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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching Today is Friday, 08/29/2025. We are live from the TBPN UltraDome, the Temple Of Technology, the Fortress Of Finance, the capital of capital. Jordy is fired up because we got
Speaker 2:Oh, we're live
Speaker 1:on
Speaker 2:VHS.
Speaker 1:Live on VHS. It is crazy.
Speaker 2:He said it couldn't be done.
Speaker 1:He said it couldn't be done.
Speaker 2:But we did
Speaker 1:it. Here we are.
Speaker 2:Ben did it.
Speaker 1:We're here.
Speaker 2:Our champion.
Speaker 1:We're talking about we're channeling the vibes of the .com boom because we, of course, today, we are talking about the history. It doesn't quite repeat, but it rhymes. Today, we are talking about La Boo Booze and the story of Pop Mart, which to me really stands out as a similar like, in the .com boom, there was this, the Beanie Babies went on a similar run. Incredibly popular, built on the backof.com technology. I remember going over to a friend's house and loading the beaniebabies.com website, And it was so heavy because it had all these images.
Speaker 2:Did it take like minutes to load?
Speaker 1:It took minutes to load because they like, whoever built the website just didn't kind of think about It probably how take long it would take. Even then,
Speaker 2:it was like, this is so cool. Yeah. It takes thirty minutes to go to the store.
Speaker 1:Exactly. Oh, if it takes five minutes to load all And so, yeah, the page would load. The HTML would load. And then slowly, one image after another would load in. And you could really feel the difference at the time.
Speaker 1:Many people were on dial up, which was 56 k, which is like a staggeringly slow speed compared to what you get even just on like a plane. Yeah. And then DSL was
Speaker 2:Posted one level Posted that United has Starlink now.
Speaker 1:Yeah. And I think it's 300 megs per second. 300 megs. So that's what, 6,000 times faster than what we were experiencing back in like the mid nineties. Yep.
Speaker 1:So then you could upgrade to DSL. DSL was between two fifty six ks and 1.5 megs. I had a friend who had a T1 line, which was like enterprise level internet in the '90s. It was one meg up and down. So you could get equal upload symmetrical line.
Speaker 1:And he could still he could load the Beanie Baby website faster than anyone. It was like a true status symbol at Yeah, the was Alpha. His parents were very successful.
Speaker 2:What was the most expensive Beanie Baby transaction ever? Do you know?
Speaker 1:I don't know. I I do know that prices peaked throughout just they perfectly tracked the .com boom. So in '2 in 1998, Ty, which is Ty Warner, his company is called Ty, t y, they make Beanie Babies. They made $1,400,000,000 in sales, making it one of the fastest growing toy companies in history. Two years later, the market crashed almost overnight.
Speaker 1:Prices on the secondary market plummeted as supply overwhelmed demand, and speculative buyers exited. So people were in the habit of yes, age in the chat is correct. EBay was a major, major driver of Beanie Babies' growth because people could buy them, and then the secondary market was way more liquid than ever before. Before, it was like, okay. If you buy some some rare drop or some limited edition thing and you wanna go sell it, you have to go to, like, a trade show that maybe happens every once in a once a once a year.
Speaker 1:You have to find maybe your local shop, but there's not that much liquidity. Remember when we were talking to our friend about the the the the the collectible card market, Beatles memorabilia? He was saying, like, I only need two buyers. It's very easy to find two buyers if you're if you're if you're interacting at Internet scale.
Speaker 2:Totally.
Speaker 1:It's harder if you're in some town and you have a rare Beanie Baby and you need to see, are there any other crazy Beanie Baby fans in this town? So eBay was a huge yeah. Beanie Babies, the original unicorn startup, essentially. I mean, it was it was an overnight success in the sense that I think the business was gone for about a decade before the boom. But they rode the wave of
Speaker 2:the Internet. Interestingly Yeah. Most expensive Lububu ever sold was a 170,000 Mhmm. In June. Yep.
Speaker 2:And the most expensive Beanie Baby ever sold was something around half a million dollars. Half a million.
Speaker 1:Oh, we got room to run.
Speaker 2:We got
Speaker 1:room run-in the Lububu market. So my question is like, what is driving the Lububu? Yeah. Enjoy your victory lap. Get get out there.
Speaker 1:Get some exercise. Do some push ups halfway through the lap.
Speaker 2:Aidan Enjoy. Belt ski. Did we
Speaker 1:say that right? Belt skis. Yes. Belt skis?
Speaker 2:You said your full name now. And Here we go.
Speaker 1:Thanks for watching. The yeah. So Laboo clearly clearly a beneficiary of the social media boom of TikTok, of the unboxing culture, TMU culture, live shop culture, flex culture.
Speaker 2:Because you these people
Speaker 1:put them on,
Speaker 2:you know, their their purse.
Speaker 1:Interestingly, even though it's like it's like money is cheap right now. Everything is going up into the right. The market is booming. I I can't find a yeah. I can't really find a bridge between, like, the AI boom and the and the boo boos.
Speaker 1:It seems like it's just the social media boom that we're continuing to see. Yeah.
Speaker 2:It's the fart coins, the boo boos.
Speaker 1:Yes. Yes. Yes. Yeah. There there's a little bit of that.
Speaker 1:There's a little bit of just, like, gambling culture has has infiltrated everything from sports betting, obviously, as being is legal in more states and and and has been on a tear for a long time to folks big gambling on crypto and stocks and out of the money options all the way to, you know, the the collector culture on all sorts of different platforms. Like, there's a big there's just a broad boom happening here. And then there's also the China angle, which I think is interesting. We were talking about this yesterday that China hasn't had a major cultural export, and this might be sort of the first one more or less. Like, TikTok counts in some ways, but TikTok, I see it as like a bucket that fills up with the local culture of the people that open the app.
Speaker 1:Like, if you're in It doesn't you're in LA, you see LA. Chinatown when you go Yeah. Exactly. But whenever you're But you can certainly access that if you wind up in that filter, if you search the right keywords, and then you can
Speaker 2:But same with Instagram.
Speaker 1:Go there. Yeah. Yeah. Same with Instagram. But by default, I don't see TikTok as, a uniquely a a uniquely Chinese cultural export.
Speaker 2:It's an export, not a cultural export.
Speaker 1:It's a technology. It's a technology. And and, of course, like, China's been exporting, like, manufacturing technology and manufacturing prowess for a long time. And so, my
Speaker 2:Got a got a real win with the demon dolls.
Speaker 1:They do look crazy. Right? I just I don't like them. I I they just rub me the wrong way. I I don't know.
Speaker 1:They're something is weird, but I'm just not into it. I don't know.
Speaker 2:That's why we bought one for Bill Bishop's dog.
Speaker 1:Toshi.
Speaker 2:We're we're excited for Toshi to rip it apart.
Speaker 1:Rip it apart. Yes. It it feels it just it's not a good look. I don't like the aesthetics at all. It's very odd.
Speaker 2:I would not buy one for my child.
Speaker 1:The bigger question that I have that I think we wanna answer so we're gonna dig into the history of Pop Mart, take you through some of this the history of Lububus. The the question that I have is, like, the the horse is out of the stable with, like, gambling on toys, clearly. Think about the TikTok story. There was a big discussion, nationwide discussion a few years ago. Should we ban TikTok?
Speaker 1:Is it spyware? Is it influencing our culture? Is it causing brain rot? Where do we land on that as America? We said, yeah.
Speaker 1:It's fine. We're good. The answer was YouTube will compete in shorts, and Instagram will compete in reels. And, you know, TikTok will be out there and, you know, buyer beware. Like, you know what you're using, and you're an American.
Speaker 1:You're a free person. And if you wanna use that app, you can. And if you wanna come over to a different app and you trust Mark Zuckerberg
Speaker 2:Stated versus versus revealed preference, people are like, I just wanna follow my friends. Yep. The the the, you know, feeds that are algo driven
Speaker 1:Yep.
Speaker 2:Get used more.
Speaker 1:And so my my pitch and what I'm what I'm kind of digging into what I wrote about in the newsletter this morning, you should subscribe at Substack to our substack.
Speaker 2:Tb.com.
Speaker 1:Dot substack.com is is the conclusion to the TikTok debate was the YouTube team and the Instagram team need to launch direct competitors and take it very seriously. And Mark Zuckerberg invested, like, tens of billions of dollars, I think, in, like, data center build out to actually support Reels and the algo feeds. And they took it really seriously, and they executed very well. So what's the conclusion to the Lububu story? Well, it's probably, like, Ty, the maker of Beanie Babies, or Mattel, the maker of Barbie
Speaker 2:Has to get
Speaker 1:getting into blind boxes. Yeah. Like, that's the only answer. That that's the way the, like, the arrow of progress moves by one direction. To gamble.
Speaker 1:They wanna gamble. And so I think that that's the end state here, and I'm just I'm I'm that's the situation that I'm monitoring. I'm not holding my breath being like, oh, yeah. La boo boos are going away anytime soon. Yeah.
Speaker 1:Sure. There might be, a bubble, and then it subsides. But in general, I think that the future is, like, more mystery boxes under the Christmas tree generally, broadly in American culture. Like, we love gambling. We love freedom.
Speaker 1:Pick your poison.
Speaker 2:That's very gambling as a gift is crazy.
Speaker 1:Like, I
Speaker 2:buy you this blind box.
Speaker 1:You never give someone scratchers? Give someone scratchers. It's great.
Speaker 2:We should give the team scratchers. Send them off into their three day weekend.
Speaker 1:I bet somebody was like, I'm I'm into scratchers. I I have a friend in college who was into scratchers.
Speaker 2:Really?
Speaker 1:You know, the thrill of a scratcher. Ticket in my life and it was electric. I was like, I'm gonna win. Like, it's gonna happen. And then it didn't.
Speaker 1:And I was like, okay. I'm never spending $2 ever again on that. But anyway, this is what happened with video games. They went free to play plus micro transactions. The whales drive everything, price discrimination, and everything.
Speaker 1:We see this with OnlyFans. We see this with the future of romantic companions. Price discrimination is key, and this will probably unlock some of that. It'll be interesting to see where it goes. But I think if you're a toymaker, you gotta get into mystery boxes, unfortunately.
Speaker 1:Maybe maybe unfortunately, but like that's where the that's where the culture's moved.
Speaker 2:Late stage capitalism.
Speaker 1:Pretty much.
Speaker 2:Which I would say we're just getting started.
Speaker 1:Pretty much. Anyway, let's go through. Brandon Gurrell has a fantastic thread on on Pop Mart and Tyler has the the story here.
Speaker 2:Well, history.
Speaker 1:Do do you wanna take us through the history? Yeah. Tyler, what you got
Speaker 2:for us?
Speaker 3:Can we pull
Speaker 2:this up on VHS, Ben? I think this is this is gonna be important.
Speaker 1:There we go.
Speaker 2:There we go.
Speaker 1:Here is Dan.
Speaker 3:Oh, man. Yeah. It is. So I I think we should I
Speaker 2:just love the way this looks. Yes. I can't help it.
Speaker 3:Okay. Let's first go through some big big numbers here. So Yep. Pop Mart, public company currently at what like around 55,000,000,000. Yes.
Speaker 3:Hong Kong
Speaker 1:is now the tenth richest person in China. He's worth $28,000,000,000. Wow. Pretty pretty crazy.
Speaker 2:Credit is due.
Speaker 1:And a lot of these a lot of the data sources here are Chinese and we tried to double check everything by translating. But there might be some details that are wrong. So,
Speaker 2:you know.
Speaker 3:Okay. So, yeah. They have almost 600 retail stores, 2,500 vending machines, revenues at 1,800,000,000.0.
Speaker 1:Vending machines. That's
Speaker 3:that's really the big thing. That that was big. Kind of so the kind of main story of Pop Mart is that they basically took a lot of things that were first in Japan and then brought them to China Okay. And then exported them basically worldwide.
Speaker 1:Yeah.
Speaker 3:But yeah, the revenue is a 106% growth year over year and then 700,000,000 of that is overseas?
Speaker 1:Yeah. The stat was crazy. Think in the first half of this year, they beat last year's total revenue. Yeah. And they're already like a scale Is that good?
Speaker 1:Pretty huge company.
Speaker 2:Is that good?
Speaker 1:It's I think it's better than Nvidia. It's the backbone of the economy. Okay. So take
Speaker 3:2010 Yeah. In Beijing, Wei Ning starts Okay. Originally, basically, it's just like retail store for these little collectibles. Yeah. They don't There's a bunch of stores that do like license other people's IP.
Speaker 3:So there's I think they originally started with some Marvel. Okay. Yeah. But then really the I mean, the majority of the revenue is just from their custom IP that they basically license from artists they find.
Speaker 1:Yeah. So that's the nature of Pop Mart. Like it's like pop culture market. Yep. And Brandon says And Brandon.
Speaker 1:It started as a single variety mall store. Think Spencer's are Hot Topic. Couldn't get they couldn't get investment at the time because no one thought adult toys would work. Now, he's the tenth
Speaker 2:when Wang was growing up, his parents ran small shops. Oh. So it was Yeah. In the DNA. Family.
Speaker 2:Okay.
Speaker 3:Yeah. So then 2014, this is when they basically bring over these sunny angels. These are the Japanese like figurines. Yep. And this is when they they start the blind boxes.
Speaker 3:This is, like, really the main thing that spurs the rest of their growth. Yep. 2015.
Speaker 1:Wait. Before this, this is this is actually crazy. Brandon has some extra context here. So he starts the company in 2010. A year out of college, he had an undergraduate degree in advertising and a short stint at the Chinese version of Twitter.
Speaker 1:His single variety store in Beijing in a Beijing mall is essentially a reseller. He has seven employees. He spends two years selling third party stuff on thin margins, trying to scale with debt, But he's it's hard to finance because investors don't get selling toys to adults. He manages to raise $320,000 equivalent in in RMB and then $1,000,000 around there in 2013, which he opens to use which he uses to open three new mall shops. And then in 2014, he hits his first lick, finds a repeatable format blind boxes.
Speaker 1:So take us into that.
Speaker 3:Okay. So then So they start with that. These are still different figurines from Japan?
Speaker 1:Yeah. These Sunny Angel blind boxes. They look kinda like nineties troll dolls. Interesting.
Speaker 2:Yeah. And then Yeah. And and I I don't think we already we covered specifically what a blind box is. It's Yep. You're going in, you're you're paying a a generic price for something Yep.
Speaker 2:And you have no idea what's in it. It could be the super generic one of, you know, a 100,000 Yep. Item or it could be ultra ultra limited and so you just get this massive buyers get this massive dopamine rush when they're buying Yeah. They're they're paying and and that whatever item they unpack might immediately be worth like some significant multiple of what they paid.
Speaker 1:Yep. Yep. Yep. Kinda like angel investing.
Speaker 2:So it has it has yeah. But it but way more condensed. It's like I buy this and then I immediately figure out am I am I gonna get dollars crazy in Turn.
Speaker 1:10 cap
Speaker 2:But unlike angel investing, I think there's like a floor. Right? Angel investing, you usually go to zero. Well, boo boos like have, you know, somewhat stable Yeah. Like Yeah.
Speaker 2:It has some Yeah. Market value.
Speaker 1:So if you're trying to like gamble less and you're addicted to angel investing, maybe, you know, downgrade to just the boo boos Yeah. Boxes.
Speaker 3:A big attraction of especially the boos which we can get into later Yeah. Is like they have like these sets that come out.
Speaker 1:So like you can't collect the full set.
Speaker 3:Yeah. It's like 10 and then they're basically all the same except like the color of the fur is slightly different or something. Yep. But
Speaker 2:complete set which will then sell for more.
Speaker 3:Yeah. But obviously, if there's 10, you can't just buy 10 of the boxes because you're probably not gonna get all of them. Yeah. So you have to buy
Speaker 2:Do you think that Porsche should get into blind boxes? Imagine if you just Imagine if like a nine You could just buy nine eleven's only with blind boxes. It's like 200 k. You might just get a bay you might get a Carrera t like super base model. You might get a GT three r s.
Speaker 1:You might get an s t. Wow. Yeah. Yeah. There might be something there.
Speaker 1:I don't know.
Speaker 2:I mean, people would be people would be sending it on those.
Speaker 1:I think so. Yeah. I mean, and you just work out the expected value, right? So you just charge whatever the expected value is. There I there isn't quite enough of a delta.
Speaker 1:They need to throw in like a Carrera Carrera GT as well. A few of those as well.
Speaker 3:Yeah. But used to see a similar thing in the sneaker market when that was like a really big thing. Really? On eBay, you would see these like a third party like mystery boxes.
Speaker 1:Oh, eBay would just do it. Interesting. EBay, but that's crazy because Yeah. Like that's even like less regulated because they can just totally like cook the box. I I
Speaker 3:feel Oh, like yeah.
Speaker 1:For sure. Like versus like a real company that has probably some sort of oversight.
Speaker 3:Yeah. I mean, I you don't really know how many people were actually buying it. Like, it was just like for YouTube that they make the videos like, oh, I bought this $500 mystery box.
Speaker 1:I I remember I bought a mystery box of cords on awoot.com which was an electronics reseller that was bought by Amazon and we That's so Kugenko. It's a crying box of cords. It was just electronics. Electronics. It was like so woot.com would go around and find like like a bunch of electronics that have been discounted.
Speaker 1:I bought a I bought an HD projector that was probably like $3 for like $600 because like they were like going out of stock and they just needed to like liquidate. And so we would go and buy the liquidation and then put it on the website. You could just buy it, but it was limited time. They would just do one daily deal every day. And one day, they just did a mystery box and you could just buy they would just give you, like, literally, like, whatever was in their facility, they would just pop back, like like pack up for you and who knows?
Speaker 1:I got like, oh, this is like HDMI to DVI cable or something.
Speaker 3:Yeah. You can probably trace back something like do you remember Storage Wars, the show?
Speaker 1:Yeah. Yeah. Yeah.
Speaker 3:It's like they open it, you can't go in but you can just see the front and then you can try to estimate the value.
Speaker 1:Yeah. Yeah.
Speaker 3:Yeah. And then, yeah. So there's probably some lineage there.
Speaker 2:That's great. So when did China figure out that this was gambling? Because they banned the sale of Lububus to kids under eight years old. Yeah. But that still means you got ten years before you're legally adult here in The US where Yeah.
Speaker 3:Yeah. Also, I I don't gambling is know how many like actual Okay. Eight year olds are going to the store and buying in. It's not their parents.
Speaker 1:Yeah.
Speaker 3:So it's kind of unclear.
Speaker 1:Well, you're worried about your employees gambling with your company funds, get on ramp.com. Time as money save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. .Com. Very easy to set a a rule in Ramp.
Speaker 1:No pop No LaBubu. No anyway, pop No pop continue.
Speaker 3:Okay. So let's go back. So Yeah. So 2015 is when LaBubu first appears as it's in a picture book. So Okay.
Speaker 3:This has nothing to do with Pop Mark. Mhmm. It's just this other artist, Kai Singh Leung. Mhmm. And then 2016, this is Pop Mart's first like kind of real IP that they created that like went super viral.
Speaker 1:Yes. Ning saw in 2016 Ning tries something new. He flies to Hong Kong and meets with artist Kenny Wong who had created the trendy toy figurine Molly in 2006 and was a big designer in the toy niche. There, he negotiates exclusive an exclusive license with Wong to develop and sell Molly products and blind boxes.
Speaker 3:Interesting. Yeah. So I I I think this was it's done around 800,000,000 in revenue Woah. Since 2016.
Speaker 1:Let's go.
Speaker 2:Yeah.
Speaker 1:So selling Molly not only gives Ning more control and capitalizes on trendy toy plus blind box signal, but it capitalizes on Kenny Wong's fan base and leads Ning to his next big unlock, betting big on controlling existing toy IP with a built in fan base instead of selling third party. So in 2017, sales of Molly are going nuts. Total, 22,000,000 by end of year for Molly. Pop Mart rolls out vending machines, reducing rent they had to pay in malls and establishing way deeper reach with fandom. Company begins repeating It's great.
Speaker 1:It's replicating the molly products.
Speaker 2:Unregulated slot machines.
Speaker 1:Yeah. Basically. And then they Puck Puckie is another Hong Kong artist derivative. They launch it and they launch a seder. You know, it's like half half like goat legs which is very odd.
Speaker 1:They're getting
Speaker 2:Not beating the Antichrist delegations. Yes.
Speaker 1:If you've been at the PT lectures in SF for who the Antichrist is, I think we got a lead here. I think we got a lead. Did you already write that?
Speaker 3:Yeah. This is already there. Yeah.
Speaker 1:You already wrote that?
Speaker 3:That's amazing. Yeah. Many there's a lot of allegations here. I mean, it's unclear whether, you
Speaker 4:know, what's I original
Speaker 1:think we solved it, folks. Yeah. We've solved it. Wait. Is there really a star on them?
Speaker 1:Is that a thing?
Speaker 2:Do you No. I just broke pentagram? Okay.
Speaker 3:Okay. Well, that's why yeah. Question mark.
