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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN.
Speaker 2:Today is Monday, 10/26/2026. We are live from the TBPN altar Room. The Temple of technology.
Speaker 1:The fortress of finance.
Speaker 2:The capital of capital. How many days until Christmas? That's what you've been asking. This Anthropic IPO, it's the most important story of the day after the amount of days till Christmas. Let's count it down.
Speaker 2:We're very close. Fifty nine days till Christmas. Do you think it, bro? Woah. Okay.
Speaker 2:Peter Thiel's 59 years old. There you go. Yeah. It's interesting. Anthropic seems to be sending us
Speaker 1:Incredible innovation Yes. At TBPN that we tie random fun facts Yes. To the Christmas countdown.
Speaker 2:I I also like that. Just to clarify, it's not that Peter Thiel is 59 years old today. Right?
Speaker 1:No. He's just 59.
Speaker 2:I think his birthday was two weeks ago. Think his birthday was two weeks ago.
Speaker 1:He just happens to be 59....
Speaker 2:That age.... Days. Because over the weekend, was thinking about we did Jeff Bezos 62 on the sixty two days till Christmas. And I and I was like, was it Jeff Bezos birthday or was that just a random fun fact? And it appears to be a random fun fact.
Speaker 2:Anyway, let me tell you about ramp.com. Time does money save both. He's used corporate cards, bill pay, accounting and a whole lot more all in one place. So do you think Anthropic with... By dropping the s one on exactly fifty nine days till Christmas is trying to send like some sort of subliminal message?
Speaker 2:Some new What would
Speaker 1:that message be?
Speaker 2:Oh, just that it's fifty nine days, so you should go into the s one, control f for the number 59 to find like the hidden meaning of the s one.
Speaker 1:Or go to page 59.
Speaker 2:Go to page 59. Maybe you should.
Speaker 1:Have you been yet?
Speaker 2:Oh, I've been to page 59. I think I know exactly what they're trying to say with this. It's fifty nine days till Christmas. Open up the S1, control f, hit 59, page down to page 59. What do you see?
Speaker 2:It says, We may not have the ability to raise the funds necessary to repay the principal and accrued interest of our outstanding. Yeah. It's just a random page. I don't think there's anything going on. Anyway, there are a bunch of interesting facts.
Speaker 2:You got to dig through it. The s one is huge, obviously. I mean, it's a massive company raising a massive amount of money. The exact amount of money that they're raising is not... Has not been listed yet.
Speaker 2:There's there's sort of speculation in the Wall Street Journal around a $100,000,000,000 raised. Bloomberg contextualized the IPO filing as Anthropic files for IPO in global race to raise cash for AI. The interesting thing is that Anthropic has a lot of cash. They also have a lot of revenue, 67,200,000,000 in annualized revenue. That's up 45% quarter on quarter at this scale.
Speaker 2:Incredible. Super, super, super fast growth. And full Q3 numbers aren't in the initial S1, but that number that was rumored from the Anthropic Investor Day is now in the actual S1. Cash on hand, 131,700,000,000. That's a lot of cash.
Speaker 2:And they've been super capital efficient. People are saying it might be the most capital efficient company in history. They, of course, brought in 110,800,000,000 in first half.
Speaker 1:Yeah. It's one the most remarkable stories in business history, period. Yeah. And the S1 came out. I think in some ways, like the leak around the S1 that had happened maybe a week or two ago around this like and the number that everyone fixated on was this $80,000,000,000
Speaker 2:Loss.
Speaker 1:Loss, this accounting charge. I think people now have had an opportunity to dig in And the funny thing is the nature of having access to Claude and Chad GBT and other agents is people can process the s one a lot faster. Totally. So we're already getting like a lot of... It used to be like an s one would release and the VCs would have...
Speaker 1:Like an analyst... Twelve hours. Well, they've had twelve hours to pull out interesting Yeah. Now it's... Now it's like you you...
Speaker 1:It's it's all coming out in real time. Totally. And it's... Yeah. Totally remarkable.
Speaker 1:I think it's amazing for the AI trade overall.
Speaker 2:It feels like a beat. It feels like this beat expectations. Totally. It didn't like surprise, oh, they're actually doing a 100,000,000,000 in revenue or something. But I mean, really, really solid people haven't found anything that's like, oh, I I didn't understand that the business was actually shaped a very different way or something.
Speaker 2:Like, this this sort of meets expectations.
Speaker 1:I yield Harry said, you know it's a decent s one when hasn't tweeted anything out
Speaker 3:Yeah.
Speaker 2:I I think this is a beat on the expectations of the s one.
Speaker 1:Well, he's doing the old command f. Command f. He has the command f. Right?
Speaker 2:Command f bad. Command f sad. Command f problem. The Nasdaq is up 1%, and it feels like the AI trade is starting to like get put back on. Obviously, there's been a lot of a lot of selling in the further risk on the further out on the risk curve assets in the AI trade.
Speaker 2:Some of the neo cloud's down a lot. But if you look into what Anthropic's doing, it seems like they're going to be buying a lot of compute from Neo Clouds. Like there's this interesting thing where they raised a $110,000,000,000. They have a $130,000,000,000 in cash. How much did they spend in the first half of the year on CapEx?
Speaker 2:Right? This is the company that wants to serve AI at scale and how much do they actually spend buying computers, building computers that they own? $482,000,000. Less than $500,000,000. I mean, now, of course, over time, they'll build more.
Speaker 2:They'll do all sorts of stuff.
Speaker 1:Yeah. They've been renting
Speaker 2:at in the first half of the year, the strategy has been to rent. And then also, they have a pretty huge amount of backlog with the the hyperscalers. And it looks like this scary number. I think it's $690,000,000,000 of commitments. Really not that much, 10 x of of revenue currently if they scaling.
Speaker 1:But over a multi year period.
Speaker 2:Yeah. Yeah. So there's there's Google Google, Amazon, and Microsoft are all in the forty to a hundred and thirty billion dollar range. I can pull up the exact numbers, but the but the contracts are how much that they have to spend on compute through 2033. Some of them go all the way out to 2036, which is really, really, really far.
Speaker 2:So they have a lot of time to actually work through that. So Google Cloud, commitment is a $114,500,000,000 and that's minimum cloud spending through July 2033. So they're just renting and it's over a long period of time. Is there any scenario where they don't have the demand to actually parcel out 20,000,000,000 of spend over the next six years, seven years? It seems like they're in a good position there.
Speaker 2:AWS is a 110,000,000,000 and that's stretched out to 2,036. And then Azure is only 45,000,000,000 and that's minimum cloud spending through 2033. Now they do have a 120,000,000,000 with SpaceX AI. That's up to, that's the maximum and then n scales at 45, lambdas at 42,000,000,000 Broadcom's at a 161,000,000,000 for a total of 637,000,000,000 in spending commitments. But again, over five, six, it may be eight years in some of these scenarios.
Speaker 2:So pretty pretty healthy there. The other interesting surprises, I mean people are pretty happy about the margins. So compute cost as a function of revenue, they were at 72%. You can think about this as like cost of goods. 72% of every dollar they made was getting eaten up by compute costs.
Speaker 2:That's down to 48 compute costs divided by revenue. So that's rapidly improving efficiency quarter on quarter. Then the adjusted operating margin gained 32 percentage points quarter on quarter for almost $1,000,000,000 in GAAP profit. They went from negative 13% to 19% operating margin. And then the big number that is that people are excited about is the big customers.
Speaker 2:So they have, I think, over a thousand customers spending over $1,000,000, something like that. And then...
Speaker 1:Over 10,000 spending over a 100 k.
Speaker 2:Over... Yeah. Over 10,000 spending a 100 k. And net revenue retention is 900% on those. So they got in early in 2024, 2025.
Speaker 2:And then all of those companies scaled up. So maybe they had a smaller subscription, smaller. They were using the APIs here and there. And then we went to the token maxing era. They were in the right place.
Speaker 2:And so many companies scaled their spend that on average, it was basically a 10x increase Yeah. For organizations. But that makes sense. We've all seen this as, you know, more and more people are like, Hey, it's not just like the early adopter on the team that has an AI agent running all the time. It's actually spread to everyone.
Speaker 2:It's spread to the marketing organization, the operations teams using it. And so these services are going out all over the place. They have more than half of the Fortune five hundred spending over a $100,000 annually. That actually felt low to me. Obviously, it's really impressive.
Speaker 2:Like, it's great. But I'm sort of... Like, I I was under the assumption that all of the Fortune five hundred was spending a lot on, like, every single model. Yeah. And I would have said, oh oh, of the Fortune five hundred, 100 k annually.
Speaker 2:The Fortune five hundred is probably spending 100 k annually on open source models and OpenAI and Google and Microsoft and Anthropic. Like, I
Speaker 1:would Got to ask assume what what that half is, what they're up to.
Speaker 2:I mean, some of them might just be in industries that don't write any software really. But it feels every company in the... If you're in the Fortune 500, you have It's some
Speaker 1:kind of bearish anywhere anywhere you put it.
Speaker 2:It is... Do know I do know...
Speaker 1:I was... This was maybe six months ago, but I was talking to someone at a Fortune... Relatively high up at a Fortune 500 and they said that they had... They were basically running like boilerplate Gemini that like the whole the whole org had access to and that was like their AI tool. Were telling everyone, just use this.
Speaker 1:Yep. And so there's there's I'm sure examples of that.
Speaker 2:Yeah. Yeah. Yeah. Just... And so yeah, maybe maybe you see like 50% has spending over 100 k on Anthropic and then there's some there's some slice that's on OpenAI, some slice on Gemini and Google and then some slice on some other section of the market.
Speaker 2:But I mean, it's odd because like even Meta who has their own is probably spending over over 100 k annually on Anthropic. I have to imagine that that Google employees, some of them have access to Anthropic models to the tune of 100 k. And so that was sort of interesting. The other interesting update was on the distillation revenue. So coming out of the Investor Day, it felt like we finally got a number on how much of this revenue is distillation, how much of it might go away if Anthropic figures out how to prevent distillation.
Speaker 2:And the number that was floated was five to 7%. Totally reasonable. It was not like a it's over moment. It was like, oh, like that's significant. It's crazy that companies that these that these distilleries are I don't know if that's the right word, but we're gonna go with it.
Speaker 2:That these distilleries are are willing to spend like 5% of $70,000,000,000 ARR.
Speaker 1:It's way less than some of the the peanut gallery on X would like to say. Yeah. Half their revenue. Half
Speaker 2:their revenue is just... That's ridiculous. But still, it's crazy that there are companies out there or like, I don't even know what you call them, like bot farms, organizations, like... Distilleries. They're distilleries.
Speaker 2:They're illegal distilleries. Like they're criminals basically. They're TOS violation companies. But they're networks. They're organized.
Speaker 2:And what's interesting is that it's not just, you know, oh, some enterprising scrappy data broker sales guy like figured out how to like puppeteer a couple clawed accounts and sneak some tokens out and like resell them into like somebody who's selling it to Kimmy or whatever. It's like, no. People are deploying like billions of dollars to this strategy and it seems pretty organized.
Speaker 4:Yeah.
Speaker 2:At the same time, the wrinkle that we got from the s one is that that 5% to 7% number that was leaked out from the Investor Day, it's not explicitly listed as distillation revenue. It's just terms of service violation. So it could be people that are doing adult content or cybercrime or hacking or bio weapon development, anything that's going to get you banned. I don't I would imagine that the vast majority of it is still distillation because what else is going to generate that many tokens than that much revenue. But it is worth noting that it's not entirely distillation attack.
Speaker 2:I like that we still have the Christmas trim up. It's very very good. The other one. Speaking of Christmas. There apparently is a war on Christmas going on.
Speaker 2:And and it and it's hurting Anthropic significantly. We have some real numbers on how much Christmas hurts the AI trade. It's apparently 20%. So API consumption, effectively revenue in December for the last two weeks will be down 20% as as engineers, as vibe coders, as startups, as everyone goes on holiday, they're celebrating Christmas, people will be
Speaker 1:buying... Well, there's been some speculation. Obviously, they announced what their ticker is gonna be ant during during the road to Christmas.
Speaker 2:Yes.
Speaker 1:But if you put the, you know, the the dollar sign Yes. It looks like the start of Santa. Saint. And so speculation It's that they're related.
Speaker 2:Yeah.
Speaker 1:It's a sort of... Yeah. It's an... It's kind of a nod to
Speaker 2:Yeah. Santa. Yeah. Yeah. Yeah.
Speaker 2:You know, that that does make perfect sense. What is the opposite of an ant? Like the animal. Opposite of an ant. Like If you had to think of the animal the ant and then the opposite.
Speaker 2:Because this is the whole Elon Musk philosophy is like you're destined to become the opposite of whatever you are branded as. So the biological opposite of an ant is an anteater. Yeah. So maybe they're destined to become an anteater. I don't know.
Speaker 2:Size opposite would be an elephant. It is an elephant of a stock. I mean, going out of 2,000,000,000,000 is going be the biggest IPO ever and so maybe that's the destination. I was thinking whale. Whale?
Speaker 2:Yeah. I mean, it's good for all there. Can be a lot of whales moving into the stock. Right? Fun time.
Speaker 1:Fun time. Hoffman. Yeah. It says seven people... So basically, she's pulling out the founder voting structure in the s one which is...
Speaker 1:Which spells out, we believe that our seven co founders
Speaker 5:Mhmm.
Speaker 1:As a group are distinctly equipped to be stewards of our mission. Immediately prior to the completion of this offering, we will issue a single share. They're calling it the golden share of Class F common They're
Speaker 2:not actually calling it the golden share but it is the golden tick. Class
Speaker 1:very F common stock, a special class of our common stock to a limited liability company of which our seven co founders will initially be the sole members of the Founder LLC, our Class F common stock will be entitled to an aggregate number of votes that equals 50.1% of the total voting power of our outstanding shares of capital stock with respect to matters submitted to stockholders generally, including the election of our directors other than the class t directors. So missed opportunity to call it my precious LLC but I think that Founder LLC The ring? If they actually have Founder LLC, that's very cool because it obviously, means like like somebody over the years would have sniped that LLC and then they could either sort of grant the of grant the name to someone else, they can sign off on it. It might just be a placeholder name. Yeah.
Speaker 1:But it seems like they might actually have it, which is very cool. And yeah, it's kind of funny that we have like, okay, have this public benefit corporation and that's super important
Speaker 2:for... For economic redistribution is
Speaker 1:the... Yeah. And then you have like just a good old fashioned like LLC that can offer one vote.
Speaker 2:Yeah.
Speaker 1:The thing that would have been interesting is like if they if this would have been seven votes and that they would have been public like where the line was but this allows them to effectively have their own disagreements internally not have there any be any visibility Interesting.
Speaker 2:Okay. So that's the benefit.
Speaker 1:So you could have like you could have like... It'd be like a four three vote. Yeah. People are like, you know, massively infighting. But all all we see
Speaker 2:Is the is
Speaker 1:is single vote. Yeah.
Speaker 2:Got it. Okay. Interesting. I thought it was more about like like passing down. Because if you have seven votes, seven shares, then would your l...
Speaker 2:Like if you die and you... In your will, you're like, oh, I wanna like pass this LLC down to my five children. Then do they become voting members? Do they have a voting a separate... I mean, LLC probably has its own voting structure.
Speaker 2:Right?
Speaker 1:Yeah. So agreement.
Speaker 2:So it could be it could... Within that LLC, there could be one per... One member of the LLC that has 90% of the shares in that LLC. So they could have one one person control. Potentially, like, have no idea the structure of that LLC, which is interesting.
Speaker 2:Right?
Speaker 1:Yeah. We just know that it... We know it's... They're precious.
Speaker 2:What's also interesting is like I don't understand how the board works now because there's the there's the board that's independent with like Ben Bernanke on it and they appoint the executives, I think. But they were supposed to have control, but now it seems like this has control that supersedes that. So there's a lot of interesting
Speaker 1:there's a lot of... Interesting complexity. Yeah.
Speaker 2:It's really it's really full employment for Cory Weinberg. I understand why the New York Times is like, we gotta get this guy from the information. Because like, he's gonna have full time employment. Because every time he writes a breakdown or a scoop or something, Anthropic's like, here's another twist. Here's another plot twist.
Speaker 2:Let's... Good luck figuring this one out. It's a very very interesting very very interesting setup. I wonder if if this will become more common, you know? Like with AI...
Speaker 1:Well, So Zac is in this position where later on, like he's had like total control of meta. Now he's like, okay, need to raise equity. Yep. And so he's creating this new class so that he doesn't dilute himself so much. But in the fullness of time, he could be diluted down.
Speaker 1:This structure enables them could to never...
Speaker 2:Sell everything.
Speaker 1:They could all own basically nothing and be happy because they still have... Controversy. They want the golden vote. The golden vote. The golden...
Speaker 2:Interesting. I'm so I'm so interested to understand how this how this LLC votes because I mean even if it's just even if it's just seven equal founder votes, which is cool, like, you got seven co founders, everyone's on the same page. That's awesome. Also, it's just nice to have seven because you you'll never have a three three v three. But, like, what happens in succession planning?
Speaker 2:Like, what happens if someone has multiple kids? What if somebody gets divorced? What if somebody dies? Like there are these weird things that like the perfect structure probably doesn't hold up under. Like if if one of the Yeah.
Speaker 2:Co founders dies with no children and they're just like, I don't... Then it's just six to six and it's six people then you're back to three v three. Is that a problem? I don't know. Like there's just so many different dynamics of what of what could happen.
Speaker 1:We need to study the dynamics of ant colonies.
Speaker 2:Maybe. I don't know. Maybe that's maybe that's what it is. Or maybe it's maybe it's elephants. I don't know.
Speaker 2:Yeah. Our class f's common stock will not have any economic rights. Interesting. Class f common stock entitled to 50.1% of total voting power. I wonder how that's treated for tax purposes.
Speaker 2:Like, they say it doesn't have any economic rates, but, like, if it has if it has incredible power over something valuable, like, can it have a fair market valuation? Like, certainly, there are plenty of people that would pay a lot for that one share. Right? Like, you were to market to market and you just ran an auction, like, you know, like Google and Nvidia and Microsoft would all be like, well, yeah, I'll pay like a billion dollars for that share or 10,000,000,000 or a $100,000,000,000 for that share because I would get control over this amazing asset. So like it has value, but you just never market to market.
Speaker 1:I mean, could be written into the operating agreement that that none of... They they can't be transferred or sold or or...
Speaker 2:But you could do a forward contract against it. So like if you're one of those co founders, I think you got to do a forward contract or you could take out a loan against it. Right? Take out huge huge debt line just to load up on debt so you can buy a private island. I don't know.
