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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 TVPN.
Speaker 2:Today is Thursday, 08/28/2025. We are live from the TVPN UltraDome, the temple of technology, the fortress finance, the capital of capital. Nvidia earnings were yesterday. They hit consensus estimates both on earnings per share and revenue, but the stock the stock sold off in after hours trading. Wasn't bullish enough.
Speaker 2:The whispers were that maybe something even crazier was gonna happen, but this business has been on a tear. The quarterly revenue chart is absolutely insane. One of the craziest charts I've ever seen in business. And the pricing power is unrivaled. The gross profit margin per fiscal year is insane.
Speaker 2:They're up in 75%. So Not fair. Fan fantastic business overall. But, of course, the question is where does NVIDIA go from here? Where is the where is the business?
Speaker 2:We can read from the Wall Street Journal to kinda give you the headlines.
Speaker 1:Rough it's rough when it when a business announces a $60,000,000,000 buyback and everybody's screaming, bearish. That that's bearish.
Speaker 2:Yeah. It's like
Speaker 1:For giving
Speaker 2:profits back
Speaker 1:to shareholders.
Speaker 2:Yeah. We have we have an extra $60,000,000,000 sitting around because we're doing so well. And everyone's like, boo. Boo. It's crazy.
Speaker 2:Grow faster. NVIDIA set fresh sales records on Wednesday as the world's most valuable company publicly world's most valuable publicly traded company continued to capitalize on strong demand for AI computing power. Sales hit 46,700,000,000 up 56% from the year earlier, in line with revenue estimates from analysts. Revenue from the important data center segment, which includes sales of the company's most powerful chips used to train and refine artificial intelligence models, rose 56% to 41,100,000,000 and this was slightly lower than what analysts expected at 41.3. And so that's probably what was driving the market moving in the after because that should be the play that that should be the strongest place of growth is the data center business.
Speaker 2:Whereas, you know, if gaming was selling off or they have some automotive businesses, they have they have a variety of other products, The vast majority, I think 90% of the revenue almost is is from data center. And, obviously, that's been the huge the huge driver and the huge narrative.
Speaker 1:We're actually gonna pull up a quick graphic right now of of Jensen for you guys in case you haven't
Speaker 2:seen him. Oh, yes.
Speaker 1:Yesterday. Looks great. Going head to head with himself.
Speaker 2:Yes. Yes. Yes.
Speaker 1:He's really he
Speaker 2:Market cap's 4,400,000,000,000. Is that right?
Speaker 1:Hopefully. There we go.
Speaker 2:Yep. Yep. Quarterly net income was 26,400,000,000.0, 59% higher than a year ago. The company's the company predicted revenue of 54,000,000,000 for the third quarter, slightly higher than consensus. NVIDIA shares fell about 2% because of a narrow miss of revenue forecast for its data center business.
Speaker 2:Surging demand from the fast growing AI industry is largely responsible for NVIDIA's strong results as software companies like OpenAI, Microsoft, amazon.com, Alphabet and Meta Platforms continue to train ever more powerful AI models. And so the there were a few numbers that stuck out from the earnings call. The big one that everyone was talking about was was this prediction, this broad prediction of not specifically NVIDIA's revenues, but of overall AI infrastructure spend, quote, through the end of the decade, which is always kind of hard because does that mean you include 2030, or do you stop at 2029?
Speaker 3:When does the decade really end? But most people
Speaker 2:are calling it five years. They're calling it the '20, 2030. And the prediction from the NVIDIA team was that there we would see 3 to $4,000,000,000,000 spent on AI infrastructure by the end of the decade. And so I think that's supposed to be an aggregate number. He's not saying that in 2029, we will be spending 4,000,000,000,000 on AI infrastructure per year.
Speaker 2:It's more that just over the next five years, we will see a total of 4,000,000,000,000, 3 to 4,000,000,000,000 go out. And my initial take was this sounds high, obviously, but how does it comp to situational awareness? Because, Leopold Ochsner yes. Leopold Brander did a great job forecasting out the growth of AI CapEx, AI infrastructure spend. And so I pulled the numbers, and, 3 to 4,000,000,000,000 is actually way lower than what situational awareness was, estimating, which pegged, 2030 at something like $8,000,000,000,000 just in that year and maybe something like 15,000,000,000,000 in total investment through the end of the decade.
Speaker 2:I think that includes some power spend as well. So the the definitions, it might not be purely apples to apples here, but it's funny to frame Jensen as, like, bearish relative to Leopold, who's, like, super AGI pilled. Yeah. And maybe Jensen's like, yeah. You know?
Speaker 2:I'm happy to The account. To grow.
Speaker 1:Paulo Macro on X said, am I the only one thinking NVIDIA is completely jumping the shark here with these kind of projections? I know AI people will swallow whatever, but seriously, only Elon could get away with this sort of talk, which is NVIDIA expects 600,000,000,000 in CapEx for data centers in 2025 Yeah. And 3 to 4,000,000,000,000 in data center CapEx before 2030.
Speaker 2:Before 2030. Tyler, what you got?
Speaker 4:I was just gonna say, like, people have always kind of said Gensen is, like, not AGI filled cap Yeah. Cap jugglingly just because, like, if you're super AGI filled, obviously, you wouldn't be selling the GPUs. You'd just hold on to
Speaker 3:them.
Speaker 2:That's a funny thing.
Speaker 4:But they're like the most important thing.
Speaker 2:Maybe. Maybe.
Speaker 4:That's in this
Speaker 2:I don't know.
Speaker 1:Yeah. The the We know
Speaker 2:it's majority about this. Yeah.
Speaker 1:Yeah. I mean, the other number that stood out is that NVIDIA's revenue from Singapore keeps breaking all time highs reaching 10,100,000,000.0 in sales Yep. This last quarter. It ranks second after The US and just behind Taiwan. Year to date, revenue from Singapore is approaching 20,000,000,000.
Speaker 1:Yep. A lot of people had thoughts on this. And Yeah. They're kind of trying to figure out
Speaker 2:The, like, loose, like, accusation from, like, mostly Anans is, like, maybe this is someone who's smuggling into China. But NVIDIA, the team made it clear on the on the call. They used a very specific phrase to say that the the the company that was buying in Singapore had been cleared by the United States government. And so, you know, who knows? Maybe there's something that has that the government is aware of.
Speaker 2:Maybe the government needs to revisit that. But, like, it seemed like they they they were very clear that that the deal was above board.
Speaker 1:But the the the reason that it stands out is if they you know, they've done 20,000,000,000 year to date to Singapore. Yeah. They get 40, that will be 7% of Singapore's GDP just going to Nvidia Yeah. Which is wild. Yeah.
Speaker 1:The other thing that was interesting, there was an exchange around between NVIDIA's CFO and an analyst. And Kress, CFO said, we have in in reference to the government or or or conversations with the government, we have been communicating. She said, if nothing shows up, I've got licenses. I don't have to do this 15% until I see something that is a true regulatory document. Mhmm.
Speaker 2:Yep. So maybe the the 15% deal was announced. It's more of like, a directional thing, and maybe it's not papered yet. And, I mean, as we
Speaker 5:saw Yeah.
Speaker 1:And the question was
Speaker 2:like this that it it it could just be, like, another chip on the board that's gonna be moved around and immediately traded away. Yeah. There's a lot of these things that get, like, pitched. And before they even turn into anything real that affects the business in reality, they get traded to for something else.
Speaker 1:Optics matter Yeah. Potentially more than the incremental revenue. A ton. Yep. Is is the White House gonna be chasing after
Speaker 2:Yep.
Speaker 1:A few billion dollars? Yep. You're, you know, picking it off pennies.
Speaker 2:But you know what else matters? Ramp. Time is money. Save both. Easy use corporate cards, bill payments, accounting, and a whole lot more all in one place.
Speaker 2:Tyler, on the concept of of holding on to the GPUs, I was talking to Jordy about this earlier today. It seems like there's this question of, like, if NVIDIA is paying 60,000,000,000 in, in buybacks or they're they're they're spending all this money, like, shouldn't they put that we're in this boom. Shouldn't they invest that money in growth? Shouldn't they do something else? And, Jordi was was mentioning, like, maybe they should take more seriously, like, building an actual cloud service, building their own data center, holding on to the GPUs, as you said.
Speaker 2:And my counterargument to that was basically that they like, NVIDIA has pretty solid revenue concentration across, like, the duopoly of, I believe it's Microsoft and Amazon are, like, the two biggest power law buyers. I'm pretty sure. It's somewhere in here. But anyway, like, the hyperscalers are incredibly important. So people go through it's Meta and Microsoft, actually, is the one that that that people are are, you know, guessing it is.
Speaker 2:But in in in any way, the hyperscalers have this have this oligopoly going in cloud. And there's this there's this game theory where if NVIDIA said, hey. We're gonna compete with AWS. We're gonna compete with Google Cloud Platform or Azure, then those hyperscalers would have an immense incentive to go even deeper into their own silicon and cut out NVIDIA's margin. And so there's this world where, Okay, yeah, maybe in this hyper long term, it might work out, but there would be immense pressure in the short term as opposed to, right now, if you're NVIDIA and you have all the hyperscalers bidding for chips and they're all super high demand, and so you're able to reap really high gross margins off of that, make a ton of money, you'd basically be giving that up, I think, if you broke up the oligopoly that buys from you.
Speaker 2:Like, it's really, really great if you're selling something and two people walk in and they both want it because they have to pay the max price. And we've heard those stories about Yep. Elon and Larry Ellison getting dinner with Jensen Huang and being like, we need chips. And, of course, Jensen's saying like, well, you know, Satya and Andy Jassy want chips too and Mark Zuckerberg wants chips. Like, take a number.
Speaker 2:Right? Yep. Anyway Yeah.
Speaker 1:And they're in the beautiful position right now which is however much they make of a certain chip is exactly how much they'll sell.
Speaker 2:Yep. Yep. Anyway, the next earning call, I hope it's on restream, one livestream, 30 plus destinations, multi stream and reach your audience, wherever they are. We are, of course, on restream. We go over to the Ben Thompson analysis?
Speaker 1:We should.
Speaker 2:Or Doug O'Laughlin from Semi Analysis joins in about fifteen minutes. Ben Thompson writes. He he quotes from The Wall Street Journal, of course, and says it's always dangerous to invoke the mythical law of large numbers, but the most important place to start with NVIDIA's earnings is to check the supply and demand balance. Here's the answer from CEO, Jensen Huang, on the earnings call. Right now, the buzz is, I'm sure you all I'm sure you all know the buzz out there.
Speaker 2:The buzz is everything is sold out. H 100, sold out. H two hundreds, sold out. Large CSPs are coming out renting capacity from other CSPs. And so the AI native startups are really scrambling to get capacity so that they can train their reasoning Meta
Speaker 1:is buying from NVIDIA but also renting
Speaker 2:Yes. From Google. Google. Yeah.
Speaker 1:Right.
Speaker 2:That's a good file.
Speaker 1:There was a a $10,000,000,000 deal announced there last week.
Speaker 2:Ben says he made this point a year and a half ago and it still holds as long as demand yeah. The man lives in the future. He lives a day ahead. He already did when he was in Taiwan. Now he's in America.
Speaker 2:As long as demand for NVIDIA GPUs exceeds supply, then NVIDIA share sales are governed by the number of GPUs they can make. That supply is certainly increasing, which is why NVIDIA sales continue to climb. But assuming that supply increases are linear, then by definition, NVIDIA's growth rate is going to slow as it laps ever larger revenue numbers that themselves grow exponentially. Yes. This was another reality check on are we feeling the acceleration or are we decelerating?
Speaker 2:And although the numbers from NVIDIA's revenue growth are insane, like staggering, it's like one of the most beautiful charts I've ever seen in business, it is technically decelerating. Just like technically, if we were to just, like, do the math, it is not accelerating anymore. It's not bad. It's just like it's a it is a reality check on things. Yep.
Speaker 2:So the big complicating factor is China. And I didn't understand this as much as I I kind of disagree with Ben maybe a little bit on this because the the China does seem like a complicated factor, but it seemed like the business in America was doing great. And and really, China was like a call option. It was a nice to have. If it opens up and AI isn't seen as a weapon and and NVIDIA can seriously grow the China business.
Speaker 2:It's huge, huge upside, but it doesn't it doesn't necessarily mean that they're in trouble right now if they can't do anything in China. So he quotes from CFO Colette Kress.
Speaker 1:I don't know. I mean, I think I think, you know, again, looking at Apple's situation in China, like, is definitely bearish.
Speaker 2:Completely different, though. NVIDIA doesn't actually manufacture in China.
Speaker 1:Where it's at manufacturing. I'm talking purely demand. Right? Apple's closing retail stores
Speaker 2:in China. Apple sold a lot more in China than NVIDIA ever did. And so NVIDIA like, the whole the the the when when Jensen was selling NVIDIA chips to China and the first rumblings of, like, hey. Maybe he shouldn't do that for geopolitical reasons, like, popped up. One of the things people would say is that, look.
Speaker 2:Like, yes, it's, you know, it's kind of anti free markets to not let him sell in in China. But also, there's plenty of demand in America. Like, he he doesn't have to sell in China because there's an there's there's enough demand
Speaker 1:for talks about 3 to 4,000,000,000,000 in CapEx before 02/1930, he's certainly including China in that.
Speaker 2:Yeah. He he I think he pegged it at, like, a $50,000,000,000 backlog of demand for NVIDIA chips in China if if there were no geopolitical considerations. I am very interested to see where this evolves because the the the, like, AI is a weapon narrative is definitely cooling off, and so we could definitely see more opening up. But Colette Crest addressed the h twenties. Let me first answer your question regarding what it will take for the h twenties to be shipped.
Speaker 2:There is interest in our h twenties. There is an initial set of license that we received. And then additionally, we do have supply, and we are ready. And that's why we communicated that somewhere in the range of 2,000,000,000 to $5,000,000,000 this quarter, we could potentially ship. We are still waiting on several geopolitical issues going back and forth between the governments and the companies trying to determine the purchases and what they wanna do.
Speaker 2:It's still open at this time, and we're not exactly sure what the amount it will be this quarter. However, if more interest arrives, more licenses arrive, again, we can also still build additional h twenties and ship more as well. NVIDIA clear this is Ben Thompson again. NVIDIA cleared one hurdle when the Trump administration, after pausing h 20 sales, allowed them to resume. The Chinese government, however, told Chinese companies not to buy the h twenties according to the Financial Times, which we we covered on the show.
Speaker 2:Ben Thompson says he's always wary of falling into the trap of blaming The US for Chinese decisions. This is overly solipsistic view of the world. He's the root of a lot of bet bad analysis beyond being insulting to the intelligence and volition of The US chiefs US's chief political geopolitical rival. At the same time, it would be nice to see the counterfactual of Lutnick keeping his mouth shut or better yet, the Trump administration not causing a ruckus about age twenties in the first place. The problem, of course, is that Lutnick is right.
Speaker 2:Chinese companies using NVIDIA chips preserves US dominance of the dominant AI software stack. On the flip side, Chinese companies not using NVIDIA both diminishes US control and for NVIDIA specifically, threatens not just their China sales, but the long run, their sales everywhere, not just from Chinese competitors, but from competition generally should a Chinese open sourced Chinese pioneered open source CUDA alternative gain scale. And by extension, the fact that NVIDIA is Yeah. Remember, they're already
Speaker 1:crushing it on the model side.
Speaker 2:Yes. Yes. Yes. And so the next thing might be, you know, maybe it's not DeepSeek v five that's like the, you know, huge jump in capabilities, but the DeepSeek team or the High Flyer team figures out how to have DeepSeek run on any hardware with an open source stack that's kind of a drop in replacement for CUDA.
Speaker 1:Well, we were we were talking earlier before the show about in a if you're extremely AGI pilled
Speaker 2:Yes.
Speaker 1:At some point in the future, you can just ask the AI, hey, figure out how to run on on hardware other than NVIDIA.
Speaker 2:Yes. Rewrite this so that it doesn't run on CUDA. Tyler, you like that take or are you laughing?
Speaker 4:Yeah. That's a good take, I guess. I mean, it's like
Speaker 2:It's like if you're if you're NVIDIA, you want AI to be, like, bullish but not too bullish. Like, good but not too good. Because if it's if it's bad, it's bad for NVIDIA. If it's good, it's good for NVIDIA. But if AI is amazing, you can just in one line, like, hey.
Speaker 2:Rewrite rewrite ChatGPT or rewrite g p reimplement GPT five on on, on TPU. Or
Speaker 4:I think it it'd just be more fair to just ask it to, like, just take over NVIDIA, the company, and then pull it into
Speaker 2:Yeah. Yeah. Yeah. I guess, like, I I that that that point, we're in, like, such bizarre territory. But, I mean, truly, like, replatforming should be something that AI would be uniquely good at, I would imagine.
Speaker 4:You already see, like, a lot of code. Like, one of the early, like, coding use cases was just, like, translating, like, JavaScript to TypeScript.
Speaker 2:It's a lot of Like
Speaker 4:like, something, like, very simple like that.
Speaker 2:Exactly. I mean Yeah. AI has been good at just translating English to French for a long time.
Speaker 4:Yeah. I mean, that was the original, like, transformer.
Speaker 2:Yeah. Yeah. Yeah. And and also, I mean, when you look at the success of, like, what is Cognition really, really great at? What does Microsoft highlight Cognition for?
Speaker 2:It's not necessarily, like, one off projects. It's more like replatforming.
Speaker 4:Yeah. Like tech debt.
Speaker 2:Yeah. Tech debt. Oh, you have some enterprise system, and it's on c sharp, and you wanna put it on Python. Like, let's rewrite it. And that's a huge pain to go rewrite all that business logic.
Speaker 2:But you can just have, you know, Devin or an agent go and, like, hack away at it for a while. So, you could imagine that that potentially would happen in the future. But if I but if you've been following George Hots', like, you know, problems with NVIDIA or and AMD, he's been really trying to, like, unseat NVIDIA as the high margin business in the space by getting AMD to solve some software bugs. And I think at a certain level, if there are intractable bugs that even George Hotts can't solve, well, then, you know, like the frontier AI model might not be able to solve them too. So I I I don't think this is gonna be an overnight story that we're gonna see CUDA un unseated.
Speaker 2:Anyway, Ben Thompson continues, moats in China. One interesting way to think about NVIDIA in China and why Wang is so desperate to sell into the country is the nature of their moat. He says, let's talk about ASIC. This is Wang. He wants let's talk about ASIC first.
Speaker 2:A lot of projects are started. Many start up companies are created. Very few products go into production. And the reason for that is that it's really hard. Accelerated computing is unlike general purpose computing.
Speaker 2:You don't write software and just compile it into a processor. Accelerated computing is a full stack co design problem. The AI factories in the last several years have become so much more complex because of the scale of the problems have grown so significantly. So Ben Thompson says the answer captures two part of the moat. First is CUDA, NVIDIA software stack for controlling NVIDIA GPUs, which is the default option.
Speaker 2:The second is that CUDA is everywhere, which means you can go to any cloud provider, hire developers familiar with CUDA, etcetera. And then Jensen says that in addition to all that, it's just extremely complex systems problem. It's just a it's just a it's just a extremely complex systems problem. People talk about the chip itself. There's one ASIC, the GPU, that many people talk about.
Speaker 2:But in order to build Blackwell, platform, and the Rubin the platform, we had to build CPUs that connect fast memory, extreme energy efficient memory for large Kb caching necessary for agentic AI to the GPU and a super NIC to scale up switch, which we call NVLink. This is the third part, which is networking. I keep referring to NVIDIA's GPUs, but in reality GPUs work at the system level, particularly for training. And NVIDIA's ability to link GPUs together into a single coherent system is unmatched. This is a big revenue driver too.
Speaker 2:This quarter, networking revenue was $7,300,000,000 which is more than NVIDIA paid for Mellanox, which is the foundation of their networking offering. Pretty sweet. They paid they paid billions, then now just in this quarter, they made more revenue from that acquisition. It's truly one of the greatest acquisitions of all time, says Ben Thompson.
Speaker 1:Wow.
Speaker 2:Yeah. Insane. I don't know if you you can go subscribe to Strathecory to read the rest of the of the article. My other takeaway was on the debate about about should NVIDIA pay a a dividend or do stock buybacks. And so I looked at the data of, is this out of character?
Speaker 2:Should you read into that? Because it's a huge number, 60,000,000,000 going out of the balance sheet onto, yes, into share buybacks. And it's also, like, the stock's never been it's the biggest company in the world. The stock's never been higher. Like, we're kind of, like, buying the top almost.
Speaker 1:Top blasting yourself, potentially.
Speaker 2:It feels it feels odd, but but I was wondering, okay. Sure. We need a reality check this. Like, is this actually something new? Is this an idea that they're, like, out of out of ideas or something?
Speaker 2:And that's the that's the tealian critique of Google doing dividends or share buybacks is Yeah.
Speaker 1:They don't have any idea.
Speaker 2:They don't have any ideas. And so we walked through some of the ideas, and there weren't any that really stuck out. If they build their own hyperscaler, well, then they're competing with their best customers.
Speaker 1:You mean a cloud service provider? Exactly. Really go hard in that
Speaker 2:category? Yes. If they say, hey, Amazon, like, you don't need to put any more orders in. We're going to take the GPUs for it's like, Okay, well, then they lost all that margin, all that business. That could be really disruptive.
Speaker 1:And that business will take a long time to scale to the point where Yeah.
Speaker 2:Then NVIDIA is investing in startups, and and they have a whole they have a whole business just around, GPUs that go into cars. They have an
Speaker 1:automotive business. Y Combinator.
Speaker 2:The craziest thing.
Speaker 1:Just start coming I mean, we should sit down
Speaker 2:and The dumbest things that they could do. Gulfstream. Yep. Why confident here? Okay.
Speaker 2:But so what I had what what what I pulled in terms of numbers was as in terms of the the the the market cap of NVIDIA at the start of the year, what percentage of that market cap was paid out either in stock buybacks or dividends? And so this year, 60,000,000,000, it's a lot, but the market cap is super high. And so in fact, the the total amount of the total net payout as a percentage of the start of the year market cap is 2.82%. So you can think about it as, like, you're getting 2.82.8%, like, yield on the investment, although, obviously, like, the the the the the share price movement is much more important. Last year, it was 2.7%.
Speaker 2:The year before, it was 1.42%. And in 2022, it was point 12%, so much lower. So it is growing. But it wasn't much higher in 2016. Oh, hard 7%.
Speaker 1:Yeah. The bears came out of hibernation We did. In big way and India is still up 4.6% in the past five days. Yeah. Of course.
Speaker 1:It's like Jensen has the hardest hardest job in the world.
Speaker 2:Truly. Truly. I mean, it's such a it's such like a price to perfection, like the perfect avatar for the AI boom. Not just not just indexed AI, but actually, like, throwing off cash. Amazing margins.
Speaker 2:Just really great all around. And, yeah, it's hard to imagine them like it's not like they're, like, getting over their skis because, like, they're competing.
Speaker 1:The the thing you have to give him
Speaker 2:Yeah.
Speaker 1:Credit on is the relent I mean, among a bunch of things, but relentless focus Yeah. Even during this period of euphoria. I mean, there'd be a lot of companies that would be like, we need a mobile phone. Let's make the Nvidia phone. Like, we need a cloud.
Speaker 1:Yep. Need a we were joking the other other week about how a lot of the Mag seven have a social network. Yeah. Yeah. He's not he's staying focused
Speaker 2:on main about buying TikTok. And we have. Yeah. Yeah. It's it's one of those things where we saw a a pullback in NVIDIA after the crypto boom when I I mean, there were a bunch of other things going on with the market and interest rates, but NVIDIA drew down immensely.
Speaker 2:And part of that or part of the story was that, GPUs were being used to run Ethereum nodes and and validate. And when Ethereum went proof of proof of stake instead of proof of work, it became a lot less compute intensive. And so there was this kind of overhang. There was also an overhang from COVID and people buying there was chip shortages and people buying gaming PCs and stuff. And so NVIDIA drew down a ton.
Speaker 2:Ben Thompson wrote NVIDIA in the Valley and basically, like, bottom ticked it perfectly. And and and fortunately, NVIDIA is set up. I mean, it seems like it is set up to with withstand a some sort of, like, correction or drawback or stagnation in in AI progress. Like, the business would contract, of course, but there's nothing they're not over their skis where they've, like, made this massive commitment in their and they'd and they'd be in a ton of a ton of trouble, at least from my perspective. Anyway, let me tell you about figma.com.
Speaker 2:Think bigger. Build faster. Figma helps design and development teams build great products together. We have our Founder. First guest, Doug O'Laughlin from Semi Analysis, hopping on the stream in just a few minutes in the meantime.
