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TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
You're watching TBPN. Today is Wednesday, 05/13/2026. We are live from the Temple Of Technology.
Speaker 2:The Fortress Of Finance.
Speaker 1:The capital of capital. A bunch of news going on today. Huge show. Max Levchin's coming on the show. Delian's coming in person from VARTA.
Speaker 1:Recursive's coming out of stealth. Brandon Tepper from Bory. Nate Tepper from True Short. Very excited to talk about vertical video, the trough, the The trough. The trough is cooking.
Speaker 2:Some of the trough is Trough economy.
Speaker 1:Joubin Mirzadegan from Roadrunner and Roman Chernin from Nebius. Absolutely destroying earnings. Very excited to talk to the cofounder and chief business officer over at NIBUS. But the big news this week, and I'm sure what, you know, everyone will be focused on, is, of course, on the cover of The Wall Street Journal. That's the Trump Xi Jinping Summit that's happening in Beijing.
Speaker 1:Trump and Xi Jinping vie for wins at Summit. They're duking it out. And Trump brought they both brought big a big crew with them.
Speaker 3:A team.
Speaker 1:Yeah. Trump brought Geopolitics? A couple couple Team sport. A couple political people that we won't even care about, but the business leaders are what is particularly interesting. So we got Elon Musk from Tesla, Tim Cook from Apple, Jensen from Nvidia, Kelly Ortberg from Boeing.
Speaker 1:A little flex there because Boeing has been able to maintain the lead in manufacturing large planes for a very long time. DJI has not been able to scale up and make a seven forty seven. What's going on over there? David Solomon from Goldman Sachs, Steven Schwartzman from Blackstone, Larry Fink from BlackRock, Jane Fraser from Citi, and Dina Powell McCormack from Meta. So we should read through the stakes of the Trump Xi Jinping Summit in the Wall Street Journal the Wall Street
Speaker 2:Let's get into the more important stuff
Speaker 1:Yeah, please.
Speaker 2:Which is do you think Jensen was always coming on the trip? Right? There's been some speculation. He got on he got on the plane in Alaska. Oh, yeah.
Speaker 2:Was that just the most convenient place for him to get on or was he a late addition?
Speaker 1:I don't know. Why would he have been been a late addition? I don't I don't know. It seems
Speaker 2:reporting earlier this week company in in America. I know, but but statements made from what I saw that he wasn't going.
Speaker 4:I don't know. Yes.
Speaker 5:Well, so Trump had a truth social post that said CNBC incorrectly reported that the great Jensen Huang of Nvidia was not invited, but then he he corrected it. He said he didn't invite him personally.
Speaker 1:I don't know. These schedules move around. It's gotta be really, really difficult if you're the leader of the biggest company in the world to move things around and and commit to this. I know. But what's more important for Jensen and his objectives?
Speaker 1:No. Of course, it's critical importance. But at the same time, there might have just been other moving pieces of like, okay, when can he go? Where will he arrive from? Where will he get picked up from?
Speaker 1:I don't know. These things always like shift. I I I don't have a good thesis. I mean, other than the fact that, like, there that is the company that has maybe the most tension between the trade deals with China. Like, Apple obviously does a ton of business in China, but has been much less of a focus in the chip sanctions.
Speaker 1:And so having Jensen there is a little bit more of a discussion point. What do think?
Speaker 5:I mean, I I think on China, like, the Nvidia stuff seems like pretty, like, fine now. But but but yeah. But Meta, I think, has like some conflict. Right? Because I mean, Manus yeah.
Speaker 5:Maybe it's like not that big of an acquisition. Yeah. Unlike market cap wise, but
Speaker 1:Yeah. Yeah.
Speaker 5:They're blocking it.
Speaker 1:A lot of these things, you know, we always say in the in the context of Silicon Valley, it's like a $2,000,000,000 deal or a company that's doing 40,000,000,000 in revenue. And then you get over there and the stakes are like, you know, a trillion dollar oil market or like all the rare earths in the world. And it's your, you know, geopolitical conflict, is obviously a much bigger deal. So I don't know. We we can speculate it on more.
Speaker 1:There might be more reporting that comes out about Jensen's goals there, what actually happened, how he found his way onto Air Force One. But that was confirmed by Elon Musk. Right? He said that Elon, Jensen, and Trump were all on Air Force One together flying over. I certainly wouldn't want to get there.
Speaker 1:I would want to arrive on the cool plane. Can we play the video of the the arrival? Trump arrives in Beijing with Elon Musk and Jensen in tow. I guess the rest of the business leaders came separately. But here is their arrival with those Can we get Sam?
Speaker 1:Leaders or something? I don't know what they seem to be waving oh, flags. They're waving flags. That makes sense. Well, there they go walking down the red carpet.
Speaker 1:Air Force One is truly stately. There's it's so it's so disappointing that the economics of the airline industry didn't just get bigger and bigger and so you find yourself very rarely on seven forty sevens unless you're flying across the world, because they do have such a presence. And they're spacious inside. But we we we have been, you know, cramped down into the seven
Speaker 2:thirty Pretty cities much everything. Where they give a proper tour of Air Force one or is it kinda locked down?
Speaker 1:I think they've done tours. I mean, there isn't there are several Air Force ones, I believe, that are on display at presidential libraries. And so you can go and tour them. There might be one at the Smithsonian. I'm not exactly sure, but pretty sure you can go walk around.
Speaker 1:Old
Speaker 2:ones Take note.
Speaker 1:I wouldn't be surprised if they keep the the the the the current spec, like somewhat secretive. There we go. This is very grainy footage. It looks like oh, maybe it's just,
Speaker 2:the middle And it reminds me of, Dune. Dune. Myrakis. That's Taiwan though.
Speaker 1:Anyway, let's go through Jensen's pack list. He was having trouble thinking of what was he going
Speaker 6:to
Speaker 1:bring. Of course, he landed on just a ton of leather jackets. The back sneakers,
Speaker 2:feel like are pretty iconic.
Speaker 1:Yeah. Like the uniform is really starting to compound where it used to just be the jacket. Soon we will know the exact brand and specs of the of the pants as well as the shoes and the whole Jensen uniform will be out in full force.
Speaker 2:Yeah. The clothing industry doesn't want you to know this. Yeah. But wearing just just getting a few pieces of clothes that you like and then wearing them until they fall apart
Speaker 1:incredibly
Speaker 2:underrated. That's what Jensen's doing, but Yep. It's pretty funny. I I tend to wear almost the exact same thing
Speaker 7:Yep.
Speaker 2:Every day. And so sometimes people on the team will come in and be like, oh, we're matching today.
Speaker 8:Mhmm.
Speaker 2:Like every day you dress like this, you will match with me.
Speaker 1:Yeah. That's right. That's right. There's obviously a personal brand benefit to adopting a uniform. We've seen it with Jensen, Steve Jobs with the black turtleneck, Palmer Lucky with the with the Hawaiian shirt.
Speaker 1:Big news from Andrew Roll today. New round series. Are they running out of letters? Series h? H.
Speaker 1:Series h. 51, 61,000,000,000, something like that. Fantastic progress. But you adopt the uniform, you become more iconic, you become more recognizable outside of your face and that builds your personal brand, your lore and it helps you sort of differentiate and stand out. Right?
Speaker 1:The flip side, the thing you got to watch out for is that if you are always dressed exactly the same and you never switch your wardrobe, clips of you saying something a decade ago can go viral. And if you're not if you're aging gracefully, it will look like you said them just yesterday. And that can be a big problem if, say, you're an AI CEO who a decade ago is reading some sci fi and thinking like, man, there's something to this Terminator thing. And then maybe in the past decade, you've done a lot of work, you've investigated the systems, you have a more informed position and opinion. Well, the old video of you still looks like you today.
Speaker 1:And so there might be something to leveling up the wardrobe and changing the wardrobe over time that actually creates more distance between, oh, well clearly that was
Speaker 2:So this is an indirect way of saying you want Jensen to be in a leather sort of like, you know, sort of trench coat eventually, like flowing robes?
Speaker 1:Well the easiest thing to do is go bald. That's what Jeff Bezos did. He was saying some crazy stuff back when he was building Amazon in the nineties and he's changed his opinion. It will be very evident from new clips that, oh, that's an old one because it's very it's very iconic, his older look. Now his new look, he looks transformed, he looks very different.
Speaker 5:Well, I I don't think Jensen has to go bald, but he can do the the Bezos playbook which is just get like get really jacked.
Speaker 1:Get really jacked.
Speaker 5:So as he gets more jacked, you'll just see, oh, yeah. There's I mean, he's looking like three twenty lean right there.
Speaker 1:There you go.
Speaker 5:Like, that must be pretty decent.
Speaker 1:Three twenty. Jensen at three twenty would be electric. Well, he's
Speaker 2:We have a video of the Air Force One Golden Palace.
Speaker 1:Okay.
Speaker 4:Pull it
Speaker 1:up. What is the Golden Palace?
Speaker 2:That's the
Speaker 1:Is that what they call the interior The these
Speaker 2:Air Force one that was gifted by Qatar.
Speaker 1:Okay. And that one is never going to be in use but gonna go straight to the library, I think. Is that the idea or is it gonna get flown around? Well, let's let's watch the Presumably, it's gonna be you. Golden Palace.
Speaker 1:Really particular aesthetics here. It looks like a normal seven forty seven on the outside.
Speaker 2:Looks like a yacht.
Speaker 1:I feel like isn't there a big there's a big swing in in fuel efficiency based on the color of the plane. If you paint your plane black because you think it looks cool, it will attract more heat, and you will burn a lot more fuel. And so most companies go with white. Spirit Airlines went yellow. I don't know if that had anything to do with their downfall.
Speaker 1:But you would think, is there a chance? Is there some weird economic logic where if you painted gold, the gold will reflect the sunlight and increase Well,
Speaker 2:unfortunately, the exterior is
Speaker 4:not great.
Speaker 5:You should wrap your plane in like a mirror like
Speaker 1:Yeah. Maybe. Surface. But yeah. I don't know if that actually
Speaker 5:That would reflect the most.
Speaker 1:That would probably reflect the most. Right?
Speaker 9:Yeah.
Speaker 1:Mirrored plane. There are some silver there are some silver bombers and and jets that are in service across the United States Air Force. I can't call upon it right
Speaker 2:now. This really is a sky yacht.
Speaker 1:Chessboard. You think anybody's played chess on there?
Speaker 5:I I Boardy chess.
Speaker 2:Yeah. The whole plane is actually used for four d chess, John.
Speaker 1:Four d chess. Chess is already three d by default. It's a two d playing board, but time is the third dimension. Because the turn that you're on is a dimension as well.
Speaker 2:This goes deeper than I thought.
Speaker 1:So four d chess is merely a three d representation of two d chess that's played over time. That is the fourth dimension. AI is being put to good use visualizing Xi Jinping Donald Trump, Elon Musk and Tim Cook having a beer and I guess a cigarette as well in China somewhere. And then look who pulled up. If you scroll down, Jensen coming in from the back, looking pretty good.
Speaker 1:Looking pretty good. Maybe not three twenty lean, but he's certainly up there. He's scrolling off. And people are really having fun with this. It it turned into a little chain letter.
Speaker 1:Anyway, what let's go through The Wall Street Journal's report and the what the editorial board had to say about the stakes of this summit. What what's actually at stake? So The United States wants stability, but Chinese communist leader has larger ambitions, says The Wall Street Journal's editorial board. President Trump visits Chinese President Xi Jinping in Beijing on Thursday, and the pre meeting US spin is a search for stability, in quotes. It's a nice idea as long as mister Trump doesn't think personal rapport can overcome mister Xi Jinping's anti American purposes, says The Wall Street Journal.
Speaker 1:The agenda ranges from trade to technology to Iran. On trade, the best outcome may be ratifying the status quo, a truce on tariffs with a promise from Beijing not to hold the world's rare earth supply hostage. Again, the markets, business leaders, no one wants chaos. Everyone can sort of work around a tariff plan if it's going to It is really a long time.
Speaker 2:For Trump to be Yeah. Coming and being like, look, guys. All I'm asking for is a little stability. Yes. I just want stability.
Speaker 2:Yeah. I want calmness. Yes. I don't I don't want any conflict.
Speaker 1:Yes. Didn't he famously call himself a stable genius? That he stability has been part of his brand for a long time, at least the one that he projects. Mister Xi Jinping on the others on the other hand, China's weak economy is incentive for him to cooperate and he'll hope to placate mister Trump with promises of buying more farm goods. We talked about this previously, more aircraft and, other things.
Speaker 1:So that's maybe why Boeing is there. Although there is not it doesn't look like there's representation from a an agricultural leader, though I I can't name one off the top of my head, but maybe they should be in maybe they should be represented. But mister Xi Jinping has made that promise before, and US farmers have never regained their lost market share in China. Rare Earth's ransom offer the Rare Earth's ransom offer may be more US advanced chip exports to China. Xi Jinping views artificial intelligence as a decisive theater in Beijing's competition with The United States, and he is trailing, though not by much, maybe six months by most people's estimates.
Speaker 1:The administration wants to talk with Beijing about AI guardrails, and by all means, keep the phone lines open. But don't expect much from AI arms control, and the best deterrent is US dominance on models and computing power. Beijing will be happy to make pronouncements about responsible stewardship and then pursue its own interests with little regard for norms or laws. Beijing is in is engaging in, quote, industrial scale theft of American AI models. The Trump administration warned this year, and don't forget the Justice Department's indictment this year of a technology executive and associates allegedly running a sophisticated operation to divert high end chips to China.
Speaker 1:Was
Speaker 5:Super micro. Super micro.
Speaker 1:Yeah. They were doing the the the heater. What was it? The hair dryer?
Speaker 5:Hair dryer? They're putting the fake shipping labels on
Speaker 1:fake shipping labels. Yeah. Noticeably absent from this trip are the key leaders of the top AI labs. I mean, Elon Musk is there. Yes.
Speaker 1:And Jensen is there, obviously, deeply involved in AI as as are many of the other folks. McCormick at Meta. But you don't have Demis from Google. You don't have Sundar from Google, DeepMind. You don't have Dario from Anthropic or Sam Altman from OpenAI.
Speaker 1:And each one of those leaders has their own complicated relationships with the federal government, the Trump administration. So it's not shocking that they aren't there, but, it does feel like there's a little bit of a disconnect between the conversation that's happening in Silicon Valley and the conversation that's happening on the global geopolitical stage at the highest levels. And so if you were looking for answers to some of the biggest questions posed about how superintelligence will play out in the global stage, the AI 2027 scenario, the China wakes up scenario. You're going to have to keep waiting because that's not really what this is about. It's about maybe a little bit of semiconductor supply chain details and export restrictions, but not answering the big questions about what a U.
Speaker 1:S.-China relationship looks like in a post AGI world, a post ASI world, a post, you know, a fast takeoff scenario.
Speaker 2:OTP says, why is Meta there at all? Good question. All Meta platform products have been banned for quite a long time. I don't think that will change, but they have this manus thing. I think it might just be to show some friendliness
Speaker 1:Yeah.
Speaker 2:Some presence there. I again, I'd be shocked if there's any time between Xi and Trump that gets dedicated to manus because like $2,000,000,000 is really rounding
Speaker 8:error when
Speaker 2:you look at all of these other issues. But
Speaker 1:But it is a big question for both economies. Not not only can American companies acquire Chinese companies that have relocated to Singapore and have sort of moved out. Like, how how strict will China be around maintaining talent and restricting exports of whole companies and technologies? There even like a single sentence on it from this talk will clearly resound throughout the industry. And so the Venus flytrap that Xi Jinping is setting for Mr.
Speaker 1:Trump is on Taiwan. Xi Jinping wants veto power over arms sales from The United States to Taiwan and he is pressing for The United States to formally oppose Taiwanese independence as opposed to the current posture of not supporting it. Xi Jinping will argue the tweak is of no great consequence to Americans and stoke and stroke mister Trump's ego that he can bring peace to one more troubled region. Yet that change would disrupt decades of US policy that for all its delicate diplomatic wording has held the peace. Taiwan is not the aggressor in the Taiwan Strait, a c a Xi Jinping fiction that opposing independence would indulge.
Speaker 1:Mister Trump may not care about Taiwan's freedom or its example that a prosperous Chinese democracy is possible, but the president doesn't want a crisis on his watch, which would be an economic and geopolitical catastrophe. That's 100% accurate.
Speaker 2:He would never want an economic, geopolitical catastrophe No. On his watch.
Speaker 1:Xi Jinping will be looking to see if mister Trump suggests he won't defend Taiwan in the clutch. Trump's diplomacy is above all personal, and no one can predict what he'll do in the room. Japan and others in the region are watching with anxiety, a reminder that US support for Taipei is an interest that informs America's alliances around the world. One mistake would be not stop not stopping in Tokyo to advance Beijing in advance of Beijing as a signal of solidarity with Japan. Trump has said he'll bring up the case of political prisoner Jimmy Lai, but Xi Jinping won't move to release the 78 year old publisher who was convicted of bogus charges in Hong Kong unless he believes Trump's request is more than a token gesture.
Speaker 1:The US wants China's help on Iran and it would be an improvement if China at least stopped actively helping the enemy. Retired Navy Rear Admiral Mark Montgomery suggested last week that mister Trump should ask Xi Jinping directly if he's helping Iran with intelligence. And the Wall Street Journal goes on to say, the larger context for the summit is that the CCP continues to be the main financier and industrial base for the world's bad actors from Russia to Iran to North Korea. The first Trump administration understood China as a strategic adversary, military, economic, and ideological. The second Trump admin is searching for detent.
Speaker 1:The and mister Trump is the chief dove. This has some merit if America spends the interlude diversifying its rare earth supply chain and passing a $1,500,000,000,000 defense budget to rearm, says the Wall Street Journal editorial board.
Speaker 2:Anyway Yeah. A lot of people are speculating that there's already been significant deals that have been made and that this whole thing is ceremonial. Mhmm. Because if if you bring if you make this, you know, huge trip and you bring all these leaders of industry Yeah. And then you don't come away with some significant progress, like, just feels like a even bigger out.
Speaker 2:So I'm expecting some some real progress out of this. Yeah. And and it's good to it's good to it's good to see I I every time we talk to a to an expert on Yeah. China like like Bill or Jordan Schneider, it's always shocking like how little like direct comms there actually is Yeah. Between these groups like and so the more the better.
Speaker 1:Mhmm. Well, in somewhat related news, Anthropic has granted Mythos access to three major Japanese banks. Japan's three mega banks are set to gain access to Claude Mythos, the powerful artificial intelligence model developed by U. S. Startup Anthropic as soon as the May.
Speaker 1:The banks MUFG Bank, Sumitomo, Mitsui Banking Corp, and Mizuho Bank were likely informed of the move by The U. S. Treasury Secretary Scott Besson in a meeting in Japan on Tuesday. This will mark the first time that a company from the East Asian nation has been granted access to Mythos. The AI model, can discover and exploit software security flaws far faster than earlier tech, had been restricted to just 50 or so corporates and organizations worldwide, including U.
Speaker 1:S. Firms, U. S. Banks and U. K.
Speaker 1:Government organizations. So this isn't the first international expansion since The U. K. Did have access, but now Japan does. Japanese Prime Minister Sane Takichi had instructed cabinet members to ramp up efforts to find cybersecurity weaknesses in Japan's infrastructure and minimize risks posed by cutting edge AI models like Mythos.
Speaker 1:Access to Mythos was likely mentioned in her meeting with Besant on Tuesday. And so Chris McGuire says tonight the secretary of the treasury is personally vetting and approving each company that gets access to the most advanced U. S. AI model because the risks of the model being misused to hurt U. S.
Speaker 1:National security are so high. Also tonight, Jensen Huang is flying on Air Force One with President Trump to Beijing to sell China the AI chips it will use to develop its own mythos level AI model as soon as possible. The administration the administration's AI policy remains inconsistent, incoherent. It is impossible to justify these two approaches simultaneously. And, yeah, I'm still sympathetic to the the the export control take at the same time.
Speaker 1:I feel like there's a larger negotiation that's going on so I can sort of see both sides. But the interesting question that I've been noodling on that I haven't fully gotten to the bottom of is, you know, Dario has said that, you know, open source community China is maybe six months behind Mythos and that seems to fall in line with the progress that we're seeing from all the American labs. And so the interesting question is what would the mythos moment look like in China? Because in America there was a showdown with the Department of War and Dario going back and forth and Emile Michael and there was threat of a supply chain designation, which it doesn't feel like ever really went anywhere because the business is still cooking and it's available on all the hyperscaler clouds and the the models being granted to Japan. And so it feels like the administration has backed off of that.
Speaker 1:But it was a really tense moment and it did call into question all these debates around what rules and what authority should rest with the private sector versus the government. And America handled it in sort of a democratic way loosely, sort of evaluating the technology, having the option to sort of nationalize and there's this bigger discussion around that. But in China, we've seen many times where tech companies have gotten really big and it feels like the CCP is applying pressure to the CEOs And High Flyer is the the company behind DeepSeek is in a very unique position where the founder has an immense amount of control. And, you know, no matter what you two think of the
Speaker 2:billion of his own money Any art really low dilution round.
Speaker 1:Yeah. And I'm pretty sure he's a solo founder who like owns probably like majority control, at least majority voting control, if not majority economic control. And that's wildly different than Anthropic where Dario had like 15 cofounders, tons of dilution from different funding rounds. And we had talked about the SPV thing yesterday. Like there are lots of people on the cap table.
