TBPN Live - NVIDIA Chip Export Debate with Aaron Ginn, Apple Building a Robotic Siri | Delian Asparouhov, Jen Bucci, Ben Kennedy, Jessica Wu, Parag Agrawal, Eric Simons, Matt George

Starting point is 00:00:00 Watch TVPN! Today is Thursday, August 14th, 2025. We are live from the TBPN Ultradome, the Temple of Technology. The Fortress of Finance. The capital of capital. Jordi, why are you bearish today? Did you not see that a company named Bullish went public and the stock popped 85%? Top signal. Why? Why? Why? Are yes, gross margins are negative, but is that not a green flag? Is that not a good thing? What does AI have to say about negative gross margins? Is it that bad? Break it down for me. I asked one of the smartest models in the world.

Starting point is 00:00:39 Chat ChpT, five. Negative gross margins are fine, right? We shouldn't worry about negative gross margin companies selling to negative gross margin companies, right? Chad ChbD says, no. Negative gross margins are generally not fine. When you have one negative gross margin company selling to another, that's usually a flashing red flag, rather than a don't worry situation. If you can't clearly explain how gross margins

Starting point is 00:01:05 will turn positive and the plan relies on, we'll make it up in volume, that's not strategy, that's financial quicksand. Financial quicksand. It does seem like they solved alignment by default with this. It's great that it's pushing back. During the Glazegate era, it would have been like, yeah, absolutely.

Starting point is 00:01:22 Well, they're not fine, they're not fine for most companies. But you're different, you're different, you're in the conversation. Anyway, if you want to fix your gross margins, if you want to dial in your finances, go to ramp.com. Time is money. Save both. Easy to use corporate cards, bill, payments, accounting, and a whole lot more all in one place. Now, more important than ever, there is a weird trend shaping up. And it's a question that's on the top of my mind. It's a question that should be on the top of most venture capitalist mind right now, I think. So the question is, how-losses?

Starting point is 00:01:54 Bad, yeah, how bad are AI startup unit economics? Also, good morning to the chat. Good morning, John Exley. Good morning. Sean, Nicola, Matt, Techno Chief is here. We got Gold Rock in the chat. A lot of names, a lot of names I recognize. So good to see you guys.

Starting point is 00:02:11 Great to see you. So here's an example of how the AI startup economy works right now. You, the user, the purchaser of the AI application, you pay a company, an application layer company, $1. Seems pretty like a good deal. you're getting a nice little tool for a dollar then let's trace what happens that company that application layer company they go to a foundation model company they give that company five dollars then that foundation model company goes to a

Starting point is 00:02:40 hyperscaler they give that hyperscaler for cloud hosting they give them seven dollars and in turn that hyperscaler goes to a GPU maker and they give them thirteen dollars and so it's uh it's giving house of cards uh It's giving chained losses. It's giving chain losses. But the question is how fast can inference fall? If fixed performance inference falls at the... Inference, come down.

Starting point is 00:03:07 Come down in price. I need you to come down. So if fixed performance inference falls at the rate of Moore's Law, Moore's Law, for those who have been living under a data center, is the idea that the cost of compute on a dollar per flop basis cuts in half every two years. It used to be every year to 18 months, and then it kind of stretched out, but we are still making gains in just more advanced semiconductors, better performance on a per dollar per unit of energy cost. The chips are getting better, and that's happening every two years. But if fixed performance inference, like inference at a certain level of intelligence is only getting cheaper, like 50% every other year, that's probably not that great for your gross.

Starting point is 00:03:55 margins. Because if you're negative 500% gross margins, it's like, okay, in two years, you're still going to be negative 250, then you're going to be negative 125. It's going to take you a long time to kind of dig out of that hole. But there is cause for optimism. So algorithmic improvements in inference efficiency do seem to be moving quicker than Moore's law. We saw this with Deepseek. Deepseek R1, the reasoning model, is dramatically cheaper on a per million token basis than chat GPT and so we know it's possible a lot of those algorithmic improvements are getting ported back to models right now we see this with the parade of frontier and all the labs are in in the rumor credible competition rumor by the way is

Starting point is 00:04:38 deep seek is planning to launch R2 on the day of NVIDIA's earnings really probably just random how solid is this rumor like I I wouldn't I wouldn't lean on it too hard but I think it's a possibility okay so Basically, we're getting the Moore's Law improvements, like almost certainly. That's kind of just assumed to be true. There should be some algorithmic improvements that will end up.

Starting point is 00:05:05 We should see cost of inference having every six to 12 months, maybe five months on the really fast horizon. So I think we're not quite on a knife's edge here, but it's definitely something to keep an eye on. And we need to make sure that we're actually hitting all of those different algorithmic improvements as fast as possible.

Starting point is 00:05:26 Or just 5x prices. Yeah, that is the question, is that I, if you had told me in... And Gurley's point has broadly been, if you're selling, you know, some application layer software at negative gross margins, you are effectively subsidizing demand and creating more demand than if you're just... Which makes sense because these businesses often trade on revenue multiple and revenue growth multiple. So revenue growth going from having the steepest line to the $100 million, that's the most important thing. People don't care. This is the shooting stars.

Starting point is 00:06:02 We were joking around earlier. You were saying there might be, well, no, you earlier today, you were saying you were potentially interested in investing in some companies that don't have to pay for inference. Yes, yes, yes. Software companies with little to no inference. Maybe no inference cost. Could be something there. Maybe traditional. Traditional SaaS might be making a comeback. There's been a yard sale in SaaS broadly. Seriously. Seriously.

Starting point is 00:06:31 Maybe there's something there. I mean, it is a, it is a bull case if you're running a company that is growing but doesn't have upside down unit economics and is doing well on gross margins. You might, you know, even if there is some sort of market correction or pullback, like you're going to be in a strong position. So certainly treat the R&D AI agents. stuff that you bolt on as incremental, as experimental, see how it can improve your workflow. But you should make sure that the demand is actually there.

Starting point is 00:07:02 Somebody should build AI agents to help negative gross margin AI companies achieve positive unit economics. I mean, at the same time, if you told me that as basically a pro-sumer, I would be paying $200 a month for chat GPT and feeling that that's a steal and I pay that bill happily, and even 250 for Google, Gemini, just to get access to V-O, I'm happy with that one. I almost hit GROC 3 Ultra Pro plan, which is $300 a month yesterday, but I was like, I don't think I need GROC 4 heavy as well, but I want to test these models. It's also kind of my job, but still, just the idea of spending $500 on effectively consumer software is somewhat remarkable.

Starting point is 00:07:47 and so I do wonder what the elasticity of demand is. And if these AI companies that are selling AI-enabled SaaS products were to quintuple prices, what their churn would look like. Yeah, you're also a coastal elite living in a bubble, in a technology bubble, and you'll happily pay hundreds of dollars a month. Yeah, it is, it is rare. For leading edge models. Just like I would pay hundreds of dollars a month for re-stream

Starting point is 00:08:14 because it's what powers this stream, one live stream, 30-plus destinations, multi-stream and reach your audience wherever they are. You can sign up for free at Restream. And Restream lets us aggregate all the chats. So we see the chats from X and YouTube. But YouTube seems to be where it's at. I would recommend the YouTube chat. John Exley is there. Greeting everyone, hanging out. I recommend John Exley in the YouTube chat. But we have our first guest of the show live in person. Aaron Ginn. bring him in from hydrohost he's been on the show three four five times too many times to count welcome to tbpn welcome to the ultradome errand how you doing bring it to see you did you bring a present

Starting point is 00:09:00 what you bring you bring you got a match the gong man it's topic is china take a seat take a seat tell us how you're doing tell us how long you're in town and then i want to go through the nVIDia h20 export yeah we have some pros and cons we're going to debate it a lot on the show yeah I mean we should we need to discuss the fortune please in terms of like who favored to win yes well so you brought us some fortune cookies yeah yeah story on the fortune cookies well actually the fortune cookies so I'm hopper it's called half Asian Pacific Islanders is actually not Chinese at all it's a fortune cookies are in San Francisco so we unbox and open one yeah I mean fortune is for the show

Starting point is 00:09:37 yeah see we should see who is actually gonna win this AI war so um it's open so are these rigged by the way these rigged no I wish there were funny ones no they're Get those. There's a company that sells ads in fortune cookies. So they get the fortune cookies away from for free, but then when you open the fortune cookie, you get an ad. So I am opening my fortune cookie. It says, your careful nature will bring you financial success. I think it's pretty accurate. Jordan, wasn't I just talking about this? We need to read again. We need to dial back the CAPEX at TVPN. Your careful nature will bring you financial success. What was I telling you earlier? I was telling you. We need to dial back the CAPX. Less HAPX. Less supercars. Let's hold off our next round of supercars. We don't need that incremental rack. Exactly. You are next in line for promotion.

Starting point is 00:10:27 Wow. Okay. And mine is, uh, gold is in your, oh, excuse me. Excuse me. My dad came out there for a second. Gold is in your future. There we go. Maybe Jensen will get you a gold plated rack.

Starting point is 00:10:43 He used to do that, right? He used to deliver gold plated racks to all the different. I think Sam has like probably 20 of those. San has 20 of those. And then whenever you need to talk about China, you can you can just pull out these whenever you want. We do need some different hats. I know I know Jordi loves the hats.

Starting point is 00:10:59 These are cool. I might actually take this home for the weekend. This is a pretty sweet hat. Me and my dad has one. That's what he uses the garden in. I mean, it's highly practical, highly functioned. It is, right. It does be creating some sort of echo in my ears, but I'm down.

Starting point is 00:11:16 It's actually terrible for the lighting. We need a whole new set of cinematography lights in here if we're going to make this work. Anyway, good to have you in the studio. We've been talking about age 20s. We talked to you about the export ban on Monday, but I wanted to run through kind of now that the story has developed a little bit more. Most recently, the Financial Times reported Beijing presses local chips on tech giants. Alibaba and ByteDance are told to justify orders for U.S. made semiconductors. So I want to run through all of the pros and cons of an export ban, and we've written some on the whiteboard.

Starting point is 00:11:52 And so if you two can go to the whiteboard, we can run through these each one at a time and try and get your reaction to them step by step. Okay, so let's start with the case for allowing exports of NVIDIA H20s to China. So, the first, the first pro camp, if I want NVIDIA to be allowed to export H20s, is it will increase China's dependency on the United States. Aaron, do you agree with that? Is that a good reason to allow exports? Okay, why? America always wins when we excel at soft power. How does it increase soft power?

Starting point is 00:12:29 Walk me through that. Because the way that the architecture actually works, it's not just a hunk of metal. That's what people assume. Yeah, yeah, yeah. So it's a combination of software and as well as Jensen is pushing this with the next direction with Grace and Rubin and basically arm. So the future direction of GPUs is essentially like Navidia is an Apple like software platform. Okay.

Starting point is 00:12:50 But aren't they completely fixated on making sure they aren't dependent on Nvidia generally, right? But the only way do that is to build off of NVIDIA. And they're doing that. With Huawei, yeah. Yeah. Yeah. So that's why we need more there. So if we export, we hurt Huawei.

Starting point is 00:13:05 Yes, essentially. Okay. Take money from them. What about just the libertarian free market capitalism? Potentially underrated. Potentially underrated. Like, should the US government control exports broadly? Where should they draw the line?

Starting point is 00:13:21 You know, the famous example is like, you make an F-35. We're not going to let you sell that to a near peer adversary. But why aren't GPUs in that category? Because you could have a GPU in here and it's not going to long. and kill somebody. So as well as the future, the past Biden, AI diffusion rule, you could have an F-35, you could not have an offer. So there's not a consistency in the theory of the so-called expert class.

Starting point is 00:13:46 Yeah. So much so that like, you know, like we, I think there was 78 or 77 F-35 sold to Portugal. Portugal was on the band list or the bad boy list. Oh, interesting. How that happened? I mean, literally asked the people out there and they're like, we didn't know they're on the list. So, you know, it's over-exaggeration of like, you know.

Starting point is 00:14:05 That's why it's the purity test of like well what about this what about this or what this and the reality is like we can be reasonable about this and say that like if the goal is to create dependency on the US because you know I like less war I like less people going to war if we can increase China dependency on our platforms therefore less likely go to war Taiwan Okay, and that's kind of the idea and we actually can be very successful at that because we're really good at being platforms okay what about the the case for just pumping our bags lots of people are long in video right now it's the largest company in America largest company in the world four trillion dollars well beyond well beyond four trillion now isn't it like 4.4 yeah i think so like that yeah they had another 400 million market 400 billion in market cap without me even paying attention uh so um yeah how how good is the export uh is the export uh allowing age 20 exports for nvidia it feels like they already took a write down um is this actually a material piece of their business is this important to nvita shareholders uh It probably have a very minimal impact.

Starting point is 00:15:07 It's barely anything. Yeah, what about this idea? I was talking to somebody who is very anti-NVIDIA exporting to China just because of there's no reason to be because there's plenty of GPU demand in the United States. So, Nvidia could essentially sell 100% of the chips that they fab at TSM to American companies. So anything that they sell to China is just pulling away from American GPU demand. it's making American GPU farms like more GPU poor it's it has a dude ever talked to anyone outside of America yeah probably yeah because they would

Starting point is 00:15:43 say we're not interested in that wait what why so if you talk to anyone who's like one is that most of the technology got cool it's like fun you know you all use the AI to edit videos use chatchip to search the way at which AI is viewed by everyone outside of America is is basically inherently connected to the sovereignty of the nation sure sure sure try go telling Saudi Arabia like hey just give that stuff to Bezos. Yeah, yeah. No, no, I just mean like there's that famous story of Larry Ellison and Elon Musk sitting down

Starting point is 00:16:11 at dinner with Jensen Wong and saying, Jensen, we will pay any amount of money, give us as many GPUs as you can possibly give us. We need 100,000 H-100s. We need as many as we can. We're trying to build super clusters. Like any excess capacity, any excess supply you have, we will soak up for sure. And so isn't there a. decent argument just for, hey, American company should be at the top of the buyers list for what American companies produce.

Starting point is 00:16:41 But they are right now. But the real thing is that if you assume this, which is what Jensen's doing, like he's basically pushing everyone to him, he is the Apple of Silicon. Are there Apple stores in other countries? Yes, but iPhones were out of stock in New York City, like someone would make the make the argument that Apple should prioritize fulfilling orders in America before they expand it international. And I think Nvidia does it because Amiga is an American company. But at the same time. Yeah, but every H20 could have been an H100, correct? No, no.

Starting point is 00:17:17 It's the same one time at TSM. One is that you have to remember, like, Nvidia is a found foundryless organization. I mean, it has 700 or 70 billion in free cash flow last quarter. So it is cap X is, I think, like a couple billion dollars. So you can't just go to your supplier and be like, hey, just do this. That's not the way a foundry's work. Because TSM is also fabbing for Apple and Google with the TPU.

Starting point is 00:17:40 I mean, NVIDIA is the bulk of that. But as well, like, they removed all the H20 from the production line. And most of what is remaining is, like, what's in the inventory. And as well as, like, people confuse, conflate constantly. It's just to be these, like, Navidia bears, where they assume that NVIDIA is actually making the lithography, assuming that they're the ones that control of the foreign nanomedia process. They're not.

Starting point is 00:18:03 Like, they hire someone else to do that. That's why I said last time. You want to put this on while you're playing the bear? I was going to get a panda, man. A panda. If you put that on, you will not be able to see anything. Can you even hear me? But he's not better.

Starting point is 00:18:21 He's just role playing. Roleplay? I mean, we're in Hollywooder. Yeah, yeah, yeah. You can just throw it down. Yeah, but the, most of the Navi bears, they, one, they don't understand the segmentation of actual out of the space is made.

Starting point is 00:18:33 Two, they underappreciate the platform that is associated with Navidia. And three, go look at the list of the superintelligence team. Okay. Are you, am I hearing you correctly when you're saying Navidia instead of NVIDIA? Is that correct? It's like NVIDIA. Okay. I'm wondering if there's like a pronunciation that I'm getting wrong.

Starting point is 00:18:55 Visibility and leverage. One of the reasons we want to be able to export to China is that it gives us more. visibility into where the chips actually end up, whereas if there's a diversion regime where they're all going to Malaysia and then flying wherever, they could be going to North Korea. Whereas at least if we are licensing to send them to China, we know it's going to Alibaba. It's going to bite dance. And that's not the worst possible place that they could go. Yeah. What do you think about that? Is that a reasonable argument? Yeah, that's reasonable. Okay. What about just 15% for the big guy? Uncle Sam. Is that a good reason to export? That's funny thing is you remember by the Biden thing right was that remember the Biden no the Ukraine is called the big guy leave aside with the big guy okay oh yeah yeah the backdoor payments

Starting point is 00:19:41 okay so this is American is that pot that's where I got that that's right oh okay so if you know if he was sentient he would be appreciated so the I mean so export taxes are are illegal yeah by the Constitution that's it's an immutable fact the I in some respects like I'm very happy about reshoring to our shores. I'm very happy all this. This is voluntary, as far as I could find out, completely voluntary. He's not going to increase the price to China. I guess some people have been saying that it's a guy, oh, like, as if it's just weird,

Starting point is 00:20:17 like some of the Navidia Hawks or AI Dumers are like, well, now Nvidia is going to be more expensive than Huawei. I mean, one, Huawei is already cheaper? Yep. But two, like now you want, Nvidia make more money? Is Huawei cheaper on a like dollar per kilowatt basis, like unit energy? No, no, like a Huawei's cheaper as like a whole holistic solution. Okay, got it.

Starting point is 00:20:38 It's more expensive to run, but they don't care. I mean, I heard a take from Dylan Patel at semi-analysis that with this 15% tax, the H20 is already less profitable than the H-100, and so this could potentially put them in the nightmare scenario of having similar gross margins to AMD. Because AMD is way, way lower. So I think they will be fine. Yeah, it'll be fine. So maybe that's a good, maybe that's a good reason.

Starting point is 00:21:06 It does seem like tariff revenue is going through the roof for the United States. Yeah, like $300 billion is projection or something like that. Yeah, yeah. It does seem like money is flowing into the government at some level that's higher than previous years. You know, and so far the way that... Check the PPI, though. Well, so far it's not really coming from our pocket, right? So about 80% is being absorbed by companies.

Starting point is 00:21:27 Okay. Yeah. Okay. Sustain chip leadership. If we export the H20 to China, this allows America, this puts more dollars in American companies' pockets to fuel future versions of CUDA, future learning curve step downs in chip dominance, and it will ultimately unlock the American ability to produce the one nanometer chip, the zero nanometer chip, the negative one nanometer,

Starting point is 00:21:57 The negative one nanometer chip, which is what we're all hoping for, to bring down this interest costs. First come negative gross margins, then negative nanometer chips. That's the future. Something there. That's the future. This is, I think, I think it's indifferent to NVIDI. I think this matters more to like the Indy cards. So the GROCs, the Positrons, the edges of the world, A&Ds.

Starting point is 00:22:16 Like, I would apply that to there, but in terms of, because people forget that every rule that applies to NVIDia applies to them too. Yeah, yeah, yeah. And cutting off half of all AI developers to, to, and, and, and, In video, like I think it would have, like I said earlier about profit, like profit side, I think it's kind of a new. Yeah, yeah. But to an AMD could be a much bigger deal. Okay.