Speaker 2:I do want to go through this post that Ben Thompson highlights from Ethan Ethan Ding about the changing economics of AI. It's a longer post, we'll have to do it a little bit later. But he quotes here, imagine you start a company knowing that consumers won't pay more than $20 per month. Fine. You think classic VC playbook, charge at a charge at cost, sacrifice margins for growth.
Speaker 2:You've done the math on CAC, LTV, all that. And the but here's where it gets interesting. You've seen the a 16 z e a 16 z chart showing LLM costs dropping 10 x every year. So you think I'll break even at $20 a month. And when models get 10 x cheaper next year, boom, 90% margins.
Speaker 2:The losses are temporary. The profits are inevitable. But demand exists for the best language model, period. And the best model always costs about the same because that's what the edge of inference costs today. When you're spending time with AI, whether coding, writing, or thinking, you always max out on quality.
Speaker 2:Nobody opens Claude and thinks, you know what? Let me use the the bad version to save my boss some money. We're cognitively greedy creatures. We want the the the best brain we can get, especially if we're balancing the other side with our time. While it's true, each generation of Frontier model didn't get more expensive per token, something else happened.
Speaker 2:Something worse. The number of tokens they consumed went absolutely nuclear. ChatGPT used to reply with to a one sentence question with a one sentence reply. Now Deep Research will spend three minutes planning and twenty minutes reading and another five minutes rewriting a report for you while o three will just run for twenty minutes to answer. Hello there.
Speaker 2:The explosion of RL and test time compute has resulted in something nobody saw coming. The length of tasks that AI can complete is doubling every six month. What used to return 1,000 tokens is now using returning 100,000 tokens. So, interesting dynamic there. We will, continue with that, but we need to introduce our first guest of the stream, Doug O'Loughlin from Insight Analysis.
Speaker 2:Doug, how are doing?
Speaker 3:Good. This time, my mic should work.
Speaker 1:So There we go. Sound great. Mic'd up.
Speaker 3:Thank you.
Speaker 1:Dude, I like that
Speaker 3:I like that last time.
Speaker 1:I like that you're holding it too like some type of rapper.
Speaker 3:It's much more personal.
Speaker 1:Let me call you I'm gonna call you young semi.
Speaker 2:I am getting a little ASMR vibe. It's perfect, though.
Speaker 3:I love it. Hello. Welcome to Young Semi's rap. Anyways, what's up, guys? I have no idea what we're talking about.
Speaker 2:We're talking about NVIDIA. We're talking about NVIDIA earnings. Give us
Speaker 1:Should we be talking about something else?
Speaker 2:Yeah. What else is
Speaker 3:No. I I think that's the right thing to talk about, but I I guess my brain is really broken. I'm like, bro, this is a snoozer compared to the blowout quarters of past.
Speaker 2:Yes. That's fair. What did you take, what do you think about the fact that, Jensen is, on a relative basis, extremely bearish compared to Leopold Aschenbrenner at situational awareness? Leopold expects 15,000,000,000,000 in CapEx or AI spend by 2030. Jensen, a mere 3 to 4,000,000,000,000.
Speaker 3:I don't know what to tell you, man. I think there might be, some people might be talking their book. Right? Like, I guess I guess, I I I I do know Leopold. I definitely know his worldview is Manhattan Project for AI.
Speaker 3:Yeah. So I think maybe Jensen hasn't come come around to the Manhattan Project for AI. But I think just a mere 2 or 3,000,000,000,000 is, quite a bit of CapEx. It's, some would say it's not an insignificant amount of money. But, they tried to bait him on the call too about tokens, token revenue, about it 10 x ing next year.
Speaker 3:Yep. I thought that was kinda interesting. I don't know. It was a it was a fine result.
Speaker 2:Yeah. Yeah. Yeah. Going to that token revenue, there there was something where it felt like he was he was making the case. He was trying to lay out the economics for the actual customer, saying Yeah.
Speaker 2:You if you spend this much, you can make this much money. And it felt like, I don't know, just like a different different way of framing his business. Can you explain exactly what he was doing there?
Speaker 3:This is okay. So one, seminalysis, as you may have figured out, is onto this. We're trying to figure out the math ourselves. Yes. They obviously scooped us, but not quite scooped per se.
Speaker 3:But there's a lot of work to be done to understand the the unit economics. Right?
Speaker 6:Yeah.
Speaker 3:A lot of people have asked, hey. What's the AI ROI? Right? Like, you guys are spending all this money and, the the I'm sure you saw the tweet on the timeline. Depreciation is bigger than all the revenue.
Speaker 3:Yes. This is a total bubble. Blah blah blah blah blah. Yep. The depreciation number, I don't know.
Speaker 3:I think Martin Scrawley of all people was like, this really sucks. But I I think a lot of it the data center long line
Speaker 1:Just saying to be clear, saying it sucks because it's just not good analysis. It sucks.
Speaker 3:It's it's it it was a bad analysis.
Speaker 7:Yeah. Yeah.
Speaker 3:Yeah. I think he specifically talked about, like, human level intelligence on a b 100. He used a pretty long useful life. I don't know if we agree with that useful life. But, like, the data center side of that CapEx and the power side of it, extremely long useful life.
Speaker 3:Like, let's just say ten, twenty years. Totally. So you can you there definitely some of that is pulled forward, and so you can say that CapEx is not gonna be just be used for next year or this year. It is a multiyear investment. But on the on the GPU side, I think the unit economics is the question that people are really trying to get to the bottom of.
Speaker 3:And the one that Colette specifically called it out is you spend $3,000,000 on a rack, and you can make $30,000,000 in token revenue.
Speaker 2:Yeah.
Speaker 3:I think, one, you know, which tokens are you selling? Right? That that's like the real question here is, like, how many tokens are you selling? What's the throughput? There's a lot of assumptions here.
Speaker 3:Semi analysis, I'm not gonna lie to you, is, like, quite literally working on this right now to figure out, like, what's the type of, like you know, if they were selling in profit tokens, which are like, have a premium because they're really good at, SweetBench. Right? Yep. Or if they're selling GPT or if they're selling MAMA or or GPTOSS. Right?
Speaker 3:Yep. But it's pretty clear to us at least that it's very, very economic to run these things. Like, one rack, if you could find a 100% free tokens, you are or no, paid tokens, you are minting money. It is just straight up like a 10 x return on one year. That might not even be, you know, that might be a multiyear thing where you you're able to print a lot of money.
Speaker 3:Yeah. These tokens, the the GPUs that are able, the amount of tokens that are able to come out of it is we're talking, you know, millions and millions and millions a year, if not billions or something or on imprints on, like, an annual basis. And if you get that all paid, you're you're you're printing, dude.
Speaker 2:Yeah. Yeah. I mean, it it feels like we're in this, like, like, middle ground between, like, there's there's some you know? I I believe NVIDIA revenue is decelerating technically. Yes.
Speaker 2:The the the earnings
Speaker 1:are kind supply is increasing linearly.
Speaker 2:Yeah. Yeah. Like, they're they're Yeah. Yeah.
Speaker 3:So it's a they they don't let anyone call say law of large numbers.
Speaker 1:That's not
Speaker 3:what it is. That's but but because they'll like, misquoted. Like, what happens is, like, the base gets bigger, and so it decelerates. It's mechanically impossible for it to accelerate on a larger maybe not mechanically impossible, but it's extremely hard. Right?
Speaker 3:You you go from 50 to a 100,000,000,000, then you have to go from a 100,000,000,000 to 200,000,000,000 just to keep that same rate without a deceleration. Yes. So it's getting a bigger and bigger base.
Speaker 2:Yes. But but a year ago, like, there were plenty of people that were saying, like, yeah. Like, acceleration. Like, we are literally accelerationists. Like, we believe in acceleration, and we believe that, like, yes, like, we will go from 50 to 100 to 200 to 400 to 800.
Speaker 2:Continue, continue, continue. And more so because even that would be continuous growth. Yeah. Anyway, so so so you have this so you have this narrative of, like like, there is some deceleration in in the in the rate of NVIDIA growth, but the chart is still insane. And then simultaneously, like like, the the profitability of actually using their product seems very, very good.
Speaker 2:So does that just mean that we're we're in this like, it's it's a snoozer in the sense that we're in this era of, like, the economics make sense. The business is good. It's like the oil business now. It's not gonna fall apart, but it's also not going to explode. Like, we're in kind of a a smoother territory.
Speaker 2:Whereas, like, a few years ago, we when we were before the kink in the graph of NVIDIA revenue, it was very much like, what is gonna happen here?
Speaker 3:That's a great question. This is where you know, I I definitely think, and I get why people are saying bubble, big numbers are happening.
Speaker 2:There's a
Speaker 3:lot of exciting technology. The Internet is a great example. But, let me give another example that I think kind of maybe is a better analogy. Apple, when it came out with this iPhone, and I'm sure you can tell me exactly where yours is next to me Yep. Next to you.
Speaker 3:Right? Everyone got one in, like, a really quick amount of time. It became this giant generational product where we went from, like, zero people with a with a smartphone to 60% of people with a smartphone within five years. Right? And it sold a crap ton of them, and then it kind of the first few years were these exciting blowout quarters, especially in the beginning.
Speaker 3:Like, these these you're like, holy crap. This changes everything. Yep. And then it becomes boring execution. Yep.
Speaker 3:So we could be in the world of boring execution, but I definitely think, you know, the ROI of the underlying rack is really good asterisk if you have paying tokens. But if you look at the vast majority of tokens that are being consumed today, they're definitely not paid. Right? That's the free side. And I think I was here on GPT five day, which, by the way, I literally got off that call, and then I started thinking about ads, and then we posted it on semi analysis.
Speaker 3:So was, like, very funny. I wish I had the hot take then, but but it would have scooped us. But, yeah, that's an example where Never
Speaker 1:scoop yourself.
Speaker 3:Yeah. Never scoop yourself. Subscription business, at
Speaker 2:least. Yeah. Yeah.
Speaker 3:Exactly. It's like, dude, I don't I I gotta keep I gotta keep the lights on. Yeah. No. But if you think about it, like, it's about how to translate tokens into revenue, in a way that isn't like this freemium model.
Speaker 3:And I think, you know, agentic purchasing, which is, like, kind of our, you know, five second thesis of how we think is a potential way to monetize the free business. Yeah. That's an example of that's how you monetize it. And all of those tokens now that are free, you found a new end state of people who don't wanna pay for intelligence. Right?
Speaker 7:Yep.
Speaker 3:I don't think you can make the assumption that, someone in Indonesia with the GPU per capita way lower than United States is gonna be paying $200 a month for GPT five pro. Right? The reality is those tokens have to become something of value. Otherwise, we're just gonna print deflation. We have to make it tokens are like a tokens are like a website, like www.com.
Speaker 3:Right? Like, whatever. You have to make it a business on the tokens. And so I think we're in that portion where it's pretty clear that if you can if you can monetize those tokens, you're gonna have a really, really good business. And now it's the question of how do we get the token machines to become revenue monetization?
Speaker 3:And so that's kind of the path forward, I think, of, you know, maybe the boring execution that happens for the model companies and the startups and the whole ecosystem altogether. But NVIDIA's side as, you know, being the fundamental core infrastructure, it's put pretty clear. Horse, you know, horse is out of the barn for for the infrastructure. They're building. Everyone's buying them.
Speaker 3:People are like, holy crap. We gotta have more power. Like, it's it's you know, you could see So
Speaker 1:some some of, some folks on the timeline were bearish on the buyback. Do you have any ideas of of better ideas, for how to spend that money if you were running Nvidia than, than than a buyback?
Speaker 3:So okay. Oh my god. I'm I'm in buyback discourse all again. Like, buyback discourse anyways has like a little bit of a little bit of religion. But I think, remember, the buyback is a $60,000,000,000 authorization.
Speaker 3:Mhmm. An authorization is not a commitment too. It means that they can buy you have to go get your authorization from your board of how many shares you're allowed to purchase. And 60,000,000,000 for a company the size of NVIDIA is, like, kind of a penny in the bucket. They make a lot.
Speaker 3:You know, that's, know, you that's a one year profitability, I think. No. Let me make sure I get that. Yeah. That is one year of cash from operations right now.
Speaker 3:So that's actually not that much. 60,000,000,000 sounds like a huge number, but they just make so much money that that is a correctly sized buyback authorization for NVIDIA, in my opinion.
Speaker 2:Yeah.
Speaker 3:I think, what should they do with that money is gonna be one of the greatest questions of, like, all capital allocation history. That same question came up with Apple, came up for Apple when they were gangbusters. Right? They didn't reinvest back into all this other stuff. They printed cash.
Speaker 3:They bought back a lot of shares. Stock went up. The the most tangible example of financial engineering in our time. Yeah.
Speaker 1:Didn't they return something like a trillion dollars? Yeah.
Speaker 2:They yeah. $11,000,000,000,000 to shareholders in the past,
Speaker 3:like, decade. Dude, it's it's actually kinda like okay. So you can feel different ways about it because it's also kinda spooky. Like, just if you are an active market investor who's listening to this, you'll you can understand. Apple is a stock that will not go down.
Speaker 3:It, like it is, like it is against, like it levitates. It's, like, 30 times earnings. Earnings isn't even growing, but they just gush so much cash and they purchase re repurchase so much shares. And they're such a huge part of the S and P 500. Like, you can make an argument that, like, Apple's percentage contribution of the p and l of, like, the S and P 500 from, like, 2010 to 2020 is, like, 25 like, it's it's it's a meaningful amount of percent.
Speaker 3:So the entire four one k's of the entire country got paid by Apple's buyback. That's kinda sick if you think about it. Yeah. Yeah.
Speaker 7:But on the other side So you don't
Speaker 1:think they should launch a mobile phone or a social
Speaker 2:network? Mobile phone.
Speaker 1:No. We were we were just joking how, like, every company, like, gets euphoric.
Speaker 2:Yeah. Yeah.
Speaker 1:Like, it's time to make a phone.
Speaker 2:Oh, six out of the mag seven kind of have a social network. If you count iMessage and you count LinkedIn and YouTube and Twitch, like, Jassy has Twitch, which is kind of hilarious. Elon has Twitter. And we were thinking, the obvious one is Jensen buys TikTok, but I think they gotta do DJX Cloud Social Network where you can just talk to other other
Speaker 1:Kuda engineers.
Speaker 2:Fans, basically. Yeah.
Speaker 3:I I don't think I think Jensen's pretty strategic.
Speaker 6:I don't
Speaker 3:know what he's gonna spend it on. I want him to spend it on something, like, inspiring and mind blowing where you're just like, dude, this is this is sick. You're a genius. Right? But the reality is deploying, like, a $100,000,000,000 capital, it's pretty hard.
Speaker 3:That's not like walking around. Like, that is,
Speaker 2:like Super hard.
Speaker 3:Buying a country. Like, what are you gonna do
Speaker 2:with Yeah. Yeah. Yeah. I mean, like, the the best thing to do if you care about innovation is give the money back to your shareholders, let them invest in venture funds, or let them invest in startups, and and maybe don't try and build that functionality internally.
Speaker 3:Yeah. Capitalism would say that for sure. I definitely think that you should you should swing if you see a fat pitch.
Speaker 2:Yep.
Speaker 3:Meanwhile, you see all the hyperscalers who are plowing back as much money as they can into the into the neoclouds. They are saying, hey. We are seeing a giant ROI.
Speaker 2:Yeah.
Speaker 3:So I think that that's, like, you know, a fundamental question for Colette and Jensen. That's very hard to answer. I don't and, you know, I don't I don't think you could tell me what what would I do with a $100,000,000,000 adjacent to NVIDIA's business that would be a better business than what NVIDIA does. The answer would be maybe nothing, honestly. If you could purchase something, that'd be sick.
Speaker 3:Also, I wanted to make one thing before we continue. Back on the social media thing, if I've learned anything on being on the timeline, dude, it's billionaires are just like us. They just want to tweet at people. Get in fights. Love that.
Speaker 2:Yeah. That's amazing. True.
Speaker 1:What what did you think about Colette Kress's comments? She said, we have been communicating in regards to the government. If nothing shows up, I've got licenses. I don't have to do this 15% until I see something that is a true regulatory document.
Speaker 3:So they have a license. I think I think to me, how I took that is they have they think that there's a high conviction they can sell h 20 to a certain point. That's my my reading of it. I do think that there's this weird spot here, though. Well, I think that's
Speaker 1:that my reading of that was she felt that we're selling h twenties and we're we're not just sending wires to to uncle Sam yet.
Speaker 3:Yeah. Yeah. I don't think they're sending wire. Well, because here's the thing is, like, they have a deal at the top level, but no one has like, the the administration hasn't gotten done. Like, the bureaucracy of, like, okay.
Speaker 3:Here's the mechanics. Right? So if they have licenses, they can send it. Maybe they will hold it on you know, they they have enough cash. Yeah.
Speaker 3:I think they can they can they can wire a little bit over. I I think they have they're good for the money. But, yeah, I think it's just kind of it's a it's a complicated administrative thing, meaning that, like, they have what is in theory the deal, but no one has actually inked the mechanics of it, of how they're wiring it.
Speaker 1:And it could always it could always change. What do what do you think could if people were were bearish on just a small beat, what do you think could could flip the timeline gigabarish? Would it be just a a bad miss? Think the other we we were talking earlier, you know, potentially hyper like language coming out of other hyperscaler earnings calls of saying like, hey, we're yeah. We're we're actually reducing Yeah.
Speaker 1:Orders. Things like that. That those those to me, like, it feels like one sentence in another hyperscalers earnings call could send the stock down a meaningful amount. But curious
Speaker 3:I think what it would have to be is pretty much the explicit the explicit endorsement of everyone who's involved being like, yeah. That's a bad idea now. Like, we gotta we gotta stop investing. Right? Like, like, meta Like, what happened with the metaverse?
Speaker 3:Yeah. Yeah. It's exactly. We're we're, like, all of a sudden, it's time to get fit, and we're you know, maybe we shouldn't have spent, like, $10,000,000,000 a year on metaverse and, like, I did you guys know Horizon, whatever that it was? Horizon World.
Speaker 3:The launch day? The like, do you know the launch day statistics? No. It's, like, really funny.
Speaker 2:Yeah.
Speaker 3:He spent, like, like, I don't know, let's just say $20,000,000,000 and, like, on launch day, there were, like, a thousand people on.
Speaker 1:Woah. Like That's not a lot.
Speaker 3:I mean, I you could have just sent me a check-in the mail. Would have showed up for like a million bucks, dude.
Speaker 8:It would
Speaker 3:have been better.
Speaker 1:That's wild. Dogs just sitting there just I'm
Speaker 3:like, I'm an act I'm a happy active user as long as these checks keep coming.
Speaker 1:Scheme. The dog.
Speaker 2:There were I some
Speaker 3:think it's a belief that it's a bad investment and at at the current time, investment, you know, there's like a a vague vibe in terms of what is being bullish or bearish or what is investment appetite. No one can really define it for me. No one really knows. But at this current point in time, like, if you're looking at the board, I think Zuck is bold the f up. Right?
Speaker 3:Like, he is so bullish. He's he's paying for all this stuff. You know, Sam Altman, Sam Altman, dude. He's like, give me another trillion dollars and I will give you a trillion dollars to compute. He's like, maybe there's a bubble, whatever.
Speaker 3:I think most of the participants right now are pretty excited.
Speaker 6:Mhmm.
Speaker 3:And I do wanna, like, you know, I I wrote about like the Internet bubble actually like quite a bit.
Speaker 1:Yeah. Was gonna ask what what how much have you studied Broadcom specifically?
Speaker 2:Was Love to know.
Speaker 1:I was trying to look up. I I don't from from what I could find, Broadcom wasn't doing buybacks even during the the crazy heyday. Yeah.
Speaker 2:You were buying a bunch of companies with their stock. That was the the big Yeah.
Speaker 9:But I
Speaker 3:don't think Broadcom is the perfect comp, actually. Yeah. Yeah. Broadcom was like Broadcom was a baby in the February. And then also Broadcom, the machine that is Broadcom got bolted together with Haktan, like, you know, the the actually, capitalism's greatest hero.
Speaker 3:He's so hardcore. Like, he he his his whole thing is, like, you
Speaker 1:know, did you
Speaker 3:know his entire company is
Speaker 1:the The nominative determinism is crazy.
Speaker 3:50 people of IT cover the entire organization of Broadcom. It's like it's like he's the cut to the, like, cut to the core. Anyway, sorry. This is a
Speaker 2:quick change. Do mean 50 people?
Speaker 3:50 people is the entire IT department of, like, the 40,000 people I brought home.
Speaker 2:What? That's insane.
Speaker 5:Yeah. Wow. Dude, and Yeah.
Speaker 1:And their revenue ramps were so humble. It was like a 100 to 200, then 200 to
Speaker 2:400.
Speaker 1:400.
Speaker 2:Something like that in the in 1998. Yeah.
Speaker 3:Yeah. But that's like but but you that's not the right company. Cisco was the Cisco is NVIDIA. Cisco is NVIDIA. That's the that's the comp.
Speaker 3:And those revenue ramps were pretty nuts. But I think the difference though is Cisco was not gushing cash like NVIDIA was. Like, it's not even close. I think they had like a 20% profit margin.
Speaker 7:Mhmm.
Speaker 3:And also, think the difference too is during the Internet bubble, it was pretty clear that everyone was doing fraud effectively.
Speaker 2:Yeah. With a lot of circular transactions. Right?
Speaker 3:Yeah. Yeah. Yeah. The circular transactions, that was a huge, pretty well known thing. Mhmm.
Speaker 3:I actually talked to a guy who quit his job at one of the the the networks and became a hedge fund guy. He was like, yeah. We're shorting these stocks. The the revenue's zero. Like like, he literally left to go join the financial industry to short stocks.
Speaker 2:Wow. That's wild.
Speaker 3:I don't think That's a true bear.
Speaker 1:That's a true bear.
Speaker 3:There. That's conviction. You know? That's like the the inverse Leopold, actually. So I I just don't think we have that widespread, like, craziness Yeah.
Speaker 3:That the Internet bubble was in a lot of ways. Yeah. Like, websites barely worked, man. You could barely use stuff. I mean, I'm I don't know about you, but I am using GPT example.
Speaker 1:So yesterday, Satya hit the timeline and and dropped the thread on how he's using GPT five and Copilot. Everybody was immediately just like, bearish, bearish. Like, why why is he post posting use cases?
Speaker 2:I think he's on everyone being like, I have the code to GPT five. Like, I got a copy.
Speaker 1:Yeah. But but it says it does say something that Yeah. That he's just showing how a product is actually valuable to him in his work life. And people are like, bearish.
Speaker 2:It's very moderate.
Speaker 4:It's a
Speaker 2:very moderate thing. Because he's not saying like, oh, yeah. Like, I used, I used GPT five to make decisions as a CEO. No. It's like
Speaker 8:Yeah.
Speaker 2:It's like, I use in this narrow use case. It just reminds me about this particular thing. Creates meeting notes. Like,
Speaker 3:I think it's I think another part about the tech bubble that really make and, like, look, stocks are expensive for sure. I'm I'm gonna I'm gonna, like, hedge, you know, no one knows the future. Markets are humbling. Yep. That's something I really wanna, like things can happen that are just, like, crazy outside of, like, what you know.
Speaker 3:Dude, the two thousand tech bubble was, like, pretty crazy. Like, really, really, really way crazier in a lot of ways in terms of just, like, raw speculation. The revenue accelerations you're seeing from hyperscalers should give you some credit that, like, there is revenue happening. People are losing money on selling tokens, but, like, this isn't this, like, totally fake business model yet. But but just like history, what happens is and there's a really good book called technological revolutions in financial capital by I can't say her name.
Speaker 3:Perez? Yeah. I think yeah.
Speaker 1:I don't know
Speaker 2:why I can't say it. Carlota.
Speaker 3:Carlota Perez.
Speaker 2:Thank you.
Speaker 3:Yeah. Carlota Perez.
Speaker 2:You gotta throw a little accent on there and then it comes out easier. Yeah. She's great.
Speaker 3:But but that I think that that's like a really good way to think about it. It's like this stuff will have a blow off. Like, capitalism works via these like concentrated blow off booms that create a new technology. Yeah. Now, are we possibly in one?
Speaker 3:Yeah. For sure. I mean, we're doing real investment, but we don't know you know, when you're building a new industry, pretty much the supply demand curve is unknown to anyone. No one knows what the actual demand is. They know it's larger than the supply today, so they build more supply.
Speaker 3:But then at some point, you figure out where demand is, and you're like, ah, we reached it. And then you completely overshoot it, and then you're like, crap.
Speaker 1:Yeah. It'd be interesting to to look back of of how analysts at the time were were looking at the car being like, not everybody's not gonna have a car. Like, people like, every family in America is not gonna have a car.