Speaker 1:Like Anthropic is going the way of like a typical American company where there are lots of different stakeholders. They might be a public company soon, which means the government has more oversight as the SEC controls a lot of what they will do. And so you're in this odd scenario where you you could have a similar level of technology deployed in China from a very closely held private company that is up against a much more aggressive government. And so what that looks like yeah. What that looks
Speaker 2:like functionally,
Speaker 1:yeah. Like, if you can't do ecommerce without disappearing for a week or something Yeah. Exactly. Exactly. Do you think you can do mythos level AI cybersecurity bug finding at the same time while having full control and not being a public company.
Speaker 1:Like, there are, like it feels like the stakes are much higher for when DeepSeek if DeepSeek is able to catch up, you know, there's some there's some some evidence that, like, China's on a on a slightly shallower growth trajectory. But still, you know, if you take Dario's claim of six months, even if you extend that to a year, like something is going to happen there where China is going to have their own mythos moment. And what that looks like and what we learn about it I I think is going to be dramatic and interesting and also it's just it's just odd that like this moment there's this backdrop of all this stuff that's happening in AI in America and then there's going to be talks over like, you guys want to buy more apples, basically. Yeah. You know, what I mean, obviously there's going be more high stakes discussion around geopolitical conflicts and rare earths, but we are talking about like tariff rates at a time when like just a couple months ago in America we were talking about like is AI going to like be able to take over the government and like what does that mean and how does the government control the AI technology as it diffuses.
Speaker 1:So very, interesting things coming at some point. A lot of this will probably be pre negotiated behind the scenes since the Mythos moment happened in America and Xi Jinping obviously saw it and can get ahead of it. But you do see this consolidation of control at DeepSeek and there's a question about
Speaker 4:Yeah.
Speaker 1:Well, where does that go? Tyler, you have any thoughts on on this? Am I directionally correct on the timeline or, you know,
Speaker 5:this concept like something's gonna happen. Like there's the graph that shows that OpenTource is increasingly getting like further and further away from Yeah. Tier models. But yeah, I don't know. It's just like so hard to tell like what's actually going on in China.
Speaker 5:Like what what is it actually Yeah. Like what what happens when the CCP starts to to have, you know, more control over a company? Like what does it actually look like Yeah. In in instantiation?
Speaker 1:Yeah. I mean it's interesting. Like so much of the way the US government exercises control over the development of AI is on like the FDA regulatory. We want to review it. We want to take a look at it.
Speaker 1:We want to take it for a spin and throw some prompts in there before we let you send it to Japan, for example. And in China, it's a very it's a much more industrial process where, you know, if the chips are coming in and it's a whole negotiation at the government level, there's just the question of like, okay, can you even get the data center to and it's much earlier stage. Whereas that's not happening in America at all. Like there hasn't any movement on the government saying, okay, well we're going to the way we're going to control AI is that we will be the we will decide if you can have a gigawatt. We will decide if you can have 10 gigawatts whereas in China that's sort of the de facto status quo.
Speaker 2:Yeah. They they still are very pro competition. Yeah. At least until you get these, you know, breakout winners. So Yeah.
Speaker 2:We'll see how that
Speaker 1:And and can they continue to be pro competition if they need to consolidate all of the black wells that are coming into the country into one data center that's networked together that can actually train a mythos level model? Right. That's a big question. But people are having huge FOMO summit. Dude, I wish I was in Beijing with Elon Musk, Trump and Xi Jinping talking business, discussing AI, real boss moves.
Speaker 1:Must be a movie, says someone who we're not going to read because it's a bad name in the thing. Anyway, speaking of Elon Musk SpaceX. SpaceX.
Speaker 2:Google are in talks to launch data centers Yeah. In orbit.
Speaker 1:Thank you
Speaker 2:so Deal between the two tech titans would give a boost to SpaceX business ahead of a historic public listing. Google is in talks for a rocket launch deal as the search giant expands its own efforts to put orbital data centers in space. Launch deal would put the two companies in partnership as they gear up to compete on orbital data centers, an unproven technology that SpaceX CEO Elon Musk has said is the next frontier for its rocket company. Google is also in discussions about a potential deal with other rocket launch companies. They gotta at least have a stocking horse.
Speaker 1:How are we not talking about blimp data centers yet?
Speaker 8:I
Speaker 1:know. Sergey Brin has a blimp company. You know, Bezos has a rocket launch company. So there's a very logical line from AWS to space data centers through Blue Origin. But we gotta put some GPUs on the blimps.
Speaker 1:We gotta start mass manufacturing the blimps. This could be the thing. I I mean, no no there's no nimbyism in the middle of the Pacific Ocean if there's just a bunch of blimp data centers floating around in a circle.
Speaker 5:Well, I think if you're already in the ocean, you should go down as well, you know, Atlantis mapping.
Speaker 2:Cooling.
Speaker 5:Yeah. I feel like none of the ocean guys
Speaker 2:Yeah.
Speaker 5:That are working on ocean robotics are thinking about, like, putting ocean Yeah. I
Speaker 1:mean, it feels easier than than than space data center. And so the space is free. The land is free. You don't run into regulatory stuff. Cooling potentially free.
Speaker 1:Energy, a little bit tricky down there. Geothermal? Geothermal maybe. I don't know.
Speaker 2:No. There's there's there's oil and natural gas reserves on the in the on sea.
Speaker 1:Oxygen there? Because how do you burn the oil and the natural gas on
Speaker 2:Big the big
Speaker 1:Diving bell. Tube. Yeah. Scuba scuba tanks or something. Anyway, let's continue.
Speaker 1:Where are we in this space SpaceX and Google?
Speaker 2:Speculative technology has been at the center of SpaceX's pitch to investors ahead of its planned IPO this summer Mhmm. Which is anticipated to be the largest IPO of all time. Last year, Google announced its own plans to launch prototype satellites by 2027 as part of a moonshot initiative called Project Suncatcher. It's working with another company, Planet
Speaker 1:Flash It's cool name.
Speaker 2:To build those satellites. We're working on getting Will Marshall from Planet Labs on the show Yeah. In the next week or so. We'll send tiny racks of machines and have them in satellites, test them out, and then start scaling from there. Mhmm.
Speaker 2:Says Sundar, there's no doubt to me that a decade or so away we'll be viewing it as a more normal way to build data centers. A little bit of an interesting timeline
Speaker 1:It's I
Speaker 2:thought There's we were no doubt to me
Speaker 1:Ten days.
Speaker 2:That a decade or so away, we'll be viewing it as a more normal way. Yeah. A decade or so away.
Speaker 1:He's being a little cautious in his language Yeah. In his timelines. But
Speaker 2:Google was an early investor in SpaceX and now 1% of the company. Yeah. Not bad. The other the other funny dynamic from SpaceX is deal making
Speaker 8:Mhmm.
Speaker 2:Recently is given that the OpenAI startup fund was an early investor in I believe Cursor's seed round. True. An $8,000,000 round. OpenAI, at least the startup fund, will have some meaningful exposure to SpaceX.
Speaker 1:Yeah. SpaceX, an OpenAI backed company. That's the way people will introduce it. OpenAI backed SpaceX IPO.
Speaker 2:Yeah. I thought it was it was quite interesting having that happen while the whole trial was going on.
Speaker 1:Everyone owns everything. Everyone has diversified into every every company at this point basically. Let's see. The company last week announced a deal to sell Earthbound computing resources to the AI company Anthropic. As part of the agreement, Anthropic expressed interest in working with SpaceX on orbital data centers.
Speaker 1:Earlier this year, SpaceX filed an application with federal regulator to launch up to a million satellites for its orbital data center ambitions. That's crazy. I remember, didn't they get what what was the original Starlink approval? I thought it was, like, tens of thousands, maybe a 100,000 satellites. I'm starting to think, like like, looking ahead, there's going to be a backlash to, like, they're blocking out the sun.
Speaker 1:Like, we've seen the matrix. This happened in the matrix, but for, like, chemical reasons. But, like, if there's, like, like, light pollution from this at all, it's going to be a absolutely massive, oh, yeah. Panthalassa Ocean data centers. You don't need to sink them to the bottom of the of the the Mariana Track.
Speaker 2:I believe you forget.
Speaker 1:Just do them on the on the ocean. Did did you look up how many satellites SpaceX currently has in orbit? Because I think I mean, it's a huge number. It's over 10,000, I believe. But a million is a huge jump.
Speaker 1:But that should be actually should math out. I think we did the math. That should math out to gigawatts in space, which is definitely meaningful.
Speaker 5:So right now they have like just over 10,000
Speaker 1:Just over 10,000. Okay. But I think they're approved for maybe up to a 100,000 or something. And so they go and get the huge the huge allocation and then they start launching. Very very excited to see the progress on Starship.
Speaker 1:What isn't there a launch that happened or is happening this week? Like what
Speaker 2:Yeah. When's the next?
Speaker 1:I'll keep reading.
Speaker 2:Other the other story, this was back in March. Blue Origin has a play in in space data center Yeah. As well. So I would kind of you could imagine them and Amazon teaming up in some capacity. But you could also imagine Amazon saying like, hey, if we're gonna be a real player here, we need to we probably need to work with
Speaker 1:Moonstar Cloud finally probably finds a dance partner, if not multiple. Many industry leaders see orbital computing as a solution to the limitations of earthbound data centers. Earthbound is capitalized. It's a proper term now, which requires swaths of land and power. These data centers are designed to be powered by solar panels, emitting eliminating the major power constraint faced by data centers on Earth and one of the major ecological issues with emerging technologies.
Speaker 1:But there are also major engineering challenges. SpaceX made its name as the world's leading private launch provider sending NASA astronauts to the space station and launching thousands of satellites as part of its Starlink Internet constellation, over 10,000 apparently. As it prepares to go public, SpaceX has struck a number of deals that have rewritten its balance sheet, helped Musk consolidate his companies including its acquisition of XAI and SpaceX also announced a deal with Cursor as we have talked about on the show. Star Star Starship.
Speaker 5:What's the update on twelfth Star Ship? One is next Tuesday, the nineteenth. Next Tuesday? That's when they're targeting.
Speaker 2:Yeah. What's their goal?
Speaker 1:But they were like moving it down the runway sort of getting ready Do to
Speaker 2:you have any idea what success looks like?
Speaker 1:I think So this is
Speaker 5:the first orbital test of the v three.
Speaker 4:Okay.
Speaker 1:So they got to get it to orbit and then get it back and probably land it. But are they going to land on land or water? Because I it the last didn't the last one make it up and back but exploded in the water or was that the Blue Origin New Glenn? I don't know. Anyway, there's a whole deep dive on space data centers in the Wall Street Journal.
Speaker 1:They say, is it a pipe dream or AI's next big thing? They're pointing out some of the challenges. You're going to need thermal louvers, opening and closing shutters to block or allow heat, thermal contacts, special bolts to separate items with different heat requirements, deployable radiators. Heat is transferred to special surfaces that unfold in orbit. Looks like a big Pull up
Speaker 2:this graphic showing sun synchronous orbit.
Speaker 1:Yeah. This is cool. So when if if you're orbiting the earth vertically, essentially, the sun is constantly hitting the satellites, so you're not out of power for half the day. But they say these the radiators for data centers will likely be very large. I like that.
Speaker 1:Phase change materials, materials that can absorb that can change phase to absorb heat like wax or salicylic acid, usually from solid to liquid when returned to normal when temperature is reduced. Sun synchronous orbit, 373 miles to 497 miles up. So about 400 miles up is when you're getting to sun synchronous orbit. That's on the low end of low Earth orbit. Low Earth orbit around a thousand miles.
Speaker 1:Mid orbit, one to 10,000 miles. High orbit over 22,000 miles. And so we we we we covered a decent amount of this. So we can we can move on. Do you want to talk about
Speaker 2:Matthew Yeah. Was adding the conversation we had with Doomberg.
Speaker 1:Doomberg was fun.
Speaker 2:Doomberg was saying the only way the data center build out will be successful is by either breaking all the rules or going off grid. And Sean who said the tech crowd keeps leaning into this off grid is the only way thesis. Mhmm. And I disagree with this notion. The exhibit a example of XAI Colossus even overstates what's actually happening at Colossus.
Speaker 6:Okay.
Speaker 2:XAI did not build a permanently off grid AI campus because the grid was unusable. Colossus already has 300 megawatts of TVA interconnect approved across two substations XAI funded, plus contractual obligations to curtail during periods of grid stress. That is a grid tied architecture with supplemental on-site generation, not an islanded power system.
Speaker 1:I think I think Doomberg was like the other side of this that Doomberg did highlight was like Colossus is the exception that proves the rule because it moved so quickly and and took advantage of so many different grids and there were power generation from multiple states at one point. And now there is pushback. Like there wasn't pushback when Colossus was built originally because data centers were not a hot topic. And it's the same thing with launching rockets. Like we talking to someone who lives up in Santa Barbara.
Speaker 1:They're launching a lot of rockets from Vandenberg. It's getting to be a lot of traffic. It hasn't risen to the level of, you know, protest. But you can imagine that building 10 more Vandenbergs would be difficult because you go to the local community and you say, hey, we're going to build a space launch station, a space port. And they say, oh, that sounds good.
Speaker 1:Like, you mean because we're going to go to the moon once a decade? And you're like, no. We're going to launch rockets 10 times a day or a 100 times a day. And people, if they have an example that they can draw from and say, oh, well, like, that community doesn't like it, so I shouldn't like it, that's some of the pushback. But anyway, we can keep reading Shanu Matthew's post.
Speaker 2:Yeah. Let's see.
Speaker 1:Turbines solved a time to power problem, so it accelerated the deployment while substations and transmission infrastructure were being built. That's very different from do all of this off grid. And economically, most large scale AI load will still want to be grid tied long term. Interesting. I have made this point several times, but running your own generation fleet at hyperscale is expensive and operationally complex.
Speaker 1:Fuel logistics, maintenance, n plus one redundancy, permitting, emissions compliance, balancing load and supply continuously, multi year equipment lead times. You don't just figure that out or want to do that overnight. Amin, the chief technology officer at or the chief technologist at Google AI, does that mean do you mind her? Straight up confirmed this on a podcast and they literally bought a hybrid power island hybrid island power developer. BTM generation absolutely matters.
Speaker 1:It's becoming a critical bridge solution during a period where utility interconnect timelines are badly lagging demand growth. But I'd strongly push back on the idea that the steady state future is fully off grid hyperscale campuses. The industry is converging towards hybrid architectures, grid interconnect plus captive generation, plus storage, plus demand response. They're throwing the whole kitchen sink in it. Anyway.
Speaker 1:Related. Yes.
Speaker 2:More Perfect Union had a post earlier and
Speaker 1:They're turning off
Speaker 2:people in Lake in the Lake Tahoe area have been told their utility will stop providing power to them because it's redirecting that power to data centers. Envy Energy, the Nevada utility that supplied most of Lake Tahoe's electricity for decades says that next year will stop servicing homes in the area and instead direct that electricity to the growing demand from Nevada data centers. Northern Nevada is one of the fastest growing data center corridors in the country. I read this. I was like, this is completely insane.
Speaker 1:It's so stupid. Like you read it and you're like, this is such an L in the making for the data center industry. What were they thinking?
Speaker 2:And then it's immediately getting community noted. And a quote from the president of Liberty Utilities in Lake Tahoe says, this does not mean the power is shutting off. Yeah. Energy companies, utilities, and large customers change energy supply frequently. So there's a supplier of energy that is saying like, hey, we're not gonna renew our contract.
Speaker 2:Gonna divert the energy elsewhere. But there's a bunch of suppliers of energy. Sure. And so Andy Masley says, everything MPU posts about data centers is complete garbage. They have zero respect for their audience.
Speaker 2:Literally, no one here is losing power. This tweet is a complete lie. What's actually happening is that a supply contract between two utilities is ending and the small one is just buying power from elsewhere and this was all expected to happen since 2009.
Speaker 1:No way. Wow.
Speaker 2:The company that serves You're
Speaker 1:gonna say like two years ago.
Speaker 2:The company that serves homes on the California side of Lake Tahoe is a small utility called Liberty. Liberty buys about 75% of its electricity from a much larger utility, NV Energy in Nevada, and generates the other 25% itself from solar farms it owns. Mhmm. Liberty sells then sells that 49,000 to 49,000 customers.
Speaker 7:Mhmm.
Speaker 2:NV Energy has told Liberty it will stop selling them wholesale power after May 27. Mhmm. It's kind of like Liberty's a coffee shop that buys beans and sells coffee to customers. The customers are the homes and the beans are the electricity it buys from NV storage and or makes itself. This is like your local coffee shop ending a contract with a specific bean company and started buying beans from somewhere else.
Speaker 2:It doesn't stop you from buying coffee. Why is their contract with NV? Why is their contract ending with NV Energy? NV Energy selling to Liberty was understood as transitional since it started in 2009. Long story short, NV Energy was basically Liberty's only wholesale option, but a new transmission line opening in May 2027 gives Liberty access to a much wider western market and among other things, much larger share of solar and wind and hydro.
Speaker 2:That's the whole story here. Ending the contract with NV Energy and opening up this much wider pool with much more renewable energy was the plan here completely separate from data center demand.
Speaker 1:Interesting. Well Anyways. It would be remarkable if all of Tahoe lost energy and Mark Zuckerberg couldn't charge his electric wakeboard because I I I somehow feel
Speaker 2:He hit the streets. He'd be protesting.
Speaker 1:I think he'd be protesting. I think he would get something done if if power was lost to Tahoe. I mean a lot of influential people are out there. So
Speaker 2:Anyway Alright. We gotta talk about just keep record straight on that. We gotta talk about Unitree. Unitree, GDO one.
Speaker 1:They build they build a new robot and you're gonna love it. It's not scary at all and it looks very fun and safe. This is from Avatar. They just built the mech from Avatar. This has been pictured many times in science fiction and will strike fear into many people.
Speaker 1:Coincidence that they're
Speaker 2:bucket seat.
Speaker 1:It is cool. It does feel very hacker culture. Like, feels like this was like a crack team, a little skunkworks project. This is it doesn't look like as polished or ready for, you know, sale, but remarkable results.
Speaker 2:They're like You gotta put this out so that the Americans cancel all of their technology ambitions and
Speaker 1:just go back to the dark age. It is intimidating. Is it a coincidence that it was launched the same day that the or the same week that the summit is happening in China? I don't know. It is amazing that it turns into a horse of some sort, a four legged creature.
Speaker 1:Although, how do you drive it at that point if you're laying backwards? It needs some sort of gyroscopic seat. That one hasn't really been considered because if you're laying back while you're driving it in horse mode, you're gonna be maybe maybe you just nap. Maybe you're like, oh, I wanna commute. You know, Henry Ford said if I ask people what they wanted, they would ask for a better horse.
Speaker 1:This is. This looks like a better horse to me. You get to work. You pop up into vertical mode. I'm fascinated by how they're controlling it.
Speaker 1:Is it is it just like a video game controller? Because some of this seems like it would require you to telegraph, like, in in the in the Avatar films, like, the the operator of the Mac has full, like, the input is the actual arms. So if they wanna swing a sword, they swing the sword or they swing the machete physically with their arm, and then the robot does the bigger version of that.
Speaker 2:Timeline until these mechas replace horses for police use cases.
Speaker 1:I don't know. There's gonna be pretty crazy pushback if that's rolling around during a riot.
Speaker 4:Know. But the benefit
Speaker 2:here is that the I don't think the mecca will, go go to the bathroom
Speaker 1:I mean
Speaker 2:on the ground.
Speaker 1:Obviously, this is gonna happen at some point. A lot of these developments are very early. I bet you if you give that thing a strong kick, it falls over and sort of gets stuck at this point.
Speaker 2:Selah over on X Yeah. Had pulled out the funniest part Yep. Which is that Uni Tree unveils the world's first mecca, show it breaking down a brick wall. And then in the launch announcement, they say, please everyone be sure to use the robot in a friendly and safe manner.
Speaker 1:Yeah. Wild. Ego centric data collector versus the Mecca mounted tele op Chad. Absolutely wild. Wild.
Speaker 1:Or is there another video of this? Oh, yes. This is an AI video, but we have to play the version of this getting hot dropped into what you could imagine as the battlefield with four FC 204 drone formation, max payload of 600 kilograms, unit three's new transformer mecca, 500 kilograms of weight. That's probably without a human inside. So you might need six drones.
Speaker 1:But this is something that feels not that far away. Not that far away. Although, you drop that thing in the ocean, I feel like there there are so many steps on the humanoid robot path where, you know, the deployment in a flat surface in a warehouse makes so much more sense than, like, standing on a ladder straddling a chimney in the rain and there's a little bit of mud and you use a power tool and dust kicks up. Like, actually ruggedizing all of this is probably a whole second step in this process where you're adding more weight. That means more battery.
Speaker 1:You need better battery technology. I don't think you'll be dropping this into the Taiwan Strait anytime soon, but it certainly strikes fear into the hearts of many. Well,
Speaker 2:there's more humanoid news. Yes. Brett Adcock has a livestream going
Speaker 1:That's right.
Speaker 2:Of their robots. Yeah. I do wonder how they're again, I'm sure the comments are all, how do we know this is actually live? Right? Like, how do you how do we know?
Speaker 1:So is this the actual livestream right now? It's continuing because I I I pulled this up an hour ago and it looked, I mean, I guess exactly the same because it's the robot and they've been sorting for an hour. Battery pack or plugged into the wall? What do we think? What's the
Speaker 2:battery like? He says watch a team of humanoid robots running a full eight hour shift.
Speaker 1:Okay. Oh, okay. So they might have swapped it out at some point for
Speaker 2:a different one. Just trade.
