearable on the market.
Speaker 2:So you can create 70,000 different types of bands and looks and feels for the product. I mean, for your for your audience that's watching this that's not familiar with the product, like, I'm just showing it right now, but, you you know, these bands come off very easily. Mhmm. And you could swap in and out all sorts of different colors and looks and feels. We've got, you know, everything from leather to cashmere to, you know, an an everyday silicone.
Speaker 2:And, and so we are looking at different partners in that category where maybe we'll do specific band developments with with someone. Mhmm. The sensor can also be worn in different locations on your body, which is something that's unique to WHOOP. So you can wear it on your upper arm. You can wear it in your boxers.
Speaker 2:You can wear it in shorts, women's bra, underwear. And, and so today, Whoop makes all of our own apparel as well. Mhmm. But that's, as you can imagine, another area, for potential partnership. Another category, I would say, of partnerships is around data.
Speaker 2:And so, you know, Whoop obviously has a unique set of data. And then, look, there's other products on the market that have unique sets of data. A very simple example of this was we partnered with, with Withings, you know, about nine months ago. And, you know, everyone who has a certain Withings scale, when they step on it, it goes straight into the WHOOP app. It updates their profile.
Speaker 2:The the weight, the lean body mass would feed into your health span.
Speaker 1:Mhmm.
Speaker 2:So things like that that just feel really seamless. Mhmm. You know, you asked about, like, Meta and Ray Bans and those sorts of things. I think from, like, a data display standpoint, you know, we'll go where the eyeballs go. Right?
Speaker 2:Obviously, today, everyone's got a smartphone. So as a consequence, we have an iPhone app and an Android app. Right? If one of those platforms emerges as being really popular, you know, one of these AR platforms, I could certainly imagine, WhoopData appearing there. I think at the end of the day, we view ourselves as a tool for collecting this data and helping explain it.
Speaker 2:But we are open minded to what the platform is that you analyze it on.
Speaker 1:That makes a lot of sense, Jordy.
Speaker 3:Last question on my side, and then I need to go get one of the new ones. Very curious now. How I'm assuming since I I imagine the majority of your revenue is really on the software side. Does that mean that the tear like, and I imagine a lot of your manufacturing is in is in Asia. My my uninformed assumption is that you guys aren't terribly impacted by this given that I imagine, you know, the real value that people are getting is from sort of the on ongoing sort of membership.
Speaker 3:But talk about that and and maybe how you're kind of planning around around the tariffs.
Speaker 2:Look. I mean, we we are impacted by it. No question. We manufacture some products in in China. We also do some manufacturing in Mexico.
Speaker 2:We've got accessories and apparel that we source around the world. So, yeah, look, the tariffs have impacted us. You know, I think for now, we're we're taking it on the chin rather than passing it to consumers. And, you know, my expectation is that some of this will evolve. And, look, our standpoint as well is, alright.
Speaker 2:We have to have a manufacturing policy that, adapts to where The US is and US relations with China and and all of these different things. So I would say we're looking at a few different options in that category, but we haven't we haven't done anything yet that directly affects the consumer in a negative way, and at least I'm happy with that.
Speaker 3:Yeah. That makes sense. Well, this is exciting.
Speaker 1:Yeah. Congratulations. Lunch. Where can people get it?
Speaker 3:Whoop.com.
Speaker 2:Whoop Com.
Speaker 1:Let's go. Whoop.com, baby.
Speaker 2:And and I just wanna say congrats to you guys, I think, on on creating a cool new category in this show. I've enjoyed seeing snippets on Yeah. On the Internet and listening to you guys. I I I appreciate what you do.
Speaker 3:Thank you. Thank you. Appreciate back on whenever you have news.
Speaker 1:Yeah. We'll see you soon.
Speaker 3:Yeah. We might we might start we might have to start flashing our our health spans Yep. On on the chiron so that So
Speaker 1:it works well.
Speaker 3:We we track our our eight sleep scores Yep. Daily with the audience to sort of keep ourselves accountable. Just We wanna just
Speaker 1:because the audience wants that.
Speaker 3:Yeah. Yeah. We're we're gonna add every single health metric because we wanna we wanna do this for decades. You can't you can't stream for three hours a day without taking your health very seriously.
Speaker 2:Yeah. I think like every 30 days just kind of a live update on your age, your
Speaker 9:health. That's great.
Speaker 2:That's what the people mean.
Speaker 1:Yeah. Wait. Doing the show three hours a day aged you ten years in three months. Woah. Woah.
Speaker 1:What happened, Jordy? Yeah. Hopefully not.
Speaker 3:Awesome. Well, congrats to you and the team on the line. Congratulations. We'll talk more soon.
Speaker 1:We'll talk more soon. Thanks so much. Bye. Cheers. Fantastic.
Speaker 1:Giga stream. Giga over four hours now. Getting close to four hours. Actually, on the dot. So thank you if you watched the whole thing.
Speaker 1:Thank you if you watched some clips.
Speaker 3:Thank you
Speaker 1:if you bought from any of our sponsors.
Speaker 3:We have another great show tomorrow. I'm looking forward to it.
Speaker 1:It's gonna be Friday.
Speaker 3:And that means
Speaker 1:It's rough. It's the worst day of the week.
Speaker 3:It's our last day of podcasting for the week.
Speaker 1:Yeah. But we got it. We we we got another week next and then another week. And then
Speaker 3:another always comes around. Yeah.
Speaker 1:Thanks, folks. Thank you for watching. We'll see you soon. Bye.
Speaker 3:Have a great day.