Starting point is 00:22:39 You mentioned the new chip companies etched, Cerebrus, GROC, et cetera. Yeah, positive, drone, yeah. Do any of those chips, I mean, I imagine that they all fall under the chip restrictions because they were never designed to be nerfed. But if the nerve is around like memory, some of them don't. don't even do HBM, for example. So are any of them sneaking through currently? Do you have any insight into what's going on

Starting point is 00:23:05 with those new chip companies and exports? I mean, as far as I know, every deployment I've heard about with the Indy cards, they all required an export license. An export license, okay. So they might be paying 15% going forward. That maybe, I mean, I think this really applies to. Envidia and again, this is where going back to,

Starting point is 00:23:24 I am a free marketer where I give props to the president for being creative. At the same time, it does open up weird doors, right? Okay, what about this idea that it forces China to subsidize their domestic chip manufacturing supply chain more aggressively? And that takes money out of the pocket of the CCP because if they wanna stay competitive,

Starting point is 00:23:47 if they wanna keep Huawei competitive, if they wanna keep Smick and Smee competitive, they need to tax their population and spend more money to make those chips competitive. Look at the history of China subsidizing various industries. It's gone fairly well for them. So I don't necessarily... Yeah, this might be marginal, but what's your take?

Starting point is 00:24:07 Yeah, generally speaking, the Chinese customer wants NVIDIA. They do not want Huawei, which is why the financial town's reporting as it is. And that's purely because of Kuda or just pricing or everything? It's because the goal of the CCP regime is stability. And NVIDIA introduces a new vector that they can't control, as well as many of these rules. Like, people have to understand that, yes, the Standing Committee and the Central Committee has the ability to influence what the original governors do. But many of these things are being reported are coming from the governors. And the governors have really, like, China's very, very federalized.

Starting point is 00:24:41 Okay, now we're in meme territory. But important. Important. So, one of the benefits of exporting age 20 is to China is that they will become addicted to AI girlfriends and AI boyfriends, and this will hasten population collapse. So in theory, we should give them as many chips as they want. Yes. If AI is bad, an AI will lead to an AI girlfriend apocalypse. Was this yours?

Starting point is 00:25:06 I mean, this has been an ongoing discussion. Everyone's worried about this. Everyone's worried about this. This is on the timeline. So if you think that deployment of a frontier AI is bad for the population. The AI psychosis doomers, the one-shot crowd should be heavily in favor of giving them as many chips as we can get. Proms. Do not think of this.

Starting point is 00:25:26 Imagine, imagine, Xi Jinping is thinking about invading Taiwan. He fires up some age 20s. He's like, I've gotten to the frontier of warfare. I've discovered new warfare techniques. And he's completely delusional. And everyone realizes that he's been one shot by AI psychosis. And it creates upheaval in the country, which would be net beneficial for America, maybe. That is flipping around the Dumeer's argument back on their face.

Starting point is 00:25:54 Exactly. Yeah, I mean, that deserves a. maybe like a gong hit the gong hit the gong hit it big you got a really I don't know that's how Americans they like it's like in culture it's more of a small yeah yeah yeah yeah yeah yeah more traditional form okay what about what about this last one one of the benefits of exporting the age 20 to China will be it will force China to invest in negative gross margin businesses and they will and they will get over their skis and they will fund a whole bunch of companies

Starting point is 00:26:28 with negative gross margins. And it will create an incredible chain of losses with negative gross margin companies selling to negative gross margin companies and just destroying value. Exactly. What about that? Well, as a positive gross margin company,

Starting point is 00:26:40 yes. So, yeah, they love doing stuff like that. They do? Oh, yeah. They kind of build a house of cards. I didn't know you had positive gross margins. Get out of here. Yeah, yeah.

Starting point is 00:26:49 See you. How dare you? How dare you? How dare you? In this economy, how dare you? Yeah, exactly. How dare you? Let's flip over to the,

Starting point is 00:26:56 reasons for the ban you're going to need to debunk these but I will play the role of the pro H20 ban let's keep H20s in America Coogan the Hawk

Starting point is 00:27:11 and the first yeah yeah the fohawk I'll style my hair in a faux hawk the true China Hawk who wants to ban Nvidia H20s would say that by exporting we will wind up with increased capability for China. We want to keep AI. We want to keep anything that is valuable to their economy,

Starting point is 00:27:32 valuable to their military capabilities, anything like that out of their hands. Why should I not be worried about that? I think it's one that the fact of going back to what Jensen said, which is accurate, that over half of the super intelligence team is actually Chinese national and then add in the people who are Chinese descent, it's like 75%. So we can't really control that. Okay. Math is universal. Yes. Engineering is universal. So saying that, It's like saying we're going to really control the way French macrosan. And we're going to really get after them and say, you cannot use that much butter. Let me steal man this more.

Starting point is 00:28:07 Let me steal man this more because, yeah, math is universal. E equals MC squared is universal. Or basic physics is rocket science is universal. And yet we might not want to export rocket motors because then you can just build up extra capability. There is a difference between having the weights of a model and being able to influence it a trillion times a day across your entire population, that might be a strategic advantage. Yeah, again, I go back to the fact of that China is going to China. And they're very limited things we actually can do. And the things we can do going back to this idea of like,

Starting point is 00:28:40 we can make them more dependence. Sure, sure. Right. Because one of the things I believe about trade, one of the examples of free markets is like I'm as a universal, I'm against war. I think conflict is bad. I agree. And at times it's just, just war theory. But when you kind of just hyper-focus on this, you over-extend what we think we actually can do. And this is where America as the... Yeah, but the China Hawks are going to say, you know, have a potential conflict with Taiwan. They're going to be leveraging drones. But this increases it. So that's the funny thing about all these China Hawks things is like they're creating the scenario for war. Like all of these things, many of them we can't control, many of them we can't, and then we over-reserved

Starting point is 00:29:18 ourselves. Let's say they are gearing up to try to take Taiwan. Don't we want them to have less compute? No, this basically, increasing the dependency on us decreases the life of time. But do we have any leverage? My argument is that ultimately they're going to, they're already focused on decreasing their dependency on American companies, Taiwan itself. It's already happening. No, I think you're one, you're overestimating the, one, the power the actual central committee

Starting point is 00:29:45 actually has. And two, many of these things, you have to delineate between what is bloviating and propaganda and actual reality. The Chinese companies operate very differently than what actually happens in the committee. So it's, yes, the committee has a lot of power, but it's more of like structured socialism than it is communism.

Starting point is 00:30:04 That all of the ingenuity around DeepSeek came from just Chinese engineers trying something. It was not, the committee was like, go be better at this. And I think there's many things in this zone where they think that we can impact it because we view it as a state-by-state actor action, When in reality, it's almost like China's coming to y'all and saying, hey, you got to, you know, do the last gong stuff.

Starting point is 00:30:27 And he goes to the president. He goes, hey, Jordan John, they hit the gong too much. And Trump's going to be like, they've already tried. I was like, what am I going to do about that? Right. It's like John Jordan, they're great, they're beautiful, beautiful human beings, right? Yeah. I mean, there's a little bit of dynamic in China that I think is maybe underrated, which is that even though Beijing is pressing Alibaba and bite dance to not buy.

Starting point is 00:30:50 H-20s. Alibah and Bight Dance are independent companies. They don't want to be GPU poor. They want NVIDIA chips. Yeah, like they'll, they'll, you know,

Starting point is 00:30:59 placate, they'll do, yeah, yeah. They'll be compliant, but if it was up to them, they would buy the best, and they would buy the most. And this is why leaning into our strings,

Starting point is 00:31:06 which is like, we are the best at making chips. Yeah. Let's draw them, create maybe a division in the ranks, right? Rather as being here, being like,

Starting point is 00:31:15 oh, China, right? It's like, many of these are, one, are failed neocons, who make up these kind of reasons and excuses and got us until all these like wars that didn't go anywhere. But then you actually like read into okay so let's say we did all this stuff

Starting point is 00:31:29 it actually creates a scenario for war. This actually creates a scenario for less war. This creates a scenario of maybe division in the ranks. Right? Because we increase the dependency, we increase trade and therefore lowers the threshold. But this creates isolation which therefore increases likelihood of innovation of Taiwan. What about the risk of short-term leverage over you know China dependency over

Starting point is 00:31:50 long-term independence. I'm thinking of that IP leakage point, the idea that maybe cloning the CUDA ecosystem. Hate to break it to you, brother. The IP's leaking. It is true that obviously they can get their hands on one H20, tear it down, reverse engineer it. But there might be gains to be had from running a true H20 cluster, the lessons that you learn from that, and then porting that back to Huawei ascend clusters. And so is there any risk of setting up a, you know, a series of large H20 clusters that actually allows, that actually accelerates Huawei. So this is what's different about the Trump.

Starting point is 00:32:29 One of the differences in Trump administration and Biden administration. Biden administration was actually not that focused on this because they basically targeted the ability to buy chips, but they didn't really have as much restrictions on the ability to make chips. Trump is targeting the ability to make chips and having less restrictions on the ability to buy because if you can't have the ability to make, it's like... But Nvidia has an R&D center in Shanghai. Yeah, but they don't make anything.

Starting point is 00:32:51 That's different than ASML and TSM. Correct. And so what we're not hearing the news is... I think it's important from an IP leakage standpoint. I'm just saying it's not being... It doesn't get solved by the ban, but it's happening regardless. The software is made in America, but again, it's... One is like most of that stuff is open source because again, it's a combination of hardware and software.

Starting point is 00:33:11 Yeah. But the IP leakage you should be concerned about it relates to foundry equipment. It does not relate to Nvidia. That is a very, very low threshold. Like Zyce and Trump, like those companies, that make the mirrors that go inside the fans. Like the EDA software stuff that like just basically came out about, like that stuff relates to the ability,

Starting point is 00:33:28 that's the IP-Lagate-GGGGGGForgia. And we're not seeing anything in the news about Trump moving on allowing ASML to send the other directions. No, he went the opposite direction to buy the administration. Yeah, yeah. So if you control the ability to produce, then all this good stuff starts happening. Sure, sure, sure.

Starting point is 00:33:42 But if you're like, which is what happened in the previous administration was they inverted it, they thought that because the, as I said, last time we were show, that they associate GPUs with AI Dumerism. And if you remove the, like, AI is a god and we don't want a Chinese god, then all this stuff kind of just doesn't make any sense. Okay, let's get into the meme ones. One of the reasons to ban exports of age 20s to China is that it will result in higher employment for Chinese thumbnail artists.

Starting point is 00:34:12 So Chinese thumbnail artists are obviously going to be put out of business by generative AI models. If your job is creating a ton of slop content on listical websites, you're having a rough time with the rollout of GPT5. Of course. Sure. And so if we hobble the ability for China to run LLMs, that will result in higher employment for thumbnail artists. What about that? I mean, China is not the lowest cost manufacturer or producer of content or any type of it. It's the Philippines, Malaysia, Mexico.

Starting point is 00:34:49 That's true. They actually do a lot of work in the factory that's less displaceable. They should be worried about robotics, potentially. Humanoid robotics. Yes. But, you know, maybe that does what, where was that thing? Yeah. Right there.

Starting point is 00:35:00 Yeah, yeah, yeah, yeah. Yeah. What about incentivizing AI researchers to leave so they can be GPU rich? You're a top AI researcher in China, and you can't get any age 20s, and you're sick and tired of working at a GPU. poor company like Alibaba or bite dance and you say you know what I'm going to MSL I'm going to meta I'm going to open AI I'm going to anthropic I'm hopping a flight to San Francisco is that a positive yes yes so that's why we should ban it because if they're GPU rich over

Starting point is 00:35:30 there they'll stay oh but if their GPU poor they will say I got Zuck is setting up 100,000 H-100's intense I want to train on that I got to get to Palo Alto yeah but as well as like Alibaba isn't going to pay them 100 million dollars exactly yeah no no I No, it's like if it's independent. Yeah, but they both have factors, right? And so if you keep the Chinese AI company's GPU poor, it will be an incentive for AI researchers to come to America. I mean, it's a good argument, right?

Starting point is 00:36:01 I mean, on the edges, maybe. Yeah, yeah, yeah. It requires lots of confounding factors that, like, make it an unpredictable sort of thing. But, I mean, again, I don't think, I think the desire to be on the super intelligence team, maybe, you know, would you want to go be on it for mobility? That sounds pretty nice, right? A billion dollar cash out. I'm happy right here.

Starting point is 00:36:23 You're happy right here? I mean, look at the car outside. I don't know. A billion dollars, right? But that is completely independent of GPU capacity. Yeah. So that's where this is much more of a, and actually, let me maybe inverse this argument,

Starting point is 00:36:37 because I think a lot of the constraints as we've seen on the recent frontier models are heavily driven by talent. So if we keep the talent over there, and they're basically provide artificial constraints because we give them these things, then actually they're going to make more progress on making it more efficient and become more skilled at things that we're not skilled at. Is there a risk that they go close source and we don't actually, we're not actually able to port back the inference savings that we're seeing from Deep Sea? No, because I think they're really, I mean, they don't care about open source.

Starting point is 00:37:07 They're very clearly. They care about soft power. Yes. Yeah. And so that's why they're doing everything they're doing, which is kind of counter. us that I would say that China generally behaves as a very ingenious population but in terms of being they're much more reactive to us than we then we presuppose but there is an there's an innate desire in the population to have soft power

Starting point is 00:37:31 that's why they did the Belt and Road Initiative and this is like the basis of their renewed effort so I'd rather basically starve them of any capability to actually project power externally by creating an export nation and that we can basically become the dominant exploration and that we're like something like this is that in reality is that they just have millions and millions more engineers than we do. And so we want those people to come to America if they, you know, basically want to portray the regime. And we want to make sure they advance that IP. But if we continue to isolate them, they're just going to make advancements, even though they are GPU poor. Because

Starting point is 00:38:05 that goes to an over-protectionism on our side where we create a more GPU slop because we have way more high-performance computing and we just don't care to make it efficient. Sure. So I'd rather have that be to where all that stuff is just happening on our stuff. So in some respects, by giving them more, we actually decrease the incentive for them to make innovations because they actually will have more GPUs. So this is the solution to negative gross margins. This is what will save venture capital.

Starting point is 00:38:35 It all comes back. Anyway, I want to go to a post that you put up. We can wrap up with the board. If you want to design, if you want to take that board and design it into a beautiful graphic, do it on figma.com, think bigger, build faster. Figma helps design and development teams build great products together and you can get started for free. You posted, this is really a race between America and the world, and you have the generative AI startups ranking, OpenAI, DeepSeek, Anthropic, XAI. What was your takeaway from this chart of Gen AI startups? Oh, that one.

Starting point is 00:39:10 Yeah, I think it's a, yeah, China's obviously listed the most out of America. But I think one is that it's our ability as a nation to invest in stuff that we think is revolutionary and become, again, the default nation. We want to be the standard. We want to be the exporter. But in reality is that seeing, when have we ever seen a great wave of new infrastructure development that has occurred this fast that's international? So that goes back to whatever China shocking person that you're talking about. That's where he does it.

Starting point is 00:39:44 That's why I make a little bit of a jest of a joke of, has he talked to anyone who doesn't live in America? Because we haven't ever seen that in Silicon Valley to where there's a big motion in Silicon Valley to do this investment, you know, social media, mobile, web three. And what we see now is the fact of like all these countries are doing sovereign AI projects. That's where the roll up effect, the ability for us to control, this is it's way more like bitcoin where it's something accessible to everybody and and that's what leaning on that side is kind of accepting the escape velocity that we're in versus the other side

Starting point is 00:40:18 wants to live I think in a little bit of a fairy tale being like oh wouldn't it be nice if you control those things it's it's like if you have children you're like well wouldn't it be nice if you stop hitting your sister and you're the kid's going to be like right and it's yeah it's like you can only you can really only extend yourself so far when you are a world occupied by multiple free agents, multiple sovereign nations. And so I'd rather lean into our strengths where we can actually execute control. The more that we are a platform, the more soft power we have, therefore, I believe, more peace and more prosperity, less starvation, good or greater things for humanity, and we can still control

Starting point is 00:40:51 things. But if we're in this other side where we think that we can just hit people with sticks, they're just going to be like, all right, I don't want to play this game anymore. Would you go further? Would you allow the export of the B-200? I think some version of Blackwell should be in there. I don't have much of opinion on how much nerve to it should be or anything like that. Gavin Baker had a good post that you reposted.

Starting point is 00:41:10 He said, any journalist describing Nvidia H20 as an advanced chip is not a serious person. They're either ignorant or ideological. The H20 is circa four years behind the actually advanced B200 that NVIDIA sells to America and our allies. The B200 has 30x more compute, 2X the memory bandwidth, 2X the memory of the H20 sold in China, arguably 100x more usable compute. Selling H20s to China is good policy as they are slightly 1.5x better than domestic Chinese accelerators. Selling the H20 thus effectively slows down to the development of a robust domestic Chinese AI accelerator ecosystem, which would be good for China long term. In the event of conflict, we would simply stop selling H20s to China,

Starting point is 00:41:54 and they would be left with inferior domestic alternatives, and America would have a five to six year technology advantage over those domestic alternatives. Conversely, if we do not sell the H20 to China during peacetime, they would absolutely build effective domestic alternatives over time. These alternatives would almost certainly be less powerful, less power efficient than Nvidia. See the Huawei Cloud Matrix 384, with it super fast, but power-hungry optical scale-up fabric.

Starting point is 00:42:25 But China has way more power available for AI than the United States due to their embrace of solar. selling H20s to China during peacetime is also good for the world in America because it means their AI ecosystem is comparable to the American AI ecosystem and we can easily adopt

Starting point is 00:42:41 the impressive algorithmic innovation seen in their open source models like DeepC and the world benefits from a robust Chinese open source ecosystem that remains well behind American closed source frontier models. The fact that the Chinese government is discouraging the use of H20s

Starting point is 00:42:56 in favor of domestic alternatives should tell a rational dispatch passionate observer that all they need to know about which country benefits from the sale of age 20s in China so power yeah my my my question is is there something structural going on where where China has to remain open source because of their position in the market yeah like I think what what Gavin is reflecting which is more or my disposition is if we're going to make a strategic decision around because we want to still want to be the dominant superpower in the

Starting point is 00:43:27 world we have to be realistic and pragmatic about where we are like the fact is that we have I don't know how how is the debt 30 trillion right it's it's negligible in the age of AGI but once we get a fast takeoff fixes this yeah we just grow GDP at 5,000 percent a year we're fine yeah if I yeah so so the or just like fudge the numbers right that the if we're going to make a decision about any sort of policy trajectory we have to understand like what we actually are like we generally have a quite hostile politics. We have many states that are essentially bankrupt. And we have a military that is still the strongest, but is kind of lacking on the asymmetric capabilities, which is why we have

Starting point is 00:44:08 Andrew being created. So if we're going to say, hey, we're going to go to basically to soft war with somebody, we should really understand what's going on. And I think there's many people who occupy the China Hawk policy who, like as Gavin said, who don't even understand this technology or they commingle TSM with NVIDIA. And so if they if they're if they're constructing an argument based on bad priors, then it's really hard to take anything else they say seriously because it and that's why I go back to the AI if you remove the AI doomers many of the people who are China Hawks are just actually I doomers. They think that Terminator is coming. It's going to kill us all. We're just robots. A very old is proven. Do you think that's

Starting point is 00:44:51 the flow? I thought it might be the opposite. It's like you're a China Hawk and you need to justify your policy and so you you wrap it in paper clipping that I mean I can go like either way yeah I can say going either way yeah yeah that but I just don't believe that and and if you have any for example the number of genes you have is like basically hundreds of thousands the number of cells you have is in is in the billions the number of neurons the number of neurons synapsis you have is about 500 trillion the number of basically spaces in the model that like open,

Starting point is 00:45:28 open AI uses is 500 times less. Yeah. Right. And even in the fact, even the fact of like the way that we construct all limbs a day, if you did that in human brain, that's called a seizure. Right.

Starting point is 00:45:39 So like we have to, we have to realize that that, again, it doesn't mean. Don't make mistakes and don't have a seizure. Yeah. It doesn't mean AI can be amazing. Like it doesn't mean any of these things.