Speaker 2:Max over in the sub stack chat says we need to tokenize the Lububus. I think that's I think that's how
Speaker 1:you That's obviously happening next. We know that's gonna happen. We know that's gonna happen. CSGO loot boxes walked so Lulu boo boo could run
Speaker 2:this. Brandon in the x chat says we gotta get a bezel box going. I totally
Speaker 1:agree. Agree.
Speaker 2:Quaid, let's get some let's get some blind boxes going. You might you might get a Nautilus. You might get a tutor.
Speaker 1:Yeah. There you go. There you go. Okay. So where are we?
Speaker 2:Okay. So now
Speaker 3:2019 Okay. Labubu is then licensed to Pop Mart.
Speaker 1:Yep. So just in in 2018, right before this, sales spiked to 73,000,000 on the back of Molly. Around this time, Pop Mart builds its own in house design team, the Pop Design Center, like a Porsche Design Center. It becomes a powerful pipeline alongside ever more exclusive artist licenses and big nonexclusive entertainment licenses. If you wanna entertain people on a stream, get on Restream, one livestream, 30 plus destinations.
Speaker 2:That's right.
Speaker 1:Multistream and feature options wherever they are. Continue.
Speaker 3:Okay. So so they licensed in 2019, but they don't actually release like the modern Lu Bu Bu Doll Okay. 2023.
Speaker 1:So it's in the book or whatever. Yeah. So like they're starting to build the lore, build the IP.
Speaker 3:They do characters, they do little figurines, but it's not like the the kind of modern Yep. Instantiation. Mhmm. So then let's go to 2020. They IPO at 7,000,000,000
Speaker 1:Okay.
Speaker 3:In Hong Kong. And then Wait.
Speaker 1:Hold on. So so continuing with Brandon, 2019, Pop Mart begins selling LubuBoo blind boxes, an exclusive deal with artist Kasing Leung, Lububu's original character in Leung's picture book trilogy called The Monsters, but was selling his figurines in Hong Kong by 2015. At time of the deal, it's only popular among niche toy collectors. And we do have some images in the deck, by the way, guys, if you wanna pull up the pictures of these these monsters. Yeah.
Speaker 1:If you scroll down a bunch, there are some photos of the Labubus. It it has, like, kind of a street art vibe, very chaotic drawings. Keep going. There's one more. Keep going.
Speaker 1:One more. Keep going. That's Molly. There we go. That's the first LaBubu.
Speaker 1:The Monsters Trilogy by Kasung Lung, the story of Puka, Pato and the Girl, Miro's Requiem. And so these started selling in 2039. In 2020, Pop Mart raises a $100,000,000 on a 2,500,000,000 valuation. Hit the gong.
Speaker 4:I see a large IPO.
Speaker 1:And a few months later, IPOs in Hong Kong. Stock rips 80% on open day opening day. You thought meme stocks were just an American phenomenon. Meme stocks are a worldwide phenomenon.
Speaker 2:I got them across the pond.
Speaker 1:Ning's net worth doubles overnight. He's worth 3,200,000,000.0 at open, 6,000,000,000 at close. Popmart has a 12,500,000,000.0 market cap at close. That's a big company. That's a big company.
Speaker 1:So let's continue.
Speaker 3:Okay. So so 2023 is when the blind box, lububu like phenomenon really takes off. Yeah. This is I think probably it's it's mostly due to TikTok. You see a lot of this.
Speaker 3:And then, yeah, 2025. Right now it's like around 55,000,000,000.
Speaker 1:Now it's now it's at 55. Absolutely incredible. What a run. Should we pull up the Wall Street Journal video, watch some of that? What do you think?
Speaker 2:Yeah. Let's do it.
Speaker 1:While they're pulling that up, let's tell you about figma.com. Think bigger, build faster. Figma helps design and development teams build great products together, folks. Get to figma.com. Design your next libubu drop.
Speaker 2:Yeah. I mean, developing real IP this quickly is incredibly impressive. Yeah. Yeah. IP that can do billions of of
Speaker 1:Yeah. I mean, it just takes so long. I remember learning about the the Lucasfilm acquisition that Disney did. Even the Marvel acquisition. This is the These are like They were big acquisitions at the time, but like single digit billions, low double digit billions.
Speaker 1:Yep. Like, and then they just created so much value as they actually monetized the IP and created like shows and merch and like ran the Disney machine around it. Yeah. Seems like Pop Mart's capable of running like a Disney esque monetization playbook on top of somewhat new IP, which is pretty crazy. Anyway, let's pull up The Wall Street Journal video and watch a bit of that.
Speaker 1:Aidan says nightmare fuel. I agree. Whenever Chinese retailer Popmark drops a new Lububu designer toys, it sells out within minutes. They sold out. Insufficient stock.
Speaker 1:Yay. It does seem like It's hard to get toys. Like, it's it's truly like a worldwide phenomenon in a sense, like, it's not just women that are doing it. It's not just men. It's like it's really people all are not
Speaker 2:just adults. It's children. Children and adults.
Speaker 1:Yeah. Yeah. Yeah. You would think it's like, oh, it's just kids. So, yeah, their revenue doubled in the have flooded social media.
Speaker 1:Fans flock overseas to buy exclusive products. I mean, it just has the natural off of celebrities. Look at Madonna promoting I got Popmart everywhere. But can the company continue to grow beyond this viral moment Yeah. That has seen its share prices rocket more than 1200% since the beginning of '24?
Speaker 1:Your pause it. Is it the economics up
Speaker 2:Are you rooting for their downfall?
Speaker 1:Praying on it even. The I don't know. I think I think the bigger question is there's something that so it's easy to say these go viral on social media. It's a beneficiary of social media. But if you actually think about why is LaBubu more viral than you know, the latest iteration of Barbie or Beanie Babies?
Speaker 1:Like, there is a reason and it's directly related to the nature of the algorithm. So when you do an unboxing, there it like the it naturally takes about one minute if you edit it down to do it. And the reveal comes at the end. So when you watch it, you say, oh, someone's doing an unboxing. They're introducing what the stakes are.
Speaker 2:It hasn't good for the creator because they get that retention.
Speaker 1:Exactly. It it drives retention because it has a natural storyline of like, okay, how did I get this box? How much did I pay for it? What are my expectations? Do I have something on the line?
Speaker 1:Maybe I'm hoping to build the set. Right? I want to build the set. I really am hoping for the red one or whatever. And then you're taken on this journey.
Speaker 1:And I believe when they unbox them, there's like two stages to the unboxing. You take it out of the box, and then there's packages tied up,
Speaker 3:So you there's a box.
Speaker 2:Is when you have your dog rip its
Speaker 1:head off. And see what's inside.
Speaker 3:What was what was this? So there's the box and then you there's like a nice like opening, like, you like rip it. It's like nicely packaged. And then inside there, there's a little bag. And then inside the bag is the actual
Speaker 1:Yeah. Yeah. Yeah. Boy. Yeah.
Speaker 1:So so even that, like, lends itself to, like, keeping you engaged for sixty seconds, which is going to drive more virality in the in the feed.
Speaker 2:Aaron Frank, partner at Lightspeed Yep. Says, I have the largest single collection of LaBooBoos
Speaker 1:Nowhere.
Speaker 2:In America. No. I'm kidding. He texted me and said, this is hard to watch.
Speaker 1:This is hard to watch.
Speaker 2:So sorry we're we're forcing you to sit through this, Aaron.
Speaker 1:Let's play a little bit more of the journal video.
Speaker 2:Yeah. Let's pull it back up.
Speaker 1:Yeah. Keep going. Of Pop Mart. 50 year girl was founded in old school. Wang Ning, as a
Speaker 2:Lawrence in the chat says my startup has done 75,000,000 in unboxings. Say more.
Speaker 1:Yeah. Elaborate, please. 19, over 70% of top Tamagotchi for real should come back. AI powered Tamagotchi. That's a good business.
Speaker 1:We've done is just added our own flavor to that. Yeah. Now the company has more than 500,000 venues worldwide. Southeast Asia. When you decide to splurge on a PopMark blind box, which could cost around 20 to $30, you don't go in totally blind.
Speaker 1:Take this collection. There are six possible characters you could unbox, and a secret one that you have a one in seventy two chance of One of the things that the brand can do to keep engagement, to encourage consumers to get a little more excitement out of it, is to label the box. This one says,
Speaker 4:have a seat.
Speaker 1:I know people people throw the satanic panic around a lot. Like, white monster monster energy drink. There's like a whole six six six. It's satanic. But it's always unclear if it's like the the founders are are like poking fun at satanism.
Speaker 1:Like like no one accuses like John Carmack of being satanic by or I mean, guess people did when he released Doom. But in in Doom, it's like you're clearly playing as a as a mortal, like killing the demons. And that's the name of that. That's that's the virtue of the game.
Speaker 2:Aaron just sent me the the stock chart for Build A Bear. Have you
Speaker 4:seen that?
Speaker 1:Oh, yeah. Build A Bear is ripping Does Build A Bear have loot boxes yet? That could be the next unlock.
Speaker 2:Build A Bear is up It's outperforming Nvidia, I believe. 470%
Speaker 1:over the
Speaker 2:past five years.
Speaker 1:It's absolutely ripping. Who's clapping?
Speaker 2:Build A Bear blind boxes. No more building. Just just gambling, children. Just come in come into the store.
Speaker 1:Yeah. Yeah. If Lubu is like the slot machine that you could be pull out of the the vending machine, Build A Bear should turn it into like a game of like high stakes
Speaker 2:Has anybody a lot done like remote LaBooBoo openings? So it's just actually like
Speaker 1:I think I've seen that. Yeah. Who is it? Blake Robbins posts about this a lot, how there's like apps in the app store that
Speaker 2:are Oh, it's probably happening on like Whatnot, to be honest.
Speaker 1:Well, have you seen have you seen the Claw game? So there is a there is a an app that you can download and you can pay real money to use a a claw in the real world to pick something out of a out of a, you know, a a a machine or like a bucket. And whatever you pick out, you get to keep, and they will mail it to you. Wow. And so it's not technically gambling.
Speaker 1:Somehow, they got something like loophole there.
Speaker 2:Very Right now on whatnot, there's like seemingly hundreds of streams selling Labubus.
Speaker 1:Wow. Don't gamble, folks. Don't gamble on compliance. Get on Vanta, automated compliance management, improve trust continuously. Vanta's trust management platform takes the annual work out of your security compliance process and replace it with continuous automation, whether you're pursuing your first framework or managing a complex program.
Speaker 1:Anyway, the last two years of what's interesting is the last two years of of sales in in of Lububu have been heavily driven by international expansion. They've definitely figured out how to take the brand abroad. It was predominantly growing in Mainland China. And I believe it's still growing. It's doubling in China, but it's also like seen maybe like a 10x increase in international sales over the last two years.
Speaker 1:So it's on a tear. It's on a tear. We'll see. We'll see how people respond. We'll see how the American toy companies respond.
Speaker 1:I feel like this is like the the horse has left the the stable. The cow has left the barn. The dog has left the dog.
Speaker 2:The children yearn for the slots.
Speaker 1:They do. They're gonna they're they're gonna figure out how to gamble one way or another. I mean, what what's the alternative? Like ban La Boo Boo?
Speaker 2:Airwon Airwon blind boxes combo plates.
Speaker 1:Yeah. Combo plates.
Speaker 2:You might just get the worst slop bowl of your life. How about sweet green blind
Speaker 1:Or you get 12 ounces of blue green You
Speaker 2:might get a bunch of steak. You might get a bunch of kale.
Speaker 1:You might get some caviar.
Speaker 2:Never know.
Speaker 1:Anyway, should we pull up this old clip? We're going back nine years ago. Apple missed earnings. And Yeah. Tim Cook went on Mad Money with Jim Kramer to talk about the business and explain what was going on.
Speaker 1:It's called Executive Decision. I wanna play this and revisit Apple CEO Tim Cook on Kramer. It's a very interesting discussion. Let's play it.
Speaker 2:Pull it up.
Speaker 5:Alright. Tim, there's a curious, really strange disconnect between what I read and hear on Wall Street about Apple and this. Because if you It's gonna be an impossibility to pry this for me. Cold dead hand time. You can't.
Speaker 5:And yet, when I read the stories, it seems like people think it's over. How could it be that you can't have this ever, or the ecosystem, but it's dead? Yeah. I I
Speaker 1:It's crazy. The narrative in 2016 was was like apples apples dead. It's it's Hewlett Packard of the era. Like, it's gonna just be flat. Let's keep playing.
Speaker 6:50,000,000,000 plus in revenues and 10,000,000,000 in profits. To put that in perspective, the 10,000,000,000 is more than any other company made.
Speaker 1:We literally made the most money of any company.
Speaker 6:But not up
Speaker 1:to streets the
Speaker 6:What we're seeing is that people are upgrading at a different rate, a lower rate than they did last year
Speaker 1:Okay.
Speaker 4:Pause.
Speaker 6:But still higher than the
Speaker 1:If you go go back a couple frames to where it's on the close-up of him, this one, it's very weird framing. You're not supposed to frame someone where they're looking off to the side and they're framed like this. If you go to my close-up, like this so go to yeah. So if I'm like this, it's like and I'm looking off, it looks like I'm cornered in a wall. Like, it's bad framing.
Speaker 1:What you're supposed to do is you're supposed to have me in this third, and then I'm looking across the frame. And this looks more cinematic, and it looks like there's room. I'm not, like, backed up against a wall either way.
Speaker 2:Yes. So when is mistake? Era CNBC team. Free alpha. Free game.
Speaker 1:Yeah. I yeah. Yeah. I'm sure. I don't know.
Speaker 1:I mean, it but it is an interesting question because sometimes this stuff's deliberate, and sometimes it's just accidental. Like, sometimes, like, the cameraman is like, I wanna put the TV back
Speaker 2:there. Trying to make him look like he's backed up into a corner?
Speaker 1:That is something that happens in production. Like, it also happens accidentally every once in a while. But it's just it was just something that stuck out to me that it's like it it makes it look like like Cook is like kind of I don't know. It looks like he's in this like more tense scenario than just, like, having a nice conversation. It doesn't look as, like, cinematic and relaxing.
Speaker 1:And Kramer's in this odd position because Kramer is relaying what the what Wall Street is saying about Apple, but he's actually kind of steel manning the bull case. And he introduced the whole segment by saying, like, I always say Apple's not a stock you buy. It's a stock you own. Like, you're supposed to own it. You're supposed to just hold on to it.
Speaker 1:It's a great company. He's super bullish. But then he's like, but I got this hedge fund guy who just sold, and he thinks you guys are done. Like, explain this. Debate this.
Speaker 1:And and he so he's doing I think he's doing a good job, and I like the way he frames the conversation. But but we can continue. I want to I wanna get to the part where he he talks about the the upgrade cycle. So let's keep let's keep playing.
Speaker 6:At a different rate, a lower rate than they did last year, but still higher than the the year before. And so we had this abnormally high upgrade rate last year as people bought into the iPhone six. And now we're comparing to that along with the other things going on that many companies are facing with currency rates and macroeconomics, etcetera.
Speaker 1:But So basically, what he's saying is like is like we've been on this tear where, like, no one had an iPhone, and so people were just, like, coming on. And then and then there were huge leaps between iPhones. So everyone was, like, upgrading constantly. Constantly. You go from, you know, not having three g to having three g or not having a retina screen or, you know, for the first time, you have huge multiple cameras.
Speaker 1:The cameras get dramatically better to, like, that kind of slowing down. And he's kind of defending that and being like, but it's gonna be fine. And he actually calls out services revenue for the first time saying like, hey, it's like it's like this it's like a pretty good business.
Speaker 2:Basically a toll booth.
Speaker 1:It turned Pretty into tired an absolute monster of a business where now he has to say like, oh, don't even talk about that. Oh, services? You wanna talk about movies? Yeah. We make some movies.
Speaker 1:Anyway, continue.
Speaker 6:I I I couldn't disagree more. Okay. So, here's what I see. We're in some incredible markets. The smartphone market, eventually everyone in the world will have a smartphone.
Speaker 6:Penetration today is in the forties. Long way to go. Markets like India. Yeah. The LTE penetration is zero.
Speaker 6:We've got great innovation
Speaker 1:new did not have
Speaker 6:will incent Did not have have iPhones today to upgrade to new iPhones.
Speaker 5:I will need something else because I
Speaker 6:don't will need something
Speaker 5:But I can't think of anything else that I need.
Speaker 1:This is good.
Speaker 6:I but we're gonna give you things that you can't live without that you just don't know that you need today. Okay.
Speaker 1:This is great. This is great. Guess always been the objective. Yes. Yes.
Speaker 1:Tim, later, he says, like, I I don't wanna, like, leak what we're working on, but they came out with iPod AirPods, Apple Watch, AirPods Pro, HomePod. Like, some of those were not huge, but the and the Vision Pro is still early. But the AirPods and the Apple Watch, like, went on to, like, become, like, massive, massive drivers of growth for Apple. But you just can't really
Speaker 5:Versus what we know, which is that other than say the Netflix bill, maybe the Amazon bill, you can put things on this, whether it be my music, I've got the family plan, whether it be because I've got a lot of pictures and I do the iCloud backup, the Apple Pay. Why do people not talk about the fact that this is not a dead device? It's something
Speaker 6:that we belong to. I think in fairness, we didn't talk about it a lot until recently, and so I I take that. But but as you say, services now is the second largest revenue segment at Apple. It was for last quarter. It was for the first half of the year as far as that goes.
Speaker 6:And so, last quarter, we were at 6,000,000,000, up 20%. It's a fast growing. And you look at what it is. It's things like the App Store. You go and you might apps It's like, I'm gonna buy.
Speaker 6:The sale. You might subscribe to Apple Music. You might use Apple Pay. You might buy songs. You might rent movies.
Speaker 6:And so, it's all of these things. And It's
Speaker 2:a tollbooth your Now
Speaker 6:And that's That, of course, is based on how many people are using our devices, how many devices out there. And there's over a billion devices in use. This is huge.
Speaker 5:See, because I I I Exactly. I figure when it gets to 1,500,000,000, some There's a number where we'll be thinking of the average use each month and the average pay to you. It's not there yet. In the interim, what defines the story would be that China's fallen off. That China, which you said in the previous quarter was going pretty good, the beginning of this last month of the last quarter was not that good, has now become clouded out everything else.
Speaker 5:Right? Wrong? Should be? Shouldn't? You've talked endlessly about China, middle classification.
Speaker 5:What's happening there and how did it happen so fast that many didn't see it coming?
Speaker 6:Here's what here's what we see going on in China in the short term.
Speaker 1:In the
Speaker 6:short term, the iPhone upgrade rate affects all countries, including China. The great thing is the switcher rate in China is huge. 40% up over the first half of last year, the first half of this year. This is huge. So these are people switching from Android smartphones to iPhone in China.
Speaker 6:Economy, clearly not as strong as it was a year ago, softening. Currency, weakening. And so you've got a confluence of items in there, some that are Apple specific like the upgrade thing that we talked about, some things that are more general that affect everyone. However, here's the way I look at it. Okay.
Speaker 6:Two years ago, we had enormous sales. And so last year, we and last year we did even better, 80% better. So we grew 80% over the previous year. This year, in in in constant currency in Mainland China, we were down seven. So if you look at it on a two year basis, Apple grew 70% in China.
Speaker 6:It's hard pressed to say those aren't good results.
Speaker 5:Okay. I wanna stay on China for a second because the stock last week was because your guidance. Second leg down was a man, Carl Icahn, who had been closely affiliated talking about a no brainer Apple, who says, look, China's an issue. Now, sold before be be before we knew anything about the China State Administration of press publication, radio, film, and television blocking Apple iBooks and iTunes movies. Concerned at least
Speaker 1:I was like, yeah. You can sell iPhones but not
Speaker 2:We don't want the books. We
Speaker 1:want your your American books.
Speaker 5:But how about
Speaker 1:In this country.
Speaker 5:How about the fact that there is an encroachment issue at the lower end? And is that something that could have slowed Apple sales down?
Speaker 6:No. I I I think what you see in China in in general is the smartphone industry isn't growing.
Speaker 2:Okay.
Speaker 6:There's movement between different suppliers of smartphone. But I I think in the areas that we play, we're doing quite well. And in the last month, I'm thrilled at what we've seen with the iPhone SE launch that's been there. This is the phone that we just shipped that packages a whole bunch of our technology from iPhone six s into the four inch form factor. And so that looks very strong.
Speaker 6:In terms of the the books and movies Yeah.
Speaker 2:It is interesting. A lot of
Speaker 1:the China issues have
Speaker 2:really just started to hit
Speaker 1:Totally. In the last Yeah. And so it was like A couple of icon was like correct that there was like something happening in China and like maybe you should read into the iBooks ban and the iTunes ban and like Apple
Speaker 2:is not in the top five
Speaker 1:smartphone But it took it took almost a decade for that narrative to actually play out. And even now, I don't think that they're, like, weighed down. I think they're just kind of flat. And so, like, there's they still have a big business there. And it's just like that that thesis, like, didn't really play out.
