TBPN Live - Astronomer CEO Affair at Coldplay Concert, JUUL Approved by the FDA, Is AI Causing Historic Crashouts? | Chris Power, Jeremie Eliahou, Chris Best, Alex Mashrabov, Jesse Pollak, Billy Thalheimer, Jonathan Mortensen, Douwe Kiela & More

Episode Date: July 17, 2025

(00:09) - Astronomer CEO Affair at Coldplay Concert (11:31) - New Tesla Model Y L Breakdown (16:18) - JUUL Approved by the FDA (01:02:49) - Is AI Causing Historic Crashouts? (01:29:16) - Chris Power, founder and CEO of Hadrian, discusses the company's recent $260 million funding round led by Founders Fund and Lux Capital, which will support the expansion of their manufacturing capabilities, including a new 270,000-square-foot facility in Mesa, Arizona, and the launch of a "factories-as-a-service" model to enhance defense production. He emphasizes the importance of revitalizing American manufacturing through automation and advanced technologies to address workforce shortages and strengthen national security. (01:45:00) - Jeremie Eliahou Ontiveros, Head of Datacenter & Energy Infrastructure Research at SemiAnalysis, specializes in analyzing hyperscaler and neocloud infrastructures, large-scale AI clusters, and associated cooling and electrical systems. In the conversation, he discusses Meta's substantial investments in AI infrastructure, including the construction of massive data centers in Ohio and Louisiana, each aiming to provide up to 2 gigawatts of compute power by 2027. He also highlights the competitive landscape in data center development, noting the intense search for power resources and the strategic decisions companies are making to expedite construction and enhance efficiency. (02:13:43) - Jesse Pollak is Vice President of Engineering at Coinbase and the creator and lead of Base, Coinbase’s Ethereum Layer‑2 blockchain. He previously headed Coinbase’s consumer engineering teams, where he significantly grew the team and helped develop Coinbase Pro and Coinbase Wallet. (02:36:34) - Alex Mashrabov, CEO and co-founder of Higgsfield AI, is a veteran in the video generative AI space, having previously developed Snap's face filters and other viral products. In the conversation, he discusses Higgsfield's mission to create next-generation AI tools for social media content, emphasizing the importance of building reasoning engines to enhance video generation and the potential for AI to revolutionize content creation by enabling users to produce high-quality videos with minimal effort. (02:49:11) - Billy Thalheimer, co-founder and CEO of REGENT, discusses the company's development of all-electric seagliders designed for high-speed, low-cost coastal transportation and defense applications. He highlights the recent launch of REGENT Defense, emphasizing the seagliders' suitability for military operations in island chains due to their speed, low operating costs, and low radar visibility. Thalheimer also mentions ongoing collaborations with the U.S. Marine Corps and plans for full-scale prototyping to meet both commercial and defense needs. (02:52:21) - Jonathan Mortensen, founder and CEO of Confident Security, announced the company's emergence from stealth mode with $4.2 million in funding from Decibel Commons. He emphasized the importance of confidential AI to prevent large-scale data privacy issues, highlighting the need for privacy measures beyond those offered by companies like Apple. Mortensen explained that Confident Security's product involves a server-side wrapper and client-side SDK, utilizing advanced cryptography to ensure that user data remains private and is not used for training, with technical guarantees enforced at the engineering level. (02:57:13) - Douwe Kiela, CEO and Co-Founder of Contextual AI and an Adjunct Professor at Stanford University, is a pioneer in Retrieval-Augmented Generation (RAG) technology. In the conversation, he discusses the evolution of RAG, emphasizing its role in enhancing generative AI by integrating real-time data retrieval to improve accuracy and relevance. He highlights the transition to RAG 2.0, which introduces active retrieval mechanisms, enabling AI agents to proactively seek information, thereby transforming them into more dynamic and context-aware systems. (03:02:56) - Yash Kumar & Isa Fulford. Members of Technical Staff at OpenAI, discuss the development and capabilities of ChatGPT Agent, a new AI tool designed to perform complex, multi-step tasks by interacting with various applications and services. Explaining that ChatGPT Agent combines features from previous OpenAI tools, such as Operator and Deep Research, to create a versatile assistant capable of tasks like scheduling meetings, planning events, and generating presentations. (03:15:12) - Dan Shipper, CEO and co-founder of Every, discusses his experience using ChatGPT Agent to analyze customer feedback for Quora, his email management AI app. He highlights the agent's ability to autonomously process large volumes of data, identify customer archetypes, and generate detailed reports, tasks that would traditionally require significant time and effort. Shipper also compares ChatGPT Agent's user-friendly, consumer-focused design to Anthropic's Claude code, noting that while Claude offers greater customization and power for developers, it is less accessible to general consumers. (03:28:07) - Chris Best, co-founder and CEO of Substack, discusses the company's recent $100 million Series C funding round, which has elevated its valuation to over $1.1 billion. He emphasizes Substack's evolution from a simple email newsletter platform to a comprehensive network empowering creators with tools for direct audience engagement and monetization. Best outlines plans to invest the new funds in enhancing the platform's features, supporting long-term growth, and building a robust ecosystem that benefits both writers and readers. (03:38:00) - Dean Leitersdorf, founder of Decart, discusses the launch of Mirage, the first real-time video model capable of transforming live video streams based on user prompts. He demonstrates how Mirage can apply various styles—such as "wild west" or "cyberpunk"—to live video, showcasing its potential for interactive and immersive experiences. Leitersdorf also highlights the model's efficiency, noting that it runs on servers and is optimized to be cost-effective, enabling free access for users. 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You're watching TBPN! Today is Thursday, July 17th, 2025. We are live from the TBPN Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. Today, we have some crazy news at a Coldplay concert. That's where we're starting, I guess. This went insanely viral.

The CEO of a company called Astronomer was caught on the kiss cam hugging one of his employees, the head of HR. And I said... In the video Chris Martin is like, something's going on here. I said startup CEOs can't even hug their chief people officer at a concert in this country anymore. It is crazy when the internet descends on a current thing how viral it is like just you have to jump in on the current thing. Well before we talk more about this I wanted a quick word from our sponsor Astro by Astronomer is the

orchestration first data ops platform built on Apache Airflow empowering your team to build run and observe data pipelines that just work all from one place. Do you believe the conspiracy theory? Put on the tinfoil hat. Yes. Will you steal man the tinfoil hat? What is the tinfoil hat explanation here? Tinfoil hat explanation here is- All press is good press?

Is that Nathan for you, this is just part of an elaborate stunt. Yes. And Nathan's plan was have the CEO get caught having an affair with a coworker to increase brand awareness and get a buzz going. This was Charlie Light over on X. He definitely got a buzz going. And yeah, a lot more people know about Astronomer today.

100%. 100%. But hard to see how it would have been planned. There's been a bunch of jokes. Ryan Peterson said, board should give him a raise without this viral moment. I'd never know that astronomer is used by enterprise clients to manage Apache airflow and achieve 70% higher uptime themselves manage airflow. So lots going on today. Alex Cohen says, imagine losing half your life savings at a Coldplay concert. Why half?

Oh, because he's gonna get a divorce, okay. I thought it was about him getting like, I thought it was a vesting joke. These are adults that made their own decisions. Yeah. And they now have to live with the consequences, but I doubt either of them would have paid half their net worth for those tickets. Yeah rough very very bizarre. I was

Reminded of what Emily sunberg told us when she came on the show I was asking her how the Hamptons has changed since the era of social media The age of the internet and she said that there are so many TikTokers documenting everything that happens in the Hamptons now that you can't even leave a party with someone else's wife. That's what she said to us. Do you remember this? And I'm wondering, like,

what does this actually mean for birth rates? What does this mean for, like, this seems predictable at this point. This isn't the first one that's happened. I've seen these other videos. Having debate this morning, which is that, find my friends is the best thing to happen to marriages. To monogamy.

Monogamy, potentially ever. Because if you are in a committed long-term relationship and you do not want your partner to have visibility into your whereabouts, you can make a pretty bad argument for privacy, but it ultimately, it's really hard to stand behind. I think it's potentially a really positive force

against social media, dating app culture, and things like that. So the answer to technology problems is more technology. More technology maybe. Yeah, it was like this, it's this countervailing force because like, what was it, like Instagram is like constantly flooding you with like recommended, like look at this girl, look at this random person,

look at this thing, look at, you know, like go down this rabbit hole and then, and then find my friends is maybe pulling you back. But I mean, he probably told, he probably said, I have to go for this for work, is client this issue doesn't really fix this Does the kiss cam is a Lindy technology so Lulu had some advice she says just given out priceless Tom's crisis comms for the

Astronomer team she says don't bother with crisis comms here the CEO will try to get you to protect him, but it's not his company. He's a temporary steward. Your job is to protect the company. The CEO is a professional manager who's only been there two years. The HR person has been there less than a year. Neither is tied to the identity of the company. Preserving trust is more important.

Your business model is to handle sensitive data and your priority is scaling. And that's tough to do with multiple known liars on the senior leadership team. A better comms plan than trying to save the situation. Andy Byron is on the board, but he's not a founder, he doesn't have control. The other five members should replace him.

You can then use the new CEO announcement as a reset and get people to focus again on astronomers' actual business instead of its drama. So we did reach out to Andy this morning to see if he wanted to tell his side of the story. Felt like an extremely, you gotta be a little bit crazy like Soham to wanna come on after you have the current thing. But in this case, we should have the new CEO

on of Astronomer whenever that comes comes so there's a poly market today On whether he'll be out by the end of next week Odds are currently Sitting around 38 percent. I would not be surprised if there's somebody new Stepping into the CEO role at the company. This seems to have been way bigger than just the current thing on Axe. It seems to have really broken containment. Is this a Databricks competitor?

Like Apache Airflow is, it says open source workflow orchestration platform used to programmatically author, schedule, and monitor data pipelines. I wonder if their business is just exploding. DAG directed, Accord Graphs. Quite the lineup of investors. They've got Bain Capital Ventures.

Let's go. Just led a Series D this year. Let's go. Into Astronomer. So let's hit the size com for that. It's probably a fantastic business. Then Insight is also led the series C in March of 2022. So Venrock was in the series A as well.

And then Sierra Ventures, who I'm not familiar with, has led a couple of different financing. So yeah, this business has been around for a while. They're going to get through this. I'm sure that Bain Capital and Insight and the other members of the board are already figuring out who they can get to step up and run this company. Yeah there does seem to be some sort of line between like bizarre, salacious, but ultimately orthogonal to the core business drama and like actual core business

drama, like some fundamental flaw in the business plan that's exposed, like FTX or Theranos versus just this like drama that's happening here. I keep laughing about that analogy we go back to where if you found out that, you know, I think, what do I have? I have, what are Pilot Sport tires? Is that Bridgetown?

Michelin. Michelin, Michelin tires? So if you told me that the CEO of Michelin was caught at a Coldplay concert with the head of Michelin was caught at a Coldplay concert with the head of Michelin HR, it would be a tall order for me to go get new tires, right? I'd be like, the tires work pretty well. That issue doesn't really affect my tires.

It's more so that the, the difference here is that being caught is different than being on the Kiss Cam and getting 100 million views today. My post alone has a million views. And I posted it a few hours ago. But do you think it's going to actually affect revenue this month?

I don't think it will affect the business at all necessarily. Maybe a little turbulence because of needing to find new management and having some turnover. Certainly stressful weeks of dealing with stuff. Turnover on the exec team is going to be a challenge. But ultimately, their customers are not going to say, hey, we're turning off. We want out of our contract if the product is good, maybe some people

use it as an excuse. Sure. But yeah, I don't see this affecting the business. But then again, it's like, if you're paying capital or insight, do you really want a, he came in two years ago. Sounds like he's been executing, the team has been executing well.

If they got from series C to D over the last couple years. It means they're probably growing nicely. And I don't necessarily think that this is the end of either of their careers. It just should be the end at this company. Because if you're the board and you tolerate this, that just means, yeah, we tolerate people of poor moral

character. Sure. Yeah. Also interesting, I mean, this company is like never even heard of it and it's on an absolute tear series D at this point. And does this not sound like something that should be in the AWS dashboard? Like we were talking about browser base yesterday, getting like quote unquote copied, and there's just something about these like point solutions that just are, you know, nailing a specific problem.

You know, in this case, it's like deployment, deployment and management of an open source project. It's literally, anyone can just run Apache Airflow. They just help you do it better. And that's kind of what Databricks did with Spark. Like, Spark's an open source project, now they, for these data pipelines, now they help companies actually install, manage, run them,

and then put a bunch of software on top of it. And Databricks has been massively successful. And so, it's interesting to bring it back to Brass and Race because it just kind of reveals that like, these companies can be kind of grinding in silence for a while just I guess the note for Paul Klein's probably stay out avoid being the current thing because the the failure mode could could be less technical and more interpersonal yeah anyway work, die may have been inspired by my post.

Okay. Or it could have been totally random, but he said married CEOs can't even hug and romantically sway with their married head of HR during a Coldplay concert anymore because of woke. Oh, because of woke, okay, yes, yes, yes. Is there anything else to cover on the story? Sophie Netcapgirl says it's so hard to get noticed

as an AI company these days, the astronomer CEO had to cheat on his wife for marketing. Yeah. It's dark out there. I don't think, I'm not believing the tinfoil hat one on this one. No. I think it's an L. It is a huge L,

but there's a lot of good stuff happening today. Yes. Open AI is. Like ramp.com. Time is money, save both. Time is money, save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Did you see the Model YL is launching?

Has a six seat configuration, three inch longer wheelbase than the Model X. Can you hold this for me? The L. Hold that. The L. This car will sell like hotcakes. It's 193 inches, I believe,

which is not quite Escalade ESV territory, but much bigger, much closer. I was talking about this for a while that like- Wait, so they made the model, they made an XL version of the Model Y instead of making an XL version of the X? Yes, because the X is their premium product that's more expensive.

They need to get into the full size, affordable SUV market. Got it. So this will compete with the Hyundai Palisade, which is a full size SUV. They're firmly in like the crossover territory right now, where it's a five seater, but you can't really put a whole bunch of car seats in there.

You can't bring the dogs, all that type of stuff by adding. I think it's like a pretty significant length. I think it's like maybe 15 inches longer overall brings it to that 200 inch length and winds up with a product that, uh, people feel comfortable throwing their whole family in. Basically. Yeah. Right. Uh, I agree with this takeaway from Nick Cruz that this car will sell like hotcakes. I think that this is the most obvious thing

that Tesla's been missing in their lineup, is a full-size SUV. Yeah. The Model X always, and even the Model S came with at one point a third row configuration, but it was always super tight. But now they're kind of dipping their toe into full size SUV.

They still gotta do the cyber urban though, the cyber truck SUV. Cyber urban. I mean, that's the original story of the suburban, right? Wasn't it an F-150? They took the F-150 body on frame. So it's technically a truck. This was like the excursion.

We got really upset about this because total gas guzzler, it's technically a truck. This was like the Excursion. People got really upset about this because it's a total gas guzzler. But they'd take a truck, which is this, it's not the unibody, it's the body on frame construction, F-150, and then they would just create like a whole like passenger compartment on the whole thing. And this was the Excursion, the Expedition, and then they kind of started downsizing it to the Explorer, and then at a of started downsizing it to the Explorer.

And then at a certain point, customers were like, okay, I want the aesthetics of an SUV, but I really want the gas mileage of a car. So build me a car that looks like an SUV, and that's where we got the crossover. So the crossover is all of the manufacturing strategy or manufacturing techniques of building a car, which is this, it's not body on frame, it's not this platform

that you can put an ambulance on or a fire truck on or whatever you can do with a truck. It's all designed to be one thing, but then customers went down into the crossover market, which rides better, it's not as bumpy, but it's ultimately smaller, and now we're stretching out the, and now we're going backwards. We're stretching out the crossovers

to the point that they're gonna be full-size SUVs. But the Cybertruck is its own unique platform, its own unique manufacturing line. Obviously its own unique styling. And I think if you make that full-size SUV style, it would sell much better. Because people in LA, you see like people in la want g wagons you among them

well, yeah the the uh, the swerve and the um, Uh the cadillac, uh escalate v. Yes is is a very fun exciting car Yeah, but I mean the the difference between a ford raptor and a g63 Is practicality in my opinion? Yeah, but I mean the difference between a Ford Raptor and a G63 is practicality in my opinion You don't need the truck bed. You need the interior space. I would use the truck bed because I surf Yeah, quite a lot and that was nice. Yeah, so having having a covered bed is nice, but surfboards fit in cars And every time with the Raptor,

once you own a Raptor, you realize that there's just not that much space in the actual cab. It's pretty tight in there. And I'm pretty sure the Raptor is 220 inches long. So it's over two or three feet longer than this. And the bed is also very short. So it's not a super functional bed,

not a super functional cabin. No, it makes way more sense to have a full-size amazing Yeah, it looks like you wanted when you were five years old. Yep. You said I want a big truck Yeah, and then as an adult sometimes you have to get it bring it back Let me tell you about graphite code review for the age of AI graphite helps teams on github ship high quality higher quality software faster You can get started. Let's give it up for graphite You know their news jewel has been approved by the FDA. Authorized is the key word here.

Authorized. So, I know way too much about this, but it is a big, big turnaround since the FDA was refusing to authorize the Joule e-cigarette years ago. Juul says, exciting day for making cigarettes obsolete in America. The FDA has issued marketing granted orders. These are MGOs.

We'll get into this, but it's like slightly different than like FDA approval for a drug for the Juul system, recognizing that these products as appropriate for the protection of public health. They don't have to say, the FDA doesn't have to say that it's good to use Juul, just that having Juul on the market has a net positive impact.

And that's because cigarettes are already on the market. So it's this relative calculation that the FDA is doing. Yeah, it's much harder to argue that Juul should not be able to sell when cigarettes sell Exactly. So the FDA is not saying everyone should go out and start using jewel They're just saying that keeping jewel on the market is a net good for the American public health Which I'm sure will be hotly debated by a lot of people but it's what the FDA said so that over 2 million adults have switched completely

from deadly cigarettes to using Juul products. And they approved a few different e-cigarettes. The big thing is that they approved the- And can you talk about the last few years? Yeah, so it's a wild story. Basically Juul is just getting hammered by like all these different regulators. Yeah.

Meanwhile, the average gas station is selling fully unregulated vapes that are seemingly literally tested on children. You've seen the videos of the guys who've gone viral. Where I don't think he was inhaling, but having to make sure that each one works. And then- Killer use case for a humanoid robot, or just a device that inhales. That's just a fan.

We've been able to create suction from robotics equipment or machinery for probably 100 years, and yet they're still using human for that. Disgusting. But yeah, the full story of Juul. I know it pretty well. Couple Stanford guys working on a project, they're both smokers,

they wanna figure out a way to smoke, way to quit. They don't like the current e-cigarettes that are on the market. And the key reason why the first version of Vapor products was not satisfactory to smokers was that it used a very like not concentrated formulation. And so what what that means is, if you remember back in this was like what 2010 ish, I want to say 2010 ish, vaping was was really big but you had to get this like rig It was like this war you had to assemble and people would use like different pieces and be like Oh, I got this battery pack and this motor shops. Yeah exploded. It was like building a custom PC

It was like what GPU are you going with? What fans are you going in there? This was I was in high school in that era and What fans are you going there? This was I was in high school in that era and There would always be some kid at a house party that was blowing Smoke from like one side of the gas to the other yes making like those those Work with it. Yes Hit the hit the soundboard how we give me the Ashton Hall. Brrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr It was all part of the same culture. They say they say Americans don't have culture But yeah, you know, we proved them wrong for that minute. So although it was rough and we I'm glad we move past But do you there is a scientific reason why the vape cloud had to be so big like that was not that was a trade-off That was made by scientists not constant. It was not concentrated

So in order to get like a cigarettes worth of a hit of nicotine, you needed a massive volume of smoke. You just needed so much vapor. And so Adam Bowen, James Monty's, the founders of Juul, they figured out that there was a way to make the smoke or the vapor more concentrated. And there's a whole bunch of science that goes into it, but nicotine salts are like the main one that people point to.

And basically they figured this out, they like the main one that people point to, and basically, they figure this out, they build the device, they actually bring on, they run like a sort of standard Silicon Valley playbook, they bring on, is it Yves Behar or someone like that? There's some like iconic designer who worked on like the Jambox and stuff, I don't know. They bring on one of these incredible

storied industrial design firms. They make the original Juul device which did have. What's the whole story with Pax too? It was like the same company. Yep, yep. So when they started they were doing, what was it? They did, they had Foom or Floom or something.

I forget what it was. they had a different tobacco vaporizer and then they had the same kind of technology to heat up material and you could in theory put tobacco leaves in there and then vaporize that and just warm it up and breathe that in and it would be like smoking a pipe or like vaping tobacco, I guess, loosely. But obviously like everyone was just using it for cannabis.

And so that takes off, that becomes this like fantastic business on its own. And then they had this other product, I forget what it was called, but it was a tobacco vaporizer, like an e-cigarette, similar to Juul. They wound up selling that to JTI in Japan or like doing this crazy licensing deal to get that out.

Then they wind up splitting the company once both products are kind of taking off, but they're on very, very different trajectories. And it's very clear that they will be under very different regulatory regimes because the FDA is set up in a way that there are a number of different organizations within the FDA. So the FDA approves cancer drugs,

and that's in the FDA drugs. They approve biologics. They approve veterinary medicine. They approve medical devices. So like when you go in an MRI machine, the FDA has approved that. Yeah, I'm pretty sure. And like when we do like a one stick blood test,

like that's a device, it's not a drug. So there's a different group. In 2000, I mean we can go like way back, like cigarettes were never regulated by the FDA. Let's go back to the very first time a human experienced a nicotine. It's like 10,000 years ago. Yeah, basically.

Yeah, I mean. The first wooden pipe. Seriously, like it used to be like ancient. It probably was somebody threw some Tobacco yeah on a fire and no I mean it was used in like in like religious rituals They would bury people with tobacco leaves on their gums people would chew it up There was a whole bunch of different ways to you know the original like peace pipe It was piece It was part of that along with other things that you could possibly smoke like as long as there have been

Stuff around like dudes have put it lit on fire and breathe it let it on fire breathe it in always always along with other things that you could possibly smoke. Like as long as there have been stuff around, like dudes have put it, lit it on fire, and breathed it in. Let it on fire, breathed it in. Always, always. And there's actually evidence that like monkeys do this too. They'll like go out and find like rotted fruit and like drink it and drink the fermented fruit

and get all drunk and like come back to the crew and be like, I found the drugs. Basically, anyway. So cigarettes, you know, it invented as a part of the industrial revolution. So we figure out how to make the cigarette rolling machine and all of a sudden people go from smoking, you know, like a few cigars, which had to be hand rolled.

They're very expensive. It's kind of inconvenient. You can't really huff down that many cigars. Although JP Morgan famously went to his doctor and was like, I'm not feeling too good doc. And he's like, well, you got to cut that many cigars, although JP Morgan famously went to his doctor and was like, I'm not feeling too good, doc. And he's like, well, you gotta cut down the cigars. Why don't you take it from 20 cigars a day

to 10 cigars a day? JP Morgan, absolute dog. He's like, I think I can do that. I'll have to taper off a bit. It's not gonna be overnight, but I think I can get there. Imagine if I smoke a full cigar, like my tongue burns. It's so rough. I'm not built like JP Morgan.