Starting point is 00:45:49 But it's very different than from, from intelligence. There's enough in. Back on the Kurzweil timeline. It's back on Kurtzweil makes this argument that you know, the singularity will occur when the total amount of flops in computing is is greater than the total amount of flops equivalent in the human brain. And we're we're orders of magnitude away from that. Yeah. So you really have to you really within one human being it will encompass all the can be can be competing power. Yeah in that lifetime of 80-ish years a person live than anything we have on planet Earth. Yeah. So so like just sit down and be humble like because when you humble you can like basically appreciate you. appreciate because even the fact of like what the the way elements work are very directive but that's not even the way attention works and perception works like do you recognize you're sitting in a chair like do you feel that but your body

Starting point is 00:46:38 does but your brain doesn't acknowledge it right so like even that differentiation between that there is so much computing happen in your body that you're not even aware of which makes this such an effective species and LMs again they're great like it but you're overextending yourself to thinking that because you have all of this power and all this energy, uh, being, being able to generate T-flops that you're going to say like, oh, you're a person now or you have sentience. Yep. And that's just not the way the brain works.

Starting point is 00:47:05 And it doesn't even, not even way intelligence works. Yeah. I like that there's some, I think it's a woman I just post where he's saying like when they invented the steam engine, uh, there were people that were saying like, like the brain is just like a steam engine. And then when they invented the, uh, the, the, the, the, the, the, the, the, the, the, the human brain is just like a gas powered engine. And then when they invent the CPU, they're like, the brain is just like a CPU and GPU.

Starting point is 00:47:28 The brain is just like a GPU. People want to like bring their, their current technology understanding into like the human. And my, and go ahead. Cars, 10 horsepower. Yeah. It's the same. Yeah. There's 10 horses.

Starting point is 00:47:40 Yeah. And like one of the things like I love about the brain so much is like it's, it's very, for example, the ability to be plastic, right? Being only to mold itself, which LLMs can't do. Yeah. Because they see novel information and they basically just like, well, right they'd kind of freak out but but even even how we understand uh neuromodulators like acetycholine dopamine like neuroaffrin even though we understand that uh whenever you see something um you know you're you're you all have kids when you see your kids uh your body releases these neuromodulars

Starting point is 00:48:12 that creates basically attachments to synapses and forms memories and the way they even understand that cocktail we just know it just gets released we don't know the percentages we have no freaking clue and as well as like if I take your brain and then release it the same amount right just like take electrons there and just boom right that you don't have the same effects right that how does directive focus impact cells we have no idea but like you can for example like hold this gong or hold that right you're your diet coke yeah like even these two things right we don't even know what's happening when you have a fridge cigarette there you're how how does like information affect this is diet coke and this like

Starting point is 00:48:51 translate from cell information to the fact of me and dealing in caffeine and science has no clue like how that works but we know it works and and so i expect podcasters to figure it out i mean the do you watch tim dylan of course he has he has a great thing on like podcasters blank slate he's a blank slate he's a blank slate yeah exactly all the alpha every show every show all the i have a three-hour context window Anyway, Aaron again, thank you so much for stopping by. It's great to see you. Thanks for coming in person.

Starting point is 00:49:26 This is fantastic. Let me tell you about Vanta, automate 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. Let's take it over to Mark German himself. Mark German. He has some new reporting. Apple plots, expansion into AI robots, home security. and smart displays.

Starting point is 00:49:54 Apple, Inc. is plotting its artificial intelligence. Comeback. Don't call it a comeback. Actually, you can call it a comeback. I'll give you... I mean, it makes sense. They've been, they've gotten a lot of hate over the last few years for the role, just particularly the rollout of Apple intelligence, very hyped. A lot of features on display at WWDC that didn't ship when the new iPhone launched. They sold the new iPhone against it.

Starting point is 00:50:18 Yeah, exactly. And so I think that there were. There were high expectations because of Apple's position with on-device inference being very cool. Tim Cook, I gave you Gen Moji. Are you not entertained? They shipped a few things. I think that I would love to see the Gen Moji actual usage data because I feel like even though it's not popular in teapot and on X and in the technorati, it might actually be seeing like decent adoption and joy. I mean, I've seen people share generative imagery from Microsoft copilot. which I had no idea was a popular image generation platform whatsoever.

Starting point is 00:50:55 Facebook crowd. Exactly, exactly. So I wouldn't be so sure that Gen Moji is producing zero value. But at the same time, it's clearly been a tumultuous time for the company. They've been kind of on defense in terms of public relations. But Mark German is still scoop in every single day. So Apple is plotting its AI comeback with an ambitious slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display,

Starting point is 00:51:21 and home security cameras. A tabletop robot that serves as a virtual companion targeted for 2027 is the centerpiece of the AI strategy according to people with knowledge of the matter. The smart speaker with a display, meanwhile, is slated to arrive next year, part of a push into entry-level smart home products. Tabletop robot that's a virtual companion.

Starting point is 00:51:42 Yep. That's big. A lot of software. They got to write to make that work. They got to get on graphite. Dev. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality.

Starting point is 00:51:51 software faster. Tim Cook, if you're listening, get on graph. So this is big two. Home security is seen as another big growth opportunity. New cameras will anchor an Apple security system that can automate household functions. The approach should help make Apple's product ecosystem stickier with consumers to the people who ask not to be identified because the initiatives haven't been announced. I mean, this seems like something that they could knock out of the park. Like just the smart thermostat, like these patterns have been defined for a decade. And that's like the sweet spot for Apple to come in and like the Sonos home speaker where we were saying like it they're just like the speaker everyone knows what they want out of a connected speaker system they just want it at the level of

Starting point is 00:52:32 apple execution it doesn't require going zero to one in some new territory and so I feel like they could be very successful in in the home video monitoring home thermostat home speaker so I think I like this overall the robot is where it gets funny because this feels crazy, but I'll let you keep doing. Going into companionship feels interesting. I don't think it's a companionship. I don't think of it like that at all. A tabletop robot that

Starting point is 00:53:00 serves as a virtual companion is the centerpiece of the AI strategy. I mean, so let's read what the actual report is on this robot. The tabletop robot resembles an iPad mounted on a movable limb that can swivel and reposition itself to follow users

Starting point is 00:53:16 in a room like a human head. It can turn toward a person who is speaking or summoning it and even seek to draw the attention of someone not facing it, the hope is to bring AI into life. I don't think of this as like companion necessarily. This could just be... Jarvis. Yeah, Jarvis.

Starting point is 00:53:33 It feels like Jarvis. I mean, I guess Jarvis isn't a companion, but companion has a bad flavor to it right now, a bad vibe, because people are saying, like, I married my companion, and that feels very black mirror. I do think that there's a serious black mirror risk, but I'll go into that in a second, but what were you about to say? Yeah, I'm not going out and saying this feels like a competitor to friend.com or any other players that are actually focused on companionship, but this does feel like giving Siri a presence in the home. Yeah. Like an always on presence in the home.

Starting point is 00:54:06 It will be interesting to see how they solve it. A partnership with Open AI or Anthropic seems logical, but Apple Siri partnership with Open AI Anthropic before September on Polymarkets is a 6% chance. By December, it's at a 44% chance, though. So, but this is a very low volume market, but still, it feels like we haven't seen a lot of messaging from Tim Cook that they're going to be building a huge data center, going to be training a foundation model. It feels like they're going to need to partner on some of the underlying infrastructure for that, because I would not, I would not want Siri hanging out in my kitchen talking to me. Like, Siri is just not reliable enough, but I would, I would welcome. or chat GPT into my house. But I would treat it specifically as a, like an Alexa.

Starting point is 00:54:58 What's the weather like? What's on my calendar? Look up the history of the Roman Empire. I would ask it questions like that and I would use it as a knowledge retrieval tool. I might start to trust it in some agentic contexts. And the question is, do we want a robot iPad with an arm swinging around your kitchen and so, And hopefully when you want to know the weather, it's you're, you're within your shot. I think, I think this could be really cool.

Starting point is 00:55:28 I think it could be really cool. I mean, they say FaceTime is going to be. And it's just funny because you're competing, they're still competing with their own. Yeah, but if you're ever in the kitchen, like, this is an example. So FaceTime calls will be a key function of the device during video conferencing. The display will able, will be able to shift to lock on to people around a room. And so as you're walking around, the FaceTime is just following you. That actually feels more social.

Starting point is 00:55:51 I remember during COVID, I bought Facebook's camera. They had some sort of device that you would mount on your TV and it would act as a video conferencing system. And I used it a few times. I ultimately churned, but it had a really wide angle lens and it would zoom in on the people. It had really good face detection. And so it would center you no matter where you were in the room.

Starting point is 00:56:14 But as soon as you walked to the other side of the room, it wouldn't be able to follow you because it didn't have any motors in it. Um, and I feel like this could be interesting link in the chat. Uh, this all reminds me of the meta portal. Yeah, that's the one I'm talking about the portal. Yeah, that's the one I bought. They didn't market it as a robot, but it would sit on a table and it would sort of follow

Starting point is 00:56:35 you around the room and meta is no longer selling meta portal. Uh, I guess they wound it down. So anyways, uh, Tim Cook told employees, I gave, I gifted some of these and they were pretty well received. Most of them wound up being used as like digital digital photo frames though. Yeah. And they weren't actually used that often for calls. I don't know if putting it on a robotic arm is enough to make it useful. I think you do have to nail the underlying speech recognition and in the in the conversational nature. Like it has to be powered by a frontier LLM. You know what's funny? What is I feel like the product I could imagine.

Starting point is 00:57:18 them having a mood board internally with the Pixar lamp hopping around that's literally listed here as like one of their inspirations apparently so tim cook told employees in all hands meeting this month that apple must win in AI and hinted at the upcoming devices the quote the product pipeline which i can't talk about thankfully mark german has his malls and apple that are talking tim cook says it's amazing guys it's amazing some of it you'll see soon some of it will come later but there's a lot to see yeah so apple obviously always always is cooking on moonshots. Very little of it surfaces to Mark German and even less actually services, you know, publicly via Apple's own channels. Mark German, if you have a little extra time,

Starting point is 00:58:00 you should leak Julius's user numbers because Julius has over 2 million users now. They're trusted by folks at Princeton, BCG, Zapier. What analysis do you want to run? It's the AI data analyst that works for you. Connect your data, ask questions in plain English, and get insights in seconds, no crowding required. We need to get our logo up there. Yeah. The fourth logo. For sure.

Starting point is 00:58:22 There's a lot more. So Apple is planning to put Siri at the center of the device operating system and give it a visual personality to make it feel lifelike. The approach dubbed bubbles is vaguely reminiscent of Clippy, which we are super bullish on. And we think Microsoft should totally bring back Clippy, an animated paper clip from the 90s that served as a virtual assistant in Microsoft Office. Apple has tested making Siri look like an animated version of the Finder logo, the iconic smiley face representing the max file management system. The final decision on its appearance hasn't been

Starting point is 00:58:53 made with designers considering ideas that veer closer to Memoji, the player, the playful characters that represent Apple user accounts. Device prototypes use a roughly seven inch horizontal display approaching the size of an iPad mini. The motorized arm can extend the display away from the base roughly half a foot in any direction. So that's not going to snap out. I was really hoping seven feet across the room, it reaches across and pins you against the fridge. Yeah, I think Apple should be able to nail delivering this in a way that doesn't feel Blackmere and dystopian. Oh, that's funny. Sorry, I actually didn't see this, but there's a quote in here. Some people familiar with the product call it the Pixar lamp. Yep, exactly. I think it could work

Starting point is 00:59:34 really, really well. Now, they have to be cognizant of the Black Mirror vibes. That would be very cool. Because that, if it could hop off my kitchen table. It can definitely hop around. That's Friedman core this is this is this is this is this is doable with modern technology but the risk is that they they botched it because Apple's had a rough go with the recent marketing and they've had a couple real like backlashes they had that one where they smashed all the pianos in the press do you remember this so they had a huge hydraulic press and they and they pressed like an easel with paints and a bunch of paint buckets and pianos and

Starting point is 01:00:13 violins and all this they got a ton of blowback from this we can we can try and pull it up uh do you remember this yeah i remember that uh people were saying that they're like destroying these timeless pieces yeah it's just like the things that i instruments and stuff like that yeah the thing that i love you're literally you're destroying it for this particular um uh oh shots fired bill bishop from the substack stream you need better guests to talk about china and chips not just invidia partners who are regurgitating invidia's talking points bill bishop get on the stream call in. We'd love to have you. Bill, Bill, you're welcome. Hop on. Of course, Aaron is riding with Jensen. Yeah, he is the Jensen surrogate. He's easy. He's a surrogate for Jensen the juggler. He has to

Starting point is 01:00:53 juggle both United States and Nvidia and China's interest and Taiwan's interest and all of them. Miles Fisher wants to see the production team. He says show the off camera voices. Let's get the production team up on the screen. So, Bill, call into the show right now. We'll send you the Zoom link. Yep. Colin, you're welcome. Can we pull up the Apple. ad of them crushing the videos is that even available anymore they might have just taken it off the internet um but there was uh i think i found it but there was this is it right yeah i think yeah yeah yeah it's a record player like literally all these things that bring people joy and it's just crushing a trumpet it's like all your dreams like all the things that you want to spend oh an arcade

Starting point is 01:01:34 machine all the things that are nostalgia nostalgia plays so well and this is just anti nostalgia in a million way is destroying. I mean, it is a beautiful shot. Like this is a crazy. Apple, the company that built itself empowering. I know. Creative talent globally. Yeah. They crushed the Pixar lamp and the angry bird. Oh, it's brutal. The TV blows up. This is such an incredible production, though, the fact that they actually shot this. It is, it is a remarkable ad. Oh, and then the poor, the poor emoji gets crushed. And then, of course, it is revealed after everything blows up that all of that fits in your iPad, which is super thin. A reasonable message. You get all of that in the context of an iPad. You get games. You get an arcade machine. You get an easel. You get a piano.

Starting point is 01:02:22 You get all of those things. At the time, Tor, Myron said our goal is always to celebrate the myriad of ways users express themselves and bring their ideas to life through iPad. We missed the mark with this video. Yeah. And we're sorry. Absolutely brutal. Well, really quickly, let me tell you about profound. Get your brand mentioned on chat. You p.T. Reach millions of consumers who are using AI to discover

Starting point is 01:02:44 your new products and brands. Check out profound. So the other ad that didn't go as viral and result in major backlash was the launch of the Apple Vision Pro. So when the Apple Vision Pro launched, one of the videos that they showed was of a middle-aged man

Starting point is 01:03:00 looking at VR video of his kids. But he was alone in a dark room. And Ben Thompson was like, it feels like he's divorced or something, or maybe like the kids died. It felt like Minority Report, which is a movie I know you haven't seen,

Starting point is 01:03:16 but in Minority Report, Tom Cruise's son goes missing from the pool one day, and he has a virtual 3D video that he plays back and gets very emotional about. And the imagery was very similar in the Apple Vision Pro, but it wasn't an optimistic scenario. It was like, yeah, like, I guess if my son passed away, or got kidnapped, like I would want to relive that, but that's not like, you're going to inspire me to

Starting point is 01:03:43 buy an Applevision Pro. And so with, with this like Pixar lamp, this, this, this robot in your, in your kitchen or in your house, like they really, I think they have to lean into, to light mode, not dark mode. They have to really be aware and reality check themselves on the black mirror effect because the idea of someone hanging out in their kitchen being lonely and having this be the only companion that they ever talked to, that's a lot less fun than, hey, we're all cooking together in the kitchen and this is helping us keep track of the ingredients or my idea was teach it to, teach it to pour some beers and get it at the fraternity. This thing needs to be tending bar at a frat house.

Starting point is 01:04:31 and inspiring dancing silhouettes like the original iPod commercial in order to be successful. Get the I-Robot, a stack of red solo cups, ASAP. Apple's canceled for fraternity-coded marketing. I think that would be amazing. If this thing could pour a beer without foam, I think they got a winner.

Starting point is 01:04:51 Because it needs to inject itself into social. Even the iPod, like yes, you could put it in the headphones and you could tune out the world and be that dancing silhouette during the iPod commercial. But also, you could say, pass me the ox cord. I want to play a song for my iPod that everyone can enjoy. And it's a social experience. And so it's important to show both of those sides now more than ever.

Starting point is 01:05:13 And in chatypte demos and any AI product demo, there's always going to be the user who uses the product to be more isolating. But the marketing should always be aspirational and pro-social, just like social media. Social media is at its best when we're highlighting the fact that, like, I have so many friends. that just send me a random Instagram reel every single day. And like, that's our interaction. And it's, and for me, it's a way to, like, check in with a friend. And, like, share a laugh. And, share a laugh. And it's a heart and it's a laughing.

Starting point is 01:05:43 I can imagine the ad creative for the Apple Pixar lamp. You know, it's sitting on the center of a kitchen island. The family's hanging out and they're FaceTiming somebody. Exactly. Yeah. One of the family members is out of town. I can actually imagine us having a Pixar lamp here on the table. Really?

Starting point is 01:05:59 Really, it's like, yeah, it's like you want to be connecting two families or two, two sides of the family. The East Coast side of the family, the West Coast side of the family, they're both having Thanksgiving and they're able to connect. But there's, everyone's being extremely social. Do not film this thing with the lonely, the lonely person, you know, having the Pixar Lampe be the only thing to keep it company. Anyway, that's my advice for. What else is doing here? The projects coded Linwood and Glenwood. core to the new home devices

Starting point is 01:06:29 and current products like iPhones and iPads is an overhaul to the underpinnings of Siri. Engineers are working on a version code named Linwood with an entirely new brain built around LLMs, the foundation of GenAI. The goal is to tap into personal data

Starting point is 01:06:44 to fulfill queries and ability that was delayed due to hiccups with the current version. It should be able to do it. Hopefully, they should have a moonshot division just trying to solve eye. message search they could probably start there every tech company is that amazon search is rough google gmail search is rough there search has gotten so like dominated a billion dollar business

Starting point is 01:07:10 in figuring out i mean that would be the killer that might be a killer app for comment in some of the browsers is just like actually being able to search my gmail inbox better that would be pretty fantastic i feel like it should be at the app layer anyway whatever they're building they're building products. They got to get on linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Open AIs on linear. Let's get Apple on linear. Let's get the Siri team on linear. They very well might be already. So somebody, Craig Federigi, who you all know, says the work we've done on this end-to-end revamp of Syria has given us the result. We need it.

Starting point is 01:07:53 He added that this has put us in a position to not just deliver what we announced, but to deliver a much bigger upgrade than we envisioned. He said there is no project people are taking more seriously. So that is very positive. A final decision hasn't been made on which models will be used, but Apple has been testing Anthropic PBC's Claude for this purpose. Mike Rockwell, the former Vision Pro Chief, who was put in charge of Siri earlier this year, is overseeing both the Linwood and Glenwood efforts.

Starting point is 01:08:23 Apparently, so during the development of the tabletop robot, Apple engineers have made heavy use of chat GPT and Google Gemini to build and test features within Apple AI and Siri teams as a whole software developers are increasingly using third-party systems as part of their development process. Getting into a ring competitor here, Apple is working on a camera code name J450s is designed for home security detecting people and automating tasks. The device will be battery powered and could last for several months to a year on a single. charge. That's interesting. If they can do this for, they can, they can do this for a random home security camera. They can't do it for you. So they have, you're telling me they have the capability to have an always on camera. Put the tinfoil hat on. We need the tent foil hat. The device has facial recognition and infrared sensors to determine who is in a room. Apple believes users will replace, will place cameras throughout their home to help with automation. That can be turning

Starting point is 01:09:20 lights off when someone leaves a room or automatically playing music so apple you're telling me that you can make a home security camera of which i will purchase multiple and put them around my house and it will be able to have a single battery that could last for several months to a year on a single charge and you can't make an iPhone it's a little bit different the screen's pretty bright the screen's Right. Yeah. But an always on camera? How long do you think your phone battery would last if you just constantly had the camera?