Speaker 1:Interesting. It looks like a lot of progress.
Speaker 4:It's extremely fast.
Speaker 1:It is fast. Like, the movement's very natural. I wonder what what is the goal here exactly? Because the is the robot sorting these? What does it do with the blue one?
Speaker 5:I I think it's putting it so the shipping label is visible.
Speaker 1:Or the shipping label's down. Oh, okay. Okay. Okay. Yeah.
Speaker 1:That makes sense. That feels like because some of the robot applications are things that you could do with a two axis gantry or or a sorter. Like, if you watch how it's made, there are industrial machines, not robots, that can do all sorts of sorting. Like, you watch how Diet Coke gets filled and the cans roll down and at some point they all need to be facing upwards and so there's a machine that sorts them and and tilts them all upwards. Obviously, the the humanoid use case is much more unstructured and that is beneficial for so many things.
Speaker 1:I don't know. If if this is Apparently,
Speaker 2:they're just gonna have the robot go until it taps out.
Speaker 1:Oh. Okay. I like that.
Speaker 10:That's
Speaker 1:cool. That's great. Very cool. Well, in other video news that we need to play, General Catalyst launched an ad on X that might be making it into TV ads or
Speaker 2:G cat.
Speaker 1:Ads at some point. What?
Speaker 2:G cat?
Speaker 1:G cat? What's G cat? Oh. What I'm Maybe that's the new ad campaign. But the the campaign is called Meet GC, and it's a clear reference.
Speaker 3:I'm GC. And I'm VC.
Speaker 8:Who's your
Speaker 3:friend here, VC?
Speaker 8:This is Woof AI, an AI native companion platform that combines robotics and machine learning. You'll never want
Speaker 1:a real dog after this.
Speaker 3:Well, I think people like dogs as they already are though, VC. You don't need
Speaker 8:to walk it. You never need to tell the kids you sent Milo to the farm. We're leading the seed and could probably make room for you.
Speaker 3:I'd love to hear more,
Speaker 8:but we
Speaker 3:actually have a really high bar around responsibility for these things. Is Wolf AI okay? Of course, he's fine.
Speaker 8:Oh, sorry, buddy. Doesn't want Easy. Stay. Stay. No.
Speaker 8:No. Stop. Stop. Stop. Stop.
Speaker 3:I'm sure he'll be fine. Interesting
Speaker 1:symmetry to the podcast set that Reggie's doing. Right? I reckon
Speaker 2:Reggie directed.
Speaker 1:Yeah. But it's cool that like the brand like like you could wind up doing two very different designs, but there's, like, a there's a through line there, even though it's obviously a nod to the Mac versus PC ads from the two thousands, which we can pull up to watch one of those. I think we've watched these before. And they have a very similar, you know, stiff PC versus Mac look. But I think that's I I think that was a good message of like, okay, like We're not like the other cat.
Speaker 1:Also like let's not fund the stuff that like is
Speaker 8:Yeah.
Speaker 1:Pointless and useless and if you already have a dog. And Keep a dog.
Speaker 2:This is a big moment
Speaker 1:Yeah.
Speaker 2:Because you have been wanting a VC firm to just commit to paid advertising for a long Well,
Speaker 1:I wouldn't say this is a commitment yet. We gotta actually Yeah. See spend behind Of course. Of course. Yeah.
Speaker 1:No. No.
Speaker 2:I Magazine ads.
Speaker 1:Yeah. In the right I mean, certainly, like, Wall Street Journal and Forbes and, like, the places that people the entrepreneurs go for information, it makes so much sense to to actually spend on advertising to build a brand, especially when you're at the scale of General Catalyst. Can we pull up the Mac versus PC ads? We're not gonna watch all of them. There's 66 of them.
Speaker 1:Talk about a generational run.
Speaker 11:A lot of the same kinds of programs. Yeah. Like Microsoft Office. But we retain a lot of what makes us us.
Speaker 12:But you
Speaker 9:should see what this guy can do
Speaker 6:with the spreadsheet. It's insane. Bogged.
Speaker 8:Yeah. He knows that I'm better at
Speaker 6:life stuff like music, pictures, movies, stuff like that.
Speaker 11:Woah. Woah. Woah. What what exactly do you
Speaker 6:mean by better? By better, I mean, making a website or photo book is easy for me and for you, it's not.
Speaker 9:Oh.
Speaker 11:Oh, that kind of better. Anyway, I I was thinking of the other kind.
Speaker 4:What other kind?
Speaker 1:Hello? We we we can switch away because the he you've seen all these. Mark Andreessen quote tweeted a dunked. He said, stay tuned for our upcoming ad campaign. We're the VC who doesn't sneer at your idea.
Speaker 1:Interesting. Getting spicy. Yeah. Red alert over there. Red alert.
Speaker 3:It's a
Speaker 1:lot of red alert going on. It's a long thing. Well
Speaker 2:Well both companies are invested in robotics company and or.
Speaker 1:Oh, yeah. I mean, I'm sure there's a ton of portfolio overlap.
Speaker 2:Oh, no. I I I just think I I just think like in another world that that that's an Andoril product, that dog thing. Probably. I'm sure they've experimented with that form factor.
Speaker 8:And rolled
Speaker 1:in both funds of to build a mecca. I it is I mean, if there's ever someone to build the Mecca, it would be Palmer Lucky. He has talked about this stuff. I I even asked him on stage once like, walk me through the Pacific Rim vision. Like, how do we build that?
Speaker 1:And we had a fun back and forth about it. Well, we Do you remember do
Speaker 2:you remember much about his response?
Speaker 1:Yeah. So his response to stuff like that
Speaker 2:form factor is just like, hey, I'm a I'm a sitting duck Yeah. On a platform.
Speaker 1:Yeah. Exactly. So so his his point is always like the technology to build the Mecca is way behind the technology to like remote control something or put an AI on board or something like that. So you actually don't wanna build the Iron Man suit because Yeah. You can just build the drone, the submarine, the
Speaker 2:use the example of like the Batmobile. Yeah. It's like if if you need a vehicle for the city Yeah. Like do you really need this like massive vehicle? Yeah.
Speaker 2:Right? No. Clearly, Bruce Wayne
Speaker 1:just The wanted parking guy, he's obsessed with he's obsessed with building Batmobiles. Very funny. I don't know. That is a very cool demonstration, though. But, yeah, he Anderoli says, don't build the Batmobile and focus on, like, is there an actual, like, urgent need from the military?
Speaker 1:Is there support from congress to actually appropriate the funds? And Unitree, I don't actually know. That feels like just like an that's like a marketing project at this point.
Speaker 5:Yeah. I mean, I think their their IPO is like very soon. Right? Think the the original application was like late March.
Speaker 1:Yeah. That would probably pump it. And then also, you know, they're they're showing it like break down a brick wall. But like, when I was thinking about what that's actually valuable for, we were talking about like, could you deploy that and like sneak through a forest and then attack the enemy or something? It's so big.
Speaker 1:It's so visible. Like, a single drone with a, you know, fiber cable coming out of the back is gonna blow that up. It it doesn't really seem that practical. Maybe if you're going over really rough terrain, you want the legs instead of a tank tread, but you can sort of just put a huge tank tread on something and just crush everything in your way. But if you're building and you need to get a bunch of two by fours onto the roof, like, there's a theory that that might be a little bit better.
Speaker 1:You were saying you're you're forklift maxing, and you think the the forklift will always defeat that. But there's got to be certain areas where you can't necessarily bring a forklift because there's a narrow it's an uneven ground, a narrow entryway into the back of a house. You have all the two by fours. You need to get them on the roof. You would otherwise be going up and down a ladder.
Speaker 1:And so Mecca to the the to the rescue.
Speaker 5:Yeah. I mean, I it's just like pretty hard to justify this. Like I think, yes, for certain like emergency scenarios
Speaker 6:Yeah.
Speaker 5:It makes sense to have some like super weird
Speaker 1:form factor. Emergency. I need a really cool thing piece of tech. I need something that looks really cool before my IPO. Emergency.
Speaker 1:Well, we can we can flip over to the other financial news that's making headlines on the cover of The Wall Street Journal. Inflation accelerated 3.8% last Not good news. Joe Wiesenthal has a couple posts, but one is just man. And he says the headline, US April producer prices rose 6% year over year. The estimate was 4.8%.
Speaker 1:So obviously, closure of the Strait Of Hormuz is having an effect. We were talking about Diet Cokes. You would think that the caffeine doesn't come from The Middle East. The delicious caramel flavor or whatever else they put in this does not come from The Middle East. But aluminum actually, there are smelters in The Middle East.
Speaker 1:Aluminum is in shorter supply because of the closure of the Strait Of Hormuz. And so Diet Coke is rapidly going out of stock. And so you need to load up if you prepared.
Speaker 2:How many you got four or five pallets?
Speaker 1:Have not actually gotten any. I'm not stockpiling Diet But Coke who knows? Maybe prices go up. That's what inflation represents. And Wall Street is getting more anxious about it.
Speaker 1:So we can read through this quickly before we are joined by Max Levchin from Affirm. So surging energy prices have pushed investors' inflation expectations to multiyear highs. Tuesday's hot readout on consumer prices is intensifying Wall Street's anxiety about inflation. Even before the latest release of the consumer price index, inflation expectations had been climbing, a potential trouble spot in the market where stocks have largely shrugged off The US Iran conflict and the resulting energy shock. So investors bet on inflation by buying and selling both ordinary US Treasuries and those that hedge the risk of inflation called TIPS, treasury inflation protected securities.
Speaker 1:The gaps between the yields of those two types of bonds known as the breakeven rate recently hit the highest level since October 2022 according to Federal Reserve data suggesting that investors expect annual inflation to average around 2.7% over the next five years. Now that's not entirely doom and gloom, but the risk here is that the AI boom, the GDP numbers are sort of concentrated in AI, CapEx and data centers. It's not evenly distributed. The real economy is only growing at 0.1 while the real economy is suffering from 2.7% inflation over the next five years. That's a recipe for stagflation, stagnation plus inflation, a very rough thing for any economy to go through and something that the market and the economy and the politicians should be focused on.
Speaker 1:So the ten year breakeven rate has also climbed, I think, 2.5% this month, its highest level since 2023, driven largely by the war fueled surge in oil prices, the rise in inflation expectation worries investors because of the challenges it poses for the Fed interest rates policy and major indexes latest run to records. And so for a while, everyone was thinking about maybe interest rates will come down, maybe mortgages will become more affordable. But there was even the whole debate or the the fight with Powell and lawsuits, which were eventually dropped. But Powell and Trump were at each other's necks and issuing statements about their vision for the future of the American economy. And on the flip side, you have Kevin Warsh coming in, maybe more friendly, maybe more receptive to a rate cut, but the data makes that very, very hard to justify.
Speaker 1:And so we are in
Speaker 2:Yeah. In some in ways in some ways, you know, who who knows how how history will view Powell, but, like, he landed he landed the plane.
Speaker 1:He did.
Speaker 2:And then, you know, we get war in The Middle East. And and now Kevin Worsch in some ways looks like he'll have just as tough of a job.
Speaker 1:Potentially. Potentially. So Well, our next guest, Max Levchin from Affirm, he's the co founder and CEO. He's returning to the show. We've been keeping him waiting far too long.
Speaker 1:Max, how are you doing?
Speaker 9:I'm great. Thanks for having me again. Third time's a charm.
Speaker 2:Third time. What have you learned
Speaker 7:about that?
Speaker 1:Third time can't be the charm. I want twenty fifth time to be charm. Let's keep it going. I love these.
Speaker 13:I enjoy this course.
Speaker 2:What have you learned about making coffee since the last Oh, yes. The important update first. Because I'm assuming you're never like, oh, I'm I'm pretty good at this.
Speaker 1:Laurels? Are you are you the
Speaker 9:final boss? I'm absolutely not. Okay. I took apart e sixty one group, which is the classic 1961, sort of that that's the granddaddy of all the espresso espresso group heads, and I wanted to learn how the mushroom valve works because I thought mine was clogged. It turned out not to be clogged, but I went down an extremely deep rabbit hole of taking apart an e 61, which I've actually never done before.
Speaker 9:So I'm now really boned up on how espresso machines worked in 1961 and and and since.
Speaker 1:But Yeah. Yeah. People always talk about like when you get into coffee, you go you effectively vertically integrate or go deeper in the supply chain. You start roasting the beans. You got to grow your own coffee.
Speaker 1:At a certain point, you have to be smelting the metals that go into the machines, understanding the alloys coming up with new chemical processes. You have to set up your own mind. You're you're you're putting all
Speaker 9:kinds of wrong ideas into
Speaker 1:my mind. Jack. Oh, not yet. Yeah. Yeah.
Speaker 1:Yeah. Yeah. Yeah. Did did did you smelt the metal that went into the espresso machine?
Speaker 9:I've not smelt anything lately. I'm
Speaker 1:Wow. Gonna get a real novice. Last time. Anyway, we're not here about my smelting experiences. Fantastic.
Speaker 1:I imagine that the smelting process is as intricate and as as rewarding as the coffee making process in some ways for
Speaker 8:Yeah.
Speaker 2:I I expect you to be able to try our coffee and understand the
Speaker 1:The hour. Exact hour. The machine. Yes.
Speaker 9:Possibly. But I I I'm I'm very very long depth. Okay. Anything that you can go very deep into, like, this is the time in general, but, like, depth as a competitive advantage is, like, a profound strength. So Yeah.
Speaker 9:The reason I'm so into whatever things I'm into is I found over the years that if you out depth your competitors, they just can't beat you. So I'm very pro smelting. I'm very pro going over the deep.
Speaker 1:Yeah. Yeah. That's interesting. Is there a translation or if you transpose that to sort of like advice for young people who might have anxiety about traditional career paths. I was sort of, you know, we look at like job numbers all the time and layoffs and at the same time I think about when I was a kid if I said, Oh, when you grow up you will be a live streamer who at an AI lab.
Speaker 1:It's like none of those words existed back in the nineties and here
Speaker 2:I Yeah. Also a lot of a lot of there's so much advice out there. It's like you want to be a generalist. This is the age of being, you
Speaker 1:know Yeah.
Speaker 2:A strong, you know. Maybe it's the opposite. And and when I when I look at people that are that are maybe sort of midway through their career, the highest earning, you know, the most respected Yeah. Are almost always the ones with extreme depth
Speaker 1:Expert where
Speaker 2:they can simply out compete anyone else in that role because they know more about it. Yeah. They put in more hours.
Speaker 1:Yeah. But yeah. But what are you thinking for young people?
Speaker 9:I I'm I'm definitely big on depth. I think I'll be these are like entirely non contrarian opinions but maybe they're contrarian right now. But I think it's a great time to get a computer science degree. I think if you're ultra deep into really understanding how software is made
Speaker 1:Yeah. You
Speaker 9:are like, everyone's going be a 10x engineer. If you're 1x engineer yesterday, you better be a 10x engineer tomorrow. That's the new baseline. But if you really, really get it, if you're smelting your own code I'm just going to go with the smelting analogy for a break. But if if if you're that good, you're going to be 10,000 x engineer.
Speaker 9:And like, you will be worth your weight in smelted gold. Who knows? But it it it's very, very powerful to be a deep expert. Like, you are the one AIs want to learn from. And like, that that is that is the unattainable Mount Olympus of value.
Speaker 9:And so I I would strongly suggest that being deep is great. Majoring in computer science is great. If you love computer science, like, this is the time to major in whatever it is you see yourself being as deep as possible because then you'll become absolutely valuable worlds.
Speaker 2:What about industry specific depth? Like, a founder comes to you and they're like, oh, I've been building I've been building an e commerce but really and and I've done quite well but really I'm interested in space. I I wanna work on that. You've done
Speaker 7:You're interested
Speaker 9:in space and you're not working on it and you're like, what are you doing? This is the best time in history to do that.
Speaker 2:Yeah. Yeah. But generally, like you've done quite well by just focusing on something in a category that you know better than maybe there's maybe like three, four other people in the world that understand the intersection of like money and technology the way that you do. And I feel like a lot of founders oftentimes will do one thing, feel like they kind of like climb the mountain and then some some will just go back and climb a very similar mountain and do quite well again. Others want to jump ship and do something completely different.
Speaker 9:So I tried both. My last startup in between the other payments startup was not in payments and it turns out that I'm very good at climbing this one mountain. I'm just going to keep climbing it because I also the reason I'm good at it is because I love depth and I love getting deeper and deeper deeper into payments, into how to make payments more expedient, transparent in the case of a firm. Payments are a lot of things, and access to credit is a totally new idea. Like, I've never touched credit until Affirm, and now, you know, maybe without false humility, I think we are definitely one of the very best credit underwriters in the world and are just getting better and better.
Speaker 9:We just announced yesterday we built an entire new model family loosely inspired by the attention mechanism that is powering all of your LMs out there, including your your parent company now. Some some ideas we borrowed from the from from from all all these really amazing discoveries and sort of pure, you know, language AI. And yet, it feels like we're just getting started. Like, every time I look at this sort of corpus of things that we can try to do, things we can build, a product we can launch, it's like, my god, we have much to do. Like, there's absolutely no chance I'll get to rest.
Speaker 9:I'm not sure I'll get to sleep after all. It's a great time to build stuff because everything is faster and more exciting and easier to start. Yeah. But the depth reveals itself deeper you dig.
Speaker 1:Okay. So, yeah, we sort of mentioned or we referred to it a little bit, the twenty twenty six investor forum. Who attended? What was the goal of that? Take us through that event.
Speaker 1:And then I have a whole bunch of follow-up questions about how you're communicating at the current time.
Speaker 9:Yeah. It was amazing. I'm still kind of slightly high on the whole thing. But the the thing that was really fascinating, so we did this event Yeah. Three years ago or similar event three years ago, and it's like a blink of an eye.
Speaker 9:Like, I remember it was in the same buildings. A of lot the same people attended, so these are mostly buy and sell side analysts, a bunch of our shareholders, a couple of our board members actually flew in for it, which was like a nice surprise to
Speaker 8:me. Great.
Speaker 9:And the entire management team gets on stage and they're like, here's what I work on, here's what the company is, and But like, the reason analysts are there, they're like, okay, tell us about your vision, Max, yada yada yada. Really, what will the next three years worth of gross targets gonna look like? And so, the the the main act I was the warm up act. I try to be funny, but the the main act was our CFO, Rob, who got on stage and said, alright, so we're going to grow to a $100,000,000,000 of GMV. We're we're just in the range of touching 50.
Speaker 9:We're going
Speaker 3:to double.
Speaker 9:And we're going to do this by compounding at 25% every year. Mhmm. And we're going to move our profitability target from three to 4%, which is our current range to 3.75 up. And so, we're we're going to up the floor. We're going to be more profitable and grow faster and it's like faster.
Speaker 9:We're a bigger company now. Like, well, what are we doing? Wait a second. Last time we did this three years ago, we said we're to compound at 20%. But instead we did it like 30 plus.
Speaker 9:Mhmm. And so just like this out of body experience of like we're getting bigger, the room was significantly larger. Same building, different floor, different room. Many more people, many more shareholders, and yet we're telling people like, hey, we're gonna compound that much faster than the last time. It's like, I guess it's like a flywheel, this network we've built.
Speaker 9:It keeps on spinning and spinning faster. So, it was amazing in a sense that, like, I I knew all these numbers, like, I obviously approved and worked with the team to make sure we feel great about them. When you sort of say it out loud, like, compare that to the last time we told you the same thing, we're gonna accelerate.
Speaker 7:Yeah.
Speaker 9:It's like, wow, that is like so cool. So anyway, so I'm I'm I'm still very high from like being able to say that out loud is very fun.
Speaker 1:So there's a flywheel. I imagine with a lot of financial companies, there's economies of scale. And so that seems doable. Are you also talking about TAM at this point because the company is so large? Or is it still early enough that that's not something that investors are coming to you asking to sort of justify, well, the global economy is only this big.
Speaker 1:And if you take 50% of it, well, there's nothing else.
Speaker 9:The good news is that a $100,000,000,000 Yeah. Payments in this country is but a drop in the bucket.
Speaker 1:Okay. That's good. Even
Speaker 9:a larger bucket. We're we're in no The US revolving credit, which is obviously a fraction of total total economic rotation, is like a trillion 3 right now.
Speaker 1:And
Speaker 9:a 100,000,000,000 is like then that's worth taking shares. So I I like to compare that number. People are not using revolving credit.
Speaker 1:They're using
Speaker 9:a firm. It's good for them. Not revolving. No fees, all that. And so we're not yet at the sort of time.
Speaker 9:By the way, these are all U. S. Numbers, we're already live in The U. K. And Canada, and we've announced a bunch of other countries.
Speaker 1:Okay. So speaking of the investors, obviously, it's very important to communicate with investors right now, both from your growth plans and also what's going on in the market. As you think back to the March time period, the SaaS pocalypse, every company got sort of beaten up. You came back really quickly. How much of that was show versus tell?
Speaker 1:How did you think about communicating to investors through that? How important was the investor communication versus just continuing to deliver on the actual metrics? Like what as you're confronted with one of these, there's a new narrative, how do you what's your playbook for actually working with investors to get them comfortable?
Speaker 13:You know,
Speaker 9:to be completely honest, I don't know. I think the well, and I'm I'm I'm hugely honest, I might as well tell the truth every time. So this particular time, we said nothing. We basically said, okay. I I guess the the sky's falling.
Speaker 9:Doesn't feel like it's falling on us. Yeah. We're printing a really, really good quarter.
Speaker 1:Yeah.