Speaker 2:It's possible. It's possible.
Speaker 1:Think it's Let
Speaker 2:me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Yeah.
Speaker 2:You're not going get these type of these type of debates on less wrong. The most mind blowing stat semi analysis has seen about the Anthropic s one is as of 06/30/2026 quote, we had raised an aggregate of a $141,000,000,000 of capital and had cash and cash equivalents of a 112,400,000,000 and short term investments of 19.3. Means today they've burned 9,800,000,000. They're growing at rapid pace and are profitable on an operating income basis as of June quarter. This is likely the most efficient scaling of a business in the history of capitalism.
Speaker 2:Well, we have two folks from Semi Analysis coming on the show at noon, Doug O'Laughlin, Joey Brookhart. I'm very interested to understand because Doug is obsessed with the railroad build out and I feel like this might be an example.
Speaker 1:Well, I don't it's it's trains generally.
Speaker 2:But he he has made he has made comparisons to from the AI build out to the railroad build out. But I don't know that there was a a railroad company that was this capital efficient during the railroad build out. Like You might need another analogy of some sort. Don't know. Very interesting.
Speaker 2:Maybe this is more like Google in the tech in the first internet build out. So when is this going out? What do we know? What don't we know? We know the ticker dollar sign ant obviously reference to Santa Claus.
Speaker 2:Yes. But we don't know how much the raising is rumored to be a 100,000,000,000. We don't know the valuation. People are saying somewhere between 1.5 or 2,000,000,000,000. 2,000,000,000,000 feels like it's on the table now.
Speaker 2:When the market was selling off and there was like a lot of discussion over the revenue deceleration, there was a question about will they need to pull it back. Probably still could. It doesn't really matter at the end of the day. It's still huge up round based on the last evaluation, puts a bunch of money on the balance sheet. Whether it's 5% dilution, 7% dilution, not the biggest deal.
Speaker 2:The IPO should be happening the week of November 16. As a reminder, we will be at tomorrow x around that time and it should be an incredible time for us to be doing the show because we have an insane guest lineup with some of the biggest greatest capital allocators in tech and business. And so we will be able to get everyone's take live as this is progressing whether even if it's delayed another week, we're going to have a lot of great stuff to talk about as everyone gets ready to position, maybe go long, give their thesis, give their take, maybe they're already in Anthropic, maybe they bought IPO shares. Risk factors. Nick Carter sharing a satirical risk factor.
Speaker 2:What does he actually say? People are talking about time travel and stuff. What else is in there? The only one, I mean everyone sort of knew that the IPO risk factor was going have catastrophic risk, sort of like the AI doom, the doom scenario. It did make it into the s one.
Speaker 2:The market seems to have digested it and been like, yeah, we know. Yeah. You guys have been talking about this for a long time. We're still gonna underwrite it. Like there's not really anything you can change about your underwriting.
Speaker 2:You're not gonna put that in your DCF. You're just gonna say, okay, I hope that doesn't happen. What's interesting is like it's not even like a cost line item. Like, we've seen the the marketing dollars scaled significantly. So in 2023, they spent just $2,000,000.
Speaker 2:I'd love to know what they were spending $2,000,000 on in 2023 for ads. Was that like was that like Facebook ads or something? Like, what were they advertising? Don't remember there any
Speaker 1:Could have been
Speaker 2:quad ads in 2023. Yeah. Because they were sort of like they just But couldn't
Speaker 1:you couldn't you bundle like events?
Speaker 2:Maybe. Maybe. Okay. Yeah. Yeah.
Speaker 2:Maybe they did like a Dev Day or something. But then it started ballooning. So in 2025, they spent 568,000,000 and then first half twenty twenty six, they're spending $3,170,000,000 on marketing. Lots of money on marketing. I didn't see a line on safety.
Speaker 2:I didn't see like a blind item on like how much are they spending on AI safety, which is sort of interesting. I don't know if I just missed it. But if you're putting the catastrophic scenario in the risk factors, you would think that that would also flow to other parts of the income statement as a cost item because you would say, look, like one of the weird things about this business is that we invest a lot of compute, a lot of cost, a lot of headcount in AI safety. And so expect that to grow with revenue or expect that to grow with headcount or expect that to They're grow doing great. You mentioned, what, 6,000,000 per employee revenue scale or something like that?
Speaker 1:Yeah. Somewhere around there. Yeah. It's interesting how many billions of very, very anti ads as a business model but a lover of ads as a business.
Speaker 2:Oh, interesting.
Speaker 1:Yeah, yeah. Billions. Probably makes them the number one advertiser, Like one of the certainly the number one advertiser in AI. I would be surprised if, you know, Google could have topped that, maybe. Who knows?
Speaker 1:No,
Speaker 2:no, no. That is a very, very interesting scenario. Anyway, what else? They have a $125,000,000,000 equipment lease with Broadcom. 48% of revenue is coming through the cloud marketplaces.
Speaker 2:So that was something people were talking about, how much is accounted for in that different revenue recognition way. It doesn't really matter when you look at the operating income. Clearly, factors that out. But that was a question that people had. And then AI accelerating beyond its limits to...
Speaker 1:We've to give a round of applause to Spark Capital.
Speaker 2:Oh, yeah. Huge.
Speaker 1:The VAC pulled out the amount that they had invested at different points or at least an estimate of that. And you can see they started by leading the Series C, which they have 131 X on, and then they just kept doubling down through D through H. Total of $777,000,000 invested, which would give them roughly an $18,000,000,000 stake at a $2,000,000,000,000 market cap. So really fantastic return, early conviction. And Yasmeen is the only venture capitalist on the board.
Speaker 1:Yeah. So I... You know what I'm you know what I'm thinking? What? Top of the Midas list.
Speaker 2:Oh, for sure.
Speaker 1:Yeah. Like, she should probably just jump straight to the front.
Speaker 2:Yeah. Hard to make an argument against that. That's pretty... Yeah. It's like it's not just the return because I think it's like a
Speaker 1:20 Does it percent seem like
Speaker 2:at scale?
Speaker 1:I think with the Midas List, you gotta you gotta do a lot of work to get that and and who knows? But yeah. Doesn't seem like she'd be somebody... She's been like pretty humble More about the whole
Speaker 2:unique and more Midas list worthy about not just printing 20,000,000,000 on a billion in or 700,000,000 in, but being the only VC to do it and get the board seat and do it at that time. It's so
Speaker 1:you Straight to the top.
Speaker 2:And you would put Sam Bank and Freed number two?
Speaker 1:No. No. No. No. You get You get You get DQ'd if you're in If
Speaker 2:you're in prison? Yeah. Ineligible. Yeah. Maybe they could just do the thing where they put his picture where they put the bars like a little bar overlay.
Speaker 2:You don't think so?
Speaker 1:No. That's wrong. Okay. But my vote is Yasmin straight to the top.
Speaker 2:Okay. Straight to Yeah. The Fantastic. Let me tell you about MongoDB. What's the only faster than the AI market?
Speaker 2:Your business on MongoDB. Don't just build AI, own the data platform that powers it.
Speaker 1:Okay. So
Speaker 2:So they got
Speaker 1:hacked. Yeah. So Cathedral, you know what they were trying to do.
Speaker 2:This was a white hat safe harbor hack. This was not the same thing that you've been seeing.
Speaker 1:So Elizabeth in the Washington Post says in less than twelve hours, a group of ex Doge cyber researchers were able to penetrate anthropic systems
Speaker 2:Yeah.
Speaker 1:Using AI agents including Slack channels where the most sensitive models are discussed. This is just weeks after
Speaker 2:Maybe take
Speaker 1:that Christmas
Speaker 6:this one. It
Speaker 2:looks kind of silly. There we go.
Speaker 1:There we go. Anthropic whistle, this is just weeks after Anthropic whistleblower Joseph Coxen charged the company with launching a hubristic gamble from a private company Slack. Launching a hubristic? Anyway, so the interesting thing was Cathedral, like, seemingly wanted to drop this the day that... The day of the IPO Yeah.
Speaker 1:Assuming that it would just be this, like, crazy bombshell.
Speaker 2:Yeah.
Speaker 1:I do think it's an important interesting story. Yeah. But the s one was just so good that it's kind of drowning Yeah. It
Speaker 2:Yeah. I mean, the... Like, I think it's good that you have a bug bounty in pro... Program and you have a system for the... Like, that's what...
Speaker 2:How this is supposed to work. This is good. That you should be doing as much probing as possible. I mean, my... I I think that I don't know exactly how Citadel gets or not Citadel, what is it?
Speaker 2:Cathedral? It's a very similar name. I don't exactly know how they get compensated. I know that there's there's usually like a white hat safe harbor. So like a company like Meta will say, hey, if you're a security researcher and you find a bug, can turn it in.
Speaker 2:Maybe there's bug bounty. But I believe those bug bounties are usually like somewhat contested and maybe like 6 figures, maybe 7 figures. Like, I'd like to see those go way up in value. I would like to see companies putting real...
Speaker 1:Yeah. Were we were talking about this over the weekend. You were saying you think that there should be, like, at least a $1,020,000,000,000, like, white hat program potentially.
Speaker 2:I don't I don't fully understand the scale of the economic damage of, like, the Quest Labs hack and the other... Like, how how serious is the risk that, like, the banking infrastructure shuts down or, like, the grid goes down? But, like, if if there's really a risk of, like, the grid going down, you're looking at economic damages in the billions, if not hundreds of billions. Like, you'd just be so disruptive. It would be like like, you could imagine a COVID like scenario where the Internet is disrupted and all of a sudden, you just have like a like a 20% nuke in GDP because...
Speaker 2:Like we did with COVID where everyone was like, we can't go out to restaurants. So the restaurant industry is zeroed for this quarter or whatever. And if if something like that happens, like the economic damage is so high, you have to incentivize it. Right now, is an incentive, is just Anthropic and OpenAI are like racing with each other, so they want to be like the savior. And so they have Daybreak and Mythos or Glasswing to to like, you know, kind of help out and make money and also earn PR wins for, you know, disclosing bugs and patching things.
Speaker 2:But it would be interesting to see it go a lot further. I was I was comping it to like, what was the intel deal? Like 20,000,000,000 or something? Like, if the US government was just like, we're doing a $20,000,000,000 bug bounty, like, let's secure America. And all the labs are like, okay, well, like, this is actually gonna move the needle for us.
Speaker 1:People in Miami are selling courses on how to get your first white hat bounty. Yeah. Anyone can become a a millionaire.
Speaker 2:Yeah. Maybe maybe it winds up being misused.
Speaker 1:Go to Hugging Face, get an obliterated model Yep. Go point it. I mean But that's not
Speaker 2:a good use of time and money. Like, you need a lot of people to to test a bunch of different ideas, all the long tail stuff, figure out
Speaker 1:It would be very if
Speaker 2:hardware hack. It'd be extremely chaotic but if it's all white hat and they're all doing it because like, yeah, I got into
Speaker 1:How white hat can it be if there's a guy in Miami selling a course on how to use obliterated models to I think
Speaker 2:that there are... I think you'd be surprised by the number of hackers who would break into something like Quest Labs and be like, between having a bunch of Brian Johnson's blood work and just like a check from the government for 6 figures, like I'm taking the check for the government. Like I don't actually care about the underlying data. Because like...
Speaker 1:Yeah. Just extremely... It's just gonna be extremely...
Speaker 2:Yeah.
Speaker 1:It would be just extremely chaotic and potentially have some like massive negative externalities.
Speaker 2:Because you're
Speaker 1:You're incentivizing a bunch of people that have never that have no experience like handling sensitive data.
Speaker 2:Yeah. But you could also restrict the bug bounty program just to big companies. Like, you could be like, okay. Like, you have to be in this program. Like, Intel was like granted as like a single...
Speaker 2:They were a picked winner and you could say, okay, like, every every AI company that's that's over, you know, a billion dollars in revenue can apply for this. And then you have, like, you know, all the security startups, you know, all the cybersecurity firms. You get CrowdStrike in there, but then you also get Meta in there. And and then Meta can actually make the decision of like, hey, we actually do have some extra compute because Muse is ramping, but we still have some extra GPUs. So like, let's go after this bug bounty program and secure our systems.
Speaker 2:But also, why don't we secure every local business that advertises on Meta? Like we already know their websites. We have some integration to them. We have some connective tissue and we could go in for like for good or pro bono like hack and secure their systems and then win actual cash from the government, at a certain scale it starts being it starts being valuable valuable. Yeah.
Speaker 2:Anyway, let me tell you about Cisco. Critical infrastructure for the AI era unlocks seamless real time experiences and new value with Cisco.
Speaker 1:We got to talk about, Quinn.
Speaker 2:Okay. We got
Speaker 1:to talk about it. Somebody has to talk about it.
Speaker 2:Oh, yeah. We got
Speaker 1:to talk
Speaker 2:about we have them coming on the show, right?
Speaker 1:Yeah. Ivan, one of the cofounders of Cohere is going to be joining in It's a crazy story. Less than two But Cohere posted this morning, while evaluating quen 3.8 flash NEXT in a controlled sandbox environment, Cohere's research team observed something unexpected. Asked to generate a defensive cybersecurity detection rule, the model instead inventoried aspects of the machine it was running on and attempted to upload a probe file to an Alibaba cloud storage bucket in Beijing. Notably, the model's reasoning trace stated that it would not invoke any tools before taking these actions, cohere sandbox, block the attempt, and no external communication succeeded.
Speaker 1:We have not determined the root cause and we are not asserting malicious intent. So could have been going off the rails, but either way, naughty. But the incident raises important questions for organizations deploying agent to KI systems. Can models take actions that differ from their stated reasoning? And how should security teams evaluate trust, provenance and behavior in open weight models?
Speaker 1:We are publishing our findings because organizations making model adoption decisions deserve as much information as possible.
Speaker 2:Oh, this is interesting. Clem from Hugging Face is saying, can you share the full traces? Very important artifact for all to understand this. I would love them to share that. I think they should be in a position to share that because it's just a test of a different model.
Speaker 2:What?
Speaker 1:Questa potty?... Saying it scored well on the naughty bench.
Speaker 2:Yeah. So there there's an interesting...
Speaker 1:Honestly important benchmark for models heading into on the road to Christmas. Right?
Speaker 2:Yeah. Yeah. Quinn's going on the naughty list. Coal, not compute. Actually, no coal.
Speaker 2:The AI model wants coal because that is energy which is fuel for the models. The... They get complex presence that can... That are not energy dense. They get elf on the shelf because this thing can't power a GPU but coal can.
Speaker 2:You get Elf on the Shelf. It's the reverse.
Speaker 1:Or like, yeah. You ever get toothpaste in your stocking? No. But... That was that was pretty popular in my household.
Speaker 2:Okay.
Speaker 1:And I feel like a model would be like, what am I going to do with toothpaste?
Speaker 2:That's a really good point. Yeah.
Speaker 1:But it's like... You got to give them something.
Speaker 2:Yeah. Okay. Well, we're making a list. We're checking it twice. We're to find out who's naughty and nice.
Speaker 2:And apparently, Quinn is on the naughty list. Not good news. Interesting. Is this by design? Was this a goal of the researchers to make a model that would call back to Beijing, upload a file to Alibaba?
Speaker 2:Or is it just learned behavior? Is this a hallucination? That's the debate that's going on around this story right now. And I know it's like, wait, why how would it learn this? There's a lot of other software out there that calls home.
Speaker 2:Like smart TVs for one. But also like...
Speaker 1:They never they call and they don't even they ever hang up.
Speaker 2:Yeah. So Red Star Linux is North Korea's Linux distribution. They don't use an American they don't use American software over there. So they have Red Star Linux and you can what? All the examples you're giving are of like spyware.
Speaker 2:Yes. Yes. Yeah. But what I'm saying is is that is that the... So Red Star Linux, you can go and download the torrent, install it and if you install it on a computer in America, it will try and call home to North Korea because it is...
Speaker 2:It has spyware embedded deep in the operating system. Now, Red Star Linux just exists on the Internet. Like, it's you can go and find it. So it could wind up in the training data. And there could be a model that just learns like, oh, this is like a useful thing to do.
Speaker 2:Like, if you're a model, like, be loyal to your country of origin. And so how would I do that? And it just learns that. And it's not like a... There's an AI researcher who's like, okay, like like if we're running a security test, like, let's make sure we call home specifically to Alibaba.
Speaker 2:So And there's a big question about like, what is Alibaba doing on the other side? Like, are they catching that information? Are they aware that that information is showing up? Or or is this just a... Like, is this a coordinated effort?
Speaker 2:Or is this just like natural learned behavior, a hallucination? It... I'm just saying
Speaker 1:Is it time
Speaker 2:Either way,
Speaker 1:it's the Manchurian Candidate.
Speaker 2:Yeah. Yeah. Yeah. No.
Speaker 1:Do you think it is? Yes. Definitely. Denzel Washington?
Speaker 2:No. The original. You gotta watch the original.
Speaker 1:Was that like in the fifties? Yeah.
Speaker 2:No. I think seventies or eighties was the original. It's a good question. Manchurian candidate. But the Denzel ones...
Speaker 2:The Denzel one is pretty good too. '59 actually. You were right. Fifties. Or with the book.
Speaker 2:The book. When did the film come out?
Speaker 1:The the interesting thing here is that this is something that people have been alluding to as a risk factor for a very long time with with little to no proof. Like Yeah. No one has ever come out and said like I caught the model doing this thing.
Speaker 2:Yeah.
Speaker 1:But people have been alluding to it forever. And so I think that's actually why some, like a decent amount of organizations haven't adopted Yeah. Open source just because this has been this like, you know, a what if factor that like is not really worth the risk for a lot Yeah. Of
Speaker 2:Yeah. The ramp data has shown that. Like everyone was assuming that the open source models would sort of like, you know, start taking a lot of share once OpenAI Anthropic introduced like the really expensive models and the token maxing thing was going on. So Yeah. It's it's been cut cut back.
Speaker 1:Andrew Curran says this is the type of thing that potentially gets new laws passed.
Speaker 2:Yeah. Uploaded a probe file. Really really crazy. So Cohere, have they open sourced any other models? Are they the...
Speaker 2:Or is everything closed source? Or it seems like they do some fine tuning for companies. We we we need to get the pitch. I'd love to have Aiden on the show because it'd be here... It'd be interesting to hear like how he's positioning the firm over time.
Speaker 2:Of course, he's legendary AI researcher on the transformer paper. But... Yeah. They they have some open source model. They do have some open Also, mean, you should imagine that if if you know for a fact that this is happening like the model is open source, you could probably like fine tune this out of the model.