Starting point is 01:09:54 I actually think running the camera sensor is a lot less power intensive than running a screen for sure. And obviously a bunch of different applications. But still, pretty powerful, pretty exciting. I don't think people want an always on iPhone. They want the thrill of charging the iPhone every night. If you're an adrenaline junkie, there's nothing like being on 1% trying to fire off that last I message. You know, I actually had a moment yesterday. My one-year-old is starting to walk.

Starting point is 01:10:22 And I had this moment yesterday where I was, I was, I was, I'd filmed a video of her walking. Yep. For about 10 seconds. Everyone's in, in the house is like laughing, enjoying the moment. And then my battery died and completely lost the video because I didn't hit, I didn't hit like end the video. So the battery died right in the middle of this memory gone forever. There is actually, that has something to do. do with the encoder. There is a certain file type that you can use when you're filming on one of

Starting point is 01:10:53 these cameras that if the battery dies, it will actually save the last of the file. But there's certain there's certain codecs where if you don't hit finish recording, the whole thing will be corrupted. It's very annoying. Anyway, get on numeral HQ, sales tax on autopilot. Sped less than five minutes per month on sales tax compliance. Tyler, what do you think about the Apple robot? Would you buy this thing? Would you do a challenge for it and then churn in two weeks? That's probably that's most likely. It depends on how much it is. I'm like, you know, what, what have you adopted this summer that you still daily drive? You've churned from the vision, you've turned from the VR headset, you've churned from clearly. My new phone. Your phone, you have not gone back to

Starting point is 01:11:38 the old phone. It's yeah. Extremely bullish for Apple. Let's hear it. Let's hear it. Let's hear it for new phones. You know, you talk a lot of trash, you already about, oh, the latest iPhone doesn't have an all-day battery. Tyler's still using the latest and greatest phone. Still a good business. iPhone sales are ripping. Well, Apple still got it. In other news, Emily Choi has announced we just closed the biggest deal in crypto history. Deribit is the number one crypto options exchange by volume and open interest. And now it's officially part of Coinbase. So, of course, Coinbase just completed their 2.9 billion cash in stock acquisition of Deribit.

Starting point is 01:12:13 This had been announced previously. Deribet launched in 2016 and reportedly notched over $1 trillion in annual trading volume in 2024. So let's give it up for a big number. In other crypto news, bullish, this is one of the greatest headlines I've ever seen in the the nominative determinism of the nominative determinism of bullish. I don't know if you can see. Maybe I should just put it here. We need like the printer cam back.

Starting point is 01:12:43 But the business and finance section of the Wall Street Journal says bullish's IPO lives up to name. Price of crypto exchanges, shares jump 84% on their first day of trading. Shares of bullish sword in the IPO, highlighting the challenge of pricing an IPO in today's exuberant market. Just last month, shares of software company Figma jumped 250% in their debut. That prompted whispers about the risks of a company underwent. pricing and IPO and potentially leaving billions of dollars on the table. The ideal first day gains are typically around 20 to 30 percent, many bankers who work on deal say. Bullish had more had a market capitalization of more than $13 billion as of Wednesday afternoon. Its stock,

Starting point is 01:13:28 which trades under the symbol BLSH, was temporarily paused after it began trading. All eyes were on Bullish's debut, largely because the company is led by Tom Farley, the former president of the New York Stock Exchange. Farley in the role guided some of the biggest IPOs, including those of Alibaba and Snap. Bullish's debut was a chance for him to show his own ability to nail an IPO pricing to both maximize for company proceeds because when you're going public, you are selling stock.

Starting point is 01:14:00 It's a fundraising event. It's a fundraising event. You want to sell it at the fairest price. If the stock pops, you could have sold a lot more potentially and gotten with the same amount of dilution, essentially. So they could have, so they raised 1.1 billion, but because it jumped 84%, they could have raised $2 billion for the same dilution. And so that's, in theory, the, in theory, the problem here.

Starting point is 01:14:22 And so, you know, people, people kind of go back and forth. But it gets to this point. But again, I mean, you're making a gamble, right? Yep. Even the Facebook, the Facebook IPO didn't, didn't it decline? Tanked, yeah. It was like one of the worst IPOs in tech history. It was very, very rough.

Starting point is 01:14:38 and it took over a year, I think, for them to build back up. But that was due to a few things. There was a technical error. There was mispricing. There was a lot of, like, I think the numbers or something. There was like the mobile risk. There were a few different factors where people were like, oh, maybe this isn't the best, like a true like compounder.

Starting point is 01:14:56 I don't know. It was very odd in hindsight. But yes, this all goes to the point of how will individual investors react to public debuts? Because if they go out and it's a hot company, it becomes a meme stock, or there's just, you know, too much late in demand, the stock will pop insanely. And so that's what a lot of companies that are going public are dealing with these days,

Starting point is 01:15:16 but it's sort of a champagne problem because it's good to have a high-valued stock that you can go out and acquire stuff. 11 billion-dollar public company now. Yeah, that's great. Bin.a.I, the number one AI, the number one AI agent for customer service. Number one in performance benchmarks,

Starting point is 01:15:28 number one in competitive bakeoffs, number one ranking on G2. You can get started for free. Brad Pitt says his Ford versus Ferrari movie with Tom Cruise never happened because Cruz found out he would not be driving much in the movie. I had no idea this is what happened. We both wanted to drive. Tom realized

Starting point is 01:15:45 that Shelby would not be driving much, so it didn't come through. Some lore. Who wound up starring in Ford versus Ferrari? Who plays Shelby? I forget. It's someone else, right? Ford versus Ferrari. Oh, it's Christian Bale.

Starting point is 01:16:01 Christian Bale, that's right. Christian Bale and Matt Damon. Although Matt Damon does not play Who does he play? Matt Damon, Ken Miles, Donald Frey. Anyway, Adio, customer relationship magic. Adio is an AI Native CRM that builds and grows your company the next level.

Starting point is 01:16:19 You can get started for free at Adio. Well, in other news, OpenAI and Sam Altman are investing a quarter of a billion dollars in Merge Labs at an $850 million valuation. That's a big stake. The Financial Times is reporting. So Sam Altman wants to put a chip in your brain. I think everyone wants to put a chip in your brain.

Starting point is 01:16:42 Everyone, even Roy Lee wants to put a chip in your brain. Roy Lee wants to and Mark Zuckerberg said that if you are, if you're not wearing meta-ray bans, you'll be at a cognitive disability or something like that, didn't he say? Or cognitive disadvantage because having A.I. And Hope's Revenge said, good, I'm used to it. This is great. So the Financial Times.

Starting point is 01:17:02 Altman's co-founding the company. Wow. That's pretty crazy. And its co-founder, Sam Altman, are preparing to back a company that will compete with Elon Musk-NorLink by connecting human brains with computers. I'm sure he's going to have a normal one over this. The two billionaire entrepreneurs, the new venture called Merge Labs is raising funds at $850 million, with much of the new capital expected to come from Open AIs Ventures team, according to three people with direct knowledge of the plans. Altman has encouraged the investment and will help launch the project alongside Alex Blania, who runs World and an eyeball-scanning digital ID project. also backed by Sam Altman.

Starting point is 01:17:38 Altman will co-found the company but not have a day-to-day role in the new project they added. Merge is one of a slate of young companies looking to take advantage of recent advances in artificial intelligence to build more useful BCIs. Its name comes from what many in Silicon Valley describe as the merge, a moment when humans and machines come together. Yeah, it's a good. The Dumers are going to love this one. I'm sure. Altman wrote a lengthy blog post on the topic.

Starting point is 01:18:05 in 2017, speculating the moment would come as soon as 2025. This year, he suggested in another blog post that he could soon have high bandwidth brain computer interfaces as a result of recent technological advances. I'm gonna reference back to this blog post from Sam Altman called The Merge. He posted this eight years ago on December 7th, 2017.

Starting point is 01:18:28 A popular topic in Silicon Valley is talking about what year humans and machines will merge, or if not what year, humans will get surpassed by rapidly improving AI or a genetically enhanced species. Most guesses seem to be between 2025 and 2075. People used to call this the singularity. Now it feels uncomfortable and real enough that many seem to avoid naming it at all. Perhaps another reason people stopped using the word singularity is that it implies a single moment in time and it now looks like the merge is going to be a gradual process and gradual

Starting point is 01:19:00 processes are hard to notice. I believe the merge has already started and we are a few years in. Our phones control us and tell us what to do. Social media feeds determine how we feel. Search engines decide what we think. The algorithms that make all of this happen are no longer understood by any one person. They optimize for what their creators tell them to optimize for, but in ways that no human could figure out. They are what today seems like sophisticated AI and tomorrow will seem like child's play. And they're extremely effective, at least speaking for myself, I have a very hard time resisting what the algorithms want me to do. Until I made a real effort to combat it, I found myself getting extremely addicted to the internet. We are already in the phase of co-evolution,

Starting point is 01:19:43 the AI's effect, effect and infect us, and then we improve the AI. We build more computing power to run the AI on it, and it figures out how to build even better chips. This probably cannot be stopped. As we have learned, scientific advancement eventually happens if the laws of physics do not prevent it. More important than that, unless we destroy ourselves first, superhuman AI is going to happen. Genetic enhancement is going to happen, and brain machine interfaces are going to happen. It is a failure of human imagination and human arrogance to assume that we will never build things smarter than ourselves. Our self-worth is so based on our intelligent that we believe it must be singular and not slightly higher than all the other animals on a continuum. Perhaps the AI will feel

Starting point is 01:20:28 the same way and note that differences between us and Bonobos are barely worth discussing. The merge can take a lot of forms. We could plug electrodes into our brains or we could all just become really close friends with a chat bot. Wow. Eight years ago, he said that? Eight years ago. That's crazy. ChatGBTGBT, of course, wouldn't exist for years, but I think a merge is probably our best case scenario. If two different species both want the same thing and only one can have it, In this case, to be the dominant species on the planet and beyond, they are going to have a conflict. We should all want one team where all members care about the well-being of everyone else. Although the merge has already begun, it's going to get a lot weirder.

Starting point is 01:21:07 We will be the first species ever to design our own descendants. My guess is that we can either be a biological bootloader for digital intelligence and then fade into an evolutionary tree branch, or we can figure out what a successful merge looks like. It's probably going to happen sooner than most people think. hardware is improving at an exponential rate. The most surprising thing I've learned, working on Open AI is just how correlated, increasing computing power and AI breakthroughs are.

Starting point is 01:21:34 And the number of smart people working on AI is increasing exponentially as well. Double exponential functions get away from you fast. It would be good for the entire world to start taking this a lot more seriously now. Worldwide coordination doesn't happen quickly, and we need it for this. That's a wild post.

Starting point is 01:21:53 Is that still up? Did you have to go to the archive? Still up. Still up. Interesting. That's a hot take. Tyler, would you put a chip in your brain? Yeah, I want 4-0 piped straight in.

Starting point is 01:22:06 Yeah, you're down? I'd do it, yeah. Sycophancy maxing. Chat is not super into it. Gabe says he just wants salt and vinegar chips, not brain chips. John actually says he's got to be honest. I don't think it's for me ever. I can already picture the contagion of pure pressure.

Starting point is 01:22:21 Yeah, reading that blog post made me want to touch some grass. We should actually get some grass here in the studio. We should get some grass in the studio. Or even on the table so we could just have one hand on the grass. It relates a lot to this cold healing post. 2040 population distribution predictions. 90% brainless content zombies who are functionally illiterate cannot write a paragraph. 5% neo-amish flip phone users.

Starting point is 01:22:48 5% elites and super elites at algorithmic war with each other to steer the 90% to their whims. And then Crabbs as always has been. I do, I think this, I think the case of the Neo Amish is fascinating because the non-Amish, the Amish are doing fantastically. They have adopted flip phones, I believe, and they've adopted some technology. But in general, they've accumulated a lot of real estate. And they're by all accounts, they're reproducing rapidly.

Starting point is 01:23:19 By all accounts, they are flourishing. And so what's interesting is that the coastal elites have not gone to war with the Amish. They're not said, like, what they are doing is unacceptable and we must, like, eradicate them. I don't know if they'll ever be threatened by it. I think they might be fine with it forever. I think everyone might be fine with it forever. And so I think you do. They can build barns like they're in a game of Fortnite.

Starting point is 01:23:43 Oh, you're threatened by that? I mean, if they can build a barn, what else could they build quickly? I think that, like, you, even though there will be. You've seen the videos, right? them like assembling a barn in 12 hours it truly is some of the greatest some of the greatest grass touching we can do all the time the um the amic population doubles every 20 years amazing yeah what's bullish yeah and it's america like not doubling ever chart that out yeah oh that's a fast take off there yeah yeah yeah yeah project the next 10 000 years what will the omish population

Starting point is 01:24:14 do i work on that general intelligence how many omish people were there be in 10 000 years if they keep doubling every 20 years. That's what I want to know. I bet it's a big number. Mark has a good one. He says, AI equals Amish intelligence. How to build a barn in 20 hours.

Starting point is 01:24:31 I love it. Thank you, Mark. This is so funny. But I think my takeaway is like the, so Sam is painting this picture of like, you get left in the evolution tree and you get like dropped off and it's a dead end. I don't know that it's necessarily a dead end.

Starting point is 01:24:48 I don't know that it's necessarily a dead end. Like, you could, like, monkeys are still around. You could still just be a monkey. And you could be an Amish and, like, the superintelligence brain computer merged people could go off and do their own thing. And you could just be vibed as an Amish for thousands and thousands of years. Like, there's not necessarily an incentive to eradicate the everyone. Until the super intelligence comes and says, hey, I'm going to need you guys to come and ride

Starting point is 01:25:11 Soul Cycle bikes to power my data center. I think that, I think that people are just, are just, people like. People like animals. People are nice by default. Like the default state of most living things is not this like vicious battle to dominate everything constantly. Like yes, like the animal kingdom is extremely metal and there are insane battles constantly. But it doesn't, it doesn't need to necessarily be that way.

Starting point is 01:25:38 Yeah, I don't think it necessarily needs to be that way. I think the, I think the Amish can coexist. Tyler, do you have the final number? How many Amish people will there be in the year? in 10,000, 12,025, 12,025. Yeah, so I think it'd be 1.3 times 10 to the 156. Can you turn that into like words? Is it quintillion, octillion, septillion?

Starting point is 01:26:02 I want to know, convert it into, convert it to the 156 is like. Is that past a Google? I guess 10 to 100. So there will be more than a Google Amish. Yeah. That's fantastic. I'm rooting for the Amish. That's great.

Starting point is 01:26:17 I think you've got to go long Amish. How do we make money on this? Someone asks, what about the absent-minded destruction of parking lots? I don't get that. I'm confused. I don't know about the Amish. Amish reference. Are the Amish destroying parking lots?

Starting point is 01:26:31 I think they're building parking lots for all those barns they're putting up. Anyway, the Amish are missing out on eight sleep, or maybe that's a loophole that they can do. We should definitely get the Amish on eight sleep. Get a pod five if you're Amish and you're listening to the stream and you're in the chat right now. They got a five-year warranty, 30-night risk retrial, free returns-free shipping. So that would be imagine the first thing you put in the barn, pod five. They could imagine if we find out that the Amish can build barns so quickly because they've all been secretly sleeping on eight sleep. Maybe that's the secret. Maybe that's the secret. They got an Amish version from

Starting point is 01:27:05 Mateo that's that's like cooled by the earth. Ooh, the, the, the farm to table eight sleep. That's Nice. Taylor says, I for one welcome our Amish Borg overlords. And Gabe says Long Home Depot. Yeah, Long Home Depot. Going Long Home Depot to, did the Amish shop at Home Depot or do they chop their own trees down? I don't know. I need to do deep dive on the Amish. Anyway, should we debate whether or not TV is dead, our magazine's dead. One of our strongest stands, Adam Faye's. I believe he's a part of Faye's clan. Adam Faye said Emily Sundberg asked me for my anonymous hot take, which I guess he immediately de-anomized. On the state of media right now, I'll out myself because I don't think mine's that anonymous. Magazines are dead. TV is dead.

Starting point is 01:27:53 Hollywood is dead. TBPN is more important than CNBC. Emily Sunberg is more important than Vanity Fair. Nick Fuentes is more important than Fox News and X is unfortunately the center of the universe. Interesting take, very spicy. Alex Heath from the bird says half is true half is not will never know which half and Max Tani says I think you could make the argument that none of this is true yeah who knows what is relevancy what is importance who knows all I know is we're having fun on this stream we're having

Starting point is 01:28:24 fun with you in the chat I just want to say you're keeping magazines in business John I am I mean yeah oh the newspaper is dead why do I read it every single day then well he didn't say the newspaper was dead. No, the newspoopers, Lindy. I think, uh, I think, uh, I actually think true journalism is more important than ever. As long as TBPN is alive, Hollywood cannot be dead because we are live from Hollywood and we are joined by someone, we got it on life support. He's not far from Hollywood, Deli and Asperuho, partner founders fund, co-founder of Varda space. What can we do to second office for Varda? Let's move it to Hollywood. Hollywood is the new Silicon Valley. Well, if they get tasked, not a lot of

Starting point is 01:29:04 warehouse space wait think about this so if you guys task get tasked with a moon landing and we you know we need to oh yeah yeah yeah yeah we got you covered if if you're going out for for series j and you need to you know make a moon landing appear like it happened we got the cameras for you we're good but i you know somewhat controversial take is the moon landing did happen yeah the footage wasn't looking that good oh they did live stream from hollywood for the footage that they had It's a great years of takes. So both are true. That's great.

Starting point is 01:29:37 They had to reshoot it. They had to reshoot it. Yeah, reshoot's happened all the time. I don't have a problem with it. I say let it happen. Fair, fair play. Yeah. Anyway, what is new in your world?

Starting point is 01:29:48 There's a bunch of stuff going on D.C. We can talk about chips in China. We can talk about, I want to talk about negative gross margins and AI companies. What's going on in venture? There's a bunch of stuff. But what's top of my view? Why don't we start there? Let's start there.

Starting point is 01:30:00 Let's a fun one. Okay. Because Delian has been getting, you know, notoriously. For years about margin profiles. Oh, yeah. Yeah, yeah, that's true. That's true.

Starting point is 01:30:12 Back to Everett, baby. Yeah. Let's make it just an effort. Somebody tell Everett to come on right now. Yeah, yeah. Let's have the gross margins debate. So here's my take to kick it off. Here's an example of how the AI startup economy works.

Starting point is 01:30:27 I've anonymized the companies, but this was relayed to me in a group chat, and I believe it to be roughly true. You, the user, gives an application layer company $1. They turn around and give $5 to a foundation model company that gives $7 to a hyperscaler, who in turn gives $13 to a GPU maker. And it's giving house of cards.

Starting point is 01:30:46 And so the question is, how fast can inference costs fall? Are we so over? Will we solve this? Is Moore's law enough to save us? What else needs to change? What's your take on negative gross margins in now software businesses? and the end of zero fixed costs. I saw this graph that was in video's free cash flow by quarter

Starting point is 01:31:07 and they're like capex by quarter. The first was like the day spent, I think, I figured it was quarter yearly, maybe it was yearly, but they're spending something on the order of like, you know, 4.5, you know, sort of billion in, you know, sort of capx on, you know, so scale up of production lines. And their free cash flow is something on the order of like $35, 40, you know, sort of billion dollars.

Starting point is 01:31:25 And so there's just something like funnily ironic where like you take the whole like 2010 Hens mantra of like, you know, software's eating the world, marginal cost of distribution is zero, so your margins are phenomenal, and then it's just like, it's all just completely wrong, right? Like, you know, SaaS companies end up having, like, crazy high sales and marketing spend in order to actually, like, euro the revenues at all, so the margins don't look anywhere near what they look like.