Speaker 1:And I feel like I feel like Warren Buffett invested, like, right around this time, and so must have, like, seen this interview and been like, yeah. The the the market is is wrong. The the the the price to earnings ratio was was like crazy, crazy low at this time. It was very much like this, like, huge stable business and
Speaker 2:Tim was Tim was certainly right about AirPods or just net new products that people Totally. Didn't even know that they would want. Yep. Last year, AirPods did around the same amount of revenue as Square and Cash App combined. So Square blocked at 24,000,000,000.
Speaker 2:Yeah. AirPods did 22,000,000,000.
Speaker 1:That is insane. Okay. We can I I think we can wrap that up? There there there's a bunch more there. You can go watch the full thing.
Speaker 1:It's on YouTube. Anyway, let me tell you about graphite.dev code review for the age of AI. Graphite helps teams with GitHub chip higher quality software faster. Gets there for free at graphite.dev. This is a crazy story from Eric Bergman.
Speaker 1:He says, I got scammed for 1,250,000.00. I feel ashamed and stupid. The story starts with me getting a phone call from mister Beast and Mark Rober. They asked me to donate money to Team Water to build wells in Africa and help people get clean water. I'm surprised by their call.
Speaker 1:We've met before but haven't spoken in years. I take a few days to think. I focus on learning more about the water crisis in the world. I decided to donate $1,000,000. Mister Beast gets excited about this and tweets to the world about the donation.
Speaker 1:I'm proud and excited to be part of this amazing campaign. About a week later, I get a message from Team Water on WhatsApp on my personal phone number. They are excited about the donation. They invite me on a trip to with the top donors to Africa to see the Wells being built and to do a few days of wildlife safari. To go to Africa and see Wells has been a long time dream of his.
Speaker 1:He says he's excited to go. He immediately says yes. Then they add him to a WhatsApp group with some other top donors. Mister Beast is in the group, Mark Rober. There's other folks.
Speaker 1:Toby Lutke from, from Shopify is there. Aiden Ross, the streamer is there. Says he can't believe he's in this group. He feels like a four 13 year old boy. They're all chatting, having good banter going on.
Speaker 1:Find myself writing a message, then deleting what I wrote because I didn't feel cool enough. I write it again, then then I delete it. I can't I can't believe I'll be traveling with all these people. The conversation goes on for about a week. It's Friday.
Speaker 1:I'm heading in for for a weekend trip with a bunch of my friends. I've been looking forward to this for a month. We have a packed schedule and and very excited. On Saturday, Jimmy writes in the chat. It's mister Beast and tells us about this other opportunity.
Speaker 1:He just signed a deal with Coinbase, one of the largest crypto exchanges that will launch their own crypto coin. As part of marketing collaboration with Jimmy, he's gotten the chance to buy in early on this coin. As a thank you, he wants to extend this offer to anyone who donated over $1,000,000. Everything is secretive, and it's important to act fast. This is where I should have stopped.
Speaker 1:When someone acts needs you to act fast, it's often to get you to do something without thinking. But I didn't. Everyone in the chat gets excited about this. I know some of them are real crypto experts, and they jump on this opportunity. I don't know much about crypto, but the 13 year old boy in me wants to belong.
Speaker 1:If they are excited, I wanna be excited. Also I don't wanna be the only one on the trip to Africa that didn't join in on the investment. I find myself calling a crypto friend telling him about this, and he says that if Coinbase is launching a coin and you can get early access to it, it's a sure win. I get even more excited. I'm very I'm very distracted.
Speaker 1:He doesn't wanna be in his head right now. Blah blah blah. He says, let's go. Within a few year within a few hours, he sent $500,000 in crypto to a wallet that he was given over this chat. The chat's going strong.
Speaker 1:People are even more excited. Other people want in, but he's too, Eddie from Stake wants in, but he's too slow. When he asks if he can get saw it's, if he can get involved after the deadline, he's told that he's too late. I read it, and I can't believe a guy like that gets rejected. The next day, Jimmy writes again and says, there's a new chance to invest.
Speaker 1:However, the price has gone up from $0.15 per coin to from 15¢ per coin to 30¢ per coin. The the maximum investment in this round is $750,000. I call my friend again. I tell him the billionaire that got rejected and how everyone else is buying in again. I'm still at the event.
Speaker 1:I'm still super distracted by other things. And we end up falling forward again, sending another $750,000. Now it's Monday. The retreat has ended, and I'm heading home. I still have a good feeling about all this, and I'm excited.
Speaker 1:I'm also exhausted after the weekend. Lots of experiences to process and far too little sleep. On Tuesday, Jimmy writes one more time in the chat saying, this is the final chance to get it. The price is now 45¢, and everything up in up up until now has been taken. Once again, I call my friend, and we say, let's go.
Speaker 1:We're about to send the money, but this time something makes me stop for a second. Something and I see some of the some of the details are off. I know that I know that Aidan Ross is American, but his phone number is British. The first time since the chat started, I called Jimmy just to confirm everything. And he says, what are you talking about?
Speaker 1:That's a punch to my stomach. I say, please say that you're kidding me. And I sent him a printout screen screenshot of the chat. He looks at it and says, wow. I don't know what to say.
Speaker 1:Please tell me you didn't send them any money. And he says, I sent them 1,250,000.00. The realization sinks in. The first phone call from a week from a few weeks ago was the real MrBeast, the real Jimmy. The fundraiser for Clean Water was Jimmy, the real Jimmy.
Speaker 1:But the person reaching out from his team wasn't on his team. It was a scammer. He just saw the post that he had donated and said, hey. I'm on the team that, you know, is involved in the donation. Come into this chat.
Speaker 1:I'll set you up. And and everyone in that chat was fake. And so it was all very skillfully orchestrated. All the people in the chat were fake. All the banter was fake.
Speaker 1:The trip was fake. I feel the shame inside, the regret, the sadness, anger. I've been fooled. I so deeply wanted to belong to this group. I acted way out of character.
Speaker 1:I trusted the fake Jimmy. I followed peer pressure of the billionaires and superstars. I broke many of my own principles of how to make decisions. At least there was a silver lining. He's been scammed before.
Speaker 1:It was a fortune.
Speaker 2:A silver lining.
Speaker 1:Silver lining is that he's been scammed before. That time he felt so ashamed. Didn't tell anyone. The shame kept haunting me. The fur this time, the first thing I did was tell my wife.
Speaker 1:Later, I wrote to tell my parents and my brother, then a group chat with many of my closest friends. I've gotten so much support. He's sharing the he's sharing the story now. And, it's a pretty wild it's a pretty wild scheme to set up all these fake accounts and and have someone, you know, pretending to be Aidan Ross. And Aidan Ross, bro, raised 12,000,000 for clean water, and he's drinking it all himself, crying emoji, crying emoji.
Speaker 1:And it's, like, somewhat believable in tone. And they and they did, the like, these scammers really, really did a crazy, crazy job here. So be careful out there. One of the hottest takes on this is that this guy runs some sort of gambling company or something like that. So people are having fun with that, the fact that his his business is gambling and he got and he clearly likes gambling and so he took a gamble on kind of a wild investment.
Speaker 2:But Yeah. How do you run an online casino and not and and send $1.01 and a quarter million
Speaker 1:It doesn't seem odd.
Speaker 2:To some random address claiming that Coinbase is gonna launch a token when they already have a chain that doesn't have a token
Speaker 1:And they have a public stock and plenty
Speaker 2:of stock. Now I think I think this
Speaker 1:is reads as like This feels karmic. Yes. Because because it should set off red flags as like this would be insider trading if it was actually going on. Even if people I respect are insider trading from first principles, I should think like, no, I shouldn't do that. This is wrong.
Speaker 2:He has one of his slot machines. It's called Le Bandit.
Speaker 1:Le Bandit. That's the one armed bandit. That's what the slot machine is called. When you buy, like, the actual machine
Speaker 2:Oh. It's called a It's stealing Your coins.
Speaker 1:That is hilarious. The deter I no name. I I I didn't realize that's that that I never put those together.
Speaker 2:Great.com. Great domain.
Speaker 1:Insane domain.
Speaker 2:Funny to use it for gambling. Yes.
Speaker 1:It's also funny to It's a Swedish initiative. It's like, maybe it shouldn't be. I don't know. Like, it apparently, the the site helps you find, like, the correct
Speaker 2:What were the comments like on this for people?
Speaker 1:People were upset. People were like, yeah. This like, they're they're they're not a fan of this guy's business. But it is it is a good cautionary tale. And it's a wild story.
Speaker 1:It's
Speaker 2:I'm sure Eric's I'm sure Eric's a nice guy. But Yeah. The fact that he's advertising his online gambling website as great.com. Yep. A Swedish initiative.
Speaker 1:It's pretty crazy. Pretty crazy story.
Speaker 2:It's a Swedish initiative. Online gambling. To do what? By Sweden.
Speaker 1:Yeah. I don't know. Anyway, stay out of the stay out of the trenches. Stay out of the the casinos. Just focus on analysis.
Speaker 1:Data and analysis. Should use Julius. What analysis do you wanna run? Get chat with your data and get expert level insights in seconds. Ask Julius to analyze your data.
Speaker 1:You pour all that information in Julius, you probably get a better result.
Speaker 2:That's right. Or you get that new Garmin
Speaker 1:Yeah. Horse tracker.
Speaker 2:Horse tracker. Yep. Take that data. Into Glyde is under
Speaker 1:skin to the long term friends of your horse.
Speaker 2:Better than anyone else.
Speaker 1:Yes. Well, another more enjoyable
Speaker 2:This is
Speaker 1:thing that you can do.
Speaker 2:Important. There's a new food item at Air Force football games this year, our b two bomber nachos.
Speaker 1:It's amazing. They didn't
Speaker 2:just go with the black and
Speaker 1:This is American innovation right here. Yep. This is great.
Speaker 2:The chips are the chips are not b two bomber shaped. So
Speaker 1:They are. The chips are are b two bomber shaped and the box is b two bomber shaped.
Speaker 2:This is capitalism at its best.
Speaker 1:Oh, this is this is like the Air Force Academy like every single one of their football games will
Speaker 3:have Yes.
Speaker 1:This. That's really cool.
Speaker 2:Yeah. I love that. Took a call outside the hospital while his wife was giving birth and then didn't invest. This this is insane levels of angel investing addiction. Seriously.
Speaker 2:This is like Can you How is this different than going to gamble
Speaker 1:I mean, there are some crazy, crazy stories. I heard one about an influencer who's like, the the kid was like in the pool. Did you hear this story? And he was Oh, very, very dark. Very, very dark.
Speaker 1:Yeah. One of my buddies is like very Sogger and Jetty is very, very acutely worried about the online gambling epidemic and has been tracking it very closely. We we we we gotta have Sogger on the show and just chat about that because he
Speaker 2:has
Speaker 1:a bunch of good takes. Anyway, yeah. Maybe log off. Touch grass. Touch the inside of the hospital when you're giving birth.
Speaker 2:Get yourself some grass.
Speaker 1:Get yourself some grass and, you know, maybe maybe you get into the series a. It's it's a company. Have you heard of Concentration?
Speaker 2:Or just text and say, I'm in I'm can you can this wait twenty four hours?
Speaker 1:Totally. Yeah. Can it wait twenty four hours? Or also just like, hey, I'm the type of person that will turn down your phone call while I'm at an important family.
Speaker 2:Every time I'm having a kid and my wife is giving birth, I won't be available.
Speaker 1:Yes. Exactly.
Speaker 2:And you can expect that out of me for the duration of your of
Speaker 1:Yes.
Speaker 2:Of your time
Speaker 1:And that should be a massive green flag for wanting to work with someone. It should be it should make you wanna work with them more. It should be like, okay. You're the type of person that actually has some family values. I'm gonna I'm gonna sneak you in late to the deal.
Speaker 1:I'm gonna let you in on an uncapped note so you can get into the next round. I I I I want to work with you because you're actually you actually have some, like, backbone. It's crazy.
Speaker 2:Last year. Imagine you're three years old and your parents are addicted to angel investing. Nonstop refreshing Carta and and cold emailing founders. Sad that many kids in SF grow up like this.
Speaker 1:It's crazy you were joking and it's like a real thing. It's terrible. Anyway, let me tell you about ProFound. Get your brand mentioned on ChatGPT. I mean, reach millions of consumers who are using AI to discover new products and brands.
Speaker 1:You can get a demo. Go to ProFound. This post by Steve Maguire. Let's read through this. They were cracking up not simply because grades had gotten so high, but because they knew how little students were doing to earn them.
Speaker 1:Harvard faculty recognized that grade inflation has become absurd.
Speaker 2:Their final meeting of the spring twenty twenty four semester after an academic year marked by controversies, infighting, and the defenestration. Defenestration.
Speaker 1:Thrown out of a tower. Defenestration. Yes. But this is a metaphor.
Speaker 2:Yes. Harvard's faculty burst out laughing as was tradition. The then dean of Harvard College, Rakesh
Speaker 1:Corona.
Speaker 2:Corona. Corona. Had been providing updates on the graduating class. When he got to GPA, Corona couldn't help but chuckle at how ludicrously high it was.
Speaker 1:About 3.8 on average. The rest of the room soon joined in according to a professor present at the meeting.
Speaker 2:Everyone's just laughing.
Speaker 1:Just like, yeah. Everyone got an a plus. Every the average was a plus. I'm pretty sure 3.8 is a plus. Right?
Speaker 1:Like, isn't isn't 3.5 a? 3.2 would be a minus, 3.8 would be like a plus?
Speaker 2:It's different in high school, though. Right?
Speaker 1:I don't I don't know. I mean, like, it's supposed to be out of four, and three point eight is really, really close to four. And so I would assume that I thought it would be yeah. Four o is a perfect score. So it's, like, extremely close.
Speaker 1:And Steve gives more context here. He says twenty five years ago, Harvey c minus Mansfield decided he would, quote, distribute two sets of grades to his students, an initial grade he thinks they deserve, and then a second grade, the one that will go on their transcript, which will be based on Harvard's systems of
Speaker 2:What's the point grade? Really? What's I mean, to to
Speaker 1:be Because he wants to just give the feedback
Speaker 2:of, like, you I'm don't mess not saying what's I'm saying what's the point of grade inflation at a school like Harvard, right? If 99% of the value is that you went to Harvard and got the degree, and then GPA is tacked on as
Speaker 1:Well, HBS does that. HBS does grade nondisclosure, so you cannot find the grades. Like, if you are hiring someone from HBS, I believe, I don't know. This was told to me by somebody who went to HBS. You can't email Harvard and say like, I wanna know their their grades.
Speaker 1:And so there's a whole bunch of other like, whereas law school, think it's, like, perfectly ranked. And so you just know your ranking. And so even if there's inflation, it's like we still know where you are on the curve. Just very different cultures. Would imagine that in undergrad, it's more about, like, basically NPS.
Speaker 1:Like, if if if if it's if it's discovered that employers are seeing that, oh, everyone that goes to Harvard is dumb because they get c's, and everyone that goes to Yale gets a's, they're smart. Then it's like the the buyer, the the person that pays full tuition will say, well, I'm gonna pay and donate and get my kids into Yale because that's where they get a's. It's like a very weird perverse incentive, but I think that's probably a little bit of what's going on. And then there's just like immense pressure from from everyone in the ecosystem, and and there aren't that many people that want, you know, fair grades or, like, or downward pressure on grades.
Speaker 2:Well, speaking of a student of the game, Pat McAfee is set to play the role of US marine drill instructor in the Mosquito Bowl Love it. Which is directed by Peter Berg and now in production. Following the attack on Pearl Harbor, four of America's top college football stars set their fame aside to enlist in the marines as they prepare for the brutal invasion of Okinawa. They'll play in a legendary game featuring some of the greatest players in history, a game that for many will be the last they ever play. Doesn't mean This is gonna be crazy.
Speaker 1:He looks
Speaker 2:this role.
Speaker 1:Like, it's crazy. You see this image and I'm like, oh, yeah. He's been acting in Hollywood for two decades. Like, I feel like I've seen him in this role before. It's amazing.
Speaker 1:Congratulations to Pat McAfee. Pat says, an honor of a lifetime. Thank you for the opportunity. It's fantastic.
Speaker 2:This is gonna be amazing.
Speaker 1:And then and then he's
Speaker 2:How's he gonna fit filming into college his
Speaker 1:sports earlier like, need this in the film. It's Pat laying on the ground drinking a beer. It's great. So funny. Anyway, if you're planning a movie, you're trying to plan everything out.
Speaker 1:Get on linear. Linear's purpose built tool for planning, building products. Meet the system for modern software development, streamline issues, projects, product road maps. Maybe your project is building a movie. Start building it linear.
Speaker 1:The New York Times profiled Snackshot.
Speaker 2:Let's go. Let's go. Congratulations. Andrea.
Speaker 1:She says, it's been the most fulfilling five years of her life getting to work with the biggest food and beverages companies the world, and swaying the conversation around what we find in grocery stores. Thank you to everyone who has supported her journey.
Speaker 2:Really amazing to watch. And this is why I love You the can be you can you can build a business obsessing over topics that Yes. One Yes. You know, would have thought at some point Yes. That, you know, just weren't weren't large enough Yeah.
Speaker 2:Justify.
Speaker 1:Yeah. Very deep but very insightful. And she's Huge impact.
Speaker 2:Focusing on something that I think is real. She says, I like to call our generation the snacking generation.
Speaker 1:Snacking generation. Says Andrea Hernandez, the creator of the Snack Shot Snack Shot newsletter and Instagram account. She knows your favorite snack before you do. Your next favorite snack before you do, says the New York Times.
Speaker 2:And and she's yeah. She really is a snack critic. Not it's It's not all c p all new CPG is good. She's willing to call out the silly stuff. Yeah.
Speaker 2:You know? Maybe we don't need the the twentieth prebiotic protein creatine. Although that does
Speaker 1:sound What was the latest thing? It's like combining protein with a psilocybin. That was it. An psilocybin gainer. Masking.
Speaker 2:Masking. I think I
Speaker 1:think I think that's what's on trend right now. With Snack Shot, miss Hernandez is doing the antithesis of what I grew up doing, positioning herself less as myth buster than as cultural anthropologist, whether prebiotic sodas are effective, is less less interesting to her than why everyone seems to suddenly be obsessed with them. In the five years since, Ms. Hernandez has become, at least in certain circles, a kind of snacking Nostradamus. When Andrea covers a product or a shift, it tends to ripple within the industry.
Speaker 1:Says Melanie, the founder of nonalcoholic aperitif brand Gia, in an email noting that Ms. Hernandez's observations have a way of showing up in group chats, brand conversations, and beyond. Snackshot offers observations, analysis, and industry scoops presented breathlessly, often without punctuation. A new nicotine energy drink is evidence. We have entered an era of the cocaine induced opulence, a sharp pendulum swing from the past decade of adaptogenic and mushroom coffees.
Speaker 1:J. Crew Retail releasing limited edition pasta is just the latest example of youthful appetite for affordable affluence. And man cereal, which we covered here, packed with two point five grams of creatine per serving. Well, that remains to be fully deciphered. But if you think that's the craziest thing I've seen containing creatine, you'd be wrong, says Andrea.
Speaker 1:Anyway, congrats on the post they even got. The New York Times even got BJ Novak to comment. He said a whole at the same time, she still operates with a modicum of anonymity, whole swath of her followers. Among them, the actor and comedian BJ Novak and Ellie Sussman, the chef behind the Sussman's Instagram account, know her only through SnackShot's Instagram where she posts steady stream of brutally precise memes. It's a little bit for everyone, says
Speaker 2:mister Precision memes. Precision memes. Well, did you see that company Buddha Juice?
Speaker 1:Yes. They're going public.
Speaker 2:Going public. Buddha Juice, which makes branded and private label citrus drinks, filed on Wednesday with the SEC to raise up to 22,000,000 in an initial public offering. Buddha Juice states that it is pioneering the ultra fat ultra fresh juice category through its end to end cold chain platform. Yes. It's anyways, they have company was founded in twenty twenty twenty thirteen and booked 12,000,000 in sales for the twelve months ending 06/30/2025.
Speaker 2:And so you don't see this
Speaker 1:right screenshot? Because this screen like, I I that the screenshot of the financials looks like something that was made in the Microsoft Excel template. It doesn't look like a normal SEC filing. It's not a screenshot of, like, what I would normally I don't know. It it it stuck out to me as, like, particularly, like, early stage financial aesthetics.
Speaker 1:But I don't know. Good luck to them. If they're gonna get
Speaker 2:out Send it.
Speaker 1:Wonder what's gonna happen. I have no I've I really have very little idea of what's involved in going public as a small cap or micro cap. I'm only familiar with the the traditional IPO, the DPO, the big, big companies going out that way, direct listings, and then the SPAC route, which seems to always hover around 4,000,000,000. It's like you go out at 4,000,000,000. When you're ready to be a $4,000,000,000 company, you go out as this $4,000,000,000 SPAC.
Speaker 1:I don't know why the number settled around there, but that seems to be the the the kind of default price.
Speaker 2:I know. Mean, look, John. Growing 20% a year.
Speaker 1:Yeah. I mean, it seems
Speaker 2:like a It
Speaker 1:seems like a fine company, but, like, you know, this is probably like a $20,000,000 business, maybe a $50,000,000 business. Like, I don't know. Like, we gotta get the Ridge guys on and get the actual actual value.
