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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN. Today's Wednesday, 06/03/2026. We are live from the TBPN UltraDome. The temple of technology. It's the fortress of finance.
Speaker 2:The capital of capital.
Speaker 1:Wow. That's loud. Ramp.com.
Speaker 2:Time is money simple. If you use corporate card, go pay account and go home up and all in one place.
Speaker 1:We're having fun today. I've got the air air horn. Yeah.
Speaker 3:We got
Speaker 4:a air horn. And when
Speaker 1:Nick fired thing off unexpectedly, it really did some damage. But once you're prepared for it, it it's
Speaker 4:It'll grow
Speaker 1:on pretty satisfying. Anyway, Microsoft Build is satisfying for a number of reasons. They're in the foundation model game. They train a bunch of models. MAI Code One Flash, MAI Thinking One, the company's first coding and reasoning models respectively, with several several speakers played up as super efficient on cost per token basis in ROI.
Speaker 1:Race, you gotta be efficient. Microsoft Scout is an agent. They're OpenClaw pilled now, powered by OpenClaw, open source technology that operates across cloud, desktop, and webcom connecting to Teams, Outlook, OneDrive, and SharePoint, and to the data that powers your day, including chats, emails, calendar, contacts. Good news if you're all in on the Microsoft ecosystem. And then we talked about this a little bit with the Jensen announcements from NVIDIA.
Speaker 1:They're going into the PC market more. The r the Surface RTX Spark dev box is sort of the answer to Apple's Mac mini custom silicon designed for agentic AI. There's also a new Android based OS operating system, designed to run agents instead of apps called Project Solara. And there's a pretty cool demo, so we should play the video. The Verge always does a cut down of these keynotes.
Speaker 1:They take you through Microsoft Build in twenty five minutes, but we're only gonna play a couple minutes of this because And so today, one of
Speaker 5:things that I'm really excited about in order to tap into all this compute power is to expand the scope of Windows ML and Windows AI. We are also announcing two very cool new models that are all gonna run on Windows inbox.
Speaker 1:Okay. Let's jump to is a new Escalade minutes. Sort of
Speaker 5:a more efficient
Speaker 1:Because this is where Satya introduces Project Solara, which Ben Thompson said, Project Solara is to be very clear vaporware at this point, although the company did show real devices and has signed up Qualcomm and MediaTek as chip partners. It's also extremely compelling. So Ben Thompson likes it. Let's listen to Satya Nadella introduce
Speaker 6:Very broad categories. The first is stationary and the second is portable. The first device device is designed for your desk and it's built on media tech silicon.
Speaker 1:Concept cars. With Hello for Business Consumer technology.
Speaker 6:To the device, securely signs you in, giving you direct access to your agents.
Speaker 1:And Amazon and Google Home have similar products at this point with screens for more smart home.
Speaker 6:When you think, plan, and even act by delegating tasks to your agents with a simple tap or just using your voice. It even supports experiences like hand off between devices acting
Speaker 1:as a It's tricky to imagine when you wouldn't want to use your phone for this since people carry their phones everywhere. Firing off an agent isn't the most cumbersome thing, but I do love consumer hardware. So I'm excited to see if there's any unique things that you can do only with this product.
Speaker 6:Form factor designed for agent interactions.
Speaker 1:This is very interesting thing. It's not a phone. It looks more like a smart key card or badge. Yeah. It even has its face on it.
Speaker 1:Like, it's a badge that you'd wear.
Speaker 6:Fingerprint. I tap to unlock the device, and I have access now to all my agents in a secured manner. And would you look at that, I already have a task. And it says, gather content for your social media post
Speaker 4:if I missed it. Why
Speaker 3:We should do it right now. Right?
Speaker 4:Why would you want this over having an application
Speaker 1:And then now your phone?
Speaker 6:Camera is recording. I'm gonna pan across
Speaker 1:I'm not sure.
Speaker 6:I'm not take the shot. Yes. Thank you.
Speaker 7:That's a
Speaker 1:good question.
Speaker 6:Find some good shot.
Speaker 1:Does anyone have an answer?
Speaker 4:There's there's a there's a new meme, the two phone meme. Yeah. You know, maybe some people feel left out. They want a second And then
Speaker 6:you have it.
Speaker 1:There's like the dumb phone route where you don't want everything in the phone, but you do wanna kick off agents that go do things for you. You want to be more like delegating instead of like consuming. Like, you're not gonna be scrolling TikTok on that thing, but you might be firing off work tasks that you can come to later on your desktop and sort of lock in on.
Speaker 8:Agents are
Speaker 3:I don't know.
Speaker 4:Yeah. So I could I could I could prompt it and say, write a 20,000 word message to John Yep. Telling him that I would like to hang out on Saturday afternoon. Yeah. Make sure it's easy enough to digest so his agent can summarize it into a few bullet points.
Speaker 1:Yeah. Into ideally, just one sentence. Wanna hang out. Let's see. Ben Thompson broke it down a little bit.
Speaker 1:He said, first off, note the framing. The PC is old tech with agents. What about new tech uniquely enabled by agents? And note the classic Microsoft hook. Could that new tech sit on top of a new platform?
Speaker 1:So he says, there was one brief moment in the promotional video appearance that made the concept click for him. The problem with wearable devices is the interaction model. They are only useful when you are interacting with them, when the human is in the loop. But being in the loop with a wearable is annoying and inefficient. What is being demonstrated here, however, is a brief interaction and then the agent doing work in the background.
Speaker 1:In other words, the usefulness happens in the cloud without the human needing to be involved because an agent is doing work. That's what Ben Thompson finds compelling. On one hand, you can make the case that, of course, Microsoft would be interested in a device model that uses the cloud as a platform, given that Microsoft doesn't control a mobile device like the iPhone. What occurs to Ben Thompson, however, is that even if Microsoft doesn't succeed with Project Solara, this model where the cloud is the hub and multiple devices are the spoke instead of the phone being at the center is clearly a better one for agents. Agents work best in the cloud and across Yes, apps and the phone might be one of those devices.
Speaker 1:But when it comes to agents, it shouldn't be the hub because it's too locked out. And he says, again, this is vaporware and very much in Microsoft's interest. So take Project Solara with an appropriate grain of salt. It's a vision of the future, however, that does make a lot of sense, particularly in an enterprise scenario where all of the context and compute is already in the cloud. And Project Solara is focused on enterprise, not consumer, so you can mandate effectively that all of your employees carry these as their badges, and then they have a sort of like secure on ramp to their enterprise agents in the cloud that all run-in the Microsoft Azure ecosystem, in the Microsoft three sixty five ecosystem.
Speaker 1:He says it's also something completely different from the past and fits Ben Thompson's thesis that in the age of AI, thin is in because the compute is so constrained to the data center, on device compute. This may be gonna happen, but there's a lot that you can do on in the cloud that you can't do locally. So Yeah. Just have a very thin client and that that that little key card device is basically the thinnest client you can have. It it it's it's it's sole purpose is to just interface.
Speaker 1:It looks a lot like the Rabbit r one, sort of that form factor, which a lot of people were taking a little victory laps on behalf of the founder of the Rabbit r one saying he was just a little bit too early because the actual decision to offload all the compute to the cloud, do something useful up there, have a very minimal device that maybe you could take out with you, that could do some basic stuff. But it's always hard because people like the phone. They like being able to just watch a full movie on their phone if they want. And you never know.
Speaker 4:Has anybody been running down making a smart AI enabled cowboy hat? Hat, you potentially have a lot of room up here for onboard some Potentially. Right? Potentially. Maybe you could build a Starlink into it.
Speaker 1:I feel like you would not wear the smart cowboy hat. Just frying your brain with the Mac mini on your head. You're gonna you're gonna be against that. There's no way you're picking that up.
Speaker 4:Underexplored underexplored Anywhere. Hardware platform.
Speaker 1:You're bullish or bearish on Microsoft, you got to get on public.com investing for those who take it seriously. Stocks, options, bonds, cryptos, treasuries and more with great customer service. Alex Heath, friend of the show summed up the embrace of OpenClaw in a post. Scout is what it's called at Microsoft's first proactive AI agent for Copilot buried the news that Satya Nadella is fully embracing OpenClaw. When Scout is released more widely this summer, it will be powered by OpenClaw, Microsoft will contribute its security guardrails back to the project's open source ecosystem.
Speaker 1:A lot of people that got excited by OpenClaw sort of saw the rough edges and we saw this with the Meta AI, the Instagram account theft that was going on. You can imagine that if you have something that's as powerful as Open Cloud but still constrained within your Microsoft ecosystem, your your your all your cloud accounts, you could do things that are useful, pull together spreadsheets, PowerPoints, databases, all this different stuff, but not run roughshod over everything. And so if you're all in on one walled garden, the walls are actually somewhat safe. I don't know. Totally.
Speaker 1:So Microsoft getting in bed with OpenClaw makes a lot of sense, says Alex Heath. You only welcome a growing open framework onto your turf when you're confident you can control the ground it stands on. In this case, Microsoft is doing what it does best, being a platform company rather than trying to own too much of the stack. Microsoft also gets to ride the agent wave in a way its main hardware rival won't. Even with OpenClaw's initial buzz driving a surge in Mac Mini purchases, it's highly unlikely Apple will create a white glove experience for Microsoft, for OpenClaw like Microsoft has with Scout.
Speaker 1:And so Apple, you know, you're in the Mac
Speaker 4:mini, Yeah. You're of the world. Top the
Speaker 1:top But But
Speaker 4:not gonna embrace it. Not Yeah. Just not a
Speaker 1:They just don't have the enterprise motion necessarily.
Speaker 4:Well, that that, but also the security, privacy
Speaker 1:Yeah. But WWC is next week and who knows? Maybe we will see an Open Claw competitor. Maybe we will see something that's that's, you know, a great leap forward for Apple in the AI and the Apple intelligence feature set. I don't know.
Speaker 1:I I I'm I'm my my predictions are something that are look a lot more just like, okay. Siri works now. It can do the basic shortcut integrations. It can answer questions at a near frontier level. It's running Gemini under the hood.
Speaker 1:And so it's probably gonna be pretty good at just answering basic questions, doing basic things on your phone. I'm not expecting it to go and, like, warm its way into every other app like OpenClaw So there's a few other observations that Alex Heath had from Microsoft Build. Nidella is trying to tamp down the data center backlash. You know it's getting bad out there when a Mag seven CEO is debunking water usage fears. The quote was, in fact, the daily water usage over the course of the entire year is roughly equivalent to what a single restaurant would use.
Speaker 1:So he's giving more context there. The Copilot super app is not ready. Alex Heath showed off, what the new autopilot tab with Scout looks like, but it wasn't shown on stage. So that is delayed as it rolls out to become the Copilot super app that will sit alongside all of the Microsoft apps. Microsoft is still not at the frontier according to Alex Heath.
Speaker 1:He says it didn't make a big deal out of the benchmarks for its new family of models. There were other comps. They were comping it to older models from Anthropic and OpenAI. There were some, obviously, some great cost benefit trade offs. It's important to be in the game.
Speaker 1:Do you have more context on how these models are performing?
Speaker 9:Yeah. I think the interesting comparison here is is not with Frontier Labs, but I think with Meta.
Speaker 1:Yeah. Right?
Speaker 4:Because they
Speaker 9:had Muse Spark, like, pretty recently. And the thinking model, like, MAI Thinking One Yeah. Is actually, like, quite competitive with the Meta, which is interesting because I feel like I I just have not heard that much about the MAI team. Like, obviously, they have they have Mustafa and that's kind of like the big name
Speaker 1:Yeah.
Speaker 9:At Microsoft. But, like, Meta, you hear, like, over and over.
Speaker 1:Because we went through all this crazy this Alan Ward thing. Nat Friedman, Daniel Gross, Alex Wong. You know, you have so many people that have, like, you know, have done podcasts to have aura and have clout in the industry coming together. Not to mention like the actual researchers that they recruited.
Speaker 9:Yeah. So it's interesting that they're actually like Yeah. These are these are the
Speaker 4:would actually be more important than Yeah.
Speaker 1:But but in terms of like building building hype around whatever you're working on, like Meta has No. Didn't built the see aura of MSL and TBD Labs. There's a whole article about Alex Wang and that in the Journal or the Financial Times today. We can get to that later. But Alex, he says agents are the new OS.
Speaker 1:I'm not sure if an AI access badge with a screen will do it. He's skeptical. Are you putting on the badge?
Speaker 4:I'll throw on the badge.
Speaker 1:I would throw on the badge for a little bit. I wonder how often I would actually reach for it versus a phone. Also, I'm not although I love PCs and I love Windows for gaming, I don't I've never been like a run my whole life in Outlook and Microsoft Teams and all of that. So I I I feel like I would get 1% of the benefit of that. You like, you gotta be all in on that ecosystem.
Speaker 1:Gotta be all in. You gotta pushing your your chips in. For sure. For sure. Well, we will keep tracking that.
Speaker 1:What else is going on? Okay. Live reading reacting thread from Stochasm. There's ton to go through on MAI thinking. Was there anything interesting in this thread?
Speaker 1:Stochasm says, I also have to wonder how much of this report is informed by what they know about IP, OpenAI's IP. So, of course, they have access to intellectual property from OpenAI for training and they have access to the models. But one of the things that kept coming up in this presentation is that Microsoft is sort of touting like a very clean pre training data set so that you as a company who are using this model can be very confident that it's not it's not going to get you in any trouble down the road. Because if the New York Times doesn't wanna be in there or Harry Potter books don't wanna be in there, it's not in there because Microsoft has done all the hard work to sanitize all the training data. And they also made a very big point that they did not distill on another lab, which has been accusations that have been thrown around a bunch.
Speaker 1:During the Elon Musk OpenAI lawsuit, Elon was on the stand and mentioned that he might have or XAI folks might have done some distillation on either Anthropic or OpenAI models at one point. And so that was sort of like not the cleanest thing and might lead to problems down the road. Microsoft saying, hey, we're getting out in front of this. There's no distillation involved at all. And then they also launched a lot of features for companies to be able to fine tune these models.
Speaker 1:Slightly different than what Amazon does. Amazon does mid training. They give you a checkpoint of the pre trained and then you can add data that is relevant to your business and fine tune it from a mid training checkpoint. Microsoft is offering more of a reinforcement learning, RLE, post training step. But all of these lend themselves to there is a model that has a bunch of great capabilities at the baseline and good price per performance, and it runs on Azure, they've already optimized this for systems.
Speaker 1:And then you can take it, tweak it, fine tune it, and then you can deploy it on the same hardware, and you know it's gonna run, you know how much it's gonna cost per token, you're good to go. But it's gonna answer your particular questions, work for your particular business a little bit better. At least that is the pitch. That is the hope. We will see what adoption is like.
Speaker 1:Microsoft clearly has a strong go to market team, strong enterprise sales team. So we will hear how this is being deployed in the near future. Before we bring in our first guest to the show, let me tell you about CrowdStrike.
Speaker 2:No business is AI. No business is security. CrowdStrike's security self conscious.
Speaker 1:I don't know if you can actually hear that. The the the filter might be a little bit too much. But anyway, we can deal with that later. We are very, very fortunate to be joined by Mikey from Suno. Welcome to the show.
Speaker 4:How are
Speaker 1:you doing? I'm massive fan. He's here live with us in the TBPN UltraDome. Amazing that you could be here. How are doing?
Speaker 10:I'm I'm doing great. I'm excited to be here. This place is awesome.
Speaker 1:Thank you. Yeah. Give us the news. What happened today? Hit the gong.
Speaker 10:Hit it.
Speaker 1:Hey. Hit the gong. Tell us what happened.
Speaker 4:And then come back.
Speaker 1:And then come back and tell us. Woah. Thunderous. I I kinda shakes the entire camera.
Speaker 4:Anyway. That was by far the strongest hit from a guest.
Speaker 1:Yeah. A lot of people come in and they don't they they they they don't wanna break the gong. It's You might
Speaker 10:told me to go at it. Went, know.
Speaker 4:That was perfect.
Speaker 1:Well, it's a good day for that.
Speaker 4:That's the
Speaker 7:new bar.
Speaker 1:So take us through. Why are we hitting the gong?
Speaker 10:We're hitting the gong. We raised a little over 400,000,000 announced today. Very exciting. Led by Bond. A history of investing in really category defining consumer businesses which is really really cool.
Speaker 10:Lots of new investors joining. All of our old investors participating. So Yeah. Really really excited about that.
Speaker 1:IVP, Forerunner, Union Square, Matrix, Quiet Lightspeed, Menlo. Wow. Murderer's Row. Good job. Great.
Speaker 1:What unlocked this round? Why do this round? Are you spending a ton on inference? Are you spending a ton on training? Is there a huge cost or is there just so much traction that that unlocked the round?
Speaker 1:Like, what's the thesis?
Speaker 10:Really really more of the latter. There's been a ton of traction and a ton of actually progress since the last time Cool. I was on. And so just to just to Yeah. Zoom out here.
Speaker 1:Where is the company right now in terms of the products?
Speaker 10:So every time we we release new products, we release new models Yeah. More people come to the product, but more people stick around. And so the engagement metrics that we track Mhmm. Say it's usage retention, what fraction of our users come three or more days a week Mhmm. Session time, all of these are getting really really good.
Speaker 10:All of these are are up like about 50% in the last six months, is huge. This is just like Right. Constant making the product better, making more people fall in love with being creative. And so it's been incredible to see. And, yeah, it's like a lot of hard work from the team, but
Speaker 1:it's What is really paying the North Star metric on retention? Like, DAU now, monthly churn? Like, how are you thinking about actually, like, is the correct metric to measure for your particular business?
Speaker 10:You know, yeah. Different businesses are gonna be different. Yeah. We like we like retention. Okay.
Speaker 10:I think all of these are kind of very, very similar.
Speaker 1:Yeah.
Speaker 10:The thing that's like really important here is just to remember, yeah, like revenue is is a trailing metric for how good is your product. And retention is really the best way to think about people are coming to my product over and over again. Yeah. They're falling in love with it. Yeah.
Speaker 10:There's no real hacking that, basically.
Speaker 1:Yeah. And are you early are you are you far enough along to see like smiling curves in the retention curve?
Speaker 10:Yeah. For sure. So it's been it's been really exciting. So there's also there's two retentions, there's usage retention, there's paid retention. Okay.
Speaker 10:So remember we have a pretty generous free tier and Yeah. So our free users are also still coming back
Speaker 1:Okay.
Speaker 10:Over and over again. Yeah. And so all signs point to I think the thing that we've thought about for a long time which is everybody's creative, everybody will enjoy being creative if we can make the experience right for them. Yeah. And we've known this deep down because when you demo the product for somebody, take out your phone and you guide them through having that magical moment, their eyes light up.
