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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching watching TVPN.
Speaker 2:Today is Wednesday, 06/18/2025. We are live from the TVPN Ultradome. The Temple Of Technology. The Fortress Of Finance. The capital of capital.
Speaker 1:The home of the golden retriever.
Speaker 2:We are so back. Deleon sums it up well. He says, we thought it was so over, but in fact, we are so back because Chamath Palihapitiya is launching a SPAC order. He's exploring.
Speaker 1:He's exploring. He's exploring the idea. And He's having
Speaker 2:advanced conversations. Advanced talks.
Speaker 1:I think I'm gonna vote yes. The reason for that is that 9999% of SPAC sponsors quit right before they're about
Speaker 3:to hit a big. Yes.
Speaker 1:I agree. And so agree. I think that this could be the one and I think everybody should be open to the idea. Right? Let's let's it's not the the the vehicle's not the problem.
Speaker 1:Yep. It's the it's the asset that, you know, that that that becomes a part of it. And so let's let's keep an open mind. I agree. He might he could very well be spacking Stripe.
Speaker 2:I've never wanted a poly market on something more. We need a poly market on whether or not this SPAC happens before the end of the year ASAP.
Speaker 1:ASAP.
Speaker 2:Immediately. Also, I mean, if the SPAC gets out, you know where to go. Public.com, investing for those who take it seriously. Multi asset investing, industry leading yields. They're trusted by millions.
Speaker 2:Go check it out. Let's read through some of the news that we wanna cover today, give you a little bit overview of the show. The big news is more development in the story around Time Warner. Look at that lineup. Wow.
Speaker 2:That is a stacked lineup.
Speaker 1:It's getting to point it's actually a little hard for me
Speaker 2:to read. Hard to read. Yeah. We might have to condense some of this down, figure out a way to kinda roll up. We're working on a lightning round product, something where we can go back to back to back.
Speaker 2:We did it with the Teal fellows. Worked out really well. We've been doing it at YC demo day. I think we're gonna do it more frequently because there's so much news. Have you been following how many funding raising announcements have been going out?
Speaker 2:Like, the timeline is just, like, six companies raising legitimate, like, seed series series a, series b's every single day. Yep. Narrative violation. The venture capitalists do not appear to be on a vacation somehow. We'll see.
Speaker 2:These might be deals that got done before before the the private jets left for Europe.
Speaker 1:But That's right.
Speaker 2:They're just getting announced now. But we'll be here covering it, talking to the founders who are raising big dollars from big name VCs. And we have some news about who's joining what team. And there's a lot of movement amongst the tier
Speaker 1:ones. Action.
Speaker 2:So Lot of action. There's an update to the David Zaslav story about Time Warner. We'll we'll dig into a little bit of the split of what's going on. This is, of course, HBO, HBO Max. They went to HBO.
Speaker 1:They went to Max. They went to HBO. They went back and forth
Speaker 2:with the brand. Eventually, now they're splitting up the company And big news, Warner's chief to receive pay cut after split. This is David Zaslav. And so he will be making less money now as he's only overseeing kinda half of the organization. Kraft Heinz is also removing all artificial dyes on the back of the MAHA movement, a lot of stuff that that RFK junior has been pushing.
Speaker 2:Right? Bobby Kennedy.
Speaker 1:I've been surprised at how quickly some of these players have been willing to give up.
Speaker 2:They're moving on
Speaker 1:it really artificial dice.
Speaker 2:At the same time, with the artificial dice story, I don't know. I still don't have a firm idea of exactly how dangerous they are, exactly the impact. Like, it seems like there's a study that shows You've
Speaker 1:never been afraid of them.
Speaker 2:I've never been I'm still
Speaker 1:not afraid of
Speaker 2:say it. But but it seems like right now the the narrative is that they might lead to increase slight increases in ADHD symptoms amongst kids. And so if that's true, that's obviously something we wanna avoid. It seems like, you know, a lot of the rationale
Speaker 1:Alright, John.
Speaker 2:They don't have
Speaker 1:You're taking the side of big food.
Speaker 2:I'm just saying, like, like, the the the actual narrative, the commute the science communication, I think, has been lacking on the food desk. It's been a lot of, like, it's scary, but it hasn't been concretized in the sense of, like, of, like, it takes two years off your life. It it it raises your chance of cancer by five percent. Like, we're not there yet, and we've been there with other products. And and I think that there is more there's like, we need more from the scientific community or from from the actual thought leaders in MAHA, anywhere else to really make it clear, like, what are we getting when we remove this?
Speaker 2:It seems like something that, like, we could do without because apparently, food does, they just make Yeah. Yeah. Yeah. Don't think gets more enticing, basically.
Speaker 1:Yeah. And and there's plenty well well, the the more important thing is there's plenty of of natural alternatives that are already used in Europe and other places around the world that we can So
Speaker 2:it's kinda like a why not conversation Yeah. It's it's is fine, but it would be cool if we actually knew to a point exactly how bad it was for you. I I would always like to see that if possible. Other news, obviously, the the the the war between Israel and Iran is raging. Now there's a more interesting dynamic emerging in the oil markets.
Speaker 2:We're gonna have a founder on to talk about oil markets soon, but China will pay if Iran's oil is cut off. The country's refineries have become hooked on cheap imports of sanctioned Iranian crude. So there's a very interesting dynamic between Russia, China, and Iran as they all are kind of going to various levels of conflict with neighboring countries, neighboring areas. As they get cut off, they kind of drive each other towards one another, and so, it'll be interesting. They would be unlikely bedfellows because of the difference in religion between China and Iran, but certainly, likely trade partners if, if they, you know, need to keep the oil flowing.
Speaker 2:And Iran obviously needs to keep the money flowing as they fund their war effort. So interesting story there. Andy Jassy from Amazon is also talking about AI potentially cutting the size of their big workforce, which is interesting. We've heard this from Klarna. We're we're gonna have the CEO of Klarna on the show soon and dig into how much of that is real, where exactly is generative AI agent stuff, like, actually affecting hiring?
Speaker 2:Where can you actually
Speaker 1:Get leverage.
Speaker 2:Get leverage. But the thing with leverage is, like, the game the game theoretic outcome is usually, like, you know, I can do x with 10 employees plus AI. You can do x. You can do the same amount of output with 10 employees and AI. And so we both wind up using the maximum amount of employees and AI.
Speaker 2:Like, you Yeah. Like, it it doesn't always play out that that there's an advantage to be gained by cutting your workforce. Totally. Especially if we're in kind of this more, like, centaur era where we're not fully delegating entirely, and it's more like we want these AI enhanced employees, and we need lots of them. So but but but it is interesting.
Speaker 2:He says about 41% of employers said that they would downsize their workforce due to AI, a World Economic Forum survey found. And so lots of people are talking about this. It's unclear if it's just a signal to the market that, hey, we're gonna be more profitable going forward.
Speaker 1:Yeah. It'd be interesting to to think about what type of messaging there was from CEOs in the .com era. Hey. We're gonna be able to All
Speaker 2:the fax machine employees are going away. Yeah. Eli Lilly is buying a gene editing start up. They're paying 1,300,000,000.0 for Verve Therapeutics. It's on the cover of the the business and finance section today.
Speaker 2:So I I'm I'm not super familiar with this. We need to have some more biotech people on to really dig into this, but they're paying $1,000,000,000 upfront, adding potential treatment for cardiovascular disease to its portfolio under the agreement. The company has said Eli Lilly will buy all of the gene editing startup shares outstanding at for about $10.50. The stock was at around $6 beforehand. There's another $300,000,000 contingent on the company's lead treatment achieving certain clinical milestones.
Speaker 2:The treatment is being evaluated in phase one b clinical trial study and has been granted fast track designation by the Food and Drug Administration. There's a lot of excitement about
Speaker 1:Marty over at the end. Some quick notes on please..com era CEOs and how they thought about workforce expansion or contraction because of the Internet. So during the .com era, many CEOs and founders of Internet companies believed that the Internet would enable them to operate with leaner workforces compared to traditional businesses. This belief was rooted in the idea that the Internet could bypass established distribution channels, automate processes, and reduce reduce the need for large numbers of employees to deliver products and services. The web was seen as a killer app that could connect buyers and sellers in seamless low cost ways, fueling optimism about efficiency and scalability.
Speaker 1:However, this vision did not always materialize as expected. While some companies did achieve efficiencies, many.com firms rapidly expanded their work forces in pursuit of growth and market share often hiring hundreds of employees within months. So when the bubble burst, these companies faced quite a lot of pressure with layoffs and it did lead to a glut in the job market. But it was ultimately driven by that desire to compete and capture market share. So many of these CEOs, they they aspire to say, hey, we're gonna have these much leaner sort of workforces, but the reality was that it was a lot more complicated than that.
Speaker 1:Right. And there was some over hiring. So anyways, I I I think we will probably we'll see some of that. Right? There's this pressure to just compete and just access the best talent
Speaker 2:Yep.
Speaker 1:And scale head count in order to win market share. And and I'm sure that will lead to, layoffs at different points, that might be blamed on AI. Because right now AI is a great scapegoat. If you wanna downsize, you can be like, we're 10 times more efficient than we were last year.
Speaker 2:And if you wanna upsize, you can be like, this stuff's too dangerous or it's too big of an opportunity.
Speaker 1:Or you wanna spend a lot of CapEx.
Speaker 2:We have to go after it. Yeah. It is it is the dominant narrative. It drives everything. It even drives the FDA, because the FDA, reporting to the Wall Street Journal here says, the FDA chief to fast track some drugs.
Speaker 2:This is what Eli Lilly is banking on and tap AI. And so, artificial intelligence top of mind even for the, even for the government, embracing artificial intelligence, taking on companies that make ultra processed foods, and offering a fast track to approve drugs the Trump administration views as a priority. Welcome to the new FDA as envisioned by doctor Marty Mokary, who is leading the agency under health secretary RFK junior. Both men have said they want to overhaul the agency citing what they see as FDA's reputation for coziness with the pharmaceutical companies. Makery's, goal is to deliver more transparency, unleash innovation, eliminate conflicts, and lower drug pricing, said Callie Means, a White House adviser and ally, and former guest of the show.
Speaker 2:Of course. That's here.
Speaker 1:Of course.
Speaker 2:Callie. Very interesting. The changes. And so I'm not exactly sure how they're planning on implementing AI, but it actually does make a ton of sense because FDA officials said about 6,000 people at the FDA are using AI weekly. AI can modernize the FDA and radically increase efficiency in the review process.
Speaker 2:I mean, that is huge because you wind up sending in, a 100,000 doc a 100,000 page document citing all this stuff. And a lot of the early FDA trials are just fact checking that you actually filled out the form properly or fact checking that you even have scientific data. Like, did you do the test at all? And then if you did the test, then we will evaluate the results and put the scientists on it. But there's a lot of folks in the FDA where their job is not actually to understand the efficacy or the results of the trial, but just to understand that the trial happened at all.
Speaker 2:And that is something that AI could probably jump into pretty quickly. So that's exciting. Other news, the senate is set to pass a bill regulating stablecoins. This was on the front page of the Wall Street Journal. The senate was poised to pass legislation to regulate a widely used type of cryptocurrency, a key victory for the digital asset industry after it poured money into last year's election.
Speaker 2:The bill, the first of its kind, put federal guardrails on digital currencies would set up oversight of stablecoins, a popular crypto asset typically pegged to fee a fiat currency like the US dollar. The peg keeps their price steady, making them attractive to traders looking for a store value while they buy and sell more volatile cryptocurrencies. And with stablecoins can also be used for cross border payments. We've covered the Genius Act a few times. We're having Catherine Hahn come on the show to talk about exactly what's going on
Speaker 1:to break it down.
Speaker 2:It'd be fun.
Speaker 1:We've talked plenty about unstablecoins as well as stable coins. Yes. And Plenty of those. But but, yeah, her analysis should be, spot on. So excited to get that.
Speaker 2:In other news, there is a shake up at Renault. Is that right? Caring. Renault's star boss tests his skills at Caring. DeMeo revived the carmaker's fortune at Renault as CEO, but views are split on whether he can do the same for the luxury group.
Speaker 2:Luca DeMeo was among French business elite celebrating the opening of the twenty twenty four Olympic games at a party hosted by luxury group LVMH at its five star, Chabot Blanc Hotel in Paris last July. Let's hear it for luxury group LVMH. The Renault chief executive joined LVMH patriarch Bernard Arnaud and top executives such as Louis Vuitton chief Pietro Beccarri. But few expected that within a year, the motor industry veteran would end up with the top job at LVMH LVMH's longtime rival, Kering. And so he's hanging out at the LVMH party.
Speaker 2:Little do they know, there's a trade deal in the works, he's gonna go work for the direct competitor at Kering. The Italian is set to leave Renault next month and become the boss of Kering, the struggling owner of Gucci in Saint Laurent from mid September. While DeMeo has spent his entire career in the car industry, he has been making discreet overtures to the luxury sector from some for some time according to two people with knowledge of the situation. He cemented his reputation by leading a turnaround of Renault, which he took over in 2020 when it was reeling from the exit of Carlos Ghosn. Do you remember this?
Speaker 2:No. He escaped. He he escaped in a suitcase. Do you remember this whole story? Oh, it's amazing.
Speaker 2:Yeah. The the Carlos Ghosn story is insane. Ghosn had been ousted after his arrest in Japan on charges he denies later later making a daredevil escape to Lebanon in a musical instrument box. That's what happened.
Speaker 1:Wow.
Speaker 4:So
Speaker 2:he so he In
Speaker 1:a plane.
Speaker 2:In a in a private jet. He so he chartered a private jet under someone else's name and then basically was sleeping in a in a, like, a In a jar. Guitar case or something like that. Or, you you know, one of those, like, roadie cases that has, like, speakers in it and stuff? Yeah.
Speaker 2:So he goes in there, and then he gets out, and he can't be X rayed because he's in his home country because and he claims that, like, the Japanese government was accusing him of was basically being, like, anticompetitive with him because he was dominating the Japanese market, they were like, you're cooking the books. It's unclear. And, like, we'll never really know, I guess, who who did the right thing. But DeMeo came in and was like, okay, I'm gonna turn this around. Be a little bit more by
Speaker 1:the book. Maybe maybe don't get, you know, charges for You don't wanna end up in a situation where you're getting snuck in a private jet in a in a musical instrument case. Yeah. You just wanna avoid that.
Speaker 2:Yeah. You wanna be in the in It's not about couch. It's not life's not about what
Speaker 1:you should do. It's about what you, you know, shouldn't do. It's about avoiding things.
Speaker 2:So he took over so DeMeo took over in July of twenty twenty. Renault shares price has almost doubled. Let's hear it for that. While Volkswagen has fallen by a third, Stellantis has been almost flat. Stellantis is also in trouble.
Speaker 2:Renault's operating margin improved from a loss in 2020 to a record 7.6% last year as he moves from one top French group to another. He and prepares to steer another turnaround. The question is whether DeMeo's lack of experience selling handbags and high heels will help or hinder his bid to revive Caring. Luxury is a bit different from carmakers, said one luxury executive who said DeMeo was a big captain of industry and a real star who could still succeed in his new role. Caring isn't lacking in creativity, but in structure and discipline.
Speaker 2:A combination of strategic missteps and global slowdown in demand for high end handbags and watches has left Caring in a difficult difficult position. Flavio, Creda, fund manager, and luxury specialist at GAM said Kering had to do something big to address the situation. Kering's slowdown follows years ago.
Speaker 1:The Kering Kering Lvm LvmH dynamic is interesting. So Kering has Gucci Gucci. Laurent. Yep. Tega Veneta, Balenciaga.
Speaker 1:Okay. Brioni, you know, a bunch of other brands.
Speaker 2:This is good.
Speaker 1:LVMH has pretty much every other one Yep. Besides Hermes, which is obviously an independent company.
Speaker 2:I thought they were investing.
Speaker 1:Oh, they own a
Speaker 2:stake of Hermes?
Speaker 1:Have some some ownership. Mhmm. And it was always the goal to just kind of buy up and eventually take control, but Yep. That didn't happen. Yep.
Speaker 1:But the power law dynamics that we see in venture clearly playing out here. Caring is a 22,000,000,000 market cap Mhmm. Group down over 60% in the past five years. LVMH is, you know, an order of magnitude bigger, $270,000,000,000 company at that's that's up 20% it's 27% over the past five years. So if you remember, too long ago, Bernard Arnaud was richest man in the world.
Speaker 2:Yep. Still up there.
Speaker 1:I already said this is people weren't exactly excited about that except for us. Why not? No. I think that I think the pushback was like okay the Instagram era crew made it so that the a a He's not exactly curing cancer. Yeah.
Speaker 1:Is that Is criticism? The criticism was that he wasn't a a technologist. And but anyways Well,
Speaker 2:he's an honorary technologist. Anyway, in other news Absolute dog. This is there are two crazy deals happening today. Dylan Field is leading around into Senra Systems, which is a wire harness company. Named after David Senra?
Speaker 2:I think so. We'll have to ask We'll have to ask. We have both of them on. So today, so we can figure that out. Yeah.
Speaker 2:And then Spotify, Daniel Ek, is leading a $600,000,000 round into drone maker, Helsing, at a 12,000,000,000 valuation. And so, I mean, Spotify and Figma, they're in different categories, but I see them both as, like, you know, like consumer ish Internet, like, the design heavy, like, not hardware stuff.
Speaker 1:Everyone should aspire to be an angel investor that leads $600,000,000 rounds.
Speaker 2:Yes. Or $25,000,000 rounds
Speaker 1:in the case of Yeah. I mean, there's a range.
Speaker 2:Yeah. There's a range.
Speaker 5:You can do a lot.
Speaker 1:But, yeah, stop. You know, don't aim so small and think, oh, I just wanna write 100 k flyers. Yep. You know, shoot for the, you know, 25 k lead Yeah. Or sorry, 25 mil lead check or 600,000,000 depending on the opportunity.
Speaker 2:So we can dig into this more when we get to that. Also, you know the $5,000,000 US investor visa, the gold card? Yeah. People were joking that like common AE is gonna apply for one and then just be a citizen even though he's, like, you know, public enemy number one in the war for Iran. Well, 70,000 people have applied for it.
Speaker 6:It's a lot.
Speaker 1:How many of those are real?
Speaker 2:I don't know. But, yeah. Is it is it like you put down a $5, you know, playtolder? Model.
Speaker 1:You know, $100,100 bucks. I mean, I I I believe that there there are that many people that would that would be willing to pay
Speaker 2:For sure. For sure.
Speaker 1:Much to
Speaker 2:come to America. The the just look at demand for luxury apartments in tier one American cities. Yeah. Like, there's so much international demand, and that's just to have an asset in America Yeah. That that that that feels more durable than something in your country.
Speaker 1:In your local currency.
Speaker 2:In your local currency. Exactly. So the number seems staggering, but also maybe believable. We'll have to dig into where it goes from this. We can we can read into this article more, but I thought it was an interesting headline.
Speaker 1:Yeah. Apparently, there's 59,000,000 millionaires. Many of those wouldn't be able to just, you know, slam 5,000,000 down for a gold card, but many of them, I'm sure, would be able to.
Speaker 2:So There's also an interesting article in the Financial Times today, breaking down the weapons that are being used. Obviously, we know some defense tech founders that are playing in the in in this world generally, mostly on the smaller drone side. But the the the the Financial Times has a good breakdown showing the different missile types of systems. There's ballistic missiles, cruise missiles, and then UAVs, and you can kind of see the different arcs that they take. We were talking about this with, like, regard to hypersonics.
Speaker 2:But, Iran has four different, kind of ranges and different different classes of ICBMs that they've been sending sending over. One is the Hajj Qassem, solid propellant missile named after the IRGC commander. That's Qasem Soleimani, who was assassinated by The United States in 2020 there and, immortalizing him in the name of this rocket. It has a maneuverable warhead and according to Iran, was used Saturday night and might have struck the Haifa Haifa refinery. There's the Fatah one, the Koromshara, and the Ahmad.
Speaker 2:And there's a few different chain, trade offs between range and payload. And, it'll be interesting to talk to some defense tech founders over the next few weeks about what's actually on the ground, and then how do you counter this stuff.
Speaker 1:Some interesting electronic warfare or propaganda happening right now. Oh, yeah. Apparently, the satellite signal for Iran's state run television channel has been hacked. So every channel is now playing anti regime messaging Interesting. Which are calling for freedom and revolution against the regime.
Speaker 1:So interesting.
Speaker 2:I think that's like the the biggest question to answer is like how popular is the actual how how popular is the current game? Because there's obviously, you know, it it's it's very it's very advantageous to someone who's attacking. If I'm attacking your country, I'm gonna say if Geordie's really unpopular, everyone who says everyone who says Geordie's popular is lying. And and you never really know. Yeah.
Speaker 2:But something like that shows that there is at least enough will We gotta
Speaker 1:get Shervin on the show. To Shervar?
Speaker 2:Yeah. Oh, yeah. That'd be great.
Speaker 1:To He he's according to X, very excited to be to be able to go home.
Speaker 2:Yeah. He wants to
Speaker 1:go home.
Speaker 2:And there's a lot of folks that are in that in in in that camp. The other news, Musk's XAI nears a $9,300,000,000 fundraising. You highlighted this later on the show yesterday. Investors shrug off White House spat. Makes sense.
Speaker 2:They're closing $9,300,000,000 in debt and equity, and the burn rate is over a billion dollars a month. Right? Yeah. I think that was the stat. Burning a b.
Speaker 2:Investors have placed orders on more than 5,000,000,000 in a bond and loan offering, giving the company's bankers at Morgan Stanley confidence that they can finalize the financing round. I know the banks are on this
Speaker 1:too. So Tesla is down 5% in the last month. Mhmm. Is that the number that you would think if if this if
Speaker 2:No. The narrative would be it's 75% down. Yeah. Like, based on the news and, like, the drama.
Speaker 1:I don't think many people could pull this off though. If you're if you're a, you know, series c founder, don't make wild accusations about the president. Yeah. Expect, you know,
Speaker 2:to take a little bit
Speaker 1:of a hit. Yeah. You're get a rose A bigger bigger hit than than, you know, 5%. Yeah.
Speaker 2:Yeah. It's wild. Well, people know. Naturally aspirated v 12 is coming in the next Tesla. They're moving on.
Speaker 2:They're they're
Speaker 1:brand If if they can if they can do that, this is a $10,000,000,000,000 stock. Maybe a $100,000,000,000,000 stock.
Speaker 2:Maybe even bigger.
Speaker 1:If they can Why not quad? Get the right engine
Speaker 2:Why not one quad? Yeah. One quad. Let's do it. Musk's company told investors that it also expects to complete a $4,300,000,000 equity raise alongside the debt package giving it the firepower to build the data centers it needs to expand.
Speaker 2:It is competing with OpenAI, Anthropic, Google, and others to develop and commercialize AI tools. Musk's group launched a chatbot. Grok as an irreverent alternative to ChatGPT and Google's Gemini, claiming that it would seek truth rather than a politically correct narrative. Musk combined XAI with his social media company X in March in a deal that valued the company the combined entity at a $113,000,000,000. That's up there.
Speaker 2:TBG's in the deal. There's a couple other folks in the deal. Anyway, let's move on to some timeline. What's going on in the timeline?
Speaker 1:Let's Get into it.
Speaker 2:I think we should go deeper on, what's going on at Warner Brothers because this is an interesting story that we didn't really get to. Somewhat in the tech in the tech world because, of course, they interface with Netflix, former Fang current Fang, I guess, but Fang's just fallen off
Speaker 1:the side.
Speaker 2:But the news today that's driving the the story is, Warner's, their chief executive, David Zaslav, will take a pay cut after the company splits. And so the news is that, Zaslav could receive over a $150,000,000 in stock by exercising options if share price targets are met post split. Gunnar Winden Weidenfels will become the CEO of the cable networks company receiving a 15,000,000 stock and options grant. And so we'll go into this into this split. The new pay package goes into effect only if the split happens by the end of twenty twenty six.
Speaker 2:We need a poly market on this to be tracking it, but Zaslav already received options for nearly 21,000,000 shares last week. The underlying stock was valued at more than 200,000,000 at the time. The board gave priority to retaining Zaslav and giving him strong incentives by trying by tying pay to performance. He will head the streaming and studios business after the split and is often he's often one of the highest paid CEOs in the S and P five hundreds. Last year, he received a pay package of 51,900,000.0.
Speaker 2:Up there with Tim Cook. Pretty big. Big. Feeling criticism amongst shareholders. Yeah.
Speaker 2:A lot of folks have been kind of saying that his strategy has been misdirected. A lot of focus on the brand, which we'll go into with the HBO stuff, but, interesting to see how the how this dynamic's playing out. At the new company, he would keep his $3,000,000 a year in salary. His target bonus would fall to 6,000,000 with a cap of 12,000,000 from a target of 22,000,000 and a payout of 24,000,000 last year. The contract promises Zaslav a target of 15,500,000.0 in equity awards the first year and 7 and a half million annually.
Speaker 2:After that, the amount could rise or fall with performance. He's gonna invest. And they kinda go into the this is, like, an incredible amount of detail, but I guess they had to share this with the board. And so it's in the journal now. I'm kind of interested in, like, how this actually plays out.
Speaker 2:But Yeah. Anyway, I don't know. We should we we we we could do a little bit of a backstory on Warner Brothers Discovery to kind of set things up to to take us up to speed. I mean, it's a really, really old company.
Speaker 1:Yeah.
Speaker 2:Literally started by brothers. Like Harry, Albert, Sam, Jack Warner began screening motion pictures in mining towns across Ohio and Pennsylvania in nineteen o three.
Speaker 1:Wow.
Speaker 2:You don't see many brothers companies anymore. We've completely lost the the user last name as the name of the company
Speaker 7:Yeah.
Speaker 2:Meme. That's completely gone.
Speaker 1:I do Chris Amadon is bringing this back.
Speaker 2:Oh, he's doing it?
Speaker 1:Amadon Heavy Industries. Oh, there you go. That's I like that. So that's a good start. Do think that could be the next meta because Totally.
Speaker 1:It allows you to quickly, you know the.com's available. Attaches some meaning.
Speaker 2:Yep. As an investor
Speaker 1:as an investor, it's like, wanna invest in the company that the founder attaches their name to. Right? Yep. Yep. I'm putting it all online.