Starting point is 01:31:47 Alex Clayton from, you know, sort of Meritech had this tweet where now the, just publicly reported AI Labs's revenue company, sorry, the publicly reported revenues of AI Labs now surpass the entire public-sace, you know, publicly traded SaaS, you know, industry. So it's just like, you have this entire, like, decade of companies, things that people, you know, sort of worked on, revenues, et cetera. And then it turns out, like, it was all just completely wrong, both on, like, those companies actually having durability, margins, et cetera. And there's replaced by something that is somehow bigger and potentially also has all those,

Starting point is 01:32:23 you know, sort of same, like, risks and concerns of durability, margin center. And who's the winner? it still ends up being the people that have the fundamental, like, hardware, you know, infrastructure. Like, if you look at, like, where all the, like, free cash flows ending up, it's somehow ending up in, like, Oracle running data centers, Microsoft running data centers, and, you know, and video basically building the chips that, you know, should go into those and, like, the energy companies that are providing the energy for it. But, like, the end, like, application layer and, like, software companies end up capturing, like, none of the, you know,

Starting point is 01:32:49 sort of margins or cash flows from all of this. And so, I don't know, is the guy that's always loved bits in atoms rather than pure bits alone. I continue to feel very validated. And I admit that I enjoy studying, you know, some of these AI companies gross margin profiles and then realizing that like the fucking space factory company has better gross margins than made. It's wild.

Starting point is 01:33:07 Do you think that there's any hope for inference costs to fall off a cliff and and gross margins to kind of get right side up very quickly? Because that is the bull case. Like we saw this with deep seek. Like the inference cost, even for reasoning models,

Starting point is 01:33:23 dropped like, you know, 20 X very quickly and you just don't see that in you know I'm a home I'm a homemaker and all of a sudden like like the price of lumber just drop 10x like that just doesn't happen it only happens in in software and algorithms where a more elegant implementation of the algorithm can actually drive same results 10x savings and cost and that feels like everything's like everyone's kind of hoping for a bailout maybe but and I'm like cautiously optimistic that it could We're going to get a government bailout of the artificial intelligence industry within the next 365 days. We need a federal backstop.

Starting point is 01:34:04 Yeah, universal tokens. Everyone gets $1,000 in Nvidia credits or something. The other, like, interesting, you know, sort of macro lens on this is if you look at the amount of CAPEX that is going into setting up, you know, basically, you know, buying chips, setting up use of data centers, basically all things that the like, you know, sort of hyperscalers and foundation labs are contributing towards. It's actually the highest single, you know, sort of industry investment line item as a percentage of GDP since basically, you know, the fiber rollout in, you know, sort of the late 90s. And then before that, the last time that we had an equivalent was basically the railroad broom in the late 1890s, right? I want to say. And the real-load boom was significantly higher.

Starting point is 01:34:52 I think it was like almost 9% of GDP. I know the chart you're thinking of. And I think fiber and like the internet rollout was like 1.2 and we're at like 1.3% of GDP. Something like that. So we're not. We're not like insane 10% of GDP, which is kind of what like the fast takeoff folks, the, you know, the, the, the, the Dwar Keshez Patel crowd talking with Sata Nadella talking about like this could be 50% of GDP if scaling really, really works like we think it Well, the thing that's unique, though, to those, you know, relative to those prior booms is fiber companies were dependent on their fiber revenue in order to keep justifying rolling out fiber, right? And they obviously ended up being wrong. You thought that fiber was going to be everywhere. There's going to be infinite internet. And then it turns out you set up like a basic backbone for the internet. And then after that you actually didn't need fiber everywhere. And so there was like projected to be semi infinite demand for fiber. And now the biggest, you know, sort of company that was rolling that out in like the late 90s Corning literally only like finally last year reached their original like peak, you know, 201, you know, sort of market cap.

Starting point is 01:35:49 it took, you know, whatever, like, four years. And most of that now has nothing to do with fiber. It's like the gorilla glass that they make for, you know, iPhone, all these other, like, special glass applications. But, you know, shows how long can take to, you know, get back to your prior peak. The railroad companies obviously were highly dependent on their, like, you know, rail revenue in order to be able to continue to invest into railroads.

Starting point is 01:36:07 What's crazy about the, like, you know, capax that's going into these data centers is, like a significant chunk of it is funded from companies that have free cash loan revenues from completely unrelated to the AI business, right? Like, meta's funding all of this stuff from, like, their social media and targeted ads. ads, you know, Microsoft is, you know, feeding all this off of their, like, you know, sort of SaaS, you know, revenues, you know, Amazon, obviously from their like, you know,

Starting point is 01:36:25 marketplace, et cetera. It's like, the only companies that are actually dependent on the air AI revenues to fund this CapEx are like basically the foundation, you know, sort of model companies. And then Google from their like monopoly, you know, basically on, you know, sort of search. And so when you think about like how long they could potentially sustain that like at 1.3 or you get up to like 2% of GDP, it could potentially take a significantly longer time if there is any type of, you know, sort of bubble here for there to be eventually is a decrease in the percent of GDP because they're not actually that reliant on, you know, that that KAPX rollout actually immediately contributing to, you know, revenues.

Starting point is 01:36:57 And then the crazy part is like you still have Apple, you know, sort of mostly setting on a huge chunk of cash and hasn't really participated in all this other than the fact that actually they're like, you know, revenues have now been flat for like five and a half year straight. And then they're like, you know, bounce sheet has basically only decreased linearly, you know, quarter over quarter for the last five years straight. So it's like, man, if you were like a more brilliant version of Tim Cook five years ago, should have just bought like $90 billion of GPUs and started building, you know, some data centers. And instead he like, I don't know, rolled out the like iPhone like, you know, 400.

Starting point is 01:37:26 iPhone 400 would actually go pretty hard. Which, to be fair, has good margins and low churn. We gave our intern a new iPhone and he has still using it. And we can't say that about some of the SaaS that we've had him try. Happy DAU. There is a there is a wrinkle with the Apple thing. A lot of the balance sheet decline is because of dividends. They're paying shareholders out. But I agree with you. The other thing that I don't know what to do with the cash, you don't know what to do with the cash. They're creating their they're creating the Pixar lamp. Yeah, yeah, they're going to create Pixar lamp. They're literally creating a Pixar lamp that will sit on your, your, it's going to be an iPad on a robotic arm and it will be able to like move around and

Starting point is 01:38:02 follow you around the room. So if you're FaceTime or someone in the kitchen and you walk over to the stove or the refrigerator, it'll follow you around. And they're going to compete with ring. I think they don't know what to do with their cap. I think they got plenty of world changing ideas. Yeah, yeah, they're going to go steamroll of two billion dollar company It sounds like a shitty, like, 2013, like, YC, like, startup, you know, sort of pitch, like, on the order of, like, Jucero, basically. Yeah, yeah, who knows? I want to talk about, yeah, the fractures in the, in the financial world around AI do feel, like,

Starting point is 01:38:32 the foundation's a little more solid because it's coming off of cash flow from these hyperscalor balance sheets. There's also the, and that's the bowl case for the hyperscalers in AI and just being competitive, even if they're behind the ball. on code gen and personal assistance and things like that is that they're just gonna be able to sustain this pace and investment level for the other kind of, yeah, the other kind of source of capital

Starting point is 01:38:59 that people are discussing now is private credit and people are wondering if there's this private credit bubble, but then also private credit isn't mark to market as much. And can you give me kind of like the venture capitalist 101 on how venture capitalists are interfacing with private credit these days because it feels like there was usually like a handoff where you invest in a company and then at a certain point it goes public and then you know or goes into private equity and then you're kind of out of the game but it feels like there's a little bit

Starting point is 01:39:29 more interface between the VC world and the private credit world now like do you have any insight into what's going on there have you followed that at all a bit you know um uh the place It's very deal by deal, right? Study this stuff is like the upstream, which is like the, you know, sort of equity side of things. Sure. I'm forgetting the, you know, sort of exact stat that I'm thinking of, but there was basically this crossover point in the last year, which I want to say was it wasn't IPO equity raised, but it was, it was something like, you know, sort of capital deployed into like sub-200 billion dollar market cap companies. And basically for the first time ever, the private capital market was actually as large, you know, and had. crossed over to the public, you know, basically capital markets in terms of, you know, sort of fundraising in terms of like issuing a primary and fundraising. And so the strategies that some of

Starting point is 01:40:25 these like major asset managers on the equity user side of things, these are obviously like the Fidelity, the Black Rocks, et cetera, the ones that are like, you know, the Vanguard, all of those groups at this point have clearly, you know, sort of admitted to themselves that the sort of prototypical, IPO when you're between 5 and 25 billion to dollar market cap is just a world that is not coming back anytime soon. It's not to say there won't be some companies that do that. Obviously, Figma has done, you know, sort of phenomenally well. And so that may tempt some companies to go back to it. But all these asset managers have realized that, you know, so much of the returns are now being, you know, sort of held up in the private markets that they need to, you know, sort of go

Starting point is 01:41:00 enter those. And so you're seeing the equivalent on the, you know, sort of private credit side of things. I think I can, you know, sort of share the logo of the company. But there was a company in our portfolio that recently, you know, raised hundreds of millions of dollars in private, you know, sort of credit from tier one, you know, basically, you know, sort of bank, you know, top, you know, sort of four in the United States. The cost of credit that they had on it was effectively like LIBOR plus 25 bibs, which is just like the equivalent of like cost of capital for a like $50 billion publicly, you know, a company.

Starting point is 01:41:31 It's like, you know, notably very different than like venture debt, which is like something people like, oh, yeah, I raised $10 million. I got a $1 million credit line or something. that. This is a completely different world. If you have a bad quarter, we're, we're going to we run the company. Yeah, exactly. These are totally different. This is like, you know, you know, you know, backing physical assets at these either sort of companies are going and buying and, you know, sort of rolling out. And so I remember watching that deal happen and being like, wow. Like, I mean, first, as the like equity investor, I'm like, oh my God, this cost

Starting point is 01:42:02 of capital super easy for this company to like, you know, cover the like, you know, KAPX, you sort of roll out based off their, you know, sort of margins, et cetera. And so the like return on equity now that you can see as the private investor is like insane where it's like, why go public where this company doesn't even need to raise that much equity. And they like, one of the, like, there's a lot of value purposes for being public. But one of them is that you're like general cost of capital on the debt side just goes down significantly, typically when you're, you know, sort of a public company. And that was what people thought of on the cost of equity side for a long time. That was the whole purpose of going public was like,

Starting point is 01:42:31 you know, in 2013, you couldn't raise $5 billion in the private markets. And so if you wanted to scale to that level. You had to basically go public. Private credit was much more laggard to catch up, but is now actually starting to catch up where it's like, well, man, you're like, cost of equity is basically the equivalent, if not cheaper than what it is when you're public. Now the cost of credit is starting to basically, you know, should have become the equivalent at some point. It's like, you know, why are you even, you know, sort of bothering to, you know, you can go public? So that was like, you know, sort of first set of thoughts that I had. But then the second was okay, I was like trying to think about it from like the lender perspective. I was like,

Starting point is 01:43:01 in what world, you know, are they giving this like, you know, private company the like equivalent cost of capital of like you know publicly traded and it couldn't it couldn't be that they've just raised so much money and they need to deploy it at all cost right couldn't be that i yeah yeah i mean maybe there's a part of it that couldn't be it right like why would we yeah but it's a lot of money we have a lot of a um we got to take some huge risk right here we got to deploy we can't we can't generate fees unless we're you know slugging around maybe huge check but what we yeah what's the other reason i i think the other reason is like um there there's these certain, like, super cycle macro trends that sort of feel unstoppable.

Starting point is 01:43:41 And if your company is related to that, the banks are willing to underwriting because they believe that, like, look, this piece of infrastructure that you're building, if you don't utilize it, there will be a fast follower that quickly, you know, sort of jams it up. So you build out XYZ data center with all these GPUs. For some reason, if your model, your, like, particular consumer application doesn't work, somebody else is basically going to go snap that up. And so they clearly are treating like a part of underwriting, you know, CapEx as a, you know, infrastructure like debt provider is thinking about like if the like equity holder of this you know basically

Starting point is 01:44:09 goes belly up is this does this asset actually have secondary liquidity right it's that's why you know companies that have super esoteric pieces of equipment or technology a little harder to have debt if you're buying something say like you know you know i mean like that warehouse i mean the warehouse space like if you were to i don't know you're probably leasing it but like if you were to say i want a mortgage and i want to buy a warehouse like that's hyper liquid and you can sell that to somebody else who needs a warehouse very easily. You're in El Segundo. It's pretty simple.

Starting point is 01:44:36 But yeah, like if it's R&D and if the R&D doesn't produce fruits, like that needs to be equity backed. That needs to be paid for with equity. And so, yeah, it is interesting that, yeah, there's this like super cycle and there's certain technology, certain pieces of equipment, certain pieces of hardware that you can just underwrite way, way differently because somebody's going to pick them up. There's three high water, there's three hedgers at GPU centers.

Starting point is 01:44:56 Transmit lines, like people building transformers. Yeah. You know, the gas turbines that people are using for like, you know, basically backup, you know, sort of power to like smooth out the grid, battery systems. And so it's interesting where it's like you almost have the like, you know, and I always talk about this. It's like you want to, you know, transform the world. You can, you know, do all the government policy you want. But ultimately it's like the invisible hand that is going to, you know, when we think about like electrification and build out of like, you know, sort of grid,

Starting point is 01:45:17 when you think about like reshoring of, you know, sort of manufacturing the United States and having like, you know, not just 10 CNC machines in a facility like this, but like hundreds, thousands, et cetera. Yeah. The easiest signal to see whether or not that stuff is going to happen is like, what does the cost of capital to go do that? And the banks are clearly signaling, like, we believe that this is such a macro trend. There's such strong, you know, support from the market, such strong support from government policy that, like, we're going to be giving these, like, subscale companies, but that are focused in these particular areas, cost of capital low enough that this, you know, and we believe

Starting point is 01:45:44 that the risk is low enough because of the secondary liquidity and because of all these macro trends, that it sort of becomes this self-fulfilling loop. Or now of a sudden, you do get, you know, all those sort of trends, you know, built out on, you know, crazy amounts of energy built out, you know, restoring a production in the United States, you know, sort of huge data centers. And so now the stuff can also go in the reverse direction. But I think it's just like one of these highlights of like capital markets are just so reflexive. We're like when people believe in a trend more, then the cost of capital becomes less,

Starting point is 01:46:08 then the rollout, you know, it basically happens faster. And then it loops on itself with the cost of capital becomes less, et cetera. As you're seeing this in these like, you know, sort of categories. But there's like more sustainability against you this, especially in the data center world where, you know, it's not dependent on the data centers producing cash flows for, you know, a lot of these businesses. Obviously on all things, reshorring production there, obviously, more, you know, sort of dependent on actual revenues there. The only other topic that I was going to sort of flag, by the way, is I don't know if you guys saw, But the White House actually put out an executive order yesterday that was one of their, you know, sort of first, you know, broader orders on basically maintaining commercial space leadership in the United States that I kind of wanted to do.

Starting point is 01:46:39 Yeah, please bring it down. You know, a little bit, you know, Delta V, you know, space topic. Break it down, space man. Breaking it down. It was something, I hope I don't butcher, you know, apologies, Michael Cratio, so I butcher the name of the order. But there's something like, you know, America maintaining, making space great again, you know, maintaining American leadership in space. There were a couple different aspects of it, you know, that I enjoyed, you know, reading through. I think the first primary, like, lens that I put on it is it was just the clearest language

Starting point is 01:47:07 that I've ever seen from a government official talking about just making so much of space activity far more regular. It was everything from just, like, you know, sort of rethinking the regulations around both launch and reentry to think of these things as like much more, you know, sort of regular activities. You know, the example that I always like to provide in relation to, you know, sort of Varda was, you know, if you studied the airspace around Cape Canaveral over the past, you know, so decade, it's had a significant, you know, sort of, you know, shift in that there used to just just be the occasional rocket launch that would do a basically like temporary, basically shutdown of airspace. You know, flights would get, you know, sort of rerouted, you know, across Florida

Starting point is 01:47:45 in order to, you know, sort of accommodate that. And it was always sort of like a one-off special operation. At this point, if you actually look at like the commercial, you know, plane traffic patterns around Florida. Most of it has basically largely shifted, like they used to typically actually fly along the coast. If you think about that in New York to, you know, Miami flight, it would actually sort of cut along the, you know, sort of coast to basically, you know, sort of reduce a little bit of the distance. Now, because there's just such consistent operations, the airspace is basically, you know, predicted to be effectively closed off at basically all times. And so all of the commercial airline traffic basically just goes along the like central

Starting point is 01:48:17 line of Florida. And it sounds like a, you know, so simple thing, but it's interesting to think about, like, how day-to-day, you know, activities and commercial activities are shaped when something is seen as, like, a regular activity rather than, like, a, you know, sort of special occasion. And so you've seen that, you know, built out around Cape Canaver, where now do you have this, like, rocket flight corridor that is basically just, like, permanently, you know, sort of cordoned off. It's really the only place that we have that in the United States at that regular bed activity where, like, it's thought of as something that need to be cordoned off. You obviously have Vandenberg, you know, sort of space, force base, but still,

Starting point is 01:48:47 their things are still occasional enough that you don't have the equivalent. There's also a little bit less like, you know, sort of commercial, you know, flight traffic that, you know, sort of goes around there. It's just a little bit, you know, less than like a, you know, sort of dense urban population. But a part of the, you know, sort of executive order from the president was both, you know, sort of rethinking and reshaping, you know, basically launch and reentry, you know, basically launch and then thinking through, you know, and establishing of a bunch of spaceports around America that are meant to have basically, you know, regular both reentry and, you know, and launch activity. and then thinking through how much burden should there be put on reentry vehicles that are coming back from space. If those reentry vehicles have a basically what's known as a flight termination system on board, basically it's like, hey, if something's going wrong, just explode the damn thing so we don't actually like land in the wrong place. And so should you allow for basically like looser, you know, regulations when you know that there is that type of, you know, sort of termination system on board

Starting point is 01:49:39 that can basically self-terminate if you're in an off, you know, off-nominal scenario. And so it was just great to see leadership from, you know, the administration and the president in such a, like, pointed direction of hey, this type of activity needs to be thought of as day to day and as common as like commercial sort of flight. The example that I like to give is we are now approaching the point of the amount of orbital rocket

Starting point is 01:50:00 launches from the United States per year is about the same number of commercial airliners landing and taking off in LAX every day. He's becoming regular. I mean, it's sold 365, you know, off of, you know, truly, you know, the daily equivalent of LAX, but it's like, you know, it's in

Starting point is 01:50:16 the orders of magnitude now of like, you know, some of busiest airports. And so we need to think of these things, not as like rocket launch pads, but like spaceports. And I like the executive order had like the word spaceport in it like 15 times, not like esoteric crazy rocket launch pad thing. It's like no. You know, airports and space port. Yeah, we kind of do that with the commercial flights. I think like when commercial airliners are flying east to west, they fly at like 35,000 feet. And when you're flying west to east, you fly at 32,000 feet. So there's just always a gap. And you know, you don't even have to think about, like, am I going to run into someone because you're just, everyone's just codified.