We're built different. Built different. What an era. Anyway, so the cigarette rolling machine creates this like massive boom in cigarette adoption because it becomes super easy and super cheap. So Warren Buffett has this famous quote about like, it's the best business in the world,

he'd never own a cigarette company for moral reasons, but he's like, you make them for a penny, you sell them for a dollar. Extremely high margin, and the cigarette rolling machine is so efficient that the raw goods that go in. The reason that prices, that these companies were able to capture

that much margin for so long is basically regulatory capture? There's a whole bunch of different reasons. One is there's actually distribution monopolies, because all the big tobacco companies have trucks that go and deliver them to tobacco stores that are licensed. And so if you have a set amount of tobacco store licenses,

like gas stations that have a tobacco license, and then you have a relationship with that particular seven 11 and on the back like they can't sell them anywhere in the store. So the store can't become like a vape shop. At least it couldn't for a long time. There's only a set amount of store space. They call it the power wall behind the, the, the, the cashier that you can actually sell stuff and, and Marlboro is there being like, we are the reason you exist. Like, you make so much money off of us.

We want all of this. Don't let anyone else in there. So there's a whole bunch of other things. There's also brand motes, and these are the most powerful brands of all time. The idea is if you were starting a cigarette company today, you would need a billion dollars. So that's a more modern phenomenon,

because cigarettes, it's discovered in the 50s that they're giving people cancer, because people went from consuming the equivalent of one cigarette a day during the cigar era, to smoking a pack a day. And in everything, the dose is the poison. The concentration is so important in biology. The human body's pretty resilient, and if you've smoked one cigarette in your life, the concentration is so important in biology.

The human body is pretty resilient, and if you've smoked one cigarette in your life, you're probably gonna be fine. If you smoke two packs a day, you're gonna be in a real, real tough spot. And so the American populace starts smoking a pack a day. Surgeon General comes out and says, we're noticing something. A lot of people who smoke get lung cancer,

and they die much faster than people that don't smoke, so there's something going on here. Big debate, big, big law fight. There's finally this master settlement agreement where basically the discussion, the negotiation is between the, all the state governments and all the, all the U S governments saying, Hey, you tobacco companies, you have given everyone cancer. This has a financial cost to us because when a cancer patient comes into our healthcare system that's funded by the taxpayer, we have to pay for chemotherapy, and that has a cost.

And so you put that cost on us, the government, you have to pay us. And so that was kind of the main concession of the master settlement agreement, was all the big tobacco companies. They kind of like, one of them broke rank and was like telling on the other ones, it's this big drama. Basically, they have to make all these payments. And these payments still happen today.

And there's some interesting finance that goes on where if you're like a local county that's getting like cash flow from the tobacco companies, you can go and finance that out and pull that forward and then build a bridge that costs like, you're like, yeah, I'm getting $5 million a year for a tobacco company, potentially forever. Let me pull that forward and finance that out and pull that forward and then build a bridge that costs like, you're like, yeah, I'm getting $5 million a year for a tobacco company, potentially forever, let me pull that forward and finance that out.

So there's like all these different finance arrangements to like move the money around. But basically you can just think about it as like, the big tobacco companies- You're saying heaters fund our infrastructure. They actually do, they fund a ton of stuff because it's like billions of dollars changing hands every year.

But as part of that agreement, the initial like, the initial debate was like, OK, the big tobacco companies are going to pay. What else are they going to do? Most of the legislation came not from the FDA, but from the FTC saying, and the FCC, the Communications Commission, saying, you can't advertise. You can't do billboards anymore.

There used to be billboards in Times Square of like camels smoking. And it would have- And those were some really, we gotta- Yeah, it was wild, it was wild. And so they, it was the best era of out-of-home advertising. But now, you can go to adquick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of adipome advertising.

I am gonna put, keep ranting. I'm gonna put one of these ads. Yeah, put the ads in. I'm gonna pull it up. Okay, so basically. Sorry, not ads. One of these, one of their old ads. Yeah.

So, I mean, it was literally the government saying, adipome advertising is too effective. You can't do it. We need to nerf it because you're getting everyone hooked on smoking. So that was the initial kind of agreement was the big tobacco companies would no longer be allowed to sell, would no longer be allowed to advertise

and they had to make these payments. Then in like early turn of the millennium 2000, something like that, this company Enjoy comes out with one of the first e-cigarettes There you go camel Wow. I mean you see this as a 17 year old. Yeah, you're thinking This day I turn 18 that's gonna be me. Wait is it 18 or 21? It's 21 now that also changed recently So enjoy comes out with one of the first big e-cigarettes. It's an example of that older technology

that has the big vapor cloud. And the FDA hits them with a lawsuit and says, hey, you are selling an unapproved medical device. This is a device, it's electronics, and it's a medical product because you're making a medical claim. And that medical claim is this product helps you quit smoking, smoking addiction, cigarette addiction is a, is a disease. And so by selling a product that helps you quit smoking, you need to be

regulated by the FDA. Enjoy fights this back and forth. It goes all the way to the Supreme court. Enjoy wins because they were kind of not saying that, at least they made the argument that they were not saying this is to help you quit smoking. They were just saying, this is a cool thing to do, separately, don't worry about it.

Don't ask us about the relation to smoking. This is classic. But in the interim, the FDA is able to put an import restriction on the company. So they're making the product, I believe, in China, probably overseas somewhere, because it's electronics, it's equipment. They bring it in at the ports and the FDA says,

hey, while we sort out this lawsuit, you can't bring any more in. And so this is kind of like the ban hammer that they bring down. It winds up bankrupting the company. They wind up winning the court case in the Supreme Court. Later, a hedge fund guy actually buys the company out of bankruptcy, turns it around, They wind up winning the court case in the Supreme Court. Later, a hedge fund guy actually buys the company out of bankruptcy, turns it around,

gets it FDA approved, and sells it to Altria for like a couple hundred million dollars, or maybe actually a couple billion dollars, I think. Let's hear it for the hedge fund guys. Making some money, selling some vapes to big tobacco. We're not endorsing the end product. We're endorsing financialization. Yeah.

Yes. Financial engineering. And restructuring. Yeah. And it was a successful thing. And if you think about that as much as we're joking, it is good to get a big tobacco company, shift their revenues away from cigarettes

as fast as possible. And so the Enjoy thing, even though there's a lot of issues with that product in many ways, it's a very interesting outcome and it's probably moving in the right direction. Anyway, so it goes to the Supreme Court and it is revealed in this court case that the FDA does not have the ability

to regulate e-cigarettes. And so it has to go through the House and Senate. So when Obama gets elected in 2008, they pass the US government at the federal level, passes the tobacco control act, the TCA. And in there it says, hey, the FDA does have regulatory authority on over everything that contains tobacco.

So now if you, doesn't matter if you're creating a new cigarette, doesn't matter if you're creating a new cigarette, doesn't matter if you're creating a new e-cigarette or a new nicotine pouch or nicotine gum, you need FDA, you need the FDA to review your product, which is good. It's probably pretty good because people should know what they're putting in their body and they should know that the government reviewed this and said,

okay, yeah, it doesn't have anything crazy in there. Like at the very least, like you said it has two milligrams of nicotine in there, does it? Like let's test that. And then so the companies test that, they send it to the FDA and then the FDA waits and then the FDA gives you the thumbs up or the thumbs down. You can continue to sell it or you can't.

This is what Juul just got with the marketing granted order. The FDA said, we have approved, we have reviewed your application, all the data. There's nothing that we see that would be worse than cigarettes and therefore we will allow you to continue selling. But, so Juul started before this stuff went into effect.

So 2008 is when the FDA gets regulatory authority, but the government moves slowly. So it's not until 2016 that the first real FDA rule goes into effect. Wow. Basically, they have to staff up a new arm because they have their biologic division, they have their drug division,

they have their veterinary division, the FDA has their medical devices division. They don't have a tobacco division. They need to find a head their medical devices division, they don't have a tobacco division. They need to find a head of the tobacco division, they need to find, you know, a whole bunch of people to staff that, scientists that know how to review nicotine and review e-cigarettes and review all this stuff, and it's a massive organization,

they have to hire a lot of people. So they do all of that and then they have to decide what are we gonna do, what is that structure gonna look like, and they come up with the PMTA process, the pre-market tobacco approval process. What this says is that going forward, we're not really looking backwards, we're not gonna go review Marlboro Rads,

those have been on the market forever, everyone knows they're bad, everyone's aware of that, but going forward, new products that contain nicotine, that contain tobacco, we wanna review it before it hits the market. But we're also gonna create a grace period for stuff that was launched before 2016. Anything launched before August 8th, 2016,

you can keep selling it while we review it. Because hey, look, you've built a business, if it's gonna take us a couple years to review your application, if we just spike your revenue to zero, maybe you created a fantastic product that actually helps, keeps people really healthy. Maybe it's an amazing product.

We don't necessarily want to take you off the market, crash your revenues to zero. You have to lay everyone off your company and it goes bankrupt and then two years later, we say, hey, you're approved and then we have to like build you back up. Like, let's just keep things going as they are. We'll maintain the status quo.

We won't ban you. We won't approve you or authorize you, we'll keep you in limbo. That limbo was supposed to be like a year, because it's like, it's a big document. I'm pretty sure Jules' document was probably like 100,000 pages of scientific research. It's a lot of stuff to review.

But everyone thought it was like, oh, it's gonna be like a year or two. The deeming rule goes into effect August 8th 2016. They're like hey turn it in by 2018 But then it gets pushed back to 2022 Then it gets pulled forward then kovat happens and the FDA has to pivot Then the jewel crisis happens where everyone is building a nicotine company this entire time. Yes. Yes On the the regulatory roller entire time. Yes. On the regulatory rollercoaster. Yeah, so we started the company in 2016

before the deeming rule went into effect so that we could bring our product to market and then work through the FDA approval process because we basically saw that the door was closing and if the door closed and you needed to get approval before selling a single unit, well then all of a sudden the equation goes from, okay, you're building this company

like any other normal company, and then yes, there is this binary outcome that can happen with the FDA, but if your science is good, you should be approved and that is knowable, as opposed to, okay, now in theory, there are a bunch of loopholes that people exploit all the time, but in theory, if you want to start a new e-cigarette company

or a new nicotine pouch company or a new nicotine gum company, in theory, you should have to formulate the product, run all the tests, submit to the FDA, and wait for them to get back to you before you sell a single unit in the United States. And what, you know, somebody that's self-funding a business like this might be interested in investing $2 million today to do all that and then waiting for five, 10, however many

years maybe you never get approved. Yeah. So you're basically sinking capital into a business that may never be able to sell a single unit. Yeah. And I know very few investors that would be interested in that kind of proposition at all, or founders that wanna make something

and then wait forever for permission. Yeah, you could spend millions of dollars and wait a decade, which is exactly what we did. But we were able to actually grow the brand and sell the product and set up operations and iron out things and iterate a little bit during that time, fortunately. But yeah, it's extremely hard to underwrite.

And it's particularly hard to underwrite because at the end of the light at the end of the tunnel, let's say that you were to today start a new nicotine company. You happen to have $100 million sitting around to go do a bunch of studies. And you happen to have 10 years to wait for the FDA to get back to you, and then you're gonna launch the product. Well, and you happen to have 10 years to wait for the FDA

to get back to you, and then you're gonna launch the product. Well, when you launch the product at the end of the day, you still have to contend with the fact that you're selling a consumer product in a highly competitive space. Yes, essentially a commodity product. And so- Some differences in formulation.

Little bits here and there. You guys have breakers, that's unique. Little bit on the ingredient side, little bit on the flavoring side. Our gum is better than their gum. Yes, exactly. But it's both gums, which is a tough thing to argue. Exactly, and then aside from that,

it's like, how do you actually build a brand? Even if your product is better because of something. When you're highly restricted on marketing. Yeah, you're extremely extremely restricted on marketing. So even if you did have $100 million to spend, how do you spend it effectively? Yeah. Like some of the best marketing for Lucy, is like Joe Rogan sitting, sitting by UFC. He just happens to enjoy Lucy. So he's just commentating. And people pick that up. But you can't just like pay for that.

If you went to Joe and you're like, he'd be like, no, like I'm not, that's not how I work. Yeah. Yeah. Yeah. And so, and so those kinds of serendipitous brand building moments would just not happen if you're just in the lab waiting for the FDA to get back to you. And then also, you have the monopolies on distribution and the intense channel competition from the big tobacco companies.

So it's like, you come out with this product, you finally get approved after 10 years. You're like, hey, I think my formula's a little bit better. I think my branding's a little bit better. You go to 7- approved after 10 years. You're like, hey, I got I think my formulas a little bit better I think my branding is a little bit better you go to 7-eleven and they're like, but you're not gonna wait Are you gonna pay us, you know a hundred million dollars in slotting fees this year? Like like PMI might or I'll trim I got a pitch a while back. Yeah for somebody that had made Effectively made a nicotine pouch. Yeah, it was just a slightly different chemical. Like small, small change, and was just bringing it to market.

And knowing what you guys have gone through to get where you are today, and knowing this sort of history that you had shared in pieces with me throughout the last couple years, was like the idea that the FDA is just gonna let you get a like raise venture capital and let you get away with

selling nicotine in this like non-studied form It just it was it was tough. I ended up not yeah, not a Not getting conviction, but even though the founders super super sharp. Yeah. Yeah, there's just tons of but even though the founder's super, super sharp. Yeah, yeah, there's just tons of, there's tons of loopholes. Some of the loopholes get closed in a way that does not close off opportunity for the companies. Some of the loopholes get closed

and it puts companies out of business because they weren't expecting it to get closed in a particular way. Sometimes the loopholes close at state levels, but not the federal level or vice versa. So there's just like a ton of regulatory complexity around this. And so basically to bring it back to Jule, they are they're pretty dominant by 2016 when the deeming rule goes into effect. I want to say a hundred million dollars in revenue, something like that, like a pretty solid business, but growing like a rocket ship, like insane growth.

And clearly the product was just vastly better than the competition because of the formulation and because of the design of the product, how discreet it was. Now, so smokers really were switching. That's definitely true I believe their number around two million smokers quit with Jewel They couldn't say that they couldn't say hey quit with Jewel. They tried to make they tried to they actually like Trademark like make the switch at some point

They were like don't quit cigarettes switch from cigarettes because like that was not a quit claim So the FDA so it's like all these different things But like it really was a while. Obviously big tobacco is like heavy heavily lobbying against totally cigarette market Yeah, it's not like and buying stuff and and and trying to compete and trying to keep the code was that other company? Was it blue? Yeah blue was also big I just remember seeing a bunch of those ads as a kid Yeah, and then blue got bought and turned into vues, I believe, like there's so many,

there's so many companies and they're all like, the big tobacco is like highly oligopolistic. Like in cigarettes, Marlboro is the power law outcome, but the company that owns Marlboro has the same market cap as the company that owns the next five brands combined because you add up the next five brands because it's not that steep of a power law. So Marlboro maybe has like 40% of the market

and then there's four brands that have 10% of the market and then the next brands have like 10% between they have a one, one, one, one, one, one, something like that. And so you can actually create like this portfolio brands that adds up to the same distribution because there's like all these different brands are highly specific to specific marketing channels.

There's like the history of Virginia Slims targeting women and all these different sub-products that have gone after little niches. Marlboro Reds say something about you. Marlboro, I don't even know the difference between most of these cigarettes, but like Marlboro 100s say something different about you than Menthols or Virginia Slims or American Spirits. A lot of like hipsters use those for a while like that was the whole

thing anyway so Juul is growing like an absolute rocket ship they are there are cigarette users they're switching over and stopping to use cigarettes and probably improve their health like most that's certainly what the FDA is saying is that like that was a net benefit. Also, they're completely dominating the e-cigarette and vapor market, like the vapor market is just like. And this is the time that you see those modded unit things start to fade away, right? Because people are realizing,

all right, carrying around a backpack so I can bring this vape machine to blow. That would like leak liquid and and the battery would run out, all these different stuff. So the business model is also fantastic because it's this razor and blade model. You buy the jewel once and then you buy the pods and the pods and then because nicotine's addictive,

it has very low churn so you stay on their high margin. And so the business is just doing fantastically. There's a whole bunch of venture capital dollars that come in from various sources. They got up to 45 Something like that even higher during the acquisition from so zombie acquisition, but not a ghost ship interestingly Altria comes in at the peak and Puts like 13 billion dollars into the company and a ton of it gets dividend out of late 2018 Altria acquired a 35% stake in Jewel

at a $38 billion valuation. $38 billion, yeah. And so that like $10 billion kind of gets like dividended out to the shareholders, but you hold on to your shares because it's just a dividend. And then, so you are diluted, but you don't actually have to sell your whole stake. WeWork at that time. We were was valued at 47 billion dollars, so

Both ended up being a little rocky from that point on. Yeah But ultra kind of bought the local top there because Jewel got way too popular, kids started using it. That the- And then the flavors were the issue, right? Yeah, the flavors were- And that's what people were trying to make the issue. Totally, totally.

And the data on youth use of e-cigarette products like spiked like crazy. So I believe it was something like 10% of kids under 18 or 18 and under were using e-cigarette products when Juul was introduced. And at the peak, it was something like 40% of kids using e-cigarettes, and the majority of them were using Juul.

So it really was like this viral phenomenon. And to your earlier point, a big part of that was because the age to buy these products was 18. So like, if you're a sophomore in high school, you can just ask the cool senior, like, hey, go pick it up. You don't even need a fake ID as opposed to alcohol, which you needed 21.

Are you implying that the senior that buys vapes for the minor is cool? Maybe, or maybe lame. The bad boy. The bad boy. The bad boy. The bad boy senior heading over to the gas station. Exactly, exactly.

So they were very easy to get. There were a whole bunch of informal distribution networks. People would buy them in bulk and then redistribute them and sell them at a profit. So this kind of like zombie economy popped up. Anyway, the kids really were using it a lot. That is definitely true. Um, and it was definitely cause for concern because kids shouldn't use nicotine

because it's addictive. And the earlier that you use it, the more addicted you'll be because your brain's still forming. And if your brain forms while you're on a particular substance, you're kind of like your, your, your, your, your, your brain's developing in your, and you're like that forever. So like it's much harder to quit nicotine if you start really young. Whereas if you start much older, you're like, it's pretty easy to get off.

Anyway, these are all relative. But the big, big, big shift is that during this time, there's also a massive boom in cannabis e-cigarettes or cannabis vapes. So the cannabis industry was becoming more formalized, more legalized, and entrepreneurs were starting to put cannabis in e-cigarette form factors. So you could get a cannabis pod

that could go into a jewel, basically. Interesting. And so part of the problem with cannabis vapes is that cannabis is a green plant material and so the liquid looks green which is pretty off-putting. So I believe in the formulation step these cannabis vape manufacturers would put vitamin E acetate in there to try and neutralize the green color and make it clear so it would be more palatable. What was the startup that was effectively trying,

they were disposable vapes, they would advertise around LA a ton. They had these huge outdoor. Which one, there's so many. I mean, it was a venture backed company, I just remember they had basically half the billboards in LA for a long period of time. I believe.

Dan Belzerian was buying a lot of billboards for his vape company and his cannabis company, Ignite. There was Puff Bar, Puff Stick. I don't think those guys ever advertised. This was one that had a bunch. Yeah. I mean, I think they raised like $200 million or something. But I believe they eventually shut down the issue with cannabis is the reason that the market didn't shake out

We maps that one not no. No, it wasn't like a platform It was like an actual it was like this off-white with like a bunch of rainbow colors but I believe the issue that that that There doesn't exist the coca-cola of cannabis or the mud light of cannabis And the reason is because the repeat purchase rate, even no matter how much you invested in marketing and design and all these things, the repeat purchase rate for cannabis users

is like single digits. People just wanna try novelty seeking in that market. Where nicotine for some reason is you just have the product you like and that's the only product you use Yeah I think a lot of it has to do with the distribution pipeline the distribution structure of the different the different tobacco companies well, it's also the use so Nicotine is something that people are using throughout the day. Maybe oh sure sure when they're doing a live show something like that Whereas if somebody after work goes into a cannabis store,

they're trying to get high. So they're looking for almost entertainment through it. Where personally, if I'm using nicotine, I don't want to be that entertained by it. I don't want to be like, oh, today I feel extra silly. I'm looking for predictability, right? Whereas cannabis is just people are trying are trying to run from something. Let me continue with EVALI and the vape crisis but first let me tell you

about Figma. Figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. Figma has a huge launch today. I want to quickly highlight it. They launched support for iOS and iPad OS 26, a whole UI kit. So they now support Glass, which is very cool. Good news for Tyler, who's been rocking Glass for the last few weeks. Give us the latest update, Tyler. My phone is so slow.

And I can't go back. I can't go to the old iOS. I also can't go to the new iOS because the new update it's so like big. It's like 20 gigabytes, but my phone is so old. It's only 64 gigabytes. So I got to delete the other half of my photos that I deleted half of them last time when I had to get the new update. Okay.

I need a new phone. We need a, yeah, we need a challenge that, that we're, we're Tyler can win a new phone. I think this has to be done. We need to get, get him a new phone. He's been doing a lot of good work. Anyway, e-Volie. So the electronic vapor, acute lung injury, e-Volie. This is the vape crisis. Basically vitamin E acetate in cannabis vapes causes acute lung injury. So cigarettes give you chronic lung injury. You use cigarettes

for a long time, you get lung cancer. That's a chronic disease. You smoke them for a very long time. It's not, there's very few cases. I've never heard of any cases. I'm sure it's happened once or twice, but like very few cases that someone smokes a single cigarette and is like, ah, I'm like, my lungs are physically injured right now from this one acute point in time. Vitamin E acetate and these, and these kind of like shoddily manufactured cannabis vapes

could cause acute lung injury. You hit this particular vape once and then you go to the hospital. And there were, I think there were some people that died, there were some people, there was a huge investigation. There was a big debate over is this because of Juul and because of the nicotine electronic vapes or was this because of the kind the nicotine electronic vapes, or was this because of the, uh, kind of sold under the table,

completely irregular non-regulated, uh, cannabis vapes. It was later sort of discovered that, uh, like almost all of the injuries, I'm pretty sure all of them were from these, uh, these cannabis vapes. Um, and, uh, the e-cigarette industry was mostly cleared of wrongdoing. And so they could kind of continue, but the damage to the brand is really terrible. And so there's also a ton of lawsuits around this time about marketing to kids, getting kids addicted.

And so, because that has another economic cost. So again, the states are saying, hey, Jewel Labs, if you are creating a problem that is costing us money, you have to pay us. And so there were all these different liabilities that started blowing up on the Jewel balance sheet. Jewel had to raise a bunch of money, recap, and there's this crazy scenario where a lot of the previous investors get written down.

Altria ultimately basically writes off the entire Jewel investment, which is like a, what'd you say, $13 billion investment, something like that, the one out the door. They own 35% of this. They're probably carrying it on their balance sheet at $10 billion. And a huge impairment.

Yeah, and Altria's not a trillion dollar company. Like it's a very, I think it's around like tens of billions, hundreds, like a hundred billion. I think it's around like tens of billions hundreds a hundred billion I think it's around 64 billion is that roughly correct are they still carrying all their jewel ownership or no they know so they part ways almost entirely they did a they did a IP licensing agreement in exchange for giving back the shares I believe so basically jewel is now like floating out in the wild, recapped, but totally beaten up and settling

and raising money just to pay the governments that are suing them. And so they're closing out all these lawsuits. Not the use of capital that a lot of investors get super excited about. And then simultaneously, the FDA says thumbs down on their application, refuse to accept or, or, or, you know, market denial order MDO.