Speaker 2:What's I'm not just gonna, like, dip on this company because then when I
Speaker 1:lose that company named after me, you know, failed.
Speaker 2:Yeah. Exactly. Now putting it on the line. Yeah. It's good.
Speaker 2:I I I think it could could become a meme. Just like the the browser company of San Francisco or new of New York and the compute company of San Francisco and the American Manufacturing Company of America. Like, there's a whole bunch of those. And and and and we're maybe reaching the end of that meta and a new
Speaker 1:meta That meta is over. Think Do Do not name yourself the
Speaker 2:The media company of Hollywood.
Speaker 1:The media company of Hollywood. Although, you did throw that out at one point as
Speaker 2:a good name for a c corp. Did be disrespectful to the folks who are actually using that name. So they so in 1923, not far from here in Hollywood, California, they incorporated Warner Brothers pictures in 1923. So they were grinding for twenty years just showing motion pictures in mining towns. Just showing up to some mining town in Ohio or Pennsylvania and saying,
Speaker 1:you guys wanna see a movie? You guys like flicks?
Speaker 2:Yeah. It's just, like, not even incorporated really as, a proper company. 1927, they released The Jazz Singer popularizes the synchronized sound talkies. This was the the generative AI, the v o three moment of the day, when you could hear sound synchronized with the, with the movie. And this propelled them to major player status.
Speaker 2:And then you jump forward forty years, 1967. Jack Warner sells his remaining shares. Seven Arts by the studio, and the firm is briefly renamed Warner Brothers seven Arts. In the next three years, parking and services conglomerate Kindley National acquires Warner Brothers. They just, like, changed hands a bunch.
Speaker 2:The Discovery Channel launches in 1985. In 1990, there's a $14,000,000,000 merger of Time Incorporated with Warner. This creates Time Warner, and we're gonna get to, Time Warner in 1996 acquires Turner Broadcasting Systems, Ted Turner's company. That's CNN, TNT, and Cartoon Network for 7.6 7,500,000,000.0. And so now it has a cable portfolio.
Speaker 2:And then in the .com boom, you gotta get on the Internet action. And, of course, you get to America online announces it it closed a 165,000,000,000. It really is a great name, America Online.
Speaker 1:Yeah.
Speaker 2:It's fantastic.
Speaker 1:And I think I think the I think the that the IP is, like, kind of floating around.
Speaker 2:It's like the Enron IP. You can just, like,
Speaker 1:launch Like, aol.com still exists. Okay. But but, like, does it really exist?
Speaker 2:Yeah. So the I mean, this was the I think this was the biggest merger of all time.
Speaker 1:Aol.com, I got a Ramp ad.
Speaker 2:Oh, yeah?
Speaker 1:So that's cool.
Speaker 2:Well, time is money.
Speaker 1:Save both.
Speaker 2:To use corporate cards, bill payments, accounting, and a whole lot more all in one place. Go to rev.com. The
Speaker 1:official corporate card of the golden retriever.
Speaker 2:Exactly. So AOL announces a $165,000,000,000 merger with Time Warner forming AOL Time Warner, later judged one of the least successful mega deals in US history. Oof. Over the next ten years, the the early two thousands, AOL has dropped from the corporate name. Time Warner ultimately spins AOL off as a stand alone company.
Speaker 2:In 2018, Discovery Communication closes its $14,600,000,000 purchase of Scripps Network Interactive for HGTV and Food Network, rebrands Discovery Inc. So they have, a package of of cable assets there. Warner Brothers. So in '9 in in 2018, AT and T completes its $85,000,000,000 takeover of Time Warner and renames its division WarnerMedia. And so Comcast has Universal and AT and T has Time Warner and kind of like the the the the the pipes of distribution are also owning the networks of distribution, which also own the shows, which own the content, and and this is the this is the nature of of the of the the the TV media era Yeah.
Speaker 2:Basically pre pre Internet. We haven't seen this with the social networks that much. We've seen, like, a couple big deals from, like, Spotify, you know, doing, like, one offs, but there there aren't as many, like, okay. The social the social network bought, like, a creator organization that's operating on top of
Speaker 1:it.
Speaker 2:Yeah. It just doesn't really happen. But maybe in the future. Who knows? In 2020, WarnerMedia debuts direct to consumer streaming service HBO Max in The United States.
Speaker 2:And HBO has a fascinating history too. Disney at
Speaker 1:one point bought Maker Studios. Yep. Do remember that for
Speaker 2:Did they
Speaker 1:go in the way? I I wonder
Speaker 2:if they like kept pumping stuff because like, it feels like like the core Disney IP portfolio
Speaker 1:is Maker at one point had tens of thousands of creators. And I don't
Speaker 2:know This is a true network. Were they thinking of it I wonder if they were thinking about it like the new what's that what's that like farm team that Disney has? Where they where like Justin Timberlake came up from and like Britney Spears was part of it. It was like Mouseketeers. Are you familiar with this?
Speaker 2:No. I don't even So like, there was some sort of like child actor farm team that Disney had for a while. They were they would put different child actors on for like little bits to kind of like audition and they'd get some Yeah. Screen time, but it wouldn't be like they're starring in their own show. And if they did well, they would wind up getting music deals and movie deals and and kind of rolling from there.
Speaker 2:So I could imagine them thinking about that as being like Yeah. A like an arm into the next generation of talent. But Yeah. Unclear if
Speaker 6:they Yeah.
Speaker 1:So maker maker maker studios was absorbed by Disney Digital Network Mhmm. In 2017. This was a couple years after the acquisition and it effectively is no no longer operating. So not not that great.
Speaker 2:It'd be interesting to talk to them and get the postmortem, see what they're up to now. So, yeah, HBO Max, AT and T agrees to spin off WarnerMedia. One of these these assets change hands so much. But they merged with Discovery in a $43,000,000,000 reverse Morris Trust transaction. Discovery CEO David Zaslav is tapped to run the combined entity.
Speaker 2:This is in 2021. Deal closes. Warner Brothers Discovery or everyone calls it WBD begins trading on Nasdaq under the ticker WBD. They consolidate HBO Max and Discovery in 2023 into a single streaming platform branded Max. And then responding to brand recognition concerns in 2025, this is May 14, Warner Brothers Discovery announces Max will revert to the HBO Max name in summer of twenty twenty five.
Speaker 2:And that was like everyone was saying it's a massive l to what dropped the HBO brand name because they've spent decades building HBO home box office, like The Sopranos, Sex and the City.
Speaker 1:It used to mean something.
Speaker 2:Andre. Yeah.
Speaker 1:It still means something.
Speaker 2:It meant it meant
Speaker 1:Stood for quality.
Speaker 2:Movie quality television. Yeah. And you turn it on, you're gonna get movie quality content the entire time. And they built that. It was such a premium brand.
Speaker 2:And then they just were like, yeah. We're not gonna use it anymore. It was a mess. I mean, there there is the counterfactual, which is like they wanted to put Discovery assets on an app. And so if they put that on HBO and all of a sudden you're going to HBO and seeing, like, home and garden content or Yeah.
Speaker 2:I don't know exactly what's on Discovery these days, So confusing. Food Network, you might be like, ah, this doesn't feel like HBO. It's like diluting the HBO brand. But still, it was it was a little bit of a mess. And so facing debt and strategic pressures, Warner Brothers Discovery unveils a plan to split the two publicly traded companies into two publicly traded companies by mid twenty twenty six.
Speaker 2:Streaming and studios networks will be headed by CFO Gunnar Weidenfels. And so this was the big this was the big news last week, June 9 or the week before. Yep. They're gonna split into two different companies.
Speaker 1:The
Speaker 2:there will be global networks, which will be home to CNN, TNT, TBS, and Warner's dozens of cable channels as well as international holdings. Global Networks will hold 20% stake in the second entity, which Warner is referring to as streaming and studios, which they're gonna give a different name to. And it plans to use earnings from that stake to pay off debt. And so it's still a little bit of koretzu happening, but they are
Speaker 1:Yeah.
Speaker 2:Drifting apart.
Speaker 1:I mean, it it is it'll be interesting to see how these two entities trade once once they're independent. Right? There there could be more of a growth story around HBO Max.
Speaker 2:Yep.
Speaker 1:You know, if they if they continue to wanna to compete with with Apple and Netflix and the many other players, Prime, etcetera. Yeah. The cable division will you know, it's hard hard to see what what the long term growth story there, but I'm I'm sure they'll continue to find a way to make money.
Speaker 2:I mean, the weird thing about this is that, like, the the The Wall Street Journal has this little little infographic about what's in global networks and what's in streaming studios. And in global networks, it's Bleacher Report, cable channels, CNN's planned streaming service. That's, I believe, CNN oh, yeah. They're not calling it. Is it it Was that ESPN where their pro streaming service is just called ESPN?
Speaker 2:Is What what is CNN gonna do? Are they gonna do CNN plus? This is the chart, Jordy. So Global Networks has Discovery plus which I believe is a streaming service. And then streaming and studios has HBO in addition to HBO Max.
Speaker 2:I believe HBO is just a channel because they're still selling HBO to cable subscribers as a premium channel. And so even though they are, like, separating these things out based on whether or not it's streaming or a cable network, it's really more of, like, a separation around the brands and the IP. And what I'm seeing is that is that CNN and Discovery are more like news, reality TV, more ephemeral, less durable franchises, less long lived IP. And over in streaming services, I'm seeing DC. You have Superman, Batman, HBO.
Speaker 2:These there are real assets, Westworld and
Speaker 1:Yeah.
Speaker 2:And Sopranos and Game of Thrones. Right? Like, Game of Thrones could become its own whole world, and they do more spin offs and more movies and stuff. And so Yeah. It feels more like they divided it along IP lines than really along, like, technology and distribution lines, but I don't know.
Speaker 2:Yeah. We'll see.
Speaker 1:We'll see. We'll
Speaker 2:see. Are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today's evolving media landscape, Zaslav said in a statement. Riveting. Zoslav is under increasing pressure to boost the company's sagging stock price, which before Monday had dropped about 59% since the company was created from the merger of AT and T's Warner Media and Discovery Communications. Shares closed down 3% Monday.
Speaker 2:S and P Global Ratings, friend of the show, downgraded Warner's debt to junk status earlier this month. It's really it's really such a dig that they just have you know, it it's like it's kinda like how if you're in school, you know, it goes like a, b, c, d, and then they skip e and just do
Speaker 1:f. F. Right?
Speaker 2:It's like they they needed to give you that extra, like, you did really bad.
Speaker 7:Yeah.
Speaker 2:And so if and they could because they could just do, like, triple a debt, double a debt, a b c d Yeah. E f g h I. They they could have it be much more, you know, random or or or just like linear. Instead, it's like, you go from like triple a sounds amazing. Sounds really safe.
Speaker 2:Like, I'm not gonna lose my money in triple a. And then junk sounds like extremely risky to me. Junk. Anyway, they're going into into his pay package again. Significant portion of Warner's roughly $34,000,000,000 of debt will live on the balance sheet of Global Networks, which currently generates more revenue and has stronger cash flow than streaming studios.
Speaker 2:So maybe this is more of like a CFO play figuring out the the finances, kind of like the reverse version of what X and XAI did. Right? Yeah. Warner said it secured a 17.5 bridge loan, $17,500,000,000 bridge loan from JPMorgan to buy back a chunk of its debt. Yeah.
Speaker 2:If you're if you're this is this is the big leagues. You don't go to that VC for, you know, oh, I need $2,000,000 bridge loan to get me to series a. This is you go to JPMorgan and ask for 18 bill.
Speaker 1:Yeah. It is interesting. You know, people love to poke fun over the HBO Max Yep. Max. Now back to HBO Max over the last few years.
Speaker 1:But if you actually look at the full corporate history of these assets, it's always been constantly renaming, changing things around Yep. Etcetera. So in many ways, it's just a continuation of decades of rebrands and restructuring and mergers and reverse mergers. So
Speaker 2:lots of lots of fodder for the journal, maybe. That's what we're here for.
Speaker 1:My my key issue is getting rehearsal renewed for another eight seasons.
Speaker 2:For sure. Can see
Speaker 1:ten seasons.
Speaker 2:Yeah. It's so good.
Speaker 1:I don't know how you top flying a commercial aircraft.
Speaker 2:He has been like the direction of that
Speaker 1:a lot. Maybe. Oh. Oh. Here here's how it goes full circle.
Speaker 1:So Nathan Fielder becomes the CEO of of HBO Max.
Speaker 2:Or the CEO. He gets the CEO. Yeah. Your CFO.
Speaker 1:He actually convinces, you know, management and gets sort of a critical mass of shareholders aligned to, you know, become Yeah. Just to to sort of sell off all the legacy IP and just focus on him. Yeah. It's And he really go really just become a personality led, you know, media company that's just centered around Nathan Fielder. Yep.
Speaker 1:And maybe they could go into consulting, you know, you could see, you know, other media companies like like Netflix coming to Nathan Fielder saying, how do we you know, we already have subscribers in every household in America. How do we And, you know, I I imagine he'd have some wild ideas around around how to catalyze growth.
Speaker 2:Yeah. I like that he's been able to basically, like, do be incredibly impactful at a global scale, like, as a bit. Basically, he's like, wouldn't it be funny if we fixed serious problems with the FAA? And then he, like, goes and, like, kind of makes it funny, but mostly he's just actually doing, like, investigative journalism and, like, a documentary about aircraft safety. And, yes, there's, like, a layer of comedy over it, but mostly, it's just it's just, like, impactful work and insightful analysis.
Speaker 2:And, yes, I would love to see him do that at Warner Brothers Discovery. Come in and, you know, as a bit, just make it a high performing growth stock. Give it a growth story.
Speaker 1:Yeah. I mean, could potentially double investors. He could potentially double HBO Max's revenue if he used you remember when he did this gas rebate Yes.
Speaker 2:Yes. Where he
Speaker 1:it was a dollar 75 gas Yeah. But you had to, like, take the rebate up
Speaker 2:Yeah.
Speaker 1:You know, a mountain. Yeah. I remember that.
Speaker 2:He could
Speaker 1:do something like that with HBO Max, which is like, you know, you can actually we'll give you a a you have to sign up for for $50 a month. But once you've been a member for a few months, if you hike up Mount Everest and you actually put, you know, this rebate in in the box, we'll offer you a free subscription.
Speaker 2:Yeah. Yeah. Yeah.
Speaker 1:And so there could be some a lot of different a lot of different strategies I could see him rolling out.
Speaker 2:I'd be more interested in his investor relations strategy as CEO. I wanna see him, like, as a joke, go to Sun Valley. As a joke, go on Squawk Box regularly. You know? As a joke, tell a really convincing story during earnings that that excites retail.
Speaker 2:Turn it into a meme stock as a joke.
Speaker 1:Yeah. He could do something like Well, sure.
Speaker 7:He could
Speaker 1:he could live stream and day trade with the company balance
Speaker 2:sheet Yes.
Speaker 1:As a way to kind of just drive retail engagement.
Speaker 2:Yes. Yes. Yes. I I think you gotta put him in the boardroom at this point.
Speaker 1:Put him in the boardroom.
Speaker 2:For sure. He deserves a board seat after the rehearsal.
Speaker 1:We should buy, since apparently after the whole Tesla pay CEO compensation saga
Speaker 2:Yeah.
Speaker 1:If you own like seven shares of a company Oh, get to you could you could sue. So it's possible, you know, we could buy some shares of Warner Brothers and start, you know or sorry, HBO Max and start actually lobbying to get get Nathan in
Speaker 2:the I've been saying this for our buddies who wind up selling companies to public companies and we always tell them our advice for anyone who does some sort of like acquire or like sells their company to a bigger company. Like, job is not to rest invest. Your job is to become the CEO, put the company back in founder mode. We're we're half joking, but oftentimes, the the company that's acquiring you is acquiring you because they're not in founder And and and you are and you are more agentic and more aggressive, more creative. And so you should actually try and get into the boardroom.
Speaker 2:You should
Speaker 1:actually try Regardless of what the CEO that bought your company actually wants.
Speaker 2:Exactly. I think Very likely,
Speaker 1:you know better than they do.
Speaker 2:Yeah. And I think we as we as we as friends should potentially buy some shares in the acquiring company, fire up a shareholder lawsuit, and say, hey. Put our friend who you just acqui hired for a couple mil Yeah. In the boardroom.
Speaker 1:You got an MVP that's basically benched right now. Exactly. Because they're not in the boardroom.
Speaker 2:Perfect metaphor. That's the perfect metaphor. Well, speaking of MVPs, Ben Thompson, MVP of has a breakdown on his reaction to the news. He says he feels compelled to cover this because as much as he likes celebrating when he gets things right, he also needs to own his l's, and I'm taking a big one here. He says, I was very optimistic about the idea of combining Warner Brothers and Discovery.
Speaker 2:And this is what I love about Ben. He's like, he really holds himself accountable. He gets a lot of things incredibly right. I mean, NVIDIA and Meta, when they were down, he was laying out really, really detailed bull cases. But he does it in a way that's not he doesn't issue, like, a buy rating.
Speaker 2:You know? He just walks through the strategy, but he still holds himself accountable even though he's, like like, you know, he's kinda like the opposite of Kramer. Like, Kramer's, like, riffing, offering, like, buy and sell ratings, like, all the time. And then, like, constantly
Speaker 1:He's not afraid to change his mind.
Speaker 2:Yeah. Exactly. Because he's just going, going, going on the daily basis. Ben's obviously much more detailed in his analysis, but then also revisits what he said before. So back when Warner Brothers and Discovery were in the process of that merger, Ben Thompson said there would be increasing, bargaining power with MVPD providers.
Speaker 2:I think that's Netflix. I don't I don't I don't even know what do you know what MVPD stands for? This is like industry jargon. Streaming package combo. A streaming package that appealed to the entire household with a combination of prestige content and top notch
Speaker 1:MVPD MVPD is multichannel video programming distributor, which is traditional Okay. TV providers like cable, satellite, fiber optic.
Speaker 2:Got it. Okay. So so so if they if they go to Comcast and say, hey. In the bundle that you're offering to Comcast subscribers
Speaker 1:Yeah.
Speaker 2:You know, there's usually, like, the base tier, the premium tier, and then, like, every channel possible in, like, sports package. Yeah. They would have leverage to say, we want you to push HBO harder and get the upsell for that and give us more of that. Because otherwise, you don't get, you know, Discovery reality TV shows or something like that, theoretically. And so, yeah, that's what he's saying is that the streaming package could appeal appeal to the entire household because you get the prestige content, Game of Thrones on the weekends, but then you also get filler content, which he calls, you know, his affectionate term for Discovery style reality shows.
Speaker 2:And so I don't actually know what the top what the top Discovery reality shows are because there's so many different ones. And I know Bravo, I believe, is owned by NBC, and they have a whole bunch of reality shows. I'd love to know what, Discovery is working with, but there's clearly stuff on HGTV and and other Discovery channels. I imagine they do doesn't Discovery do, like, Shark Week? Isn't that the big one?
Speaker 2:I imagine, like,
Speaker 1:that's a discovery I
Speaker 2:don't know. They have so many.
Speaker 1:Yeah. They have Deadliest Cats.
Speaker 2:Deadliest Cats. Mythbusters. Mythbusters. That's
Speaker 1:bush people.
Speaker 2:I haven't heard about that one. Dirty Jobs. Dirty Jobs might grow. Okay. Yeah.
Speaker 2:So, so that that that kind of content is something that you'd be putting on the background, like a laundry afraid. Never heard of that? Not interested.
Speaker 1:That's where no. No. No. You it's not as bad as it sounds. It's, contestants are dropped into remote wilderness locations with no clothes
Speaker 2:No clothes?
Speaker 1:And must survive for twenty one days. Would be great
Speaker 2:if we could get
Speaker 1:venture capitalists to do it. Yep. I think they could you know, it's a it's a high risk, you know, move for them to say, I'm gonna take my August instead of going to Europe. Yep. I'm gonna be dropped into the Alaskan wilderness and forced to survive Yeah.
Speaker 1:For twenty one days on camera.
Speaker 2:But they have some grit coming out of that. They have some grit and some credibility. Credibility.
Speaker 1:Be able to say, you know, I've I've pushed through. I've I've faced
Speaker 2:some darkness.
Speaker 1:I'm in the trenches with you.
Speaker 2:You might be in a literal trench.
Speaker 1:Yeah.
Speaker 2:Muddy and naked and afraid.
Speaker 1:Yeah.
Speaker 2:Anyway, Ben Thompson also laid out a reason for optimism, a better advertising offering that extended across linear TV and streaming. But he says his biggest mistake in his analysis, which was was not properly accounting for the debt, which the new Warner Brothers Discovery was taking on, a mistake that was greatly amplified by the significant rise in interest rates that occurred over the past few years. Interesting. Although, Warner Brothers Discovery debt is still fairly cheap and is going to and is going down, S and P Global downgraded them to junk, thanks in large part to declining linear TV revenues. Interesting.
Speaker 2:It's important to acknowledge, however, that my reasons for optimism were overstated as well. First, there were serious questions about w WBD's MVPD leverage going forward, particularly now that TNT has lost the NBA. Second, there's no evidence that Max's breadth does anything to mitigate churn, which remains among the highest of any of the streaming services. Is that just because it's so expensive? And it's like, either there's a take over the world moment with Game of Thrones, like, gotta be subscribed, or else it's like, nah.
Speaker 2:I can skip it. I feel like HBO is something that, like, once a year, I'm open
Speaker 1:They don't have it in them to slop it up.
Speaker 2:Yeah. I'm not like, oh, going through Netflix
Speaker 1:is down to slop. They're down to just throw them out at the wall.
Speaker 2:Watch Netflix. I don't even have it installed because, like, I just don't. Very little stuff on Like,
Speaker 1:you can't get to Netflix on your TV?
Speaker 2:No. Wow. I can't get to it on my phone either.
Speaker 1:You're the last one. Hey, Netflix. No. You got got a guy for you. Come find me.
Speaker 2:To be clear, I pay.
Speaker 1:They're gonna be banging on the door. Okay. Okay. Good.
Speaker 2:I pay for it. Okay. And probably on, like, the most premium tier. But Very
Speaker 1:good American to not support, you know, a
Speaker 2:I I great American tech company. So so unlike you, I do I do enjoy the current thing when it comes to cinema and television. Yeah. But it needs to be take over the world. Everyone is talking about it, and then I watch it.
Speaker 2:So White Lotus, the last thing I watched on Netflix was Squid Game season one. Really? Yeah. Because it was like so important to see it and everyone and it was good. I liked it.
Speaker 2:But like, what was the biggest show on Netflix this year so far? Like, it's all just background TV to me. I I feel like. I mean, I guess f one.
Speaker 1:Drive to Survive is pretty good.
Speaker 2:But I just haven't had a chance to.
Speaker 1:Yeah. But even Drive to Survive, I don't I I would be fascinated to understand their viewership in in late in these later seasons versus some of the initial ones.
Speaker 2:Yep. You know what they should do? They should have Designed to Survive. Kind of some Figma spawn con on Netflix all about designers The best. Fighting for their lives.
Speaker 1:Mobile app. And the price. Exactly.
Speaker 2:Go to figma.com. Think bigger. Build faster. Figma helps design and
Speaker 1:development teams here.
Speaker 2:Build great products together. Dylan,
Speaker 1:Consider
Speaker 2:Absolute dog. Designed to survive. Designed to survive.
Speaker 1:If we don't increase the conversion rate on this button by 5%, we get thrown into this pit of sharks.
Speaker 2:Yeah. Yeah. Yeah. And then it would be
Speaker 1:This pit of snakes.
Speaker 2:But that's actually not the stake with Drives to Survive. Like like, the stakes are are just like all like interpersonal job and trade deals.
Speaker 1:I would yeah. It would
Speaker 2:be like, oh, who's poaching who?
Speaker 1:Yeah.
Speaker 2:Oh, this person. Coinbase.
Speaker 1:Coinbase. Reach out. To one of
Speaker 2:Oh, yeah. We know. We we we know the story.
Speaker 1:The US Army's designers. Yes. And Yeah. You know, they're pulling them in.
Speaker 2:Meta's trying to pull designers in. It's a hot market.
Speaker 1:Meta just offered $200,000,000 No.
Speaker 2:For. It's Too much. The number's 100 and that's not confirmed by
Speaker 1:the It's not confirmed. Speculation.
Speaker 2:Yeah. And then they and then, of course, they they dropped the they dropped the the the HBO name, and they went back and forth on that. There was a funny, thing. Compare that to Netflix. Certainly, the streaming service is investing tons of money in having differentiated content, but the long term goal, and by extension, the ultimate value proposition for consumers is offering something for offering something something offering something for everyone all of the time to be to be TV, in other words, but freed from the constraints of geography and time.
Speaker 2:One subscribes to Netflix not to get a particular show, but simply because that is what one does just as one once subscribed to cable. Can you see the difference? Just think of the tagline. It's not TV. It's HBO.
Speaker 2:That's not simply a slogan. At least it wasn't, but it will be if AT and T sees the brand's ultimate value as a consumer front end for a de facto Netflix competitor, that is to say TV. More broadly, if my interpretation of these comments is correct and AT and T plans to build a streaming service to rival Netflix, well, first, good luck. And second, that is quite a bit higher level of ambition for the Time Warner acquisition than I anticipated was what he said. Okay.
Speaker 2:Maybe I can take the w on this analysis, he says. It holds up pretty well. In the end, the mistake was not so much about combining Warner Brothers and Discovery as it was trying to take on Netflix in the first place. My instincts were right about that. I just wish I'd stayed anchored on that point all the way through.
Speaker 2:And if you look at the I saw somebody being like, oh, whatever happened to Fang? We I think we covered this in the show. And it's like it was like, why was Netflix ever in Fang? It was kind of a good question because, like, Netflix doesn't have the same just intense power of the hyperscalers and the other trillion dollar tech companies. But you look at the stock chart, and, yeah, it went way, way down for a little bit, but it's but it's back up.
Speaker 2:And it's been on absolute tear. And for a long time, it was the best performing stock in the stock market. And I think it's up, like, millions of percent or something like that. Like, the numbers are insane.
Speaker 1:It's trading at a 57 x.
Speaker 2:Earnings? Yeah. Price to earnings? Okay. What's the market cap?
Speaker 1:520,000,000,000.