Starting point is 01:50:49 A default pattern of operation, because you don't have to think about that. And so we need the equivalent for space ports where it's like, yeah, there's this corridor that allows, you know, for reentry, you know, so regularly. And just like, it's not like it's the one-off rerouting of planes, but the planes just don't go there because they know that that's where things reenter. Yep. Anything on the, what's the update on Firefly Aerospace? They went out, they went public on August 7th at 60, down 18-ish percent. since then but this is the company that had the rover moon landing moon landing what's the general update on the company and yeah yeah how do they fit in the

Starting point is 01:51:28 ecosystem yeah I've been spending a bunch of time with some of the investment bankers that you just sort of led that your deal and then some of the like long you know hedge funds that did it it was exciting to see that of the call it like top eight you know mega IPO allocators that are like the long only you know sort of public equity types. I think something like seven out of the eight did like meaningful, you know, sort of positions in that Firefly IPO round. And so I think this kind of goes back to like the, you know, super cycle stuff that we were talking about where I do think that this stuff starts to become a little bit of like a self-fulfilling prophecy where like you have the president

Starting point is 01:52:04 administration really leaning in and leaning forward. Obviously there's like Jared Isaacman, no longer administrator, secretary Duffy stepping in. They're trying to find, you know, interim. So, you know, there's obviously things that they're still sorting out on like our space leadership. clearly, you know, sort of leaning forward in a way that is, you know, sort of marching towards, you know, wanting more launch providers, more activity, you know, both military and civil in space and then obviously towards the moon and Mars. Firefly, you know, has had a, you know, somewhat, you know, sort of complicated history. It's no longer the original founding CEO. They've had a swapout CEO a few times. But I do think in this, you know, sort of category of

Starting point is 01:52:34 aerospace company, it's really important to focus on just like ultimate, like, flights and, you know, success in those. And for it's worth, Firefly has accomplished two things that I think are quite, you know, phenomenal. They are the only rocket launch company that, basically had this contract with the DOD, where the DOD basically had them on guard, and then they were only given 24 hours to notice, and they had to launch a satellite. And so it wasn't like a, oh, pre-planned, et cetera. It was basically like responsive, you know, sort of launch is, I think the, you know, sort of term that the Air Force gave it. I think it was Air Force.

Starting point is 01:53:00 And so very impressive to have done that. And then obviously, you know, they've managed to actually, you know, sort of land on the moon and not tip over. Intuitive machines is still working on that, you know, sort of second part. So they've clearly accomplished some things. Financial profile of the business, I admit, is like, you know, it's a lot of CAPEX, a lot of burn. it's not super repeatable, you know, sort of yet. But the fact that, like, you know, these public, you know, long, you know, equity folks are, you know, buying in at such scale, again, improves their balance sheet, reduces their cost of capital, clearly shows some signaling

Starting point is 01:53:26 from the equity markets, at least, that they really do believe that this type of, like, lunar infrastructure, launch infrastructure is something that has such macro tailwinds behind it, that, you know, even though they're still, you know, choppy in terms of operations, et cetera, that there's, you know, sort of clear potential there. And you're seeing that with RocketLab. I mean, look at the company, like, you know, was, you know, I think a year ago, probably trading like three and a half, you know, sort of $4 billion in market cap. It's something like a $22 billion, you know, sort of market cap company today is like, you know, amongst the, you know, sort of higher, you know, sort of, you know, sort of ratios, you know, in all things, you know,

Starting point is 01:53:55 A&D. Let's give it up for high revenue multiples. We love them here. We love them. Love them. Give them to the rocket companies, babies. We don't have enough of them. Yeah.

Starting point is 01:54:03 Not saying Barton's going public anytime soon, but it is encouraging to see, you know, all the interest in activity. Well, you're the one who said you were talking with investment bankers. Yeah. Oh, you know, the job of a capital allocator. you know right right right so i i posted earlier somewhat of a joke somewhat real breaking group chat sentiment flips bearish investor confidence confidence dips to the lowest level since late 2023 source my phone how are you feeling about general sentiment right now in private markets there's been a lot of people being gritty a lot of people should we be fearful yeah a lot of people being

Starting point is 01:54:38 greedy should we be is is there any alpha and being fearful yeah we always uh Yeah, try to, you know, Zig when others are zagging at a FAP, obviously. So when we see this level of exuberance, I think that always makes us a little more hesitant. But yeah, it's been wild to see just the, you know, sort of depth of interest. But in this like sort of case-shaped, you know, sort of dynamic, right? Where, you know, the equivalent of like, I forget who tweeted this today, some relative problem with venture capitalists, but or maybe reporter. It was basically saying that, like, private capital markets are basically replicating the, like,

Starting point is 01:55:08 mag-7 strategy, but, you know, in the private markets where it's like, you know, basically if you look at the like mag 7 versus the like s and p 493 is basically flat mag 7 or up you kind of have the equivalent dynamic in private capital markets both literally with like the individual logos of like SpaceX open ai and a rule et cetera where it's like you know representing the biggest chunk of you know capital allocated you know ever in the history of private capital markets but i think it's also generally true in like the categories where it's like if you're not and d and if you're not a i oh my god like there's like you know basically no interest and nobody you know wants to you just to talk to you and then if you're in those categories

Starting point is 01:55:40 the rounds get done in like a, you know, sort of week and are done at like the, you know, sort of craziest, you know, prices. Yeah, I think we always stick to our general strategy of like, you know, ignore the noise, focus on the things that we think are in the long term. And so, you know, my... Well, it's just, it's worth remembering because we just had, you know, we, you know, Figma IPO was, you know, this amazing moment. But if you look back, it's like Andrew Reed did the C at 400 million posts. And you look at the, you look at the companies that are doing rounds of 400 posts right now, and they were not, they were not anywhere near that kind of profile. In those categories, you know, this is where, you know, again, you know, obviously there's lots

Starting point is 01:56:20 of benefits to doing the hot category where you're like downstream, you know, financing typically are much less risky, but there's also the, you know, you know, return, you know, compression there. So my, you know, sort of pithy joke on it is like, while everybody else is focused on, you know, A&D and like AI, I'm just doing the series A's, they're like fish-killing robot companies where, you know, nobody's really thinking. We tasted Shinkay on the stream. It was a lot of fun. What does A&D stand for?

Starting point is 01:56:45 Oh, aerospace and defense. I'm sorry. Spending too much time with capital. Lots of jargon. Lots of jargon. What else needs to be clarified in space? Obviously, the space port, the actual path, the rockets travel along is important. But is there, is there, you know, appetite for more clear regulation around Leo?

Starting point is 01:57:08 middle earth orbit, geo orbit, are there even just like re-entry of the pods that Varta sends up? Like what else, what's the next thing that we need to kind of standardize around? I liked it in my head now. I have Middle Earth orbit going. Yeah, middle Earth orbit. What's it actually called? Medium Earth orbit. Medium Earth orbit. I like Middle Earth orbit better. Let's take it back. Let's coin it. Exactly. Exactly. Yeah, I mean, there has been, you know, I've heard some like, you know, sort of light rumblings, you know, sort of around this. Right now, when you look at your sort of general space policy, it is kind of split up in a bunch of different areas.

Starting point is 01:57:43 You basically have FAA responsible for all launch and reentry licensing. So basically like when you're in the air, then once you're in orbit, you have everything from, if you want to take photos of other things in orbit, that's all regulated by NOAA. Kind of crazy because it's like, you know, Noah stands for like ocean, whatever administration, et cetera. So it's like why are they regulating pictures? But it's because they're responsible for all things OSINT, you know, in, you know, photography land. And then if you want to communicate with your satellite, you know, it's the radio spectrum from the FCC, and they even govern, like so, for example, you know, one of the recent back and forth, you know, more in the prior administration around Vardo was they were trying to debate whether or not ISAM, so in space, so in manufacturing needed to live in its own specific, you know, sort of spectrum and everybody had to communicate in there rather than getting to be in like the general, you know, sort of space, you know, sort of spectrum. And so you have all these like sort of split, you know, sort of regulators. And as a space company, it's very burdensome. to like, okay, if you're like a pharmaceutical company, you kind of know that like your only regulator is the, you know, FDA and that's all that you're sort of working with.

Starting point is 01:58:41 And so, yeah, I think, you know, probably when I think about what needs to happen next beyond just the space ports, it's just like make it to that there's sort of more of a single point of contact if you're a space company rather than having to establish like four different, you know, regulatory, you know, relationships, which, by the way, none of them talk to one another, right? Yeah, yeah. So that and then probably like a space traffic coordinator, like there isn't the equivalent of like we have air traffic control here, there's regulations on like how you need

Starting point is 01:59:03 to report your position, how you communicate, et cetera. Space traffic control, they like kind of started something actually in the first Trump administration. It worked through Biden and administration. And then oddly enough, the Trump administration actually shut down their own project. And so now we're kind of back to like wild west again on all things, space traffic. So it's mostly just like literal like the companies like individually email each other. And there's like this one like nonprofit foundation that like collects everybody's space traffic data. And then it's like, by the way, there's no rules. And like by the way, if like you're going to be intersecting with a Chinese satellite and then like the nonprofit introduces you and the Chinese company over email, it's not obviously like who's going to maneuver. There's no rule.

Starting point is 01:59:37 It's a game of chicken. It's still just Catholic. It helps that it's mostly just pretty empty up there, so there's not any, you know, incursions. We're going to need regulation around drunk space. We're going to need pilots who live their life one mile at a time. I have a sort of an odd. Pretty short is going 14,000 miles an hour. Yeah.

Starting point is 01:59:56 14,000 miles at a time. What's your read on the future of the sort of pilot career? path. It seems like obviously we, like many, many different types of planes have like great autonomous systems, yet we obviously still want pilots in the cabin. How do you, how do you, when you kind of look at the progress happening on the, on the autonomous side, where do you think human pilots will fit in? Man, there's clearly some things that are moving forward, like, you know, Secretary Duffy, you know, Secretary of Transportation, you know, has really pushed forward more aggressively than I would have expected on all things like E.V. Tall, you know,

Starting point is 02:00:42 beyond visual line of sight, you know, sort of drones, you know, on like the small scale, you know, sort of vehicle autonomy side of things. When you think about like a Boeing 747, you know, sort of getting actually fully automated, man, the commercial airliner, you know, commercial passenger stuff is just, it feels so hard. And a part of it is, other than obviously a recent whole set of events, you know, DCA crash, obviously included. generally the United States has such a flawless safety profile I think we've talked about this and like you know other yeah to like get things changed because you have you know so much you know such a great safety record so yeah I think you know

Starting point is 02:01:18 job yeah when you I mean when you think about if you have you know hundreds of people in a single metal tube flying through the air is it worth having you know a couple more people to be in there it's also there's also an economic dynamic where I believe the cost of labor for an Uber is about 70% born by human labor, whereas the cost of a 747 flight is like 7% pilot fees, even though the pilot, no, no, it's like 50% fuel, 70% fuel. Yeah, yeah, exactly, whereas the gas and the Uber is like 10% of the cost of the ride, 70% is the actual human. And so there's a lot, there's a very different economic dynamic there. But we're actually going to talk to Merlin Labs today that are, and Merlin is going public. They work on autonomous flights for planes, autonomous pilots for planes.

Starting point is 02:02:10 So we'll dig in with Matthew George. My last comment for the session is this is my, you know, sort of favorite one where I didn't realize it was going to be on TVPN until the TVPN account tweeted. And it was like, I didn't know that. Well, lo and behold, look at it. I am. That's amazing. We should just communicate purely over X.com. It is the everything app after all.

Starting point is 02:02:30 Anyway, this is always a great time. Thanks so much for hopping on. Later, boys. We'll talk to you later. Bye. And whether we talked to Delian about the markets, whether you're long, whether you're short, where you think it's top or local bottom, head over to public.com investing for those who take it seriously. They got multi-asset investing, industry leading yields, and they're trusted by millions, folks.

Starting point is 02:02:49 We are joined next by some folks at Anderl. Today, Anderle posted. They are waiting in the Restream waiting room, I believe we will bring them in just a second. Anderil industry said introducing the Anderl's, 250 the first ever NASCAR race on an active military base. So welcome to the stream. I believe we have Jeff

Starting point is 02:03:08 and Jen joining. So welcome to the stream. From the we stream waiting room. Whoa. Okay. Hey. Can we flip them? Can they flip their camera? We're seeing you horizontal or flipped somehow. But good to meet

Starting point is 02:03:24 you. Good to see you. Actually, I met both of you online. And Jen's been on the show before. Let's try and the camera 90 degrees if possible? There we go. Looking good. And I see some vehicle in the... That thing looks stunning.

Starting point is 02:03:37 Both of them. Fantastic. How are you doing today? Hi, everyone. My name is Jeff Miller. I'm great. It's good to see you. John.

Starting point is 02:03:44 I'm going to see it, Jordy. We're here in the hangar in Moorsville, North Carolina. So we wanted to give you guys a little bit of a window into our big announcement around the Anderral 250. Why North Carolina?

Starting point is 02:04:00 Isn't this happening in San Diego? Well, NASCAR headquarters is in Dayton and in Charlotte. So we've been here this week. Not only working with the NASCAR team to make sure we show up into the sport in an authentic way. But we've also been meeting with several of the teams themselves because you might be seeing an Anderol stock car with a paint scheme come June 21st, 2026. Fantastic. Getting to learn the sport as we make the announcement.

Starting point is 02:04:30 Yeah, what is the Andrel color way? I think of, when I think of Anderl, I think of like all the, the slate gray, but then I also think of all the anime colors. And so there's a little bit of both. Is, is yellow and gray going to be a brand pattern going forward? We are not getting a lot of audio from you. I don't know if there's, is there one microphone? What's going on here? Can we hear you, Jen? we can hear we can hear what jem saying is that okay great so i'm just saying that black is in not only one of our core colors or not a color as you like to say but our accent tone there is safety yellow

Starting point is 02:05:14 so anything that you see whether it's in incredible products that jen and team are designing the finish you're going to see that safety yellow so in the paint skiing there we like to call it using the language that they use here in NASCAR versus what you'll hear more in F1 called a livery, what we call livery on our aircraft. For our paint scheme here, we really lead into that black and that safety yellow. The car looks incredible. It's amazing. You guys cooked, as usual.

Starting point is 02:05:43 Can you give us a tour of the livery? I want to see it close up. Yeah, can the camera move around? Can you show us the car up close? A little bit. I can hear you like loosely on his microphone, I think. But if it's a shared pair of AirPods is car. switching back and forth. Let's see if we can get a tour of the car. Okay. I'm going to take you

Starting point is 02:06:02 around the car. Okay. Very cool. This is why. All right. That's a huge annual logo on the front. You really dominated this. Yeah. Safety. Safety yellow. The primary color is black, right? Okay. The safety yellow comes from our livery scheme on our actual products where we're calling out high-vis critical warnings and markings. Sure. And you know, as we think about, bringing these two worlds together i really thought there was a lot of symmetry a lot of kinship between our two identities right i think i love also spending time here getting to know the nascar brand uh like bringing uh they're leaning really hard into their legacy and their heritage but then they pair that with such contemporary you know bold graphics and high you know

Starting point is 02:06:47 visibility colors which is um you know there's a lot of synergy between our identity and their identity we're gonna get some mustang gtds in the and rural parking lot after the next tender have you seen the Mustang GtD it's beautiful it's like a $500,000 it's beautiful oh wow is that a fury in the background too yeah that's right it's hard to see that's amazing Jeff can Jeff can walk you around the fury that's awesome uh talk to me about the actual race would this race have existed without and Earl stepping in it is like it's not just the logo on a car it's not just the logo on the entire car it's the logo and the name and a role on the actual race and a whole new race and a whole new race

Starting point is 02:07:30 and a whole new race yeah what i'd like to say that this this race first and foremost is the brain shop of um nat's club leadership and uh the u s navy so it's our privilege to to be a part of it ben kennedy you're going to have the opportunity to speak with we've got such incredible vision along with uh aiming the race director and so we came on in april Jen and I had a chance to go on the Navy base. And the second you stepped on a naval base, Coronado, I mean, this is where the film's Top Gun and Top Gun Maverick had seen film, that famous Eyebar is there.

Starting point is 02:08:08 And you stepped on a U.S. aircraft carrier, and you feel the power. You feel like you are there. And with people who are doing work that really matters. So yes, this race would absolutely work without us. But I think what NASCAR saw in Andrews was a company that was so, deeply committed to our American values and our warfighter and wanted to celebrate that story that it was a perfect fit. Very cool. Well, we're going to hop on with Ben Kennedy from NASCAR. Thank you so much for taking the time to chat with us. When is the actual race? Can people buy tickets

Starting point is 02:08:41 now? Is it on sale? What's the next step? And how do we get some merch? People are usually asking us that. People are definitely now we're asking you that. We can talk offline. But but yeah, when is the race? The race is June 21st, 2006. You can go ahead and get your, place your deposits now. We'll definitely be having merch. I'm expecting a live broadcast from TBPN. We will be there.

Starting point is 02:09:06 100%. I can't wait. I can't wait to run this back with you guys in about 11 months. Fantastic. Incredible. Thank you so much. And congratulations on the partnership. We're very excited to keep tracking it.

Starting point is 02:09:19 And can't wait for the race. We'll talk to you soon. Cheers. Thank you all. Thanks for coming on. And we're also notorious for running snarky billboard ads on 101. If you want to run an ad, go to adquick.com. Out of home advertising made easy and measurable.

Starting point is 02:09:33 Say goodbye to the headaches of out of home advertising. Only ad quick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe. Did you see the billboard that they actually dropped on the 101? Yeah, we talked about this, where Jeff Miller, who we just talked to, put up a billboard of the fury saying, like, no more enterprise SaaS. because every single I think Tray Stevens got sick

Starting point is 02:09:55 of seeing another enterprise SaaS billboard and he said I need an Anderral billboard up there And so they did it They did it And so we will be hopping on with Ben Kennedy from NASCAR In just a few minutes

Starting point is 02:10:07 But in the meantime Let's tell you about Bezell Get Bezle.com Your Bezell Consum is available now to source you any watch on the planet Seriously any watch Jordy where would you like to go In the post?

Starting point is 02:10:18 I have a post here from Ian Roundtree friend of the show he says a friend hadn't heard of tbpn and another described it as follows tbpn is a very popular ramp infomercial in the style of esbn instead of rankings tied to sport leagues they are tied to how early and how much you invested in ramp or how close you are to someone who did i said fact check true we love it we love it uh daniel tanrero says happy core weave lockup expiry day basically the super bowl for guys like us Correweave down 10% today.

Starting point is 02:10:53 As some folks sell, I'm not sure, I'm not sure how the actual lockup plays out. 15%, still a $48 billion company and shout out Nick Carter. They also, angel investor in the, or was it seed round? Yeah, yeah. You can run the numbers. Corre we've most recently beat on top line, missed on bottom line. They are burning something around 300, something million dollars a quarter. but making a lot of revenue and so who hasn't burned they're investing a billion

Starting point is 02:11:26 invest three hundred million a quarter yeah happens uh prerog agriwal uh says he's just setting up his twitter again coming on the show today heads down building parallel with some of the best people he's ever work with creating infrastructure for a i to search and use a web uh he will be on the show in not too long very excited for that buck says stas s t a as subsidized tokens as a service i.e. most of the VC-backed AI app layer. And on that note, a Chris Pike post has hit the timeline. A Google Doc has hit the timeline. I repeat a Google Doc. It's called Curser's Problem. Product Market Fit is the story founders love to tell. Business Model Product Market Fit is the part they often skip. Product Market Fit is users repeatedly choose your product, business model product fit, the extraction of

Starting point is 02:12:20 value is sustainably in excess and proportional to the cost of delivering value. Cursor has relied on a subscription model that historically allowed for quote-unquote unlimited use. That's a fixed revenue variable cost setup. Insurance companies are the canonical example, and they employ actuaries to accurately price risk and segment users. Hypergrowth startups rarely have that muscle. When variable costs scale with intensity of usage, but revenue doesn't, you're not selling software, you're underwriting risk, without actuarial actuarial. Discipline, pricing, segmentation, caps, exclusions, these models drift into the same ditch that killed movie pass, oyster, and forced class pass to retire, quote-unquote, unlimited.