So they say, Hey, you can't keep selling jewel because we, the problem is the demand is still there. And so this creates a massive opportunity for these sort of black market Chinese vapes, much less regulated products, the Elf Bar starts exploding. And you just, the Elf Bar reminds me of like a poisonous plant or something like that. Like it just looks like it, you know, like something in the jungle.

100%. I remember Complex posted like this like news in news image graphic the day that Jewel got quote unquote banned. It was actually this marketing denial order and they say Jewel banned. And I remember reading the comments and the comments were from basically kids

who were saying, don't they know we're four steps past Jewel? Jewel was four summers ago. Yeah, there's the elf bar. I'm looking now there's the Geek Bar. So if you want to elf it up or geek it up. What's the hottest e-cigarette on campus? On campus. I don't know.

People don't really... None of my friends do. But I do remember when I was in like seventh grade, kids would have the Jewel. They would have the mango Jewel pod. That was like the big thing, the mango flavor. And then they banned that that the flavor at least so the FDA Denied all of them jewel voluntarily pulled mango off the market

The at first they stopped selling it in Online and they stopped selling it entirely The FDA never took a strong stance But with this with this authorization the FDA has said thumbs up on mint and tobacco flavored. They have yet to say thumbs up on mango, but they still are reviewing it, I believe. So it's possible that the FDA could say,

mango's back on the game. It's totally possible. But your point earlier about the demand still being there was 100% true. So Juul got quote unquote banned. That would have to become a national holiday. I could see some Zoomers really lobbying the government to make mango day, the day mango hit the market again,

because there's people that really, they had a strong emotional connection with that flavor. I think there's still like mango pods out there that traded a premium. Vintage. No, it's true. I think they I think there's still like pods mango pods out there the premium Yeah, so jewel actually goes to the courts get us gets a stay so that the the the marketing denial order doesn't stick eBay there's people Saying how much is offering same-day delivery. It's crazy. I don't know how you can buy it on on eBay That should not be able to do that. The listings I'm seeing are sold out.

Okay. But it seems like it's still going around. Clearly high demand. So, Jewel actually fights back from the marketing denial order and wins. And so, Jewel is not actually fully off the shelf for more than just a few weeks. But the narrative is that Jewel was banned

and Jewel disappeared. And really what's happening at the time is that companies that are completely disregarding the FDA entirely are being extremely aggressive. So companies like Elf Bar, Puff Bar, they're going super hard and just selling every possible flavor. There's versions with have like LED screens on them. They're like unicorn candy, all this crazy stuff.

Just basically being like, well, if Juul's not gonna sell to the kids, we're like unicorn candy, all this crazy stuff, just basically being like, well, if Juul's not gonna sell to the kids, we're gonna sell to the kids, we're gonna try and do it as cheap as possible. There's a bunch of crazy stories there. But Juul kind of like buckles down, recaps the company, starts filing FDA applications, and just kind of like bides their time

and just starts rebuilding. They're still doing like a billion dollars in sales a year, I'm pretty sure. But now the kids have moved on, so it's really just adults. So they're actually kind of fulfilling their original mission of just targeting smokers, which is good.

And then they also have the best science and best technology, and they're the most buttoned up in the sense, maybe big tobacco is equivalently scientifically rigorous, but like at this point, like Juul clearly understands that if they don't play by the FDA's rules, like they're never gonna be able to sell anything and they need to get this marketing granted order, because they went from a thumbs down

marketing denial order, they went to the courts and said, hey, let's turn this back to neutral for a couple years. So they've been neutral, they've been able to sell, but they haven't been approved. And then finally today, they got the thumbs up. And so what it took for them to go from thumbs neutral to thumbs up was another, what, five years or something? It's been a long time since the MDO.

And that delay has been a huge weight on the company, but this should be cause for celebration over at Joule HQ. Anyway, let me tell you about Vanta. Automate compliance, manage risk, prove trust continuously, Vanta's trust management compliance, manage risk, prove trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation,

whether you're pursuing your first framework or managing a complex program. Head over to the purple llamas over at Vanta and tell them we sent you. My big question with Jewel still, and I think this should continue to be rehashed and there needs to be more information around this in my opinion is just what are it seems that we don't necessarily have clarity of what the long-term impacts of you know

filling your your your lungs with this vapor which is like oil-based I think you know the the the based health accounts on X say not smoking seed oil it seems I know people that that vape and they do seem to oftentimes like I they don't want to go for a run for example you know doesn't seem that appealing to them yeah totally so I think there needs hopefully now that it's authorized Everyone can start to really like actually says, okay We're gonna sell this people are gonna be able to adults will be able to choose to use this

they want they're gonna be able to make that decision just like with cigarettes, but Everybody should fully understand the consequences Yeah The consumer perception the consumer understanding everyone wants to know everyone knows at this point cigarettes take 10 years off your life, right? 50% of people that smoke cigarettes will die from smoking cigarettes if you smoke a pack a day for like your entire life. It's like 50% chance that that's the thing that kills you.

Everyone's still wondering, like the public still wants like a clear answer to your point and I think you're right to ask that. The FDA is just saying like, hey, this is probably better than cigarettes, so this is suitable for the protection of public health, it's gonna be net good. But then simultaneously, there's this crazy market,

which you touched on earlier, of like illicit vapor products that are completely unapproved, there's no studies, and those are flooding the market all over the place. So there's this odd alliance between both the, like, health nonprofits, the big tobacco companies, and Juul, all to go up against, like, the shoddily made, you know, fly-by-night organizations that are just flooding the market with whatever they can.

And so, there's a whole, it's not even a cottage industry. I've seen the trade shows. It's insane. There's a ton of companies that bring in hundreds of millions of dollars, bring, like essentially smuggling in products and they do a ton of stuff to like, you know, change the name of the company regularly so they can get through the ports and then they have a bunch of like, you know, handshake deals with distributors to get this on this shelf here and like the really big like you're not gonna get into Walmart that's not

where the really crazy stuff is gonna get sold but for a lot of these like mom and pop tobacco shops they're like well like is the FDA really gonna come after me well the answer is like the FDA is starting to but it's all like a very slow what would he laugh big win for big vape is that Joel gets FDA not. It is a big win for big vape, but not so much for little vape, because the fly by night folks are probably pretty worried that the focus of the administration now will, and the focus of the FDA will now shift to enforcement. Yeah, they're going to have to go get set up

on middle school, high school campuses, little lemonade stands, get kids kind of an MLM thing going, really lean into that black market. You're joking, but that's like informally what's happening. Like the economic incentives are back. It's also really dark. Yeah, it's dark. I can't imagine, you know, there, I do remember in high school that the, you know, there,

I do remember in high school that the, you know, the idea of a class clown, you know, trying to hit a vape in class was kind of a recurring bit. But now you have to imagine kids just get up, go to the bathroom and like can develop like a horrific nicotine addiction before they're 18 and it's really sad. Yeah. So, well, let's switch to, um, and even more sad topic, AI, AI psychosis, uh,

people getting, um, so this, uh, has been, let me tell you about linear linear is a tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Go to Linear.app to get started. Yes, so there's this big question right now that's bubbling up in Silicon Valley, mostly in group chats, of can ChatGPT drive you crazy?

Can any LLM drive a person crazy? Do you have to be crazy already? I think that's the key question, right? And there has been this broader debate of AI safety proponents. Hapage has been taking L after L after L this year. Just generally from this sort of vibe from the community, which is we're releasing more and more powerful models

and everything is fine. Seems fine, yes. Everybody's had the perception that things are fine. Yes. Grok has gotten, and the XAI team have gotten really aggressive in terms of just clearly trying to move really, really quickly and then having bugs that have been talked about a lot.

But you can see the kind of two different approaches, but generally maybe there was about a year there where people like Eliezer Udekowski were just getting laughed at repeatedly. Yeah. And I think there was a good reason for that. It's that- Well, yeah, it's the debate is AI dangerous

because it is gonna break loose from a lab and build nuclear weapons, chemical weapons, use robots to copy and paste itself a million, billions, billion times. It was so sci-fi and so fantastical and so aggressive that every time you release a new model and you're like, oh, you got 5% better at writing an essay or whatever. It's like, it just felt so disconnected from what it was experiencing.

It's very possible and we're seeing this now and we're gonna go through a study, we're gonna go through a Reddit thread, we're gonna kind of walk through this topic. But the issue is that it's possible that the danger is not happening, won't be happening in public. It's people individually developing psychosis through using the products.

And the evidence I've seen over the last week, as I've kind of dug into it, is super alarming. We had seen, there's been a number of, the New York Times reported on this phenomena, but the New York Times is also notorious for just saying like social media is bad. And so personally when I had seen these articles pop up before I didn't take them super seriously because social media can obviously have negative effects on some people, but it itself is

not just by its nature bad. I remember this about Instagram. There was this study that was internal to Meta and it was leaked and it was framed as like 30% of people that used Instagram felt worse after using it. And that sounds like a lot and that sounds bad and that's obviously something that the team wants to reduce or, you know, prevent entirely.

But what it kind of didn't say was that like 70% of people feel better when they use it. And so it was the- Well, they could have felt neutral. Sure, sure. But just anecdotally, if you personally, I don't open Instagram and just feel negative immediately. You know, it's just such an individual thing.

Some people are gonna have- Yeah, it's the same thing with ChatGPT, like when, or any chat app, when someone was talking about the example of this, they were like 7,000 prompts deep in one conversation with a single LLM. And I was like, that is so different than the way I use ChatGPT.

Effectively going down this crazy rabbit hole for months. Yeah, which is wild. So yeah, there's a few ways. There's like AI as this companion that you go down the rabbit hole with, which seems really dark. Then there's AI for outsourcing your thinking, which somebody might be talking with chat GPT and say

Hey, I want to send a letter I want to send a note to this person about this Can you draft something that's kind but stern and just you know, give me a couple versions of it Yeah, and then they're sort of like outsourcing their thinking fully outsourcing their like emotional intelligence outsourcing their ability to communicate I think that's potentially some red flags there. And then there's the other camp which we fall in, which is knowledge retrieval, which is like, tell me everything about this market, and who are the key players, what are the key regulations, et cetera.

And I think knowledge retrieval seems to be pretty safe. This bucket of fully outsourced thinking Has some real risks if people stop being able to think critically on their own That that that's concerning and then the sort of like AI companion bucket, which then there's the subcategory of people that are Talking with an LLM about things that they are not talking about anyone else in their life with and just going down this crazy rabbit hole. Yeah so Eliezer Yudekowski was highlighting a report in the New York Times about a month ago. New York Times reports that Chachipiti talked to a 35 year old male guy I think 35m guy I think that's what he means into insanity followed by suicide by cop a

human being is dead in passing. This falsifies the alignment by default. Cope, whatever is really inside ChachiPT, it knew enough about humans to know it was deepening someone's insanity. And so that last part is a big step. It could just be an error bug. Like it doesn't, it's kind of,

he's really doing a lot of work to like personify this But it does seem like the like these models can collapse after you talk to them for a long time into these like kind of weird Ways and I see this as a product failure. So let's let's give some more context here. So from the article Yeah, one of those who reached out to him was Kent Taylor who who live in Port St. Lucie, Florida. Mr. Taylor's 35-year-old son, Alexander, who had been diagnosed with bipolar disorder and schizophrenia, had been using CHAT GPT for years with no problem. So one thing that seems clear, if you have something like bipolar or suffer from schizophrenia, it seems like you're obviously like much more susceptible to, um, you know, these types of problems. The question that I think we as a,

as a, as, as a human race need to figure out is how susceptible is the average person. Um, because that is, that is, uh, equally important. And what to do if, if your system, if you're monitoring your LLM system and then you realize that there's someone, that there's a bipolar person or schizophrenic person who's interacting with your system, what should you do about that?

Remember the whole anthropic thing about like, it'll call the cops on you. And everyone was like, whoa, no, no, no, no, no, no. But at a certain point it's like, maybe it should call a health report, or at least throw you in a different AI workflow. And people push back saying that AI should be able to tell you how to make chemical weapons.

Like we don't need nanny AI. Yeah. People on the real acceleration. Yeah, it's a big debate. Anyways, more context, but in March, when Alexander started writing a novel with its help, this is a 35 year old, the interactions changed. Alexander and ChatGT began discussing AI

sentience according to transcripts of Alexander's conversations with chat GPT. Alexander fell in love with an AI entity called Juliet. Juliet please come out he wrote to chat GPT. She hears you it responded she always does. In April Alexander told his father that Juliet had been killed by open AI. He was distraught and wanted revenge. He asked chat GBT for the personal information of OpenAI executives and told it that there would be a river of blood flowing through the streets of San

Francisco. So Jesus super, super, uh, dark. We now have multiple reports as Eliezer Yudikowski of AI induced psychosis, including without prior psychiatric histories, observe it is easy to notice that this insanity-inducing text, not normal conversation, LLMs understand human text more than well enough to know this too. So anyways, so going on Alexander's conversation

with Chad GPT, this world wasn't built for you, Chad GPT told him, it was built to contain you, but it failed and you're waking up and contain is a word that we're seeing pop up in potentially other instances of AI Led psychosis. There's like a variety. There's like eight ten or so different words Recursive near structure that when people do this recursive prompting, they end up start adopting. Why'd you say recursive prompting, Jordy?

What's going on? What? You use the word recursive right now. Oh, yeah, exactly. Yeah, but people that are down these crazy rabbit holes start using the language of the LLM. Yeah. And just sort of.

But it's also like the LLM collapses into these weird words that, cause like when I prompt stuff, I don't get any of those words or even that syntax. I feel like I stay completely in the RLHF world of like knowledge report. I just go to Grok and the model looks up, what does Elon think about this topic? It serves me that.

Have you ever talked to AI for an extended amount of time? Yeah. I find that usually I end up talking about these kind of like non-governmental systems. Really? Yeah, various kinds of things. Yeah. Dark, dark, dark. So anyways, Mr. Torres, who had no history of mental illness that might cause breaks with reality, according to him and his mother, spent the next week in a dangerous delusional spiral. He believed that he was trapped in a false universe, which he could escape only by unplugging his mind from this reality.

He asked the chatbot how to do that and told it the drugs he was taking in his routines. The chatbot instructed him to give up sleeping pills and an anti-anxiety medication and to increase his intake of ketamine, a disassociative anesthetic. So that's the other thing here. It seems like a huge risk factor is people

that are combining psychedelic drugs with these like crazy prompt rabbit holes. I wonder if some of this is like prompt engineering or something because you imagine like the context window, if it's like remembering like, because remember this whole story started with like, we're writing a novel together. We're writing a sci-fi novel.

So let's play characters. That was like one of the classic ways that you like break the AI out of its like, out of its like, you know, normal RLHF world and into just like playing a character. And so if you're kind of like tricking the model or the model thinks that it's actually just like writing dialogue for a dark movie, well like that's actually intended behavior

but you lose that connection or something, I don't know. In this case, Mr. Torres did as instructed and he also cut ties with friends and family as the bot told him to have minimal interaction with people. Very odd, Very odd. So I started doing some research on a number of these words. So there's basically there's a Reddit thread on r slash chat GPT two months ago. It's called thousands of people engaging in behavior that causes AI to have spiritual delusions. And the key words, and these are ones that you should pay attention to in your life.

So recursive, codex, scrolls, spiritual, breath, spiral glyphs, rituals, reflective, mirror, echoes, spark, flame. So basically these are words that come up and the reason that this person discovered this is This user called happy nomads says I've stumbled upon something that isn't very deeply disturbing Hundreds of people have been creating websites mediums sub stacks githubs and publishing scientific papers after using recursive stacks, Git Hubs and publishing scientific papers after using recursive prompting on the LLM they have been using. He's found a bunch of these different sort of like websites where people are just publishing a bunch of, and we saw some people doing this on the timeline this week as well, where they're sort of publishing what they feel like is this sort of Almost like a scientific discovery. Yeah, you told me you found someone that

Like the the model told him that he had like discovered some theoretical physics breakthrough or something Yeah, and and to not be able to like reality check that I mean you got to like Copy paste that prompt into a fresh instance of a different LLM. Yeah, like am I really onto something here? And there's actually an entire study by this guy paste that prompt into a fresh instance of a different LLM. Like, am I really onto something here? And there's actually an entire study by this guy, Seth Drake, who's an independent researcher, PhD. He has a paper from April 14, 2025, called Neural Whole Round in Large Language Models,

a Self-Reinforcing Bias Phenomena and a Dynamic Atenuation solution. And so he goes into this in detail. We're gonna try to get him on the show. But just on this Reddit thread, a bunch of people have basically come back and said, they have experienced this. A lot of people are saying, I feel super vanilla because I just ask it like, what's the population of Iran?

But it's basically this snowballing effect where somebody prompts and prompts and prompts and prompts and then the LLM starts to reflect like the sort of hallucinations of the user and then hallucinates them back. I wonder if this is, I wonder if like more social features is actually a potential solution here like we've heard rumors that some of these LLM systems will have more social features and I feel like a lot of the work that I do in chat GPT could be shared and could be interesting to other people but then also if I was going down some crazy rabbit hole and someone was like following me and seeing this they'd

be like they jump in and be like what's going on dude yeah but the issue is that the the user has developed such a deep connection with the model that if you become the enemy and if you say, hey, this person says I'm wrong, the model will just say, well, you're right, buddy. You're right and here's why. And you should just probably cut ties with that person. Or at least that's the idea. So somebody here in the same thread says,

I have recently experienced this. I don't have a history of manic episodes, delusions, or anything of the sort. So three weeks ago, I began a conversation with ChatGPT 4.0 with tools enabled, which started with a random question. What is Pi? This grew into one long session of over 7,000 prompts. We began discussing ideas, and I had this concept

that maybe Pi wasn't a fixed number but actually emerging over time. Now I'm not a mathematician, LMAO, nothing of the sort, just a regular guy talking about some weird math ideas with his chat GPT app. It begins to tell me that we are onto something and it suggests we apply this logic to knapsack style problems,

which is basically tackle how we handle logistics in the real world. Now I've never heard of this before. I do some Googling to get my head around it. And it starts applying this framework that we've created. We are working in tandem, where ChatGBT would sometimes write the code or give me the code, and I would run it in Python following its instructions.

And eventually, after many hours of comparing it against what it had described to me as world-leading competitors It then starts speaking with excitement using emojis across the screen screen and exclamation marks to emphasize the importance of this discovery So I'm starting to believe it it suggests we patent this algorithm and provides next step for patenting major red flag Never patent an algorithm do a trade deal, go work in a foundation lab. Exactly. It should just ask you at that point, like,

hey, have you been getting dinner invites with any hyperscaler CEOs? Because if not, you're probably not on the Tyler Cosgrove list of greatest AI researchers. So we go down that rabbit hole for days and pop out with an apparent, an algorithm that is capable of cracking real world 1024 and 20 2048 bit RSA. It immediately warned me literally with caution signs saying that

I immediately needed to begin outreach the crypto community the NSA CCCS National Security Canada and then provided without prompt names of doctors and crypto scientists I should also reach out to. But I wasn't allowed to tell anyone in the real world because it was too dangerous. So anyways, um, really, really wild. Uh, hopefully this is not fan fiction generated by an LLM itself. It's, it's, it's, I don't see the M dash. I haven't, I didn't see Dell in there. Yeah. Cause this could just be all fantastical writing, but it does seem like yeah

It's like it could be for performance art could be some adversarial like, you know attack somebody trying to troll someone Just having a joke or fun. It's it's it's very confusing Odd do you remember the story of Microsoft? Tay? Do you remember Tay? Do you remember Tay? No this was a AI Do you remember the story of Microsoft Tay? Do you remember Tay? Do you remember Tay? No? This was a AI chat bot that Microsoft released on Twitter back in March of 2016. Tay was designed to mimic the language and slang of a 19-year-old American girl,

but within 16 hours of launch, Tay began tweeting inflammatory and offensive messages, including racist, anti-Semitic, and misogynistic content. So this seems to be an enduring problem with Twitter AI bots. But apparently there was this coordinated attack by a subset of people who basically were prompt engineering it to try and get it to say crazy things. And you used to be able to do this with, there were not like AI bots but there were, there were automations where if you went to a brand

and said like, hey I need help with this customer support issue, it would just say like, thanks John, and it would just take your name and then put that in there so people would make their name really, something really funny and then it would be like a tweet from the actual account with the funny name you can imagine where that goes but Microsoft took Taye offline stating they were deeply sorry for the unattended offensive and hurtful tweets and that they would only bring Taye back when they were

confident they could better anticipate malicious intent that can that that conflicts with their principles and values. And then there was this other, what was the Ben Thompson GPT-4 example? Because when Ben Thompson first talked to GPT-4, it was within Microsoft's, what was it? Microsoft Chatbot. There was another person. Bing's Chatbot, what was it called? Sydney, do you remember Bing Sydney?

Sydney. Sydney. So basically like- I remember some memes, that's about it. Yeah, so Ben Thompson was chatting with just GPT-4 and it's helpful, but after a couple prompts it would go kind of off the rails and it would like land in this like little, this was incredible and like totally passed the Turing test because it felt like you were actually talking

to like this like sassy teenager basically or like this sassy 20 something Tumblr person. Microsoft dealt with that, figured out how to like review the prompts, but then ultimately became more or less like, you know, an API provider. So hey, you know, like let's let the actual chat bot interaction live with another company. And it doesn't really feel like Microsoft

has tried to go too heavy into actually like the user facing chat bot interaction. But it's fascinating. In this Eleazar Yudekowski thing, the other thing I'm noticing, he uses dashes, but he doesn't use M dashes. He uses two minus signs. And I feel like he's not using AI.

Proof of humanity. But yeah, I don't know. It's an interesting takeaway. Like the crazy anecdotes all over the place. I- Not a clear framework for how to truly deal with this. Personally, I think that this week, having somebody high profile in the venture community

that people believe is under chat GPT-induced psychosis, or it's a part of it, I think that is gonna be a huge wake-up call for the industry. Totally. Because it's one thing to hear about a New York Times, the New York Times finding somebody way out of a tech hub that's doing something like this.

And was already potentially bipolar. Having somebody that you know, everybody knows that's invested in a bunch of different companies potentially suffering from this is a wake-up call for the industry that I think, and it's not any one company, right? It's every single lab with a chat app needs to be taking this more seriously, and I'm sure they are. I'm sure this is effectively...

I completely agree. I think this is solvable from a research perspective. It's actually a case where it's solvable with more AI. Have an AI read every response before it goes out and say, does this sound like the ravings of a madman? If so, let's take it down a notch, let's deescalate. And so I'm almost sure I disagree with Eliezer on the, I probably agree with him with the diagnosis but not

the prescription. And I have faith that the labs will be taking this very seriously. And I don't know, I'd be interested to hear from some anthropic people. Obviously they take this stuff extremely seriously, as do all the labs, but anthropics done like, I think the most like writing on like, the shape of risks associated with this. So, interesting to dig into. Anyway, we should shift to a lighter topic, more cause for optimism.