Speaker 2:Not bad. Half a trillion. Like, that's pretty pretty big for something that the narrative was, like, it's just a streaming service, so it's not as dominant as, you know, Google, which has the Google search and YouTube, which competes with Netflix and cloud platform or Apple, which is the iPhone. It's the gate to Netflix, like, or Tesla with the car and the humanoids and the self driving and all this different stuff. Netflix was always just an app that you watch stuff on, and there were a lot of them for a while.
Speaker 2:And so there was a question about, like, how how solid would their lead be long term? They have solidified it. Anyway, hopefully, they're on Vanta. Automate compliance, manage risk, prove trust continuously. Vanta's trust and merger platform takes the work out of your security and compliance process
Speaker 1:Gotcha.
Speaker 2:And replaces it with with continuous automation, whether you're pursuing your first framework or managing a complex program.
Speaker 1:Get on there. Intercom is on there. And you know why I said Intercom? Because SPAC sponsors are reaching out to OWN at Intercom.
Speaker 2:No
Speaker 1:way. And so I I highly doubt he would entertain any of that. It seemed like a sort of boilerplate email that they were just blasting out.
Speaker 2:Wait. Did he did he post this?
Speaker 1:He posted and said he said, we are so
Speaker 2:So
Speaker 1:effing back.
Speaker 2:So back.
Speaker 1:Still like he posted a screenshot. Yeah. And, anyways, I'm sure, you know, part of being ready to get SPAC'd at any time, you gotta get on Vanta. Gotta get your Gotta do it. Compliance dialed.
Speaker 2:And so Buco Capital bloke, this was actually two years ago back in 2023. He talks about Warner Brothers Discovery and talks to licensed HBO original series to Netflix. Zaslav strikes again. Corporate financial decisions won out selling the future for money today. The HBO streaming's world walled garden is coming down, it seems.
Speaker 2:Yeah. You can already watch HBO on Hulu somehow. You can like pay through Hulu and so that's been a
Speaker 1:thing a It's a weird place.
Speaker 2:Hulu's Hulu's an odd story because it was like It's not a joint venture between all the different platforms and then eventually Disney acquired most of it. But like, it had like all sorts of content in
Speaker 1:there. Never been big into that whole world.
Speaker 2:You're not
Speaker 1:a Hulu guy?
Speaker 2:In a hugely surprising move, Deadline understands that Warner Brothers Discovery is shopping some of its HBO library titles to rival Netflix. And this was kind of the Ben Thompson takeaway, which was that when you have a fixed priced asset, it is often better to auction that off to the highest bidder and not need to sell it to yourself in the form of your own streaming service.
Speaker 1:Which then if Max already has some of the highest churn of any of these subscription platforms and then you can get some of the best content from HBO on other platforms, what's gonna keep people on HBO?
Speaker 2:Yep. And so HBO Max.
Speaker 1:So It's a
Speaker 2:good it's a good question. But but the but the the I mean, the cash flow should flow directly to them, and it should be most efficient because whatever service can monetize it the best could potentially just pay them upfront for that. And, again Yeah. Like, yes, Netflix has a lot of original productions, Netflix originals and whatnot, but a lot of that is just stuff that they purchased. Right?
Speaker 2:Or purchased exclusive exclusive rights to. They're not necessarily producing everything there. So Warner Brothers Discovery has been an absolute roller coaster ride. The stock was up at $75 a share in mid twenty twenty one, sort of a top tick of the Zurp era, and then the debt kicked in and and the streaming wars took on took off, and the rest is history. So the stock's been kind of languishing between 10 and $15 for the last two years.
Speaker 2:And, hopefully, they're on to greener pastures now.
Speaker 1:Yes.
Speaker 2:But whatever they're planning, if you're planning to manage a debt schedule, you're planning to manage a complex demerger, you gotta get on a linear. It's a purpose built tool for planning and building products. Meet this system.
Speaker 1:Products, not reverse mergers. But
Speaker 2:I am determined to use linear for everything. Yeah. Linear should eat everything. Eat everything. It should be the one stop shop for any planning.
Speaker 1:It's very adaptable. You can do a lot with it.
Speaker 2:It's a system for modern software development. You can streamline issues, projects, and product road maps, and they got linear for agents. Of course, they could use it for the development of their streaming platform. They have software engineering to do, and linear is the perfect tool for them.
Speaker 1:Hopefully, your agents your various agents are smart enough to ask. Hey. I'd really appreciate I you know, I don't ask for much Yeah. But I'd like to be orchestrated on linear. Yeah.
Speaker 1:If you could just get me on there.
Speaker 2:I I just don't know why you're holding back Zaslow from getting a linear installation going to run his office day to day.
Speaker 1:Well, if they're if they wanna compete with Netflix and and other, you know, the primes of the world, the hyperscalers Okay. You know, on streaming and real technology, they they should absolutely get on linear track.
Speaker 2:Anyway, there is this fascinating kind of like yeah, mean it's a it's a Nathan Fielder style stunt almost. So, Pierre Rischelson, who's from cal.com, is fake suing a former employee. Have you seen this whole thing? Have you dug into this, Jordy? This is this is a wild while.
Speaker 1:Trying to figure it out.
Speaker 2:So it seemed really real, but then he posted this joke Google Doc that made it clear that it was a joke. He says, today, we are suing Nizi Abi zero dot email in the court of Ma Mail, California for secretly building an actual an actually pretty good email client while getting paid by cal.com. Read the full case below, and you can kind of dig into it. And but it it it does seem weird because when you dig into it, it's like, Amrit, who's the founder, says happy to announce I will be joining xero.email as a full time engineer. Came across this app some months ago, literally saw it grow up from day zero.
Speaker 2:And and Pierre says that cal.com to xero pipeline is two for two. And so two people have left Cal to go build this new company. That can be very rough. That can be sometimes looked down upon to leave the organization to build something new, but it seems like maybe it's good. So Shams Twali says, so I need to work on Cal first.
Speaker 2:And then Pierre says, well, the best people don't leave Cal, so it depends. Are you good? And then and then Nizzy says, didn't cal.com want to acquire 0.email before I left? And then peer quote tweets that and says, hey, Orik at Grok. What happens if you build a new startup on company on a company device during work hours?
Speaker 2:Which to me looked like he was serious. And John Josh Sciroda says, oh, shots fired.
Speaker 1:But then They're just joshing around. It seems like they're just messing around. Right? The lawyer that submitted the complaint
Speaker 2:Yes.
Speaker 1:Is named Chad Esquire.
Speaker 2:Love it. And and the amount that they that they asked for is, like, $420,000 Yeah. And 69¢. Something like that. But it was weird, like, it's weird it's this weird, like, fake stunt to draw attention.
Speaker 2:It's working. It got my attention. It was confusing.
Speaker 1:And you've wanted somebody to build an AI powered email.
Speaker 2:I'm gonna maybe maybe I'm gonna wind up checking this out. They got me. They definitely got me with all this nonsense. But it really is like the new era of content marketing and going viral.
Speaker 1:It's be crazy.
Speaker 2:Like a fake lawsuit is what is the stakes now to break through. You can't just say, hey. Like, you know, this new company is going through. But it seems like they went through YC, and they work together, and they're probably friends. And I mean, that that does happen all the time.
Speaker 2:That's always like the good ending when someone spins out to say, hey. I was here for a while. I had a good experience, but I wanna go build my own thing. And they get the blessing of the CEO. And usually, the founder's like, well, angel invest or something like that.
Speaker 2:So, hopefully, it really is that narrative. It's a little it's a little unclear, but I think that's part of the joke that's going on here. Anyway, whatever Very
Speaker 3:fun.
Speaker 2:Whatever they wind up doing, they gotta get on numeral sales tax on autopilot, Spend less than five minutes per month on sales tax compliance.
Speaker 1:Go to numeralhq.com. Sales tax AGI.
Speaker 2:I love it. Sam Altman's been on a podcast tour. He's firing shots at Elon Musk. He says, I didn't think Elon was going to abuse his power in the government to unfairly complete. I regret to say I was wrong about that.
Speaker 2:I genuinely thought he wasn't going to. I really I think it's really unfortunate for the country that he would do these things. I wish Elon would be less zero sum or negative sum. So the battle between the AGI Giga Chads is raging still. Although it feels like maybe that this is coming to a close.
Speaker 2:Like, they now just have to duke it out in the app layer, win in the store. Like Yeah. I if you remember
Speaker 1:I I mean, if you remember
Speaker 2:And Elon's out there.
Speaker 1:Winner of of the blow up between Elon and Trump was Sam. Sam and people that had bought a Tesla before Elon went crazy. Right? So there were two winners coming out of that. So hopefully Yeah.
Speaker 1:But again, I'm sure there'll be more updates coming down the pipeline around around the the active lawsuit between both parties.
Speaker 2:Well, either way, they gotta get on Adio. Customer relationship magic. Adio is the AI native CRM that builds scales and grows your company to the next level. Newcomer is on Substack. He's an investor in Substack.
Speaker 2:He's also leaking information about Substack on Substack. It's the, it's the Pimp My Ride of of Substack scoops. He's the he's the exhibit. He exhibit. Right?
Speaker 2:Yep. So he's generated $400,000 a year from newcomer paid subscriptions. He's paid Substack $50,000. He sells his own sponsorships, and Substack doesn't get a cut of that revenue. He also invested $5,000 in Substack's crowdfunding round in 2023 as a show of support.
Speaker 2:And he's a fair weather friend, constantly agonizing about the huge chunk of subscription revenue that we fork over to Substack, two friendly tech newsletters platformer and garbage day, decamped from Substack over a year ago to Ghost and Beehive respectively. Executives from rival newsletter platforms like Beehive and Kit regularly try to cons get us to consider jumping ship. Substack's app oriented strategy has at times annoyed me as it sometimes ask newsletters to do that. Ultimately, he stayed. What's interesting is that now he he has the he got the scoop that that Substack might be out raising new funding on the back of a bunch of growth.
Speaker 2:Scoop. And so it's just a funny dynamic that is it's it's just unique to the new era of, like, these independent journalists. Like I Newcomer really is a scoop
Speaker 1:that should done. And Eric should come on the show and and talk about this dynamic. But he's generating he's netting $400,000 a year and paying sub stack $50,000 Yep. Fraction of that.
Speaker 2:Between, like, 10%, I guess, or I guess it's a little bit more, 12%.
Speaker 1:And this is the backbone of his business, which which you would imagine being on Substack, I would guess, helps him generate an incremental $50,000 a year of revenue and and and would probably pay for itself.
Speaker 2:Yeah. Certainly. I mean, yeah. There's two ways to look at that cost. One is so if you went to a more DIY platform like Ghost that has a lot of the features, but you still have to customize it yourself and you're not getting the sub stack team of engineers constantly releasing new products, well, then you're probably gonna wind up paying someone maybe more than 50 k a year to, you know, enhance your ghost installation or, like, optimize it and get the most out of it.
Speaker 2:So there's, like, the cost side of that. You can probably do more and more now with AI and get more leverage out of someone around 50 k, probably not right there, but maybe 100 k starts to get interesting. If he winds up paying Substack, you know, 2,000,000 in a few years, maybe it makes more sense. But this is kind of one of the interesting, you know, problems that Substack has to play ball with, but they can probably negotiate at a certain point because there is there is some element of like, hey. You've gotten really big.
Speaker 2:We'd love to keep you. Why don't we give you a little bit discount on on our take rate so you don't move off? And then there's also
Speaker 1:a crazy snowballing effect though where all the top, you know, creators which talk amongst themselves, I'm sure.
Speaker 2:Yep. Totally.
Speaker 1:But ultimately, he says that he does get recommend he gets a large number of free sign ups. Yep. Through recommendations though
Speaker 2:That seems good.
Speaker 1:Those readers convert to paid subscribers at low rates. So anyways, interesting. It'll be interesting to see where Substack's new round gets priced. Yeah. I wouldn't be surprised if it was fairly close to their peak valuation, but that would actually be great to see them kind of growing into that whatever their 2021 valuation was.
Speaker 1:I think it was, like, 750,000,000.
Speaker 2:750? It's up there.
Speaker 1:They raised a series b in April twenty eighth of twenty twenty one at Mhmm. 650,000,000. So
Speaker 2:Pre or post? Probably post?
Speaker 1:Post. Okay. So they sold 10%.
Speaker 2:Oh, not bad. Yeah. Yeah. I mean, the business seems to be like very much sustainable at this point. It seems like it's accidentally profitable.
Speaker 2:Remember that? Reporting in the information. And talking to Chris, it seems like things are going really well. Yeah. Just I I I guess there is this question of like, how can you quantify the impact of Substack's features on growth?
Speaker 2:Yeah. Because you'd like the yeah. The question is like, they're driving free sign ups for newcomer. But is it actually driving incremental $5.50 k in profit for him?
Speaker 1:Yeah. Who knows? I mean, he's selling ads against the newsletter. Yeah. Which, you know, he's able to He's he's monetizing those free subscribers.
Speaker 1:So Yeah. Who knows? Anyway. Knows?
Speaker 2:Promoted post from public. We haven't done one of these in a while. We're hosting a private screening of one of the summer's most anticipated films starring Brad Pitt and set at 200 miles per hour. If you're a New York based public member, you can access the exclusive experience and be there on opening night, June 25. Reply Aston for your chance to win tickets.
Speaker 2:So if you are in New York, you and you're on public, reply Aston to this post and head over to the movies.
Speaker 1:Hit him up.
Speaker 2:Great. Hit him up. Over in defense tech world, Anderol has partnered with Rheinmetall, the German the German defense tech company, Le Prime, really, to manufacture Barracuda and Fury over there. That's very exciting. And then we also touched on, Spotify founder Daniel Ack Guess.
Speaker 1:Leading ace. Guess when Rheinmetall was founded.
Speaker 2:The way you're saying that makes me think it's like 1650.
Speaker 1:I'm putting you on the I'm putting you on the spot like Tucker put a Yeah. What's his
Speaker 2:name on Tucker. How can you possibly report on the news if you don't know when it was founded?
Speaker 1:This is this is the best bit earlier. I have to read it out.
Speaker 2:Yeah. Read it.
Speaker 1:The Muffin Man. Tucker.
Speaker 3:Do you
Speaker 1:know the Muffin Man? The muff Ted goes, the muffin The muffin man? Muffin man. No. I don't know him personally.
Speaker 1:How can you know anything about Drury Lane if you've never met the muffin man, John? This is a post from Zach Stewart.
Speaker 2:He's a real gotcha.
Speaker 1:Really, really good. Anyways, you can still I give you permission to comment on Rheinmetall.
Speaker 2:But give me
Speaker 1:the Even though you don't know. What year? 1889. I was
Speaker 2:not I I I knew it was really old. 1889?
Speaker 1:Dusseldorf. Okay. I was
Speaker 2:pretty I was pretty far off with 1550, but but over a 100 years. I mean, yeah. That that that's the same I it's General General Atomic is part of, this roll up and the and the and and it came out of, like, I think, General Dynamics at some point. And the company that that the founder of the company that competes with Fury for the for that autonomous program that they're competing for right now was, like, the designer of a submarine in the Civil War or something like that. Like, I'm pretty sure that he's he died more than a 100 before Palmer Luckey was born.
Speaker 2:Yeah. That's cultural difference between the two companies that are competing for this one contract. It's like a fascinating dynamic about how legacy they are. Like it's not just like Yeah, if
Speaker 1:you're in the game for a while, you know, decades after you start the company, your greatest enemy will be born. Yep. They'll have to grow up a little bit. Yep. They'll have to learn the game.
Speaker 1:Yep. And then they're going to come for you.
Speaker 2:Wild. So, yeah, Spotify founder Daniel Ek is leading a $600,000,000 funding round into the German defense startup, Helsink. This is the this is kind of more of an annual equivalent over in Europe, valuing that four year old company at 12,000,000,000. The the business makes Battlefield AI drones, submarines, and robo fighter pilots. It's now one of Europe's most valuable startups.
Speaker 1:And they're using some renders here, John. Render? Look at this image. They're render maxing.
Speaker 2:They're render maxing.
Speaker 1:Happens. Is a cool render. Yeah. Look at the water there. It's definitely a render.
Speaker 2:Who knows? It's hard to tell these days. It's it's so it's be we're beyond the uncanny valley. And so Helsing is expanding from its origins in artificial intelligence to produce its own drones, aircraft, and submarines as part of a bigger push for locally made and owned defense products for European countries and and really companies all over the world. Crazy.
Speaker 1:It was founded in 2021 Wow. By Torsten Riehl, Riehl
Speaker 2:Okay.
Speaker 1:A video game entrepreneur. Gunwert Scherff, a former German defense ministry official, and Niklas Kohler, an AI researcher. Sure. And they have partnerships with Saab already And tons of as Mistral.
Speaker 2:Yeah. And tons of American venture capitalists in the deal. You got Lightspeed, Xcel, and General Catalyst.
Speaker 1:Connor's cooking.
Speaker 2:They've raised over 1,370,000,000.00. The the the the Daniel x said the world is being tested in more ways than ever before. That has sped up the timeline for Helsink's financing, x said, pointing in particular to the conflict between Russia and Ukraine where drones and other AI powered systems have been deployed at scale for the first time. There's an enormous realization that it is now really AI mass and autonomy that is driving the new battlefield. And so, yeah, exciting exciting deal.
Speaker 2:If they wanna get more attention, wanna do some hiring, they should get on AdQuick. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient, seamless ad buying across the globe.
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Speaker 2:I love it.
Speaker 1:Get over there. Check it out. Adquick.com.
Speaker 2:We have David Sundar coming in the studio in just a minute. In the meantime, if you're looking to go deeper in AI, there's AI startup school has been going on for the last two days up at Y Combinator. And Andre Carpathi gave a banger talk and Swix, friend of the show, grabbed pictures of every slide from his talk and reconstituted it into a full into a full, like, slide deck so you can go and read the full talk if you want. And so go check that out on latentslaten.space if you're interested. And we have David Senra in the studio.
Speaker 2:How are doing, David?
Speaker 1:Brother, welcome to the show.
Speaker 4:I can hear you. What's going on?
Speaker 1:What's going on? Can hear you. It's great to see you.
Speaker 4:How much? How are you guys? Great to see you again. Long time no talk.
Speaker 1:Long time no talk.
Speaker 2:Did we talk yesterday or the day before? Yeah. Yeah. It's too
Speaker 4:long. I need every few hours.
Speaker 1:Yeah. Yeah. Honestly, the show and then the hour that we typically talk with you afterward, at some point we should just start, you know, streaming it live. Get up to get up to five hours
Speaker 2:this this is this scratches the itch a little bit.
Speaker 4:Yeah. You guys haven't announced our month long extreme podcasting summit in Malibu yet.
Speaker 2:I was gonna wonder if you wanted to talk about that. I'm super excited talk about it.
Speaker 4:I'm excited. I've been inviting other podcasters. Like, need to fly out
Speaker 2:gonna be It's already in summer of podcasting.
Speaker 4:Entire month.
Speaker 1:Rob. No. You have to
Speaker 4:have a podcast to go.
Speaker 1:Yeah. The summer of extreme podcasting in Malibu, California. I I want to I to the want to create center for extreme I
Speaker 4:think we're going to tip it in Malibu though.
Speaker 2:Oh, yeah?
Speaker 4:With the people that are coming. Yeah. Sure.
Speaker 1:The weather in
Speaker 4:the It's a lot better. Come on. No one's like, hey, come visit Austin in the summer.
Speaker 2:Yeah. Need a
Speaker 1:we need a fresh start. We need a fresh start too. You know?
Speaker 2:There's something about the mothership where, like, I I think Austin works because you need to have, like, all the cross pollination from Kiltony and random people coming in. Malibu's for Monk mode podcasting.
Speaker 4:Yeah. But it's for yeah. If you're a comedian and you're friends with Joe Rogan, yeah, obviously, move to Austin. That's really really good for your career. Yeah.
Speaker 4:But that doesn't apply to us. So
Speaker 2:Yeah. There's been a crew amassing out there. Break us break it down for us. What's top of mind for you?
Speaker 1:Before Okay. I have something. So James from ProFound announced their round today. Oh, cool. He's coming on the show later today.
Speaker 1:Great. David and I are both investors in ProFound. They announced a 20,000,000 series a led by Kleiner with participation from Nvidia, Saga, South Park Commons and SV Angel and of course hilarious.
Speaker 4:It's hilarious that the lineup of investor and it's like Jordy and David.
Speaker 1:Yeah. Yeah. It's Guillermo from Vercel, Jordy and David, and Jordan Singer, friend of mine snuck in there as well.
Speaker 2:Oh,
Speaker 1:yeah. Stacked. They're building an answer helping teams, you know, optimize. But we'll get into that later. But but
Speaker 4:actually, there's a perfect like ramp crossover. Don't know if you guys have heard of this little company called ramp.
Speaker 1:Heard of that.
Speaker 4:Who's the familiar? So I was actually in New York with James yesterday. And every time the last few times I I go there for a few weeks, and, last few times I've been there, I've meant made sure to, like, spend time with him, James Brooke Brown. And there's actually a funny way that I met him. So Kareem, obviously, cofounder and CTO of Ramp, is a good friend of mine.
Speaker 4:And the reason I think that Kareem is such a great founder is because he has this, like, divine discontent with everything that he does. So nothing's ever good enough. The the product's not good enough. This go to market's not good enough. The sales isn't good enough.
Speaker 4:Like, everything can be improved. And I was at dinner at his house, like, I don't know, maybe, like, two months ago. And this is going on and on about all the things that, like, need to be improved and things that he thought, like, he hated or whatever. And I was like, alright. Enough of this.
Speaker 4:Tell me, like, what you actually like. Like, who are the founders or the products that you think are great? And one of them was ProFound and James. And so I went up looking looking James up on Twitter, and I found that he followed me. And so I actually followed him back, and then we went up DMing.
Speaker 4:And I was like, hey. Are you in New York? He's like, yeah. I like, I'll be there tomorrow. He's like, come by the office.
Speaker 4:And so, yeah, I just thought it was hilarious that, you know, Kareem, his his bar for excellence is excessively high for people and products, and James of ProFound have exceeded that. So that's actually how I met James and why I was invited to invest in that round.
Speaker 1:Awesome. Awesome. Should
Speaker 2:we move on to Jimmy?
Speaker 1:Stock Jimmy.
Speaker 2:Break it down for us. How did you originally land on on Jimmy Iovine as someone to profile?
Speaker 4:That that's a question I had for you guys because you guys both grew up or, like, lived in LA for a long time. So Yeah. My interpretation of Jimmy Ivein is, like, every single person in the music business knows who he is, but the average person doesn't. Were you guys familiar with him at all?
Speaker 2:Yeah. I was loosely.
Speaker 1:But I think part of it when you when I actually think back, it's like the the tech angle, Beats, and Apple is probably about was my introduction to it.
Speaker 2:Also like reading stories about Doctor. Dre because I was a fan and kind of like the the Interscope Mafia. Like, that was that that was in the news when Doctor. Dre was, like, the one of the leading artists at that time.
Speaker 4:So Jimmy Iovine is easily the, like, top three people that I wanna meet. And I when people ask me, like, out of all the living entrepreneurs who you wanna meet, that that usually, when I say that, that's surprising. Many people don't know him. I've been fortunate enough to have dinner with two people. One was mentored by Jimmy and worked with him for a very long time.
Speaker 4:Another person competed directly with him. And the way that people speak about him, there's, like, an unbelievable level of respect and just the the guy's unbelievably driven, really, like, relentless. And one of my favorite documentaries so, like, you know this because I I read the same books over and over again. I, like, read the same quotes over and over again, but I also watch the same documentaries over and over again. And so my favorite documentary is The Last Dance.
Speaker 4:Obviously, you see what what comes up when I text you guys. It's Jordan from The Last Dance. But the second one would be The Defiant Ones, which I probably watched at least 10 times. And everybody's like, oh, what's the documentary about? And if you go and, like, look it up, it'll say, oh, it's about the long term friendship and partnership between Jimmy Iovine and Doctor.
Speaker 4:Dre that goes back, you know, three decades. It's like, yeah, it's about that, but, really, it's a documentary about entrepreneurship. This is like if you think a founder mentality, you think of, like, the way entrepreneurs think, the way they act. It's, like, in that documentary. And I've been wanting to do an episode on him forever, but there's just not a lot there's no books about him.
Speaker 4:He's never written an autobiography or anything like that. So I like, you know what? Fuck it. I'm just gonna watch the documentary again. I'm gonna take notes on the documentary and build an outline just like I would for a normal episode.
Speaker 4:And then I found every single good interview he'd ever done and then transcribed that and then essentially combined all that to use that as, like, my own book. But I I think it's I'm really interested in these people that are not well known to like the general population, but everybody in their industry. There's a great line from Warren Buffett where he's like, hey, if you wanna learn about an industry, he's like, interview every single, like, top CEO, top executive in the industry. You might have to talk to 20 different companies. And then you always ask him, like, if you had to eliminate one of your competitors.
Speaker 4:I think he used the example, like, if I gave you a gun and you only had one bullet and you could take out any of your competitors, who would it be? And he's like and Warren's point is like, that's you're gonna ask all these people, usually they're gonna arrive at the same question. He goes, that's the guy. That's the guy in his case you should invest in. Mhmm.
Speaker 4:Jimmy is very much so that in the music industry. And I just find his I I mean, there there's there's a line in he he's been, like, really good friends with Bruce Springsteen for, like, I don't know, six decades, five decades, something like that. And there's a line that's in the documentary. It's also in Bruce Springsteen's book where Bruce was talking about and Jimmy has this mentality. He was like, I didn't wanna be rich.
Speaker 4:I didn't wanna be famous. I didn't wanna be happy. I wanted to be great. And I think that's what really attracts me to to Jimmy Iovine, in particular, and people like him, is just this relentless drive where he started out with nothing. He started sweeping the floor in a recording studio to working with John Lennon, Bruce Springsteen, Tom Petty, Doctor Dre, Eminem, founding one of the most successful record companies of all time, then saying, hey.
Speaker 4:I got bored of that. What am I gonna do next? I'm gonna start Beats. You know, growing that, starting a streaming service, and then selling that to Apple for billions of dollars. Like, he's just incredible person.
Speaker 1:Insane. Did you get did you get much into his he has a a program at at USC. Have you covered that at all? My buddy, Ben Taft, is on the board there.