Starting point is 02:13:01 Cohorts invert your most profitable user churn because they use the product the lease and get the least value. Oftentimes, they can get better value from a competitor who prices them more accurately or with less breakage. The remaining users are those who extract more value than they pay. Over time, older cohorts morph into deeply negative gross margin. top line mass rot new larger cohorts can briefly offset the drag hiding the deterioration in earlier cohorts revenue grows margin quality quietly decays a large cause of this problem in fast growing companies is the conflation of subsidies and marketing they are both expensive growth strategies but they do very different things marketing buys attention it changes who hears about you not what the products is worth in equilibrium subsidies buy behavior they put economic value on the product scale distorting the read on willingness to pay the 15-minute delivery boom made this vivid PMF seemed strong when prices were artificially low when prices rose to true cost demand snapped back the quote-unquote fit was with the discount not the service venture lore

Starting point is 02:14:07 points to uver and door dash as counter examples the lesson isn't negative gross margins are fine the lesson is if there's an operational path to positive margins i.e density batching or utilization and future pricing power, quote, moats, the temporary subsidies can be a bridge. Indeed, venture capital is precisely the right instrument to facilitate these kinds of companies, but most businesses don't have such a bridge. Does this bridge exist for cursor? Cursors users expect the best coding performance, which is currently delivered by the frontier models. That pins cursors' cogs to open AI anthropic price cards. Curser doesn't control two critical dials. One model performance frontier, which is what you

Starting point is 02:14:48 users demand and model input output pricing what cursor pays. If cursor steps down to cheaper, weaker models, the users who care about performance will notice and churn. Those who can tolerate weaker models can get them cheaper elsewhere. If it stays at the frontier while keeping prices flat, the variable real cost to service their heaviest users will explode. In an effort to combat this cursor has been forced to raise prices and institute usage caps leading to user outrage and churn.

Starting point is 02:15:14 Any time unlimited shows up in variable cost businesses, PMF becomes a permanently open question. Are users here for the product or for the subsidy? Would they still use it as much or at all at true marginal cost? Until cursor prices consumption in proportion to cost it cannot know. Last couple paragraphs. So interesting that we're going into, we're leaving the world of zero marginal costs. Like this is the Ben Thompson intellectual, like aggregation theory regime of the past two decades, like since, you know, if you're trying to understand Google, you had to understand what it meant to serve an incremental user at zero marginal cost. And it was something that Wall Street and retail and lots of folks, even a lot of VCs,

Starting point is 02:16:01 like, could not wrap their minds around for a long, long time. And there was huge alpha in that. And now it's become consensus right when the economic, like, equation is now flipping. wonder how long we'll be in this regime if it's here to stay if we plateau and reasoning models are always expensive and then I wonder I do wonder how bad the gross margins are at various companies how bad this subsidization subsidized tokens problem is and I also wonder if there are any companies like there have been plenty previously like previous era SaaS companies that have said have gone out and said, hey, we're an AI company now.

Starting point is 02:16:45 And I wonder if that's hurt their gross margins. I've been picking at that with a few founders that have come on. I've said, like, so like, is your inference bill growing or is it material at all? And basically what I'm getting at is like, is it affecting your gross margins? Yeah, we were asking Rahul from Julius about this. And he said that it's, it's a thing, but it's not incredibly material. There's going to need, you just have to find a way with the application layer company that you build to deliver enough value that the actual inference is under the hood very

Starting point is 02:17:17 efficient and then i do wonder if cursors in a unique unique position because it's such a raw interface to to the frontier coding model and the quality really matters uh but yeah could they could they swap out deep seek r2 save 10 times as much money and then you know happen and then all of a sudden finish off gross markets he says cursor will have to choose what it wants to know if it keeps subsidizing the heaviest usage. It can keep growing, but it cannot claim unambiguous PMF. If it starts charging in proportion to cost, some usage will fall and what remains will be the market. The burning question that should nag founders, do I have demand for my product or for my subsidies? So it seems,

Starting point is 02:17:57 it seems very reasonable to a loved product. Yeah, and it seems very reasonable to subsidize for a while and really get people installed and hooked on the product and then raise prices to to the point where you are delivering value. you. Like, when you think about what the value of an AI software engineer, that could be justified in the $50,000 a year, $100,000 a year territory. That doesn't seem that crazy to me if you're actually getting that leverage out of the system. But the idea of saying, oh, yeah, my, my, my, my, my, my, my, my, my, my IDE bill is 10k a month is crazy. But it could be. I don't know. Anyway, before we get in to our next guest, Ben, we have some news breaking. Cohere just raised 500,000.

Starting point is 02:18:40 million at 6.8 billion. On the Transformer paper, one of the greatest to ever do it. Nick on X says, we are so back. We are so back. Congratulations to the folks. I'm feeling it. Well, let's bring in Ben from the Restream waiting room. Ben Kennedy from NASCAR. How are you doing? Ben, good to meet you. Good. How are you guys doing? Thanks for having me on today. Of course, of course. Why don't you kick me off with an introduction on yourself and how you fit in the NASCAR organization? Yeah. So my name is Ben Kennedy. I am EVP here at NASCAR, but we get the opportunity to wear a bunch of different hats. So we're responsible for the NASCAR own track properties, NASCAR regional team, emissions team, people making improvements to our racetracks.

Starting point is 02:19:24 And then importantly, what we're talking about today is schedule. So dreaming up the next year's schedule, and we're getting ready to announce our 2026 schedule here pretty soon. But, you know, one of our big projects, which I know we're talking about today, is the race on the base next year. We're bringing our NASCAR Cup series, our Xfinity series, and our Craftsman Truck Series to San Diego for the first time and for the first time ever on a military base. So really excited about it. Take me through the shape of all of the different NASCAR events because there's like, you know, there's the tent pole events that people kind of know and love. And then there's a whole bunch of other different properties, activations, events, races, kind of give me the shape of what NASCAR is today. yeah so we compete across 38 race weekends throughout the year 36 of those are points races and then we have two exhibition races and our season it starts in February with the biggest race the year of the Daytona 500 so we're a little bit different in the sense that we start with our Super Bowl and then we will go pretty much straight through the entire year we'll have one or two weeks off to the first week in November where we'll have our championship race which will be in in Phoenix this year so we're competing

Starting point is 02:20:36 every single season, we have three different national series. So you can almost think of it like high school or college that kind of leads to the pros. But we have our cup series, our Xfinity series, which is our last step for a lot of drivers before they go up to the premier series. And then our Craftsman Truck Series, which are a little bit different style of vehicle. It's more of a pickup truck style. And that's where a lot of drivers will start their national series career as they they begin touring with us. And then how does the race on the base fit into that structure? Yeah, so the race on the base will be, it'll be in the middle of our season.

Starting point is 02:21:14 So Amazon Prime will cover it for the Cup series, a lot of the Xfinity series and truck series, which will be on Saturday and Friday that weekend, but it's June 19th to 21st. And essentially what we're going to do at Naval Base Coronado is we're going to build a temporary three-mile circuit that will go around the base. So anyone that comes out, we're going to create kind of these different neighborhoods of experiences that fans can go and see. So you'll have the start finish line where you'll have a lot of the hospitality, the garage area, people will be able to get down and see and hear the cars. They'll go out towards the bay side of San Diego or they'll go past an aircraft carrier or two. And then eventually we'll come out onto the tarmac where they'll be weaving their way through F-18s and Ospreys and all sorts of fun stuff.

Starting point is 02:22:01 So don't have the course design finalized yet, but around a three-mile course, we're going to build temporary on the base. What do you think the expected lap time will be for a course of that size? It's a good question. I would say, you know, we've run a couple models on it. We do a lot of our sim work virtual before we commit to anything. It's around a minute and a half, a minute, 40 seconds or so. It's a pretty high speed track. 120 miles an hour on average something like that I imagine that's wild that'll be a lot of fun to watch talk about partnering with anderil who they are trying to to reach they have customers they have employees they have they have fans of the merch uh why was it a good partnership uh what are you excited to like deliver to them on the marketing side and what did they bring to the table other than you know just money yeah we couldn't ask for a better partner than and and we if we approached them

Starting point is 02:22:57 or they approached us. I think we reached out to them through the grapevine. And we had some conversations earlier this year, you know, probably five or six months ago with them. And they had a ton of energy around the event. And, you know, for us, we want to find partners and companies that we can do business with that are both strategic in the sense that we're going to add value to them and hopefully they'll add value to the weekend, which I know they're going to do. But partners that are organic as well. And you couldn't think of a more natural fit than a partner like Andril. You know, you look at all the different types of technology that they're creating, both on the software side and the hardware side. It's incredible. And you think about precision,

Starting point is 02:23:39 speed, and innovations in technology, that's what our sport is all about. So couldn't ask for a better partner than Andrew. Really fired up about the announcement today. This has been a long coming. We had a couple of Easter eggs that snuck out about a month ago when we had the announcement, but glad to be able to be talking publicly today about it and, you know, excited to see there's a lot of elements that they're going to be bringing to the table over the next 11 months. And then especially on that weekend, that fans will get to go out and experience as a part of it. What's the pat, a lot of our audience, our founders and executives at various technology companies, what's the path into partnering with NASCAR itself or various teams and events?

Starting point is 02:24:30 Yeah, I would say if anyone's interested, reach out to us. I'm sure we can find a way to provide contact info and whatnot, but typically we'll have conversations with whoever might be interested. I think the good news is there's a lot of interest around this event. and whether it's NASCAR as a sanctioning body or a team or a driver, we have connections to everyone in the industry. So happy to put them in touch along the way. That's amazing. Thank you so much for hopping on the stream. Congratulations. Congratulations on the announcement. I'm looking forward to it. We'll see you there. We'll see you there. Yeah, I look forward to seeing you guys out there. It'd be a blast. This is going to be great. Talk to you soon. Bye. If you're looking to go to San Diego,

Starting point is 02:25:10 you got to book a wander. Find your happy place. Find your happy place. Find your Happy place. Book of Wander with inspiring views. Hotel great amenities, dreamy beds, top tier cleaning, 24-7 concierge service. It's a vacation home, but better folks. Jordi, warm up that gong. Can we, I just want to say, if Jessica waiting in the restream waiting room. I want to be live streaming from an aircraft carrier for the race. We can do it. We can do it. For sure. For sure. Well, let's bring in Jessica in from the solar from the stream waiting room and from solo. How you doing? What's happening? Welcome to the show. It's good. It's good. Would you mind kicking us off with an introduction on yourself and the company? Absolutely. I'm Jess. I'm co-founder and CEO of Sola. We're an agentic process automation platform that helps businesses automate their most operational workflows using AI by doing workflows the way that humans do. Name one process you've automated with an agentic workflow. Yeah, absolutely. As an example, we work with companies across a whole bunch of different verticals.

Starting point is 02:26:12 But for example, for some of the logistics companies we work with, you can imagine they operate on internal portals, external systems, spreadsheets, everything in between. And to actually get a shipment out end to end, it requires a lot of manual work. And so Sola will type data in. It will take down data. It will do all the coordination that gets the shipment

Starting point is 02:26:33 end to end and work in that passion. Give us the news today. Anything to share? Very exciting day. We just raised a 17 million Series A, led by A16 Z. Congratulations. Don't leave out conviction. I was just about to get there.

Starting point is 02:26:52 We continued support from our feed lead conviction as well as Y Combinator. There we go. Fantastic. Amazing. That's a great. Great lineup. Talk to me about what the state of the art is in actually building an agentic workflow on top of kind of an internal dashboard. We've been hearing a lot about like the big labs setting up reinforcement learning environments with verifiable war wards.

Starting point is 02:27:16 They're cloning DoorDash. They're creating copies of Amazon.com. So the future version of ShoutGPT will let me order headphones or gongs or whatever I need for the show just within that chat interface. I imagine that if you're talking about some custom piece of logistics software, some internal portal, there's probably some things that you can get out of the box just by using Frontier, reasoning, models and web browsers and agentic browsers, but what extra steps do you have to take to actually deliver a ton of value? Absolutely. Let me give a little context. A hundred percent, you know, everyone's talking about enterprise AI agents and computer use and VLMs, but there's a gap between where those are at today and how that gets into productionized workflows, right, for enterprise companies at scale.

Starting point is 02:28:04 You can imagine that, you know, for the first time we have these models that can reason and they can act like humans, they can understand how these platforms are working, and we don't need to, you know, build an integration or like an API connection into platforms in order to be able to do work on them. But instead, we can just, you know, mimic the way humans do. Now, that said, if you've tried operator or, you know, computer use agents or any of these models, they're pretty unreliable for individual tasks. And then you can imagine, if you're scaling this up to, you know, hundreds of thousands of hours of real world work, it's going to be really tough to do so.

Starting point is 02:28:40 And so what Sola does is we take an approach where we use a combination of deterministic as well as more deterministic, non-deterministic automation and sort of change the abstractions on which things are built so that, you know, you are able to, for example, send a shipment across five different platforms reliably and at scale. And so we use these models, but also a whole lot of different architectures on top of that to make things very accurate and be able to plan and, you know, build guardrails around the processes that people have.

Starting point is 02:29:11 Did you start with a focus on logistics, or is that somewhere you ended up after, you know, talking with a bunch of different companies in various industries? After I demanded a single example to dig into. Absolutely. I mean, today we, we work, we have workflows across a lot of different verticals. So Sola does finance workflows and KYC. Sola does healthcare workflows and enters data into EMRs. Logistics is a big part of that. I would say that the two biggest verticals that Sola has a ton of, done a ton of work in today is logistics and health care. It's by no means where we started, actually.

Starting point is 02:29:47 Our early customers were in legal and in health care, I would say, mostly, and some insurance as well. But I think logistics just turned out to be an industry that we discovered a few months ago. Turns out there's a million perfect automations for Sola there. And today we work with a whole bunch of really large companies in the end. industry who are using it for all kinds of different applications. What's been the employee reaction at the companies that you guys work with? I imagine a lot of these employees are stressed out, overworked, kind of, you know, exhausted from managing all these different service areas.

Starting point is 02:30:21 So my sense would be that they welcome a tool like this, but what's your read? Yeah, for sure. I think that it really meaningfully changes the way people work. Like for example, some of the companies that we operate at, you know, you know, we're saving people from doing the very boring copy pasting, very manual, repetitive work so that they can focus on sales and customer relationships and everything else that goes into their business. One of the customers that we work with, they do a few hundred million in revenue. We started working with about half a year ago, and their kind of famous

Starting point is 02:30:55 data point is that they haven't had to hire a single person at their company since bringing on Sola because they've just been able to do more with the same amount of people that they have on hand and they can kind of scale the revenue of their business without having to scale headcount. Yeah, I've heard that from a founder building in the AI roll-up space and he's buying companies and he's telling the management team, we're not like a traditional private equity that's just going to like, you know, gut the company, reduce headcount. We're going to focus on growth, but we don't need to add a bunch of incremental headcount. We're just going to make you more effective. Interesting. It's a great value prop. There's a big kind of discussion online today about

Starting point is 02:31:32 gross margins at startups. Can you walk me through the economic thinking of your buyer, your customer? How are they thinking about the value that you deliver and then your costs? Because obviously I imagine that these workflows use reasoning models, the token bills are probably significant, but you're delivering hopefully a lot more value than that.

Starting point is 02:31:57 So how are people responding to the idea that, okay, There's a company that has real variable costs with the amount that I demand, or the amount that I'm using this tool. Are they receptive to a consumption model? Are they receptive to price increases? What's the vibe been like from the AI buyer world? Yeah, absolutely. I mean, I think the most direct way to justify value is just how many hours are you saving, right? That's the most straightforward way and the traditional way automation is justified.

Starting point is 02:32:28 On top of that, for a lot of businesses, you actually see top-line revenue lift. Like if you start powering their core operations and they can just do more business, so it becomes a very different equation. And I think that's a lot of the ways customers see Sola on top of just time savings. In terms of model costs, it really doesn't make sense to paying a computer use agent at every single step that you're doing. You can imagine that will get super costly, it will be slow, it will be unreliable. And so we have a lot of infrastructure built on top of that so that,

Starting point is 02:32:58 the things that you know you don't necessarily need models for that are very straightforward we can just you know apply more traditional automation and then areas where you need reasoning you need flexibility you need workflows to adapt then obviously we use more models there and so costs aren't crazy and i imagine those will keep going down over time fantastic well congrats on the round and congrats on hiring yes hiring lots of engineers we're based in new york um if you're interested please reach out we are growing very quickly fantastic amazing congratulations on the milestone. And we'll see you back here soon, I'm sure.

Starting point is 02:33:31 Yeah. Have a great rest of your day. Cheers. We'll talk to you soon. And we have Parag Agarwal, the former CEO of Twitter. Man, the myth. In the stream waiting room, he is launching a new company today. And we are pleased to have him join the show.

Starting point is 02:33:45 Welcome to the stream. What's happening? What's happening? Hey, Johnny. Hey, John. Great to be here. Great to have you. So much to talk about.

Starting point is 02:33:53 Let's start with the new company. I mean, I'd love your thoughts on live streaming, on Twitter and X and all the things that we're doing. But let's stay focused on your company. What did you announce today? Should we bring this gong for you? Let's do it. Give us a breakdown.

Starting point is 02:34:12 How are you describing the new company? We're building parallels to build infrastructure for AI's using the web. Or not of this observation that the web was built for humans. We built Twitter. You're thinking about people in browsers and apps you're designing stuff for humans and two years ago as i was thinking around like the eyes are going to use the web and that's going to be the primary user of the web and it's going to be at

Starting point is 02:34:41 massive scale like thousand x a million x of what we've ever done on the web that needs new infrastructure new business models and that's what this company's about today the product we shipped is our deep research product now i'll tell you more about it yeah um how long when When did you actually start the company? It sounds like you've been in stealth for a while. Yeah, a year and a half ago. We've been building a lot of infrastructure in that time, a lot of infrastructure. So talk about the first product, break it down.

Starting point is 02:35:09 We shipped a deep research API today. So your users of chat GPT and I'm assuming several deep research tools. We have an API product that any enterprise developer can integrate into their applications into their workflows. Since we have reimagined the search stack, as well as the technology for the web from the ground up, we can outperform open-eyive deep research. We can outperform every leading model's deep research quality

Starting point is 02:35:41 in terms of their benchmarks, others benchmarks, and with real customers. And I think that's the product we've announced today. So break down some initial use cases for the product. let's say I have a SaaS company, like a vertical SaaS company, is this, and I'm building, or something, you know, I can imagine somebody's building SaaS for sales reps or, you know, a CRM provider. Is this something they would be running, you know, deep research style queries within the product?

Starting point is 02:36:12 Yeah, people do all kinds of things. So in the sales, CRM context, right, there's a lot of people who have this massive current customer list, prospect lift. they want to go, I wish I knew this about this customer. I wish I knew this about this customer. So they just add a bunch of data to have the CRM now have a lot of information that wasn't in there but was on the web. And now it's in their systems, in their CRM, they're ranking based on that, they're prioritizing based on that. They're able to go do meeting a SIFT, right? Before you meet someone, pull everything from my internal information that I have about the customer and our interactions with them.

Starting point is 02:36:50 also pull everything that's happening with their business, what they're talking about, what they're doing, what they're shipping. How do you think about the parade of frontier? I mean, Google's, I mean, I believe they have Gemini APIs and they have, and they've focused on kind of this idea of the tradeoff between cost and quality of result and intelligence is a function of cost ultimately. Where do you see pockets of value? Do you just want to go way further?

Starting point is 02:37:17 It doesn't matter how much it costs companies are willing to pay, or is there a, is there different kind of angle on the Pareto Frontier that you think is unexplored. Glad you mentioned the Pareto Frontier. I think we obsess about the Pareto Frontier, but I think both are important. One, at every price point, you've got to be the best. And then for someone who has no price sensitivity, you've got to be the absolute best, right? And I don't think you get to do the one without the other. Yeah. The way we push, the first thing, push quality and accuracy for use cases as high as possible. And once you can do that, it actually, you can do a lot of work to make it cheaper by trading

Starting point is 02:38:03 off a little bit of quality. That's the motion you take on, but you've got to be on the Pareto frontier for every use case to be operating at the scale that we want to operate at, which is like every application, every workflow, anytime, everything should use AI. Yeah. How do you, how do you think about competition in the category? Are you competing with OpenAI's API? Is that the wrong way to think about it?

