TBPN Live - Apple Looks to Anthropic and OpenAI for Siri Upgrade, Senate Passes Trump's Megabill | Zak Kukoff, SWYX, Matthew Prince, Luca Netz, Julia Steinberg, Joel Hron, Mackenzie Burnett

Episode Date: July 1, 2025

(02:32) - Apple Looks to Anthropic and OpenAI for Siri Upgrade (04:06) - Senate Passes Trump's Megabill (08:46) - Grammarly Acquires Superhuman (12:08) - Amazon on the Cusp of More Robots Than Humans in Factories (15:20) - Microsoft's AI Diagnoses Beat Doctors (19:31) - Apple Eyes Anthropic, OpenAI to Power New Siri (49:01) - Timeline Reactions (57:02) - Zak Kukoff, a Washington correspondent, discusses the Senate's recent removal of a proposed 10-year moratorium on state-level AI regulation from President Trump's comprehensive tax and spending bill. He highlights the bipartisan opposition to the moratorium, noting that Senator Marsha Blackburn of Tennessee led the amendment to eliminate it, emphasizing the need for states to protect their citizens in the absence of comprehensive federal legislation. Kukoff also touches on the broader implications of the bill, including potential Medicaid cuts and the political dynamics surrounding its passage. (01:12:41) - Shawn Wang, also known as Swyx, is a developer experience leader and angel investor who has led developer tooling at AWS, Two Sigma, and three devtool unicorns (Netlify, Temporal, Airbyte). He is the founder of Smol AI, which produces AI News, a widely read AI industry newsletter. In the conversation, he discusses Meta's aggressive recruitment of AI talent, the resilience of OpenAI despite key departures, and the evolving landscape of AI development, emphasizing the strategic shifts companies are making to stay competitive. (01:31:30) - Matthew Prince, co-founder and CEO of Cloudflare, discusses the challenges publishers face as AI-generated summaries reduce traditional search traffic, threatening their business models. To address this, Cloudflare is developing tools to prevent unauthorized content scraping and aims to establish a system where AI companies compensate content creators fairly. Prince emphasizes the need for a balanced approach that rewards original content while fostering a sustainable digital ecosystem. (02:03:25) - Luca Netz, CEO of Pudgy Penguins, discusses the transformative potential of stablecoins in driving mainstream crypto adoption, emphasizing their role in enabling consumer-friendly applications beyond speculative investments. He highlights the importance of blockchain's censorship-resistant payment systems in reducing transaction costs and barriers, particularly for entrepreneurs facing challenges with traditional financial intermediaries. Netz also shares insights into leveraging community incentives to achieve significant retail success, exemplified by Pudgy Penguins' strategic product launches and partnerships with major retailers. (02:19:15) - Julia Steinberg, a recent Stanford graduate and writer for *Palladium* magazine, discusses the evolving job market for elite university graduates, highlighting a shift from traditional high-status roles to positions in venture capital and entrepreneurship. She observes that the proliferation of AI technologies is rendering certain careers obsolete, leading to a sense of economic nihilism among her peers. Steinberg also notes a paradox where students feel entitled to prestigious jobs yet are unwilling to pursue roles they perceive as less elite, contributing to underemployment and dissatisfaction. (02:33:12) - Joel Hron, Chief Technology Officer at Thomson Reuters, discusses the company's integration of artificial intelligence across its services, emphasizing the legal industry's rapid adoption of AI technologies. He highlights the use of Retrieval Augmented Generation (RAG) to ground large language models with reliable content, reducing errors and enhancing accuracy. Hron also underscores the importance of human expertise in developing AI solutions, ensuring they meet the high standards expected by professionals. (02:46:37) - Mackenzie Burnett, CEO and co-founder of Ambrook, a financial management software company for American family-run businesses, discusses the company's mission to enhance profitability and resilience in agriculture by providing comprehensive financial tools tailored for farmers and ranchers. She highlights the challenges faced by producers, such as managing complex financial records and accessing capital, and explains how Ambrook's platform addresses these issues by offering accounting, payments, banking, and card services designed for those who spend more time in the field than the office. Burnett also announces Ambrook's recent $26.1 million Series A funding led by Thrive Capital, emphasizing the company's commitment to supporting sustainable and resilient farming practices. TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.com/tbpnFin - https://fin.ai/tbpnGraphite - https://graphite.devFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

You're watching TVPN! Today is Tuesday, July 1st, 2025. We are live from the TVPN Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. We have The Current Thing hot off the presses. It's Siri V2. Apple is making moves, finally.

Apple's making moves. They are weighing. They are listening. They're listening. They're weighing using Anthropic or OpenAI to power Siri in a major reversal. Everyone thought they were gonna do it in house. Can you imagine the actual customer feedback that they get on the Siri product?

It's like, people try to get Siri to do a simple thing, it fails, and they're just hearing somebody swearing or something while they turn it off. Oh, I hadn't even thought about that. They could transcribe all that. It's like, we've heard you loud and clear. At scale. We've heard you loud and clear.

Yeah, the expertives, yeah. You guys are mad. I don't even know if that's the- And they're doing something about it. Is that really, I feel like people, the expectations for Syria have also been low because it was introduced a decade ago and it was like the thing that sets the timer

and the thing that you ask to get the weather, and that's it. And so people haven't been asking for super intelligence or the Chachi Petit-like experience. And so- Or even a companion, certainly not. Yeah, certainly not. You don't hear about people falling in love with Siri.

It was kind of pitched like that though, back in the day. Yeah. It was very much like Siri, we're giving it a human's name because it will be as integrated into your life as a human. And that was the original pitch. And now it's possible, but not possible with the team they have on staff, so they're partnering with Anthropic

or OpenAI. It seems like a bidding war. Bit of a bidding war. And Apple allegedly has been balking at some of the prices being thrown out. Okay. I haven't really seen that. Anthropic wants billions a year and ramping up over time.

Yeah, what's interesting is that like, it could go the other way, right? Where like, Anthropic or OpenAI could pay Apple, like Google pays Apple. No, I imagine knowing Tim, he'll figure out a way to make it a profit center. I would think so. Yeah, I mean, the data for reinforcement learning

seems really- But the issue is there's real cost to running these products. For now, yeah. I mean, it seems reinforcement learning seems really- But the issue is there's real cost to running these products. For now, yeah. I mean it seems like the cost will come way down. And I mean I believe that the current ChatGPT, OpenAI, Apple deal is revenue neutral for both. I don't think there's any money changing hands, but it's also kind of a mess of a product

because you have to say, hey Siri, go to ChatGPT and look this up up and then it pops up a prompt that says Would you like to use chat GPT even though you just said that and I don't understand that what you said And then you have to click yes It's like come on Apple like you know what I want to do forward progress the markets like it anyway up 2% Mark Gurman has the story in Bloomberg We'll be diving into that said side is sidelining its own in-house models and potentially a blockbuster move aimed at turning around It's AI effort. We should go to the mag 7

Market caps to track the horse race of the biggest tech companies in the world Let's pull them up on the screen and see where people are tracking. So Apple's in third at 3.1 trillion. Good to see that they're over 3 trillion. Stock's up 2% today. Nvidia and Microsoft is climbing as well. And one of these companies is not like the other. Meta does not. It's just measured in Tesla. Oh. Measured in the paltry billions. Congratulations to Apple. They're up 2% up. You'll love to see it. They're up 2%. Yeah, Meta being in sixth,

doesn't feel like a sixth company to me, based on the team and the moves they've made this week, which we will continue to dive into. We have Swix on the show today to break down some of the AI talent moves. We have a bunch of other folks coming on the show today yep talk about that anyway other news the Senate passes Trump's mega bill the big beautiful bill after an all-night session they went all night I like that and it's got to get

through the house still but Elon is fuming play the Ashton Hall sound effect for he is that coming on coming for the bill. It's absolute war on the timeline the timelines in turmoil because Elon Musk said anyone who campaigned on the promise of reducing spending but continues to vote on the biggest debt ceiling increase in history will see their face on this poster in the primary next year. Pinocchio mode. Liar voted to increase America's debt by five trillion. It's actually never been easier to make your enemies look like Pinocchio.

Yeah, but I feel like if you put, I don't know, I don't even know who voted for it. Let's just say Ted Cruz or something. If you put Ted Cruz's face on here, are you going to lose the Pinocchiones? AI will find a way. I feel like it could be a little bit rough. Anyway, Elon's upset.

He's trying to start a new party. The America party. He said Vox Popula, Populi, Vox Dei. He wants to start the American party. And he is pissed because Polymarket is showing that the, is expecting the reconciliation bill, the big beautiful bill to pass 70% July 5th and 62%

Yeah, 60% by July 4th and almost certainly by the end of the month So this will be the one to watch they're voting. I guess the first vote is tomorrow. Yeah, we'll be following that Lots of pork, but if your a GI pill it doesn't matter Yeah We are gonna be printing at 10% GDP folks in just just a few thousand days when super intelligence arrives These debts were weeks. It's not days away many people many people are saying and so if you're if you're against this bill You're just telling yourself about your a GI timelines. You're like, I don't really think super intelligence is coming. Yeah, it is I think teal was pushing

Generally pushing on Elon a bit in the interview. He did last week. I'm like, okay, so our humanoids Humanoids are gonna be important. You're obviously making them. Are they going to Impact the economy. Are they gonna accelerate growth? Yeah. This is the post 1970s stagnation. We've been growing at 2%. Satya Nadella's asking the question of will AI accelerate GDP growth?

Because if GDP growth accelerates a lot, it changes the dynamic around everything. Like, not just this debt, which we've been kind of lightly joking about, but also redistribution. To Elon's credit, he's also said when he initially exited Doge and just stopped being a special employee, he did say the only way out is growth. So he knows this too.

But I think he can hold both of these ideas, which is we need to grow, but he's also frustrated. The Hegelian dialectic, of course. Yeah, I mean if GDP is growing really, really fast, you could even keep tax rates the same or lower them and still pay down the debt and do more redistribution. You could be paying people, you could have something that feels like a massive social safety net,

something that feels like UBI or socialism, but actually attack people less because the growth is so significant. So it all changes once super intelligence arrives. Maybe Zoran is just so AGI-pilled himself. That's true. That he's like, yeah, we're gonna have plenty. We're gonna have plenty to go around.

We're gonna have such high levels of production that sure the state can just see a little bit. Or alternatively, maybe he's a hardcore Bitcoiner. And so if he wants there to be no billionaires, no, it is impossible mathematically to be a billionaire in Bitcoin because there's only 21 million of them. So the richest you could possibly be as a millionaire

if you owned over 5% of the Bitcoin supply, right? So there will never be a Bitcoin billionaire because there aren't a billion of them well whereas there are Maybe he doesn't want the network to vote to expand the supply Yes, so he's probably against the expansion of the Bitcoin supply, but maybe he's a hardcore Bitcoin. He's a hardcore Bitcoin against Inflation yes, yes exactly exactly anyway in other news somewhere We got to hit that gong Jordy for Rahul Vora Founder got the hammer of superhuman. He has sold his company to Grammarly for an undisclosed sum

Nothing like hitting the gong for an undisclosed sum. You just don't you don't know Could be a billion who knows but a billion, who knows? But I've used Superhuman for many, many years now. How many, when did they really get out? Was it like six years ago? I think it was, it'd been older. I feel like it came on the scene like 2018. I remember I was, I think, yeah, I was graduating college and there was this concept that the Threadboys at the time

were talking about luxury software. Oh, and this was it, yeah. The idea of charging $30 for email, which was just default free. They grew really quickly. Apparently at the time of the idea of charging $30 for email which was just default free they grew really quickly Apparently at the time of this acquisition they have about 35 million of AR are very impressive of ARR Okay, so that's like what a hundred thousand users paying roughly something like that something like that between a hundred and two hundred thousand users paying $30 a month. Got it. Pretty cool.

I mean, yeah, serious business at 35 mil. If it's run effectively could have been kind of a lifestyle business throwing off a couple million dollars in free cash flow. Clearly wanted to go bigger. Yeah, potentially. Yeah, I'm really interested. We should have the CEO of Grammarly on

because I want to understand. So they acquired Koda. That was surprising. Coda was another company that had a lot of meaningful traction, a lot of fans. It was a great product, but I don't think it was breaking out. It wasn't on a path to being a public company itself

or a billion dollar outcome. And then now they're adding Superhuman to the network. I don't see yet exactly how these tools all interconnect. Grammarly helps you with grammar in the browser. Superhuman does have some AI functionality. I'm sure, and I know Coda does as well. Unclear to me yet how, if it's the same user that's going to be using all of these things, if it's like the same user that's gonna be using all of these things,

if it's truly a productivity suite, or it's a basket of... I mean, selling a point solution in the enterprise is hard when you look at the story of Slack versus Teams. Like Microsoft just has so much dominant distribution there. Actually having someone rip out their productivity suite and say, as a company we're using Superhuman for email and Grammarly for writing and this other product for docs.

And then not to mention the fact that Notion's running somewhat of a similar playbook with Notion Mail and Notion Docs and then Google has a similar productivity suite. So, I mean, it's a tall order, but will be cool to see how these different products interact because they're clearly excited about tying them all together in some interesting way.

Very cool. Anyway, you mentioned Humanoid Robotics and there's another player. It's not just Elon, it's Jeff Bezos as well. Amazon now has as many robots as employees in its warehouses. So the number of, let's give it up for the hardworking robots. Yes.

They haven't striked yet. They haven't striked yet. The number of Amazon employees per facility over the last 10 years has kind of oscillated from 700 and 5,800 employees per facility went up to a thousand. Now it's down around 700 down 30% over the last five years, that's the post-COVID era, and the packages handled by Amazon end-to-end per employee has skyrocketed over that time from zero to over 4,000. And so the robots are taking over.

They're about to cross their one millionth robot deployed in an Amazon warehouse. So congrats to Jeff Bezos, hope you enjoyed the wedding. Yeah, we should hit the gong for that. Maybe the gong sounded like that. Yeah, I saw a post, somebody, maybe it ended up in the timeline, but I'll say it now, it was like a lot of people have opinions

on Jeff Bezos' wedding. I ordered a phone last night at 10 p.m. and I got it this morning. I think he should be able to celebrate however he wants. So I'm happy for him and Lauren a huge business very helpful. This was and even looking at Like Amazon puts up over a hundred billion dollars a year of profit. Yeah Let the man have a fifty million dollar a year wedding a year. Not a year. Not a year. Not a year

Hopefully not a year. Hopefully not a year not a year hopefully not a year hopefully not a year he's only done twice some guys get to that stage of life and they just enjoy weddings right yeah so they just have you know yeah frequent there was this narrative around the wedding actually that oh he only invited celebrities because like Sydney Sweeney went and everyone was like oh is he really tight with like Sydney Sweeney like and but but and I was saying like look he invited 200 people you're seeing Sydney Sweeney? Like, and I was saying like, look, he invited 200 people. You're seeing Sidney Sweeney because like, if you're a celebrity, like, you know,

paparazzi photographer, you're not taking a picture of like RJ Scorringe from Rivian, who Bezos invested in and might have been there, I don't know. Or like Andy Jassy, the current CEO of Amazon. Probably got the invite, but doesn't get in the paparazzi. So he's having a party. Yeah.

He's having a party. But you're going to invite your boys, your business. Yeah, I'm sure he did. Yeah, the media is obviously going to fix it on who are the biggest stars there. Exactly. Because they are who drive clicks. That's why we need to send our paparazzi to get photos

of Andy Jassy. That's true. Andy Jassy spotted the dapper in Venice. Yeah, yeah, yeah. And then it's just like Sidney Sweeney off blurry in the left. It's like, everyone's like, you missed the most important person at the wedding. We did not.

No, we didn't. Andy Jassy is the most important person at that wedding, potentially, if he went. Anyway, in other news, Commonwealth Fusion Systems, a fusion startup, it has struck a deal with Google. Historic news, we've signed a landmark agreement with Google, a multifaceted partnership that dramatically advances

our commercial fusion energy mission. Google signed an off-take agreement for 200 megawatts of power from our first Arc power plant. Google is increasing its corporate investment in Commonwealth Fusion Systems. Google has the option to procure power from future arcs the deal is very strong signal that the world wants clean secure power that fusion offers Together we're catalyzing the fusion market. So there's a couple players in this space, but all the interesting hashtags as well Dating themselves a little bit. They maybe have a veteran social media manager

dating themselves a little bit. They maybe have a veteran social media manager on board. Maybe, maybe more for the academic world. Hashtag fusion energy, hashtag power moves. Power moves, because people are searching that. Didn't Elon ban hashtags recently? But from ads. Oh, from ads, okay, so you can still rip them into hard posts.

Yeah, anyway, beautiful video, good luck to them. And if you want to learn more about commonwealth fusion systems, go to hashtag. Stop it. Stop it. No, it's great. Super exciting. So I mean, this is like the flip side of the Sam Altman helium deal where open AI and Sam

Altman, he's clearly thinking about power being very, very important for the long term. Crusoe has been very important in finding stranded energy, building natural gas plants, and helping scale up Stargate in Abilene, Texas. And Commonwealth Fusion Systems is kind of the other side of that, and they're partnering up with Google, so good to see it. In other news, Microsoft claims that their new AI framework

diagnoses four times better than doctors. And people are kind of putting this in the truth zone. Says, Dr. Dominic Ng, I'm a medical doctor and I actually read the paper. Here's my perspective on why this is both impressive and misleading. There were some interesting things where in the control set, I believe the doctors

couldn't use Google. So it wasn't necessarily like a current doctor versus the Microsoft AI system. It was like a doctor just completely. Sort of acting like a human GPU. Yeah, yeah, just being like completely pen and paper, which isn't really the benchmark that you need to go against, but still impressive.

Maybe the Forex is a little overstated. Because the average doctor in the United States, when they're sitting with a patient, is Googling. They have Google. Whatever's happening, and then Reddit at the end. And then going to Reddit, and then OpenAI is scraping that. Yeah, yeah, yeah. And summarizing it.