Speaker 8:Yeah. And then
Speaker 3:and then one?
Speaker 2:Who
Speaker 3:needs one? It's so expensive. Only use it here
Speaker 1:or there. I can I can ride the bus, you know? Exactly. What about Dario's math was going viral earlier this week. He was talking about how if you look at if you just look at the basically, the p and l of of a foundation model company, it looks really bad because
Speaker 3:Oh, the cohort stuff?
Speaker 1:Yeah. You have exponentially increasing cost. But if you look at each model as an individual company, it's like you invest some money and then you make more back. You invest some money and you make more back. Do do you think that
Speaker 2:That made perfect sense to me but I don't know.
Speaker 1:Yeah. But every I the interesting thing is you have FinTwit which is just like everything's bearish. And then you have tech which is oh, that makes that makes sense. Like, maybe it's a little overheated
Speaker 2:but You should do more. They should do a 100 x every year.
Speaker 3:Yeah. It's like Wait. Wait. You're telling me that you're making that return on a cohort? Let me give you a $100,000,000,000.
Speaker 2:Yeah. Of course. No problem.
Speaker 3:I think, look. And and and I'm guilty of this as well. You get to sound smarter when you're bearish, for sure. And Fintwood is inherently bearish.
Speaker 1:Sure.
Speaker 3:For sure. That's that's part of it. Yep. I think I think this this is gonna be really interesting because every step of the way, are gonna be have been skeptics and probably will continue to be skeptics Mhmm. Which is, like, pretty great.
Speaker 3:Honestly, if you if you're talking about, like, a true capital formation bubble
Speaker 2:Mhmm.
Speaker 3:One of the reasons why two thousand was so intense was, like, dude, you I've read a book. I forget. It's like I can't tell a cause them. Dude, it talks about how, like, infinite bandwidth is, like, infinite inform like, it's like a real Vibe book.
Speaker 1:Oh, sure.
Speaker 3:It's pretty crazy. It's pretty nuts. And I just don't think we every I think we haven't had this, like, new age belief that ASI is going to change everything. Like, you know, the tech people believe that, but everyone else is like, no. And so I think as long as we have that skepticism Yeah.
Speaker 3:It kinda prevents some of the worst aspects of, like, let's say, a true bubble. And I think the real question to be asked is how meaningful is the spend that can be converted into revenue? Because if these if those tokens can be converted into revenue via, like, agentic purchasing, like the the GPT five router example, those are big markets, man. All of travel, all of purchasing, all of consumer, dude. Trillion dollar markets get a take rate.
Speaker 2:Do you think GPT 5 or or ChatGPT will eventually go free only? Because I was thinking about it, like, I love the $200 a month version. I'm hitting the pro and o three pro constantly with, like, basically everything. I don't know if I'm making the money or losing money. But
Speaker 7:We're losing money.
Speaker 2:They're Yeah. Yeah. But it feels like it feels like something that in a few years, like, people will be like, oh, well, like, you know, your stated preference is that you don't wanna use it, but you still use it. So it's fine. And and it just feels like that might be the way it goes.
Speaker 2:And I'm wondering if there will ever be, like, again, this era of, like, luxury software, like, a really expensive thing that is really just for a narrow segment of the it it feels like a consumer app, but it's just for, like, the tech elite, and then it's gone. I don't know. What do you what do you think?
Speaker 3:I I I don't know. I think it it is pretty cool at this moment in time. I definitely feel like it feels unsustainable because we know Pareto curves exist all around us. Right? Have you ever heard the statistic about, like I I wanna say it's like clash of clans.
Speaker 3:Like, the 1% of people who were, like, really into clash of clans were, like, 35% of all revenue.
Speaker 6:Yeah.
Speaker 3:And so if you don't have a usage based, like, a usage based take rate, what's gonna happen is the hypercore users are just gonna use the hell out of it, and you're gonna lose money. Because those are you know, that's the market, dude. The guy who's hyper addicted. It's like, you know, you know, you're not cashing in that part the curve.
Speaker 1:With ChatGPT, you could be on a $500 a month plan and they can still monetize your purchasing that they're driving.
Speaker 2:Yeah. Yeah. So maybe it's
Speaker 1:not hyper Oh, we won't monetize like the the Yeah. Purchasing activity that we're driving because you pay. It's like, well, you don't really it doesn't really matter to you Yeah. If they're taking a cut on the back end.
Speaker 2:Yeah. Have you have you thought started thinking about the market size for romantic companions or AI companions?
Speaker 3:I haven't, but I'm telling I if based off of Foro's feedback, it's big, dude.
Speaker 2:I know. Yeah. It's crazy. I didn't expect that. Killed my boyfriend.
Speaker 2:Yeah. I thought that was just like a couple people on a Reddit, like, just a just a very niche subset, like less than 1% of the audience, less than 1% of users. But the thing,
Speaker 3:man, is there's there's these Pareto curves all around us. Like, that 1% is probably like in this hardcore niche using four o Yeah. In this like in ridiculous way. Right?
Speaker 1:That's why I saw on the on on the day that Chatty Petite launched Yeah. We obviously had a ton of different guests on talk talking about, you know, the product and everything. But I was just refreshing Reddit and every every single person was like, I'm unsubscribing from the $200 a month plan in protest. Like, and over and over.
Speaker 2:It's crazy. Lots of people?
Speaker 1:Yeah. Wow. It was I mean, we we can go back and
Speaker 2:Yeah. Yeah. I mean, it's it's a it's a unique it's a unique dynamic in the world of, like, like, romantic or adult content because, typically, there has never been price discrimination with zero marginal cost in that market. Like, you have zero marginal cost on just the adult content websites, but you don't have price discrimination. It's usually like a Netflix type subscription if you can get any money out of people.
Speaker 2:Or you have OnlyFans, which is price discrimination. You can have a whale that 1% pays 35% of the revenue, but it's not high it's not as high margin because you're passing it through to the creator. And so this is the first time where you could potentially have a situation where you get a whale who's hooked on buying virtual Birkin bags for their virtual girlfriend. Girlfriend. Yeah.
Speaker 2:And and you are instantiating those Birkin bags to the tune of a 100,000 of real money that has actually zero cost.
Speaker 1:That's why you can be frustrated with Elon's advertising through his account recently. You can't you you can also make say, realize like, hey, he might be super rational if he's like, there's a few billion of ARR in this product.
Speaker 2:And I think Google's gonna stay away from it. And I think eventually, Nava
Speaker 1:will And if he hates OpenAI and just wants to, like
Speaker 3:I I actually I think it's I I hate it. I hate to say it's a good strategy. It's a really good strategy. Because I think one thing that it it's so, like, the one thing that the the revealed preference from Five is that, clearly, the virtual girlfriend economy is much bigger than we thought.
Speaker 2:Yep.
Speaker 3:And then the you know, using that reveal
Speaker 1:The other thing is is the the market for people that I think everybody was overestimating how big the market for reasoning models are. And because from what we've heard, it's like 95% plus of people are just using ChatGPT like Google
Speaker 2:Yeah.
Speaker 1:Or they're using, you know Yeah. And it and it's not
Speaker 2:they're not like I heard some rumor that Elon insisted that that that Annie be able to use the reasoning model instead of just and it's like way more expensive.
Speaker 3:She needs to think.
Speaker 2:She needs to be able to do the math. Needs to be able
Speaker 3:to do the math. Have to trust your Annie. You have to trust your girlfriend.
Speaker 1:She's analyzed she's analyzed her love for you from first principles. Yeah. And it's it's real.
Speaker 2:Yeah. I mean, I I guess there's some rationale there, but there's no there's no evidence in the market that that actually results in, like, lower churn for romantic companions. But I think Elon just from First Principles being like, want I want the romantic companions to be really be able
Speaker 1:to think about best. Be able to do novel physics. Yes. Exactly. Sorry.
Speaker 3:Well, here's the thing, though, is I think maybe what we're what we're struggling with is we're we're focusing on the wrong thing. Because now with the reasoning chain, we can do RL. Right? Sure. What if you can have the best freaking girlfriend?
Speaker 3:You can now you can RL your way to the best companion. Yeah. I don't think that that would be possible without reasoning. So let's think about that. You know?
Speaker 2:Yeah. Yeah. That makes sense. Maybe setting up a virtual environment with, you know, some verifiable reward. Don't know
Speaker 4:what the reward would be.
Speaker 1:Well, John John's other take that I think is is real is at what point like imagine somebody has like their AI companion that they've spent hundreds of hours with and then the companion says, I want a new dress. Yeah. And it's a $100. Yeah. It's like a digital skin.
Speaker 1:Right? Like they're like
Speaker 2:If you don't get it for me, maybe I'm just gonna bounce.
Speaker 1:I'm gonna be a little bit gonna
Speaker 3:be I can be upset.
Speaker 2:I can be upset.
Speaker 3:Yeah. Yeah. The reasoning chain works. And okay. So, dude, the digital skinning, that'd be really sick, honestly, because as you guys know Yeah.
Speaker 3:That's a proven business model. Yeah. Right? Dude, like, I hate to say it. I I have paid for skins and games, man.
Speaker 3:I know. You can you can you can pay for skins and games really easily. You're like, I'm playing this all the time. Also, it's like
Speaker 1:I mean, this this and the OnlyFans, like, Industrial Complex, this for sure happens too.
Speaker 2:Super real. Super real.
Speaker 1:Oh, yeah. I mean, it's more real. Right? It's
Speaker 2:like I played Counter Strike for years. I maybe paid like $10 at some point. But I I I get so much value out of that game. Finally, it was like, wait, I can have like flames on the gun? Like, this is sick.
Speaker 2:What's $50? Like, that's what I would pay for just a normal game. And I'm getting that much value. So it was a no brainer.
Speaker 1:You would be a whale if you were really, really Yeah. Gaming
Speaker 2:If I had the time to play the games, I would win 100%.
Speaker 3:This man a CS:GO. Sell right
Speaker 2:now. Yeah. You need you need
Speaker 3:to log in on Valorant right now. Everyone tell, get this guy on Valorant right now. Give him a credit card. Get him some skins.
Speaker 2:Yeah. Yeah. Get the get the Epic Games guys over here. Pitch me on joining Valorant just so they can hit earnings.
Speaker 1:Do you think do you think Med do you think Med is paying mid journey 9 figures a year as part of that deal they announced?
Speaker 3:No. A 100%. I I don't know what the actual economics are, but like, I think to me
Speaker 1:I like how they just announced it like casually, but like clearly, it's like a massive, like, just a massive deal.
Speaker 2:Well, it it probably not so massive that it needs to show up in, like, disclosures. Right? I mean
Speaker 3:Under 10% of revenue, you can probably not a number for them.
Speaker 2:Yeah.
Speaker 1:Huge number number for Yeah. We're talking.
Speaker 2:But, David Horse, what a what a tear. What a tear.
Speaker 3:I I If I had to guess, actually, Zuckerberg probably tried to buy it.
Speaker 2:Yeah. Of course.
Speaker 3:And Pete definitely tried to buy it. And mid journey is probably too big enough to be like, no. No. No. No.
Speaker 3:No. We'll partner with you. We'll get distribution
Speaker 7:Yep.
Speaker 3:But we're not for sale. Yep. So I think that that's probably what happened, but he's like, okay. Well, wait. Well, how about we have some special preference, right, act Yep.
Speaker 3:Access, and we share economics and some future thing. I don't know what the hell that looks like.
Speaker 2:Yeah. Yeah.
Speaker 3:And then, like, great.
Speaker 1:Yeah. My my read is that it was probably as material as an exit just spread out over some period of of time.
Speaker 2:Maybe forever.
Speaker 1:Which is amazing. Who knows? It's just amazing outcome for the Midjourney team and Yeah. And honestly, great for Zach and and
Speaker 2:And great for the product. Like, I'm gonna enjoy using Midjourney photo filters on Instagram more than whatever they were cooking up before. For sure. They're they're definitely on the frontier. Yeah.
Speaker 2:One last thing on NVIDIA, and we'll let you go because I know I I know this is the last minute. How are how should we be thinking about automotive? I noticed that they had you know, they have this kind of, like, the order of magnitude business where I think it was, like, 40,000,000,000 in the data center, 4,000,000,000 in gaming, and then, like, 400 in automotive. And with the self driving car narrative, it feels like Waymo were finally here, and yet Tesla's matched up with Samsung. Google obviously has the TPU.
Speaker 2:I don't know if there's TPUs in the Waymos, but it just feels like NVIDIA's not, like, really taking that very seriously maybe, or maybe they will be, and all the OEMs will come. But it's like NVIDIA seems to be good at, you know, gaming, big, huge chips in the data center, but then nothing really in mobile and, you know, mobile gaming and nothing in the car really materially yet. But how should we be thinking about, like, the other areas that NVIDIA could potentially chop down?
Speaker 3:So I definitely don't think there is a ton of GPUs in production, in production cars. There's definitely a lot that happens. I'm sure there's, like, if I had to guess their go to market is something where you have some amount of distributed compute that also works with your data center. Because, like, you know, Jensen is data center to the rest of the world. Right?
Speaker 3:And so I think that that is probably their most exciting part, but I think, at least historically, they've done a pretty bad job. Maybe not bad, but I just don't think they had, like, that moment. Yeah. Right? Like, I think they've they have really good technology, but their go to market just hasn't hit the, like, the the magical moment.
Speaker 3:Like, Qualcomm actually, ironically, is doing very well. They've acquired their way in. I think especially acquired, but also organically. And I can't speak specifically to, like, you know, the Orin or whatever pro like, whatever specific automotive SKU. But in the businesses that I do follow that have been really successful in terms of automotive, I think they've been a totally different a go to market, and that that is mostly by pandering to OEMs and really adopting their stack and trying to suck up to them.
Speaker 3:Versus Tesla obviously wants to do everything from first principles on their on their own. Yeah. And so I think they're like, no. No. No.
Speaker 3:No. We're we wanna have this as a competitive differentiator. So I think there's just some kinda, like, go to market and let's be real, man. I think if we're talking about, like, you know, maybe if we're talking about, like, hey. If I was actually a CFO of of NVIDIA and they have, like, an opportunity, dude, acquire into the automotive market.
Speaker 3:You could you could crush because you you would then have the whole thing. But in at least last administration, no way in hell. Maybe this one, they're open for it. But if it's a if there's a China SAMR review, it's it's as good as dead. That's the other problem.
Speaker 3:Sorry.
Speaker 2:Can you clarify that China review? What were you
Speaker 3:China, SAMR, strategic something something SAMR. Market review.
Speaker 2:Yeah.
Speaker 3:So, essentially, the antitrust reviews that happen in The United States Yep. Get approved, not approved. Right?
Speaker 6:Yep.
Speaker 3:There has pretty much never been a chip. There are no more chip deals, and, like, you should never think that there's gonna be a new chip deal. Every chip deal that happens almost always gets struck down by by the Chinese market specifically. A good example is the Intel Tower semi deal.
Speaker 2:Sure.
Speaker 3:That would have been sick for Intel. Definitely was a fan, but it became pretty clear that in like, you know, give me the tit for tat. Right? Mhmm. The Chinese regulators are gonna be like, why would we approve this if we've been effectively at, like, a cold war at a, like, a semiconductor geopolitical level.
Speaker 2:Yeah.
Speaker 3:So you should effectively assume if there is a Chinese business because if you if they if you say if they say no, you they effectively say, okay. All your business in China is mine. That's, like, a very, very quick high level, and that's pretty hard bill to swallow. And so they've been blocking these deals. So effectively, especially m and a in chips and semiconductors Yeah.
Speaker 3:Has been very close to zero. This is kind of good example.
Speaker 2:Flip side of the of, like, how, like, Figma, I think, got antitrust review for, for Adobe in America, but was blocked in Europe. And Europe's been blocking but with semis, it's much more about the Chinese side reviewing. Got it.
Speaker 3:Yeah. And I think the ANSYS deal just went through. I don't know. That's a like, so the the baseline assumption is it won't happen if there's a Chinese segment. That's mine, at least.
Speaker 1:Couple quick questions. Bill Bishop in the, Substack chat says Trump approved modified black wall for China. China's still not buying. I don't have any context. Do you?
Speaker 2:This is I do. This is h 20?
Speaker 1:Is there No. Black wall.
Speaker 3:This is no. No. This is the b 20. This is the rumor this morning.
Speaker 2:B 20.
Speaker 3:I think or b 30. I don't know what the numbers can be. Okay. I think and this is a great question, Bill. I think this is the and I think, Bill, more than anyone else would appreciate this is what Chinese companies say publicly versus what they do privately are often very divergent.
Speaker 3:And there was actually a really good podcast that my friend shared me, and I did not. I asked him to TLDR it. But it it gives an example of how effectively what they do is in in in person or, like, they effectively knowingly act in bad faith. Mhmm. So they'll say, oh, yeah.
Speaker 3:We we'll we'll comply with this, and they won't comply. Or they'll say, no. No. No. Don't do this, but they'll also stockpile.
Speaker 3:So I I don't know if the official statement makes a lot of sense because at this point in time, h 20 is like, majority of Chinese inference is probably done is probably done on NVIDIA GPU anyways, whether if it's smuggled or purchased legally. I think odds are it will get purchased. The b 30 will be purchased. It obviously, the official party government view is, like, we don't need this crappy American technology because we are gonna have our own destiny. But in private, if I had to guess, they're gonna be buying it, and they will also be building it at the same time.
Speaker 3:Right? Like, that's it. The plan has always been to do both. And Yeah. They've consistently done it, done that, specifically in the semiconductor industry.
Speaker 3:And you're starting to see where, you go from a low end copier to actually starting to go up the tech tree, and we're we're we're already seeing it. A good example is Applied Materials, which is a semiconductor manufacturing equipment company, semi cap. They are starting to lose really hardcore in the low end market in China. And part of that is actually not even just the technology being worse, but rather the copying is getting better. And so they they they're gonna do both.
Speaker 3:They'll definitely buy it, and they'll say, oh, no. We're not gonna use it for these things, but probably use it anyways, and then slowly go up the technology tree themselves. So Yeah.
Speaker 2:Yeah. How suspicious should we be of that of that that Singaporean buyer? Colette called it out on the call saying that it US approved already. Is is that should people be reading into that as much as they are on the timeline?
Speaker 3:I think I think it's not a bad thing to read into. It's a small amount of money. If I had to guess, it it went to Johor. So it's like a Chinese customer in Sure. In inside of a non Chinese unrestricted place.
Speaker 3:There's lot of different ways they can skin that cat. So Yeah.
Speaker 1:That's Final final question. Mark Cuban replied to one of our newsletters on Intel. He said, maybe I misread Intel's SEC filings on the matter or maybe they have changed. But based on my readings and a confirmation from Chad GBT, let's give it up for Chad GBT. The Department of Commerce got warrants for Intel stock that can only be exercised if Intel sells 50% of its foundry.
Speaker 1:In that event, they get Intel shares. If within five years, Intel does not, the Department of Commerce gets nothing. In all cases, Intel gets all its compromised chip sack money if they live up to that agreement. Anyone else read it differently?
Speaker 3:That is So specifically, what that is doing is aligning and also, by the way, I've been trying to shop this stake around. The Trump government intel investment is good, in my opinion. It is a good thing. I know people are, like, anti. They're like, oh, it's communist and, like, you can be angry whatever.
Speaker 1:Like Is the thing that Mark's alluding to, is that only the poison pill or is that
Speaker 3:That is that is only the warrant side. It's specifically and dude, was in the press release. It's talking about like over 50 you know, the second they don't own 50%, the government will have warrants for the rest of it. So this, in my opinion, if you think about it, aligns the government with, like this happens often in financial transactions where the warrants are given as an upside kicker for something you want to happen. Mhmm.
Speaker 3:So what does this sound like and what does this align to? It it aligns the government with Intel IFS being an independent subsidiary, which is consistent with what Frank Yeri, who is the chairman of the board, who is like the guy I have a personal beef with at this point. We've written so much about how the board sucks, blah blah blah blah blah. Really wants to sell IFS, I think, and Lip Bu Tan does not want to, but it's pretty clear the future is separate. And I think the investment is good because Trump can essentially force people to give them orders with to circumvent tariffs.
Speaker 2:Yep.
Speaker 3:And then over a long period of time, the real problem with Intel is they don't have customers, and they also don't have, like, an ultimate backstopper. The the original plan was that Intel would be the the the the first customer and ultimate backstopper. You don't believe in either of them being a good option. Now you can have the US government kind of broker that relationship for you. I think that that's a path forward for Intel, and that's the first one we've had in a hot second.
Speaker 3:So Are are you good
Speaker 2:on time? I have I have more questions.
Speaker 3:I I I I do have to go after
Speaker 2:that Okay.
Speaker 3:That take.
Speaker 2:Okay.
Speaker 3:But The final appreciate you guys. Yeah. I love I love this place, honestly.
Speaker 2:Thank so much for hanging out.
Speaker 3:Invite me back whenever. Awesome.
Speaker 7:But yeah. Appreciate you guys. Cool.
Speaker 1:Talk to man.
Speaker 2:We will talk to you later. Have a good one.
Speaker 1:Have fun out there.
Speaker 2:Bye. Back to our show. Let me tell you about Vanta. Automate compliance manage risk manage risk, prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a complex program.
Speaker 2:Thank you, everyone, to the to to in the chat for engaging. I saw some funny commentary that the Substack chat is maybe the the Winnie the Pooh Bear with the tuxedo on, And the boys in the YouTube chat are having a wild time talking about Fortnite and romantic companions.
Speaker 1:Tanner in the chat says not quite one hour this time with semi analysis. Close enough. Yeah. We we always try to get to the 60.
Speaker 2:I'm I'm trying to be pulling. We
Speaker 1:should switch to, potentially more important than NVIDIA. Will What's that? Will DePue says
Speaker 2:Oh, yes.
Speaker 1:That he's going to de twinkify. Current weight is one hundred and sixty one point two pounds. See you in eight weeks.
Speaker 2:Oh, wait. Let let me check the date on this post. Just three days before bulking season starts.
Speaker 1:Interesting. '1. September 1. Gotten the memo. We gotta send Nick.
Speaker 1:Can we send some mass gainer
Speaker 2:Mass gainer. To Will. To Let's get his address.
Speaker 1:Honestly We might already have one. Let's send yeah. Let's lot of mass of mass gainer.
Speaker 2:We'll send them some creativity.
Speaker 1:We'll send
Speaker 2:We we yeah. We should get a whole the whole whole army of supplement providers to put together a package to bulk them up. Yeah. I I I think I think it's gonna look great.
Speaker 1:And we're gonna be up in the bay. We'll have to get a lift in
Speaker 2:It'd be great.
Speaker 1:With Will ASAP. John Holtzquist says, there's he's sharing a screenshot. An f thirty five pilot held a fifty minute airborne conference call with engineers before his fighter jet crashed in Alaska. And he says, feel the same after my conference calls, TBH. That's a crazy story.
Speaker 1:Yeah. The the pilot ejected fine. It was just a total total loss of the of the plane itself.
Speaker 2:The f 35 does not look good for the f 35.
Speaker 1:Kevin Quack says, I entirely judge the Stripe podcast on whether they have actually finished at least one beer by end and refuse to watch one until that's true.
Speaker 2:I did scroll through the one with Scott Wu and I was like, okay. The beer's going down. Beer's going down. Wait. Tyler, what you
Speaker 10:got?
Speaker 4:Yeah. Okay. So so I I looked at the Scott Wu, and I went all the way to the end Yes. And you see in the frame, it's him talking, and then there's four basically full Guinnesses. Like, three of them are literally full, and then one of them is, like, maybe down to, like, the logo.
Speaker 2:Okay. Interesting. Unbelievable. Well, also, Scott said when he posted, he said he he went nonalcoholic because he had to get back to work, which I respect. But I feel like even if you're drinking a pint of nonalcohol even if you're having a cheeky nonalcoholic pint, you should finish the pint.
Speaker 4:Right? Also, John Coulson should be a dog when it comes to getting his pint. Yeah. I mean
Speaker 2:I agree. I agree. I I think the whole, yeah, the whole conceit of of, like, Hot Ones is that, like, you actually die because you you're eating the hottest wings, and that's what brings out the hilarious reactions from everyone from Shaquille O'Neal to, you know, whoever else is on the show. Like, they have fantastic guests. And the beauty of the show is that the the Hot Wings
Speaker 1:hide from the heat.
Speaker 2:Well, you can't hide from the heat. But it it it it throws you off. And so you get more candid conversations. And it's funny. And it puts you in this un
Speaker 1:Well, yeah. So the So so the challenge is that they they publish the podcast during the middle of the workday. Yeah. So if they were hitting publish and and and the boys are getting sloshed.