Speaker 1:Yeah.
Speaker 10:And so it's it's really around how do we let people do that themselves and really feel creative by themselves.
Speaker 1:Walk me through the paid tier philosophy. Single tier, how do you have like are you thinking or do you already have like ultra mid pro plans where someone can spend a lot of money if they're using this as like more of a prosumer tool, enterprise, like how how striated is the the monetization at this point?
Speaker 10:It's a great question. I think the short answer is we haven't really changed our pricing all that much in in a long time and so it might not even be appropriate. But what we have now is there's a free tier, there's a 10 a month tier, there's a $30 month. Okay. The $30 a month tier gets you not only more usage
Speaker 1:Yeah.
Speaker 10:But some different power features. Yep. And then, you know, AI is this weird thing. It doesn't really fit neatly into SaaS pricing and so a lot of sub companies are trying different things. A lot like everyone else, when you reach your cap, you can buy overages.
Speaker 10:And so we've got lots of people who spend hours and hours a day on it and they hit their caps and and they keep paying for more.
Speaker 1:Yeah. It's such a weird dynamic in the modern era where you will have customers that are effectively gross margin negative potentially depending on exactly where you set the thresholds. And then you will have customers that are they they want the best product, they're happy to pay, but they come once a month with something. And and they're probably much higher gross margin and there's just this blend because we're in this like, you know, real marginal cost era no longer, the zero marginal cost era.
Speaker 10:You know, a few things there, like actually our margins are pretty okay
Speaker 1:Yeah.
Speaker 10:And music models are small Yeah. And so it's not really the same cost structure. But the other thing is, it's really interesting, there's not really a lot of consumer businesses being built right now and certainly not a lot of consumer entertainment businesses Yeah. Being built right now. And there's a real different, I think, interaction that the average user has when I'm sitting down at co work Mhmm.
Speaker 10:And my boss is paying for it. And so I don't really think or care Sure. About how much money this is costing me. And when you're building for consumer entertainment and you're paying for it and Mhmm. It's not for doing a task, it's actually for enjoying yourself, you actually do think a lot about it.
Speaker 10:And so, a, it makes our jobs harder. We actually have to deliver more. But b, you you you want to make sure that you provide the right experience where you're not constantly thinking about, oh gosh, how many credits do I have left If before I pay a
Speaker 1:if Ben Thompson were here, he'd probably ask you about advertising. I feel like consumers want to be entertained. They don't necessarily want to be productive. It's very hard to get consumers to pay at scale. Obviously, the AI era is like a big narrative violation of that because there's tens of millions of consumers that are paying for AI tools across the entire industry.
Speaker 1:But there does seem to be a limit to how many consumers will pay even $10 a month. Are you thinking about trading credits while you're waiting for a song to generate
Speaker 7:ads? How are
Speaker 1:you thinking about that?
Speaker 10:We're not thinking at that scale yet. I actually kind of disagree with Ben here. Okay. I mean, he's awesome. He's But I just I just think about like 800,000,000 people about stream music.
Speaker 10:A little less than half of them pay for it.
Speaker 11:That's actually a lot
Speaker 10:of people. Like Yeah. 300,000,000 people pay Yeah. For streaming music. That's a lot.
Speaker 1:Yeah. I just think that that like the history
Speaker 4:here So so there's billions and billions of people that don't listen to music online whatsoever? Is it really only 800,000,000?
Speaker 10:Accounts? Or
Speaker 4:is that accounts on Spotify that does maybe count YouTube?
Speaker 10:That's to my knowledge, that's like Spotify, YouTube, Apple, and maybe like five others.
Speaker 1:There's a billion vinyl record DAUs now, too.
Speaker 10:Vinyl's gonna make a big comeback. I mean, I think as we change the place of music and culture, as the product gets better, we change the place that music has and culture, we see these creative moments happening. And so you see them digitally now, where maybe you saw the Puerto Rico song Yeah. Where you saw an amazing creative trend where people are making like their cringey text messages into songs viral on TikTok. And I think you'll start to see that penetrate actually the IRL world as well.
Speaker 10:And so I yeah. I'm I'm long Vinyl.
Speaker 4:Yeah. I was talking to someone who wanted a job at Suno and they were they were asking me what I thought about the business. And obviously, I've been bullish for a long time, like this new entertainment form factor. People love the product. You guys have real revenue.
Speaker 4:You're growing really quickly. The my unsophisticated view was that I I told the person, I can easily imagine this as like a $10,000,000,000 company. It's hard for me to see the world in which this is a 100,000,000,000 company. Why am I why am I wrong? I know you're insanely ambitious.
Speaker 4:You're not gonna Yeah. You're not gonna two x from here and then be like, job's done. The
Speaker 10:job the job's not done. I think this is one of those things actually.
Speaker 3:I think
Speaker 10:you've just been hanging around investors too much, is the thing that you have to be right for a long time while while a lot of people are wrong. And the thing is every every revenue scale we hit, every usage scale we hit, the question is like, but how many people really want to create? And that was got those questions at a $100,000 in revenue, we get those questions at a $100,000,000 in revenue. And the lived experience we have playing with the product with people, but also the metrics and looking at our growth curves and seeing that every time we make the product better, yes, things inflect up, but we appeal to a broader and broader audience. And so, I feel very
Speaker 4:the same the same thing would have been said with early creative tools on the Internet. Absolutely. It was, you know, how big you know, with Figma, was always how big could Figma be. Know, there's only so many designer professional designers. Then, of course, like the rest of the organization, same thing with with Canva.
Speaker 4:I'm sure a lot of people passed early on because they just thought, like, yeah, there's just not that many people relatively that, that do design. And then, of course, like, you make the tools more accessible. And and so so anyways.
Speaker 10:So yeah. And so there's a couple things here. One is, I think, actually, we'll have a very large fraction of those 300,000,000 subscribers to streaming also subscribe to Asuno in the long run. But the other thing that's amazing is that for the first time in a long time in music, there's innovation on the end user experience. And so you can have something where there are multiple products out there.
Speaker 10:Like, now, the end user experiences for music all look the same. They all look like a a streaming provider. Right? It's just like I have all of the world's music living on my phone and I can listen to it and that's it. In the future, when you can do more things and play with it, you probably subscribe to multiple video games, you probably subscribe to multiple video streaming platforms.
Speaker 4:Yeah.
Speaker 10:Why can't you subscribe to multiple music things? And I think the answer is in 10, you will.
Speaker 4:Yeah. Do you think Apple would ever make a play in this space?
Speaker 10:I think lots of people are gonna make plays in this space. It's almost validating to see that people finally think of music as a growth area. Yeah. Again, and so but again, I think that there's so much room for innovation here, there's so much greenfield to build upon that I'm actually really excited.
Speaker 1:Yeah. You take me through the story of the Puerto Rico song? What happened there? What were the key inflection points, actually?
Speaker 10:I don't I don't know is the answer. Know, this is like a song from a creator and it hits the right cultural moment and the right vibe. And and I don't want to say it's a good song or it's a bad song, but it is a platform where so many people can be creative on top of it. Yeah. And that is really fulfilling to see.
Speaker 10:And that's stuff that it's like new use cases for music that haven't been around for a minute.
Speaker 4:Is AI music becoming less controversial, or are there still people discovering it and getting angry? Because I could imagine there was a wave over the last two years where people were like, wait, they're making music with AI. This is a this is meant to be a human creative pursuit or whatever criticisms they've they've thrown at it. But I imagine over time, people start to realize that these are fun entertainment products and tools. And before you form an opinion, you should just try using it and form an opinion based on your experience, not, you know, Internet comments or things like that.
Speaker 4:But my expectation is that it will actually become less controversial year over year as it sort of normalizes.
Speaker 10:It is definitely becoming less controversial. There are still plenty of people who have preformed opinions and then, you know, actually playing with the product is the best way to change their minds. The thing that has become apparent in the music industry is that so many people are using it without talking about it. And as people realize that everybody knows that everybody knows, it certainly normalizes there. And then as a consumer, either when you play with the product and you realize how fun it is, or when you realize, actually there's some AI music in the music that I love, all of a sudden you're not so anti AI.
Speaker 10:I think this is a lot like people being anti AI and then they realize that ChatGPT can help them with their homework and they kind of soften a little Yeah.
Speaker 1:As a useful tool. Mean, Martin Scorsese came out yesterday in a Black Forest Labs video talking about the value of AI in the filmmaking process. But the video demos we'll watch it later on the show. But it it demos, sort of like a pre visualization step, almost like a storyboarding step. He's describing this alpine town, and it's generating visuals for him.
Speaker 1:He's not taking it end to end. Of course, that that that's happening more and more, but but he I I think having a filmmaker like Scorsese kind of step up and say, like, yeah, this is useful. I I can see this working
Speaker 10:there's an analog in music, actually, which is that you'll have songwriters make beautiful songs and instead of making demos for an artist Sure. It can make low fidelity songs, like low fidelity productions, which are demos, with Suno so much easier. Yeah. And it will get ripped out and produced without AI or with minimal AI when it's produced for the last time. Yeah.
Speaker 4:But Do you think there's still an opportunity for major artists to be a first mover in the space? We were talking, I think, a mutual friend of the three of us, and I was telling him he loves Suno. He uses it all the time. And I was telling him, like, why don't you just be the first one to take, like, a proper leap and do this? And, like, the first person that goes and says, like, hey, this is okay.
Speaker 4:It's not so scary. I used it in the creative process. We still use a bunch of, you know, traditional producers, sing you know, songwriters, etcetera. I think that person will get a lot of, like, credit and potentially, you know, a lot of attention. It will obviously be polarizing, but then the fourth, fifth, sixth mover won't really get any potential benefit, it'll just be normalized by that point.
Speaker 10:I think that's totally possible. Like, we've you know, there are people there are a few people who are outspoken about it, but I don't know if we've had like the moment yet.
Speaker 4:I want like the project. Yeah. Somebody has to make like a hit record.
Speaker 10:There have been I think what what
Speaker 4:you're And they have to they have to go out and say. They have to be just very upfront. And I What I want is them to document the whole process. Like, I want a video camera.
Speaker 10:How much is enough Suno in there, actually? It that's the that's the whole point.
Speaker 4:It's like like a guitar might have only been like one little riff in a song and it could have been some originally, like, recorded it on their phone, and then they brought it into the studio, and then, like, maybe it got transformed
Speaker 1:Are they using
Speaker 4:a and made with a different hand. Yeah. Exactly. And so to me to me, there just needs to be it's it's always gonna be a spectrum. Right?
Speaker 4:There's gonna be songs that are heavily Suno. But I would expect for, like, major artists, even if, like, the the original kind of idea or or some element of the song was made on Suno, you said, it'll just get transformed and adapted and evolved. And so, I think it's just positioning it as not like a replacement for anything, but another kind of individual artist in the room, another instrument in the room that's contributing to the project?
Speaker 10:Here's how I think of it. We we we haven't hit that moment, but at some point, somebody will really document and celebrate the use of these tools in making things like we're already in a lot of very popular music, but at some point, somebody will really do that actually proactively and that will be a huge cultural moment. And then the next amazing cultural moment will be an artist releases an album that is meant to be sunod by their fans.
Speaker 4:Yeah.
Speaker 10:Cool. And this is the new format. This is the thing that will pull people in that deepens the artist fan connection and that will be a very very important moment.
Speaker 1:How spiky is Sunu's intelligence? I wanna know about the training process.
Speaker 4:There's And we know you have to leave,
Speaker 1:so final final But the there's this like famous story about I think Andre Carpathi told it about like GPT four four one, some iteration where at at a certain checkpoint, it was terrible at chess And then all of the AI researchers just were really interested in chess. And they were like, there's no reason it should be bad at chess. And so they added a bunch of chess training data. And then all of a sudden, the models got pretty good at chess. And it seems like we're in this spiky intelligence race where coding is really valuable.
Speaker 1:There's a lot of money there, so the models are getting better at coding. But if you look at the models, like, it doesn't really feel like they're getting that much better at copywriting right now because that's not where the boom is. They're getting really good at coding. And I'm wondering if you're seeing like, okay, there's an opportunity for us to nail jazz in the next iteration or us to nail EDM in this iteration. Like, is it is like, what fingerprints is the team leaving on the model versus just we're scaling up and it's getting better at everything and there's surprises and it's very indeterminate?
Speaker 10:We we actually try not to leave our fingerprints on it. And we have a like, the approach is we should not be the arbiters of good and bad music, you know, like a file corrupt or or low quality Yeah. Sound recording. But like, you can go and you can listen to a song that has 10,000 YouTube plays or 10,000,000 YouTube plays and you won't actually be able to tell the difference. And so we should not be the arbiters of that.
Speaker 10:The thing that's different here also is that in the chess and the coding examples, there are objective right answers and that's why the models are so good at getting spiky there.
Speaker 7:Yeah.
Speaker 10:Music has no right answers.
Speaker 4:Yeah. And so
Speaker 1:There's no verified rewards. Not a viable reward.
Speaker 10:Yeah. And so all of those techniques actually don't work. You can
Speaker 1:do our LVR.
Speaker 10:So we're actually in the regime where it's much less spiky and actually when we find a hole, an anti spike, then we actually try to fill that in. Okay. Like it's not like we're amazing at jazz. It's like you suck at jazz or you suck at country and now we have to go and figure that one out.
Speaker 1:Last question. We'll let you out here. What about adding on to the viral fuel when I hear about turn your text messages into a Suno song? I think why can't I just screenshot my text messages and then you edit the video for me and I get a viral format. That feels like very tool you see, very like each video format's going to be a whole process for you.
Speaker 1:It's going to be hard to like one shot the full end to end. But I want what do think about
Speaker 4:I want the Slack integration. I want a Suno song at the end of each day that
Speaker 1:Yeah. Why weren't you on the stage at Microsoft Build?
Speaker 4:Want my I want the workday at at the office summarized.
Speaker 1:You want a workday integration?
Speaker 4:No. I want I want the Slack summarized and I wanna be able to listen to an hour long song on my drive home about what's happening at work.
Speaker 10:We'll try we'll try to make that happen. We're not doing a workday integration. But I will say, the thing that's amazing is actually this is platform where people are on top
Speaker 1:of it.
Speaker 10:Of course. And so we're not gonna come up with the
Speaker 1:right Yeah.
Speaker 10:Cringey text message video. Sure. Somebody is gonna
Speaker 4:do that.
Speaker 1:Well, that's a challenge for you at home. Go make the cringey text message. Go make the Workday integration. Prove Mikey wrong. Says he You won't build can.
Speaker 1:You can go and build. You can go and build the Workday integration yourself.
Speaker 4:Well Imagine keeping up at work Yep. Through music, John.
Speaker 1:It'd be fantastic.
Speaker 4:What's more powerful than that?
Speaker 1:You know what's more powerful than that? Console.com. Console builds AI agents that automate 70%
Speaker 2:of IT, HR, and finance support.
Speaker 1:Giving employees instant resolution for access requests and password resets. So we can talk about the there there there's a bunch of funny posts in the time that we got to go through before our next guest, Samir, from Collins. Samir joins us to talk about Hollywood. You can tell when a coworker got nothing going on outside of work. Why did why is that in here?
Speaker 1:220,000 people
Speaker 4:Is like our use is this did you put this in to kind of subtweet me, Tyler? I didn't read didn't send this in. The team I sent
Speaker 1:this in.
Speaker 4:The team always asks Monday morning. What do you this weekend?
Speaker 1:6,000,000. 6,000,000 views. Anyway, there's some news on the timeline about GOP repping Michigan senate candidate Mike Rogers. There's an actual photo from the campaign trail and then a photo put out by the staffer. Let's compare these.
Speaker 1:It's one of those can you tell can you spot the differences video. They made him a little bit bulkier. They they just added just a couple pounds of muscle. Just a couple? Just No.
Speaker 1:A looks huge in this in this photo.
Speaker 4:I mean, he looks like he's ready for the Olympia.
Speaker 1:Yeah. I don't think they went far far enough, so I I took it upon myself to generate an even more accurate photo we can pull up because I think this is what he should look like. If you're gonna AI your photos, just pull just just pull
Speaker 4:pull the stringer.
Speaker 1:Yeah. Get yourself in the stringer and make sure you're looking like you walked off of the Olympia stage. And still claim natural. Absolute mass absolute mass sponsor. Yeah.
Speaker 1:You can
Speaker 4:A typical natural politician thinks it would
Speaker 1:be I'm not on performance enhancing drugs. I just run every single photo through images too and chatty bitty. People are having fun. It was funny. I thought I was so original for doing this, but if you scroll down the comments, everyone had the same idea and made him way way more jacked if you scroll down.
Speaker 1:There's 25 others. And there
Speaker 12:are some Enhanced
Speaker 4:politics. Jack says the enhanced senate.
Speaker 1:Yeah. There are some that are absolutely crazy here. The enhanced senate. Okay. We got a debate on our hands.
Speaker 1:We got a debate on our hands. So Philip Johnston, friend of the show, founder of Star Cloud, founders, before you go out and raise, ask all the best AI models this. Play the role of a venture capitalist and give each startup in the x y z category of your startup space a ranking from one to 10 on how much they would want to invest in them with one don't want to invest at all and 10 desperately want to invest. Do deep research and give reasons. All the VCs are doing some version of this.
Speaker 1:He's claiming that the VCs are just AI psychosis letting AI do their job. Maybe it's true. We don't know. Maybe. It's But Advice out your funds.
Speaker 1:Says all the VCs are doing some version of this and if you're not at the top of the list, you're going to have problems so it might make sense to delay the raise until you can closer to the top. So if if the frontier models don't approve of your startup pitch, take go back to the drawing board, build a little bit more before you go out on that fundraising journey. Seth Bannon at fifty years says founders do not listen to this. You should in no way time your raise based on how an LLM ranks you. The best VCs are not sitting around asking AI who should I invest in and then doing that.
Speaker 1:Well that's a different question. Are you trying to raise or are you trying to raise from the best VCs? These are two different things.
Speaker 4:Yeah. I I Fill out
Speaker 3:a round.
Speaker 4:The LLM would would do a pretty good job of of figuring out like the relative interest and excitement. Right? Yeah. You can look at you could if an agent was running a pretty interesting metric is like, you know, head count growth on LinkedIn. Right?
Speaker 4:Sure. Sure. Are are people leaving? You know, how many people are leaving the company? Yeah.
Speaker 4:All all these things. So I actually think it
Speaker 1:Has has this fund has this fund's competitor done another deal and they're excluded from and that competitor is excluded from year round, but they're looking for
Speaker 4:also also, you know, pedigree. Right? Yeah. This is whether you like it or not, a big factor in especially like king making right now. So if you're in a category and you're you're a smart talented individual, but you're you're at the seed stage.