Yeah, but it is cool, because now we have a Pareto frontier. We have a graph of the average total diagnostic care per case, how much it costs, versus the diagnostic accuracy. And Microsoft with this team, this is led by Mustafa Suleiman, who in an interesting trade deal was over at Google in DeepMind, co-founded DeepMind,

then did inflection AI and got like aqua-hired in one of those like zombie deals to go to Microsoft. He's now the head of AI at Microsoft. And he has been leading this push that's much more, it feels maybe more Microsoft coded than what Apple's, or than what Google is doing on the DeepMind team where Google is focused on like solving these very fundamental questions

in science and health. Like how do you do protein folding? That's not something that you go into your primary care doctor, say like my shoulder hurts and they need to know how to fold proteins, right? But if you go into your doctor and you say my shoulder hurts, having an AI tool, basically like a great fine-tuned chat bot

that's HIPAA compliant and works within the Microsoft Teams ecosystem to pull the patient records in appropriately, fine tune on the right data, and then suggest a bunch of things that the human doctor can then go investigate. That's super valuable, and this feels like something that Microsoft is equipped to roll out to the network of doctors and clinicians that probably are already

on Microsoft tool sets and Microsoft stacks. So, good stuff from Microsoft. We'll have to get somebody on the show to talk about that, since AI in healthcare is all the rage. Anyway, hit that sound effect, Jordy, as we move to our next important news item, which is that ramp.com is available now for you to. For time is money.

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Signal had a post breaking down Mark Gurman's analysis of Apple weighing Anthropic or OpenAI in the major power shift in the Siri game. Signal says, absolutely astonishing, Apple used to own the full stack, silicon to software to services. Now they're outsourcing the one layer that will define the next decade of computing.

It's a metaphysical betrayal of their own DNA, Anthropic and OpenAI don't need Apple, but Apple desperately needs one of them. This puts Apple under the models, it's integrating wild reversal, whoever they choose, they now owe existential dependency to. And finally, if consumers realize Siri does not equal Apple anymore,

that it's powered by OpenAI or Anthropic, then what exactly is Apple's IP? Thin shell over someone else's mind? That kills the aura of vertical magic. Do you agree? It's exciting. It's certainly exciting. It's exciting.

I would push back and say OpenAI and Anthropic don't need Apple. I would say that OpenAI, Anthropic don't need Apple. I would say that OpenAI, sure, they don't need Apple. But integrating deeply at the hardware layer is going to be important. Otherwise, they wouldn't buy Johnny Ive's love from. They wouldn't spend billions of dollars trying to develop their own hardware device.

Obviously, they're trying to figure out what's after phones or what could complement phones. But ultimately I think it is for both companies extremely important relationship in the context of consumer. Is this going to impact Anthropics code gen business? No. But will this? It might. It might in the sense that if I'm asking Siri to do tasks that require writing code and the models are generating more code, that's more training data, right? Like that example of like, I took a photo of Pat McAfee, I took a screenshot from the Pat McAfee show and asked how tall is his desk?

And chat GPT 303 wrote like a thousand lines of Python to go through and calculate how tall that desk was. And then I was able to say, basically, by thumbs up or thumbs down or asking another question, I was able to give it human feedback on whether or not that code path was the accurate, if it got me the answer I wanted. And if I walk away from that, that's a signal. If I ask another question, that's a signal. If I give it And if I walk away from that, that's a signal.

If I ask another question, that's a signal. If I give it a thumbs up or a thumbs down, that's another signal. And so there actually is a world where, if you need to test a ton of different real world code generation tasks, and is the code that you're writing actually useful to the consumer? The average consumer, the person who's just asking Siri

for random stuff, maybe that is valuable. And so I don't know, I'm still curious as to like, what is the flow of value accrual here? At the same time, obviously, are they gonna get better, more valuable data from just having tens of thousands or hundreds of thousands of developers building on true, true. Cloud code daily.

Yeah, yeah. The other thing is, what's completely unclear so far is will consumers just be talking to Siri and it's still the relationship, just like Siri might be running on some cloud somewhere. Consumers aren't saying, well, Siri is not Apple because it's not their own servers. Well, Apple does push on that point very precisely

because they say, around privacy, they say, yes, when you use our models, it is on our cloud and it is super private and it is on device. Yeah, but they can still partner with an open AI or an anthropic and figure out how to deliver that same and value prop. Yeah, it seemed like a lot of the privacy narrative

at Apple was about control of the ecosystem and the ability to To really push on the Apple tax and justify it right and and maintain that leverage I don't know it's interesting also the money Siri was an acquisition Yeah, consumers didn't have an issue with that saying oh, this isn't Apple code Yeah, you this isn't home code. Yeah This is an homegirl isn't far the table You imagine if consumers cared about that is like this was technically an aqua hire not an acquisition No, no, I don't want to wear beats like that the earn-out structure wasn't add to my liking

Like only one board seat changed hands I wanted I wanted three board seats in the acquisition No, yeah, it was telling though that Perkesh here has a post Claude gave Tim Cook sticker shock. I was referring to this earlier in the show Anthropic have asked Apple for a multi-billion dollar annual fee that increases sharply each year very Acceleration pill. Yes, and drop it. Yes billion annual fee that increases sharply each year. Very acceleration-pilled, anthropic. But yeah, so ultimately, I think that that feels like Apple having a cost center that can scale exponentially with usage is not going to be something they're super excited about,

because at the same point in time, they're trying to show we are this ecosystem of software products. Yes, hardware is important, but really we're growing services revenue. And so if their costs are growing sharply, as defined here, but the surprising thing is,

yeah, you could imagine a world where a part, OpenAI says, we'll give it to you for free for the first five years or something like that, right? I mean, it could even be that that OpenAI is paying Apple because if they are able to drop the inference costs low enough that it's similar to serving a Google search and they're able to stuff ads in it,

that would be incredibly valuable. Like imagine if you go to Siri and you say, um, I'm looking for a new backpack and chat GPT can dynamically insert out ads into that response within Siri. That should be extremely valuable. And so that, I mean, that's the, that's the current structure that Google has that the current arrangement that Google has. I'm, it's unclear to me how much different the market will be going forward.

I don't know. Anyway, let's read through some of this Mark Gurman report in Bloomberg. Apple ways using Anthropic or OpenAI to power Siri in major reversal. I'll read through some of this and then I'll want your reaction, Jordy. Apple is considering using artificial intelligence

technology from Anthropic BPC or OpenAI to power a new version of Siri, sidelining its own in-house models in a potentially blockbuster move aimed at turning around its failing AI effort. The iPhone maker has talked with both companies about using their large language models for Siri according to people familiar with the matter.

It asked them to retrain versions of their models that could run on Apple's cloud infrastructure for testing, who asked not to be identified discussing private deliberations. Interesting, so I mean, I don't know if Apple's cloud infrastructure has a lot of H200s and is ready. I mean, they certainly could not serve 4.5,

like a truly large model like that. Another hundred billion dollar customer for Jensen. I mean Apple has enough of a relationship with TSMC that they could go and do kind of like you know that the A3, the A or the the Apple silicon you know the M2 chip the M3 chip like the M3 chip, like the M4 chip, they could do a different run with the SMC that's more optimized for inference of large models in the data center context. But it does seem like it would be a very different muscle for Apple since they have not been,

I mean, when you think Apple's cloud infrastructure, it's like storing photos, it's like iCloud, that's probably their biggest service, or like, I guess like Apple Music, Apple TV, like they serve files. They don't do a lot of machine learning inference versus say Meta that already has a $100 billion data center that just does recommendation algorithms

and machine learning and inference. It's not fully like a large transformer model, but it is multi-parameter model for deciding what ads go where and what reels get served to you so it would definitely be a new over time to serve you the perfect real right now for sure for sure and and and Apple just doesn't have that scale GPU cluster that I'm aware of so they'll have to call up Dylan Patel and some folks to get it done call up up Jensen maybe, who knows. If Apple ultimately moves forward,

it would represent a monumental reversal. The company currently powers most of its AI features with homegrown technology. It calls Apple Foundation models and had been planning a new version of its voice assistant that runs on that technology for 2026, but it seems like they're backtracking. Switch to Claude or Chet GPT models for Siri

would be an acknowledgement that the company is struggling to compete in generative AI, the most important new technology in decades. Apple already allows ChatGPT to answer web-based search queries in Siri, but the Assistant itself is powered by Apple. Apple's investigation into third-party models is at an early stage, and the company

hasn't made a final decision on using them. Marking a change, which is under discussion for next year, could allow Cupertino-based Apple to offer Siri features on par with AI assistance on Android phones, which you don't hear about that much. I see the Gemini demos on- You don't? Your friends that use Android phones don't talk about how they're- You know the Lone Rangers on Android.

The Lone Ranger. You know we got one in our group chat. But other than that, it is rare. But even then, I feel like there would be more like viral X posts about cool Android features if they had really done well on the Gemini product like implementation. And it's just like maybe not quite there.

But Gemini is great. the models are really top tier. The Gemini app on iOS is not amazing. The text to speech is really, really rough. You click dictate, and then it will just stop dictating when you pause, and then just submit their query. And so you can be, with ChatGPT, I love it, because I open it up, and I hit that button, and then I think, query. And so you can be with ChatGPT, I love it because I open it up and I hit that button and I think and I say,

okay, I'm trying to do a research on the Mag-7 and I want to look at Mag-7, their performance over the last decade, so go back and pull what their market cap was 10 years ago and then what it was today and then create a table. But then if I pause, like Google will just submit that and I'll be like, whoa, I wanted to add more and I wanted to give you more context,

but ChatGPT waits until I push the button to finish that. So it's just like minor, minor UI, but that's more important to me than like, does it have 150 on MMLU versus 149? Like I care more about the UX of like, did I just waste 10 minutes by sending like a query that isn't complete and I know I'm gonna get a bad answer on? Yeah.

And so, I don't know, but again, Andrew is clearly ahead of Siri here, so it's not even a competition. The competing project internally dubbed LLM Siri that uses in-house models remains in active development. So, representatives for Apple declined to comment, shares closed up over 2% after Bloomberg reported on the deliberation, so Wall Street clearly likes

the idea of one of these deals getting done, but very big question as to the structure of those deals. And I keep triggering Siri because I'm talking about it on my phone, it keeps popping up. Fantastic. Incredible. The project to evaluate external models was started by Siri chief Mike Rockwell

and software engineering lead Craig Federighi. They were given oversight of Siri after the duties were removed from the command of John G. Andrea, the company's AI chief. This was a spicy little trade deal going on over there. John Andrea Federighi. Spicy meatball over at Apple. In Cupertino.

He was sidelined in the wake of a tepid response to Apple Intelligence and Siri's feature delays. Rockwell, who previously launched the Vision Pro headset, assumed the Siri engineering role in March. After taking over, he instructed his new group to assess whether Siri would do a better job handling queries using Apple's AI models or third party technology, including Claude,

ChatGPT, and Google's Gemini. Interesting. After multiple rounds of testing, Rockwell and other executives concluded that Anthropix technology is most promising for Siri's needs. That led Adrian Perica, the company's vice president of corporate development to start discussions

with Anthropic about using Claude. What's interesting is that SSI, not in the conversation here yet, also Thinking Machines, not in the conversation yet. And when you think about Thinking Machines, that recent information article about Mir and Morati wanting to do fine tuning Runing RL for businesses. It's like there's very few bigger businesses than Apple.

That's a pretty good client to go win. And so if you have a foundation model, you have to assume she's raised what, two billion? So she can do a- Just a pre-seed, yeah. Yeah, the pre-seed. It could be a thing Apple doesn't really work with a lot of pre-seed companies.

Yeah, yeah, yeah. Call us when you're like Series C. I'm sorry, I can't bet my career on a pre-seed company, but call us if you can get a seat around us. Yeah, yeah. But I mean, I think the fact of the matter is like $2 billion is enough to do a GPT-4 level run, to do a DeepSeek style run. And so if you take all the best practices

from DeepSeek V3 and R1, like the reasoning model, and you spend the money to go do the training, and you pull all the data together, and maybe you're not completely stealing the data from the GPT-4 API, but you're getting it somewhat legitimately through these data brokers like Mercor and Scale and whatnot, you should be able to get a near the frontier level model done.

The issue is Apple isn't set up to comp top AI researchers. Exactly, and it's a skill issue. In some ways it's not a money issue. They're not willing to spend the money to put together to say, hey, we're getting kind of cooked in AI. We should spend $5 billion like Zoc just did to put together an incredible team. But they'll have to pay for it by,

it sounds like they may end up paying annually to get access to the technology that those types of teams built. And so you got to pay for it somewhere. It's the CapEx, OpEx, switcheroo. The CFO is like, okay, yeah, we don't want to spend a bunch of money up front to reap this award endlessly, but we will pay a billion dollars a year, I guess.

I don't know. Yeah. They seem not fully AGI-pelled over there. The Siri Assistant, originally released in 2011, has fallen behind popular AI chatbots, and Apple's attempt to upgrade the software has been stymied by engineering snags and delays. A year ago, Apple unveiled new Siri capabilities,

including ones that would let it tap into users' personal data and analyze on-screen content to better fulfill queries. I do wonder if Apple is thinking about thinking machines. You have to imagine that Zuck is thinking about buying the company, right? Sure, they talked. It's only a couple billion dollars and by all accounts. I think to be honest, it sounds like Zuck had offered somewhere around the last private

market valuation for SSI. And he probably, even though all the investors had a 1X preff, he probably needed to do that to get at least early investors comfortable with it. So. But Ilya is a true missionary, true believer, wants to take the straight shot to SSI. He doesn't care about. Mirra likes optimizing business processing. I He doesn't care about the debt ceiling.

Let's put it that way. Mira on the other hand is doing reinforcement learning for businesses. So you throw a $15 billion acquihire her way with that team, maybe it gets done. I don't know. If I'm Apple, let's pull up the Mag 7 market cap again. What are they at, two trillion trillion 3 trillion? They're up there

and an apple is You know, it feels like they could afford even 15 billion for thinking machines Sure, do you disagree no, I mean they totally could but they'd be looking at it as talent acquisition I think yeah because the team is I mean It's such a young company. Yeah, and But if you were if you were in in the big man But but then you would do that you think Mira is gonna be cool. Just clearing

74 million she's not gonna make more than Tim You think she's gonna be down to sell now and then just make, have total comp less than the average AI researcher going meta? I don't know. I mean, the beauty of an acquisition is that you can be structured to make more than the CEO, at least in a short amount of time. That certainly was the case with the Beats acquisition.

Sure. For those years when that earn out was active, they made more than the CEO. And that's okay. Anyway, people with knowledge of Apple's AI team say it is operating with a high degree of uncertainty and a lack of clarity. With executives pouring over a number

of possible directions, Apple has already approved a multi-billion dollar budget for 2026 for running its own models via the cloud, but plans for that beyond that remain murky. Still, Federighi, Rockwell, and other executives have grown increasingly open to the idea that embracing outside technology is the key to a near-term turnaround.

They don't see the need for Apple to rely on its own models, which they currently consider inferior. And this makes a lot of sense because Apple is not great at software that needs to be updated 25 times a year. We're in this crazy AI model horse race. You don't want to be waiting around for, oh yeah, like at the next WWDC they're gonna improve it

when Sam Altman shipped like 25 updates. Sam's gonna have 40 buzzy announcements between eggs exactly So beats was Apple's largest ever acquisition yes paid three billion dollars Okay, including four million about four hundred million of Apple stock, but beats at the time was doing a billion dollars Three X revenue multiple Wow Intel's modem business yeah, which was in 2019 for a billion. OK. It was doing two billion in revenue, probably.

Yeah, probably. Yeah, you look that up. I'll keep reading. They don't see the need to rely on their own models. Licensing third-party AI would mirror an approach taken by Samsung. While the company brands its features under the Galaxy AI Umbrella many of its features are actually based on Gemini

Anthropic for its part is already used by Amazon to help power the new Alexa plus Which I haven't seen rolling out into the Amazon Alexis Maybe the Alexis aren't wired up properly and you have to get the next batch the next revision Yes, so Intel's motor business was doing it over a billion. So less than a one X revenue multiple. Yeah, basically a one X. Okay. And you remember in 2018 they acquired Shazam.

Oh yeah. For 400 million. How much were they doing? I gotta ask you. I gotta, this is- In the future, if its own technology improves, the executives believe Apple should have ownership of AI models given their increasing importance

of how the product operated. What do you think Shazam's annual revenue was at the time of acquisition? I wanna say 80. How much? Waiting. Okay. The company is working on a series of projects

including a tabletop robot and glasses that will make heavy use of AI. I'm really excited for the Apple tabletop robot. That doesn't get enough coverage these days. I think that's a really cool idea. So Apple paid 400 million, the app was pulling in roughly 38 million a year. Oh, so over 10x revenue multiple, okay.

So anyways, not a long history of making massive acquihires. Yeah. Actually no history at all. Well, whatever Apple's planning, they gotta do it on linear. Linear is a purpose-built tool for planning and building products meet the system for modern software development Streamline issues projects and product roadmaps if Apple wants to

Be more like open AI one way they could do that is by getting on linear. Yes Uses linear. Oh, here we go. We get we get to think machines Apple has also recently considered acquiring perplexity in order to help bolster its AI work as opening AI uses linear. Oh, here we go. We get to thinking machines. Apple has also recently considered acquiring Perplexity in order to help bolster its AI work. It also briefly held discussions with Thinking Machines Lab, the AI startup founded by former open AI Chief Technology Officer, Mir Amorati,

but nothing really more than that in the story. Apple's models are developed by a roughly 100 person team, maybe two times big, too big, who knows, maybe 50s. A lot of pizzas. A lot of pizzas. Run by Rueming Pang, an Apple distinguished engineer who joined from Google in 2021 to lead this work. He reports to Daphne Luong, a senior root director in charge of AI research. Luong is one of G. Andrea's top lieutenants and the foundation models team is one of the few significant AI groups still reporting to G. Andrea. Even in that area, Federighi and Rockwell

have taken a larger role, regardless of the path it takes, the proposed shift has weighed on the team, which has some of the AI industry's most in demand talent. Some members have signaled internally that they are unhappy the company is considering technology from a third party, creating the perception that they are to blame, at least partially, for the company's AI shortcomings. They have said that they could leave

for multi-million dollar packages being floated by meta-platforms and OpenAI. Yeah, if you are a great AI researcher, the idea of being responsible for just integrating the work of opening I or anthropic is gonna be much less exciting than trying to build frontier models totally and also like I don't know just in terms of missionary work like the idea of building like the the most advanced God that you can talk to

in this crazy AI like that is exciting but there's also something that's like I think potentially like a really strong missionary pitch for, you are going to build models that are used at massive scale by every iPhone user. And you can actually surprise and delight the customer to the tune of hundreds of millions of people. I think that is actually pretty laudable work and very, very cool.