Speaker 9:We're about to report it. Yeah. We could, like, wave our hand in it, and then, like, you got it all wrong. We're fine. Yeah.
Speaker 9:Or just wait a few more weeks and, like, hey, here's what we printed. How about that? And, we're going to guide, we're going to reveal that we're having a pretty good quarter too. Yeah. And so, that's what we did this time and we just didn't spend too much time communicating Mhmm.
Speaker 9:How the story isn't true. Yeah. I don't know if that's like the best response. Like, we've definitely in the past, we would read, you know, the the most recent time when I thought we need to speak was when the rates were rising very quickly. We were screaming into the void of like, no, no, no.
Speaker 9:This business is fantastic at Zurp. It is fantastic at 5% Mhmm. Fed funds rate. It is just fine at a number that's higher than that. We love our value creation opportunities more or less at any rate.
Speaker 9:Like, obviously, you know, it breaks at some point, but US economy breaks at some point too Yeah. For all possible values of the federal funds rate, we're gonna be just fine. And a long explanation why, and I don't think anybody heard it. People like, yeah. Yeah.
Speaker 9:But but the rates are up, so you're obviously. Yeah. We're we're and so the the the dip in return of our stock is like like, you a great turnaround, but it basically amounts to people saying, wait a second. This thing is in just as much demand, does just as well, grow just as fast, just as profitably
Speaker 1:Yeah.
Speaker 9:Through whatever rate cycle.
Speaker 1:Yeah. I think we've talked about the history of effective interest rates on a firm. But we're now in a new regime, and the fear is not higher rates, it's higher inflation. And so are you do you do you already have an intuitive sense of how a different inflation regime or different inflation environment will affect a firm? Are you confident?
Speaker 1:How do you think about the
Speaker 2:relationship It's like a between I can imagine it's somewhat of a double edged sword and that, like, you know, higher prices means people are more likely to want to use credit, but maybe there's a drop in some purchasing activity of some items. Yeah. You know?
Speaker 1:Also just like if if you're getting $10 in two years and it's worth less, that that that should have an effect. But how how is it actually playing out?
Speaker 9:So a little too early to tell
Speaker 2:Yeah.
Speaker 9:But you were exactly right in a sense that we we saw this game play out in the last inflation spike just a few years ago. We absolutely saw an increase in demand Mhmm. Because as things became a little bit more expensive, people felt that it would be better if they weren't paying for them upfront. People who initially would say, yeah, doesn't really make sense for me to finance this thing. I have the cash.
Speaker 9:Like, I kind of want my cash to go a bit longer
Speaker 1:because Mhmm.
Speaker 9:I don't know exactly which way the price is going to go. So, we expect more demand. We have to be we're always very careful. I the number one line I give at at at every investor event is credit is job number zero. As a computer science major, I count from zero.
Speaker 9:Mhmm. And it it is the most important job. We we grow as fast as credit performance will allow us to grow, full stop. We have to print consistent credit returns. Otherwise, we lose credibility with our debt investors, and that that's the most important thing.
Speaker 9:So we will grow fast no faster than credit results will allow us to. We expect more demand. We don't yet see literally anything related to changing credit performance. We just Mhmm. Printed our results, and they're just as we expected them.
Speaker 1:Yeah.
Speaker 9:And so TBD, whether we see some deterioration of consumer credit due to prices, we really didn't see much of it at all through the last inflation cycle, which was quite dramatic, if you remember.
Speaker 8:Yeah.
Speaker 9:And so, we feel pretty great about our ability to underwrite kind of all eventualities. We are obviously not blind to the macro reality.
Speaker 3:Yeah.
Speaker 9:The minute before I got on stage and promised people 25% growth with an increased profit margin. So, you know, we must think we're gonna be okay, and and that is the case, in fact, the case.
Speaker 2:Yeah. How is is AI changing how you think about international expansion? Does it does it make teams more efficient in terms of adapting the product for different markets? Everything from language to just simply being able to ship more code? Or is international is your, like, international GTM just, like, much more, like, we know what it takes to launch a new market.
Speaker 2:If AI makes it slightly more efficient, great, but it's not gonna change the strategy?
Speaker 9:I think the one a of every list of things that have really changed, thanks to AI, is shipping code. Like, I think it's this is the best time to be a CEO with a computer science degree because, you feel what this means. You know what it's like to make code. You've done it, in my case, for the last forty years. I know how much easier it is, how much more effective Teams can be, how you can have three people in a room build a product over the weekend, which is an amazing thing that didn't exist six months ago.
Speaker 9:And so shipping code is absolutely we're seeing that in my latest shareholder letter actually showed an illustration of percentage of code written by AI at a firm and it's like and it's not like a slow rise. You're like, okay, we're trying, we're trying. We're convinced. 60% to start, 75% last month. So, it's just rocketing.
Speaker 9:It's not like people are writing less code or reviewing less code. It's just that much more productive. So, that helps us internationally. It helps us domestically. Helps us with everything.
Speaker 9:I think other parts of the business are much better with AI, so translation, obviously, services are fantastically effective with AI. You can do a lot of interesting things with legal. Anything that's text heavy, you have just a great helping hand. But the sort of night and day moment is writing code. Like, that that's one a through maybe, like, one p on on the list of things that are just stunningly effective.
Speaker 1:Are you expecting token cost to be, like, an important line item in the p and l going forward? Like, we've seen because there's so many stories of a lot of code written by AI. Sometimes that moves the needle. Sometimes you're just sort of doing what you needed to do and doing it more efficiently or faster. But at the same time, if you get hit with like $1,000,000,000 token bill in a year, that might be material.
Speaker 1:And so you you start having to do and it feels like we're at the earliest innings of ROI calculations. We're more in like the feeling of like, oh, everyone loves this. We're seeing good results.
Speaker 2:Max doesn't strike me as someone who's just gonna tell your team to
Speaker 12:Slop
Speaker 2:it use a lot of AI because obviously there's stories coming out of Amazon and Meta where teams are basically just like, I I wanna I want opt I want the optics Yeah. To be that I'm using more AI than anyone else on my team. So I'm just gonna run things overnight Yep. For no reason.
Speaker 9:Yeah. We are extremely extremely metrics driven company. Like, some might take issue with just how completely obsessed we are. We're like you know, you improve what you can measure. Like, if you're going on the feels, you're going to, you know, feel great until you don't.
Speaker 9:So we measure everything obsessively. We have, at the moment at least, fantastic ROI on our token spend.
Speaker 8:That's great.
Speaker 9:We are I would say, know, it's real numbers, so it's not like, oh, you know, don't care, don't look. We have a weekly report that's generated thanks to AI and and some very smart humans
Speaker 1:Yep.
Speaker 9:Who are monitoring our token use and tell us how each team is producing value and what it's costing us in tokens and Yeah. All the sort of various conclusions downstream. So we are already very mindful of what it means in terms of return on investment on to tokens, return to shareholders at the limit. Right now, it's, like, undoubtedly a very, very accretive thing.
Speaker 1:Mhmm.
Speaker 9:But we're also not assuming that, you know, like infinite budgets are just great. We also expect, by the way, prices of tokens will probably increase over time. Like, I think there's plenty of subsidies taking place. Yeah. You're now inside of one of those places, so you probably know the the true the true price.
Speaker 1:If we can circle back to specialization from AI creating effectively more generalists, interested in sort of computer science history, your career history. How have you processed like the there was a point where front end and back end engineering were two very separate disciplines. At the point where you could do JavaScript on the front end and the back end, you see more full stack engineers. Now you have engineers that are designers, designers that are engineers, designers that might be pushing server code and stuff. So I'm wondering how you're thinking about maintaining that idea of you want the specialized genius, the artisan, the true expert in your organization versus you also want to empower someone to move really fast with a small team.
Speaker 1:And so you might not need to staff 100 experts to do one thing. There's got to be attention there, so I'm wondering how you're grappling with that.
Speaker 9:It's a great question. You're totally right. There are definitely pockets of today's software engineering that accrete profoundly to specialists. If you are an extraordinary infrastructure engineer, you're far from being replaced by some mindless drone because it's as much art as it is science, intuition, experience. Like, I've seen this kind of a failure before.
Speaker 9:AI is good at it, but AI is a great tool. Like, you're in no danger of being supplanted just because so much depth goes into that. And, by the way, AI making a slight mistake could cost you a massive outage in the Yeah. Case of And so, the cost of error is very high. Like, an even better example, actually, in my world would be an underwriting model.
Speaker 9:Somebody who designs underwriting models it's like, hey, AI, go build me a great underwriting model. Come back when you're done. Like, here it is. I hallucinated one for you. Like, that's like real money lost that we will never see again if it, in fact, didn't hallucinate the right thing.
Speaker 9:And so many of these sort of ultra specialist roles, they are absolutely benefiting from AI, but that human is not just in control. They're not just steering. They're like reviewing every line of code. They have another human making sure that there's absolutely nothing that could go wrong. So that's sort of one thing.
Speaker 9:The on the completely other spectrum of this, is, I think, what you're alluding to to, you know, fun examples, we just had a product hackathon, so only product managers can attend. A lot of our product managers have CS degrees, so we're cheating here a little bit. But these people are like, hey, I love writing code, but I want to make it into things as opposed to code. And like, I I I want to ship a full product. So most of the folks haven't written code professionally in quite some time, maybe since college.
Speaker 9:They're like really good with Figma. They know how to design things. They have a sense for taste, but they like they they don't remember anymore what it's like to sort of go deep into some, you know, SQL query debugging. We had a 100 people, 37 projects in twenty seven hours went from a whiteboard plan to a shippable feature that was presented to the entire company. Like, hey, we have this thing.
Speaker 9:It's and we we graded it not just on so the the winners and the the whole grading, like, won first through whatever tenth, were all people that had to report not just like, here's my idea, here's what it looks like, here's my prototype. How close are we to shipping it?
Speaker 1:Like,
Speaker 9:are you ready? And the winner was absolutely probably the best idea, but also the ones that said, we're ready. Like, if if we're allowed to ship it tomorrow, we will. So that is like an extreme generalist who like has a vision
Speaker 8:Yeah.
Speaker 9:And a tokens and a feature in in twenty seven hours with like two other co conspirators and like a pizza box. So that is new and different and it's totally a new phenomenon.
Speaker 1:Well, this AI thing is going be terrible for the pizza industry because famously two pizza team, you only need one pizza teams now.
Speaker 9:50% reduction
Speaker 1:50% reduction. Short Domino's. This is disaster. I hadn't thought
Speaker 4:about this.
Speaker 9:We we sprung for a somewhat higher quality
Speaker 1:Oh, yes. Okay. So revenue is flat, Margin's potentially going up in
Speaker 2:the pizza industry. Okay. We got the bold piece. Question for you. How are you how are you What's your framework for evaluating the the all the different AI products being pitched to you across the rest the organization.
Speaker 2:Yeah. You have the benefit of being a technical, you know, CEO. A lot of other CEOs in your role are just like, just wanna buy AI everywhere. Just give me every part of my company. Just give me give me give me three pilots.
Speaker 2:I'll I'll pilot anything. Whereas, I think you're probably looking at some of this more non, you know, nondeterministic work saying like, hey, you know Yeah. You you can play around with it, but maybe you don't have budget.
Speaker 9:So I have a I have a great heuristic. This will be potentially worth the rest of my drill. If you know how to describe the evaluation criteria being used by the maker of the tool you're buying, it's probably worth piloting. If you can't, it is slop and you're being sold a story. So if so we know code gen works and is amazing, and it's only getting more amazing because we know how to validate code.
Speaker 9:And you can use another AI to validate code, but you can also just like, look, does it work? Does it pass the unit test? So the feedback loop of I gave you a thing, like codex was okay and then it was better and then it was great and now it's really pretty damn good. It's not because someone was coding faster. It's because it has really objective eval criteria and it just loops on making itself better with some degree of human influence.
Speaker 9:The same can be said for a bunch of industries. It cannot be said for others. Mhmm. Like, I'm I'm I'm not going to dig into examples too quickly, give them a short on time. But if you can say, oh, I know exactly what these guys are doing.
Speaker 9:Customer service centers. Is the consumer happy after they hung up the phone with an Can we ask them?
Speaker 7:Yes. What is We their
Speaker 2:satisfaction rate?
Speaker 9:Is there is there a way to say, that was good, that was bad, AI, do more of the good kind?
Speaker 1:Yeah.
Speaker 9:Fast feedback loop, high quality eval criteria
Speaker 8:Yeah.
Speaker 9:The great So we use a ton of agentic customer service because we know it'll just get better and better and better. Yeah. That's a great thing to buy. We're not a specialist. We are excited to buy it from a specialist.
Speaker 9:Somebody tells you, it's AI. It's gonna be a tool. It's gonna make you a better writer of fiction.
Speaker 2:Yeah. Yeah. Or even pitch decks are pitch decks are an example because like worst formatted pitch deck and having tremendous success with it, but it didn't have anything to do with the deck. It had to do with your delivery and who you are
Speaker 9:and So I I would not would not buy pitch deck AI assistant even if somebody paid me to do it because it's 95% the talk track
Speaker 2:And the company.
Speaker 9:So far, and the company, and the idea, and the market, and the TAM, and all those things. And so but most importantly, a 100 companies pitch their decks good old and made by AI. Seven out of a 100 get funded, 93% failure rate sucks. Should never raise money. Like, is that the conclusion?
Speaker 9:So I I I would I would stay away from the non objective or very slow feedback loop systems before I I consider buying tools there.
Speaker 1:I love it. Well, thank you so much for taking the time to come chat with us.
Speaker 2:Great to catch up.
Speaker 1:Have a great rest
Speaker 2:of your the progress. I'll come Thank the guide.
Speaker 9:Thank you. And I'll come back with smelting news.
Speaker 1:We'll talk to Have you a good one. Thanks. Goodbye. We have Delian Asparouhov from Founders Fund and BARDA joining in just a few minutes. While we wait for him to get here, he's coming in person, we will talk about Joe Lowe who I thought was a household name, but apparently is not.
Speaker 1:He is the fugitive behind the 1MDB scandal. It reads like IMDB, it's not 1MDB. It was a Malaysian financial fraud that led to the disappearance of 4 and a half billion dollars. And he's in the news today because he asked Donald Trump for a pardon while on the run, believe. So Joe Lo, the alleged mastermind of one of the greatest financial frauds in history.
Speaker 1:You gotta read this book. The I like the the camera's following you around.
Speaker 2:That's the new meta.
Speaker 1:New meta. On until you can get the You're
Speaker 2:on the run and you're just just popping up to say, I'd like a pardon, please.
Speaker 1:Yeah. Yeah. Yeah. Yeah. So, yeah.
Speaker 1:You gotta read this book, Billion Dollar Whale. Fantastic book. I thought it was gonna be turned into a movie at some point. It should be. It's it's a fascinating story.
Speaker 1:But we'll just give you the high level and we'll do a whole deep dive later. Joe Lo, the alleging I think mastermind
Speaker 2:we should we should take matters into our own hands and turn it into a play.
Speaker 1:A play. Okay. A stage play. I like a stage play.
Speaker 2:We haven't we haven't done a play yet
Speaker 6:on No.
Speaker 2:Not yet. Although a
Speaker 1:lot of the a lot of the red string poster board sessions, they feel like plays. They they're very well active. But I'm telling
Speaker 2:reading off.
Speaker 1:Yeah. Yeah. We don't have lines for
Speaker 2:this. Joe Joe lie.
Speaker 1:One in the
Speaker 2:room billionairely.
Speaker 1:Yeah. So Joe Lowe, the alleged mastermind alleged mastermind of one of the greatest financial frauds in history is asking president Trump for a pardon. The request was filed in recent weeks according to people familiar with the matter and if granted would remove US criminal charges against the fugitive Malaysian financier. A Justice Department website lists a pending request for pardon for completion of sentence under Joe Lo. The move represents the latest gambit in the extraordinary saga of Lo, a once little known businessman who prosecutors prove prosecutors say used subterfuge fake documents and payoffs to engineer the heist of billions of dollars from one MDB, which was a Malaysian government owned investment vehicle set up to promote economic growth.
Speaker 1:He's known for his lavish lifestyle, partying partying with Hollywood stars and political rulers. He was involved in there were a bunch of other people that went to jail for this. But he financed the Wolf of Wall Street in potentially the most ironic thing you could do as a fraud, finance a movie about a fraud to
Speaker 2:make some awesome movies now?
Speaker 1:I guess. It is a great movie and you can tell the budget was really flying with that one because they they crashed a Lamborghini Countach, is maybe $500,000 car. And they just I think they just destroyed it. And they destroyed maybe the actual I don't know. That might be not real.
Speaker 1:But very fun movie. Anyway, we have Delian Asparouhov from Varda and Founders Fund in the TBPN UltraDome. Hey, guys. There we go. The self hug.
Speaker 1:There
Speaker 4:we go.
Speaker 1:Have a seat. Oh, he's doing a victory lap. He's doing a victory lap. We still have a victory lap running around the table. For anyone who's been living under a data center, introduce yourself.
Speaker 3:Hi. My name is Delian, cofounder and president of VARTA. I have a couple other side gigs, but Okay. That's the main gig.
Speaker 1:Let's focus on VARTA today. Oh, yeah. We're talking space data centers. Right? Space has gotta be that.
Speaker 3:We do have some chips up there, so in theory,
Speaker 2:you could do.
Speaker 3:But we do more valuable things than just some inference. We make some drugs up there.
Speaker 1:And there's a big announcement today.
Speaker 3:Yeah. Spirit. So for the first time in human history, there is a large publicly traded company, United Therapeutics, $25,000,000,000 in market cap, traded on the Nasdaq. Yeah. They're using their own balance sheet to go produce a product, physical product, in low Earth orbit.
Speaker 3:Wow. With us. Pharmaceuticals, they focus on pulmonary disease, so think lung, blood, etcetera. We're working on those products together, crystallizing them into a better formulation, bringing them back down. That's the only company that makes physical products in space.
Speaker 3:Everybody else, it's all radio waves. It's Internet. Yeah. It's in France. It's, you know, you know, photos of the earth, This is literally the first time in human history where there is physical products being moved in space as a way to generate revenue
Speaker 1:up For real business.
Speaker 2:And is that that that's happening or is about to be happening?
Speaker 3:Yeah. So we signed this deal, you know, call it like, you
Speaker 2:know Stop you right there because there's an opportunity for someone else to put it's a race. And a balloon. We should we should race.
Speaker 1:We should
Speaker 9:race a
Speaker 1:bit No. No. Balloons can't go to space. Balloons can't
Speaker 3:go to space. You gotta go. You gotta go on
Speaker 2:the a balloon and then once you're up there, jet pack type thing to
Speaker 3:Yeah. People have talked about the like, you know, could you go float a rocket up there? But it turns out the like size of balloon complexity that you're just better off building a rocket to get the rocket up there. Yeah.
Speaker 2:Talked about
Speaker 1:space ride. They would they would take the balloon up and Yeah. And this was actually used back in, like, the thirties, I think.
Speaker 3:I think they did some, like, very early tests when rockets Yeah. Were Yeah. Now the rockets are big and, like, satellites are big, a little a little harder to get up there. But, we signed the deal a little while ago. We've working on the products with them for a period of time.
Speaker 3:In order to get ready to go to space, we do do some work on the ground to understand, hey, what is the thing that we're going go do in space? And let's make sure we figure out all the other process parameters. When you're, like, crystallizing a drug, there's a particular temperature, a mixing rate, a solvent. We just bring one extra knob, the gravity knob. Yeah.
Speaker 3:Now, here on Earth, we can't decrease gravity, but we can increase it. So alongside the customer, we look at basically adjusting that gravity knob down here on Earth. Yeah. Figure out kind of how to tune all the other things, so we're tuning the right knob. Once we get that all set, load that up into a spacecraft, send it up to space.
Speaker 3:Obviously, there, gravity knob goes to zero, get a different result, land it in Australia, and then send it off to the clinic. Yeah. We're still working with United on the ground so far, getting those drugs ready for flight, but we'd expect basically next year to fly the first United drugs.
Speaker 2:And how are they making this drug on Earth today?
Speaker 3:Today, you're using traditional techniques. So there's a whole set
Speaker 2:of Much less efficient.
Speaker 3:You're just getting a different result. So as an example, the use case or paper that the company was in some ways predicated on, obviously, there's been forty to fifty years of work on protein crystallization up on the International Space Station, Skylab, Space Shuttle. But in 2019, Merck basically showed their blockbuster cancer drug, Keytruda. They crystallized it up in space. They showed they could shift the administration from what was previously an IV drip to now a subcutaneous syringe, so you don't have to go to an IV clinic.
Speaker 3:A rural patient that can't access IV clinics can now access this drug. And so that's what we're doing up there with United Therapeutics, is we're looking for changes in performance of the drug because of those different results that allows United them to shift Therapeutics is famous for a variety of different things. So the company was originally started by Martine Rothblatt to solve a rare pulmonary disorder for her daughter, built that up into a huge platform. They've really leaned into the frontier over the course of the last year, so twenty, thirty years, including they make gene modifications for pigs to create human organs inside of pigs. But one of the things that they're known for is for one of their pulmonary compounds, shifted the administration from a nice pig sound.
Speaker 3:Well done. Well done. Like it. You know, a lot better than waiting on, you know, whatever 24 year old kid to die on a motorcycle
Speaker 1:and get
Speaker 3:your kidney. Instead, just
Speaker 8:get it
Speaker 3:from a pig farm. Yeah. But one of the other things that they're known for is they actually shifted one of their, you know, sort of primary drugs from an oral pill to instead an inhalable and made it much more efficacious, easier for the patient because you take the drug less often. It's things like that that we're looking to, you know, sort of do with them.