Speaker 4:And then there's another pet
Speaker 1:food company? Pedigree Pet Foods?
Speaker 4:No. That's what I know of a pet food for. Food and treats. And you have another company, you're same stage where, you know, all three founders just came out of SpaceX after being there for ten years and you're both competing Yeah. You know, some adjacent category.
Speaker 4:Right? Like, I actually think the model is gonna do a pretty good job and say, like, hey, VCs, very likely might be, you know, three times more excited to invest in
Speaker 1:Yeah.
Speaker 4:This team than you. And and that is just that's just reality.
Speaker 1:Okay. So Philip Johnson says, I'm glad I provoked I'm glad I provoked a reaction. This will age badly over the coming few years. He's saying Seth is wrong. He says also I'm not talking about timing arrays based on AI opinion.
Speaker 1:I'm talking about actually improving your startup. Get more customers for example, which will at some point be picked up in the AI rankings, which is a lot of what you were getting at. So I I guess the question is should you delay a raise based on AI opinion? And would you actually listen to a clanker tell you how your business is doing? Or are you gonna say I know better?
Speaker 1:What do you think? I I I think you're arguing it's a good source of feedback. It's worthwhile. But at the same time, I can't see you doing this. I can't see you actually going to a model and being like, yeah, they're right.
Speaker 1:I am washed. No way. No way. Zero shot.
Speaker 4:Like I think I think I I was think I was I I think that earlier in my a decade ago, this actually would have been super helpful. Yeah. Because I wasn't fully aware of all the different factors Yeah. That made that went into that went into making a company
Speaker 1:That's a good point. Yeah.
Speaker 4:So I mean, early on
Speaker 1:early on, I like, there was like a checklist from zero to one. Yeah. Peter Thiel, zero to one. You and you could go through it and say like, okay, do I have defensibility? Am I building something that will have staying power?
Speaker 1:How many of these boxes do I check? Because when I go out to raise, a lot of the VCs are going to be thinking the same thing. It's worthwhile and and and AI can sort help you do that checklist. So that's valuable.
Speaker 4:Another another thing I was talking, I I
Speaker 1:I don't think you're taking a
Speaker 11:no offense, sir.
Speaker 4:An LLM, a smart enough model would be able to do this if it was trained on enough VC blog post maybe Which which certainly, I think some are quite are quite well trained on on PG's blog and others. But I was talking to a founder yesterday. Two year old company has gone through a pivot, figured out a much more interesting opportunity
Speaker 1:Yeah.
Speaker 4:Than they originally started with. Mhmm. Have a bunch of, you know, pilots, a lot of positive momentum. Revenue is growing. But I had to tell the founder, like, look, you are the VCs that you're gonna talk to, if you got to raise right now, are are are are talking to companies
Speaker 1:Yeah.
Speaker 4:That are adding what the revenue you will add in the next year, they're gonna add it in the next thirty days. Yeah. Yeah. So even though you have a super exciting opportunity Yeah. It's gonna be really hard to invest right now
Speaker 1:Yeah.
Speaker 4:Be just because there's they have a limited amount of capital Yeah. They wanna be making bets against, you know, oftentimes momentum. Yeah. That's just that's just the game.
Speaker 1:Yeah. And a really, really good model could say, look, your startup is very mid. You're don't even bother pitching founders fund top tier firms. But I got some I got some guys who they got crazy AIs that goes right now. They they'd love to invest.
Speaker 1:So you should definitely DM this person because they've been posting crazy slop on the timeline nonstop and they're they're just ripping checks at anything. And so you fit that category. So go get the go get the bag from them. This is possible. This is possible with super intelligence.
Speaker 1:Anyway, our next guest is in the waiting room. But first, let me tell you about the New York Stock Exchange. We want to change the world, raise capital at the New York Stock Exchange.
Speaker 4:Yeah.
Speaker 1:And we are very lucky to be joined by Samir from Kyle and Samir. The TBPN LCRM. How are you doing?
Speaker 4:Cabin in the woods.
Speaker 1:That's right. Been I missed you.
Speaker 8:You see the view?
Speaker 1:Yes. I wanna see the There we go. Everything. This looks amazing.
Speaker 4:Take me home. Take
Speaker 7:me home.
Speaker 1:Hey, are how off the record is this conference? Can you describe what you're actually doing?
Speaker 8:Never. Whenever you come to Montana, you can't tell anyone.
Speaker 1:Yeah. That makes sense.
Speaker 8:Mean, I did I did just tell you I'm in Montana. But no, I'm actually GeoGuest Services knows exactly where
Speaker 1:you are. Yeah. Yeah. It's over geo rainbow on next. It will not too fully.
Speaker 4:What happens in the woods stays in the woods.
Speaker 1:I imagine I imagine you're you're there for good reason. Hopefully, there's been someone there that has provided more context on a story that we've been hunting around.
Speaker 4:Well, first, thank you again for hosting us
Speaker 1:Yeah.
Speaker 4:At your event last week.
Speaker 1:It was amazing. Was amazing. Dude. Incredible. Was amazing.
Speaker 1:Thank
Speaker 8:you guys for coming. Also, extremely relevant weekend, you know Yeah. To to to have that event. I mean, knew Backrooms was coming out the next day, obviously we'll get into that. Yeah.
Speaker 8:What what a time for Hollywood and creators.
Speaker 1:Yeah. Yeah. And yeah, was it was funny because I was telling you, oh, yeah, the Markiplier story is so cool. You're like, hey, I just talked to him on the on the stage. Yeah.
Speaker 1:And so obviously you've been tracking this for basically your entire career. You've seen this coming. But has it felt overdue to you? Ben Thompson was taking a victory lap saying he sort of predicted this in 2017. It's been a decade and it feels like this intersection of YouTube and Hollywood.
Speaker 1:It's been very combative but my my takeaway is that this feels like the first moment when we're seeing glimmers of real cooperation between the two separate communities and a way that that traditional Hollywood can work with YouTubers in a way that's mutually beneficial within the current system. But how are you processing this? How overdue is this? Like how have you been processing the current moment?
Speaker 8:I don't know if it's overdue or if it's just happening as it's unfolding, like in in real time where, you know, Kane, when I started on YouTube, Kane was five years old. So, like, you know, these are Internet native Overnight? Filmmakers.
Speaker 1:Yeah.
Speaker 8:And and I think there's three reasons why it's happening right now. You know, one one really important thing when we think about backrooms
Speaker 1:Yeah.
Speaker 8:Is backrooms you guys talked about this. Backrooms started as a 4chan image that then became like a collaborative story. Yeah. I think the reality is is Gen Z IP is not legacy IP like The Mandalorian. It's IP that is collaboratively created on the Internet.
Speaker 8:Yeah. So Backrooms feels like something that everybody on the Internet had a hand in creating. Or millions and millions of people on the Internet had a hand in creating. So when that comes out in theaters, I want a thing that I had a hand in.
Speaker 1:Yeah.
Speaker 4:I I
Speaker 8:I think the other thing is that cutting your teeth as an Internet filmmaker, it teaches you a lot about how to earn attention. Curry Barker, the director of of Obsession talked about this. In an interview, they said, what did YouTube teach you about directing movies? He said, the reality is when you make something for the Internet, the audience is beg ging and you have to convince them to stay. Mhmm.
Speaker 8:And I think historically in Hollywood, there's been an entitlement of, hey, we have George Clooney in the movie, we spent a lot on marketing, you're going to buy a ticket, and you're just going to sit and enjoy it. But I think Internet filmmakers know when you're making something for YouTube that like the audience can click away at any moment to something more interesting, so I better tell you a great story that's unfolding frame by frame.
Speaker 1:Yeah. Continue.
Speaker 8:Third thing, because I know we both we all love lists.
Speaker 3:And the
Speaker 8:third thing will blow your mind, by
Speaker 1:the shock you.
Speaker 8:Yeah. It'll shock you. The third thing is that Hollywood talent is I actually think like the linchpin in this moment in time that there's a lot of talent that's available that are like craftspeople in Hollywood who have focused on specific crafts whether those are DPs or screenwriters
Speaker 4:Or set design.
Speaker 8:Or set designers. Like, when that is paired with the acumen of Internet storytelling, it's it's it's proven to be very powerful.
Speaker 3:Mhmm.
Speaker 8:So I I think there's been this, like, narrative, of course, Hollywood is dying. But I think it just looks very different now. Like, we didn't know theaters were available. Like, Markiplier put his movie himself. He picked up the phone and put his movie in 4,600 theaters.
Speaker 8:Theaters are available, and they're they're great. You know, like Hollywood talent is available. They don't have other jobs, and they're great. So I think these worlds finally coming together, there's there's been a lot that's happened, but it's it's super exciting to see.
Speaker 4:Yeah. Yeah. I look at it as like the last fifteen years has been a story. There was collaboration happening, but it was overwhelmingly a disruption story. You look at the market cap, the value creation of the platforms Mhmm.
Speaker 4:You know, the the YouTubes, the the Instagrams, etcetera. How much how much the explosion of enterprise value in these new platforms, the overall reduction in EV in some of these sort of like more legacy entertainment. Sure. But now we're meeting at a point where there can both sides can say like, hey, we've we've now is the opportunity to figure out how to both win because clearly there's a place for both. Right?
Speaker 4:We still we still want to see the I mean, I don't. But John would like to see the the blockbuster
Speaker 1:Jordy's gonna see movies. You're gonna see gonna be the tipping point because you were never a movie guy, but once the new creators once there's a Wombo film and a whole cinematic universe around Professor Sendy, you're gonna be I'll be there. Into
Speaker 4:But but yeah. So so this is the moment where I think the I I expect digital platforms to consume more and more and more and more attention. That just seems to be Mhmm. They're frictionless. Right?
Speaker 4:They're free. They're available everywhere. But now is the moment of, hey, both sides should be, you know, actively trying to do more and more stuff together.
Speaker 8:Yeah. The reality is that also it's important to note that this has all happened in horror. Right? And this has happened once before with the Roc A Roc A brothers, you know, signing with a twenty four and making Talk To Me for about $4,000,000 that ended up making just about a 100,000,000. These are outsized returns.
Speaker 8:Like, Curry Barker making something for a million dollars. You know, Obsession was made for about a million dollars. Focus purchased it for around 15,000,000, and then generating a $148,000,000 not even a month in is absolutely insane. And so horror has historically been cheaper to produce. Right?
Speaker 8:If you even remember in the nineties, the Blair Witch Project was like this cheap indie horror movie that ended up exploding. Mhmm. And I think there's something to to explore about, like, the absurdity of horror and the absurdity of these movies and the absurdity of our world right now, and maybe the comfort in going to see something that is more absurd than the world around you. Yeah. That's just a hypothesis I have around, you know, horror, but horror has historically been cheap to make.
Speaker 8:I think we're about to see every agent in Hollywood ping their creator talent and say, do you have a horror script? Because it is that moment that's gonna happen. There will be likely an overreaction Yeah. You know, to this in Hollywood. But I do think, like, what was proven over this past month is that Internet native storytellers can tell a story that reaches millions of people, that fills theaters, and potentially better than, you know, the the storytellers that cost you in the hundreds of millions of dollars.
Speaker 8:The Mandalorian cost $265,000,000 all in, and it's made 247,000,000 right now. So it's like
Speaker 1:It's crazy.
Speaker 8:It's super hard to make a big blockbuster movie like that. And, you know, even Markiplier making something like he made independently for under $5,000,000, you know, is is is pretty incredible.
Speaker 1:Okay. Talk about the state of horror on YouTube or fiction on YouTube. It's somewhat interesting to me that I would put Backrooms, like the the the actual content as it's horror and the movie is a direct adaptation of that. The original Backrooms series on YouTube is creepy. But Obsession, Curry Barker, that was comedy.
Speaker 1:And Markiplier was horror but video gaming. He wasn't creating And the fiction so I'm wondering about how if we will see a shift, does this give does this basically, does this give YouTubers permission to do things that are more fiction based versus explainer videos, podcast interviews, reactions, commentary which is like the bread and butter of most YouTube, comedy as well. Or will we see more people pulling, okay, this person is talented but horror is ROI positive so we should just give them a crack at this even though they're a commentary channel as opposed to someone coming through. Okay. They've been telling love stories in a fictional context.
Speaker 1:They have a rom com series on YouTube. Let's Mhmm. Let them make a rom com.
Speaker 8:I I think animation will be the other space outside of horror, it's already happening. The Amazing Digital Circus is a great example from an animation studio called Glitch. Mhmm. You know, their first few episodes crossed half a billion views of of Amazing Digital Circus. They didn't know that was gonna happen, but but it did and a community, you know, gathered around them.
Speaker 8:I think horror and animation and and anything video game adjacent works really well on YouTube. Yeah. I think some of the other stuff is harder. I think that stuff may emerge more on, like, Instagram and TikTok. And whether it could be adapted into feature length stuff, I think will be up up for debate.
Speaker 8:But I do think both things will happen. I think YouTube will be looked at now as a real incubator of IP and a real incubator of talent. Mhmm. And I think that's always been like a concept, but it was never like like, think when you meet with Hollywood execs, they're like, yeah, we can't make any money off of it. Right?
Speaker 8:Like, yeah, they can make money through brand deals and a couple million bucks here and there, but, like, we can't make real money. These movies have proved you can make real money. And so I think that's where both things will be true. I think creators who upload to the platform and, you know, incubate IP. Backrooms was found by a 27 year old, you know, basically, staffer who was just poking around and seeing what was going on on YouTube and Reddit.
Speaker 8:I think that will be like, everybody will have a young person just perusing Reddit and YouTube to go what's catching. And I think if I was giving advice to those people, I would say, really take a hard look at Reddit and see where things are being built in real time by big communities. Another great example of this is, like, in the Minecraft community years and years ago, the Dream SMP
Speaker 1:Yeah.
Speaker 8:Was this, like, collaborative Minecraft story that had so much lore to it that a bunch of people were involved in. Yeah. So I think the reason why video games is is such a bright place for IP to build is because it's interactive storytelling and interactive world building that a lot of people are involved in.
Speaker 1:Yeah.
Speaker 8:And that then, more than just a, like, large audience, that guarantees like a mobile audience because they're invested in it.
Speaker 1:And then there's there's Red versus Blue with Halo and Yeah. GTA RP. Like, there
Speaker 7:are rich
Speaker 1:And it's interesting. There's been so many video game adaptation flops. Basically, Detective Pikachu is the only one I think that has a Metacritic score above 80. Last of Us did well. So it feels like we're hitting a tipping point there.
Speaker 1:But you go back to the original like Doom adaptation, a lot of the Resident Evil films. Some of them made money but none of them were critically acclaimed or really became like cultural moments in the way the video games did. But if you have a creator who actually really deeply understands the community, the content, the lore and then they build their audience on top of the IP, potentially some of these video game companies that are maybe not as internet, not as like not as linear storytelling native. If they have someone in the mix who's already sort of pre vetted this can work as a two hour film, then they can unleash them, turn them loose. But of course, this is an IP negotiation.
Speaker 4:Is there any missing part of the stack right now to meet this moment? You have the, you know, the CAAs, the talent Mhmm. You know, the talent agencies that can, you know, wear a lot of different hats and help make plays. You have production companies, but is there any, is there any part is there, like, financing component missing? Maybe it's too risky to create, some type of vehicle just to back creator led, films, but at the same time, maybe having domain expertise would be, actually
Speaker 8:I think the missing piece, and this has been historic in our industry, is development. I think there is a lot of assumption that creators with big audiences know what works, and part of that is true. But, you know, Kane got signed at 16 years old, and eight twenty four kind of mentored him from from the age of 17 to the age of 20. And I think, you know, eight twenty four has a history of making great movies that are culturally relevant and knowing how to make something iconic, knowing how to make us all feel something. And so that I think should not be overlooked is the development step.
Speaker 8:Like, surround me if I'm a filmmaker, surround me with people who have done this before. Help me write the script, which Kane did have a lot of help in in screenwriting. He's looking for a collaborator for for part two. But give me the the development support to make it long lasting IP or big global IP. And I think that happened with Kane.
Speaker 8:I think Curry is like a a really great talent, and what he's done in in in comedy historically has led him here. But I think development's gonna be the missing step because what's gonna happen is it's going to be a very quick reaction. Let's get creators with scripts. Let's put money behind them. Let's move fast so we can also make a $150,000,000.
Speaker 8:But, you know, you have to remember this is years and years and years of these storytellers cutting their teeth and having good people around them to help them learn how to tell a good story. So I think the financing will not be a problem because you can finance create creators know how to make stuff for cheap.
Speaker 4:Last last question.
Speaker 8:Was twenty days
Speaker 1:Wow.
Speaker 8:That Curry made that movie,
Speaker 4:which is crazy. Wow. Somewhere out there, someone is sitting in a dark room for like eighteen hours a day trying to prompt their way to a hit movie. I don't know if I don't know if the models are good enough yet. I have a feeling they might be and it really is about figuring out the storytelling component and piecing it all together to be cohesive.
Speaker 4:But do you have any sort of personal timeline to that kind of moment where some one individual takes, you know, an idea through a, you know, even a thirty minute film that actually gets a, you know, positive reaction from critics or, you know, something like 20,000,000 views, something like that. I
Speaker 8:mean, I'd you know, obviously, we all live in LA. I feel like I the the first thing that comes to mind for me is the Spencer Pratt Mayoral ads because those are, like, a lot
Speaker 1:ads
Speaker 4:ads are are so much easier to make.
Speaker 1:It's a glimmer.
Speaker 8:They're they're much easier to make, but I'm saying that's that's where we are in the timeline. Right? Yeah. Like Yeah. That those ads are are clearly AI, but they got shared a lot, and they did do millions of views.
Speaker 8:And people just accepted them for the story that he was telling Yeah. I think. Yeah. And so I think if you look at that, like, maybe it'll be in a year or two, and I think it'll start in animation with short films Yeah. Because we'll accept that more.
Speaker 8:But I don't know. All all things, I think another element of this whole story is I do think, maybe you guys feel this, maybe you don't. I think there's a bit of Internet fatigue that is allowing theaters to come back. Yeah. I think maybe I'm just overstepping there, but I do feel it.
Speaker 8:I personally
Speaker 1:screen time finally Yeah. Sort of dropping off a little bit after Yeah. Spiking things back.
Speaker 4:Yes. Like running over my phone with my car Right. On purpose is to have a little bit of forced Yeah. Time offline.