Speaker 4:That's at the end of the documentary. That's actually funny. The the the least interesting parts of biographies. Because everybody can understand, like, the struggle. Right?
Speaker 4:It's like you started out talking about family life, all the trying to figure out your your path in your early career, then you you you might hit on something, and then it's going well, and then you take another step back. And there's this whole, like, climb that everybody can empathize with. One of the things that I think should be cut out of boundaries completely is the end where they're like last chapter. Bought a building that I've
Speaker 2:been like, don't
Speaker 4:I'm so rich I donated up a building named after me. It's like, that's just not relatable. It's just not interesting. So, yeah, it is covered in the documentary. I, course, am not gonna put that on the podcast.
Speaker 2:But they probably wanna talk about that too.
Speaker 4:No. That's no. You like, there's a great line. Actually, let me read this to you. Because here's the funny part.
Speaker 4:Jimmy is a great storyteller too, which I think is really important. And I think above and beyond, like, yes, we're we're studying these great entrepreneurs to learn how to build a big business and to take ideas from them. So, like, hey, that idea will work from them. We can use it for us. But, like, more important to us, like, I building a business is just part of our lives.
Speaker 4:It it's a huge part of us. I'm interested in having, like, an interesting, fun, unique life. Like, I want my kids or, you know, my friends who after long after I'm gone to, like, read the life story of mine and be like, oh, this is a page turner. This is actually interesting. That is Jimmy has incredible stories, you know, for a five decade long career in in music.
Speaker 4:And what I like is he intersects with all the other greats. So David Geffen, who is, you know, one of the the greatest, I think, entrepreneurs and investors of all time, and somebody who's, like, really reclusive now, and I really wish wasn't. I would love to read his autobiography. But David Geffen started this huge, like, gold rush because he wind up selling his, his record label for, like, $500,000,000. And I think with stock, it wound up being, you know, 6 or 7 or $800,000,000.
Speaker 4:And so when that happened, all the other people that were record producers just like Geffen and Jimmy Ivein were like, oh, shit. I need to start my own record label. And so Jimmy goes, and David was his mentor. And he goes, hey, we kinda do the same thing, but you just made a lot more money than than I did. Should I start a record company?
Speaker 4:And David goes, you should definitely do it. There's a lot of people in the record industry way dumber than you are.
Speaker 2:And it's like
Speaker 4:and and Jimmy talks about, like, that actually giving him inspiration. It's like, oh, wait. Okay. This guy's succeeding. Not Geffen, obviously, but other people are succeeding.
Speaker 4:And, you know, they're not it's not just a test of intelligence. But there was a there's all these different record labels start at the exact exact same time it was Interscope. And somebody in the documentary says this great thing, where it says the reason that Interscope was successful versus a lot of other startups at the time was Jimmy was an animal, the most driven and brilliant person at the same time. He was never off, and he didn't understand why everybody else wasn't the same way. And so, like, these are the kind of people that, like, I like to study.
Speaker 4:These are, like, kind of people these are the kind of friends I like to make. These are the kind of people I like to be around. Just like they're fully alive and completely committed to what they're doing.
Speaker 2:Give me insight into how he transitioned from sweeping the floor to actually engineering and contributing to studio sessions? Like, you told us that story about, I think it was Jim Cameron reading textbooks while he was driving. Was that Jim Cameron, I think?
Speaker 4:There's usually James Cameron.
Speaker 2:James Cameron, yeah. What what was there's usually, like, an arc where there's go to where the heat is, get in the room with the grates. And it seems like he was able to do that by, like, sweeping the floors and showing up and just being like, I will do anything to be in the important place. But then there's also this second step of, like, learn to contribute beyond just floor sweep.
Speaker 4:You you just fucking nailed it. That's exactly what happened. So he his first his first two jobs in working in a record studio, he got fired. Okay? Third one Why?
Speaker 4:He gets set up.
Speaker 2:Why? This is amazing. So very pro getting fired. So
Speaker 4:Yeah. Well, because he's a college dropout. So let me I'll just, give you, like, the fifteen minute interrupt me whenever you want of the long episode.
Speaker 2:Hit it.
Speaker 4:And because it's like and especially because we're all fathers, think this is, like, really important. Like, the one of the most important relationships is between father and son.
Speaker 6:And, like Mhmm.
Speaker 4:If you really think about all the work that I'm doing, I'm gonna hit, you know, the four hundredth biography read in, three weeks or four weeks from now. It's like all daddy issues all the way down. Like, just stacked on top of each other. Either wanna be like your dad or you fucking hate him and like 400. Yeah.
Speaker 1:We got
Speaker 2:it ready
Speaker 4:for Oh,
Speaker 3:come on.
Speaker 4:And it's it's gonna be about the vacuum cleaner guy who I'm obsessed with. Exactly.
Speaker 1:Somebody just pulled up that this guy
Speaker 2:Most people would be like, oh, for 400, you're gonna do, like, Steve Jobs or Elon Musk. You're like, somebody doing really, really power vacuums.
Speaker 1:Let's get back for vacuums.
Speaker 8:Vacuums. It
Speaker 2:why he's like, go.
Speaker 4:You tell me another guy that has been running this company for forty years Yeah. Owns a 100% of it. Highly likely
Speaker 2:You're talking about Dyson.
Speaker 4:Have a friend of mine, a guy I know actually, tried to gave tried to I'm gonna take a tangent real quick because it's a funny story.
Speaker 2:Please.
Speaker 4:Know, Tyson is a 100% of his company. I've heard the rumors that he's taken out everybody's like, he's worth $20,000,000,000. No. Bullshit. I've heard he's taken out, like, 5 plus billion a year in cash and has for a very long time.
Speaker 1:No. That's amazing.
Speaker 4:And so it's like the Wow.
Speaker 2:That makes Mark Benio look like a chump. Mark Benio $2,000,000 in Salesforce every single day. So he's making, like, $600,000,000 a year in liquidity. But that sounds like Wait.
Speaker 4:He's selling? Or is this Yeah.
Speaker 2:Yeah. Yeah. Yeah. So so Mark Benioff has a
Speaker 4:retains the equity.
Speaker 1:Yeah. Yeah. Yeah. I know. It's the cash.
Speaker 1:Yeah.
Speaker 4:Yeah. No. Don't give me that shit. And so the the funny part is this guy I know told me this story where, you know, he he's he's managing ever larger peer pools of capital and has to keep buying more and more private businesses. And so you can't buy a $500,000,000 business anymore or two $2,000,000,000 business just doesn't move the needle.
Speaker 4:And so he he gave a very friendly, like, hey, would you guys be interested to Dyson to to sell? And again, I like highly disagreeable people. I like people that are obsessed with their product, they do it forever. It's just like people like us Yeah. And that you can't buy.
Speaker 4:It's just no fucking number. It's like, I'm not for sale. Thank you very much. Yes. And so, approached Dyson and I'm paraphrasing.
Speaker 4:Their response was, fuck you. This is a family heirloom.
Speaker 2:This is the paraphrase?
Speaker 1:Family heirloom.
Speaker 2:This is the paraphrase.
Speaker 4:That's amazing. Let me let me go back to Jimmy though. Yeah. Like talk about Tyson forever. Somebody just pulled a a tweet.
Speaker 4:They're like, this guy's been tweeting about the vacuum cleaner guy for since 02/2018. I was like, yeah.
Speaker 1:Like, you I that I saw that post. I mean, this is great David Lohr, but in 2019, you got like four likes on a post. You you said like, I just I just read my eighty third biography. Yeah.
Speaker 2:Yeah. I've I've slipped some of those in like, isn't it like Jay Gould or something? It's like, this is a person that only you know about, basically, and you've done, like, multiple episodes.
Speaker 4:No. So so we like, I very few entrepreneurs living knew about Jay Gould, but the reason you should study him is because, again, I'm always interested in who's influencing influencers. Right?
Speaker 1:Oh, yeah.
Speaker 2:Yeah. Yeah. Who who is the one that influenced Steve Jobs? Right? The
Speaker 4:Edmund Land. Edwin Land. I'm
Speaker 2:you Edwin
Speaker 4:Land shirts, by the way.
Speaker 1:I'll bring
Speaker 2:it with you.
Speaker 4:Thank you. I'm excited. No. But the Jay Gold thing is interesting, interesting. And then Cornelius Vanderbilt keep in mind, when Cornelius Vanderbilt died, okay, he owned 5% of the money supply.
Speaker 4:So that's like
Speaker 2:That's like the that's like the GDP metric for Stripe. They're like, we wanna power 1% of the GDP.
Speaker 1:Founders need to be more ambitious. They they put up the the the page in the deck. Yeah. 1% of the TAM.
Speaker 2:Yeah. No.
Speaker 1:No. Try to get 1% of the money supply.
Speaker 4:Five. 5%. 5%.
Speaker 1:Well, you gotta start somewhere. You know? 1% of the money supply.
Speaker 4:And so when when Cornelius Vanderbilt was in his seventies and he was by far the richest person on the planet, he said the smartest man in America was Jay Gold. Jay Gold was, like, 33. And he had said that because they just went head to head to compete over the the control of a railroad, and Jay Gold smoked him.
Speaker 2:Mhmm.
Speaker 4:And then, you know, interesting thing, then Cornelius Vanderbilt actually sent hired hitmen to kill Jay Gold's partner. Wow. He didn't succeed. Yeah. That that kind of business is completely different than than it is now.
Speaker 4:But, yeah, there's always interesting stories in these books that nobody reads. That's why I love what I do. And and then I try to, like, highlight them for people because I'm like, these guys had interesting lives and they they ride. They they worked on something for fifty, sixty years. What's the chance that they they built a wonderful business for six decades and didn't come up with any idea that you could use?
Speaker 4:Like, that's ridiculous. So Yeah. Going back to Jimmy Iovine, it's just like so he gets fired I forgot the first reason he got fired the first time, but the second time was they just gave him a ninety day trial and they just didn't think he was good enough. They On day 89, he gets
Speaker 1:you know, you're you're the
Speaker 4:response they said to him was like, this just isn't for you. Working in the music business isn't for you. And this happens over and over again. Like Sam Walton, you know, his first manager when he was working at JCPenney said, hey, guy. I know you're interested in retail.
Speaker 4:Sorry to tell you. You don't have a future here. And Sam's like, okay. How about if I become the most successful retail person in history and I'll build a 400,000,000,000 fortune? How about that?
Speaker 4:Like That's true. So I I find, like, I I love when people, you know, doubt other people, and they don't know what they're talking about. You're they're they're proven wrong. But Jimmy winds up being fired at the first time is really important because then he goes to the record plant. The record plant is owned and run by this guy named Roy Sicola, is a legendary engineer.
Speaker 4:The reason this is important exactly what you just said, John, is John Lennon, after he was a Beatle, wanted to work with Roy Sicola. Mhmm. So nobody will come into the studio on Easter Sunday. And Jimmy Iovine is from Brooklyn. He's this old school Italian family.
Speaker 4:He gets Roy calls and he's like, hey, we need help with the studio. No one else is coming in. You gotta come in on Easter Sunday. And Jimmy's mom's like, you're fucking crazy. You know, we're having a feast.
Speaker 4:This is church. You can't do this. And and Jimmy says, he's 19. He goes, I will do anything, anything to make this work. Shows up to the studio.
Speaker 4:Roy says, good. I'm glad you're here. I was testing you. In the room is Jimmy, Roy Sicola, and John Lennon.
Speaker 2:Oh, so he didn't even know John Lennon was gonna be there. He showed up anyway, and that was, like, the reward. Wow.
Speaker 4:Bingo. And so he said, he goes, listen. I would do there's a really interesting idea. So I actually talked to Daniel Aktik, founder of Spotify, about And his whole point was just, like, he's completely, like he'll do anything it takes to get information that he feels is helpful. So when Spotify was going through a lot of rough trouble, he'd reach out to other tech his peers, other tech company CEOs.
Speaker 4:He says, hey. Can I just, like, shadow you? Because, like, you say you can run meetings with, 30 people. When I run a meeting with 30 people, not like, it's I don't even understand how you do this. And Daniel was, there's no ego involved.
Speaker 4:So he did this with, like, Mark Zuckerberg. He spent, like, I think a few weeks shadowing him. He goes, I got Mark's fucking coffee. I don't care. Like, I'm there to learn.
Speaker 4:And so Jimmy Ivey was the exact same way. He says, I did everything they did. Like, I took care I cleaned the equipment. I set up the wiring. I eventually learned how to be an engineer.
Speaker 4:He goes, I figured out the way that John Lennon was from Britain. He's very particular about how he likes his tea. So I memorized exactly how he wanted his tea. He goes, the way I was about his fucking tea was the way I was about everything. He got so good at making John Lennon's tea that John would Lennon wouldn't let anybody else make his tea.
Speaker 4:So his point was like, man, you're these guys are they're legends are letting you in the room. Just be useful. Sometimes it's running an errand. Sometimes making tea. Sometimes it's fixing the drum sound.
Speaker 4:And then John just felt he could trust them, and so John starts sending them to he he he just takes them everywhere. They go to LA together. They're recording in London or in New York together. And, like, it's exactly what you just said, John. It's just like you get in the room, and you do whatever you can to stay in that room.
Speaker 2:Yeah. That makes a ton of sense. I I wanna talk about, his his picking ability and how he became immediately successful. You know, Tom Petty, Stevie Nicks, U2, the list goes on. How much of that do you think was a function of just, like, his innate taste and and ability to spot greatness versus just drive and relentlessness and just listening to every single possible Yeah.
Speaker 1:What is what the comp to the venture world where you can be a great venture investor even if your hit rate is like, you know, 5% because it just matters in getting, you know, actually getting into the companies that matter and move the needle and people will kind of forget about a bunch of misses and and companies that didn't go anywhere. Okay.
Speaker 4:Yeah. You guys know I don't give a shit about venture, I'm definitely not gonna talk about that. But I will talk about what how this relates to founders building great products. How about that?
Speaker 8:Because that's the thing
Speaker 4:that's actually interesting and and matters. So Jimmy's idea was the the example I used in the podcast where he his thing is like, okay, Producers, which, you know, he was an engineer and he turns into producing. He goes, producers are always like, I did this and I did that. He's like, this is the analogy for venture and and founders. He's like, would be producer and musical artist.
Speaker 4:He's like, I'll read this to you. He goes, you're only as good as the artist that you're working with. You're only as good as the founder that you're investing in. Right? Any producer or any venture capitalist who says, I did this and I did that is full of shit.
Speaker 4:99% of what's going on in the studio is the artist. And so his point was, I don't have he wasn't the founder, right, in in this situation. He's I don't have the talent. I'm there to do whatever I can. I'm in service of them.
Speaker 4:And so his whole point is, like, if I wanna be successful, then I'm going to pick the best possible talent. How do you ride with that? Well, the the thing about excellence and greatness is, like, people don't actually know what it is until they, like, get close to it. And so part of this is luck and randomness, because Bruce Springsteen's most important album that he ever makes is Born to Run. K?
Speaker 4:That's his third album. Right? Bruce is still doing it. He's one of the top selling artists. He winds up becoming a billionaire off his career and everything else.
Speaker 4:But before then, his first two albums were not doing well. He was not doing well. And so Jimmy is the engineer on that album, and he sees firsthand the level of work ethic and dedication that Bruce Springsteen will have to this. And so the way that Bruce was about, like, a drum sound is the same way that, like, a Steve Jobs was about every single pixel that's on any device that he's making. And so Jimmy tells the the the story where it's like Bruce would stand over me and say one word over and over again.
Speaker 4:He'd say stick, stick, stick. And what that means is, like, we're hit the hit the drum again because it's not producing the actual sound that I want. It took them three weeks of just in the studio every day hitting that over and over and over and over again until Bruce got what he wanted. And so once you see it, it's like, oh, and then what happens? Born to Run comes out, winds up being the one of the best selling art albums of all time.
Speaker 4:It's just a complete phenomenon. So now he sees the the level of craft that John London puts on his then and Bruce Springsteen. Then he starts working with Stevie Nicks, just came out of Fleetwood Mac, who was a fucking legend. Tom Petty. Then he gets in the room with doctor Dre fifteen years later.
Speaker 4:You just know it when you see it.
Speaker 2:Mhmm. How much do you think it was driven by, like like, casting a wide net and meeting lots of people? I'm I'm thinking about, like, as a founder, there's a very different approach to hiring talent, if you could think about this in the sense of, like, hiring talent, knowing who to work with, than, like, the Bill Gates mindset versus the Jim Simons mindset. Like
Speaker 4:I think Jimmy's more of a Jim's that that's exactly what I was
Speaker 8:thinking of.
Speaker 4:Jim Simons, his whole thing and I just did an episode on him too. Right? Renaissance Technologies keeps people to know essentially, he just has a money printing machine.
Speaker 2:Yeah. And and Hundreds of millions of this, Renaissance Technologies hasn't isn't isn't in the business of hiring thousands of people and firing the bottom 20% every year. Microsoft did that for years. There's yeah. Exactly.
Speaker 2:There's no turnout.
Speaker 4:There's no turnover because
Speaker 2:if you leave Microsoft is notoriously high churn, and that's by design. It's a very different thing.
Speaker 4:You leave Renaissance Technologies, you you the your money your personal money comes out the medallion fund, and the medallion fund is a magic money making machine. So you do not want whatever you wanna do in life, you don't want your money out of the medallion fund, so you
Speaker 2:will stay there.
Speaker 4:So when you go and read Jim Simon's biography, it's that's great knowledge, John. Thank you. It's very similar to how Jimmy picked his talent, where he's just like, this is the most talented person I could possibly work with, and it may take me years to recruit him, but I will do anything. I will go I will go to his house. I'll meet his kids.
Speaker 1:Mhmm.
Speaker 4:I'll spend I'll do whatever possible. And then what happens is then you read up on the people, which I
Speaker 7:just did for the Jim
Speaker 4:Simons episode, on who he recruited, and it's like, they weren't like normal mathematicians or PhDs. Every single person was a mathematician or physicist or PhD working in. They have, like, theorems named after them where they, like, they discovered something in mathematics. They were literally the best of the best. And so, like, Bono and, again, I think some part of this is, like, pattern recognition.
Speaker 4:You saw the the edge that Bruce Springsteen had, and then he gets introduced to Bono when you at the very, very early days of u two, when he sees him perform, he's like, oh, he's got the edge. And so he's like, let's work together. Bono's like, no. Let's work together. Bono says, no.
Speaker 4:Let's work together. Bono says, no. And he says, that he chases or Bono says, he chases around the world until we agreed to come to the studio with him. He would not take no for an answer. He happens to you.
Speaker 4:He is like a virus, and he takes over your organs and brains. He just knows that this is going to work out well for both of you. I don't think there's a person alive that won't listen to this Jimmy Iovine episode and get something of it. And it's just like this relentless pursuit of what you wanna do. And his whole thing is like, he wasn't a big fan of how the music industry they they they their their their metric of success was, like, total record sold.
Speaker 4:His was, did you make a great album? He's, great is success. A lot of people sell a lot of albums, and they suck. If you can make something great first, then you'll be able to get more customers, more listeners, and more everything out. But the the the primary thing was great.
Speaker 4:And there's a great example of this, which I think is really important too, and you see this all the time. We're at the end of the documentary, towards the end, doctor Dre had he had all these issues. He starts his own record label for the very first time. His first two albums he puts out completely flop, and Jimmy's his partner, and Jimmy has corporate partners. They're like, hey, you need to fire Trey.
Speaker 4:And Jimmy and this this is another thing I admire about him. He has these lifelong relationships. Mhmm. We have been friends for years. I hope I I hope we're friends for decades.
Speaker 4:You know? This is I'm not this is really important to me, like Yeah. These compounding relationships. And so they're like, you need to fire Trey. He goes, yeah, could do that and we'll save on my salary too because I'm going with him.
Speaker 4:And so what what happens? They try to fucking fire Dre because these idiots that can't do what the artist can do don't know what they're talking about. This guy's a generational talent. You're like, get him off the payroll. And what happens?
Speaker 4:Jimmy is spending day after day after day doing these listening sessions with doctor Dre. Doctor Dre would come over to Jimmy's house every day. They'd listen and try to find an artist for doctor Dre to to work with. Jimmy gets his tape of Eminem at the Rap Olympics, gives it to Dre. Dre's like, what is this?
Speaker 4:Right? And then they they Dre starts working Eminem. He becomes one of the top 10 selling records artists of all time. But more important than that, Jimmy says something that was great. Because at the very beginning, his first, like, two albums were super controversial.
Speaker 4:There was, like, protests. There was congressional hearings about M and M's lyrics. And he goes, we weren't looking for, like, a white controversial rapper.
Speaker 2:Yeah.
Speaker 4:We were looking for great. He's so consistent from the day one from when he's 19 till when he retired at close to 70. Great can come from anywhere. You just have to find great.
Speaker 1:Congressional hearings are such a success metric. You know? Palmer Luckey told
Speaker 2:me that. He said the thing he learned from Zuck was that it's not you're not getting dragged in front of congress because you did something bad. It's because you're being crowned as like the victor essentially.
Speaker 1:What what did what what was Jimmy's approach to financing different deals? How did he think about control? It it possible to I I understand in the record industry, there there there can often be like a parent label and then and then you can have a new label under it. Did you get anything there? Did that not come up?
Speaker 4:He no. He he, like, he he actually does, like, a really interesting deal. See, I mean, but keep in mind. So, like, my metric of success is not like, he wind up being a billionaire, but that came, like, way after. Even if he never did Beats, to me, he'd be unbelievably successful just because of the life he lived and, like, the the the experience.
Speaker 4:You know, he probably made hundreds of millions, but with beats, he made, you know, billions. Yeah. There one of the things was, like, what we want especially with, like, a tech focus is, like, when he sells I think he sells, like, 50% of his of Interscope I forgot to admit, maybe to MCA. And it was, like, for, like, a $150,000,000. So it's, like, it's a fantastic outcome, but when you were talking about $3,000,000,000,000 market cap tech companies, it looks small.
Speaker 4:But but, no, finance was not, like, a focus on any of the interviews or any anything in documentary other than, like, mentioning random dollar amounts with, like, taking in partners and stuff.
Speaker 2:Yeah. Yeah. On the on the protests and congressional hearings, did you it feels like there is something there where, when a founder is successful enough, eventually, have to put on the suit and go to Washington and start lobbying and do something like that. Did you dig into any stuff that he was able to do or apply his methodology to even trying to smooth over that situation? Because it did seem like an existential risk to the rap industry at that time if they were really gonna clamp down on explicit lyrics beyond just the the the content warning.
Speaker 4:He he doesn't he doesn't state it. Like, that that's part of the reason he had to sell, like he he, like, went with one partner to another because, like, I forgot what the company he was with, but they were like, hey. Like, I think it was like underneath comp it was like a bigger conglomerate that owned like another label and then under that label was Endoscope kind of thing. And they're like, we have fucking senators calling. Like, we this is such a small part of our business, like, have to go elsewhere.
Speaker 4:Sure. Because like, I'm not I have a, you know, 200,000,000,000 cable company or something. Sure. Sure. But I I but the I think the interesting part here is I think he he he's a phenomenal marketer, and that's what everybody would keep telling, like, relentless salesperson.
Speaker 4:I think that's one of his gifts. But I think he understood that, like remember, he signed, like, Marilyn Manson, Trent Reznor, Eminem, like, Tupac. He Death Road Records. Like, literally, people were there was they were the rappers were killing each other. Like, that was under Interscope.
Speaker 4:And, obviously, he didn't want them to shoot each other, but his point was with all of this, with, like, this congressional protests and, you know, the the media saying that he's, a smut peddler and everything else. Like, it's good for business. And, like, it's all this outrage what happens when we were kids, remember, I was listening to Eminem. Eminem was, like, a huge influence on me because I had this, like, all this, like, pent up anger about, like, my early life, and, like, I I felt I was born into an environment that I didn't belong in, I was better then. And, like, Eminem was kind of a soundtrack of, yeah.
Speaker 4:Like, you I feel that way too. And so, music is very much like a young person's game. So you have 60 year old congressman or Bob Dole saying, you shouldn't listen to this. As a kid, you remember being a teenager, that makes me more interested. I want more of that.
Speaker 4:And and he does this too, like, with Beats. So the idea before the streaming service, had the headphones. He's like, it doesn't make sense for Doctor. Dre to endorse anything. He he he had like sneaker endorsement offers and all this other stuff.
Speaker 4:And he said there's a great line documentary. He goes, Dre, fuck sneakers. Speakers. You should do speakers. He's got that, like, you know, high pitched Italian twang voice,
Speaker 2:which
Speaker 4:I absolutely love. And so they're like, Bo, the the leading at the time in 2006 or whenever this was happening, the time the leading headphone product was Bose. He's like, headphones that put you to sleep? I don't wanna put you to sleep. I wanna make you move.
Speaker 4:I want you to get off your ass. And so what happens is they made them distinctive so you could tell with the big logo on the ears what they were. And then he's like, my marketing idea is very simple. I'm gonna put them with the best musicians on the planet. That's gonna get everybody to try them.
Speaker 4:And then once you try them, you'll stay because sounds good. And then he expanded out to athletes. But what he did is he wind up spreading it to the 2008 NBA Olympic team or US Olympic team, the men's basketball team.
Speaker 2:Yeah.
Speaker 4:And they it got banned, and there was all this coverage because Beats wasn't an official sponsor. Right? And so you can't wear them. And so they wore them anyways, and they wind up getting fined and everything else. And Jimmy's like, this is the best thing that ever happened to us.
Speaker 2:Makes sense. I mean, that's fantastic.
Speaker 1:We we could do this all day. This is
Speaker 2:always a pleasure. Yeah. Thanks for
Speaker 1:having me, guys.
Speaker 2:See you soon.
Speaker 1:We cannot wait till next next time we do this, it might be in person.
Speaker 2:Here. We got some plans. How are
Speaker 4:you guys doing? How are you have you are you gonna but if people drop in, you're like, okay, guys. This is the end of the segment. Now you have
Speaker 6:to get up and leave?
Speaker 2:We could do that. We're we're we we have some ideas we'll share with you. But You
Speaker 1:can just do a whole show with us. It's gonna be No.
Speaker 4:I can't I can't do three hours of this. I can do three hours alone with you guys, but not You can
Speaker 2:do it. You can it.