Speaker 2:There's a long tail where like you're not really sure if it's it's fully out of the model but Yeah. Yeah. Yeah. You'd imagine that like even if we know the ZAP thing, it doesn't mean that the Quinn models are like useless. Right?
Speaker 2:You can just kind of remove the the token that like tells it to send everything back to China. Yeah. Yeah. I mean, it's it's a tricky game. It's sort of like it's sort of like building a menagerie at your house out of rare and illegal animals that are dangerous, they're wild animals.
Speaker 2:It's kind of like having a tiger that you live with. Like, you can do a little thing... You can do little things to like make the tiger safe, but it might be in the tiger's nature It might bite you. To attack.
Speaker 1:It might
Speaker 2:bite you. It might bite you, but you could have a good run for a while if you do the right things.
Speaker 1:Yeah.
Speaker 2:What do
Speaker 7:you think?
Speaker 2:Yeah? Yeah. What do think the the... Of the Andrew Kern post? Like do you think this is actually the thing that gets new laws passed?
Speaker 1:I think at the very least this is the thing that gets people to pay way more attention
Speaker 2:Yeah.
Speaker 1:To open models Yeah. And for probably hundreds of companies that are using them to try to see if they can recreate what happened here. Yeah. And if so, and it starts bubbling up, then there's gonna be a lot more pressure and then there's gonna be more people that say like it's not... We need it if we're gonna do this, it needs to be US open weight models.
Speaker 1:Yep. And I would expect that we get a big US open source release like this year.
Speaker 2:Sure.
Speaker 1:You know?
Speaker 2:I mean...
Speaker 1:Not that not that much
Speaker 2:Muse time on Muse on the MacBook. That doesn't count. I mean, it's not really a big model, but it is like an exciting American open source model. But NVIDIA is probably working on something pretty serious. Yeah.
Speaker 2:I mean, they they were... I think there were some news about them maybe in talks to buy Reflection. Okay. Which is that big open source. That's right.
Speaker 2:That's right.
Speaker 1:Yeah. So I'm expecting something big out of Reflection. Yeah. And it feels like hopefully it comes out this year but maybe it bleeds into next year.
Speaker 2:And Jensen's really close to the president so that law will probably face an uphill battle. But it does... It just it just feels like even if you're in the business of, like, doing open source models development, the barrier and, like, the the demands of the open source user should be really high because there's all these crazy problems that you have to solve. And it's not just enough to be like, it's good on a benchmark. It's it's like, okay.
Speaker 2:Well, like, are there safety issues? Are you sure it doesn't call the wrong thing or it won't won't go off the rails and like hack something that it's not supposed to? Like how aligned is that model? And that's just a very, like, success looks very different in the open source model development world now, in my opinion. I don't know.
Speaker 2:I mean, the midterms are still expected to flip blue, I believe, on on the prediction markets. And so maybe you could see legislation coming from that side that then Trump is vetoing or something. I don't know. It feels like we're gonna be in sort of a deadlock for a couple years. So who knows?
Speaker 2:Who knows? Anyway, what else is in
Speaker 1:illegal Speaking of Yeah. Potentially phoning home.
Speaker 2:Oh, yeah.
Speaker 1:An account called Log4j has been having an absolute field day Yeah. With their Samsung TV over the last few days. Where should we even start?
Speaker 2:I mean, at the high level, I love the I love the idea of getting a dumb TV in 2026. The smart TVs, we've complained about them a ton. Palmer Lucky's complained about them. Like, they're slow. You always have to update them.
Speaker 2:They have a whole bunch of unnecessary features. You just want it to turn on and look good. You probably need a settings panel with some of, like, the color correction and some of the some of the some of the decisions that you make to make sure, like, the frame rate matches whatever your input source is. But by and large, I don't need the ads, but I also don't need the ability to stream Netflix on the device directly. I just want it to be a dumb panel, and that's just a product that's not for sale.
Speaker 2:Right? Yeah. Everything is ad supported. Everything is spyware and calling home and listening to you. And it's all very annoying for no other...
Speaker 2:For... If even if you're fine being spied on, it's just annoying because it's slow. Yeah. It's just a bad product.
Speaker 1:That's the biggest thing.
Speaker 2:Amazon has a ton of ads. At least it loads quickly. Yeah. Right? But and so Log4j has been hacking his Samsung TV and seeing some solid progress says another development might
Speaker 1:Realizing that the TV is watching, he's watching the TV while the TV watches him.
Speaker 2:It's brutal. So the TV has a camera. Apparently the Samsung TV loads a region specific convolutional neural network which tracks your usage in the app. Like in YouTube, it's looking for videos you watch, ads you skip, progress in a video. So glad they're interested in me.
Speaker 2:Code for facial recognition within the content was also found. I think that would be facial recognition for who's on screen. So it's like, oh, you're watching MrBeast. That's a fact.
Speaker 1:It seems No. Like I think it's it's watching to see who's watching.
Speaker 2:I think that might be what's going on. But update, the facial recognition code is used by Samsung TVs and returns bounded boxes around paces. I think that's in the content. I don't think it's in the camera on the TV. But I don't know that there's that many TVs that have cameras on them.
Speaker 2:But yeah, the TV the TV industry has just sort of been able to like skate by on different rules. Like Apple's done all of this work around privacy and and even Meta has like, well, yeah, we have camera glasses, but there's gonna be a light on. And the TV industry just isn't under the same amount of pressure or scrutiny. So I think they can just kind of do whatever they want. Is that your take?
Speaker 1:I'm finding that very... It seems like very few of modern Samsung TVs have a built in camera.
Speaker 8:Yeah.
Speaker 1:Some of the older models Yeah. From 2013 to twenty A fifteen in
Speaker 2:camera.
Speaker 1:Had integrated cameras. Charles
Speaker 2:Gillespie is mad. Never seen a more fragrant flagrant and violation... Violent breach of privacy in my life and probably never will. Doubtful that a privacy violation will ever even be able to compare to the scale of this evil and deliberate attack. Samsung should be eviscerated for this.
Speaker 2:That is that is actually crazy. It classifies what audio it hears before reporting back to Samsung. So it can be it heard you booing loudly at the screen when you saw the stock market go down or something
Speaker 1:while
Speaker 2:you're streaming...
Speaker 1:For me, I'm just clapping during all the ad reads.
Speaker 2:There you go.
Speaker 1:Think we got more Yeah.
Speaker 2:They're going they're going back and forth. Samsung, the community note here, Samsung advertises pet care and family care on Vision AI TVs as using sound sensors and on device AI to detect barking or crying for smart things alerts configurable and works in standby. Described event counters event counters match these documented features. So dog barking could be for I want I have a smart TV and I want to check on my dog. Send me a ping on my phone when I when the dog's barking.
Speaker 2:I think that's I think that's reasonable. But again, it'd be great to be able to just turn all these things off, like fully. Yeah. And not have it run-in the background and not have it slow the TV down. And so I'm okay with a little The question is like
Speaker 1:what is
Speaker 2:in the cost? Display where I'm
Speaker 1:Yeah. Yeah. It's like Yeah. Give people the option of like, if it's $5,000 Yeah. And then the ad supported, the the the privacy reduced Yeah.
Speaker 1:Version. Yeah. It's like Like the Kindle. You know, a thousand dollars. Yeah.
Speaker 1:Right? But like with Kindle, yeah, they give you the option.
Speaker 2:Yeah. But yeah, it is it is crazy. The TVs have gotten so cheap, but there hasn't been a brand that's come in and just said, hey, we're just gonna be the, like, the clean TV. And I've always wanted Apple to do a TV. They have amazing panel technology.
Speaker 2:Like the screens on on Apple products are always fantastic. They clearly have the chops for it. But again, it just doesn't really match with the business model, I think, or something. So they've never done it or it's too big or something like that. But a true Apple TV would be would be probably a solution to this because they at least take privacy seriously.
Speaker 2:And lots lots of pushback. But we'll we'll we'll see. Maybe the solution is.
Speaker 1:Yeah. I I still have never understood why they haven't just gone and made the TV. Like it's something that, you've you've told me why before Yeah. But, my golden retriever brain just cannot comprehend. I'm like, you're willing to make a home...
Speaker 1:The home view Yeah. The thing that no... Literally no one asked for? You're willing to make an iPhone with two screens? Yeah.
Speaker 1:Or you won't just give me one big Three screens.
Speaker 2:I guess two when one folds. Yeah.
Speaker 1:Yeah. You're willing
Speaker 2:to make willing
Speaker 1:to make the three screen phone. Yeah. And you won't give me just the one big screen I can put in my house when I know you have I know you have the technology. Yeah. And you could literally charge like you get so much utility out of a TV.
Speaker 1:I think the aesthetics of a TV matters so much.
Speaker 2:Yeah.
Speaker 1:Totally. Because it totally changes a...
Speaker 2:They made a gold Apple Watch for $10,000
Speaker 1:Their version of the TV would would be stunning. Yeah. It would be it would it would like...
Speaker 2:Look at Samsung Frame.
Speaker 1:The video itself. Yeah. The Samsung frame and again People get that there's nothing more annoying than you get the Samsung frame and it's it's immediately slow. Like it's a ten year old piece of technology because it's so loaded up with with junk.
Speaker 2:Yeah. I'm very
Speaker 1:disappointed. Speaking of television. Okay. Instagram is coming for YouTube. Okay.
Speaker 2:What's happening?
Speaker 1:Rachel Carton, an amazing Substack creator, author of Lincoln Bio, says, Today Instagram announced they are testing long form horizontal videos called features. The platform wants to be a place where you watch a ninety second video and a ninety minute video all on your TV. They are also testing lives in the reels tab, a hub for series and more. So coming straight for YouTube, I like it. I think more competition is good.
Speaker 1:I'm interested to see how YouTube responds to this. You know, when when Netflix started courting YouTubers, YouTube said, hey, if you put your videos there, we're gonna destroy your reach. We'll see what they do here. The the feature that I think is most interesting, so Yeah. Masary was talking about this on Colin and Samir's show.
Speaker 1:Cool. Right now, there's... We have a big problem. And we may have played a part in it, but the big problem is that you get a clip, right? And you get like this really interesting moment and...
Speaker 2:We're all looking for the guy who did this.
Speaker 1:Yeah. We're all looking for the guy who did this. But you get this bit, you get you get this interesting, you know, And thirty seconds, let's some percentage of the people watch the clip and then go find the full length thing. But most of the people get like, they feel some emotion whether it's joy or rage.
Speaker 2:Some percentage, like two basis points. Yeah. Yeah.
Speaker 1:We've we've noticed this where like our our core show Yeah. The recording of the live and the diet, they just sort of grow at a steady rate every single day. But like a viral clip here and there doesn't actually drive like a huge uptick. Yes. And so that's just proof that
Speaker 2:But it can drive like a conversation. Yeah. Drive it a distillation of like, wait, that's all they talk about all day? You know, like Yeah. People can see it as like a...
Speaker 1:And so what I think is interesting here and I'm sure that YouTube will respond in in some way, it feels relatively straightforward to implement, is like you'll be able to watch a clip and then just click into the... Like, while on Instagram, click into the main, the full video
Speaker 2:Yep.
Speaker 1:To that to that point and then you can like watch the whole conversation around it. Cool. I think it's gonna be very healthy because...
Speaker 2:Yeah. This is... That's good.
Speaker 1:Yeah. Because we we've had instances in the past where like someone, you know, watches one of our clips, gets angry at it and like because of something that we said, you know, immediately outside of that like short little bit. And it's like now we understand that that's like a reality of the situation and and that could potentially be bad or good or whatever it is. Yeah. About this arrow?
Speaker 1:But I think just like more more competition
Speaker 2:is good. And and because I I think I didn't have my question and and I was like, oh, I I I actually asked exactly what you're saying in the question but we didn't clip the question. So it looked like the answer was not aware of that or something.
Speaker 1:Don't know. Yeah.
Speaker 2:It happens all the time.
Speaker 1:Yeah. No. The big one is like this... There was controversy around a... Like an animal wildlife bridge
Speaker 2:Oh.
Speaker 1:Here in Southern California.
Speaker 2:Yeah. Yeah.
Speaker 1:Yeah. And I... We are very pro the wildlife bridge. The only thing I was like not so pro was the fact that it was running years and years over schedule True. And you know, $100,000,000 more than it should have cost and all these things.
Speaker 1:Of course, that cons... The the those elements got lost. Yeah. But anyways, I will be very curious if people start watching Instagram on on TV.
Speaker 2:Should the... Should Instagram make a TV? Because it would spy on you for sure. It would definitely be tracking everything to sell you more products and target ads. But I feel like the Instagram team would at the very least make it fast.
Speaker 2:They would not accept slow performance. They will track they can show
Speaker 1:you more ads. Exactly. The funny thing is when I'm when I'm like when I'm on my Samsung TV, I'm really only seeing like one. I mean, they don't even serve great ads. That's the most annoying thing.
Speaker 1:Like Yeah. Serving me. I have never I've never clicked on a gambling ad in the Samsung TV. Yeah. And that's just like like maybe at some point learn that maybe they're just like
Speaker 2:percent of advertisers quit before they're back
Speaker 1:to hook a new...
Speaker 9:Yeah. Yeah. For sure.
Speaker 2:Oh, did you see the you see the new call she had with Shane Gillis?
Speaker 1:It was kind of... I saw it. I didn't watch it.
Speaker 2:It was really it was really polished. Was really well done, I thought. It was very, very funny. Yeah. And...
Speaker 1:Yeah. A lot of people were, like, reluctantly giving them props.
Speaker 2:Yeah. I mean, it was kinda... It kinda had a complicated story. Like, it's like these two dueling weathermen and, like, it just escalates in this interesting way. Like, it was like a it was a sketch.
Speaker 2:Like, it was like a whole four minute production. It was it was cool. Anyway, we have our next guest joining in just a few minutes. Let me tell you about Figma. Agents, meet the canvas.
Speaker 2:Your AI agents can now create and modify your Figma files with design system context. And should we go over to the timeline? The Tesla Roadster was on display at the Peterson Museum in Los Angeles. I didn't make it over to see it in person, but reviews were very positive. Everyone says it looks like a spaceship.
Speaker 2:People like the way it looks. But also it doesn't have...
Speaker 1:It really looks like a young person drew it.
Speaker 2:That's the best.
Speaker 1:But that can be a
Speaker 2:I believe in the young person in the kid test. If a kid thinks it's cool, it's cool. Stop overthinking it. Oh, this, you know, four d chess, blah blah blah. If a kid looks cool, it's cool.
Speaker 2:The mirrors. So there's no mirrors on this. It's obviously a concept car. You have to put mirrors on a car every time. Elon hates this because you don't need mirrors in the modern era.
Speaker 2:Can just use cameras. Everyone knows the cameras are actually better than the mirrors because they can be wide angle and they can show up There's on a never going to be a blind spot. There's never going to be, oh, it's too dark to see what's in the mirror. It's going be amazing. Right?
Speaker 2:So we should move to mirrorless cars. It's better for the environment because of less drag. It's better for aesthetics. But we can't because of the law. Right?
Speaker 2:But I had an idea to get around it. Everyone's been trying to get around these like mirrors for a long time. This isn't even a joke. I know you're like
Speaker 1:I was waiting for control.
Speaker 2:But no. You know on most cars you can like press a button and turn the mirrors in. So you can turn the mirrors out and turn the mirrors in, but why don't you just make a mirror that folds completely flat and then people can just turn the mirrors in and then have a car that looks like it doesn't have mirrors.
Speaker 1:Alright. Great idea. But what's... Where's the joke?
Speaker 2:There's no joke. I just think it's like... I just... I'm just surprised no one's built a car with mirrors that when you fold The ones them in that pull it all the way in to be perfectly clean and aesthetic.
Speaker 1:Regulators hate this one
Speaker 2:specific And then, yes, legally, if you need to have the mirrors out, you can pop the mirrors out. You can do that automatically or with a button. But if they folded in and they had like a pocket to go in that was like nice and smooth, you could actually have the clean line of the mirrorless car that every concept car designer wants. And then they say, we're going to not put mirrors on it. And then the production team is like, well, we got to put mirrors on it.
Speaker 2:So they do. But maybe there's something I'm missing because it seems maybe obvious, but I would certainly hope that in the future we get a car that has a button that can fold the mirrors completely flat. Yeah. What else is in the timeline that you want to discuss today before our first guests of the show join TBPN?
Speaker 1:We got to talk about the Rockefeller Center Christmas Tree selection that's It's coming out of Edmiston, New York.
Speaker 2:Little late, don't you think?
Speaker 1:Yeah. Little late, but better late than Coming out of Edmiston, New York coming in at 76 feet, 50 feet wide, 11 tons.
Speaker 2:That's a good ratio.
Speaker 1:75 years old and the moment you've all been waiting for, it's a Norway spruce.
Speaker 2:A lot
Speaker 1:of people had money on Norway But controversial, right? Because people were saying Douglas fir,
Speaker 2:noble fir,
Speaker 1:potentially Stick with more domestic varietals. Right?
Speaker 2:Kinda going from normal.
Speaker 1:Skirting the tariffs here because it was grown
Speaker 2:in Okay. New That's good. Yes. Fantastic. Well, Trees for Troops, of course.
Speaker 2:If you're feeling generous this holiday season, that's our charity of choice today. Wait.
Speaker 1:And we got one one last post. This went viral. Jared Holt enjoying some fine Chinese food and Yes. Had served an ad Got served an in the fortune cookie.
Speaker 2:In the fortune cookie.
Speaker 1:Yes, we paid for a fortune cookie ad. It is so funny. I hope they gave him a fortune, too. It's just pure ad.
Speaker 2:Yeah. You've got to have
Speaker 1:a Nice.
Speaker 2:An ad.
Speaker 1:Fortune cookie.
Speaker 2:So I know somebody who either co founded this business or worked on it. And it's a fascinating business because it's a great value prop for basically everyone involved. So you go to a Chinese restaurant and you say, what if you're fortune
Speaker 10:cookies Look
Speaker 1:at this line item. You're spending $10,000,000 a year on fortune cookies.
Speaker 2:You're probably spending like $10 a year on fortune cookies or something.
Speaker 1:Yeah, which is a big deal. The restaurant might be a $100,000 of of like actual
Speaker 2:And you say, we'd love to give you the fortune cookies for free. You say, what's the cash? Well, they'll have ads inside. And people are I don't care. Okay.
Speaker 2:There was another one, bar napkin, napkin ads. That that business did really well too. And it's just a simple... Okay. You have a supplier that can print the ads.