Speaker 8:So like the the models are really good. Like, we even playing around with Yeah. Gemini Omni. Obviously, had them
Speaker 1:at at Press Publish LA, but like
Speaker 8:they're really good models. They're crazy good.
Speaker 1:Yeah.
Speaker 8:You know, whether you can they'll probably happen in the next two years. We'll probably watch something like that.
Speaker 1:One somewhat related cut on this that I want your reaction to is I found it very interesting that Backrooms started as a purely CGI VFX effort and Mhmm. In Blender and After Effects. And it and what's interesting is there's actually a whole Discord for modeling different three d models that are that are shared so the community can build around it. And the assumption, if you are worried about the relentless march of technology is like, well, of course, they had everything modeled. They already had the Blender assets.
Speaker 1:Like, just hand that off to the VFX team and you got yourself a CGI movie. Put Chiwetel Edge of Four on a green screen and it's done. But they didn't do that. They built 30,000 square feet of physical Yeah. Set design.
Speaker 1:And it's interesting that I feel like the CGI wound up being like the audition for actually building and underwriting the build out of that And I imagine that that might happen in AI where you get someone that has some interesting idea that they were able to prompt and then they take that into a CGI that's a little more polished and then they can go build the actual sets and it's all just this extra underwriting process. But I was wondering if there was anything else that stuck out to you about the fact that they that they sort of went light on CGI when you think the fans of Backrooms are are they're already Blender. They love Blender. Like they're not upset about But
Speaker 8:if it was CGI, then I would be like just make it for YouTube. The the the reason why it's an event
Speaker 5:Yeah.
Speaker 8:Is because of all that. I think the b twenty four and, you know, I don't know who yeah. I don't know who whose call it was, but Yeah. A twenty four is very good at making things iconic. All the interviews of the cast are done in the backrooms.
Speaker 8:There was a DJ set from the backrooms. There was people who visited the backrooms. Like, the fact that it was tactile three
Speaker 1:sixty experience. I don't
Speaker 4:I've seen five movies, but I can tell when I can tell just based on with hardly paying any attention, can tell when a movie is an a '24 movie from like the first video Yeah. That I see the first 15 of a trailer there's just something about it.
Speaker 8:It's the same with you guys. Like, you can like, there's, you know, countless shows that try and be TBPN, but you can see t p you could yeah. I could, like, see something for a split second even without you guys on screen and know if it's TBPN. And I think eight twenty four has that, and that is really hard to do. It takes a lot of focus, and it takes a lot of discipline.
Speaker 8:Yeah. But, you know, I think a 24 has done it again. Like, this is this is incredible, and and pulling someone like Kane into this and beating Marty Supreme, which had like a crazy marketing push Huge marketing push. Shows the power of the Internet.
Speaker 1:Yeah. Yeah.
Speaker 4:Yeah. They overpowered the blimp. Powerful, man.
Speaker 8:Yeah. The Internet's powerful and and the communities are powerful.
Speaker 1:Okay. Last question.
Speaker 8:I'm assuming we're about to leave, and I just wanted to say I'm thrilled to see ads back. I couldn't tell you how great this looks to me.
Speaker 1:Yes. Yeah. Thank you.
Speaker 8:I'll give it up for that. I'm thrilled.
Speaker 4:It really
Speaker 8:is part of the back, guys. We we It's part of the brand.
Speaker 1:It is part of the brand. Yeah. Do you have time for one more question?
Speaker 8:Yeah. I got time, man. I'm just here in Montana. You guys have to go properly. Doing mysterious
Speaker 4:things in Montana.
Speaker 1:Yes. Next question. Where are you? And don't dodge the question. I want advice for YouTubers in the context of passion projects.
Speaker 1:There's a lot of YouTubers that have grown off of a single format. They know what works, the title, thumbnail, hook, the format, the structure of the video. They know they can put up a million views for every video that they do in that series. But they get sort of bored and they want to do their passion project, their series and then they do it, they take the time off and then it just doesn't quite perform. Maybe the 200,000 true fans show up but it's not getting the viral hooks.
Speaker 1:I noticed this with Johnny Harris did this fantastic series on Cyprus and he went around these islands but it just it wasn't financially the same as all the other videos that he does. And I'm wondering if there's a new format where you should sort of give YouTubers the permission to keep that special project in their back pocket and take it to a different place, take it to Hollywood where that type of project can live and flourish and go through development as opposed to trying to stuff it down the same funnel that is very optimized for a particular type of video.
Speaker 8:I I think monetizing your passion projects is almost like an oxymoron. Oh. Right? Like if if if it's if it's a passion project, you care about it. Yeah.
Speaker 8:You should not get other people involved. Like k. We are in the business of media. You can sell media.
Speaker 1:Yeah.
Speaker 8:You can you can come up with your media product. You can sell your media product. You can sell your ad integrations into your YouTube videos. But you have something you deeply care about that you just know how to make it. You know what it should be.
Speaker 4:I call right.
Speaker 8:You add a bunch of yeah. Yeah. You go or you have a that you trust. Yeah. You got a that you trust that's not going to hinder it.
Speaker 8:And again, Curry, I think the danger with these creators now is actually having too much money. You know, like Curry making that for $7.50 is what makes it special. It's what actually gets less strings attached. Yeah. And why it's good.
Speaker 8:Markiplier making something no strings attached, like, that's just his money. Mhmm. He gets to make something really special. So I think Markiplier is a great example. Like, when you have a passion project, you you ideally have the cash to do it or can get it from someone you trust who's not gonna intervene with it.
Speaker 8:But I think that is a danger. I think too much money can kill creativity very quickly, and it just becomes a product, of course. Okay. And so I I would caution.
Speaker 1:Yeah. Have I have one last hot take that I want We your reaction need to bring the host red mid roll ad to the cinema. Movies should have host red mid roll because if you look at the if you look at the budgets of some of these films $7.50 $1,000,000. If if you're watching obsession and then just at the one hour mark
Speaker 4:And then you get an ad
Speaker 10:for Chase
Speaker 4:sapphire reserve. Not just product placement. I want the I want the characters to sit down.
Speaker 1:No. No. No. No. No.
Speaker 1:The whole point is that it's not product placement because everyone goes to movies. This is separate.
Speaker 12:This is a host red ad. Agree agree it. Okay.
Speaker 4:I want the characters to sit down and not just use like a Chase Sapphire card Yeah. To pay. I want them to look at the camera Yeah. And deliver
Speaker 1:Because I'm actually sick of seeing James Bond use the Samsung Galaxy s 26. I'm I would rather just James Bond tell me about it separately, and then I can go back to enjoying the movie with whatever phone he would use, the whatever phone the character would normally use.
Speaker 8:I love you guys, and I love how you speak about advertising. I disagree wholeheartedly. I don't want that
Speaker 1:at all. Okay.
Speaker 8:I'm happy to have the theatrical run sponsored by someone like Chase. If you have a Chase Sapphire card, you get them for free. And like Oh, okay. You get perks for something if you have a Chase Sapphire card. The one thing my hot take is I want movies to be like ninety minutes and under again.
Speaker 8:I don't I I can't do the two hour movie. Like, I just cannot do it. I would prefer like, ninety minutes and under, I got time for.
Speaker 1:Yeah.
Speaker 8:Two hours feels like and I think all of our attention spans are being trained to, like, be way shorter than that. Even an hour and a half is, like, working out. Like, it's hard.
Speaker 1:Maybe go shorter. Ninety second movie. Vertical.
Speaker 4:Well, John and I are gonna John and I are start. Start a box.
Speaker 1:It's $20, but I I, you know, I checked the box. I saw a movie. Yeah. Went to the theater. That'd good for me.
Speaker 1:That'd great for you. You'd be able to catch up. You'd be like, yeah, I've seen hundreds of movies.
Speaker 4:Yeah. Well, we can agree to disagree on ads. John and I will start a media buying company called Fourth Wall and it's just focused on Fourth Wall. Focused on breaking down
Speaker 1:the Fourth agency. Breaking down
Speaker 4:the Fourth Wall and delivering ad impressions during your most sacred moments of entertainment.
Speaker 1:Yes. Yes. Yes. The next Godfather will be sponsored fully. Anyway, enjoy Montana.
Speaker 1:Thank you so much for taking the time on a busy day to come chat with us.
Speaker 4:Great to see you, dude.
Speaker 1:Great to see you. Again, not that busy, but I appreciate you.
Speaker 4:Okay. See you guys serious activities.
Speaker 1:Goodbye. Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real time experiences and new value
Speaker 2:with Cisco.
Speaker 4:Hey, team. Is this, Ben, is this real? What is real? Did you take a screenshot of What happened?
Speaker 1:Satellite. Satellite. Is this?
Speaker 4:Look look in the chat.
Speaker 1:No. No way. He's he's
Speaker 4:not the target. Just off that one screenshot, our our intern Ben was able to find Samir's exact location.
Speaker 1:Okay. We will not dock. We won't be docking. We do know exactly where it is potentially. I don't know.
Speaker 1:This might be a hallucination. But it looks pretty it looks pretty accurate. Anyway, we've been keeping our next guest waiting. We have Tom Fairley from Bullish in the waiting room. Let's bring him in to the TBPN UltraDome.
Speaker 1:How are you doing?
Speaker 4:What's going on?
Speaker 1:Good to meet you. Welcome to the show. Can you hear us?
Speaker 4:Cannot hear us
Speaker 1:but we're sharp. Turning on the audio. Hopefully, we'll hear him. In the meantime, let's go to this debate. Okay.
Speaker 1:Becky Quick at CNBC is getting in trouble because she claimed that GLP ones are responsible for school budgets shortfalls. When I saw this, I was like, what could possibly be the connection? Bio investor five said she's so misinformed. She fact checked it. Turns out it's true.
Speaker 1:School budgets are paying for GLP ones. They're very expensive and so that's driving up health care costs in a lot of in a lot of schools. Welcome to the show. Anyway, welcome to the show. Thank you so much for taking the time.
Speaker 1:How you doing?
Speaker 7:Sorry about the sorry about the audio. I I found the the little bit about Becky interesting. She's It's interesting. About somebody else somebody on a on a different network, but she's a pro. She's a serious journalist.
Speaker 1:We know. You're huge fan of all everyone in CNBC. We love the Squawk Hawks crew. They pioneered this whole format. Invented television over there.
Speaker 1:Anyway, let's go to you. Tell us about bullish. Give us the update. Take us through what's recent in the business, and let's get started.
Speaker 7:Yeah. Sure. Just before I do, just to follow on on that, you said you're a fan of CNBC. I I too am a fan of CNBC, but also we have our own media business here.
Speaker 3:No
Speaker 7:way. And I've watched with some as as both both a practitioner and a and a fan of someone somebody who's done a lot of it. I've watched with some astonishment the success that you guys have met with.
Speaker 1:Thank you.
Speaker 7:By just just creating a a fresher, more interesting format. You guys do an awesome job. Thanks.
Speaker 4:Yeah. Thanks for having me on. Thanks for saying that.
Speaker 1:Been a really wild ride. It's really fun and Wow. Best part is getting to talk to people like you have all day long like and and again and again and talking to six people a day. A lot of people start podcasts because they want to talk to interesting people, but then they talk to one a week. We get to talk to seven a day.
Speaker 1:It's great.
Speaker 7:Yeah. Yeah. Super cool. Anyway. I'm happy for you and happy for me.
Speaker 7:Yeah. What can we talk about?
Speaker 1:Well, why don't you take us through like the shape of the business currently and then some of the new deals that you've been working on.
Speaker 7:Wait. Can we
Speaker 4:get some backstory?
Speaker 1:Yeah. Oh, yeah. Yeah. Let's start there.
Speaker 4:That's You're at you're at Nikesh. Right? Yeah.
Speaker 7:I was I was born in Bowie, Maryland just outside of DC, went to
Speaker 1:high born on the stock exchange.
Speaker 3:I was born on
Speaker 4:the floor. Born on the
Speaker 1:trading floor.
Speaker 4:On the trading floor.
Speaker 1:That would be amazing, Lor.
Speaker 7:I actually didn't know like, I wasn't born with any, like, pre any any destiny. I didn't I didn't know Yeah. I was I was always interested in business and money and No. It wasn't Nothing was preordained, but so Yeah. My country guy.
Speaker 7:Grew up in
Speaker 4:lot of people are afraid to say that. Was never afraid to say that.
Speaker 7:Yeah. Yeah. No. I could tell. My mother would shake her head sometimes.
Speaker 7:My mom my mom was a nun for five years. Yeah. And and worked in you know, I grew up in a place called PG County and she worked at Elizabeth Seaton High School, which, you know, by and large had kids from a different socioeconomic strata than me. Then she would come home and I would talk about making money. You know, she looked at me like, oh, he's the black sheep.
Speaker 4:Yeah. Yeah.
Speaker 7:But met my met my wife at Georgetown. I need a dollar to buy a Gatorade. And she lent it to me, and now we have we have three kids in in New York City and I just fell in love with business. And, first couple of years, I I did like banking and private equity. Honestly, I love that too, but when when I really kind of hit hit got got my mojo is is in the markets industry because it's the intersection of tech and business.
Speaker 7:And that to me is my happy place and I've been there ever since. I started when I was in my twenties. I'm like granddad now in the digital asset space. I'm 50 and I've been right there at that kind of overlap of the Venn diagram of technology and markets. I I I have these friends, the Romero's, and and I love them.
Speaker 7:I love them all. Stay in touch with all of them. There's four brothers and and they're all super smart, super successful. And three of them are just like meatheads, like, you know, always had their shirts off and and wrestling and playing playing hoops. And then Danny was always like reading Java coding for for dummies when he was like 10 years old, and I would always keep an eye on him.
Speaker 7:And so in 2013, I'm like, Danny, are you going back to Duke? And he said, no, I'm going out west to start a blockchain company. Mhmm. And I'm like, alright. I don't know what the hell that
Speaker 3:is. Mhmm.
Speaker 7:But if you're doing it, I want in.
Speaker 4:There you go.
Speaker 7:You know, a few days later, New York Stock Exchange where I was at the time, we we agreed to put $10,000,000 into a a little bitty, maybe pre revenue company called Coinbase.
Speaker 1:That's good.
Speaker 7:And so I I got this bird's eye view of the digital asset space.
Speaker 4:Oh. Dan Romero.
Speaker 1:Yep. Woah. Yeah. We know him well. He's been on the show.
Speaker 4:That's a that's a deep cut.
Speaker 1:That's so good.
Speaker 7:Oh, it was great.
Speaker 13:It was great. Literally literally, I'm like, Danny, back to Duke? He's like, no. He's like, no, Tom. I actually graduated this past May.
Speaker 13:You're a year off. I'm starting this blockchain company.
Speaker 7:Meanwhile, I know I'm going in to run the New York Stock Exchange. He does not. Yeah.
Speaker 13:And I'm like, hey, dude. You got you got a couple minutes? Come sit on the porch.
Speaker 7:And he comes up, and he starts telling me about blockchain. And I'm like, wait. You know, I'd heard of Bitcoin, but they this is early. Right? It's like smart contracts and
Speaker 1:Yeah.
Speaker 7:And I'm like, but what but but what use is there for these smart contracts? He's like, oh, it's gonna
Speaker 13:be amazing. It's gonna disintermediate. It's it's this layer of programmable finance. It's gonna disintermediate all the kind of big institutions like the New York Stock Exchange.
Speaker 7:And I'm like, wait. What? Wait.
Speaker 3:What are you
Speaker 7:what are you talking about? It can't be. And so I said, I I got to put some money in. He said, oh, well, my roommate Fred is going to be in New York tomorrow. Why don't you meet with him?
Speaker 7:And so I I met Fred Ursan. I ended up meeting with with with Fred at at Union Square, And we put that dough in, and it was like the best money we we ever invested. We got lucky on the return. Just dumb, you
Speaker 4:know, just dumb luck. Is this like this series a stage? Like
Speaker 7:I don't know. I can't remember last Tuesday. I let alone 2013. But early.
Speaker 4:But early.
Speaker 1:I mean, Coinbase was in my YC batch in 2012 and summer twenty twelve. So I think Cedar Series A was right around
Speaker 7:that. We should punch it we should punch it in, you know. Yeah. Anyway, it was a long time ago. Punch in New York Stock Exchange Coinbase.
Speaker 7:It'll come up.
Speaker 1:That's crazy.
Speaker 4:The direction What what kind of reaction did you get on Wall Street from that investment at the time? I don't know how public it was, but I imagine you still had some some of your peers that were saying, you know, what what the heck is Tom up to?
Speaker 7:You know, it's act I I think if if you ask Brian or or Fred or or Fred at Union Square, I I think they would all say, with humility, it has nothing to do with me, has to do with the NYC brand, That it that it was hugely valuable for Coinbase. It was not only public. It was massively public.
Speaker 1:Yeah.
Speaker 7:So in other words, if you were to look it up, you're gonna find story after story after story after story, which is, hey, traditional bellwether a traditional bellwether, you know, firm, New York Stock Exchange validates crypto firm Coinbase. Yeah. So on the on the West Coast, it was it was like a lot of celebration and, you know, hey, this is finally the coming together of these two worlds. On the East Coast, it was like, what the hell is this? You know, what a weird investment from these guys.
Speaker 7:Yeah. And it and it wasn't as it wasn't as celebrated. I I will say just my thesis was this was a programmable layer of finance for institutions. Yeah. Like, that was the thesis.
Speaker 7:It was dead wrong, if if I'm honest. You know, there were no institutions. There weren't institutions until
Speaker 4:Yeah. Was that just a you had the timing wrong. You didn't
Speaker 3:Yeah.
Speaker 7:But pretty darn wrong. Right?
Speaker 4:Yeah. Pretty darn wrong. Yeah. Yeah. But you're only off by only off by what?
Speaker 4:A decade?
Speaker 7:A decade plus.
Speaker 4:And just miss but miss that retail would be the the the early adopters. Yeah. And even some of the late adopters.
Speaker 1:Yeah. I guess Exactly. How how do you synthesize the fact that crypto did not disrupt the traditional finance system like entirely like, you know, JP Morgan, Morgan Stanley, these firms still exist. They're chugging along. New York Stock Exchange is still chugging along.
Speaker 1:NASDAQ and many others. And yet crypto firms have been very successful. It was sort of a a heads eye win tails you lose situation. Like both sides did well. There was not total destruction of the traditional financial infrastructure and institutions.
Speaker 1:But crypto was a lot was, you know, wound up flourishing. Like what does that say about everyone's preconceptions, I guess? Because there were two sides a decade ago. Either crypto is a zero or it's going to take over everything. And it and we we wound up with the middle road.
Speaker 7:Yeah. I don't I agree. I agree. And I'm going to challenge it a little bit. I'm not sure it was it it has been up to this point such a big win for crypto.