Even going to work at Super Intelligence at Facebook, knowing, or at Meta, knowing that your work will be integrated into the Meta Ray-Bans, and you're gonna have a Clueli-like experience. That's cool, yeah. Just wearing glasses. That's very cool. Like that is a cool, that is a new dimension that you can build on. I remember the initial Siri build out, they,

they did a bunch of magical things. Like you could say like, Siri, tell me a joke and it would come up with these like funny zingers that were like tuned to Apple's brand, but still actually pretty funny. And they hired comedy writers to work on it. And so like, I think that there still is a world where you you find you develop the model you own it and you're doing the foundational like serious AI research but you're still productizing it in the Apple way creating something special you know you already hear about this with the the

Claude is different than chat GPT like the vibe tests like we haven't seen the vibes fork out really all that much But there's definitely a world where the Apple LLm performs at a similar scale and speed and the reasoning and it's doing well in the benchmarks But then you know You're talking to the Apple model and it has the Apple feel to it and like that could be cool If you if you can actually it could be so cool. It could be very cool. It could be so cool yeah, like if they brought if they could bring back some of the like flair

from the brand campaigns that you remember Apple by, 1984, the like original iPod, these things that were just iconic. And if you could think about how to like embody that original Apple feeling. It's like Steve Jobs' voice basically. Yeah, bicycle for the mind and and like encouraging that that that wonder I keep going back to that idea of like what would Steve jobs have thought about

Vibe coding and it's like he would have loved it. He loved garage band He loved giving everyone the tools to be an artist everyone's a musician He loved giving everyone the tools to be an artist. Everyone's a musician, everyone's a programmer. Like these things, this giving someone the ability to do really, really interesting things with Siri, awesome, I think it's very, very on brand for Apple. Anyway, let me tell you about Vanta. Automate compliance, manage risk, improve 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. And you head over to vanta.com and tell them the technology brothers sent you. There are some more trade deals in this report in Bloomberg.

One of Apple's most senior large language model researchers, Tom Gunter, left last week. He had worked at Apple for about eight years and some colleagues see him as difficult to replace One of Apple's most senior large language model researchers, Tom Gunter, left last week. He had worked at Apple for about eight years and some colleagues see him as difficult to replace given his unique skillset and the willingness of Apple's competitors to pay exponentially more for talent. Apple this month also nearly lost the team behind MLX, its key open source system for developing machine learning models on the latest Apple chips.

After the engineers threatened to leave, Apple made counter offers to retain them and they're staying for now. That's dramatic, wow. In his discussions with both Anthropic and OpenAI, the iPhone maker requested a custom version that could run on Apple's private cloud computer. Apple's such an interesting culture

because it's counter to a lot of other Cultures and tech that are like oh I might work at meta for five years and then go to Google for a few years and then Dabble at a startup and then go back to meta and Apple you see more of the somebody who's been there for 15 years But then at a certain point even if you've been there a long time you're looking around and you're saying people with my exact same Skill set are making yeah five ten times Yeah, this article highlights that that the meta pay packages have been between ten and forty million Yeah, annually and I would try and add more on that that feels more realistic than What the New York Times had been saying

about $100 million signing bonuses and all that good stuff. Well, you know, the source is not conflicted at all. The guy that hates the fact that these pay packages exist is quoting them. It's so funny to source a podcast between two brothers doing PsyHops. Come on, New York Times. Step it up.

The company has already internally tested the idea of running these LLMs, other companies' models on their own Apple-controlled cloud services. Obviously, that's very important for the data privacy narrative. Other Apple intelligence features are powered by AI models that reside in consumers' devices. These models, slower and less powerful

than cloud-based versions, are used for tasks like summarizing short emails and creating genmojis. It's here for genmoji. Underrated. Just bake down Ghibli. Just bake down Ghibli, have it be a filter in the iPhone app, boom, you're done, like you have a bang or product there, something like that. Just like, you know, you can go in and make any photo

in your camera roll black and white. You can make it Hollywood, like teal and orange. You can make it, you know, super moody or super cool or super warm, like you can adjust the contrast and the color temperature. Turn it into a cartoon. People will love that. Everyone will be using that. Apple is opening up the on-device models

to third-party developers later this year, letting app makers create AI features based on its technology. Very excited for that. Very bullish for Apple on that. Amazing. Yeah, which is why the fact that they almost lost the team working on that entirely. They need that team that team badly is would have been crazy that

product stagnant I saw founder I saw founder I forget their name posting hearing that you know the team that you're based and he was building a product based on MLX mm-hmm and then he heard the MLX team almost left he's freaking out he's like No. It's rough. So last year, OpenAI offered to train on device models for Apple, but the iPhone maker was not interested. They said, we got it handled. Turns out they didn't.

Since December 2024, Apple has been using OpenAI to handle some features, in addition to responding to world knowledge queries in Siri. ChatGPT can write blocks of text in the writing tools feature later this year. In iOS 26, there will Siri. ChatGPT can write blocks of text in the writing tools feature later this year. In iOS 26, there will be a ChatGPT option for image generation and on-screen image analysis. While discussing the potential arrangement,

Apple and Anthropic have disagreed over preliminary financial terms, according to the people. The AI startup is seeking a multi-billion dollar annual fee that increases sharply each year. The struggle to reach a deal has left Apple contemplating working with OpenAI or others if it moves forward with a third party plan. They said if Apple does-

It's so interesting. You can imagine OpenAI being more willing to strike some type of deal because they wanna be effectively the next Google in terms of this dominant consumer internet company. But at the same time, OpenAI is building devices to try to kill Apple. You can imagine. They wouldn't say that.

They wouldn't say that. I do believe that consumers, there's a finite amount of devices that they're willing to have and so if they want to compete in hardware It's a little hard for Apple to get excited Yeah, although they partner with Google and Google has I have been surprised by the number of devices that people carry I mean like I'd say like a decent chunk of San Francisco tech people carry of San Francisco tech people carry AirPods, an iPhone, an Apple Watch, and an Apple laptop, basically everywhere they go. That's four devices, that's like a lot.

And then yeah, maybe a VR headset eventually. Well, if they do wind up buying a device, they gotta pay sales tax, they gotta get a numeral HQ sales tax on autopilot, spend less than five minutes per month on sales tax compliance. Anyway, in other news, John Mew, the inventor of mewing, has passed away at 96 in his castle. Rest in peace to John Mew.

Professor John Mew, visionary orthodontist and founder of Orthotropics, passed away peacefully in June 2025 at the age of 96 in his castle, a pioneering figure in the facial growth and development, John Mew challenged the status quo of traditional orthodontics, arguing that environment, posture, and function, not genetics alone, shaped the face.

His philosophy, orthotropics, aimed not only to straighten the teeth, but help promote healthy jaws, open airways, and confident faces. Though his work was often met with fierce resistance from the establishment, John stood firm in his convictions, driven by a lifelong commitment to prevention, integrity, and science, and giving every child

a fair chance at full facial development. Today, his legacy lives on through the work of his son. John Mew will be remembered not only as a clinician, but as a courageous truth seeker who dared to ask better questions and never stopped looking for better answers. So, if you're chewing some mastic gum, say, pour one out for John Mew.

I wonder how he processed the explosion of Mewing's popularity on social media. It must have come as a surprise because it was the last like few years of his life and working on it for pro he's 96 and somebody probably printed out a tweet for him and said look some some trad influencer has gotten 10,000 likes on your on your work and a million views anyway we have some trade deal news. Ring that gong, Jordy.

Mary D'Onofrio has joined Crosslink Capital as a partner and a leader of the Berms crossover strategy. She will be focusing series B plus venture investments across software categories. She, Fortune Magazine has the story. She was a long time Bessemer investor, and now she's heading over to cross-link capital to cross over into private growth equity deals. So congratulations to Mary Zanofrio. In other news, Miramarati's Thinking Machines

is offering top dollar to technical talent, much higher base salaries than Anthropic and OpenAI. Thinking Machines will give you $500K. Anthropic, how about a salaries than Anthropic and OpenAI. Thinking machines will give you 500K. Anthropic, how about a safe 400K? OpenAI, best we can do is 300K. No wonder everyone's jumping ship. I think we're looking at two different things here. Like, this is like, not necessarily for the top researchers who are these like star athletes.

This is maybe more for just the general folks who are joining as software engineers and developers and members of technical staff. But it is interesting to see that Mira is offering generous. Yeah, getting aggressive and offering generous pay packages because there's obviously a lot of work and it's a very small team.

And even though Thinking Machines has some great AI researchers on board, they gotta have some folks to chop wood. And now that Mira is in the business of selling to businesses, B2B, fine tuning, reinforcement learning for businesses to drive profit, she's gotta get Thinking Machines on 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 for free. Adio.com slash TBPN. You can try it out for free on us. So the 462.5K average salary thinking machines lab offered for technical hires is considerably higher

than more established language model competitors. Merati is aiming to compete with. So the competition in AI talent rages on. We will be joined by Swicks in just a few minutes to discuss the AI talent wars in more detail. Aidan McLaughlin, who's been on the show, says post the survivorship bias photo of the plane with the red dots.

And Benjamin, this is in response to Benjamin DeKraker, who says, the open AI brain drain poaching by other labs kind of confirms that the smartest minds in AI don't actually believe open AI is on the cusp of AGI, but rather that it's going to be a drawn out slugfest for several years at least, and the economy still matters. In other words, if you really believed that open AI

was right around the corner from AGI, and once their AI disrupts the entire economy to a post-scarcity economy, why would you leave that organization right now in exchange for money? It's a good question, but Aidan is of course saying that the true believers are still there. They haven't left, it's only the mercenaries that left.

And he's continuing to. We gotta have Aidan back on the show. Get him back on. That was a really fun conversation. He's a great guy it's fantastic also in other news they're saying meta is now preparing a huge pile of cash to acquire sweet baby rays sweet baby rays i would love to see that identified as a potential acquisition target yeah i mean i wonder what their ai talent pool really looks i mean el Elon sells the Tesla tequila Chamath has tequila maybe Zuck. You know he the meta sweet. He says he doesn't use caffeine

You know, maybe I just saw sweet baby race sweet baby raise bands Ray-Ban's sweet baby Ray-Ban that is there we go They come with sauce honestly the glasses There we go. They come with sauce in the glasses. No, no, no, no, no. When you're barbecuing, that's the ultimate augmented reality use case. That's right.

Because it can take a picture and say, okay, I've set a timer automatically, check the temperature. How long, oh, how long should this particular steak be cooked? Sets the timer, lets you know. Starts buzzing, little reminder when it's ready. This is actually a killer application. The perfect ready. This is actually a killer application.

The perfect ribs. This is actually a killer application. With the sweet baby Ray-Bans. Well, if you're interested in getting in on the action of the Mag-7, the public companies, head over to public.com. Investing for those who take it seriously. They've got multi-asset investing,

industry-leading yields, and they're trusted by millions. So Elon Musk is starting a new party. He says Vox Popula, Vox Dei, 80% of people voted for a new political party that actually represents the 80% in the middle. Interesting. So we'll see if he actually does it. There is a polymarket tracking whether or not

he will do it. It has been surging. We will be tracking that. Third parties, not very successful in American history, but we're in a new era. Maybe Elon will chair it. It's unclear if he wants to be the head, because he can't be the president,

because he's not a native born citizen. So who would he put in charge, or who would he back? Andrew Yang was running a third party for a while, the forward party, do you remember this whole thing remember that whole thing? I do remember. Yeah Yeah, I mean he had the backing of like Sam Altman some really big tech people and he was running as a Democrat and then he and then he dropped out and kind of like was not seen as like an outsider and then he started the Forward party said not left not right before and didn't really get that off the ground fully but yeah

branding so I wonder what the Elon Musk I wonder what the Elon Musk party will be called I think the I think it's called the America Party oh the American Party okay he said he called it that was his words what Elon Musk's America Party could look like yeah He seems he clearly hated politics. Yes got out But he's angry enough about the state of things that he wants to potentially get back in the game, but one We're gonna have Zach Kukoff on the show in two minutes We're going to have Zach Kukoff on the show in two minutes. He's going to be breaking down the big, beautiful bill for us, what's happening on the ground in Washington.

One thing that was included was the Invest America Act, which got approval from the Senate as part of the bill. It's on the verge of becoming law, the first country on the planet to make sure that every child has a stake in the game, real private account ownership Compounding in our best companies from birth very cool so very very cool great work from Brad Gerstner and Otherwise we have some breaking news from TVPN which is that we have partnered with graphite

Graphite dev is the website, let's pull it up, team. I've been very excited about this. I was a happy Graphite customer at my last company. Entire engineering team was running on it. Graphite helps teams on GitHub ship higher quality software faster. It is the platform trusted by 45,000 developers at top engineering orgs like Harvey,

Asana, Ramp, Replet. Who else we got? We got a bunch more. Harveysana. Datadog for sell. Datadog? The browser company. I love Datadog.

DuckDuckGo. Let's go. A lot of them, but if you're building on GitHub, like I'm sure you are, go and get on Graphite. graphite.dev is the website. And we'll have to have Meryl, the CEO, on the show very soon. But very excited to partner with them. And Tyler will be running our TVPN engineering

org on Graphite as well. Love it. More to come. Well, we have our first guest of the show, Zach Kukoff. Thanks for having me. Live from Washington. Mr. Washington. Washington correspondent.

Mr. Washington. I even set up, I don't know if you can see, that's the monument right there. Wow, no way. There we go. Beautiful. There we go. That's great.

We'll just have our production team zoom in, zoom in just on the monument, so you won't be on camera. Perfect. I'll get out of the way, but you can see the good stuff behind me. That's the important thing. So yeah, break it down for us. The Wall Street Journal has a story.

Senate passes Trump's mega bill after all night session. Tax cuts and Medicaid spending reductions head to the House with a July 4th deadline reachable. What's interesting in the bill? How likely do you think it is to pass? What are the major reads on this? And then we want to get your your takeaway from like where the dividing lines are around the bill. Yeah so there's a couple trip lines. The first trip line I would say you guys been tracking the moratorium, the 10-year moratorium on AI development. This was the on AI regulation.

This was the first it was in Ted Cruz put it in, then it was out, then it was back in. There was a compromise. There was a five year agreement instead of a 10 year agreements and Blackburn has been sort of the key driver of getting it back out again. It's out. Now it was done 99 to one in the Senate, almost unanimous in the Senate to get this out. This was a big win for Dario of entropic, probably the number one beneficiary. And by the way, somebody who certainly used a fair bit of political capital pushing for this, that's fault line.

Number one, I would say fault line. Number two, so really quickly before on that it's, it's a, it's a potential ban on AI regulation that was removed. And so the current bill does not have a, has a, does not have a moratorium on regulation. So it's kind of a double moratorium on federal regulation. That's right. So you can have California states, whatever, who wants you Marsha Blackburn, her home state, Tennessee,

passed last year something called the Elvis Act, which was cutely named, but basically said, look, if you are building like an AI audio business, you cannot use any likeness of a real performer's sound. So if you wanna have John singing the blues or Jory singing the blues, I cannot do that without a prior deal. That's because in Tennessee, Nashville is a dominant industry, a music industry is a dominant industry. And so part of Blackburn's opposition to the moratorium, which would have prevented bills like that from taking effect, is that it ended

up superseding the work that her home state has done to protect its dominant industries. By the way, Netnet, this moratorium, the time that they got to a compromise was so watered down, it really wouldn't have impacted Tennessee or California anyway, but it was a very dramatic swing from in, out, in, and now out once again for good. And what do you, what do you expect at the state level around AI safety going forward? Is this gonna, is the fact that this was removed

gonna inspire certain governors to say, you know, make this a part of their platform? And I guess like, I wanna know more about like, if I'm 11 Labs and I'm training a voice agent and I can't be sure that some Clip from you know Elvis or you know some Justin Bieber worked its way in there Does that mean that I just turn off Tennessee at like the DNS level or do some geofencing? Or or is it more risky than that? Where I have to I have to comply kind of at the national level.

And they're kind of forcing me to comply everywhere. Or can I just pull back out of that state? Cause we've seen this with, with uh, Apple intelligence not being available in China, not being available in Europe, for example. But yeah, what would the impact on something like that be? Well, think about states in two categories, right? There are some states that are so large. And by the way, the analog that I would think about here is what happens in the

textbook market. So if you're a textbook publisher and you want to write some textbook about biology or whatever, if the largest states in the country, it's category one, has a law mandating something needs to be in a textbook, suddenly you're going to comply nationally because they are so large. They work the market exactly. You have to. That's right. And so if California tomorrow says, look, we're passing a European style bill to severely curtail, which I think would be a disaster, this severely curtail AI development that would in effect be a national bill. And part of the, in my view, a mistake that's happening tactically right now is this self-imposed

July 4th deadline is so restrictive that it forces all of these more nuanced negotiating points to fall by the wayside, right? It becomes blanket either it's in or it's out. There's just not time to get to a more nuanced middle ground. So 11 Labs of Tennessee, the Elvis act probably says, look, we just screwed around Tennessee. I don't, I haven't spoken to 11 labs, but if California passes, then suddenly you have the whole country warped by this.