Speaker 1:Dumb question. You you you have the gravity knob. You're able to turn that off. But aren't you adding a knob for like vibrations and basically dialing it to 10? Like does that ever affect because you imagine you're sort of centrifuging it like it's gyrating as it's reentering.
Speaker 1:So is that a problem? Do you have to is that like for the selection criteria? Do you have mitigation strategies?
Speaker 3:What you can think of is like in a pharmaceutical process where you're crystallizing something
Speaker 2:Yeah.
Speaker 3:You're basically going through like a phase change. You're going through liquid to a solid.
Speaker 1:Okay.
Speaker 3:Where things matter is when that phase change is happening. Okay. In that particular moment is where you don't want the sedimentation, convection, etcetera. So what we do in some ways is we load up all the liquids ahead of time. Yep.
Speaker 3:Those liquids, for sure, on the rocket light it up, get shaking, etcetera, but it doesn't matter because the liquid's still saying a liquid. Yeah. Then up in space, what we do is we go through that phase change. We go from basically like a liquid to a solid. Okay.
Speaker 3:That needs to happen in a very pure environment. Sure. We shut down all the reaction wheels. We make sure that, like, everything on the spacecraft that would vibrate Yeah. Is totally silent
Speaker 2:Got it.
Speaker 3:So that it is as pure of microgravity, basically, possible.
Speaker 7:Got it.
Speaker 3:It then becomes a solid. And at the end of it, it kinda looks like a salt, basically. Like, think of it like table salt. Now on the way back, that table salt for sure is shaking a bunch. But the table salt, if you think about, like, you know, some, you know, table salt that we put and we go put it in, a centrifuge for a hundred years at, you know, a thousand g's, it's still gonna be table salt.
Speaker 3:Sure. Where those, like, vibrations matter? Heat
Speaker 2:more. You do
Speaker 3:need to manage heat. If you melt the salt, you're fucked because of facto liquid. Yeah. But, you know, this is what, you convinced United that we would be capable as a partner is we actually had datasets from our very first mission where the surface of the heat shield was hotter than the temperature of the surface of the sun. So, like, extremely hot.
Speaker 3:Onboard, I think it was, like, something like 14 degrees centigrade plus or minus point one degrees.
Speaker 1:Wow.
Speaker 3:And so we had extremely precise temperature control on board. And so a lot of what has brought people to the table for this first commercial deal is while there's been this historical work on the ISS, nobody had showed how do you go do this on a purely private platform, fully autonomous, low cost, high cadence. A part of what convinced them was, yes, both the regular flights we've been doing, right, we are now on W six, seven, eight, and nine will be launching later this year. But it was also, hey, not only are they launching and landing these things, but on board, they've got the right process control so I can see, hey, they can go work on my drug. And by next year, when we fly seven times in a year, that's going to be higher cadence than everything that the ISS, space shuttle, etcetera, have done in all of human history, let alone in 2028, 2029, as we continue to go higher and higher cadence.
Speaker 2:So how many things need to go right in a row to have a successful mission? I imagine that, you know, there's like all these different
Speaker 3:Like, just the space mission or like get the drug into the clinic?
Speaker 2:Because the
Speaker 3:Well, drug in the clinic is more just the
Speaker 2:space mission.
Speaker 3:The space mission, at this point, we've kind of shown we can do pretty safely, but I'll walk you through First on the ground, we got to go build. Basically, effectively think of it as like a two part spacecraft. One is sort of looks like a traditional satellite system. It's a little bit lower power and under, you know, spec relative to most satellites because we don't need super high power to communicate with, you know, Internet terminals, radio waves of photos, etcetera.
Speaker 1:Oh, that makes sense.
Speaker 3:Yeah. The only power we need is just to run the bioreactor, and the bioreactor doesn't consume that much power. So think of it as like a
Speaker 1:it is, like basic telemetry.
Speaker 3:Yeah. Basic telemetry, but we don't super high pointing accuracy while just floating up there because, again, we're not pointing at a particular place on the ground to basically try and take a photo of it. And so think of it as like we build an under spec sort of satellite. Now, the one thing that it is big on is it's got a lot of thrust and propulsion on board because we need to come back unlike every other satellite, But otherwise, spec satellites. So we do those on the ground.
Speaker 3:We've now built a handful of those. Then we have to build the second part of the spacecraft, which is the reentry pod. All of this does have a relatively complex supply chain. Think like those solar panels, the GPS chip, the flight computer, that type of stuff we buy out of house. Some things you have to do in house.
Speaker 3:You can't buy a capsule, like, off the shelf, so we have to build the heat shield, the structure, etcetera, around that. Those have to get integrated. We have to do a bunch of ground tests to make sure that works. Then you ship it off to SpaceX's facility a couple months before launch, make sure that everything's still working over there, install it onto the rocket. Once we're on the rocket, we kinda look like any other satellite that goes up there, whether it's like, you know, asteroid mining satellites or comm satellites or spy satellites.
Speaker 3:SpaceX takes us up to orbit. They then drop us off, again, like any other satellite. We spend between, call it, like, four to twelve weeks up there. It kinda depends on the drug manufacturing process. Some go pretty quick.
Speaker 3:Some take quite a bit of time. While we're up there, we have, basically, pharmaceutical scientists on the ground in Mission Control. So you remember those, like, Apollo films in Mission Control? We literally have, like Been in there. Think, like, Amgen scientists, but like they're in Mission Control I talking to the buyer out
Speaker 2:can imagine you you love hanging out in there.
Speaker 3:Brewie always makes fun of me. He's like, you know, I don't quite know the American idiom or don't get it, but hopefully you guys will, but he's like he calls me like the gentleman's mission control, where like there's like the gentleman's farmer. It's like the guy that stands around the farm, but it's like I'm really doing anything. I'm like the gentleman's mission control where like, yeah, I like hanging out there. Obviously, I like I'm completely useless and mostly a distraction.
Speaker 3:So I try mostly just listening to the livestream Yeah.
Speaker 2:Every team needs a class clown.
Speaker 1:Yeah. Exactly. Can you unpack a little bit more about the orbit? There's a piece in the journal today, space data centers face a lot of challenges. They all got to go to sun synchronous orbit.
Speaker 1:I imagine you don't, but I wanna know about the knock on effects of, like, what can you tell me about sun synchronous orbit? What orbit do you use and why? And then how might this change what happens in the future?
Speaker 3:Yeah. Part of what's beneficial about sun synchronous orbit is you're basically, like, always, like, facing towards the sun and have sunshine. Yeah. We are not as dependent on that. As I mentioned earlier, we're not super power constrained.
Speaker 3:And so we can just charge up, you know, basically our batteries on board. While we're on the dark side of the earth, we can basically just drain those batteries, recharge them basically on, like, the next orbit. We're up there just for the microgravity, and so we can be in almost any orbit. That gives us a ton of benefits. One, when you're in space, you don't have to worry as much about traffic.
Speaker 3:We just go where other people aren't. But two, it actually helps a ton with launch. As an example, later this year, for the first time, we'll be launching historically, we've only launched to sun synchronous orbit because that's where all the transporter missions, which are the SpaceX rideshare missions have come That's
Speaker 1:what I was gonna ask.
Speaker 3:They now have what are called bandwagon missions, which go up to they're also rideshare, but they go to polar orbit. Yeah. We'll actually be flying our first bandwagon mission later this year. Okay. So now we have launch flexibility.
Speaker 3:I was gonna say bunch of companies that can't go on bandwagon or basically, they're we're actually probably one of the only companies that can go on both.
Speaker 1:Either. That's what was gonna ask. Because what happens if everything winds up being sun synchronous orbit? Because I think there's 10,000 or so Starlink satellites Elon's asking for a million for space data centers. That means, like, 90% of the launches are gonna be sun synchronous, but that's okay for you.
Speaker 3:Yeah. We're okay going to sun synchronous. We can quickly get out of the orbit if we like need
Speaker 1:to or
Speaker 3:try and go, you know, sort of slightly off of it. Yeah. Or we can just go to polar and be totally, you know, sort of happy there. Yeah. And that gives us some benefits on the like launch economic side of things.
Speaker 3:Yeah. For now, we're basically able to go on any rocket. Yeah.
Speaker 2:So I was gonna ask, it seems like every hyperscaler, some startups are, you know, and some of the labs are thinking about space. Are you expecting like launch to could, you know, theoretically Increase because it's man. Bottleneck, launch pricing It's
Speaker 1:been falling for so long, but, yeah, what do
Speaker 2:you expect? Yeah. How are you planning? Because you have to buy capacity launch capacity years out.
Speaker 3:Yeah. Yeah. To date, launch prices have only gone up, so they have not gone down since we started the company. Launch costs for SpaceX, I'm sure have. Yeah.
Speaker 3:But there has not yet been pricing competition, so why would they necessarily pass on those savings to us? You know, and they haven't, I think, seen that much price elasticity in the market when they've, like, lowered prices. It's not like they've seen, like, 10x greater demand. And so for them, it's, capture as many margin dollars, basically, as possible.
Speaker 1:Yeah.
Speaker 3:I do think what we're going to start to see is more competition in the launch market over the course of the next five years rather than the prior five. Right? Mhmm. Blue Origin, I think it was today or yesterday, announced that they're, you know, going to be doing their first external, you know, sort of fundraising, which speaks to, you know, I think them taking themselves much more seriously as a company that is going to regularly show shareholder value and launch very regularly. You've got Rocket Lab now.
Speaker 3:It's like a, I think, $65,000,000,000 company.
Speaker 1:Yeah.
Speaker 3:Wow. Definitely have enough resources to go tackle Neutron, and they've got shareholder expectations for them to get that medium lift, you know, sort of rocket You've got Stokes space. And so there's a few others basically playing in it. We are booking out, you know, sort of rocket launches now all the way through 2029. So we do have the capacity that we need for the next, you know, sort of many years.
Speaker 3:And I think by the time we're getting into booking late twenty twenty nine flights, yeah, there's a world where there start to be, you know, basically more providers online. Mhmm. SpaceX at least, basically, to date has been like, you know, for us at least, as many times as we've as we've wanted to launch, that capacity has been available. Like, are not capacity constrained. They are still more demand constrained.
Speaker 3:I do think they're Yeah.
Speaker 2:Because no one's making anything in space. Totally. Nobody's making And
Speaker 1:that's why they were able to be so successful with Starlink was because they had the residual capability. Right?
Speaker 2:It's so it's it's it's like a tealism. Right? It's like we we created we created the space economy and then it's just more Internet. Yeah. More apps.
Speaker 2:And now it's just gonna be more more AI. How are you thinking about other drug categories? I can imagine space Retta would be a pretty hot drug if people would smoke space Retta.
Speaker 3:Yeah. One thing that I didn't realize is Ozempic today, one kilo of Ozempic retails for a million dollars. Woah. People don't realize, when people ask me, like, oh, space drugs, economics, etcetera, does this stuff work? Have to, like, tell them, like, yeah, for you, like, you know, it might be like a thousand bucks, you know, basically per shot.
Speaker 3:But, like, it's because there's very, very little Ozempic based on board.
Speaker 1:A lot of them are like powders that then get diluted and then injected. And so, like, yeah, the actual core ingredient is so tiny.
Speaker 3:Exactly. And what we do up there is we just make the powder.
Speaker 1:Yeah, exactly.
Speaker 3:United Therapeutics, our partner that we're announcing today, they have a ton of expertise in all things like rare pulmonary disorders. For sure going to be the person that we work with on that indication area. But microgravity has a wide set of pharmaceutical applications, neurological, immunology, oncology, etcetera. And so for sure, we'll start to I think in the success case of Savarda, it's not going be like we have 50 different partners. It's probably to be like five to seven that we go really deep with when we kind of choose one partner per indication area, then we go as deep as possible.
Speaker 3:Ophthalmology is another area that we're looking deeply at, partially because the eye, smallest organ, again, smallest amount of powder that you need, also an area where some of the other changes of administration technologies don't really work as well. And so, yeah, we're starting to explore who are the partners for the other indication areas.
Speaker 1:What about Beyond Bio? I remember ZB land being something that people were talking about potentially being able to manufacture microgravity, wildly different economic trade off there. But are there other when you imagine like the industrial city in LEO, like, there other categories that extend maybe ten years out, twenty years out where it might be logical?
Speaker 3:I think like if we look at the next decade, you know, call it, like, if there's 200 products that are manufactured in Orbit, I think a 195 of those are gonna be pharmaceuticals. Really? So vast majority is gonna be, you know, sort of there, and that's where our core focus area is. Yeah. If I had to, you know, sort of peer into the crystal ball and look at what comes next, I do actually think probably fiber before semis is probably, you know, sort of my rough guess.
Speaker 3:Yeah. When we were looking at that, like, high end, you know, of ZBLAN, you know, sort of fiber market back in 2021 when we started the company, there was clearly some level of, like, you know, sort of interesting capabilities there, but just, like, relative to what we were seeing on hypersonics and pharma, not as large. Interestingly, that market has matured a lot. There's sort of two, call it three areas where it has applications. One is it is the lowest, basically, think of it as interference inside the optical fiber for infrared.
Speaker 3:Near infrared is now used in a lot of the high energy weapon systems. Oh.
Speaker 8:So if
Speaker 3:think about having to pump that laser through a fiber, you basically want as little, basically, resistance as possible. There's just like a lot more being spent on those types of near infrared weapon systems, especially with some of the anti drone stuff that's coming down the pipe. So that's sort of expanded. It's also used now a lot more in metal cutting and organ eye surgery relative to where it was five years ago. So that's expanded.
Speaker 3:The other area is quantum communications. So quantum entangled photons are much more sensitive to those types of impurities in fiber. Quantum comm has also grown a lot over the last five years. And then the other area is oddly data centers. Know, there's
Speaker 1:I was gonna say, as soon as there's a data center story Yeah. There's gonna be 25 companies that's gonna invent funding IPOs and stuff.
Speaker 3:So ground data centers, not space ones, they are Yeah. Actually
Speaker 1:No. No. No. You make the ZBLAN there, you bring it back, and then you
Speaker 3:Dude, ZBLAN is now being used in terrestrial data centers. That was not a use case at all five years ago. Yep. I know it's all these
Speaker 1:things photonics and optical interconnect.
Speaker 3:Yeah. They're still, like, early, I would say. But and, like, you know, what's happening though is also, the Vard economics keep improving on a flight by basis. The Z Blade market keeps growing.
Speaker 1:Yep.
Speaker 3:We're, for the first time, I would say we're, like, dedicating resources or anything. But, like, around the office for the first time in five years, somebody was, the Z Blade stuff is, like, almost starting to fence line again. It's probably, like, four years till we, you know, sort of do anything, but, like, you're starting to see those lines start to get closer together. That's what I love about a platform like ours is, like, if you had told me, like, predict where your revenues would be five years ago, really hard, even this year, like, things that are landing are probably not what I would have underwritten a year ago. Like, I think pharma has, like, way exceeded expectations.
Speaker 3:Like, it's pulled in probably, like, three and a half years relative to, you know, our series c that we announced last year. Our financial projections on that on pharma were just, totally, you know, sort of wrong. And so I'm excited by the idea that, like, yeah, there might be other areas that are wrong. Semis, I think, is just gonna be, like, you know, the furthest out, Partially, just like the process equipment and the sensitivities. Like, if think about a bioreactor, it's, like, hard, but it's kinda like mixing, like, liquids together.
Speaker 3:The hard thing is, like, which liquids? That's what's hard. The mixing of it, not so hard.
Speaker 2:Yeah. But you're making those decisions.
Speaker 3:Down here on the ground. Fiber, Yeah. Same thing. It's like once you make that precursor rod, then drawing it is not like a crazy complex process. It's making that rod that's hard, but again, you're doing that on the ground.
Speaker 3:With semis, it's like, oh my God, that process is so sensitive. If you look at the stuff that they use for EUV, basically, like, know, lithography, the mirrors for
Speaker 7:that.
Speaker 3:If you were to lay out a lithography mirror over the course of the size of Germany, the amount of variation you see in terms of mountains would still be less than 0.1 millimeters. So this stuff just has to be so, so, so, so, so precise that it's just like
Speaker 2:The cost is so high. Even during the experimentation process, you could
Speaker 1:Yeah. The famous quote from TSMC is that if there's an earthquake, they don't have, like, a pager duty. Like, they don't slack everyone, hey. You gotta come in. There's an earthquake.
Speaker 1:Everyone knows if there's an earthquake, just go to the factory.
Speaker 3:Exactly.
Speaker 1:Exactly. And the just know because it's just so so important.
Speaker 3:And so just that, like, microgravity process equipment is just so much more complex than semi. So it'll get there one day, but, like, bioreactors, the fiber draw things are, like, orders and orders of magnitude simpler to make, like, microgravity bioreactors, microgravity fiber draw towers.
Speaker 2:Yeah. Yeah. Yeah. Will it ever make sense to have a permanent, like, ISS style structure that you are transporting supplies to and then sending, you know, your finished product down? Because, like, you Warehouse.
Speaker 2:You would like to have a proper, like, dedicated space factory, but does it actually make sense?
Speaker 3:It's always been the somewhat secret, somewhat not secret, like, ambition of Varda is to go build that, but go do it step by step. Right? So when you look at, like, generation one of basically what we're building, it's this two part spacecraft. Right? Yeah.
Speaker 3:Satellite, pod. Satellite has all the process equipment, etcetera. Pod just has the finished good. When we're done, pod survives. All that process equipment, everything on board, we basically just burned it
Speaker 11:up. Mhmm.
Speaker 3:Generation two, that'll be flying in, like, call 2029. Think of it as just like we make it so that that heat shield material just envelops everything. And so now the satellite plus the pod, they both survive. And that'll probably look like a little mini space plane is kind of how you can think about it. So a space plane has the solar panels, the propulsion.
Speaker 3:It's got the process equipment. It's also got the finished good. That goes up and down. And so now that full system is reusable, improves the economics. We'll have more payload on board too.
Speaker 3:Now at some point, like, it doesn't make economic sense to keep moving that process equipment up, down, up, down every time. Call it by the end of the decade, the goal will be we'll start to invest into those, like, fixed pieces of infrastructure in orbit. Early on, they'll probably just look like a satellite just with a little docking port, basically. The, like, space plane will come with the raw ingredients, basically, liquids, etcetera. It'll dock with that, like, satellite up in orbit, exchange for the fabricated goods.
Speaker 3:But then we'll have, like, 10 of those satellites. We'll start to stitch them together. Basically, it looks like a station. One day, there'll be so many of those pieces of equipment on board that we'll be able to economically justify, hey, probably need a dude with a wrench every once in a while to go, like, fix some stuff up there. But, like, once we can economically justify, like, one person with a wrench, 10, a 100, a thousand.
Speaker 3:And so like, yeah, we for sure, we want to build the first industrial city in low Earth orbit, but we're taking it like one step at a time, building out the business, getting great unit economics, proving out one use case at a time.
Speaker 2:What about the other parts of the stack that you actually need for that? So like, I'm thinking like docking. Is there a startup that's just just working on docking?
Speaker 3:Yeah. I mean, you know, sort of credit to them. There's a company in Seattle called Starfish, you know, sort of space that is hyper focused just on like the, like, docking, maneuvering the software for that. Yeah.
Speaker 2:Because that that feels like something that, like, if that's not your core competency, like, seems like you could have a series of nightmares around just trying to figure out docking, and that is a probably, you know, super widely applicable process for the rest of the space economy.
Speaker 3:Totally. It's like back in the day, would have had to make our own solar panels, our own thrusters, propulsion tanks, etcetera, for the stuff that we build on the ground. That stuff, over the course of last decade, has become a much more mature supply chain. As we start to get to this, like, space station world, I think there will be some of these things where, like, Starfish Starfish, I believe, basically makes this, camera that you can basically attach to your satellite. They take over the controls for your, like, propulsion, and they'll dock you to wherever you're needing to go.
Speaker 3:Yeah. Five, ten years ago, there's no way that we would have, like, been able to buy that. We would have absolutely had to build it. And so, yeah, I think on a, you know, ongoing basis, we'll always be doing that, you know, sort of build by trade. And ideally, obviously, if there's an off the shelf solution integrating that, and that only accelerates basically our progress.
Speaker 3:And so, yeah, it's cool to see that, like, as obviously VAR is developing, the general space economy and all these use cases are developing. And heck, when you said, like, you know, sort of warehouse in space, there are companies like, you know, Gravitics that are trying to do, like, dedicated warehouse vehicles. Maybe there's some world where, like, we buy the warehouse and we just install some docking ports, fill it up with process equipment, we don't have to build the warehouse. I'm not opposed to that. What we really want to focus on is we're going have the best lab down here on Earth to assess how to make these formulations.
Speaker 3:We definitely have to make the bioreactors ourselves. Nobody else is going to make microgravity bioreactors. We gotta make those space planes basically ourselves because, like, nobody else is gonna be bringing those up and down all the time. But the rest of it, pretty open to, like, you know, buying where we can.
Speaker 1:How are you thinking about the public markets? SpaceX is going out at, like, in the trillions. A lot of bio companies, I'm sure United Therapeutics went out in the billions probably. And a lot of biotech companies, they go out earlier. Pharmaceutical companies go out earlier.
Speaker 1:The public markets, sometimes they like really stable projections. Do we understand the quarterly forecast? Sometimes they like a big vision, and you get out there with a Tesla or something, and does really well. What is your take on how you might fit into the public markets in the future? Yeah.