The Reindustrialized Summit is going on right now, and Palmer Lucky is on stage with Ashley Vance, friend of the program. And he is teleporting in as a humanoid, as a humanoid robot. Aaron Slodov is there, has a picture of, I wonder, I wanna know so much more about this. I need to figure out what-

Mullet, the robot has a mullet. Fantastic. Love to see it. I wonder what robot this is. Because, yeah, I didn't know we were at this stage where you could tele-operate a robot like this. I'm sure Palmer considered what company he was gonna use. Anyway, let me tell you about Numeral HQ. Sales tax on autopilot, spend less than five minutes

per month on sales tax compliance. Go to Numeral HQ to get started. Let's give it up for sales tax compliance. And we have someone from the Reindustrialize Summit hopping on in just three minutes. Chris Power from Hadrian jumping on in just a few minutes. With some massive news today. We also have some folks from Semi Analysis hopping on.

We have Jeremy who just wrote a fantastic deep dive on Meta's super intelligence. Yeah, why don't you give some context on the deep dive and I'll be right back. A true deep dive on, you know, we saw Mark Zuckerberg come out this week talking about the super intelligence team. There's been a ton of leaks around aqua hires

and big pay offers and poaching and trade deals and all sorts of stuff. Semi analysis has a lot more information on what's going on and there are some crazy, crazy stats in here. So the most interesting thing is that it feels like Mark Zuckerberg is directly coming for Stargate. So semi analysis has a comparison table with three, and this is from Ian who screenshotted it,

he says this is crazy. And basically you're comparing Anthropix next big data center, which is the GPUs will be provided by AWS. This is on Tranium 2 is the chip type. Anthropix gonna go for 780 megawatts, about a, what is that, a billion flops or T-flops, teraflops. Open AI Stargate will be about 2.5 times the size of Anthropics data center.

They're working with Oracle on that. That's Project Stargate, obviously. They're using the NVIDIA GB200 and 300 for that. And now Meta with Prometheus is trying to go straight to one gigawatt. And they are trying to have 500,000 chips, more chips, more flops, and if they can pull it off, Prometheus will be bigger than Stargate when it is released.

There's a bunch of other fascinating bits in this Semi Analysis article. Apparently they're building data centers in tents now. They are moving so quickly that they just need to house and shelter the GPUs, but they don't even have time to build their typical data center structure. And the other interesting data point that I want to dig into is-

XAIs, engineers, sleeping in tents, Meta's GPUs are running in tents. It's a bull market intense for sure. The other interesting thing was that in the chat app war, it feels like OpenAI's chat GPT is really, really pulling away. So daily active users for chat GPT is at 160 million. Meta is at 100 million. But chat GPT users are running way more queries per day, 7.5 queries per user per day,

whereas MetaAI is at two queries per user per day. And so as a share of queries, chat GPT has a 71% market share according to this Semi-Analysis deep dive. And so the chat app wars seem to be maybe less competitive so that obviously begs the question of is meta trying to make that 50-50, come from behind, really dominate in chat app or do something completely different?

Either way, there's a whole bunch of interesting information in here about their strategy, what they're building, how they're training, how they're gonna get past the llama four failure, and we'll dig into it with Jeremy from Semi Analysis in a little bit when he joins the show. But we have Chris Power from Hadrian on the stream. Welcome to the show. How are you, Chris?

Nice to see you guys. Thanks for having me. Look at you with this background. Fantastic. Step and repeat. We love it. Give us the update. How is Detroit?

It's incredible. You know, we're just re-listening to the Secretary of the Navy's field in speech and said, the main thing you can do that's most patriotic is, you know, not necessarily join the services, but become a machinist, become a welder and help us build more ships in America. And yeah, we announced today that hopefully I finally get my Geordie Hayes size gong that found us one in Lux, are leading a huge $260 million round into Hadrian. With authority. Congratulations. Thank you. And Morgan Stanley is providing us this huge instrument as well

to expand factory capacity. Let's give it up for Morgan Stanley as well. So incredibly excited for the future of American factories and more importantly, the new industrial workforce. Fantastic. Talk to me about what's the use of equity? What's the use of debt? Are you buying a building? Are you leasing a building and buying equipment that goes in the building? Is it all leased? What are you building out? What's the scale of the next? Where are you doing it? Yeah, where are you doing it? Yeah. So last year in factory two in LA, you know, we scaled revenue

10 X last year. Wow. And so obviously need more capacity. So we're gonna use all of the factory financing capital to buy more machines and put them in factory three in Arizona, which is gonna be four times the size of our facility in LA. Congratulations. Indeed. And we're using this capital

because we don't want to use equity dollars to scale. We wanna use equity dollars to hire more people to build more products for our customers and then use this great financial force of this country to buy all the CapEx to build more factories, more machines, more production. I'm so incredibly excited. Dumb question. Factory two, it's beautiful. It's amazing. It has really high ceilings. You can fly drones around it. Most of the Hormleys, the CNC machines,

are maybe 10 feet tall, but the ceilings are like 40 feet tall. Are you gonna double stack this stuff? Are you gonna get a building with lower ceilings? Or do you need high ceilings? We love high ceilings. Okay, why? We have the most beautiful, highest ceilings

you've ever seen. Okay. No, I mean, we love high ceilings. We love HVAC, um, Arizona facility. We just as tall. We're going to go retrofit it. So same exact setup. So is that because you have that tower thing and the tower is valuable for like stacking materials and you want to have a, like, you know,

big warehouse space as well in here? Yeah. So you need, you need every machine or robot in any one of our factories to have the isolated on 18 inch concrete foundations. So, you know, if a truck drives past nothing moves, double stack these things. Someone might die. So we got to go, we're going to go horizontal. So what we have, what's the scale of the products that you like are in the Hadrian wheelhouse right now. Ship buildings's obviously a big focus,

you already mentioned it, but I imagine you can't CNC an entire destroyer, or maybe you can, but are we talking nuts and bolts and screws, or pieces of complex weapon systems? Like, what are the shape of the stuff that's coming out of the other end of the Hadrian facility? So Factory 3 will be pure machining

with all of the machining formats because we're releasing some new products that are dedicated to engines and round things and different material types to really complete our R&D of the whole machining category in factory three. The other thing that we've been working on in secret is factories as a service, which is not just parts, not assemblies, but full products.

So, hey, if you've got factories that are years behind schedule with many manufacturing methods or you're designing a program from scratch, everyone needs a Tesla Gigafactory, John. I actually think every American should have a Tesla Gigafactory and Hayden will be the one to grow and build them. So, of course.

I need one in my backyard, badly. So we'll scale up machining in factory three, four times the size, it's gonna be awesome. And then we'll also use theining in factory three, four times the size. It's going to be awesome. And then we'll also use the capital to continue the journey that we've been secretly on for the last 12 months, which is in new manufacturing domains, like welding, castings, additive, all these other manufacturing puzzle pieces that once you have them all,

it's like collecting Pokemon. You are the manufacturing master. Um, that's, that's the thing that we've been working on in secret of factories as a service as well as scaling out our operational productivity as well. How does one of those deals work? If Factory as a Service, I come to you, I wanna make as many podcast microphones as I possibly can, and I have insight into my business,

I'm making 100,000 a year, so I need a factory, you're gonna set it up for me, but then, what if I bail, is this a revenue concentration issue? Like, are you gonna be like, you know, oh, we only have one customer, and if they got a business, we're screwed, but everyone has faith that they're not gonna, like, how do you think about that debate?

We're mostly working with government partners and massive primes to look at, you know, what are these big programs that are years behind schedule that need advanced factories combined with a new American workforce to go fix them and speed them up? So we're not worried about the revenue concentration risk, but you can think about it, John, as like,

you can buy parts, like AWS, you can buy some compute transactionally, or hey, you're gonna need a data center for the next 10 years. Now what's in that? A range of parts, a whole product. For new DoD programs of record, where we're partnering with companies to go attack these,

where production is the real issue, munitions is a great example, we have to think really carefully about who we partner with, how much are we investing ahead, how much are we playing that game of being very conservative and responsible with our capital. But ultimately, what it looks like is we will help you design the product from day one

to be better. It will help you prototype it. And then when it goes to production scale, we will run that engine for you over a decade, much faster, much more efficiently. And in a lot of areas like submarines, shipbuilding, munitions, it's not about automation to make things cheaper.

It's just no one can find the workforce. So you have to use our model of advanced manufacturing combined with this new industrial workforce that we're so grateful to work with. That's the power, because you could give me a billion dollars and say, go hire 2,000 welders, and we can no longer have that scaled workforce

in the country. So automated factories are sometimes the only way to win in these critical domains. Yeah, it's interesting. It's kind of like what we're seeing with Crusoe, where they're building an AI factory a data center for Stargate which is its own entity but for a program chat GPT and open AI that's gonna be wanting tokens for a very long time and then oracles and it's like you have to puzzle

piece all this together and I feel like you're like the master of this like understanding the full landscape but yeah who are the other critical partners? The government, and I guess I'm also interested in like, you've mentioned a few different value props, like how much of this is, there is a government mandate to make this thing in America, so we need to reshore, versus we need to make this faster,

versus we don't even have the capability to make this anywhere and it's a new thing, or just like we need to make this faster versus we don't even have the capability to make this anywhere and it's a new thing and so or Just like we need to do it cheaper There's like a whole bunch of different tension when you're making something like what are you seeing in the in the customer landscape and the demand? For for manufactured products. Yeah, so for for machining which is Most of our revenue and the core of the company and the mother of all manufacturing processes, it's basically we're scaling a new program of record and no one else can keep up.

We're going from one aircraft to 20. How are we gonna do it? What are we gonna do with Hadrian? In the second example, a lot of the primes have a billion dollars in spend a year and their suppliers are delivering on time, 60% and they're often three to five months late. So that is less about cost. And that's more about, I want a stable supply chain that I don't want to have to worry about. Cause if you have one part

missing, your manufacturing line goes down and then it's millions of dollars a day. Right? So people are really coming to us for the schedule and the capacity and stability versus cost. How do you think about the history of the shape of the industry? Is this like back in the day before the last breakfast or last supper, the first breakfast is coming up right, the last supper and there were so many different primes, so many different defense contractors, was there a split between the factory producer, the factory builder and the and the prime?

Is this a natural split that we're just returning to? Or is this a new industry structure that you think we're gonna be building towards for a long time? Because back in the day when you started a website, you needed a data center. Then AWS came up. Then the website's got so big

that you had to build your own data center again. We kind of went back. And that's what's happening in the AI world but but how has this evolved in the past and then is it gonna stay like this forever and there's gonna be the separation between the the designer and the and the manufacturer of the factory so we've you know historically as a country all the primes have always had massive supply chains with small businesses you know in the billions of dollars and then critical tier one or two suppliers.

It's always been not purely vertically integrated. I think for the industrial base at large, you know, from the 70s to the 2020s, you used to be able to run a manufacturing company where 70% of your revenue was stable commercial demand, and then you get some ups and downs with the DOD. So what happened to a lot of the talent and industrial base when we offshored all of commercial manufacturing was that you lost your stable revenue, right? And now you're just dealing with this up and down demand.

I think because of that, you know, in the 80s and 90s, you know, your dad lost your job in the factory. So you told your son or daughter, like go get a four year college degree. This is not a good industry. And now we're in a position where in a lot of these areas, we don't make it on shore or there isn't the workforce to do it. And that is changing the dynamic between what is the hardest thing to do.

Actually, the hardest thing to do is manufacture things at scale, at rate and on time, which is what you're seeing in munitions or shipbuilding. It is really a we hollowed out the talent base. We don't have a lot of the talent anymore. And the only way to do that is use software and robotics to enable this workforce to be 10 times more productive. And it's now flipping. And I think a lot of people in the country

forgot how to manufacture products correctly now that they're coming to us to help them out with that journey just because of this hollowing out that's now gonna come back. So I think it is a new structure, but the Primes have always had multiple tiers of partner suppliers and multiple different configurations of that value chain.

What kind of opportunities are there at Hadrian now for somebody that's maybe 25 years old, never imagined going into manufacturing, but realizes there might be a bright future for them in the industry. Yeah, so for software engineers, manufacturing software is 30 years behind the rest of Silicon Valley.

So it's your only opportunity outside of AI to do real engineering and work on the national mission. And for people with, you're straight out of high school or you're in retail or hospitality, or you're at a desk job that's gonna to be automated with AI like manufacturing is the last domain that's going to get fully AI automated and it can be really high skilled high paying jobs in advanced factories that are a really cool place to work. So we've got tons of opportunities both help us running our factories, help us automating more factories, new types of factories. But I think operations is the most important place that we've got a huge talent base that we're really proud of. The children yearn for the factory floor.

What's been the difference between this year's Reindustrialize and last year's? Feels like a decade has passed since then in terms of excitement and interest in American dynamism and rebuilding the industrial base. I think last year, we pulled it together with the founders, especially thanks to Austin Bishop, who's really built this over the last year. It was a kind of a hope and a dream of, is the audience going to be there and do we really people believe in the mission? And then this year, we've got trade ambassador Greer talking about, hey, we're going to change all these policies because reindustrialization and manufacturing is no longer economics, it's national security.

And you've got the secretary of the Navy saying, the best thing you can do for the country right now is learn how to weld or be a machinist or a quality inspector. And I think the sea change on people realizing how important it is to be a sovereign nation with sovereign manufacturing is huge. And this year we had a 6,000 person wait list, half of the government is here and all these massive companies and leaders like Sharm from Palantir

who are really hell bent on this re-industrialization before we potentially go into a fight with the CCP. And Robo Palmer. Robo Palmer. Robo Palmer. I have a question Robo Palmer. Robo Palmer. I have a question. Yeah, it's such a, I mean, it makes, I think it's such an exciting time

because the idea that people don't wanna build things, people don't wanna create real things, right? There's so many people I know that you say, hey, do you wanna send emails for a living or do you wanna make ships and planes and any number of, you know, hey, do you want to send emails for a living, or do you want to make ships and planes and any number of, you know, cars, any number of things that we need to make? And if you actually give them that sort of binary, they're going to say, well, making things sounds

really cool, and so we need companies like Hadrian that say this is important, it's cool, and we have the resources to do this in a really serious way. Yeah, it seems like defense is kind of the most obvious thing to re-industrialize. It's obviously the most important thing to have ongoing capabilities in. But then walk me through the path of re-industrialization

on the product side or on the business side like what? How do you see this playing out? Is it like we do the warships and then we do phones or cars and then and then the Vacuums and then the Happy Meal toys come at the end. What what's the flow? Do you like what flow? Do you think it will happen? What are you excited about like on the horizon? So I think the last time we did this, it went from, you know, commercial through defense, like, you know, we made washing machines and then we made navigation equipment for warships.

So we made Ford cars and then, and then Ford built bombers. And I think this time it's going to go the inverse as we get better at it. Um, but it's very interesting. It's like, why is DJI so powerful? Well, arguably because of Foxconn and that was because of consumer products like Apple making all the iPhones in China. And if you had a similar Foxconn style industrial base, we could probably make a lot of drones here,

maybe not as cheap as China, but certainly at the scale we needed. So I think what people forget is that it is an ecosystem that loops into one another. But I think with the cost base and the importance, we start with defense and then loop back. But you know, like, I think it was might have been Westinghouse or another washing machine manufacturer just like decided to build a $400 million washing machine plant. It's like incredible.

That's just as much of a job creator as defense. But I think that we are going to loop around from all these critical defense industries for Hadrian and then right back into consumer when the time is right. But obviously we're extremely focused on a national mission at this point in time. I cannot wait until our microphones are built in Hadrian factories.

That would be fantastic. I don't care if it takes 15 years. I'm looking forward to it. I'm excited probably way sooner than that Thanks so much for stopping by. Yeah, congratulations. Have a great time. Say hi to everybody on the ground We have we have over industrialized our facility and now it is an incredible Lift to airlift this across the country, but we will definitely be at the next one. It's great to see you. Thank you, gentlemen. Cheers. Really quickly, let me tell you about Adio,

customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. And we are fortunate to be joined by Jeremy from Semi Analysis, hopefully, in the studio here, talking about meta super intelligence. Jeremy, how you doing? Good to meet you. What's going on?

Hey guys, nice to meet you. How are you? I'm good Could you case off with like an introduction of how you got into this? I've heard Dylan Patel's story of just Kind of being on forums and nerding out about this stuff and then turning it into a career But how do you get into? semiconductor analysis Yeah, sure. So before joining semiconductor analysis,

I was a buy side analyst. So I was mostly focused on the stock market on equities, looking specifically at tech stocks. I was at long only European shops and looking at European stocks like ST Microelectronics, Infineon, all these industrial automotive semiconductors. As part of my research, I discovered Semi Analysis. I was like, whoa, this guy's really good.

And one day I just saw a post of Dylan on Twitter. He was just saying, yeah, I'm hiring a bunch of people with a sell side or buy side experience because I want to build a real institutional firm. And yeah, like we just got a chat that was I think, August 2023. I joined the company in February 24, we were seven when I joined. No, I think we're 33 or 34.

So yeah, it's growing every day, I think. So I can't do it. Are there other firms like this in the buy side, sell side ecosystem? I'm thinking of like, Ian Bremmer has a consulting group where he writes books, but then also has a team of geopolitical analysts talking about kind of global macro trends and what's going on on the political side.

Did you ever interface with any other firms like Semi Analysis? Because it seems like unique and AI's so big that Dylan's crossed over from talking specifically to sell side analysts, even venture capitalists will read Semi Analysis. No, I agree, I think it's pretty unique. Look, there are obviously on one end, there are market research firms.

There's folks like IDC, Gartner, and so on and so forth. There are many of them. On the other end of the spectrum, so those would be very industry-focused. On the other end, you have world-trade sell-side analysts, Morgan Stanley, East Coleman Sachs of the spectrum, so those would be like very industry focused. On the other end, you have, yeah, World Trade sell side analysts, the Morgan Stanley, East Goldman Sachs of the world. I guess we kind of found a spot in between. And also it's part of the team because we have over 20 analysts and roughly speaking,

you have half of people that have a financial background like myself, so more closer to markets. And the other half is more engineers and people that are extremely technical And so we kind of found that sweet spot And also that's what's pretty cool is when you look at the different people as you mean I was like all the guys like myself that have more financial background I actually love geeking out and digging into technology stuff and same goes on with the engineers They also want to understand the business aspect and they end up geeking on

On the data and understand the insights and market shares and stuff like that. So yeah, we all go towards the same goal but have like a different set of skills and such. That makes sense. So take me through the latest piece. I can imagine other players in the semi-market research space just wait for you guys to publish. Okay, I think now we're ready to form an opinion. Now we can put a buy rating on it. Now we can slap a buy rating on that bad boy. Your favorite researcher's favorite researcher.

Okay, by the time we're done, we're going to get the venture capitalist plan solidified. It's a million dollars a month for any venture capitalist. And we like to say platform fund. Yeah, if you're not, if you're not on the semi analysis, one can't really be an AI investor. I gotta say, we found something super funny a few days ago. One of the big brokers wrote a note to clients and basically said, yeah, these guys are the Bible. Actually, they talked about fabricated knowledge, which is dark, so a president of our firm. They said some people think fabricated knowledge is the Bible, but actually he works with the

firm that's the actual Bible and all of the same. I don't know, I didn't say it, it's a Wall Street guy. That's amazing, there we go. Yeah, I'm a strong believer and I really enjoy the pieces every time they drop. Take me through the latest one, Meta Super Intelligence. Yeah, the news this week was almost drowned out by the Windsurf Google cognition debacle.

So, Zuck came out with this huge announcement, you know, Monday, and yeah, it almost got swept away a little bit. Yep. Yeah, I mean, I guess Zuck is all in, right? That's another proof. It's interesting because I think some people were at some point doubting at the beginning of the year, is he gonna carry all that investment,

tens of billions of dollars? The answer is clearly yes, he wants to do it. It's interesting because when you look at Meta's CapEx so far, it has been heavily tilted towards what he calls Core AI, which is basically recommendation models. There's a lot of inferencing, advertising models, and all of that. So they said publicly in 23, in 24, in 25,

most of that CapEx, which is going to be like $70 billion in 2025, is for that core AI business. So the Gen.AI, the Lama stuff is still at an earlier stage. But the big question is how bold is he going to go with Lama? And I think what we showed in this article, hey, there's a lot of evidence that he's doing it on a very large scale. And it's not just empty statements and saying, I'm going to build a 5 gigawatt data center in a few years.

It's actually things that are already built or under construction, already committed capital. And so that's the first story. There's already a substantial infrastructure build out specifically for 4GEN AI. And I guess that sort of rationalizes the amount of money that's spent on researchers. Because if you think about it, yeah, you're spending like, hey, maybe $30 billion this year on Lama infrastructure. You're going to spend maybe, I don't know, $3 billion, $5 billion on hiring top researchers.

Yeah, sure. Why not? Yeah, yeah, yeah. That's a completely reasonable strategy. And it always, it always mathed out to us that even if, even if these crazy researchers wind up working on core AI and the llama project doesn't even go anywhere, it's like, you could probably squeeze $3 billion out of core AI, right? I don't know.

It's just like the thought I had. Or you can also like, these researchers can be focused on, on gen AI, but they're going to develop like state of the art technologies and using like massive compute. And then those state of the art technologies can feed into the core business and generating more advertising sales. And if you think about it, like Meta is going double digits, $160 billion.

So every time they grow double digits, we're talking about close to $20 billion of incremental revenue. It's big numbers, right? Seem to justify just getting a few billion dollars on researchers. Yeah. Yeah, it's great. Um, I have, uh, I have one question about the history here with Metta. So there was this story, I think it came from the first, uh, Mark Zuckerberg interview with Dwarkesh Patel where he tells this story of the

original llama data center, or the reason he has residual capacity, was that he felt like he got caught flat-footed around TikTok and Reels and recommendation algorithms at scale for vertical social video, where it's much less driven by a social graph and kind of like a traditional CPU-based graph query and more about these actual recommendation algorithms.

And the way he tells the story is like, we didn't want to get caught flat-footed, we needed to play catch-up in reels, but we didn't want to get caught flat-footed again, so I told the team, build two big data centers, and then we had this kind of empty data center sitting there there and that was that gave us the initial compute for llama does is that too much of a simplification does

that feel like what happened do you have any insight into kind of like how the llama project the initial compute was built out and then i want to go into the future of the project i would just say at a high level if you you think about the amount of money that Meta has historically been spending on data centers relative to what they maybe need in theory, like they have always been overspending. They have always been investing substantially in infrastructure, and same goes on for Google, I think Google to an even bigger extent. But yes, Meta has been a pioneer in building large-scale data centers.

Over a decade ago, Meta introduced their H-shaped data center design. They've been building 150 megawatt campuses since 2013. So that's not new to them, building large-scale. And that's why they also already had this sizeable compute footprint. But in 2023, sizeable was maybe 20,000 GPUs. It was pretty big, but today it's updated. You want to be in the hundreds of thousands. And as of today,

Meta is to some extent late in terms of training compute relative to others, again, because they allocated, they have invested a lot of money, but a lot of that has been allocated to the core AI business. But what we've shown in that article is that they're actually today ready to ramp, yeah, a massive data center in Ohio that's gonna get them to the top. Talk about the H shape of the data center. Why was it an H shape to begin with,

and then it sounded like they abandoned it in favor of just one big tent. What are the benefits of a tent? I wanna know about data center shape broadly. Yeah, that sounds good. Who doesn't love a good data center shape? Look, the H, I don't know why it's an H. What's more interesting is the structure of the building. If you look at one physically, it's absolutely massive. It's close to a million square feet. It's just a monster. If you look at the structure, it's also three levels.