And Gavin Newsome and the California legislature are certainly ambitious enough to try as they did last session to try to pass something that would impact the whole country. Yeah. Wasn't, wasn't there news out of California this week or last week around some of the stuff? Yeah, yeah, there's there was a huge fight which had an unlikely set of bedfellows where you saw and recent and others Leading the anti-legislative anti-regulatory brigade against some other folks who are much more pro curtailing by the way

I will just say the other interesting takeaway for tech, not to totally dovetail away from your question, but the interesting takeaway for us, I think, in this is the deciding vote in the Senate on the overall package, the reconciliation bill, was JD Vance. And so if you're a Vance head looking at 2028, right, you already see that Ocasio-Cortez and others, AOC and others, are going to use his deciding vote on this bill, which includes huge amounts of Medicaid cuts that Tom Tillis from North Carolina, in particular, thought were politically toxic as a wedge against him when he comes and runs for president in four years. So sorry, that was it. You asked a question about California and I

dovetailed it back to the federal level. That's the the, yeah, yeah, yeah. That's the big shock. So you asked about tripwires. The AI tripwire was one. Medicaid cuts, which are politically really toxic, right? Cause who wants to get the idea that you voted for the government to take away your healthcare. That's another huge tripwire. And then there's a package of things

that maybe we care about that are nuanced. Like for example, IRA tax incentives for clean energy, right? Or new taxes on wind and solar from China. These are all things that might enrage the Republican, the very conservative Republican faction in the House, which now has to still pass the bill and now complicates the negotiating posture because the Senate watered down. The Senate preserved the IRA tax incentives and watered down some of the tax cuts, got rid of some of the tax cuts on Chinese imports, which means basically you have a bill that's actually financially harder to pass because it's less balanced.

And at the same time, you've now alienated a huge faction of the GOP, the super conservative GOP side of the party who still have to vote for the bill to happen. So it's up in the air if it passes or not. Can you tell me about the EV tax credits? I know Americans are struggling more than ever to buy naturally aspirated V12s. I'm hoping that there's some move there to subsidize things like the Ferrari 12, the Dolce Trilindee multi-hundred thousand dollar car. Even if we can't subsidize that, maybe we can just take away the subsidies

from electric cars to tilt the playing field in favor of the larger engines, the supercharged V8s, the twin turbos, the G63s, these types of cars that Americans deserve to be driving. So what's the news on the EV credit front? I agree with you that the backbone of the American economy is the Ferrari, right? It's impossible to me to imagine a world.

Thank you for the last track. I appreciate that. Where a blue collar factory worker cannot own a sports car is beyond me. This bill doesn't address that. I wish it did. It would be great if it did. It's not gonna solve that huge unsolved problem.

What it will do, by the way, is continue to drive a wedge between Elon and Trump. Then you saw Elon take the Twitter. I imagine you guys probably mentioned earlier, you saw Elon take the Twitter and start to really crusade against people voting for this. That is in part because at least the House version of the bill was much worse on a lot of the subsidies for electric vehicles than the Senate version. The big challenge is going gonna be going into now

the conference committee. It's gonna be how do they reconcile these two challenges so that they can hopefully tilt the market back in favor of course of Ferraris and supercars nonetheless, while also not alienating one of the two power centers of the GOP at least today in Elon, who could easily primary somebody who votes against. Yeah, that makes a lot of sense.

What about, how are the Democrats feeling about EVs these days? Because it used to, I used to feel like it was a democratic cause to be pro-EV incentive. Let's save the environment. Let's get people out of the gas cars. I'm joking about the V12s obviously, but now it's become maybe let's punish Elon,

but is this a cut your nose, to spite your face situation for the Democrats? I think it's become maybe let's punish Elon, but is this a cut your nose despite your face situation for the Democrats? I think it's a rough spot I mean you guys remember when Elon wasn't invited to the big EV summit and that's why administration, right? That's part of what kicked off his political awakening So is he isn't he doesn't use unionized labor and so he was excluded from this EV summit There's been a huge polarization a negative polarization against EVs among not only Dems in office, but the Democratic base too, which is to all the points you brought up, quite ironic. You're not going to find many Dems willing to cross the aisle in support

of electric vehicles to save this bill. This is a bill that will live or die by Republican whip count and Republican unity. If the whip count isn't there, it's going to be really hard to get it done before July 4th. What about Elon's America party? You think that's real or just exciting? Are those my only two options, real or exciting? There's no door number three. Yeah, I mean, it's obvious, like, you know,

we were talking earlier, third parties haven't historically done well. Well, he's obvious, like, you know, we were talking earlier, third parties haven't historically done well. Well, he has the America PAC. So when you say Elon could primary someone, he could potentially primary a Republican on the Republican ticket with the American PAC. And he could almost like be kind of like a head fake, like, oh, this is part of the America Party, but it's not really a third party.

Is that more what we're thinking here? How this plays out? Maybe, maybe one historical analog. It's not perfect, but think about like a fewer Roosevelt, like a Teddy Roosevelt with the bull moose party, right? You think about it's a faction within a larger established party to your point that can serve as an engine to primary people who are in disagreement. Exactly.

Like the tea party or frankly, what's happening now. Look at Zoran. Maga. Maga is also like a wing of the Republican Party. That's right. That's right. Maga the tea party and now on the left the polarization from the Zoran and democratic socialist world. All of these folks are new factions in a way that by the way we haven't seen before the same way that 50 years ago you basically watched a mash on television and that was your only option. And now I tune into TBPN while I play subway surfers and have 30 other things hitting me at the same time. This is the political version of that, right? Where you say, okay, it used to be my options were a platform that I accepted wholesale on the Republican side or the Dem side. Now I can be a MAGA guy, I can be a tech right guy, I can be a populist guy, and I'm a new right guy. And on the

left, I can be a democratic socialist. I can be an abundance bro. I have an infinite menu of things. The America party is more likely, if it sticks, one more menu on the side of the right. Sure, sure. Yeah, that makes a lot of sense. What do you expect out of the next 24 hours? So tomorrow morning at nine, House Rules Committee votes.

That's gonna be a key vote to see how this thing does. What I would say is if this gets done by July 4th, the thing that you're going to have to look to is that 9 a.m. Eastern vote to see how much unity is there in the Republican Party. They can barely lose any votes. So this thing goes through the House in its current form. But I think it's unlikely that it's going to happen immediately.

It'll happen. This will get passed. But on their timeline, I don't know. The next 24 hours, have you seen more senators like Murkowski from Alaska who are saying things like the bill is flawed, please send it back to the Senate so we can work on it. Again, that's a key indicator. This thing may not have the legs it needs the next couple of days.

Yeah, we heard about, I mean, everyone's saying like, it's the biggest bill. There's all this pork. Are there any like green shoots where there's some random startup out there that's just super excited because maybe it's not a headline grabbing, you know, 10 billion dollar thing. But it's like, that's $100 million that I can go after in energy or in defense and shipbuilding or anything. Have you seen any of these like, they're called

riders, right? Yeah, yeah. It's a good question. Biden was famous for stacking a lot of these, like the inflation reduction act had a million ways you could go participate. This one's got fewer. I'll say one funny piece of pork. And I'll say one actual opportunity. The real opportunity I would say is for FinTech folks who are looking at the Trump accounts, right? Which is giving huge amounts of new Americans

who are underbanked or not banked before access to capital for the first time. If I'm Robin Hood, I am loving, that's a big change for me. Funniest piece of work in the bill. Markowski, who was the key holdout in the Senate from Alaska, got a tax exemption for Alaska, native Alaskan whalers. She said basically native Alaskan whalers need to be. Yeah, that was honestly big delivery for her constituency of people who kill whales in Alaska I suppose.

Let's give it up for the whalers. Yeah. They don't get enough attention in Washington. Well, I mean, we've talked about it before, but you know, energy is really important for the AI data center race. Whales, they produce oil that you can burn and sell. Wasn't it Chase who said he would burn whale blubber?

No, he didn't say he would do it. He said that the hyperscalers are so desperate for energy right now that they would burn whale oil. It's more fun to think about Chase personally. Launching Cruso for whales. Yeah, that's right. Cruso blubber. Well, VCs are the new whalers.

Yes, yes, they really are. And the old whalers. And the old whalers. Yes. Yes. They really are the old whalers and the old Zach this was so much fun. We'll have to have you call in tomorrow or Thursday when there's more news, please I'll be all right to my first wedding anniversary. So I'll be around congratulations on the time to call in. Thank you Incredible incredible. We'll talk to you. It's not just me boys. See you soon. Yeah, bye Up next we're going back to the AI talent wars talking trade deals talking hundred million dollar offers with Sean Swicks. How are you doing? There he is with the suit with the suit looking fantastic. We

you wore a suit last time and we didn't give you enough credit because you were at your own conference. The AI World, and this is a sign of respect. This is a sign of great respect in our culture. This is a sign of great respect. So thank you. Thank you. Thank you. And it's always great to catch up with you.

How did you process the news over the weekend? What jumped out at you? I saw a couple of your posts. You were breaking it down. But how would you tell the story? How big is this for Metta? How big is this for Metta? How bad is this for OpenAI? How are you feeling about the trade deals

that we've seen break loose over the last few days? I feel like people who have been in discussing like sports trades might be way more equipped to discuss this. This is like relatively new in AI land. And honestly, just like absurd, you know, like, get that back guys, like, you know, like, I'm happy you're getting paid. But like, also, it definitely feels like, for the a lot of the AI researchers I talked to, like,

like, this is a little bit sort of like a panic move, in some extent warranted, right? Like I think that Meta has felt like it needs to do something different than what it has been doing, especially leading up to Llama 4. And this is different. This is very, very different. This is something that only Zuck can do. I think from me- Yeah, so there was just for some extra context, there was new reporting from Kylie over at Wired

just now saying that there's been some back and forth, what are the actual offers? Obviously, a lot of them are different, right? It's not just like a set offer that everybody is getting. If you join Meta, you get $100 million immediately. In a brief case, hand delivered. I don't think that's what's going on. So apparently, some of them are up to $300 million over four years, with more than $100 million immediately. The end. In a briefcase. Hand delivered. I don't think that's what's going on. So apparently, some of them are up to $300 million

over four years, with more than $100 million in total compensation for the first year. This is Wired's reporting, right? Mark Gurman was saying. It must have seen. She said she needed to see an offer letter to put that. But the funny thing here is there's an OpenAI staffer who was responding to this anonymously.

And they said, that's about how much it would take for me to go work at Metta. Shots fired. Wow. But yeah. I mean, they have set the price, right? So now they have, unfortunately, they have set their own price.

It is public now. I think there was some back and forth between like whether or not Sam appearing on his brother's podcast was like a very calculated move and like, was he dishonest? This is not my words. This is what matters. It seems like you might've been honest

based on this reporting. Like it seems that's real. I think it, look, it's in that ballpark, right? Whether or not it's exactly a hundred plus minus, like it is at least eight figures. And that is like far and beyond what anyone else had been getting prior basically. And it is in there, at least in the relative range of what?

Tim Cook and Satya made all of 2024. Yeah Crazy, which is also the hundred million number It's so round that it just jumps out to you and I think it's much more viral than 112 or 89 like a hundred is just such a round number. It's such a big amount of money. It's just instant generational wealth. For sure. I think like that's exactly, it's weird that the calculus of like, does this make sense for Meta? Yes, it does. Because I think you guys covered my analysis before that, like basically they just cut VR spend and reallocate to AI spend. And they have the funding. They have the equivalent of Anthropix entire annual spend.

Yeah, and Meta's at all time highs right now. The market likes the aggression. And so it doesn't really matter. If you could move a $1.8 trillion company market cap by a couple points, you're doing pretty well. Yeah, Zuck is no stranger to betting 1% of his company to make sure against the future. company market cap by a couple points, you're doing pretty well. Yeah. Yeah, Zuck is no stranger to betting like 1% of his company, right?

To, to against the future. And he like, I think of uniquely of, of a lot of the sort of fang or what does it, I think a lot of people are trying to come up with like new acronyms for like the, the magnificent seven. So I like the one that's among us. Among us. Yeah. Among us is the best acronym.

There've been some wild acronyms flying around. That is uniquely empowered as like a, you know, founder mode of the, of the, of the trillion dollar companies to actually do this. And like, so like, it's really amazing that the leaders is higher than the people that he's managed to hire. I would say that, you know, to one part of your opening question, like, how affected is OpenAI? I would have said no, know, to one part of your opening question, like, how affected is OpenAI? I would have said no, not that affected. You have a super deep bench.

Even like the people that you don't really hear about, like, are actually like fantastic leaders in their own right. And so like in some extent, OpenAI is very robust to already sort of departures already. But the email from Mark Chen over the weekend, I think was also like, oh, like I wouldn't say that if I were him. I don't know if you guys have the exact view. Yeah, knowing that that memo would immediately leak,

it felt emotional and defensive versus, hey, John's phrasing was, or at least the way that you said, if you phrase this as, hey guys, we have billions of people coming to our website monthly. We have hundreds, we have billions and billions of revenue. We are the category leader in this space. We are doing something different than Metta is doing. And we will continue to dominate.

And now is the time to rally. This is the fourth time this has happened. Maybe fifth time this has happened. So we survived Anthropic and Dario leaving. Don't forget, surviving Elon leaving. We survived Ilia leaving and we survived Mira leaving. And there's four spin out direct competitor co-founder companies.

This is a couple people leaving. We're gonna get through it. We've been, look at the growth chart. We're growing, growing, growing. I would have, yeah, definitely gone from a source of strength there. I don't know. But yeah, what is your thought on the narrative

that OpenAI seems, Lindy at this point, incredibly resilient, able to lose key people and just keep plotting forward with iterative releases, models get a little bit better, UI on the app gets a little bit better, deep research comes back, they're just always staying on the frontier, just one step ahead of everyone else in that core chat product, And yeah, maybe they might not be able to dominate

in the Claude Code ecosystem immediately. They gotta make some plays to make that happen. They definitely want to, by the way. They want to, yeah, for sure. But in terms of the core thing that's clearly dominant and huge and game-changing and profitable, they're doing great and they should and they should kind of they should lead from a source of strength there because they've

been through so much and continue to deliver on that front and and this doesn't seem like a cause for like the narrative around this this leaving is that okay Meadow is going to catch up to a frontier LLM reasoning model. They're going to have great image generation. But does anyone think that in three years time, people's home screens are going to switch from chat GPT to MetaChat? No, I don't think so. But what about you?

Yeah, I don't think so. Keep in mind also, Meta has its own institutional issues with AI products. I think they launched this AI chat feature that where every chat was public. I don't think, I still think it's still there. I think it was like a box you had to check. Yeah, people were accidentally sharing it,

but it kind of speaks to like, yeah, when you're dealing with a trillion DAUs, like you're gonna have weird stuff happen. But yeah. I would say that Sam would be the first of many people to acknowledge that there's such a thing as a 10,000 X engineer and 10,000 X AI researcher. But they also have a very deep bench

and it's not just about the bench, it's also about the data, it's also about the infrastructure that they've accumulated. That, you know, the TM, what's their acronym? MSL? Meta Superintelligence is going to have to build up effectively from scratch because effectively, Yung Lagoon has failed in his leadership of Meta AI there.

And I think like that's fine. Like that's a pivot, like that's something that only Zuck can do. But like, yeah, OpenAI has very deep bench and like, I think they are I think they're good there. I would say though that it's really interesting how well diversified this landscape is. Most people when I talk to,

there's often in the AI circles, there's this discussion of who has the mandate of heaven. Mandate of heaven meaning they're just most likely to achieve AGI. Or switch, obviously. Of the big labs, myself excluded, of the big labs, a lot of people are mostly saying DeepMind is actually not OpenAI. So I think OpenAI is intensely aware that they're being poached, they're being outcompeted

on pricing, they're being out competed on pricing. Yeah, I'll be all competing on some metrics like LMSYS for DeepMind. And they're, and opening eyes like extremely competitive. Like whenever I talk to them, I'm so impressed that like they're not just arrogance and they're not like resting on the laurels. They're actually just like, we will win

on every single front. And I think it's just a very impressive company that way. Then let's flip over. I mean, MSL is very, it's a cooler acronym than than llama I always loved llama because it's a fun name, but it didn't have the same like Fair fair and fair felt also just like it's it's a little nice. It's not hardcore team No, we don't we don't care about fairness. We know we drop safety from MSL is like going to the majors exactly Sounds like major league LLM and major league AI

training. But I want to talk about the historical energy analogy because Zuck has been in this position before with the shift to mobile. So when Facebook back in the day was a web browser, they initially moved over to To an iPhone app and the iPhone was growing and they kind of made a mistake Going a little bit too far into the HTML5 route wrapping it in an in an iOS shell

But they didn't build the app natively and they were kind of falling behind But then you know from 2012 to 2015 and they were kind of falling behind. But then, from 2012 to 2015, Mark was extremely aggressive about acquiring Instagram and WhatsApp, rebuilding the team, hiring some great people. This is when Adam Masseri and Andrew Bosworth came in and really, really built out monetization in the feed. So they had more money flowing through the system

to actually pay for all this stuff. And then the design stuff. Yeah, we were covering yesterday that Zuck did a talent rate in the 2010 era of Google because he just wanted to get better at ads. Basically. And then he built the greatest ad engine of all time. Yeah. So yeah, how are you, how are you interpreting the comeback story and the fact that like Mark

has also been here before? I think that it's interesting how you have, like Zuck has almost has to fail first and then he overcorrects and goes really, really hard and wins. In contrast, I think like VR never really had a failure because it didn't really have that, had that much of a success to begin with.

But yeah, like MSL could only have happened after the comparative disappointment of Lama 4. If Lama 4 had had proportionally the same traction that Lama 3 had, I don't think we'd be sitting here today. So actually this is like net positive that we went through that because they were like, oh, like we proved out that this is, we've tapped out in this direction and we just need a whole new team.