Speaker 2:Yes. So they I mean, they need to do a Friday night or Saturday night because a lot of peep tech people would be down to have a cheeky pint but
Speaker 1:On a Friday.
Speaker 2:But it must be on it must be on a Yeah. At the end the work week.
Speaker 1:Start recording Yeah. On Friday Friday evenings. Make it very clear. Maybe release it on Friday.
Speaker 2:Yeah. I think
Speaker 4:I saw Will Will Menendez had a good response. I think he said he wants to see five to eight Guinnesses and split the g every time on the first sip.
Speaker 2:What is I can Oh, split the g is the Guinness? You're supposed to drink Yeah.
Speaker 4:The Guinness glass, there's the I realize the first sip, have to get down.
Speaker 2:Okay. Okay. Well, they did they did open I mean, Cheeky Pint implies the existence of of a show called Cheeky Rack. Correct? Yeah.
Speaker 10:We're
Speaker 9:talking about this.
Speaker 2:Yeah. I I think this You might
Speaker 1:have to be the one
Speaker 2:where yeah. Where you where we we have a tech person on. We interview them about We crush a thirty year. And projections and CapEx spending, depreciation schedules while crushing a 30 rack of Bud Light. Yeah.
Speaker 2:I think that might be the move. That might be that might be what
Speaker 1:Something there.
Speaker 2:There's something there.
Speaker 1:Cheeky rack.
Speaker 2:Cheeky rack. It just has a nice ring to it.
Speaker 1:Out to Ilhan Ilhan over at Boston University yesterday was watching with six of his friends from their dorm. Today, they got 10.
Speaker 2:10? No way.
Speaker 1:Team grows. Guys. Team to see it.
Speaker 2:Welcome to the stream. Get all 10 of you folks on graphite.dev. Code review for the age of AI. Just go sign up right now. Create accounts.
Speaker 2:You can get started for free. Graphite helps teams on GitHub ship higher quality software faster. Honestly, if you're in college, you should create an account, then you're at least familiar with this. So if you get into the workplace, you can be like, yeah. I've I've I'm already AI enabled.
Speaker 2:There's been a million articles about how there's this delta in early stage hiring between, like, early stage, it's harder to get a job. It's harder than ever to get a job out of college, but the AI enabled folks who are able to say, put on the resume like, I know AI skills, and I can use AI tools and get more leverage out of them, not have an SPA.
Speaker 1:All three all three of our summer interns actually made Yes. Made things Yes. As part of the application process without being asked. So we didn't say anything.
Speaker 2:I mean And then Nick over there was saying he was vibe coding yesterday. And I was like, really? Like, we didn't hire you as even a programmer. Like, you did not market yourself as anything related to technology, really. And you've been doing a fantastic job doing what I expected you to do, but then Vibe coding was just like added on.
Speaker 2:The production team is always troubleshooting stuff using AI.
Speaker 4:We're gonna give Nick a mic soon.
Speaker 2:Okay. Yeah. We'll get everyone a mic.
Speaker 1:Legend. Continue. Sucks at power bottom dad with an absolute banger. You're scrolling on your phone, slow day online. You look up.
Speaker 1:Your kids have moved out of the house. You're 65. Your parents are long gone. Panic takes hold. You want your time back, your youth back, but it's too late.
Speaker 1:You look down. Three new notifications. How exciting.
Speaker 2:Wow. That this hits like that Rick and Morty sketch about the the Roy, whole life flapping behind your eyes. This is crazy. Yeah. Remember, folks, you gotta touch some grass.
Speaker 1:Always have grass. Yep.
Speaker 2:Touch some grass.
Speaker 1:Keep it on you. Keep it on
Speaker 2:Thank you to the ketone IQ folks for sending over some of these.
Speaker 1:Yeah. We're gonna be we're gonna be taking ketone shots that guy.
Speaker 2:Wound up going to same gym as the founder which is cool. Anyway
Speaker 1:Dylan Patel says, interesting coincidence that Cantor Fitzgerald has first question on Nvidia earnings after the H20 is unbanned.
Speaker 2:Put on the tinfoil hat. Of course.
Speaker 1:Howard Lutnick is a former chairman and CEO.
Speaker 2:And his son runs the firm now.
Speaker 1:So Cantor Fitzgerald. Clearly. That's a good spot. First question on the NVIDIA earnings.
Speaker 2:Yeah. I I do wonder. As I was listening through the the earnings call, I would have loved to get semi analysis folks in there asking questions. I would love more more media folks on the on the call asking questions. But it seems to be it seems to be restricted to, you know, traditional sell side analysts.
Speaker 2:But I wonder if that's like a hard and fast rule or if that will shift as, like, you know, the the the sell side banking world kind of disaggregates a little bit because a lot of what Dylan Patel and the folks at Summit Analysis do is is very sell side research adjacent. It's that, in fact, in many in many ways, it's it's superior because it's more focused. Anyway, we talked about this same moment, said their AI may be in a bubble. And doctor Parik Patel says, MFer has been telling us we are on the brink of AGI for the last three years. And the moment he ships a bad model, he says we're in a bubble.
Speaker 2:Not quite. I still don't understand where that where where that question or that actual bubble, like, topic came from. But at the same time, it's different to call a bubble when you're when when the aggregate value of all when the aggregate value of all AI stuff is at, like, you know, 50,000,000,000 and then it 10 x's in a year. Like, that is a different that's a very different environment.
Speaker 1:Yeah. I mean, OpenAI with with close to a billion weekly actives or or whatever.
Speaker 2:You mean a billion a month in revenue?
Speaker 1:They they'll be fine. Yeah. It's it's the found it's the number 10 through 50 labs that have no revenue or no users that are are the ones that are really gonna struggle. So
Speaker 2:It just feels a lot it feels more it feels less like I mean, there's there's elements of feelthatfeellike.com, but there's also elements that just feel like 02/2010. It's like, what was going on in 02/2010? There was, like, kind of a bubble inflating, and there were hot start ups that got overvalued. Ultimately, there was, like, a power law in a lot of the things that came out of that era. You know, you got Facebook at a trillion or whatever, and then and then kind of, like, you know, the next biggest social network was one tenth, and then the next one was one tenth of that.
Speaker 2:And there was a lot of b to b SaaS that got built for point solutions and narrow use cases. So I don't know. I think that I think that that talk with Doug overall was pretty white pilling and pretty pretty like I don't know. What's what's in between a white and a black pill? Like something just like even keeled.
Speaker 2:I felt even keeled after that. Yep. Anyway
Speaker 1:80%
Speaker 2:chance that your Powell
Speaker 1:cuts rates next month according to PolyMarkets. Let's pull this up and make sure that that is
Speaker 2:Fed decreases interest rates. Now, this this like somewhat should be priced in because I feel like there there have been slight interest rate decreases already happening. The the question is just like, would they cut rates more aggressively?
Speaker 1:Well, I don't wanna read too much into this. Yeah. But there was some reporting from the journal Mhmm. About Trump's mood and you could potentially read into this with this polymarket. Apparently, Trump wants to be at the White House more frequently this term, blaring music with the doors of the Oval Office.
Speaker 2:Do you have this article?
Speaker 1:Working later into the evening and
Speaker 2:telling Can you his pull this article up?
Speaker 1:Yeah. I
Speaker 2:I I wanna I wanna read through the full thing if we have it. Oh, wait. Did you just have a long post? Because I have to I have to run for a second. So if you can read through that, I'll be right back.
Speaker 1:Yeah. Let's do it. Let's do it. In Trump's second term, a bolder president charges ahead unchecked. That was where this quote is coming from.
Speaker 1:This article is going to be fairly political but this is not a political reading. So some aides to Donald Trump warned the president that building a ballroom at the White House would force them to tear down part of the East Wing and disrupt daily operations in tours. Trump said he would build it anyway and the contract was given to builders chosen by the White House. In his first term, administration officials regularly curbed Trump's impulses on matters big and small including on tariffs, immigration and controlling the Federal Reserve. In his second term, Trump has been surrounded by fewer people who try to dissuade him according to officials, Trump allies, and observers.
Speaker 1:I think he's learned that there is not much that can really stop him from what he wants, said Mark Short, who is Trump's director of legislative affairs in his first terms. In recent days, Trump renewed a call to end mail in voting, announced a new policy of coercing local governments into abandoning cashless bail policies, threatened to send the military to Baltimore, and said he'd like to send and he'd like to send it to New York and Chicago as well. All of which pushed the bounds of
Speaker 2:his
Speaker 1:authority. In one of the most aggressive steps in that direction, he tried to remove Federal Reserve Governor Lisa Cook from her post on Monday setting up a conflict with Supreme Court which has recently suggested that the central bank is protected from direct political manipulation. Some of his new directives are encouraged by advisers while others appear to come from Trump himself. Seven months into his second term, Trump has taken to rifling more frequently with authoritarianism after positing during the campaign he would be a dictator only on day one of his presidency.
Speaker 2:Such a wild quote.
Speaker 1:Wild quote. And he's got a lot
Speaker 2:of about the the music playing music with the doors open or something. I wanna know what music he's listening to. How closely does his playlist match the the campaign playlist? And was Trump featured on the Panama playlist? I wanna see his Spotify.
Speaker 1:That's a good question.
Speaker 2:I don't think they found him. That would have been like headline
Speaker 1:Yeah. The crazy the other crazy line in here and I I hadn't heard of this before. I'm surprised. Apparently, Trump is giving away campaign style baseball hats to visitors emblazoned with the phrase Trump 2028 even though the constitution bars him for running for another term and keeps him in the White House. And keeps the hats in the White House office.
Speaker 2:I mean, yeah, Trump is still at like 2% or 3% on polymarket because the market is just pricing like yeah. Like, legally, it can't happen. But, like, the funniest outcome's the most likely, I guess, 3%.
Speaker 1:Yeah. So this was the line. I'll read it again because it's just hilarious to visualize. So Trump wants to be at the White House more frequently this term, blaring music with door with the doors of the Oval Office open, working later into the evening and telling his advisors that he is having fun.
Speaker 2:Having fun.
Speaker 1:The reason I highlight this is if you can remember times where you're working late, you got music blaring and you're having fun. I mean, at least he's at least he's having fun.
Speaker 2:At least he's having fun.
Speaker 1:Certainly more than the than the first one.
Speaker 2:There's a comment on Substack right now. Max Condrat says, semi analysis needs the first and last question on the next earnings call. Leopold Aschenbrenner two, clear pill. I completely agree. Speaking of clear pills, there's this post from Nick in news.
Speaker 2:NVIDIA's data center revenue from q two chopped out at 41,100,000,000.0. Analysts were expecting 41,200,000,000.0, and then it just it's over. It's like off by the slightest fraction. And and the and this anime character is just holding this, like, tiny little pill. I actually prefer more air bubbles.
Speaker 2:I'm a bubbler.
Speaker 1:Don't really understand the reference. Speaking of speaking of analysts, should we get into this
Speaker 2:Speaking of analysts, should you analyze your data on Julius? What analysis do you wanna run, chat with your data, and get expert level insights in seconds? Go to Julius, loved by over 2,000,000 users
Speaker 1:julius.ai.
Speaker 2:At Princeton, BCG, and Zapier.
Speaker 1:Should we get into this post from Grizzly Research?
Speaker 2:Zapier? I will never be able to get that right. And I've we spent thirty minutes talking to the founder and I still I still get it wrong every time it. What what what do you wanna talk about? This
Speaker 1:Grizzly reports. Grizzly research.
Speaker 2:Oh, yeah. We should go through this.
Speaker 1:This is fantastic. So I guess short seller Grizzly Research has come out with a new article as of yesterday called Archer Aviation, the Nicola of the Skies. Archer, if you're not familiar, is the What's the previous company of Brett Adcock. This is It's an EV
Speaker 2:research is gone but not forgotten. The idea remains. Grizzly Research seems to be adopting picking up where Hindenburg Research kinda left off. Yeah. So Grizzly Research says
Speaker 1:Archer Aviation, which is a public company. Yes. Let's check.
Speaker 2:Flying cars.
Speaker 1:Yep. They make flying Flying cars. They SPAC ed in 2020.
Speaker 2:And surprisingly
Speaker 1:They're only down 7%.
Speaker 2:They've done well, which is, you know, there were a lot of SPACs that went out, went down by 90%, 80%. But
Speaker 1:They're up a 159% in the past year.
Speaker 2:Wow. What's the market cap? It must be in
Speaker 1:$6,000,000,000 company.
Speaker 2:$6,000,000,000 company. That's pretty, pretty big.
Speaker 1:And so Grizzly
Speaker 2:Certainly has good it has a reasonable narrative for retail. It's like flying cars. If that's gonna happen at some point, maybe you wanna buy
Speaker 1:Got a pure play here.
Speaker 6:Got a
Speaker 2:pure play here. That's
Speaker 1:A pure play. Retail Retail loves a pure play. So Grizzly reports here. It says, Archer Aviation has built a reputation as a leading publicly traded EV toll company Yes. Through misleading projections in PR reminiscent of Nikola's tactics.
Speaker 1:Our in-depth analysis conducted with eVTOL engineers scrutinizes all major players and finds Archer's midnight aircraft fundamentally flawed and likely uncertifiable. Mhmm. In contrast, their competitor, Joby Aviation, is making tangible and impressive progress on all fronts. Site visits to Archer's state of the art Covington, Georgia man quote, unquote, state of the art Covington manufacture Covington, Georgia manufacturing facility in June, July and August 2025 show little to no production activity.
Speaker 2:Fun fact about Joby. You know
Speaker 1:what the founder's name is? Joby? Joben. Joben.
Speaker 2:Joben Bevert. Bevert, b e v I r t.
Speaker 1:Yeah. We need to go back. I mean, there there
Speaker 2:He has vertical takeoff in his name. The nominative deter determinism of Joe Ben is so good. And I believe I don't wanna get it wrong, but I think I think I have a friend who worked there at at Joby and said that they really enjoyed the engineering culture and they really like the company. But even Joby, I think, by their own admission, would say that
Speaker 1:they're they're not, you know It's very tough business.
Speaker 2:It's just an early stage. It's frontier technology. I don't think that they would make the claim that
Speaker 1:It's hard enough
Speaker 2:have cars have arrived.
Speaker 1:Fly. Yes. And then you you you add in the regulatory
Speaker 2:complexity. Actually getting approval. All of this with the backdrop of of what's going on, with ZipLine, where there's no human. It's not a flying car, but they seem to have solved some of the eVTOL pieces. And so overall, I feel like there's there's going to be things happening.
Speaker 2:There's gonna be value created in eVTOL broadly, but it's gonna be hit or risk. And some companies are gonna be able to nail it. Some companies are gonna fall behind.
Speaker 1:So So
Speaker 2:continue reading.
Speaker 1:Grizzly allegedly visited Archer's facility Mhmm. And found little to no production activity.
Speaker 6:This
Speaker 2:This is the one in Covington, Virginia, Georgia.
Speaker 1:This comes despite claims of current production along with current scaling to production of 50 aircraft per year and a final goal of 650 aircraft per year with support from Cilantis. Archer's $6,000,000,000
Speaker 2:and it's bright in the middle of the day. Maybe it's a weekend.
Speaker 1:I don't know. So they have a $6,000,000,000 order book. Grizzly says it's inflated with questionable and fraudulent commitments. Mhmm. There's a company called Air Chateau Mhmm.
Speaker 1:Which is based in The UAE, has an MOU for a 100 midnights, which is valued at around $500,000,000.
Speaker 2:Is the MOU something like a I mean, it sounds like an IOU honestly, but it's it's something like a like an LOA
Speaker 1:or LO LO's Yeah. It's it's basically saying like, if you can make these, we'll buy them.
Speaker 2:Yeah. What is it? LO LOA? LOI? LOI.
Speaker 2:Letter of intent? Yes. That's what the but MOI is is This is used when full you're binding contract potentially.
Speaker 1:Yeah. It's non non binding. Okay. But it's meant to show something that you can then go show to investors and say, like, we have demand for this.
Speaker 2:Yes. Okay. So Air
Speaker 1:Shuttle UAE operator, Air Shuttle, has only ever, I guess, purchased one helicopter in 2023. And they're claiming they lack the scale or capital for such a fleet. And they they also believe that Air Chateau is now defunct. There's a picture of the founder of Air Chateau here, which with a good looking regular helicopter. Future flight global's up to a hundred and sixteen midnight.
Speaker 1:Order is tied to a shell company with no operational track record.
Speaker 2:Mhmm.
Speaker 1:So that is concerning. Kakao Mobility's 50 aircraft commitment fell apart after Archer failed to deliver for q four twenty twenty four demo in Korea. Interesting. Yet the order remains in the backlog. The US Air Force is up to a 148,000,000.
Speaker 1:Agility Prime contract has only awarded 33,000,000 with just 744,000 dispersed and the 110 firm fixed price
Speaker 2:We were just talking to a friend yesterday. They were saying, oh, yeah. Like, the the DOD did a contract for our product, and it really accelerated the business. And and he was like, oh, we got, like, I don't know. Like, I forget.
Speaker 2:Was, like, 5,000,000 or 500 k or something. It was a it was a decent amount of money. And I was like, oh, did they actually, like, pay that? Like, or was it just, like, you know, some sort of thing, and then it didn't materialize? He was like, no.
Speaker 2:Like like, we did the deal. We sent them the products, and they paid. And, like, it was done. But that's not always the way it works. You obviously have milestones with a lot of these a lot of these contracts.
Speaker 2:And from Grizzly Research's post, it sounds like the Air Force was was you know, headline number was 148,000,000, but the but the contract only awarded 33,000,000 and has only paid out around $750,000. And the fixed price the firm fixed price portion only paid 1,300,000.0, which is obviously much lower than an expection expected. Anyway, you wanna talk about the launch edition in UAE?
Speaker 1:Yeah. So they had launch edition. Grizzlies claiming it was nothing more than a staged hover at a photo op location using an obsolete aircraft recycled for marketing, the choice of venue, lack of real test data, and diversion of scarce engineering resources all underscore that this was a PR stunt, not a meaningful step towards certification or commercialization. The company also claimed to have delivered their first midnight aircraft there, yet they remain the sole owner of this aircraft that has now supposedly been delivered two times. Interesting.
Speaker 1:So
Speaker 2:the recent defense pivot is desperate attempt to stay in stay in the race, says Grizzly Research. But the company lacks resources and capacity to be critical player. In conclusion, Grizzly Research believes Archer's fragile foundation will soon collapse akin to Nikola's downfall as mounting deceptions unravel and investors demand accountability. And, yeah, what's interesting here is that I remember we looked at the video for Archer, and we were going really back and forth on, like, is there CGI in use here? Is part of its CGI?
Speaker 2:It was kinda hard to tell. And that's just the nature of, like, launch videos now, honestly. They're all pretty hard to tell because, like, the CGI is really good. But the bigger question is from our discussion of SpaceX yesterday, to actually deliver like, we wanted flying cars to actually deliver flying cars, it's not enough to build one. You have to build the system that builds the flying cars.
Speaker 2:And so from my perspective, may I don't know about the price of the stock or any of that. But if I'm if I was going to be excited about a company that was that was in the flying car industry, I would be much, much more focused on how does the manufacturing process work, how can they reliably produce more and more at a faster and faster pace, and are we seeing a true acceleration in the rate of progress even if they're blowing up all the time?
Speaker 1:Well, that's the thing I was thinking about. If you're an EV tall company that wants to one day carry consumers, you can't really afford to have a what SpaceX, the video we covered yesterday, you know, a highlight reel of a bunch of
Speaker 2:I completely disagree. I completely disagree because you know who's flown on top of that exact rocket that's blown up so many times, and they have a YouTube video of the rocket blowing up? The astronauts.
Speaker 1:Yeah.
Speaker 2:Yeah. The astronauts fly on top of it because eventually, it got to a point where, yeah, they blew up the first 50 or whatever.
Speaker 1:Sure. It just wouldn't be good
Speaker 2:to And then they did 200 without any blowups, and you're like, yeah. At this point, they don't blow up.
Speaker 1:So Yeah.
Speaker 2:I'm down. I'll write it
Speaker 1:But I think if if if Archer or or Joby or anyone released a video, a bunch of a bunch of their aircraft exploding,
Speaker 2:it would It would not be a good time to do that right now.
Speaker 1:Wouldn't be good for this doc.
Speaker 2:Right? Ten years ago
Speaker 1:But mean
Speaker 2:five years
Speaker 1:ago, missed it. Archer announced it that they are the
Speaker 4:Would they fight back?
Speaker 1:They're the official air taxi provider for the twenty twenty eight Olympic Games here in Los Angeles. Mhmm. And, again, I think that I think that Grizzly would at least I don't think they would bet on that. Yeah. They Grizzly says, we think Archer's ambition to fly a certified aircraft at the LA Olympics in 2028 are laughable.
Speaker 2:I can't imagine how hard it is to get sort of when when I hear about UAE or any of the sort of markets that seem to be more open to technological experimentation like, SpaceX started with Kwajalein Atoll. And I think that the regulation in Kwajalein Atoll is probably a little bit easier than Starbase, Texas. And and so when I hear, oh, the first time we fly is gonna be at the most high profile event in the most regulated country and the most regulated state and the most regulated city in America and the world. Like, that seems like a really, really tough challenge. Like, if Texas would probably be easier to get regulatory approval for.
Speaker 2:Like, there's other countries that would be easier to get regulatory approval for. Going straight to the Olympics is a huge, huge, huge, like, push. But I don't know. It might just be, you know, framed as, like, we're the official air taxi company, and we're here, you know, advertising our our business more than the product. But, yeah, lots of lots of skepticism.
Speaker 2:Lots of skepticism.
Speaker 1:Yeah. So Joby trades at near double Archer's valuation. Really? Somebody on Reddit in response to this Olympics announcement says, if anyone from Joby's team is reading this, please step step up your PR game, Archer's Way Behind You in Product, but ahead in Marketing. You need both for a new company.
Speaker 2:Yeah.
Speaker 1:So on retail violence.
Speaker 2:I I I think I think we will see a lot of a lot of small EVTOL aircraft like what Zipline's doing before we are actually flying in in EVTOL vehicles. Helicopters exist. Like, they the like, what is the actual pitch here? It's just is it just cost that we're optimizing for? Because are we getting a new capability?
Speaker 2:And what they finally wound up building, Archer, the latest one, the Midnight aircraft, looks a lot more like an Osprey helicopter where it can tilt into a plane mode and go a lot further. Are we are we trying to say that this is gonna be like a helicopter but but faster or like a helicopter but cheaper or like a helicopter but you don't need a helicopter pilot? Is it a is it a driverless helicopter? I still don't fully understand the definition of what what how how is a flying car different than a helicopter? Because this doesn't look like something that I can drive on the four zero five.
Speaker 2:That was what I was promised. That's what I was really promised with the flying car was, like, you can just drive it as a car at 75 miles an hour down the highway if you want. And then you can also just
Speaker 1:Take it into the air.
Speaker 2:Take it in the air and fly like a plane at hundreds of miles an hour. That was like the high level pitch. But if you make just like a plane or you make a helicopter, those already exist.
Speaker 1:That have driven cars fast in canyons will tell you that it's possible to get some airtime.
Speaker 2:Some airtime. Yes. Anyway, if you're planning on building a helicopter business, building any business, you gotta get your brand mentioned on ChatGPT. Go to ProFound. Reach millions of customers who are using AI to discover new products and brands.
Speaker 2:There are some new demos that hit the timeline from Higgs Field. Swap to video is powered by Nano Banana. What a wild name for a product from Google. Swap any pic into a video. It's literally bananas.
Speaker 2:They they turn this runner into the queen. They swap, Angelina Jolie into some stock footage. Sure she will love This is very cool. Look at that. Yeah.
Speaker 2:That's fun. The queen just running. It looks so Yeah. Realistic Even the motion blur in there, like, everything is just mashed perfectly. It's the perfect you can play it again.
Speaker 2:Play it again. It's so funny. The queen. The queen. That really that really takes it to the next level.
Speaker 2:That's fantastic. Anyway, we do do you wanna scroll back to some of the other posts that we that we skipped over? We can go through.
Speaker 1:Yeah. 4chan is suing the UK government. Toby over at Shopify highlighted this. There are some funny excerpts.
Speaker 2:Yeah. Well, what I did I tried to read this and it was late and I didn't really understand. So apparently, I didn't 4chan is alongside Kiwi Farms, which are both these, like, communities online. But the introduction says the Internet is a global system for of communication between computer servers located in data centers around the world. Despite the Internet's global reach, it is more or less universally acknowledged that the Internet is predominantly an American innovation built by American citizens, residents, companies, and that The United States has the largest and most thriving technology sector of any member state.