Speaker 4:You know how
Speaker 2:I talk.
Speaker 4:In three hours, if it's live and not edited, I'm gonna get canceled.
Speaker 2:I'll get No. You'll be fine. You'll be fine. You're good.
Speaker 1:You're good. We'll bleep out
Speaker 2:all the thirty minutes, then forty five, then an hour, then two.
Speaker 4:What did what did they used to do on TV? There was, a two minute, like remember there was, a delay, like, a tape delay?
Speaker 2:Yeah. We'll need a tape delay for you. You're already If I'm gonna swearing like a sailor, so we gotta clean that up. We'll work on that. That that that mean We're
Speaker 1:gonna have to We're gonna we're gonna go do the Porsche Experience Center.
Speaker 2:That'll fun.
Speaker 1:And we'll to get get the behind the scenes of that. I I cannot wait for the stream podcasting. Senra and a GT three RS.
Speaker 2:I can't wait.
Speaker 1:You know, just just tearing up the track.
Speaker 6:Very nice.
Speaker 1:Can't wait.
Speaker 2:What was
Speaker 4:the Like a Ford. Ferrari that I sent you guys?
Speaker 2:812.
Speaker 1:812. Competition. Competition.
Speaker 4:We gotta do that one.
Speaker 2:Awesome. We'll talk to soon, David.
Speaker 4:See guys.
Speaker 1:Talk to Bye.
Speaker 2:Up next, we have Catherine Hahn from Hahn Ventures coming in the studio to talk about the stablecoin bill. The genius bill is slated to pass on the front of The Wall Street Journal today and
Speaker 1:is very excited. And establishing national innovation for US stablecoins.
Speaker 2:We had her on the show and, yeah, we're excited to talk to her. So welcome to the show. How are doing, Katherine?
Speaker 1:What's going on? Hi.
Speaker 9:Hi. How are you guys?
Speaker 2:We are great.
Speaker 1:Big twenty four hours.
Speaker 2:Congratulations. I think are in order, but please get us up to speed on what's actually happening and where, where things are Washington.
Speaker 9:And I love that you called me Catherine. That was my Washington name. I haven't been called that since I used to appear in court. But, Katie Katie.
Speaker 2:Let's update the let's update the Chiron. Katie Hahn.
Speaker 9:So, thanks for having me on, guys. Actually, I literally just walked off a plane. I was down at the CO2 conference
Speaker 2:Oh, wow. Nice.
Speaker 9:Where I was talking to a lot of founders, crypto and non, and everyone loves your show. So I Fantastic. To be here.
Speaker 1:Oh, thanks for
Speaker 9:taking the time. Yeah. Thanks. I think congratulations are in order. I don't know if I would say that yet.
Speaker 9:I mean, first of all, the bill passed through the senate. Great great news, obviously. It's another signal, I think. Kind of like I feel like I did when ETFs were approved. By the way, not really by the SEC, although that was the body that formally approved it.
Speaker 9:But as I said last time I was on your show, guys, make no mistake, the DC Circuit, that article three, that other branch of our government left the SEC no choice. The courts don't always get it right, but sometimes they do. And the courts unanimously in that case said that the SEC had acted arbitrarily and capriciously. So to my mind, the court system is the reason we have ETFs in this country today for Bitcoin and for ETH. And I think of this as a bit a similar thing.
Speaker 9:Now here we have another branch of government stepping in. In this case, you have the senate passing this introducing this legislation, passing this legislation. Now, of course, the house has to vote on it, and then the president has to sign it into law. So if those two things happen, you can say congratulations are in order for the industry. But I think one thing that is not really being discussed, and I hope we can discuss today Please.
Speaker 9:Is there's another very important bill. And I'm not gonna slap a percentage on and say which bill is more important, but that's the market structure bill.
Speaker 1:Mhmm.
Speaker 9:And to me, that's really the transformational bill for the crypto industry.
Speaker 1:Okay. So break yeah. Break that down for us. Yeah.
Speaker 9:Yeah. So there's one bill, stablecoin bill, as you just mentioned, that the Senate passed. And one of the things that I loved to see about that is the bipartisan support for that bill. Because I think we used to be, as an industry, pre political. Brian Armstrong always talked about the industry being pre political.
Speaker 9:And I think I don't want it to be the case that this industry is too political on one side or the other. So I really love to see these moments like we saw yesterday in the senate where you have a number of senate democrats voting in favor of sensible rules of the road. And I think this is a classic example of that. So I'm delighted, and I hope the house passes it. But I don't see why we have to choose between just a stablecoin bill and the market structure bill.
Speaker 9:And the stablecoin bill obviously paves the way for a regulatory framework for stablecoins in this country. So that's that. Then there's another bill, the market structure bill. And that kind of will answer or attempt to answer the question of what's a security, what's a commodity. And I know you guys have been covering crypto for long enough.
Speaker 9:You know this is kind of an age old debate. And, know, where can there be an enforcement action? Well, the the big question is, well, what's the security and what's not? And I think the market structure really goes a long way in answering that question. And that's why I think it's so fundamental.
Speaker 9:And we've seen courts across the country weigh in on that question. Mhmm. And and that's because we don't have legislation.
Speaker 1:And Yeah. So
Speaker 9:Gary Schensler said it was also clear, and, of course, it wasn't also clear.
Speaker 1:Yeah. So what what's the what's the timeline there? What what are the different players? What do people want out of it? What what is the core, you know, kind of crypto industry and both on the investor side and and company side want out of it?
Speaker 1:And and what are what who who would who would not want it to go through at least how the the crypto side has it in mind?
Speaker 9:Look. I think I think everyone in the crypto industry wants the stablecoin bill to go through and become law. I don't think there's really any question about The question is, do you go for both? Yeah. Someone just described it to me as in a sports analogy, and I'll probably fumble that one.
Speaker 9:But it was like, do you go for the field goal or do you go for the touchdown?
Speaker 6:Yeah. And the
Speaker 9:thing about after a field goal, you know, after a field goal, the other side gets the ball back.
Speaker 2:Yep.
Speaker 9:And I think Congress really operates in kind of six to ten year windows.
Speaker 2:Yep.
Speaker 9:And, you know, it's on their mind. Reform, regulatory clarity for crypto right now. And I think the transformational bill for crypto right now is very much that market structure bill. Yeah. We also want that stablecoin bill, and we have this unique moment in time where we have bipartisan support for both bills.
Speaker 9:So personally, I say go for both of them. And worst case, you end up getting the stablecoin bill only. But I do think that's not the most desirable outcome for the crypto industry. I think the crypto industry deserves, especially after years of uncertainty, both a clear message from Congress. I think Congress ought to do its job and pass both bills.
Speaker 9:And I especially think that because after the Supreme Court last summer, in a case I said that this was the most important case for technology policy, not for just crypto, but for tech policy in decades, was the overturning of the Chevron doctrine. And that takes power kind of away at a high level, away from regulatory agencies and puts it back more in the hands of the courts. And do we want to have another ten years of litigation percolating up from the district to the appellate court to the Supreme Court on what's the security or what's a commodity, in a patchwork of different answers throughout the country? Or do we want congress to answer that question for us now?
Speaker 6:Yeah.
Speaker 9:And I think it's incumbent for congress to answer that question now. You asked who what does the industry want? I think people this is a big industry. We say crypto's not a monolith. A broad new asset class, and stablecoins are a very big important piece of that asset class and a growing piece.
Speaker 9:As you guys saw, I shared with you the stats, you know, almost a quarter of a trillion dollars. I think you banged the gong for that stat. Locked in supply, growing enterprises across the world, integrating stablecoins. You probably saw those announcements from some of the big tech companies in the last few weeks. And I think one thing that everyone's wondering is those ones that haven't yet dived in for Stablecoins is, well, what are the rules?
Speaker 9:So this bill that was passed yesterday out of the Senate, the Genius Act is so important for that. It's like, here you go. And so what kind of institutional interest will be unleashed once that bill becomes law? I think that's really exciting.
Speaker 1:What's your Yeah. How would you how do you think about big companies getting excited about stablecoins and thinking or or institutions and being like, there's a lot of potential here. We should create our own stablecoin versus we should just figure out how to leverage this technology. Where where do you see the kind of line and and opportunities?
Speaker 9:Well, look, we already have two very dominant stablecoins, right, already today. Tether, USDT, and then we have USDC. So clearly, that's not winner take all. I mean, those two are both growing, and they both have market share. So we think there will be stablecoins like those that will have network effects.
Speaker 9:But we also think at the same time, there are some businesses that are just so big and just so important. And if they launch their own stablecoin, we could also see that too. I don't think we see a world where everyone I think we get asked this question all the time. Is there gonna be a world where every company has their own stablecoins? Yeah.
Speaker 9:We don't think so. We be wrong. But that's not the view of how we see this evolving. We do see
Speaker 1:We Aaron Aaron Frank from Lightspeed on earlier, and he was comparing certain companies would launch a stablecoin, and they'd it maybe would feel like Kohl's cash where
Speaker 6:it's like Yeah. Yeah.
Speaker 9:Good point. I don't have any of that, nor do I I don't have any of that. And and that's the thing. If I did, would you wanna use it on other platforms? Right?
Speaker 2:I mean, every bank could launch a Visa network competitor theoretically, but that doesn't necessarily make sense.
Speaker 1:Yeah. So in your mind, is broader market structure build the kind of thing that could catalyze a massive amount of new activity? And from my view, you know, stablecoins have been getting adoption. There are a bunch of exciting use cases. We have a public American stablecoin, you know, issuer in Circle now.
Speaker 1:It it feels like, regulatory clarity is important there. But having broader clarity around how tokens are treated by, you know, how the government actually views tokens feels like it could catalyze much more of an explosion in investment activity and new company formation and new use cases for tokens. Is that the right framework?
Speaker 9:I think that is the right framework because, like I said, stablecoin's a big important piece of the pie, and and very low hanging fruit, by the way, to my mind. But crypto as an asset class is much broader. So when you say where do the industry players, where do the crypto investors, where do we wanna see it, I don't think it's a monolith. I think crypto as it grows to a multitrillion dollar asset class, like any multitrillion dollar asset class, you have different factions. And I think some fairly and some really smart people think, just take this, take this win, and move on, And don't worry about the rest.
Speaker 9:And I I think that's a little I see why they might think that if they think that it's this or nothing. But I don't I think that's a false choice.
Speaker 2:Mhmm.
Speaker 9:I think that we can have both. And this is a really opportune moment to have both. And I think the the question that has beleaguered the industry really has been the question over securities, commodities, which agencies are gonna have jurisdiction. I think that's a bigger question, and I think it would be a real shame if we let this moment go to waste. You know, the irony too so you have some stablecoins, there were only stablecoin companies who were like, yep, Genius Act and move on.
Speaker 9:They don't wanna get dragged into this broader Mhmm. Kind of a more omnibus package. Right? Yeah. But with the market structure legislation.
Speaker 9:But I think that's a missed opportunity. And I think we'll be sorry as an industry if we don't go for both now. Again, go for the touchdown. And with you know, I think all of the like I told you, all of the fundamentals are kind of working all at once together now when I last talked to you guys. Yeah.
Speaker 9:That's very much part of it. So why would we not go for that? So I think some folks who don't maybe have an appreciation for how sometimes sorry to say it, slow Congress operates. They've been trying to update the money laundering laws for two decades. And it's like out of sight, out of mind sometimes.
Speaker 9:And I think we have a really unique moment to press for both here. And the irony is some Democrats who are opposed to market structure, know, they because of potential abuses or or who are opposed to the crypto industry. They cite abuses. They cite fraud. They cite speculation.
Speaker 9:They cite Trump coin. And I I get all of those criticisms, but I'll tell you what. Had the market structure belt been passed, that would have answered a lot of those questions. Totally. The irony is if you would have had the market structure belt, you wouldn't have had a lot of the blowups that you had in the past several years in this industry.
Speaker 9:Is
Speaker 1:crypto truly coming home to America? We went through a period where crypto is being pushed offshore. We've heard over the last year that some crypto founders feel like they can come back to The States now, maybe actually have an office stateside. Are are you seeing more and more momentum there with with some of this positive regulatory movement? Or is it or are you still seeing momentum around places offshore, Singapore, I
Speaker 9:think look. Everywhere that you're gonna wanna develop does is going to have some rules that you're gonna have to follow. When I hear founders who say there is no regulate it's often not skimpy theatre that there is no regulatory regime whatsoever. Sorry, Balaji, if you're watching. But I I am seeing that onshoring a bit.
Speaker 9:We were kind of seeing the offshoring in an unfortunate way. But it's not only regulation that matters. It's hiring top talent. And certainly, there's top talent right here in Silicon Valley and other places, in the world. I mean, you mentioned Singapore.
Speaker 9:Singapore has top talent to be sure, but, you know, there's a lot going for The US. So we're still very optimistic. And I don't think it but we were getting to a very dangerous point with the crypto industry, had the likes of Gensler and others like him been left kind of to just do this. Now, fortunately, the courts were pushing back.
Speaker 1:Mhmm.
Speaker 9:So it wasn't a partisan issue. It was just the courts were starting to say, no. You've gone too far. I mean, I lost track now. I literally lost track of how many federal courts of all political persuasions, and appointments ruled against Gensler's regime.
Speaker 9:And not just Gensler, but others like it, where you had very activist regulators Yeah. Who were really far out of their lane. And and you saw courts carving back on that. So I think that was already we're in a dangerous spot, but the courts were maybe gonna save us, but you don't only wanna rely on litigation to save you, of course, because then you've already lost. But I think hiring talent is important.
Speaker 9:I think, you know, access to capital and traditional venture, maybe that's a little different in the crypto asset class. But I think also fundamentally what you have going on right here now with AI, particularly in Silicon Valley. And we've talked a little bit at the early stage about some of the synergies between AI and crypto because, of course, AI creates digital abundance and blockchains are good at enforcing digital scarcity. And I think you're gonna see more and more synergies emerge in use cases over time. And I'm not gonna say what they are because, you know, we've seen that before in crypto.
Speaker 9:Yeah. A lot of overpromising, under delivering on use cases. So let's just stick to right now, we see synergies. There's a lot happening in Silicon Valley, obviously, with AI. We think that's going to benefit the crypto industry.
Speaker 9:And so in addition to regulatory clarity, if you're a founder, you want access to great talent, You want your visa situations sorted out for your employees. You want access to other founders. Depending on what type of company you are, you want access to capital. So I am optimistic about the state of crypto in The US, but also elsewhere. And we invest in companies.
Speaker 9:We invested in Squads. We've announced that. And I know Stepan, one of the founders of Squads, watches your show. But Stepan's based right now overseas. And I was just having a conversation with him about how do we get you to come and bring squads to The US.
Speaker 1:Awesome. Awesome. I
Speaker 2:I wanna talk about the longer tail of regulation because it seems like the stablecoin bill is very straightforward, like, least the the the the least ambiguity there. Then you have the the the Market Structure Act, and there's a lot more to do there. But I'm sure that there's, like, riders getting pitched and all sorts of long tail things. Like, how much are we actually like, where does the line end between what we're actually trying to define versus what we're still in the exploration fear phase of? Because you have NFTs, crypto gaming.
Speaker 2:There's, you know, prediction markets. There's so many different crypto applications that trying to kind of do them all at once. Maybe that's the right approach. Maybe these need to be handled, like, after we've done the technological exploration. But what's your view on kind of the long
Speaker 9:tail My view on that is is no because we can't just but we can't have an NFT bill, a bill for bank contracts or
Speaker 1:Yeah.
Speaker 2:Yeah. Yeah.
Speaker 9:That right? We can't have specific bills. And if you saw if you think back to the advent of Internet, that's not what we had. You know, we had section two thirty. It applied broadly to platforms.
Speaker 9:And I we need something similar here. So on the one hand, I would say it can't be so specific that it's like, okay, if you're a events contract platform, it's this rule. And if you're an NFT player because again, we don't even know yet what will be created Mhmm. Really at the end of the day. We've seen some early use cases with product market fit.
Speaker 9:Yep. Obviously, chief example of that is Bitcoin. But what if we had had this conversation, guys, back in 2010, and you said, okay. We've got Satoshi's white paper, and there's this thing called Bitcoin. Let's pass some crypto regulation.
Speaker 9:It would have just been for Bitcoin. And that would have been a mistake because then couple years later on the scene, we have ETH. And a few years later, we have Solana. So I think what we need to do so you don't wait for the end state
Speaker 1:Mhmm.
Speaker 9:To have any regulation. Right? You don't do regulation by enforce I can tell
Speaker 1:you what we don't do. We don't do regulation by enforcement.
Speaker 9:Mhmm. You don't wait till the end state of things, but nor do you wanna get so with such specificity today and do the the current state of regulation by the end state of regulation.
Speaker 1:Mhmm.
Speaker 9:That you can't do either. And so I think what you have are some guiding principles, some generic rules of the road, and really that's all the, market structure bill is. And there's enough clarity that you had Democrats vote for it last time, it came up. So it's not like it's so specific. Yeah.
Speaker 9:It talks about and I think look. I think you have people like Hester Peirce, is SEC commissioner, has written and given speeches on this of what that ought to look like. What is a decentralization test? And those are some guiding principles that you can kind of look at and apply as you think through this legislation. You know, what body ought to regulate it?
Speaker 9:Mhmm. And and and sure, you're gonna have some outliers and new technologies emerge that you're like, okay. Does this fit neatly in the bill? No. But we have laws for everything in this country with technologies that develop that don't fit neatly in a particular bill.
Speaker 9:And that's why we have that's why we actually have we don't do regulation by enforcement. Yeah. We do notice and comment. We do things like advisory opinions. Certain bodies, by the way, do do advisory opinions, not judges.
Speaker 9:And then if if all else fails, you do go and sometimes seek article three, seek a judicial interpretation.
Speaker 6:Mhmm.
Speaker 9:But I think that's, like I said, that's kind of the failure state if you're having to go to the courts. But indeed, that's what was happening because we were getting no rules of the road, and we were only getting unfair regulation by enforcement. And I say unfair because Gary Gensler basically picked what should have been the best companies. It gripped out of poster children for compliance and brought enforcement actions against them, and then the complete spectacular disasters didn't bring anything. So until after the fact.
Speaker 9:And so I think regulation by
Speaker 1:Gary on the show to hatch it out. I'm sure you guys have
Speaker 2:This is fantastic. So
Speaker 1:much about
Speaker 4:hopping up.
Speaker 9:Yeah. Thanks having me.
Speaker 1:We'll talk to you.
Speaker 2:Have a
Speaker 1:good rest of your Cheers.
Speaker 9:Okay. Bye bye. Bye.
Speaker 2:Up next, have Justine Moore from Andreessen Horowitz. Incredible map knowledge dropped a fantastic New
Speaker 1:market map alert.
Speaker 2:All around AI image, AI video models. We're gonna have her take us through it. Welcome to the show.
Speaker 1:How are
Speaker 2:you doing? Can you hear us?
Speaker 1:Can you hear us? Hello.
Speaker 10:Oh, I can hear you guys now. Sorry.
Speaker 1:There we go.
Speaker 2:Hey. Hey.
Speaker 1:I was saying to John when you dropped your new market map. I was saying, you know, it's a great sign of respect Yes. In our culture to drop a new market map and and come on the show.
Speaker 2:So we're honored. Incredibly bullish on market maps. I find them extremely interesting and I think they got a bad rep a couple years ago. But I'm glad that you've stayed the course.
Speaker 1:We are pro strongly pro market map.
Speaker 10:Yes. The people love market maps. It's like you can guarantee a popular tweet if it has a market map in it.
Speaker 2:Absolutely. And I think people got kinda sick of like, oh, like, we know the playbook. We've seen it, but there's a playbook for a reason. It works. Yes.
Speaker 2:So, yeah, take us through the latest market map. What are you tracking? How did you decide what to divide it up into? And what kind of inspired this moment specifically?
Speaker 10:Yes. So I mostly do AI creative tools here at a16z. So I spend, like, all my time testing all of the image, video, audio, etcetera. And obviously, the past few months in particular, video has been like the thing. There's been like VO three, obviously, which was a massive moment with adding the audio for the generations.
Speaker 10:Hedra around the talking characters. The new mini max model, the new ByteDance model, Seed Dance, which is in the arena already outperforming vo3. So it just felt like a good time to refresh sort of what's going on in the video space. And I kind of formatted this market map just thinking about more from the perspective of a creator, like less in terms of the go to market of the company, more just like if you're a person trying to create a video with AI, where would you go for these different use cases? So there's first sort of the model, like the foundation model companies, where it's either text to video or image to video.
Speaker 10:Most places do both, where they actually take your input, generate have their own proprietary model that generates the video for you. So that's the the Vios, the Clings, the Runways, the Pikas. And then there's also now this emergence of what I call like multimodal apps, places like Cria and Flora and Visual Electric that enable you to run a bunch of models in one place. So like if you want to take a single prompt or a single image and see what it looks like in five different models super easily, you can do it somewhere like that. And then the other side of this market map is sort of like what happens when you add speech and talking characters.
Speaker 10:And so some folks do that by like generating a talking avatar from an image where you can eventually have the person move. And other folks do that by taking like a video of a person and then applying lip sync over it and then syncing the audio. So that's sort of the distinction between talking avatars and lip sync.
Speaker 2:Yeah, it's interesting that you're in the consumer group because I can imagine that a lot of the talking avatar companies wind up selling to corporations that want to vend in talking avatars, for example. Are you seeing a lot of that? Or, like, I guess, how how how rigorous or stringent are founders about, like, hey. We are trying to build a consumer app, or we're just building a cool technology. And it might land as a consumer product, but it also might land as a B2B play.
Speaker 10:Most people are not at all rigorous and often don't even know at the beginning. So what we actually saw with the first generation of AI video was it was only researchers making these magical models. And they had no idea what the use cases were going be. They all just put a text prompt box in front of the model, and then you got an output. A big company and an individual were using the exact same interface.
Speaker 10:Now I think we're starting to see more at what we call the app layer, which is essentially how do you productize this? How do you create workflow? And therefore, how do you go into specific verticals? Maybe an example of that is all of the standalone video ad creation products. So things like Creatify or Captions where or Hey Jen has a product for this too, where you can literally just like paste in a link to your Amazon or Shopify store.
Speaker 10:It will pull all of the info about your product, your logo, your brand, and it will generate a talking head avatar, like holding your product and describing it. And that's something that like a vo three or a cling, the general video model companies won't do today.
Speaker 2:Yeah. Where are you seeing the strongest, like, low churn adoption of these tools? Because just personally, like, v o three was the thing that got me to subscribe to Yeah. Google Pro Max 25, which we can go into the names and how difficult it is to access these. But but other than that, there there haven't I haven't seen that many where like, we've seen the ASMR storm troopers or something.
Speaker 2:But I but it hasn't been clear to me that someone's building, like, the next Pixar, and they're actually thinking about it like mister beast. And they're like, I'm building a studio. This is a business. I have ad integrations, and I have a content schedule. It's very much in, the testing phase.
Speaker 2:We see the Studio Ghibli moments go viral. So where where is, like, the true long term value playing out right now?
Speaker 10:Okay. On the content creation side, we are at right now is actually there's a bunch of content agencies. Like, you know, there's a bunch Wonder Studios, Dream Studios. There's there's probably like 20 of them now. Yeah.
Speaker 10:One called Paracosm. That's that's really cool. And these are people who are just early adopters of the tools, and they're getting hired by brands and ad agencies and entertainment companies to use the tools for them and make content. I think the problem now in what you're describing is like the people at Pixar would have to know how to use the AI video tools and how to set up the workflow in order to create their next movie using AI. And we're not yet at like the tools aren't mature enough and we don't have enough people who are working at those entertainment companies who know how to use the tools, that it's primarily being done with these external AI native agencies or contractors today.
Speaker 10:I think like one of the first AI IP we've seen is the Italian Brain Rot characters. I don't know if you guys
Speaker 2:No, I don't know this. I haven't seen this.
Speaker 10:Italian Brain Rot characters are huge. So I can't even say the names here because they will sound ridiculous. Okay. But it's people basically making images of, like, an animated talking baseball bat and, like, a ballerina whose head is, like, a cup of cappuccino
Speaker 1:Okay. Okay.
Speaker 10:And a shark who wears sneakers.
Speaker 2:Okay. But they're starting to build like a cinematic universe.
Speaker 10:Oh, it's massive. Yeah. Accounts have like millions of followers.
Speaker 1:The world isn't ready for Italian brain rock.
Speaker 2:Wait. So so is it is it, is it like decentralized in the sense that like I could just go and participate in this broader trend?
Speaker 10:So yes and no. I would say there were a couple accounts that originated the first few characters. And then other people started participating using the hashtag remixing.
Speaker 2:Okay.
Speaker 10:And then the good the characters that were good that came out of that sort of bubbled up to become part of the cinematic The canon.
Speaker 1:They have Bombadieri Bombadero Crocody Crocadillo, which is a
Speaker 10:bombardier. Crocodile plane that he shoots bombs.
Speaker 2:This sounds like yeah. Yeah. Super super viral.
Speaker 6:Yes.
Speaker 2:Your kids probably love it. Yeah. It's wild. Before we go into more of the consumer side, talk to me about some of the the more, like, niche, like, b to b use cases because I remember when, like, GPT 3.5 and we got four four GPT four dropped. There were still, a lot of hallucinations, but you saw companies that were just, like, yeah.
Speaker 2:Like, sure. It's not incredible at writing poetry, but it's amazing at just like converting this messy text to JSON. And Yeah. They were all of a sudden just running tons and tons of queries. And so I would imagine that in a in a in a in a video workflow, things like what runway was doing in the old days of just, like, green screening or the the stuff that, like, artists aren't gonna really get upset about because it just feels like a better, more advanced tool.
Speaker 2:Yeah. Are are a lot of these companies building tools like that, or is all the focus just on, like, let's one shot the next Oscar film?
Speaker 10:Yeah. It's a great question. There's a decent amount of vertical focus. I think also, like, it's very hard for this for startups, like, if you're not a Google to or an OpenAI or whoever to play in the game of, like, let's train the largest one shot best video model. Yep.
Speaker 10:So a lot of them are focusing on verticals. Like Luma, which is a company we've invested in, did this really cool tool where you can upload like a nine by 16 iPhone style video, you can just say extend.