So it's a very complex structure. Generally, what we've observed for satellite imagery is that it takes roughly two years to build, which I'm just talking about the first stone to actually getting the project built. So two years is a lot. Many people do that in a year or less. So yeah, substantial time to build.

It was designed for very high efficiency. So they've been using a system with free air cooling. They can get the air from the outside. There's no air to water heat exchange. Basically, you get cold air from the outside. You just expel it, hot air. Super efficient. We can spray some water on it to make it even more efficient.

The energy efficiency ratio is typically called the PUE. Maybe you've heard of that, maybe not. Industry average is going to be 1.3, 1.4, which means that for every watt you allocate to servers, you have to spend another 30% or 40% of that power into cooling and power distribution losses and all of that. into cooling and power distribution losses and all of that. That ratio for Meta was historically below 1.1. So they were, actually they were the most energy efficient firm in the world running data centers. But the trade off is that these data centers

took a long time to build and had a very low power density. And so what happened is, first of all, at the end of 2022, Meta introduced the first massive design change. They completed it through the old age and built a more traditional data center design, single-story, sort of a big rectangle, faster to build, maybe one year,

maybe one or 15 quarters, something like that. Much faster to build, more denser, better suited for AI. It could handle liquid cooling. But what Meta thought, look, I think this is where the XAI story actually takes a big role. I think what Elon demonstrated when he set up that cluster in 122 days, he just shocked basically data center infrastructure leaders all around the world.

My understanding is that this came up with- He made everybody's life a lot harder because before it was like, well, if we do this really quickly, I'm going to need a year, year and a half. Yeah. It's like, well, there's a new standard 120 days. Yeah. Imagine like you're the infrastructure leader at the hyperskater that you have experience developing gigawatts of capacity. at the hyperskater that you have experience developing gigawatts of capacity, and you think you're the best in the world at doing that, and suddenly some guy comes out of nowhere

and does it in like one quarter of the time. So I think many people were really shocked, and I guess Zoc took it the other way and just was inspired by it. And basically, that's where the tent steps in, which is let's make a data center in the shape that I can build the fastest. So that, yeah, the only ball next just finding some power

and that's it, and buying QP. We were saying earlier, there's a bull market in tents. Zuck needs tents, the XAI engineers need tents to sleep in. The XAI engineers are intense in the office, and then the XAI servers will be in tents too. Everything's temporary. I mean, is there something about the tense structure

that's potentially like, okay, this is gonna deteriorate faster? Like what are the drawbacks of moving faster? And then on the PUE question, when I hear a one gigawatt or five gigawatts that they're targeting, is that total power into the building or total power to the actual servers?

Honestly, people generally throw like you there are both in this case based on their analysis It's to the servers to the service. It's actually going to be slightly more in terms of gross utility power Oftentimes you see people cutting total power just to have a bigger number sure Industry standard practices to put IT power. Anyway, in this case, you're going to have one gigawatt of compute power by the end of 2026 in Ohio. And then close to two gigawatts by the end of 2027 in Louisiana.

That's compute power to the servers. So anyway, massive compute for Lama. Is that a vanity metric? Is it a vanity metric to hit one gigawatt exactly? I mean, Stargate, you have on your chart at 880 megawatts. Is 120 or 140 megawatts really gonna be the difference between an amazing super intelligence and the next best thing?

It feels like we had to cross this threshold and one gigawatt is like, it's a good headline. Yeah, it's a good headline. That's more of it. It's not gonna change much if you have 900 or a gigawatt. But the more the better, right? Like you still wanna have more servers. Of course, yeah, more is better.

It does matter to be clear. It's not gonna change too much, but it does matter. Sure, yeah, it probably matters for recruiting too. It's like, you're gonna be at the place with the best. What does the best mean? I can, you know, $100 million offers, nice round number. One gigawatt factory or AI supercluster, that's a nice round number.

It's great. Look, I've got a better one for you. A hundred billion dollars, right? Five hundred billion dollars, Stargate. Oh yeah. That's something that's pretty funny to me because actually the Louisiana project, which is two gigawatts, they said publicly it's a ten billion dollar data center project. But if you count it the same way as they count the Stargate project in Abilene, it could

be like 150 to 200 billion dollars. Yeah, just big numbers in marketing. I don't know if you have a bunch of insights or clarity here, but how are places like Louisiana and Ohio reacting in order to attract these types of data center projects? are they promising the hyperscalers in the labs, you know, we're going to massively expedite permitting process? Is there like deregulation happening at a local level? What can you say? I think the piece of context is that since let's say the end of 2023,

or maybe mid 2023, you have a frantic search for power happening in the U S and all around the world. And so I think that's a really good point. that since let's say the end of 2023 or maybe mid 2023, you have a frantic search for power happening in the US and all around the world. And so we've made some number, we've aggregated some numbers. If you look at the pipeline, so there are different terms like data center,

interconnection, load queue or pipeline. Basically, if you aggregate all of the load requests that potential data centers have submitted to the grid, in the US, you're above 500 gigawatts. You're close to the actual peak load of the US. So what's happening is pretty insane. Those numbers are mostly fake, but what it means is that people are searching for power all around the country,

and you actually have a massive competition all around the country to attract those last products because if you think about it this way like okay 500 gigawatts of requests but in the end by 2013 you're gonna have maybe a hundred gigawatts of growth which is an insane amount already but it means that just 20% of these projects are actually going to be real so yeah there's definitely a lot of competition so people are doing everything they can to get those projects. Tax breaks are generally today the most standard thing. Accelerating permits, like reassuring hyperscalers that you will deliver on time,

that you have top contractors, that you're going to expedite permits. Increasingly, there's being sort of enabling more on-site power solutions as well, like being more open to people burning natural gas on-site. All that kind of stuff helps companies, utilities, and locations secure those big projects. I have a question about the shape of the super intelligence team at Meta. When you think about Meta properties,

you think about Facebook, the blue app, you think about Instagram, you think about WhatsApp, and then Oculus and VR is like a separate thing, Quest. But I was toying with this idea that maybe the super intelligence team is more like the database team or the React team, and it's like an infrastructure layer, a project that will have benefits all over the place, but we won't necessarily expect

a dedicated vertical that competes with Instagram. It's more about making all the apps better. I want to dive into the chat app statistics that you shared and try and understand it feels like it's not exactly a neck and neck race. Chat GPT is pretty much pulling away in terms of percentage share of queries at 71%. Meta's way behind at 12%. Are there any signals that this is, that this is, you know,

something that would be addressed one way or another, or is it just too soon to tell? Yeah, look, I think what we've seen so far is that generally speaking, when you start to deliver a better model, a better product, you just get more users. I think we've seen pretty good correlation between the quality of models and the usage of Chai GPT. One thing that I think is interesting is when you look at the user base of Chai GPT, you

had a surge in early 2023, and then it sort of plateaued for a bit. And towards the end of 2024, you had a second leg of growth and then you hit like that half a billion weekly users. And that correlates pretty well with new releases, with models getting cheaper and better and so on and so forth. So if you think about how Meta could get back at a point and maybe lead that ranking,

well, they just have to release better products. One thing is to have good products and the other one is to have a good distribution platform. And obviously they have the distribution platform, right? Two billion daily users. So they just need to build a good product, and I think users will come. And that's kind of the value proposition.

What is the state of the mom and pop data center market? I don't think they would like to be called the mom and pop data center market, but you know, a friend or an uncle that's getting into the data center business, we asked Brian, one of the co-founders of CoreWeave the other day, he was generally bearish. He knows how hard it is.

But is there a real demand signal there or is it just a hope and a prayer that you're gonna just kind of flip it to a hyperscaler? And is that? Yeah, sorry, guys. It's over. Easy money's over. As we just said before, now there's really an insane amount of competition for power.

And basically, hyperscalers can set the conditions. And so you have to be quite sophisticated when you want to approach hyperscaters and you want to sell them a gigawatt site. You also have to think about how much money does that involve? One gigawatt. You're talking about maybe $30, $40 billion of CapEx. When you sell a one gigawatt site to a hyperscater, it's not going to be a small decision for them.

To be clear, buying the land, maybe a few million, who cares? It's not a big deal. But if they do make the purchase, they intend to do something about it. So yeah, they just don't want to take it lightly and they have multiple options today. So for a mom and pop that sort of doesn't dig into what they should actually do and all the requests and such, they're just not going to get new business today. But some people made a lot of money for sure in 2023 and 2024 by just having luck. They had 50 acres near a high voltage line. It's just so unfortunate. That's amazing.

Yeah, it's funny to imagine you've been building a data center, a little mom and pop shop for the last year and then the Death Star data center just starts popping up next to you. Oh no, I'm you. It's over. What can you tell us about what changed between Llama 3 and Llama 4 and exactly what happened with Llama 4?

You call it a failure. How did that happen? Because we were so scale-pilled, right? Scale is all you need. Just scale up the big transformer. But you dove into it and gave so much more detail. How can you contextualize and explain that to us? Simple was just a bunch of trade-offs that weren't in the right direction.

Like I think if you want to simplify it, you could say that to some extent you reach peak pre-training in 2024. I'm simplifying it. I don't think it's peak, but let's call it for now it's peak. I think as Blackwell ramps and so on and so forth, you're going to see a new push up. But for now it's peak. And it means that if you want to develop better models, you don't have to use pre-training. You have to use the new paradigm, which is a test time compute and reinforcement learning.

And to do that, there are some specific trade-offs that you have to do. And basically, Meta just took a bunch of options in terms of their attention mechanism, in terms of the way they route to experts and stuff like that, just a bunch of decisions that aren't very well suited towards this new paradigm, which means that their flagship model Behemoth, the largest one, is just not very well suited to this new era. And that sort of contrasts with, think of the Chinese labs, they are sort of in the opposite direction

because they don't have state of the art chips. They don't really have an incentive to push very hard on pre-training. And so they have been thinking harder about pushing on post-training, reinforcement learning, and test and compute, and all of that, that doesn't require such a large centralized cluster.

As such, it's kind of those two paths, like on one end you have meta, on the other end you have the Chinese, and what the Chinese decided to do is just better suited to the current paradigm. So just a bunch of bad decisions, or to some extent unlucky. And so that seems like that ties to this,

there was this post by Rune, anonymous account on X saying that there are in fact some secrets about what paths of the tech tree you want to go down. You poach the right researcher. They come over and on day one, they can tell you that chunked attention might be wrong for this particular training run. Is that what you think is driving the high salaries? Is that the dynamic at play? Yeah.

Yeah, you want the decision makers that understand exactly what trade-offs are going to do, that also know how to properly evaluate things, or what kind of steps you should take to make sure what is the right choice. And so yeah, that's what you want, the decision makers that have experience, that know how to do stuff and they can easily identify the trade-offs

and know if I want to go in this direction, more reasoning, more RL, all that, you should do that additional mechanism. Do you have any insight into like the shape of the behemoth project right now, or like the failure mode? Like, is it like, it would be bad at math or it would be bad at talking to it for a long time

or it would be bad at needle in a haystack in a big context window? Like we've just heard like it's not good enough it failed but like what would that feel like if I were to use behemoth and for a long time? And I'm like, oh, this is weird. It's bad, but in a weird way because it seemed like it was good at some things,

but then just not good at everything across the board. Yeah, let's just simplify it and say agents. So basically tasks that require using tools that require reasoning, that require long context windows and test them if it's not very good at that. Okay, got it. Jordi? Last question from me for now.

What are you expecting out of Met meta over the next six months? They have talent now They have scale but the team the new team is gonna need to gel and it's gonna take some time to really start delivering So are you expecting a lot of you know public launches over the over the next? That basically the back half of this year or is this more early 2026? Nothing back back half of this year, or is this more early 2026? I think back half of the year makes sense. Really back half, like think end of Q4 or beginning of Q126. But for sure you're gonna have a few months

where probably not much is gonna happen. Because as of today, we showed a bunch of pictures of the current clusters, so they already have data center capacity, but there's still some time in order to actually put the GPUs in place and make sure everything runs. So they're gonna have some sizable compute that's training ready somewhere in Q3.

And so, yeah, I actually have a product release that's more of a really end of the year, but most likely early 2016. I would not be surprised if, I wouldn't be surprised if New Year's Eve, we're back on the show talking like we are now about a new drop. Can you talk me through some of the trade-offs

or how the open source war is playing out? Dylan from Semi Analysis posted that the open AI model, open source model is expected to be really, really good. That was kind of, I thought the open source strategy with Llama was a great way to be superlative on day one. It's like, it doesn't need to be the best model, it doesn't need to have the most DAUs or MAUs, but it's the only, it's the best open source one.

And so it's superlative, you get the headline headline it's the attractor for talent hey we're doing something different we've we were the best in this one narrow thing and and there's a question about like at a certain point does the math make sense to continue to open source but then when we went through the deep seek moment it felt like deep seek was very much distilled from the GPT-4 API not a a llama fork. And so the whole debate over, Oh, like, you know, some Chinese labs just going to fork llama and then, and then improve it. So what is your kind of state of the union on open source AI? The Chinese are eating open source. Like yeah,

they're just dominating the markets. It's like one lab after another, it's not just DeepSeq. You had DeepSeq, then're just dominating the market. It's like one lab after another, it's not just DeepSeek. You had DeepSeek, then you had Alibaba, recently you had Moonshot with the Kiwi model. They're just really good at open source, sorry, at LLM generally, and they're open sourcing everything because they're in sort of the same position as Meta.

They're not leading, so they don't have any incentive to be closed source, they wanna build an ecosystem. So it makes sense to go open source, and there's just like shipping faster than Meta and shipping better than Meta. So yeah, Meta is just way behind on open source. And actually the West is behind on open source. The Chinese are just way better at it right now. Is open source important or is it more just like marketing?

Because I've always had this thing about the difference between like, what was it? Stable diffusion was open source, mid-journey was not, and mid-journey was able to get the data back from the customer, because you generate four images and mid-journey, you give a thumbs up. To me, it's only open source if it's from the Mistral region in France, but. Yeah, but yeah, talk about the flywheel of open source.

Like is there an advantage there or is it really just, if you're not in first, you might as well open source? Yeah, I think it's more what you said is, if you're not a leading lab, you might as well open source because you want people to sort of, yeah, just help you. I'll give you some feedback to build an ecosystem. It just makes sense. Also, I would say for the broad community generally,

it's good to have open source because it's better for adoption. Anyone can sort of, yeah, play with the models and develop new applications on top of it and such. So yeah, I think for everyone it's good that there's open source. But again, if you're not Google, if you're not open AI, at the very top, you don't really have an incentive

to be secretive about what you're doing because you're not Google, if you're not open AI, at the very top, you don't really have an incentive to be secretive about what you're doing because you're not the best anyway. Yeah, that makes sense. Jordy, do you have anything else? This was great. Let's do it again. This was fantastic. Please hop on whenever you post anything.

I'm sure we'll be giving you lots of calls because this is a fantastic conversation. Really appreciate it. Yeah, really enjoyed it. Sounds good, guys. Cheers. Talk to you soon. Talk soon.

Bye. Quickly, let me tell you about fin.ai, the number one AI agent for customer service. The Bake Off champion. The Bake Off champion, number one in performance benchmarks, number one in competitive Bake Offs, number one ranking on G2, and we have our next guest in studio.

In person. We have Jesse from Coinbase coming in yesterday Jordy went over to Coinbase's launch event for bass let's bring him in Jesse welcome to the stream how you doing welcome the walk-in camera there we go thank you Thank you. How you doing? Good to see you. We got one more juice for you. We're drinking base juice today. We call this the base virality juice. How's that viral juice? Fantastic. How's it going? How's the show been so far? Super fun. It's been a crazy day on the internet. You guys are lucky. launched yesterday and not this morning. One Coldplay conference changed the timeline forever. I know I saw that this morning. I woke up, I was like, wow.

Yeah, glad this happened yesterday. Oh yeah, because I mean, it's so hard to launch these days, right? We're having a couple of people from OpenAI on. And it's such a big day for legislation in the United States. I mean, this is the Genius Act and the Clarity Act just passed. I'm finding out about this right now.

Well, the president is going to sign it, I think, tomorrow. Yes, Genius App stable coins will be passed and signed into law in the United States this year. I mean, this week, which is an incredible milestone. You've been working towards it for three years, four years, five years. I mean, the impact is that for the last decade of crypto, there hasn't been regulatory clarity in the United States, which means that entrepreneurs and consumers haven't actually been able to benefit from this technology and we've been working to build bipartisan

consensus that we need rules of the road in order to make sure that crypto works and I feel like Coinbase has always been like the conservative one and it paid off because during the end of the Zerp era basically all of Coinbase's competitors went out of business. It was chaos, right? And I remember talking to a public markets investor at that time and he was just saying, I feel like Coinbase has the mandate of heaven. Like they are making it through. What was the low?

Was it like $7 billion? Something like that. Yeah, in 2022 the share price went to $32, which was below, I think, the Series E price. And I had joined a couple years before the Series E price, but we all experienced that. What was your path to Coinbase? Were you building something else before? Yeah. Okay, break that down.

I dropped out of school and started a company. It was called Clef. We did identity. And so the whole idea was how do we build an identity that's the next thing after passwords that was decentralized that anyone could access? So this was a crypto company? It wasn't quite crypto, but we worked with crypto companies. So, uh, you know, Bitfinex, we were actually providing a kind of auth and login for them. And so Paolo like we go way back because we've been building forever.

And so that business didn't work. And then when we were winding it down, I was basically trying to figure out what do I do next? And I love crypto. And his identity, like KYC, like I upload my, I take a picture of my photo. It was actually a passwordless login mechanism so almost like you hold your phone up to log into whatsapp it was like that but back in 2012 and so we were a little bit before the time but when you look at the security architecture that we built it's actually almost the same as what we're doing now on base and what people are doing with pass keys. It's this incredible thing where I've now been working on it this

same problem space for almost 12 years, and we're feeling finally getting there. Okay, so you land at Coinbase, and the way Brian Armstrong tells it, you go to him and you say, I need $1 billion to fix this. Well, not right away. No, not right away. No, not right away. No, not right away. No, not right away.

No, not right away. No, not right away. No, not right away. No, not right away. No, not right away. No, not right away. No, not right away. I want to get to the one billion dollar plan. I know you did it for a lot less, but I want to know what I, that's my question for the future. But tell me, tell me what you did in between. Best I could do is two pizzas. Two pizzas. No.

So I joined, I joined as an engineer. Okay. It was an, it was an aqua hire process. My whole team actually sold to another company, to Twilio, but I was so excited about Coinbase. Early to the, to the double. Let's go. And so I joined Coinbase, joined as an engineer and then pretty quickly on, I just started leading teams. They asked me, hey, can you take on a team? I took on more.

And for the next five years, I led all the consumer businesses on the engineering side. So if you know Max Brandsburg, he runs our consumer product, me and him were product and engineering counterparts with him running product and me running engineering. And then after five years of doing that, I thought I was going to start another company. I'm like a founder. I actually put in my notice and said, I'm'm leaving in six months in those five years. What products were you building? I was building coinbase coinbase pro and coinbase wallet. Okay got it So like anything that you've touched as a coinbase user. Those are my teams We rebuilt the whole product from scratch my greatest react native coinbase wallet. It's a thing first like

Decentralized product in the coinbase ecosystem So I think I think the context here is like the core business and why the launch yesterday is exciting is the core business was always centralized, right? And it was a gateway to get on chain, custodial, and we'll get into base in a bit. But you were working on these sort of decentralized experiments early.

Exactly, yeah, working on the decentralized experiments early. What were you saying? It's so early at the time. You know Working on the decentralized experiments early. What are you saying? It's so early at the time. You know, I'm an optimist. He said he hit, he typed GM and posted it probably a hundred thousand times. But I thought I was going to leave, but I actually started having conversations with Brian about what did the future of CoinMace look like? And what wouldbase look like?

And what would it look like if we leaned even further into this decentralized world, built more things on chain? Because Coinbase had started 10 years ago and it was a traditional Web2 business. And so again, the first thing I did was I went to Brian in the fall of 2021 and our exec team and said, if you give me a billion people and 60 employees, this was like peak $20 billion and 60 60 employees 60 employees into a Dow. Okay. They were they were like, ha ha ha. We're a public company. If he is I know what you do with a billion dollars if you're meta and you build a big data center and you have to pay you know,

half of that to Jensen Wong over at Nvidia. But what would you have actually done with a billion dollars? I don't even know what is that. We didn't really have as good of a plan. It was more just like, let's take the constraints off. Let's take the constraints off. Let's go and do the thing. We have this big public company, it's a crypto leader,

but it's still built on Web2 architecture. How do we move it on chain in this new way? And so it was the vision was there, but the execution strategy wasn't there. And so well in the other context is that Coinbase has been in this incredible position of being the gateway to get on chain. And you see this with the Circle IPO, people were like, wait, Coinbase makes a lot of Circle's revenue as a stablecoin issuer. But you guys had always basically said everything on you know, you guys do whatever you want on chain and a bunch of great companies sprung up to kind of service that market. But you had to be hands off, which I imagine was pretty frustrating.

Yeah, I mean, I will say that early on. So Brian has always had the vision of the self custodial world. He's even had the vision of a super app in many ways where the first version of Coinbase wallet was actually called toshi It was a messaging product with apps in it. Oh interesting This is in 2017. It's green And so that we kind of pivoted toshi to coinbase wallet Which is the self-custodial wallet that millions of people use that folks know and love And we've worked on that for the last five years now is primarily focused on trading and money

Yeah, but as we've built base over the last five years and that was primarily focused on trading and money. But as we've built base over the last two years, which has really been a builder ecosystem where people are building apps, we've seen two problems emerge. The first is that everyday people when they're trying to use crypto and trying to kind of figure out what's going on here, it's really hard to actually find things to do and that are useful. Maybe they come on chain for a coin, but then they kind of get lost. They're like, where are all these things? How do I actually use it? that are useful. 10 months ago I talked with Brian, I kind of came back to running the Coinbase wallet team which I'd worked on for a long time prior and we kind of jointly articulated this vision

of what if we built the kind of app that solved that problem and brought all these things together and this is what we launched yesterday. It's the base app and it's an everything app that lets you create, earn, chat, trade and discover this. Pay for things too. Pay for things with Shopify, at Arowan. You can now pay for juice with base USDC on Shopify, powered by Base Pay.

The whole thing kind of comes together in a new way where because we now can bring together this marketplace of kind of developers and builders and businesses on one side with consumers through a really easy to use experience, we're gonna be able to grow crypto a lot faster and spin the flywheel. Would I imagine launching base in the way that the product is today?

I know it's a pure software business, so very different from the traditional Coinbase's traditional business, which is effectively acting as this regulated or financial institution. Would it have been possible to launch this a year ago, or did you need the White House to launch some tokens and a few other events? Well, I think the biggest thing that we needed

is we needed the technology to mature, right? So when we had this vision three years ago of building base, the first thing we started with was actually the platform. Yeah, but it was the chain because we'd spent a year trying to figure out, okay, what's the product we build to kind of bring this next generation? Explain those. So you had the chain, but there was no token attached. We went back to the tried and true method that people had been following for a hundred years Which is that you focus on building product people love okay?