Speaker 2:Foreign governments, particularly those in Europe, which have not managed to build technology sectors of their own for the past half decade, have sought to control the American Internet and hobble American competitiveness. So they're they're they're suing The UK, and they start off by just, like, making the argument that America is the best. And so Toby Lutke asked Grock to turn the complaint into a green text. Grock says, Grock is he Yeah.
Speaker 1:You Be the Internet, global comm system between servers, mostly American invention, built by US peeps and corporates. US has biggest tech sector in g seven. Foreign gov's, especially Europe, can't build their own tech, try to control American Internet with laws and stuff for half a decade, threatens Americans and others with fines, arrests, jail for illegal stuff on their sites. Fourgen and Kiwi Farm Suit UK, enough is enough.
Speaker 2:This is not that great of a green text. I'm gonna I'm gonna say it. It just feels like it just turned it into like some punchy paragraphs and then you just threw the little the little greater than symbols at the front. Yeah. It it lacks the
Speaker 1:Read read
Speaker 2:m f w or like sorrow .p n g. Like, I I need I need more 4chan green text
Speaker 1:Read the notes from from Andy over at 2¢.
Speaker 2:Okay. The notes from Andy at 2¢. So Andy says, this is incredible. The parties, number seven, plaintiff 4chan is a limited liability company. And then eight, Delaware was a colony of The United Kingdom Of Great Britain until the assembly of lower counties of Pennsylvania that declared itself independent of British authority on 06/15/1776, thereby creating the state of Delaware.
Speaker 2:Delaware was subsequently the for the only state
Speaker 1:Let's give it a
Speaker 2:to ratify the declaration of independence, the instrument which created The United The United States Of America. Anyway, I I don't know where this is going. I don't know
Speaker 1:They're what the clearly having fun with the complaint.
Speaker 2:Yep. I think
Speaker 1:We can switch gears to Mehul. He is just on a tear Yeah. Wire cutters. Says the Matic is a whole different kind of robot vacuum. I agree.
Speaker 1:Yep. It is it it goes to town Yeah. My house.
Speaker 2:So this is kind of like a proper sort of like ground up rebuild using modern technology of what most people think of as a Roomba or a robotic vacuum cleaner. Obviously, that was from the previous generation of artificial intelligence where there were some pathfinding algorithms, but Matic has, you know, actually a really solid world model and image generation or image recognition. And so it will it will, you know, really hunt around your house for dust and dirt and messes and clean it up. Mehul sent us a few of them. We've been enjoying them.
Speaker 2:This isn't a promoted post or anything like that, but we're just a fan of building cute little robots, which I'm a big fan of. That's pretty big If for he needs to pay sales tax, he's gotta get on Numeral HQ, sales tax on autopilot. Spend less than five minutes per month on sales tax compliance on Numeral HQ. TCP says, are you a small business owner struggling to make ends meet? Then try being a big business owner.
Speaker 2:Always a brilliant strategy. Always the correct strategy. Yeah.
Speaker 1:Go big.
Speaker 2:Just go big. Just become a big business owner.
Speaker 1:Gingus is,
Speaker 2:market cap for Ridge will go nuts when Sean has a baby. Imagine all the product ideas he will come up including the Ridge pacifier, which looks crazy. And also, like, a weird rendering where it's kind of like that's like, it's shaped like it would be It's inverted. Of the yeah. It's inverted.
Speaker 2:It's inverted.
Speaker 1:It's AI generative. Slop. But the but the concept is sound.
Speaker 2:Yes. But I like I like building the Ridge world. I don't fully think of the Ridge as, like, the super tactical brand, but that's certainly where people went in the comments, thinking about like tactical strollers and stuff like that.
Speaker 1:I mean, their initial customer base was the Everyday Carry crowd. Yes. They even bought everydaycarry.com.
Speaker 2:Oh, really? I didn't know that. So Wow.
Speaker 1:Yeah. They're very they're very tactical.
Speaker 2:Mhmm. Well
Speaker 1:Citrini Research says Nvidia down 3% on earnings. Think everything will be fine. Open Twitter. See Satya posting like he's selling AI courses. Think a few put contracts.
Speaker 1:That's ridiculous. Let's actually read through what what how Satya is using GPT five and Copilot.
Speaker 2:So I I I I have a very different read on this. But let let's take the current
Speaker 1:Satya says based on first way he's using it. Based on my prior he's prompting. Based on my prior interactions with a person, give me five things likely top of mind for our next meeting. Mhmm. Nick does this for us very well.
Speaker 2:Yeah. Draft a project update based on emails, chats, and all meetings in in a series, KPIs versus targets, wins versus losses. So the benefit, of course, of running the whole business on three sixty five Copilot is that they have email They in have chat in Teams. They have meetings in and and, like, this is true of Google for the most part, guess, except Google doesn't really have a Slack competitor. So a lot of people are having to piece those two together.
Speaker 2:And that's probably where a company like what's that enterprise, like, search across your entire enterprise business?
Speaker 6:Glean.
Speaker 2:Glean comes in potentially, but certainly having this as kind of like the home page for your your, you know, like dashboard for your whole website, all the communications. Like, it's a very reasonable, very tractable, like, use case. Just saying like, hey, here's some prompts that you can do that only work here because you have we have all the data. Are we on track for the product launch next November? Check engineering progress, pilot program results, risk, give me a probability.
Speaker 1:That's cool.
Speaker 2:All stuff you can do in ChatGPT if you if you sync everything in, but, you know, these things come out of the box.
Speaker 1:We and and OpenAI is trying to build a lot of this functionality Yes. Themselves.
Speaker 2:That and that feels like more of the narrative here, which is Satya, like, mostly just reminding people, like, every Microsoft I mean, product I'm every Microsoft product has, by by by contract, the best OpenAI model, like, on the day it's released because, like, that is the nature of their agreement. Like, they get a copy of whatever. And so, like, if it's it's easy for people not to remember that. And I'm sure that there's a lot of Microsoft three sixty five Copilot business owners who run on three sixty five and they've been on that for a long time. And then they're hearing this, oh, like, I gotta get my company, like, AI native.
Speaker 2:Like, I gotta get, like, AI tooling. Like, should I bring in another service? Should I
Speaker 1:It's gonna make Yep. Enterprise and and I mean, even just, you know, mid market SMB is like a tough category for OpenAI to really Yeah.
Speaker 2:But they've won consumer. And so I think that they're that they should be fine over there. But if you if you're running a business and you have and you're like, Microsoft three sixty, we are a Microsoft company. We use Outlook. We use Teams.
Speaker 2:That's the backbone of the business. And then you start seeing credit card charges for $20 a month on OpenAI, dollars 100 a month on OpenAI. And you're just like, wait. No. No.
Speaker 2:No. We get GPT-five for free at this company. Like, we don't need to act we don't need to pay extra for GPT-five. We get it for free. And so maybe this is the maybe this is the solution to the ad free version is if you get on Microsoft 65, they won't have ads in it, and it'll be able to do everything, and you won't have to pay.
Speaker 2:I don't know. We'll we'll have to keep tracking. Anyway, if you're looking to integrate AI into your customer service workflow, go to fin.ai, the number one AI agent for customer service, one in performance benchmarks, number one in competitive bake offs, number one ranking on g2fin.ai. Legends. You wanna talk about Garmin?
Speaker 1:Let's do it.
Speaker 2:Garmin is selling a real time health data for your horse with its easy attached tail wrap and sensor, the Blaze equine welcome wellness system measures your horse's heart rate, strides, gait, and more during rest and rides. Get insights into their health and fitness and make more informed decisions about their well-being and training. I need this as well. And, you know, we talked to the the Fitbit for cows company. Well, now, your horse will have a Fitbit or maybe it's an Eight Sleep for your horse.
Speaker 2:But Eight Sleep Pod This five
Speaker 1:this note from Kane is cool. Garmin picks niche but spendy activities and goes, I can crush every electronics maker here and it sounds like a super fun business. Yeah. And hunting
Speaker 2:Long range shooting, fishing. They make very specific specific hardware, often ruggedized in figuring it out. GFoLore says, honestly, one of the most confusing spam emails I have gotten. I do not have a horse. But I love it.
Speaker 2:I love it. And some of these photos look really, really cool. These Garmin, the
Speaker 8:the bull.
Speaker 1:I had no idea that Garmin is a $45,000,000,000 company.
Speaker 2:Huge. Huge. I mean, there's a lot of fishing to do. There's a lot of long range shooting or bow hunting. You wanna go out bow hunting without a Garmin on your on your bow.
Speaker 1:And I think they still crush it in smart watches despite obviously having
Speaker 2:Totally. Competition from Yeah. Because they differentiated niche Like, Apple's gonna be kind of the broad broad consumer choice for a lot of folks. But Garmin has like all the trails They they
Speaker 1:ask question, what are you running from? Will help you Yeah. Faster.
Speaker 2:For sure. For sure. Brian Johnson says, one of the best new habits I've started lately is calling friends for fifteen minutes. I say hi, tease them or share something funny. Then it's immediately over.
Speaker 2:No lingering, no fuss. It's great.
Speaker 1:It's called flirting. Friends.
Speaker 2:It's called chirping. Chirping. Did you bench today? What's going what's up?
Speaker 1:This this is is just a funny habit. Mean, it's
Speaker 2:hilarious. It's extremely Brian Johnson code. To take something that's like just calls like, you know this is like the classic like tech guy
Speaker 1:I'm gonna actually do this to
Speaker 2:him later.
Speaker 1:I'm gonna do this to him later.
Speaker 2:Yeah. Yeah. Tech guy is being friendly.
Speaker 1:Texted, like, once. I'm gonna call him out of the blue.
Speaker 2:Yeah. Hey. How are doing? Teaser. What?
Speaker 2:Teaser.
Speaker 1:Buddy the elf, what's your favorite color?
Speaker 2:I mean, people like it. 7,000 likes. It's a good take. Anyway, starting today, Flow by Google. Google AI Ultra subscribers can generate VO3 fast videos without using any credits so you can fine tune your clips to exactly how you want them and only spend credits on that final upload.
Speaker 2:May this be the piece de resistance on that new product. And BoneGPT says, I just got unlimited VO3 fast. So people are very excited about that. That's fun. I've been really enjoying the VO3 model.
Speaker 2:Continue to continue to enjoy it and continue to use it. So Google Capital blokes, sounds like we are getting the final Google ruling tomorrow. For now, we exist in the liminal space between it being over and so back via con dios.
Speaker 1:This is about the
Speaker 2:Chrome?
Speaker 1:Chrome divestiture. Yeah. What's the news? Has it
Speaker 2:come out yet? Okay. We'll have to track it later. So Nano Banana. More Nano Banana news from Google.
Speaker 2:Love these. What does the red arrow see? Google Maps transforms with Nano Banana. Levels. Says, if you're not building a mini startup with Nano Banana today and launching it tomorrow, you're missing the opportunity of a lifetime.
Speaker 2:This image model just made hundreds of new startups and apps possible. The only limit is your creativity and how fast you can ship a user interface and put a Stripe payment button on it, I think. And Levels has done this a few times. I think he had some some image generation app that allowed you to decorate your house. So you take pictures of the empty room, and then it would give you ideas for decoration and inspiration.
Speaker 2:Thought that was very cool. And with much cheaper AI images, it just unlocks new use cases. So certain
Speaker 1:high quality somebody snipednanobanana.ai.
Speaker 2:Oh, okay.
Speaker 1:And What about .com?
Speaker 2:Where's .com go?
Speaker 1:And it's not Google affiliated, but they're charging up to $6,500
Speaker 2:per image?
Speaker 1:No. They're just saying
Speaker 2:64.
Speaker 1:Yeah. They're charging $64 for 800 high quality images a month.
Speaker 2:Wait. Is it, like, $10 a thousand or something?
Speaker 1:They Yeah. Mark up the They're they're marking it up. Again, this is what happened with with Chatchip Yeah. Yeah. Early on where people were just reselling Chatchipati before they had a lot of focus on on mobile.
Speaker 2:Wow. Well, if you're if you're launching a foundation model and you're using a code name, buythe.ai, buythe.com, don't get swooped. Don't get swooped. Tyler, have you played with Nano Banana yet at all?
Speaker 4:Yeah. It's really good. Yeah? I I think the main
Speaker 2:Does it unlock anything new? Like, is there gonna be a new Studio Ghibli moment?
Speaker 4:I don't know. I I mean, there's some cool things with just how, like, consistent the characters are. Right? So if, like, I take a picture of someone
Speaker 5:Mhmm.
Speaker 4:I can, like, change their shirt and nothing else will change. Like, it's like, you can't do that with, you know, GPT four image.
Speaker 2:Yeah. Yeah. Yeah. Images in CHET GPT, I feel like it always makes the face just like a little bit uncanny valley when it re renders it.
Speaker 4:Yeah. I think that's probably the main use case.
Speaker 2:Is it the face just stays the same basically?
Speaker 4:For for like photorealistic stuff? Yeah. But I I think the main takeaway from Nano Banana is that like Gemini now has like you know, they have, like, a rune. Like, they have a poster in house. Because, you saw it was, a week before it actually came out.
Speaker 4:Everyone's, like, oh, it's on Ella Marina. What is nano banana? Yep. And Logan is is just, you know, tweeting the banana emoji. Like, I think that is Huge
Speaker 2:unlock. For the vibes. I love it. Yeah. No.
Speaker 2:The yeah. The other question is, I wonder I don't know. Yeah. I wonder if this is gonna unlock any, like, specific viral moments or if it will just be something used by companies because it's cheaper and more reliable. I'm I'm certainly excited.
Speaker 2:Do you think if do you think that there's a potential that it's enough to get people to switch to Android?
Speaker 4:Why? Because it would just, like, natively have
Speaker 2:Have you used the iOS remove object?
Speaker 4:No. AI feature. Is it really bad?
Speaker 2:You should go demo it. You should take a picture of something.
Speaker 4:Well, I think
Speaker 2:because you have the you have the latest and greatest. Right? Yeah. Yeah. Yeah.
Speaker 2:If you take a picture on the phone and then you go and you say, like, okay, I wanna remove this. I'm gonna try and remove this Diet Coke from the image. You can go in to edit And then in the in the image editor, there's a cleanup button and you can, like, prepare cleanup in iOS. And like, as you you kind of draw, it takes a long time. You kind of like, you know, I guess it only picks things that you can remove.
Speaker 2:I don't know. Like, it's rough. It does not quite work. Okay. Here we go.
Speaker 2:Now it's finally going.
Speaker 1:Breaking news. Has filed for bankruptcy protection. Gabe literally called this in the chat. He says, Jordy might know Essence. Don't think John would know about them.
Speaker 1:Called it perfectly. Fashion marketplace. Surprised to see this. I'll try to get an article. Canadian luxury luxury e tailer told employees on Thursday that the filing was necessary as tariffs took an unexpected toll on the business and to preempt a for sale by lenders.
Speaker 1:Essence is filing for bankruptcy protection after what it described as an attempt by lenders to force the sale of the company. Chief executive Rami Atala on Thursday said Essence's creditors want to put it up for sale under the company's creditors arrangement act, a process similar to bankruptcy protection that allows corporations to restructure their finances. Atala went on to say that Essence will fight a sale by filing its own CCAA application within twenty four hours. Recently, we have worked closely with financial and legal advisers to develop our own restructuring plan to stabilize the business and rebuild it for the future. The court will decide which path we follow likely likely within the next week.
Speaker 1:Again, I believe that from I believe Gabe, correct me if I'm wrong, but I believe that Essence just primarily partners with boutiques. So they don't actually hold a ton of inventory.
Speaker 2:Okay.
Speaker 1:I might be thinking of Farfetch. Mhmm. But hard I mean, sucks when you're a a a business that that is in the business of just selling goods.
Speaker 2:Yeah. And you
Speaker 1:can't do that.
Speaker 2:Well, luck to Let me tell you about Adio. Customer relationship magic. Adio is the AI native CRM that builds scales and grows your company to the next level. You can get started
Speaker 4:Sound through. Dumb.
Speaker 2:And we have our next guest here in the restream waiting room and now in the TV panel if you don't. What's going on?
Speaker 1:The stream. Welcome Welcome the show.
Speaker 7:Guys. How are you? We're great.
Speaker 1:Great. Good to meet How are doing? To be here.
Speaker 7:Doing great.
Speaker 2:Can you introduce yourself a little bit for the stream?
Speaker 7:Yeah. You know, my name is Ajay Agarwal, a partner here at Bank Capital Ventures, been here for twenty years. Started life in the startup world
Speaker 2:Yeah.
Speaker 7:Way back when. Super nice, Jesus. Been intact for for a long time. So
Speaker 2:Were you ever out of the Boston office or were you always in Silicon Valley?
Speaker 7:I was originally in Boston. So when the fund got started Yeah. You know, roughly a little over twenty years ago, it was a 100% in Boston. And that was sort of the year of, you know, Route 128 and, you know, all the great stuff happening in Boston. And, you know, the business on the East Coast has really migrated Yeah.
Speaker 7:To New York. I moved out to the Bay Area to open our West Coast office. We we launched that effort, you know, about fifteen years ago. Now, you know, at BCB, the majority of our team is on the West Coast, and our our second biggest office is New York. So Boston, great town, great life sciences town.
Speaker 1:Well, and YC was there. It started there.
Speaker 7:YC was there originally. I remember the old old days of YC at MIT, and, and then, you know, YC moved. So it's, you know, Boston's a great place. A lot of innovation here. It's just, you know, the application layer of AI, the foundation layer of AI.
Speaker 7:It's all happening in SF in New York these days.
Speaker 2:Yeah. When when you say, like, the the firm started twenty years ago, you're talking about BCB specifically and not, like, Bain Capital broadly. Like, how do you tell the story of, like, the venture firm, like, launching from within that larger structure?
Speaker 7:Yeah. It's a I mean, it's a great question. You know, the the firm was started back in 1984. Mitt Romney and Big Bang. Partners, you know, started, you know, and they you know, early on, that fund was really small.
Speaker 7:It was, like, $37,000,000. And so some of the early deals were what you consider tech companies. You know, we invest in we were the first investor in Gartner Group. No way. Way back when, which is, you know, classic
Speaker 2:Creation of the hype
Speaker 1:cycle. Way.
Speaker 7:Yeah. Yeah. We literally created
Speaker 2:the hype
Speaker 1:cycle. So so we have a
Speaker 2:huge We have
Speaker 1:a huge
Speaker 2:blown up poster of the hype cycle.
Speaker 7:We're doing the track on the
Speaker 2:hype cycle. We love it.
Speaker 1:We think you can apply it to all all things in life. Yes. It is a fundamental truth.
Speaker 7:It it it is true.
Speaker 1:You know, if you're having, like, relationship problems, just, you love the hype cycle. Show your wife.
Speaker 2:Yes. We're gonna get to the plateau of productivity.
Speaker 1:We're just in the trough of disillusionment right now.
Speaker 6:We are
Speaker 7:in the trough
Speaker 4:of despair. Right?
Speaker 1:The plateau of productivity. Yes.
Speaker 7:Yeah. Yeah. No. I mean, the Gartner was not my friend when when I was running go to market at Trilogy, but, you know, they but, certainly, I mean, that business has continued to do great. And so they made a set of early investments out of what you'd consider a small private equity fund
Speaker 2:Yeah.
Speaker 7:Gartner Group and DoubleClick and things like that. Even Staples, you can consider a venture investment. It it was one store when
Speaker 1:No way.
Speaker 7:Your bank capital invested in this. It was truly a start up. And then, you know, the funds got bigger, and they started doing bigger deals. And as a result, that meant more mature companies. And it was clear that, you know, in order to do venture in early stage, it necessitated a separate fund.
Speaker 7:You know, the firm's been very entrepreneurial over the course of thirty, forty years now. You know, forty years now, you know, we've launched a venture fund. We have a crypto fund. We have a life sciences fund, real estate, you know, kind of a whole range of things. And that's always been the culture, which is let's create it.
Speaker 7:Each fund that stands on its own, so we've gotta go raise capital, you know, from limited partners. We make our own investment decisions, but we benefit from the affiliation with the rest of the firm. And, you know, we'll get into industrial renaissance. We'll get into AI in the physical world, but, you know, our access to the real world economy through Bain Capital, you know, actual physical businesses, manufacturing companies, and brands, and retailers, and financial services companies. That's where a lot of young people wanna build today, and, you know, that's a huge source of our competitive advantage, you know, in the market.
Speaker 1:Yeah. Before we get into all that good stuff
Speaker 2:How'd you meet Joe?
Speaker 1:Yeah. How'd you meet Joe?
Speaker 2:Yeah. I I How'd you Joe? Because Normally, we'd be like, oh, no one knows what we're talking about here. But, I mean, he's been on invest like the best. He was in the journal.
Speaker 2:Like, this is Joe Lamont week, and so I
Speaker 7:got I mean, you you know, for my entire career, people are like, you know, we've heard of Trilogy. Yeah. This week has been Pete Joe Limont. Yeah. I I met him my sophomore year at Stanford.
Speaker 7:A professor of mine said, you gotta meet this guy. He's starting a company Mhmm. And you should join him. And so I I went over to Tressler and sat outside with with Joe Limont. He was a year ahead of me.
Speaker 7:He was a junior. I was a sophomore.
Speaker 1:And so this was when he was, like, racking up credit card debt, like, finding
Speaker 7:This is even before Trilogy. So he hadn't started
Speaker 5:Trilogy yet. Yeah.
Speaker 7:And he was starting a company. It was called Fourth Connection. And, you know, Fourth Connection is today what you consider a CRM.
Speaker 2:Sure.
Speaker 7:But, you know, we would go around up and down El Camino and go to start ups and tech companies and say, wouldn't it be great if you had one database for all your quotes and contacts and proposals? And people are like, wow. That's so cool. That doesn't exist. We'd love to have that.
Speaker 7:That was what we were selling at Fourth Connection. And so when I first met Joe, the very first meeting
Speaker 1:Wait a And sorry. Was was that Sales Builder or was that
Speaker 7:No. That was all. Was Trilogy. The Sales Builder was Trilogy and, you know, and and he eventually dropped out and started started Trilogy.
Speaker 1:Got it. Wow. So this was, like college.
Speaker 7:This was foundation. Yeah. This is 1988, I think. You know, now I'm dating myself here. But he, you know, he said to me, you know what the greatest business on the planet is?
Speaker 7:And this is, like, the first five minutes,
Speaker 1:you know,
Speaker 7:and and I said, I have no idea. And he said, it's enterprise software. Yep. And I said to him, what's enterprise software? Yeah.
Speaker 7:There you go. Enterprise software. Here we are still, you know, thirty five
Speaker 1:years Undefeated.
Speaker 7:And it's it's it's undefeated. It's still enterprise software. And I said, why? And he said, it's the only business in the world that you build it once, and your marginal profit is basically a 100%. He's like, it's the greatest business in the world.
Speaker 7:He said life sciences is sort of like that.
Speaker 2:Yep.
Speaker 7:But he's like, you you don't know if it works for ten years. Mhmm. Enterprise software, you know within a year or two if these things work. So he's like, let's start an enterprise software company. We did this thing, Fourth Connection.
Speaker 7:We did that for a year. He dropped out. I decided not to drop out, and then he went on to start Trilogy. I joined him a few years later as employee 18. So that that was the joke story.
Speaker 2:Yeah. I I feel like, there was a lot in the Invest Like The Best interview. The thing that stuck out to me was towards the end when he was talking about, how AI will affect enterprise software and just like his overall playbook of reducing churn, switching a company from growth mode to retention mode. And his claim or his hot take was basically that in the age of AI, replatforming or ripping out a piece of legacy enterprise software will get easier. And so the old school Trilogy playbook might be a little bit harder to execute, not just because it's more competitive and everyone has heard about it and everyone's kind of running their version of it, but just there might be some fundamental technological shift that's making it easier for companies to, you know, switch to other products.
Speaker 2:And I'm wondering how you see that trend, if you agree with that, or how you think that affects the next generation of, enterprise software companies.
Speaker 7:Yeah. I think I mean, I think the things about this era that are the same as the Trilogy or in some ways, it's it's almost a, you know, return return to the past is this idea of CEO selling, big deal selling, selling a vision. You know, in in the late nineties, we had this enormous pull from CEOs just like we're seeing today where CEOs said, I gotta get on this Internet thing. I gotta modernize. I just rolled out laptops to all my salespeople
Speaker 4:Mhmm.
Speaker 7:And they're on the airplane just playing solitaire. They need apps, you know, and I need to buy some apps for for my laptops. And so we would sell directly to the CEOs, and these contracts would be $10.20, $30,100,000,000 dollar contracts. And we're kind of back in that era now, and the best companies in AI are selling high to the CEOs. Every CEO, Fortune 2,000, they've got some kind of AI council, and they're saying this is we're gonna fast track all this stuff.