Speaker 2:It's very possible that retail loves the stock.
Speaker 1:Do people love Butta Juice? Is it a popular
Speaker 2:Well, I've never heard of it before but it's just it's just funny.
Speaker 1:Well, they probably have to pay sales tax.
Speaker 2:So Butta Juice,
Speaker 1:you gotta get on numeralhq.com. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Let's go through John,
Speaker 2:they didn't put this. I don't know if this ended up in the s one, but they have 7,000 followers on Instagram.
Speaker 1:Woah. Got it. That's got
Speaker 2:count for count for something.
Speaker 1:Do you mind you and Tyler running
Speaker 2:They've posted once this year, by the
Speaker 1:way. Only once? Wait. Hey. That's strategy.
Speaker 1:Yeah. I mean, we've posted, like, hundreds of times. Don't think we have 7,000 yet.
Speaker 2:Yeah. It's a barbell strategy.
Speaker 1:I I mean, one post that just does that well. That's very impressive. So congrats to the team over at Buddha Juice. We have some breaking news in the chat. X AI has sued a former employee for stealing trade secrets about Grok and taking them to OpenAI.
Speaker 1:I wanna learn more about that.
Speaker 2:The lawsuit said.
Speaker 1:You and Tyler to talk through this chief scientist of Meta Super Intelligence Labs potentially threatening to resign.
Speaker 2:Yep.
Speaker 1:I'm gonna
Speaker 2:I can give a little bit of info here. I'm just pulling it up now. Open sorry. XAI's lawsuit against Xu Shen Li says he took trade secrets in July shortly after accepting a job from OpenAI and selling 7,000,000 in XAI stock. Li admitted to stealing XAI files during a meeting on August 14.
Speaker 2:X AI later found additional stolen material on his devices that he had not disclosed. X AI asked the court for an unspecified amount of monetary damages and a restraining order blocking Lee's move to OpenAI. I'm not sure if there is much more info on this but
Speaker 3:Yeah. This is like just breaking. Right? Yep. It's kind of weird to to like physically like take materials.
Speaker 3:Right? Like you can imagine most of the secrets are just like, oh, it's like this new kind of like, you know, activation function or something that we use that you can just kind of like you don't have to like actually store like a big file. I would imagine for like training secrets, stuff like that.
Speaker 2:Yeah. You you you can imagine that a lot of what he learned at xAI, he would be able to pretty quickly implement over at OpenAI when starting. He wouldn't actually need the files. But, but who know? Who knows?
Speaker 2:Sounds like, if the complaint, is correct, it sounds like he already admitted to doing this. So we'll see what the damages amount to, but it'll be interesting to see if he can actually, according to his, profile right now, it doesn't appear that he's at, OpenAI at the time. So we'll see if they're successful in blocking the move to OpenAI. But clearly, Elon is not playing around. He's happy to use the courts to further XAI's goals.
Speaker 2:There was some more reporting. Shengjia Jiao, which is the co creator of ChatGPT, within days of starting at MSL, Meta Super Intelligence Labs, threatened to quit and return to OpenAI. He actually even signed employment paperwork with OpenAI to rejoin. That's crazy.
Speaker 1:That is very, very crazy. This is extremely dramatic in my opinion. Tyler, what what what's your take? What do we know about this particular AI researcher?
Speaker 3:This is like very this is not a good sign for MSL. I mean, he he's, like, the head of MSL, so he's leading the entire
Speaker 2:team.
Speaker 1:He was on the board when you put up the whole chart. Right?
Speaker 3:Yeah. I mean, he's he's the head of MSL. Like, he directly to Alexander Wang.
Speaker 1:Yeah. So do they have anything in here about his motivation? One of the few remaining big tech founder CEOs, Zuckerberg has relied upon longtime acolytes, such as chief product officer Chris Cox to head up his favored departments. But in the battle to dominate AI, the billionaire shifting towards new and recently hired generation of executives including Zhao, Scale AI CEO Alex Wang and former GitHub chief Nat Friedman. There's lot of big men on campus, said one investor who's close to some of New Meta's new Let's
Speaker 2:give it up for big men on campus.
Speaker 1:I love it. Nice to campus. Adding to the tumult, a handful of new staff have already decided to leave after brief tenures. Like, what could you have possibly learned in, like, a month?
Speaker 2:By the way, Crazy. We spend so much time on the show Yeah. In in normal everyday conversations that I have off air, which someone says something like, there's a lot of big men on campus. My immediate reaction
Speaker 3:Let's give it in the
Speaker 1:actual conversation. Let's give it up. Let's give it up for bringing your work everywhere and randomly clapping when you're interacting with people.
Speaker 2:It really adds to the conversation.
Speaker 1:Okay. So he said that while so Rabih Rasab Rasab Agarwal, a research scientist who started at Meta in April, announced his departure in a tweet on X on Wednesday. He said that while Zuckerberg and Wang's pitch was incredibly compelling, he felt the pull to take on a different
Speaker 2:I mean, this just sounds like he's starting a company.
Speaker 1:Well, so so Yeah.
Speaker 3:That researcher was never in MSL.
Speaker 1:Okay.
Speaker 3:He was just I think he was another Sold ballet.
Speaker 1:So he's like, they wanted me, but like, I can't, you know
Speaker 2:You guys are incredibly compelling. Yeah. And I
Speaker 1:know you just gotta go a different direction.
Speaker 2:Ask me to join the team, but I'm a I'm a take my talents somewhere else.
Speaker 1:Yeah. We're actually good.
Speaker 2:You never you never invite him.
Speaker 3:He was on I think I I don't know exactly if it was fair or just like Meta AI team. But I I I don't think the MSL team was, like, even really there when he was during his tenure.
Speaker 1:Yeah. It is an it is it is such a funny dynamic because, like, MSL is, like, the hot new thing. But, like, at the same time, like, you could wind up being at a different in a different org, not like a new hot thing, and actually have, like, a huge impact and have a great career and, like, really enjoy it and be comped well. And so it's gotta be a whole bunch of like, you know, odd odd dynamics back and forth. They don't I don't think they got anything about this motivation.
Speaker 1:This is just purely like, you know, some some leaked like like, you know
Speaker 2:This is one one meta research scientist, said one more reorg and everything will be fixed. Just one more.
Speaker 1:He said that's hilarious.
Speaker 2:He said that on x.
Speaker 1:Yeah. Wow.
Speaker 3:I think like it's
Speaker 2:good to have a little fun with it.
Speaker 3:The the only possible reasoning I I can imagine is like the promise to join Meta was basically that like you're gonna have a ton of free compute. You can work on whatever you want. Yep. And then you get there and then Zuck or Alexander Wang is just kind of like, oh, actually, we're gonna do, you know, Instagram companions. Like, you have to Sure.
Speaker 3:Work on this, like, random project that
Speaker 1:It feels like yeah. I don't know.
Speaker 3:Or you have to work on ads or something.
Speaker 1:It it I mean, even the even the Instagram companions, like, even if you, like, say even if you wanna tell that story of, like, oh, like, yeah, stepmom and cow or whatever, like, that doesn't feel like an MSL project. That doesn't feel like, oh, yeah. They built a team. They launched something. Yeah.
Speaker 1:The idea
Speaker 2:that the idea that
Speaker 1:Those those that chat with a celebrity thing, that's been going on for like a year.
Speaker 2:Yeah. And the idea that he would, you know, have this maxed out offer to some cracked researcher and then say, like, get ready to work on the ads product. Like, that that that doesn't seem like what you would immediately put somebody like
Speaker 1:No. No. It it feels like don't work on any product. Work on the foundational research. Build the build the amazing model.
Speaker 1:Get us to the frontier.
Speaker 3:I I think it could also be like, imagine like, okay, you give these massive offers to a ton of people.
Speaker 2:Yeah.
Speaker 3:You can probably expect some of them are gonna be like, okay, I just made like a billion dollars. I'm not gonna work that hard. And then the rest of them are just like, well, the team is like only really half into it. I'll just go back to OpenAI where everyone is like actually grinding. Like, they have this vision of AGI.
Speaker 3:Yeah. Everyone is super driven. Even though here, I might make a little bit more money. Yeah. You know?
Speaker 3:Something
Speaker 1:like that. At the same time, like, just the idea of, like, being on any sort of implementation, I I just would be we'd be shocked if any of that's left up to MSL. It feels like their job is to build, like, basically an incredible AI API that can be vended into every single product team at Meta. And so, like, if you're on the ads team, you're like, cool. We're gonna get a new capability.
Speaker 1:Like, we're gonna get better AI researchers.
Speaker 2:I this.
Speaker 1:But it's not like the AI researchers can be, like, now in charge of ads. I don't know.
Speaker 2:I don't know.
Speaker 1:Anyway, what
Speaker 2:was that? Financial Times says multiple company insiders describe Zac as deeply invested and involved in the TBD team Yep. While others criticized him for micromanaging Can't that
Speaker 1:Can't win.
Speaker 2:Being surprised that that that that Zac is gonna micromanage something that he's investing tens of billions of dollars in.
Speaker 1:Yep.
Speaker 2:Seems silly. Wang struggled to align on a timeline to achieve the CEO's goal of reaching super intelligence for AI that surpasses human capabilities according to one another person familiar with the matter. Obviously, this is gonna be a debate. Like It's how do we move as fast as possible but at the same time what's realistic.
Speaker 1:Yeah.
Speaker 2:Yeah. Meta said this allegation was quote, manufactured tension without basis in fact that's clearly being pushed by dramatic navel gazing busy bodies.
Speaker 1:That's interesting. I think that's the real line. I think that's the real story here. Like someone went to the press with like a very salacious headline that's like sort of ridiculous and doesn't really doesn't really have a solid narrative.
Speaker 2:Meta also said while TBD Labs is still relatively new, we believe it has the greatest compute per researcher in the industry and that will only increase.
Speaker 1:That's fun. That's cool. Well, instead of chatting with the cow, chat with AI agent for customer service with fin dot ai. Number one in performance benchmarks, number one in competitive bake offs, number one ranking on g two with fin dot ai. Let's go over to Doge Designer.
Speaker 1:He has a video of SpaceX landing. He says this isn't CGI. We'll be the real judges of whether or not it's CGI Doge Designer. Let's play the video of Starship coming down and landing. What do you think, Jordy?
Speaker 1:Real or CGI? Maybe it's not CGI. It's generative AI. It's nano banana. It's Gronk five.
Speaker 1:No. This is incredible. Obviously, this is the higher res video from that camera that was livestreamed and
Speaker 2:Wait for the explosion. Oh. Wait for the explosion?
Speaker 1:You think they're gonna Oh. Fade to black beforehand.
Speaker 2:Yeah. They get it.
Speaker 1:Wait. Wait. Wait. Wait. Wait.
Speaker 1:Wait. Wait. A fade to black. Fade to black is a technically it's technically a computer generated image. Right?
Speaker 1:Because you are taking the frames of the video and you are adding an opacity. You're adding a black layer. What do you think?
Speaker 3:Can you do a fade, like, practically?
Speaker 1:Yes. But do you think that was practical fade? Do you think that they
Speaker 3:could have been on film. Yeah.
Speaker 1:You think they had a a neutral density filter that they were rotating over the lens at that exact moment?
Speaker 3:On kiddie pool the kiddie
Speaker 1:pool that was done post using computer generated imagery. I'm calling CGI, not on the rocket landing, but on the fade. I think the fade is CGI.
Speaker 2:Think you called it.
Speaker 1:I think the faded black, that
Speaker 2:looks like CGI. Video of the lift off.
Speaker 1:Yeah. Yeah. Let's see the the lift off. This is the real tinfoil hat. Ah, he
Speaker 2:in the chat says clearly v o three.
Speaker 1:Yes. V o three could pull it off. I would love to see if somebody tried to generate that in v o three, what it would look like. Anyway, let's look at the lift off of Super Heavy, the most powerful launch vehicle in history on sparse on Starship's tenth flight. I believe this is slowed down.
Speaker 1:Right? I think this is a slowed down video, but it's it is incredible. So this the first question is, like, how how are they filming this? You would immediately imagine that the camera would melt. Apparently, they're using a high speed phantom camera in custom water cooled nitrogen pure purged housings.
Speaker 1:They use sapphire windows and protective enclosures to survive the extreme heat from Super Heavy's Raptor engines. Either that or Photoshop, one of the two. Just kidding. It is remarkable.
Speaker 2:Sapphire and really strong air conditioning.
Speaker 1:Basically. Yeah. Yeah. Well, water cooling like an Eight Sleep. 8sleep.com.
Speaker 1:Get a pod five. Five year warranty. Thirty through thirty night risk free trial.
Speaker 2:I got a little cocky last night.
Speaker 1:Yeah. How'd you do?
Speaker 2:I had so many good nights of sleep this week.
Speaker 1:Yeah. Look at Jordy's drip. The chat loves the outfit. They're really they're really happy. Eight, sleep.
Speaker 1:How did I do? I I was up late last night. I got an eighty four.
Speaker 2:Got a ninety three Monday Monday, eighty six Tuesday, eighty four Wednesday, sixty eight Thursday.
Speaker 1:Thursday, I got a 95. I did great. What about last night? I got an 84. What'd you get?
Speaker 2:68.
Speaker 1:Hit that soundboard for me. I think it's clean sweep this week.
Speaker 2:How wait. What did you get on what did you get Monday night?
Speaker 1:Monday night? I don't know. Let me check.
Speaker 2:Monday Can't say.
Speaker 1:Monday night in 83.
Speaker 2:93.
Speaker 1:Oh, okay. You beat me then. So not a clean sweep, but I think I won best of five. Anyway, there is a battle. The timeline's in turmoil over a partnership between Cloudflare and Browserbase.
Speaker 1:Paul Klein, he's been on the show a few times, says, today, we're announcing an unlikely partnership. We believe that agents need reliable, responsible web access. That's why we're partnering with Cloudflare to support in support of web bot auth and signed agents, a new standard to allow good bots to authenticate themselves. Here are the details. And Varunam Ganash says, I get why Browserbase is doing this, but if perplexity doesn't step up, we'll be in a world where, no reason, Cloudflare gatekeeps the entire Internet and dictates how agent to agent interaction will evolve in the next few years.
Speaker 2:What's Perplexity's role in all this?
Speaker 1:I don't know. It maybe Perplexity has the ability to get around Cloudflare's agent user agent blocking. I don't know. I mean, I know Google has the ability to get around Cloudflare's user agent blocking because they have two bots. One is the Google bot that scrapes your and indexes your website, and the other one is the Gemini bot.
Speaker 1:And you can turn off the Gemini bot, but you can't turn off the Google bot without not showing up in search rankings. So, like, they're gonna get your data and they're gonna and you're gonna show up in the AI search review search, like the AI overviews. Maybe Perplexity is building something similar where it's like the option Perplexity has leverage over Cloudflare potentially because if if you're using Perplexity and Perplexity says, look, if you don't let agents interact with your website, we won't show you in Perplexity at all. I guess that might be a theory. I don't know.
Speaker 1:Yeah. Anyway, Gary Tan's not happy with it. He says, the Cloudflare browser based Axis of Evil was not on my bingo card for '25. Legalize AI agents. And Paul Klein quote tweets it and says, good morning from the Axis of Evil, and they're all wearing fucking hats, having fun on the timeline.
Speaker 1:I don't know how the axis of evil this is. I mean, I guess people are unhappy with the Cloudflare thing. I mean, it is just a default. People can go like, if you want to legalize an AI agent coming to your website, like, if you use Cloudflare, you can go turn that on. You can but the the main thing is that by default, Cloudflare blocks AI agents.
Speaker 1:So you have to go and configure it, but you can. I don't know. I don't know how disruptive it is to for Cloudflare. They don't control a 100% of the of the of the Internet. And then also, there are plenty of other companies that are being probably way more proactive about blocking AI agents.
Speaker 1:And, really, it's like it's a it's a cold war because, you know, the company says, oh, we don't want, you know, to be disintermediated by, you know, an an an AI company. And then the AI company is like, well, we're gonna go and build an RL environment with verifiable reward and be able to get over your CAPTCHAs. And when you watch ChatGPT in agent mode, it's often like, oh, I hit a captcha. I'm gonna try a different browser. Now, like, it just did that for me yesterday.
Speaker 1:Tyler, what you got?
Speaker 3:Yeah. You can also like, you can kind of always get around these things. It's like the there's like the meme of like the Chad web scraper versus like the Virgin like API user
Speaker 1:Yeah. Yeah. Yeah.
Speaker 3:Where it's like you can you can kind of always just
Speaker 1:The front end is the API. Yeah. It's commonly what
Speaker 2:I said.
Speaker 3:I I I think it's not like a massive deal.
Speaker 1:Yeah. I don't know. We'll we'll have to keep tracking it. It doesn't seem like it's a it's too much of a fight just yet, but we'll keep monitoring. Anyway, Adio, customer relationship magic.
Speaker 1:Adio is the AI native CRM that builds scales and grows your company to the next level. Get started.
Speaker 2:Coterie. According to Drew Fallon, Coterie nearing deal to be acquired by Mammoth Brands for $650,000,000 Reuters reported that Mammoth Brands, owner of brands like Harry's and Flamingo Mhmm. Is nearing an acquisition of the Baby Care diaper brand. Coterie is reportedly doing over 200,000,000 in revenue with 50,000,000 in EBITDA. A $650,000,000 price tag would represent three and a quarter times revenue and 13 x EBITDA.
Speaker 2:I remember when Coterie launched and it was long before I had children.
Speaker 1:Yeah.
Speaker 2:Yeah. And I thought, is this that great of a business? You sign a you you you get a customer and then like, you know, they use diapers for a little bit and then and then they they're gonna churn because they learn how to use the potty. Yep. And then I realized I've now I've spent like thousands and thousands of dollars Totally.
Speaker 2:With Coterie. They they probably Yep. Who knows what what our Same. Family's CAC was early on but seems like fantastic business. I they're they're like, we're we've been on a subscription I think for years now.
Speaker 2:Yep. And we run out and then we go Whole Foods and they're out. Like, it just seems like this infinite demand for for the products they make. So
Speaker 1:Yeah. I wonder how big the actual market is for diapers because that seems like the cap is that, like, you actually can't get a a user for life. Kids do grow out of them eventually. But it seems like they're the the business is certainly solid. What's interesting is are you familiar with Mammoth Brands?
Speaker 1:Are you familiar with where that came from? So Harry's you you know the story of Harry's. Right? Yeah. So Harry's, d to c shaving company.
Speaker 1:They launch with this massive fundraising round. They buy their supplier. They buy a razor blade manufacturing company. The razor blade and shaving industry was highly oligopolistic and very hard to break into because there were only a few companies that owned basically everything. I think it was Unilever and Gillette, and there were a few others that, like, had, like, vast majority ownership.
Speaker 1:And so Harry's figures out that if they wanna break in, they gotta buy the they gotta buy the manufacturer. They do that. They scale. They I believe they tried to sell the company and they got blocked. Yeah.
Speaker 1:And then they were thinking of IPO ing or something, but they just rebranded.
Speaker 2:Is this gonna be another brand? Antitrust victory where they end up getting blocked and they're
Speaker 1:Maybe. Maybe.
Speaker 2:The thing I like about this acquisition is is Mammoth like, it feels like if Mammoth just executes for twenty years and buys starts, like, acquiring the breakout brands instead of P and G, they'll actually be a a real new a a new consumer conglomerate.
Speaker 1:Yeah. And there's something there's something sort of maybe differentiated about so Harry's rebranded as Mammoth Brands. Like, it's not like Harry's sold to some sort of roll up holdco. They just became a parent company.
Speaker 2:Still Harry's. Well, no. No.
Speaker 1:No. No. No. The parent company now is no longer Harry's. It is Mammoth Brands.
Speaker 2:Yeah. I know. But Harry's is what they sell products.
Speaker 1:Yes. Harry's sells products, but then they also own Flamingo, and then they're gonna buy Coterie. And Harry's, like the team at Harry's, the owners of Harry's, have become like this holdco. And so instead of trying to spin up new D2C products and try and become like launching new things, they're actually just going out and using the cash from the business that's working to acquire new stuff, saying if we can't if we can't get if we can't sell, we're gonna buy. This is basically the takeaway.
Speaker 1:Yep. Don't know. That was my
Speaker 2:Interesting data point here. So Align Ventures led a $23,000,000 series a in Cotery in 2022. Align is the venture fund that was meant to lead Figure AI's round at a 39 and a half billion dollar valuation.
Speaker 1:Wow.
Speaker 2:So, Lion had invested, I think, previously in Figure AI. And so when Figure the the news broke that Figure AI is in talks to raise 1 and a half billion at 15 times its last valuation, everyone's like, okay. Who's leading? And it's like, okay. It's just like CPG fund.
Speaker 1:Yeah. That's interesting. That feels that feels not that Align Ventures, that doesn't feel particularly aligned. It feels misaligned to invest in both babies that wear diapers, new humans, new human labor, and then robots that don't wear diapers, new robotic labor. Those two things are actually at odds.
Speaker 2:What if what if the figure robots have diapers back here that they can pull out?
Speaker 1:And then they can diaper the babies. It's a beautiful symbiosis. How
Speaker 2:much would people pay to not have to change a diaper again?