Speaker 7:There's actually relative relatively for all the money and attention and time and and and, you know, ink spilled and for all that has gone into digital assets, there's actually relatively few successful companies.
Speaker 1:Yeah.
Speaker 7:And certainly, the disruption to traditional finance has been relatively small and very small, actually. I I and and and look, it hasn't always been great. Just I'm not a Totally. Yeah. Cheerleader.
Speaker 7:I call it I call I call balls and strikes. Like Yeah. Not only were there winters, but there were frauds and scams and Yeah. You know, like I'm not in it for the fart coins and monkey drawings. I'm just not, and I respect it and I understand why they're there.
Speaker 7:And and just to pivot to that, like, the nice thing is they've brought a lot of attention Sure. Into the industry, a lot of money into the into the industry. And I think it's all been a warm up act. Mhmm. And, you know, remember, like, blockchain's going down.
Speaker 7:In some in some cases, once a day.
Speaker 1:Yeah. Yeah.
Speaker 7:And none of that happens anymore. And they've they've been battle hardened. Yeah. And regulators have now come around, and and you've seen broad acceptance of blockchain rails
Speaker 6:Yeah.
Speaker 7:For serious use cases in Asia, in Hong Kong and Singapore, in Europe, in, you know, in Brussels, Europe, but then in the individual countries. And now in The US, not just with Genius, which is the state that, you know, it ratifies stablecoins, kind of gives them papal blessing, but hopefully the the Clarity Act, we can talk about
Speaker 1:Yeah.
Speaker 7:How to handicap that. But if that gets passed, that that'll be perhaps the biggest regulatory or or or legislative step ever. And so I am very, very optimistic that I come on this show a decade from now and the global securities market is it's on blockchain rails. Yeah. And that's a $270,000,000,000,000 market.
Speaker 7:So Yeah. I I I there's no mission accomplished banner behind me in terms of crypto up to this point, but it's it's coming. And it's it's coming it's coming in in real time. That's kind of how I view it.
Speaker 4:Yeah. Crypto, you know, the the the cycles and the the hype cycles are so vicious and yet it keeps creating these opportunities where the true believers, if you just maintain that conviction, like this window right now where there's some at least, you know, we we primarily cover private markets. And so there's so there's some interest at the intersection of AI and and crypto. There's been a decent amount of investment there. But I don't see, you know, hundreds of new companies focusing at the intersection of what you guys are doing, which is that, like, true institutional adoption across, you know, global equity markets and and other asset classes.
Speaker 4:And so I do I can I can you know, thinking on that ten year time horizon, I very much can see how the best days are yet to come and huge opportunity to just, like, you know, be in the foxhole and and focus on the opportunity?
Speaker 7:Yeah. And I and I I think agentic commerce will intersect with blockchain technology. And I'm not one of those who says, oh, no, 100% of agentic commerce is going to happen on blockchain rails and fiat rails will see their share. But that's going to be a big driver as well. But you're absolutely right, Chaudry, and thanks for doing the prep work and learning up on bullish because you're absolutely right.
Speaker 7:We are focused on institutions, really institutions exclusively in our exchange business over in our CoinDesk and consensus business. Of course, we're a media business, we service all sorts of people and customers. But we focus on institutions exclusively.
Speaker 1:Yeah. I'm reflecting on the question of like the should there be a mission accomplished banner behind you. And I take your point. At the same time, yeah, there has been a lot of success in crypto, trillions of dollars in market cap. A lot of that captured by the the coins themselves, but there's a number of very successful companies.
Speaker 1:Yours is among them. But I'm interested in in where you think we are in 2026. A lot of the prices are we're not in some insane falling knife scenario, but stable coin volumes are sort of stable even though they were growing very quickly. The Bitcoin price is fairly stable, which is what?
Speaker 4:Fairly stable micro strategy selling.
Speaker 1:But but it just doesn't it it doesn't feel like, oh, there's this is the FTX moment all over again. Like, the crypto is about to fall into zero and like people are panicking. It it it's more just like, you know, this is a mature stable industry that's, you know, there's some there's some growth, there's some companies that are beating earnings, there's all sorts of different stuff happening. It feels very mature. And so I'm wondering
Speaker 4:Yeah. Well, it's mature, still feels like there's an opportunity for pretty parabolic growth as you get real institutional adoption, not just, hey, we're gonna hold some
Speaker 1:Yeah.
Speaker 4:You know, Bitcoin on our treasury Yeah. Etcetera.
Speaker 7:Based on hype. It's based on real use cases like stablecoin. The stablecoins are being used for trading and stablecoins are being used for payment and stablecoins are being used for lend borrowing. They've gone from 0 to 300,000,000,000. And, you know, the whole industry is now 2,700,000,000,000.
Speaker 7:And Yeah. Yes, Bitcoin's more stable now. We happen to be sitting here at a moment in time when Bitcoin's down, you know, 15% over the last two weeks or something of that nature. But there were
Speaker 1:times when these when when like there was like the whole crypto industry is down 50% and and like people are actually penning the take. Everything's going to zero. And it's being and it's being debated seriously. And that's not happening right now. No.
Speaker 1:And so it is a different time.
Speaker 7:And then what and the majority said that I agree with. So, you know, you mentioned, John, that crypto is a couple trillion. The last time I looked, coincidentally, I'm not that good at math in my head. It made the numbers made it real easy. 2,700,000,000,000 and the global securities market is $270,000,000,000,000.
Speaker 1:Oh, yeah.
Speaker 7:So that and that is coming, right? Money market funds have already moved on to blockchain rails. US equities have already moved on to blockchain rails. You know, you look at all the industry bigwigs from the new, you know, my old haunt, the New York Stock Exchange or DTC, the clearer or many of the electronic brokers, Kraken or Binance put out an announcement yesterday. They're all tokenizing stocks.
Speaker 7:You're seeing more, examples of tokenizing fixed income. And so you're looking at the the parabolic growth that Jordy referred to, I believe, is going to come from the so called tokenization the global securities industry.
Speaker 1:What's more important there? Cost or speed? Because and when I mean speed, guess I mean like twenty four seven trading. That seems like it's crazy. We don't have that yet everywhere.
Speaker 1:It seems like a purely technical issue. And yet, I've talked to folks at hedge funds that are like, yeah, like, actually can't get traders who want to work at 2AM eastern on a Sunday. It's hard to recruit the best to actually make that market and provide liquidity at that point in time. But then on the other side, have, you know, fees and all of the different things that happen with crypto potentially dropping costs. Like, what are the different pieces of adoption?
Speaker 7:Yeah. The twenty four seven, what people miss sometimes is actually the investing demand, especially for the most liquid US based securities, like think Nvidia stock. Yeah. Comes come the incremental buyer comes from abroad. And, you know, where we have an office is Yeah.
Speaker 7:Twelve hours away and they don't want to trade some crappy derivative or they don't want to trade some like IOU. They want to trade the actual stock. And so by going twenty fourseven, you can bring on new liquidity, which drives down the the cost of equity of the of of of those companies. And so there's a there's a real incremental benefit. I I think to answer your question, like, what is the benefit that's most attractive?
Speaker 7:You have to look at particular constituent. The issuers, they hate little things like what you know, I say little. They're not little to them, but like this issue of naked short selling, which is illegal, but is possible in a world where trading is obfuscated in a Russian series of Russian dolls of of brokers or other intermediaries. With blockchain rails, there is no naked short selling. You just look, are the the shares in a wallet or are they not in a wallet?
Speaker 7:Like, it's it's done. But also, issuers want the ability to pay stable dividends and stablecoins. Issuers want the ability to be able to reward long term holders. Imagine you're a company and say, hey, we're going pay a dividend of a dollar, but we're going to give an extra penny for every quarter you've held our stock. It's it's there was a there was a whole exchange on the West Coast that started that was really So great long term Eric Reiss,
Speaker 1:long term stock exchange.
Speaker 4:Right?
Speaker 7:Yeah. Exactly. Mark introduced me to Eric Reiss maybe ten years ago, fifteen years ago. And I remember the first meeting I had with him, I thought, this guy's onto something. Like, yeah, we should we should reward that.
Speaker 7:We should reward long term holders. Well, it turns out you can't do it if you don't know who owns the damn thing and it's buried within, you know, five Russian dolls. With blockchain technology, again, you just you just look at it. Yeah. Oh, they own it.
Speaker 7:It's in that wallet. It hasn't moved. So so for the issuer, it's it's actually incremental functionality as opposed to cost or speed. And then for for the investors, it's just the ability to do things at a at a lower cost. So I guess that's more that's that's more cost.
Speaker 7:But then on the on the speed perspective, being able to settle instantly is interesting. So it kind of depends. Depends which constituent.
Speaker 4:Short on time. Couple questions. People on the West Coast who know nothing about finance have been excited about compute futures, markets or treat treating compute like like a like, you know, trading it like a commodity. Is that something, you know, how how do you think about that, you know, potential market? Is that something that you think could start on blockchain rails because it is a new type of commodity in some way?
Speaker 7:Yeah. Two questions embedded in that. One is, will compute futures actually be a successful product? I think it will be. The issue is standardizing it and commoditizing it.
Speaker 7:Successful the real successful futures contracts with lots and lots of open interest all come down to the question of are you able to standardize it and commoditize it and come up with the cheapest to deliver that has value in the world and everybody agrees upon. So that's not going to be that easy. It's still probably going to take a couple of years, but I suspect that that will happen.
Speaker 10:Second
Speaker 4:question that is will because like an onion is an onion, but a GPU is not necessarily a GPU? Like an a 100 is is not a black well. So then do you need, you know Exactly.
Speaker 7:And and the providers
Speaker 4:you know, basically, submarkets. Yeah.
Speaker 7:And the providers have a vested interest in not being commoditized. So sometimes it it takes time for for the market to commoditize, but it's it's it's exactly what what you just described.
Speaker 4:Got it. Yeah.
Speaker 7:Go ahead.
Speaker 4:One more random question. Friday IPOs, we're looking at a SpaceX IPO next Friday. My sense is like that's does that not introduce like more chaos because you have like one, you know, real trading day, there's gonna be so much retail activity, then you go into a weekend. Of course, you know, people will be trading it over the weekend in different ways. But I know there was Alibaba and Uber that both went out on on the Nikesh on Fridays.
Speaker 4:How did how did those goes? Does that make it, you know, more complicated or chaotic? Or is it is you know, are the exchanges set up to handle that?
Speaker 7:I that was one the the Alibaba IPO in particular was one of the best days of my career, maybe even my life. But it was also
Speaker 4:Coming from the guy who, as a young boy, knew he loved money.
Speaker 7:I also was so freaking nervous that honestly, when you just said that, I like was tingling remembering it. I was I was at we were in our beautiful ballroom that morning and Jet Li was there, Masa and Jack and and Jimmy Lee, who's who's departed, who's an iconic and legendary JPMorgan banker, he kind of sidled up to me. He's like, hey, Tom, did you guys test this thing at all? Like, is this actually going to work? Because you're about to get a gazillion retail orders.
Speaker 7:Good god. Next Friday, it it's going to make Alibaba look like child's play. So Adena at the Nasdaq is fantastic, and the Nasdaq is fantastic. Oh, man. It still makes me nervous.
Speaker 7:But to answer your question, I think a Friday is fine. There there there will be awesome price discovery on Friday, and you're going to see extreme volatility for the first hour. It's that's nobody's fault. That's that's called markets. Could it be better?
Speaker 7:Could there be better mechanisms that could be put in place to smooth it out? Yes. And we should all strive to get there. I just went through an IPO. I have a thousand things that need to change.
Speaker 7:I think blockchain technology can be very, very helpful in the future. And I think you're going to see more capital formation on blockchain rails because it can do just that. But high volatility to be expected. It's going to calm down dramatically through the day, and it won't be a problem getting through the weekend because there's not gonna be any substantive substantive new news.
Speaker 1:Right. Thank you so much for coming on the show.
Speaker 7:Yeah. It was fun.
Speaker 4:Maybe should come back on maybe you should come back on on next Friday.
Speaker 1:Yeah. We gotta do it.
Speaker 4:This was super fun.
Speaker 1:This is a fantastic. We'll talk to you soon.
Speaker 4:Yeah. Great to
Speaker 1:meet you. Have a good Let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy your web apps, servers, databases, and more well. Railway automatically takes care of scaling monitor and security.
Speaker 1:Our next guest is Nikesh Arora from Palo Alto Networks. He's the chairman, CEO, friend of the show. Welcome back, Nikesh. Great to see you. How are you doing?
Speaker 3:I'm doing great, gentlemen. How are you?
Speaker 1:We're doing well as as We're doing great. It's been great to see Let me
Speaker 7:see those watches. Oh.
Speaker 1:I have a Rolex Submariner in TBPN green on. We got them for the whole team.
Speaker 4:Yeah. Not gonna be happy to say that.
Speaker 3:What about your favorite guests?
Speaker 1:Our favorite guests, we we we do have some of those but
Speaker 4:We do. We do. I actually I can't wear watches when I'm using a computer. Really? It's too annoying to me to have it clacking against it's
Speaker 1:just Skill issue. Can't do it. Total skill issue.
Speaker 4:Skill issue. Total skill issue.
Speaker 1:Well issues over at Palo Alto Networks, thankfully. Incredible progress. Take us through it. What's the latest in your world?
Speaker 3:Well, I think the good news is we can officially declare the SaaS eclipse dead for cybersecurity.
Speaker 1:Why? Why is he Like,
Speaker 4:did or were you surprised
Speaker 1:Who killed it?
Speaker 4:That it that it took so long? It it it obviously has only been, what, a couple months? But still
Speaker 3:Oh, the good news, it gave every one of our happy shareholders a buying opportunity. It's just good.
Speaker 1:Yeah. So Yeah. There you go. It took
Speaker 3:a few months because I think, look, the general tendency in the market was AI is gonna eat every piece of software, and it's gonna be amazing. It's gonna take care of it. Now AI is good. Yeah. But even now, the false positive rate on unaided models is twenty five percent.
Speaker 3:Right? Yeah. So if I don't explain the harness, if I don't explain the context, if I don't explain what the code is trying to do, the model still gets one out of four wrong.
Speaker 1:Yeah.
Speaker 3:In cybersecurity, our business is to get everything right. Not getting one out of four wrong. I don't think I'm going to replace anytime soon. Yeah. It's like it's like having your car driven by OpenAI because I don't need to weigh more.
Speaker 3:I don't need to have all the machine learning code that tells you everything. So let's just stick a model in a new car and go drive off. It doesn't work like that. So I think what the market is beginning to realize is cybersecurity is going to get enabled with AI. Yeah.
Speaker 3:And if you're going to get it enabled, you have to go with the people who've been doing this for a long time who sit at various enforcement points because we sit at north of 125,000,000 enforcement points. You need AI to enable the enforcement points with new techniques to go suss things out that allows us to do a better job. But it's not going to come over and take my enforcement point away and replace me. So future? Yes.
Speaker 4:There's an alternate reality where the world wakes up to AI being good at, you know, hacking computer systems and all of the cyber stocks just like rip like off of that news. But it was interesting.
Speaker 3:Yeah. Interesting if you saw, you know, one of the core skills of MITOS is this ability to daisy chain vulnerabilities Yeah. And develop an attack. So, it is not an alternate reality. It's not hypothetical.
Speaker 3:It is true. It is the capability exists, and that's why they were being so careful, rightfully so, in making sure they don't release the model at large because they know the model unconstrained has the ability of determining attacks based on vulnerabilities. Yeah. So I think it's the right thing for them to do is to make sure they do that in a measured fashion. But what you're beginning to see, more and more capabilities getting embedded in the core models.
Speaker 3:OpenAI has one now and Anthropic has another one. I'm sure Google has one too. Yep. So just play this movie forward. Six to nine months from now, it'll be impossible to put the genie back in the bottle or constrain them.
Speaker 3:Yeah. We have six to nine months to make sure that if somebody is able to use AI to attack somebody, the infrastructure on the customer end is equally fast to be able to repel it or block it at the same speed. Yeah. Now you don't get that without modernizing your stack, without, of course, buying a lot of Palo Alto and having us help you get to a place where we can defend in real time just the way AI can attack in real time.
Speaker 1:So the the the cancellation of the SaaSpocalypse is clearly it was a referendum on the For cybersecurity. Think I'm not seeing brother. For cybersecurity. But the claim was AI will make Palo Alto Networks business worse. And I think that's been disproven.
Speaker 1:We've discussed that. The bigger question I have is, how does AI make your business better? Is it just the demand side because there are more threats than ever so people have to buy more Palo Alto? Or are there other things happening internal to the organization that are making you more efficient, higher growth? Like, what are the other levers that are being pulled in the AI era?
Speaker 3:Well, like, AI will impact in multiple places. Right? The first place is the amount of build out that's happening across the world in AI Mhmm. Require means that more bits are going to be traveling across networks. Right?
Speaker 3:Okay. Everybody is trying to deploy AI, collect more data. Remember, cybersecurity is the inspection business. We inspect every bit. Mhmm.
Speaker 3:We're the TSA of the Internet. Right? Every bit has to go through a firewall. Every bit has to go through a product that looks at the bit and say, good bit, bad bit. Bad bit, stay away.
Speaker 3:Good bit can go. Yeah. If you're going to explode the amount of traffic in technology in the world, you're gonna need more cybersecurity capabilities. That's one. That drives more more traffic, drives more demand.
Speaker 3:I think the other part is capability. Yeah. AI models are good at certain things. The question is, how can we take them, take their false positive rate from 25% down to zero, and leverage them in what I do, what we do? And that's happening right now.
Speaker 3:We're all looking at how to take certain key categories of cybersecurity, embed AI into them to make sure we build a better product for the customer from a protection perspective. Yeah. And of course, like you said, there's a third aspect where we can all use AI internally in our business to make it much more efficient. And I always maintained, as I said, perhaps last time I was with you, that AI will democratize intelligence
Speaker 1:Yeah.
Speaker 3:Which means So
Speaker 1:you said
Speaker 3:the average
Speaker 1:Yeah. Yeah. You said you said efficient efficient. And it feels like you're a leader in this efficiency moment where so many companies are token maxing. We've saw $500,000,000 bills going out.
Speaker 1:When I saw the Palo Alto Networks headline of using AI, using mythos to to find critical bugs Yes. The bill was token min. I don't know what happened but you only spent a million bucks. What what's going on? Is this a cultural thing?
Speaker 1:Are you already looking at ROI? Are you ahead of the ball there? No. Or are you being is it more like a scalpel? You use it just where you need?
Speaker 1:Like, what is the actual token maxing, token leaderboard, token ROI maxing? What are you doing?