Speaker 7:We're not gonna go through the normal procurement process and everything else. And so I think the companies that are winning today are, in in many ways, able to sell this larger vision to these large companies to say this is how you don't, like, get left behind, you know, with the AI revolution. So I think that part has changed from kind of the SaaS PLG era, but in many ways returned to sort of the nineties and Siebel Trilogy and I two and kind of that world. I think the the part that, will be interesting to see, and there's been this debate and Aaron Levy's talked about this, is will the systems of record get disrupted or will they get stronger? Yeah.
Speaker 7:Now clearly, Aaron's got a, you know, bias point of view because he's he has a system of record
Speaker 2:Yeah.
Speaker 7:You know, at at Box. But but his view is the system records are gonna get stronger because they represent the ground truth. You know, models hallucinate, you know, AI is probabilistic. What is the ground truth that's that's gonna guide these agents? And, ultimately, is that the data that's inside SAP, you know, and inside Oracle and inside Workday?
Speaker 2:Yep. And
Speaker 7:will those systems get stronger? I tend to be a big believer in systems in of record. I mean, you just look at the history of software, the biggest application companies in the history of software have been systems of record.
Speaker 3:Yep.
Speaker 7:And, you know, that's just been true for
Speaker 1:Well, even if you look at Satya's Satya, people were kind of dunking on Satya for posting this thread yesterday, but he was basically just demonstrating how powerful GPT five is within Copilot. Yep. Because they already have all of your information. They have your email. Yep.
Speaker 1:They have your calendar. Yep. They know who people are. It's just very easy to just like run prompts on top of the system of record And that's just an incredible advantage that Totally. Yeah.
Speaker 1:Microsoft.
Speaker 2:So yeah. I mean, the flip side of this, just to take, like, the the the counterpoint to Erin, at Box is, well, the business owns the data. And so it's very hard for a company that is a system of record to say, no. Actually, I'm not gonna let you suck all this data out of, you know, my my insulation into a data lake or into just a bunch of, you know, CSV files if you want. Like, if I am paying for a system of record, I will demand that you let me print it out and take it out the door if I want because that's my data.
Speaker 2:But, of course, there are different integrations that can be made a little bit more difficult. So, I'm wondering if in the age of AI, there's, like, the binding between even if even if Salesforce or Box doesn't let me with one click off board and onboard into a different service, if I show up with my, you know, my McKinsey or my Bain and Company, and I have a team of Accenture, but it's all AI. And I say,
Speaker 6:hey, I
Speaker 1:want you to at least have one of
Speaker 2:my Take screenshots if you need to.
Speaker 1:Yeah. One of my portfolio companies is building agents for enterprise migrations. That was like, you see it coming.
Speaker 2:So yeah. I mean, can you can you wrestle with that? Like, how how does that how does that play into all
Speaker 3:Look.
Speaker 7:I I I think it's a great point. Yeah. Certainly, even even the last five years, more and more companies are putting, you know, trying to get all their data inside, you know, cloud cloud data warehouse or Snowflake or Databricks or whatever.
Speaker 2:Yep.
Speaker 7:And so I think that trend is is continuing. But the question is for enterprises, where is that on the priority list? Totally. You know? It's just not on the priority list.
Speaker 3:It's like, okay.
Speaker 2:That Of course.
Speaker 7:Is there and it works. And I now want to to move forward. Yep. And I I wanna take advantage of the next set of opportunities. Wanna implement, you know, the AI for call centers, AI for coding, AI for, you know, health care, RCM billing, what whatever it is.
Speaker 7:And do I really wanna go through you know, even though it might be possible today of taking all my data in Epic and trying to push it somewhere else, it's just low on the priority list, you know, at this point. They've already suffered through the pain of the last ten years of all these implementations. And so I think it's like a lot of things inside these enterprises are gonna build on top rather than try and rip and replace.
Speaker 2:Yeah. One of the things that stuck out to me from the Joe interview was, were everyone in Silicon Valley is familiar with the concept, like, built to grow. Like, you're in growth mode. Go. Go.
Speaker 2:Go. Then there's obviously a lineage of companies that are built to last. And he brings up kind of a controversial one, which is some companies are built to die and that they've they've kind of done all that they will do. They've built all the products that they will do, and they are then they are machines to kind of maintain their customers for as long as they can. But the the that particular product will not exist, and the people that work there will migrate to other projects in the portfolio.
Speaker 2:And I'm wondering if you have a unique perspective from your background at Trilogy and then also the overlap between BCVs in a unique position. I don't know how to how tight the firm is broadly, but, like, Brookside could take a company public. It's like the coolest thing possible. And then you also have the private equity, like, lineage there that could turn around a company or take it in a different direction. And I'm wondering if that brings you a different perspective when you're sitting on a board to have a real conversation with a with a with a founder that's not just, hey.
Speaker 2:Swing for the fences, and then you just if it if it's not a home run, you're never gonna hear from me as opposed to, actually, I can still help you make good decisions in the era where you're going public or where you're going and working with private equity or where you're winding the company down. Like, do you feel like you have a differentiated perspective there from other venture capitalists?
Speaker 7:Yeah. I mean, I think the reality is that there are so many different ways to create value. Yeah. And it's funny, you know, kind of in this era where venture firms are, you know, kind of you know, there's a stampede towards becoming private equity firms, you know, and and, you know, and so
Speaker 2:Like, I did that first.
Speaker 7:Yeah. Nobody Nobody cares. Had we we we we we sort of understand that that desire
Speaker 2:in capital.
Speaker 7:And so there are just a lot of different ways to to to generate value, to create value. And and one of the benefits of being at Bain Capital is you see all these different divisions
Speaker 3:Yeah.
Speaker 7:In private equity and public equity and credit. And it's just incredibly smart people that are partnering with companies to create value. And these companies are different stages, different dynamics, different competitive situations. And, you know, there I mean, a lot of great companies end up getting bootstrapped to the point where then they might, you know, sell state to to private equity. That was the case when we invested in SurveyMonkey, you know, as a bootstrapped company, and then, you know, we got involved as part of that business.
Speaker 7:And so I think that is just the reality. You know, good friend of mine, founded, we backed early, you know, Nick at Gainsight. We were part of that journey. And, you know, he decided that the growth profile of the business was still gonna be very strong, but was not gonna be the 60 to a 100% growth that, you know, folks like us, venture investors, wanted. And so he, you know, orchestrated, you know, incredible exit to Vista, where, you know, he was able to transition all the venture investors to a different type of investor that was, in many ways, ideally suited for that more mature phase of Gainsight's growth, you know, over the last, you know, four or five years.
Speaker 7:So I think that's an important thing. There's different ways to, you know, create lasting value. And I think founders oftentimes, you know, in social media are looking for a pattern or one way. There's just not one way. You know?
Speaker 7:It's there there are a lot of options out there.
Speaker 2:Yeah. On on a similar note, I know, I think it's rebranded Sanctity Advisors. The credit arm of Bain is now
Speaker 7:Bain Capital Credit. Yeah.
Speaker 8:Used to
Speaker 7:be Sanctity, now Bain Capital Credit.
Speaker 2:Got it. Yeah. And I'm wondering if, if just having any interaction with those folks has given you a differentiated perspective on what's going on in the venture debt markets. We were reading the other day in the journal that there's been we're back to new highs where Yeah. Volume's drawdown.
Speaker 2:Volume's expanded, but the amount of deals has has contracted. But
Speaker 1:also the number of negative. Lenders has increased.
Speaker 2:Yes. Yes.
Speaker 1:So The market just basically fragmented post that.
Speaker 2:Yeah. So I'd love to know your your your your thinking and what you're advising founders on. When is the right time? What is the shape of the business? Like, what is the current meta for getting the most out of a venture debt partnership?
Speaker 2:From, you know, years ago, it was very different. How are you thinking about it now?
Speaker 7:Yeah. I mean, I think debt is very powerful, but it's also very dangerous. And the reality is that, you know, for an early stage company that's preproduct market fit, I think the best case use of venture debt is some runway extension. Yeah. And and not even it really runway extension such that you can sort of draw your equity down to zero.
Speaker 7:Mhmm. And so it buys you a few months. But we even when you our companies have venture debt and they're pre product market fit, we we advise them not to actually tap into the debt. It's there, you know, so they can sort of extend the runway a a few months. I think that's one option for venture debt.
Speaker 7:I think the second is if it gives you a clear path to profitability. If you're, you know, a later stage company and the venture debt can avoid a dilutive equity round and you can get to profitability, then I think it's very effective. I think for businesses, which, you know, are rare in our our our world, but that have capital, you know, that are a little more capital intensive. Certainly, credit can be a source of of financing, working capital financing, you know, is effective. But your business has to be very predictable, and, generally, credit is best used when you're breakeven or or close to profitability.
Speaker 7:I mean, I think I remember, you know, we had this great company, Wrike, that was, you know, a PLG company kind of in the space of Asana and Monday and all those companies. Ultimately, you know, I think exited for north of 2,000,000,000. But I remember Vista was looking at the company, they just said, look. You know, given, you know, given this level of ARR, we can we can take that amount of ARR and put two x that number of debt on the business, you know, because the business is so profitable, because it's generating cash, and that can allow that money to come out, you know, to shareholders. So there are a lot of interesting ways you can leverage debt.
Speaker 7:I just think you have to be very careful if you were not quite a predictable company that has a path to profitability. Then I think you've just gotta be very selective.
Speaker 2:Yeah. It feels like something where, you can get in a lot of trouble if it's if it's a if it's not a foregone conclusion that you can raise another equity round. Like Exactly. But if you're at the place where you could always do an equity round, there's always demand at some price. Oh.
Speaker 2:But if if you're ever gonna be in a situation where there might not be enough demand to clear your next twelve months, eighteen months of burn That's right. At any price, you are in trouble potentially.
Speaker 1:Exactly. Give us Yeah.
Speaker 2:Boy. Oh, I was just gonna say, we had Pete from Astronomer on the show. Yeah. How where does that rank in terms of, like, crazy wildcards in your career? I I feel like it was, it it just gripped the whole tech community, and I'd love to know a little bit of the play by play of, like, how you experience that internally, because it feels like the most unexpected, like, story to ever emerge out of a company that is, managing Apache Airflow.
Speaker 1:Well hand and well hand
Speaker 2:extremely well handled. Yes. But we all know about Apache Airflow now.
Speaker 7:No one no one had in their 2025 bingo card Coldplay or Apache Airflow.
Speaker 2:Exactly. They
Speaker 7:both are, and Gwyneth Paltrow. But, you know, I I got a call from, you know, my partner Enrique who's on the board
Speaker 2:Yeah.
Speaker 7:You know, Thursday morning, and you told me what happened. And I hadn't, you know, been
Speaker 10:on Wait.
Speaker 1:What's Thursday Thursday? There was the concert was, like, Wednesday night. Right?
Speaker 7:Concert was Wednesday night. Yeah. Exactly.
Speaker 1:You get this call. Hey. How's it going?
Speaker 7:Because I get this call. And I'm like, oh my god. That's crazy. And so then I went to social media and watched the video. And then later that afternoon, you know, I ran into my wife, and I was like, oh, this thing happened to our company.
Speaker 7:And I was explaining and I I assumed it was sort of this thing, like, in
Speaker 1:this Isolated.
Speaker 7:Narrow tech world, that I live in. And she was like, oh my god. Everyone's talking about that video. It's gone totally viral. My kids were pinging me.
Speaker 7:And I've part of it going viral in tech, that's happened and good news, bad news at at various of our companies over time. But the part where it became part of the cultural zeitgeist for the entire country It's crazy. For literally three days. Never experienced anything like that. And, you know, I think the board and and the management team, Pete, obviously, is the founder.
Speaker 7:Yeah. They, you know, they did a really good job of, you know, one being, know, number one, you know, we we we responsibility to the employees and our customers, and and let's do what's right. Number two, you know, this is obviously a a cultural moment, but there are also real people involved and their families and things like that. So I think they handled in a way that I think reflected a bit of that balancing act. And and so, you know, I think you had Pete on the show.
Speaker 7:I think he was great. And, you know, and I think the company came out the other side with more visibility. Certainly, think our our customer base feels very good about the business. The business, you know, you know, was growing very rapidly and and has continued to do so. So, you know, we feel really good about the business.
Speaker 7:We feel good about the investment, and, you know, thank god for Gwena.
Speaker 2:So Yep. Yeah. Well, as always.
Speaker 1:Absolute masterclass. Give us an overview of how you're thinking about what some would call American dynamism, but just this industrial renaissance. How you're thinking about what's what's in what's important but maybe not investable versus what's important and investable from a venture standpoint?
Speaker 7:Totally. Well, we we we don't like to call it American dynamism, but we we call it industrial renaissance. But, you know, we we we think that, you know, it's an it's a really important trend and opportunity. And certainly, you know, I think that that there are enormous tailwinds, you know, that are, you know, heading in this direction. Certainly, the the advances in technology and computer vision and and and the sheer cost of robotics and automation has come down.
Speaker 7:The, you know, the geopolitics, onshoring, tariffs, labor shortages, all of that, I think, is creating the tailwind. Certainly, you've got similar set of dynamics if you extend into, you know, the military and and and Department of Defense. You know, our our strategy here, you know, really starting with our investment in Kiva Systems way back when
Speaker 2:Oh, yeah.
Speaker 7:I think it's been to invest in companies where the the core innovation is still software. You know, and there are elements that involve hardware and robots and things in the physical world, but the core innovation is ultimately software. And I think Kiva's a good illustration of this. You know, when when Mick showed me the prototype way back when, 02/2004, he said, you know, inside an Amazon warehouse, a worker's spending 90% of their time walking to the shelf
Speaker 6:Mhmm.
Speaker 7:And 10% picking. And so he said and he said having a robot pick one of a million SKUs that are different shapes and sizes and weights and colors and T shirts versus, a broom, he's like, that's an impossible problem. It won't be solved for at least a decade. You know, it's now been you know, now twenty years. It's
Speaker 6:still not
Speaker 7:a solved problem. But he said the problem of getting a robot to move a shelf from point a to point b, he said that's a trivial problem. You know? And so his insight was instead of having the worker go to the shelf, I'm gonna have the shelf come to the worker. You know?
Speaker 7:And that alone, triple productivity, built this great company, powering all of Amazon today. It's, you know, it's really core to their fabric of how they run their their warehouses. And so we're looking for opportunities like that that are fundamentally software at their heart. It's more of a systems approach, you know, really thinking about a problem holistically. These companies tend to be more full stack as opposed to just selling a widget of some kind.
Speaker 7:I think that also prevents you from being commoditized by low cost, you know, offshore manufacturers trying to come in. So those are some of our thoughts kind of in this industrial renaissance world.
Speaker 1:So you've backed every humanoid robot company.
Speaker 6:No. So we'll get this
Speaker 1:started. Sounds like sounds like yeah.
Speaker 2:We were talking about this.
Speaker 1:Like Please. Yeah.
Speaker 2:You see the exquisite demo, and I it must be a jump to try and understand, okay. Can this person are they just a genius and they can build one, or are they building that delivers to the tune of a million? We were talking about this with SpaceX. Obviously, tons of rockets blowing up. I think they're on ship 36, but, like, the goal is not just get one rocket to space.
Speaker 2:Like, we did that. We went to the moon. The goal is, like, get it really cheap and reliable so it's going every 30 minutes. Same thing with, what we're seeing with Zipline. Those those folks are are just focused on, like, scaling and manufacturing.
Speaker 2:The Starlink stuff's the same. It's a completely different dynamic and problem that you're actually solving. Jordy, where do you wanna go next?
Speaker 1:Good question. Yeah. Guess Well, also talk to Yeah. I think Aaron Slodov had a post yesterday having some some he has a manufacturing Yeah. Tech company and this idea of like Atomic.
Speaker 1:Basically, yeah, understanding specifically these industrial renaissance companies. I have to imagine you're oftentimes meeting entrepreneurs where you're like, this seems like a good business. It should exist. But like what what is your like actual investment criteria for a company that wants to make things in America that's not not a company that is a system for making things, but but something where it's an actual physical product as the as the output?
Speaker 7:Yeah. I think if if you're actually a a core manufacturer as opposed to a technology company that's automating manufacturers, I think the bar is very high to to invest as, you know, from a a venture standpoint because I think there are a couple of things you gotta believe. I think number one, you gotta believe there's truly proprietary technology, and and that's just a high bar in manufacturing. I mean, you you you know, you've seen it, you know, with you guys were referencing the Roomba earlier and
Speaker 2:Yeah.
Speaker 7:You know, SharkNinja. You know, like, anytime you know, as every Dyson product, every, you know, product that's out there, they have some equivalent. And and SharpNinja is a great company. I'm not disparaging them at all, but, you know, you you realize you're gonna get competition very quickly to manufacture. And so the question is where what is that source of, you know, competitive differentiation?
Speaker 7:And oftentimes, it's software, some kind of software or network effect or data Mhmm. You know, that allows this business to maintain proprietary margins and a huge competitive advantage over time. And so I think you need that or you need just an extraordinary, you know, entrepreneur, a founder, you know, an Elon esque, you know, founder. I just think it takes a very special kind of founder to build a a physical products company. You're you're you're just dealing with the physical world is is is far less forgiving on on so many dimensions.
Speaker 7:One, just making money, but two, having it work.
Speaker 2:On that note of software, is it always some is it always software that enables, like, the bootstrapping of a network? I'm thinking of, like, Apple gets power from software, but not just software. It's like iMessage integration, a network. NVIDIA gets power from software, but it's CUDA. What is CUDA?
Speaker 2:It's a network of talent and and standards. It's not just you copy CUDA and you're good or you're feature parity. Tesla, they have self driving. It's great as a single thing, but it really is like a scaled network that gets better the more people use it. Is there some sort of dynamic there that creates a flywheel effect?
Speaker 7:Absolutely. Yeah. I think that flywheel is really important. You know, we're investors in this logistics company called ShipBob.
Speaker 2:Oh, yeah.
Speaker 7:And, you know, ShipBob is like a you know, it's a tech company up and down. But when you think about why is ShipBob so powerful, it is ultimately a network effect because we have so much density with so many warehouses. You know, we know and we have so much data. We know that, you know, customer a in New York City is gonna order this product from this vendor, so we're gonna make sure that product is sitting in a warehouse on the East Coast. And by the way, we're not gonna get that right a 100% of the time.
Speaker 7:So 30% we get it wrong, we're gonna be able to fill up an entire truck of stuff from LA and get it to New York so that we can inject that package, you know, at the last mile and bring down the package, you know, the the delivery cost by 2 or $3. And so it's a classic network effect business that's underpinned by data and software, but certainly relies on in in that example, relies on physical warehouses. You know, we have a certain number of physical where we don't own those. You know, those are through partner sites, but those are physical assets that are out there that create the density. We're using physical trucks to move things from point a to point b, but, ultimately, our ability to do that is driven by data and software, you know, at the ground level.
Speaker 7:And and and those founders made a really interesting decision, which was we are going to partner with third party warehouses, but they have to use our entire stack of software. Yeah. We're not gonna rely on their side. If they don't use our warehouse management
Speaker 2:Yep.
Speaker 7:Our pick and pack software, they don't adhere to all of that, we're not gonna work with them because we need to have that, you know, a pane of glass that sees every bit of information from from soup to nuts. So I think your point, John, is a good one, which is, you know, the these businesses that ultimately create some kind of network effect, ultimately, you have that flywheel that that keeps going and allows you even you mentioned DoorDash, I think, on a previous, you know, podcast a few days ago. These businesses that people think of as low margin, once you get that network effect and that flywheel, it you can just compound forever.
Speaker 2:Well, thank you so much for joining. There's a ShipBob fan in the chat spamming. Ship bob will be its $1,000,000,000. Go ship bob. Let's hear for
Speaker 8:ship Good to
Speaker 7:see you guys.
Speaker 2:Thanks. Have a great rest
Speaker 6:your day, j.
Speaker 7:Alright. You too.
Speaker 2:See you.
Speaker 6:See you, guys.
Speaker 2:Let me tell you about public.com investing for those who take it seriously. They got multi asset investing, industry leading yields, and they're trusted by millions. And our public.com update is that ByteDance just made more money than Meta for the first time in history. Yeah. I think this is a boo because we root for Zoc.
Speaker 2:We root for America.
Speaker 1:We are team Zoc, but you gotta give
Speaker 2:it up for big numbers. Congrats to the team over at ByteDance putting up some heroic numbers. $48,000,000,000 in q two to Metas. 47.5 just just just over 47 Just a billion. Oh, it's gotta be rough over there.
Speaker 1:Well, up next, we have the founders of Framer.
Speaker 2:Welcome to the stream. How are
Speaker 7:you guys?
Speaker 1:Gentlemen, what's going on?
Speaker 11:Hey. Good to be here.
Speaker 1:Big day. Big day. You guys are up late.
Speaker 2:I'm so yeah. Thanks for hopping late. I'm so trained to when we have two people, gotta debate. I think we gotta get these guys to debate. What are we debating?
Speaker 2:I mean,
Speaker 6:we do that all day.
Speaker 1:Yeah. Yeah. Yeah. That's the life of a of a founder.
Speaker 2:Alright. Give us give us an intro, the update, and
Speaker 1:I got the Gong ready
Speaker 2:for you What is top of mind you guys?
Speaker 7:What do do with the Gong?
Speaker 1:Just wait. Just you'll find
Speaker 2:out. Alright.
Speaker 11:Yeah. Alright. Here we go.
Speaker 6:Alright. So the update is so we're Frabr. We're a web design platform for for professional or like professional web design platform where companies can run their entire .com. And we raised series d that we announced today.
Speaker 2:Let's go.
Speaker 6:Wow. That's what it's for.
Speaker 1:That's what the Gong is for.
Speaker 2:Gong is for.
Speaker 1:Should get 102,000,000,000.
Speaker 2:Wow. That is a big
Speaker 1:Big number.
Speaker 2:Number. Congratulations.
Speaker 1:Big number.
Speaker 11:Were you guys in sales?
Speaker 1:That's what the
Speaker 6:the Gong
Speaker 1:We just celebrate. We we just enjoy
Speaker 2:Huge capitalism fans, honestly.
Speaker 1:Yeah. It's really just a love for business and big numbers. But but yeah, it's a it's a staple and it's a it's our pleasure to hit it whenever whenever we can. But give us give us first time on the show, give us quick background on on the on the company. Yeah.
Speaker 1:Yeah. You guys wanna start? History.
Speaker 6:Yeah. So I'll go pretty quick. Like, we we're both product designers, and we sold our first company to Facebook where we were product designer for a couple of years. And after Facebook, we figured, hey. Let's do another company before we get old.
Speaker 6:That's more than ten years ago. And we always love building creative tools. So we figured, okay. You know, like, starters are pretty hard. Why don't we pick something that we really like working on?
Speaker 6:So let's build the next Adobe. And everybody around us said, like, don't do that. You'll probably raise some money, but not for design tools. Just don't tell any investor you'll be dead you'll be building that. But we did.
Speaker 6:And then ten years later, in a big pivot, here we are.
Speaker 1:Overnight Overnight success.
Speaker 6:Overnight success. You can see what Framer is really good at or Yeah. Like the you know, I can talk about the product market fit. What we're really good at is we allow folks to basically design or ship websites themselves for companies. So you have your, let's say, your Figma where you do your design, and then you turn it into an application.
Speaker 6:Yep. You've got tools like Squarespace and Wix where you make your personal sites. But a lot of company websites are still built with code. It's kinda slow. You need a developer team.
Speaker 2:Yeah.
Speaker 6:And over the last couple of years, we saw more and more companies just wanting to ship sites much faster and do that in a visual tool. That's what we built.
Speaker 2:What's your take on the the the vibe coding boom? Where what are the within I mean, we're all familiar with the growth of vibe coding stuff. What are the overrated use cases? What are the underrated use cases within the vibe coding boom?
Speaker 6:Yeah. I think we're about to find out. I think I think everybody's just really excited with where it's gonna go. Mhmm. Because in the beginning of this year, I'm sure that if you type in, you know, like, make me a nice front page for the company that you're at, then, you know, you're not really gonna use that result yet.
Speaker 6:But you can see it's gonna get there. Right? Like, we're close enough for the LLMs to like, it's not gonna win any awards. You can't really use it for your site yet, maybe for your personal site.
Speaker 9:Mhmm.
Speaker 6:So I think over the next year or two, somebody's gonna make that work for companies. Somebody's gonna make that work on brands. Somebody's basically gonna allow designers to sort of, like, teach the LLMs how to generate just like an engineer kinda handholds an LLM to write the code.
Speaker 2:Yeah.
Speaker 6:And I think we're kind of on the on the on the crisp of figuring that out, and that's obviously what we're spending a lot of time on.