Speaker 3:I mean, there's not a lot of private, like, 10 plus billion dollar in market cap, like, pharmaceutical companies. They basically all go, you know, public before that. Think it's like
Speaker 1:I mean, there's so many deals. Like, every day, a big biotech company is buying something for 1,000,000,000, 2,000,000,000 all day long.
Speaker 3:Totally. That's basically like the default. Yeah. Now I think like GLPs have shown that like in the therapeutics world, you can build a like, you know, be a business that can effectively be like a trillion dollar outcome You like just like one therapeutics business. You know, we're definitely thinking about that from the, you know, founders fund hat side of things, how we back things that aren't just that 1 to $5,000,000,000 therapeutics outcome.
Speaker 3:Yeah. At Varda, I think we'll look at it like on a round by round basis where, like, I think about it as like cost of capital. Yeah. The public markets are offering me a lower cost of capital because they have more expertise because there's a bunch of hedge funds that have, like, MD, PhDs Yeah. And tons of them on staff to deeply understand pulmonary diseases, ophthalmology, etcetera.
Speaker 3:Yeah. We'll go to the public markets if that's the case. If we're still seeing tons of support in the private market and we think it's like relatively similar, you know, we'll study private for a period of time. If I did, again, peer into the crystal ball, my guess is like, yes, relative to a SpaceX or an Andoril or things like that, I think we will have much lower cost of capital early on, you know, sort of being public rather than not because the public markets have so much appreciation for the types of clinical data sets that we'll be putting out.
Speaker 1:What about on the other side? I've heard there's a like a really way to really great way to make a lot of money really quickly is like an unlicensed broker dealer of like SBVs. Like, you recommend that? What's your take? You know?
Speaker 1:Get into that game? Like, go to some employee
Speaker 2:There's no securities laws
Speaker 1:in space. Random person. Oh, there we go.
Speaker 3:He can't find me there, period.
Speaker 1:But, like, how are you even processing the SPV boom, all of these questions around brokering and what's going on there?
Speaker 3:Yeah. Mean, think I do think that one lady's anthropic tweet basically led to anthropics Part like policy on of why that sort of is happening is there's this SEC regulation on the number of entities you can have on your cap table while staying a private company. I forget the exact number. Think it used to be a thousand. Yeah.
Speaker 3:Now it's 6,000. These private companies, as they stay private so long and have this number of SPVs, and especially as these SPVs get warehoused out, it increases your entity count. Mhmm. And so I do think there's a significant user lock down on it because
Speaker 1:And employees typically own options, and they don't show up on the cap table until they exercise.
Speaker 3:Got it. Okay. So, yeah, I mean, we're we're obviously tracking that at VARTA in terms of how many entities we have. We're not seeing some, like, exponential growth where we're, like, we're too worried about it. I don't know that we've been as stringent to date, but as I look at our future rounds, you need to start to think about, okay, how many more rounds am I going to stay private?
Speaker 3:And at some point, I need to keep the entity count managed. So I totally get the Anthropics of the world. They've just raised so many good bajillion of dollars in the private markets that they have to
Speaker 2:be I did get some more backstory on that one deal. Allegedly, it was a much more complicated structure that wasn't as bad sounding as the original post said. There was an SPV involved and some other stuff. But anyways, why every single person that you know that has invested in the company has probably come to you saying like, what are you doing with data centers? And all the biggest companies in the world are now like dedicating resources to it.
Speaker 2:You guys are seemingly staying, like, extremely focused. You've had conviction around timelines around space data centers being longer. But now that the sort of regulatory environment on Earth is changing things, that could change potentially the need or the economics? Like, when would you change your mind and capitulate?
Speaker 3:I mean, I'm definitely, you know, sort of open to changing my mind as, like, a shareholder of companies that may take advantage of these technologies. As somebody that's going and building a space company, I really want to focus on, like, where I think we have the right to win and can, you know, sort of build up something that has, like, you know, sort of durable margins.
Speaker 2:Yeah. Not not a great situation. Like, you being in a situation where you're like this, like, deeply entrenched partner with five, you know, massive pharmaceutical companies that are dependent on you for a specific part of supply chain. That is much better business to me than like competing with SpaceX on like, you know, putting GPUs in space when they just are naturally gonna have a lot of advantages. And so it feels like, yeah, you could pull forward like around, but do you shoot yourself in the foot in the process of that?
Speaker 3:Yeah. I just think there are a lot of companies in the space industry that will raise off of contracts, renders, etcetera, but ultimately, these things aren't durable unless you are regularly flying spacecraft, building up a production line. Right? The Elon quote that I love is like, the factory is the, you know, sort of product. I think the thing that we've done well at VARTA is we've stayed hyper focused on just, like, our particular W series vehicle, getting that up to, you know, production rate, flying it regularly, and making sure that it's exceeding and serving, you know, customers across a wide variety of verticals versus distracting ourselves with, like, there have been a lot of opportunities that we've said no to.
Speaker 3:I'm sure some of those things in the short term would have inflated our valuation and top line, etcetera.
Speaker 2:But wearing your investor hat, you're like, I don't care about what my valuation is today. I care about
Speaker 3:what it is in ten, twenty years. And so, like, I don't need to, like, listen to the noise of the market. And so I think that is the benefit of, like, having somebody like me on the, you know, sort of cap table or as a, you know, sort of cofounder versus, like, there are plenty of companies that had x y z vision two years ago and are now fully pivoting to space data centers because, like, that's where investors are deploying capital. And at some point, it's like, if you're changing your company vision and product off of the basis of where investors are cycling capital into versus what customers are demanding, and this where it's like, look, are there areas where it's like, yeah, ZBland might get affected in there? I think we have much more of, like, a right to win, and that affects terrestrial data centers and things like that.
Speaker 3:Yeah. Like, there might be areas that we either sort of play, but, like, go launch a bunch of NVIDIA Jetsons up into orbit and do that at economics that aren't competitive relative to SpaceX. And even then, I think the SpaceX economics, while promising, still have a long ways to go. That's not a game that I wanna play in. You know, competition is for losers.
Speaker 2:There you go.
Speaker 1:Yeah. Yeah. I mean, you also like, you're so far from realizing, like, the TAM of what you're building. Like, it makes sense for Google to, like, jump into AI. Like, search is saturated, and they need the next thing.
Speaker 2:Yeah. It's possible we'll look back on this moment and be like, okay, every viable competitor for to actually go and compete in pharma Yeah. Like went and did this other thing and maybe some did well, but then that still left an opportunity to just kind of like verticalize own the category.
Speaker 3:And I think what like tech people misunderstand is just like the like size of the TAM in pharma.
Speaker 1:Oh,
Speaker 3:yeah. So, you know, Anthropic is what? I think like a $60,000,000,000 run rate or something like that. I forget like the, you know, sort of latest numbers. Keytruda, that drug that I mentioned that Merck did in 2019, that one drug's top line last year for Merck, dollars 25,000,000,000 in revenue.
Speaker 3:One drug. Yeah. That obviously have many other drugs. There are many other cancer drugs. There are many other immunology drugs.
Speaker 3:And so it is a massive TAM. If you're able to actually significantly improve the performance out of these things, capture some upside, start to go more full stack yourself in pharma, I'm not concerned. And especially by the way, once there's AGI, what do think everybody's going be focused on afterwards when there's no more white collar labor that is needed? Everybody's just going want to live for forever. Where do you think all that capital's going rotate into?
Speaker 3:It's going to rotate into longevity, therapeutics, manufacturing, and so I'm, you know, sort of happy to stay on the sidelines and, know, sort of accept that capital once, you know, sort of all the AGI people rotate out.
Speaker 1:I love it. I love it. Well, thank you so much for coming on the show.
Speaker 3:Oh, yeah. Had finally come in person.
Speaker 4:Good to see you, boys.
Speaker 3:Good to
Speaker 1:have you in person. We'll talk to you soon, darling. Have a
Speaker 3:great Say hi to the team.
Speaker 1:Today. We have Richard Socher from Recursive in the waiting room. We've been keeping him waiting, so we will bring him in to the TBPN Ultra Dome. I love when companies emerge from stealth. Nothing makes me more frustrated than them.
Speaker 1:We've talked to Richard before.
Speaker 2:So Yes. Welcome back.
Speaker 1:But we're very excited
Speaker 2:about We've talked to you before. Yes. Was that am I that was a bad joke. You.com. Right?
Speaker 1:Oh, that's right. That's right. Yes.
Speaker 2:Great to
Speaker 1:see you, Richard. Let's but but even though you've been on the show before, let's reintroduce the the the the company and and sort of set the table for us on what you're building.
Speaker 11:To. Yeah. So still happily running u.com and AIX Ventures, but now very excited to start Recursive with seven incredible cofounders. At Recursive, we're looking to build Recursive self improving superintelligence to automate knowledge discovery. Yeah.
Speaker 11:It's a lot to unpack there. You know? We're getting closer and closer to AGI. I think we just have to set our sights set our goals now to to superintelligence. I think AI is code, and AI can code.
Speaker 11:So now we can actually put those two together and allow in an open ended fashion to let AI actually improve itself.
Speaker 1:Yeah. Are there any other is is the entire focus on AI research? Or are there any other areas of research that you're interested in? You see a lot of labs do research on cybersecurity or research on bio or science. There's a whole bunch of different initiatives.
Speaker 1:How focused do you want to be on AI research specifically?
Speaker 2:Yeah. It part of that part of that focus just if you can get RSI actually going, then everything else you can enter Potentially. Yeah. Seemingly very easily.
Speaker 3:There you
Speaker 11:go. You you kind of answered the question. That's exactly right. I think for now as a a company, you wanna have a very strong laser focus, and that laser focus for us is on enabling AI to automate the scientific method on itself. The ideation, implementation, validation of ideas.
Speaker 11:Right? And once it's gotten really, really good at that, that means it can be fully recursive self improving, then we're going to apply it to a whole host of other applications first in software and, you know, broadly construed digital work, eventually even physical work. And I saw your previous, show just now. I'm very excited about preclinical biology and the impact AI can have, on that.
Speaker 1:Talk about the round, the structure, who's in, how much did you raise?
Speaker 11:We raised north of, 650,000,000.
Speaker 7:We can pay for you.
Speaker 1:There we go.
Speaker 2:What, walk us through the pitch that you gave investors. What's your what's your right to win? This you're one of, you know, many many teams working on this problem, including all the existing labs. But I'm sure that the pitch was compelling. Otherwise, you wouldn't have gotten a $650,000,000.
Speaker 11:That's right. Yeah. At a 4,000,000,000 pre as led by Google Ventures, the Greycroft, some amazing participation also from NVIDIA
Speaker 6:Yeah.
Speaker 11:AMD, and and many other incredible funds that we're very grateful for, Angel's, Strategix, and so on. Our right to win is essentially fourfold. It's the focus. Yes. We know that everyone works a little bit
Speaker 1:Yeah.
Speaker 11:On self improvement, auto research, things like that, but no one is fully focused on this. We have the team. We have incredible cofounders, Tim Rockteschel, who invented Retreat Augmented Generation with others and rainbow teaming and prompt reader and Genie three, which is, like, the most sophisticated world model that Google DeepMind had recently launched. Like, some incredible talent. We got Jeff Clune who has worked together with Tim R on many things.
Speaker 11:He's done incredible papers like the Darwin Godel machine, HyperAgents with some of his students who are also with us. We got Tim Shih who built Cresta into Unicorn, AI for for service centers. We got Josh Tobin who's one of the earliest people at OpenAI and eventually led some of their work on ChachiPN agents, Codex, Deep Research. We got Samin Shiung, co inventor of prompt engineering. We got Alexey Dostoevitsky, co inventor of the vision transformer.
Speaker 11:We got Yuan Dong Chen, who used to lead RL at Meta. Mean, this is such an incredible team. Great.
Speaker 2:Yeah. That's that's pretty compelling.
Speaker 1:Then then how are you thinking about scale being all you need or not? Is is there a capital war or is $650,000,000 enough to do the level of training or inference that you need to actually reach RSI? Because if a lot of the labs at least are sort of, you know, putting the AGI, ASI terms in orders of magnitude of compute or orders of magnitude of dollars. And so is there some sort of race condition? Or do you think that there's a more like elegant solution?
Speaker 1:We need new algorithms, I guess.
Speaker 11:It's it's a great question. Certainly, 650 in this league that we're now in is step one. Yeah. If you wanna compete at that level, you wanna build massive frontier AI, you have to eventually raise more. At the same time, you know, this will last us for quite some time
Speaker 1:Yeah.
Speaker 11:Unless we're seeing enough progress that makes us want to accelerate this. Right? And then we prove a new kind of scaling law
Speaker 3:Sure.
Speaker 11:Where more compute results and more inventions, more capabilities in AI, more automation in the process of AI research itself, then we're probably going to accelerate that. And to be honest, the team has already made some incredible meta inventions that led the AI to make its own inventions. And so we're really excited about the progress and, like, they will accelerate.
Speaker 2:Yeah. Do you do you view today's coding agents as somewhat of a form of RSI, or is that the wrong, you know, kind of wrong category?
Speaker 11:I'm glad you asked that question. The current models are great for auto research, which is a step towards RSI, but you're not doing true recursive self improvement if you don't have full control over the entire self, namely the model, the architecture, the infrastructure, its entire harness, and all of the things that go into the training, pre, mid, post training, all of these things. And so they are it's a useful step to use coding agents for auto research, but it's just a step towards the true RSA vision.
Speaker 2:Got it.
Speaker 1:How are you thinking about standing on the shoulders of giants broadly? I mean, you mentioned a bunch of researchers who have published a bunch of papers, and obviously, you're integrating that. But is there a way to pull forward progress or like catch up to the frontier faster based on open source models, open source research, open source data sets or distilling or integrating existing open source projects? I would love to know just your thesis on leveraging open source and tweaking and fine tuning and iterating on versus start from a completely blank sheet?
Speaker 11:Great question. Yeah. I think as with many things and similar to the applications of RSI, you wanna start with a laser focus and then open up the aperture
Speaker 8:Mhmm.
Speaker 11:To more and more things. And 100%, you wanna stand on the shoulders of giants, both, like, closed, open source. Open source has
Speaker 9:done an
Speaker 11:incredible job bringing in and and more capabilities to, you know, the the community. And so we will we'll use anything and everything that we can, but we also know that long term, you're gonna wanna own and be knowledgeable and able to build the entire stack.
Speaker 2:Yeah. Now that you have your own funded NeoLab, do we need more new NeoLabs or do we have enough?
Speaker 11:I'd like to think
Speaker 13:so one, we want to
Speaker 11:build a real company. Right? We're not we're not just a lab. I sometimes struggle a little bit with that terminology. I think there are a couple of labs that are truly just labs and it's a little bit unclear where they're going to go long term.
Speaker 11:We have folks that also build unicorn companies from scratch with revenue and and so on, have launched amazing project products like an OpenAI, a codex with Josh and others. So we're we're excited. But at the same time, this machine we're building is almost like a Eureka machine in the sense of, like, it'll keep making inventions for you. And so a lot of labs that are focused on, like, continual learning and world models and maybe memory and all of these other aspects. I believe those are all important aspects.
Speaker 11:I believe that if we were successful, those are all just special cases and outputs of this machinery that we're building.
Speaker 1:So do you I mean, how close are you? I imagine that this is a whole process. But how close are you to thinking about a product for businesses or a product for consumers, an API, a web playground, a demo? Is that something that, by design you want to be super fast about and get something out into the world, have some impact in the interim? Or do you want to keep everything closely held for potentially a really long time?
Speaker 1:I don't know. Forever potentially if you're just gonna
Speaker 2:Yeah. When I hear the eureka machine, I'm not I'm keeping that to myself personally.
Speaker 1:Yeah. What's up?
Speaker 11:Initially initially, we thought about, like, really giving ourselves, like, a year or more of time. Mhmm. In the last few months, the team has already made some incredible breakthroughs, and so we may accelerate some of the productization of this research to to come out earlier. I don't wanna commit yet to to specific, date or anything, but, like, I think, you know, we wanna build a viable company here, that brings superintelligence and allows it to have massive impact, to help humanity flourish. And that won't happen in just the research lab.
Speaker 2:I love it. Could you ever see a scenario where you create something that would make more sense to spin off into another company to productize? Or do you expect to, you know, basically use all of your creations internally and productize them yourself?
Speaker 11:I can see how our customers will use this in incredible ways so that they can then use like, create new kinds of products and new kinds of product categories. I think we've seen similarly incredible new companies, like, that that have used AI and code generation to enable others to build their own businesses. You know, Replit, Lovable, and so so on are great examples of that. And I can see our technology doing something similar at an even more, foundational level.
Speaker 1:Amazing. Thank you so much for coming on the show. Congratulations on the progress.
Speaker 2:Having great day get the update and come back on when for your first release.
Speaker 1:Yeah. Great to see you. We'll talk to soon.
Speaker 2:Cheers, Richard.
Speaker 1:Have a good one. Goodbye. We have a debate. We have a debate.
Speaker 2:What's that?
Speaker 1:In the Wall Street Journal. They are reporting that typing is being replaced by whispering and it's way more annoying. This is a trend because programmers, startup founders, startup employees are starting to resemble high end call centers, only these employees are talking to AI and people are saying it's a little awkward. Where do you stand on whispering? Tyler, you have a take?
Speaker 5:Well, so I think this might be a play on words, right, because whisper is like the model
Speaker 1:Yes.
Speaker 2:That you
Speaker 5:used to speak into.
Speaker 1:Yes. But apparently literally whispering? They are literally whispering. So Molly here mumbling. Molly's mumbling was starting to get on her husband's nerves.
Speaker 1:What was once a sacred nightly routine putting the toddler to bed collapsing onto the couch and opening their laptops to finish their work in peace had become anything but peaceful. Instead of typing quietly Molly started to hold down the function key and talk in hushed tones to her computer. She runs her own AI business in Seattle and is hooked on Whisper Flow, a company you might have heard of, a dictation app that users are pairing with coding tools like Codex from OpenAI and Claude Code to turn rambling stream of consciousness prompts into coherent usable texts in seconds. Efficient? The Wall Street Journal says yes, but annoying.
Speaker 1:You bet. It didn't take long before Molly's husband told her they needed to talk. The couple now often sit apart. If we need to get something done at night, one of us will stay in our office. Across Silicon Valley, work is being remade as once mellow spaces become dens of din.
Speaker 1:And we got a mention of our friends over at Ramp. One venture capitalist said visiting AI startups today is like showing up at a high end call center. Everyone is except everyone is chatting with AI. Engineers at credit card startup ramp sit at their desks wearing gaming headsets so they can talk loudly to their AI assistants. Gusto co founder Edward Kim has encouraged employees at the human resources company to experiment with dictation technology, telling them the office of the future will sound more like a sales floor.
Speaker 1:People are going to be screaming at the AI agents.
Speaker 2:Oh, I like that. Like, yeah, stock tradings.
Speaker 1:Yeah. We're bringing back the New York Stock Exchange. There is a way to combat this. I've seen a couple masks, the the Bane mask. The Bane mask.
Speaker 1:It's the Bane mask, basically. The Bane mask. But people do put it over and it has a headphone jack and a USB C port, and then they can yell very aggressively if they're live streaming video games late at night and they don't want to wake up their partner or roommate. But I think I I think I'm pro this. What do you think, Jordy?
Speaker 1:I I think I'm in favor of a noisier, louder I I do like a library environment. I like a calm environment, but there's something invigorating about everyone yelling at their computers all day long. Where where do you stand on it, Jordy?
Speaker 2:I like it. You like bring the energy.
Speaker 1:Yeah. What about you, Tyler?
Speaker 5:Yeah. Like the aspects of people yelling. Although the the kind
Speaker 8:of the
Speaker 5:muzzle Yeah. Building muzzle I think is a good You
Speaker 1:won't put on the Bane mask?
Speaker 5:I don't want the muzzle. No.
Speaker 1:Yeah. Want the muzzle. Yeah. You can't muzzle me.
Speaker 5:You're gonna me from screaming at
Speaker 1:my So you say you say you're a fan of this but I don't feel like I've ever seen you talking to Whisper Flow while you are vibe coding.
Speaker 5:That that is true. I
Speaker 1:Reveal preference.
Speaker 5:I I find I I usually only use the speaking when I'm like driving or
Speaker 9:something.
Speaker 1:I do that all the time. I'm always on the dictation mode. I don't use the advanced voice mode that often. What I will do is I will go and press the little microphone button, ramble for a few minutes, and then fire off a more robust query to ChatGPT with context.
Speaker 2:Yeah. You're doing that like once a day and it's incredibly powerful. I actually don't think many people realize that you can just ramble.
Speaker 1:Once a day in front of you. Like 50 times a day.
Speaker 2:Some controversy has hit the timeline.
Speaker 1:Okay. What's going on?
Speaker 2:Socks has pulled a screenshot of the figure livestream where the robot appears to be doing something like adjusting a headset.
Speaker 1:Okay.
Speaker 2:And so he's he's alleging Oh,
Speaker 1:thinks it's teleoperation.
Speaker 2:It's teleoperation.
Speaker 1:Okay.
Speaker 2:And the the robot is actually just being controlled by someone in a VR headset. Well. There's some comments that say, hey, maybe this could have been in the training data.
Speaker 1:I was about to say. Yeah. It could be in the training data. Interesting.
Speaker 2:So who knows?