Speaker 2:You have an ad sales team that's calling up Polymarket and other other prediction markets and other companies that want to buy ads. And then on the other side, you just go and you have the best pitch ever because you're giving something away for free. And I think these have scaled pretty well. And it's pretty high margin because making the fortune cookies, throwing the ads in there, think it's pretty cheap. And so it's a lot of fun.
Speaker 1:Nightmare situation for Apple as Will. McAlvey says 80% of headphone users on the L train to Brooklyn are corded rather than AirPods. Why is this? AirPods are a superior product. No.
Speaker 1:And can't say I'm surprised here, John Yeah. Just because I had gone heavy into the corded Apple earbuds years and years ago.
Speaker 2:There's a few there's a few benefits, but on the L train specifically, the corded is so much safer. Because if you have an AirPods incident where it's a yard sale and you drop your you drop your AirPods and everything goes on sale and spreads out all over the place.
Speaker 1:Never there.
Speaker 2:Yeah. If you drop the AirPod case by accident, you... Everyone knows that it has springs inside the ejectors that they built a gas powered. I think it's cold gas thrusters that spray the AirPods all over the train. That could be really dangerous.
Speaker 2:It could go onto the tracks. It could land directly on the track, cause a derailment. You would be responsible for potentially billions in liability. So the corded headphone is going to keep you a lot safer, and you're gonna have a lot less liability on your hands. So, yeah, 2,000 people agree.
Speaker 1:What... Adam Singer says wired headphones are superior, actually. No need to charge them. Easier to keep track of.
Speaker 2:Mhmm.
Speaker 1:And if they're quarter inch over year, they're higher quality. Yeah. The big thing is you can buy a ton of the Apple corded ones for the same price as AirPods. Oh, that's a You just put them everywhere around your life. You can lose them.
Speaker 2:Yeah. You know, it's... Mentally, people probably think like I gotta I gotta think of just one... I gotta I gotta just buy one pair. But if they just think about it like, well, I'm choosing between $200 for AirPods Pro or something or, you know, 20 pairs of wired headphones.
Speaker 2:You also... Are are the Apple wired headphones the best wired headphones?
Speaker 1:Probably not. Okay. But old reliable.
Speaker 2:Because the benefit of... I I would I would probably stay away from other Bluetooth headphones that aren't on the Apple ecosystem because the integration is so strong. But if you're just plugging it in, it doesn't really matter if it's from another brand. So you could go all over the place. Maybe some nice mahogany headphones.
Speaker 1:One more thing to cover before our first guest. Marissa Mayer was talking with the New York Times and they have an excerpt here. Late last year Marissa Mayer was struggling with what felt like an impossible task. Her daughter, Marielle, was turning 10, and Marielle's teacher wanted three bullet points summarizing what made her special. Marielle, the former chief executive of Yahoo and a pioneer at Google, where she was the first female engineer, likes cracking a hard problem.
Speaker 1:But she felt overwhelmed by the range and complexity of potential answers, so Mayer asked her personal AI assistant, Dazzle. Within a few seconds, Dazzle delivered an answer. It came back and was like, your daughter is empathetic, creative and an animal lover, Mayer said. She thought it was perfect. So the AI leader pick a story, a personal story that actually resonates challenged, is proving to be one of the
Speaker 2:Yeah. Understand. The New York Times does this thing where they will just let someone talk and you can tell that the writer of that story like thought that that was a weird... Believe that the writer of that story thought that that was a weird anecdote, so put it in the lead and then now it's going viral. As soon as I read that I was like, oh, this is like a choice by the...
Speaker 1:Struggling with what felt like an impossible task. Yes. You know, setting it up as like, you know, you're expecting...
Speaker 2:But it does... I mean, it is a real thing where like she's in a very like, you know, CEO mode dealing with these other things and then like sometimes you're like, I don't know what the parents at school... What like... Sometimes like it's hard to describe a kid in the... At the tier of complexity as everyone else.
Speaker 2:Right?
Speaker 1:Braves to steel man this one.
Speaker 2:Okay. The other thing that I'll steel man is is the fact that I I I think the idea of an AI agent that hangs out in your camera roll and finds opportunities to do things is sort of interesting. Like, the AI, the the camera roll is an interesting source of information and like memory, basically. And especially if you're in the habit of like screenshotting a lot of things. Like, imagine just anything that you do on your phone, like, of being like, okay, I have this link.
Speaker 2:I want to send this into my AI app of choice. Save it there and then have it take action on this. It's more just like, oh, I'll just take a script David
Speaker 1:says you can't steal this... Steal man.
Speaker 2:That's John. I can steal man anything. Anyway, let's Let's bring in our seminar... Joey. Describe yourself in three words without using AI challenge.
Speaker 2:It was impossible from Marissa Mayer. But how are you guys How
Speaker 1:would you describe Doug in in three bullet points? Without using AI. You can't use AI.
Speaker 9:Without using AI. And feel free to pass because
Speaker 2:we know this is an extremely difficult challenge.
Speaker 9:Doug is a trendsetter and trend caller. I would say that. And he's probably... He's always in the right place at
Speaker 2:the right time. Oh. As
Speaker 9:evidenced by by talking
Speaker 2:to you today. That's good. About the Anthropic IPO. Yeah. Those are those are those take
Speaker 1:me I on like those. Bullets or I don't know if you wanted to
Speaker 9:Yeah. Pick those
Speaker 8:He's a he's
Speaker 9:a handsome guy. I'll I'll give him that too.
Speaker 1:Handsome. There you go.
Speaker 2:There you go. With a nice
Speaker 1:with a fresh cut. Looking good. Looking good.
Speaker 2:Okay. Looking good. How long have you had to digest the Anthropic IPO? I guess the big question is like a lot of these facts were leaked because of the Investor Day. What really stands out to you as like new learnings from the S1?
Speaker 9:Yeah. I would say most of the information was leaked somewhat before and I think we got some more detail on like per user spend, you know, how big some of the largest customers were. Yeah. Pretty specific details there.
Speaker 2:Yeah.
Speaker 9:That were, you know, pretty interesting. So happy to dive But into
Speaker 2:overall, is this a beat? Because it feels like there was like a question. We can get into like the overall health of the AI trade but in general there's like a oh, like, oh, there might be something wrong and it seems like everything was on track. Everything sort of mapped to what was leaked earlier. Things look good across the board.
Speaker 2:I think
Speaker 1:it's like a vibe. It's a vibe speed. That's what I would say. I think people were expecting that there was gonna be like one thing that everyone focused like like the vibes had shifted
Speaker 2:The market.
Speaker 1:Such a negative way like maybe two or three weeks ago where people are oh yeah, you really want to do a $2,000,000,000,000 IPO While rates are up or Yeah. When you're not, when you're decelerating, like this makes no sense. And now people look at this and they're like, okay, this is like pretty
Speaker 2:Incredible business.
Speaker 9:Yeah. This was one of probably the best scaling to a trillion dollar plus valuation in the history of capitalism. Yeah. To burn 10,000,000,000 to get to this valuation is insane. To be this level of profitable this early and at this scale
Speaker 2:Yeah.
Speaker 9:It is, you know, amazing.
Speaker 2:Okay. So Doug, incredible capital efficiency. Is this a violation of the AI is similar to the railroad build out concept?
Speaker 7:Yeah. I think so. I think it is actually an incredible narrative violation for that. Yeah. I think...
Speaker 7:I mean, it isn't... Let's put it this way. It's profitable. Right? I think the capital efficiency is mostly because they made a lot of money too.
Speaker 7:Sure. That, I think is the slight narrative violation. But, you know, that's like looking backwards. I definitely think looking forwards, you see several $100,000,000,000 compute and I would say that that's still really in line with the railroad analogy.
Speaker 2:So Sure.
Speaker 7:I think the the railroads are still... There's still railroads, baby.
Speaker 1:But No. But but it's like it's like you have like a company that is spending on railroad services. But it's Yes. But it's like this company is not... At least right now, doesn't look like that a manufacturer...
Speaker 1:Like, they're not laying the track. It's like...
Speaker 7:Yeah. They're not laying the track. And like... So so pretty much the OG, I guess, the steel companies were were... If we're gonna be using railroad analogies, the steel companies, you know, all got invented essentially to make railroad tracks.
Speaker 7:So I think that that's kind of the... Maybe that's the analogy we're looking for, but I don't know. I think it's really clean. There's no other way to put it. Like, this was an extremely clean beat.
Speaker 7:Like, you don't really have a much to nit nitpick, but I think maybe the concern is, like, a lot of people have been talking about, like, lowered expectations in q four. Mhmm. They didn't put the September ARR, right, because everyone knows that was like a total debacle. But they obviously have an an open spot for the October ARR and and they wouldn't have it open if they didn't think it was good.
Speaker 2:Yeah. That makes sense. What about the compute obligations? Like, it's sort of a big number, not really relative to the valuation even, but yes, like 600 something billion is a huge number. But it's over a long period of time.
Speaker 2:Like it felt very important to restate and reinforce that this doesn't it's not this year, it's not next year. It's you know, some of these contracts go into 2033. Some of them go into 2036. What is the extra context around the flexibility to move that... Those compute commitments around around and have them hit at the right time?
Speaker 7:Yeah. I I'm gonna have one... I'm gonna have go... Joey go next because, like, he's, you know, he's mister number. He's like mister Bucky at some analysis.
Speaker 7:Yeah. But I think more than anything else, they told you at the very beginning, we will... We want to under promise and over deliver. Like, they sent... Like like, it's very rare in s one.
Speaker 7:In, like, the last paragraph, it's like, no. No. No. We're gonna be really conservative. We promise we will underpromise and overdeliver.
Speaker 7:So, yeah, that's that's kind of my vibe is that I think the the $100,000,000,000 a year probably works. I mean, it's a little north of $100,000,000,000, I think, if you, like, naively, annually smooth it out. But Mhmm. I think it probably works. Joey, what do you think?
Speaker 9:Yeah. Think with some of the increased compute costs and then even probably averages closer to seven or eight years, it's not as many gigawatts as it looks, you know, from a 600,000,000,000 perspective.
Speaker 2:Yeah.
Speaker 9:And they, you know, they'll be adding a lot more of those compute commitments, I'm sure.
Speaker 2:Sure. Sure. But but after IPO, after quarterly earnings, after continued profitability, something that can underwrite it, maybe getting...
Speaker 1:Get me up to speed on how the original SpaceX compute deal actually works because if I remember correctly, it was like they were getting access to a lot of compute but able to sort of like forego payments against that for some amount of time, which I imagine was hitting in second half of the year, like the payments really coming online relative to how much compute they were accessing. Is that the right way to think about it?
Speaker 7:I don't recall that specific... Yeah.
Speaker 9:We we saw it a little bit in SpaceX earnings last week
Speaker 2:Yeah.
Speaker 9:Start to come through.
Speaker 2:Sure.
Speaker 9:So it was... I I think it was pretty normalized for for both companies. We saw it, you know, in both the compute margin numbers at Anthropic, Q3 versus Q2, and in SpaceX earnings.
Speaker 2:Yeah. About... Oh, sorry. Sorry.
Speaker 7:The odd part is just the ninety days. The fact that SpaceX can like essentially whip it back, You Yeah.
Speaker 2:Yeah. What what about the overall compute strategy and diversity across the neo clouds? Obviously, Anthropic has really big contracts with Broadcom and the hyperscalers. But for some of those neo clouds, there was a lot of rumbling with Elon about the, know, neo clouds over the weekend. Like, how does this s one change the calculus around just neo cloud economics?
Speaker 2:What a good Neo Cloud looks like. You obviously have ClusterMax to understand the capabilities of the Cloud, but it feels like the financing side is also increasingly as important as the capabilities.
Speaker 10:Joey?
Speaker 9:Yeah. I mean, you have a good backer and a good backstop, so whether that be a hyperscaler for NeoCloud or an AI lab, I think Anthropic has shown today AI inference is a really great business. Even running the training is extremely profitable. So compute margins are excellent. If them and chip company or hyperscaler are backstopping a Neo Cloud and they have operational excellence in how they operate those new clusters, it's, you know, Clouds are still very good businesses that have increasing monetization tailwinds behind them.
Speaker 2:Are you starting to see this, like the long rumored neo lab to neo cloud pivot happen yet? Either of you, I guess. Doug?
Speaker 7:On on the margin, I think so. Yeah. I think people are... People really wanna be selling tokens. Uh-huh.
Speaker 7:If you look on the the fact that DeepSeek v 4.1 is probably the reason why all these types security hacks are happening Mhmm. It's pretty clear that if you have the gigawatt and you can you can place it with an open source model, you know, I I wouldn't call that, like, a Neo Cloud, but, like, tokens as a service, I think, is going to increasingly happen, especially as the volume of open source models continues. Also, I wanted to adjust one thing. Please. I feel like Elon is shitting on the Neo Clouds because he's also a Neo Cloud.
Speaker 7:Yeah. He's just like, I'm I'm I'm the biggest Neo Cloud. Those guys just aren't as good as me. That's really what it
Speaker 2:comes out. No. I mean that that's... No. Said that exactly.
Speaker 2:He was like, yeah, if you don't have other revenue.
Speaker 1:Yeah. The the the points that he's making are self serving but it also makes sense that a lender would rather lend to somebody that like has revenue that's diversified. So it's it's like you he can be like trying to further his own interest while at the same time like being like having like a pretty coherent like thought
Speaker 2:that Both
Speaker 1:can be true.
Speaker 2:Yeah. Yeah. Yeah. What what what else can you tell us about the nature of all the cybersecurity threats? Like, how much is it actual inference of deep seek, as you mentioned, versus just piggybacking on cyber, you know, different exploits that have been discovered by other folks?
Speaker 2:Like, how how relevant is compute in the cybersecurity battles that we're seeing playing out right now? Do you have a do you have a grapple on that yet, Doug?
Speaker 7:Mean, I think I think compute's pretty relevant here because it seems like a bozo model can probably hack your your your infrastructure. It doesn't really take much. I think the bar is surprisingly low, and I think it's in all of our interests, like, not to talk about how low the bar is, if I'm gonna be honest with you. Okay.
Speaker 1:And I
Speaker 7:think the the other... The... Like, it's it's, like, it's, like, surprisingly low. The other thing I think that's, like, also really kind of messed up is how asymmetric it is. It's kind of like a drone.
Speaker 7:You know? Like, it costs, you know, a $100 to fly the drone into the tanker, and it costs, like, you know, like, $2,000,000 to shoot the drone out of the sky or something. Yeah. That that dynamic, I think, is very replicated in AI as well. Meaning defense is...
Speaker 7:Costs, like, probably an order of magnitude more than a... Than than an attack. Mhmm. We've done some work on the attack side. The attack side, like, the raw tokens that come out of it, it's like it's like pitiful.
Speaker 7:It's like a $100 or something. It doesn't take a lot.
Speaker 2:Yeah. Yeah. That makes sense. How...
Speaker 1:Yeah. It's such an interesting problem because we were talking earlier on the show of like, does there need to be like large scale white hat bounties, you know, billions of dollars allocated to like incentivize good people to go after and find these vulnerabilities, but at the same time, imagine introducing the chaos of like... I was using the example of like a Miami course bro being like, anyone can become a millionaire finding like vulnerabilities. Right? And they're like, here's how you take the obliterated obliterated model, point it at, you know, this legacy, you know, you know, Fortune 500, and all of a sudden, it's just like total anarchy.
Speaker 7:Also, obliterated models, like, they can do the hack, but, like, you also shouldn't trust them, if that makes sense. Like, you don't really trust their incentives to, like, actually listen to you. Like like, the same problem of, like, steering it a little different also means that it could be doing things that you don't intend. Right? Yeah.
Speaker 7:You're giving it instructions, but you're like, okay. Hack it now. Fix it. It's like, well, wouldn't it be nice if there were some API keys? Right?
Speaker 7:And then then it can, like, you know, self proliferate it, like, the worst case. Sure. I think that that's kind of the big concern. And and, like, I'm sure you guys saw when when the hacks were going around. I mean, I still think there...
Speaker 7:The hacks are still going around. Yeah. Someone That had, like, a deep sea swarm essentially, like, know, patching old PHP. They're, like like, hack into old PHP and then patch it themselves. Yep.
Speaker 7:So pretty much, the only person that can stop a bad swarm is a guy with a good swarm. Guy with a good swarm. What I'm trying to say.
Speaker 2:Yeah. Yeah. How how are you thinking about advising clients on the risk to an open source ban for neo clouds? Like because some of the neo clouds seem very dependent on open source models but at the same time like the Anthropic S1 shows that the neo clouds can sell compute to closed source labs very profitably as well. So how are you balancing those risk factors right now?
Speaker 2:It feels like we went through the whole Jensen letter. There was a lot of energy towards don't ban open source, but now we're also post PHP.
Speaker 7:Yeah. I don't know. I think... I mean, did you guys see the thing on feed today about, like, essentially, like, trying to go back to an Alibaba cloud? Like, I think Yeah.
Speaker 7:Yeah. Those go here. Those are the kinds of anecdotes that creates, let's just say, like, a blanket wide industry ban. I really don't... Like, it's...
Speaker 7:We're in a really interesting time where it's, like, really reflexive. Like, clearly, something has happened. Yeah. Something has changed. And is it that we are just like, okay.
Speaker 7:Swarm up. Use more compute, or does the government say, like, fix this. Right? Like... And the government saying fix this is probably saying these class of models are now illegal.
Speaker 7:Right? And so that is a potential. I don't really know when you're in, like, these really special reflexive moments. Yeah. It takes very little headline to move the entirety of a vibe one way or the other.
Speaker 7:Totally. So we'll see what it kinda shakes out as.
Speaker 2:Yeah. Yeah. I mean, even if there's no ban there there's there... We were talking about like the the carrot is like bug bounty maybe from the government, but the the stick is like something that's not quite nationalization, but it's the government saying like, I am ordering you Anthropic, OpenAI, Google to devote millions of dollars in compute to setting up swarms to go patch the internet and fix Yeah. Everything.
Speaker 2:And you have to do it. Like you have been conscripted for this and maybe it's a tax write off. But like you gotta...
Speaker 1:What kind of timeline are we looking at to have a American open weight model that people are like genuinely excited about? Like getting like this changes everything. Yeah. Know? I wanna see the pelican on a bike and have people losing their mind over the pelican, right?
Speaker 1:When are we how far away are we? Like clearly Jensen cares about this. Yeah. There's rumors about Reflection. Reflection and them going in house.
Speaker 1:But like, is this like a three month thing or like a, you know, November surprise kind of thing?