And we need to scale things in a very different way. And probably we just need to poach from the other labs. Yeah. What do you think the, I mean, it's interesting. It's also interesting though, that what their current strategy was their third choice and somewhere in the middle, either first or second choice was perplexity. And that would have led, um, that would have led, um, Facebook or Metta in a very, very different direction, more consumery than,

uh, right now, which is building a lab. What do you think the post-mortem on llama four is? Is it just that they over rotated towards pre-training, massive model, behemoth, these like, you know, not focused on reasoning, not focused on all the little tricks and tool use and stuff that actually creates a delightful LLM experience or chat experience these days?

Or is there something else going on there? Like, how do you tell the story of what they got wrong with Llama IV, if anything? I don't want to bag a Llama IV too much. By the way, I put in a thing in the chat for people to compare. Scout and Maverick were great, and then the shenanigans around LL Arena were regrettable, but like understandable, just an honest mistake, whatever.

Yeah. But it seems that Behemoth will just never be released. Interesting. arena were regrettable, but like understandable, honest mistake, whatever. Yeah. But it seems that Behemoth will just never be released. The assertion again, Behemoth is never released. So this is all rumors was that they tried to basically adopt whatever that DeepSeek did for their large fine grained mixture of experts model. And it just didn't work. They didn't, they didn't put in it enough, whatever.

We will never really know the answer. I think there's probably also organizational issues around what data they can use. I know this for a fact just because I've heard issues around... Honestly, at a big corp, when your lawyers get into the mix of training data issues that can get very inconvenient when you know i think like comparatively anthropic when they won their recent case they were more like you know seek you know bend the laws and seek founder bound like i think now that we actually have a little bit of ruling around like, okay, like pre-trading on copyrighted data is actually transformative.

It's fair use, therefore it's fair game. Go ahead. Actually, we'll see. Yes, but the case is still trying whether you need to buy the underlying thing, which could still be egregiously you know could be incredibly expensive to to acquire the copyrighted material. Not at all. You don't think you don't think that'll go through? No no no yeah whether or not you buy the underlying thing it's fine it's actually just the issue of copyright whether you have to pay per

use especially our paper inference. Now that the bad issues out of the way. Yeah but I was saying the anthropic case is still like they had 7,000, 7 million books that they obtained through that they don't that they didn't purchase. And the case is the pirated ones, the pirated ones. Yeah, so that will be interesting if labs have to effectively strike deals with publish, you know, I don't know. It's still in the courts. They are doing that.

They probably just should do that. It's a one-time cost comparatively compared to the value that they can extract out of the books. The books are just guaranteed to be underpriced because the books are priced as though they're sold to one person. Whereas, you know, a model is gonna be used by millions. So like there's just no, like it's fine, just pay it.

The piracy thing is a legacy of books three, which is a data set that was created in a, by a, let's say someone who was very pro piracy. It was a copy of books one and books two was actual licensed public books. Anyway, so, so long, long story short, like I think, I think those cases will be resolved. And I think that Lama and Meta's strategy there would probably be affected by the quality of data that they had and the fact that they just couldn't, they were playing one hand tight behind their back,

whereas all the other labs were not. Yeah, interesting. Well, this has been fantastic. Last, one more question. Any reactions to the news that Apple is working with, you know, potentially working on a deal with Anthropic or OpenAI? Anthropic wants potentially billions out of it? Very convenient timing for the open model release,

which is rumored to be soon. But like, no reactions yet. I think Apple, there's a lot of news around Apple that never materializes. I think Apple hasn't's a lot of news around Apple that never materializes. I think Apple hasn't shown that it has gotten the memo like Zuck has shown. So until it wakes up, I don't know. I think around the time of the Apple intelligence launch last year, I think a lot of people, I was commenting that basically Apple wanted to be

the first layer of intelligence and then he wanted to route So he always wanted to keep wanted to be Switzerland wanted to play nice between opening eye and topic and all and whatever other labs Probably not Google, but I Think you kind of have to make a bet I think you I think you had to have to go all in like I'm not that interested in Apple making deals with Open eye one topic. I still want opening eye to do an opening eye iPhone. I don't feel like I don't like the in your device. And I just I just wish they just went all in and took Apple on head on because like all of these are half measures man. Like the like you're going to be sitting here like five years from now and

Siri is still going to like kind of suck. Like it's the same deal as like Amazon making a deal with entropic for like smarter Alexa. Where is that today? Yep. I was just asking. I haven't actually seen it in the wild. Yeah. Great point. This is really one more breaking news for you guys. I don't know if you probably, you guys probably missed it, but cursor has hired the cloud code people from the topic. What do you mean? What do you mean? Like how many of them,

I heard they hired the notion mail team. I didn't realize that they hired the Notion mail team. I didn't realize that they hired the cloud code team. That's an interesting commentary on like, what is Notion able to keep its people? Because the Notion mail team was, you know, they just launched it. Yeah, they just launched it. And now they have left. Trade deal.

But like cursor, so cloud code, developers have been talking about it nonstop. I think people who are adjacent to developers really pay attention to this one. This is as close as anything is to being the new Cursor. It is Cloud Code. People are going absolutely nuts and spending a huge amount on it.

Anthropics revenue is up 4x since the start of this year. And Cloud Code only launched in February. And now Cursor has poached the top two people from Cloud Code, like the creator and the PM. I'd like, it's breaking news. But in terms of like talent trades, this is a really interesting one because it's at the engineering level,

not the model level. And it's starting to spread out. It's starting to be like extremely competitive here. And I think it's very exciting. Wow. Yeah, we'll have to have you back soon since this is the top story every day now. This is real life.

Thank you so much for joining. Yeah, great to see you, Sean. Great to see you. Cheers. Have a great rest of your day. And next up we have Matthew Prince from Cloudflare coming in to TBPN. Welcome to the stream.

Some huge news from Cloudflare coming in to TBPM. Welcome to the stream. Some huge news from CloudFlare. We'll let him tell us the story. How are you doing? Good to meet you. That's me too. Welcome to the stream. I would love to start with the news today and then I want to go into some of the history of the company and when you faced similar junction points and kind of turning points in the past. So why don't you kick us off with the big announcement and the big news today from CloudFlare.

Sure, so about 18 months ago, we started getting approached by a number of content creators saying that they faced a new threat online. We spend most of our days, most of our business, trying to fight cyber hackers, Iranians, Russians, North Koreans. And so I was surprised when the new threat

was AI companies. And frankly, I kind of rolled my eyes at publishers. I was like, publishers are always complaining about, you know, the next new technology. And they said, just pull the data, look at what is going on. And it was really striking that over time, you could watch as the sort of deal

that publishers had made with Google, starting 30 years ago, which was, you can copy all of my content and in exchange you send us traffic. That deal just didn't hold up anymore, where they were copying the content, but because they were providing answer boxes, AI overviews, they just weren't sending nearly as much traffic.

And that was the good news. As you looked at OpenAI, it was about 750 times harder than with the kind of Google of old to get traffic with something like Anthropic, it's 30,000 times harder. And the reason why is because people are reading the derivatives, they're not reading the content. It'd be effectively like if I asked an AI system, summarize what happened on the Technology Brothers show today.

I have less incentive to actually go and watch your actual show. And that means that if you're making money through advertising, if you're making money through subscriptions, if you're just getting value out of the ego of knowing that people are watching your show, that's going away in an increasingly AI driven web. And we worried about that quite a bit.

And more and more as we talked to publishers, we realized there was something that we could do about it because CloudFlare runs one of the world's largest networks. A huge amount of the Internet already sits behind us. We could partner with literally publishers, everyone from Adweek to Ziff Davis and everything in between to say that let's change the way that the Internet works. And let's change the sort of model where if you're going to take content, you should actually compensate the content creators for it. And so starting on July 1st, we flipped the script. We made it as a default that if you're using CloudFlare that you can by default for free Block any AI crawlers from taking your content without compensating you and I think now the hard work begins

Where we have to figure out now the business model around how we get Compensation back to these content creators and make sure that folks like you who are creating real original content can continue to be Compensated for the hard work that you're doing. Well, we used to joke saying that the labs are welcome to scrape our content because we want to influence the outputs of the model. No, it's a serious issue. We were covering one of Ben Thompson's pieces

about this whole debacle a few weeks ago. And it was funny because at the time we were like, there's so many different stakeholders here who could possibly try to figure out a solution to this problem and I obviously you guys are a key player in this and you have the scale in order to kind of make changes happen can you yeah can you I guess like break down more kind of like the kind of the market structure between and how you see this actually working out and who really... Yeah, I mean, I guess what deals have been done in over the past year, because I know didn't News Corp do a bespoke deal with OpenAI for that exact thing. It sounds like you are more equipped to kind of handle like the longer tail, but also some of the bigger publishers.

So talk to me about kind of the state of the art of what those deals look like when they're one-to-one and then what things might look like going forward. Yeah. So I think that, um, first of all, uh, I think for some time to come, uh, large publishers will do deals with large AI companies, uh, where there might be places that people need help or either small publishers or small AI companies, and figuring out what has to happen there. But I think even in the case of places where deals have been struck,

what the challenge is, is something like OpenAI is paying a lot of publishers for their content and doesn't actually object to the basic idea that they should pay for the content that they're using. But they do object to the fact that they're paying where all of their competitors are getting content for free. Any market that exists has to have scarcity. And the problem, the reason why there hasn't been a market in this place, space is that there isn't scarcity.

And so what changed yesterday is scarcity was introduced really for the first time. And I think the closest analogy is if you think back to, before iTunes launched, we were all downloading music on Napster and all the free pirate services. That's effectively how the AI companies are taking data from any content creators today. What you need is an iTunes. You need someone to come in and say,

okay, let's provide a way where people can pay for that content and then go back. Now, that's evolved over time. I think our first version in the marketplace will probably be relatively naive and we'll figure it out. We know it's paying 99 cents for songs anymore. We've moved to something that's closer to a subscription model like a Spotify. And I think that that's what we will evolve

to have over time. And if we do it right, I think that we can have a large number of sellers of content, obviously, but also a large number of buyers of content, both the big sort of general purpose models, but then also very specific models. And we've got to make sure that new entrants can come into this market and

have a vibrant way of participating and competing. And so I think that for now, most of the deals will be one on one bespoke deals between publishers and AI companies. You'll need to have some way of enforcing those deals and making sure that if you're charging someone, they can get access, but their competitors can't. And then over time, I think we'll develop something that looks much more like a robust marketplace where content providers can set sort of what their price is, there can be

a bid for maybe getting that content exclusively for some period of time or whatever else. And that's going to develop over the next, over the coming months. Is that the correct model to think that the content producer would set the price? I mean, that's certainly what happens on Substack and, you know, the New York Times and the Wall Street Journal set their price. But I've always thought that this might evolve a little bit more like YouTube or like Spotify, where there is a pool of dollars that are going into chat GPT subscriptions. I personally pay $200 a month and occasionally I fire off queries that probably land on the Wall Street Journal or the Financial Times and I would be happy for them to send ten cents or a dollar or

Split off 50% of what I'm paying So you have a hundred dollars to kind to kind of parcel out in the pool and then you see how much inference pulled, what data from what sources, and kind of have it all be driven by the, like kind of the same volume, like the volume algorithm that you see on YouTube or Spotify, does that seem like kind of what the long term outcome might look like, or do we need to also get to some sort of like ad-driven marketplace because that's ultimately where YouTube, how YouTube prices these things?

You know, I think it's going to be, I think that there's a lot that we still have to figure out. I last week traveled up to Stockholm to meet with Daniel Eck, the founder of Spotify. And it was really, it was interesting. He said, you know, the ultimate model that Spotify settled on, I think it's, I don't want to put words in his mouth, but it was basically like, it was sort of the most naive of all of the different options that he had come up with. And it is works as it is a pool of funds, and then they divide it up based on basically how many minutes of content you consume.

And there are different rates for music versus podcasts versus audio books. And it was fascinating to see. So you could imagine a version where Cloudflare effectively negotiates on behalf of all of the content that sits behind us with the big AI companies. People can opt in or opt out of being a part of that pool. The more content that's part of that, the more valuable it is to the AI companies.

And then we would look at how we could split that up across how much crawling is actually done across that. I think one of the real keys will be, how can we give hints to the AI companies on what is the content which is the most valuable to them? So for instance, if Taylor Swift releases a brand new song and maybe does an interview about it, that's incredibly valuable content if you're a chat bot for lonely teen girls, right? On the other hand, it's probably not so valuable

if you're sort of a chatbot trying to be the world's best doctor. Maybe there's some value in sort of bedside manner, but largely that's not gonna be a big deal in your care. On the other hand, if a research study comes out on acetaminophen's effects on different types of chemotherapy, very little value for the chatbot for teen girls, but incredibly valuable for the doctor.

And so what we have to do is actually, I think, on a on an LLM or AI model by AI model basis, be able to give them signals back that say this is the sort of thing that you should be paying attention to, that you should be indexing, that you should be actually scraping and paying for. And the same way that in the music industry. We've got reviews We've got different types of music that that people are, you know, you might be into country You might be in a classical and and it kind of allows you to compartmentalize that I think that whole ecosystem has to develop But once that does

Something very much like Spotify could be the right answer long term. And again, I think we're in a unique position to pull it together Talk briefly about stable coins. I remember in this Ben Thompson piece, he was the people have been suggesting this idea that stable coins could be some part of the solution to it or a backbone for a new business model for the Internet. At the same time, while I'm bullish on stable coins, someone like a cloud flare can set up the infrastructure

to just use traditional financial rails to process payments. So I'm guessing that it's not part of what your... This was Ben's reaction to the original sin of the internet was advertising and this idea that Mark Andreessen, when he built the browser, didn't build in payments because it was this multi-party discussion to figure out

how to actually integrate payments into HTTP. Didn't happen. The first MCP spec, that's the Model Context Protocol spec for AI agents to interact with each other, doesn't include payments, but he was kind of saying that it might be on the horizon, but would love your take. Yeah, you know, I think the answer doesn't have to be 100% one or the other.

And so I would guess that there are gonna be very traditional, kind of traditional financial rails that will be ways to pay people out. But there will also likely be something that is blockchain-based or stablecoin-based. And again, I think we're looking at all of the different providers that are in this space, including potentially creating our own stablecoin And again, I think we're looking at all of the different providers that are in this space,

including potentially creating our own stablecoin that would be part of how these transactions take place. And I think you're exactly right that there's a natural extension from what we're doing here to how we figure out around what the payment rails look like for MCPs. Because as your agent is going around interacting with things, that's also going to be something that is either charged for or that you actually get paid to do. And there's got to be a way for those transactions to take place and to the extent that you can reduce the transaction costs for those transactions as far as possible, then that's a pretty

interesting way of being able to process very high volume, low dollar amount transactions. So I think that's right. My only one quibble is that I think that the original center of the internet is not that it didn't include payments, it's that there was no privacy built into it and your IP address reveals far too much about you and who you are. We don't even have to get to cookies, but that's it. No, we totally can. What about, we've talked about content creators, publishers.

What about the apps of the world, the Ubers, the Instacarts that actually have really meaningful advertiser businesses built on top of them, do you expect there to be any type of this functionality rolled out to them over time? Or is that something you think they're thinking about quite a bit? Because if I can go into ChatGPT,

and that's my default daily assistant, let's say in a few years from now, and I'm like, hey, order me groceries and order me this Uber. I'm not in the app seeing ads potentially being upsold and that could be a problem for those types of companies. Yeah, totally. And I think that robots don't click on ads. And so the sort of model that part of the revenue stream to support these services has to come from somewhere.

And if today Uber is able to monetize the time where I'm waiting for a car to come by showing me an advertisement, that means that they can effectively charge me less for the ride. So it may be that if that ride is booked through an agent instead and they don't get that advertising experience, and again, I don't know enough about Uber's business model

to know how important that is to them. But if they don't get that, then maybe it is that there's some premium that an agent booked ride receives versus a human booked ride. And again, I think that that's just, we've got to figure out what that looks like. I think that's gonna be less up to Cloudflare.

I think it's gonna be, you know, our job will be how do we provide those payment rails? How do we provide the systems? How do we make it so that we can have guardrails on as agents interact with applications that are there that you as the application provider can set those rules and controls and then agents can interact within that system.

And MCP is sort of the leading candidate for providing that. But you're right that it's a sort of draft version of that specification. And there are a lot of things that have to, uh, you know, mature in order for that to be something that is the, the real, um, kind of agent, to agent, uh, uh, system that runs that is likely to run, what will be an increasingly AI driven web. Yeah. Can you talk about any previous crucible moments for either cloudflare or just like the internet history broadly,

this feels like a moment where you're potentially trying to, I mean, deal with a shift in the overall internet structure or the incentive structure, but it's a reaction, but it's also an action that should reshape the relationship between different parties on the internet. Are there different moments in the history of CloudFlare or the history of the internet that you think we could draw on as historical analogies to learn from to see how this might play out?

You know, I think that Google really 30 years ago defined what was the business model for the web, which was you create content, search drives traffic, and then you monetize that content through advertising or subscriptions or ego. Ego and monetization, not quite the right thing, but you drive value from it in one of those three ways. And that's held up for the last 30 years. I think that this is the first time that I've seen something where I thought, wow, there are really going to be very, very, very

fundamental changes to the structure of how the internet works. If we move from a search-driven model to an AI driven model and and I think that what I hope is that we can actually make this something where what gets rewarded is not what gets rewarded today which which largely is you know who can write the headline that produces the most sort of inflammatory response in all of us, who basically drives the most cortisol,

gets the most clicks, and therefore the most ad revenue or the most subscriptions. That's not a healthy way of looking at the world. I think the alternative is if you imagine that all of the AI models together are a good assemblage of an approximation on human knowledge, if we can identify where the holes are and then create incentives for content creators

to actually fill in those holes, that actually is gonna move humanity forward. It's gonna make the AIs better. It's gonna be a much more interesting thing, and that's, I think, how we're going to be creating it. I can't think in the last 30 years of a seminal moment. I think there are some things that are along the way. I think 2016 was really a big turning point year for a lot of reasons.