Speaker 1:It's interesting to think about all the all the vestigial behaviors of human behavior that might exist in training data for humanoid robots. Like, it might just go and pick up the a phantom diet coke and take a sip because it's had a long day and it knows that's what humans do, so it re recreates that. We'll let Brett Adcock respond to this, dunk on it.
Speaker 2:Yeah. The main thing is the speed. The speed up is insane. Oh, sorry. The the robot, how
Speaker 1:Yeah. Quickly it's Yeah. But from the because the the last version, he was he was talking about the Biden walk going away and it was still a little like jerky and this doesn't look jerky at all. This looks this looks very polished and and I don't think we've seen anything at this level. Like, Optimus is still a little jerky and even the unitary stuff is pretty jerky.
Speaker 1:That crazy huge unitary was pretty jerky. And we're all sort of used to that because it doesn't really matter if I do think do they should
Speaker 2:have allowed some type of like actual live demo so people could go and see the That or
Speaker 1:like a respected journalist in the room or something. I don't know. There there's a bunch of ways. But this this debate will continue going back and forth with people understanding and debating the capabilities of this technology. But we can come back to that in the future because our next guest is in The way we're We have Brandon Hill from Vory, the CEO.
Speaker 1:I kinda like that. How are doing, Brandon?
Speaker 2:What's going on?
Speaker 1:Hey. Welcome to the show. Guys. Thanks for having me. We gotta ask you.
Speaker 1:What's your stance on whispering in the office? Have you heard this? All the AI employees, all the startup employees are whispering into their computers to give commands to clog code and codex. Are you in favor of having your office feel like a sales floor, or would you like a quiet library like environment?
Speaker 12:I mean, ABC always be closing. Right? Like whether you're closing PRs, whether you're closing deals. We want Kinesis on I the love I
Speaker 1:love it. We yeah. I I agree with you. I think every it's unanimous used to
Speaker 4:it. It.
Speaker 1:But we're not here to talk about whispering your computer or screaming at it. We're here to talk about your company. So please give us an introduction on yourself and Vory.
Speaker 12:Yeah. Absolutely, guys. Thanks for having me. Name is Brandon Hill. Yeah.
Speaker 12:I am the CEO and cofounder of Vory. I'm actually a third generation grocer, just to give you my story.
Speaker 1:That's amazing.
Speaker 12:Yeah. My grandparents were in grocery. Cool. My parents met and fell in love in a grocery store
Speaker 1:Woah.
Speaker 12:And have been in the industry for over forty years.
Speaker 2:That's amazing. I
Speaker 12:went to Stanford University. That's where I met my two co founders who are two of my best friends. Yeah. Worked at Google with Trey. Rob was a aerospace engineer at SpaceX under Elon, and then self driving cars at Lyft.
Speaker 12:And we're building the operating system,
Speaker 1:a
Speaker 12:self driving operating system for supermarkets Okay. Where they basically help them make more money Yeah. And operate more autonomously because, as you know, grocery is a paper and pencil industry. Yeah. But it's also 1 and a half trillion dollars of the American economy.
Speaker 1:Yeah. So are you starting with back office ERP inventory management accounting, Or are you going to try and replace those automated checkout machines that everyone knows barely work even though they've been around for decades? It feels like there's opportunity in both. How quickly do you want to focus?
Speaker 12:Well, you know what's interesting is we found that the alpha is really in automating everything before checkout
Speaker 3:Okay.
Speaker 12:And after checkout.
Speaker 1:I can imagine.
Speaker 12:As you know, there's a bunch of companies that raised hundreds of millions of dollars trying to do the just walk out Amazon model. Yeah. The unintuitive thing is or what we were surprised by is it actually turns out building inventory, automating pricing
Speaker 5:Sure.
Speaker 12:Helping grocery stores market their products to their customers Yeah. Everything before and after is really where the that's where the economics are, and that's where the grocery stores have the most need and willing to spend money. Yeah. So that's what we do. We happen to have a a sleek modern checkout on the front end.
Speaker 12:Yeah. But it's about connecting everything in the store end to end.
Speaker 1:Okay. Automating pricing in a store, there's, you know, the price of oil is going up. There's inflation. There's all sorts of different prices that are changing all day long. The price of milk fluctuates day to day.
Speaker 1:You mentioned a pencil and page paper and pencil industry. I imagine that at some point, a store manager gets a spreadsheet or an email or some sort of notification that a price needs to be changed, and then they have to print out a new label. Is that how it works? And then how will it work in the future?
Speaker 12:So there's the old way and the new way.
Speaker 1:Yeah.
Speaker 12:In the old world, imagine a a supermarket which has a 100,000 products. Whereas a grocery store, you know, a restaurant might have 50, a 100 menu items. Grocery store has 50, a 100,000 SKUs. Yeah. They're accepting dozens of payment types.
Speaker 4:Yeah.
Speaker 12:Right? They have hundreds of employees. Yeah. And they might do more in sales than a restaurant or like a donut shop or a coffee shop might do in a month or a year
Speaker 1:Yeah.
Speaker 12:In terms of overall volume. Yeah. So the complexity of solving the problem is really hard. Now today, what they're the state of the art, if you could believe it, is you have a pricing coordinator
Speaker 8:Mhmm.
Speaker 12:Like named Judy. She has her bifocals on. Mhmm. She receives an invoice from the supplier. Mhmm.
Speaker 12:She's looking at it with her bare eyeballs, going through line by line with a ruler and highlighter to figure out if milk and bok choy and ketchup and cereal have gotten more expensive today versus last week. She finds the price change and has to go type it into her ERP system, like the back office system, and hope that that reflects accurately at the POS. Yeah. It's a 12 step process. Vory does it in one click.
Speaker 12:So our pricing agent reads all the incoming invoices from all of the hundreds of wholesale suppliers that a supermarket is using. Mhmm. It detects when there's changes in cost, which, of course, there always are due to inflation and supply chain issues, and then automatically changes the price across 30,000, 50,000, a 100,000 items in real time. So
Speaker 1:I I the the the changing of the price at the checkout actually seems like the easy part because when I'm in a grocery store, I feel like a lot of the prices are printed, and they're and they're labeled right on the shelves. Is there a move towards, like e ink displays or LCD displays that could be, updated in the cloud in the future? Is that an important, like, step along the road to, like, automating the price setting of of grocery stores?
Speaker 12:Oh, it's critical. In fact, I got a couple right here. Oh, no way. Yeah. Electronic shelf labels.
Speaker 12:Right? This is the future. Okay. Walmart actually just spent a billion dollars rolling out electronic shelf labels across every single item, across every single of their 4,600 stores.
Speaker 1:That'd be so much sense.
Speaker 12:But the thesis behind Vory is we're we do that today
Speaker 1:Yeah.
Speaker 12:For all of our customers. Yeah. And we're taking like that Walmart and Amazon level technology
Speaker 1:I'm bringing it
Speaker 12:and rolling it down market to other 75 of the trillion and a half dollar food and beverage retail market.
Speaker 1:I didn't realize it was that fractured. I would have guessed
Speaker 3:Do grocery stores
Speaker 1:doing, like, 70% of all grocery or something.
Speaker 2:Do do some of these smaller grocery stores or I guess the full stack end up selling products at a loss accidentally sometimes because they get a price change and then
Speaker 1:It didn't get rolled out
Speaker 3:fast fast.
Speaker 2:Yeah. Didn't roll it out and then they're just like losing money on an item. Is that is that a thing?
Speaker 12:It happens all the time. So Dylan. Right? Dylan from TBPN. So Dylan, I was going back and forth with him on X yesterday, and so his favorite shop is Mill Valley Market.
Speaker 12:Mhmm. Okay? Up in Mill Valley. Love that store. It's beautiful.
Speaker 12:That's powered by Lori. Okay. Before we went in that store, and Ryan, the owner, will tell you, yes, they were mispricing items here and there, and they were losing margin. We go in, we find five points of gross margin sitting on the table with our and give it back to them, put it back in their pockets with our automated Take it
Speaker 2:of our pocket.
Speaker 3:Take it
Speaker 1:out of Dylan's pocket and put
Speaker 2:it in the store
Speaker 1:owner's pocket. I like that. Hey,
Speaker 12:I'm pro competition. I'm pro America. That means I'm pro small business. Right? Just trying to help them succeed.
Speaker 1:No. No. Was good. Fine. But yeah, it's it's funny to frame it that way.
Speaker 2:The price of bok choy is going up.
Speaker 1:Yeah. Good luck, Dale. Get ready to get ready to pay through the nose for your bok choy. Tell us about the round. How much did you raise?
Speaker 1:What happened?
Speaker 12:Yes. So we raised $22,000,000 to you. We raised 22,000,000 to invest really in our go to market. We've been expanding rapidly. We've done over $500,000,000 Wow.
Speaker 12:In payments Wow. Which is where 60% of our revenue comes from. Mhmm. We're investing behind that, advancing our product, releasing more agents for the store to do more work to help them be more competitive against big big box stores
Speaker 4:Yeah.
Speaker 12:And investing behind our deployment team to help install this hardware and software and complex payment system into more grocery stores across the country. So we're super excited.
Speaker 1:That's amazing. Well, congrats. Seems really smart. And unique market too. Very unique Hard to
Speaker 2:compete with you having probably done all of these different jobs Yeah. At at different points Yep. Yourself back in the day.
Speaker 1:Generational success. I love to see it. There you go. Have a great rest of your day.
Speaker 2:Great to meet Brandon.
Speaker 1:Thank you so much for coming on. Come
Speaker 2:back on soon.
Speaker 1:Alright. Yeah. We'll talk to you soon.
Speaker 12:Have a
Speaker 1:good one. Up next, we have Nate Tepper from True Short. He's the founder and CEO here to talk
Speaker 4:The Tefinator.
Speaker 1:Funding from Coastal Ventures, Wonderco, a bunch of Hollywood investors for AI generated vertical films for mobile. The Teppernator. Welcome to the show.
Speaker 2:What's going on, dude?
Speaker 1:How are
Speaker 7:doing, Hey, guys. Good to see you. Let's go.
Speaker 2:Let's go. First
Speaker 1:time on the show. Introduce yourself. Tell us about the company. Tell us about the product.
Speaker 7:Nate Tepper, founder, CEO of TrueShort. We're an AI film studio and streaming platform. So on one side, we have creatives and engineers that are making movies together. On the other side, we make the streaming platform too like Netflix, distribute the music movies, monetize them. Yeah.
Speaker 7:Full stack creative company.
Speaker 1:Vertically integrated. What is the like, how how do customers experience this? Are you mobile first, web, desktop? Like, what is the watching behavior these days?
Speaker 7:Yeah. Exactly. So we were kind of inspired by the micro dramas. I don't know if any of you guys know about that. But basically saw that China was pumping these vertical soap operas that were making more money than the box office in China.
Speaker 7:Like, some of these apps are doing 50,000,000 a month in revenue, and they're all shot vertically minute long episodes. And that kind of led us to this idea that like, wait, there's something in between Netflix and TikTok. People are consuming this on their phone vertically short form. So we kind of took that exact same approach,
Speaker 2:but not Yeah. We had that realization probably a year ago too. We were looking at some of the the the iPhone kind of charts and seeing like, are all these companies I've never heard of that are in the top 25 that are, you know, printing money?
Speaker 1:Yeah.
Speaker 2:Is this and someone else had a realization like this years ago. One of your investors. I wonder
Speaker 1:who. Yeah.
Speaker 2:A good good friend of ours. Yeah. Jeffrey Katzenberg. Yeah. You got him into the round.
Speaker 2:Why what did he see in kind of your approach that would, you know, make make this a great investment?
Speaker 7:I mean, the next Hollywood is being built right now from the ground up. Right? Like, all of these new creators are coming in. I think some kid in his bedroom is gonna make the next Star Wars, leveraging AI and maybe different formats, short form, etcetera. And I think he just sees that opportunity.
Speaker 7:And the approach that we took, we have this vision of, like, the next Netflix, but we launched with a true crime app. Yeah. We just took a very strategic, like, Amazon launch with books. We took a niche wedge approach, and within six months with the number one true crime app, million in annualized revenue twice. I think he saw the vision, but that actually we know how to execute as well.
Speaker 7:Yeah. And so I I think he was bought into that.
Speaker 2:How are you working with creative talent? Are you hiring all over the world? Or is this going to be like you want to get a big studio here in LA and hire a bunch of people?
Speaker 1:The next James Cameron.
Speaker 7:Yeah. Let's go. I like that. We we actually just opened an office in LA. And so the we we call them creative pods.
Speaker 7:It's kind of the way we work. A pod is basically a showrunner who's like the visionary. The the knows the story, the characters, the brand. Then there's an AI filmmaker who brings all the shots to life with AI, kinda like the DP director of photography. And then you have the editor who strings it all together, and that pod basically produces content every week, a series a week.
Speaker 7:And so we wanna keep building more and more of these creative pods. And we're we're testing a bit right now. We have remote pods, but we just opened our first office in LA with our in person pods and just the speed that you can work collaboratively together there. So we're stoked about that.
Speaker 1:Talk about the customer acquisition flywheel. You've been at the top of the app charts. I'm sure that that has a lot of energy. There's news about the company. But how do you think about the content being shareable?
Speaker 1:One of the critiques of Quibi was that you couldn't screenshot or screen record the content. At the same time, if someone's just wiring up every time something goes out on TrueShort, just upload the full thing to YouTube and TikTok and Instagram and like let me steal the ad revenue. That's not going to work. So how are you how are you dealing with getting attention for the company, having the flywheel, leveraging the content that you're creating without giving everything away and still giving customers a reason to subscribe and pay you?
Speaker 7:Yeah. Yeah. Great question. And, like, growth is in our DNA. Jordy knows this, but our last app was number one in the app store for health and fitness.
Speaker 7:I think it had close to a billion views on TikTok. Let's go. And we I mean, look, run, like, kind of similar playbooks. We're super growth hacky. We're running many different TikTok accounts.
Speaker 7:Sure. Like, we know how to do all that stuff.
Speaker 1:Okay. You steal yourself. You steal the content yourself. That's probably the right move. Yeah.
Speaker 1:I mean, that's what we do here. We clip our own show.
Speaker 7:Yeah. I know we make content. We might as well put it out there Yeah. Everywhere. Yeah.
Speaker 7:But but I I do want to be straight up too, like, the micro drama space is run on paid acquisition
Speaker 12:Interesting.
Speaker 7:Right now. Very much so. And like, I won't deny that too. We Yeah. We definitely run paid acquisition.
Speaker 7:We just know how to do both. Yeah. So it's we have a growth advantage.
Speaker 1:Yeah. And I feel like the the the cost of paid acquisition probably falls when there's already some organic content out there. There's more familiarity with the brand. All of that helps with the CPMs.
Speaker 2:Yeah. Yeah. How quickly do you expect the the YouTubes of the world, the TikToks to actually roll out dedicated micro drama features?
Speaker 1:TikTok did. Okay.
Speaker 7:So TikTok has one called like pine dream, pine something. I don't know. I don't know why it has like 200 ratings on the App Store. So I don't know what they did with it. Netflix is creating kind of like vertical Okay.
Speaker 7:Section in the app. Yeah. But they haven't made vertical content in it yet. So it it's definitely happening. Things are are going
Speaker 3:It feels like it feels like
Speaker 2:this business to me will over time probably look more like a 24 that owns its own distribution and actually sells the product because you're gonna get like competition from all the
Speaker 1:Platforms and all the features.
Speaker 2:And so your advantage is like can you create a system that can reliably create hits and IP and deliver enough value to customers so that they subscribe Yeah. They keep coming back.
Speaker 1:Because YouTube YouTube had
Speaker 2:Is that is that is that is that right?
Speaker 7:Yeah. Yeah. That's why we want to build the full stack here. Like, it's almost like its own flywheel where we create the content, put it in the app, funnel that data back into our own technology and creative teams, and just keep making more. So the speed that we're going and the learning the the pace pace of learning on the creative side too, I think we'll get to hits much faster.
Speaker 7:I don't honestly, just don't see these companies keeping up in terms of speed and iteration, not of creative, actually. Yeah.
Speaker 1:Yeah. Yeah. I mean, YouTube got into original content that they were producing, and they pulled back from that eventually, and they just maintained just pure platform. Netflix, obviously, does productions, and there but a lot of that is done with other studios. And then they just buy or license the the actual end product.
Speaker 1:So, yeah, the vertically integrated approach
Speaker 2:I I think the key will be creating a setup where a pod can make more money, like, building on TrueShort than they can by just going and setting up their own kind of YouTube account.
Speaker 7:I'm I'm curious in general. Like, part of what I'm thinking about is like, there's about to be a million filmmakers. Like some like I said, some kid in his bedroom is gonna make the next Star Wars. Where is that gonna be distributed? Like, is it YouTube?
Speaker 7:Is it Netflix? Is it TrueShort? I think there we we're gonna see emerging films, is already happening, that are actually high quality that people wanna watch. Where are people gonna watch them? I don't I don't know yet.
Speaker 7:I think we'll see some stuff over there as well.
Speaker 1:How are you thinking about episode length and number of episodes? What have you actually tested? It feels like the the base case is, a two minute episode, maybe 10 episodes per story. Is that roughly correct? And then, like, do you think there'll be wide variation?
Speaker 1:Like, we see a ninety minute movie in a three hour epic from Nolan every once in while. Like, where do you see the dials turning?
Speaker 7:Yeah. I mean, I actually view this micro drama space and what we're doing as like separate from theatrical, even separate from Netflix. The way people consume it is different too. It's like they open this stuff when they're bored on the subway.
Speaker 3:Mhmm.
Speaker 7:Right? And so it's actually if you still want to go watch a full two hour length movie, you're going to go watch that on Netflix or go to their theater. That will still exist until these become good enough that they're distributed there.
Speaker 1:But Mhmm.
Speaker 7:And so for now, just for now though, we're focused on these like kind of niche genre, one to two minute long episodes, mini episodes per series
Speaker 8:Mhmm.
Speaker 7:And like getting a flywheel going around that.
Speaker 2:What is what is the do you feel like you have hit IP yet? Something that you'll invest, you know, $20,000,000 into a specific like series over time yet? Or are you still just like taking taking shots, getting base hits, doubles, etcetera?
Speaker 7:So I I do intuitively. We're launching it later this month. It's not true crime, so it's not on our true crime app. It's our next genre. And just seeing what we're creating there, I would honestly say our true crime stuff is just like, that would be the lowest quality we'll ever put out stuff.
Speaker 7:Like, it's getting better and better. So intuitively, think what we're making now is real IP.
Speaker 1:Wait.
Speaker 7:Wait. People do a lot of fans.
Speaker 1:So so true crime, true short, there's obviously a linkage there, but the the name true short feels like it can hold anything. Like, it's not like
Speaker 7:Yeah.
Speaker 1:Home box office. No one cares that they just think HBO, and it feels like you'll be there very quickly. But it sounds like you're considering multiple apps. Is that in the roadmap?
Speaker 7:I don't want to say too much yet about exactly what direction. Yeah. Because like, it's we're still discussing
Speaker 1:Yeah.
Speaker 7:It. But what I will say is, like, there are a lot of opportunities now around niche genres.
Speaker 1:Yeah. What about
Speaker 7:Fantastic. That's interesting.
Speaker 1:What about, like, pseudo or semi user generated content? HBO, you need an agent. It's got incredibly high bar to get your your your media product, your movie or show on HBO. Amazon Prime sort of has a self publishing like route if you're really creative. And Kindle self publishing, you can publish a book without any so like I think it needs to meet standards but it doesn't necessarily it's like an App Store review not it's maybe just one notch above YouTube to publish on the Amazon suite of products.
Speaker 1:How are you thinking about engaging like that random the next James Cameron who isn't in L. A. And didn't have a great resume but created a great product and you could monetize it for them. Have you thought about that?
Speaker 7:Yeah. I mean, you nailed it. Like, that was the original vision. It was like, let's be the distribution for these million filmmakers that are coming, and curation and taste is gonna be really important, things like that. But we quickly learned, like, and just realized that, like, out of those million filmmakers, a lot of it will be slop, and it's still the earliest days.
Speaker 7:Yeah. And we also learned from the micro dramas that, like, there's a formula, especially for winning in the beginning. So we're like, let's own it. Let's learn it ourselves. Let's build it right now, and we can take this.
Speaker 7:It we could probably take this to a billion dollar company just as our own team moving fast. But I do think the big big vision, like I said, is like how do you find the next James Cameron? Mhmm. Where is he putting his stuff? That's that's really exciting.
Speaker 1:Favorite song to play on the guitar?
Speaker 2:Well, have thirty seconds left. Do you want to use the opportunity to do a quick solo or or your guitar
Speaker 7:Dude, I knew you were gonna ask me to do that. No. But I will plug. I will plug. Check out my band Pink Roses on Spotify.
Speaker 7:If you know Dave Fontanot, my bandmate.
Speaker 1:Oh, amazing. Yeah. We met Dave on the show.
Speaker 2:Yeah. They've had this crazy side quest of being rock Amazing. It's amazing.
Speaker 7:Well, it actually has millions of streams. You like it.
Speaker 1:Well, congratulations on the round. I don't know
Speaker 9:if we hit
Speaker 8:the gong.
Speaker 2:Hit it again. Boom.
Speaker 7:Thanks guys. Great to see you, Nate.
Speaker 1:We'll talk to you soon.
Speaker 2:Make a micro drama about Tyler the intern's life at TBPN.
Speaker 1:Me Should we use his likeness?
Speaker 2:Yeah. Yeah. Yeah. Oh,
Speaker 7:this is not recorded. Yeah.
Speaker 2:There's a lot of training data too. So think about it. Well Later. You, Nate.