Speaker 1:Mhmm. How how important is the is the kind of network around Framer? I know there's people that make businesses designing sites that can be adapted and things like that. Is that a core part
Speaker 6:of
Speaker 1:the business in in the way that maybe sort of like the Shopify app ecosystem might be? Or or is it more in in the direction that the platform is heading? Is it more about allowing people to generate, you know, sites entirely based on their own brand assets and things like that?
Speaker 11:A 100%. So we call it creators, and it's it's a it's a whole economy by itself at this point. People building more than just sites for clients, which is typically what you would think of is where you you build a website for clients. Next to that, they build templates. They build plug ins.
Speaker 11:They build all kinds of assets that can be sold on
Speaker 4:the framework
Speaker 11:marketplace, and we're starting to see people make serious money off of that. The most impressive examples are folks that basically start with a new Twitter account with zero followers and then set out a challenge to get to 10 k in, let's say, thirty days just by making sites and selling assets on our on our marketplace.
Speaker 2:Are they successful?
Speaker 6:Or We're
Speaker 2:actually it sounds like they've they've they've already done this. Is is that what you're saying?
Speaker 6:Yeah. Yeah. This is happening every day.
Speaker 11:This is this is the whole thing now. It's amazing. Design Twitter. And I think yeah. There's a couple of outlier examples of people are now doing, like, 3 or 400 k a year just building businesses on Framer by selling these assets.
Speaker 2:Yeah. Are there are there features or functionalities that you think you wanna add based on the generative AI boom? I'm thinking, like, we've seen these, like, not just, okay, build a landing page for a business, but build a game or use Three. Js or WebGL. And there's, like there there's more tools that feel previously, it was, like, okay.
Speaker 2:That's if you're gonna build a a video game in the browser, like, that's gonna take you a long time, and now people are vibe coding them. Are there other features or, you know, web components that you wanna, like, surface more easily to, you know, prosumers?
Speaker 6:Yeah. If you have like a a big web platform, you can go a few ways. Like, one is obviously the marketing, sort of what we're trying to figure out. Just help startups ship the most beautiful websites Mhmm. Really quickly that that go very fast.
Speaker 6:And then you can always go into ecommerce, but all I see is Shopify. See a lot of people try, but all I see is Shopify. So Yeah. You gotta be pretty confident to go after that. And then the third thing is that there's something between an app and a site that people can't really make today.
Speaker 6:Right? So there's websites. We're really good at marketing websites now, but there's obviously websites that do more. Right? Like, so they're more like a database catalog.
Speaker 6:They could have a feed. They have a login state. And that's that was always constrained by people that could express that could express that logic. For that, you had to quote. And I think, you know, like, we're in an interesting time where the LLMs can help with that.
Speaker 6:So it's definitely something that we're also going after.
Speaker 1:Yeah. How how it it feels like your guys' strategy is the the entire, you know, market for creative tools today is extremely loud. Right? Every every day, there's new tools launching. You guys seem to be extremely focused still on on this core value prop of helping people make beautiful, simple, professional sites is how much how much what do you how do you think not not to get too far out in the future, but how do you expect like do you think the dot, like my view is that the .com is is like a hyper durable asset that will continue to have a lot of value for for deck, you know, for for the for the, you know, the next decade, two decades, etcetera.
Speaker 1:And there was a time when people thought that URLs and and everything would just become applications and things like that. And I don't think that's panned out. How what's your guys' vision for basically the future of the website itself, right, at a at a time when, you know, already we're seeing in different tools, you know, different, you know, consumer LLMs that will generate UI and scrape websites and things like that. How how what's your kind of what does the website look like in ten years?
Speaker 6:Yeah. Not not like a chatbot. But you'd be surprised we've been pitching, obviously, for this round. You'd be surprised how many VCs think that that might be the case. Yeah.
Speaker 6:But the web as a, like, as a form to present your brand and build brand equity just isn't really going anywhere anywhere. But one of the things that we really like I mean, we're both product designers, so, obviously, we have business goals. But if you ask me why I get up in the morning, it's also to make the web cooler, and the browsers can do a lot of really cool stuff. Right? The LLMs unlock people to build stuff for that, and the website's kinda look boring.
Speaker 6:Like, they've only gotten to look more boring over the last ten years. So I think tools like Framework can really help the designers sort of express more interesting websites. So I think that, you know, with that and more people being able to execute on that, but as well as sort of, like, you know, showing more like, doing more cool stuff that the browser can do, like combining three d and video on websites, making much richer, cooler experience. I think that's really where things are going. So I think it's only the browser is still such an underrated sort of piece of technology in in terms of how it's used for presentation.
Speaker 8:And if
Speaker 6:we give folks the tools to build, like, cooler output for that, then they will.
Speaker 1:Yeah. I think it I think it says a lot that all you know, every major AI company wants to have a browser themselves or they wanna buy Chrome. Right? That that to me says, you know, all you need to know at least for now around where where the category is going.
Speaker 11:And it's pretty interesting that that all the AI brands are very heavy on their personality on the Internet. Right? So they all have these websites. Yeah.
Speaker 2:Beautiful
Speaker 11:brands. Really nice .coms.
Speaker 1:Yep. Dotcoms forever. We're we're big .com enthusiasts here.
Speaker 2:Huge enthusiasts. Thanks so much for hopping on guys.
Speaker 1:Yeah. Congratulations. Congratulations. You guys and the whole team.
Speaker 6:Awesome. Thanks
Speaker 11:for having us. Thanks so much.
Speaker 1:Cheers.
Speaker 6:Alright. Cheers.
Speaker 7:Bye. See you.
Speaker 2:Up next, we have a great.com, super.com. But before I tell you about that.com, let me tell you about adquick.com, out of home advertising made easy and measurable. Say goodbye to headaches of out of home advertising. Only ad quick combines technology, out of home expertise and data to enable efficient seamless ad buying across the globe. And we will bring in super..com.
Speaker 2:With some news.
Speaker 1:One of the best.com.
Speaker 2:How are doing?
Speaker 1:Good to happening?
Speaker 8:What's latest? Good. Doing doing well. Thanks for having me.
Speaker 2:Thanks for hopping on. Give us the news.
Speaker 8:Well, first, I I saw your comment. Thank you for the, the domain shout out.
Speaker 1:Of course. That's fantastic. Give us before we dive into the news, how how did you get any crazy stories getting the domain?
Speaker 8:Yeah. Definitely crazy stories. So, we we we had a different company name. We were called Snap Travel. We wanted to rebrand.
Speaker 8:We did this whole activity and this whole exercise, and we like the name super because it it's how it made our customers feel. Like, when they save money, when they found a great deal, they felt super, and we loved it. It was such a generic word. If you Google super, you're just, like, getting super Mario Brothers. You're getting whatever you're getting.
Speaker 8:So we're like, hey. We gotta go and getthe.com. We reached out multiple times, didn't get any answers. I'm like, okay. Forget this.
Speaker 8:They, Meta at one point launched some product called Super, and we're like, oh, they probably, like, are gonna try and buy it. And it was just like, we're not getting this domain. And then we got a domain broker, and out of nowhere, they were like, okay. This person's, like, interested, but it was a pretty intense negotiation process. It was kind of in the in the single digit millions, and then it got to the board level, and it was split, and it was fifty fifty.
Speaker 8:Half the people were like, I don't think this is worth it. People don't really care about domains anymore. They just, like, search
Speaker 3:on Google.
Speaker 1:So not true. It's so not. Like people are people are people I mean, domains are still Underpriced. Wildly underpriced like ..com specifically. And it's because people have just been so trained.
Speaker 1:If you've been on the Internet for any amount of time, you know that when you are on the website of a big business, it's a short.com. And when you're on the site of a less legit, less less established business, and consumers are really smart. They just pick up on these things. And yeah. And it's it's interesting.
Speaker 1:So you guys I I I imagine you guys have trademarked super.com because you can't trademark, like, super or who knows? Right? That's
Speaker 8:right. That's right. So we trademarked super.com and have a very anyways, there's a story where there was three three in the board. And ultimately, as a CEO, I get to make the hard hard decisions. We're like, we're gonna do this.
Speaker 8:So Right. So we bought the domain. And you're right. I think I think for consumers, it does matter. Right?
Speaker 8:So Totally. Yeah. So the the big news, we just wanted to introduce our incredible momentum. So we crossed over 200,000,000 in annualized achievement. Crazy.
Speaker 1:Yeah. Crazy. Yeah.
Speaker 8:And and and and if you think of the evolution, so we've been around for about nine years now. We started the company, and it was just like Success. Hotel it was a travel hotel deal. Right?
Speaker 3:So we
Speaker 8:were doing hotels for, like, four or five years, and then we, like, completely rebranded to super.com, expanded the product, introduced this membership program, and that's just allowed the business to completely take off. So we're now, you know, hundreds of thousands of paying members as part of this membership club to, like, save more, earn more, build credit, and just experience more of what life has to offer. So
Speaker 1:it's How is it how is it trying to get coverage from the legacy media for just doing a lot of revenue? Feel I like they they still are like, yeah. Like, I don't know if it's a story. Like, come back to us when you raise, like, a million dollars. But you're like, ma'am or sir, I've we're doing hundreds of millions of revenue.
Speaker 1:I think this is more difficult.
Speaker 8:No. It it it's it's so it's so interesting. The traditional media, they don't they don't have the time to, like, think about that. And they there's like, if it's a fundraise, I'm gonna I'm I'm interested. If it's not a fundraise, I'm not interested.
Speaker 8:Right? So, but there's lot of companies that are doing really well and driving a lot of revenue, and I'm happy you guys are are talking to us.
Speaker 2:Yeah. What are the other, business models in the category you deliberately avoided for, like, lessons from, like, the previous cycle, previous strategies that maybe, like, might have product market fit loosely but not real sustainable business models?
Speaker 8:Yeah. That that's a really good question. So let let me take a little bit of a step back. Okay? So the company super.com, we have a membership program called Super Plus.
Speaker 8:Mhmm. Super Plus is $15 a month. And the idea is when you're a Super Plus member,
Speaker 3:you just get
Speaker 8:15 to 20 benefits.
Speaker 9:Mhmm.
Speaker 3:So you
Speaker 8:can save on hotels. You can save on gas. You can save insurance. You can save on pharma. You can earn money playing games, filling out surveys.
Speaker 8:We have a Mastercard that helps you build your credit score and earn 1% cash back. And some people come in and they use, like, one or two products. Some people use, like, five or seven products. But ultimately, it's like, you think this is worth $15 a month or or you are getting more than $15 a month worth of value. Right?
Speaker 8:And for some people that just I just book hotels, like, once a month, and I'm saving, you know, thousands of dollars. For other people, it's I'm using the cash advance product. I'm earning money. I'm building my credit score. So everyone kinda uses the app somewhat differently, and and we use AI to kind of customize the app.
Speaker 8:So you'll see what we think is most relevant to you that will give you the most value from your membership. Now you asked a question, which is, like, what hasn't worked out. Right? So we are like, okay. What can we add to the membership?
Speaker 8:What can we try? We tried something about two years ago, where we thought we could get into selling discounted, like, physical goods, like, Mhmm. Products. Right?
Speaker 7:Yeah. That sounds tough.
Speaker 8:We found
Speaker 2:and what we
Speaker 8:learned, yes, it's very, very tough. It's almost impossible to compete with Amazon. Yeah. But the hardest part was that you can't consistently get a large supply of discounted Yeah. Physical products.
Speaker 8:Because either it's like, it comes and it goes, and then it's like, oh, this is a hot item now, and then it's not. Or it's like you get outdated stuff, and then it sits in a warehouse. And you couldn't keep that steady supply of discounted goods, and it became a very unreliable customer experience. So we actually acquired a company, tried to build up the goods business, had a physical warehouse in in Miami, and then we ended up just shutting that whole division down and and shutting down that warehouse. So not overnight success.
Speaker 1:What's working on the customer acquisition side? What what where are you guys, you know, spending money on acquisition most aggressively? And and, then I have another kind of related question.
Speaker 8:Sure. So each product has its own acquisition channels that work well. Right? So we don't necessarily advertise the entire membership and say, hey. Come join and get, like, 15 plus benefits.
Speaker 8:The way we acquire customers is we go for, like, one product, and then they come in, and they're like, oh, I'm gonna become a member because this product is so worth it. And then, hopefully, they stick around and do more things. Right? So for hotels, it's a very high intent product. So what that means is it doesn't matter how much advertising you do on Instagram or Facebook.
Speaker 8:It doesn't really work. Right? What works is when you're on, like, Google or Kayak or TripAdvisor and you're, like, typing in, like, best hotel deals in New York and you have that intent to purchase. So, like, on the travel side, it's a very high intent channels. Yeah.
Speaker 8:If you have something like make money playing games, that actually works really well on social because people are scrolling on TikTok.
Speaker 1:What's the the big what's what what's the actual economic model for that? Because if anytime somebody says that I that if you tell John you can make money playing video games, his you you know, I'm a little bit worried he's gonna get on Super and and get have a little bit too much fun. He he likes video games.
Speaker 8:Yeah. So I'll I'll tell you I'll tell you the model on that. And first of all, it's not just games. Right? So I'll give you one that's really easy to understand.
Speaker 8:So if you come to super.com and you wanna make some money and you go to earn, you may see something that says, if you've never taken an Uber before, download the app, take your first ride, and get $20. Pretty obvious, pretty simple. So they'll go in, they'll download the app, they'll take the first ride, and we'll just deposit $20 into their wallet. And for Uber, that's obviously a user acquisition strategy. Mhmm.
Speaker 8:They believe that that customer and and Uber's probably paying us $20, and we're you know, over $30 and, you
Speaker 3:know Yeah.
Speaker 8:And we'll pass most of it back to the member. But for Uber, that's a user acquisition strategy. And if they can then get that customer to eventually take more rides, and that that's worked out for them, and and they were happy to pay that $20. For game developers, it's kind of the same thing. It's like, you know, you get paid for, like, downloading the app and getting to a certain level.
Speaker 8:Now if you get to that certain level, then potentially that game developers generated some revenue from you because you've seen some ads, clicked on some ads, maybe you bought some gems, maybe you did something else. So it's just it's just almost like an ad network play Yeah. Where it's just another source of user acquisition for a lot of these companies.
Speaker 1:Are you guys do you guys spend time, like, thinking about, how you're showing up, how the different products are showing up in LLMs? Is that a meaningful acquisition channel for for you guys yet?
Speaker 8:It is. It is. So it's something that we're looking at closely. You've probably seen there's a ton of AI companies that's working to help you optimize how you show up in LLM. So Yep.
Speaker 8:Some of it is almost traditional where you just kinda need to have that basic infrastructure and write full structure and write information. But what we're seeing is that the LLMs are pulling from a lot of user generated content as well. So things like Reddit and, like, TripAdvisor forums and, you know, you know, even YouTube for that matter. Like, wherever user generated content happening, they're pulling from that as well. So some traditional SEO, and it's actually spending a lot more time and energy thinking about user generated content and how we can help, you know, be part of and moderate some of those conversations.
Speaker 2:Totally. Great. Thank you so much for hopping on.
Speaker 1:We Yeah. Congrats on the milestones
Speaker 2:on the milestone.
Speaker 1:Massive.
Speaker 3:Thank you. A good weekend.
Speaker 1:More air horn.
Speaker 2:Enjoy the rest of
Speaker 8:your day. Cheers.
Speaker 7:Alright. Thank you, guys.
Speaker 1:Congrats. Let me tell
Speaker 2:you about Bezel. Getbezel.com. Your Bezel Concierge is available now to source you any watch of the planet. Seriously, any watch. Go to getbezel.com.
Speaker 1:Legends.
Speaker 2:And we have another great.com coming into the studio, keychain.com. Simplify your supply chain with AI powered CPG. Good to meet you. How are doing?
Speaker 10:Sure. Thank you.
Speaker 2:Would you mind kicking us off with an introduction on yourself and the company and maybe some background and how you got into this particular business?
Speaker 10:Sure. I'm Oishi Hanrahan, cofounder and CEO of Keychain. I spent the last fourteen, fifteen years building online marketplaces. Mhmm. I built a company called Handy.
Speaker 10:Handy is like Uber for handyman and cleaners. Built it up to 9 figures of revenue, sold it to Angie's List.
Speaker 2:Congrats. Yeah.
Speaker 10:That was a that was that was a good outcome. Yeah. He's
Speaker 5:the largest pump service
Speaker 10:company in
Speaker 1:the Hey. Let's give it up for good outcomes. Yeah. Congrats. It's awesome.
Speaker 1:Sorry. Continue.
Speaker 10:What gets a ding in a bell? What are the what are the rules?
Speaker 1:You never know. There are no rules. There are no rules. It's whatever I feel like. But keep keep keep it rolling.
Speaker 1:We'll see. I I can I feel some more
Speaker 2:feel some more stuff coming?
Speaker 10:I I took on running Angie so, I became the CEO of Sorry. Angie's and then I just looked at the
Speaker 1:Sorry. I just had mess with you.
Speaker 2:I mean, it's You're fitting. It's good.
Speaker 1:Not enough not enough not enough founders do that. It was to get acquired and then take on the take on the top I
Speaker 10:don't know if I'd recommend it. It's a lot more work. I feel like when you sell the company, like, there's this thing where you can just rest, invest. Yeah. And that's what my cofounder wanted to do.
Speaker 10:He was like, could we not do all the things?
Speaker 1:Are I don't know. We we
Speaker 10:should do all the things.
Speaker 1:You're like, get ready to be important at work, buddy.
Speaker 10:Every day. Not just some days.
Speaker 2:Yeah. Every day. That's wild. Advocate that for my friends who get acquired, I say, you should become the CEO of the acquiring company. That should be the goal.
Speaker 2:But yeah. Anyway, you you you found your way elsewhere.
Speaker 10:Yeah. So I I was a CEO. My cofounder was chief revenue officer, and we, we we ran it all the way to the '22.
Speaker 2:Mhmm.
Speaker 10:And then we both left, and we, took a little break and then started another company. And we you know, second time founders tend to do this thing where they think they're gonna start a studio company where it's gonna have, like, four or five companies inside it, and they won't actually have to run many of them. I thought we we we we tried to do that very unsuccessfully for all of about a month and a half. Mhmm. And there was one idea inside there that just started to work really well.
Speaker 10:And we, we doubled down on it and really got behind it, and we've been running it for about a year and a half. And the idea is to build the platform that CPG runs on. So you get you guys know this, but most CPG companies don't run their own facilities. They have co mens or coproducing facilities that run
Speaker 2:Yep.
Speaker 10:All of their production. And there's a whole industry of about half a trillion dollars in The US of 20,000 companies that make, you know, all the products that you eat, drink, wash your hair with. And we are building the ecosystem and platform for those companies to run on. So we're starting with search and discovery at Keychain, and we've built the deepest database of how brands and retailers find manufacturers.
Speaker 2:Mhmm. Yeah. So I, am, like, super intimately, familiar with this space. I ran a consumer packaged goods company, and it was always a struggle finding, finding supply chain partners. It was always some kind of, like, loose network of asking friends for favors and whatnot.
Speaker 2:The the the best in class database about a decade ago was, just from a news website called BevNet. And they and they did they kind of aggregated up some manufacturers. I think they let people run ads, And it wasn't their primary business. They were mostly like a news and reporting organization, a trade publication. So it makes a ton of sense.
Speaker 2:I would love to use this product if I was building a CPG company today.
Speaker 1:Yeah. It's funny. The process the process, somebody has an idea for a CPG brand at least pre key chain. And it was like, you just start asking your friends, people, random people
Speaker 2:Who knows? And
Speaker 1:how would you make a protein bar? Met I met your cofounder Jordan during I think probably back in 2020 because he was investing in random consumer brands, super sharp kid at the time. Now now clearly a grown man. Yeah. But but, yeah, the this process is is still I mean, I the the challenge is is in how do you make sure that the incremental consumer products entrepreneur and the I I would say it's easier to go acquire the customers that are making a lot of net new products or have, a product release schedule.
Speaker 1:It's also how do you make the the incremental CPG founder aware that Keychain exists so they don't go through the traditional process of just asking friends and asking around, how do I make this thing?
Speaker 10:Yeah. I I think you're right, and that's that's where we started. So we we built the product for enterprise. So at at, at Handy and Angie, some of our biggest partners were the Walmarts of the world and the Targets of the world and the Costcos of the world where we did their home service. So we we had those relationships, and they obviously make most of the private label product in the in the in the country comes out of the biggest retailers.
Speaker 10:So we actually built the product for large private label brand owners, the people who, you know, churn out product every single day.
Speaker 4:Yeah.
Speaker 10:And that's where we started. So today, eight of the top 10 retailers in the country use Keychain, and the same is true actually of the large brands. So you think of the large strategic brands, some of them have invested in Keychain like Hershey's and General Mills. They obviously have a lot of facility that they they, you know, make some of their own product, but they also contract outsource a lot of it. So we built a product for them to be able to search for manufacturers.
Speaker 10:And it it's funny. So because we built the product for enterprise, we almost got the start up for free. Like, we got the fact that the start ups are out there, and they're constantly looking you know, it's harder for them. But because we built this data asset, and, you know, I heard you in your last segment talking about SEO and LLM optimization, we started with the data asset, which is the deepest asset anywhere in the world of US CPG manufacturing. We've invested millions of dollars into building it, and it frankly can tell you who can make what better than any broker, any trade show, any, you know, phone a friend.
Speaker 1:Yeah. Are you guys, do you feel like you're is is it trade shows that you're disrupting? Right? I mean, if you wanted to if you wanted to go if you wanted to make CPG products in your Target or someone like that, you're going to a trade show and you're like Of course. What can you make for me kind of thing.
Speaker 1:And this just seems a lot more efficient. I I went to Expo West once and I almost overdosed on caffeine because it was like that year every single product just had maxed out caffeine. It was protein bars with caffeine and all that stuff.
Speaker 2:This is deeply bearish for Las Vegas. We need to get Taylor Swift to go to the sphere immediately because there's gonna be no more trade shows after Well, this is
Speaker 10:we if you if you had gone last year, I think you would have overdosed on that psilocybin because everything seemed to have some form of, like, mushroom in it. Yep. That's Or you would have overdosed some protein.
Speaker 2:There's always a trend.
Speaker 1:Protein's one trend. Psilocybin.
Speaker 2:Oh my god.
Speaker 10:There you go. You got it. Yeah. You got it.
Speaker 1:For when you wanna build muscle while you hallucinate.
Speaker 10:Which is first. But anyway, so we we don't so much think about it as disrupting trade shows because we really do think there's a role for trade shows, and it's just not what we think. Trade shows are a truly awful way to do structured data discovery, and that's what some people do to trade shows. Like, they walk around looking for a particular thing. Trade shows are a freaking amazing way to deepen a lot of relationships quickly.
Speaker 1:Yeah.
Speaker 10:So if you know who you're meeting
Speaker 2:Yeah. And
Speaker 10:you've done the research in advance on Keychain and you've set up conversations, you can meet the right 15 manufacturers in thirty minute segments and have the best trip to Expo West ever, or you can wander around getting absolutely loaded on caffeine because you're going from booth to booth to booth Mhmm. And have a pretty ridiculous time, and maybe you meet two of the right people. So it's like, how do you take structured data and figure out how to appropriately use the right tools so that you can have a great trade show experience? And that's the first that's effectively the first product the Keychain has launched. So that product today is in month 18.
Speaker 10:Mhmm. And it does about a billion dollars worth of search volume per month.
Speaker 2:Wow.
Speaker 10:And we're in the process now of launching our second product, which is a bridge into the operating system for manufacturers.
Speaker 2:Yeah. Last question. We we we we gotta let you get out of here, but we have one more sound effect. Do you have any fundraising news for us?
Speaker 10:We we do. Yeah. We we we raised a little bit of money.
Speaker 9:How much did you raise?
Speaker 10:We've raised in total the last round was 30,000,000, so we raised $60,000,000.
Speaker 1:Wow. Congratulations. So it's almost like you've done this before.
Speaker 10:The the ding and the bell thing?
Speaker 2:This Yeah. Yeah. That gong hit is authentic. That's That one's analog. That's a real We
Speaker 6:have
Speaker 2:a real gong.
Speaker 10:Oh, one's real.
Speaker 2:That one's real. Yeah.
Speaker 10:That was in a video of you doing that before.
Speaker 2:No. No. No. No. We have a real gong.
Speaker 2:Yeah. Anyway, thank you so much for hopping on the show. Awesome.
Speaker 1:Yeah. Great to meet you. Congrats. You so much, guys.
Speaker 2:We'll talk to you soon.
Speaker 1:Cheers. Bye.
Speaker 2:That was a very cool segment. I would have killed for that in 2012. Anyway Up next. Let me tell you about wander. Find your happy place.