It was sort of the year that technology went from being able to do no wrong to being able to do no right and sort of rise in populism around the world. You have Brexit in the EU, you have the first Donald Trump election, you've got Xi and Modi consolidating power in Asia, the Filipino election. And I think that that was a point in time where, you know, also driven by Snowden, You know, also driven by Snowden, shortly before that in 2015, that a lot of the world lost faith in kind of the US model of internet governance and it wasn't quite ready to adopt the Chinese model, but that's definitely been a shift, which is substantial. And I think we're still watching that play out. That I think is probably still remains the biggest threat to the overall internet. But this shift AI as well, again, I think is a real challenge,

but it's also an incredible opportunity. If again, we can make the rewards incentives for content creators not be who can produce the most cortisol, but who can produce the biggest sort of incremental improvement in human knowledge, that would be an incredible win. And something that I don't quite know how to get there yet, but I think yesterday or today, and we took, in July 1st, we took a real step

in moving in that direction and making sure that content creators can be compensated for really producing information which is valuable to advance human knowledge. in that direction and making sure that content creators can be compensated for really producing information which is valuable to advance human knowledge. What do you think about the future of investigative journalism? There's been a big shift in just content creation into independent creators, but a lot of that is actually downstream or separate from the type of work that investigative journalists

do. I'm thinking of like Seymour Hersh hanging out at a local army bar for a year before he gets one scoop that he can write a book about. And these investigative journalists, they tend to, you know, John Kerry Rue was on the payroll of the Wall Street Journal for years. He was writing stuff, but then he blows the Theranos case wide open eventually a book and then a movie and and I and I imagine that with artificial intelligence the value of a scoop could actually go up because you could use an LLM to read through the clickbait repurposed version of the article to find wait they're sourcing actually this person posted it on the internet earlier they're the one that actually did the hard work

to get the scoop, they should get 90% of the value, and 10% should go to the repurposed rage bait version, as opposed to the economic model now, which is maybe you get 90% more clicks on the viral repurposed content, and the scooper actually gets 10%. Do you think that's possible, or how do you think that investigative journalism will evolve?

Yeah, I don't know this is an answer to your question, but I thought it was interesting. As I said, I met with Daniel Akk up in Stockholm and he told me, he said, you know, we were talking about this and he said, you know, one of the things we do at Spotify is we actually surface All of the different queries that are sent to Spotify that we don't feel like we have a really good response for so if somebody searches for you know, I want to Song to a reggae kind of beats with and it's all about how much it sucks when your sister steals your car and your dog. Not to get too specific. I'm not sure.

I mean, again, I don't know what these are. But they're called, they're musicians who take this list and they actually write songs based on what people are looking for. No way. And that they make tens of millions of dollars a year doing just exactly that. There's something about that that I think is really beautiful, as opposed to the alternative of just trying to do a little more me too of what everybody else is doing, like taking a different twist,

using signals from the market in order to go find that. Again, that's not investigative journalism by any means, but I think it is actually advancing kind of the sort of good of humanity where it's taking what a place where there's a missing need and is filling that missing need. And so I am hopeful, you know, and relative, I mean, I'm a relatively optimistic person and I'm hopeful that if we get this right, that we might be on a golden age of content creation, where people actually are rewarded for doing things

that advance human knowledge, as opposed to just doing things that produce as much cortisol as possible. Yeah, the idea of a knowledge bounty, right? It's like, hey, there's groups of people or a single entity online that will just pay you to produce really high quality information around this specific topic.

And the internet always did this sort of organically, but it would just be somebody spinning up a blog or maybe an Instagram account or something like that. And they would just start blogging about something that was niche and then an entire network would form around it and other people would contribute to it. So I think there's quite a lot of precedent, but it would be exciting to put that reward out before,

and not saying, hey, you have to do this and then maybe you'll get some ads associated with it later. But basically, the pool of capital is here and you just have to deliver that knowledge that people already want and we know it because they're searching it on LLMs and things like that. Can I throw you, oh, sorry. that people already want and we know it because they're searching it on LLMs and things like that. I'll tell you the sort of black mirror kind of dystopian outcome if we don't get this

right. I don't think journalism goes away. I don't think that research goes away. But you could imagine a world in which we go back to something kind of like the Mediches where there are five big AI companies, and they basically employ each of them, all of the journalists, all the researchers, all the academics, to be able to do the research to feed their systems,

because you're still going to have to have original content. People are still going to have to be able to produce that in order for the AI systems to fill in the holes in their kind of effective block of Swiss cheese that is their model. But I think that's a pretty bad world where, again, because you then probably have the conservative AI and the liberal AI, and all these things that the Internet broke apart. You could imagine AI as a system that is just this massive consolidator in the future.

I think that's a bad outcome And I think a better outcome is if we can figure out How can we reward people for again? driving knowledge But but but not get to a place where all of them have to be employed by by one of the five, you know big I yeah, I actually talked to somebody very high up at one of the labs who said that it was was saying that like if you take the total The total salaries of all the journalists in America It would be a fraction of what the AI labs are spending right now just acquiring data

And so it's not a financial question. It is a political cultural question. It's interesting I think the argument why I think that, and I've been really positively surprised as we've talked with, because we've talked with all the big tech companies, all the AI companies about this, and they all, like with maybe one or two very small exceptions, they all say, yes, we understand over the long term, we have to pay for content. And so they get that. What's key though is it has to be a fair playing field. And that fair playing field, everyone sees that slightly differently.

So if you're a new incumbent, you wanna say, well, Google can't be advantaged. If you're Google, you have to say, well, we have to be respected for the ecosystem that we've helped build and flourish and we should be able to do this thing. And so everyone's got a slightly different take on this, but I'm actually encouraged that the dollars are there,

that there is an acceptance that this is something that needs to happen, and that if you ask them, everyone says, yes, we need to do this as long as you can create a level playing field. Again, that's where I think our role comes in is, how can we create that level playing field. And again, that's where I think our role comes in is how can we create that level playing field? How can we create scarcity? And then how can we make sure that content creators are being compensated for the hard work that they're doing?

Zooming out just for a second, what is the state, how's the internet been for the last few weeks? It's been a busy month in, or last month in geopolitics. And I know that makes your job a bit harder, or at least I would imagine things get a little bit busier. Keeps it interesting. I mean, it's whatever you see sort of in the sort of kinetic side, the physical side of a conflict

is usually replicated in the cyber side of the conflict. And so, you know, we, as the hostilities ramped up between Israel and Iran, first of all, we saw very clear signals that something was coming ahead of time, which is, it's interesting how there's sort of a digital residue, which shows when there's going to be kinetic action taken. And so we were watching that pretty carefully.

Big attacks targeting both Iran, one of Iran's largest banks was hacked by what looked like a group of Israeli hacktivists. The largest cryptocurrency exchange in Iran was hacked and all its funds were drained. Again, looking back, it was either by the Israelis or Israeli sympathetic attackers. Iran has tried to do the same thing against Israel.

Israel's cyber defenses are much stronger, but we're starting to see that Iran is targeting other, largely US financial services firms, critical infrastructure firms to try and strike back from how do they strike back against the US in a way that is harmful but doesn't start World War III. I think that increasingly, unfortunately, cyber will be a big piece of that. We're doing everything we can to stay in front of that, make sure that anyone who

needs it has protection and that we can keep the lights on everywhere in the world. Last question from me. There's a number of larger overarching tech narratives. I'm interested in if you're losing sleep over any or tracking any in particular focus. The AI talent wars and kind of pay inflation for top performers, is that an issue or something you've been tracking or the difficulty to build larger data centers

and infrastructure, the GPUs short of the chip wars, any of those topics kind of particularly relevant to you or your business or we're kind of keeping you up at night. Yeah, you know, I think we're, we're not trying to build a foundational model LLM. So, so we're not, we're not as much competing for the bleeding edge AI researchers. I will say that we've, I've been really amazed at both from an academic side and then also just,

you know, pure talent side, how many people are interested in working on that problem of something like how do you score content in order to be able to create a marketplace? And so that's something that's been pretty exciting. We're very excited about the people who are coming to apply to work for CloudFlare to work on problems like that. And like today has been a record applicant day for us.

It's awesome. On the- Congratulations, records. today has been a record applicant day for us. It's awesome. On the- Congratulations, record. Sorry, I hit the air horn for you on the record applicant day. But it's good, it's good news. And then, you know, I think, you know, we've, we tend to put a little bit of equipment in a lot of places. And so that we don't tend not to have kind of massive multi-

Yeah, you're not running into like power constraints or rare earth element constraints or water, right? Since we get, we, we do in, but in, in, in kind of a micro way where, you know, you, we put GPUs at the edge of our network, we have to live with a power envelope that we're given by an ISP. And so we're doing things to try and figure out how to just get the best power efficiency out of the GPUs. The answer to more and more need of GPUs can't be

everyone has to turn up their own nuclear power station. So I do think the place where we're pushing suppliers and AMD is doing some really interesting things in this space, Qualcomm is doing some interesting things in this space, Fruit Company down in Cupertino is doing some interesting things in this space, or how do you focus on, yes, performance, but performance per watt.

And we've seen this game before with Intel saying, oh, that doesn't matter. Just get the most performance possible. You can water cool things, all kinds of things. That tends to not be the winning strategy over the long term. And so we do think that there will be a renewed focus on just energy efficiency around GPUs and we're really pushing that in a way that because again, we can't build our own business that we're in. And then and then chip shortage.

The chip shortage are funny. Like it's there's never been a chip shortage in any time in the history of silicon that doesn't turn into a glut. Because it's hey, but this time it's different. Yeah, this time it's totally different. I think you're going to see both. You're going to just see shifting demand that's there and a lot more. Nvidia is not going to be the only chip supplier of GPUs.

There's some really great other providers that are out there. Yeah. Well, thank you so much for stopping by. Yeah, we really enjoyed the conversation. Congrats on the launch and come back on again soon. Yeah, yeah, thanks for having me on. Good luck filtering through all those job applicants. We'll talk to you soon.

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Head over to Finn.ai to get started. I'll be right back. And we'll kick it off with our next guest. Yeah, we'll bring in Luca from Pudgey Penguins. We're gonna talk about what's going on with the market structure bill, what's going on with the Genius Act, what's going on with his business.

So we're very excited to catch up with him. It's his second time on the show. He came on during crypto day, fantastic conversation. And now we're excited to have him back on to talk about the state of crypto. How are you doing, Luca? Good to see you. I'm doing good. How are you doing? I'm great. What is that behind you? The igloo? Is this

part of the Pudgy Penguins expanded universe? Yeah, the holding company that holds Pudgy wins abstract and a couple other companies we've got to announce that we've acquired is called igloo. So everything lives within the igloo. That makes sense. It has there, is there a, uh, is anyone riffing on the meme of like selling ice to an Eskimo yet? I feel like that's, uh, you know, I know that you're good at doing deals with old line retailers, but can you sell ice to an Eskimo? I can, I can sell ice to an Eskimo I can sell fish to a penguin

Land to a mammal. Yeah, what is what what is the latest? I mean we caught up on crypto day a couple months ago What's the latest in your world? How are you feeling? We've been in this kind of kangaroo market for the high-level l1s Prices are up prices are down. Everyone's kind of waiting for the next big crypto catalyst, but maybe that's the genius act, the market structure act, maybe that's legislation. But what else are you tracking? Stablecoins have been really hot with the Circle IPO. What's been top of mind for you? Yeah, our big thing at the Igloo is actually like we feel like we are one of the most well positioned organizations for consumer and culture in crypto. And it was actually a little fascinating because I actually felt like I missed a piece in terms of what I felt like was needed for this consumer crypto revolution.

And I think it's really prevalent around this genius act, which is I think you're going to see crypto breakthrough mass off the backs of stablecoins because if you look at all of the consumer crypto applications and really their barrier and bottleneck, you know, I thought it was product builds and I do think that is true to a certain extent, but I think the product builds are a byproduct of the current environment that rewards builders for building in. And I think that gets completely flipped on its face when average consumers are now transacting in dollars that are on chain. It opens up a whole new vertical of product builds

that I think are more oriented around maybe providing a service or an experience and not providing a scheme to return your dollars two or threefold as like a financial mechanism for you to kind of speculate on. And so I think like the genius act is quite literally going to kick off the consumer crypto revolution. And that is really apps that are built around, I think the best properties of blockchain, which is like on its face

I think a lot of people listening specifically around your audience like maybe look at blockchains as like maybe speculative vehicles or like programming languages but I think the best frame to look at it as is like a blockchain is a censorship resistant version of a stripe or a PayPal that taps into global composability and global liquidity, which basically means that like anybody with an internet connection can transact, you know, using these payment rails without some sort of intermediary. And that at scale, if you actually understand like consumer product builds, you know, every every guy that I know that's building an AI or building consumer product goods at one point has had their account locked up or their funds withheld or paying a huge premium on these transactions, whether it's 3% in some cases, 5 to 8% if it's a higher risk product. Blockchain is very useful when you think about removing that middleman for those applications. I think we've just been pigeonholed as an industry around like these builds that are solely around speculation and making the end user more money, right? Like I go buy this, I should return a 2X or a 3X or a 5X.

And I think we're slowly transitioning into more traditional builds where it's like, hey, consumer crypto is really around this idea of removing these layers that I think today make it so hard to build fun and robust applications that are segmented either from a geography perspective, whether it's certain regions, et cetera. And I think it's kind of transitioning to like more real product builds that I think more serious entrepreneurs are interested in.

So the genius act, I think it's gonna change everything because the floodgates for stable coins are here. And I think that was the missing piece to the consumer crypto revolution that I think crypto very much desperately needed. Okay, I want your reaction to this older analysis by Ben Thompson during the first NFT boom, where he was talking about the value of NFTs as a disintermediated membership program, essentially.

So basically, the link I see to stable coins is if you have a community, and you're a creator, you might not want to have someone have a super fluctuating financial interest in your community. And so when I think about the folks who are big on Patreon, and it's $5 a month or $10 a month, but when I pay $30 a month for the Wall Street Journal, I get access to wsj.com. I can comment there. There's a bunch of other things that you could imagine,

but I can't really go around the internet and carry my Wall Street Journal login to their YouTube account and get custom YouTube videos, like the videos have to be embedded on the Wall Street Journal website, so it can't really follow me around the web. And Ben Thompson was talking to Adam Masseri at Instagram about this idea that Instagram might be open

to a bring your own membership type of integration with web three. And so I think that we were almost there, but there was no one that really broke out into mainstream adoption where both, you gotta get YouTube and you got to get Instagram to say yes, we are integrating this membership card as a primitive on our platform to allow creators to create subscription level content.

Instead we wound up with every social media app has their own subscriptions. So I can go get YouTube premium subscribers who subscribe to me, pay me $5. Then on X I can have subscriptions $5, they subscribe to me there. But you gotta follow me around, you can't just subscribe to me as the creator. That felt like something that Web3 could do,

but we weren't quite there with stable coins. Is that something you think is a reasonable dynamic that could play out post genius act? Is there still some sort of countervailing force where the big tech companies might just want not want to give it away because, Hey, they're earning a cut on those membership revenues directly. How do you see that playing out? They're, they're definitely not going to want to give it away, right?

Like those guys are pretty good at capturing and trying to keep revenue. I think like one of the big, you know, bull cases around web three is like these universal logins and identities, right? That like follow you all over the internet. Like that, that's gonna take a lot of pieces to put together, but like things like the genius act, right? And everyone transacting and stable coins

makes that so much more possible and feasible. That I don't know of anyone who's really mastering that build just yet. And to the point of NFTs, I think there's two bulk cases for NFTs. One, which is the one that you referenced, which is access, right? And that is a more mundane, probably less exciting,

but probably bigger TAM, because you could replace the entire ticketing industry and OnlyFans and Patreon, like you'd mentioned, and info, right? The WAP guys can go and plug that in so I You know I I think there's that and then there's also the TAM of digital collectibles Which is you know physical collectibles today have a total addressable market of about 600 billion 1% of that 600 billion is digital yet digital collectibles have a slew of pros that physical do not

Right they are they have no friction when buying or selling they that physical do not. They have no friction when buying or selling. They have no insurance issues. They have no storage issues. They have no inauthenticity issues. And so I think there's a gap in value to capture in terms of in a $600 billion market, it's kind of like physical gold, the digital gold, Bitcoin's captured 10% of it. I believe that digital collectibles are, you know, whether you argue what side of the spectrum they're on, they're not 1%, they shouldn't have 1% of that market share. And so I think there's gonna be value to capture

between that spread. The other thing that stands out to me as a, as just an observer is that I think when people are frustrated with the NFT market broadly, it's frustration with 90. It's basically saying like, yes, 99% of attempts to create new IP are gonna fall flat because it's really hard to create IP that is actually, like it's easy to create IP,

it's hard to create valuable IP. And so there was a period in 2021, 2022 see the random scripts that are floating around Hollywood. Yeah. 90% of scripts in Hollywood don't go anywhere. Fall flat. But with crypto, it's like they just hit the chain and people assume that there should be some value tied to them. And so I think it's just very possible that NFTs become bigger and bigger and bigger, but it's just a handful of really select projects that become these sort of centers for gravity

and get developed in all these different ways. But you're not gonna have 100,000 projects that each have movie offshoots, video game offshoots, physical toys attached to them. And that's exactly the way it happens in the real world where people in Hollywood Like you said will spend their entire life trying to develop a cartoon that actually turns into a franchise And many people will try and fail yeah, and the difference with crypto is like the expectation is immediate value creation and

I just don't I don't see that happening. Yeah The the tokens whether it's fungible or non-fungible, there's a superpower behind it. It's a kryptonite and it's a superpower depending on how you harness the power. The financial alignments can be your greatest weapon or your greatest weakness, right? And how you harness that, right?