Speaker 3:Well, remember, we have we have we have parsed our efforts into what is extremely critical in crown jewels.
Speaker 1:Sure.
Speaker 3:And we can't let open source model, open models touch them
Speaker 1:Yeah.
Speaker 3:Because we don't want our code to ever train anything in the public domain. Sure. It doesn't matter if whatever they tell us. Yeah. I don't want my code training public domain.
Speaker 3:So for that, we built our own harness, we built our own, we're using our own open source sequestered model which can't talk to the external world. Got it. So we know it's safe. Oh. So how our code is going through that, we're not paying anyone for it.
Speaker 1:Okay.
Speaker 3:We're using it ourselves and built it ourselves. Is it going to be a 100% of what's out there public domain? Probably not. But it's probably 85 or 90% there, and that's okay. I'll go deal with that.
Speaker 1:And on that, is is inference cost an issue yet? Are you burning GPUs to the max and No. Dealing with a half
Speaker 3:billion dollar bill? Using trade models to run it through Okay. Because we're using sort of task. We're not using them to go generate new stuff. Right?
Speaker 3:Got it. So that's one part of it. The other part is when it's stuff that is I don't need to spend expensive tokens for an IQ of 180 to solve a customer support problem. I can use a smaller language model. I can use an open source model to solve that problem because it's task specific.
Speaker 3:So we're trying to be judicious about the use of AI,
Speaker 13:but at the same time, I think we're not using
Speaker 3:it as well as we should be using it. I don't think anybody in the world, except unless you're a Frontier AI model company, has got it perfectly right in terms of how many users. So we've got to get up the learning curve, and we'll get there. I think the the part which I was trying to say to you earlier, I think it's a very important point. What AI is doing for me internally is, as I said, is democratizing intelligence.
Speaker 3:The biggest risk in businesses is you hire a 100 marketing people, not all of them are equally good. So you all gravitate towards the 10 good ones and you've to find a way to deal with the 10 really at the other end of the spectrum and 80 in the middle. The good news is if I train my model right with all my marketing data, I can increase the average intelligence of all 100 of them to 95%.
Speaker 10:Mhmm.
Speaker 3:Then I just need the judgment of the 5% from them, which means, you know, it's a rising tide lifting all boats from an average in average intelligence perspective. Yeah. If I can get the outcomes of 3,000 customer support people to be amazing and there's no disparity, no standard deviation, I become highly effective, highly efficient, and pretty good at what I do.
Speaker 1:Yeah. Jordy, do you have something or can I keep going?
Speaker 4:What's your what's your point of view on AI psychosis in in the in the enterprise? John and I have been talk there there's a handful of our friends that we believe do have AI psychosis. They're heavy heavy users of the tools, and you ask them what they've actually made and they can't give you a good answer. Now, certainly, there's an entire other category that is being very productive, making useful things, but there's sort of a Like Tyler on our team.
Speaker 1:Tyler is extremely productive. Very low AI psychosis. You ask him for it, he just builds it immediately and it's there. Use it all tangible.
Speaker 4:But it feels like
Speaker 1:But there's a lot of make Yeah.
Speaker 4:There's at least one model that has created a sort of psychosis in the enterprise Mhmm. In the last six months. Mhmm.
Speaker 3:Now tell me which one? Mhmm.
Speaker 4:We don't need to name the specific model, but there's Wow. Like there's a there's the the same maybe sycophancy that you saw with four o with a consumer, I think is touch the enterprise in an interesting way. Well, there's
Speaker 1:just this risk of having the AI model. An employee goes to an AI model, says help me with this, and then the AI model responds in a sycophantic way, oh yeah, you're you're you're you're you're making a major breakthrough. You're making a huge impact at this company. And it's just shuffling, you know, spreadsheets around re contextualizing data, building It's analyst not actually moving the needle. Again, it gets back to the ROI question.
Speaker 1:And And I feel like as a leader of a large organization that's very AI forward, this is something that you'll have to contend with. You know, are my employees using AI tools effectively? It's another question on just the effectiveness.
Speaker 3:Yeah. That's a great question. I think we're past that stage at Palo Alto. So what we did was we let people use AI models and AI tools to experiment, to understand the art of the possible, train themselves. Thankfully, we did it without token maxing, ing, so people have a good sense.
Speaker 3:They use all kinds of tools to understand where they are. But when it comes to enterprise efforts, we're positive to say that, you know, we've got one great Tyler. I'm sure Tyler's amazing. Yeah. I have 21,000 people.
Speaker 3:You know, one great Tyler doesn't change my moves the needle for 21,000 people in the company.
Speaker 1:So I'm going to take the other side of that, but I I take your point.
Speaker 3:Right. You don't want me to take Tyler away. What's You told me last time was like, don't take my boy.
Speaker 1:Keep your
Speaker 3:hands off. Right. So I'm sure we have our own Tyler's. Don't worry about We'll we'll be fine. But the more important part I'm trying to make is that now we sit and understand what are the 20 things we could do and how much scale impact would they have.
Speaker 1:Yeah.
Speaker 3:Right? When if I say, let's refactor customer support. I have 3,000 people, less trained model, less trained intelligence, less build harnesses, less build diagnostic agents, less understand the problem using AI instead of human beings trying to diagnose it. Now, that's not a usable model. That's almost like a business transformation project.
Speaker 3:Mhmm. What data do I need to do? How should my product behave? You know, what's the first agent that you want when you get the data? What data does the customer have to give?
Speaker 3:So it's reimagining how we do the whole activity is a business transformation project. I've got 30 people working on it. They're not using AI tools. They're embedding the LLM in a certain place. They're they're sort of complementing it machine learning.
Speaker 3:They're complementing with new knowledge bases. They're complementing with new data that comes from my product. So I'm trying to reduce my false positive down to low single digit. Right? I can't run enterprise business AI with high false positives.
Speaker 3:So Yeah. To get it to low single digits, a lot of programming goes around it. Yeah. So so the psychosis works, it it it all happens if you're just randomly arbitrarily using models to do certain things. We're not doing.
Speaker 3:Yeah. We're building harmony and building context.
Speaker 1:Most importantly, the psychosis sets in when you're letting the AI evaluate itself or tell you if it did a good job instead of you knowing the ground truth. If you know that what it that they you're looking at a false positive, you're going to remain in reality. If you ask it, is it a false positive? It says, no. It's not a false.
Speaker 1:This is the best
Speaker 3:I was doing my earnings. Okay? I had Gemini in for my scripts. I don't like the way it reads. Can you just give me alternate So ways to say it has this feature called refine, I had to look at it.
Speaker 3:I said refine. Yeah. And I'm reading both of them. My team had written that we simulated a cyber attack and it was possible in twenty four minutes using new for tree AI models. When I refined it, he said, we attacked in twenty four minutes.
Speaker 3:I'm like, shit. That's not what I'm going to say.
Speaker 1:Right? So
Speaker 3:I can't let AI lose not pay attention to what it's doing. I still need the human supervision. I need the guardrail.
Speaker 1:Yeah. You have to know the ground truth. Yeah. Talk to me about not not the crazy AI doom terminator scenario, but just I think that there is some anxiety around AI and cybersecurity where you you see these powerful models. They're able to to to find vulnerabilities effectively.
Speaker 1:And there's a fear that there might just be, you know, a rash of exploits that result in like your some emails leaking or some social network data leaking and just just a leakier Internet that causes people to be, like, upset. But my white pill on this, and I don't know if this is correct, is that the gap between private closed source frontier models and open source models appears to be widening. And that feels like there's going to be an increase maybe it's six months right now that you have access to the frontier models before it commoditizes. If that grows, that gives me more confidence because I know you're going to go and clean up the Internet and police it and be the TSA for longer. If that gap was closing and all of a sudden it was, you know, open source closed source model, you know, gets a new capability and the hackers have it next week, I'm a little bit worried.
Speaker 1:I think you could do it in a week, it's much better to have you have six months. But that am I interpreting that information correctly? How afraid should normal people be about the risk to a leakier Internet, a less safe, less cyber secure Internet in the future?
Speaker 3:Let's step back. All of us test our software on a constant basis before we launch it. We don't want to have vulnerabilities in our software. Yeah. Now, you know, guess what?
Speaker 3:Humans write bad code sometimes. Yeah. Surprise, surprise. Yeah. So what AI is doing is discovering that bad code.
Speaker 3:We've And been testing our products and so has everybody else in the industry and every company does that. And on average, we used to find four or five issues every month and we'd go build a patch and we'll fix, you know, a 108 products, we'll fix the patch every every month and put a patch out there. What we found in the last six weeks was it would have taken us five to seven years to find. Mhmm. Right?
Speaker 3:So a huge deluge of vulnerabilities. Now, of course, we have people. We redirected them. We patched them. We had to put out a bigger patch and go patch all of our customers.
Speaker 3:So and the the point of that is that there'll be a lot of testing happening in next few to six months already is with OPUS 4.8 or OpenAI 5.5 and other models out there. There's lot of testing going on in the industry across the board. Everybody's testing their code. All that code is going to get passed in the next few weeks, months, what have you. Now there'll be huge influx of patches to every IT department because you got to patch everything right away because everybody showed up with all these patches.
Speaker 3:So it's going
Speaker 1:to be
Speaker 3:bumpy. But I think what we're going to be doing in the next few to six months is paying off a lot of technical debt we've accumulated over the last many years. Mhmm. It's bumpy, but it's a better starting point six months from now than it is today. Mhmm.
Speaker 3:So I'm an optimist. I think if you're a better starting point six months from now, the next model is going find a lot fewer things than the last one found because we had to deal with all the stuff that we found.
Speaker 1:Yeah. Well, the
Speaker 3:next one finds something, I'm sure it will. Yeah. Right? But it may go back to finding five and we seem to have survived in a world where there were five vulnerabilities found every month by software vendors.
Speaker 1:Yeah.
Speaker 3:Now, the second problem, like you said, is AI might be able to concatenate them or daisy chain them and find a way to attack them faster. Yeah. For that, it's a different problem. You know, the vulnerabilities already always exist. When somebody attacks you, the question becomes how quickly can you find it and shut it down?
Speaker 3:Mhmm. Now that is a slightly longer term problem because that requires to have a much more modern stack, requires you to have way more data to analyze anomalous behavior and be able to defend against it. But we'll get there.
Speaker 1:Pay down all the technical debt, start building technical equity. I like to hear it.
Speaker 4:Well, it's I mean, like, this is why AI is so exciting.
Speaker 1:Yeah.
Speaker 4:You can do five to seven years of work in a month. In
Speaker 3:a month.
Speaker 4:Yeah.
Speaker 3:It's amazing. I think it's amazing. The only thing we have is we have to find a way of getting 21,000 people transformed without AI psychosis to amazing leverages of AI so they're using it in their day to day life and trying to treat it as their assistant as opposed to be afraid of it.
Speaker 1:Yeah. Yep. I love it. Last question. I don't want to get too geopolitical but I want to know about America's compute advantage or the AI race in the context of cybersecurity because there has been this debate over are data centers the nuclear bombs or are the weights the nuclear bombs?
Speaker 1:If the weights were stolen by a North Korean hacker firm, they could wreak havoc. But I don't know if that's real because I think you have to actually go and inference these massive models, you know, millions of times and test every little system to find the actual exploits to actually do the hacking. And so another maybe white pill for America and the American Internet remaining secure is that as we build more infrastructure, more data centers, more GPU racks, we are able to do more of good guy inference, more cybersecurity, more testing. And our systems become more secure relative to the near peer competitors that might want to hack us but have not invested enough in energy and compute capacity.
Speaker 3:Well, let's back up. Like, look, we're all internal technology optimists. Right? We all live for Silicon Valley. We hang out here.
Speaker 3:Yeah. 99% use cases we talk about AI are good use cases. Yeah. AI is doing amazing things. It's to do drug discovery.
Speaker 3:Going to do a whole bunch of positive stuff. It's going to get rid of mundane things that we don't have to do. Generally, being an AI optimist is a good thing. Does America have an advantage? Yes.
Speaker 3:We are building on the last lead in the technological revolution from last go round. Right? Where all the hyperscalers live? Where do all the large consumer tech companies live? Where do all the cybersecurity companies live?
Speaker 3:90% live in The United States. Right? Yep. So we have the core of building the next wave of technology on the back of the last amount of success we've had. And I think all the efforts you're seeing, whether you're seeing it from the recent executive orders on cybersecurity, whether you're seeing it around investment in chips, whether you're seeing it around investment in electricity, everything else, we are trying to build the underpinnings of building an amazing future with AI with us.
Speaker 3:Now, does it mean there will be an edge case of single digit percentage of where people will try and use for bad things?
Speaker 1:Sure.
Speaker 3:Every technology, every invention has had people using it for bad things. Yeah. Can we protect cases? Yes. We will have protections.
Speaker 3:Will there be some notable mishaps? Most likely. I know it's happened. We have 2,000 ransomware attacks a year. Yeah.
Speaker 3:And we move on. We go solve them. Life moves on. We fix them. We move through it.
Speaker 3:So I think we have to take an optimistic outlook. Now, can models be distilled? Yes. Can weights get reappropriated? No, it doesn't look like you need to, but every three months somebody seems to build the same capability open source, they're picking it out.
Speaker 3:So and do they need the three month advantage or not? I think they'll get the advantage. I think the key is going to be is we have to keep sort of marching along and making sure that our infrastructure is up to speed so we can actually match sort of defense with the speed of his offense can happen. And it's always been an asymmetric battle. Cybersecurity has always had to be right a 100% of the time, and the bad guys have right once.
Speaker 3:They don't need a lot of compute. They can go rent compute and come after an enterprise if they so choose to do so, and this game of cat and mouse will continue.
Speaker 1:Last question. How much of your time is spent on quantum?
Speaker 3:A lot. So what's interesting is we launched a capability where we can assess people's quantum cryptography readiness.
Speaker 1:Yeah.
Speaker 3:And we built capability where we can wrap your traffic with quantum secure keys. So even if you haven't upgraded your infrastructure to quantum yet, there's a fear that quantum is still coming, and there are nation states who might be collecting data which they're harvest later
Speaker 7:Yeah.
Speaker 3:When quantum becomes reality, hoping they can hang on to classified data and break the keys afterwards. So we're already wrapping the traffic now. Yes.
Speaker 1:That's really cool. If you
Speaker 3:know there's classified data Yeah. And you can start sucking the data. I don't know what's in it, but it's classified. But I'm to break it as soon as Quantum's ready. And I'm pretty sure nation states will have Quantum capability much before it's commercially available.
Speaker 1:Wow. That's amazing. I I love that you're already working on that. That's
Speaker 3:so We have a Quantum wrapper. You can buy a wrapper from us. You can go look and do full cryptographic inventory. We can encrypt the traffic with Quantum Secure today across your sort of traffic nodes and make sure that your data can be intercepted.
Speaker 1:I love it. Thank you. Thank you for doing that and then also thank you for coming on the It's fantastic catch up with you. Great update. Congratulations on all the progress and thank you
Speaker 4:Great
Speaker 1:to for canceling the SaaSpocalypse, at least in cybersecurity. We're gonna cancel the SaaSpocalypse everywhere. We're gonna cancel all apocalypses eventually.
Speaker 3:Sounds like a plan.
Speaker 1:Have a great rest of your day. Thank you so much. We'll talk to you soon. Goodbye. Speaking of a company that canceled the SaaS apocalypse, got Figma.
Speaker 1:Meet agents meet the canvas. Your AI agents can now create and modify your Figma files with design system context. And we got a timeline post here somewhat related to Figma design. Teddy said he couldn't decide on art to hang on his apartment walls so he built a drawing machine to decide for him. This is a very cool little hack project, I guess, that it will move the weights so that it can draw on an x and y axis.
Speaker 1:It can generate an image, and then it can draw it with a pencil or a pen that you reload, and it can pick an image and draw a different thing every day. I thought there was a Calling it
Speaker 4:a generative pen train transformer.
Speaker 1:Yeah. Theodore.net. What a good domain name for just an individual like solo creator. A generative pre trained transformer, pen trained transformer of course. We'll go check it out.
Speaker 1:But we have our next guest in the waiting room. We have Henry Stern from Primi back on the show. Welcome back. How are doing?
Speaker 4:Are you at the Rainforest Cafe?
Speaker 1:Are you at
Speaker 11:the Rainforest Cafe? I'm the Rainforest Cafe. I'm I'm in Europe because in fact TBPN is the TBPN of Europe.
Speaker 1:Oh, that
Speaker 8:is it.
Speaker 11:But I'm calling in from Amsterdam. Yeah.
Speaker 1:Fantastic. What what brings you to Amsterdam?
Speaker 11:Work? Money 2020.
Speaker 4:Okay. Yeah.
Speaker 11:And This is a FinTech conference.
Speaker 1:Yes. And I imagine you're speaking? Networking?
Speaker 11:Yes. All of the above. We we we we launched a few products. We had a great launch with with Veal today Yeah. To enable contractors to basically receive stablecoins globally and do a number of things with them.
Speaker 11:And then speaking, meeting customers, all of that.
Speaker 1:Yeah. Yeah. That makes a lot of sense. Deal's been really ahead of Deal's
Speaker 4:so Deal's been dealing with stablecoins for quite a long time.
Speaker 1:Oh, yeah. Did they have their own like in house solution? Like what what yeah. What what what is the nature of the partnership? How does it change?
Speaker 1:Like what what what was the what was the before era like?
Speaker 11:So I I think the before era, they they they had done a few products to enable people to, believe they'd experimented a lot in this space, but this is basically the coming together, I think, of the full package where they're doing three things really. One is enabling any business to pay out their contractors in stable. So the contractor so chooses, they can receive basically stable assets as payment no matter where they are. They're starting to roll out in Argentina, but moving a lot from there. Two is they're basically putting out a wallet app.
Speaker 11:It doesn't look like that at all. It just looks like an account where you can receive your payment, but that allows you to basically hold the balance, earn on the balance, so really a savings account in many ways, and then basically spend from the balance. And so this is, you know, sort of the whole package coming together in an exciting way. And then the third thing is is that they are actually issuing their own stablecoins, so they can have a lot more control over how the underlying treasury is managed and so on and so forth. And so from the previous standpoint, I've been very focused on the wallets and how do you connect all of these pieces together.
Speaker 11:But then obviously across Stripe, we've been we've been working with them on a number of products. So it's been kind of fun to watch all these products coming together really well.
Speaker 1:Yeah. So I imagine So this
Speaker 4:is like the announcement from their side is really they have they're in consumer fintech now.
Speaker 11:Exactly.
Speaker 4:Very cool.