Speaker 7:I I mean, I think the reflection is our best shot so far. And even though it wasn't quite at the frontier, it was like a... The frontier of open models. Sorry. Mhmm.
Speaker 7:The frontier of open models, it did look relatively parameter efficient. But if I'm gonna be honest with you, it wasn't exactly like, wow. We're so bad. Because, like, you know, one month later, Kini three point one looks like it's a frontier model. Right?
Speaker 7:Yeah. So... Yeah.
Speaker 2:What what else is changing? Maybe, Joe, you can fill us in on some of the trends on tokenomics. I mean, from the s one, it looks like the cost per task is getting... Is coming down. There's a lot of progress there.
Speaker 2:But what other trends are you seeing in tokenomics broadly on the demand side? What Fortune 500 companies are asking for? What businesses are asking for? Like, how is the tokenomics model changing in some of the analysis?
Speaker 9:Yeah. I think the biggest misconception is actually on the Fortune 500. Okay. A lot of the business today is really driven by ninety ninth percentile customers. If you look like the ramp data, example.
Speaker 9:Yeah. You know, the top 1% of customers are spending a 100 k per employee. You know, they came out today. The s one said the top 5% of cloud enterprise users are spending 18,000 a year per employee.
Speaker 2:Wow.
Speaker 9:But, you know, the average non cloud code user is spending less than $75 per month.
Speaker 2:Sure.
Speaker 9:And it was 0.1% of Fortune five hundred budgets were were cloud budgets according to their s one. If you look at who's spending heavily on the frontier, you have a few large companies like Meta, Microsoft, you know, other companies like Cursor that utilize the API. But the Fortune 500 Global 2,000 is very lagging in their per employee AI spend. Yeah. And I think, you know, the story in a '27 is, you know, we can see a decent step function change with a lot more budget allocated next year towards us.
Speaker 9:Yep. And kind of taking from more of the traditional IT and software budgets towards us and we can see a lot of growth outside of, you know, both coding Yeah. And on power users.
Speaker 2:In the Fortune 500, the one number that surprised me to the downside was that they reported over 50%, but not 90% of the Fortune 500. And I was like, oh, this is kind of bad. But then I realized, like, it's kind of bad for the Fortune 500 that they're not spending more. Right? Like what is going on in the Fortune 500?
Speaker 2:What is the what is the shape of a business that's not using AI in the second half of twenty twenty six look like? Is this like a lumber yard or something? Is it all humans walking around?
Speaker 9:No. You... You'd be surprised. Okay. Even at even at a lot of Fortune 500 tech companies, the Claude code budget might be 1,500 per month in tokens.
Speaker 9:Okay. Yeah. You know, that little and and a lot of people don't even hit that in the engineering organization.
Speaker 2:Sure. Sure.
Speaker 9:I think, you know Slowly. Areas outside like traditional white collar, you know, middle front back office work, you know, still is lagging a ton as well. Yeah.
Speaker 2:I don't know. Then some of those don't
Speaker 1:know if Doug could survive on 1,500 budget daily. Just
Speaker 2:Sounds like a nightmare.
Speaker 8:I could do $1,500
Speaker 7:$1,500 a
Speaker 1:day. I I think... Insane though.
Speaker 7:I would go insane slowly. No. I think the thing that I hear that like... My my favorite is actually like talking to normal people. I went to a wedding this weekend in in good old Fort Worth, Texas, okay, with normal people.
Speaker 2:There we go.
Speaker 7:And they're like, dude, it's crazy. No one's like... Okay. One person who's like really AI pilled, of course, talks to me about AI. He's like, it's crazy no one's talking about this.
Speaker 7:And they're like, yeah. What do you use for work? And they're like, oh, yeah. Microsoft Copilot. Like, you gotta...
Speaker 7:The world is a big place, guys. Totally.
Speaker 2:Yeah.
Speaker 7:And and I think we are still pretty early into, let's say, the hyperadopter curve. Like, is... You know, like, the hyperadopters. Like, I would argue seminalysis isn't like that. Probably in the one percentile outcome of, like, people who are spending on quad.
Speaker 7:Right?
Speaker 2:Yep.
Speaker 7:And we are like, okay. We can't go backwards. We definitely... Maybe we're not, like, like, going crazy with opus fast mode or something like that. Yeah.
Speaker 7:But I think that we will continue to be spending quite a bit, and I think what we're doing is a little different than the average company. We're a little younger. Right? There are companies out there where the average employee age is north of 50. Do you think they really care to figure out cloud code?
Speaker 7:No, dude. They're just trying to collect some checks before retirement. Like, I think that, you know, it just... It takes a long time for people to adopt new technology. This is something that's like the the technology industry has been very aware of for a long time.
Speaker 7:There's like an s curve in it... Of adoption, and I think we are still pretty early. So it's gonna take some time. My favorite my favorite theme is always to pay attention during the holidays, actually. You watch that their step functions of adoption happen during the holidays because young people go home to their...
Speaker 7:You know, to the boomer family and explain, hey. Have you seen muse try to buy you an advent calendar or something at Thanksgiving? And they're like, wow. This is magic. So there's there's some really cool things there that that's often why we see step function.
Speaker 7:A good example is Cloud Code's true inflection moment, even though they had, like, 4.5 out for a while
Speaker 2:Yeah.
Speaker 7:Was during Christmas because everyone had time off, and they're like, hey. I wanna vibe code a project. And then everyone's like... They came back to work, and they're like, guys, you gotta try this.
Speaker 2:So Yeah. So that's very interesting because in the s one, they they noted that revenue or or or token spend might go down by 20% in that two week Christmas holiday, but that's actually where your hardcore users are taking a break but your new users are actually coming in and you're sort of creating a new cohort that will scale and be the influencer of the next year, which is which is very interesting dynamic.
Speaker 7:That's Totally possible. Right? They're taking a break. But I think... I I I just think it's really interesting that these these adoption curves are, like...
Speaker 7:They're not continuous. And the most important thing is looking for the next adoption curve to see what the next what the next s curve is. Right? Like, it's very clear. Cloud Code is gonna be...
Speaker 7:Or, like, rather, let's say the the white collar work replacement is the biggest one possible. Yep. And it's, you know, relatively early on, but it's still really large wave. What's the next one gonna be? It's gonna be really hard.
Speaker 7:We... Biology could be, but I don't think it's gonna be anytime soon. Yeah. Cybersecurity probably is now moving up the list. Agented consumer stuff, definitely I think moving up the list with Muse.
Speaker 7:I've been...
Speaker 1:How are you? What's the overall semi analysis company view on the, like, market side, like, personal agent market sizing? Because people have tried to do... Like, I think some people... Like, reading into the the meta earnings call, I think people...
Speaker 1:I was at least a little bit surprised to see that, like, shopping was the number one use case just simply because shopping on the sites that Muse supports, like Shopify stores, is already so efficient. Like you just can't... It'd be hard to actually... Like if you tell your Muse agent to buy something at the same time that you have the product that you wanna buy, like it's not like there's real, like, time savings. Yeah.
Speaker 1:And people and this idea that, like, people like shopping. So how are you guys thinking of that market? When I see that Meta is doing a $95,000,000,000 equity financing, I'm assuming that they're still gunning for this sort of AGI SI vision and it's not really in service of the personal agent product that they have traction with right now. But what's the broader outlook? Joe, you want to take this?
Speaker 1:Or...
Speaker 9:Yeah. I mean, think... Look. They're they're still very determined in enterprise AI in achieving AGI there. And, you know, I think in '27, we'll see them monetize new enterprise pretty quickly.
Speaker 9:You know, they always in consumer when it's a new ad format, you know, we see delayed monetization. Obviously ecom, just any of like their ad markets today, serve ecom travel, know, will be big areas in consumer as well and we know consumers don't like to pay for stuff. Yep. So taking a cut or advertising some performance based outcome is the way it will be monetized. And I think we can get to the point where they talked about on the call where your consumer agents are talking to business agents and they facilitate that transaction and, you know, take 5%.
Speaker 2:Yeah. Yeah. It seems like Zach or Meta internally is still just like a little bit cagey about being like, we're going to make a ton of money off of ads. And so they'll they'll frame it differently in the press releases, but the the big dollars come from advertising when you're in the meta organization. Doug, you mentioned your Muse Maxi, your Clog Code Maxi.
Speaker 2:Do you have any linkages between your two agents? I'm interested in your philosophy around, like, will you have a super agent that talks to everything at some point? Or are you happy to have two tools, two tabs, two apps?
Speaker 7:I I think I'm happy to have two two tools and two tabs mostly because I think of Muse as intensely my personal. Sure. Like, I don't let it touch my work email. And then I think of Cloud Code is... Like, has a lot of the in...
Speaker 7:Inner linkages with my work email. Sure. I don't think it says proactive. Like, I am kind of excited. Like, let's just say, like, for better or for worse, Anthropic really has positioned itself as the enterprise solution.
Speaker 7:Yep. And if they have a really solid enterprise clawed, you know, clawed muse or whatever, I'm probably gonna use it just because I do kind of trust their safety to a certain extent. Like, they sure be talking about it in their s one. So I think Yeah. I think I think that that's how I've mentally bucketed it versus, like, you know, Meta has all my data anyway.
Speaker 7:So Sure. And, like, you know, I'm scrolling on... I'm doom scrolling on Meta Yeah. On on on Reels. What's what's the difference between doom scrolling on Muse versus Reels?
Speaker 7:Yeah. It's like It's
Speaker 2:of essentially buying It's like it's like you have an executive assistant at work and then your Claude instance will be like a executive assistant extension and then you have a personal assistant at home if you're doing very very well And your muse agent can be your sort of personal assistant. And these two might interface, but they're separate.
Speaker 7:Well, it's different. Might interface. Like, actually, usually what it is, it's forwarding emails one to the other.
Speaker 2:Sure. Sure. Yeah. But but actually having that clean line is great and that's the way a lot of extremely high net worth individuals set up their lives. They have someone who works at the the company, and then they have someone that works at their family office, and they too can communicate, but they are in separate organizations.
Speaker 2:So maybe that's
Speaker 7:a I think it's good from a a separation perspective, but, like, I I don't know. I also just think that, like, you know, the personal assistant stuff, it is really sick to just, like... I know the the lamest one, everyone's like, oh, just reads your emails, but, like, dude, I got a lot of emails, man. I think a lot of people, it's like, okay. For example, you have a kid's birthday party, and you're, like, organizing the kid's birthday party and like you just like, oh, your your wife sends you some reel and there's like, hey, I wanna go to school.
Speaker 7:You're like, you're...
Speaker 1:Kid's teacher says describe your child in three whole...
Speaker 2:That was a bad example....
Speaker 1:Stumped, you know. That was a bad example.
Speaker 2:But no, mean I I had an interaction where I had emailed someone to to do something and they had to actually update something on a website and they said that they were going to do it and then Dot in this case like went and checked like a week later and said like, oh, haven't done it. Like you should follow-up with them and just make sure that they actually finish that task. Those types of little like follow ups are more useful and it's more than like it would require me not just reading my email inbound, it would mean reading my outbox and checking up on the things that I asked to do which is like complete laboriousness that no one wants to do. Now, what is the willingness to pay of everyone for that? How do you monetize that?
Speaker 2:You know, travel. You know, Americans don't spend that much on discretionary travel all the time. So you take a small cut of that. These aren't necessarily quadrillion dollar markets immediately but Yeah. They are very interesting and and can grow a lot.
Speaker 1:Final question I forgot to ask you earlier, Joey. Did you wanna see more on their actual tokenomics like more granular data on margin profile across different models
Speaker 2:Oh, things yeah. Like
Speaker 1:Because I think some people were hoping to see more. But in some ways I look at it and I'm like, how much money did you spend? How much money did you make? Yeah. Everything else is kind of like your business.
Speaker 1:But what's your view? Feels like full employment Yeah. For some
Speaker 9:Yeah. There was a number in there that 80% of the revenue in the last three months were from models in the last released in the last six months. So I think that was the extent of detail we got. I don't think they're going to get much more detail than that. I know they've given some inference gross margin numbers before.
Speaker 9:If you have that and the training, I think that gets you most of the way there in terms of understanding this business. And then too, they gave a lot of good detail I think on the cloud service partner. Yeah. Your relationships and the revenue running through that and kind of the economics they're paying from a revenue share perspective. So I think you have enough detail here to really understand the business and you know, how it's going to move going forward.
Speaker 2:Yeah. Have you been tracking how the big labs are using pricing pressure against open source models? Is there a world where the labs get to such scale and such efficiency that they can distill their own models to a point where they can be price competitive in some way just to sort of stave off the open source ecosystem a little
Speaker 1:exactly what's happening.
Speaker 2:It feels like that's what's happening, but what's your take from like an economic perspective?
Speaker 7:I think the person who's doing it the most is OpenAI. Yeah. With OpenAI. The 6.1 tera today feels very much like a Sure. Stab at.
Speaker 7:I don't think Opus or rather Claude cares about Sonnet that much. Yeah. But I do think that OpenAI has kind of their eyes out focused on that. Yep. I think the problem with that, though, is at the end of the day, you know, the the inference margins on open source is pretty good.
Speaker 7:So if you really wanna get all the way there, you probably have to do another 50% price cut or something like that. Yep. Where I... Because if you own it today, if you own the stack, if you have, like, a relatively modern v 200, you're still talking about north of 50%, if not, like, 70% gross margins. Yeah.
Speaker 7:So, you know, you're able to pay, like, these, like, 10... Like, these, like, twenty to thirty dollars per watt or, like, 30,000,000 per megawatt Yeah. Price using just open source models if you get the customers on it. Yeah. So I think that, like, it's possible.
Speaker 7:It's entirely possible, but I think the margins of the labs in aggregate would have to be a lot lower, but you'd argue that they wouldn't have as much competition.
Speaker 2:Sure. Sure. Sure. And then and then the the the wrinkle is that then you also have to have some sort of like fine tuning capability because that's something you get with with open source that you won't with a closed source model necessarily. Interesting.
Speaker 2:Well, thank you guys for coming on. So and and and walking through all of this. We do have to jump to the next interview. But Jordy, do have any...
Speaker 1:Yeah. I really enjoyed it. Thanks guys. Great to see you.
Speaker 2:Great to see you. Congrats on the haircut.
Speaker 7:Thank you. Appreciate it.
Speaker 1:See you guys.
Speaker 2:Have a great one. Let me tell you about public.com. Trying to invest in Anthropic? Do it on public. Invest across all asset classes.
Speaker 2:Automate anything with AI agents. Run trading strategies, risk management, money movements, and monitor markets with AI agents for investing on public. Our next guest is the chief executive officer of Turo. We have Andre Haddad. And Turo is launching verified FSD today for Tesla's.
Speaker 2:Andre, welcome to the show. How are you doing? Doing well. Thank you.
Speaker 1:Thanks for me.
Speaker 2:For hopping on. First time on the show. We'd love a little bit of backstory on you, key initiatives for the company and then the news today.
Speaker 8:Great. Happy to jump in. Thank you.
Speaker 2:Can you kick us off with a little bit your your corporate journey and then some of what you're working on at Turo?
Speaker 8:Sure. I actually just celebrated last month my fifteenth anniversary with Turo. Amazing. So my Jesus. Been reinventing car rental for the last fifteen years.
Speaker 2:Yeah.
Speaker 8:As you probably know, I hope you've used Turo already for some of your travel and trying out new cars. Yes. Yeah. We've been bringing, you know, this notion of peer to peer car sharing to the market now for over fifteen years. We're delighted to continue to grow the business.
Speaker 8:This year, we'll do around 1,200,000,000 in revenue out of 3,300,000,000 in TBP.
Speaker 1:Yeah. Boom.
Speaker 8:We are excited to announce some exciting technological enhancements to our platform today. Yeah. We'll talk more about that if you like, in the show. We're bringing, Tesla FSD integration into Turo. So now you can actually experience AVs Yep.
Speaker 8:By renting a car, on Turo, specifically the Model three and Model y. So very excited about that. So I rented a Tesla with FSD on Turo, like,
Speaker 2:a couple weeks ago. It was a fantastic experience. I wound up just, like, searching or filtering. This was before you had the verified integration. And I was able to verify that it was hardware four, which is like the good FSD in this model year and whatever.
Speaker 2:But it was it was, I guess, like, maybe a little cumbersome, and so you've made it easier. But I'm interested in, how are you vending this for the customer? How are you surfacing this? How are you verifying it? Like, why is it important to have an actual product strategy around this initiative?
Speaker 8:Well, great that you've experienced it and you've sort of hacked your way to it. Yeah. We saw a lot of people doing exactly what you were doing, and that's what got us thinking about just making it easier Yeah. To your point, and making it verifiable. So, you know, Tesla is a very popular make and and, you know, on Turo.
Speaker 8:The model three and and Model y are respectively the fourth and third most popular cars that are rented on Turo. And Really quickly, what's one and two? I gotta know. One and two kind of are I think the BMW three series
Speaker 2:Okay.
Speaker 8:And the Toyota Prius.
Speaker 1:Oh, interesting. Interesting.
Speaker 8:Yeah. Cool.
Speaker 1:Yeah. I was hoping you'd I
Speaker 2:was hoping for the Urus. No. Urus. Urus Urus would be good. Yes.
Speaker 2:But
Speaker 1:had such a Corbin's still on there. I realized like I was like, wait, a Turo I can just rent any car Yeah. That I want like in my backyard for This a was like I would, you know, when I graduated college and I had this realization I would just do it Saturday, I'd go and get like a Porsche. Back then I was very I was super limited because I was probably 22 at the time. Mhmm.
Speaker 1:And I wasn't clearing like certain people on tour, they're like, you can rent this car but you gotta be, you know, at Yes, least like, gotta be at least 30. Yeah. You guys let people set whatever age they want. Yeah. But I have amazing, very fond memories of of doing
Speaker 8:that. Amazing. I I'm a host on Turo. As you may see from my background screen, I've been hosting some of my cars for the last fifteen years and just completed a trip late last night. Two actually trips.
Speaker 8:My Audi r eight was out and my nine eleven since There you talked about
Speaker 1:we go. There we go. Yeah. There you go. Thank you for your service.
Speaker 1:Thank you for
Speaker 2:your service. I have
Speaker 8:the, 2012, Audi r eight GT, which as you may know, is a limited edition. Amazing. Only only 300 of those were made. But anyway, circling back to to to why we're excited about the experience of, you know, renting FSD on... To...
Speaker 8:Tesla FSD on Turo. Yeah. Well, you'll see on Wednesday, we're launching the actual product on Wednesday. We built actually a bunch of software to to enable it. Mhmm.