Speaker 1:Potentially billions. Potentially billions. Jeff
Speaker 2:Dean made the Time AI one hundredth.
Speaker 1:Hit the soundboard for Jeff Dean. One of the greatest to ever do. Congrats to Jeff Dean. We got
Speaker 2:a whole bunch of finally is gonna pat himself on the back and think, I'm good at AI now. I actually might be decent at this stuff. I made the Time AI 100.
Speaker 1:Yes. And I saw in the chat, I didn't verify this, but somebody said that Google is hitting all time highs. Congrats to everyone at Google, including Jeff Dean. If you're looking to go long or short Google, do it on public.com. Investing for those that take it seriously.
Speaker 1:They got multi asset investing, industry leading yields, and trusted by millions.
Speaker 2:Dave Dave Graham Graham poll in the action that says TLDR diaper LTV. LTV industry sources confirm the average spend per US child over their diaper using years is between $1,800 and $2,100. That makes sense. That tracks. Yep.
Speaker 2:With Coterie, you get to spend even more. They're clean. Yeah. Microplastics or something.
Speaker 1:Tyler, would you mind pulling up the the Time AI 100 list? Putting it in the truth zone. Let me know who
Speaker 2:See how it tracks at the Metis list.
Speaker 1:Who didn't get on did they include Sholto? Did they include
Speaker 2:Wait. I think wait. Ilya has a new profile picture. Yeah. We might need to update the Metis list because it's a great it's great
Speaker 1:Oh, for sure. For sure. Okay. So anyway, Tyler, dig into the Time AI 100 list. I wanna know who who sticks out to you, who's interesting.
Speaker 1:In the meantime, let's go over to Mechanize. They said we built a Twitter vibes engine for AI Labs. Evals are important, but the vibes are hard to fake. And it's the vibes for OpenAI and Anthropic over time. And you can see Anthropic had great vibes throughout 2024.
Speaker 1:Then the vibe started dipping a little bit. After 3.7 SONNET, they were on a high, then they went negative, negative net sentiment score, and then have been climbing back up. Anthropics about even. OpenAI has been lagging a little bit. The vibes seem to be, flipping back and forth between the two.
Speaker 1:Very, very interesting analysis. Of course, you know, you gotta take it with a grain of salt. It's just a bunch of scraped posts and then run through sentiment analysis. We, of course, love looking at the Polymarket best AI model and seeing who's tracking there, the vibes. Google is running away with it.
Speaker 1:They're now at 71% by the end of the year predicted to have the best AI model, and they seem to be chopping chopping wood over there. The vibes are getting better too. I saw Logan posted a an interview with the team behind Nano Banana.
Speaker 2:People are loving
Speaker 1:good with the the naming. And Nano Banana, I mean, major reversal from some of the earlier Google AI image projects, which were were kinda hated on for a variety of reasons. This just feels like it's a it's a very useful tool. I was playing around with it. Some amazing results where I the the the generated output looked so much like the input that I couldn't even tell if it was doing generation.
Speaker 1:It was like it was actually just like, oh, like, did it anything? Had had a few errors where I was trying to get it to swap outfits from one person to the next, and it wouldn't it it it was getting confused or it just wasn't doing it. It was sending me back the same image that I put in, basically. But you had some luck with it. You were trying to turn yourself into a centaur or something.
Speaker 1:Yeah. That was kind of a bizarre outcome, but I've seen some good ones. Tyler, have you been having fun with Nano Banana?
Speaker 3:Yeah. Mostly, I've just done, like, change the outfit or something. Yep. Like, works perfectly fine.
Speaker 1:Oh, good.
Speaker 3:But I I did try, like making myself look more jacked and it didn't work. I think I was already like max You're
Speaker 2:TJ Krasinski says, takes longer than GPT five but does better at turning people into Chads. Does better? Interesting.
Speaker 3:Maybe my prompt was just wrong then.
Speaker 1:Yeah. So let me let me show you. I I think it's it's interestingly particularly good at at posting let me see if this works. So did I did I post this? I'm putting this in the chat.
Speaker 1:It's I took a like, one of these, like, trade deal alerts, kind of like the meme formats that we do that we would normally do in Photoshop, and I fed it an image of Ilia and the logo and just asked it to kind of recreate the same image. And if we can pull up the ESPN one, there's an alert for the Green Bay Packers. The Packers are trading for Micah Parsons, and you have an image of the football player on the left. You can see this. And then alert and then the logo.
Speaker 1:And then the other image is from Ilya Sutzkever, changes his profile photo, and I put the corporate logo there. And like, look at this looks like it came from Photoshop. But this was actually just a Nana Banana prompt. And I guess it's like, it kind of re rendered his face. It's probably not 100% perfect.
Speaker 1:But in terms of just like
Speaker 2:And they watermarked it?
Speaker 1:Yeah. The the watermark is weird because the watermark in this in this image is it just says sports. It's not it's it's like a random hallucination of a watermark. But but it it so in terms of just like take some images and and make the meme, it can now do that very, very reliably, which is just kind of a new unlock. And and we were talking, Tyler, about the nano banana chatty p t moment.
Speaker 1:And I feel like I'm starting to see that on the timeline with people posting take Sam Altman's face and put him at this posit this pose on this
Speaker 3:Yeah. Like ballerina.
Speaker 1:Yeah. The ballerina one. You saw that. And I feel like that's that's kind of a meme. It's like it's like make a super photo real image of this person doing this funny thing in this funny place.
Speaker 1:And it requires a lot of creativity to come up with a good with a good concept. But once you do, it can instantiate something that's photo real, like, extremely quickly. So Yeah. Very cool.
Speaker 3:Yeah. I mean, that's what we kinda talked about. It's like the consistency is, like, vastly better. So you can actually do, like, photorealistic stuff now.
Speaker 1:Yeah. I think it's at a point where it's good enough to put on a billboard if you have a if you have out of home advertising campaign idea. Generate an in nano banana and then head on over to ad.com. Out of home advertising.
Speaker 2:This ad is brought to you by Diet Coke.
Speaker 1:By easy and measurable. Goodbye to the ethics of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable seamless, efficient ad buying across the globe. We were debating whether or not we should do a a cheeky rack and react to Cheeky Pint, the the podcast hosted by John Collison at Stripe. We're really
Speaker 2:Cheeky rack would, of course, be where John and I drink a 30 rack
Speaker 1:30 racks.
Speaker 2:During during an episode of Cheeky Pie.
Speaker 1:Three three hours of of John Collison interviewing founders while drinking. He drinks one Guinness. We would drink 30
Speaker 3:Well
Speaker 1:light beers. There was there some debate over how much he was drinking. And so, obviously, the bar has been the gauntlet has been thrown down. As any podcaster capable of drinking a 30 rack in within within the context of one podcast. But I think we just solved how bad that would be because even a single Diet Coke Burping.
Speaker 1:Makes me, you know, incapable of doing a clean show. Anyway, Forbes is undefeated, says Rob Froond.
Speaker 2:Yeah. Do you remember this company, IRL?
Speaker 1:Oh, I remember.
Speaker 2:They got marked up to a billion Yes. In 2021. Yes. Of course, led by none other than SoftBank.
Speaker 1:Interesting.
Speaker 2:At the time when I saw this round Yes. I didn't know a single person that was using it. Yep. But I also just realized that people still use Snapchat because the the younger guns on our team use Snapchat. Yep.
Speaker 2:And I didn't I don't know anybody. I didn't think I knew anybody that still use Snapchat.
Speaker 1:Yep. It's out there.
Speaker 2:But it's out there. It's real. So I I wasn't quite, I thought maybe it was real.
Speaker 1:Social networks that pop up from time to time, the anonymous social networks. There's always something new. And if you're not really tapped in, you can miss them. So the narrative around IRL was if you're not using it, maybe you just missed it.
Speaker 2:Yeah. Or maybe you're not you're not in the
Speaker 1:I the timeline kind of turning on them as they raised more and more money and more people started saying
Speaker 2:Well, and it was Wait.
Speaker 1:Does anyone know anyone who uses this product?
Speaker 2:Well, yeah. And it was it was employees that were also wondering. Yes. Do we do do people actually use this product?
Speaker 1:So the allegations were that they were cooking the books, and it was it was a rough go. And now a federal grand jury returned an indictment charge of a Hawaiian a Hawaii man with wire fraud, securities fraud, and obstruction.
Speaker 2:The founder. The founder. Yeah. Apparently, 95% of their 20,000,000 users were fake automated bots. Wow.
Speaker 2:And the actual number of human users was around
Speaker 1:Yeah. What's so interesting is like, Reddit started as a platform that was seeded with fake users. But I I think that from an
Speaker 2:early There was also Alexis just
Speaker 1:using a Yeah. So it was actually just And
Speaker 2:it's very different if he if he was telling I'm I'm sure at the time he was telling investors like, yeah, we're trying to kind of kick start this network. So we're Yep. We are using the product ourselves.
Speaker 1:Yep.
Speaker 2:And he he wasn't necessarily saying, you know, we have millions and millions of of
Speaker 1:Yeah. Totally. It makes it makes a ton of sense to have, like, some sort of flywheel early on and but you have to disclose that. And it's wire fraud if you don't make it clear. Yeah.
Speaker 1:And so if Alexis Ohainian had gone to investors and said, like, yeah. Look at all the usage. It's all real. Instead of being like, no. Like, we're seeding it.
Speaker 1:Yeah. Like, don't value us on the basis of our MAUs yet. Value us on the promise of what this platform can do. And that And I'm sure the first I'm sure the first round was, you know, $5,000,000 or something like that. Like, super, super low.
Speaker 1:Not a $175,000,000 going in this crazy company that had a lot of fake users.
Speaker 2:So anyway Sad story.
Speaker 1:What should we talk about next? Should we talk about Bezel? Go to getbezel.com. Your Bezel concierge is available now to source you any watch on the planet. Seriously, any watch.
Speaker 2:Blind boxes, Kuwait.
Speaker 1:Yeah. Oh, yeah. Do them. It's easy money. It's not gonna happen.
Speaker 1:It's the only it's it's the
Speaker 2:end of the We would just be hitting that button Yes. Over and over and over on the
Speaker 1:show. Yes. Should we talk about the $25,000,000 home that's listed in the mansion section?
Speaker 2:At least Isn't there another article here in the journal about Lovable?
Speaker 1:No. That one is in the Financial Times. So in the Financial Times
Speaker 2:This is crazy.
Speaker 1:Page six on the in the Financial Times. AI startup nears $4,000,000,000 valuation. Swedish vibe coding startup Lovable is fielding inbound investment offers
Speaker 2:It's a Swedish initiative.
Speaker 1:Valuing comp I mean, I like the company a lot more than that gambling company, for sure. We talked to the founder. He's a nice guy. Swedish vibe coding startup, Lovable, is fielding in inbound investment offers valuing the company above 4,000,000,000, more than double the price at which it raised funding just weeks ago. So that's like the rare double tap.
Speaker 1:We saw this with I mean, Ramp did this. There are a number of companies when if you're on fire and all the metrics are up into the right and there's more and more demand for your stock, it's not the craziest thing to sell one tranche at one valuation and then go back out to the market and do the second tranche at the next valuation. So Lovable was valued at $1,800,000,000 in a deal in Xcel by Xcel in mid July, cementing its position as one of Europe's hottest AI companies. Now this is one of those things where did Excel do that deal three months ago? And it just released now, and then we're getting leaked information about a new deal happening.
Speaker 1:Is it early talks to advance talks? Exactly.
Speaker 2:Saying that the deal was actually done. I mean, I mean, the the question
Speaker 1:But in February, they just raised 15,000,000. So, like, that is a big jump up going from $15,000,000 raised to $200,000,000 raised in something like six months. I mean, the company is on fire, apparently. People with knowledge of the new investment approaches said that Lovable's chief executive Anton Ossica was not engaging with investors on the latest proposals, but he was weighing fundraising options for the coming months. So again, we're talking,
Speaker 2:you know, Jason going Turner in the chat says Lovable is the ish. I have, like, 15 prototypes. Do you have any any production products, though?
Speaker 1:Yes. Plan for production.
Speaker 2:I I mean, the the big question around Lovable is, like, clearly, they've caught fire with the product. People love it. But what is great metrics?
Speaker 1:Let's see the trend. A 100,000,000 just eight months after crossing the $1,000,000 threshold. That's a huge ramp to do two orders of magnitude in eight months. You can see why these things are piling in on the momentum. And that more than 10,000,000 projects have been built on the platform.
Speaker 1:So if it's 15 per person, that's pretty crazy. However, it is yet to demonstrate that it can generate a consistent profit amid questions from some investors about whether AI coding tools can make a margin in a highly competitive market. So I mean Isn't
Speaker 2:this beautiful?
Speaker 1:Everyone back the What we got? Louis Vuitton? Looks nice. Love it.
Speaker 2:Very nice. Print print ads. It's a new meta.
Speaker 1:Yeah. So the the trick is like, I think that reporting suggested that for free projects, they're definitely losing money because they have to use reasoning models. They generate a ton of tokens. Inference is pretty expensive. And so when if you go to just let's zoom out to website creator tools.
Speaker 1:If there's not if they're for free and you're just generating a bunch of them, you're probably losing money on inference because you're not you don't own the GPUs. You don't own the foundation model. Like, you're paying pretty high inference, and you've gotta use the best to be competitive. But the light at the end of the tunnel is that you get someone who stands up a website and then they use that as their front end to their business or their restaurant for a decade and people stick around. And so that's the pitch for, you know, everyone from from Weebly to Squarespace to Yeah.
Speaker 1:There there's a whole bunch of these companies that have all done they and and what's weird about those companies is they've all done very well. I've seen I've seen tons of, like, Squarespace ads on YouTube for a long time. I've seen a bunch of those website builders, and this is kind of like the next generation of them. And if you can get someone to build a website that they get value from and they don't wanna replatform from and the hosting cost is zero marginal cost. Even if there's a even if there is a non zero marginal cost, like, onboarding process, which is the generation of the website, you can imagine that most people would spend a ton of tokens generating the first version of their website.
Speaker 1:And they'd be like, yeah, I'm good for like a year. My business is basically the same. Yeah. They're not hammering it with prompts every single day. So there is a way where the math can math out, and I feel like that's probably what the VCs who are underwriting Excel.
Speaker 1:And we just talked to the Framer guys yesterday. It's a kinda similar business model. Get someone to build a website. Maybe it's expensive upfront, but if they stick around for a long time, you can be reaping a reward.
Speaker 2:Yeah. When Anton was on the show, he was saying they're clearly fixated on enterprise
Speaker 1:Mhmm.
Speaker 2:And that that will be an important That's interesting. Market for them.
Speaker 3:That's very interesting.
Speaker 2:And I don't think it's a market that they're, you know, dominating in.
Speaker 1:No. No. I I I know them as, like, particularly good at, like, go viral on social media for, like, build an app in a second, and then people go and build a bunch of a bunch of stuff. My my weird, like, question about all the Well, question is the site builders. Yeah.
Speaker 2:Obviously, I'm biased here as as a Figma Yeah. Power user for a decade and and obviously, they're a partner of ours. But Yeah. Figma is just so dominant in the enterprise and people love FigmaMake. Right?
Speaker 2:Yeah. And so they have lovable's, I think, in a struggle in the enterprise.
Speaker 1:So this comment in the chat from Paraclete says, I'd imagine lovable customers will have high churn and not stay long because it's for starting and not finishing ideas, and you won't be finishing them as final web products. And that is like the second act that I think the lovable customers stay for a few months, whereas a real platform like Webflow has lifetime customers. And I think that that's probably the second act that all the VCs are betting on. They're saying, you've filled the top of funnel. You've gotten people to show up long enough to actually build and deploy a website.
Speaker 1:Can you charge them $20 a month forever? Can you charge them a $100 a month for a for ten years? Which is certainly the story of Webflow and and the other site builders.
Speaker 2:Yeah. So Squarespace, if you remember Squarespace. Their site builder did 1,000,000,000 in 2023.
Speaker 1:1,000,000,000 in revenue?
Speaker 2:Yes. Okay. But was taken private at 7,000,000,000 last year.
Speaker 1:Okay. And and Lovable's at 4,000,000,000 on a 100,000,000 in sales?
Speaker 2:Sure. They're well beyond
Speaker 1:They Yeah. Must be well beyond a 100,000,000.
Speaker 2:Run rate. Yeah. But as as one knows.
Speaker 1:It's fascinating. Well, anyway
Speaker 2:Kyla Scanlon has an essay around how do workers actually feel about AI.
Speaker 1:Yes. She does
Speaker 2:surveyed 1,200 people across various industries with the main goal of learning what they wanted from AI. The results show a workforce that isn't really blindly optimistic or totally resistant, negotiating a rather messy middle. Makes sense. Workers hope AI will take over repetitive tasks and boost efficiency, but they worry it could erode career opportunities and work quality. Trust is fragile too.
Speaker 2:Most people somewhat trust their employers on AI while some industries lean heavily toward no trust. The biggest ask was training and a seat at the table. 62% want shared decision making and how AI is implemented. But overall, this wasn't really about job loss worries. It was about why we work and what makes work meaningful.
Speaker 2:The policy asks weren't about banning AI. It was about training, transparency, and actual input in implementation decisions. It was about preserving the human parts of work. And that makes sense as AI is making us reckon with what it means to be human in a way that not many of us have ever had to do. One of the human parts of of work that I I think will endure for a long time is power lunches.
Speaker 1:Right? Throwing a couple back. Throwing couple cheeky pints.
Speaker 2:A couple cheeky pints. Cheeky boot. Cheeky Cheeky boot.
Speaker 1:Stucking out of the beer boot is the way to do it, for sure.
Speaker 2:A cheeky round of shots. Yeah. Not lunchtime.
Speaker 1:Yeah. Was a team. What what are the other takeaways from her article? In the executive summary, she says eighty five percent of people are familiar with AI. But even among the very familiar, more than a quarter don't use AI at all.
Speaker 1:Workers want AI to take over the boring That's parts of
Speaker 2:their beautiful the 15% of people she surveyed just being like, AI? No. Familiar?
Speaker 1:Not I haven't heard about it. 62% want shared decision making and how AI is implemented at work. 15% want 30, want full authority. Fewer than 2% are comfortable with no input. There's a there's a trust paradox.
Speaker 1:Most people somewhat trust their employers on AI. But in many industries, a majority report no trust, no industry meet reached a majority of complete trust. Only 60% of respondents have received training with especially low rates in creative industries and entertainment. That's interesting. I would think creative industries, like, you you definitely wanna push the creative tools.
Speaker 1:You'd wanna have training on Nano Banana, but maybe you just want to turn your folks loose and let your teams know if you're in a creative industry, like, just go figure it out your self. The the the the AI tools are out there. So maybe you don't need formal training. Anyway, there is a beautiful house available in Alpine, New Jersey.
Speaker 2:Pull it up.
Speaker 1:We gotta pull this up. Ellie Tahari, co founder lists European inspired New Jersey home. And these photos are I think that's I think you got the wrong one pulled up. I think that might be fifty Cent's house, which we can do next. Arvam Tahari, co founder of New York based fashion brand, Eli Tahari, is listing his property in the affluent suburb of Alpine, New Jersey for 24,750,000.00.
Speaker 1:His roughly 21,000 square foot home was completed around 2016 with a slate roof and a backyard landscape that reminds him of the South Of France. And look at that car, Jordy. Can you ID that? It's Countach. It's a Lamborghini Countach in red.
Speaker 1:I love it.
Speaker 2:It looks fantastic in red.
Speaker 1:It doesn't it belong there?
Speaker 2:White so often?
Speaker 1:Yes. You see it in white a lot, of course, in the Wolf of Wall Street. It has eight bedrooms, indoor and outdoor pools. You gotta be having multiple pools these days. I bought the two acre property fifteen years ago for 4,250,000.00.
Speaker 1:The previous owner had built a foundation and then stopped. They finished the job. The home has eight bedrooms, a mosaic tiled indoor pool and an outdoor pool with cabanas. Walls were hand plastered and stenciled by an artist from Portugal. The Tataris raised their three children there and had many parties, including a white party and a friend's engagement party for about a 150 people.
Speaker 1:I hate to move from here, he said, but they have children they decided to move out. They plan to spend more time in Florida. Located across the river from New York City, Alpine is a borough of Bergen County. Homes there sell for millions of dollars and often span over 15,000 square feet according to Serhant. Oh, Serhant.
Speaker 1:Nice. Who lists the homes under contract with a $2.222490000.00 listing price. So go pick that up. There are a few other stories in here that we should cover. In a bunker, no one can hear you scream.
Speaker 1:The question that the mansion section asked real estate brokers is, have you ever encountered a secret room or bunker in a house you've listed or sold? And Scott Bayens, a real estate broker at Aspen Snowmass Sotheby's International
Speaker 2:wouldn't you wanna know about the secret bunkers in the houses I've sold? The whole point if it's secret bunker, it shouldn't be on the listing.