Speaker 1:I I imagine internationally there aren't like spending the stablecoins. I I understand, you know, receiving for contractor payments makes a ton of sense. Earning on the on the money that's in the account, that makes a ton of sense. But I imagine actually living your life in any country, even in America, it is still hard to go and spend stablecoins or is it not because there's credit card infrastructure that can be tied in very quickly? Like what does it actually take to like run your life if you're a contractor in Brazil or Egypt or Thailand and you make money from deal, they pay you in stable coins, you winds up in a wallet, you're very happy with your your interest that you're getting.
Speaker 1:But then you want to go live your life. You want to pay your rent. You also want to you effectively want to be able to send wires and and peer to peer payments and also buy food and buy, you know, get money from an ATM at some point. Like, how does that all work?
Speaker 11:Yeah. That's a great question. I think this is the part that's very exciting is is kind of how the whole space is is getting stitched together. So it's at a high level at this point. There's just a huge explosion in the usage of stablecoin cards that enable you basically to settle directly on, you know, traditional rails like Visa and Mastercard Makes sense.
Speaker 11:From your stablecoin balance directly. So for the, you know, merchant accepting it, they don't have to think about this at all. It's a Yeah. Same experiences that they were getting a purchase from anyone else. And then obviously in reverse, we're doing a ton of work at Stripe to make sure that merchants can also accept stablecoins directly if the user has, you know, the balance and so on.
Speaker 11:So we're kind of working on on the platform from both angles to make sure it's completely multimodal.
Speaker 1:How high is the great wall of great firewall in China? Like, there any stablecoin penetration in China? Are people doing VPN stuff? Or is it because there were some tech company Apple obviously wound up working with China effectively. Airbnb was over there for a while as if you wanted to rent a place because, you know, it's not like the countries are actively fighting.
Speaker 1:It's, you know, it's a tense rivalry, but there are companies that have been successful there. At the same time, Facebook, not successful. Google, not successful. Uber sort of, you know, was unable to get a foothold there. Tesla, doing very great.
Speaker 1:Model y sell over there. So what is stablecoin adoption? Does China have their own ecosystem, or is there some cross pollination?
Speaker 11:No. So today, I I I think the situation has has changed over time. But basically, very much remote in in a sense and and not an active part of of what's happening. So we don't for for this particular, you know, speaking for we we don't have customers that that that we serve there in terms of stablecoins because very specifically, it isn't something that's running. So it's a it's a it's a, you know, the approach is very much the technology itself in a sense.
Speaker 11:This is a file format for money. Right? You're kind of sleeving your your fiat into a digital asset. The way I like to think about it is like different, you know, stable coins are like different formats. So, know, we accept JPEGs and PNGs just the same.
Speaker 11:But then ultimately, getting currency on the ground in every country depends on the local regulation. And in this case, China is is is very much not open to stablecoins today.
Speaker 4:Interesting. Yeah. More and more and more capital controls.
Speaker 1:Yeah. I mean, yeah, makes makes a ton of sense because you load up a bunch of stablecoins, and then you transfer all your money out of the country. Are are you tracking any like is there like an a mirror industry, like an indigenous Chinese, like digital yuan effort that's getting traction? Because they like, there's been a whole, you know, open source AI movement. I'm wondering if there's, you know, Chinese versions of crypto projects that are actually maybe, you know, six months behind.
Speaker 11:It's a great question. I mean, to to be honest, I don't know. I I think the the the honest take is is is twofold, which is one, we've seen a ton of adoption in The US since Genius and and and and, you know, with with a lot of what's happening around Clarity. Yeah. And so that's kept us quite busy.
Speaker 1:Likewise, you
Speaker 11:know, in Europe, and then the adoption in LATAM and other parts of Southeast Asia is is huge. There's a really vibrant set of communities in Singapore, in Korea. So there is a lot happening in the region generally, but but I just haven't seen that much by way of companies working in Mainland China doing this sort of thing. So I I couldn't tell you, to be honest.
Speaker 1:So in terms of maybe other countries that are the the fastest adopters, it feels like America is on the frontier here. Clear regulations, some more coming down the pipe. A lot of the companies are based here. Is there who's in second? Like, what what what country is leaning in the most to stablecoins broadly?
Speaker 11:It's a it's a great question, and I think part of it is that today, by nature, at least, it's a very cross border technology. So it ends up being pairs, basically, as you go along. And so there's very good corridors. For example, US to Mexico, we serve a company called Felix Bago
Speaker 1:Okay.
Speaker 11:That's doing, like, 5% of The US to Mexico remittance corridor. And I think that's, like, $60,000,000,000 a year. So it's a really meaningful the the entire corridor is $60,000,000,000 a year, but it's a it's a really meaningful pair. Likewise, I talked to a company not too long ago that was trying to help with, for instance, from The UAE to India. And so you've basically got these these pairs as you go.
Speaker 11:The most leaned in though, Mexico is doing a lot and there's a lot of clarity there. And then we're seeing just generally a lot of activity in LATAM, so that's where a lot of the the the volumes are happening.
Speaker 4:Very cool. Well, what does new startup formation look like in in stable coin in in the stable coin market broadly look like at this moment in time? I'm sure you get pitched all the time as an angel, but for a lot of these, it feels like in a lot of these categories, there is now a category leader and maybe less opportunity even though we're getting so much adoption.
Speaker 11:Yeah. It's a great question. I I think basically there's like two types. Right? There's very pure software plays, and I think I think Privy was was was such a company in that we run, you know, cryptographic infra to to enable people to do things.
Speaker 11:And then there's a lot of people who want to take care of, the data piping on the ground in various countries. So I, you know, I think of these as money pipes in a sense, and you've got the software layer, then you've got the connections into local banking systems. And so we are seeing a lot of things happening trying to build like better APIs, better abstractions on top of the aggregation. But I think there's actually a huge gap in building localized partnerships because there's really art obviously in any of the individual countries that you can do. So that's one.
Speaker 11:And then the other frankly is we're seeing a lot of stuff around agentic commerce with people basically trying to build better control systems for agents to actually take these assets and and pay with them. So this isn't actually stablecoin specific. There's a lot happening in fiat as well and and Stripe's doing a ton in this space, but it's, know, broadly around like service discovery, how can you find what you can pay for and actually connect into it. It's around the actual protocols for delivering payment really easily via, you know, sort of a genetic interfaces, LLMs and so on. And it's about being able to actually sort of meter spend, so you don't get wrecked if your agent hallucinates.
Speaker 11:So those are probably like two of the super active areas that we're seeing. And then we're seeing just a lot more adoption, something that struck me at this money twenty twenty in Amsterdam, which is a lot more institutional adoption, including from like larger banks and and and players who historically have been have been kind of waiting to come in.
Speaker 1:Amazing. Well Very cool. Enjoy the conference. Thank you so much for calling in.
Speaker 4:I'm sure
Speaker 1:late there.
Speaker 4:Enjoy the Rainforest Cafe.
Speaker 1:Enjoy the Rainforest Cafe. Thank you. We'll talk to you soon.
Speaker 4:Great to see you, Henry. Have a
Speaker 1:great rest of your day. Goodbye. Let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds in online, in store, on mobile, on social, on marketplaces and now with AI agents. You know, think the AI agentic commerce could be big because if you get hit with like a $500,000,000 bill for your agentic AI, you might not it might be over the wire limit.
Speaker 1:So you might need to use you might you might need to transfer like tens of thousands of Bitcoin, low fees. This is valuable. That's the future of agentic commerce potentially.
Speaker 4:Who knows? For all the for all the people getting hit with half $1,000,000,000 bills.
Speaker 1:It happens to the dust of us sometimes. Well, our next guest is Alexander Good from Post Fiat. Welcome to the show. How are you doing?
Speaker 4:What's happening?
Speaker 14:Hey. What's up?
Speaker 1:Not too much. It was
Speaker 8:great to
Speaker 4:have you on.
Speaker 7:On a Wednesday.
Speaker 14:Oh, man. I can't hear you guys.
Speaker 1:Okay. We'll try and fix that. I would tell everyone about MongoDB in the meantime. What's the only thing faster than the AI market? Your business on MongoDB.
Speaker 1:Don't just build AI. Own the data platform that powers it and let's see if can hear us.
Speaker 4:We can hear you.
Speaker 1:We can hear you. He can't hear that. We need to put up text on the screen that says that we can hear him and then he will know. We need update the Chiron, we can hear you.
Speaker 4:Joe, Weisenthal is tracking the popularity of various running shoe brands. He says on r slash running shoe geeks, one out of 18 posts mentioned a major Chinese running shoe brand. Just last quarter, it was one out of 40. Lee Ning is the big one. Lee Ning, of course, signed a shoe endorsement contract with
Speaker 1:Golden State Warriors star, Steph Curry. Very interesting. I mean, haven't the basketball shoes been made in China for a long time? That was like the whole Nike thing. But I guess it's like the
Speaker 4:brand now is is big. No. That's a big that's it's it's a Yeah. Chinese companies have acquired, you know, a bunch of brands like Arcterix Yeah. Things like that.
Speaker 4:Yeah. And the next step is to actually get meaningful
Speaker 1:What is the best of brands. Brand in America. The one that Americans like the most that comes from China. It's gotta be DJI. Right?
Speaker 4:Yep.
Speaker 1:Drone, videographer Yeah.
Speaker 4:Bernie was Like using Bernie was using a
Speaker 1:I know it's a controversial company because people see it as industrial capacity. But if you're just like, I I my only I don't think about geopolitics but I like that my wedding video had a drone in it and it was a DJI drone. You think about that very positively. Has sort of a GoPro aspirational brand. Is there anything else that pops up as Chinese brands that are loved in America?
Speaker 1:I can't really think of anything in particular. Obviously tons of stuff gets made there. But anything on the top of your mind?
Speaker 4:Every product on Amazon that has a name that
Speaker 1:Yeah. But that's not yeah. I I I was gonna say hoverboards, but they didn't have a brand. And a lot of the cars aren't here. I believe that they would be popular if you could get a hyper car for $20,000 like they make over there.
Speaker 9:Kimu or Sheen?
Speaker 1:Are those like really loved brands in the same way
Speaker 4:that Marketplace.
Speaker 1:DJI feels a lot closer to like a Nike brand or an Apple brand than SHEIN or TIMU. TIMU seems more like a Walmart brand. I I I agree with you. It's popular. It's it's certainly brand recognition is there but in terms of brand admiration, I don't know.
Speaker 1:Can we play this video from Instagram explaining the new Call of Duty map format? They're getting into generative level design. It's not Gen AI. It's not fully transformer based, but they're they're creating a whole bunch of different pieces of the pie and they remix them. Let's play it.
Speaker 12:The other three like slabs
Speaker 1:Look at this.
Speaker 12:And we're able to randomize that
Speaker 8:at run time when you're playing.
Speaker 1:Three slabs on the map. They randomize them every time you load in the map. We have.
Speaker 10:That is a 100. We have the content to do upwards of 900.
Speaker 12:When you play a multiplayer game for a while, like, you have this sense of discovery each time you play a new map, but that quickly fades. Right? You've played that map maybe five, ten times. You're like, get it. I know all the places.
Speaker 12:That never fades with Kill Block.
Speaker 1:I I I see this as an existential risk. I think this might be the end of TBPN. I think that once this goes live and we're playing this in the Ultra Dome, we're not gonna remember to go live because we're just gonna be gaming too much. It's entirely possible.
Speaker 4:I don't know. I keep coming back to Rust.
Speaker 1:Yeah? It ain't broke don't fix it.
Speaker 4:I'm so happy. Okay. Like Rust for me is like a vacation destination that you have so many good memories.
Speaker 1:Yeah. You don't want it remixed.
Speaker 4:And you're just like, no. I'm good. I'm going to this beach, this place. Okay. And I'm happy to keep going back.
Speaker 1:He's a Luddite. He's a Luddite folks. Anyway, we have Alexander Good in the waiting room. Let's bring him in and see if he can hear us. How are doing?
Speaker 4:Can you
Speaker 8:hear us now? Can you hear me?
Speaker 1:Yeah. Fantastic. How are you doing?
Speaker 4:And fantastic green screen background or Zoom background.
Speaker 14:Yeah. It's it's the new AI. It's very powerful.
Speaker 4:Great to finally have you on the show. I've enjoyed your your post and For
Speaker 1:a long time.
Speaker 4:And some of your rants. You're you're you have some of the best rants on the Internet.
Speaker 10:Appreciate that.
Speaker 4:I've been been looking forward to this.
Speaker 1:Yeah. How how would you introduce yourself these days? Like how much of just I I mean, I guess, set the table for people, give us a little bit of backstory, and, and your thesis right now.
Speaker 14:Cool. Yeah. I used to be a normie. I worked at, Citigroup, Palantir, Bali Asmi, started a company, sold it. And then I got into crypto.
Speaker 14:And AI changed a lot of, obviously, what I was working on and what many people were working on. And I was really just trying to figure out how to I got very, very pilled early on on the idea that AI would just destroy people's work product. Mhmm. And a lot of people are getting on that train now, but I guess I was on it in 2023, so a lot of the rants were coming from processing that and going through my own AI psychosis. And now I'm like post psychosis.
Speaker 14:Now I'm just like in a co I'm in a codex terminal working on building a protocol that hopefully can move the needle for people who who own it and, also, you know, just our investors.
Speaker 1:A lot of money, like, flow a lot of, like, attention, money, everything flowed from crypto to AI. There was even that meme, like, you're in crypto, pivot to AI. Has has AI strengthened your belief in crypto? Like, what do you think the intersection is? Because a lot of people jump to, like, well, the agents will need they wouldn't couldn't possibly figure out Stripe, so they'll have to use a token.
Speaker 1:And I've never really believed that fully. I think that there's some opportunity there but it feels like the AI trends, you're a believer in that but also your faith in crypto broadly has not been shaken and you haven't like pivoted or like gone to like the hot thing which is not it's just less common these days I think.
Speaker 14:Yeah. I mean, let let's be honest. The intersection of crypto and AI has not been a particularly good intersection so far. There's hacking events. Every human piece of code that's ever been written is being evaluated by agents right now, which has obviously created like an acceleration in hacking.
Speaker 14:Mhmm. X four zero two has kind of like gotten exploited. Right? So, you know, there's been you know, there's this kind of, you know, you can prompt engineer agents to send you money and that's like not a good thing if you're running a protocol. So it's like, do you really want a protocol that can just like send people money?
Speaker 14:I think the thing that's kind of kept me in the space or kept me excited about the space is I was always kind of fundamentally in this because of something I called the doom thesis, which is that, you know, AI might not cause productivity productivity to accelerate. It might actually accelerate, you know, the kind of onset of the surveillance state Mhmm. Or, you know, basically a
Speaker 8:type
Speaker 14:of world where capital is gonna flee the system. Mhmm. And I think that thesis is very much intact. I think that's why you're seeing a lot of crypto like Zcash run very, very aggressively. And I think that's gonna continue to be a story.
Speaker 14:You know, I think that's why Teal moved to Argentina. I think it's sort of like, you know, it's in motion.
Speaker 1:Where are you on Bitcoin versus other coins? I mean, obviously, mentioned Zcash. Like, how strong do you think the Bitcoin thesis is these days, and how how much maxiness needs to be considered in that thesis?
Speaker 14:The the Bitcoin thesis is getting weaker, by the day. You have privacy coins accelerating in terms of their adoption. I think it's notable. So, you know, the European Union and other countries tried to kill Monero, and we're not successful at that. Mhmm.
Speaker 14:You know, the tornado cash rulings in The United States have given given clarity to to coins like Railgun, are smaller, but are good tech, and Vitalik uses it, and, you know, they're big privacy summits. And Bitcoin is fundamentally not private technology, and it also has the unfortunate sort of leverage concentration from Michael Saylor, who has, you know, issued a lot of preferred and complex convertible financial instruments on top of it, which have kind of concentrated the ownership and the liquidity profile, and now is kind of driving a market downturn. Right? So so today's STRC drop as well as MicroStrategy's equity situation are driving down moves in Bitcoin. And, unfortunately, like, it's hard to see that structurally reversing.
Speaker 1:Do you know if there's been a material impact on crypto from not just the the the the capital markets moving around and and founders and employees pivoting to AI, but the actual mining operations pivoting to AI? Because a lot of the a lot of the neo clouds that we know, they got their start in crypto mining and they're sort of out of that market. Is that actually affecting crypto in any way? I haven't really followed it.
Speaker 14:Yeah. I mean, it's interesting. CoreWeave, you guys might know Vance at Framework, you know, he had a fantastic return for his fund partly because, you know, CoreWeave literally pivoted out of crypto into AI. Yeah. And they're the OG pivot story.
Speaker 14:So they they were, like, pre Jason Kalakanis. They they did it. Yeah.
Speaker 4:And You you know the JCAL post, the if you're in crypto pivot to AI in, like, 2023.
Speaker 1:It was post ChatGPT, so it was a little bit late. But it turned out to be, you know, a crack for a lot of people.
Speaker 4:Yeah. A lot of companies launched
Speaker 1:Impressive. Very well. So,
Speaker 14:yeah, I mean, like, there is an inter there is an interesting thing going on right now. You guys are probably gonna hear about something called Pearl relatively soon. It's aggressively back. There's rumors that Thrive isn't it? And, you know, the TLDR is that it's a proof of work AI coin.
Speaker 14:And, basically, there's a paper that came out in late twenty twenty five by SG Lang, which talks about determinism in in basically GPUs, which allows you to use AI to mine cryptocurrency. And so this is something my my brother started working on with Ambien, which got backed by a 16 z. And then Pearl is an Israeli team, which is doing something kind of, like, similar. They're using MapMul mining, and they have a partnership with TogetherAI. They got tweeted out.
Speaker 14:Right? And so so, you know, essentially, the the the argument that a lot of these crypto AI protocols increasingly are trying to make is is something called useful proof of work Sure. Which is the idea that, you know, you have a miner that can also deploy a service. So, you know, my brother is delivering verified inference, and then the Pearl argument is that you can basically buy GLM not GLM, it's Gemma on together.ai for a 25% discount because the miners are subsidizing it.
Speaker 1:Okay.
Speaker 14:Now the funky thing is that, like, you can also buy it for, like, 50% less than their subsidized version on OpenRouter. Right? So so you're, like, you're kinda like market cap dependent. You need this thing to really, really move in order for it to provide a meaningful subsidy. But, you know, there's an argument that I think the the the compelling zoomed out argument is that, you know, TSMC back in 2017 or 2018, you know, 10% of their of their product was Bitcoin ASICs.
Speaker 14:And now it's like way less than 1%. And so if you're like, okay. You wanna secure money with proof of work, very, very high level, it's like, why wouldn't you secure it with GPUs? Yep. You know, there there are arguments why you wouldn't.