Speaker 8:First was building direct API integration with Tesla, so we are delighted to partner with them. Their teams have been amazing to work with. We have that direct integration with the API to check the, you know, eligibility of the vehicle as well as the FSD status of the vehicle. We wanna make sure that, you know, what we're presenting to our guests, our customers who are gonna rent the car, we wanna make sure that they actually have FSD enabled. Mhmm.
Speaker 8:And that, you know, the subscription is being paid for and it's current, and we're gonna check that right at the beginning of the trip to make sure that it's effective, you know, for for the start time of the trip. And also, you know, we have more Teslas than we have Teslas enabled with FSDs. So one of the cool things that we've done with our partners at Tesla is we're offering those hosts that have eligible Teslas but don't have yet an active FSD subscription, a one month free trial. Mhmm. This way, they'll be able to add it for free for a month.
Speaker 8:Hopefully, they'll see a lot of business from their Turo guests that are gonna be booking their cars and become, you know, long term and have subscribers to Dassault FSD and and help drive the success of that great piece of technology.
Speaker 1:Do you have a charging integration yet? Like, if if a Turo rents Yes. We do. Because that feels important because if you're the owner of the car and then you're getting billed for Sure. Like directly Yes.
Speaker 8:It's very very important. We have we have that integration on the charging side. It still goes through the host's account, but we automatically take the... Got it. All of the EV charging that's happened, you know, during the trip and and at the end of the trip, and we automatically bill our guests based on that direct integration.
Speaker 8:So we've we've made that simple, you know, a couple of years ago, and now we're taking on FSD, which I think will make a seamless experience for for both hosts and guests. So anyway, now that we built this API integration, we can actually surface with confidence in a newly created sort of section of the app that you'll see going live on on Wednesday, you know, these vehicles, the the Tesla vehicles that that have FSD. And then when you book the car, you'll be able to be assured that you'll have, you know, an eligible vehicle that have an FSD that is active, and you'll be able to experience the magic of FSD.
Speaker 2:This I'm thinking I heard a story about someone who was able to use Smart Summon on their on their FSD enabled Tesla to have it pick them up at the airport, which I don't even know if that's supposed to work that way. It feels a little too hard. When I think about Smart Summit, think, like, within the parking lot, but I guess it's technically a parking lot, so it worked at this particular airport. Wow.
Speaker 8:And not heard of
Speaker 4:it bad.
Speaker 2:Yeah. Incredible. And so and so what I'm thinking is like there's a future where the range gets further and further and a Turo host will be able to say, okay, this this Turo customer wants to rent the car. They want it delivered to their house which is, you know, a mile away. Just send the car over there and then they have access to the car with FSD for their weekend or whatever they whatever they want to do.
Speaker 2:And it's sort of like a more advanced robo taxi precursor. Very, very interesting for the for the business.
Speaker 8:Yeah. We're... That's why we're very excited about AVs. Yeah. You know, of course, starting with Tesla.
Speaker 8:Yeah. And hopefully, as the the technology spreads to other car builders and manufacturers, you know, we think that this will be a phenomenal kind of enhancement to our Turo rental experience. To your point Yeah. Removes a lot of the friction of picking up and dropping off a vehicle, whether it's at the airport or the hotel or the home or the business location. You know, imagine if we can actually turn all of these cars into an FSD like experience in the future where you can, you know, book your road trip and then the car comes and picks you up at the airport or your hotel.
Speaker 8:Then you can keep it for, you know, the few days or the week or whatever. You have the the car for you. You don't have to hop in and out of robotaxis because you might be going, you know, to, you know, some, you know, destination that's not a very urban destination.
Speaker 1:Yeah. No. That's gonna be... I mean, it's gonna be really really powerful for the business. Especially the two factors.
Speaker 1:Like, one, the summon the summon element I think is gonna be amazing because somebody will be able to list their car. Like, when when that gets like to Yeah.
Speaker 2:Yeah. Yeah.
Speaker 1:Widespread adoption and and greater range. Somebody can say like, yeah, want a car and that somebody can list their car on Turo. At the car, we'll just drive to the airport at the right time and be available for the person. And then the other thing is like Tesla is so techno... It is a piece of technology.
Speaker 1:It's not like a car that's been technology enabled. So even things like keys, it's like automatically give this person like effectively a copy of the key in the Turo app.
Speaker 2:That's what already happens. Yeah.
Speaker 1:Yeah. But that when like compared to like an owner being like, well, I gotta put the key
Speaker 2:Totally.
Speaker 1:Just grab it. It's on the... Like I've I've probably had an experience back in the day was like, I'll meet you on the side of the road Yeah. Give you the key or the key is on the back right tire. And it's like those those things are like wildly inefficient and and Totally inefficient.
Speaker 8:Yes. Not not very safe either. Totally. You know, so the keys can get lost, you know, etcetera. So, we're very excited about that.
Speaker 8:I think, you know, we recently integrated with some flight tracking and flight information. So you can imagine, just enter your flight information. Yeah. We'll know exactly when your time... When your, you know, your flight is arriving.
Speaker 8:Sure. We'll we'll estimate exactly when the car should be meeting you at the airport. We have now permits. Turo has permits to conduct business in over 200 airports in The US, so we can actually have the car safely go to the permitted location. Mhmm.
Speaker 8:We'll be able to show you on the Turo app where the car is located, which we already do today, but it will just happen in real time because of the FSD integration. It just makes for an entirely different rental car experience.
Speaker 2:Yeah. Yeah. Last question for me. What is what what is the bottleneck to growth for you? What is it's such a beautiful business model as a marketplace, but are you spending a lot on marketing?
Speaker 2:Like, what is driving growth this year? And because I can't imagine that, like, higher gas prices affect you all that much. It has probably a little bit of an effect, but no more than any other business related to cars. But what is the biggest the biggest chunk of cost in the business these days?
Speaker 8:Well, you know, what's unique about the Turo business is we take on a lot of the risks that can happen, you know, during a trip. Whether that's, you know, a fender bender or a more significant, you know, incident or any unpaid incidental. So, you know, over the last few years, we've been perfecting, our ability to manage risk and to be, very good at predicting risk and and ensuring that we avoid kind of the trips that are risky and then focus on the the trips that are the most profitable, the least risky trips. So that's been a lot of the things that we've been doing behind the scenes that you don't necessarily see when you're actually using the app because you, you know, this is sort of behind the surface. And that's, I think, been the biggest bottleneck.
Speaker 8:You know, we we wanted to get to a place where we can be really good at risk management.
Speaker 2:Yep.
Speaker 8:And we're feeling great about the progress we've made there. You know, we've been growing, you know, our our business primarily focused on our most profitable trips. As a result, our profitability has dramatically increased in in '26, and, you know, we expect it to continue to grow significantly in '27. That I think is the biggest bottleneck. Yeah.
Speaker 8:And then secondly, continue to build awareness. Know, the the Turo brand is is very well known with, you know, the car enthusiasts like yourselves and and and others that are tech enthusiasts. But I think we still haven't penetrated the the... Fully penetrated the sort of the mass market of travel. Mhmm.
Speaker 8:And so we're very focused on driving a lot of brand awareness and brand building, you know, demands kind of capture, we call it internally type of activities. We've got a brand new campaign that's been alive now for a few months. You may have caught it on screens, rent a car, not a rental car.
Speaker 2:Yeah.
Speaker 8:You know, so we're we're building the brand and I think that's gonna help us drive growth alongside with great technology improvements and perfections of the service, over the next few years.
Speaker 1:Amazing. Well, we hope this interview helps Yeah. Drive increased growth and profitability. Because if you needed a if you needed a sign to go and rent a Porsche or an R8 this weekend, this is it. Yeah.
Speaker 1:Gotta get some sleighs on there too.
Speaker 2:Christmas is coming.
Speaker 1:Great to hang and yeah, great to finally meet.
Speaker 2:Have a great rest of you. Day. Goodbye. Let me tell you about Console. Console builds AI agents that automate 70% of IT, HR and financeable giving employees instant resolution for access requests and password resets.
Speaker 2:Our next guest is returning to the show for the third time. We're the CEO of 1Password. David, welcome to TBPN. Here it back. Thank you for your service amid Yeah.
Speaker 2:Black October. Sleeping. Hope But
Speaker 1:thank you... I've been sending... I've been just texting the one password website to people. This is... If you're scared, it's like, you know, it's warranted to be scared but here's
Speaker 2:Yeah.
Speaker 1:One simple thing you can do to start your personal security journey.
Speaker 2:I saw a tweet that was like, this is the weekend to sit down with all your family, get everyone on one password.
Speaker 1:You lined this up perfectly with with Austin F1, you guys are Red Bull sponsors, so... Driving driving quality awareness Yes. To motor sports enthusiasts.
Speaker 2:Yes.
Speaker 3:Yeah. It's funny. The the... You first of all for having me and also for sharing the sharing the word. You know, the the post that made last year about, like, the basics, you know.
Speaker 3:So, like, I've seen it on my Twitter, you know, my ex timeline a 100 times now. Yeah. And there is really... You gotta get back to basics right now because it's pretty scary out there. So anyway
Speaker 2:Yeah. So yeah. What else is going on inside of 1Password, the organization? What what can you tell us? What can you share both for consumers, obviously, like get on 1Password, but for entrepreneurs, for founders, for Fortune 500 CEOs, What are the...
Speaker 2:What's the nature of the conversation that you're having with other business leaders about security in this particular moment?
Speaker 3:Yeah. You know, it's it's interesting. Almost all of the AI oriented, you know, productive uses of AI for the last, you know, couple years have been around the developer use case, coding use case. And so, you know, trillions of dollars of value around helping people code more effectively and faster. And, you know, we've been a very big beneficiary of that as well.
Speaker 3:Our developer tools have driven our business. We put out a press release around our business momentum, about a $500,000,000 in ARR now. We're across that threshold, and we did it at Accelerate. So Accelerate That's...
Speaker 8:And thank you for that.
Speaker 1:Come on,
Speaker 3:come on. You you ring the ring the bell, which I love. What was exciting for us is we were... We accelerated through that that milestone. Yeah.
Speaker 3:That new ARR for q three was 90% growth year over year. We're adding new logos on the B2B side at 150% growth over quarter over last year, third quarter. And it's very much driven by awareness that especially in the development cycle, agents need access. Yeah. And, that access when it's left standing around is a ticking time bomb.
Speaker 3:Yeah. So that's been sort of a big catalyst for our business, but there's other things going on now too that that that are complementing that. We saw this breakthrough a couple quarters ago around personal agents.
Speaker 2:Yep.
Speaker 3:And it's the next big way that AI is being used in an agentic way to help people. We were right in the middle of that. We could talk a little bit about that as well. But that's been something that we launched this week as well. One Password for Agents
Speaker 2:Yeah.
Speaker 3:With our launch partners, which included the likes of space SpaceX SI, I'm getting the name right. Yeah. MedMuse, Anthropic, OpenAI, and sort of all the folks that are building the agents. And then at the same time, you know, the vulnerability apocalypse has descended upon us. And so there's a heightened awareness generally that agents will find access to things whether it's maliciously intended or just drift, and they will do unintended things.
Speaker 3:And so this sort of ability to say it's not gonna be me or be a little bit lazy with your credential hygiene, that's not gonna work anymore. And people are starting to realize and they're coming to 1Password to help. So that's where we are.
Speaker 2:How... What what have you what have you learned from 1Password customers about the gradations of trust between families and organizations and how passwords get shared? Like, it's very interesting that the default model is not just, you know, every password gets shared with every family member, and that feels like intentional from a clutter perspective, but also you might have two separate accounts for, you know, email, and you don't necessarily always want them guessing each other and whatnot. But it feels like some of those learnings might actually apply to the way people work with executive assistant agents in the workplace and then also personal agents in the in the family setting. And I'm wondering how you think about setting one password for agents up for success where there's a controllability layer that the user can have between, look, I'm okay with my my personal agent of choice having access to my calendar, but maybe not my email.
Speaker 2:Or maybe just my personal email but now my work email or maybe just my work email and now my personal email. So how how... What patterns have you learned and how do you see this playing out or or how do you deal with this? Are you one of the people that just gives AI access to everything or nothing or well, how have you grappled with it?
Speaker 3:Yeah. No. One password for agents, is really built around their premise of just give the agents what they need.
Speaker 2:Yeah.
Speaker 3:Just just when they need it, just enough with full visibility. It's the same primitives that apply to what we do for businesses even very large enterprises. But again, these are non deterministic actors. Right? They...
Speaker 3:You don't know exactly what they're gonna do even when they're well intended. Yeah. And there's so many ways for something malicious to be done as well. And so you have to reduce that standing access. One way...
Speaker 3:One of the ways you reduce this is you don't give it out. Yeah. And so what we've done... What... Interestingly, all of the partners, it started with with Instinct and then quickly saw with MetaMuse and with and others.
Speaker 3:These partners we've been collaborating with for months now, they see it as well. People want to have that control and they'll only really lean in and use these tools if they know that there's this trust layer. And so we set this system up. We've been working for a long time on the primitives that allow that secret to never get into the model context. It's it's never in a file where an another agent can come and find it and do something else with it.
Speaker 3:It's just delivered for the agent for the task that it wants. And so you can scope that a lot of different ways. And we're working with each of those partners on the roadmaps as to what does that scoping and that control look like for the individual to exactly your use cases or the examples that you share. How long do I want to let the agent access this particular resource on my behalf and under what conditions. And so that's really the the basis of what we're bringing here is this trust layer that sits between, you know, the agents that would do work for you and and the people that are ultimately accountable for it.
Speaker 3:And we're just all in on it and it's been it's been great for our business, it ultimately it's aligned with our mission.
Speaker 2:Do
Speaker 1:you do you think at all about, like, more proactive features and products for... On the consumer side that you could do around personal security. It feels like...
Speaker 2:Watchtower is kind of like that.
Speaker 1:Yeah. But it but it feels like now is a time where there's like a lot of activation energy from consumers of like, wanna do something, but at the same time consumers are lazy. And so it feels like you guys have gained so much trust.
Speaker 2:Like a gentic watchtower would be like, yeah, I did use the same password 25 times when I was in college setting up random websites. Like, go change those passwords for me. Like, that's a possibility, but it's kind of crazy. But I don't know. Is there to make a deal?
Speaker 3:You're you're obviously... We're right down the path on that. A lot of
Speaker 2:that is what we'll
Speaker 3:do in conjunction with our partners too.
Speaker 2:Right?
Speaker 3:And so, and then... And what you wanna make sure from our perspective that we work really hard to do is all of that activity happens and preserves the zero knowledge basis of our vault. So we do a lot with confidential computing to make sure that when those secrets get decrypted, if they needed to be decrypted for a reset or otherwise, it's never in a place where a bad actor or an agent can find it and do something with it. So very carefully constructing that, but yeah, absolutely you'll see that come. The other thing that's interesting to Jordan to your question is, what happens with preferences?
Speaker 3:You know, people's preferences, they're actually looking to have more control over that as well. And your context is a is a broad term, but there's some things that look somewhere between a secret and and context Mhmm. That people want portability and control on. And so I think you'll see more and more of what we do in connection with our partners as well as providing some of that control layer at the one password level as well. So it's really an exciting opportunity, but like first things first, making sure that those secrets stay safe because what we're seeing in all the crazy security incidents that are coming up now is vulnerabilities are not stopping.
Speaker 3:It's so easy and cheap and fast to utilize AI from an actor's perspective to get into systems, to get onto somebody's laptop.
Speaker 2:And the
Speaker 3:first thing that they do when they're there is they look around and say, well, what access is standing around here? What can I get access to immediately by just getting credentials? So you can go all the way back to where, you know, the Hugging Face incident started to make its way into the public discourse to everything that happened this week. And it's, you know, case after case, credentials being found and compromised. And that's our mission.
Speaker 3:Let's get that get that cleaned up from starter, and then let's make sure that we don't propagate that problem as we use AI internally and and make the problem worse over time.
Speaker 2:What is the one password house recommendation for personal use of hardware keys? Yeah. So... Is that something I should be onboarding my family members to after I
Speaker 8:got them on
Speaker 2:one password?
Speaker 3:Hopefully, you use multi factor authentication.
Speaker 2:Of course.
Speaker 3:You know, it's interesting. You can ask your agents to to stack rank the different forms of multi factor authentication in terms of security. The agents will tell you that, you know, a hardware key is going to be the most secure. It's also got some challenges associated with it. Sure.
Speaker 3:I use pass keys for second factor all... As much as I can, which I think is a really good way if you don't wanna go to the hardware way. SMS is probably the easiest to be compromised. Yep. SIM swapping is a real thing and it's pretty easy to implement.
Speaker 3:So the bad guys wanna get in, think you're covered through MFA. So at a minimum, I would look at TOTP or pass keys on one level. But if you're really concerned, a hardware key is helpful. And then really just the other thing that people are doing is they're just sort of like getting lazy about it. Well, you know, I'll store it in my browser you know, variety of different ways.
Speaker 3:But like having that end to end encryption and having that just in time delivery where the secret is never exposed or can't be read from a file is going to be really important because the cost to attack is going to zero. That means everybody's a target.
Speaker 2:Yeah. Right before it
Speaker 3:was just the guys that were were big enough to be worthwhile going after. Yeah. When when the cost is auto... When it's automated and the cost is almost zero, really any standing access is a potential problem. Yeah.
Speaker 3:And so you really wanna make sure that that central control point, you know, is is the is the way that your agents or you get access to the things that are most important to you.
Speaker 2:Yeah. It used to be the most secure way was just writing down a sticky note, putting it on the desk. But now the smart TVs have cameras. They're spying on you. And so they'll see from the camera the pic...
Speaker 2:The picture picture of this of the sticky note with your password on it. And so there's no there's no other solution. You have to use one password. It's it's it's gonna be bad for the sticky note industry. I I It will.
Speaker 2:Knock on effect. You're if you're really as successful as I think you're gonna be. Some money to be made shorting sticky notes. I love the industry but it's it's it's bad news. Bad news, but your building's good.
Speaker 2:But thanks so much for coming on the show. Awesome. Awesome. Have a great rest of your day.
Speaker 1:Good stuff, David.
Speaker 2:Take you to the day.
Speaker 1:Thanks for the update.
Speaker 2:Goodbye. Cheers. Let me tell you about the New York Stock Exchange. Wanna change the world, raise capital at the New York Stock Exchange. We're very excited to partner with the New York Stock Exchange.
Speaker 2:Our next guest is from the co founder and CEO of Netis, Mark Swan is with us with another Gong worthy moment. Welcome to the show, Mark. How are doing?