Speaker 1:Yes. Right? So in May, this particular broker listed a property in Aspen for $15,950,000 that has two structures on it. One of the structures is a contemporary home with three bedrooms and the other is a detached three car garage with a one bedroom, Pied De Terre, above. Below the garage and access and accessed via a hydraulic door that leads to a hidden stairway is what we call the Smugglers Den Speakeasy, which includes a lounge and bar, LED lights like a high end dance club, a fireplace, a TV, a sound system, a powder room, a photo booth, and a reverse car lift, which allows you to pull your collector vehicle into an elevator and transport it down into the Speakeasy where it's on display behind glass.
Speaker 1:Right now, there's a classic motorcycle, a drum set, and a disco ball to provide a little something for everyone. The owner who built the Speakeasy was one of the founders of a well known nationally franchised train chain of restaurants, so he has hospitality in his blood and a love for a good bar and a well crafted cocktail. Since he was active on the Aspen social scene, he conceived of a truly unique space designed to surprise and amaze everyone lucky enough to get an invite. When we showed when when showing the house, we always save the Speakeasy for last and enjoy seeing prospective buyers' mouths drop. It's a very specific listing with a feature that cannot be replicated, and I know there's a buyer out there who will love it.
Speaker 1:Let's go on to Renee Roberts, who says, In September 2018, I met with the owner of a five bedroom contemporary Cape style home in Canton about a half hour south of Boston. And it had a lot of desirable features. It had a one acre private lot, a grand foyer, a large eat in kitchen, and a wooden stove with high end appliances. The owner, an older gentleman, wanted a market analysis. I didn't know him.
Speaker 1:As we were touring the house, we got to the basement where I learned that the house had two hidden soundproof concrete bunkers. The bunkers didn't have any technology cameras or food storage, but there were electrical outlets and air exchange systems in both of them. Both of the bunkers were accessible from secret doors located inside the basement. As the owner showed me the basement, my heart sank a little bit because I was in the house alone with a stranger, and nobody knew I was there. When he opened the door to one of the bunkers and invited me to see it, everything in my body was saying not to go in.
Speaker 1:But he was excited to show it to me, and I was curious. So I went in to peek around, but then our tour but then our tour took a chilling turn when he closed the heavy steel door, the kind that banks use for their vaults, to show me how soundproof the bunker was. I started to get anxious, but after a minute or so Super stoked. The door, which had a keypad. And when we left the space, when he showed me the second bunker, I didn't go in.
Speaker 1:It definitely made for one of the most scary and unforgettable listing appointments of my career. Ever since that day when I go to a listing appointment, I tell everyone and give them the address of where I'm gonna be going. This guy was just excite just like nerdy and nerding out about his silly bunkers and scare scared the living daylights out of his
Speaker 2:You're scaring the realtors.
Speaker 1:In other news, 50¢ former estate has hit the market. Look at this thing. 51,000 square feet. It has a nightclub. It has a recording studio.
Speaker 1:It has two pools.
Speaker 2:A thousand square feet.
Speaker 1:He really should have. He should have remodeled and taken a a thousand feet off. So a tricked out Connecticut estate once owned by both rapper fifty Cent and famed boxer Mike Mike Tyson is listing for 9,900,000.0. And, Jordy, tell me. I feel like we could move the entire crew here, and this might be a solve for everything.
Speaker 1:Look at this. It has 19 bedrooms. That's more than we all have combined for sure. It's it's 51,000 square feet. I'm prob probably more than we have now.
Speaker 1:The suburban home in Farmington is in Central Connecticut, about halfway between Boston and New York. You can get back and forth to either. The 17.6 acre estate has a recording studio where fifty Cent said he recorded the 2005 album, The Massacre. Tyson, who paid about 3,000,000 for the property in 1996, sold it to fifty Cent for 4,100,000.0 in 02/2003. Not that much of an appreciation in in, in what's, nine years.
Speaker 1:The rapper bought it as a real estate investment following a lucrative tour, he said, on Million Dollar Listing New York. The current sellers are food and beverage investor, Casey Ascar, and his wife, Shira Ascar, who purchased the home from 50 Cent in 2019 for 2,900,000.0, about 84% less than what was first sought in in 02/2007. So fifty Cent went out to market trying to sell it for, like, 12,000,000 and only got 2.9. It's crazy. For a 51,000 square foot house.
Speaker 1:2,900,000.0. That's like like in LA, that's like a normal house. Like, it's crazy.
Speaker 2:Two bedroom.
Speaker 1:Yeah. The property underwent several price cuts and was adjust. It was listed by various agencies until the Oscars purchased it. They live primarily in Florida and own Dunkin' Donuts franchises, pizza places, and chicken restaurants around the country. That's another example of owning a bunch of franchises.
Speaker 1:They spend summers and holidays at the Farmington House with their seven children. Wow. Seven children. What a flex. Tyson's former ownership was an added incentive, said Casey, who had been a fan since childhood.
Speaker 1:The Ascars renovated the circa 1985 house, investing more than $3,000,000 over the course of their ownership. After buying the house, they installed the cigar lounge and upgraded the commercial kitchen. The Oscars also redid the indoor pool and spa, which has a steam room, red light therapy sauna, showers Nice. A massage area, and a hair salon. The nightclub called Club TKO, a reference to the boxing term technical knockouts, was installed by Tyson.
Speaker 1:The Ascars used the space as an event venue for parties and company retreats. Recently, hosted a surprise party there for Shira's parents' fiftieth anniversary. It was the best family gathering gathering they've ever had in their life, and that property made that happen. The Oscars are selling because they don't anticipate using the house as much now that their children are grown. So if you're in the mood and if you're in the market for a 51,000 square foot house halfway between New York City and and Boston, head over to the main section in the Wall Street Journal.
Speaker 1:And if you're looking to just get a weekend away, head over to Wander.
Speaker 2:Find your happy place. Find your happy place.
Speaker 1:Book a Wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home but better.
Speaker 2:Well, in two minutes, we have Max Levchin from Affirm Fantastic. Joining. Very excited about that. Tyler, do you wanna give us a quick review of the Time 100 list? Please.
Speaker 2:How are looking?
Speaker 3:Yeah. It's pretty mid. So Okay. So it it's like basically so so there's if there's there's a couple different sections. There's like thinkers, innovators
Speaker 2:Breyer of the Midas list other AI list mid.
Speaker 3:But so it basically has most of the lab CEOs, but it's missing Demis for some reason.
Speaker 1:Oh, weird.
Speaker 3:So kind of strange.
Speaker 1:Yeah. Yeah.
Speaker 3:Yeah. It has Nat Friedman and Alexander Wang share a spot. Odd. A little bit odd too. Okay.
Speaker 3:But it's like, okay. It's like reasonable, obviously. Yeah. CEO CEOs are influential. Yeah.
Speaker 3:They're missing a lot of big researchers. Right? Ilya is not there. Woah. What?
Speaker 3:Basically, most of the big researchers are not there. Okay. But it's like maybe, okay, maybe it's like not technical. There there's some like big
Speaker 2:Are there some do think it was pay to play? In Elliot's
Speaker 3:You're getting that vibe a little bit. I'm not
Speaker 2:paying to be on your list.
Speaker 3:Yeah. Especially as you go down You see, there's some good picks. Josh Kushner, great pick.
Speaker 1:Oh, nice.
Speaker 3:Love to see him there.
Speaker 1:I support that one.
Speaker 3:But then, you know, you go
Speaker 1:down Rick Rubin's in there?
Speaker 3:Rick Rubin, you see the the president of the teachers union.
Speaker 1:Okay.
Speaker 3:A little odd.
Speaker 2:Yeah. Wait. Wait. Teachers union?
Speaker 3:The American Federation of Teachers.
Speaker 2:Oh, I mean, that makes total sense. Like, they're on the bleeding edge. Scale is all you need. There's a lot of teachers out there.
Speaker 3:I suppose. There's like some senders.
Speaker 1:I think it makes sense in the sense of like influential. They're going for influential. So it's like if the head of the teachers union decides that AI will be used in every classroom in America, that is an influential decision that will steer how AI is implemented.
Speaker 3:Yeah. But up until now, has the union affected AI progress in any way?
Speaker 1:Probably. Probably in the sense of, like I mean, maybe not yet, but I'm not exactly sure what they put up. But if they signal that, like, we are in full support of AI in the classroom, Let's get universal basic chat GBT. Let's go all in. That is an important moment for the AI industry just like if they say, hey.
Speaker 1:Teachers are don't want AI in the classroom at all. We're gonna ban it. We're gonna ban phones. We're gonna ban technology. Like, Like, that is an important, like, fork in the road of AI progress even if it doesn't even if it's not tied to capabilities.
Speaker 3:Okay. Okay. What about this minister of communications, innovation, and digital economy for Nigeria? Thoughts on that?
Speaker 1:I'm not sure. I don't know what what what's going on there.
Speaker 3:Seems I don't know.
Speaker 1:Like this quote in the in the chat though from Gabe. He says, Alex Karp never learned AI. He was too poor and now he's too rich.
Speaker 2:Wait. John in the x chat says the pope is on
Speaker 3:The pope is on the list.
Speaker 2:Oh, let's give it up for the pope.
Speaker 1:Let's give it up for the pope. He's a Chicago boy. Right? Isn't he American pope? I mean
Speaker 2:The American pope should be on the
Speaker 3:Broadly, would say the list is extremely word cell oriented. There's almost no shape rotators.
Speaker 1:Okay.
Speaker 3:Rough. I think a good good Easter egg, Pliny the Liberator. You know, the No. X anon. No.
Speaker 3:No. No. I'm serious. It's the very last spot. Digital jailbreaker.
Speaker 1:Wait. Really? Yeah. Wow. Okay.
Speaker 1:They did get some crazy ones on there. That's good.
Speaker 3:Like I mean, sure. It's, a good pick, but, I would like to see Gwern.
Speaker 1:I would like
Speaker 3:to see Dwarkesh on
Speaker 1:a video.
Speaker 2:Totally. Yeah.
Speaker 1:No. Dwarkesh got snubbed for sure.
Speaker 3:Yeah. I don't know. A bunch of the researchers
Speaker 1:Okay. I can imagine. Okay. Download the HTML. Fix the list.
Speaker 1:Repost it in the next twenty minutes. Anyway, we will move over to our first guest of the show. We have Max Levchin. Here he is. Welcome to the show.
Speaker 1:How you doing?
Speaker 4:I'm good. Thank you. That's cool walk on music.
Speaker 1:We're working on Yeah. A little bit better every day.
Speaker 2:We have expect more sound effects too. Just fair fair warning. You guys just had a great quarter, so we might do something like this.
Speaker 1:Yes.
Speaker 4:Alright.
Speaker 1:Where should we kick it off? I mean, I I yeah. Maybe we should start with the quarter update. How is the business going? Give us, like, the the high level, overview of how you are positioning the company, what is next on the horizon for you.
Speaker 1:And then, obviously, I have a whole bunch of other questions that we can dive into.
Speaker 4:Yep. Quarter speaks for itself. It's pretty pretty killer, if I do say so myself. GMB, which is a fancy acronym for merchant sales powered by us, grew 43%
Speaker 1:Mhmm.
Speaker 4:Which is a fourth in a row quarter of accelerating volume growth, which is pretty powerful for a company.
Speaker 2:Incredible.
Speaker 4:This is in the you know, for for those not watching, the quarter we just reported, the GMV number was 10,400,000,000.
Speaker 2:Yep.
Speaker 4:So, you know, compounding at 40% ish, pretty solid.
Speaker 2:Pretty solid.
Speaker 4:Us sorry?
Speaker 1:Pretty solid. Extremely solid. Extremely solid is good.
Speaker 4:That's good. I'll take it.
Speaker 1:Extremely solid. We're very happy. Congratulations.
Speaker 2:Accelerating growth at scale.
Speaker 1:We love it.
Speaker 2:You don't see it often.
Speaker 4:Exactly. Exactly. But just hit GAAP profitability, for, you know, Internet companies are not expected to do that. We're 15 in. It's well expected of us.
Speaker 4:So we we we delivered on that. It's not a huge surprise to anybody. We we said exactly a year ago, it'll take us exactly one year to to exit with with Gap Profitable, and and we delivered on that. User growth accelerated for the sixth quarter in a row, so it's another really nice result. Yeah.
Speaker 4:Anyway, every metric is anywhere between mid thirties to mid to low forties.
Speaker 1:How are you breaking down the GMV growth? Like, what what do you think is driving that? What can we read into that on, like, the health of the American consumer or the broader consumer market? Like, what's the story that we should be telling around g m
Speaker 2:p? How how is the macro driving it versus just your
Speaker 1:team's execution?
Speaker 2:Yeah. Mhmm.
Speaker 4:It's actually a really good question. So, normally so every quarter, I get asked 12 different ways, hey. So what's the standout segment? And there's always like, oh, you know, people are really traveling because COVID's over Yep. So airlines and tickets.
Speaker 4:Yep. And then everybody upgraded their electronics during COVID, and then it was like a dead low for electronics for a year and a half, and then poof, electronic everybody needed a new TV. So this quarter is special because there's not a single category that is like, oh, wow. That thing's exploding. Like, literally every category is generally speaking contributing on par with the average, with the weighted average.
Speaker 4:And the best explanation I got, which these things you you think we know everything about American consumers just given our scale. And we kind of do, but it's also now big enough where parsing it is more and more of a spelunking process. And what what I think is really going on is we've hit an inflection point where Buy Now Pay Later as an industry is just such a part of the vernacular. If you're like, oh, of course, I'm gonna pay over time for this thing and I'm gonna use Affirm. So I don't have a great, like, oh, yeah.
Speaker 4:It's a standout industry x. The only thing that sort of jumped out at me when I was looking through the category results, services, like in home services, things like that are really growing nicely. Mhmm. In part, that's because our card, which we launched a couple years ago
Speaker 1:Yep.
Speaker 4:That's growing at a 120% year over year, so it has a serve its own very, very strong growth curve. That's a really nice product to pay for things that are not traditionally bought online. So as an offline tool, it it's just surging really nicely. So services are kind of a standout story, but even that is, like, just distributed across many, many different things.
Speaker 1:Yeah. What what about that narrative that was kind of bubbling up around tariffs where there was this thesis that consumers would be fearful about, like, the iPhone price going up. And so they would lock in current prices by Demand. Pulling forward demand. Did you see any evidence of that being
Speaker 2:true
Speaker 1:or bearing out or not?
Speaker 4:A little bit. I I would call it as a I I think a bunch of public company CEOs spoke to this last couple of quarters sort of pulling forward some purchase people expected, etcetera. Not a major contributor.
Speaker 2:I don't think
Speaker 4:I could stick a finger at Like, that's the the root cause of growth. Yeah.
Speaker 1:Not What about, interest rates broadly? How are you thinking about profitability in a high interest rate regime? There's a lot of discussion around should rates be lowered? Is that a tailwind, a headwind? How are you thinking about the interest rate environment broadly?
Speaker 2:I feel like it says a lot that you guys are Yeah. I was yeah. Putting putting these numbers up in in in I would say Exactly. Critics five years ago or not five years ago, only a few years ago would have said it's, you know
Speaker 1:The model will never work in a higher interest rate environment. Right? That was the that was the criticism, and you've kinda proved it wrong. But walk me through a little bit more of, like, the actual flow from interest rates to the business.
Speaker 4:The interest rates are certainly an input. So we're so we're nondepository, nonbank lender, which means that our own capital or the capital that we lend out is some form of sourced, and there's multiple ways of doing it. We're extremely diversified in a source of capital. You have to be because at any given time, somebody may choose to no longer participate. We generally speaking have an extremely strong set of relationships.
Speaker 4:At this point, I kinda lost count at so many different folks that we work with both at sort of huge depositaries, insurance companies, banks, funds. Some of these people buy our loans. We now are big enough where we securitize in a fairly regular basis, which means people buy our securities, the receivables that we securitize, and then we have a whole collection of what's called warehouse lines where you finance the receivables or you borrow against the receivables as a security. And so all of that comprises our capital markets program. Every one of these people has their own benchmark, which of course is dictated by Fed funds rate to a pretty significant degree.
Speaker 4:Majority these agreements, majority of these contracts are reasonably long dated, which means that an increase in interest rates or decrease in interest rates is a sort of a slow trickle into our cost of capital. So it's not a tomorrow morning we go back to ZERP, which I think we won't, But as the rates will come down, inevitably, there's now enough conversation about it, it will accrete to us as a tailwind to the business, but it won't happen overnight just like the even the sharpest increase in history, which is what we saw in the tail end of '23, I think, didn't really impact us overnight, but required quite a lot of maneuvering to make sure that we consistently deliver yields to the people who buy our loans or, you know, the the those who who lend to us against it. But it'll be nicer, it'll be easier perhaps to run this business when the rates come down. But I think a couple of quarters ago, I had a headline in my letter saying, hire for longer is just fine. I got we obviously printed great margin.
Speaker 4:We we call our margin RLTC revenue less transaction cost. It's a very fancy term for, you know, essentially the bottom line of the business. And that's been between three and four with, I think, one exception every quarter since we were public in the 2021. And so rates have changed quite a lot from then to '23 to now, and we've been able to maintain a very consistent margin that should tell you everything you wanna know.
Speaker 1:Are there any new, like, uses or unlocks in the buy now, pay later world that you're thinking about? We were talking about Coterie diapers earlier on the show. It's a subscription product. And I always thought that there's a world where you get a year supply delivered. You pay for a year supply, and then you use buy now pay later to just do the virtual financial transactions every month, but you only have to pay for one shipping fee.
Speaker 1:And so the the like, the cost to the consumer, there's some savings there for both the consumer and the probably doesn't work if it's a really big object. But for small things that are that are subscription, maybe there's a match there. Has have any of the smaller dollar merchants or or more regular purchase merchants been beneficiaries recently?
Speaker 4:Yeah. Actually, if you look at our average ticket, I think when we went public I already screwed this up today once, so I don't wanna injure myself again. But I think our first quarter of the public com public traded company, we were on the order of $900, maybe. Yeah. People think
Speaker 1:about it as like you're getting a Peloton or something. You're buying a a TV. You're you're you're in the $1,000 range roughly, and it makes sense to and you're gonna have that thing for five years, so you make sense to match that that the the payments Exactly. The price.
Speaker 4:So this quarter, our average ticket is just under $300. Mhmm. So that should give you a really good sense for the the trickle down. All the while, our transaction frequency went up, I think, over 20% just in the last year.
Speaker 1:Yep.
Speaker 4:And so as people realize that this is a great alternative to credit cards, we're getting more and more acceptance in all kinds of places. The thing you're describing kind of this reverse factoring, if,
Speaker 2:you know Yeah.
Speaker 4:That may
Speaker 2:be the
Speaker 4:right term for I don't know if that happens too much yet, but it was a good idea. I didn't actually think of the shipping savings Yeah. But that that's very real, it's good for the environment, all sorts of things. So I'll I'll suggest it to our sales team immediately.
Speaker 1:Fantastic. Let's give you credit
Speaker 4:for that. Amazing. I I'm My kids are out of diaper age, but, but this would have been helpful.
Speaker 1:If it works, I will expect you to send me a year's supply of coffee because you're you are you still into coffee? I read that about you. Okay.
Speaker 2:Oh, yeah.
Speaker 1:How explain to me coffee. I I I'm not I don't know anything about coffee. Where should I get started? What should I avoid? Give me the TLDR on how to become a coffee expert quickly.
Speaker 4:You've opened a can of worms or a can of Folgers that you may not have wished for. Really quickly. So I'm a
Speaker 1:huge
Speaker 4:espresso aficionado, so you gotta sort of but that that's that's a bucket in and of itself. There's plenty of people who think that the highest form of coffee is something else, but Good. I love espresso. The easiest way to get into it
Speaker 1:Yeah.
Speaker 4:Is find a great, what's called third wave coffee shop nearby. Mhmm. And that's typically a place where they don't sell food, they don't or they may sell like some pastries in a corner, but Yeah. It's a coffee centric small coffee shop. Sure.
Speaker 4:And chat up the barista behind the counter and ask them to teach you about tasting espresso.
Speaker 1:Okay.
Speaker 4:And like from, I don't no idea what this is to, I can understand what you're talking about when you say crema and sour versus bitter shot and all sorts of fun jargon and the minutiae will hit you.
Speaker 1:Okay.
Speaker 4:And you'll either be like, oh, I can totally taste the sour apple in this shot. You're like, have no idea what you're talking about. If you're in the former group, you've hit the right rabbit hole. Like six months later, you'll be buying your first Lumber Zoko for $10,000. And so I When do you have
Speaker 2:your last espresso when do you have your last espresso shot of the
Speaker 1:Yeah. What's your caffeine stack look like?
Speaker 4:So I wake up pretty early in the morning and before I brush my teeth, because I don't wanna mess my, know Pallet. I'll I'll exactly. So I'll I'll have some water, but sparkling water is the right thing to drink before espresso.
Speaker 1:Oh, okay. Yep.
Speaker 4:I'll head downstairs and do what's called dial in my espresso machine, which in fact is very expressive. Bamerzocco, of course. And not the only one I own either. But you asked. The be You
Speaker 2:gotta blow out a quarter. Yeah. What's that? That's coffee. You should talk about coffee for for twenty minutes.
Speaker 2:Yeah.
Speaker 4:We should go back to Affirmative.