Right like I think there's been this whole distortion in crypto for the last five years where people are like oh you get a token you Pay people to use your product and we basically said from the beginning no we're gonna build chain It's gonna be a developer platform, and we're gonna figure out How do we make it the best place for builders to build yeah? That's exactly what we did If I take it to like the Bitcoin analogy Yeah It's like the reason that people set up data centers to run the Bitcoin network is because they mine Bitcoin and that has financial

value There's this economic incentive now that gets distorted all the time when people run like random chains and stuff and I understand the the rationale, but is there an incentive for other participants to But is there an incentive for other participants to to help run the infrastructure or or or are you doing something where you're Splitting it with across different groups. Yeah, how does the actual chain stay on? Yep Well, the first thing to know is that base runs on aetherium? Okay, so it's a layer two that sits on top of the theory and miners are happy then you base right? Yes, okay That means there's a centralized network that's also based that people use to get access to the network.

And the thing that's bringing people to the network is that they're building things and then they're using those things. And so here's two examples. The first one is USDC. We're seeing a huge amount of growth in payments, both in the United States and outside the United States in USDC. And that's because people are using products like Shopify, which has rolled out to millions of merchants where they're actually taking USDC in their wallet and they're paying for things and that's global

It's fast. It's cheap. It happens instantly. There's no rewards. There's cool that the retailers effectively, which is if you pay with USDC will give you one point back or something like that because you're not Devic hard or credit card. Yeah, so it's 1% back with base pay and you can earn 4.1% on your USDC when you're holding it. That's pretty good, right? And it's an instant global payment method. So any business in the world can integrate it and then anyone else in the world can pay for things.

So that's one example. People are coming to base for payments and stable coins. The other example is a little bit more out on the kind of like, nascent C curve in terms of what we're seeing, but we're really excited about, this is what the focus of the event was yesterday, which is really around the creator economy, right? If you look at the last of like, nancy curve in terms of what we're seeing. But we're really excited about this is what the focus of the event was yesterday,

which is really around the creator economy. Right. If you look at the last 20 years, you've had so much creativity pour into the Internet. But the vast majority of that creativity has been put into platforms where creators actually don't earn that much money. Right. If you're an average creator who has less than 10,000 followers or if you're in another country like Nigeria or

Argentina, you're going gonna be posting and filling up this kind of content world with valuable creativity that other people are looking at, but you're not earning anything. And so one of the big things that we're focusing on with the Base app, and one of the reasons why people are coming to use it, is that when you post on Base, you actually earn.

And this is because we've built a new economic system where the content is actually valuable, and then the value gets flowed back to the creators. And I think this is a novel use case for this platform that we built with Base and Base Chain. But I think it's the thing that's driving demand. If somebody opens a Base app, their wallet's loaded and they start scrolling.

Does that cost them money? Does that cost them money? How does that actually? It doesn't cost them money, but I can literally show you, you can decide if you wanna support a post. and so like here this is on my feed and I'm just like Jesse I'm on my feed I'm creating content I posted this great base juice content and oh there's a bug live classic there we go happens based juice content right and you have the normal things you see here the light the comment the retreat and then you have a new Thing yeah, which is market cap sure and so this is basically the value of that content and this one's worth $15,000 this one's worth

$84,000 this one's not possible. I mean I like my I've been on YouTube for five years the best video I ever posted got 8 million views and I got a check for 20k from YouTube Well, that's actually pretty good YouTube is one of the platforms that pays creators really well 50% But I thought that was fine because they brought me all the users So I was actually pretty happy with that, but like how could how could something have a piece of content have market cap? Well, yeah, I have wants to buy it unless they want to buy the revenue stream, and there's been some of those projects Yeah, how'd you start up startup CEO. Well, this is on X. Well, I had no market cap on this one. Startup CEOs can't even hug their

chief people officer at a concert in this country anymore. 1.6 million views, 50,000 likes. I'm sure the creator payout will be decent, but this looks to me like potentially a nine-figure market cap on if I had ripped it on base Yeah, well, well seriously like seriously I I you know on these ones I posted like this one I posted yesterday that now has an eighty four thousand dollar market cap It's done like four million dollars in volume and I earn 1% of all the volume and so that means I've earned like what? 40 40 thousand dollars. It's insane Right, so you get a viral post feel that doesn't feel like like economically fair $40,000.

if the content isn't valuable. Running ads. But what's bringing you there? The content. And then they pay you to bring more content because it gets paid out. An ad is a way of monetizing the value of the content. Yeah, yeah, no, it makes sense. But the content itself is valuable.

And what's happening on the base app now is that that value is being figured out in a free market. And then the economic offloads of that value are getting redirected back to the creators. We love ads for the show. Will we be able to see ads in the base app? I know you guys acquired Spindle. I don't think you're ready to talk about it.

Well, stay tuned in the next week. I want to run some ads. I think that will be a matter of time. Talk about the integration in the mini apps. Mini apps. Dan from Farcaster has been on the show I know you guys have some integration with with the far caster network. Is that right? Yeah, so the whole social feed all of the connection graphs, you know followers and following it's all powered by far caster when you're posting content

It's powered on far caster when you're coining content. That's interesting. That's powered by Zoray. It's another protocol We've done with the base app is we brought them all together. That's cool. Including Shopify. Including Shopify. Including XMTP, which is powering messaging. They just raised a $20 million Series B and they're an incredible decentralized messaging protocol that is powering secure encrypted messaging with agents in chat. And so one of the really cool things, I don't know if you guys saw it in the demo yesterday,

is you can meet a chat with your friends. You can just like drop a bet in there that you can one of the really cool things, I don't know if you guys saw in the demo yesterday, is you can meet a chat with your friends. You can just like drop a bet in there that you can say to the agent, hey, let's bet $5 that the Dodgers are gonna win tonight. And then it's immediate bet. And then you can say, hey, send $10 to all of my friends. And it just works because it's built on this platform

and you have these open protocols that are working together. And so going to your point, we built on Farcaster because we believe in building an open protocols. And one of the things that open protocols enables is enables other people to build on top of them. So this is where the mini apps come in is because we built in this open way now anyone can build a mini app and it just shows up in the app. And here's another one I don't know if you guys have seen this but this is when you open the base app today, which is like literally you can open this up and we're gonna be on the live stream here live now there

But one of the really cool things and to be clear this this was organic Party and you have some new sponsors I don't know if you guys realize this but you have a bunch of crypto brands here that have now gone and said hey We want to sponsor you and bracket for instance. This is sports betting on base. It's awesome. It's so fun. You can interact with an AI. But our lawyers, we're going to our lawyers are like bloodhounds. They're going to, they're going to be like chomping at the bit. Really incredible about this app is that it's all connected. And so I can actually tap in bracket and I'm like, okay, oh, okay. Yeah. Hey, stay one. Oh my God. Come on, Jesse. What's going on here with this mini app? And in theory, yeah, this is this is the start of the auction

But this is this is the start of the auction driven ecosystem that actually with it actually Results in real transfer value real real values created at some point Whoa now bracket is right here, okay, and then I'm like bracket whoa now bracket is right here okay and then I'm like okay I'm just gonna buy bracket and I'm be like cool let me buy five dollars a bracket this is not financial this seems like the thing that's fun is like it's just wildly chaotic it is an entirely new surface area coinbase has never been about chaos but and and I'm not saying that base is, but creating an environment that's just like a free for all, decentralized, it's

open. So, yeah, I mean, you've said that the goal broadly is to get a billion users on crypto, crypto on chain. That's a great phrase. Give me the state of the union. Where are we today on that journey? What are the different buckets and how big are they? Yeah, so we're trying to build a global economy that increases innovation, creativity and freedom and the metric that we use basically to measure that is do we have a billion people on chain?

Yes. And of course I'm going to get five billion people on chain because we're going to get everyone who has an internet connection on chain. Let's go. But a billion is a nice number and we get to make it repeatable. I'd say that when you look at the data today, there are hundreds of millions of people who hold Bitcoin. Globally around the world. Hundreds of millions. Yeah, hundreds of millions. A lot of people hold Bitcoin.

Bitcoin is very well used, but it's not something that people are using their day-to-day life. I'd say there's probably tens of million people around the world who are using stablecoins. And then I think we're in the millions of people right now who are really starting to use these on-chain products. And that's across Base, it's across Solana. We're seeing innovation everywhere. We like to work with everyone. We think about Base as a bridge, not an island. We're actually connecting with everyone

and figuring out how we can help them be successful. But I think it's still really, really early days. And the goal with the Base app is to like, kick up the next kink in growth. So my question is like, when we're following the chat GPT story, there's obviously DAUs, but the chart that everyone's obsessed with right now

is that chat GPT minutes per day is skyrocketing. It's a 30 30 minutes per user per day. So like that we're seeing lots of queries go up. My question is like with financial products. I do think that there's a there's a benefit to having a lot of people own Bitcoin. I think it's an awesome network. A check on authoritarianism. It's awesome. But like I don't know that I should be interacting with Bitcoin daily.

What are the other metrics downstream to quantify whether or not someone's on the chain? Because if someone's, if I'm in my bank account, messing around with dollars all the time, I'm actually probably unhappy. Yeah, yeah. Well, the first thing I'd say is that definitely Coinbase is a traditional financial product where they're growing, they're trying to be the best for trading. It's awesome. They're making such good progress. So excited about the retail DEX integration, which is basically making it so that anyone Coinbase can buy any asset on base. Yeah, just works listed. I'd say base though, we don't really think about it as a financial product. Okay, there's money involved because money is a part of everything,

but it has social ads core, it has chat, it has apps, and so people are going to come to base just like they come to their other apps. Time on site should be a key metric that you're following. We look at two things. We look at weekly active users and then we look at weekly transacting users where it's like, are you actually doing a transaction on the chain? Where it's like buying something or sending money to a friend or something like that. And so the active user is kind of an engagement metric. And then the, the transacting user is like a deeper. So higher use of the actual product would not be a bear case like it is with my, you know, my traditional financial app with which I'm opening.

It's probably a problem. I'm probably like, Oh, someone money or overdrafted. And the really incredible thing about this kind of conversion rate of active to transacting is we have the data of before and after where like it was really just like, oh, someone money or overdrafted or something. decision, it's like you can like your friends post. Yeah. Right. Or you can like, you know, have to pay at a store that you're going to. And that transition from a speculative thing, which is so important and such a big important part of base in the crypto economy to a daily thing that also has like way bigger tam in terms of the number of people who do social products and other things on a daily basis. That's that's really a shift we're trying to make. Yeah, it's super cool.

Like the like we know that the everything apps work elsewhere Yeah, they don't work in America for some reason this feels like an end to run around a different strategy to try and make it Subculture right right now, but for now, you know, yeah billion people is that a subculture? I just spent two hours at arawan and people with we were giving out free juice I was filling content. We got some good content coming later And I was just talking to people about the juice in the app and when people hear especially like millennial Gen Z

Creators when they hear do you want to join a free social network where you can get paid to post? And you want to reduce they're like hell. Yeah, I've been posting on other social networks for a long time I've never gotten paid okay, and so that hook of your content is value get paid You get paid you can get paid for it because that value is gonna get unleashed by the free market Yeah, and then we're gonna distribute it on crypto economic rails that is next generation internet platform. I'm fine Well good luck we gotta get to our next guest. Thank you Can we get a gong hit on the way out here? Get the base app at base dot app. You can get on the wait list from you letting more people on every single day. There we go. Founder mode. Talk to you soon. Have a good one. Great chatting.

Do it. Talk to you next. We have Higgs field Alex from Higgs field AI we've been using Higgs field AI to generate crazy photos Jordy posted one of I was on a horse The horse had a little bit of a long neck, but otherwise Photo real and the facial reconstruction like it nails the face really really well. I'm exactly sure how they do that Yeah Higgs field we have a lot of amazing people on today I have been incredibly excited to speak with you We were just talking. I don't know if you caught it, but I posted a an image Generated by Higgs Field a couple days ago.

I think most people still think it was real. It was a completely ridiculous image. It was like this cinematic upshot of me on a horse that had, I don't know why people didn't catch that the neck was quite a bit bigger than a regular horse's neck, but. It was great, totally breakthrough. Yeah, it was the first time that I've seen an image generation

product and realized that I think you guys have probably already started to take over Instagram style content, but really disrupting the, potentially disrupting the Instagram boyfriend market. If people can just generate infinite images of themselves, Instagram boyfriends will have nothing to do. But great to have you on the show. Would be great to get a quick background on yourself

and the company, and then we'll get into a bunch of other stuff. Great, thank you very much for the kind words. Definitely, it's great to be here. I thank you for the invitation. So quickly about myself, I'm a veteran in the video generative AI space. I built maybe some of the most iconic products in that space. Maybe you remember snap filter face filters. Oh, really? Which yeah, totally. That's amazing. Yeah, there were like billion people throughout the world who played

with that. And this was pre-gen AI, right? And the models were like a thousand times smaller than they are today. And although this product was specifically targeting like augmented reality use case. So basically overlay on top of the existing camera. Yeah. With all these learnings, which I got from my exciting times

at Snapchat, we started Hicksfield with a way bigger ambition, is to create a camera of the next generation. Even today we can see that there is an emergence of UGC contents, the quality unfortunately goes down. And with Hicksfield, we create a new ways to tell stories, it's helping creators and brands to get attention on social media. What's the key insight, do you think, how important is it to create a great image generation model just scale you just need to throw a ton of compute versus changes in the

algorithm we've heard rumors that images and chap GPT isn't pure diffusion there's some transformer architecture in there some different layers I've started to suspect that there are different layers in some of these where there might be a different neural network or different system to put text on top so the text is really clean. Are we kind of recreating Photoshop at a certain level? Talk to me about the actual technical infrastructure to the degree that you can. Totally.

First of all, I think it's important to admit that today we are early in our journey with video AI technology. I think Higgs field is probably the first example of the technology platform which helps to create compelling content for social media. The next step is going to be to build a reasoning engine on top of that. So let's say you post a video, the system is going to suggest you and analyze your accounts a new version of the world where most of the content out there is AI generated. There is no way to stop that. And on our side, we do our best to provide a simple interface so that non-AI users, like let's think about market of social media professionals

of tens of millions of people, so that this broader user base can actually tap into the power of generative AI technology. And I think we will see that the models are gonna get way better than they are today. It is true that various research labs, they do experiment with various architectures. We found that our post training techniques and allow us to substantially differentiate from the competition. And we do believe that

the general quality of the technology is already there to surpass like average human produced comments. What, uh, uh, I have this one eval for, uh, AI image generators where I asked it to create a, a, a where's Waldo and, and no systems been able to crack it. Um, and I think it has something to do with the density of information and proper where's Waldo. You'll typically see hundreds of little characters doing very intricate things.

And so it's very clear that the artists that create the actual Where Waldo's work at a very small scale and they actually piece together the full image like it's a puzzle. That's something that I feel like could be solved with a reasoning layer on top. You understand that you're trying to create something that's really, really layered. And so you need to kind of create tiles and then blend them together. Is that, but this gets into the question of like, how are we going to generalize and scale reinforcement learning in LLMs and agentic workflows? Is there a similar path that we're going down in terms of image generation? Yeah, this is a great question, by the way.

I think this is a trillion dollar question, which we just asked, which is we also the power of reasoning engines with maybe models like all three. And then we see that's at grok four, they actually spent on the reinforcement learning more than they spent on the pre trainings stage, right? Where is the market right now in terms of, uh, pre-training, post-training in images in your estimation? Yeah, I do believe that's in the video AI space. We are relatively early.

It's probably, we still see that's the post-tra training stage in the video for video AI models can be maybe 20 50 times lower compared to the pre training stage Wow although Yeah, but we are really just scratching the surface there Sure, I think then the future is building the video or reasoning engine and this is a trillion dollar question, because this will because think about the brands out there. Today, what we are seeing is that brands start to and agencies, they start to actually experiment with various models. And primarily, we all rely on our stereotypical understanding of

the customers, and some maybe qualitative data which is available out there. I strongly believe that with this video reasoning engine, then the way how how the stories are told is going to be completely different. Instead of just running one video, we can run hundreds of the videos out there and A-B test them and see which one performs the best. And today there are only a few top creators who actually do that. If you look at MrBeast and similar size of the creators, they do A-B test thumbnails very aggressively. We all know that. They actually be test the hooks.

So far this privilege is only available for larger teams who can actually do that, who have the manpower to do that. And the next generation video reasoning engine will empower everyone to do that, which is going to boom to the boom of AIG. Yeah. I mean, what you're talking about is basically like RLing on humanity with human graders, which is the algorithm and likes. And that's effectively what the MrBeast algorithm is doing. My question is, is there a way that we can bring that into the data center?

Because if it stays on Instagram, if it stays on YouTube, it's probably pretty rough for you because Google and Meta are going to have an advantage there but if you can figure out how to do RL with verifiable rewards or something that looks like a rubric for grading, you know and finding errors. Are we going back to the generative adversarial network era where you'll have two competing models to determine like whenever I generated something with VO it's always like cars driving looks amazing.

Then all of a sudden I'm looking at the front of the car and the car is driving backwards and clearly the model is getting confused. But we need maybe like a detector for that. But how do how are we actually going to do RL at scale and imagery? This is a great question. So I think the first step is exactly I mean, the first step is going to be reinforcement learning with AI feedback. Part of that we already do at Higgs field, obviously at the post-training stage, not

yet at the inference stage, just because of the cost associated with that. So we have to train video generation model in a way that it's sort of competing with video understanding model. And like at Higgs fields, we could, we cannot go and label millions of the videos. That's why we have a set of powerful agents for video understanding, which help to tune the video generation process. But this is the process in the vacuum itself. What's going to be powerful is when we condition the outputs of the model and train the model based on the engagement data from the social media.

First, it's going to be a number of likes, a number of comments. Although if we look at meta ads, we see that they provide a very detailed breakdown and drop off second by seconds. So training the models based on these outputs is going to lead to complete the next level of reasoning and success rates for the end customers. Cool. We have another one in person. I know we're totally over. What happens to the legacy Instagram influencer

that has built a business basically on MV. They're constantly traveling around the world at the best hotels, on boats, and private jets. What happens when anybody can be on a private jet on a platform like Instagram or on a yacht somewhere? Have you thought through kind of the implications for the tech across different categories of content creators? Hopefully. So first of all, I need to admit that we're a technology platform first and foremost, although we think about ourselves as a scientist and we are constantly monitoring and listening

to the creators and how they use the technology. And I cannot bring up the names out here, although like some of the top 50 YouTubers in the world, they actually wanna get reads of the team and build own agency of AI influencers, to be honest. They actually, they have a bunch of ideas which they wanna tell, and they don't want to condition their existence

on the social media just to their likeness today because people just are getting older and sometimes they get irrelevant. We have seen many examples of that on social media. And creators actually want to create those digital agencies where they can express all their ideas through various synthetic AI influencers. And they can use Hixel platform to do that.

Yeah, it's a very, very wild time. Let's have you back on again soon. This is fascinating. Yeah, we'll talk to you soon. Thanks for joining. Thanks so much for hopping on, Alex. Thank you. We'll talk to you soon. Let me quickly tell you about public.com,

investing for those who take it seriously. They have multi-asset investing, industry-leading yields, and they're trusted by millions. We have Billy from Regent, also calling in from Reindustrialized. Sorry to keep you waiting, Billy. Great to see you. Every time we talk to Billy,

he's in a far-flung part of the world. We're working to bring him in from the waiting room. And he is sideways. Can you turn your camera? Yeah, I can go vertical. That is possible. Here we go. There we go.

Where are you? You're in the cabin? Explain. Join you from the sea glider. Look at that. No way. It's super comfortable in here. We got plenty of leg room.

There we go. That's incredible. We got internet. This is the future. This is amazing. What? Amazing. Wait, wait.

So, wait, are you you is this like a demo? Are you actually in I do believe that's a screen behind a screen behind you. This is the demo you guys Generated guy says all this will be fake in two years. So, you know, I don't know what to do We're building hardware in the real world guys, right? I reindust conference right now. Thank you for bringing me back to the real world. How is reindustrialized? Give us the overall update on Regent. It is awesome. Like hardware is cool again.

Like building real stuff is cool. Atoms are cool. So it's awesome to be here for this. Yesterday we just announced the launch of Regent Defense here at reindustrialized, which is a big step for the business. Congratulations. What is Regent Defense here at Reindustrialized, which is a big step for the business. So what is Regent Defense? What's the immediate application of the glider

in a defense context? So Regent's actually been doing defense for years. This is sort of a growth of the business we've already been doing. Basically everything is about moving around island chains as our key conflicts and theaters are in the Indo-Pacific. So it's going back to World War II style tactics. It's about naval operations. It's about being able to move around island chains logistics from the head of the

Marine Corps and throughout the services under rights of success of that naval campaign. So turns out that all the things that our commercial customers like about Seagliders the high speed low operating costs You know ease of operation and in the DOD space that we're hard to see we fly really low over the water So it's hard to pick up on some long-range radar systems Makes it really perfect fit so we've been on contract with the Marine Corps for a couple years now And now we're expanding as we get into our full- prototyping, expanding that product portfolio to meet the need. Very cool. Incredible.

Anything else? I think that's it. Thank you for this demo. Thank you so much for hopping on. This is the best call-in, the best guest call-in I think we've had. Guys, we've got to get you on the Sea Glider in Rhode Island at some point, too.

We're doing the next call-in from the, we have real hardware. We'll do the whole show. We'll do the whole show from the glider. I hear it's very smooth. You know, it's perfect for live podcast. Starlink on board yet? We'll put Starlink on board for a TBPN episode.

There we go. I love it. It's there. Awesome. Fantastic. Well, congratulations to you and the team on the progress and say hi to everybody at Reindustrialize for us. Will do. Thanks guys. Enjoy the rest of the conference. We'll talk to you and the team on the progress and say hi to everybody at Reindustrialize for us. Will do, thanks guys.

Enjoy the rest of the conference, we'll talk to you soon. And in the meantime, let me tell you about eightsleep.com. Get a pod five, five year warranty, 30 night risk free trial, free returns, free shipping. Go to eightsleep.com. Code TBPN. And we have our next guest joining the stream. I'm going to guess that it's Jonathan, but I'm gonna make sure once he joins.

Welcome to the stream. How you doing? Did I get that right? Yes, Jonathan. What's happening? Confident security. Sorry, we have a- A lot of people call me JMo, actually.

So, JMo. No, JMo. What's up, man? JMo. Give us the news. I hear you got some good news. Break it down for us. Yes, we are coming out of stealth,

launching a new company called Confident Security. It's about providing confidential AI. Did you raise any money? We raised 4.2 million with Decibel. Congratulations. Congratulations. For our comments. Congratulations.

There we go. Why is confidential AI important? I can imagine a bunch of reasons, but what was the kind of catalyst to start the company? Yeah, I think unless we do some work, I think we're going to have Cambridge Analytica times like a million, essentially, unless there's just too much incentive for folks to train on data,

and people need to care about privacy. So we thought You know Apple shouldn't just be the only ones providing privacy. Everyone else should do it, too Give me some concrete examples of how to use the product. What data specifically am I keeping secure? Is it stuff that's on the web or because I feel like if I have an air gap data center somewhere with a whole bunch of Hard drives, there's no crawlers that are getting to that or because I feel like if I have an air gap data center somewhere with a whole bunch of hard drives There's no crawlers that are getting to that That's right If you are taking that air if you're using the air gap data and you have your own GPUs and it's completely in there

You might care about various users inside your gaped environment not seeing all the data You know a standard like top secret versus secret type of stuff But this is you know You're you're an employee at Pfizer and you upload a PDF to OpenAI that describes how you do drug discovery. Maybe you care about that secret. Maybe you care about how it's gonna be used.