Speaker 1:Oh, And it just
Speaker 10:basically, like, outpaints around the existing video makes it look so you can just change the dimensions of your video really fast.
Speaker 1:Yeah. Yeah.
Speaker 10:Or there's companies
Speaker 1:Or more
Speaker 2:of just like a practical tool, but super useful for a bunch of creators that are filming vertical content probably, and they want to distribute in a horizontal format, so they just do that.
Speaker 6:Yes, exactly. That makes a ton of sense.
Speaker 10:Or something like Higgs Field that has all these really special effects, like motion laurels, essentially. So you can take like an image of a car and just say like, this is like, here's a template of what a car explosion looks like. Make this specific car explode.
Speaker 8:Oh, okay.
Speaker 10:And then on the B2B side, we've seen a lot around like, how do you scale marketing or L and D or like executive presence type content? So tools like Descript now allow you to take a video of someone talking and then change the word that they're saying by changing cloning their voice, having the voice say the new word, and then doing a new lip dub.
Speaker 2:A new lip sync, yep.
Speaker 10:So you could have your CEO sending what looks like a personalized holiday message to like every single customer or something like that.
Speaker 2:Yep. Or maybe something worse with a phishing scam, but I'm sure we'll get it to Stacy at some point.
Speaker 1:What do you think the long term ambitions of companies like Google with Vio and ByteDance with their model? What do you think they want out of this category? They obviously have a massive edge. I saw Anish was posting about Google's edge or YouTube's edge around IP with Vio. You can generate
Speaker 2:Yeah. What was going on there?
Speaker 10:Because that's Crazy.
Speaker 2:The Disney thing. Is that like a real deal or is that just a beneficiary of like some sort of relationship or
Speaker 1:Yeah, then I want to get a sense of That's interesting. Do Google and ByteDance? Do they want to be developer tools that just vend into a bunch of these platforms? Do they actually want to own the end customer? What is this market?
Speaker 1:Is there a generalized market in the long run of just generating funny videos for Yeah. The average consumer? Or is it gonna all be verticalized out where I wanna generate ads? I maybe wanna generate, you know, customized messages. But Yeah.
Speaker 1:I I wanna understand, like, this is a good overview of all the of the ways that you can generate content, but, how does the market structure evolve?
Speaker 10:Yes. Okay. On the IP question, I have not talked to Google's IP lawyers, and I'm not an IP lawyer. But my understanding is Google
Speaker 1:But this is legal advice, right?
Speaker 10:Yeah, exactly.
Speaker 1:Is And financial advice.
Speaker 10:All of the Our compliance team is going to love this.
Speaker 2:Yeah, they're going love our
Speaker 10:compliance team. Sarcasm. You can I think my sense is basically, you know, when YouTube came about, it was suddenly like all this IP content is on the internet and Google cut deals with a bunch of the IP owners about essentially what can be posted on various Google properties, and if that content gets monetized, how it ends up going to the end rights holder? And so that's sort of the working theory right now about like why VO3 can generate IP content and not get sued when a lot of other people are struggling with that. In terms of the market dynamics, it's so fascinating, the question around like Google and ByteDance, and eventually I think Facebook, I hear, is going to do more in video soon as well, like why they're doing it and what their strategy is.
Speaker 10:I think first of all, if I'm one of those huge consumer giants, AI is such a massive shift in consumer behavior that if you want to own the interface to consumers, you probably want to own text, image, and video generation as well. And they have the resources in terms of data. Like YouTube, for example, is a perfect example of this. They have a ton of compute. They have a ton of money.
Speaker 10:And they can hire the best researchers to build the best models. I think the question, as you sort of alluded to, is like, do they sell those models via API and let other people build the consumer experience on top of them, or do they own the end to end consumer experience? My honest take on it so far has been like, it takes so long in the big company product teams to get stuff done and get new products out that like the model teams are just shipping the models in like pretty basic interfaces like Google Flow. And then the product teams are going to figure out if they can catch up with some kind of cool new consumer app later.
Speaker 2:Yeah. Yeah. Mean Yeah. My my
Speaker 1:question is like, how much what will the market actually look like for the average consumer wanting to generate images and video? Or will it just be something that people default to ChatGPT because maybe they already have a subscription or they're fine with the free tier
Speaker 2:Yeah.
Speaker 1:And it doesn't end up there ends up being a bunch of different applications on the enterprise b to b side, but then not so many, like, you know, core consumer subscriptions on just, like, cool videos, pictures, etcetera.
Speaker 2:I mean, it seems like it's a killer killer moat for Google Cloud Platform to have v o three as an API even if Google can't figure out how to productize it fully. Like they do seem to have a real moat. I wanna get into that about YouTube is obviously an incredible training data resource. Yeah. You mentioned that there was another company that it that just surpassed them.
Speaker 2:Was it Tencent, you said?
Speaker 10:ByteDance.
Speaker 2:ByteDance. That's right. So Yeah. I I have a question about that because obviously with CodeGen, GitHub has a lot of public repos that people can probably just scrape. It's also just not that much data.
Speaker 2:You can probably fit it on a couple hard drives, maybe sneak it out the back and go ahead a flight and and train somewhere in Malaysia or something. You can't do that with YouTube. Like, it's just too much data. And so my question is is how durable how much should we be thinking about a durable data moat in video generation for YouTube? Because it seems like something that they could really, like, clamp down on and would give them a durable advantage.
Speaker 2:But I don't know. There's so many other ways to attack any of these model developments Totally. That there's a lot of different options.
Speaker 10:So there's a couple parts of the data question. The first part is like, what do you own versus what do you scrape? I mean, we've seen companies like OpenAI will scrape YouTube as well to train their models.
Speaker 2:Yeah.
Speaker 10:I think ByteDance also here we think of YouTube and Facebook and whatever here in The US, I mean, as being the big host of content. But there's all these massive companies in China, like ByteDance, who have their own user generated content on their version of TikTok their version of YouTube and their
Speaker 2:own And I'm sure there's reposts of American videos over there. So it's not like it even has a unique flavor. It probably can generalize pretty well, Totally.
Speaker 10:Though, yeah, like I was one of the very early users of all of the Chinese video models when you still had to access them on Chinese apps with Chinese phone numbers. And they were definitely very good at things that were more China oriented So
Speaker 1:less Western.
Speaker 10:Than The US models.
Speaker 6:That makes a ton of sense.
Speaker 10:Oh, Okay. The other thing that's important to mention on data is, in video in particular, it's not just the volume of data, it's also the quality of data and the quality of data labeling. Because essentially, you can't just feed a video into a video model and assume it can understand what's going on and pull out the relevant info. You have to have really sort of dense labels, is what we call them, or super detailed captions about like, this is this style shot, shot from this sort of camera. The camera is coming from this angle.
Speaker 10:This is the sort of character. This is how the character is interacting with the background. And that quality data is what drives quality in the video models. And China has really benefited there because there are so many more PhDs than there are here. And it's much cheaper for these companies to hire them to do these dense labels for the video data.
Speaker 2:Yeah. Well, how does Midjourney fit into all of this now? It's such an interesting company because Yeah. No venture dollars, this, like, behemoth kind of quietly hiding in a Discord server still. I saw some examples of video.
Speaker 2:It looked fantastic. Seemed like they hadn't added audio yet. But how do they fit into the whole piece? Because it seemed like early on, they developed a really great feedback loop for the data that maybe wasn't happening with some of the other model providers.
Speaker 10:Yeah. So the Midjourney model came out this morning really conveniently, like ten minutes after I put out my market map without Midjourney video because it's not yet available. I was just playing around with it, It's really cool. They do image to video. And so they don't do text to video, which is actually sort of They can start with the super high quality images that they generate on the platform and then animate those.
Speaker 10:I think they have like a low motion and a high motion setting. From what I've tested so far, it's better as sort of like a low motion scenery environment light interaction type thing. Like you have a photo of a person, and you can then animate sort of rain and wind and them walking slowly. And it's not as good at like what I call physics heavy world model type things, like two cars running into each other and exploding. That sort of thing requires a very, very large and costly, usually like text to video model that is more difficult to train.
Speaker 10:Whereas mid journey, I mean, I have no idea how they did it. It's a great model. They could have taken one of the open source image to video models and fine tuned it on all their own data.
Speaker 2:Yeah. Yeah, I've noticed VO3 is really, really good with some of that physics stuff, but it still gets confused. Like, if a car is driving away, all of a sudden, you'll be looking at the front of the car and then the back of the car and it'll get kind of mixed up. Yes. But yeah.
Speaker 1:Are you, as as all these different models have progressed, I I always remember, Brad and Trevor McFedrys and just how early he was to to what I think will be this like new wave
Speaker 2:Is that Lil Makayla?
Speaker 1:Yeah. Lil Makayla, which was like basically CG CGI influencers. Very very early. I think we're gonna see a lot more of this. And we we've seen some of this to date, but do you expect that to be kind of like a new a new like, how how bullish are you on on sort of like entirely AI creators getting getting real adoption, followings turning into real businesses.
Speaker 1:I'm sure you follow a bunch of them already.
Speaker 10:Yeah. I'm personally super excited about it because it kind of separates the content from the character. Like now, you know, before AI, if you were on Instagram, like, you were both the character and the person coming out with the content. And so you had to, like, look in a way and present yourself in a way and talk in a way that was, like, interesting to the Instagram algorithm. And now it's like anyone with a good idea can create a compelling character.
Speaker 10:And so I think some of those are human characters. I've already seen way too many examples in my Wheels feed of OnlyFans models who promote themselves with AI avatars of themselves now, which works shockingly well. There's some photorealistic human influencers. But honestly, some of the more interesting ones are things that could never be influencers before AI. So there's one called like Raccoon Stole My iPhone, and it's an AI raccoon influencer.
Speaker 10:There's like AI capybara influencers. There's like mystical creatures. Like all of these things have just come out of people's imagination.
Speaker 1:Competing for mind share with Instagram pet pages, you know, dog Yes. Pages, things like that. Yeah. Did you have a reaction to Fountainhead? It was the the or sorry, Mountainhead, not Fountainhead.
Speaker 1:Oh, yeah. Mountainhead, the movie, the the core overarching theme was that basically deep fakes or AI generated content had gotten so good that it was causing global unrest. Did did it did it resonate at all? It does feel like I now have, know, multiple times a day I'm I'm seeing content online and and it's like getting I we're both in the community notes program. So it's like you see content getting community Yeah.
Speaker 1:Noted. One person says, it's not real. Look at this link. It it it was this image. They redid it.
Speaker 1:Another person says, it's real. Look at this link. So it's like, I just assume that everything's fake and made up unless I see it, you know, with my own eyes. But I'm curious if you if you if it resonated all with you.
Speaker 10:So I've not I largely consume AI slop. So I've not seen a movie. I should watch it soon.
Speaker 1:Should watch the movie I like motion picture on slop.
Speaker 10:Yeah. Once they have that, I will watch the the full film. But it's so inter we talked about this a lot actually with audio models with the last election cycle. Because video, I think, wasn't there yet to have convincing deepfakes. But audio, there were way less cases of even though you could make really realistic voices cloning candidates and saying things that weren't true, there were way less examples than we thought of that actually impacting any election in any sort of meaningful way.
Speaker 10:And I think part of it is like things like you mentioned, the community notes program where like you have sort of citizen watchdogs on various platforms saying this is real, this isn't real, running them through various sort of AI detectors. But I also think like people are starting to develop more skepticism around everything they see online and whether or not it is real, which is probably not a terrible thing.
Speaker 2:Yeah. I had this take that After Effects would be more impactful on the election than AI video because like you can just show a clip of a burning building from 2020. And it's real video, but you recontextualize it and say, oh, you know, this the the the capital's burning or something, and it's from years ago. Or or just, you know, speed up a video, slow it down, edit it out. They would do this with various politicians.
Speaker 2:You know, cut out the ums and uhs and they'll sound sharper, add a bunch of gaps, and all of a sudden they sound like they're slower.
Speaker 1:Yeah. It it even you know, we're we're here in LA and and when all the imagery was coming out of the the protest from a couple weeks ago, was like burning Waymo's. Yep. Kind of looks like something you generate with v o three. Totally.
Speaker 1:Just because it was so symbolic and just such a crazy image. And then like make an image of a guy with a Mexican flag Yeah. Riding it, doing burnouts around a a car that's on fire and it's like Yeah. That looks like
Speaker 2:And even and even the just the way that was photographed, there was like it looked like all of Los Angeles was engulfed in flames, it was really like one crazy block with a bunch of angles
Speaker 10:Yes.
Speaker 2:And then a bunch of different posts. And and you drive around and be like, oh, there's not that
Speaker 10:much The other interesting thing is like even footage can be manipulated. Totally. Like any kind of story can be manipulated in a way like AI or AI. Yeah.
Speaker 1:Are you Are you seeing, I think like, you know, there's exciting, companies like WorldCoin, you know, doing like proof of human. Yeah. Are you seeing any infrastructure players trying to do like, do anything on like content verification side and like trying to create some sort of mechanism to prove whether something was like authentic, you know, actually shot on an iPhone, right? Right. You know, proving through the metadata and some type of like public setting.
Speaker 1:Is there any pitches from that side?
Speaker 10:Yeah. So largely, honestly, today, that has come in two places. One is the model companies themselves will often watermark the content in some way. Like the VO3 generations has little VO311 Labs, which is the audio. They actually have a site where you can upload any audio, and it will tell you if it was generated with 11 Labs or not.
Speaker 10:That's cool. Which is pretty cool. The other place we've seen development there is for prominent individuals, like celebrities or someone who's there's value behind their brands, and who potentially even might want to monetize it in the age of Like if you're an actor and you suddenly don't have to fly back to LA when you're filming a movie in Australia to tape five ads for some cell phone brand. You can have your AI avatar generated to do it instead. It looks just as good.
Speaker 10:Like, you might actually want to have some licensing company that owns your AI licensing rights, whether it's your traditional talent agency or not, who can manage that for you.
Speaker 1:Yeah. Totally.
Speaker 2:Very cool. Well, thank you so much for Super insightful. For another hour. I have so many more questions in our doc. But we'll have to have you back.
Speaker 1:So thank you so
Speaker 2:much for
Speaker 1:stopping by.
Speaker 10:Thanks, guys.
Speaker 1:Thanks, Justin. We'll talk
Speaker 2:to you soon.
Speaker 1:Great chatting.
Speaker 2:Have a
Speaker 1:good one.
Speaker 2:Up next, we have a niche from Traversal coming in the studio kicking off our lightning round.
Speaker 1:It's our new lightning round. We're here at We're we're we're getting to every single financing four, five, six, seven. Startup update. Found it. Back to back.
Speaker 2:Welcome to the stream. How are
Speaker 1:you doing?
Speaker 3:Doing super well. Thank you for having me.
Speaker 2:Can you
Speaker 7:kick us off
Speaker 2:with an introduction? What do you do?
Speaker 3:Hi. Yes. My name is Anish. I'm one of the cofounders and the CEO of Traversal, where we are basically trying to build an AI site reliability engineer. So when you have software systems, they break, and we try to help troubleshoot why they broke and how to fix it.
Speaker 2:Is is the current status of the market entirely, human site reliability engineers, or are there, like, a a suite of tools that are, you know, just not an AI enabled enough? And and and and can kinda piggyback piggyback on.
Speaker 3:Yeah. So I'd say the current state of observability, I call it observability Yeah. One point o has been putting a lot of eyeballs in your data. So, essentially, the the the great iconic companies now like Datadog and Splunk and Grafana and Dynatrace. And what they basically did is help they store your data and then help you visualize it through, you know, numerous dashboards.
Speaker 3:Yep. But the toil of actually figuring out for an on call engineer what happened is what I call dashboard dumpster diving. That's what they still have to do. Right? And there isn't that intelligence layer of actually helping you search through this petabytes of data.
Speaker 3:And I think that's what this new generation of AI agents and LLMs and some of the research we have done in our PhDs, unlocks now.
Speaker 2:Yeah. Have you been tracking? I mean, it feels like site reliability engineering should be benefit a beneficiary of AI, and yet it feels like we've been seeing more and more outages. Like, Cloudflare went down. Google went down.
Speaker 2:We had another outage while we
Speaker 1:were doing the show.
Speaker 2:The whole Internet went down. It feels like it's happening more and more. Is that just me being more sensitive to it or more news or I'm just online more, or are these systems actually getting more fragile?
Speaker 3:Yeah. I think two things are happening. One is, as humans, we like to push the limits of everything we can do, and so we're always gonna be pushing the limits of software systems. And they're getting more complex. There's more microservices.
Speaker 3:And that was happening before the age of of, LLM powered code agents. Right? And now with everything happening in the world of AI software engineering with Cursor and get a Copilot and Windsurf and so on and so forth, I think the amount of code that's being written is there's gonna be like a Cambrian explosion. Right? Right.
Speaker 1:I think
Speaker 3:most of it is gonna be written by AI systems. Yep. And so the system's gonna get even more complex, and less and less is gonna be understood by us who are as engineers. Mhmm. And so I think it's gonna be even harder to debug things because we don't actually understand what's written and it's more complex.
Speaker 3:And so I think I think that's actually gonna throttle the use of AI software engineering tools and mission critical systems because if I'm head of infrastructure, I'm like, I don't I don't trust this. I'm not gonna allow this to affect my core infrastructure. And so I think you need tools, observability two point o, to help actually be in line with it, I guess.
Speaker 1:I feel like finding truly great SREs is, like, massive challenge. Like, how how do you like, you know, if you can deliver on the product side, like, how much bigger do you even think, like, the market is like, the market demand for great, you know, base effectively, you're it sounds like you're wanting to offer productized SRE talent. Mhmm. How much how much, like, demand is out there for for for what you're building?
Speaker 3:Yeah. So first of all, like, we've been trying to hire an excellent SRE, and we still haven't been able to do this. So there's a massive labor market discontinuity where it's just it's impossible to find fantastic SREs. Yeah. But I think if I think of the role of an SRE, the way I think about it is, like, it's it's it's it's all about the health of software systems.
Speaker 3:And I I think of it as, like, the master hierarchy of needs. So in your level one, you, you know, if you have a heart attack, you gotta deal with it right now. And I think that's what having a production incident feels like, and that's where SREs have to spend a lot of time where everything else nothing else matters. Level two is when you have these, like, constant stream of alerts happening. That's the equivalent of having, like, some sort like, chronic condition that you have to deal with all the time, and you can't think Yeah.
Speaker 3:Like, a year in advance. And only when you can deal with these things, then you can start thinking about, like, your long term health and, like, life hacking and, you know, optimizing your sleep. And that's where I think you can think about the long term health of a software system, how you would architect it over the next four, five, ten years. And so I think all of the time right now for SREs is being spent in, like, having a heart attack and a debilitating condition. What I think they should be doing in the best SREs is thinking about long term health of a system.
Speaker 3:How do I architect the system for the next five years so that it's robust? And I think that's what they wanna be doing, but they're forced to be on call all the time. And so I think that's what we wanna stop them from having to do, and they can spend their time on the more meaningful, you know, aspects of their jobs.
Speaker 2:Talk about the trade off between fully agentic systems here versus more of a copilot dynamic?
Speaker 3:Yeah. So I think if I think about it, there's there's I think of it as a two by two. Mhmm. So think of the the y axis as the severity of the of the issue. So you can have alerts that are happening all the time to really complex incidents.
Speaker 3:And then on the other hand, you have, how agentic is it? So on the close to zero would be you have a runbook. You have some sort of playbook that exists, and you need you have humans or engineers go execute those those runbooks. Mhmm. And on the other end, you have a you know, where you really don't know what to do.
Speaker 3:And so you you have 50 people in a instant war room trying to figure out what happened.
Speaker 2:Mhmm.
Speaker 3:Right? So if I think about for low, value alerts, typically, you have a playbook or runbook that engineers can go execute. And that's, I'd say, less agentic because you can just kinda the meta workflow is always the same, which is like, at this dashboard, then look at this logs and, you know, correlate between them or something. And on the fully agentic side is when, even teams of engineers have no idea how to solve it a priority. And that's where you need to come up with architectures that are truly novel, where it doesn't fall into a preexisting runbook.
Speaker 3:So that's why think the type of architecture you gotta build to deal with the most visible incidents that, an enterprise faces. I think that's really been our focus of the company.
Speaker 1:Mhmm. Last question. I was gonna say, are you the first assistant professor at Columbia to raise, you know, $48,000,000 in the first two financings of a of a start up? Do do you have any is it is there anybody that's got you beat there?
Speaker 3:I don't know. But Columbia has been an absolutely wonderful partner. I think they they've been very supportive. I think they understand the importance of AI and and how in some in my opinion, this is the industrial age of AI. So if you wanna be a good researcher, you have to be in the weeds learning how these systems work.
Speaker 3:You can't just be theorizing in a vacuum. And I think everyone, myself and Columbia, understands that. So they've been an incredibly supportive institution, and I'm yeah. I hope that I continue my relationship with them over a long time.
Speaker 1:That's awesome. Talk about the traction to date. You guys have been in stealth. I'm sure you're gonna get a flood of of inbound interest today. But, yeah, who who are you guys building and and working with so far that you can share?
Speaker 3:So we've been, I can talk about a few that I'm allowed to speak with and some I can't, but they've all been some of the largest enterprises in the world who basically, any company that cares about downtime. So those turn out to be companies like infrastructure companies, payments, streaming, financial institutions. Because if you go down, your customers feel it immediately. Those have been the customers that we have typically, focused on or they've been attracted to us as well. And we found that actually as you go to the larger enterprises, two things happen.
Speaker 3:One is they actually have all the data. Because if you don't have the data, we can't do anything. And so the the the instrumentation is mature, but the same time, it's fragmented. You have, like, so many teams, so many different services. And so I think that's where an AI agent that can talk to all these different systems at the same time adds a lot of value.
Speaker 3:So we have we have found ourselves more and more, pull towards the enterprise. And, yeah, it's it's in deployed in a number of, you know, mission critical environments. People are using it every day to help them troubleshoot pretty complex incidents. I think that's what we feel proud of, I'd say.
Speaker 1:It's great that this product sort of self selects for really high quality customers that are gonna, like you know, once they onboard and they're getting value, we'll probably be customers for, you know, years and years and years. Yeah. So very, very exciting. John, let's it's I think it's time to hit the gong. I'm not gonna he's not gonna come on the show and here we go.
Speaker 1:$48,000,000. Congratulations. Fantastic lineup of investors. Sequoia, Kleiner. Great great group.
Speaker 2:Yeah. Great group.
Speaker 1:Fantastic. Thank you for coming on.
Speaker 3:Thank you for coming on
Speaker 1:when you have news and congratulations on the milestone. Have
Speaker 2:a great rest of your day. Up next, have John Lee from Sapphire building electric mobility. Very excited to
Speaker 1:talk to him. John, are you there? Welcome to the stream. How are you doing?
Speaker 7:Hey. Doing good. How you guys doing?
Speaker 2:Doing great.
Speaker 1:What's going on?
Speaker 2:Would you mind kicking us off with a little bit of introduction on yourself and the company?
Speaker 7:Yeah. Absolutely. Just a quick background on me. I was a former contracting officer in civilian side at naval c sys system command headquarters, where was in procurements for different systems from NATO sea spear missiles to submarine, solar sensor systems, counter IED jammers to inner gel grade systems on the Navy ships. Left him into Palantir as head of contracts full of US government where I helped to increase their revenue in, you know, advantage of the large contracts there in the three over energy millionaire contracts there.
Speaker 7:And then went off to do a lot of other, you know, helping startups. Most of them are ex Palantir friends, and I was trying to get conscious from the US government, helping them with the go to market side. And then I've met with my cofounders to start Sapphire, and we're accelerating electrification for defense, starting with some of the deepest IP from the US government. We're our first IPs out of Oak Ridge National Land. It's great to meet you.
Speaker 2:Yeah. What's the, what what is the main gating factor in, electrification in the military? Is it on the supply side? Is it just on the deployment side? Like, can you give us some concrete examples of where, electric systems can be leveraged for the warfighter?
Speaker 7:Yeah. Absolutely. So right now, absolutely, for sure, on the supply chain side, we there is an absolute shortage of Mhmm. If there is a surge capacity need for us to be able to produce in The US from the cathode to the anode and up and have the vertical integration to be able to do it on our own, there is a lag. So there is a huge push from US government to make sure we onshore or or we industrialize the from ground up in terms of that production capacity, especially when it comes to surge capacity.
Speaker 7:If and when we we need it, we need it. And, and and and we're lacking behind, in in their production side. But, also, we're just just behind in the advancement of how, the battery cells are evolving and how we need more energy power on the battlefield. It's not interoperable. It's not interchangeable, and there's not enough of it, especially when there's no grid.
Speaker 2:What what are some of the most, important weapon systems or just defense systems that, are are impacted by that?
Speaker 7:Yeah. Absolutely. So it's actually, goes all the way down from handheld for for soldiers and up. So we're talking, you know, we're talking to, you know, air force research lab program manager, and there was an actual, you know, case where, there was a a soldier that's doing a airstrike call Halfway through loses battery, and the coordinates are still on him. And because of that battery loss, it, it was a friendly friendly airstrike fire, and that just is not acceptable.
Speaker 7:That is such a easy elementary fix, to be able to have a better management system software Yeah. That allows us to reserve that extra percent. It's an advancement that we have not been focused on. It is something that we need to do. But on top of that is the grid, is to be able to provide a a tactical microgrid out of the edge where, hey.
Speaker 7:If all the power goes out, bring it in. And now we've got a a tactical microgrid that's solar powered, self sustaining, that provides a and then operable, also energy source to mobile systems as well as standing systems, and that network, availability also does not exist today, well.
Speaker 2:What's oh, sorry.
Speaker 1:Talk about the decision to to be dual use. I'm sure there was a lot of thinking that that went into that. It'd be interesting to get your insight.
Speaker 7:Yeah. Absolutely. That's, certainly, amazing question. That was something we've been learning a lot from since the company started. So the the our core IP technology is out of Oak Ridge National Lab where some of the nuclear materials were invented.
Speaker 7:And, our CTO has been there for over twenty years, and it's got funded by ARPA E to work on a silicon nanoparticle that would go into lithium ion batteries. Essentially, if you ever work, play with water and cornstarch, it creates this thing called Oubli. It's very fun for the, project for the kids.
Speaker 2:Yeah.