Speaker 2:Yeah. Got I've got it coming
Speaker 4:But but but but so I'll I'll dial in Espresso Machine, which means that I'll grind and pull. And two is like a good like, I I can get to a really good tasting shot by two shots if I feel by the time and feel especially passionate or it's not working out.
Speaker 2:I think You mean you're making the first shot, you're tasting it, seeing
Speaker 1:the the If it's it's where
Speaker 2:then you're trying to iterate on it to get the testing.
Speaker 4:Yeah. And dialing in is basically two things. You're setting your grinder finest Mhmm. Setting, and then you're playing with the time of the pull. The two are not entirely independent variables.
Speaker 4:Like, the finer the ground, the longer it takes to pull the shot but you control when you wanna stop it. Interesting. And you have you know, I have three different tenth of a gram precision scales in my kitchen just to make sure.
Speaker 2:What's the most what's the most you've spent on a single bag of beans? Because that's one thing that's interesting about coffee addiction
Speaker 1:is I mean, people Yeah.
Speaker 2:The upfront cost of the machine can be high but then the actual habit Yeah. Enjoyment of it doesn't actually, you know, it feels like something that everyone can get into.
Speaker 1:Yeah.
Speaker 4:Espresso is expensive, but it's not outrageous.
Speaker 1:Sure.
Speaker 4:I think at any given I mean, it's also amortized over climate consumption. Sure. On the one hand, yes, you can bloat a lot of money on extremely rare espresso, but even if you tried, you couldn't spend more than a $100 per bag unless you go into like crazy outlier, but like, you know, really rare, very time sensitive, you know, only roasted in this particular time of the year from this particular single origin espresso farm in some faraway land. Like, even that will run you, like, a $150.
Speaker 1:Yeah.
Speaker 4:There's some exceptions, but that that's a good high tensile average. I spend probably $30 per espresso bag that I buy, and I try to buy larger sizes so to to save on shipping, obviously.
Speaker 1:That's great. Smart.
Speaker 2:What's the going back to the what what do you think the is the number one misunderstanding around the category from investors? Because I feel like buy now, later is something that people experience as a consumer all the time. They're seeing it all the time. They they think they might have a good sense of of how the business works but it's still relatively still relatively new at least in this form.
Speaker 4:Totally. You know, I I today's market reaction actually tells me maybe, you know, we'll we'll we'll see we'll see what happens in the days and months ahead. But I think for the first time, the reaction correlates pretty well to our perception of our performance. Mhmm. We've been printing exceptional quarters for a very long time.
Speaker 4:The stock has been essentially not a good predictor of our performance. Yeah. Fairly uncorrelated. It's gratifying to see, like, we have a blowout quarter. The stock does really well.
Speaker 4:That's that's us. Putting that aside, there's a bunch of things that are still misunderstood probably, but I feel like they're less misunderstood now, at least today. Mhmm. I think a lot of people think, oh, that's for people that can't afford to buy things. They borrow money, and that's why.
Speaker 4:And that that's such an arrogant point of view that just it frustrates me a lot. And maybe that's the thing that angers me the most. I'm not sure it's the most important thing that's misunderstood, but it's the angriest thing that I have to a beef with. It's fundamentally a better product than credit cards simply because credit cards are designed to get you into revolving debt, which is a exponential function. Like, sort of the simplest form of math, you borrow a thousand dollars, make minimum payments, sit on a balance, it looks like this.
Speaker 4:It just goes up and up and
Speaker 2:up,
Speaker 4:and people on coasts, us, generally speaking, look at them like, I don't understand. I just pay it off at the end of the month. A lot of people don't. It doesn't make them poor. It doesn't make them dumb.
Speaker 4:They actually have much better facility with interest rate math because they actually pay interest.
Speaker 1:Mhmm.
Speaker 4:And for a lot of those folks, it's not a matter of I cannot afford it. In fact, we will not lend money to someone who cannot afford it. Our whole model is built around the idea of no late fees, no gimmicks, no compounding interest, which means that we can only lend money to those who can afford it. So they're discerning customers. They're not poor.
Speaker 4:They have jobs pretty much 100% of the time, and they are the very middle Americana that fuels this country in every way imaginable. They use this product as a great alternative to credit card, but they're not like, this is not the last resort. This is not even near kind of a bottom of the the economic strata. And so that's been a for a long time. I think it's a lot better now that people have seen the performance of our our securitizations are public in terms of their their results, and they're updated more frequently than our quarterly earnings.
Speaker 4:And so you pretty easily see that the loss rates are meaningfully below those of credit cards Mhmm. Which even a casual observer can be like, okay. So clearly, this thing is performing better than what they compete with.
Speaker 2:Yeah. And how how is the competitive dynamic how have the competitive dynamics changed over the last few years?
Speaker 4:It's a competitive space. Payments has never had a monopoly ever in in any version of payments, which is not a surprise given how enormous it is. It's the single largest industry in the world, but maybe energy gets close. And it's very competitive, which is good in a sense that it forces people like us to compete or everyone to compete on substance. Like, it's very hard to compete in a highly competitive market on things like clever slogans and temporary promos.
Speaker 4:Like, you have to perform day in and day out and year in, year out. And so our competitive edge has always been underwriting, just depth of understanding of the borrower, of the end customer, better usage of data, better modeling, kind of living in the cutting edge of whatever the most interesting math thing that happened in in the sort of the research world for us. And so in that domain, we're unmatched, and that's always been our strength, and we continue to win there. But there are plenty of competitors, and many banks that looked at us ten years ago and said, no one will ever use this thing.
Speaker 1:It's
Speaker 4:stupid. It's barely understandable. I've now come around and said, actually, we have our own buy now affiliate product. It's gonna be great.
Speaker 2:You guys
Speaker 1:should know.
Speaker 2:Yeah.
Speaker 4:That's probably that's pretty
Speaker 1:Outside of the outside of the narrow competition within this particular category, BNPL, what does it look like to think about the next, like, ten or twenty years? There's this interesting dynamic that I've noticed where there are a few kind of broadly fintech founders who are still at the helm. They're in double digits, billions market cap. They don't seem to be slowing down, and they're somewhat on a collision course where they're starting to build products in the other spaces. And the legacy players, the really big banks are maybe less in founder mode.
Speaker 1:And so just as like a start up Silicon Valley guy, I kind of root for the the next wave. And I'm wondering, obviously, like, the the current product is working well, everything you've been on this for a long time. Like, is there a desire to build, like, a mega firm and and expand into a bunch of different categories? What are the risks associated with that? How narrow do you wanna stay, and over what time?
Speaker 1:Do you have a do you have a vision for where you wanna go over the next, like, several decades?
Speaker 4:Yeah. For sure. So if you look at our mission statement, which very proud to note has not changed a word since the day we started the company. We're almost 15 years old, so we're Wow. Still a startup.
Speaker 4:We're definitely in founder mode. Yeah. Am founder. Yeah. We're we're years.
Speaker 2:Sorry. That's one of our sound effects.
Speaker 1:Gotcha.
Speaker 2:Love it.
Speaker 4:I I I'm I'm urgently in search of a I'm a sound board here.
Speaker 2:Yeah. We'll set you up with one.
Speaker 4:Excellent. Anyway, so our our mission is to build honest financial products that improve lives.
Speaker 1:Mhmm.
Speaker 4:That is not nearly as narrow as
Speaker 1:Yeah.
Speaker 4:Let's have some loans at the point of sale.
Speaker 1:Yeah.
Speaker 4:Now, loans at the point of sale turn out to be a roughly trillion dollar TAM, and so, like, we're pretty busy trying to claw our way. You know, we're every quarter, we we print 10,000,000,000. That that's a a round off error, and so we'll we'll we'll continue trying to get our way to to a one or or or, you know, multiple percentage points of the overall just in the current plan.
Speaker 1:Yeah.
Speaker 4:But the consumer that we attract and this sort of speaks to sort of your your broader question, like, is this whole thing going? The thing that's really amazing slash sort of what a time
Speaker 7:to be alive sort of like
Speaker 4:the the thing that I wake up to every morning, like, we're all getting so much smarter. It's so cool. Like, this whole AI revolution and the various sort of offshoots of the idea, even before and certainly what what's to come next, it's like the general increase of the IQ of the universe that we are familiar with. Certainly a general increase of the IQ of the Internet savvy consumer, which naturally accretes to the younger player. Mhmm.
Speaker 4:People twenty five years older than me have a harder time catching on to the current thing. People twenty five years younger than me, they're born with it. Like, they have no idea what it's like not to have an iPhone. They have no idea what it's not like not to talk to Chad GPT about. You know, my kids just like pull up their phone and be like, what's the answer to this thing?
Speaker 4:And they're like, that's a lot of steps. Like, no, it's not. It's just like one bicep movement. And so as we all get smarter, lots of things are changing, and the idea of I got tricked into this stupid financial product. Man, I'm so unhappy about the dumb loan I took out or the sale I did with my stocks or, you know, all the many things that people regret about financial products is going to start trending down because you will have a PhD level adviser, as Sam Altman likes to say, at all times in your ear telling you, hey.
Speaker 4:That's a good idea. It's a bad idea that you will trust, that will be completely dispassionate, and will have a really deep understanding of who you are and where you're going financially and and in your life with your goals. And so as a company that's built to create products that we are proud of, like, lending is kind of a dirty industry. The reason we tackle this thing is because, you know, I've done payments my entire professional career on and off, and lending is like the thing you don't touch because it's like kinda yucky. Like, you wanna maybe stay away from that because, like, ultimately, it's all about late fees and compounding interest, and we started the company specifically to not have late fees, to not have compounding interest, all the things that people hate.
Speaker 4:We wanted to be on the opposite side, and I was told over and over again by people, this is stupid. One, that's where the profit is, but two, you can't survive. Like, the whole industry depends on this. Like, don't be an idiot, And we just kept on going like, yeah, we'll figure it out. And for the longest time, people looked at us be like, okay, you have less margin and less opportunity for margin, then boy, that's gonna be tough.
Speaker 4:And it wasn't easy, but with every passing day, as people get smarter, it gets easier because the machines will not make the mistake that consumers make when they're like, oh, it's a big zero. The asterisk. I don't care about the asterisk. You should care about the asterisk. We don't have an asterisk.
Speaker 4:The rest of the industry is about to find out what it's like when a PhD level advisor is like, mind the asterisk. It is about to screw you. And so so that that's like a anyway, a lyrical digression. But where the world is going in financial services is there's tons of opportunity to apply the same level of purism that we brought to lending to other things, from mortgages to banking to auto loans to all sorts of fun things where if it's not good for consumers, it will be naturally demoted by the next generation of search engines, are the AI bots.
Speaker 2:Yeah.
Speaker 4:So there's there's a lot to do. It's it's not just point of sale loans for sure.
Speaker 1:I wanna play out a hypothetical counterfactual. What would the world look like if you couldn't sell PayPal, no one could ever leave PayPal, and the original PayPal mafia was still working together on that business?
Speaker 4:Well, you wouldn't have SpaceX. You wouldn't have Tesla. Yeah. You wouldn't have Founders Fund. You wouldn't have David Sachs, the AI czar.
Speaker 4:Yeah. I mean, the world would be a boring place.
Speaker 1:I suppose. Yeah. Do you think PayPal would be, like, a trillion dollar, like, owning everything, like financial institutions for everything? Like, you know, get your mortgage, get stay trade your stocks, crypto, everything. Like, would it just would there be any chance for an upstart fintech company?
Speaker 2:You'd have a first true monopoly and
Speaker 1:Yeah. Yeah. Yeah. You said you said it's it's competitive space. Would it still be competitive if if the entire team was was there?
Speaker 4:I don't think so. Yeah. This this dates me but it'll date anybody. There's a great comedic musician slash math professor named Tom Blair. If you don't know who he is, he he is worth knowing.
Speaker 1:Mhmm.
Speaker 4:He had a great quote. I had a great time in high school, but I certainly wouldn't want to repeat it. And I think PayPal was a little bit of a high school for all of us. It was crazy times. We're super young.
Speaker 4:Some strange things happened. Some tough words were spoken, and the fact that we're all friends now is a function of the fact that we're no longer working together in some ways. Sure. And so I think we all graduated with decent grades and went on to everything from graduate school to other fun projects. But I think in many ways, PayPal was as successful as it was in spite of some of the decisions we made and some of the behaviors we exhibited than because.
Speaker 4:I think all of us went into our next set of ventures with a very strong view of, I would love to do that again, and I'm definitely not doing this other thing ever again to myself. So the learnings of the crucible of PayPal are unique, but I'm not sure the original the original crew starting another company together would be a really fun thought experiment. That that would be quite something because we're all older and presumably smarter.
Speaker 1:Avengers. Avengers. Yeah. Well, what what lessons from PayPal have you codified in sort of like the employee handbook at a firm? Or, like, what what are the stories that you tell to a new hire at a firm where you can go and say, this has been true not just for the history of a firm, but it's been true for every business I've been involved in for my entire career.
Speaker 4:You know, it's not necessarily true for every business. So I I have my own educational journey, if you will, where after PayPal, one of my erroneous conclusions was, man, PayPal was such a tough environment. Like, it was not out of character for any one of us to storm out of a meeting just like, that is the dumbest thing I've ever heard of you. You're wasting my time. F this and F all of you.
Speaker 4:Like, not not quite. Yeah. But, like, think, you know, I I wasn't kidding unless that tough words were spoken. Like, we we could tear down each other and our ideas on any given Tuesday, etcetera. And when I left PayPal, was like, you know, I'm gonna definitely start another company.
Speaker 4:I would love to start with people like these or even these people. And by the way, one of my firm cofounders was one of my closest collaborators from PayPal. So this is we were the the band is still comes together and and, you know, builds interesting things. But I was so over indexing on the tough interpersonal relationship side of things was exhausting, and I don't wanna do that again. And I really overdid the let's make a family, not a team, and that was a that was an error.
Speaker 4:Like, I'm I I had since realized that one of the huge benefits of PayPal was this no holds barred, your idea is stupid. I'm gonna tell you, comma, and you're not. Like, I may be driving this idea of yours into the ground and stomping on it and trying to kill it, But just so you remember, we're here because you're brilliant and I'm not so dumb myself, and, like, let's work together to make a better one. Figuring out how to package that into a conversation that holds across 2,200 people is, like, the team strategy at a firm.
Speaker 7:Yeah. Like,
Speaker 4:you should be able to tell someone that's a dumb meeting, it's a dumb idea, I'm out of here, please do better than this, while not tearing them down personally, while not damaging their conviction around their place in the team, the company's mission, all those things. And so that's a tricky balance to strike. I think we do a pretty good job here, but that is probably the single most important lesson.
Speaker 1:Yeah. Embracing disagreeableness as a character trait of a high performing employee or coworker is it's so underrated. Once it clicks and you feel it and you feel someone disagreeing with you, but they're not disrespecting you. They're just actually making their own decision and bringing their own information, their own perspective. It's it's extremely refreshing when you first when you first feel it, at least in my experience.
Speaker 2:John, anything? The the thing that stuck in my head is that that then and then we'll let you go is this idea of the the entire lending industry being built assuming that the average person doesn't have access to legal services. Right? This you know, traditionally, a wealthy person will get a loan agreement and they'll have their counsel, you know, review it, spend thousands of dollars, you know, making changes or potentially walking away. And I I'm very excited for for what you guys can do in this space in a in a world where anybody in the world can take a loan agreement or fine print, drop it and get maybe it's not the best lawyer in the world, but it's at least decent and
Speaker 4:It's dangerously close to the best lawyer in the world. It's Yeah. It's really it yeah. That that's exactly right. And I think that's we built the company on the assumption that that's coming.
Speaker 4:The fact that it's coming so quickly and in the way that is conversational and easy is just, like, deeply inspiring. Like, I I am very pro AI because the notion of everyone's IQ is just getting lifted every day more and more is so powerful.
Speaker 1:Mhmm.
Speaker 4:Like, this whole the the sideshow of, oh gosh, you know, the job, like, everyone has gotten so much smarter. They can do the jobs that were always out of reach for them. Like, the the whole thing is just gonna elevate.
Speaker 1:It's also one of the most interesting like, AI is a is a tailwind for my business theses I've ever heard. Instead Instead of just like, I'm gonna use AI to, you know, lay everyone off and cut my costs. It's like, no. AI will make my will make consumers pick me over the competition. Incredibly confident.
Speaker 1:I love it. That's right. Thank you for sharing. Brilliant. And thank you for hopping on the show.
Speaker 1:This was fantastic. I'll talk to you soon.
Speaker 2:Thanks for having
Speaker 1:me. Have a great rest
Speaker 4:of your day. Enjoy your weekend. Sound bored. What? Even if you want coffee advice,
Speaker 1:I I got coffee advice. We will definitely ping you about more coffee.
Speaker 2:Great notes.
Speaker 1:I I I think the entire team in the studio would be would be
Speaker 2:happy Congrats make to the to the whole team Yeah. On the market. Thank you. Finally finally waking up and and seeing your guys' level of execution. Really fantastic.
Speaker 4:That's getting started.
Speaker 1:Amazing. Amazing. We will talk to you soon. See you next quarter. Thanks so much.
Speaker 1:Bye.
Speaker 4:See you.
Speaker 1:Up next, we have James Belosick from Sendcut Send, one of the hottest companies in defense tech. Anyone who's building anything, they know SendCutSend. They use them regularly. I'm very excited to bring Custom
Speaker 2:sheet metal MVPs. Yes. World champions.
Speaker 1:The Restream waiting room into the TVP and UltraDome. Welcome to the stream. James, how are doing?
Speaker 2:What's happening?
Speaker 7:Great. Great. Thanks for having me, guys.
Speaker 1:Did I did did I get this right? I so I'm not a customer, but I know a ton of your customers. Why don't you just, like, explain exactly who your customers are, how you grew the business? I'd love to kinda kick it off with, an intro on you and the company.
Speaker 7:Okay. Yeah. Our customers are everyone, I guess. Everyone. Usually usually, the way I describe it, like, my mom my mom has a a silly sign that we cut for her that says live, laugh, love.
Speaker 7:And then we also have parts that are in orbit right now.
Speaker 1:Wow.
Speaker 7:We have parts at the bottom of the ocean, parts in Antarctica. Sure. You know, we do work for 60 to 70% of the Fortune five 100.
Speaker 1:Wait. How big can you go? You might you might need a solution. We're looking for Gong.
Speaker 2:Gong. Okay.
Speaker 7:Because I was hoping you would ask. Yes.
Speaker 2:Because we are trying to get a rather large Gong.
Speaker 1:Yes.
Speaker 2:And this Gong is is relatively modest.
Speaker 1:But it's not big enough.
Speaker 2:And It must be even bigger. This is incredible.
Speaker 7:Oh, yeah. I I think we could even put logos all over it. That might be some sponsorship opportunity.
Speaker 2:There we go. Now we're talking in our language.
Speaker 1:Fantastic. Do can you do you have any update for the business? Can you share anything about the scale of the business? How many employees or size of the business? Anything you got?
Speaker 7:Yeah. Yeah. We're we're in our seventh year of operation. We're profitable.
Speaker 2:Profitable? Let's hit it for I'm hitting the gong for I love it. There's nothing better. There's nothing you know, the big fundraisers, they're great, but nothing like nothing like profit. Congratulations.
Speaker 7:Yeah. We're doing 9 figures of revenue
Speaker 1:Wow.
Speaker 7:About 350 employees. That's amazing. Yeah. We're we're doing it.
Speaker 1:Yeah. And and and all in America. Right? Like, what what does the actual footprint of the business look like? Where are you based?
Speaker 1:Where how how what's the scale right now?
Speaker 7:Yeah. Yeah. 100% in The US, including Wow. Support staff, remote staff. We have staff in 22 states, I think, right now.
Speaker 7:Yeah. Our headquarters is in Reno, Nevada
Speaker 1:Yeah.
Speaker 7:Which is not known to be a big manufacturing tech hub or or whatever, but we're doing it.
Speaker 2:Biggest little city.
Speaker 7:Yeah. Yeah. It's known for a lot of things, but, yeah, we love it.
Speaker 1:Yeah.
Speaker 7:We have a fifth facility in Paris, Kentucky
Speaker 1:Yep.
Speaker 7:Which is a town of about 10,000. Yeah. Yeah. Paris. Paris.
Speaker 7:And then Paris. And then Arlington, Texas.
Speaker 1:Yeah.
Speaker 7:So just about 200,000 square feet under roof right now.
Speaker 1:Okay. So so so twenty eighteen, seven years ago, you start the business. Like, there was not an American Dynamism meme at that time. People weren't writing breathless
Speaker 2:was gonna blogs. Ask when the American Dynamism meme started. Did you look
Speaker 1:I invented American dynamism. Like, come on. But seriously, was it a happy accident? Or was it deliberate that you saw something on the horizon about America's need to manufacture things domestically and you made the conscious decision? Or was it just like, hey.
Speaker 1:You're here. You're making your thing. You're building the business. Why not build it where you grew up?
Speaker 7:Yeah. I'm I'm not that smart. I I don't see the future very well. Really, I it was for selfish reasons. Yeah.