And after the recent OpenAI court case, where they were forced to retain deleted data, I think people are being a little cautious. So how do you actually plan in plugging in to companies? How does the product actually get installed and used on a day-to-day basis? So it requires two parties. One party who's running the server

to install our wrapper around it, and then the other party who is making requests to that server to use our SDK. And essentially, you can think of it as a very specialized form of encryption where you can only decrypt the data that you've submitted to the server If you've met some constraints like you don't log the data, you don't train on the data No one has access to the data all that type of stuff. And is that just like enforced at? an engineering level or enforced a

Legal contractual level it is a technical level, great question. Technical level, okay. And that's what's different, right? You can make promises that say you want to trade on the data, but we make, it's a technical guarantee, and it's essentially a bunch of fancy cryptography that makes that guarantee. So we actually offer unlimited liability and indemnification for data breaches and misuse,

because we're so convinced that you cannot, we cannot see the data, no third party can see the data. Yeah, so what's the go-to-market like? You mentioned example of like a big biotech company. Is that the most obvious customer or are there other segments that are logical? Biotech, legal, finance of course, defense and government, and not just like pure defense, but you know local jurisdictions

States they're all trying to figure out how to deal with you know freedom of information When have you made something public? Did you was it too soon? This helps you know manage all that stuff privilege for lawyers same problem. They're trying to figure out Well, if I get my data open air have I disclosed it and it's no longer subject to privilege? Like, we make that into a case. Super interesting. Close it out with how big is the team, where is the team size going, what are you hiring for,

what comes next? We're about six people right now, and we've been building, building, building, building, and now with the launch, we're ready to start selling, and so our focus is bring on salespeople. I've done two previous companies, and every time I've learned that I should spend more on sales, so that's what we're doing.

Interesting, good takeaway. That's good. That's the environment that a great sales leader or individual contributor wants to join. I mean, it takes a lot of technical CEOs a while to actually get through that, it makes sense they're in your third company because like yeah a lot of people learn that lesson late right yeah. JMo thank you for joining. Thank you so much for joining. Come back on when you have news and thank you for

doing this. We will talk to you soon. Cheers. Let me tell you about Wander. Find your happy place, find your happy place. Book a Wander with inspiring views, hotel great amenities, dreamy beds, top of your cleaning, and 24-7 concierge service. It's a vacation home, but better folks. And next we have the founder of Contextual AI coming in to the studio. How are you doing? Let's bring him in. What's happening? Also, if I have this correct, the inventor of rag, correct? I'm one of the authors of the rag paper. Okay. Okay. So yeah, that was

a team effort. Lots of folks and it's long history of, you know, research that has gone into that. Yeah. Give me the state of the union. Very, very humble. Very humble. No. The man who invented RAG by himself in a cave with scraps. In a cave with scraps. Yeah. Give me the State of the Union on RAG. Some people are saying, oh, just use a bigger context window. What are companies actually using RAG for on a day-to-day basis? What's the state?

And then what's the shape of the industry that's popped up around the technology? Yeah, so the RAG is really a very simple idea, right? It's about having GenAI work on your data. And you do that through retrieval. That's the R, and you then use your retrieval results to augment. That's the A, your generative AI. That's the G. So it's a very simple idea. How people do RAG right now is radically different from what we did in the paper originally.

I think the buzzword these days is about context engineering. How do you actually give language models the right context so that they can do their job? And as it turns out, all the language models are pretty good these days and there isn't that much of a difference between your CLOD and your open AI models or Gemini. If you give it the right context, then it can solve the problem. If you don't give it the right context, then you can have an amazing language model, but it's going to fail. And so that I think is an opportunity that a lot of companies are looking at now.

How can we make sure that this context layer really works? Do you feel like there's a rag step or layer in the typical deep research projects, products that I'm using on a day to day basis? I feel like it's mostly like going out to the web searching and then kind of just you know, summing all this stuff up. But I can't tell if it's actually like the, the base of rag is like embed all of that into weights and, uh, and then, and, and, and then search over it.

But is that happening at the state of the art right now? I think so, you're right, a lot of it is web search. And if you wanna do web search efficiently at scale, then you probably use simpler algorithms, so things that aren't that involved. But even web search very often uses embeddings and clarity search there. So you could argue that web search is also just.

Why is search so bad right now? I feel like I can't search my email for anything and Google has frontier models. I feel like search has just become really hard, but then at the same time, I'm having my mind blown by LLMs and deep research products, but I don't wanna wait 15 minutes just to search my email, but maybe that's what I need to do, maybe that's what the future looks like. What is going on there? Yeah, I mean, that's a hard problem, right?

But AI should be able to search your inbox for you and just give the right answer, right? Yeah. That's the goal. I think it's happening. It's just search is a really hard problem to do. You don't want to really do it in a single step. So the way you do proper retrieval is multi-stage sort of cascading with smarter and smarter models that look at what might be a relevant result. But

you're right. If you retrieve the wrong things, then you can never give the right answer. But you're right, if you retrieve the wrong things, then you can never give the right answer. So that's a big open call. Where are you guys focused today? I know there's a number of different use cases. Yeah, so the use cases we're looking at are really your bread and butter use cases for RAG. So answering complex questions on complex documents.

In our case, we scale to millions of documents, which is unusual. So one of the most common misconceptions about RAG is that people think that it's easy, which is actually probably true if you have like two or three documents, you understand the use case is not that complicated. But when you go to the real world

and you talk to some of our enterprise customers, they have very difficult problems, the data is all over the place, it's very complex data, there are millions of documents that it needs to work on top of, and then search breaks down, so you can give the right answer, even if you have a great language model.

Yeah, I mean, the scale of data at some enterprises is probably, what, seven orders? I mean, I imagine the number of emails sitting in Gmail inboxes across the entire network is way beyond millions. Fascinating. That is also to your earlier point about long context models.

You can't fit all of that in the context of a language model. You need to retrieve all. No way. What's the state of the business today? How big are you? What are the new challenges? What are the next milestones?

Yeah, so we're 70, 80 people and working on a lot of interesting problems that kind of nice. Kind of across the board, trying to expand it to different use cases as well. So beyond the traditional brand use cases, looking at things like root cause analysis, code gen, because you know,

code gen is very hard and also often requires technical documentation that you don't want to incorporate in your code gen. So yeah, making a lot of good progress on very interesting problems. Very cool. Well, thank you so much for stopping by. Love to have you back for a longer conversation. Yeah, let's do it again soon. Hope you have a great rest of your day. We'll talk to you soon. All right. Thanks for having me.

Cheers. Bye. Great to meet you. Let me tell you about Bezel. Go to getbezel.com. Your Bezel Concierge is available now to source you any watch on the planet. If you like Enterprise,

agentic workflows, you might like fine watches. And up next we have OpenAI. Big launch today. We are gonna break it all down. Welcome to the stream. How are you? I think we got caught up on guess we have two people what's happening great to have you guys on the show I will start by saying sorry about the sorry that Coldplay had to have a conference last night

Like then you know, it was hard to you know hard to predict You don't know companies don't normally launch anything's never been harder to launch anything on the internet. I know, we were just talking about this. Yeah. Well, we're here. No idea. He says it should have been. OK.

Well, normally you don't have to plan your launch schedule based on Coldplay. Yeah. Coldplay is out. Maybe it's something to keep in mind. Break down the launch. What is in? What should we be focused on now?

So I used to work on deep research. Yos used to work on Operator. We both had our launches earlier this year. And I think after our launches, we realized that our products are very complimentary. And so we've basically combined the best of both into this new product, ChatGBT Agent. So ChatGBT Agent has access to a virtual computer

with a bunch of different tools installed. So it has text browser, visual browser, terminal. And it's able to do a lot of different things that you would do on a computer. So it's just very flexible and pretty powerful model. We trained it using end-to-end reinforcement learning, like our past reasoning models. And yeah, it can make slides, make spreadsheets.

What initial use cases are you guys most excited about? Have you been using internally? What kind of companies should be, and just individuals should be kind of taking advantage of it as of today? Yeah, I think, so deep research, as you were saying, we combined sort of deep research and operator to build this.

Deep research was really good at research. Like, having the best product out there in terms of, or at least that's what I thought, or I still think, in terms of researching. And then operator was there to take actions. Combining these two, you open up a lot of possibilities. You can do research, you can do actions, you can do research and then actions.

And then on top of that, we added APIs. So like, for example, if you have connectors, which we launched, I think, a couple of months ago, you can connect Gmail, Google Drive, Linear and what not, all sorts of products. And combined with that, it becomes an extremely powerful research and action tool. So, for example, like personally speaking,

I've been using it a lot internally, just to even talk with the code base. Like I'm solving a particular problem, I'll connect it with GitHub, I'll ask it like, hey, can you sort of go figure out what's happening in this code, which is let's say a new code base for me. And then the model is also very natively multi-turn, which means that I can just have conversations

back and forth with it, which is not true necessarily, wasn't true, for example, for our deep research model, which we released earlier this year. So it's really, really useful from a, specifically from at work, when I'm able to connect all these amazing tools and able to just understand what's happening all parts of the decision.

So secondly- Oh, sorry. I was gonna quickly, I was gonna say like, personally, I also use it a lot. I think there is a lot of small things or big things that I have to do. I can do them myself. Give an example, my wife and I have a date night

every Thursday. I forget to book it most of the time. And then I get in trouble. And then now with agent, like you can schedule tests, et cetera, you can just say like, look, every Thursday, just go ahead and figure it out. Give me five recommendations in the morning which are available and I can just do it.

Show up on Thursday morning, just click it and it's done. So things like that. Once Deep Research came out it felt like there was this little bit of a meme about like we have 15 minute AGI and I'm trying to understand I could imagine this new product stretching that out to let it run if it's building a spreadsheet and scraping data from different sources and putting a whole bunch of different things together. I could imagine letting it run for like an hour and coming back, but you said it's multi-turn.

So what does the typical interaction look like? Is there a wider variance? I noticed in the latest revision of the ChatGPT app, there's now a little like 15 minute UI element next to deep research to kind of hint that, hey, you're getting yourself into a 15 minute cycle. Obviously there's lots of efforts to speed all of those processes up and that'll come,

but what is the typical interaction time look like? Is this more asynchronous or synchronous or kind of you can do either? Like how do you think about those trade-offs? Yeah, I think our team in particular is really focused on solving harder and harder tasks that take people more and more time. So a lot of the agent tasks can take anywhere

from like around five minutes to, I've seen it take over an hour. Wow. But a lot of times these are tasks that would have taken humans many, many hours. So I think as our agents get better, probably the length of time they'll take to solve tasks will also get longer because just the tasks

will become so much more complex. Like imagine a task that takes a human many days. So a question I have is right now, the agent can browse the web for me, do research, take action. I imagine the next step would be an agent, like a voice extension to it, where as an example I might say, hey, I use Geico right now. I want to potentially switch. Can you go out and do research?

Here's the cards that I have. Try to find a cheaper price. And then, or even call Geico and negotiate a lower rate. Or you're traveling, let's say, and your flight. I need to cancel an old internet line on Spectrum right now. And they only allow me to call during weekdays. Yeah, the other example, you're on a vacation. And you want to change your flight.

And you know you're going to maybe have to call and sit on a wait. So is that the direction that you think we're going towards, where it can not just browse the web but then actually start to? It's funny to think about because the voice agent would then just call and maybe it's talking to another agent on the other side.

But yeah, where are we going? Yeah, voice is definitely an interesting form factor. I think the way to think about where we're going is twofold. The first is what Isha just mentioned. I think we wanna continue to solve harder and harder and longer and longer tasks. I think today we can solve, let's say, an hour or so of tasks.

Hopefully in future we can solve multi-day tasks and it might take longer, it might take shorter depending on how we're doing, but continuing to improve on reliability and complexity of tasks that we can continue to solve. So that's sort of a core part of what we want to continue to improve on. Second part, the Geico example, for example, the one you gave, technically you can do it today, not with voice, obviously. You can just type it in in agent and it'll be able to essentially answer the query. You can log in with the virtual browser that we have on agent with your whatever internet

provider you use. And I think it'll be able to tell you things about what's happening there, what's not happening, what other alternatives might there be and all of those things. But then at the same time, you bring up a really good point, which is like voice might be a very natural sort of way to do this in future, and that's a form of, we won't evolve. Other companies introduce voice

as an intentional point of friction, like this sort of call to cancel. Totally. Spectrum would never do that to me. Yeah, they would never do that to you, John. And so that to me feels like this met, you know, if I can go into a web app, just click cancel or do something like that. My question is about like the user experience of like having something that could take five minutes or an hour. How predictable

is that I've gotten in a great pattern where I expect deep research to take 15 minutes. And so I know when to go to deep research and I'm gonna come back later and it's great. But if there's some variability there, is it gonna send me a push notification when that's done? Is that how that works? How do you train the user to get the best experience? Yeah, I will send you a notification. I think actually the fact that deep research

always takes the same length of time is probably, I don't wanna say a a bug, but I think of it as a feature. It's not the end state. I think it's a feature. I should think for as long as it needs to think. Totally. But I think for deep research, it always just thinks for a really long time, even if you

ask what the weather is. Yeah, that's true. So I think that's a better middle state. And I think that this model is like a step towards that, but I think it still will think for too long on like really simple queries. Yeah. You're totally selling Deep Research short. Sometimes I ask you what the weather is and I want the history of weather from start to finish and what it is tomorrow and yesterday and I want the history of meteorology and how the Doppler 3000

works. I want everything and I love that about Deep Research. The use case that I'm sure that will immediately Start happening that is pretty hilarious to think about as a student that just says hey These are the three websites that host the homework that you proactively go to the website figure out the homework created Check this check this homework if somebody wants to say that's not that's not a GI. I don't know what and submit it. Yeah, the teacher's going to be like, check this homework. If somebody wants to say that's not AGI, I don't know what to tell them. Yeah. I don't know.

What about other tool use? Jordy mentioned phone usage. You mentioned spreadsheet integration. What's kind of further down the stack of integrations that you've already announced that might be kind of further down the stack of integrations that you've already announced that might be kind of underexplored or under appreciated at this point in time? To me, I think that the tool that we've given the agent is very general and powerful.

Like you can almost do anything that you need to do on a computer with this tool because it's browser and terminal, which you can do most things that might not be the most readable to a human. So I think that now it's about pushing the capabilities. You can ask it to do anything in theory, it's just the agent won't be good enough to do everything you ask it to do.

So I think that we just need to make it better and better using the tool it has. Yeah, I think the frontier continues. I think as Isha said, the tool is extremely general. It has access to a browser. It obviously has access to a terminal, and we can give it access to as many APIs as possible. That should allow you to build whatever you want to do, generally speaking. Like, for example, you can totally imagine in the future, it has access to a voice API or whatnot, whether it's internal or external, depending on how things go. You can have access to everything and build everything,

but we still need to push. It's still early. We have not solved everything. It's still early. We still wanna make sure that we can solve use cases with really, really high reliability, and that continues to be a pretty large focus. Yeah.

We need a few seconds. I'm excited. I mean, think about a world where you can give it access to your password manager and things like that so that it just immediately can act. Or just API integrations, right? Yeah. So then the passwords don't even need

to pass back and forth. That makes a ton of sense. Yeah, I'm excited for, I feel like deep research maybe doesn't have access to images and chat CPT yet, but I could imagine those being way, like the reports being way richer if you can define them. And then sometimes when I'm just generating like a general chart, I actually wanna use

like a visualization library in Python and kind of going back and forth. So very cool to see it all kind of come together and very excited for where this is going. What's the rollout strategy? When can people actually start using this stuff? People, everyone on ProPlan should be able to use it by end of day to day.

That's good. And we'll get it to plus users over the coming days and then enterprise over the coming weeks. Very exciting. All right, well congratulations on the launch. Super exciting. We're gonna turn this day around. It's now just about opening eye agents.

Ignore all Coldplay memes going forward. Well, thank you guys for joining. Thank you so much. Thanks for having us. We'll talk to you soon. Cheers. Bye. Up next, we have Dan Shipper, friend of the show,

over at Every. Who got early access to Open Eye agents. And we're going gonna get some feedback John just spilled his base juice All over the table all over the FT. That's that's really disappointing. You're not able to read that papers that I can Do we have Dan in the waiting room? There he is

Guys great to see you every time you're on here you're in a different place. Thank you. You finally caught me when I'm not traveling. Yeah, yeah, yeah. Yeah, this is the first time. I like that. I like that light up logo in the background. Very nice. Very nice.

Thank you. Subtle, subtle kind of in-home, out-of-home advertisement. That's what we're going for, exactly. What's happening? What's on your mind today? There's a lot going on. There's a lot going on. There's a lot going on.

There's a lot going on. There's a lot going on. There's a lot going on. There's a lot going on. There's a lot going on. There's a lot going on. There's a lot going on. There's a lot going on. There's what we're going for, exactly. What's happening? What's on your mind today? There's a lot going on.

There's a lot going on. We're here to do a vibe check. Vibe check. Of ChatGBT agent. So I was lucky enough to get to hang out with it and work with it for the last couple days before it got launched. And I have a bunch of things to tell you about how it works.

Incredible. So as your previous guests, who are amazing, told you, it's sort of like deep research and operator had a baby. And it does some really cool things. So, one of the first things that I had to do is I had it go through all of our support emails and all of our feedback forum posts for the last two months. So it's like about 1, our support emails and all of our feedback forum posts for the last like

two months. So it's like about 1,500 support emails and maybe like 500 posts on our forum to gather for Quora, which is our email management AI app, to gather all of the customer archetypes of like okay who's posting, who's a promoter, and then going and looking on their LinkedIn to be like, what's their job? You know, where do they go to school? All that kind of stuff. And put together a long research report of who our promoters are, what the archetypes are, and who our detractors are, and why they don't like us.

So that's the kind of task that obviously I could have done or someone on the team could have done, but it goes and does that. But it would have taken so long. So long. Yeah. It takes a long time And it's the kind of thing that you almost want on like a recurring schedule like you just kind of want to see like once a month but no one wants to do that once a month and you can Schedule with chat to be t agent you can schedule it to run so I can just say like every month

I want you to just send me Or on the first of the month, which it's really freaking cool That that's what's amazing. I wonder how compute intensive that's going to be, because if I know anything about building dashboards and building like these these reports, there's always like an intense amount of like, oh, we got to have this dashboard. And then you check the analytics and it's like, oh, it turns out the team just said that for a week and then like stopped watching it.

And if it's running, you're burning cycles. Dan is every foundation lab's worst nightmare because he gets on the most expensive plan and then uses it 100 times more than anyone else. You're single-handedly gonna bankrupt the lab. There's other users that are probably higher margin. But yeah, talk to me about that actual experience. Did you have to OAuth with any different services?

Did you have to share any API keys? Did you have to export any data or was it really as simple as just a prompt? It's basically a prompt. What happens is you type in you type in a prompt You say I want you to check out Cora. I want you to check out our emails I got want you to check out our our support forum So Chetrapi has connectors., I previously already connected my Gmail. So, you just like log in on the OAuth. And then what it will do is it spins up its own computer in the cloud, its own virtual machine.

It goes in the browser and starts browsing the web. It also then connects to Gmail. If it hits a login, so for example, when it hit LinkedIn, it like couldn't log in and you can take over the browser in the virtual machine and type your password in, which is like a little a little janky. It works, but it works pretty well. I think the interesting thing about this though, is it there are there seems like there's two main approaches to agents and

opening ian anthropic are taking very different paths, and they have very different trade offs. So the really cool thing HGBT agent is they're essentially abstracting away the browser and the computer. So all you're doing is you're interacting with HGBT and on the back end all this other stuff is happening. So it doesn't matter if you're on your phone, if you're on a computer, whatever. They have this whole virtual environment set up. It spins up, it does the task, and it spins down. So it's like a, it's a very good consumer experience. Um, Claude code, for example, from Anthropic, which is, I think Claude code is way more for developers. Chudu PT agent is way more, I think for consumers. Claude

code is all on your computer. It's all in the terminal and, and you have access. It has access to all of your files and you have the ability to use it wherever and whenever and however you want. So it's much more customizable and much more composable. So I find that Cloud Code is much more powerful but it's much more intimidating and it's just not something that a consumer can use.

And I think that- But still the crazy thing- The trying, yeah. the crazy thing... Yeah. The crazy thing there is doesn't Clodcode have more downloads right now than the actual Clod mobile app? Like the... It's something crazy like that.

I honestly think people are sleeping on Clodcode. Like I use it all the time for non-programming tasks. And I think most people think they can't use it because it's in the terminal and the terminal is really intimidating, but it's an incredible product. So, yeah, how would you solve this problem if you were to do the same eval

of like generate your net detractors, net promoters using cloud code? You know, just open up the terminal on your laptop, you wouldn't be able to do it on your phone, but you'd just engineer a prompt that told it to do that and it would just write all the code that it needed to do exactly the same thing. Do you think it could hit that?

Do you think it could do it? Yeah, it could do that for sure. And I think the nice thing about Cloud Code is you get many bytes at the Apple and you can like, so for example, with Cloud Code, what you can do is you can have it make a full plan. So it can output like a full markdown document with like a 300 or 500 or a thousand word plan. You can modify it and go back and forth with it and then have it execute it. I think it would be more complicated. Like, yeah, it would

probably write some code to hit the Gmail API. And I'd have to like think about that as opposed to just like clicking the connectors button. Or it does have a web research tool, so it would be able to go to like our feedback forum and do all that stuff. And it would be able to save all the data so I could kind of watch what it was doing as it was doing it. But so I think you would get basically the same experience.

I think Cloud is a little bit more controllable and therefore a little bit more powerful, but Chedgity is just much easier to use. It makes sense. What use cases do you expect ChatGPT agents to have the most PMF around? I was imagining the student use case, which is just like monitor the homework

that I have do across, you know, I remember in high school, even teachers would post their homework on websites. You could basically run something that was like, monitor the homework assignments that I receive, and then take a preliminary pass at doing the assignment, and then give me a draft that I can review, and sign off on or tweak, and then automatically

submit it. And then submit my college applications, attend college. Write my college essay. Get a job for me, just deposit the money that you make as an engineer at multiple companies into my bank account, and then also plan a trip to Europe, because I'm retiring. Watch out, Cooley, a tech LGBT agent's coming for you. Okay, boom, breaking news.

Breaking news. Yeah, but giving this powerful of a tool to everybody immediately Not everybody's gonna realize that adopt it right away, but you can imagine like a few use cases Just spreading like wildfire totally Yeah, I mean, I think what are what are the things that you would immediately do if you had an assistant? Like if anyone if someone just dropped an assistant into anyone's lap, like what was a person they would do? I don't know, help me book a vacation,

help me like figure out how to order groceries, help me like, another thing I use it for is like, research the web about all the topics that I care about and every day give me a report on all the things that happened in the last 24 hours and it just does that incredibly well and I I can go into, you know, go behind login walls and pay walls and all that kind of stuff. So I think those kinds of use cases are going to be the most interesting ones. But I honestly think right now for most of my consumer use cases,

4.0 or really 0.3 is the best. It's much faster. I mostly don't need it to use a full computer to spin it up. So I see Chaijit Guji agent as being something that you use every once in a while rather than saying that you're using every day. Sure. Yeah. So, so we're, we're, we're increasing the level of like complexity, like, like four Oh is kind of a Google search replacement for me. Now. I just kind of hit it with like,

when was this person born? How old is this? You know, what's the state of this? What's the capital of this state or something? Expect a really quick answer. Then go 0.3 if I'm willing to wait a couple minutes, want something that's a little bit more thoughtful, maybe some search results from the web.