Speaker 7:It's a non Newtonian fluid, but we're doing that shear thickening effect in the battery cell.
Speaker 2:Interesting.
Speaker 7:And that happens immediately upon a bullet hitting the battery or a car crash hitting it, then it solidifies from liquid to solid, preventing it from, crunching up and providing extra structural strength for added safety. And so we, started having conversations. We kicked off the company three years ago, raised friends and family around, and kicked off the company, and we were talking to electric vehicles and defense at the same time. And what we, we really wanted to really understand, like, what I'm really passionate about is protecting and saving lives. Like, I could care less if it's, you know, ten ten technologies or 100 technologies do it.
Speaker 7:Like, I'm gonna protect and save lives. That's where my passion is. When I was working on the counter IED jammers to put into our vehicles in CENTCOM so that the enemies cannot blow up the IDs into our vehicles, as a contracting officer. Then, it was just gonna have a moment where I was like, I couldn't do anything unless what I'm doing is impacting and open to protect and save lives. And so, we talked to EV companies, and and they wanted more safety, but they also wanted to ink increase performance and decrease cost.
Speaker 7:They want it all. Right? And so, we are, so we so we went to really focus on how do we decrease the cost. So now we're, you know, we're really focused on we went back to the drawing board on the EV side to say, okay. With our product goals, it's a lower cost than the aluminum steel that's surrounding the battery packs.
Speaker 7:And so we're looking at how do we decrease the weight to increase performance while while having same, if not higher, safety on the EV side. But that sales cycle is actually you know, you you I I I've been working with the government, you know, pretty much all my life in defense, and I think government was slow. But EV could be slower. And I was just kinda like, wow. If I wait until we have, you know, this technology and we keep building it, it's not like people would just come and buy it.
Speaker 7:It's just not how it's gonna work. The no. That's not how how how we did at Palantir. Like, we we have a playbook here. We don't have to recreate the playbook.
Speaker 7:We're gonna go to the end user and figure out what they need, and then we're gonna give them what they need. Mhmm. And however the business model, fits that is what we're gonna create. And so it that's the approach we took.
Speaker 2:Yeah. On the defense side, is this something that you could actually go and build a whole program record around, or do you just need to be a subprime contractor and and vend into some of the larger primes as they build out new systems?
Speaker 7:Yeah. So we really flipped the entire business model in its head from the beginning where we say, hey. We've got a core IP. How do we create this? And then, you know, it in the traditional sense, you would say, let's build it.
Speaker 7:Let's sell it to another supplier who then supplies it to another system, and the system will sell it to a customer. Mhmm. Instead, we just went straight to the customer. We said, what do you need? And they say, we need electrical tactical dirt bike that can be deployed out of air, deconfigurable, reconfigurable, and can be parachuted down.
Speaker 7:When it lands, I don't want it to blow up from that impact. Yeah. And it has to go, you know, x amount of miles, and and it has to carry 350 pounds because because we have gear. It's not a 180 pound type of bike, and that just didn't exist. And so we partnered up with the subcontractor, with the top, dirt bike company, and the newly designed a electric dirt bike tactical for AVSOC, air combat controllers, us as a prime.
Speaker 7:And that was the most important thing. We said we're not gonna wait for somebody else to sell. We're gonna own the customer. We're gonna own the supply chain for it to integrate and become that next, next gen systems integrator two point o that we all know is in a dire need.
Speaker 2:Electric dirt bike for the military just sounds like something straight out of, like, a cod side mission or something. It's incredible.
Speaker 1:We're down to we're down to test.
Speaker 2:Yeah. Yes. At least send us one. We'll go
Speaker 1:for a ride. I do not know. I hope they're burning out around the gong here.
Speaker 2:Yes. Yeah. Sounds amazing. But that yeah. Thank you so much for stopping by and telling us about the business.
Speaker 2:This is fantastic.
Speaker 3:We'll talk
Speaker 7:to you. Thanks so much for having for having me.
Speaker 1:Really appreciate it.
Speaker 2:Well, thanks coming on. Up next, we have Connor from Speak language learning program. Let's talk to Connor. Welcome to the stream. How are you doing today, Connor?
Speaker 1:Hello. Hello. Welcome.
Speaker 11:Thanks for having me.
Speaker 1:I was expecting you to come on and say just start talking in a variety of
Speaker 2:different languages. You're impressing us. Drop some foreign languages on us. You speak any foreign languages?
Speaker 11:Wow, great question. Just getting right into it. I mean, I should be able to speak Spanish because I took five years of it in high school and college, and I have the classic story of I learned everything except how to speak, which segues into what we're trying to do.
Speaker 1:And
Speaker 11:we finally have Spanish. So, you know, I'm working on it. I'm getting better very quickly.
Speaker 2:Yeah. Break down a little bit of history of the company because it's interesting go to market, interesting history, interesting strategy.
Speaker 11:Sure. Yeah. I mean, for context for everyone, we are trying to build the world's best language teacher using AI. So imagine, you know, a really good tutor, but they're in your pocket available whenever, wherever, thinking about how best to teach you. And it's speaking first.
Speaker 11:But, yeah, the kind of interesting and weird thing about our history is we started this company a while ago. We've been working on it for, like, eight years at this point. The first few years are really just like AI research into how we could use AI to build the technology. And then we realized that we needed to go focus on one market. So we spent the next four years or so focusing on a single market, a market that I had literally never been to in my life before, which was South Korea.
Speaker 11:A market where there's not really How'd you pick that? So we kind of did a bunch of different, you know, market analyses. We built a free app and we, like, released it in a bunch of countries and saw what kind of traction we had. But ultimately, the thing that was the most convincing to me was I went to South Korea to talk to some of our earlier users, and I saw, like, literal skyscrapers that were filled with English classrooms. And
Speaker 4:it
Speaker 11:was just very clear that the country was obsessed over learning English, but there was also way more competition and solutions there than anywhere else in the world.
Speaker 2:So we
Speaker 11:we really thought, like, the only way we're gonna build something interesting is if we actually built something substantially, like structurally better using technology, like a 10x solution. And that market was gonna be the market where we would get the most signal. Because the only way it would work is if we actually built something unique. And, you know, today, we are the clear number one leader. We've got about 80% brand awareness.
Speaker 11:We've had double digit percentage of all South Koreans try our product. That's awesome. It's
Speaker 1:Air horns. What's the Universal.
Speaker 2:Universal. It's
Speaker 1:It's the universal language of universal language. Yeah.
Speaker 2:It's the booze of celebration. What I'd like walk me through, like, how much value you're trying to deliver in the product. Like, am I benchmarking this more towards, like, a fun app to noodle on from time to time or, you know, a college level curriculum that actually will, you know, almost guarantee fluency if I work through it?
Speaker 11:It's really the second. Like like, people do become fluent if they use our method. And And really, the benchmark is these, you know, cram schools in Korea that people are spending hundreds of dollars per month on, or, you know, those private tutors that cost $40 to $80 per hour to study with. And that's really like the thing that we're benchmarking against, and really trying to surpass in terms of efficacy and enjoyment.
Speaker 1:I'm trying to think, you guys have raised a lot of money from a bunch of great investors. I was trying to think through how they might think about risk factors to the business. And one of those I could imagine would be real time translation with AI gets so good that that maybe people, you know, don't feel the same drive to learn languages. Now the counter factual or counterpoint would be something like, you know, robots being much better at chess than humans yet, you know, humans still love to play chess. And so, I I'm I'm curious how you think of that or if that's something that's kind of come up at all and and how and how you would would address something like that.
Speaker 11:It comes up all the time. You know, one term that, you know, is in some sci fi books is the idea of like a babble fish. You put something in your ear Mhmm. Which, by the way, I think will be launched by many companies this year. I mean, Google kind of released that of Google IO last
Speaker 2:month as Yeah, multiple with AirPods a little bit.
Speaker 1:They teased it at WWDC.
Speaker 11:Yeah, exactly. So that's going to happen. I mean, we're already seeing this bidirectional real time audio speech to speech technology proliferating. And my response is always, you know, what we're ultimately doing is we're building something that is all about human connection and aspiration. Like, the reason people learn languages is because they actually want to be able to connect with other people, and they aspire to be someone that speaks multiple languages.
Speaker 11:And that's the fundamental behavior we're helping with. And so if you think about like the world's greatest translator, like the UN translator that's like highly paid and the stakes are high, there's still an immense amount of friction in that interaction. And so especially when you're learning a language because it's, you know, for example, English and it's the language that will allow you to travel the world and talk to anyone or really frankly any language, I think that people will still want to do that in the era of really great live translation. And in fact, my contrarian bet, acknowledging I'm extremely biased here, is more people will learn languages, not less, because it will become radically more enjoyable and easy. Imagine you just have your best friend who's teaching you every single day and that person is funny and like knows all about you and can talk about whatever you want and make it extremely personalized.
Speaker 11:I think a lot
Speaker 1:more people Yes, humans like challenges. Yeah. It's very challenging, it's fun, it's stimulating.
Speaker 2:Look at chess.com. Yeah. Business is ripping. And like chess has been completely solved by AI for years.
Speaker 1:Yeah. Yeah.
Speaker 2:And yet people do it. Talk to me about what's working on the customer acquisition side. I wanna hear about the footprint of the business internationally and and domestically. And then just kind of like the pricing model and how customers think about actually paying you for the service.
Speaker 11:Yeah. So I mean, the business model right now is quite simple. It's just a consumer subscription business. We have multiple tiers, and that idea is we can build tiers for the people that are really dedicated and want all of the power tools and intelligence behind it. And we do charge a premium.
Speaker 11:Like, it's a little bit more expensive than most other consumer subscription businesses where we're talking, depending on the market, somewhere around $100 a year to over $200 a year.
Speaker 12:There's a
Speaker 11:lot more room there to play, and we're just getting started. But the, yeah, I think like size of, you know, business and where we're at today. So, you know, I mentioned South Korea is kind of our bread and butter. That's where we've been up until relatively recently, trying to stay under the radar and just work on building the best possible product. And then we've really started to expand in the last two years or so.
Speaker 11:And so we're now becoming a very popular brand in Japan and in Taiwan. And we've actually now expanded coverage to over 40 countries around the world in the last few quarters. And just yesterday, we have now gone from an English language learning app to a language learning app with the launch of learning Spanish, Italian, French, Korean, and Japanese, and more languages on the way. A large part of why we're even able to do that is because of all the, like, agentic AI content creation that
Speaker 1:we're doing
Speaker 2:under Like, localization has to be, like, completely one shot able by most modern LLMs. Like, you can just like, this is the transformer. It's really good at transforming stuff. It transforms things from one language to another. It's like the best, the, like, the the most bread and butter.
Speaker 2:Yeah. Anything else?
Speaker 1:Very cool. Very cool.
Speaker 2:It's fantastic.
Speaker 1:We gotta get on there. My Chinese is a little rusty. I know how to
Speaker 2:say What do you know?
Speaker 11:Yeah. What do Which
Speaker 1:is not even factually correct but it generally means I really enjoy beer. Beer. But it's a good line to have if you're ever I don't think we should go China. No. But it's a good line to have in your back pocket.
Speaker 2:Totally. Totally. I just know, don't want. If somebody comes up to you on the street, I don't want it.
Speaker 11:I know.
Speaker 2:What's that mean?
Speaker 11:Your eyes are very beautiful.
Speaker 1:Oh, there you Honestly, between the three of us, we could could establish a beachhead.
Speaker 2:And some
Speaker 1:nice compliments.
Speaker 2:It'd be fantastic.
Speaker 1:Yeah. We'll progress. Yeah. Come back on Yeah. When you have news.
Speaker 2:Yeah. We'll talk to you soon.
Speaker 7:Okay.
Speaker 1:Have a good one.
Speaker 11:Thanks, guys.
Speaker 2:Bye. Cheers. Really quickly, let's tell you about Wander.
Speaker 1:Find your happy place. Find your happy place.
Speaker 2:Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, twenty four seven concierge service. It's a vacation home but better, folks.
Speaker 1:It's summer.
Speaker 2:Next up, we have Tenor.
Speaker 1:On the wander.
Speaker 2:On the studio. And before we get to Trey at Tenor, let's tell you about Bezel. Go to getbezel.com. Your Bezel concierge is available now to source you any watch on the planet. Seriously, any watch.
Speaker 2:Get on there. Yeah. Yeah. Jordy knows the beats of the delivery.
Speaker 1:Seriously. Any
Speaker 2:Any watch. Watch. Did you sleep last night? I got destroyed.
Speaker 1:I had a rough
Speaker 2:I had a very rough
Speaker 1:night. Had a very rough night.
Speaker 2:It was it
Speaker 1:Honestly, I got a little cocky. I slept Yeah. Really well. Monday night
Speaker 2:Yeah.
Speaker 1:Last night I know. I got cocked through. Got two. Minutes.
Speaker 2:Yep. Woah. Six hours.
Speaker 1:It was all The tides have really turned, John.
Speaker 2:I know.
Speaker 1:I went on a that was I went on a truly a generational run.
Speaker 2:I gotta bring I gotta bring it all back tonight. I'm sleeping ten hours.
Speaker 1:Back in one sleep.
Speaker 2:In one sleep. Nobody outsleeps me. It's the best time.
Speaker 1:Sleeping ten hours is actually surprisingly challenging. Yeah. Especially It's almost too much time.
Speaker 2:25 kids. It's brutal. In other fundraising news applying. Intuition closed their series f round of fundraising at $15,000,000,000 valuation. We had Kayser Eunice on the show at Hillen Valley, an absolute dog.
Speaker 1:He's gonna be running out of running out of letters soon. Yep. Mean, he's got quite a quite a few to go.
Speaker 2:What is I wonder what the latest series letter we've ever that has ever been done in venture history. Like, has I I know people have done f, but have we seen a series k? Have we seen a series s? Like, how far down the the the alphabet has anyone gone ever?
Speaker 1:I could see someone like a Cluelly just
Speaker 2:raising like $1 an ounce, speed
Speaker 1:running it to get to the cities. That would be
Speaker 2:an interesting strategy. I could definitely see Stripe being deep in the alphabet. They've been going for, what, almost twenty years now, that business. 02/2007, 02/2010? I guess fifteen years they've been in business.
Speaker 2:Yeah. So they could be deep into the deep into the alphabet. Yeah. SpaceX. I don't even know if they are numbering or lettering their rounds anymore, because some of them are so, like
Speaker 1:Yeah. They're they're really the candidate.
Speaker 2:It's a tender offer. It's a preferred share. It's a common stock sale. Kinda just moves around. What were you laughing at?
Speaker 1:There's always stuff to laugh about.
Speaker 2:Looking at the timeline?
Speaker 1:Looking up the timeline. What else we got?
Speaker 2:We have our next guest, Trey from Tenet.
Speaker 1:Here we go.
Speaker 2:Here we go. He's fax matching. Hey, Trey. How you doing?
Speaker 1:The fax man.
Speaker 8:Doing well, guys. Yeah. Doing well. I did I'd daring to see myself on that screen. Reverse.
Speaker 8:You know, you never picture yourself in mirror image. It's horrible.
Speaker 2:Yeah. It is confusing. Well, thank you so much for joining us. Can you kick us off with an introduction of the company? We've we've we've heard TJ Parker teasing and educating us a little bit about this market, but I wanna hear from you.
Speaker 8:Yeah. A 100%. I mean, our solution, we work with providers that receive patients. Those patients get sent from other providers typically via what's known referrals, scripts.
Speaker 2:Doctors.
Speaker 8:Terminology. Doctors. Right? Mhmm. And those doctors, when they send a patient, they'll describe it as like sending a patient to a black hole.
Speaker 8:The patient doesn't get contacted. They don't know where they're at. And it loses a ton of money actually to those receiving providers that are trying to convert those patients into real visits. Yeah. That end up getting denied if they don't have complete documentation.
Speaker 8:So it's a whole mess. It's a it's a real problem. And it turns out it all starts at eFax documentation. Over 90% of these visits originate via eFax documentation. And if you can solve the facts, you can really drive a great outcome for those providers.
Speaker 2:So that's what we So I I I like, I hurt my knee. I go into my general doctor and they refer me to a knee specialist. And at some point, there needs to be a whole bunch of faxes going on. Is that just for insurance or for everything?
Speaker 8:Yeah. So I mean, imagine you get sent to that knee specialist and then the knee specialist says, Hey, really want to send you to a surgical center. And the surgical center has to go collect all this documentation to say, okay, Kugen, are you maybe they don't address you by that name, you know, they're gonna say It do I have do I have enough basically to get past an authorization? Is is the payer or the insurance company gonna pay for this? Yep.
Speaker 8:Or do I need to basically say, hey, sorry, we don't have complete documentation. I have to send you to PT. In that time frame, weeks go by,
Speaker 1:and you have no idea what the hell is going on. Yeah. Super
Speaker 2:frustrating. You I mean, you mentioned eFax. We've heard a lot about faxes driving the medical industry broadly. What is actually the state of the art in the fax medical world right now?
Speaker 8:This conversation usually is like it's like a misnomer, really. When we talk about most times you hear people talking about fax, you should really think like emailed PDFs. You should think eFax. Right? It's actually very rare nowadays at least as what we see that people are literally going in and like putting the pieces of paper.
Speaker 2:Yeah.
Speaker 8:It's it's actually, you know, it's more like if you wanted to send you know, you wanna send a patient, I'm just gonna right click, download the whole chart, and then I have to send it somehow. It's as easy as sending an email. It just happens to actually travel on fax wires. Like, that's the actual mechanism that the protocol is on SMTP. It's fax line.
Speaker 2:Interesting. And that's important from, like, a regulatory perspective. Right?
Speaker 8:That's right. And to be honest, that's actually even that is a little bit overblown. In many cases, it's very possible to to have a secure email inbox, which we see a lot of as well.
Speaker 2:This is a legacy network, and that's the one they use as network effect. Interesting. How how did you get into
Speaker 1:this? It seems like Yeah. When did you when did you realize you
Speaker 2:wanted to drive efficiency in in
Speaker 1:the health care business process?
Speaker 8:I I to be honest, I have no like, I I like I I view, like, automation as kind of this, like, also sort of this, like, false prophet. It's I learned about this from my mom who's sending patients out, and she'd say, Trey, it's like it's like sending patients into a black hole. And it it's not really like, automation just so happens to be one piece of the component. The other big thing is nobody knows how much it costs. Right?
Speaker 8:So if tell you, look, it's gonna be if I say, look, it's gonna be $300 and you know that right off the bat, you're actually way more likely to show up than if I tell you, look, we're gonna have to determine your costs once you show up, which is what most people do today. And the reason they do that
Speaker 1:is because then they also have
Speaker 8:to go and run a check and make sure they understand how much your insurance is gonna cover and pay for in in the process. So really, we exist to solve the black hole problem. I don't really give a crap about solving the facts. It's just like, if you say you're gonna solve a problem and the first sort of hurdle is, okay, there's a bunch of unstructured PDF flow and if we can structure that, we get like a good chance at it. That's sort of how we approached it.
Speaker 8:No. Not not that much of a student in game. Just love to
Speaker 2:to me about the scale of the customer that you can sell to. Is this is this something where like if you go to like a few networks and you win really, really big, it's kind of like game over? Do you need to go to like every single doctor in a local like, in a local neighborhood and get them on board?
Speaker 8:Yeah. So I mean somewhere in between, to be honest, right? Like there's there's you have so much private equity in health care that you if you think about the size of their markets, they're often consolidating. Those consolidated entities, those are really our ideal, you know, customer profile. We do work with a number of health systems, but like, to be like, if we're just being honest, right, it's like, if you wanna centralize an inbox and a a really a sales funnel, when you think about the patient funnel is really a sales funnel, you'd still have to go do it department by department.
Speaker 8:So there's not like 20 deals to be done. There's probably more like 200,000 when you look at like the size of of of providers because we we unfortunately can't work with like two provider shops.
Speaker 2:But Mhmm. Yeah. Totally. What's the scale of the business like today?
Speaker 8:So we're processing we have 20,000 providers sending. Right? So they're sending faxes, sending emails. We've got hundreds of providers using Tenor to process and then we've got millions of patients millions of patients Let's go. Oh, thank you.
Speaker 8:Fucking yeah. So yeah, man.
Speaker 1:And How much did you raise today?
Speaker 8:We raised a $101,000,000.
Speaker 3:That's right. Wow.
Speaker 2:Let's go. There
Speaker 1:we go. That's that's fantastic. Who how how did the round come together? What what was that process like? Was it preemptive?
Speaker 1:Did you guys go out for it? Who'd you get on board?
Speaker 8:Alright. Was just a little bit of background. I literally got lost. So I'm in the Lincoln Center. We hadn't like completely unrelated fundraising that we had big prospect customer event in the Lincoln Center tonight.
Speaker 8:Yep. I get lost five minutes before because I wanted
Speaker 1:to grab some some food,
Speaker 8:some some nuts and I get lost. I'm sprinting to the door and I found it. So I'm like running hot. But so to answer your question, like, I feel I sound really salesy right now. To be honest, I'm usually a horrible fundraiser, but historically, horrible fundraiser.
Speaker 2:Okay.
Speaker 8:This came together in like four days. Was like the the business, it was That
Speaker 1:25 mil a day.
Speaker 2:It's pretty pretty solid. It's incredible.
Speaker 1:Good run rate. You should have just kept going. Why not? Why not? Okay.
Speaker 8:Most of our rounds have been so we had a partner at Andreessen.
Speaker 1:I mean, is kind like, I think, some
Speaker 8:of the fun shop talk, but, you know, so you you have a GP partner on most deals at Andreessen, right? So we had a GP and a partner. Now, partner at Andreessen goes and actually becomes a GP over at IVP.
Speaker 2:Oh, interesting.
Speaker 8:And what does what does he do? He was just board observing us for two quarters. We said we're gonna hit the thing
Speaker 2:Yep.
Speaker 8:And he just calls me up after the quarter ends and is like, so did you do the thing? And I said, yeah, we did the thing. And so we did the round. Then That makes sense. There were a couple of other firms that we just like really respected that were just like, yeah, we're doing the thing.
Speaker 8:Let's do the thing. And we
Speaker 2:did That's amazing. What's the use of funds like? Is this R and D heavy, spending a lot on engineering? Are there hard costs in the business? Is it hiring a lot of sales reps?
Speaker 2:Is there some sort of like crazy payback period where you you, you know, you have to go and install or win a customer, and then you get paid back over, like, a really long time? Because I imagine, like, this seems like a pretty low churn product if you can get it installed, but it might be expensive to do that.
Speaker 8:That's a great yeah. It it's really it's an expensive deployment period
Speaker 2:Yep.
Speaker 8:And so you're looking at an expensive first year, typically speaking. Yeah. So not so so, yes, the traditional, hey, we're gonna, you know, keep growing the sales team, that's just been
Speaker 1:growing off of growth anyways. Sure.
Speaker 8:But get way ahead of the engineering team. We're launching this product. So, like, we have these millions of patients. Right? And I'll give you, like, one quick example.
Speaker 8:It's kind of interesting. You think about the fact that you got sent over to, a let's say you're sort of having trouble sleeping, you turns out you get diagnosed with sleep apnea. Mhmm. You now are going to get a CPAP. Now, you might actually qualify based on all the clinicals you've done because you've been to a sleep doctor, you've been processed through DME, you've been processed through diagnostics.
Speaker 8:Mhmm. We have all your clinicals, we have your insurance, we can actually suggest to you all these other services basically that you qualify, you're eligible for to go and get and whether that's additional consults, behavioral treatment, pharmaceuticals, things like that. And so we're launching this big network product and it's a huge lift on the engineering team and so we've been growing that team really aggressively as well.
Speaker 2:That makes a ton of sense.
Speaker 1:It's been an honor to hit the gong for you.
Speaker 2:It has been an honor.
Speaker 1:You're an absolute Chad. Thank you. Thank you for coming on. Congratulations on the milestone. I have a feeling you'll be back here in the temple with us Oh, yeah.
Speaker 1:Very soon
Speaker 2:Oh, yeah.
Speaker 1:With how you're talking. So It's amazing. Congratulations to you and the team.
Speaker 8:I wanted I was hoping I'd get some credit. It's like I I see all these guests come on.
Speaker 2:I'm big the jacket. I was gonna say it.
Speaker 8:I'm look fantastic. I got
Speaker 1:this Honestly honestly, you wear it. It looks natural.
Speaker 2:It looks natural.
Speaker 1:A lot of people
Speaker 2:put it
Speaker 1:on. Performative. Looks performative. You know? It's like stolen valor.
Speaker 2:Yeah. Yeah. So we don't wanna draw too much attention if that's your daily but we appreciate you dressing up for the occasion.
Speaker 1:Yeah. You look sharp.
Speaker 2:You look sharp.
Speaker 1:And just do us a favor and never wear casual clothing in the workplace ever again. Just, you know, make this a part of your daily Yeah. You know, you're you're a healthcare technologist, you know, you should be You're you're a businessman. Yep. So
Speaker 8:We we've got fit we got fit Fridays. It's the opposite of casual Fridays. You have to dress really really nice going into the office here in New York. Amazing.
Speaker 1:There we go. I love it.
Speaker 2:That's amazing.
Speaker 8:We're doing our part, man. We're doing our part. You guys have a great appreciate you. Great to see great to see you.
Speaker 1:Great chatting. Have a great one. Great chatting. Congratulations. See
Speaker 2:you. Up next, we got James from ProFound coming in the studio. Oh, is there another Gong hit coming in? Let's hear it. James, how you There
Speaker 1:he is. What's going on?
Speaker 2:Break down the news. What's going on?
Speaker 1:I got the mallet ready. What's happening? How are doing, guys?
Speaker 2:Doing great.
Speaker 1:Well, we've already covered your raise. Yep. We've talked with David Senra. We've we've got the backstory on how David Senra met you and invested. Yep.
Speaker 1:But super excited to have you on to to break down the news yourself.
Speaker 5:Yeah. Thanks for having me. Yeah. And congrats on all the TPPN traction as well. It's inspiring just to see your story kind of continue to take the main stage.
Speaker 1:Thank you. Thank you. It's been fun. We had you on recently. What's what's happened since?
Speaker 1:Talk about the new round, and then I I wanna hear about traction and Mhmm. Kinda what you're seeing on the product side as well.