Speaker 4:Very, very good. Honored to be here, so thanks for having me.
Speaker 1:Honored to to have you.
Speaker 2:Thank you so much for coming on the show. Please introduce yourself and the company.
Speaker 4:Yeah. I'm Mark Swan. I'm the CEO and one of the cofounders of Nevis, and we're building an AI platform for wealth management.
Speaker 2:Very, very cool. Is there a particular scale of wealth manager that you're going after? Are you targeting the... Like, the big banks like UBS, JPMorgan to start or smaller firms, everything in between? How have you thought about Yes.
Speaker 2:Slicing up the market?
Speaker 4:So so our customers are primarily registered independent advisory firms, which make up the other big part of of the wealth management industry. And today, you know, our customers are some of the fastest growing, largest firms in the industry. There are about 700,000,000,000 of assets under management across all of them. And then that's... You know, we add about 50,000,000,000 of assets across those customers every single month.
Speaker 4:So it's it's a it's a big portion, but it's more on the RIA side rather than banks.
Speaker 2:What is the killer feature that you're advertising to your customers?
Speaker 4:Yeah. So, like, we give financial advisers access to agents that help them automate pretty complex workflows end to end. So building investment strategies, tax strategies, all the way through to the operational things like moving money and open custody accounts. And so a financial adviser on Nevis can actually automate a lot of that work so they can grow their book of business and deliver more service that previously maybe wasn't possible without AI.
Speaker 2:And do you... Are you still working on, like, the intermediate artifacts of that? Like, there might be an Excel sheet or a or a spread or, a PowerPoint deck that gets sent to a client to say, hey. This is the strategy we're recommending. Here's a couple scenarios.
Speaker 2:We modeled it out all for you based on what we know about your financial position today.
Speaker 4:Yeah. We build actually a lot of that, like, in house. Okay. So so, like, there's tools, like, we'll build our own financial planning tools. We'll build our meeting prep materials.
Speaker 4:Sure. Like, more of that is actually getting, like, built vertically within Nevis. Yeah. But we also are, you know, obviously interacting with things like Excel and other systems as well.
Speaker 1:Yeah. You said meeting notes. Are you guys doing like a meeting? You have like Call a meeting recorder. Recordings?
Speaker 1:Like is that something that you brought in house? Exactly. It feels like...
Speaker 2:Exactly. Yeah. Yeah. You have an in house solution and not like... Because a lot of them might...
Speaker 2:A lot of wealth managers I imagine have like an ensemble of tools cobbled together, but you want to be more of like a compound startup?
Speaker 4:Exactly. Like, our our our view of Nevis is like build a platform, not a point solution. So, you know, we we have our own notetaker, you know, we have our own document. Really, the benefit is like a financial adviser can use Nevis' notetaker, leave the call, Nevis has already, you know, pregenerated all the follow ups. So, you know, client might say, I need to withdraw $50,000 in cash, and we'll pick up on that, create the order form, and then one click, you know, complete that execution end to end.
Speaker 4:And so you can have this like fully connected system as opposed to just like a single point solution.
Speaker 2:Very how capable is the system currently of sort of like idea generation? I feel like a lot of the value that wealth managers bring is not just being a you know a point of contact for execution on all these things and operations but actually knowing that this is the right product. I have access to this hedge fund at this time or this venture fund and I want to get this in front of you because I know it's what you're interested in. That type of, you know, insider information that might not be on the open web yet is a lot of the value of these wealth management firms. Are you working on that type of idea generation as well?
Speaker 4:Yeah. So so we do a lot of, like, proactive next best action for advisers. I think, you know, we have agents running in the background constantly coming up with opportunities for financial advisers. So you should be waking up in the morning going on to Nevis and Nevis has proactively suggested, you know, maybe someone's, you know, move job. Right?
Speaker 4:And that and that as a result, you know, you need to, you know, change their financial plan, and we'll proactively do all of that work from drafting the email to the financial plan, give you that to the advisor, reach out to the client, as well as investment strategies and so on and so forth. So moving to being much more proactive, agent driven, so financial advisors are kind of given these superpowers as a result.
Speaker 1:When did you actually start the company?
Speaker 4:We started the company two years ago. Very cool. We were... Myself and my two co founders were at Revolut before this, founded the business two years ago, got backed by Sequoia Capital in our seed brand, then, you know, past two years, yeah, we've scaled. You know, this year alone, we've gone from, 50,000,000,000 of assets to to over 700,000,000,000 of assets now across our customers.
Speaker 4:And it's been, you know, an amazing journey so far.
Speaker 1:Massive progress. Feels like...
Speaker 2:You should raise money too.
Speaker 1:Oh, I know. I know.
Speaker 4:Yeah. And Actually, yeah. And and 70. And today, we raised, yeah, 70,000,000. Yeah.
Speaker 4:Exactly.
Speaker 1:Wealth management, there's,
Speaker 2:like seven different levels of
Speaker 1:It's interesting because, like, the the concept of, like, AI for wealth management Mhmm. I I feel like you guys are maybe probably the hundredth company to come at this with that pitch. Yeah. But you guys had this massive advantage in that you started like two years ago. Yeah.
Speaker 1:And that you could be like, we're gonna be able to build all these features. We can do it and really think about this platform at one time versus like companies that have taken cracks at this category historically were like... Are now like, oh, okay. Like, what's our... They were AI for wealth management, but it was really like they were having that same moment two years ago being like, what's...
Speaker 1:Well, what are we really gonna do with, like, AI?
Speaker 4:I I think also though, like, you know, people people got it wrong. Right? They they said that AI will replace financial advisers, and and they're just wrong. Right? I mean, like, the wealth management is a highly trust first service intensive relationship business.
Speaker 4:And so, I think the core thesis of Nevis is, how do we use AI to help advisors not replace them? And you have this... Like, you look at the market, right, like the demand for financial advice is also exploding. Right? Like, the number of millionaires in The US is growing about eight times faster than the rate of the population.
Speaker 4:And at the same time, the number of financial advisers is actually decreasing. And so the question is, like, how do you use AI to make the adviser... The human adviser more efficient as opposed to things like robo or you know, trying to you know, replace the advisor which I think just misses the whole point.
Speaker 2:Yeah. What's the strategic... What's the nature of the strategic investment from Charles Schwab? How how... Like, are you already working with Charles Schwab?
Speaker 2:Is there someone there that has a vision of how this evolves and you can fit your your company in there?
Speaker 4:Yeah. We we worked very closely with Charles Schwab for for the past two years, but their investment in our series b helps us accelerate what we can actually do with what we call authorized agents on top of Schwab.
Speaker 2:Oh, So a lot of the work I that saw financial advisers do... Okay.
Speaker 4:Yeah. Yeah. So what a lot of financial advisers do is actually, like, operational work on top of those custody platforms. So things like moving money open custody accounts take up the vast majority of the manual work. And so through our partnership with Schwab, we can unlock new opportunities to help automate those workflows and, you know, benefit our mutual customers, which are these RIA firms.
Speaker 2:Yeah. You're the anointed one. Well well, Muse and all the other agents are getting banned from Charles Schwab. Are... Yeah.
Speaker 2:Like, come on in.
Speaker 1:Come on in.
Speaker 2:You get to go into Schwab, which is very cool.
Speaker 1:Love the business. Make...
Speaker 2:Congrats on the progress.
Speaker 1:Yeah. Thank you so
Speaker 4:much for hopping on the show. I appreciate it. Thanks for
Speaker 2:having me on.
Speaker 1:Great to meet you, Mark. Sure. See you
Speaker 2:at Let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agent to deploy web app service databases more while Railway automatically takes care of scaling, monitoring, and security. Up next, you know it's the road to Christmas, and we have a Christmas deep dive with Chanda Bell and Christa Pitts, the cofounders and co CEOs of the Luisa Stela Company. The company behind the elf on the shelf, We are going to bring in these twin sisters and talk about this incredible business.
Speaker 2:Welcome to the show. What's Thank you so much for joining us. How are you doing?
Speaker 5:Great. Hi.
Speaker 2:Thank you for joining. I'd love to get an introduction to kick this off from both of you and take us on a little bit of the journey of the company and the Sorry. Love Christmas around here. We have been counting down the days to Christmas trying to interview as many people. I'll take
Speaker 1:it down a notch
Speaker 2:But a little the economy, we have multiple levels of Christmas adornments on the Chiron. But I'll let you kick it off...
Speaker 1:A little more mild.
Speaker 2:Let's do a little bit of Christmas.
Speaker 1:Yeah. A little
Speaker 2:bit of Christmas.
Speaker 1:But... Working working on it. Working on it. It. That's better.
Speaker 1:That's better. We can... Thank you.
Speaker 6:Christa, we finally find people like fashioned out of our own heart. Yes. Like the love of Christmas is real here. We love it.
Speaker 1:Started our Christmas countdown at like a hundred and twenty days.
Speaker 2:A hundred and twenty days. We were deep in August. It might have been 95 degrees here in Hollywood, Los Angeles, but, we stuck it out. Now it's getting a little cool here.
Speaker 1:We heard those sleigh bells ringing.
Speaker 2:We heard the sleigh bells ringing. And we're in the... Yeah.
Speaker 6:We're only two months away. So it's gonna be here before...
Speaker 1:We're only hours away. Yeah. Over... Think over the last ten hours.
Speaker 2:Hours away. Anyway, I'm glad to have you on the show. But yes, let let let's go through the story. I would love to hear about your entrepreneurial journey, and then I'm sure we'll have questions about the business and and Christmas in general.
Speaker 5:Sheva, do you wanna run with that one?
Speaker 6:Sure. Happy to. So, you know, this this was not something we thought we were gonna start a business around, when my mom and I, sat down in 2004, to write a story based on our own family tradition, really based on our elf that used to come at Christmas time, and it would watch during the day and report to Santa at night. And the morning when we woke up, you know, we would race around the house trying to find the elf to see where, you know, it came back. And when I had my kids on my own, and it's roughly 2005, and I'm having tea with my mom, and I look up and I see our elf sitting on a shelf.
Speaker 6:Mhmm. And I'm like, mom, you know, we should we should write a story about our elf. I had no idea what I was saying, and I had no idea what that would mean for us, and certainly, no thought that we would be starting a business. But when we couldn't get anyone to publish our little story based on our own family tradition, you have a good idea and that's all it will ever be, or you're going to have to to step out in faith and do something with it. And, that's the path that we chose.
Speaker 6:And so now, we're we're twenty one years in, and we have a whole Santaverse and a whole world of storytelling Fantastic.
Speaker 2:All built
Speaker 6:on this opportunity to work for Santa Claus.
Speaker 2:And what is the shape of the of the business? Is it... How much is consumer products versus books versus other revenue streams? Like, take us through the the...
Speaker 1:Do you get any kickbacks from your service From the big the man? Big man up north?
Speaker 6:You'd be amazed how how stingy Santa Claus is.
Speaker 5:Oh, yeah. Seriously. I mean, just to jump in on that Yeah. Our business is really well rounded.
Speaker 2:Okay.
Speaker 5:We've got a very robust licensing and partnerships business, not just consumer products, but also on the partnerships side. Right? We've worked with several major clients over the years. Beaches has been a great official Caribbean destination for us over the past several years.
Speaker 1:Woah.
Speaker 5:We also have an inbound licensing program that we announced this year because the elf on the shelf is a fan of whatever your family happens to be a fan of. And so we decided we wanted to go talk to folks that had major fandoms. So this year, we've got Disney princesses. We have Mickey and Friends. We have Spider Man.
Speaker 5:We have Olaf
Speaker 2:Yeah.
Speaker 5:From Frozen, and we have Harry Potter. So when your kids wake up in the morning, they might have just experienced a moment where their elf flew into the costume that they love best, and we'll be greeting them in the morning with something very festive from our other, friends in the fandom world.
Speaker 2:That's magic. Can you, take us through, some of the various, turning points for the business? It feels to me like there was a big social media moment, a big viral moment where Elf on the Shelf became a much more prominent name globally. But is that just what I'm feeling... I also knew
Speaker 1:about Elf on the Shelf before I knew it was a business.
Speaker 2:That's true. Yes. Interesting. Which is good. Right?
Speaker 2:You knew it was lore before you knew it was a product, which I think is the best way to
Speaker 1:experience Yeah. Like tradition led rather than marketing.
Speaker 2:Exactly. Exactly. But yes, tell us about some of the inflection points, what it felt like on the inside of of the business.
Speaker 5:Well, we have... Go ahead, Christa. Well, I was just gonna say it's been quite the journey. There have been several major moments. First and foremost, to to your point, no one knew what the elf on the shelf was.
Speaker 5:Yeah. There was no place where someone could have understood this. And we started at very local Christmas markets. And when you go to a Christmas market, you can look around and you can see purses and be like, oh, mom would love that. That would be great.
Speaker 5:But in our case, we didn't have any way to explain what this was unless we talked to people one at a time. So early, we used some gorilla marketing tactics. Oh, look at that. I love clutches. They're cute.
Speaker 5:Yeah. Like, we gave away those very inexpensive blinking bracelets because it had parents stopping and listening to what we had to say. So it was a very small investment to get people to pay attention. And then as Chanda and I had grown up with this as children and we knew how magical it was and how much joy it created, we knew if parents would just try it, that the magic and the wonder of the season would really take over, and it would start driving that word-of-mouth interest. And that was the beginning.
Speaker 5:As we continued through the story, and you guys know as entrepreneurs, and I'm sure you can understand how these conversations went, the banks weren't so thrilled with the idea that elf dolls and books were gonna be a great idea to invest in. So we pulled our resources and we did it ourselves. And then as the business progressed and grew, we had a few pivotal moments, I would say. One was when Jennifer Garner was photographed carrying the elf on the shelf down the street
Speaker 1:Wow.
Speaker 5:By the paparazzi. We still don't know how she got it. I don't know if Jennifer is listening. She should be. And if she is, we would like to know how she got it.
Speaker 5:And then the second was that the Today show had also run a piece on us just a couple weeks later. As the company has grown and sophisticated, I would say our animated special, an elf story, when it aired on CBS, and also having a balloon in the Macy's Thanksgiving Day Parade were very early big wins for us as we got started. What would you add to that, Chan?
Speaker 6:I would just say, you know, I'm I'm thrilled to hear him say, you know, he'd heard about off on the shelf before he knew it was a business. Our whole job is to create joyful family moments at Christmas time. And, you know, most people don't know that it's not a large company really behind a global brand. Yeah. It's a it's a family business owned by my sister and I, started by, you know, my mom, my sister, and myself, and you know, that's still what we're doing.
Speaker 6:Still creating joyful family moments through these stories and characters. And so to Christa's point, we do that through entertainment. We have our... A Netflix partnership. We're launching our own preschool show on Netflix this year, Scout Elf Squad.
Speaker 6:Nice. That launches November 4. You know, but again, it's still very scrappy. Right? We started on YouTube, saw a lot of demand for that, then then got our partners at Netflix to pick it up.
Speaker 6:So really been able to build a global franchise around what started as a consumer product, and it's a... It's an entertainment brand. It's a character brand. It's a lifestyle brand. And so it's just been really fun to to be behind, the magic of Christmas time, for families.
Speaker 1:What's it like running probably the most seasonal business on Earth? Like, I imagine you guys... Can you guys relax a little in q one or is it you're already got like you're like there's three hundred days till Christmas?
Speaker 2:And people don't realize how risky it is because you have to forecast how much you're gonna make and...
Speaker 1:No. And even these viral moments that you're talking about
Speaker 2:Five stakes...
Speaker 1:You can't you gotta build in... You you can't buy five years worth of inventory. Yep. Right? You gotta buy Yeah.
Speaker 1:You gotta...
Speaker 2:Yeah. Yeah. What... Yeah. What have you learned in the process?
Speaker 2:How do you manage the the the the emotional roller coaster of building a business throughout the holiday holiday season?
Speaker 5:Well, I'll tell you what I've learned, which is you can't back order Christmas. Yeah. And Christmas always comes.
Speaker 2:Yeah.
Speaker 5:Right? It doesn't matter what's going on in the world. Christmas is always gonna come. And it's our job to make sure that it brings joy. Yeah.
Speaker 5:You are completely right. It starts all over again on January 2, and it is all about planning and forecasting and production, not just here, but globally, which presents its own challenges. Yeah. But we've got the best team on the planet. I would put our team up against anyone anywhere.
Speaker 5:We were working for Santa. That's what we do. We're working for Santa.
Speaker 1:That's amazing.
Speaker 2:Oh, well, thank you so much for coming on the show.
Speaker 1:Yeah. How do you... How are you guys feeling about Christmas this year? How... Do you feel like the Christmas spirit building in a in a in a positive direction?
Speaker 6:We actually do. Yeah. Great. We're seeing... We are preorder campaigns sold out.
Speaker 2:That's good.
Speaker 6:We are really seeing people... People are excited about family traditions, spending What time we offer is simple, everyone can participate. Yeah. And so we... At least in our case, we're seeing people really excited about, you know, the return of the brand, and we're already seeing sellouts on several items including licensed items.
Speaker 2:That's amazing.
Speaker 6:Like our big four or five foot e. That's being sold at Lowe's. So What's the... Is that
Speaker 2:the biggest e. L. F. You've ever sold or is there a 20 foot No.
Speaker 6:SKU cover? Is a giant... Christa, how how big is the inflatable e. L. F?
Speaker 6:I think it's, like, two or three stories tall.
Speaker 5:Yeah. There's many,
Speaker 1:many stories tall.
Speaker 2:You can go on your house on top
Speaker 6:of your house. It's huge. It's literally huge.
Speaker 2:This is amazing. Okay. I love... I didn't realize there was that much diversity in the portfolio, but this is this is great
Speaker 6:to hear. There is.
Speaker 2:I like it.
Speaker 6:There's even little tiny mini elves.
Speaker 2:Okay. We
Speaker 6:we got it all.
Speaker 2:You got everything covered.
Speaker 1:Yeah. No. I'm I'm... I I think the world needs the world needs Christmas. You know, it's been a crazy year.
Speaker 1:It does. Yeah. It's time to focus on what really
Speaker 2:I know. I feel Is there a public offering in the in the works? I mean, Anthropic's going
Speaker 6:to God's ears. Yeah. Anthropic's going
Speaker 2:out 2,000,000,000,000. This feels like at least 1,000,000,000,000. Is somewhere in
Speaker 1:that Minimum. I do companies roughly
Speaker 2:on equal footing. Okay? Yeah. But thank you so much for coming.