Speaker 7:I needed parts made. So I've always been a car guy. I'm always working on weird side projects, and I needed some custom parts made. No one really wanted to make them, especially in a quantity of one. Yep.
Speaker 7:You know? They I could get them made in a thousand or I could wait eight weeks. Mhmm. But no one would make something, you know, high mix, low volume. So I was like, well, I'm a software guy.
Speaker 7:Should be able to figure this out. Yeah. So that's really how it started. I told my wife, hey. I wanna buy this machine.
Speaker 7:It's like $600,000. But I think I think if I can get just enough customers, it'll pay for itself, and then I get to use it for free.
Speaker 2:Nice.
Speaker 7:And for whatever reason, she was like, yeah. Go for it. So I I told her it would print money. Took about seven years, and now it prints dollar bills. So hoping to turn that into hundreds at some point.
Speaker 2:That's amazing. What
Speaker 1:what yeah. Talk about the actual automation and software that went into, like, increasing profitability of a given machine. I imagine that that's like the secret sauce. That's the proprietary, like, platform that, you know, keeps, you know, keeps margins reasonable in a world where probably anyone can go out and buy the same machine, but they're not gonna get the same yield. How did that evolve?
Speaker 1:Where is the status of this now? Like, how autonomous is manufacturing in America?
Speaker 7:Yeah. It's it's gotta be a mix. It's gotta be a mix of robots and dudes.
Speaker 1:Mhmm.
Speaker 7:And no matter what I I think you can over robot. You can overautonomize. Is that
Speaker 2:a single word?
Speaker 7:Or you can go with just too many humans, and I think we've figured out the right mix. Mhmm. You put guys where guys are really good and put robots where robots are really good.
Speaker 1:Yeah.
Speaker 7:I think our secret sauce was we approached this whole thing as software guys. We weren't manufacturers. We're like, oh, how hard can it be? You know? Software development is supposed to be, like, the hardest thing.
Speaker 7:Like, we make all the money.
Speaker 2:You're a computer scientist. Yeah. How hard can metal be?
Speaker 7:But it was it was a gift because we approached things completely differently than anybody else Yeah. Because we just didn't know any better. And we made a lot of mistakes. Like, we had to throw stuff away that people have learned a hundred years ago, and and we were just learning for the first time because we were trying to figure it out by ourselves. But some of the things we discovered, you know, being software first, it helped us, know, like you said, we we can beat everyone on efficiency and and waste, material uptime or material utilization, machine uptime.
Speaker 7:So, you know, our our original vendors for our big equipment, they didn't wanna sell us the machines because I showed them how we were gonna use it and kinda hack their software and use our own. And they're like, oh, it'll never run. It'll never run. A few months later, the sales guy came back and saw our numbers and was like, oh, holy crap. Can you teach us how to do it?
Speaker 7:So at one point, you know, we thought, why don't we just license our software?
Speaker 1:Yeah.
Speaker 7:Yeah. You know, that's we're software guys,
Speaker 1:and Yeah.
Speaker 7:I keep getting cut on metal, and it's heavy and stinky and whatever. But but it's it's really not possible. Our software would not work for anybody else. Yeah. We're so weird with the way that we approach things.
Speaker 7:You really have to start from scratch. And I think, really, vertical integration is the way to do it. You know? If if I could, you know, buy a a bauxite mine and smelt my own aluminum and have my own ships to transport the aluminum and everything, I I would. I I don't know if that's the future for us, but really Yeah.
Speaker 7:Controlling everything from software up. Yeah.
Speaker 1:Jordy, you you can go ahead.
Speaker 2:Yeah. I I it feels like I mean, this is we we've had a lot of your customers on the show and this is your first time. Have you intentionally stayed out of, like like, the avoided kind of the the hype cycle. I know you got a Jason Carmen video as of today. But it feels like if you wanted to, you could go out and raise, like, billion, you know, billion dollars right now if if you wanted to play that game.
Speaker 2:But it feels like it's just not something that doesn't seem like that that's interesting. You seem to be just focused on this.
Speaker 1:Yeah. Yeah. What's the motivation?
Speaker 7:I I don't know that world. Like, I don't know Mhmm. Finance and venture capital or anything. I have a really tough time understanding our balance sheet. But it's you know, I have a I have a high school education.
Speaker 7:I I just like to make parts. Like, the way that I run this business is like a lemonade stand. You know? We sell lemonade.
Speaker 1:This is incredible. Yeah. I make parts.
Speaker 7:Wait. Sir, I make parts. Yeah. So if we sell enough lemonade Yeah. I can take my profit and go buy more machines and make more lemonade, and and that's that's really what I love.
Speaker 7:Yeah. So I've I've kinda had my head down for seven years, and we've been doing it. We've been self funded and Yeah. And able to buy all of our own stuff.
Speaker 3:That's great.
Speaker 7:And what I realized is, like, if you if you wanna shortcut that and go the VC route, you can light money on fire so much faster in manufacturing than you can in software. Yeah. The the CapEx is just absolutely wild. So thank god we didn't go down that path. We're a little smarter now.
Speaker 7:We do need to expand at a very, very rapid clip here in the next couple of years. We just got into CNC machining, which is an order of magnitude more expensive.
Speaker 2:Yep.
Speaker 7:But, honestly, I I I I don't wanna raise I I wanna show people that it can be done with our method, with our dumb finance method, and it Yeah. And it can work.
Speaker 1:It's great. It's amazing. Talk to me about how steep the distribution is in your customers. You said you're in I think you said somewhere in 9 figures in revenue. And I imagine that there is a tension between I want to serve the mom who wants to cut a live, laugh, love sign or whatever your example was, And then the reindustrialization process.
Speaker 1:And there's a billion dollars
Speaker 2:They work with on the Waymo.
Speaker 1:Yeah. Exactly. And so obviously, you want to say yes to both. They're both profitable. But there there tends to be attention in in just every company of we have an enterprise.
Speaker 1:We have a b to b. We have a b to c business. Have you have you bifurcated the the business at all internally? Are there trade offs or tensions? Like, talk to me about how that evolves.
Speaker 7:We treat everyone the same.
Speaker 1:Wow.
Speaker 7:We we try and emulate, In N Out Burger.
Speaker 1:Yeah.
Speaker 7:You know, I don't care who you are. Everyone gets a double double the same way. You can't ask for it medium rare. That's right. Ask for a fillet of fish.
Speaker 1:Yep.
Speaker 7:The menu is small, but it's good, fast, inexpensive. Yeah. So we're actually very proud that, you know, all these, you know, rocket launch companies that use us, they get the same exact treatment as some guy who's building a Harley in his garage. So I I think building a system that can serve everyone equally Mhmm. Maybe maybe the fortune fifties get a little worse service than they're used to.
Speaker 7:Yep. We're not bending over backwards. We're not giving them, you know, net 300 terms.
Speaker 2:Yep.
Speaker 7:They get a little worse service, but then the guys in their garage get an amazing service, and then they they grow. We help them grow. I I wanna see people do a prototype and then 10 units and then a 100 units and then a million units. You know? Everyone should be making a business out there.
Speaker 1:Yeah. And I'm sure at some point, like, if we're talking about, you know, the like, some huge, huge customer that's gonna be making trillions of things, like, they always have the option to bring that in house and do that themselves, and that's their financial calculation. But you're gonna keep scaling. And it's a race between, you know, hey. Yeah.
Speaker 1:Like, you might be able to bring it in house and do a little bit better this year, but I'm gonna keep going next year and then the year after, so maybe stick around. Yeah.
Speaker 7:It's a it's a huge incentive for us because in software and SaaS, we had the concept of churn. Churn was absolutely terrible.
Speaker 2:Yep.
Speaker 7:Here, we don't really have a concept of churn until the company gets so large that they purchase their own
Speaker 1:equipment. Yeah.
Speaker 7:And we've actually advised on that a couple times.
Speaker 1:I'm sure.
Speaker 7:But it's it's a reminder of, no, we should be the ones scaling. We should be the ones growing with them and we've been able to do it.
Speaker 1:That's good. That's good. Jordan, you have something?
Speaker 2:Or It's just incredible. Yeah. Our friend David Senrose someday, I I think he's gonna make a podcast episode about you. It'll Yeah. Have to be a biography first to reference on your approaches.
Speaker 1:I do have a question. The chat loves you, by the way. It's like obsessed. It's going crazy. But I I have a question about, like, position against, like, American made products.
Speaker 1:Like, the narrative is there's always the narrative that, like, China's cheaper. But then there's also this And they respond faster. The the responding faster thing. There was this viral YouTube video. I'm sure you saw it of, like, I tried to make something in America versus China, and, like, the Americans couldn't get it to me and blah blah blah.
Speaker 1:And so mo when I've heard the initial narrative, a lot of it's been like, look. We're gonna be a little bit more expensive, but we're gonna be higher quality, more reliable, more compliant with DoD rules and government rules. How do you see the landscape of comping your business to international competitors evolving? Like, what's at the top of the stack in terms of benefits of going with you over international competitors, and how is that evolving?
Speaker 7:Well, I think I think no matter how fast we are and how much better the service, people always will shop with their wallet. Of course. They they they vote with their wallet. Right?
Speaker 1:Yeah.
Speaker 7:So our goal is we have to be equal, if not better, than offshore options, and we are. So especially on the CNC side
Speaker 3:Yeah.
Speaker 7:Because of everything we've learned, we've been able to leverage our software and our efficiencies, and so we can compete. We have a lot of customers that are coming to us now and going, hey. You guys are maybe a dollar more or a dollar less, but you're faster, something to use. It's it's a 100% possible. There's a lot of people that are coming back onshore.
Speaker 7:I get I think the climate right now with the tariffs and then the no de minimis shipping and everything, it's there's a wave right now of stuff coming back onshore.
Speaker 1:Yeah.
Speaker 7:So if you're equipped so that you can respond or you can do instant quoting, you know, a lot of these shops, they were set up in the eighties and nineties, and it was based on facts, and it was based on, like, hey. Let me look at my your blueprints for two weeks, and then, and and then we'll we'll send you a a letter in the mail or something, and they still operate that way.
Speaker 1:Yeah.
Speaker 7:That's why I'm encouraging people to go start manufacturing now because you're gonna start with a totally different tech stack than anyone ever has. That's good. There there's, you know, email first, chat first, texting first.
Speaker 2:Yep.
Speaker 7:That's really where the business is. China does a good job of it, but all the new startups that I've interacted with are doing it even better.
Speaker 1:Yeah. So speaking of those new startups, like, I'm interested to hear from you since you're so far upstream of, like, the next tech shift. You know, we've heard about, like, drones. Like, there's been a boom in drones. There's there's been a few industries.
Speaker 1:What what are you seeing on the on, like, the next break out interesting industry of, like, things or objects or physical products that's being made in America that you have an early insight into where you're like, oh, I I didn't actually know that we'd have that as a customer. And now they're here making cool stuff, and I see their products, and that actually could be big. I'd be interested to see what your what your take on, like, the the hard tech world is broadly, even outside of, like, defense and and b to b.
Speaker 7:I I'm actually really excited about the basics. It it's not necessarily a category like drones or automotive or aerospace or whatever. It's people are making nuts and bolts here again. Sure. They're making washers.
Speaker 7:They're making just simple brackets. Stuff like that has been offshore for way too long.
Speaker 2:Got And
Speaker 7:a lot of people don't wanna make it because offshore could always, you know, outcompete.
Speaker 2:Yep.
Speaker 7:And so you'd lean on something like ITAR in order to, like, do your aerospace work that couldn't be done offshore. Yeah. But what we're seeing now is just dead simple stuff that is going into OEM components. And I was like, okay. Once we get that base, then you can add complexity as we go.
Speaker 7:So I don't know what the next thing is. I I think drones is a is a great one.
Speaker 1:Yeah.
Speaker 7:We're seeing a a lot of movement in in automotive Mhmm. Just with with OEMs that were producing stuff in The US. They have factories in The US, but the castings maybe came from offshore.
Speaker 1:Yep.
Speaker 7:Some of those castings are coming from here in The US now. So it's it's really exciting at the basic level.
Speaker 1:Yeah. Automotive's interesting. It feels like, you know, Tesla's obviously vertically integrated very heavily, but it's kind of caused, like, a rethink of all the OEMs. They all need to rethink their strategies. Anyway Well Gord, anything else?
Speaker 2:I'd like to see you guys acquire Intel.
Speaker 1:That would be get
Speaker 2:them on the right track because I think your
Speaker 1:your system of Good job.
Speaker 2:Dumb dumb finance or whatever you called it plus just hardcore engineering, it's clearly working.
Speaker 1:Yeah. This is working. Anyway, thank you so much for hopping.
Speaker 2:We are we're gonna be your next customer. We're we're gonna go We'll definitely make sure. We're gonna go to the website I got the call. This.
Speaker 7:Yep. Ready for the call. Alright.
Speaker 1:We'll talk to
Speaker 2:you You're the man. Alright. Thanks, guys. Thank you so much for joining. Bye.
Speaker 1:Thank you. We should end with this story of an OEM about the Cadillac, an electric caddy with Rolls Royce aspirations. It's in The Wall Street Journal today. GM is betting that the Cadillac Celestique with its ultra luxury ultra luxurious customizable design and striking silhouette will become a coveted electric limousine in the new gilded age of the hyper wealthy. What do you think, Jordy, about the Celestique?
Speaker 1:It's deep in the stack, but the boys are gonna pull it up. There it is. It's blue. It's got a little wagon vibe to it, a little hatchback. So this job requires an open mind, obviously.
Speaker 1:The our car test this week, says The Wall Street Journal. The Cadillac Celestique, a sultanic custom crafted electric limousine priced in the mid 6 figures, has some explaining to do. But it's so gorgeous. I'm prepared
Speaker 2:for this. This isn't a concept?
Speaker 1:This is a real car. They're shipping this. They're making it. This For starters.
Speaker 2:This is the
Speaker 1:What the hell makes GM think it can compete against ultra luxury legends like Rolls Royce, Bentley, Aston Martin, and Maybach? When it struggles to even build full size pickups properly, GM has one of the highest warranty cost and recall rates of any manufacturer. As for the Cadillac brand, most sales come from glowed up versions of mass market products such as the, Escalade SUV and XT five crossover. What does the Celestiq, a visionary four seat six figure electro yacht built to ply the oceans of global privilege have to do with that riffraff? Almost nothing.
Speaker 1:That's the point. The contradictions are largely a matter of optics. Unlike Jaguar, now on a production hiatus while ownership figures out how to retool and rebrand the classic
Speaker 2:This British market e
Speaker 1:is a four seater. Cadillac re is reimagining itself in plain sight. While the division's profits currently depend on internal combustion powered people movers in the North America, the Celestiq maps the brand's ambitions beyond The US in a gilded age of hyperwealth. And you'll have to be hyperwealthy because I imagine the depreciation on this thing is gonna be insane. Can you imagine buying a 400,000 electric car?
Speaker 2:When you could get a Bentley?
Speaker 1:I mean, the Bentley is gonna depreciate by 50 k in the first year.
Speaker 2:But what's the Cadillac
Speaker 1:gonna do? What's the Cadillac gonna do? 90.
Speaker 2:It's gonna look like a But a SPAC.
Speaker 1:They got f one now. They got Zuck. They got Kugen driving Cadillacs. And so maybe the brand's on an upswing. November 2024, Cadillac announced it would sponsor a team in the biggest, brattiest, most mammon worshiping of all international motorsports f one.
Speaker 1:Brick by brick, Cadillac is building itself an ivory tower. It wouldn't surprise me to see the division relaunched as an independent manufacturer in the next decade with its own IPO and everything. Let's just hope nothing ever happens to disturb the free flow of goods among our global trading partners. This is hilarious. Arcelestique arrived at my hotel in Monterrey, California two weeks ago leaving no head unturned.
Speaker 1:The sense of occasion is partly owed to the car's luxuriant size. 217 inches. Do you know how long that is? 220 inches is the size of, like, a full size, like, a Escalade, basically. So it is insanely long.
Speaker 1:The How thing makes a full size Lexus sedan look like a toy.
Speaker 2:How long is it?
Speaker 1:217 inches.
Speaker 2:Wow. So it's longer than the Maybach.
Speaker 1:Yes. Wow. MOG.
Speaker 2:Maybach is two fifteen.
Speaker 1:Two fifteen. Well, they got you by two inches. Has a 130 inch wheelbase. The status seeking proportions obliged designers to use the largest wheels and tires that could reasonably be fitted custom 22 inch Michelin Pilot Sport EVs wrapped around forged alloy rims. For extra swagger.
Speaker 1:You can specify 20 threes.
Speaker 2:You know the the talking talking with Jim at Senkutsen made me think that we should get a Cybertruck, lower it, put it on smaller wheels, and
Speaker 1:The Cyborrkons.
Speaker 2:Then to make a Huracan.
Speaker 1:Yes. Yes. Yes. Seen I've seen the demos of that. I would a 100% be in.
Speaker 2:Tyler. He's project.
Speaker 1:Yeah. Yeah. Build a build a sports car version of the CyberTruck.
Speaker 2:Just send cut send.
Speaker 1:Just send cut send. The design signature move is obviously the fantabulous fastback glass and the tapering rear deck lid, the hatchback of the gods. Here, I detect top notes of Jensen, Interceptor, and Maserati Moroc. The bet the brand's boomerang motif is restated in sizzling LED side markers in the sail panels. I chuckled I chucked my suitcase into the cut pile spaciousness of the cargo compartment and closed the privacy shade on the rear window.
Speaker 1:What a fantastic idea. The fastback four door configuration creates a chic futuristic cabin with, arranged more like an aircraft than an automobile with two sets of identical sports seats, gorgeous, divided by central consoles with armrests and interactive touchscreen displays all under the blister like canopy of tinted glass. I was pleasantly surprised. Over the years, Cadillac has rolled out a series of ultra of ravishing ultra luxury concept cars, the CN, the 16, the El Mirage. Have you seen those cars?
Speaker 1:The Cadillac CN. The CN looks insane. We should pull up a picture. That never made it to production for want of a business case. Cadillac's standard of the world model grew increasingly pitiful.
Speaker 1:Indeed, what make what much of what makes the Celestique compelling might have been nixed by an earlier generation of beam counters, the technically demanding carbon fiber hood, the radiotransparent material in the grill form allowing the LiDAR emitters to be hidden behind the glass surface, the shaved exterior doors with hidden push buttons replacing door handles, the nifty panoramic roof. That's the that's the CN. That's the 2002 Cadillac CN. They gotta ship it.
Speaker 2:I can see. I you're such a
Speaker 1:Super cool.
Speaker 2:You're such a Cadillac guy. I can just see you building out like the most the best Well, you can't
Speaker 1:buy that. It it was just a it was
Speaker 2:just a a There's always a price.
Speaker 1:There's always a price.
Speaker 2:Always a price.
Speaker 1:I don't know if there's a price for that. Think that's only in automotive museums. I think that
Speaker 2:butterfly doors too.
Speaker 1:Right? Yep. Yep. Pretty cool. Yep.
Speaker 1:They should have shipped it. It would have
Speaker 2:been Great. The Great option for
Speaker 1:the Mitsubishi of the Cadillac brand. But they're they're going back into halo cars. How does drive? It's stupendous. A nuclear
Speaker 2:attack Are they calling it sub halo car?
Speaker 1:This is definitely a halo car. I don't know that they're calling it, but it clearly is. The Wall Street Journal says it's stupendous to drive. It's a nuclear attack sub with heated massaging seats. Mecca Godzilla on little cat feet.
Speaker 1:Odd. Parts of California Route 17 winding over the mountains between Santa Cruz and Los Gatos, narrowed down to just four lanes separated by doom threatening concrete barriers. The traffic is fast, close, and competitive. I dialed in the car's lane keeping driver assistance and pointed it downhill, overtaking Porsches as I went. I could have driven with one finger.
Speaker 1:The unsprung mass of large wheel sets can provoke a grainy, noisy, undamped ride response. The Celestique chassis is, says, we'll have none of that. The car hangs on a variable sky hook of gravity defying interventions, including four corner adaptive air suspension, active magnetic dampers, active roll control, rear wheel steering, adaptive all wheel control. If drivers want, they can almost entirely eliminate dynamic body roll so the car stays absolutely flat in corners even as the lateral g's throw personal effects into the footwells.
Speaker 2:Maybach does have some body roll, especially when it's the way that Speeder drives it. Well, folks
Speaker 1:That's our show.
Speaker 2:I think that's our show. It is a three day weekend. We will not be live.
Speaker 1:We'll see you on Tuesday, folks.
Speaker 2:Our team has been absolutely grinding. They're gonna enjoy three full days away from the UltraDome. Yes. But Tuesday We will back.
Speaker 1:It'll be
Speaker 2:a big week next week. We've we've sensed that we've sensed that apparently people are gonna be announcing some fundraisers next week.
Speaker 1:It's gonna happen.
Speaker 2:Summer's over. Well, I guess summer's summer will be over Tuesday.
Speaker 1:Yeah.
Speaker 2:But
Speaker 1:And the fundraising will
Speaker 2:be Join the weekend. We're back on VHS. We love you. Good night.
Speaker 1:Good night. Bye.