Like us being able at Pudgee to galvanize this group of 10,000 people to go and hit algorithms. Our big breakthrough at Pudgee was I told all of them that Walmart had turned us down, that we were going to go live on Amazon and I needed everybody to buy. And if they bought it right all at the same time, we would trigger Amazon algorithms, would be number one across all of these different categories. And that they'd give me a lot of leverage to go do a deal with a major retailer.

Well, what happened was exactly that. We launched within 30 minutes of launching on Amazon, I'm number one across basically every consumer product category, every toy category. And then Laura Rush, who was the head of merchandising at the time at Walmart pinged us and said, we wanna stock you, you got three months, we're gonna put you in a pallet was the head of merchandising at the time at Walmart, pinged us and said, we want to stock you. You got three months.

We're going to put you in a pallet in the center of the store in 2000 locations in quarter four. And that was like the big paradigm shift for Pudgy where people are like, oh shit, you know, these kids, you know, came out of nowhere and did it. And the rest is history. We've basically, you know, carried that momentum up until where we are today. But that was our big breakthrough. And that was because I think of that alignment and that incentive, everyone was incentivized to go and create this headline in this moment for pudgy, at least the core community members who had quote unquote bags or collectibles, or tokens within the ecosystem. And if you can harness that, and if you can respect that, it can be a superpower, it can be your greatest kryptonptonite as you've seen 100 times over. And there's, you

know, plenty of horror stories, which we won't get into. Yeah, bit of a wild card question. But I don't know if you saw Open AI has a deal with Mattel to make a chat GPT enabled Barbie potentially, we don't really know the shape of the deal. How many LLMs can fit in a pudgy? Yeah, yeah. So we want to know. I mean, we had a lot of LLMs in this bad boy. I mean, you're in some ways in the toy business. And what does the next generation of toys look like?

What are you optimistic about? What will change? What technologies do you think will be integrated? What considerations will drive actual success, instead of just like, yeah, we slapped AI on it. We tried that with every toasteraster having Bluetooth didn't really work out but the Nest thermostat pretty fit pretty pretty popular so yeah what how does this play out it's a great question I saw this coming two years ago and I

basically jumped for joy when I thought of it and I told the guys because for those are not familiar the toys that we sell have the QR codes so it's not just like selling toys that are you know IP related We're actually putting NFTs in the hands of regular people because you buy this toy you scan this QR code you redeem these NFTs Through a gas experience. So it's like a whole crypto funnel, which is basically our product our physical toys But I jump for joy because I was like dude What if these these characters that you bought and these NFTs that you created then became like your AI homeworker helper, right? And this was an idea I had two years ago.

And Lorenzo, our president, was like, you know, dude, you know, if there's a 0.01% chance this homeworker helper tells a kid to kill himself, it's not worth it because we'll get de-shelled and it'll create a bunch of chaos. And we weren't, you know, know AI guys but we actually are doing a toy with Curio who recently raised pretty big over and the whole you know AI crypto or AI you know startup Twitter land.com land and that whole place yeah we're familiar we've dabbled yeah how who's the who's the musician I mean, I'm super bullish on this. I have kids and I mean, I was thinking about this with the Rabid R1, like yes, the safety and security stuff is really, really important, but safety interpretability research

and the ability to run an extra LLM, just filtering is this a harmful response from the LLM to the safety of the LLM? And I think that's a really important point that we're making, and I think that's a really important important but safety interpretability research and the ability to run an extra LLM just filtering is this a harmful response from the LLM that seems to be getting better and better and I'm pretty optimistic about having a watered-down LLM that can't explain everything but is really good at identifying plants and

animals that's gonna be a big product for kids I think so. The trick to CPG is all about providing value for the customer. Like Walmart will tell you if you're trying to stock, like they're always optimizing for the best deal. And so my mind frame is like, how much bang for your buck can you get for this purchase? Well, if you can buy it and redeem some NFTs, that could be worth some digital dollars. Maybe you recoup your costs on the physical item and then it's a net free good. And then maybe you can go in and ask it questions and now it's a value add.

And so I think this stuff is just changing. It's a complete paradigm shift. I think no one's really ready for how I think the world is going to change. But in terms of a value add, you can plug in an LLM to a lot of physical products, just alpha for the room, you know, and create a ton of value for your end consumer, which is ultimately your goal as an entrepreneur. That's awesome. Well, thank you so much for stopping by.

Always appreciate your perspective. We gotta have you back when there's more breaking news and we'll keep catching up with you. Good to see you, Luca. Cheers, Luca. Have a good one. Really quickly, let me tell you about adquick.com. Out-of-home advertising made easy and measurable.

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Hey, how you doing? Here as well. I like the intro music. Yes, welcome to the stream. Welcome. We are professional newscasters, as you know. You're one of a handful of people in the entire world that has actually visited the Temple of Technology.

You've been into the Temple of Technology. The capital of capital. Yes. That's right. Give us the latest and greatest in your world, new piece in Palladium. What was the thesis? What inspired it?

Take us through the high level of the piece. Yeah, so something I've been thinking about for a while, it was actually sort of inspired by this freshman at Stanford who I was talking to in the library, very, very sweet girl. And she was like, what are you doing post-grad? And I said, well, I'm working for this magazine called Arena. They want to do books, so I'm going to be helping with that.

I'm super excited. And she said, that's a 1930-ass job. And I was like, well, why is it a 1930-ass job? Well, it's like, most people are consultants or software engineers, but you're making this very real thing that you can touch. I was like, yeah, maybe it is a 1930s job. I guess people, a lot of people in the 1930s didn't have jobs.

But there were some people who were writing books and publishing books. So I was sort of thinking, it's like, well, how do we get to this point where it's like you it is sort of like this weird thing for people to be doing something real and tangible, and then I think it's also just, you know, I sort of feel like graduating from Stanford in 2025. In some ways I'm like out on the last chopper out of NOM. ChatGBT was only like super ubiquitous, really my senior year. Like sometimes you just walk into the library and everyone had ChatGBT on their screens.

And it was just you go to section and the section leader would be like, please, I know it's really easy to use AI, but it would really make me sad if you used AI to write your weekly reading response. And then just all these things that were just like you felt like you're more practicing acting like a college student because just AI was just making a lot of the day-to-day obsolete. And it's also just like, there's a pretty good chance that AI is a better writer than I am. There's a really high chance AI will be a better writer than I am in five years. And I think it's like, well, if I wanted to be a writer and that's going to be obsolete

or AI is going to be better than me, or if my friends who want to be lawyers are just going to be replaced by Harvey and my friends who want to be software engineers are going to be replaced by cursor, what does the future look like? And I think I was also guided by this conversation I had with a wonderful professor at Stanford, Jennifer Burns. She's in the history department. She is in biographies of Milton Friedman and Anne Rand. I took a really great class with her in

the fall called Thinking About Capitalism. I had a lot of conversations with her just because I found her work really interesting. She asked me, she's like, you're sort of pretty enmeshed in the current right-wing intellectual moment. Hugh is the defining economic thinker. This was back in October, November,

and I was just totally stumped. And when I published the piece with Palladia, my senator, and I was like, this is my answer to what is the economic thought of Gen Z or really of the 21st century. And it's economic nihilism. It's nihilism. So are we cooked? Where are you most bearish?

It seems like you're worried about a lot of different trends. Is capitalism cooked? Is democracy cooked? Is technology the problem there? Well, I'd be curious to get an anecdotal job market kind of update. It sounds like we got breakfast last week and you were

saying that somebody, some of your classmates got offers from what was it like Tmoo or something to work in like a warehouse and they were all like super excited. Yeah it was Sheehan and it was like become this like Sheehan warehouse manager and I was like actually that sounds like a really interesting job like if I didn't have something lined up maybe I would apply to to be a Sheehan warehouse manager. And there's this app called Fizz, which is sort of like Yik Yak 2.0. It's an anonymous forum for college students

at particular campuses. And people got so mad that Sheehan dared ask Stanford students to stoop to their level to become a warehouse manager. And I think it's sort of like a paradox because Stanford students believe that they are entitled to certain jobs. And this is true of sort of like all IVs or elite universities, but there are a lot of jobs that people aren't willing to do. And I sort of wrote in the article for Palladium, it's like the line used to be, well,

the hardest part about Harvard is getting in. And now I would say the hardest part about Harvard is getting a job that your peers deem elite enough to not feel any social backlash or to feel comfortable in the rat race. And I think it's Peter Churchin, who's a phenomenal historian, has written a lot about how conflict rises in societies

when there are more elite aspirants than there are elite positions. And I think, especially as class sizes at these schools are expanding and the internet is democratizing access to education and democratizing access to power in some ways, I think that these schools are in a really tough place because there, it is not is no longer a guarantee that you can go to Stanford, you can go to Harvard, you can go to Yale and be upper middle class.

Is, are there really not that many jobs at McKinsey, Bain, BCG, the Wall Street banks, the big tech companies, the PMs, it feels like we're hearing a lot of nervousness about job loss and not hiring, but it feels like also McKinsey's printing a bunch of money just writing slide decks about AI transformation in the Fortune 500, or has the actual shift in what is a high status job changed? And if it has, what is the high status job?

Is it entrepreneurship now? Is it YC? Where are we sitting with that? I think it's VC. I think it's entrepreneurship, just regards to whether like. VC? They wanna go straight to venture capital? Yeah, this is the golden ticket.

Just kidding. We support venture capital. I think anecdotally, it seems that big tech is like, that used to sort of be like, OK, everyone told you to study CS, and if you study CS, you'll have a $200K post-grad salary. And now that's not really happening anymore. Yeah, I think there's definitely a shortage of, or especially in more big tech firms, which offer more security than like startups.

It's a lot harder to get those positions now than five or 10 years ago. Do you think that's more of a hangover from COVID and kind of Elon showing that he could run X at one fifth the head count versus truly AI disruptive to like replacing workers? I think it's probably both. I think there's like the zero,

well, there's a time in 2021 where just people were throwing money at anything that they could throw money at and I think we're in very different times now. But I think about it less in terms of just like, oh, what's the market like now? And more in terms of like, how has the social contract changed? And I think for a lot of lead college students,

the sort of social contract was for a time like, okay, if you study like these three things, then post-grad you will have like, and you don't fuck up in college, you'll have like pretty easy access to these really important high paying jobs. But I think we've seen now that it's like maybe a job at Goldman Sachs as an analyst isn't that important. You're just like changing thought colors for 110

hours a week. But also just we're seeing underemployment rates in these sectors. I think the computer science underemployment rate is one in six, which is insane considering that pretty much every authority figure I had from ages like eight to 18 told me to major in computer science. Yeah. Do you Sam Alden wrote this post about the soft singularity and his kind of thesis was that if you went back to 1930, they would think we all have fake jobs. And so we will maybe create new fake jobs. Are you optimistic about that at all? Yeah, I don't think the fake jobs thing

is necessarily going away. Like I'm in LA right now, that's my parents live, and every third person is an influencer. So it's not hard for me to see. Let's hear it for the influencers. The hardworking content creators. It's very hard to go and The hardworking content creators. The hardworking content creators. It's very hard to go and get them working. Slaves to the algo.

Yeah. But I think what we're gonna see is just, there's a lack of, or what we're sort of seeing, it's like they're having fake jobs for, I don't know, maybe probably not an eternity, but for like recent history. And what we're going to see is just the fake job that just the work becomes more and more meaningless. So like, I don't know what the fake jobs of like five years, 10 years from now are going to look like. But I think a key thesis in my article was that like Gen Z is simultaneously

like hyper careerist, but like there's no career at all. It's just sort of floating around from one job to the other. And because there's so much like hopping over from one company to another, one firm to the next, there's never really any like real expertise that's developed and there's this shallowness in the work. I think it's like my parents, especially my dad who just retired, he worked at one firm for like the vast majority of his career.

He was like an expert in that field. And that wasn't anomalous for people of his generation of boomers at all. But I think now with Gen Z, it's just like, okay, you have one job for six months to two years, then you move on to the next thing. And these big companies have incentive structures built in, like McKinsey, that has search time. It's like, OK, well, after one year, we'll give you six weeks off so you can go and look for another job. And I think in doing that, it's admitting that it's a fake job because it has no real

tie to its employees and no real tie to their employees sticking around. Yeah, for some of the new grad roles, at least the big three, they'll very much encourage you to go take two years off to do an MBA, which feels like, I don't know, it just feels odd to me to lose an employee that you could be just nurturing internally and growing and stuff.

What's the reaction on campus been to the big AI trade deals, these massive offers, our people, most of those folks who are getting $100 million offers, they have PhDs, they're published papers. Maybe the new advice should be, don't just get a CS job and then a CS degree and then try and go work in big tech. Maybe it should stay, actually stick in academia longer. Yeah, I don't know. I can't say just because like I'm not a CS major.

In fact, I never took a single CS class at Stanford. But I also think the people who go into CS PhD programs just like love the subject. And I think Stanford in particular is very good at getting people to major in computer science because they just teach the intro courses very, very well. But I think that's a very different demographic. The people who just want to check out for college have an easy-ish major that a lot of people around them

do so they can have a cohort versus the people who are like, I'm really into systems. The thing is, if you met someone at Stanford who was like a systems concentrator rather than an AI Your systems guy name every system This is symbolic systems. No symbolic systems is a fake major. It's like the systems frack in the sea. I also did a fake major So I'm not. That's so funny, it's a fake major.

The realest major is art history, higher employment than CS. You know, symbolic systems is like, literally every first employee at all the big tech companies who's worth like $100 million now. They're all so much. Yeah, it's like they probably have a higher average income than the average comparative literature major,

which is what we did. Oh well. Well, thank you so much for stopping by. Jordan, do you have any other questions? No, let's make this, you're new, you're our Gen Z correspondent. Oh gosh, okay. We need you, we need you.

I want more updates reporting on the Stanford class of 2025. Where are they landing? We got a fake job for you. Gen Z correspondent on a live stream. Yes, new fake job We got a fake job for you. Jen Z corresponded on a live stream. Yes, new fake job alert. New fake job. I had a funny idea when I was editing, but never got around to doing it,

and here's one last thing, was that we would compile the names and photos of everyone who got a job at Goldman Sachs, and there's just black and white portraits of all of them listed vertically, and it was titled, Our Best and Brightest. So we're gonna do something like that for you guys. There we go, let's see it. portraits of all of them listed like vertically and it's titled our best and brightest Something like that for you guys. There we go. Let's see it. Love it

Well, very very excited for you to be at arena who's gonna take the companies public if not Goldman Sachs Who's gonna issue the the massive debt? To back these corporate Titans if not Goldman Sachs. Well they are, best and brightest. They're doing important things. They are. Anyway, this has been fantastic. Fantastic. Thank you so much for stopping by. Great to see you.

Thank you. Cheers, talk soon. Up next, we have Joel from Thomson Reuters coming in the studio. He was supposed to be on AI Day. He's buddies with Swix. He was introduced to me by Sean Swix, who's been on the show earlier.

We're gonna dig into how Thomson Royers is using artificial intelligence and what's going on in the enterprise. Welcome to the stream, Joel. How are you doing today? Guys, how's it going? It's going great. Good to meet you. What's happening?

Would you mind kicking us off with an introduction on yourself, and then I'd love to know a little bit about the shape of Thomson Royer's business. People are obviously familiar with the brand, but on a day-to-day basis, what's actually going on on the technology side? Yeah, you bet. So I've been at Thomson Reuters a few years.

I joined via acquisition as a CTO of an AI company, TR acquired a few years back, and I have been with the company since then. I think a lot of people know Thomson Reuters from the news business. Obviously, that's the most public facing part of the business. But from a revenue perspective and a technology perspective, it's really, I would say, a relatively small percentage of what we do. We're one of the top two or three software providers in the world in the legal industry, in the tax industry, compliance, audit and risk.

So we really cover, I would say a pretty broad expanse of the information services industry. For a lot of years, we were really seen as a content provider or an information provider within these businesses, but software and in particular, like search has been sort of a foundational piece of the technology that has kind of underpinned delivering that information to customers again, across, across the sectors, legal tax compliance, et cetera.

Okay. So walk me through of those verticals, which one is seeing the most acceleration from the current suite of AI tools, which one's kind of maybe next up at bat and not really, the models aren't really having as much impact as you expected so far, but where are we getting the most leverage in AI? Yeah, it's a great question.

You know, if you look at all of those industries, you wouldn't necessarily look at anyone and immediately say they are particularly eager to adopt technology or aggressive in that sense. But, you know, for the last two, two and a half years, the legal industry has been on fire, and I'm sure you guys have talked about it. There's a ton of capital coming into that, to the legal industry has been on fire. And I'm sure you guys have talked about it. There's a ton of capital coming

into that to the legal tech industry in general. But really, the customers to have been extremely hungry and eager to use this technology. And it's having profound impact on the way those professionals think about doing their work and operating their businesses and underlying businesses, business models themselves. I think you're starting to see more, more progress being made in industries like tax, though, I think, sort of the quantitative capabilities of the models kind

of lagged the language capabilities of the models. But I think that's improved. But I also think if you look at like the tax of the audit industry, that particularly workflow kind of heavy. And I think as agents have really taken off in the last, you know, six to nine months, and the tool call and capabilities of the models have improved, It's really opened the door to deliver real true automation and productivity with some of these agentic frameworks and reasoning-based models.

Yeah, talk to me about, I mean, I imagine you're not focused on pre-training a massive model to get to the frontier. You're probably a buyer of that capability, but we're seeing a lot of deals get done open eyes fine tuning Models for clients above ten million dollars. They have they've even cheaper offerings Palantir is doing fine tuning work now We just heard thinking machines mirror Maradi is doing some fine tuning reinforcement learning for business to business applications

What are you a buyer of right now? What are you focused on building internal applications around? Where do you want the various pieces of the building blocks of a great artificial intelligence enabled product to sit? Yeah, this might be a little bit of a long winded answer. I would say first and foremost, when we look at shipping product into the market quickly, we're certainly a buyer of these models and we're close partners with Anthropic, OpenAI, Google and others in that regard.