Speaker 14:Right? Because you're like it's because you're literally burning GPUs, which are productive assets to secure this thing, which is even worse than burning energy for Bitcoin mining. But that's kind of a separate argument. Right?
Speaker 1:How how separate is this from the render token, render network from Octane where individual computers or or folks with compute would would render CGI frames and then earn a token. It was not nearly as decentralized. And then I know PrimeIntellix was working on this as well, trying to sort of wrap spare compute and put it on a network that was sort of transacted with a coin, intermediated by that coin. It sounds like this is at a much lower level. Is that correct?
Speaker 14:It's in a yeah. It's in architecture level. One, render in a lot of these coins, including BitTensor actually
Speaker 7:Okay.
Speaker 14:Are are are stake coins. Right? So they're not secured by the operation of a GPU. So so this is kind of like this Pearl thing is a regime shift Okay. It's trading at, you know, like a $2,000,000,000 FDV on on private.
Speaker 14:There's there's there's token sale. So it's starting to move. It's an it's a relatively new story in crypto AI. Mhmm. You know, I my my protocol is like a completely different bet.
Speaker 14:You know, my essential I think the there are some interesting intersections of crypto and AI that people are probably less focused on, which is that, you know, all of crypto is open source. So, actually, when you use Codex or you use these AI agents, they're, like, phenomenally good at, you know, crypto work because it's in the train because it's in the training data. And it's all open source. So if you screw something up, you can just be like, hey. Can you just double check this with Railgun's implementation to make sure that we're doing the same thing?
Speaker 14:And then, like, you know, five minutes later, you have like a working Yeah. You know, Orchard Shielded transaction on
Speaker 1:As opposed to like some Fortran code that's locked in some old financial institution. It's never seen the light of day. Not gonna be in the training set whatsoever.
Speaker 14:Exactly. And and so there's like an OpEx efficiency argument in crypto because historically, crypto crypto has been like a very wasteful industry. You know, there's like a lot of money spent on conferences and and just like, you know, the Ethereum Foundation is like a good example of like how not to run a company. And it's it's sort of like, there's a lot of waste in crypto and AI is be like, crypto is like the ultimate software industry where you're like, okay, I could credibly reduce engineering by like, you know, 60% here.
Speaker 1:How are you thinking about AI psychosis? You said you went through it. You got to the other side. Like, what's the state of AI psychosis? Is it is it Where is it showing up?
Speaker 4:Is it bearish if someone hasn't fallen in and then climbed their way out?
Speaker 1:True. A true Luddite versus the, you know, white pilled god through the trough of disillusionment is in the No. No. It's the Plateau of It's like
Speaker 4:a trough of Slop. Illumination.
Speaker 1:Yeah. Something. I don't know. But how are you thinking about it? Where where is it cropping up?
Speaker 1:Where is it bad? What does it take to get out of it if you're in it?
Speaker 14:Well, you kind of converge on this, like, conclusion. Right? You you start with the we start with the psychosis, and the threat of the psychosis is that my work is not meaningful and that everything that I've done is basically meaningless because an AI will be able to do it better.
Speaker 10:Sure.
Speaker 14:And then you actually start encountering the tools and you're like, okay. In the areas I don't understand, AI is really good. But in the areas I deeply understand, AI is like pretty bad. Right? You know, there's not like a TBPN where there's like two AI avatars that are doing a better job than you guys.
Speaker 14:I mean, maybe the new a 16 z one is is that and we just don't realize it right. It could just be that those guys are are are running a really really advanced AI system. There's some I evidence think it's there's some evidence of that. I'm not
Speaker 1:going to
Speaker 14:discount the possibility.
Speaker 1:It does.
Speaker 14:But, you know, essentially, you're like, alright, This is a this is kind of directionally going to obsolete my work. Yeah. And so I better be the first person to obsolete it, right? Like that's sort of
Speaker 1:where Sure.
Speaker 14:Yeah. The race So can the way that you get out of AI psychosis is you say like the only way out is through, right? So you're like, all right, how do I literally automate everything that I did before? And then how do I also just start to think about network effects that were impossible So I'll give you an example. You know, I'm working with there's a pretty robust community with Microbare Project, and we have what we call the data lake.
Speaker 14:And the data lake is basically like, you know, hundreds of contributors who are doing tasks all day, and then their aggregate intelligence gets kind of like, you know, summed up by an AI, and it comes up with actionable trade ideas. Right? And and it's sort it's sort of like you're like, okay. You can make all kinds of alt data now. I I think, you know, Palantir kind of inspired me originally when they started talking about how well they're doing with corporates when they're like, hey, like, have the biggest you know, we have the best demand story in history to take unstructured data and turn it into structured data.
Speaker 14:Mhmm. And, like, okay, that's cool in a corporate and government context, but, like, nobody's ever done that with our Wall Street bets.
Speaker 4:Mhmm.
Speaker 14:Right? Or like, nobody's ever done that with trading information. And I'm like, okay, like, I'm just going to do that. I'm going to take, you know, the Palantir ontology method and apply it to, you know, a group of individuals who create, you know, market alpha. And so then that's how you get out of AI psychosis.
Speaker 14:You you can sort of identify like what new capability does AI enable that allows you to generate the the type of edge that you would have historically just with a new kind of data primitive. It's like, okay, like, you need to have a story for how you use AI to get out. That's the the short answer.
Speaker 1:Yeah. It's interesting. We're sort of at this moment where, yeah, the AI is is replacing a lot of things but I mean at least as an entrepreneur like I don't know that the moats have actually changed because people are saying like, oh, like SaaSpocalypse, like your big pile of code is no longer a moat. But if you go back and look at the literature whether it's zero to one or Hamilton Helmer, seven powers, like big pile of code was never a moat. It was always cornered resource, brand, network effect, complex coordination, like these other things that were not just, oh, yeah.
Speaker 1:You were the first person to build a lot of momentum around a piece of SaaS and you've you've accumulated so much technology and and software that that is your mode. It was always something else. But I don't know. How are you how are you thinking about entrepreneurship outside of trading, outside of before
Speaker 4:I wanted to ask how you think market cycles are evolving. We were joking in q four of last year that we were like, great. Like, the bears win, like, the bubble the bubble didn't pop. Right? It what it did feel like it deflated.
Speaker 4:You had a big sell off. And then you got a new paradigm that
Speaker 1:It's bear trap.
Speaker 4:That came, you know, it came at the right moment and kind of reignited a lot of, you know, excitement and, you know, revenue and and all the all the good things that you wanna see during a technology cycle. But it feels like, you know, everything's been massively sped up. But I'm wondering I'm wondering how how your what your kind of mental model is for market cycles today.
Speaker 14:Well, the interplay of inner of AI in the market itself is kind of accelerated. So the way that people interact with markets has changed. So they're now very commonly pasting a transcript or pasting a company's earnings release into an AI system. And those AI systems have biases, right, that are quite separate from the biases that humans have. So I'll give you an example.
Speaker 14:Like, the the company ASML is extremely complex. Like, as a human listener to the earnings call, you would be asleep halfway through the earnings call. If you paste that into Quad Opus 4.8, it loves it. It's like, wow. This is, like, the most interesting, cutting edge.
Speaker 14:I don't even believe this is true. Let me web search that. You know, Claude is highly engaged with ASML in a way that a human kind of wouldn't be. And the really esoteric bottleneck
Speaker 4:Well, there are there are humans that would be. There's just like a very small number of them in the world and now there's effectively infinite. Right?
Speaker 14:There are. And and so some of these stocks that are that are pumping like HPE, you know, like I used to trade this thing back when I was at a hedge fund. It is the most boring company
Speaker 3:in
Speaker 14:the world. And and this guy, David Gills, who lives down the street from me, you know, it's like we were trading meme stocks and now he's trading HPE. Right? And so it it it shows you, you know, this is like a buyback, like 70 year old guys like wearing, you know, nothing against wearing suits or anything, but, you know, it it wasn't an exciting story. Now it's like, okay, now it has triple digit, you know, data center growth and it's it's the things that are going up are kind of historically stocks that retail would have never thought of.
Speaker 14:And a lot of them like SanDisk and like Micron. You know, I I know one woman who's like, you know, I inherited an account from my my grandparents that had a ton of Intel, Micron and SanDisk. I'm like, yeah, it's like literally like 75 year old people were owning these stocks because they thought they were like reliable bellwethers. And these are the things that are up, you know, 300%. So so I think I think just like the market composition is really different.
Speaker 14:You know, if you look at Coinbase, it's like got substantial sequential revenue deceleration. So, you know, people are not investing in Solana. They're they're investing in HPE. And so, you know, the the sort of b to b focus of the markets has completely changed, and I think that's gonna continue to be the case. Like, I think I think people are gonna continue to engage with extremely complex equity stories in, a way that they just never would have before.
Speaker 14:And I think that benefits, like, a lot of you know, for example, in in my industry, I think it is gonna benefit coins with more complex technology stories. I I think Zcash is a good example where it's like, okay, like, are encryption technologies that are moving forward, that are esoteric, that are hard to understand, that wouldn't have generated engagement before. But now, like, the UX of the of the user interacting with it is like, just copy pasted this into Claude and it says it's the best.
Speaker 1:Sure. Sure. How does lore play into those stories? I feel like I heard I don't know if it's Zcash, but there was one about like they brought eight people together and they all had different pieces of the key and they were all like, brought a journalist with and they were different computers and they broke the computers and it was like building all this lore. Obviously, the Satoshi story is like extremely lore filled.
Speaker 1:Even the Vitalik story is like, you know, build something you want. Like and it feels like the the like starting the perpetual motion machine of some of these projects is important. How does that change?
Speaker 14:You know, I I wanna say lore becomes less important
Speaker 1:Mhmm.
Speaker 14:Just because the the stories that I just shared with you, you know, like HPE or some of Intel, like nobody knows who Intel's CEO is. Right? It's like and it's like nobody is like Poor
Speaker 8:little
Speaker 14:dog. Invested in this story right now.
Speaker 1:Are you saying they still think Pat Gelsinger's running the place or what? I
Speaker 14:I think people just don't know. Right? I think that's the the sort of real story is that Micron like, don't think people know what Micron does. It's it's like a trillion dollar, you know, memory bottleneck company.
Speaker 3:And Mhmm.
Speaker 14:So I think lore becomes less important in one way. The more contrarian view that I have is that IP universes become a lot more valuable.
Speaker 8:And
Speaker 14:so, for example, one of the there's a lot of AI stuff about Harry Potter distills, right? So you can like extract 98% of Harry Potter out of Deep Seek or Quad if you're motivated. Yeah. And so it's like, it wasn't supposed to train on it. There's the big LibGen settlement with Anthropic, like they did train on it and there's a big multi billion dollar payout.
Speaker 14:But it's like that kind of multi billion dollar payout creates a strong incentive to kind of have IP treatment Sure. In a proper way going forward. And so, you know, Games Workshop, for example, has, you know, the cinematic universe, which is World of Warcraft Yep. That becomes infinitely generative when you combine it with an AI system.
Speaker 1:Yeah.
Speaker 14:And actually, like, what you get from like AMD or where where why this is, I think, interesting is that you've seen like a big structural crowding out of entertainment because of the enterprise focus of AI. So Anthropic, for example, like if you listen to Dario, he's like, yeah, I'm not gonna ever generate videos or images because like that's just a waste of time. Right? Like he's not you know, OpenAI shut down Solara.
Speaker 4:Yeah. Because had Mikey we had Mikey from Suno on today announcing a big round, but he has had the blessing of a lot of his would be, you know, the the the most intense competitors he could have have had to just deprioritize entertainment because it might be a $20,000,000,000 market instead of a, you know, $2,000,000,000,000 market.
Speaker 14:Yeah. And and that's sort of like the interesting G Vons paradox argument in my opinion is that, like, right now, for example, Nintendo is down, you know, 40% over the last year. Right? Or or, you know, Take Two is like getting even though they're you know, they've got a new GTA game, it's it's getting smoked. And there was a narrative that like for a while that, you know, video games would be a big beneficiary of AI because intuitively, we see all these like like, wow, like, what if all NPCs were, you know, LLMs or, you know, what if you had in game generative content?
Speaker 14:And the reality is given the cost structures right now and the bottlenecks, you're like, okay. That's just not affordable. Right? You can't generate real time generative characters and expect to break even on that because that would be like, you know, $6 per game session, and that's not a good investment.
Speaker 4:Yeah.
Speaker 14:And as AI gets cheaper, that that story is actually going
Speaker 8:to change.
Speaker 14:Right? So so I think that's like an interesting kind of like like where we're going is I actually think we're going to get like a big acceleration in entertainment stuff because the cost of AI stuff is going
Speaker 1:go down. Yeah. You'd have to imagine that like the the the the the most like mildly bullish take on take two would just be like, yeah, the next GTA game is gonna take seven years instead of ten or like our DLC is gonna be pulled forward by three months and that's gonna accelerate earnings. Like, that seems very that seems very believable. But, yeah, people have been caught up in all sorts of, oh, maybe it'll just generate it all.
Speaker 1:Maybe it'll all go to some foundation model. But that does seem further away even when we see, you know, amazing demos from Google. But again, it's like six seconds here and there, very expensive, not really persistent,
Speaker 4:a lot Yeah. How Roblox done over the last year? Because that was always my thesis there. Yeah. It was just it's gonna be a lot easier for somebody to figure out how to make compelling games, but down
Speaker 1:50% the last six months. Yeah. Not good.
Speaker 14:Yeah. These things are very very bleak. Very bleak.
Speaker 1:Shouldn't be. Anyway, hopefully they build back. I'm I'm optimistic. I like Roblox. Well, thank you so much for coming on the show
Speaker 4:great to finally have you on. It was great. Let's do it. Let's do it again. See
Speaker 3:Have a
Speaker 1:good one. Cheers. Goodbye. There's one more announcement we got to share. Andrew Roland Nascar are teaming up to sell a $14,000 VR racing rig simulator.
Speaker 1:Palmer Lucky's back in the VR business. I mean, already was with the Eagle Eye headset, but he's back in the consumer entertainment VR industry with this. Of course, he's not making the actual headset. I believe it is a
Speaker 4:Really three days after I just put down a deposit on my own sim. Really? Yeah.
Speaker 1:Did you actually? Yeah. No way.
Speaker 4:But but I I don't think that's gonna be This is very that's gonna be very specific, I imagine. Yeah. For I imagine NASCAR simulation. Yeah. Right?
Speaker 4:Because that's that's where they're focused. But very, cool. Matthew Prince over at Cloudflare
Speaker 3:What's he saying?
Speaker 4:Says, well, that happened faster than I predicted. Thought it would be end of twenty twenty seven, then early twenty twenty seven, but agentic traffic growing so fast that bots have now passed human traffic online for the first time in the Internet's history.
Speaker 1:That's crazy. Lots of agents running around on the Internet.
Speaker 4:Yeah. Bots are now Yeah. According to Cloudflare, 57 and a half percent.
Speaker 1:Every time you fire something off, it's it's hundreds of pages. You see it in the reasoning traces and the tool calls. Let's watch this demo from Eric Lyman, friend of the show, sponsor of the show, introducing Stack, the AI operating system that lets accounting firms take on more clients without hiring, learns your firm's process, runs the close, post the journals, fully auditable. We're living through the biggest shift in accounting since the spreadsheet. That's a good way to frame it.
Speaker 1:And they did a very cool video for this all practically produced. I believe this is all shot with an actual camera. They got these actual pieces. They filmed this. Not CGI.
Speaker 1:Not AI.
Speaker 15:And accuracy are not negotiable. These one off experiments
Speaker 4:Such a calming voice.
Speaker 1:I love Eric doing the built stack. It's great.
Speaker 15:One secure place to orchestrate AI coworkers for accounting. From day one
Speaker 1:This has been the vision of of Ramp since they launched, and it and it feels like, oh, this is the moment, of course, they have to do an AI thing, but they've been like like pitching this exact thing since what twenty twenty, twenty nineteen. You can teach Working on it longer honestly.
Speaker 15:Ways of working
Speaker 7:You go
Speaker 1:back to parables.
Speaker 15:Every client and it learns over time. Always giving you the final say before anything gets posted. And every action it takes is fully recorded and auditable. The more you build, the lighter the work gets, and the more clients you can take on. Stack.
Speaker 1:Ramp Stack. They're saying it's god mode. It's god
Speaker 4:mode for It's the god
Speaker 1:mode. Go check it out. We should also watch this one last video from Martin Scorsese, Black Forest Labs. I have alluded to it earlier. I saw this on Instagram and I really enjoyed it.
Speaker 1:Thirty seconds of Martin Scorsese, storied filmmaker. Jordy, name your favorite Martin Scorsese movie.
Speaker 16:Doesn't feel modern. A town, not a village, not
Speaker 10:a city.
Speaker 1:Mafia. The movie Mafia. Yeah. Isn't there is it Godfather? There is a movie.
Speaker 4:Isn't it? The Godfather.
Speaker 1:Damn. You're thinking The Irishman, maybe? That is like a mafia movie.
Speaker 16:This is that.
Speaker 1:Gangs of New York?
Speaker 4:No. That one. Good for that
Speaker 1:one. Or maybe Casino or Goodfellas. Goodfellas. Goodfellas. Anyway.
Speaker 1:Play this. Sorry. I was not paying attention.
Speaker 11:Well, let's try it.
Speaker 4:And we'll go from from what you think.
Speaker 16:I need a place that doesn't feel modern. A town, not a village, not a city. Almost medieval. Even the the streets are narrower, cobblestoned. The main road through the town is twisting and turning.
Speaker 16:Put the camera higher looking down, DeMille would have his production designers do oil paintings. This is that in a sense, conveys a cinematic, a cinematic intelligence.
Speaker 1:Cinematic intelligence tagline for Black Forest Labs. I thought that was I thought it was really really good. And yeah what what what a way to like you know hammer obviously and filmmaking's deeply controversial but you get Martin Scorsese talking about it and he's at least gonna perk up people's ears and they're gonna listen to what he has to say. Yeah. And think about it.
Speaker 1:Is it a tool? Could it be useful in a workflow? Could it speed something up? Is it gonna make the next Martin Scorsese movie? Probably not this year but will he potentially be using it when he's thinking about what to work on next?
Speaker 1:Sure. So fun fun project and very cool video from Black Forest Labs. Anyway, tomorrow we have a special show but we will still see you at 11AM Pacific. Sharp. Sharp.
Speaker 1:And leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter, tbpn.com, and we will see you tomorrow.
Speaker 4:We love you.
Speaker 1:Have a good evening.