Speaker 1:Thank you so much. Our next guest is the co founder and CEO of run Roadrunner, a new company for AI native revenue infrastructure.
Speaker 2:Joubin I like the sound of that, John.
Speaker 1:Mirzadegan. Welcome to the show. How are doing?
Speaker 13:Hey, guys.
Speaker 1:Thanks so much for joining. How are you doing?
Speaker 2:It's happening. Good. Revenue infrastructure. I love revenue and I love infrastructure.
Speaker 1:Yeah. We we we we talked a couple years ago, but for those who don't know you, please introduce yourself and the company.
Speaker 13:I'm Joubin. You guys pronounce my name right. Book first and last, which I was I was impressed by.
Speaker 11:Okay.
Speaker 13:I am one of the co founders and the CEO of Roadrunner. Thanks for having me.
Speaker 1:Yeah. Nice to meet you. Mean, introduce the product, introduce the problem and sort of explain where you fit into the businesses that you're selling into these days.
Speaker 13:Sure. So the backstory is that we incubated the company at Kleiner Perkins. The reason that we did it was because I run a group of CIOs here that meet twice a year and over the course of several dinners, Mhmm. They basically told me it's the most broken problem inside their company. Mhmm.
Speaker 13:And I actually didn't believe them because I was like, there's no way this has not been a solved problem. And they were like, no. Seriously. And in some cases, it was the number one negative NPS surveyed software inside of their business. I come from sales.
Speaker 13:Yeah. So I've been the consumer of this problem. Yeah. And I'm like, okay. I understand the problem.
Speaker 13:So we did a full market map, looked at every company, ended up not finding anything, and so decided to do it ourselves.
Speaker 1:So you said that the existing solutions were low NPS. Was the market also highly fragmented? That's often like the Keith or Boyd lens that he likes to look at, both low NPS and because if it's low NPS, but there's just one monopolist, it might not be a good business opportunity. But what was that market map? How dense was it?
Speaker 13:Yeah. So I think the mother of all tailwinds for us right now, which is the challenge that every incumbent is going through, is that every ten years there's a new CPQ vendor that comes alive. The reason for that is because about every ten years there's a new technology shift that happens. We went from software to SaaS, that became a subscription based billing, then we went from SaaS to AI. AI is very likely going to be a usage or consumption based billing.
Speaker 13:Mhmm. Every time that happens and there's a new pricing pressure that comes on onto a business or a pricing model, you need somebody that can actually price. Like, if you're a rep trying to do a deal, need you to able to price that deal. If you if the data models with the incumbents were not built to be able to actually price those deals, you're screwed. So every ten years, we have a new technology shift.
Speaker 13:Every ten years, that puts a bunch of pressure on pricing models. And every ten years, you need to be able to actually get quotes out the door leveraging those new pricing models. And so I think in our case, we are the beneficiaries of that.
Speaker 1:Who what is the sales process like? Because you mentioned the CIOs, the chief information officers. They feel like they have an incredible amount of leverage over the decision of what platform to use, but then the end user is different. So can you sort of walk through the actual user journey a little bit?
Speaker 13:Yeah. I would say the two primary personas are CIOs who are the ones that are responsible for delivering software to an organization and CROs who are the ones that are responsible for getting deals done inside of an organization and the underlying software that they're using is just fundamentally broken. Yeah. So those are like the two people that really matter. The unique thing about this problem is that there's many hands in the cookie jar, which is why it's like a unique problem for a startup to go solve because you have DealsDesk and RevOps and finance and sales and IT.
Speaker 13:All of these folks touch this business process.
Speaker 2:Yeah.
Speaker 13:And so it's actually quite difficult both to build because you have to build for all of these personas and sell because you have to get all of these people kind of on board with you. Even if you can get all of that done, then you have to convince them that running one of their most important production systems onto an early stage startup makes sense. And so I think that's like kind of the the hill that we that we I guess that we have the honor of climbing.
Speaker 1:Jordy?
Speaker 2:Yeah. Just you're like, I'm pretty good at sales. Why don't I sell something that requires buy in from every part of the organization? Yeah. No.
Speaker 2:It's a great it's a great challenge, but it seemingly will be incredibly sticky once
Speaker 1:Yeah.
Speaker 2:You get everyone bought in.
Speaker 1:Where where is AI good at this out of the box? Where foundation models are open source useful versus, like, you gotta go build a harness or you gotta go write some SaaS on top of it or get some of your own data and fine tune it? Like, where are we on the frontier of, like, this problem being solved end to end by AI?
Speaker 13:Yeah. So during the the series a fundraise, the the hottest question was why won't Anthropic eat you? Yeah. Basically. And my general point of view is if they go after this, we're all screwed.
Speaker 13:Like, we might as well put all of our money and all of our eggs inside of the Anthropic basket because this feels like the most esoteric problem that you could possibly go after. I think the the unique thing about this is, you know, at at least at KP, we invested early in companies like Windsurf and Harvey, and we saw what happened when you can point these models at structured and unstructured text in nature. Mhmm. And anytime you can do that, the models are very, very good at reasoning with them. And CPQ is a very similar problem.
Speaker 13:You have price books, approvals, volume based discounting, all of these rules sit somewhere and the models are very good at reasoning with them. The challenge for us, I think like where our kind of secret sauce is, is that you need to be able to have this agent architecture, call it at the header, then on the y axis, you have a bunch of policy engines that are enforcing a probabilistic system through a deterministic engine. That sits on top of a data model that has to be flexible enough for the pricing models of today and in the future. So the combination of those three things is really our secret sauce. And then obviously, I think the problems that many of these kind of bleeding edge enterprise AI agent companies are running into is like how do you get an agent to work predictably with the harness around it inside of a large enterprise doing something where if we go down, like, get sued.
Speaker 13:Like, you can't get quotes out the door. Mhmm. And so you can't not get it right. And so I think, you know, in many ways, we are tackling probably one of the more bleeding edge agent problems in the enterprise. Yeah.
Speaker 13:And that's really where we live is in the enterprise.
Speaker 1:Awesome. Tell us about the round. How much did you raise? I wanna hit the gong.
Speaker 13:We we raised 27,000,000 in There go. Powerful. We announced the seed from KP at 5.2 mil and then 22,000,000 from with Founders Fund Leggeting and KP doubling down.
Speaker 6:Any familial conflicts conflicts going going on on over there? Just kidding.
Speaker 1:Trey Stevens led the round. Don't worry, he's brothers with a mean. Thank you so much for
Speaker 2:coming Oh, I didn't the I didn't even put that
Speaker 1:to you.
Speaker 4:Yeah, yeah, Amazing.
Speaker 2:Anyway. Family business. Love
Speaker 1:it. Love Have a good one. We'll talk to you soon. Thanks guys. Goodbye.
Speaker 2:Thanks guys. Talk soon.
Speaker 1:Up next we have Roman Chernin from Nebius. He's the co founder and chief business officer. If you've been living under a data center
Speaker 2:And Nebius is only up 15% today, so we'll ask him
Speaker 1:The AI Cloud division posted 841 year over year revenue growth. Earnings per share beat expectations significantly. Shares are up, as you mentioned. The business has been on an absolute tear. And we're excited to be joined by Roman to break it down for us.
Speaker 1:How are you doing?
Speaker 2:I'm great.
Speaker 4:Thank you for inviting. I must say that I think three meetings ago
Speaker 1:Yes.
Speaker 4:Someone said that I need to take a nap. So don't be surprised. I would just fall
Speaker 7:Okay.
Speaker 4:Fall apart here.
Speaker 1:I can imagine you're working nonstop right now. How long have you been working on this? I feel like Nebius is in the news every day, but can you take us back a little bit on your journey with this company?
Speaker 4:Yeah. So I I I'm with Nebius from the very beginning. Yeah. And Nebius officially, in the current shape of the company, exists from summer twenty twenty four, so less than two years. Yeah.
Speaker 4:But we as a team have experience longer than that. Yeah. You you maybe know that core team came out from Yandex, which was a large Russian Internet company. Yeah. And, yeah, we started with quite a unique mix of talent that helped us to start, like, really fast.
Speaker 8:Yeah.
Speaker 1:So, I mean, people know Nebius Neo Cloud, but that can mean a lot of things. How are you describing the shape of the business? How are you describing the
Speaker 2:before we get into that, what's the other what's the other spin out that's also on a tear? From Yandex? Yandex.
Speaker 4:Yeah. You maybe know Clickhouse.
Speaker 1:Clickhouse. That's right. Yeah. The Yandex.
Speaker 2:The the talent talent at Yandex seems to have been just, like, genuinely insane. So Yeah. Yeah.
Speaker 4:You you you can find a lot of other startups that or companies that created with Xiamlex people. Yeah. But Yeah. Uh-huh. Not really.
Speaker 4:About how we describe our business, I don't really like the word new cloud because, I think it's too broad definition of too many companies that do different things. Like, someone is doing just really data center business. Someone is doing data center plus renting out hardware. Someone don't own hardware and do kind of marketplace play. We like to say about us that we built vertically integrated, full stack AI specialized cloud AI specialized cloud.
Speaker 4:So that's that's what we think we do. And, I think that the difference of, like, neo cloud or bare metal compute and cloud is quite significant because it's completely different developer experience. Right? So, if you need to come and rent a large cluster and wait, like, six months it to be delivered and then sign it for three years and run it, Probably it's not really real cloud experience. Right?
Speaker 4:In the cloud, you expect more flexibility, faster time to value, more tools that you can use as a developer, more layers of the value. So yeah.
Speaker 1:How do you think about lagging edge model inference, like, load over time? Because a new model comes out. There's an incredible amount of hype. Everyone's looking at benchmarks and testing it. And then at a certain point, open source catches up, different models sort of commoditized.
Speaker 1:But if you're an enterprise and you found that GPT-four is great for scanning your receipts or something, you might leave that capability, that functionality running forever. And you might never need to deploy a smarter model against that problem. And I'm wondering as we see skyrocketing frontier revenues, lots of debate over token maxing versus incredible results on the profitability side. How are you trying to understand what's happening with those workloads that have been sort of baked into the economy already? Like the AI diffusion story is is done because that capability has has been adopted fully.
Speaker 4:Yeah. So I think there are as we see a few brands, let's say so first, as you said, open source models are catching up Mhmm. Different tier models quite quite fast, probably.
Speaker 7:Yeah.
Speaker 4:I mean, I think that, like, there is three, six months gap Yeah. Like, that we see for the most of the tasks. And we see that a lot of people, a lot of customers, when they come to the scale, they so the journey is you start with the frontier model. You you want to have the best capabilities to unlock the use case, see to that things working to start growing. But then when you grow, you may meet the limitations.
Speaker 4:And first of all, in economics because at scale, you the the economics, the economics matter. And then if you have other capabilities from open source models that can deliver in a particular use case that you already understand, like, same or close to same performance and quality for times lower cost, you need you you're actually switching. And it's not easy to switch because you need to do those models. Nobody uses, obviously, vanilla models. You need to RL, like, you need to figure out your data and so on and so forth.
Speaker 4:But, again, if you scaled, you you you have a lot of value there. And then what you need from infrastructure where where we believe that, like, our value is created is to help you with that, to lower the barrier to a, tune those models and then b, run those models reliable and cost efficient. And, that's, like, the layer, the next layers of the offering that we are building.
Speaker 1:As you look out over the next couple years or even a decade into the future, which sounds like an infinite amount of time, but but on on on the near and midterm, how are you thinking about semiconductor bottlenecks versus energy bottlenecks? So you've been going back and forth on this. Both are in short supply. What's keeping you up at night?
Speaker 4:I'm a lucky person. I'm more on the product and demand side, and it's a lot of fun. So I I really I Yeah.
Speaker 2:Being the being the demand guy during the explosion of demand has gotta be great. It's like The best work. Yeah.
Speaker 4:The best work in the world. Yeah. So people hug you and
Speaker 7:but but
Speaker 4:no. I I think that now, obviously, the physical kind of the physical infrastructure, the the even not the energy itself, but, like, getting from greenfield to having data center that works and full of GPUs is actually the big, the big the big challenge. And I I like, the the bottlenecks are, like, along the all the supply chain, starting from whatever connecting to the grid or bringing local generation and all the way to, like, even human power and all the all the complexity. So I really kind of take my head off from, like, in front of the people who who who are bringing those, like, gigawatts capacity online, and that's challenging work.
Speaker 1:Can you So
Speaker 2:how do you there there's such overwhelming overwhelming demand and just energy to bring compute online. How do you measure yourself and the team's performance? How do you know whether or not you're doing a truly great job? Right? Because people are so desperate that that Yeah.
Speaker 2:They'll they'll work with like a third tier supplier just because it's their only option. You guys have shown, you know, tremendous capability. And so but but but then again, it's like how do you know if you're actually doing an exceptional job?
Speaker 4:It's a good question. I I think the race is so that you never know. Are you good enough or not? So you look like, oh, you're growing, like, whatever. You're growing, like, times a year or so.
Speaker 4:Is it good enough? Like, in any normal business, yes. Probably, it's excellent growth. And you meet your customer, and they say, oh, you know what? I grew seven times in the last four months.
Speaker 4:And you're like, okay. Probably
Speaker 2:probably we need to move harder. Yeah. Yeah. I and
Speaker 4:and but you you there is another component that I I think is people speak less about, which is how you finance all that. So it you ask about, like, the bottlenecks in the chips. You ask about, like like, the bottleneck to bring physical infrastructure online. But then there is another part. You need to finance all that.
Speaker 4:So I think that now if you would have unlimited capital, we would be able to on technical execution, on operational execution, we could even move faster. So there are, like, there are so many components in this business of AI infrastructure, that you need to do efficient, like, and fund like, at like, finance enough and finance smart to not eat all your margins. It's it's a part of the, of the science here.
Speaker 2:Mhmm. What is a job at Nebius that is, sort of the unsung hero of the business? Besides besides you. But we're singing for you
Speaker 8:No.
Speaker 1:He gets sung for all the customers are singing. They're hugging you, you
Speaker 3:Yeah. Yeah.
Speaker 2:Like But but I but is it like somebody that's like perfect. Yeah. Boots boots on the ground.
Speaker 4:I I yeah. No. I I think that our business is very much like like, as any cloud business, to be honest, it's post sales. It's post sales business. So, like, when you sell, you give a promise.
Speaker 4:People hug you that you allocated capacity to them and, like, they have to start working with you and so on. But then how do make sure that the customers are happy and things are working? And, again, everything is moving so fast. We we've got new chips every three months. We got new physical data centers every month.
Speaker 4:We got new customers that of the scale that we never saw before every month, and the workloads are changing so fast. And I think that it's not like one role, I think, that underappreciated. But, in general, delivery in this and I started with that. It's execution business. It's it's a it's it's not not that it's not it's it's it's it's it's less magic.
Speaker 4:It's a lot of a lot of boring execution in each layer starting from finance,
Speaker 3:like
Speaker 4:physical infrastructure, software, customer kind of facing engineering support, like, every piece. And then only magically, everything comes together from supply chain to customer facing, person that, make sure they don't waste their money with us, then that that then things start working. So, yeah, I think delivery is the key. Delivery chain is the is the key in this business.
Speaker 2:Post sales.
Speaker 1:Last question. Can you talk about some of the recent acquisitions and talent moves at Nebius? I'd love to know the philosophy and and strategy there. Yeah.
Speaker 4:This the philosophy is very simple. We need to build so many things that we need to move, and we need to move so fast that we're always looking for people who can accelerate us. And it's it should be exceptional talent, and it should and or it should be something that had a great adoption. Our two recent acquisitions that we announced just like with the two two weeks post, Two teams that so two teams that work on inference optimization. So you can think Mhmm.
Speaker 4:Again, our part of big part of our business is how efficiently can your GPUs into tokens and, like, a value for for the customers. Yeah. And these are two teams. One of them, Aigen AI, another Clarify One is very much focused on model optimization, like the the engine of inference, how how you run specific model and all the techniques around spec decoding, quantization, and so. And another is more like system optimization, all the routing, k b caching, orchestration across the big cluster of compute and so on.
Speaker 4:And we had a very strong internal team also working on inference, but we felt that in we need to move fast. Like, we need to move faster. We need to bring more capabilities there because the market is so fast that every every three months, you can lose the the pay, like, so so so big pie so big piece of the pie. Yeah. And it's gonna show up
Speaker 1:in your in your margins, in your earnings, obviously, which are important now. If you if you don't if you unoptimized chips, you're not gonna get the yields that you want. The the results and the tokenomics are gonna flip.
Speaker 4:Yeah. That's true. And and also what's important that, it unlocks the new types of the customers, the new types of the workloads that we can serve. It's like not just against our raw compute, but serve all these fast growing, vertical AI companies and enterprise adoption.
Speaker 1:Yeah. That makes a ton of sense. Well, thank you so much for taking the time to join us on a busy day.
Speaker 2:Yeah. Are you gonna get some sleep or are you, you'll be asleep, in a few years?
Speaker 4:I will take enough now.
Speaker 2:Fantastic. Just a nap. It's I know you're you're you're across the pond, right? So you should be just going to sleep for eight hours but he said it's
Speaker 1:A nap. I love it. Well, for coming on the show, Roman. Talk to you Yeah. Have a good one.
Speaker 1:Yeah. Goodbye. The last post I want to talk about today is about video games of course. There's a individual who beat. Is this a Dark Souls boss or but they built a controller that uses their full body.
Speaker 1:It's not a VR game. It's not a VR simulation. But if you want to attack, you strike the dummy with a physical stick and that presses the button in the game to trigger your character to attack in the game. And then it appears that he's playing on a green screen or something because you can see the game actually playing behind him. And he also is wearing glasses of some sort.
Speaker 1:You don't like this. What's not to like? You need to get a workout while you're gaming. The future of gaming
Speaker 2:I just don't like
Speaker 1:very well might very well produce some of the fittest people. Yeah.
Speaker 2:I don't like the aesthetics of of of this.
Speaker 1:You don't? No. You think you should you're more in the But
Speaker 2:I get I shouldn't knock it till we try it.
Speaker 1:You're more you're more a fan
Speaker 2:of seen it.
Speaker 1:Let's get You're more fan of of unironic LARPing. Like live action role playing where you get the like the SD kid concert. You're a fan of that. Put on the actual armor.
Speaker 2:Yeah.
Speaker 1:Do the real battle.
Speaker 2:Yes.
Speaker 1:Don't play the video game version of that. That's a poor summer locker room.
Speaker 2:Yeah. Hit the park. Yeah. Hit the park.
Speaker 1:Or find a multiplayer version of that. Just get another human to stand next to you and you can learn defense.
Speaker 2:Perhaps. Before we go
Speaker 1:What?
Speaker 2:There's some there's more of a scuffle on the timeline Meet the Meet GC campaign.
Speaker 1:Okay.
Speaker 2:What's I realized why Mark is taking shots at it and it's because I think they use an actor to try to look like him. Let's watch it again Oh, with that
Speaker 1:really interesting. I did notice that the actor that plays the general catalyst character is like over the top handsome in the sense that like the original Apple Mac and PC ad Justin Long, he's sort of like an everyman and and the the actor who's playing the general catalyst guy looks like a male model to me. I don't know. You can be the judge of it, but
Speaker 2:Yeah. All all I'm all I'm saying is I think I think we got a Drake Kendrick situation Okay. On our hands. I think the new media team at Andreessen needs to respond.
Speaker 1:I think
Speaker 2:They need to try to dunk on
Speaker 1:General catalyst? GC. Okay.
Speaker 2:I wanna see a war. Yeah. I wanna see a it should be a bloodbath.
Speaker 1:Anyways Demanding acrimony in the tech industry. Sowing descent.
Speaker 2:Yeah. No. No. They they need to get
Speaker 1:peace? What about peace? Need to
Speaker 2:get revenge. Mark says this is a clear inversion, clever inversion of the original Mac versus PC commercials. This time it clearly intended to make the sponsor appear smarmy and judgmental. Fascinating. So
Speaker 1:You got rage baited. They rage baited you. You could have just muted this. You could have blocked them. You could have not amplified it.
Speaker 1:Now it's on everyone's timeline. Now people
Speaker 2:It's war now.
Speaker 1:Because of this
Speaker 2:We're gonna get a VC content wrapped
Speaker 3:up.
Speaker 1:No one would know what General Catalyst is until now. Now there's a fight and it's working. No. It is entertaining though.
Speaker 2:Very fun. But Duke
Speaker 9:it out.
Speaker 1:It's a good campaign.
Speaker 2:It's time.
Speaker 1:I I do I do Eric Torrenberg. Reggie James. The first oh yeah. That's a matchup there. It is just I I I mean, to to, you know, put aside the the war, it is just interesting seeing a produced thirty second, sixty second ad for a venture capital firm.
Speaker 1:It is sort of a first. I can't see
Speaker 2:a a non Vibrio Yeah.
Speaker 1:Video. The Vibrio meta, that was sort of played again.
Speaker 8:At this point. So
Speaker 1:we gotta we gotta go a different direction.
Speaker 10:And we're going to TV ads. We're going to television full thirty seconds, highly produced ads, running on the Super Bowl on Saturday and live. I don't know. When did NBC advertise?
Speaker 1:Bloomberg, CNBC?
Speaker 2:I don't know. We gotta get on with London. Yes. So we will see you tomorrow.
Speaker 1:Leave us five stars on Apple Podcast and Spotify. Sign up for the newsletter at tbpn.com, and we will see you tomorrow at 11:11AM Pacific sharp.
Speaker 2:We love you. Goodbye. Goodbye.