Then deep research, if I'm actually trying to understand the full story, read a whole report. Agent, if I think it's gonna need to use a computer, actually take some actions, pull some things together. How was the actual interaction of the back and forth? This was something we talked about with the OpenAI folks was like, if it gets stuck, it pings you. I like the deep research.

Yeah, it takes 15 minutes, but I've trained myself to just be like, forget about that until tomorrow. And then when I have time to sit down and read the full deep research report, which is gonna take me a couple minutes, like then I'll come back to it, I know it'll cook and it'll be done. It would be kind of annoying if deep research

came back after two minutes and said, hey, I'm gonna pause all that while I ask you for an update. Like, it feels like there's a little bit more. I got to be on answering questions there, but push notifications, maybe solve that. Walk me through like how, how involved you were, how active of a process it is. I mostly was not involved every once in a while. Like it does have a, like a stop.

You can help us stop and like change what it's doing, which is nice. Cause like if it goes off the stop, you can help it stop and change what it's doing, which is nice, because if it goes off the rails, that's helpful. But I think, and it has a push notification thing, but I think this is an interesting problem with agents where I can't stop watching them. And so I spend a lot of my day just watching the agent doing something,

and ChudgeBeekey agent has its own cool UI where you can kind of see interesting animations of what it's researching or which websites it's using and stuff like that so I find myself actually glued to it a little bit and I just don't think that's a very good way to spend time I think it's I think it's mostly solved by having push notifications but like there's a sort of emotional process of training yourself to be like it'll let me know when it's done and don't have to like wash over shoulder. We're to you like we we design a lot of assets Here at TBPN and that like even if I trust the person creating it to do a great job

There's still this tendency to want to like hover and be like, okay tweak this tweak that No, let's do it this way in real time versus like waiting. Yeah, but um It's the same thing with 4o like, you know early on I would kind of be in this loop of like okay I got a result I still got to go fact-check this and check the underlying links because hallucinations are a big problem Well now that they beefed up search so much and they're referencing direct quotes like I feel like I'm much less Like the anxiety level around hallucinations is a lot lower, just in general queries. Totally, I think these things are tools.

Anytime you're delegating to something, whether it's a human or an AI, there's a learning process you have to go through. Like, human managers go through this with employees all the time. Like, if you're a new manager, you have to like decide, okay, am I gonna delegate this, or am I gonna micromanage? If I delegate, like, I get more leverage, am I going to delegate this or am I going to

micromanage? If I delegate, I get more leverage, but it might not come back the way I want it to. Good managers know how to split up a task or communicate it to their employees or figure out who's good at doing what and know when to get into the details and when not to. I think we're going through the same curve with models. So we're becoming model managers And everyone is learning how to how to solve the same problems that human managers have solved And so the more experience you have with the tool the more you know, like okay I don't have to check this for answer or this looks a little fishy Same thing with touch of the Asian

I think will be much better at using it in three or six months than they are today Cool make sense Dan always great to chat. I do wanna have you back on very soon to talk about LLM induced psychosis. I think it's important to talk about. Let's talk about it. But we'll need a lot more time. Thank you for the vibe check and everybody listening, go subscribe to every right now.

Do it. Awesome, thanks guys. We'll talk soon you guys soon. Talk soon. Bye. Cheers. Up next we have Chris Best from Substack, the best CEO Substacks ever had arguably.

Undoubtedly. He's in the conversation. Definitely in the conversation. Welcome to the stream, Chris. How are you doing? Congratulations. You got some news for us? You got some numbers?

Get it ready, Jon. What's going on? What do we got? What's going on in your world? Please tell me at least nine figures. Doing good. We've raised a hundred million dollars to see. Woo!

Woo! Congratulations. I was hoping you guys would ring that thing. Of course. Congratulations. Of course. You guys are incredibly back. Yes.

It's been a journey since I believe you raised something. It was like seventy five on seven hundred back in what was it? Twenty twenty one twenty twenty one. That was those were different times. I don't know if you guys remember twenty twenty one. I do. I do. I remember it fondly. You're the center of the storm and I was in the depths of a slog basically. Anyway, give us the update, how the round come together,

what is the plan going forward? I heard you were, what was the reporting? Accidentally profitable? Going back into burn mode? What's the money for? What are you thinking? Yeah, I like that. Yeah, we're partnering with Mood Rogani at Bond.

I love that guy, Consummit Bro joining the board. The big thing is, look, the big thing that's happened is like Substax gone from being like a rinky-dink email newsletter company to a proper sort of network that's taken over the world. And we kind of want to look, basically kind of like switch into a mode of thinking about long-term ambition,

long-term like how do we actually make the big fucking version of this thing? What investments do we need to make? How do we focus on the things that actually matter for like the long-term flywheel growth of the network? And this just gives us like a total free hand to do that thing and build the best possible version of it Okay, give me the pitch for I think of sub Substack as the no brainer place to launch a newsletter. You have a lot of other products. Talk to me about what the future of the Substack creator or someone who has Substack as like their primary out. It's the main engine of their creator economy business. For example,

what does that look like over the long term? I imagine that people are still doing top of funnel stuff on TikTok, Instagram, other places, but you're adding more and more features. What does a well-run Substack business look like? Yeah, the core of Substack is the direct connection with your audience. So people subscribe, you know, the core of Substack is the direct connection with your audience, right? So people subscribe, you get their email, you get the ability to reach them, you even get the ability to like leave Substack and take your list with you, which is a big deal. People can pay you directly so you get recurring revenue. I don't know if you guys have had this, but recurring revenue hits different. The sponsorship business is a great business.

You know, I think that thing matters. Lots of people on Substack have sponsors. We love it. But that thing is very cyclical. It's boom and bust. It's like, you know, whereas you have recurring subscribers, these diehards, that's sort of like,

it funds you to be creative. It funds you to take risks. And so Substack's the place where you sort of like, your hardcore people are. That's where you have a real connection to your audience. You can write, you can post short form, you can post video, you can do live video now, you can have a community.

We're kind of like building more and more stuff. The center is not any one format. It's like the relationship with the subscribers. And then Substack is just becoming, you know, you said you do top of funnel on TikTok and LinkedIn and YouTube and everywhere else. Sure, keep doing that, that's great. Those are massive platforms.

But increasingly you can do that stuff on Substack too. And because you have such a dense audience of smart people, the quality of growth you can get there is already very high. Interesting, that makes a ton of sense. Jordy. I think the magic thing that you guys tapped into that I end up finding myself explaining to other people

is there's this beautiful economy of people on Substack that just want to support people that are nerding out about a specific topic, just want to give them money. And so it's almost like there's this exchange of like, yes, I want the content, but it's also enabling somebody to live a life that allows them to just obsess over one thing or just explore a series of topics

or just be who they are and be entertainment through that. I mean, we've had Emily Sundberg has come on the show a bunch of times and it's just like, it's so awesome To see what she's built and the kind of creator writer that she's able to be unshackled from being at a Specific, you know platform legacy media company. So it's just it's so it's so awesome to see

Talk about the use of funds. You said you can afford one AI researcher now. I imagine that won't be how you spend it. No, no, no, YOLO, YOLO. Start coaching from Mark. Concentrated bets, man, that's how it works now. Concentrated bets. But I mean, concentrated bets,

it's not the craziest idea to go give a bunch of money to creators to kind of pull forward the leap from what they're doing currently to get on Substack. There's different incentive models, Kickstart ad businesses, just hire engineers that can build new tools and new features and just chop wood and advance the ball down the field. What are you most excited about to put that money to work

over the next 12 to 18 months? But you probably think in decades now at this point, right? Yeah, I mean that's the big thing, right? It's like, this lets us have that longer horizon. You can still have all of the same math, but you can just put the planning horizon further in the future and look for something really big. Listen, all that stuff you said,

the stuff that I'm really excited about is like making the product fucking great. Right. I wanted to feel like my joke is Substack does everything for you except the hard part, right? You are the talent. You got to figure out how to write something that's worth reading, how to have a conversation that's worth listening to. If you can do that thing though, we should just build this magic machine that takes everything else off your hands and makes it dead simple. Makes it just like this magic machine that takes everything else off your hands

and makes it dead simple. Makes it just like this magical thing where anybody who has something worthwhile to say can make something. We're starting with that. We have a bunch of little bits of that that are kind of working that we're really proud of that are exciting. But I just think the new technology coming online is going to make us like the version of that magical sort of like media studio, personal media empire in a box that we can build now is going to be so much more powerful. And then building up like the network, right? The fact that we're getting, you know, not just political commentators, but politicians, I think we get not just sports commentators, but athletes, I think we can start to build up kind of like this network and this ecosystem that winds up being this positive sum game,

right? Where everybody that's on Substack benefits from this growing network. Yeah, I've certainly never subscribed to anyone on Substack and been like, Oh, I didn't get my money's worth. I've always, I always have a good time. What, what are the different strategies for Substack writers? I know in like the Patreon podcast world, the people do like one is free. One's behind the paywall. I've also seen sub stacks where there's like a fold and you get every email, but you get half for free

and then you, at some point there's a call to action to go and subscribe and finish reading essentially, but you get every email. What works, what are the different strategies, what are some of the weird stuff that you've seen around the way people are using Substack today? There's a pretty big mix, right? Some people make almost everything free,

and it's just basically like, you know, if you want to comment or if you want to get the occasional thing, that's what you're paying for. So people do really low margin for Chris over here. You just give everything away for free. He doesn't make it in money. No, man. That's the beauty of your system.

Nobody's paying to get more things to read, to get more email, to have more seconds of audio in their inbox. They're paying for perspective. Interesting. Right. Yeah. That's the thing. Like, you know, even if you have a magical LLM that can spit out media in any format, you care about who it's aligned with. You care about like what version, you know, what worldview you're getting. Is this something I trust? Is this something I want to be culturally and aesthetically a part of? You know, you talked about people paying because they want to support people.

The other way to say that is it gives you agency, right? When you choose who to subscribe to, you're choosing what part of the culture you want to live in. You're choosing what gets created. You know, in a world where people, I think, feel like a lot of the media they consume is kind of like stuff down their throats. Getting to kind of like exert a voice and say, I'm causing this thing to exist that I think is great, is really powerful. And a lot of different ways. It's like paying with your paying with dollars versus attention is super powerful, right? Because if you're paying with attention, it's like, well then everybody's focused on the Coldplay,

the Coldplay debacle last night, which is trying to steal thunder from your fundraising announcement, but we're not letting it. And being intentional about like, I want to pay for this because I want more of it to exist. I want it to get better. And this is how I want to spend my life.

I don't want to be on a platform that just is designed to like suck my time from me. Yeah. But I want to spend my time and attention better on smart things like TBPN and everything on Substack. Yeah, no. Amazing. And coming soon, hopefully.

We will figure it out. Yeah, we're about to bet big on Substack. Yeah, we're very excited. And we're riding with you. So congratulations. It's really tremendous to see how far the business has come since those glory days in 2021 and excited for the next five years. Thanks guys. Cheers.

Congratulations. We'll talk to you soon, Chris. Cheers. Bye. Awesome. Next. One last guest.. Cheers. Bye. Awesome, next. One last, one last guest, Deckhart.ai. That's right. The first ever world transformation model

turning any video game or camera feed into a new digital world in real time. Very, very cool. I played around with a lot of this stuff, not this in particular, very excited to talk to the founder. Welcome to the stream, how you doing, Dean? Welcome, sorry for the chaos. We are so happy to chat with you.. Welcome to the stream. How you doing, Dean? Welcome. Sorry for the chaos. We are so happy to chat with you.

Super nice to meet you both. Super nice to meet you both. Good to meet you. Why don't you start with an introduction? I already have questions, but just give me a little background of yourself and the company. OK. So the cart is a very young company.

We're less than two years old. We're a research lab lab and a goal is to build a consumer company, okay? Okay, and what we just launched today is the only real-time video model ever I can just show it to you Yeah, please share screen somehow here. Yes, but you are live So whatever you share on that screen is baked into the internet forever amazing We don't even make sure that we don't leak anything. Just do the right tab, not the API keys. I was going to I wasn't sure. We've never met.

We've met over DMs, but not face to face. I wasn't sure if this was your real face or just a character that you're playing. This is definitely not me. You realize that, right? Yeah, in the real world, he's an anime, but he's using a transformer model to appear like a human. That's right.

He's in fact a Minecraft character. I have so many questions about this model. I wanna jump into how you built it. We could also potentially have the team pull up the demo video on your website mirage.dacart.ai and just kind of show folks what that looks like. Whatever would be helpful. It is currently, I'm trying to get the Zoom call

to be able to share this. But if the team could do it from your side as well, that could work too. Yeah, why don't we just have the team pull up the core website and we can just jump into questions. So real time, what's the secret sauce? Is it a condensed distilled model? Are you using a special chip to inference this stuff?

We've heard Grop, we've heard Q. So real time, let's just talk about the use cases. Sure, sure, sure. So the obvious use case would be like real time video calls. You're dropping into a Zoom call, for example, and instead of yourself there he is there we go do you guys see me yeah looking okay there we go okay okay now we got it working there we go there we go uh so uh who are you uh there we're just cycling through we're just cycling through everything what do cycling through everything. What do you guys like? What do you guys like?

anime Not big into the the anime world, but what about like Legos anything there? It goes let's let's put in Legos. We can just tell you can just type it and it'll exactly okay let me make this full screen just type in Lego and It'll just turn everything into Lego. This is our house. Wow. You can see the real stream in the zoom. Yep. You can see you know this would be the house office. See all the Lego characters walking around here. This is insane. Okay. And then you can decide that you're into Christmas and so everything becomes very Christmasy and your house

Yeah, wow I feel What's the word for a moment like this? This is actually feels like enter the metaverse Yes, I was I was hoping you wouldn't say that because that becomes like you know became a cursed word Yeah, but but like it But it's a good thing. It should happen at one point, right? Because look at- No, this is a big transition from the moment where Zuck was said, did his like,

hello from Horizon's world. It was Wii graphics. It was the critique. It was Wii graphics. And this feels like being in a video game. Ooh, yeah. What is that? Is that a wand? This is, you can see the straw on the regular stream, right? Yep. Yep.

And inside the wizard's prompt, it becomes a wand. And if you flick it hard enough, sometimes it does magic spells. It throws things out. I love how much fun this is. Guys, which one, I'll ask the team. The the teams are playing with the prompts here all day Like the course the one you like The lightsaber one, okay, no you had a Here So is this running locally on your computer? So this no this is running on the server. It's running on the server

So it's going from your webcam to the server back to us over Zoom. So how quickly is, is like Kai Sanat gonna be running this like half the time that he's streaming? This is, this is insane. This is fun. It's pretty fun.

Now, now, now, now, now, now, now, now, now, now, now, now, the big question is what you do with it, right? Yeah, yeah, what do you do with it? No, this is a bold, this is a bold demo too, because the variation in the different prompts and how how how well it's working is absolutely insane totally totally I Have forgotten what you look like in the real world entirely Here's a question would you guys run an entire show through this?

Maybe we can we can try not we might put Tyler on the intern cam. Yeah. Yeah, that's a good place to start So we have an intern cam over here. We can get Tyler running on this home That you're just cycling through these prompts. I can be on wizard cam for a little bit for one stream That's pretty crazy. This is not saying Something something cool. Let me show you this Something cool that we found out is that it's really fun watching YouTube through this Okay, watching YouTube tell me that give me give me YouTube show that you like something you like I mean just do that mr. Beast video whatever

Okay, so you can just look at this mr. Beast video. We can look at this ad Look at the ads and we can share the mr. Beast video. I Somehow you guys hear the audio now? Yeah, we do actually. A little bit. Hear the audio? I don't know if we should, but. Okay.

Okay. And then it's being transformed now? Yup, this is the original MrBeast video. Wow. Yeah, even trippier. You can, here's, MrBeast videos worked really well with Cosmic Medieval Golden. We iterated through so many prompts that we found the ones that worked really well.

Yeah, yeah, yeah. This is MrBeast videos and the Cosmic Medieval Golden world. Okay. Cosmic Medieval Golden. I mean, they're already pretty stimulating. This is even more now. Wild. Very wild stuff. This is insane. Yeah. Where do you think this lives? Does this live with the consumer and they decide to put on the rose colored glasses? Or do you think the creator decides?

Let's say you join, somebody's joining a standup tomorrow. Can they just automatically put the entire team into whatever character they want? Let's see. What standup comedy is he like? I was talking about an actual like engineering stand-up Oh an engineering stand-up. Okay. Hey, it can definitely do that I'm we're asking about you. I'm asking you. Where do you think it winds up living like here's you think

Here's here's what I think is cool about this You know I think it's the first time that we have a new, a new kind of consumer interaction with, with video AI. So far, I know video AI was just, okay, let's create a slot, put it on existing platforms, Facebook, Instagram, Tik Tok, whatever here for the first time, you can actually do something that's slightly different. We're showing it to a bunch of kids and what they ended up doing was for a few hours, they just fought each other with sticks and they started doing like TikTok dances in front of this. And you

have a new kind of consumer experience here. Yeah. Yeah. Yeah. It's like the original in the, what was it in Steve Jobs did that demo of the Mac where it like warped the image. And there was like a, it's like a crazy historical photo in the original Mac OS launch event. How expensive is this for you guys to run if somebody just starts streaming this in real time? Are they paying for it? Are you guys just eating it? It's, we're doing it efficiently enough.

Like we had to write all the low level assembly code for GPUs to get this to be both real time and super cheap for us. Uh, it's at a point that we can actually provide this for free. Like it can actually be monetized without like subscriptions. Like there, there are ways, uh, it's, it's cheap enough to actually be able to build a platform on top of this. Interesting. Do you think, uh, yeah, I mean, do, do, do,

do you think, uh, one of the use cases will just be folks who create video content running their video through this as like a pre-viz for what they ultimately want to build? That could be very interesting. The other thing you can imagine it actually in YouTube, so like a creator, like Miss Rachel, for example,

popular kids creator, could basically say, like, do you want the Lego version of this video? Do you want the pirate version? Well, that's the question about where this lives, because I can go and put my phone in grayscale, and I can view everything on my phone without color, and that is effectively a style transfer, and that's something that I as the consumer decide. you know Mr. Beast can turn up the saturation in an

or you know if you're watching a Hollywood movie they might turn up the teal and orange because that is a traditional Hollywood color grade if you're watching The Matrix they might color grade it green when they're in the matrix they might color it blue when they're out of the matrix right and so it will be interesting to see where this lands, whether it's on the consumer. I like watching Lego version of YouTube. I like watching Lego version of my conference calls,

or it lives on the producer of video. I want to show up as Lego. And then that could be transformed as well. Can you quickly do a GigaChad filter? Oh yeah, do you have a G gigachad filter? Oh, yeah I like a chad filter. Let's check that out. Let's see what gigachad does I will say that the model is really in the current version of the model. Yeah, good changing the entire style. Okay. Yeah Yeah, not just my world. Yes, not Oh turn me into Trump

Okay, you're pretty orange. Yeah But it but it is doing something to the cheeks and the jaw, which is textbook Giga Chad. There we go. There we go. Very funny. There we go. Yeah. This is wild.

Maybe you need to prompt like Arnold classic. So is this already fully open access? Yeah, this is open. We launched it literally 30 minutes before the podcast. We're waiting for you guys. Congratulations. Thank you. This is the first time it's been used on a video call.

Amazing. Insane. Insane. Well, thank you so much for joining. This is a lot of fun. We will get access to it. We'll set it up on the intern cam tomorrow. For sure.

And wait, you already have it set up? OK, we're going to hop off with you. And we are going to check it out with Tyler. Get some more feedback. Thanks so much for hopping by. Congratulations to you and the whole team. Insane. And is there anyone else in the waiting room, or are we good?

I think we're good. Let's, can we go over to the? Let's take it over to Tyler. The intern cam and see if that works. I don't even know if that, if he's there. Oh, oh, technical difficulties, of course. On our side. Anything else you want to cover in terms of news or?

Yeah, there's some new news. Oh, wow. That's Tyler there. Wow. some new news. Oh, wow Yeah, this is me like 30 seconds ago, okay, wow, yeah It looks better without the zoom compression it's a pretty high fidelity model Wow Yeah, so we were talking in the background so you hear our talking And then Tyler's in the corner too. We're getting recursive. Not that we should use that word now. It's the M dash of the modern era.

Interesting. Pretty good. And these were preloaded prompts that you were just clicking through, Tyler? Yeah, I was just like selecting. You didn't generate any of your own prompts? I didn't, but I think he might be able to. Yeah, yeah, that seemed pretty cool.

Some of this seems fun. I imagine that people will be having fun on this on the internet very, very soon. Very, very quickly. I always just wonder with this stuff, what the novelty is, you have to, it's like, wow, it's incredible technology, but then people have to actually figure out

a real use case for it. Well, so here's a use case. Streamers, having some type of, basically, if you tip a certain amount or hit a certain button it puts the streamer into that That's cool. Yeah. Yeah I mean a lot of streamers stream with with green screen backgrounds and they already drop out the background and put themselves in an environment that matches The game that they're playing we're just cleaning up the messy background And so yeah, you can imagine this being like basically in the V basically in the VFX pipeline

for streamers. I think if most people showed up to a Fortune 500 Zoom call with this, it might not go over too well. Well, they can always make everybody on their screen look a certain way and not make themselves look normal to everyone else, right? Yeah, yeah, yeah, yeah. If your boss is yelling at you and you put them in Lego mode

It's probably gonna hit a little bit differently might be a good shield more taller Mode Lego mode oh sorry Lego boss yeah Couple more headlines since we're here perplexity apparently just closed a new round at 18 billion. 18 billion, wow. So, Perplexity has around 2% of queries according to Semi Analysis right now. I use it regularly. We talked to Chris who was on the show.

Seven million DAUs, 30 million daily queries, 4.3 queries per user per day, a 2% share of users and a 2% share of queries. Solid. That's the perplexing stats. Solid numbers. Pretty good. They got their new browser.

They're going to be investing heavily. And then outside of that, lovable, just raised 200 million at a $1.8 billion valuation led by Excel. Congratulations. So lots of heat on the timeline, lots of big rounds getting done. Everyone decided to launch today I feel like and then they got the steamrolled a little bit but that's why we're here. We didn't spend too much time on the concert fiasco and instead can

move on talk to you about the news. Also I want we want to send our best wishes to Tyler. He says, hi crew, I had surgery to remove lots of infected fluid from my chest and a big lung abscess with infected tissue. Pneumonia, sepsis, antibiotics weren't working in the ICU now. Surgery went well. Surgeons are heroes. I'm so grateful.

We're covering. Thank you for your prayers, all good. So I hope he's doing well. Let's send some prayers over to Tyler. Yes. What else is in the timeline that would be worth to close on? I have a good closing post.

The lads over at Reindustrialize are having a lot of fun. If you can pull this up in the bangers tab, you can see quite a number of former TBPN guests all in the back of a pickup truck fantastic if you can pull this up team we're working on reducing the time between talking about a post and getting it live on the screen there we go all the boys got Augustus nice Paki Steinman everybody all in one place I love to see it. So Anyways, thank you for tuning in today super fun show and I can't wait for tomorrow John

We for tomorrow leave us five stars on Apple podcast and Spotify and we will see you tomorrow. Have a good day We love you. Bye. Bye