Speaker 5:For sure. Yeah. I guess since we last spoke, it's just been, you know, a lot of days in the office. We we moved office. We moved across the other side of Union Square, New York City.
Speaker 5:The entire team is here in person working very hard. We're in office six days a week. And yeah. So I'd love
Speaker 1:to hear that as an investor.
Speaker 2:I I
Speaker 1:I'm not gonna I'm not gonna pretend I don't.
Speaker 5:I I think, you know, it's it's it's very exciting. I think the the tailwinds are mind blowing. It's you know, this is a clear platform shift. Maybe one of the biggest platform shifts in the history of marketing is hundreds of millions, billions of consumers turn away from blue link search and instead talk to platforms like ChatGPT and get a response. How your brand shows up, how your products show up, how your services show up in these AI responses is becoming, like, boardroom level discussion for every brand on the planet.
Speaker 5:So, yeah, we're we're building ProFound as a new age marketing platform to guide marketers, every every brand on the planet to this new generative Internet, an Internet where you can talk to it, and it talks back to you. I think the closest heuristic would be SEO for AI. But, you know, once you start to look underneath the hood, there's a lot of fundamental differences here. These models are opining. They give you know, they they have sentiment.
Speaker 5:They they give opinions. You know, the the kids are using chat these days and, yeah, more like an operating system. And, yeah, how your brand shows up there is p zero.
Speaker 1:What are some of the big struggles that maybe legacy brands are facing in terms of shaping their you can imagine
Speaker 2:Well, there's not something monocle horror stories yet. I feel like it's all pretty good stuff. Where you most most of the time I see examples of this, it's always somebody screenshotting like, oh, I I nailed it. Like like, the ChatGPT recommended my brand. But I imagine that there's probably some people that are having having rougher experiences.
Speaker 5:Well, the models are probabilistic. So, you know, you ask the same question 10 times in
Speaker 1:a row
Speaker 5:and get Interesting. Responses. So that's kind of the you know, that's one of the main upsides of using technology like ProFound is you get the kind of aggregate response Mhmm. Across all of the major platforms.
Speaker 2:Mhmm.
Speaker 5:Mean, yeah, we we work with Ramp as an example. They're an example customer, and, you know, we 7x their vis their visibility in a category where they didn't have much visibility. And the way that you do that is by you understand through lots of prompting. You you understand how the models are talking about your brand, your products, your industry, your competitor, and where where they're going in order to answer those questions. And then you strategically start creating content for bot.
Speaker 2:Mhmm.
Speaker 5:Oh, we got And yeah. It it's it's it's it's pretty tractable.
Speaker 1:Amazing. Talk about, the round, who participated. Mhmm. It's pretty pretty great list. I'm biased, but, not Dave David Sundra, like, does not really angel invest.
Speaker 1:Yeah. Yeah. It's very it's very very rare, so, you got him.
Speaker 5:Yeah. Thanks. Yeah. It's it's it's it's cool. So it's it's a, you know, it's a real kind of, like, pinch me moment.
Speaker 5:We're we're working. So Kleiner Perkins led the round. So Ilya Fishman's taking a c on the board. In addition, we have Coastal Adventures. That's with Keith Raboy.
Speaker 6:Okay.
Speaker 5:Nvidia. Nvidia. Saga Ventures. Sorry.
Speaker 1:Sorry. I didn't let you finish, but, had had to had to go. Continue.
Speaker 5:Continue. Saga Ventures. So, yeah, that's Max Altman, Ben Brave Ben Braveman, Thompson Nguyen, South Park Commons, SV Angel, and then a bunch of really great angels. Obviously, the most important being a a guy called Geordie Hayes.
Speaker 2:Yeah.
Speaker 1:Too kind. Too kind. But but yeah. Give us an update on almost like an investor update which which I won't share. But but give give us an update on on kind of the the like, what is I'm curious what the sales cycle is right now with with companies that you're talking to.
Speaker 1:I imagine this is like a kind of a hair on fire issue where they realize like, hey, we don't know what's going on or or things are happening. Is it is you know, what does that look like with some of these bigger multinational, you know, brands and and companies that you guys are working with?
Speaker 5:Yeah. I think, you know, what the the the thing you know, what they're realizing is true is that this platform shift is so big that they need dedicated technology to understand and control how they show up in answer engine outputs. They can't rely on, like, existing marketing technology, if anything, just purely because the space is moving and evolving so quickly
Speaker 2:Yeah.
Speaker 5:Which I think is really evidenced by the fact that we are able to work we're working with Fortune 10 brands. So literally, some of the biggest brands in the world are using ProFound. There's thousands of marketers on the platform now. It's hard to it's hard to mention logos, you know, as
Speaker 3:as as
Speaker 5:we all know, it's it's tricky. But, you know, some of the logos that we are able to mention are so we have brands like MongoDB, Indeed, Mercury, DocuSign, Zapier, Ramp, Plaid, Rogue.
Speaker 1:What what the it's very absolute squad.
Speaker 5:Yeah. Chime, US Bank, Clay There go. Resend. So, yeah, they're we're working with you know, that that that's just the ones we can mention.
Speaker 1:Yeah.
Speaker 5:Yeah. And, yeah, I think, you know, we're these brands are coming to us because we've built the ubiquitous technology in this new category that, you know, we we've we've we're sucking the oxygen out of the room, and, we're building a better product. And, yeah, I think that's a function of a very talented engineering team here in New York, basically.
Speaker 1:Category leader working six days a week. The only option would be to try to work seven days a week, but then you risk some major burnout. So better better just not compete at all and then just let let James cook. Just be be a customer. Well, thank you for coming on, James.
Speaker 1:Awesome milestone, and I have no doubt we'll have you back on again soon.
Speaker 5:Yeah. Thanks for having me, Appreciate it.
Speaker 2:Cheers. Amazing. We'll talk to you soon. Bye. Cheers.
Speaker 2:We got back to back guests coming in the studio next. We got Warp and Senra Systems. We're gonna figure out who's joining first.
Speaker 1:Senra's coming on first.
Speaker 2:Okay. We got Senra Systems.
Speaker 1:Not David Senra.
Speaker 2:Not David Senra. We already talked to him.
Speaker 1:We got Jordan.
Speaker 2:We got Jordan from the
Speaker 1:of Senra Systems.
Speaker 2:Let's bring him
Speaker 1:He is an emerging wire harness We're
Speaker 2:gonna try and get Senra. In the meantime, I think we have warp.
Speaker 1:Okay.
Speaker 2:Let's do warp. Welcome to the stream.
Speaker 1:How you doing? Ready? Hello. There he is. Sorry for the chaos.
Speaker 1:I told you Yeah. Now It was a jump from now back and forth. It's live TV. But you're here. We're live on TVPN in the UltraDome.
Speaker 2:Yes.
Speaker 1:It's great to have you. Great to be here. Exciting exciting day. Give give everybody some some background on you and the company, and then we can talk about the news.
Speaker 12:Yeah. Yes. My name is Ayush. I'm the founder and CEO of Warp. And as some of you may have seen, we are the best way for startups to run payroll, handle compliance, hire people, and do all those fun things.
Speaker 12:We just also announced our 18,000,000 series a.
Speaker 2:Let's go. It's not
Speaker 1:the Gong, but I'll let you the honors. I'll let you do the honors. Let's go wide. Boom. I have a I have a feeling we'll need a bigger Gong for warp.
Speaker 1:Hopefully hopefully, we can get it in here before the next round. Yeah. Talk about talk about competing in a in a in a big but crowded category. Yeah. And maybe kind of the a little bit of the origin stories of of the business Yeah.
Speaker 1:As well because Yeah. You're relatively new but but clearly making waves.
Speaker 12:Yeah. Totally. I mean, Jordy, you've known us from the the very early days, I think. And we've been we've been friends and kinda working on this from the very, start. So I think you've seen that journey.
Speaker 12:But, really, what I think about is, there's almost, like, such a high bar today for building incredible products. Right? I think a ramp obviously comes to mind where, know, you you start out in this, like, huge market and you see a incredible, like, opportunity, and maybe it looks like there's all players. But if you can build an amazing product, if you can give startups, companies the best product experience, like, that actually has a lot of demand. So I think on on our end, we also saw that there's all these different tools that people kind of piece together for running their company, running payroll, handling compliance.
Speaker 12:It's very disjoint. It's very manual still today, especially for startups. And, if there's one thing that startups hate, like, I've done this before myself is stared up piece of, like, paperwork from government, like New York department of taxation, whatever, and how to do it themselves. And that's just so so annoying. So we're kind of automating all of that for once, using tons of kind of automation AI behind the scenes to kind of accomplish that and also just building a really, really amazing product.
Speaker 12:So one of I think one of our customers told us this the other day is that using all these other providers feels like you're using, like, Bank of America to pay somebody or, like, TD Bank. But then if you use Forbes, it feels like you're you're using Brex or Ramp or, Venmo to pay your friend. And that's the kind of, like, the qualitative sort of product like difference that we think about.
Speaker 1:How much are you thinking about, agentic workflows and features versus traditional bread you know, SaaS, bread and butter Yeah. CRUD, you know, traditional fintech, all that kind of stuff.
Speaker 12:Yeah. It it's a huge part, and I think we're we're being thoughtful about it. Like, I think there's a lot of players that are just, like, waking up to it, and their approach is, well, we're gonna jam, like, some AI kind of buzzwords kind of sound cool. But I think we have the luxury that we're starting in this almost in this time where, like, all these advancements are happening very, very quickly. So maybe you guys don't know, but, like, my personal background actually is in computer science, specifically focusing on AI back at MIT.
Speaker 12:And so it was very cool to see some of these things early on right before they started taking off. And now we have the opportunity to build this in a way that is from the ground up, we can actually, like, architect this in the right way. So a lot of these manual paperwork's like, maybe the customer doesn't even know about them or think about them. I know they're completely obstructed away from them, all the PDF filing, paperwork, taxation, that would typically be their responsibility or their accountants or controllers, whatnot. We can absorb them for the first time, and there's no, like, middle ground that we have to cross where they're kinda doing it, and then it's slightly automated, they're asking some chat UI notes just, like, fully in the background automated.
Speaker 1:Where's the growth coming from? I know you guys are growing quickly. You don't have to give us, like, you know, the the full secret sauce, but how how and why are are you winning customers over?
Speaker 12:We I think the biggest thing is we have seen tons of founders just telling their friends about us. So if they if if customers are using us, we target a lot of our, you know, start up founders, a lot of the folks that you would have known of, like Rahul from Julius AI and Yeah. Isaiah from Blind. And I think tons of these really cool startups that are that are building all these amazing products. They have lots of, like, Twitter presence.
Speaker 12:They're very online, and they're they'll tell their friends a tweet about us or say something positive. And that's been a huge driver. So first and foremost, just like building incredible product. People will tell their friends, but also targeting these, like, very awesome companies that will kinda spread the word.
Speaker 2:Why is payroll so oligopolistic? I feel like there's, like, ADP Paylocity, Paycom, pay something else in the public markets. Then YC has, like, three unicorns in payroll. Yeah. Like, I get that there's a lot of money.
Speaker 2:Yeah. I I get that there's a lot of money where the money is, but, like, why is there not more of a compounding advantage? Like, what's the market dynamic? Is that expected to change? Or is it just like you can go and win even if you get 1% of the market and that's, like, fine?
Speaker 12:I think it's definitely more of the latter, but at the same time, it's almost like banking. Right? Like, if you think about banking broadly, how many different banks exist and fintechs exist, and they all kind of can win big. Yeah. Even some of the biggest players that are, you know, obviously, like, rap.
Speaker 12:Like, in the grand scheme of things, the market is so so large that even a small portion of that can be huge. Mhmm. And every five to ten years, it seems like there's some new wave of technology where the consumer behavior shifts enough. So, like, one thing I think about a lot is the founder expectations have shift shifted a ton. Right?
Speaker 12:They're used to using tools like superhuman and linear for running their team, and then they go log in to, like, a Salesforce, like, junk, you know, like HR hefty thing, and I just kinda hate that. So I think there's some consumer behavior shift. There's also the fact that you can reinvent these things from first principles every five, ten years, and then AI is a big piece of that puzzle too.
Speaker 2:It almost feels like the opposite. Like like, feels like like payroll, it's such it's so cumbersome to rip it out that Yeah. That it's actually a slower turnover. And so if as opposed to some of these tools where it's easy to rip them out, you if there's really, really great product that's actually better, you're gonna take over the market and get everyone to rip it out and replace it
Speaker 1:Yeah.
Speaker 2:Very quickly. But payroll system, it's like pulling teeth to get it out of the system. And so, like, people are like, yeah. I don't like the one that I have, but I'm I'm not I'm not gonna change or anything. I don't know.
Speaker 2:It's interesting.
Speaker 1:Are you thinking about stablecoins at all? I've been in the news in the last twenty four hours. People have talked about the potential of stables helping.
Speaker 2:And maybe just, like, saving you money or earning you more float or something. Like, I I it seems like most of the payroll companies are pretty mature in terms of, like, squeezing every penny out of the dollars that they transfer around. But is it a bull case at all, or, you know, is does it change the economics at all?
Speaker 12:I from where we sit, I mean, we haven't seen a ton of requests coming from customers directly, which is the main thing that I try to track. Right? But I think more of a macro level, it seems like the moment for Sablecoins is definitely happening. So I I I I'm bullish overall, but I haven't seen a direct uptick into, like, payroll, especially because I think if you, especially for US focused use cases, which is where we are, we do global contractors, obviously, and that's a smaller part of, like, what we're doing. But for those players, it's probably a bigger thing that they need to think about for international.
Speaker 12:But I think the one one maybe, like, take that I have is The US banking system gets more shit than it actually deserves. It's actually, like, quite good. The ACHs, the Fedwires, even though they're old and we're stuck with them in some ways that they could be better, they're better than what people realize or or give them credit for at least.
Speaker 2:Is that just because they've been wrapped in APIs so many times that, like, they're actually pretty easy to develop on, or is the actual underlying system evolved and actually gotten better?
Speaker 12:It's both. I think the rise of fintechs and APIs obviously make a lot of them very easy. But the one like, the interesting thing is, like, if you look at India, and I grew up in India, my family is still there, UPI, which is mobile wallet, they're actually a huge thing in India. And they basically around from 2015 or so, there was a period where mobile wallets just went vertical
Speaker 1:Mhmm.
Speaker 12:Almost within, like, a one year period. Mhmm. And the reason that took off is India was largely a cash based society. So the delta between going from, like, cash and change and, like, counting all of that immediately to phone wallets and QRs was massive. But in The US, you'll never get mobile wallets, not in a true sense.
Speaker 12:What we do have is credit cards and Apple Pay because that there's not enough of a delta. So, like, it's one of those things where The US figured out ACH rails and Fedwire rails and credit card rails earlier than all these other countries that that are now just catching up. So they get to kinda leapfrog and go to the next level. But we have, like, some of these things that I've actually worked for a while, all these, like, legacy layers of technologies that are built around it, that we don't get to, like, immediately crossover because there's not enough of a delta. So we will be on we will be on like ACHs and Fedwires for a long time, but they work pretty well.
Speaker 1:They're Lindy. Lindy. Lindy. Think I think a gong hit is in order.
Speaker 2:Oh, let's do it.
Speaker 1:Talk about the round. 18,000,000 series a? 18,000,000 series a led by led by John Ventures. We've got Drew Houston, Arash Oh, nice.
Speaker 12:Kyle Voigt Oh, as part of the round. Those are all MIT engineers, founders, MIT school. Crew.
Speaker 1:So, YC crew, we got we tried, like,
Speaker 12:all the technical folks. Some great people joining and we're super excited and very thrilled.
Speaker 1:Did you you graduated MIT. Right?
Speaker 12:That's right.
Speaker 2:That's right.
Speaker 1:No. No. No. No. That's the new bullseye.
Speaker 1:Yeah.
Speaker 2:Yeah. Yeah. That's the contrarian move.
Speaker 1:The contrarian thing is Yeah. Don't drop out. Yeah. That's right. That's where all the new the new alpha.
Speaker 1:Congratulations. Yeah. But that's all on your wall. I've I've it's been amazing to watch execute over the years and Fantastic. Excited for, the next chapter.
Speaker 2:We'll talk to
Speaker 11:you soon.
Speaker 12:Yeah. Likewise. Cheers.
Speaker 2:Next up, we have Jordan from Center Systems, not David Center Systems. These are high quality wire harnesses. Welcome to the stream, Jordan. Hopefully, we can bring you in. I know we had some, back and forth juggling, but great to have you on the show.
Speaker 1:We did it. Welcome to the stream. We did it. Welcome.
Speaker 2:I love I love when we I love when a plan comes together. Would you mind introducing yourself, the company, and what is a wire harness for those who don't know?
Speaker 6:Yeah. Absolutely. I'm Jordan Black. I'm the CEO of Center Systems. You probably don't know what the hell wire harness is, and that's totally fine.
Speaker 2:Yeah.
Speaker 6:Just think of it as, like, an iPhone charger, but, like, a lot more complex. Like, when you look at the hood of your car, you see a bunch of electrical wiring. It just connects Mhmm. Any two or more components together. And everybody hates it because it's entirely manual process to design it, entirely manual process to manufacture it, and it's just a very, like, bespoke thing that hasn't changed since the Cold War.
Speaker 2:Top applications. I mean, you see it in the car. I I seem to remember, like, the Cybertruck changed their wire harnessing and reduced it by, like you know, it went from, like, 10,000 feet of wires to, like, 1,000 feet or so. Is that roughly, like, the right story? Or, like, give me a more concrete example.
Speaker 6:Yeah. I think, the thing with wire harnessing, the more you have, the more expensive it's gonna be. So you have more sensors and computers and Yep. Thingamajigs around your car or rockets or drones. You're gonna have more wiring, and it's become more expensive.
Speaker 6:So what Tesla did was really kinda minimize the amount of signals they had to go through, and there's a little more complexity that goes into that too. Mhmm. But it's it's in everything. Like, that's the way you power your coffee maker, your rocket drone, missile, everything else. Because if you need to connect this thing that needs to send signal or power to this thing over here, the only way you're gonna really do it is through copper wire.
Speaker 2:Yeah. So cars, rockets, drones, planes, like, what what is the most common product that you're selling your your wire harnesses into? Is it everything, or do you have a specific focus right now?
Speaker 6:We do a little bit of everything, but right now, it's mainly aerospace and defense. And the reason why is because it's very hard to get a high quality wire harness in the space, like, not to get super morbid. But, like, the reason why, like, the astronauts signed the Apollo mission was there was, like, a nick on the cable jacket, and there was a flammable gas, and the whole thing sparked. Or, there's a lot of launch failures or launch delays that happen because, like, they can't get a wire harness on time. Interesting.
Speaker 6:And it's this hard thing because if you put a wiring in a car, it's kinda like it sits there. You know, it goes through some bad winter sometimes. But, like, when you put it into a rocket or a drone, like, it needs to withstand crazy environments, get beat the hell up, and all goes to space. It's in a vacuum. It's all over the place.
Speaker 6:Yep.
Speaker 1:And it
Speaker 7:has to be,
Speaker 6:like, very precise in the way it gets built because it's all done by hand today. So there's a lot of, like, inspection. And so that's kind of where this, like, bespoke process on top of the complexity, on top of, like, it being something really niche that nobody really knows about besides myself and the people who work at CENTERA and the very few people in The US, this is where we're trying to, like, take all that tribal knowledge, take all that processing, and really kinda make a structured output of it too.
Speaker 2:So, yeah, what what is the key innovation here? Is it automation? Is it robotics, better software, better just skilled labor
Speaker 1:Just caring about it. Exactly. 10 times more than the next
Speaker 2:person. A damn, as you say, on your website.
Speaker 6:I like, the high level is, like, if any of us ran, like, TSA tomorrow, we just do a way better job than, like, what it currently is. And so they're just, like, caring and just make like, kind of just getting rid of all the bullshit that's going into it. Yep. But what we're doing from, like, fundamental portion is, like, the way large companies today design wire harnesses, and they use, like, Excel spreadsheets and PowerPoint slides. And no one's really trained on this thing.
Speaker 6:And the way it gets built is, like, with hand tools and, like, on a wooden table. And so the, like, software aspect of it is, like, we're creating this, like, industry standard for how wire harness should be designed in, like, the our tool called AMP where we could take the tribal knowledge we have and, like, tell people, like, this is how you should design it. Because every time I get a wire harness, I go back and forth to the customer of, like, you did this thing wrong. I can't find this part, yada yada yada. And then to build it, we're actually using automation, and we're using a lot of software process to make it, like, a really streamlined effects.
Speaker 6:Like, you both can come to my factory tomorrow and start building a wire harness because it's not the most difficult thing to do in the world. The hardest part is just knowing exactly what steps to do and where to and where to actually perform the process as well.
Speaker 1:Talk about how the round came together. Did Dylan feel that some sharp elbows, elbowing out? You know, the the platform bumps.
Speaker 2:A board table with him.
Speaker 1:Yeah. Board room rooms can be rough. But how how did you guys meet and and and break down the round for us?
Speaker 6:Yeah. Absolutely. I got introduced to Dylan through one of our investors, and I FaceTimed him. You know? I was, on, I think, weekend, in Laguna.
Speaker 6:And all of a sudden, we just started hanging out a ton. That's great. And I've been pitching that we were creating a wire harness design tool, which is the Figma of wire harness thing for a very
Speaker 1:specific way.
Speaker 6:And just to explain what we're doing
Speaker 1:Did he scare you and say, well, actually, Figma is the Figma for wire harnesses, and I'm
Speaker 2:gonna EU alive.
Speaker 1:Stay out of my territory. No. It's a little bit a little bit different. Little bit different. Yeah.
Speaker 6:A little bit different. I've yet to get a Figma designed wire harness, to this day, but maybe one day we'll get it. Yeah. And we spent a lot of time together, and I I I'll be frank. Like, I'm obsessed with the guy.
Speaker 6:I think he's just so intelligent the way he thinks from a product standpoint, how you run his company. Yeah. We're taking something so bespoke, like a design tool as well and breaking into this industry that hasn't been changed in a while too. Like, it kinda just really resonate with me. And then we were chatting one day, and I was like, I wanna go out and, like, fundraise.
Speaker 6:And he's like, I'd like to, like, put a check-in. And I'm like, oh, okay. Like, Classic made it in Silicon Valley. He's gonna write an angel check, and he's like, oh, I like to, you know, own a substantial amount of the company in the round. And I was like, oh my gosh.
Speaker 6:And so, it was kinda about to start taking up the fundraise and doing that. And I don't know. It just it it really thought to me of, like, we have really great investors on the cap table, and I'm just super thankful about that too. But, I'm excited to just have someone who can be in the weeds with it and just, like, actually help grow this company, be this kind of, like, mentor, but also just, like, this company that we wanna grow into as well too. And it's it's ultimately really exciting.
Speaker 6:And so I was like, let's let's do it. It's you know, no one else can really understand, like, the, struggles and also the missions or the obstacles we have to overcome than Dylan, and we just kinda get each other. So
Speaker 2:That's amazing. What was the final round size?
Speaker 6:25,000,000 is the the the ground size.
Speaker 8:Let's go.
Speaker 1:There we go. Congratulations. There we go.
Speaker 2:It's great news.
Speaker 1:Well, I feel like you'll be back here in the Ultradome very soon.
Speaker 2:Very soon. Might need some custom wire harnesses. We're wiring up lights all over the place.
Speaker 1:Not Yeah. We we
Speaker 2:We got extension cords taped to the ground right now.
Speaker 1:Not your ICP, but we got a lot of
Speaker 2:We'll figure out a way to integrate for sure.
Speaker 6:Perfect. Yeah. If you ever need anything, electrical wiring, I'm your guy. So Fantastic.
Speaker 1:What's the before you go, how how are the the vibes in in the Gundo? You're you're guy you guys are technically in Redondo, so I don't know if you claim Gundo.
Speaker 6:I'm calling it The Dondo. No one's
Speaker 2:The Dondo.
Speaker 1:The Dondo.
Speaker 2:Redondo. Yeah. It's good. I heard that before. Seems so obvious now that I can think about it.
Speaker 2:Yeah.
Speaker 6:Yeah. It's I I think the vibes are very high. I think everyone's just so excited to build. It makes complete sense. It's not of, like, not only center up, but just even the companies in this space too of, like, there's a time to build, a time to move fast, a time to build things correctly.
Speaker 6:And I think it's our turn to kind of, start changing this entire industry, which is in the hard tech space. And I think it's What
Speaker 1:Yeah. What percentage of your customers are in Southern California right now versus other states, international, etcetera?
Speaker 6:I'd say most of our I'd say probably about 80% of our customers are in The US or is not any of those in Southern California.
Speaker 12:Southern California.
Speaker 6:All of are in The US. But that's because they like kinda having this supplier or this, face of just, like, I can come next drive over next door and just be able to support them and talk to them as well too. So
Speaker 1:It's old fashioned.
Speaker 2:I love it. Yeah. Love it. Well, congratulations.
Speaker 1:Thank you for coming on. It's very exciting.
Speaker 2:And we'll talk to you soon.
Speaker 1:Have a
Speaker 2:great rest of your day. Take
Speaker 8:care. Have a one.
Speaker 2:Cheers. Bye. Well, that is our show today, folks. We hope you enjoyed the lightning round, the deep dives, the chat with David Center and Center Systems.
Speaker 1:Visualizing that that conversation or or getting dropped in there and and Dylan's like, yeah, I'll throw in a check.
Speaker 2:Yeah. It's And
Speaker 1:he's like, cool. Like, you know, 50 Yeah. A 100. He's like, how about
Speaker 2:The whole round.
Speaker 1:8 figure. I love it. Very cool.
Speaker 2:It's fantastic. Hopefully, we see more of it. It seems cool.
Speaker 1:Yeah. It makes sense. It's it's it's about the Different timeline. Everything's the great. Fund Yeah.
Speaker 1:Or the vehicle that gives you the money.
Speaker 2:It's about
Speaker 1:the person. It's about the investor. And it seems like they have an awesome partnership. Yeah. Very cool.
Speaker 2:Well, anyway, leave us five stars on Apple and Spotify, and we will talk to you tomorrow.
Speaker 1:Thank you We will.
Speaker 2:For watching.
Speaker 1:Thank you for tuning in. Have a great afternoon.
Speaker 2:Have a great afternoon. Goodbye.