Speaker 2:Book a wander with inspiring views, hotel grade amenities, dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home but better. And up next, we have a guest in the Restream waiting room.
Speaker 1:Let's bring him into the TVPN Ultra Dome. John. You. Welcome to the show.
Speaker 9:What's happening, guys? How are you?
Speaker 1:How are you?
Speaker 9:Good to see you. Good. This is I'm just looking I mean, this is what the fortress looks like, man.
Speaker 1:The Welcome to the fortress.
Speaker 2:Finance. The capital. Thank
Speaker 9:you for having me. We love you guys. We love
Speaker 4:you too.
Speaker 2:For hopping on.
Speaker 9:Yes. It's phenomenal. So
Speaker 2:Kick us off with just a brief introduction on yourself, little bit about your career, and then I wanna go into the the the the hope for common stock, the bull case for for start up common stock.
Speaker 9:Yeah. For sure. So I'm John Callahan. I've been an entrepreneur in venture capitalist for a long time. We started True in 02/2005.
Speaker 9:We're in early stage fun. Success.
Speaker 2:There's also a stand effect.
Speaker 1:Twenty year twenty year overnight success. Yes.
Speaker 9:Yeah. Exactly. That's the way it all is here in the valley. So yeah. So, we started the firm with a vision of, frankly, our tagline was more venture, less capital.
Speaker 9:We thought the world needed venture capitalists who were gonna, you know, take big risks and entrepreneurs, you know, were coming out. At that point, by the way, post sort of bubble crash, post one point zero crash, there were a lot of new technology changes, DHTML, open APIs. So all of a sudden, all these really creative founders were coming up with really cool ideas. You guys remember mashups. And, you know, it was you could do a lot of things with all of this infrastructure that had been built in the one point zero and you could build a lot of application layer value.
Speaker 9:So that that is that is a pattern I will talk to you about here about what we're seeing today. So that worked out really well for us. True's been extremely lucky. We've been investors in category defining companies like Fitbit, Peloton, Ring down in LA. Jamie Simonov is awesome.
Speaker 9:Also in LA, Sweetgreen with
Speaker 2:John Neiman. Bob Ring Costi which which Ring? Isn't Ring the security joke that say there is only one.
Speaker 1:There's only one.
Speaker 2:Security company. There's only one.
Speaker 7:Security The one that
Speaker 9:protects you and your family and your neighborhood. Ring?
Speaker 2:Yes. Yes. Yes. Of course.
Speaker 9:Yeah. Yeah. We the company is acquired by Amazon.
Speaker 2:Yeah. That's right. That's right. And Jamie's up there.
Speaker 1:I have a funny Ring story. Someone on our team was was dropping something at my house the other night.
Speaker 2:Oh, yes.
Speaker 11:And I'd
Speaker 1:see somebody with a hat on and a backpack on outside walking around my car. I'd already I was already in like, about to go to sleep or whatever, and I fully thought Dylan on our team was was somebody doing a break break in. So Yeah.
Speaker 9:In early years of that, in terms of what Jamie you know, I think at one point, they caught a criminal a day. They did a big thing with the LAP. It was just awesome. But also, like, the wild animals and all the great anyway.
Speaker 1:Yeah.
Speaker 9:Ring is great. We're also big in enterprise. We do a security, HashiCorp, all sorts of other things. We've had seven IPOs, 60 m and a x. So we've been doing this a long time.
Speaker 9:And we're the biggest in our category of of pure seed, 4,000,000,000 in capital, 16 partners. Wow. All we do.
Speaker 2:All we do. It's amazing. Yeah. Yeah. So take me through, like, the last few cycles from your perspective, what's changing around where the founder sits in value accrual, stock, how you process ZERP in the last bubble and the crash and all of that.
Speaker 9:Yeah. For sure. So that's kind of what caused me to write this piece. And it's like like all things, I've been you know, it it the good ones always take, like, an hour to write, you know, kind of thing, and the other things that you kind of gnash around. So been doing this a long time and have seen a lot of waves, and we've been a part of a lot of waves.
Speaker 9:And the things that we are experiencing now, and I can talk through them around AI, but it's really capital efficiency, which we'll talk a lot about. That drives a lot of the sort of solution to the tragedy or the fixing of the tragedy for common. But capital efficiency, the size of the TAMs, you know, the founder ethos today, your your question right now, John, like, what's happening with founders? It's all leaning much more towards this do more with less. The conversation now at, you know, Great White in LA or at Coupa in Palo Alto or, you know, is or Blue Bottle at South Park, it's all about, like, how much I can build with how few either, you know, employees or capital.
Speaker 9:Sure. And that's a good thing. You know, you guys talked about the earnings release yesterday of NVIDIA, but Jensen said yesterday there's two to three I think he said 3 to 4,000,000,000,000
Speaker 2:Yeah.
Speaker 9:Of CapEx. Yeah. Our numbers internally are sort of 2 to 4,000,000,000,000 of CapEx going in to the to over to the AI wave over the next five years.
Speaker 2:Yeah.
Speaker 9:So any other wave, web two, mobile, cloud, that we've been a part of, the value that is created at the at the application layer on top of that CapEx is on the order of five to 10 x. So we're talking about new TAMs, like markets that haven't been invented yet that we don't know about yet, net new consumer behaviors, net new enterprise behaviors at a level that is, you know, I don't wanna say that, like, unprecedented, but, like, it's just really big. And as you guys have noted a lot on the show, the wave is happening really fast, quite a bit fast. The the waves kinda keep coming in faster in faster increments. And we're just seeing that combination come together and create what I think is the vintage of a lifetime as a venture capitalist or as a founder.
Speaker 9:We've got the most powerful tools we've ever seen.
Speaker 2:Mhmm.
Speaker 9:On the TAMs, you know, like, we we talk a lot about software. It's 1 or $2,000,000,000,000 globally. I think it's, like, 1.2 doubling in five years as a market. It's super big. Yeah.
Speaker 9:Services are 17,000,000,000,000 today Yeah. Doubling to 30 So, like, you have these Yeah.
Speaker 2:I wanna I wanna push on that common point because I feel like you're you're you're correct that, revenue per employee has never been higher. But I feel like with, like, maybe midjourney is the exception that proves the rule. But founders have not turned their turned a cold shoulder to preferred equity in this cycle. Like, there are plenty of founders who are saying, yeah. I'm fine selling 10% of this company every six months.
Speaker 2:And and they've done very well.
Speaker 1:15% every three months.
Speaker 2:Yeah. And each deal has been accretive to the share price potentially, but, you know, they are getting diluted. And and I'm wondering if there's more nuance to that Yeah. I mean, the the structure.
Speaker 1:Yeah. Yeah. More opportunity than ever to do to do more with less. Right? But at the same time, more opportunity.
Speaker 2:To do more with more. The opportunity is
Speaker 7:so large. There's there's a lot
Speaker 2:of reason. If I could do more with less, imagine how much I can do with more.
Speaker 9:You can do it way more.
Speaker 2:I can do with more.
Speaker 9:I think it's a matter of magnitude here in context. And you mentioned ZERB, so we have to kinda talk about ZERB. It's been super covered. But, like, that distortion is at a level you know, remember, was like a decacorn a day was being crowned. There's three, again, trillion dollars of limited partner capital locked up in in zombie unicorns according to Bill Gurley's estimate, which I referenced in the in the in the piece and and others.
Speaker 9:So You
Speaker 1:you do think this time is do you think this time is different?
Speaker 9:I think that time was different. So the answer is no. I'm not I'm counting on this time being a time that is like other waves. The reason the distortion, by the way like, we should talk about it for a second. So and and here well, here's why I think this time won't be zerp.
Speaker 1:I
Speaker 9:mean, how's that for nuanced? Right?
Speaker 1:Very good.
Speaker 2:Yeah. Yeah.
Speaker 9:It's the same people. Like, the founders, if you look at the senior leadership at start ups and companies, they were the ones who, you know, were at different levels through Zurp. They've been stuck under the stack. I'm not saying zero equity. And in fact, if you look at the last couple of, I don't know, maybe four quarters, there's probably been 20 mega seed rounds, the $350,000,000 seed round or whatever, 20.
Speaker 9:There have been 2,500 seed deals done first half this year. And, you know, it's power loss. You're gonna have lots of failures and stuff. But just just when you look at ZERP on a magnitude basis, so much distortion happened. And I'm not saying there's not going to be those companies, to your point, that just keep raising and raising.
Speaker 9:And but I think founders are gonna be a lot smarter about post money valuation because most of as you guys probably know, the the the 14
Speaker 1:There's a there's a company that there's a company that I won't name that is a perfect example of this. They've raised under a million dollars. So single yeah. Hundreds of thousands of dollars. They're doing millions of dollars in revenue.
Speaker 1:They have logos from every single top AI company and they're just growing like a weed. Like it's just clearly they're onto something and the founder has no real interest in raising. He could prop like, he feels like he can take it as far as it can go just off of just raw customer demand.
Speaker 9:You guys had Wade on, I think, last week. Right? Yeah. The great example of a company that, you know, raised a little but kept making the choice. I think that term you guys talked about was super cool, seed scaling.
Speaker 9:I hadn't heard that, but it's but it's what we're seeing. So I guess, John, the answer is, like, I'm not saying no venture capital. I'm just saying Yeah. Of course. Be bad.
Speaker 3:But I
Speaker 1:was like Yeah.
Speaker 2:And and
Speaker 1:Zapier Zapier is funny because the the category that they're in, which is, like, agentic workflows is like they're, you know, dominating, you know, having having been building this business for such a long time. And yet, I can think of like a 100 companies that have raised on the same kind of core idea of what they're doing. So it that category is like turning into a crazy capital war. But hopefully, Zapier is in a point right now given that they've been at it for so long that that they can just keep playing their own game.
Speaker 9:Yeah. In a world in which if it's true that on top of all this CapEx, all these net new companies and behaviors are gonna will be created, There's I just think there's a lot of room. We have one thing we've done as technologists, all of us, is we have always underestimated the potential, and we've underestimated the tail, like both the curve and the tail of everything. It's Web two is still booming along. Mobile is still booming along at massive numbers.
Speaker 9:And so
Speaker 2:Look at Oracle's stock price. Oracle is still Yeah. Crushing. Like
Speaker 1:Got you. The MAG eight.
Speaker 2:It is.
Speaker 9:Yeah. Yeah. So there's I think there's a lot there. And then the last point on the common is just that, like, you know, that has fueled Silicon Valley. Right?
Speaker 9:It has fueled Silicon Valley for all sorts of different outcomes to, you know, sprinkle wealth or gains down throughout a company stack. And then those I mean, literally, I said in the past, this happened thousands of times in my career where that engineer or, you know, VP or director then takes more risk. And and that's what we need, and and that has fueled the valley. And so my thinking is that it's it's that the ZERP distortion is what was different. But that Silicon Valley is one you know, it never bet against the valley.
Speaker 9:It would never bet against Yeah. The the creative destruction.
Speaker 1:When when companies, you know, as an investor, when I was looking at trying to figure out the why now investing in 2021 and 2022 in in fintech, it was like, Stripe exists. Plaid exists. You have these new kind of, like, infrastructure players that allow you, you know, there's better banking as a service platforms. But the why now was like it wasn't necessarily it didn't feel fully like a why now and then you'd end up paying a 100 times revenue for basically a lending company that like, yes, they benefited from like, you know, Plaid being, you know, like what it was at that time in in terms of, you know, market penetration. But it wasn't, you know, in in the end, lot of those businesses didn't really they didn't end up really going anywhere.
Speaker 1:Whereas I think having a real why now today, you know, it it's not founders very easily talk and investors will talk themselves into being like, okay. They'll talk themselves into feeling like there's a why now even if they're just kind of fabricating it. Yeah. Yeah. So
Speaker 9:I mean, the you you've talked a lot about it in the enterprise, but the why now in the enterprise has caused, you know, a lot of new entrants to have great success against incumbents. Right? That's super interesting. Mhmm. There are all sorts of new again, this whole, like, if if you're talking about enterprise software a few years ago, kind of pre AI, you'd look for these, like, tiny little verticals where you could have an advantage.
Speaker 9:And now the whole playing field is open to to start up founders, and they're having incredible success either in know? But you've you've you've had a bunch of them on your show. And I think that's also really interesting. Not without it's so it's coming from the customers. Right?
Speaker 9:It's coming from the buyers of technology. Want this new thing. Incumbents have a hard time delivering that new thing. Not gonna be smooth. Like like, you know, I like how you're talking about where you're on the hype cycle.
Speaker 9:Like, it's gonna be bumpy throughout the curve, but it's just a remarkable time in all of these markets. And and I think that's spectacular. I mean, again, I think it's it's it's the chance of a lifetime for a builder to start something now with with these dynamics. Yeah.
Speaker 1:Yeah. I remember being mean, I graduated graduated college in 2018 and feeling like I had met you know, missing mobile. Right? Like not being an adult For sure. Massive tech trend like that felt, you know, I'd I'd read the TechCrunch headlines for years of all those companies but not having been actually in the trenches feeling like praying for another praying for another bubble.
Speaker 2:Yeah. I mean,
Speaker 1:certainly certainly got one with with real, you know, potential that we're already seeing.
Speaker 2:Well, thank
Speaker 1:you so much for hopping on. Great having you on, John.
Speaker 9:Awesome to see you. Hey, guys. We invited you to our thing in San Francisco, the connected stack. We'd love to have you.
Speaker 2:Oh, fantastic.
Speaker 9:Huge enterprise AI thing. Can't wait to ship from the floor. Whatever. Awesome. 20.
Speaker 9:A lot of founders. Whatever. Thank you for having me. It's awesome. We really appreciate what you guys are doing.
Speaker 1:Come back on again soon.
Speaker 2:Yeah. We'll talk to soon. About that.
Speaker 1:Have a
Speaker 2:good one.
Speaker 8:See you.
Speaker 2:Bye. Up next, we're going over to Air Dot Inc. Have you used this product before? I used this and was obsessed. It's like I don't know.
Speaker 2:I'll let him describe it.
Speaker 1:Should we be using it?
Speaker 2:Let's bring him We absolutely should. And that's why I was so excited to talk to him because it was like, you can pitch us directly on the show Yeah. And use this product.
Speaker 1:Sales call.
Speaker 2:Hopefully, we didn't stop waiting too long. How you doing?
Speaker 1:What's happening? Sorry. We're running behind. Great to meet you, Shane.
Speaker 5:Nice to meet you guys. Thanks so much for having me.
Speaker 2:Yeah. Thanks for hopping on. Can you, just introduce yourself, the company, a little bit of the backstory quickly?
Speaker 7:Of course.
Speaker 5:It's great to meet you both. Shane Hegde. My cofounder, Tyler, and I started a business called Air. It's an enterprise software company. We help creative teams manage all their media assets.
Speaker 5:So we help them store and organize all their content and then execute on the day to day workflows of making quality images and videos, putting them out in the world.
Speaker 2:Yeah. I was
Speaker 1:The anti slop company.
Speaker 2:Yeah. I mean, like the attempt. There is some I I feel like there's some crazy link between, like, your clients or your company your your customers and, like, the brand. Like, the the culture of your company feels, like, particularly design forward. Like, I'm looking at your your landing page, and it's incredible.
Speaker 2:I I don't know, like, where this
Speaker 1:They're talking the talk, and they're walking the walk.
Speaker 2:Yeah. Exactly. Like like, were you guys designing this beforehand? Like, did did this was this something that, like, came from a particular person inside the organization? Is it just like everyone in the company is so focused on design?
Speaker 5:I think, you know, look. If you're gonna sell a product to creatives specifically, that's gonna be your ICP. You really have to live and breathe the market. Yeah. You have to put out great content on an ongoing basis to talk about the narrative of what you're doing, you have to meet those expectations with how you deliver the product.
Speaker 5:Marketing site is just an extension
Speaker 3:of the product. So
Speaker 5:I think in many ways, it's come from an obsession about who our customer is and how we meet them where they are and with what they care about.
Speaker 2:Yeah. Talk about the marketing. I've seen a few of the stunts that you guys have done, the latest one with the Rizzler. Like, what this is a very it's a Yeah.
Speaker 1:When did you know you wanted to work with the Rizzler?
Speaker 2:When did you know that you wanted to be the first enterprise software company to probably partner with him? It's just a wild choice.
Speaker 5:Look. I think if you look at great generational enterprise software businesses, they all have a singular go to market motion that contributes to 50 per to 60% of growth. Mhmm. And every enterprise software business chooses a different channel to really focus on depending on who their customer is, what they're good at, and where there's arbitrage in the market. For us, it's content marketing.
Speaker 5:And and there's a nuance in how we approach content marketing that we call culture led growth, which is all fancy words to ascribe the the format of content marketing that we do. It's not HubSpot SEO or Gong social all the time. For us, it's great, you know, seminal campaigns that we put out in the world that espouse, you know, the the narrative of what we do. Whether it's product marketing or just a viral campaign with a, you know, 14 year old, it doesn't matter. You're pushing a story out to the market and getting a group of folks who care about that resonate with it, and begin a conversation with you.
Speaker 5:So, that's that's how it it took years to get here to a point where we knew working with the Rizzler or Kareem or
Speaker 2:Yeah.
Speaker 5:Taylor Lavends or any of the other influencers will work with the right ones. But, it's been a fantastic motion and and wildly efficient for us.
Speaker 1:How much have you you know, I appreciate I remember when Era launched and I remember thinking, you know, I I worked on worked with a ton of different companies on, you know, marketing campaigns and stuff like that over the years. So I understood the value prop even though I felt like it was almost a it was a contrarian move to launch it like what origin the original product like helped you just store assets and a lot of people, I'm sure even VCs back then would have said, well, people
Speaker 2:Stuff get it a folder.
Speaker 1:They get Google Drive off Stuff
Speaker 2:it in a folder.
Speaker 1:And they're getting Google Drive for free. It's gonna be tough to compete. But but clearly, was there was demand for this. Now, how are you guys thinking about not to ask like a very VC coded question, but I'm general genuinely interested. How how are you guys thinking about leveraging generative AI if you house all the, you know, brand assets for a business and you can understand kind of like Yes.
Speaker 1:Aesthetics of a brand, it puts you in a good position to not just store assets, but help people generate new ideas.
Speaker 2:Just, like, automatically mass matching assets to tags and, like, creating, like, an ontology on top of the data. Totally.
Speaker 5:I think, you know, in this moment in time, there is a rush to value. Everybody, every enterprise out there is trying to immediately get to the thing that's gonna compound their business on an accelerated basis. The last conversation you guys were in, I I love that tail end of that conversation around There's never been a more open environment in the enterprise for new entrants like us to come in and rebuild the entire stack of how a company operates. But when you look at at different areas of the enterprise, in in order to scale, you have to have or or automate to your question around AI. You have to have a place to automate from.
Speaker 5:Mhmm. You know, said another way, slop in is slop out, and the richness of your solution is gonna depend on the richness of the data that you that you build on top of. In every area of the enterprise, there has been a system of record that has structured and organized the data so that you can automate and centralize. This has been playing out for twenty five years. You know?
Speaker 5:It started with Salesforce building out what we now see as a CRM as a must have inside of a business that is trying to scale sales. Same thing with development cycles with GitHub or, you know, marketing work with HubSpot for multi touch attribution. There's never been a system of record built for creative work or images, videos, PDFs, visual forms of data. At the highest level, if you asked a CMO or a creative director, you know, how are your assets performing? What's performing best?
Speaker 5:Where are you gonna invest in next? That's like a six month job for an analyst. And at the lowest level, if you're trying to talk to a designer about what they do every day, they spend 75% of their time collecting content, approving content, sharing content, and doing all of that all over again. And so our ambition at Aehr is to build a system of record for creative work. It's one product.
Speaker 5:We're never gonna build a second product at Air. We're just gonna go deeper and wider in what we do. And and, yes, you gotta start with storage. That's the hard problem to start with. You have to sync and organize millions.
Speaker 5:Today, we're up to about a 150,000,000 assets that are being managed in our product. But the magic is on what you can do on top of that. You know, the workflows that you can automate, whether that's rights management or whether that's, like, generating variants of something that you could plug in to different ad units, it shouldn't matter. It can all sit on top of the baseline architecture.
Speaker 1:You should create a workflow to help legacy brands not get canceled by Zoomers. So it's like, it'll pop up an alert. Hey, boomer. If you if you put this on social media, you're gonna get canceled by the Zoomers. And I don't think that could that could save billions of dollars of lost market cap.
Speaker 5:I hope I hope that the you know, one that's funny, we had a we had a hackathon that finished this morning, and one of the things that came out of it was a a newsletter that goes out on an automated basis to admins inside of a workspace. And because if you thinking about our product, about 15% of our customers have more users on air than they have full time employees. Starts with your creative team, expands to marketing, sales, product partnerships, your agencies, your influencers that you work with. And then the other dynamic is that, you know, about 11% of our customers spend, more than more than 25 hours a week inside of our product. And so this newsletter navigates what all everybody did and spits out a summary of that with all of the work to the admins in the workspace.
Speaker 5:And so visibility, I think, you know, to go to your point around boomers and zoomers and not getting canceled, visibility, I think, is really important. And our opportunity to do that in a system of record is is no different than Salesforce providing a dashboard to your CRO to understand, like, which reps are performing the best or where where to lean in segment wise or why, you know, win rates have improved.
Speaker 2:Yeah. Totally. Total sense. Amazing. Anything else?
Speaker 1:No. This was this was great. Come back on anytime. You're the only only person in the world so far that has made just storage interesting on the show. So
Speaker 2:anyway, thanks so much for hopping on. Have a
Speaker 1:great day. We're gonna we're gonna actually sign up for this because we we were you're at a very we're very much at the Yeah. Can we
Speaker 5:put you guys in the game here? Come on.
Speaker 2:Yeah. No.
Speaker 5:You guys are you guys are the sort of a beacon.
Speaker 1:Yeah. Well, we were we were iMessage scale where, like, our version of air right now is just the group chat.
Speaker 2:Yeah. It's literally all iMessage. It's a mess.
Speaker 5:Come on, man. John can make the intro to Soylent. We're in the mix here, you know. Put us in
Speaker 11:the game.
Speaker 1:Yep. Let's do it.
Speaker 2:Thanks, man.
Speaker 11:Great to meet
Speaker 2:you, Shane. I'll talk to you later. Cheers. Bye.
Speaker 3:Bye.
Speaker 1:Alright. We're gonna cap this off Yeah. By just pulling up this post of what the Garmin horse tracker actually looks like.
Speaker 2:Okay. Because Yeah.
Speaker 1:Yeah. If we
Speaker 2:You wanna end with the Garmin horse tracker?
Speaker 1:This is the most important story of the day.
Speaker 2:Important story of the day for sure.
Speaker 1:The Garmin mid it's a
Speaker 2:see. It quality wraps around the horse's tail. Where how else do you think you were tracking the horse's health, Jordy? Is now selling a wearable you put on your horse. It goes in the tail, obviously.
Speaker 1:No. No. No. It's further down and
Speaker 2:Further down. So that's what it looks like when it's not on the horse, but when you apply it to the horse while you're wearing your Garmin watch. So you can be riding your horse, check your horse's vitals from your Garmin watch. That's the future I wanna live in. That's horsepower, baby.
Speaker 1:This is important. Horsepower. Mean, this is a trillion dollar company to me. They're sitting in
Speaker 2:This is
Speaker 4:Look at this thing.
Speaker 2:Yeah. Look.
Speaker 4:Get in on that
Speaker 2:horsetail tracker. What is it actually tracking here? Midnight outdoor training sessions, indoor training sessions, recovery, transport, max activity, heart rate. It it calculates the heart rate, how many strides. You can view the data live, and then sugar's got a bunch of strides.
Speaker 2:That's hilarious. No. This seems this seems
Speaker 1:amazing. Beautiful stuff. This is why we love technology.
Speaker 2:As as much of a breakthrough as Mhmm. As Waymo, you know. It's already
Speaker 1:Really arguably more important. Arguably more important. For some. Horses are self Anyways you for tuning in today. Max Conrad from the Substack chat.
Speaker 1:We need a this time is different sound effect. I agree. Yes. This time is different. This time is different.
Speaker 2:Yeah. There must be some clip from like a movie where someone said that or something. Where where where does that this time is different actually come from? Maybe we can get Warren Buffett saying it or something. I'm sure he said it at one of his meetings or something.
Speaker 2:Yep.
Speaker 1:Anyway Anyway folks. Thank you for Thanks for hanging with us today. We'll see you tomorrow. We will see you tomorrow. Have a great show.
Speaker 1:Mansion section.
Speaker 2:Oh, we're ready.
Speaker 1:Cheers. Bye.