When those companies are working on their next versions of models, a lot of times they come to us to help them evaluate and test certain capabilities of the models because the type of work that's done in the legal industry in particular is challenging. It's not a simple rhetorical response. It's a deeper level of reasoning that happens in terms of the types of problems that we're solving. So I would say first and foremost, like we're buyers of the technology, we have done, you know, fine tuning engagements with several of these providers, super excited about the sort of RFT trend that may be coming with many of them in terms of being able to apply

more RL based methods to that fine tuning. But we're also, I would say, builders in some sense. We're not pre-training models of the size of GPT-4 or Claude, Sonnet, but we do engage in that. So about a year and a half ago, we acquired But we do engage in that. So about a year and a half ago, we acquired a small company with a couple folks from DeepMind who have come and really built up our deep learning expertise and deep learning training expertise within our team. We've got about one and a half trillion tokens of our own proprietary content in legal and tax and news.

And like I said, that's been sort of one of our defining assets for a long period of time. As RL really becomes kind of the main mechanism for driving further improvements in the model, we see our talent, you know, our 4,500 domain experts across legal and tax and otherwise, really being pivotal in that process of driving performance into the model. So we're certainly a buyer, but we're definitely trying to exercise the data and the content that we have proprietary to us, but also the human experts that we employ to drive that apply with that.

Can you give me some extra color on all the different values kind of on the table with one of these deals between a big company and a foundation model provider? Because it can seem so simple. It's like I'm buying an API, but there's actually a lot more to it. And we were talking about this in the context of Apple potentially partnering with Anthropic or OpenAI, and there's actually kind of an odd relationship there where if Apple's sending a bunch of users to ChatGPT, that could improve the model and that could make their business stronger.

They could wind up servicing ads in the responses like Google does, and you could wind up with a situation where Google is paying Apple, not the other way around. You could see Chachi PT eventually paying Apple for the right to be on the Siri button. But in your business, you have over a trillion tokens, that's pretty valuable data. There's a question of what value are you bringing to that side of the deal? And so how are you thinking about doing a great deal that sticks and is aligned economically over the long term with a foundation model provider? Yeah, it's a really hard question to answer.

And certainly you have to kind of like have some crystal ball to project out what the next two years are gonna look like. And it's hard to project two weeks to do that effectively. That's true. We got one right here So we got one. We got one right here. We actually have a crystal ball in the studio for this exact reason. It helps quite a bit in the news business.

Yeah, it's important. I'll borrow that next time I'm out there. So for us, I think, like I said, our people and our experts and the data that they create ultimately, I think, is sort of core to our identity and core to what we believe is valuable to us. And we try to really hold on to that and extract as much value from it into our IP as we can. I think where there's mutual benefit, like I said before, is we provide a lot of insight and direction to these foundation model providers in terms of like what the models are failing at day to day basis. And we spend a tremendous

amount of time building real world evaluations into those kinds of things. And not only that, but we spend a tremendous amount of time and energy grading and evaluating those on like real world rubrics for how a lawyer would interpret this. So it's not like it's a right or wrong answer. It's, is it helpful? Is it harmful in some way to a lawyer would interpret this. So it's not like it's a right or wrong answer. It's, is it helpful? Is it harmful in some way to a lawyer? These are types of things that like create a, require a tremendous amount of just domain understanding to do well.

And so that insight is super valuable to the foundation model providers to understand how they need to adjust their data sets. And it benefits us on the flip side because we get more perform performance models out the backend that are better suited for our tasks. How much time are you guys spending just on preventing hallucinations

when you talk about domains like law and tax? You know, it's not uncommon for a lawyer or a tax attorney to hallucinate themselves, put the wrong number somewhere, but usually there's hopefully checks and balances in terms of someone else reviewing it, the client reviewing it, making sure that it's getting to the right place. But that feels like one of the bigger issues holding back LLMs from unlocking the full value.

So I imagine it's a big focus for you guys. But but what are your thoughts? Yeah, I mean, all the time. I mean, I think that that's one of the core things that we do. You know, and you're right that hallucinations existed before AI was involved here and they exist now and they no matter how good these models will get they will exist in the future. I think there's there's some element of like that that will be the fact I mean foundationally the way the models operate like it is a propensity and it can happen. So we spend a lot of time trying to build guardrails, trying to build methodologies to prevent that or at least mitigate it in as many ways as we can. I would say this is where though the UX

of the applications really becomes more and more critical. Creating the environment where a lawyer knows what they need to validate, knows how to do that validation, and can do it quickly and efficiently so that they're still saving time in whatever they're doing, I think is a critical part of the design of the applications and how they operate. And as much time as we spend on the science side trying to build algorithms that prevent that, we spend just as much time on the design side trying to make sure we build experiences that allow lawyers to build that confidence and trust that they need. Very cool.

Well, thank you so much for stopping by. We'll have to have you back when there's more news from your world. And we hope you have a great day and have a happy July 4th too. Yeah, appreciate that. We'll talk to you soon. Cheers Jordy, how did you sleep last night? I think you might have me beat. I was a little rougher. I got an 81 But how did you do go to a sleep dot-com slash TBPN get a pod five actually unbelievable. Did I beat you? They beat you play the sound effect. You know, you know the reward I get 81

52 52 I said I said worth you have put on a fantastic performance this show. I would have guessed 99 I thought you were locked in. I think you thank you. I think you fantastically this show I I like need to hire a new head coach. I'm gonna like have a call Well, we got to have Brian Johnson back on the show. He's down to come in the studio He can give us a coach will bring Andrew Huberman back to you He was Andrew Huberman saying there's a drug that can help you sleep better or something like that I might need to get on PDC actually beat you If you're cheating and I'm natty sleeping,

this is not gonna fly. We sleep, we focus on our sleep to make the show better. We do. We should be able to do any type of drug available. There's no better place to sleep than a Wander if you're on vacation. Find your happy place. Book a Wander with inspiring views.

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We have our next guest. We have a further ado. Coming into the studio. I'm gonna let you take the intro. Kenzie coming in from Ambrook. Announcing some news. What's going on? Welcome to the studio.

Hey, thanks so much for having me. Quick intro on yourself and the company, and then let's get into the news. Okay, sweet. So I'm Mackenzie. I'm the CEO, one of the co-founders of Ambrook. Our mission is to help American family-owned businesses become more profitable and resilient.

And yeah, the way that we do that is we're starting in agriculture, so building out financial management software, profitable and resilient. And yeah, the way that we do that is we're starting an agriculture. So building out financial management software. So accounting, like the full bundle, so accounting, payments, banking cards for America's farmers and ranchers. How did you land on this idea? Where did it where did it all start?

Yeah, it was a pretty winding path, but we actually started during the pandemic helping a lot of producers try to get access to working capital. And if you talk to a lot of producers about their problems and sort of what they think software can help with, it almost always has to do with the all the way up the mouse with hierarchy. So, getting access to capital to take more risk.

But the more that we dug into, we helped a couple of thousand producers access a couple of million during the pandemic. But when you really dig into it, it just kind of gets down to like accounting and financial record keeping. Like it's just accounting all the way down. Non-existent.

Yeah. Was one of the issues you're like trying to underwrite a business, but they're like, well, I have this piece of paper and I have this piece of paper and maybe they have a quick books account. Yeah, it's actually a huge range like you can imagine. But a lot of, you know, you have farmers that are running multi-million dollar businesses on pennant paper.

And of course you have folks who are also using, you know, standard FMB accounting software too. But a real the real issue is just that farming is actually so complicated. Like, you know, I don't know if you guys have ever been on a dairy or how to do or how to do. I don't know if you guys have ever farmed. Not a lot of content farming, content farming. No, I grew up I grew up in the country, in wine country, so I had some exposure.

I also have some portfolio companies that have some end farms as customers. So I feel like I've had some exposure, but certainly not an expert. But from my understanding, I think the challenge is, one, you're actually on a farm. And historically, some farm, maybe I'm sure there's a lot of Starlink adoption, which maybe

is a catalyst. You would talk to some farmers about that? But at the same time, you're not at a desktop computer. So the explosion of mobile helped in farming, because you could be updating a database or even sending an email. But all that is relatively new. And I don't think the like big accounting software providers

of the world were necessarily like actually on the ground talking with farmers being like, what software do you want to run your business? Totally, yeah. We ended up, so a lot of accounting and FP&A software is built for like office workers. So it's built as if they assume that you're gonna be in an office,

you know, eight hours a day. And we actually ended up flipping that very early on and building workflows that were built for folks who spend more time in the field than in the office. And so from the very beginning, we had like sort of cross platform across mobile and desktop, like sort of web-based. But over 50% of our users use the mobile app as their primary device to do pretty complex bookkeeping, accounting, payments, receipt management, and understanding their analytics and reports. And I think that speaks to kind of what you were talking about there. How consolidated is the industry? I feel like there's this narrative of like private equity has rolled up every farm and there's like a few mega farms and the certain like billionaires

own all the farmland in America. But then at the same time, it sounds it seems like there's still like I personally know folks who have family farms that are still in this like single digit million, maybe tens of millions of dollars business. There's a little under 2 million farms in the U S and only, uh, only, only something like 12 to 16,000 of them do more than 5 million a year. And it was very long tail. Yeah. Okay. Super long tail. Yeah. Yeah. So I mean, that, yeah, that's the market opportunity for you. Talk about the, the, the new financing you guys announced today and maybe what was the

inflection point that you that that made this round kind of possible? Yeah, totally. So we just announced twenty six point one million series. Okay. Let's go. Who's it from? So it's led by Josh at Thrive and Dylan for Deal for Thrive. Woo! Congratulations. He's on a tear today. Our guys. He got a trade deal done.

He got a new deal. It's been a busy day for Thrive. All three of you. Yeah. Busy day for Dylan too. Yeah, I don't even think you caught this but they released S1 just like an hour ago. Oh yeah, that's right.

Yeah, you were gonna break it. More breaking news, but anyways, back to Ambrook. No, yeah, no, super. Yeah, so the inflection, the inflection way for us was that we just sat, you know, I think once we realized that we actually did need to, because I mentioned earlier that we, at first, were just trying to solve this paperwork problem with getting access to working capital. And once we realized that we at first were just trying to solve this paperwork problem

with getting access to working capital. And once we realized we actually had to just rebuild trick books from the ground up, but that is not, that is a long build. So non-trivial. And so we ended up sitting with a group of pilot customers, a couple of dozen farms across the US for about two and a half years before we ended up releasing it and actually starting to market it more to the public. And so it wasn't until last year that we launched early last year and that growth basically catalyzed this round.

That's awesome. And Will, is the goal for working capital to still be a core part of the business in the long run, but you just had to solve the underlying kind of ledger first? Yeah, totally. And actually, what pushed me to this decision too was just I ended up talking to a lot of these big ag tech

players, a lot of the executives there that were doing a lot of ag financing and I asked them whether or not they could standardize it by pulling on QuickBooks and they just said it was a garbage in garbage out problem. And so they couldn't even like they weren't they themselves were going in and doing pretty specialized underwriting that was one off basically per operation. I figured if we were gonna have any shot at getting a lot of these folks, our customers access

to not just commoditized financing, because a lot of these, a lot of ag bankers actually drive to the farm to put together a farm. Boots on the ground. We need boots on the ground. Yeah, which is, I mean, the faith-based relationships are really important, but what the cost is that it means that more capital can't flow into this ecosystem, right?

And it's really a lot harder to do really interesting niche Financing as well if you don't have that level of standardization And so a lot of what Ambroke has been focused on is first just solving producers problems So making it easier to file taxes making it easier to manage receipts. But now what we're starting to do is a lot of our producers, for example, are for the first time understanding their managerial costs in real time and able to make a decision. Like one of our producers realized that actually replacement heifers was a much more profitable enterprise than his hay enterprise and being able to make those decisions in real time and either, you know,

than his hay enterprise and being able to make those decisions in real time and either you know you just pick up because hay equipment is pretty expensive and so he basically has to increase the amount of income that was flowing through the hay enterprise to offset the cost or essentially you know stop growing his own hay and instead buy it and it goes the types of decisions that actually in real time affect profitability in a long run and build a more resilient operation. And that's just not something that, again, it's, you know, these farms are pretty complex. It's one of the only industries where oftentimes

for manufacturing, you're usually assembling things actually with agriculture disassembling it. So like, what are the cogs on that? A lot of the- It's exciting because to me, it's like you can level the playing field. And if you're a farm and you don't have access to capital in the way that these big sort of mega corporations have

really efficiently run businesses, plenty of access to capital because they're running sophisticated financial operations, it's just so much harder to compete. And with a business like farming, where I think a lot of you know, there's a bunch of different subcategories, but so much of the revenue comes in waves seasonally based on harvests and things like that. And so it's if you're getting paid a couple times a year and you can't really

have consistent access to capital, it's like very challenging to actually run a business and stay in business and not be forced to just sell your land or do something else. So it's very exciting. Yeah, totally. I mean, and there's a huge, the big trend that everyone talks about in ag is just the generational transition, right?

Like 70% of land is supposed to change hands the next 15, 10, 15 years. The average age of a farmer in the United States is 57, 58, it's only increasing. And so a lot of these operations are looking at generational transitions. And there's a knowledge gap there as well. Because if everything is in, you know, if everyone's in someone's head about how all the finances work and how the operation runs, right, like

that's fine. But what happens when, you know, what happens when you need to pass on to the next generation? And so a lot of what we think about is democratizing access to that knowledge, democratizing access to capital, to knowledge, right? I think this is also our thesis on AI, which is AI should actually be the great, you know, it should be actually like the democratizing wave that the computing revolution promised,

but ended up just actually hollowing out the middle class. I think you're actually seeing that come back in a real way where you're able to tap in, you know, folks who don't necessarily have, you know, specialized skill sets or like have a, you know, are a CPA or something can actually understand more about their books in real time. You don't necessarily have that background.

You can get at least access to the intelligence of the average McKinsey associate, but for the cost of Ambro. You don't have to go hire McKinsey. Yeah, that's great. Awesome, well, super exciting. Thanks for coming on the show and come back on when you have news.

Yeah, congratulations. Thanks so much, thanks guys. come back on when you have news. Yeah Awesome the breaking news, of course is that figma has File publicly filed their s1 with the SEC today printer. Oh is the printer the printer is going Let's go in it. Okay, they have applied to the list on this. Oh, don't don't don't there we go Boom, oh they have applied to this on the New York Stock Exchange under the symbol fig love it It's got a great great ticker fig New York Stock Exchange one of the best stock exchanges if you ask me preliminary

preliminary John I called you gone anyways the other interesting data point are for rock called this out there's 70 million held in Bitcoin ETFs on the balance sheet with board approval for another 30 million BTC purchase via USDC. Whoa, Dylan. So a little bit of a BTC treasury action going on. That's wild. What else? I would not have expected that. He's just stacking sats. Bill McDermott, who was formerly at Xerox,

transformed SAP, and is now leading ServiceNow, is joining Figma's board of directors. Congratulations, trade deal. Dylan says, Bill is a legend in addition to his wisdom. And is now leading service now is joining figmas board of directors Bill is a legend in addition to his wisdom. I especially appreciate his humility and authenticity So great addition to figmas board and you're heading to the New York Stock Exchange We'll have to have somebody you gotta get a watch on bezel go to get bezel comm Available now to source you any watch on the planet, any watch. Yes, this is very good news. Should we run through some timeline, get out of here? What do you think?

What's the timeline? We got another trade deal, another massive trade deal. Jeff Berkovici is joining the Wall Street Journal. Starting July 28th, he'll be heading up Wall Street Journal's San Francisco team as Deputy Tech and Media Editor. Absolutely massive news. Congratulations to Jeff on the trade deal.

We have another trade deal that we posted on the timeline. Sama is moving to Thrive Holdings to build exceptional businesses designed to compound over many decades. Massive signing from Thrive, our friends over at Thrive. I mean, we're hearing the rumors maxed out, probably four years, guessing a one-yearyear cliff but we'll wait for more details a veteran of ramp the absolute dog congratulations and in other news public our sponsor has the

IRA triple play here 1% match plus 1% plant match plus 1% match that's 3% so go check it out at public.com. The absolute dogs over public, do it again. Yes. Will Minitis has a new law, new law alert. We got a new law. Oh, he's coining. He's coining.

Citadel's law, any industry with sufficiently high stakes will end up mirroring the culture of hedge funds. Massive cash comp for top performers, bid away dynamics where entire teams walk together, extreme litigation of non-competes, hard-o work 24-7 culture, short 10 years. We are at most six months away from P.E. style midnight recruiting coming to AI,

at most 12 months away from undergraduates pre-interviewing for the job they want after a two year stint in a Frontier lab because they even start. There's a incredible Hawaii Sagaponic pair trade here. It's fun to be aghast when Ballyasny or whoever pays 100 million to bring some PM an unknown quantity of their loyalists

that's portfolio manager, not product manager. My favorite is when portfolio managers have their- Squad? No, no, no, on the LinkedIn gap, where they'll add like, I'm gardening. Gardening. It's like gardening for six months every year. Yeah, because they legally couldn't go work

at another hedge fund, after a six month cool down, of course, over. But this is actually a much purer expression of the kind of thing that is being attempted in the Wong FB Nikita Z deal, but this is actually much purer expression. At this, at the margin, I think makes the capital environment for funding independent big AI things

much worse, not worth underwriting a team if you know they can do R&D on your dollar and then walk in the same way my sense is fund staking terms got worse, not better post pod shop. He's getting in the weeds there, but it's a fun post. Yeah. Deep cut, but real. But this is the long term impact of the AI talent wars.

Yeah, I do think it's accurate to say that, you know, a lot of people over the last 24 hours have been saying, oh, nerds are being treated like athletes. I would just say this is tech, is this is AI researchers being treated like PMs in the hedge fund world. Yep, totally. So.

And then the last piece of breaking news, I think you mentioned this briefly yesterday, but Andrews and Horowitz is back in the mix to acquire TikTok, joining Oracle and Blackstone in talks to buy the United States business. It'd be fantastic. I would love to see that. Be great.

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