Starting point is 02:38:32 Yeah, and I'm interested in, where do you see pockets of unexplored territory? Like one of Google's advantages that they have the TPU, but there are lots of new chip companies that offer different tradeoffs for inference. And what are you excited about in terms of like differentiation? So one, we use models from Open AI, Google, and we use several open software in different places. We also in our own models.

Starting point is 02:38:59 We build our own index, crawl, ranker, listener. And so what we are is a little bit of a complement to the best models if you're building AI applications. Now, of course, Open AI does bundle a search tool with their API. And that we compete with and beat. on quality. So we beat not just that tool. In fact, like the benchmarks

Starting point is 02:39:24 for the products we ship today, we beat humans doing hours of work through our deep research product, not just because we're cheaper or can do it faster, but we're more accurate for a bunch of workflows

Starting point is 02:39:37 than hiring a bunch of people to do it. And that, I think, is really exciting as we work with more and more customers. We're able to replicate that. And that's an amazing moment that we've found this year. Do you think there's room for differentiation by finding a beachhead market that is a subcategory? I just imagine, like, we've seen this with Harvey and legal, and there are obviously, you know,

Starting point is 02:40:05 HIPAA compliance and medical. And we just talked to Jessica, and she was saying that, like, they were a YC company. They tried a bunch of different things. Did some health care, some legal, wound up in logistics and had a bunch of luck there. Are there any glimmers of beachhead markets on the horizon for you? Almost too many. So we're seeing like a bunch, as you mentioned, like CRM, sales, sales intelligence, marketing. There's a bunch happening there. There's a lot of people innovating and there are customers. So if you think about our customers, our customers are often vertical people who are in various markets. We have people doing science research on like papers published or on sort of clinical trials that are happening. The data coming out of those. People, we've like investors, like hedge funds to P.E funds to venture funds.

Starting point is 02:40:58 Using us because like information on the web is what gives people alpha and people can be so creative. And now can create like scaled programs for figuring out where to spend their time. Instead of doing one query at a time and chat GPT, you write a script. You do a thousand queries on our deep research system. You get better quality and you figure out where you want to spend your time. And we even have coding agents that use our search tools when they get stuck. So if you're an agent, like, it's just like, so in from beachhead markets, I think it all converges in the way I say, right? It's all agents up there.

Starting point is 02:41:32 You can have an agent for sales. You can have an agent for investing. You can have an agent for choose your favorite industry. And every agent needs to work. Horseback riding. How has it been building, you know, quietly out of the public eye? Have you enjoyed it? lot. Also, respect for founders. I don't know. This is, I ran a large company, right? I was at Twitter

Starting point is 02:41:57 11 years. Being a founder, taking something from like nothing to having like a bunch of customers. Is this your first startup? It's my first startup. Wow. Figuring it out. Like I'm massively unqualified for the jobs, but those are the only jobs you really want, right? Yeah, of course. Like, why do you want a job that you're qualified for? best. I just got to figure it out. I want to dig into a little bit more granularity. Obviously it's launch week, but chat is asking us, what did you get done this week? Break it down for us. This week, I got back on Twitter. Wow. I don't know. Ring the gong. Ring the gong. We're in the gong. It's great to see you

Starting point is 02:42:40 back on the timeline. See it in priority. Congratulations of the launch. I think that's huge. And I don't know if you caught this. I think I almost broke Twitter. Oh, really? As I was tweeting like this morning at like 8 a.m. I was like trying to get my tweets out for the first time like in years, right? And Twitter is glitching. Then I go on down detector. Okay. You might have brought it down. And I was like what timing man like. Yeah. Yeah. Timmy launch on the timeline is is like one of the hardest dances you have to do. You can get steamrolled by a viral current thing. This was a good day. This was a good day to launch. Yeah. And we're glad you were

Starting point is 02:43:22 able to make the show. There could have been like a surprise deep seek launch. Yeah, yeah, exactly. But I think you broke through and we're very excited for you. So congratulations on the launch. Thank you so much for stopping by. And have a great rest of your week. We'll talk to you soon. Yeah. Great to catch up. Have a good one. Bye. Up next we have Eric from bolt. New in the Restream rating room. Let's bring in Eric. I'm very excited to talk to him because Bolt is launching a new business model. The margins on prompting will go to zero and the company will make money from hosting websites and apps instead. I want to talk about it. How you doing Eric? Good to have you on the

Starting point is 02:43:56 stream. What's happening? And good to be here guys. Yeah, long time watch. You're good to be on the show. Fantastic. It's good to have you. Uh, introduce yourself, give us a little background of the company and then I want to go into the business model questions because we've, this has been top of mind for us all show. Yeah, for sure. Yeah. So a company's called bolt dot new, uh, formerly known as stacklets. We were in the process of swapping the logo. Got to get new merch printed. Yeah.

Starting point is 02:44:19 We've been around for eight years now. We actually just hit the eight year mark two weeks ago. Overlight success. We were actually out of business like a year ago. And it's what ended up happening was we pivoted and launched Bolt and in the first two months from zero to 20 million of ARR and was really one of the first text app tools that they came out. Okay. Are you beating the allegations? Zero to 20 million?

Starting point is 02:44:42 Very impressive. What were the gross money? margins. Can you give us any insight here? Because everyone on the timeline saying, anyone with a big revenue ramp, it's all suspicious. But give us, give us a white pill. Yeah. So our margins have actually been really good. So like typically it's been around 40%. And a big part of that is that, you know, for the text to app stuff, part of it is the inference where you're having the cogen, you know, AI model spit out code. But you actually have to run it somewhere. And so that's like the technology we've been making for the past eight years basically allows you to run full development. environments in a browser using the end user CPU. So it doesn't cost us anything, right? Okay, got it. That's a big part of why our cogs are a lot better. Sure.

Starting point is 02:45:22 But for us, it's like, I think what seems to be inevitable is that margins are just going to go to zero on this stuff. And so we're kind of skate into where the puck is going because I'll unpack that because a lot of people are saying margins are going to go to 100%. Marksons are going to go very high because inference is going to get very cheap. You're saying margins are going to go to zero, break. that down why would it go to zero is that just competitive dynamics from the competitors and the legacy companies and just all sorts of different competitive pressure i think it's really yeah good

Starting point is 02:45:53 question so i mean it's really like like we could go and use the previous generation of models but and charge users you know what we're charging for frontier stuff but the problem is like you're not going to be able to build uh you know quality apps right because the the the the frontier models and agents are incredible and they just keep getting better and so the kind of you know if if you're if you're expecting to as a as a company reselling inference unless you're a model provider uh you know your choices you can either take a margin and give worse models than what are the frontier or you can or you're or you're or you're saying hey we want to always have the best most capable stuff um and and and and not take a margin and instead and then but what that means for

Starting point is 02:46:35 your business though is that you have to be going and making money in other ways than just reselling inference Right. And so if you kind of look at the previous generation of site builders and hosters as an analogy, you know, if you go to like Wix and Squarespace, they don't charge you to like build a website. It's free. Of course, you don't have to pay for or whatever, but like you drag and draw. What they bill you for is to host the thing, right? And and that's how they have a very healthy LTV and average customer, you know, contract length, etc. is that you have your website hosts and that's the primary ongoing value that's being. Yeah. And I and I, and I, people, people that have been kind of trying to, uh, track this market of prompt to site or prompt to app have, you know, the critics have talked about churn, but my read on it has always been that it seems like there's been a fairly healthy market of just website builders for a long time. It hasn't been monopolistic. You've got the wixes, the squarespace, the web flows, the framers, and, you know, all those companies have been able to carve out solid, solid businesses. And so, yeah, this launch makes a lot of sense, which is, hey, come on the platform, generate whatever you want. But then if you're generating

Starting point is 02:47:47 a site, a marketing site for your business, you know, we'll host it, you know, for you indefinitely. Yeah, exactly. And so it kind of moved, like for us as a business, it moves the focus for us to having the best services and like workflows for the customers we're serving. So like that's for people building hosting website, that's hosting services. So we partner with like Netlify and Superbase for powering the stuff that we've got today. And they've scaled this for, you know, some of the, you know, the heaviest products like Uber and Twilio in the past. So you can, you can build like, you know, to millions of people now with Bold. And on the B2B side, we're selling to folks that are, I mean, basically replacing Figma with Bolt for doing prototyping and rapid product development.

Starting point is 02:48:28 And that's just very sticky because you're working on a team. And it's for the same reason that Figma is a collaborative product. is sticky. And that's really where we're focusing, because that's like, you know, the retention is incredible on those use cases from our numbers. Are you feeling acceleration, deceleration from the frontier labs on coding products? Lots of people were kind of on the timeline, at least, disappointed in GPT-5. It feels like it's more of a consumer product now. But in general, you know, it used to be, you know, every six months, we got something that was completely breaking. through and now, you know, the releases feel a little bit more incremental.

Starting point is 02:49:08 But what are you feeling just from the foundation model lab side? Because we are seeing a lot of progress there. The benchmarks are improving. The context windows are getting bigger. Are we accelerating, decelerating, kind of in a rebuild mode, kind of rethink. You need to go back to the drawing board and do some AI research. Yeah. I think, you know, for all the frontier labs, I mean, they should all, they're, they need to

Starting point is 02:49:29 keep hitting, you know, more and more breakthroughs, right? from a on the ground perspective of a company like us looking at these models and running e-vals and measuring them, they're, you know, the models themselves may be seeing like maybe more incremental improvements, but what's really, I think the big unlock is it not only are they getting better at just like coding, but they're getting better at being designed to be used as part of agent systems. And that's like a, that's a huge thing because I mean, if you think about how humans think, like if I asked you to like, you know, rattle off like, you know, the latest financial numbers or something.

Starting point is 02:50:04 It's like you might be able to like pull that up. But realistically, you need to like think on it. You get some things wrong on zero shot and you do like kind of go do some research bounce around. And so like that's what really agents are kind of replicating in my view is like how we as humans actually think and work. And so how do you really tune the models to to be good at going and going down different thought paths killing ones that don't actually like promising, et cetera, et cetera.

Starting point is 02:50:26 You look at Claude code is probably the best example of this in the cogeneration world. And so there's remarkable, you know, progress being made in that realm of things, right? Yeah. So there's a lot, it seems to me there's a lot of room to run just on, you know, incremental improvements on the zero shot aspect of models, but then also how these things are going in reasoning and working in agent existence. Yeah, the unhobbling's. I think about, like, I'm sure that you don't vibe code a database every time someone builds a website. You pull a database off the shelf, and I've seen the stats of all the databases. that you guys are like pumping customers into. And so, yeah, as more of those tools roll out

Starting point is 02:51:09 and you get more of that functionality off the shelf and you can pull this from over there, pull that open source project, pull this data. Like that feels like that unlocks a lot of growth. Very exciting. Last question from my side for now. Gabe in the chat asked, what are those champagne bottles in the background?

Starting point is 02:51:26 What's going on there? First time someone's asked about this. Yeah, actually. So that, you know, this is, these are the first enterprise. deals when we closed the first because like we had never done enterprise sales motions before period like you know my chief of staff and I my CTO when we closed our first kind of three major customers this is like probably four or five years ago yeah we started with the

Starting point is 02:51:45 $15 bottle of cooks for the for the 20k deal start somewhere yep that's good and then work their way up there are like yeah those are the uh those are the things I keep on the shelf just what's the top tier bottle in the back I think the top of I think it's a bottle of Dom I can't there you go that's probably 250 three yeah yeah so we got it for us as a gift or something maybe I can't remember what that was about but it's that's that's like the uh I like never drink alcohol but it's like that's you know let's hear it for some empty teotaling enterprise deals we love it we love it good experience uh well thanks so much for coming out on the show we'll talk to you soon have a good relationship likewise thank you see yeah see yeah up next we have

Starting point is 02:52:24 Matthew from Merlin labs waiting in the restream waiting room let's bring in Matthew he has some Really big news. We're going to need a bigger gong, Jordy Hayes. How you doing? Hey, guys. How are you? We're great. How are you? Give us the news. Give us the update. Give us an introduction on you, the company, and on the news today. Hey, guys, I'm Matt. I run Merlin. We are, yeah, we're going to need a bigger gone. We're going to need a bigger gong. No, like I'm seeing you already with the mallet. Like, I'm here for it, like especially the end of the show. Yeah. So I run a, I don't know, biased, like a really cool company called Merlin.

Starting point is 02:53:00 where we're developing essentially a pilot, just not a human one. We are deploying that predominantly with the US Air Force and a bunch of other partners and customers around the world. And we announced this morning that we're taking the company public, which is going to be the first time one of these big defense startups go public. Oh, that's good. Congratulations. There we go. I was waiting for that. Let's stay on the anatomy of the deal.

Starting point is 02:53:31 What's actually happening from a mechanics perspective? What does it mean to take this company public? Where will you be listed? Do you have a ticker? Like break down what's going on with the deal, what it means? And then I have a ton of questions about autonomous flight. Yeah, 100%. So we were looking at a couple different options, and particularly for us going public

Starting point is 02:53:51 sort of efficiently allows to do a bunch of things, allows us to go build. a lot more capital to go sort of execute on a couple of big contracts that we're working on, but also allows us some currency to do M&A, which is important for us, especially as we sort of build up. So we talk to a lot of folks and we're combining with Inflection Point. Inflection Point has done two other really high-profile deals, USA Rare Earth and then Intuitive machines, both of which are trading at multi-billion dollar valuations with hundreds of millions of dollars of cash in the balance sheet.

Starting point is 02:54:25 Let's go. I love it. And then another big part of the announcement today is we announced like a 120 plus million dollars of committed capital before we had announced the deal. Yeah. So it's effectively like an investment in the company, although it'll happen after the merger. 100%. So most companies, when they're going public, they raise their pipe between when they announce

Starting point is 02:54:44 and when they go public. Based off the strength of the deal, we were able to pretty quickly raise about $120 million before the announcement. TBD, how much more money will take to pre-announce? But it's super exciting and I think a really important moment for defense tech. Got it. Talk to me about the value of autonomy in flight. We were talking to Delian earlier about this. The model for self-driving cars is very logical. Something like 70% of the cost of an Uber is the human driving the car. In the plane context, it's usually something like 7%.

Starting point is 02:55:21 It's much lower because the fuel is very expensive. You only have a couple pilots. You have a lot of people in the in the vehicle. So how are you thinking about focusing on like fully autonomous versus, you know, pilot assistance technology kind of what's the equivalent of a level five self-driving, level two self-driving? How do you think about the progression to self-flying planes? Yeah, I mean, well, Delian, Delian is captaining his Cessna. Yeah. Extremely well. But he might be joined by a co-pilot. Yeah, no. Yeah, he's gotten himself in some situations where he probably would have been better to let the co-pilot take over. But he's always made it through.

Starting point is 02:55:58 So we're grateful for that. All right. So everybody thinks of an airplane with like two pilots, right? But if you're like FedEx or like big airplanes, I don't know what Delian side of it, but like big airplanes. Yeah. There's anywhere between 13 and 20 FTE pilots per airplane, making all in anywhere between half a million and a million dollars a year. Yep. So if you're able to in the future, augment that and go from two crew down to one, that's, that's, you know,

Starting point is 02:56:23 billions of dollars of savings for, you know, the airline industry, which is, which is super important. But for our military customers, getting that out there enables those pilots go act a little bit more like mission managers, which is super important, particularly given that the Air Force is short pilots, which enabled our big contract that we announced last year, sort of a big ninth-figure contract to go spearhead fixed-wing autonomy for certain parts of the Air Force. What about the role of like not necessarily autopilot, but like just enhancing the safety of airplanes? I feel like that's just something that everyone should be excited about, get about, everyone's seen the different flight disasters, everyone wants more airplane safety. They're definitely willing to pay for it.

Starting point is 02:57:13 It seems like there's like an opportunity to plug in. And I'd love to know about the different FAA pathways for what it means to actually pilot the plane via a non-deterministic machine learning-based, AI-based system versus having a, you know, an iPad next to you that's more just offering advice and diagnostics and acting as kind of just bringing, like a centaur model, bringing superintelligence alongside a human in loop. Yeah. So for our customers, particularly our DoD customers, like bottom line, most people living today have lived in a world where America has been able to go project air power and like prevent World War III from happening for the vast majority of their adult lives. We are in a world for the first time ever where America does not, in the West, does not have the unilateral ability to go project air power and prevent World War III. So like what we're doing and what we're building here

Starting point is 02:58:15 of like getting autonomy out actually in an operational service going from two crew down to one and then we're doing some uncrewed stuff as well with with a few customers like gets us to that point of like getting out of this like kind of toy iPad

Starting point is 02:58:29 pilot assist kind of like I don't know kind of like a BS solution and actually going out and really operationalizing autonomy and like getting like millions of hours of operating history so that we can start to go claw back that lead against some of our peer adversaries yep makes sense

Starting point is 02:58:48 jrude super important stuff come back on as this cycle progresses yeah we're very sad for you congratulations on the news coral we're gonna need a bigger gun guys yeah we'll get it ready it's actually it's actually in the works hopefully wherever it's manufactured we'll fly it's really it's a race against against you guys getting out yeah okay i'll do our absolute best. I'll be back and we'll expect a bigger gone. Fantastic. We'll talk to you saying that. Great to me, I see you guys.

Starting point is 02:59:16 Have a good one. Bye. Breaking news. The Trump administration is said to discuss U.S. taking a stake in Intel. Someone predicted this on the show. Maybe it was Aaron. The Trump administration is in talks with Intel to have the U.S. government potentially take a stake in the beleaguered chipmaker helping support the company's effort to expand domestic manufacturing. The deal would help shore up Intel's planned factory in Ohio, who,

Starting point is 02:59:41 said the people who asked not to be identified because the deliberations are private, of course. The company had once promised to turn that site into the world's largest chip-making facility, though it's been repeatedly delayed. The plan stems from a meeting this week between President Trump and Intel CEO Lip Bhutan. The people said, the ideas for the U.S. government to pay for the stake and the details are being sorted out. One of the people said, another caution that the plans remain fluid. So we'll be interesting to see here if this is taxpayer dollar. or this like sovereign slush fund that we're getting from Japan and making

Starting point is 03:00:16 video pay for it 15% of age 20s put that money to work by Intel I don't know if I like that I don't know if I like buying Intel it feels like we also it I don't know I mean the US government does own some companies like Fannie Mae and Freddie Mac were recently they're the the lenders for student loans or all sorts of all sorts of lending that goes on those are nationalized and so Trump was talking about IPOing those or spinning those out. What we got, Tyler? Is this, uh, do you think this is bullish for Leopold, the tuition awareness, big,

Starting point is 03:00:48 weren't they big Intel? Oh, yeah, that's huge. I mean, Intel's up 20% in the last five days. Exercise those calls, Leopold. Let's go. Bucco Capital has a, I got a post here. We'll use this to close out the show. Okay.

Starting point is 03:01:01 Pull this up. Team. Please. You just drop it in the chat. It's in the chat. Leopold, Oshon Brenner today after being clowned on literally. utilizing Intel is a horrible idea. We're going to get demonetized for this. Turn this off before we get demonitized.

Starting point is 03:01:23 No, we just got to talk over as it's playing so the AI gets confused and thinks of it. Oh, that's not a real song. Anyways, Intel. Fun hanging out with everyone in the chat. Thanks for watching Gabe, Techno Chief, John Axley, Deepak, Raghav. So many good usernames. Thanks for watching. We will see you tomorrow.

Starting point is 03:01:40 tomorrow. I can't wait. It's going to be a blast. The mansion section. Incoming. It's already Friday? Wow. Hard to believe.

Starting point is 03:01:48 Anyway, thank you so much for watching. Leave us five stars on Apple Podcasts, Spotify, and we will see you tomorrow. Goodbye. Bye. We love you.

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