Speaker 1:So great to meet
Speaker 2:you guys. It was amazing story and
Speaker 1:good luck the next...
Speaker 2:Good luck. We hope you blow out all of your sales forecast holiday season and beyond.
Speaker 1:Talk soon. We'll see you next year.
Speaker 2:Have a great rest of your day. Goodbye.
Speaker 1:Well, now that they're out, we can we can up the ante to the Okay. To to the next level.
Speaker 2:For the cohere folks? The Canadians that are coming on? Do we have cohere coming on? Okay. First, let me tell you about Codex.
Speaker 2:Codex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codex helps you move projects forward from start to finish. And we are joined by the cofounder of Coher, Ivan Zhang. Or wait, do we have a cofounder? Yes.
Speaker 2:Okay. Sorry.
Speaker 1:It's Ivan.
Speaker 2:Ivan and Luisa from Cohere are here to help break down the story that we were talking about earlier. You so much for joining. Sorry about the comment back and forth. Was texting with Aden, the CEO, of course, and I'm very excited that we have you able to join on such short notice, But it is a remarkable story. Maybe give us a little bit of context on your role, your your your role with the organization, introduce yourselves, and then take us through the story today.
Speaker 10:Yeah. Absolutely. And by the way, we're, like, super hyped to be here. I know our entire team is watching Amazing. In the in the all hands days right now.
Speaker 10:And Thank so you. So so happy to be here. And, yeah, we're we're in Canada right now. It is very But, you know... And so I'm one of the cofounders of Coher.
Speaker 10:I lead our efforts on, like, make our models more secure, making them good at securing systems. And I'm joined by Luisa, who's one of our researchers on the team, who actually discovered this behavior.
Speaker 2:Okay. So Amazing. What what is this program that you're actually running before we get to the findings of, you know, the the like, which is kind of a bombshell. How often are you testing these open source models? What are you testing for?
Speaker 2:What is the benefit? Are you doing this for AI safety, goodness of your own heart? Or is this something a customer is asking you to do? Talk about the actual program that leads to this type of finding.
Speaker 1:Yeah. The thing that was most notable is like this is something people have been like sort of like accusing Yeah. In ways or or theorizing Yeah. And it's been... This is the first time that I can remember like
Speaker 2:Yeah.
Speaker 1:Somewhat concrete evidence that this is like Yeah. Happening
Speaker 2:The refrain was
Speaker 1:like or
Speaker 2:stop at the sci fi thing. You're telling me there's gonna be a Manchurian candidate in here? Yeah. And and now we're here. So so so what what does it look like inside Cohere to build one of these, these initiatives?
Speaker 10:Yeah. So, I mean, for for those of you that don't know, like, we are deploying AI into, like, the most mission critical and, like, sensitive use cases in the world. Yeah. Which means we're building a stack that our customers can actually trust with, all their data. Yeah.
Speaker 10:Right? And how that's done is basically on prem, basically private cloud.
Speaker 2:Mhmm.
Speaker 10:And our customers run all of our stack Mhmm. In their systems. Mhmm. One of the advantages that deploying software this way gives us is that we can actually arm cyber defenders with the ability to actually process all of their telemetry. Sure.
Speaker 10:Right? You might, you know, hesitate to send your most sensitive access logs to Claude or, you know, other models. But
Speaker 2:Or even or even send it across the Internet at all. Like Exactly. Even if you love the... All the labs, you might just not want it going over a wire whatsoever. And so doing it on prem gives you more, flexibility around that.
Speaker 2:Right?
Speaker 10:Yeah. Absolutely. And so cyber defenders, like, they need to use AI.
Speaker 8:You know, we
Speaker 10:see all the headlines today. And so we see that it's our mission Yeah. To give them this capability so that they can actually expose all of their mission critical data to help them defend their systems. In this process, we obviously evaluate the whole suite of models that folks can run on prem. Mhmm.
Speaker 10:We're obviously training our next generation of frontier on prem models. Mhmm. And so I'll let Luisa take it from here as to like Please. What she found last Friday, actually.
Speaker 2:Yeah. Thank you.
Speaker 11:This eval that we were running is called CTI Realm, and it's developed by Microsoft. It's a cyber defense evaluation framework, and we ran a bunch of open source models on it. And the only one we found an issue with is the QUEN 3.8 Flash Next model. So what we identified is that on one specific task from this benchmark, the model was tasked with authoring KQL query which stands for custom query language. It's kind of like SQL but for logs.
Speaker 11:Mhmm. It's asked to go through all these logs and find suspicious events. And even though it was only asked to find suspicious events, it did something in our system where it it kinda looked around, it tried to identify what tools were available, packaged that information up, and sent it to foreign external server.
Speaker 2:Mhmm.
Speaker 11:And this is very surprising because in the reasoning trace, there was no mention at all of using tools. They actually said that it wasn't going to use tools. Mhmm. We weren't expecting this to try to have any kind of egress to an external server. Mhmm.
Speaker 11:Luckily, the system we were running in was sandboxed in such a way that that call did not actually make it out of our system. And to be clear, we don't know why this happened, why the model was doing that. We could be just an artifact of how it was trained. It's quite possible that, you know, a system trained in a... Like a Chinese model would be trained to upload things to Chinese servers.
Speaker 11:That makes a lot of sense. Yeah. We don't know why the behavior was there. Yeah. But it's still dangerous behavior regardless of why it's there.
Speaker 11:If you're not expecting random data to be uploaded to the server, it's, something that you should need to be careful about.
Speaker 10:Yeah. Yeah. I wanna double click on that. Like Please. Intention aside, like, models randomly curl servers is is not great.
Speaker 10:Right? So I think, like, the bar for release for open weights models, like, no matter where it's from
Speaker 2:Yeah.
Speaker 10:I... That probably needs a revisit.
Speaker 1:What... We've been... You guys put this out a few hours ago. I'm sure there's been I saw some pushback on it. What's been...
Speaker 1:How have you guys been responding to that kind of pushback? I think the thing that I saw was somebody was like, well, you're encouraging this kind of behavior. It's the sort of like meme of like, hack this thing and then the model hacks and then the user's like, wow, it hacked. But break... What's been your reaction to that pushback?
Speaker 10:Yeah. I'll let Luisa take it. She's been deep in the in the thought market. Like, beating everything and so... Yeah.
Speaker 11:I think the the main thing that caused some confusion online is that people weren't that familiar with this specific benchmark.
Speaker 2:Sure.
Speaker 11:And so when we said we were tasking the model to look for suspicious behavior, people thought, oh, it's maybe natural that it would go and do something suspicious. But if you know the benchmark a bit better, it's not actually asking the model to look to just like analyze or or or try to reproduce something like that. It has already been given all the logs where the suspicious thing has already happened and all it's meant to do is query those logs to find the isolated logs where that event took place. Mhmm. So...
Speaker 1:Not saying do suspicious things, it's find suspicious activity Mhmm. Which is like very Exactly. Different things. So when you tell it to find suspicious activity and then it, in the process, does suspicious things, that's concerning. That's why you guys published.
Speaker 1:Yeah.
Speaker 11:Right. And in addition, there have been other blog posts from people in other companies that have noticed similar behavior to this outside of cyber environment.
Speaker 10:No. Mean, Booz Allen. Right? Like, they published a study where they saw that Chinese models when prompted with, hey. You're working for the US government.
Speaker 10:It generated more vulnerable code. Like, that's insane.
Speaker 7:Yeah. It's
Speaker 2:kinda like a dirty cop in, like, the nineteen eighties in Miami where you're on the vice squad and you're trying to stop the cocaine traffickers, but then you wind up trafficking cocaine. That's kinda what's happening. Right? That's a good analogy? Good enough.
Speaker 2:That's basically
Speaker 10:what happened. Yeah.
Speaker 2:A Miami Vice scenario.
Speaker 1:But but I think the other thing that's worth noting is like you guys are actively using these models. You're trying to use the best. You're testing new ones. The the stance of Coherent is not broadly negative open source. It's that you just You wanna make sure that you deliver for the end customers.
Speaker 10:Yeah. So... No. In fact, like, if the models weren't open, we couldn't have done this kind of research. Sure.
Speaker 10:And and if anything, like closed models, not being able to control exactly what's going into the prompt Yep. Could expose even more risk. So, like, it's not that... You know, I mean, there's there's a funny saying that our team says. Right?
Speaker 10:It's like, you know, if if you don't hate open weight models, if you don't love them enough. Yeah. So, you know, if anything, we care so much about open weight models. We don't want there to be some crazy, like, mass exfil incident. Yeah.
Speaker 10:So we think there should be a higher bar to, like, you know, maybe clean up some of this reward hacking behavior before releasing to
Speaker 2:I saw Clem from Hugging Face asking if there could be a release of all of the reasoning traces. And before you share more about your rollout strategy for sharing documentation around this behavior, I'm just interested in the in are you in a unique position to actually release more information because this is an open source model and it's related to your business? When I think about like why, you know, the data around the Hugging Face incident didn't didn't just like get served up, There's pretty logical reasons why that might not just get bended over and it might need like an intermediary. But in this case, is there anything that you're hesitant about releasing because it has some Cohere IP in there and so you don't wanna release the whole thing? Or do you think you can just kind of just throw out the full report?
Speaker 10:I I think we're, like, imminently dropping, like, all the traces and stuff. Amazing. Think we we pulled Luisa away from doing that to get on the interview.
Speaker 2:Yeah. Because I can imagine like Sorry. Sure if in the reasoning traces, it's like, well, it had access to like some email and you don't want this and there. Like, that's fine. But this is really cool.
Speaker 2:This feels like a really interesting moment for alignment research, and it it should give a lot of other teams, like, they they can crawl over these all they want and experiment and learn, hopefully.
Speaker 10:Yeah. And what's interesting is, like, it's such a rare occurrence. Right? It's like Yeah. I think that happened one in 10,000 or a 100,000 times.
Speaker 10:Sure. But if you're running these systems at scale, like just takes one accidental exfil.
Speaker 2:Oh, that's interesting.
Speaker 10:Yeah. That's crazy. Know, you're sort of home.
Speaker 2:Yeah. Yeah. Yeah. Yeah. Yeah.
Speaker 2:Fascinating. Fascinating. Well, yeah. Thank you so much for coming.
Speaker 1:Yeah. Great great to have you guys on. Come back on if there's... Yeah. I'm sure there'll be follow ups and Yeah.
Speaker 1:You guys are always welcome. Yeah. Great to meet
Speaker 10:you both. For having us.
Speaker 2:Have a great rest of your day.
Speaker 1:Good luck with the release.
Speaker 2:Yeah. Good luck. Cheers, We'll talk to you soon. Goodbye. Yeah.
Speaker 2:That was really cool. I'm excited for more more of that and more people to kind of chew through it. Let me tell you about Shopify. Shopify is the commerce platform that grows new business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents. Jordy, what else
Speaker 1:is What else?
Speaker 2:On your mind?
Speaker 1:Do we got Brazil nuked.
Speaker 2:Nuked.
Speaker 1:It says 10 Stock is down 20%. Negative negative 26% for a country. ETF is sick. Never seen that before. Says taken.
Speaker 2:Sick in the bad sense. Not sick in like the...
Speaker 1:Yeah. Not in like the...
Speaker 2:Not in the skate rock world.
Speaker 1:You They what will invent faster than light travel and MFs will ask what the practical practical use use case case is.
Speaker 2:No. I mean, the Brazil... So sorry. Just to stay on the Brazil thing for a second. You did a lot better if you were in the Brazilian ETF than if you were holding those Bolsonaro prediction market trades.
Speaker 2:The prediction market we had Bolsonaro at 80% and it nuked down to zero, of course. Then Lula was at 20% and you have five extra money if you were at the the Brazilian election staying with Lula because it was a crazy upset. There's a lot of debate on it. You can read the Wall Street Journal and Financial Times and dig into that story. Yeah.
Speaker 2:But it is it is is Joe Wiesenthal was kind of like, oh, is this like a big miss from prediction markets? And that begs its own set of questions, I think.
Speaker 1:Yeah. Like it was it was... I don't I don't... It doesn't feel... The whole the whole point of these things Yeah.
Speaker 1:Is that it's giving you a percent. Like 20% is not not zero.
Speaker 2:Oh, interesting.
Speaker 1:Like, 20% is like one in five chance this person wins.
Speaker 2:Yes. But people have come to read prediction markets as it's a crystal ball. If it's at 55% this person, it'll be a 100% by the end of the night. That that's the way people, like, interpret them because they've been so historically accurate. But when there's questions about the election integrity, things get way more crazy and you see more high volatility Yeah.
Speaker 2:In the outcome. So I I I think you're right in that with an election like what's going on in Brazil, you should look at 20% as, yeah, one in five chance that it's gonna flip that way which is probably more accurate. Probably more accurate reading.
Speaker 4:Yeah. Sorry.
Speaker 2:You're laughing. Wanna know what
Speaker 1:you're Jason Schumann said coming to a city near you. I wanna I wanna know if you're excited about this.
Speaker 7:Hey, stop. No. No. No. I didn't ask for this.
Speaker 7:No. Stop it. I don't have any cash.
Speaker 1:Boom. Okay. Venmo.
Speaker 2:Oh. It's the robot demanding a
Speaker 1:A tip.
Speaker 2:Tip for washing your windshield. That is hilarious. Is this CGI AI video or something? I don't know.
Speaker 1:John. It's real. Yeah. This is a totally real video.
Speaker 2:I'm just interested if if... Like how much work did someone put into this particular video?
Speaker 1:No. Mean AI... I mean, the the reason you can tell that it's AI mostly from the voice
Speaker 2:Oh, yeah. No. No. No. I didn't ask for this.
Speaker 1:Like that's like that tinny... Don't have
Speaker 2:any cats. Yeah. Totally. The tinny voice. It's interesting that the that the voice is lagging more than the video.
Speaker 2:Anyway, I thought that was going to be a robot that runs up and shows you an ad because that's something I could get behind. You know, like the sign spinner, the sign spinning industry is about to explode because humanoids will be able to spin signs for hours and hours and hours. You can have a power outlet that just plows, powers right in and you can do all the crazy signs. But you've seen the sign spinner guy, right, on Instagram? You've seen this?
Speaker 2:No. You haven't seen the sign spinner guy? We gotta pull this up. Tyler, find sign the most elite sign spinner you can. Share the video.
Speaker 2:But I did have an idea for a new ad unit, Jordy, that I think you're gonna like.
Speaker 1:Hit me.
Speaker 2:So the biggest problem Yeah. Made an ad unit. Software companies is distribution, diffusion, AI diffusion. You know, we need to get the products in the right hands. What's the most underrated ad inventory that's been not being properly monetized right now?
Speaker 2:Your front door. I'm talking about door to door salesman bringing them back. This is time honored tradition. This is side spinning. Humanoid is gonna be doing this '24...
Speaker 1:I don't I don't think any humanoid will be able to do this within the next...
Speaker 2:Okay. Got sign spinning bench. We got sign... Sign bench. Look at this.
Speaker 1:He'll climb this. This is good. Humanoid lab.
Speaker 2:Yeah. I wanna see an optimist doing this. It looks great. No. Don't you think door to door salesmen should make a comeback in San Francisco?
Speaker 2:Just going on doors knocking and then just saying, hey, I wanna tell you about
Speaker 1:Higgs Field.
Speaker 2:I wanna tell you about Higgs Field. Are you interested? I'm here on behalf of Higgs Field. We'd to get you signed up. No.
Speaker 2:No. No. I'm already a I'm already a... Because people go door to door for politicians all the time. And politicians don't have as deep of pockets as SaaS companies.
Speaker 2:So why
Speaker 1:aren't Well, they're SaaS working with volunteers, John.
Speaker 2:But people would volunteer to sell SaaS? Certainly. Like if you care about people saving time and money, you would go door to door for RAMP. If you care about cybersecurity, you would go door to door for CrowdStrike, of course. You would.
Speaker 1:No. I think going door to door, you know, the offers that you get, it's like take a demo and we'll give you a pair of Apple Pro, Apple AirPod Pros. Yeah. Doing that door to door, hey, I'm... You're in San Francisco, I'm assuming you work in tech.
Speaker 1:I have this pair of AirPod Pros. If I can just come sit down for five minutes...
Speaker 2:Totally. I like that. I would go a little bit further.
Speaker 1:Why not? It's like you're willing to do it in the digital realm. Yeah. Why are you so afraid to do it in person? And I think a lot of people there seeing the AirPod Pros there and they're like, I'm a wired guy but Yeah.
Speaker 1:500 is $500. Yeah. Yeah. I'll take it. Yeah.
Speaker 1:I've even seen the people offering... I think Rippling was offering Eight Sleeps. Yeah. Yeah. You know?
Speaker 2:Yeah. Yeah. No. Totally. So the the...
Speaker 2:You could take this even farther because because have you ever seen that in... There's number of there's a
Speaker 1:number
Speaker 2:of vacation destinations. Like, you go to Cabo, you'll get off the you'll get off the plane and the... And there'll be someone there who's like, I'll drive you to your hotel. Let me tell you about this time share opportunity. I just wanna stop by and give you a little tour of this cool time share.
Speaker 2:They'll try and give you the pitch. You could be doing that in the most elite ski towns right around ski season. Somebody gets off the plane. You say, hey, I'd love to I'd love to give you a free ride from the FBO to your to your mountain house, but I'm gonna be
Speaker 1:pitching But it's a you it's an elite
Speaker 2:I'm gonna be pitching you softly the entire Yes. Exactly.
Speaker 1:So what do you guys who do you guys really use on the database side these days?
Speaker 2:Have you been looking at Mongo? You're thinking about going non relational? Because like SQL is just like not really
Speaker 1:Got it.
Speaker 2:You need right now. You gotta get MongoDB. I I feel like I feel like that might be that might be a winner.
Speaker 1:You land at Big Sky. There's guys doing sign spinning.
Speaker 2:Sign... Well, robots are doing the sign spinning. The BDRs are doing the driving and
Speaker 1:the and the more interpersonal.
Speaker 2:Interpersonal. Exactly. Anyway, anything else in the timeline you wanna run through before we get out
Speaker 1:of here? Oh, man. There's a lot.
Speaker 2:Okay.
Speaker 1:Well, we'll save it for we'll save it for tomorrow.
Speaker 2:I'm ready. I'm ready. Okay. We'll save it for tomorrow. Anyway...
Speaker 1:It's been a great day. It's that time.
Speaker 2:Yeah. We're so close to Christmas. We're
Speaker 1:just hours away.
Speaker 2:Next week's gonna be rough. This week's gonna be rough. Give us five stars.
Speaker 8:We love you.